-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, EG5wjnus4Wmj5rCZmCIMRAMuttkY8U7f/9GePqnUPO4mqmyDIT7Uv7A3vKCYHZhG psxH2KsM1cGbUS7D8lhgYQ== 0000950103-98-000233.txt : 19980309 0000950103-98-000233.hdr.sgml : 19980309 ACCESSION NUMBER: 0000950103-98-000233 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 6 CONFORMED PERIOD OF REPORT: 19980226 ITEM INFORMATION: FILED AS OF DATE: 19980306 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: FEDERAL EXPRESS CORP CENTRAL INDEX KEY: 0000230211 STANDARD INDUSTRIAL CLASSIFICATION: AIR COURIER SERVICES [4513] IRS NUMBER: 710427007 STATE OF INCORPORATION: DE FISCAL YEAR END: 0531 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 001-07806 FILM NUMBER: 98559010 BUSINESS ADDRESS: STREET 1: 2005 CORPORATE AVE CITY: MEMPHIS STATE: TN ZIP: 38132 BUSINESS PHONE: 9013693600 MAIL ADDRESS: STREET 1: 2005 CORPORATE AVE CITY: MEMPHIS STATE: TN ZIP: 38132 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: February 26, 1998 (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 are being filed in connection with, and incorporated by reference in, the Registrant's Registration Statement on Form S-3 No. 333-07691, which was declared effective on July 10, 1996, as amended by Post-Effective Amendment No. 1 to such Registration Statement, which was declared effective on April 28, 1997. Exhibit Description of Exhibit 4.b.1 Form of Trust Indenture and Security Agreement (Federal Express Corporation Trust No. N584FE), dated as of May 1, 1997, as amended and restated as of February 1, 1998, between State Street Bank and Trust Company of Connecticut, National Association (the "Owner Trustee") and First Security Bank, National Association (the "Indenture Trustee") 4.b.2 Forms of Equipment Trust Certificates (included in Exhibit 4.b.1) 4.c Form of Participation Agreement (Federal Express Corporation Trust No. N584FE), dated as of May 1, 1997, as amended and restated as of February 1, 1998, among Federal Express Corporation (the "Lessee"), Key Corporate Capital Inc. (the "Owner Participant"), the Indenture Trustee, the Owner Trustee and First Security Bank, National Association (the "Pass Through Trustee" and the "Subordination Agent") 4.d Form of Trust Agreement (Federal Express Corporation Trust No. N584FE), dated as of May 1, 1997, as amended and restated as of February 1, 1998, between the Owner Participant and the Owner Trustee 4.e Form of Lease Agreement (Federal Express Corporation Trust No. N584FE), dated as of May 1, 1997, as amended and restated as of February 1, 1998, between the Owner Trustee, as Lessor, and the Lessee 4.f Addendum to Equipment Trust Certificates (Federal Express Corporation Trust No. N584FE) dated February 26, 1998, issued by the Owner Trustee and authenticated and acknowledged by the Indenture Trustee, the Pass Through Trustee and the Subordination Agent for each of Series A, Series B and Series C 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/ MICHAEL W. HILLARD --------------------------------- Michael W. Hillard Vice President and Controller (principal accounting officer) Dated: February 26, 1998 EXHIBIT INDEX ------------- Exhibit Description of Exhibit - ------- ---------------------- 4.b.1 Form of Trust Indenture and Security Agreement (Federal Express Corporation Trust No. N584FE), dated as of May 1, 1997, as amended and restated as of February 1, 1998, between State Street Bank and Trust Company of Connecticut, National Association (the "Owner Trustee") and First Security Bank, National Association (the "Indenture Trustee") 4.b.2 Forms of Equipment Trust Certificates (included in Exhibit 4.b.1) 4.c Form of Participation Agreement (Federal Express Corporation Trust No. N584FE), dated as of May 1, 1997, as amended and restated as of February 1, 1998, among Federal Express Corporation (the "Lessee"), Key Corporate Capital Inc. (the "Owner Participant"), the Indenture Trustee, the Owner Trustee and First Security Bank, National Association (the "Pass Through Trustee" and the "Subordination Agent") 4.d Form of Trust Agreement (Federal Express Corporation Trust No. N584FE), dated as of May 1, 1997, as amended and restated as of February 1, 1998, between the Owner Participant and the Owner Trustee 4.e Form of Lease Agreement (Federal Express Corporation Trust No. N584FE), dated as of May 1, 1997, as amended and restated as of February 1, 1998, between the Owner Trustee, as Lessor, and the Lessee 4.f Addendum to Equipment Trust Certificates (Federal Express Corporation Trust No. N584FE) dated February 26, 1998, issued by the Owner Trustee and authenticated and acknowledged by the Indenture Trustee, the Pass Through Trustee and the Subordination Agent for each of Series A, Series B and Series C EX-4.B.1 2 Exhibit 4.b.1 - ------------------------------------------------------------------------------- TRUST INDENTURE AND SECURITY AGREEMENT (FEDERAL EXPRESS CORPORATION TRUST NO. N584FE) Dated as of May 1, 1997 as amended by Amendment Agreement No. 1 to Trust Indenture and Security Agreement (Federal Express Corporation Trust No. N584FE) dated September 30, 1997 and as amended and restated as of February 1, 1998 between STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT, NATIONAL ASSOCIATION, Not in its Individual Capacity, but solely As Owner Trustee, Owner Trustee and FIRST SECURITY BANK, NATIONAL ASSOCIATION, Not in its Individual Capacity, but solely As Indenture Trustee, Indenture Trustee COVERING ONE MCDONNELL DOUGLAS MD-11F AIRCRAFT SERIAL NO. 48436, REGISTRATION NO. N584FE - ------------------------------------------------------------------------------- TABLE OF CONTENTS ----------------- Page ---- Initial Recitals.......................................................... 1 Granting Clause........................................................... 2 Habendum Clause........................................................... 5 ARTICLE I DEFINITIONS Section 1.01. Definitions.............................................. 7 ARTICLE II ISSUE, EXECUTION, FORM AND REGISTRATION OF CERTIFICATES; COLLATERAL ACCOUNT Section 2.01. Authentication and Delivery of Certificates.............. 7 Section 2.02. Execution of Certificates................................ 7 Section 2.03. Certificate of Authentication............................ 8 Section 2.04. Form and Terms of Certificates; Payments of Principal, Make-Whole Premium and Interest......................... 8 Section 2.05. Payments from Trust Indenture Estate Only................ 11 Section 2.06. Registration, Transfer and Exchange...................... 12 Section 2.07. Mutilated, Defaced, Destroyed, Lost and Stolen Certificates............................................ 13 Section 2.08. Cancellation of Certificates; Destruction Thereof........ 14 Section 2.09. Temporary Certificates................................... 14 Section 2.10. Termination of Interest in Trust Indenture Estate........ 15 Section 2.11. Certificates in Respect of Replacement Airframe.......... 15 Section 2.12. Assumption of Obligations Under Certificates and Other Operative Agreements.................................... 15 Section 2.13. Establishment of Collateral Account...................... 15 Section 2.14. [Reserved]............................................... 16 Section 2.15. Release of Debt Portion and Lien on the Collateral Account and the Liquid Collateral on Delivery Date...... 16 Section 2.16. [Reserved]............................................... 16 Section 2.17. Subordination............................................ 16 ARTICLE III COVENANTS Section 3.01. Payment of Principal, Make-Whole Premium and Interest.... 17 Section 3.02. Offices for Payments, etc................................ 17 Section 3.03. Appointment to Fill a Vacancy in Office of Indenture Trustee................................................. 17 Section 3.04. Paying Agents............................................ 17 Section 3.05. Covenants of SSB and the Owner Trustee................... 18 Section 3.06. [Reserved]............................................... 19 Section 3.07. Disposal of Trust Indenture Estate....................... 19 Section 3.08. No Representations or Warranties as to Aircraft or Documents............................................... 19 Section 3.09. Further Assurances; Financing Statements................. 19 ARTICLE IV HOLDER LISTS Section 4.01. Holder Lists; Ownership of Certificates.................. 20 ARTICLE V RECEIPT, DISTRIBUTION AND APPLICATION OF INCOME FROM THE TRUST INDENTURE ESTATE Section 5.01. Basic Rent Distribution.................................. 20 Section 5.02. Event of Loss and Replacement; Prepayment................ 21 Section 5.03. Payment After Indenture Event of Default, etc............ 22 Section 5.04. Certain Payments......................................... 24 Section 5.05. Other Payments........................................... 25 Section 5.06. Payments to Owner Trustee................................ 25 Section 5.07. Application of Payments.................................. 25 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.......................... 27 Section 6.02. Prepayment of Certificates............................... 27 Section 6.03. Notice of Prepayment to Holders.......................... 29 Section 6.04. Deposit of Prepayment Price and Sinking Fund Redemption Price................................................... 29 Section 6.05. Certificates Payable on Prepayment Date.................. 30 Section 6.06. Mandatory Sinking Fund Redemption........................ 30 ARTICLE VII INDENTURE EVENTS OF DEFAULT; REMEDIES OF INDENTURE TRUSTEE AND HOLDERS Section 7.01. Indenture Event of Default............................... 33 Section 7.02. Remedies................................................. 35 Section 7.03. Return of Aircraft, etc.................................. 37 Section 7.04. Indenture Trustee May Prove Debt......................... 40 Section 7.05. Remedies Cumulative...................................... 42 Section 7.06. Suits for Enforcement.................................... 42 Section 7.07. Discontinuance of Proceedings............................ 42 Section 7.08. Limitations on Suits by Holders.......................... 42 Section 7.09. Unconditional Right of Holders to Receive Principal, Interest and Make-Whole Premium, and to Institute Certain Suits........................................... 43 Section 7.10. Control by Holders....................................... 43 Section 7.11. Waiver of Past Indenture Default......................... 44 Section 7.12. Notice of Indenture Default.............................. 44 Section 7.13. Waiver of Appraisement, etc.; Laws....................... 45 ARTICLE VIII RIGHTS OF THE OWNER TRUSTEE AND THE OWNER PARTICIPANTS Section 8.01. Certain Rights of Owner Trustee and Owner Participants... 45 Section 8.02. Owner Participant's Right to Elect to Prepay or Purchase the Certificates........................................ 49 Section 8.03. Certain Rights of Owner Participant...................... 50 ARTICLE IX CONCERNING THE INDENTURE TRUSTEE Section 9.01. Acceptance of Trusts..................................... 51 Section 9.02. Duties and Responsibilities of the Indenture Trustee; During an Indenture Event of Default; Prior to an Indenture Event of Default.............................. 52 Section 9.03. Certain Rights of the Indenture Trustee.................. 54 Section 9.04. Indenture Trustee Not Responsible for Recitals, Disposition of Certificates or Application of Proceeds Thereof................................................. 55 Section 9.05. Indenture Trustee and Agents May Hold Certificates; Collections, etc........................................ 55 Section 9.06. Moneys Held by Indenture Trustee......................... 55 Section 9.07. Right of Indenture Trustee to Rely on Officer's Certificate, etc........................................ 55 Section 9.08. Replacement Airframes and Replacement Engines............ 56 Section 9.09. Indenture and Security Agreement Supplement for Replacements............................................. 59 Section 9.10. Effect of Replacement.................................... 59 Section 9.11. Compensation............................................. 59 ARTICLE X CONCERNING THE HOLDERS Section 10.01. Evidence of Action Taken by Holders..................... 60 Section 10.02. Proof of Execution of Instruments and of Holding of Certificates........................................... 60 Section 10.03. Holders to Be Treated as Owners......................... 61 Section 10.04. Certificates Owned by Owner Trustee and the Lessee Deemed Not Outstanding................................. 61 Section 10.05. Right of Revocation of Action Taken..................... 62 Section 10.06. ERISA................................................... 62 ARTICLE XI INDEMNIFICATION OF INDENTURE TRUSTEE BY OWNER TRUSTEE ARTICLE XII SUCCESSOR TRUSTEES Section 12.01. Notice of Successor Owner Trustee....................... 64 Section 12.02. Resignation and Removal of Indenture Trustee; Appointment of Successor............................... 64 Section 12.03. Persons Eligible for Appointment as Indenture Trustee... 65 Section 12.04. Acceptance of Appointment by Successor Trustee.......... 65 Section 12.05. Merger, Conversion, Consolidation or Succession to Business of Indenture Trustee.......................... 66 Section 12.06. Appointment of Separate Trustees........................ 67 ARTICLE XIII SUPPLEMENTS AND AMENDMENTS TO THIS TRUST INDENTURE AND OTHER DOCUMENTS Section 13.01. Supplemental Indentures Without Consent of Holders...... 69 Section 13.02. Supplemental Indentures With Consent of Holders......... 70 Section 13.03. Effect of Supplemental Indenture........................ 72 Section 13.04. Documents to Be Given to Indenture Trustee.............. 72 Section 13.05. Notation on Certificates in Respect of Supplemental Indentures............................................. 72 Section 13.06. No Request Necessary for Lease Supplement or Indenture and Security Agreement Supplement...................... 72 Section 13.07. Notices to Liquidity Providers.......................... 72 ARTICLE XIV SATISFACTION AND DISCHARGE OF INDENTURE; UNCLAIMED MONEYS Section 14.01. Satisfaction and Discharge of Indenture; Termination of Indenture.............................................. 73 Section 14.02. Application by Indenture Trustee of Funds Deposited for Payment of Certificates................................ 74 Section 14.03. Repayment of Moneys Held by Paying Agent................ 74 Section 14.04. Transfer of Moneys Held by Indenture Trustee and Paying Agent Unclaimed for Two Years and Eleven Months................................................. 74 ARTICLE XV MISCELLANEOUS Section 15.01. Capacity in Which Acting................................ 75 Section 15.02. No Legal Title to Trust Indenture Estate in Holders..... 75 Section 15.03. Sale of Trust Indenture Estate by Indenture Trustee is Binding................................................ 75 Section 15.04. Indenture for Benefit of Owner Trustee, Indenture Trustee, Owner Participant, Holders and Liquidity Providers.............................................. 75 Section 15.05. No Action Contrary to the Lessee's Rights Under the Lease.................................................. 76 Section 15.06. Notices................................................. 76 Section 15.07. Officer's Certificates and Opinions of Counsel; Statements to Be Contained Therein..................... 77 Section 15.08. Severability............................................ 78 Section 15.09. No Oral Modifications or Continuing Waivers............. 78 Section 15.10. Successors and Assigns.................................. 78 Section 15.11. Headings................................................ 78 Section 15.12. Normal Commercial Relations............................. 78 Section 15.13. Governing Law; Counterparts............................. 78 Exhibit A -- Form of Indenture and Security Agreement Supplement Exhibit B -- Form of Certificate Schedule I -- [Reserved] Schedule II -- Definitions TRUST INDENTURE AND SECURITY AGREEMENT (FEDERAL EXPRESS CORPORATION TRUST NO. N584FE) TRUST INDENTURE AND SECURITY AGREEMENT (FEDERAL EXPRESS CORPORATION TRUST NO. N584FE) dated as of May 1, 1997, as amended by Amendment Agreement No. 1 to Trust Indenture and Security Agreement (Federal Express Corporation Trust No. N584FE) dated September 30, 1997 and as amended and restated as of February 1, 1998 (the "Indenture"), between STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT, NATIONAL ASSOCIATION, a national banking association, not in its individual capacity, except as otherwise specifically set forth herein (when acting in such individual capacity, "SSB"), but solely as owner trustee (the "Owner Trustee") under the Trust Agreement, as defined herein, and FIRST SECURITY BANK, 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 set forth or referred to in Article I hereof; WHEREAS, the Initial Owner Participant and SSB entered into the Original Trust Agreement whereby, among other things, the Owner Trustee declared a certain trust for the use and benefit of the Initial Owner Participant, subject, however, to the Lien of the Original Indenture; WHEREAS, the Original Indenture and the Amendment were not filed with the Federal Aviation Administration; WHEREAS, the Initial Owner Participant has transferred its Beneficial Interest to the Owner Participant and in connection therewith the Original Indenture contemplated that the Certificates would be reoptimized and the Original Indenture amended and restated; WHEREAS, all things necessary to make this Indenture the valid, binding and legal obligation of the Owner Trustee, enforceable in accordance with their respective terms, have been done and performed and have happened; and WHEREAS, the parties hereto desire to amend and restate the Original Indenture in its entirety. NOW, THEREFORE, the parties agree that such Original Indenture be and the same is hereby amended and restated in its entirety as follows: GRANTING CLAUSE NOW, THEREFORE, in consideration of the mutual promises contained herein and to secure (i) the prompt payment of the principal of and Make-Whole Premium, if any, and interest on, and all other amounts due with respect to, all the Certificates from time to time outstanding under this Indenture and all other amounts due hereunder and (ii) the performance and observance by the Owner Trustee of all the agreements, covenants and provisions in this Indenture, in the Certificates, in the Participation Agreement and in the Lease contained for the benefit of the Holders of the Certificates, and the prompt payment of any and all amounts from time to time owing under the Participation Agreement by the Owner Trustee, the Owner Participant or the Lessee to the Holders (collectively 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 first priority security interest in and confirmed, and does hereby grant, bargain, sell, assign, transfer, convey, mortgage, pledge and grant a first priority security interest in and confirm to the Indenture Trustee, its successors and assigns, in trust for the equal and ratable security and benefit of the Holders from time to time of the Certificates, a first priority security interest in and first mortgage Lien on all estate, right, title and interest of the Owner Trustee in, to and under the following described property, rights and privileges other than Excepted Payments, which collectively, excluding Excepted Payments but including all property specifically subjected to the Lien of this Indenture by the terms hereof, by any Indenture and Security Agreement Supplement or any mortgage supplemental to this Indenture, are included within the Trust Indenture Estate, subject always to the rights granted to the Owner Trustee or the Owner Participant hereunder and to the other terms and conditions of this Indenture: (1) The Airframe, as the same is more particularly described in the Indenture and Security Agreement Supplement and any airframe substituted in replacement thereof pursuant to the provisions of this Indenture; 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 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) 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; (3) The Modification Agreement (to the extent assigned to the Owner Trustee pursuant to the Warranty Bill of Sale), the GTA, the Engine Warranty Assignment and the Engine Consent, the Bills of Sale, the Ancillary Agreement I and the Participation Agreement (to the extent of amounts payable to the Owner Trustee thereunder) (collectively, and together with the Lease, the Trust Agreement and the Certificates, the "Indenture Documents"), 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 any of the foregoing documents and instruments; (4) 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; (5) 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; (6) 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; and (7) All proceeds of the foregoing. Notwithstanding the foregoing provisions: (a) (i) whether or not an Indenture Event of Default shall occur and be continuing, 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 and (B) to adjust Basic Rent and the percentages relating to Stipulated Loss Value and Termination Value and the EBO Price as provided in Section 3.04 of the Lease, (C) 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 (except for, in respect of Basic Rent constituting an Excepted Payment, the manner by which such amount is paid), (D) 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, (E) to retain the right of "Lessor" to determine the Fair Market Rental or Fair Market Value pursuant to Article 4 of the Lease, (F) 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 (G) 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) whether or not an Indenture Event of Default shall occur and be continuing, the Owner Trustee and the Indenture Trustee shall each have the rights separately but not to the exclusion of the other (agreement of both required in the case of clause (E) below), (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 (provided that if an Indenture Event of Default shall be continuing, no inspection right of the Owner Trustee shall interfere with the efforts of the Indenture Trustee to exercise remedies under the Lease or this Indenture), (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 default under Section 16.01 of the Lease, and (E) the right to consent to changes to the list of countries on Schedule III to the Participation Agreement; (iii) (A) 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, 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 and to exercise all rights, elections and options of the Lessor in connection with the return, renewal or purchase of the Aircraft and to exercise rights with respect to the use, operation, maintenance and modification of the Aircraft, in each case pursuant to express provisions of the Operative Agreements (other than in connection with an Event of Default), and (B) so long as no Indenture Event of Default not constituting an 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, jointly with the Indenture Trustee (agreement of both not being required), to further assurances and financial information from the Lessee pursuant to Section 19.01 of the Lease (other than the right to receive any funds to be delivered to the "Lessor" under the Lease (except funds delivered with respect to Excepted Payments); (iv) at all times the Owner Trustee shall have the right as Lessor, but not to the exclusion of the Indenture Trustee, to seek specific performance of the covenants of the Lessee under the Lease relating to the protection, insurance, maintenance, possession and use of the Aircraft; and (v) at all times the Owner Trustee and the Owner Participant shall have the rights granted to them under Articles VI, VIII and X and Section 7.02 hereof. (b) 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. 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. Effective upon the occurrence and continuance of an Indenture Event of Default, 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 is directed to make all payments of Rent (other than Excepted Payments not constituting Basic Rent) payable to the Owner Trustee and all other amounts (other than Excepted Payments not constituting Basic Rent) 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 not constituting Basic Rent. 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. The Owner Trustee does hereby warrant and represent that it has not assigned, pledged or otherwise disposed of, and hereby covenants that it will not assign or pledge or otherwise dispose of, so long as the assignment hereunder shall remain in effect and shall not have been terminated pursuant to Section 14.01 hereof, any of its right, title or interest hereby assigned, to anyone other than the Indenture Trustee, and that it will not, except in respect of Excepted Payments or otherwise as provided in or permitted by this Indenture, accept any payment from the Lessee or any sublessee (other than Excepted Payments not constituting Basic Rent), 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 and the chattel paper original counterpart of the Lease. It is hereby further covenanted and agreed by and between the parties as follows: 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; COLLATERAL ACCOUNT Section 2.01. Authentication and Delivery of Certificates. Forthwith upon the execution and delivery of the Original 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) were or shall be, as the case may be, executed by the Owner Trustee and delivered to the Indenture Trustee for authentication, and the Indenture Trustee thereupon did or shall, as the case may be, 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 SSB. 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 SSB 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 SSB, 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 SSB; 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 SSB, 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 SSB at the time such Certificates were issued shall bind the Owner Trustee, notwithstanding that such individuals or any of them have ceased to hold such offices prior to the authentication and delivery of such Certificates or did not hold such offices at the respective dates of such Certificates. Section 2.03. Certificate of Authentication. Only such Certificates as shall bear thereon a certificate of authentication substantially in the form set forth in Exhibit B, executed by the Indenture Trustee by manual signature of one of its authorized officers, shall be entitled to the security and benefits of this Indenture or be valid or obligatory for any purpose. Such certificate by the Indenture Trustee upon any Certificate executed by the Owner Trustee shall be conclusive evidence that the Certificate so authenticated has been duly authenticated and delivered hereunder and that the Holder, as evidenced on the Register, is entitled to the security and benefits of this Indenture. Section 2.04. Form and Terms of Certificates; Payments of Principal, Make-Whole Premium and Interest. The Certificates and the Indenture Trustee's certificate of authentication shall be substantially in the form set forth in Exhibit B hereto. Certificates may differ with respect to Maturity and as to other terms. The Certificates shall be issuable as registered securities without coupons and shall be numbered, lettered, or otherwise distinguished in such manner or in accordance with such plans as the Owner Trustee executing the same may determine with the approval of the Indenture Trustee. The aggregate principal amount of Certificates that may be authenticated and delivered under this Indenture is limited as provided in the form of Certificate attached as Exhibit B hereto. The Certificates shall be issued in registered form only and in denominations of $1,000 and any integral multiple thereof, shall be dated the Delivery Date, shall be issued in three separate series consisting of Series A, Series B and Series C 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 Department of the Indenture Trustee or at any office or agency maintained for such purpose pursuant to Section 3.02 hereof in immediately available funds prior to 10:30 A.M. (New York time) on the due date thereof and the Indenture Trustee shall remit all such amounts received by it to the Holders at such account or accounts at such financial institution or institutions as the Holders shall have designated to the Indenture Trustee in writing, in immediately available funds, such payment to be made if the payment was received prior to 10:30 A.M. New York time by the Indenture Trustee on any Business Day, by 12:00 noon New York time on such Business Day; otherwise, the Indenture Trustee shall make payment promptly, but not later than 11:00 A.M. New York time on the next succeeding Business Day; 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. If any amount payable under the Certificates, or under this 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. The Holder at the close of business on any Record Date with respect to any Payment Date shall be entitled to receive the interest if any payable on such Payment Date notwithstanding any transfer or exchange of such Certificate subsequent to the Record Date and prior to such Payment Date, except if and to the extent the Owner Trustee shall default in the payment of the interest due on such Payment Date, in which case such defaulted interest shall be paid to the Holder at the close of business on a subsequent Record Date (which shall be not less than five (5) or more than fifteen (15) Business Days prior to the date of payment of such defaulted interest) established by notice given by mail by or on behalf of the Owner Trustee to the Holders not less than fifteen (15) days preceding such subsequent Record Date. The Owner Trustee agrees to pay to the Indenture Trustee for distribution in accordance with Section 5.04 hereof (a) any and all indemnity amounts received by the Owner Trustee which are payable by the Lessee to (i) the Indenture Trustee in its individual capacity, (ii) the Subordination Agent or (iii) each Liquidity Provider, in each case pursuant to Article 8 or 9 of the Participation Agreement (it being acknowledged that the Lessee has been instructed to pay such amounts to the Person or Persons entitled thereto) and (b) the Owner Trustee's pro rata share of all amounts owed to each Liquidity Provider by the Subordination Agent under each Liquidity Facility other than amounts due as (i) repayments of the principal of advances thereunder, and (ii) interest on Interest Drawings and Final Drawings except to the extent included in Net Interest and Related Charges. As used in this Section, the Owner Trustee's pro rata share means as of any time: (A) with respect to all amounts other than Net Interest and Related Charges, a fraction the numerator of which is the aggregate principal balance then outstanding of the Certificates issued under this Indenture (other than the Series C Certificates) and the denominator of which is the aggregate principal balance of all Certificates issued under this Indenture and the Related Indentures (other than the Series C Certificates), plus (B) with respect to all Net Interest and Related Charges (x) if there exists a Payment Default under any Certificate issued under this Indenture a fraction, the numerator of which is the aggregate principal balance then outstanding of Certificates issued under this Indenture (other than the Series C Certificates) and the denominator of which is the aggregate principal balance then outstanding of all Certificates issued under this Indenture and the Related Indentures (other than the Series C Certificates) under which there exists a Payment Default or (y) at all other times, zero. As used in this Section, "Net Interest and Related Charges" means the sum of (i) the amount, if any, by which interest payable to each Liquidity Provider on any Interest Drawing and/or Final Drawing exceeds the amount which would be payable if such drawings bore interest at the weighted average Past Due Rate applicable to amounts in default on all Certificates plus (ii) any amounts payable under Section 3.01, Section 3.02, Section 3.03, Section 3.09 or Section 7.07 of each Liquidity Facility (or similar provisions of any replacement Liquidity Facility) which result from any Interest Drawing or Final Drawing. As used in this Section, a Payment Default when used in connection with a Certificate issued hereunder or a Certificate issued under any Related Indenture means a default in the payment of principal thereof or interest thereon (which default has not been cured), other than solely because of acceleration. As used in this Section, "Related Indentures" means, collectively, the Trust Indenture and Security Agreement for each of Federal Express Corporation Trust Nos. N670FE, N671FE, N672FE, N673FE and N674FE, each dated as of May 1, 1997, between the Owner Trustee and the Indenture Trustee, the Trust Indenture and Security Agreement for Federal Express Corporation Trust No. N583FE, dated as of May 1, 1997, as amended and restated as of September 1, 1997, between the Owner Trustee and the Indenture Trustee, the Trust Indenture and Security Agreement for Federal Express Corporation Trust No. N581FE, dated as of May 1, 1997, between Wilmington Trust Company, as owner trustee and the Indenture Trustee, and the Trust Indenture and Security Agreement for Federal Express Corporation Trust No. N587FE, dated as of December 1, 1996, as amended and restated as of May 1, 1997, between Wilmington Trust Company, as owner trustee and the Indenture Trustee. 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 of the type described in Section 5.01 hereof to the extent actually received by the Indenture Trustee 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 described in Section 5.01 hereof to the extent actually received by the Indenture Trustee) to the extent available for distribution to it as provided herein and that neither the Owner Participant, the Owner Trustee, SSB 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 SSB, the Owner Trustee or the Indenture Trustee. SSB 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 SSB's gross negligence or willful misconduct, or as otherwise expressly provided herein or in the Participation Agreement. If (1) all or any part of the Lessor's Estate becomes the property of a debtor subject to the reorganization provisions of the Bankruptcy Code, (2) pursuant to such reorganization provisions the Owner Participant is required, by reason of such Owner Participant being held to have recourse liability to the debtor or the trustee of the debtor directly or indirectly, to make payment on account of any amount payable as principal of or interest, Make-Whole Premium or other amounts payable on the Certificates, and (3) the Indenture Trustee actually receives any Recourse Amount which reflects any payment by the Owner Participant on account of (2) above, then the Indenture Trustee shall promptly refund to the Owner Participant such Recourse Amount. 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, or from retaining any amount paid by the Owner Participant under Sections 5.01, 8.02 and 8.03 hereof. 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 period of 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 Series and Maturity, principal amount and interest rate and in authorized denominations for an equal aggregate principal amount; provided, that such Certificate being transferred shall be cancelled in accordance with Section 2.08 hereof simultaneously with the issuance of the new Certificate. Any Certificate or Certificates may be exchanged for a Certificate or Certificates of the same Series and 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 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 SSB, the Indenture Trustee shall authenticate and deliver, a new Certificate of like Maturity, principal amount and interest rate as the Certificate being replaced, 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 the case of any Certificate so apparently destroyed, lost or stolen, the applicant for a substitute Certificate shall furnish to the Owner Trustee and to the Indenture Trustee such security or indemnity as may be required by them to indemnify and defend and to hold each of them harmless and evidence to their satisfaction of the apparent destruction, loss or theft of such Certificate and of the ownership thereof. Upon the issuance of any substitute Certificate, the Owner Trustee or the Indenture Trustee may require payment from the Holder of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and any other reasonable expenses incurred in connection 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 hold each of them harmless and the applicant shall also furnish to the Owner Trustee and the Indenture Trustee evidence to their satisfaction of the apparent destruction, loss or theft of such Certificate and of the ownership thereof. Every substitute Certificate issued pursuant to the provisions of this Section by virtue of the fact that any Certificate is apparently destroyed, lost or stolen shall constitute an original additional contractual obligation of the Owner Trustee, whether or not the apparently destroyed, lost or stolen Certificate shall be enforceable at any time by anyone and shall be entitled to all the security and benefits of (but shall be subject to all the limitations of rights set forth in) this Indenture equally and proportionately with any and all other Certificates duly authenticated and delivered hereunder. All Certificates shall be held and owned upon the express condition that, to the extent permitted by law, the foregoing provisions are exclusive with respect to the replacement or payment of mutilated, defaced, or apparently destroyed, lost or stolen Certificates and shall preclude any and all other rights or remedies notwithstanding any law or statute existing or hereafter enacted to the contrary with respect to the replacement or payment of negotiable instruments or other securities without their surrender. Section 2.08. Cancellation of Certificates; Destruction Thereof. All Certificates surrendered for payment, prepayment, registration of transfer or exchange, if surrendered to the Owner Trustee or any agent of the Owner Trustee or the Indenture Trustee, shall be delivered to the Indenture Trustee for cancellation or, if surrendered to the Indenture Trustee, shall be cancelled by it; and no Certificates shall be issued in lieu thereof except as expressly permitted by any of the provisions of this Indenture. The Indenture Trustee shall destroy cancelled Certificates held by it and deliver a certificate of destruction to the Owner Trustee. If the Owner Trustee shall acquire any of the Certificates, such acquisition shall not operate as a prepayment or satisfaction of the indebtedness represented by such Certificates unless and until the same are delivered to the Indenture Trustee for cancellation. Section 2.09. Temporary Certificates. Pending the preparation of definitive Certificates, the Owner Trustee may execute and, upon the oral or written request of an officer of SSB, 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 Series and Maturities and interest rates and in authorized denominations. Until so exchanged, temporary Certificates shall be entitled to the same security and benefits under this Indenture as definitive Certificates. Section 2.10. Termination of Interest in Trust Indenture Estate. A Holder shall not, as such, have any further interest in, or other right with respect to, the Trust Indenture Estate when and if the principal amount of and Make-Whole Premium, if any, and interest on and other amounts due under all Certificates held by such Holder and all other sums payable to such Holder hereunder and under the other Operative Agreements shall have been paid in full. Section 2.11. Certificates in Respect of Replacement Airframe. Upon the execution and delivery of an Indenture and Security Agreement Supplement covering a Replacement Airframe and/or Replacement Engine, as provided in Section 9.09 hereof, each Certificate shall be deemed to have been issued in connection with such Replacement Airframe and/or Replacement Engine and each Certificate issued thereafter upon a transfer or exchange of, or as a replacement for, a Certificate, shall be designated as having been issued in connection with such Replacement Airframe and/or Replacement Engine, but without any other change therein except as provided for in this Article II. Section 2.12. 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 7.11 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 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). Section 2.13. Establishment of Collateral Account. On the Certificate Closing Date, the Indenture Trustee, pursuant to the Collateral Account Control Agreement, established with State Street Bank and Trust Company in its name as secured party an Eligible Deposit Account entitled "First Security Bank, National Association, as secured party under the Trust Indenture and Security Agreement (Federal Express Corporation Trust No. N584FE) dated as of May 1, 1997, with the Owner Trustee referred to therein". Section 2.14. [Reserved]. Section 2.15. Release of Debt Portion and Lien on the Collateral Account and the Liquid Collateral on Delivery Date. (a) Subject to the satisfaction or waiver of the conditions precedent to the Indenture Trustee's obligations set forth in Section 4.01 of the Participation Agreement, on the Delivery Date, the Indenture Trustee shall release from the Collateral Account an amount of Liquid Collateral equal to the Debt Portion. Such amount so released shall be used to finance a portion of the Purchase Price as contemplated by Section 3.02(a) of the Participation Agreement. Any amount remaining in the Collateral Account after such release shall be remitted by the Indenture Trustee on behalf of the Owner Trustee to the Lessee pursuant to Section 3.02(a)(B) of the Participation Agreement. (b) The Lien of the Original Indenture on the Collateral Account and the Liquid Collateral shall terminate on the Delivery Date following the transfer of amounts described in Section 3.02(a) of the Participation Agreement. Section 2.16. [Reserved]. Section 2.17. Subordination. (a) The Owner Trustee and, by acceptance of its Certificates of any Series, each Holder of such Series, hereby agree that no payment or distribution shall be made on or in respect of the Secured Obligations owed to such Certificate Holder of such Series, including any payment or distribution of cash, property or securities after the commencement of a proceeding of the type referred to in clause (v), (vi) or (vii) of Section 7.01 hereof, except as expressly provided in Article V hereof. (b) By the acceptance of its Certificates of any Series (other than Series A), each Holder of such Series agrees that in the event that such Holder, in its capacity as a Holder, shall receive any payment or distribution on any Secured Obligations in respect of such Series which it is not entitled to received under this Section 2.17 or Article V hereof, it will hold any amount so received in trust for the Senior Holder (as defined in Section 2.17(c) hereof) and will forthwith turn over such payment to the Indenture Trustee in the form received to be applied as provided in Article V hereof. (c) As used in this Section 2.17, the term "Senior Holder" shall mean, (i) the Holders of Series A Certificates until the Secured Obligations in respect of Series A Certificates have been paid in full, (ii) after the Secured Obligations in respect of Series A Certificates have been paid in full, the Holders of Series B Certificates until the Secured Obligations in respect of Series B Certificates have been paid in full and (iii) after the Secured Obligations in respect of Series B Certificates have been paid in full, the Holders of Series C Certificates until the Secured Obligations in respect of Series C Certificates have been paid in full. ARTICLE III COVENANTS Section 3.01. Payment of Principal, Make-Whole Premium and Interest. The Owner Trustee covenants and agrees that it will, subject to Section 2.05 hereof, 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 Department (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 and (b) a facility or agency in New York, New York where the Certificates may be presented for registration of transfer and for exchange and for prepayment as provided in this Indenture (the "Registrar"). The Registrar shall keep a register (the "Register") with respect to the Certificates and their transfer and exchange. The Indenture Trustee may appoint one or more co-registrars ("Co-Registrars") for the Certificates and may terminate any such appointment at any time upon written notice. The term "Registrar" includes any Co-Registrar. The Indenture Trustee shall initially act as Registrar. Section 3.03. Appointment to Fill a Vacancy in Office of Indenture Trustee. The Owner Trustee, whenever necessary to avoid or fill a vacancy in the office of Indenture Trustee, will, with the consent of the Lessee, appoint, in the manner provided in Section 12.02 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 notwithstanding, the agreements to hold sums in trust as provided in this Section are subject to the provisions of Sections 14.03 and 14.04 hereof. Section 3.05. Covenants of SSB and the Owner Trustee. (a) SSB hereby covenants and agrees to perform its covenants set forth in Sections 7.04(b) and 7.04(c) of the Participation Agreement. (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 or an Event of Loss, the Owner Trustee will give prompt written notice of such Indenture Event of Default, Indenture Default 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 Lease, including, without limitation, a copy of each report or notice received pursuant to Article 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 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 or assume 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 take action to become contingently liable, directly or indirectly, in connection with the debt of any other Person. Section 3.06. [Reserved]. 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 Airframe or Engine, the further requirements of Section 9.08 hereof shall be complied with. Section 3.08. No Representations or Warranties as to Aircraft or Documents. NEITHER OF THE INDENTURE TRUSTEE NOR THE OWNER TRUSTEE NOR SSB NOR THE OWNER PARTICIPANT MAKES OR SHALL BE DEEMED TO HAVE MADE ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AS TO THE TITLE, AIRWORTHINESS, WORKMANSHIP, VALUE, CONDITION, DESIGN, COMPLIANCE WITH SPECIFICATIONS, MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR USE OR PURPOSE OF THE AIRCRAFT OR ANY ENGINE, AS TO THE ABSENCE OF ANY INFRINGEMENT OF ANY PATENT, TRADEMARK OR COPYRIGHT, AS TO THE ABSENCE OF OBLIGATIONS BASED ON STRICT LIABILITY IN TORT OR ANY OTHER REPRESENTATION OR WARRANTY WITH RESPECT TO THE AIRCRAFT OR ANY ENGINE WHATSOEVER, except that SSB warrants that on the Delivery Date (a) the Owner Trustee shall have received whatever title was conveyed to it by the Lessee, and (b) the Aircraft shall be free and clear of Lessor's Liens attributable to SSB. Neither SSB, 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 SSB, the Indenture Trustee and the Owner Participant made under this Indenture or in the Participation Agreement. Section 3.09. Further Assurances; Financing Statements. At any time and from time to time, upon the request of the Indenture Trustee or the Lessee, the Owner Trustee shall promptly and duly execute and deliver any and all such further instruments and documents as may be specified in such request and as are necessary or 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 ten (10) 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 Distribution. 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, (i) 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 Amount and interest and other amounts (as well as any interest on any overdue Principal Amount and, to the extent permitted by applicable law, on any overdue interest and any other overdue amounts) then due under all Series A Certificates shall be distributed to the Holders of Series A Certificates ratably, without priority of one over the other, in the proportion that the amount of such payment or payments then due under each Series A Certificate bears to the aggregate amount of the payments then due under all Series A Certificates; (ii) after giving effect to paragraph (i) above, 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 Amount and interest and other amounts (as well as any interest on any overdue Principal Amount and, to the extent permitted by applicable law, on any overdue interest and any other overdue amounts) then due under all Series B Certificates shall be distributed to the Holders of Series B Certificates ratably, without priority of one over the other, in the proportion that the amount of such payment or payments then due under each Series B Certificate bears to the aggregate amount of the payments then due under all Series B Certificates; and (iii) after giving effect to paragraph (ii) above, 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 Amount and interest and other amounts (as well as any interest on any overdue Principal Amount and, to the extent permitted by applicable law, on any overdue interest and any other overdue amounts) then due under all Series C Certificates shall be distributed to the Holders of Series C Certificates ratably, without priority of one over the other, in the proportion that the amount of such payment or payments then due under each Series C Certificate bears to the aggregate amount of the payments then due under all Series C 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. Section 5.02. Event of Loss and Replacement; Prepayment. (a) Except as otherwise provided in Section 5.03 hereof, any payment received by the Indenture Trustee as the result of an Event of Loss with respect to the Aircraft (including pursuant to Section 11.03(e) of the Lease, but, in the case of said Section 11.03(e), subject to the time limits specified therein) or as the result of, or in connection with any event under the Lease giving rise to, a prepayment pursuant to Section 6.02 hereof, shall be promptly distributed by the Indenture Trustee in the following order of priority: first, to reimburse the Indenture Trustee for any costs or expenses reasonably incurred in connection with such prepayment, second, (i) to pay the amounts specified in paragraph (i) of clause "second" of Section 5.03 hereof then due and payable in respect of the Series A Certificates; (ii) after giving effect to paragraph (i) above, to pay the amounts specified in paragraph (ii) of clause "second" of Section 5.03 hereof then due and payable in respect of the Series B Certificates; and (iii) after giving effect to paragraph (ii) above, to pay the amounts specified in paragraph (iii) of clause "second" of Section 5.03 hereof then due and payable in respect of the Series C Certificates; and provided that payments pursuant to this clause "second" shall be made without the payment of Make-Whole Premium except in the particular circumstances provided in Section 6.02(b) hereof; and third, as provided in clause "third" of Section 5.03 hereof; provided that if a Replacement Airframe shall be substituted for an Airframe subject to an Event of Loss as provided in Section 11.03 of the Lease and Section 9.08 hereof, any proceeds which result from such Event of Loss and are paid to the Indenture Trustee shall be held by the Indenture Trustee as part of the Trust Indenture Estate and, unless otherwise applied pursuant to Section 5.01 or 5.03 hereof, such proceeds shall be released to the Lessee upon the release of such damaged Airframe and the replacement thereof as herein provided. (b) Any amounts received directly or indirectly from any governmental authority, insurer or other party pursuant to any provision of Article 11 or 13 of the Lease as the result of loss or damage not constituting an Event of Loss (x) 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 an Event of Default shall have occurred and be continuing or (y) are pledged to the Lessor as security in connection with an Event of Loss in accordance with Section 11.03(e) of the Lease, 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 Event of Default, such amount, and the proceeds of any investment thereof, shall, to the extent not theretofore applied, be paid to the Lessee to the extent provided in the Lease. Section 5.03. Payment After Indenture Event of Default, etc. Except as otherwise provided in Sections 5.02(b), 5.04(b), 5.04(c) and 5.05 hereof, all payments (other than Excepted 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 to accelerate the Certificates in accordance with Section 7.10 hereof, or (b) after the Certificates shall have become due and payable as provided in Section 7.02(b) or (c) hereof, shall be promptly distributed by the Indenture Trustee in the following order of priority: first, so much of such payments or amounts as shall be required to reimburse the Indenture Trustee for any tax, expense, charge or other loss (including, without limitation, all amounts to be expended at the expense of, or charged upon the tolls, rents, revenues, issues, products and profits of, the property included in the Trust Indenture Estate pursuant to Section 7.03(b) hereof) incurred by the Indenture Trustee (to the extent not previously reimbursed) (including, without limitation, the expenses of any sale, taking or other proceeding, attorneys' fees and expenses, court costs, and any other expenditures incurred or expenditures or advances made by the Indenture Trustee or the Holders in the protection, exercise or enforcement of any right, power or remedy or any damages sustained by the Indenture Trustee or the Holders, liquidated or otherwise, upon such Indenture Event of Default) shall be applied by the Indenture Trustee as between itself and the Holders in reimbursement of such expenses; second, (i) so much of such payments or amounts remaining as shall be required to pay in full the aggregate unpaid Principal Amount of all Series A Certificates, and the accrued but unpaid interest and other amounts due thereon and all other Secured Obligations (other than Make-Whole Premium) in respect of the Series A Certificates to the date of distribution, shall be distributed to the Holders of Series A Certificates, and in case the aggregate amount so to be distributed shall be insufficient to pay in full as aforesaid, then ratably, without priority of one over the other, in the proportion that the aggregate unpaid Principal Amount of all Series A Certificates held by each holder plus the accrued but unpaid interest and other amounts due hereunder or thereunder (other than Make-Whole Premium) to the date of distribution, bears to the aggregate unpaid Principal Amount of all Series A Certificates held by all such holders plus the accrued but unpaid interest and other amounts due thereon (other than Make-Whole Premium) to the date of distribution; (ii) after giving effect to paragraph (i) above, so much of such payments or amounts remaining as shall be required to pay in full the aggregate unpaid Principal Amount of all Series B Certificates, and the accrued but unpaid interest and other amounts due thereon and all other Secured Obligations (other than Make-Whole Premium) in respect of the Series B Certificates to the date of distribution, shall be distributed to the Holders of Series B Certificates, and in case the aggregate amount so to be distributed shall be insufficient to pay in full as aforesaid, then ratably, without priority of one over the other, in the proportion that the aggregate unpaid Principal Amount of all Series B Certificates held by each holder plus the accrued but unpaid interest and other amounts due hereunder or thereunder (other than Make-Whole Premium) to the date of distribution, bears to the aggregate unpaid Principal Amount of all Series B Certificates held by all such holders plus the accrued but unpaid interest and other amounts due thereon (other than Make-Whole Premium) to the date of distribution; and (iii) after giving effect to paragraph (ii) above, so much of such payments or amounts remaining as shall be required to pay in full the aggregate unpaid Principal Amount of all Series C Certificates, and the accrued but unpaid interest and other amounts due thereon and all other Secured Obligations (other than Make-Whole Premium) in respect of the Series C Certificates to the date of distribution, shall be distributed to the Holders of Series C Certificates, and in case the aggregate amount so to be distributed shall be insufficient to pay in full as aforesaid, then ratably, without priority of one over the other, in the proportion that the aggregate unpaid Principal Amount of all Series C Certificates held by each holder plus the accrued but unpaid interest and other amounts due hereunder or thereunder (other than Make-Whole Premium) to the date of distribution, bears to the aggregate unpaid Principal Amount of all Series C Certificates held by all such holders plus the accrued but unpaid interest and other amounts due thereon (other than Make-Whole Premium) to the date of distribution; (it being understood that amounts payable under this clause "second" shall not include Make-Whole Premium); and third, the balance, if any of such payments or amounts remaining thereafter shall be distributed to the Owner Trustee for distribution pursuant to the Trust Agreement. Section 5.04. Certain Payments. (a) Except as otherwise provided in this Indenture, any payments received by the Indenture Trustee which are to be applied according to any provision in any other Indenture Document shall be applied thereunder in accordance therewith. (b) The Indenture Trustee will distribute, promptly upon receipt, any indemnity or other payment received by it from the Owner Trustee or the Lessee in respect of (i) the Indenture Trustee in its individual capacity, (ii) the Subordination Agent, (iii) each Liquidity Provider, and (iv) the Pass Through Trustee, in each case whether pursuant to Article 8 or 9 of the Participation Agreement or as Supplemental Rent, directly to the Person (which may include the Indenture Trustee) entitled thereto. Any payment received by the Indenture Trustee under clause (b) of the last paragraph of Section 2.04 shall be distributed to the Subordination Agent to be distributed in accordance with the terms of the Intercreditor Agreement. (c) Notwithstanding anything to the contrary contained herein, any sums received by the Indenture Trustee which constitute Excepted Payments shall be distributed promptly upon receipt by the Indenture Trustee directly to the Person or Persons entitled thereto. Section 5.05. Other Payments. Any payments received by the Indenture Trustee for which no provision as to the application thereof is made elsewhere in this Indenture or in any other Indenture Document (including without limitation Article 9 of the Lease) shall be distributed by the Indenture Trustee (a) to the extent received or realized at any time prior to the payment in full of all obligations to the Holders, in the order of priority specified in Section 5.01 hereof, and (b) to the extent received or realized at any time after payment in full of all obligations to the Holders, in the following order of priority: first, in the manner provided in clause "first" of Section 5.03 hereof and second, in the manner provided in clause "third" of Section 5.03 hereof. Section 5.06. Payments to Owner Trustee. Any amounts distributed hereunder by the Indenture Trustee to the Owner Trustee shall be paid to the Owner Trustee by wire transfer of immediately available funds of the type received by the Indenture Trustee at such office and to such account or accounts of such entity or entities as shall be designated by notice from the Owner Trustee to the Indenture Trustee from time to time. The Owner Trustee hereby notifies the Indenture Trustee that unless and until the Indenture Trustee receives notice to the contrary from the Owner Trustee, all amounts to be distributed to the Owner Trustee hereunder for distribution in accordance with the Trust Agreement shall be distributed by wire transfer of immediately available funds of the type received by the Indenture Trustee to such account of the Owner Participant as may be specified pursuant to Section 2.06 of the Trust Agreement. Section 5.07. Application of Payments. Each payment of principal of and interest or other amounts due on each Certificate shall, except as otherwise provided herein, be applied, first, to the payment of interest on such Certificate due and payable to the date of such payment, as provided in such Certificate, as well as any interest on overdue principal and Make-Whole Premium, if any, and, to the extent permitted by law, interest and other amounts due thereunder, second, to the payment of any other amount (other than the principal of such Certificate) due hereunder to the Holder of such Certificate or under such Certificate, third, to the payment of the principal of such Certificate if then due hereunder or under such Certificate and fourth, the balance, if any remaining thereafter, to the payment of the principal of such Certificate remaining unpaid (provided that such Certificate shall not be subject to prepayment without the consent of the affected Holder except as permitted by Sections 6.02, 6.06 and 8.02 hereof); provided that, solely for the purpose of determining whether an Indenture Event of Default shall have occurred and be continuing, each such payment shall be deemed applied in the following order of priority: first, in the manner provided in clause "first" above, second, in the manner provided in clause "third" above, third, in the manner provided in clause "second" above and fourth, in the manner provided in clause "fourth" above. 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 by the Indenture Trustee 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 (and in the absence of written direction by the Lessee, the Indenture Trustee shall invest such monies in direct obligations of the United States of America) 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 or any investment sold 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 Lessee, unless the Lessee 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. Notwithstanding any provision to the contrary in Sections 5.01 through 5.05 hereof and subject to Article 8 of the Participation Agreement, if the Lessee is required to pay any such Tax, or any interest or penalty thereon, or to indemnify the Owner Participant or the Owner Trustee with respect thereto pursuant to Section 8.01(c) of the Participation Agreement, the Lessee shall be entitled to receive any payments otherwise distributable to the Holder of any Certificate who was subject to such Tax pursuant to Sections 5.01 to 5.05 hereof until the foregoing amounts shall have been recovered in full by the Lessee. ARTICLE VI PREPAYMENT OF CERTIFICATES Section 6.01. No Prepayment Prior to Maturity. Except as provided in Sections 6.02, 6.06 and 8.02 hereof, the Certificates may not be prepaid prior to their respective Maturities. Section 6.02. Prepayment of Certificates. (a) The Outstanding Certificates shall be prepaid in full (and not in part except under clause (vii) 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 pursuant to Section 11.03 of the Lease and Section 9.08 hereof replacement equipment is substituted therefor). (ii) If the Lessee, pursuant to Section 4.02(a) of the Lease, gives notice of purchase of the Aircraft. (iii) If the Owner Participant 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) At the option of the Owner Trustee with the prior written consent of the Lessee upon not less than 25 days' prior written notice. (vi) [Reserved]. (vii) With respect to the Series C Certificates only, as provided in Section 2.03(b) of the Participation Agreement. (viii) Pursuant to Section 15.01 of the Participation Agreement in connection with a Refinancing of the Certificates. (b) In the event of a prepayment of the Certificates pursuant to Sections 6.02(a)(ii), (iv) and (viii) above, the Owner Trustee, having received notice from the Lessee in accordance with and subject to the terms of Section 4.02(a) or 10.01 of the Lease or Article 15 of the Participation Agreement, as the case may be, shall give irrevocable (subject to Section 6.02(c) hereof) 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 date 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)(v) above, the Certificates shall be prepaid on the 25th date following the notice referred to therein. In the case of a prepayment of the Series C Certificates pursuant to Section 6.02(a)(vii) above, the amount of such Series C Certificates to be prepaid shall be prepaid on the Delivery Date. In the case of a prepayment pursuant to Section 6.02(a)(viii) above, the Certificates shall be prepaid on the effective date of the Refinancing. The day on which the Certificates are to be prepaid pursuant to this Section 6.01(b) is herein referred to as the "Prepayment Date". On or prior to the Prepayment Date, immediately available funds shall be deposited with the Indenture Trustee in an amount in respect of the Certificates equal to: (1) (i) if such prepayment is made under any provision of Section 6.02 hereof on or after the applicable Premium Termination Date, or (ii) if such prepayment is made prior to the applicable Premium Termination Date pursuant to Section 6.02(a)(i) or 6.02(a)(iii) above (if clause (i) of the first sentence of Section 8.02(a) hereof is applicable), 6.02(a)(vii) above, the sum of (A) the aggregate principal amount of such Certificates then Outstanding, (B) accrued interest on the Certificates to the Prepayment Date and (C) all other aggregate sums due the Indenture Trustee hereunder or under the Participation Agreement or the Lease, but excluding any Make-Whole Premium or other premium or penalty, or (2) if such prepayment is made prior to the applicable Premium Termination Date pursuant to Section 6.02(a)(ii), 6.02(a)(iii) (if clause (ii) of the first sentence of Section 8.02(a) hereof is applicable), 6.02(a)(iv), 6.02(a)(v) or 6.02(a)(viii) 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 with respect to which the Premium Termination Date therefor has not occurred (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 paragraph of Section 10.01(f) of the Lease, no Termination Date shall occur, or if, pursuant to Section 4.02(a) of the Lease, the Lessee revokes its notice of election to purchase, the Lessee shall give notice thereof to the Indenture Trustee, and the prepayment proposed to be effected in respect thereof 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. Any notice of prepayment given by the Owner Trustee may be revoked by the Owner Trustee at any time on or before the Prepayment Date by prompt notice to the Holders except as otherwise provided in the Lease or the Participation Agreement. All notices of prepayment shall state: (1) the Prepayment Date, (2) the applicable basis for determining the Prepayment Price, (3) that on the Prepayment Date, subject to the provisions hereof, the Prepayment Price will become due and payable, and that interest on the Certificates shall cease to accrue on and after such Prepayment Date, and (4) the place or places where such Certificates are to be surrendered for payment. Section 6.04. Deposit of Prepayment Price 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 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 cash or Permitted Investments (marked-to-market net of all costs and expenses of liquidation thereof) by the Indenture Trustee in immediately available funds and deposited for the purpose, pay to the Indenture Trustee an amount equal to the difference between (a) the amount then so held and (b) the Prepayment Price or the Sinking Fund 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 (A) if the Owner Trustee has requested the Indenture Trustee to revoke such notice of prepayment in accordance with Section 6.03 hereof or (B) as otherwise provided in the Lease) become due and payable and from and after such Prepayment Date (unless there shall be a default in the payment of the Prepayment Price) such Certificates shall cease to bear interest. Upon surrender 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 shall be subject to partial redemption, at the aggregate principal amount set forth for the Certificates of the respective Series and Maturity, on a pro rata basis, on each date specified in this Section (a "Sinking Fund Redemption Date") for such payment on the Certificates of such Series and Maturity. 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 Certificates of each Series in the order of priority set forth in clause "first" of Section 5.01 hereof and among the Holders of the Certificates of each Series 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 ---------------- Series A Series B Series C Certificates Certificates Certificates with a with a with a Sinking Fund Maturity of Maturity of Maturity of Redemption Date January 15, 2017 January 15, 2018 January 15, 2014 - --------------------------- --------------------- --------------------- --------------------- July 15, 1998 0.00 0.00 0.00 January 15, 1999 0.00 0.00 2,431,531.00 July 15, 1999 748,202.00 147,200.00 508,981.00 January 15, 2000 748,267.00 280,600.00 802,524.00 July 15, 2000 0.00 0.00 0.00 January 15, 2001 748,266.00 280,600.00 521,645.00 July 15, 2001 0.00 0.00 0.00 January 15, 2002 748,267.00 280,600.00 643,430.00 July 15, 2002 0.00 0.00 0.00 January 15, 2003 748,267.00 280,600.00 774,902.00 July 15, 2003 0.00 0.00 0.00 January 15, 2004 748,266.00 280,600.00 1,034,047.00 July 15, 2004 0.00 0.00 0.00 January 15, 2005 748,267.00 1,258,198.00 94,728.00 July 15, 2005 0.00 0.00 0.00 January 15, 2006 748,267.00 1,412,649.00 0.00 July 15, 2006 0.00 0.00 0.00 January 15, 2007 748,266.00 1,366,709.00 0.00 July 15, 2007 0.00 0.00 0.00 January 15, 2008 748,267.00 1,008,514.00 0.00 July 15, 2008 0.00 0.00 0.00 January 15, 2009 832,209.00 2,100,026.00 0.00 July 15, 2009 0.00 0.00 0.00 January 15, 2010 2,735,672.00 0.00 0.00 July 15, 2010 0.00 0.00 0.00 January 15, 2011 2,822,009.00 0.00 0.00 July 15, 2011 0.00 0.00 0.00 January 15, 2012 2,958,343.00 0.00 0.00 July 15, 2012 0.00 0.00 0.00 January 15, 2013 3,101,317.00 0.00 0.00 July 15, 2013 0.00 0.00 0.00 January 15, 2014 91,784.00 0.00 5,079,212.00 July 15, 2014 0.00 0.00 0.00 January 15, 2015 5,613,721.00 0.00 0.00 July 15, 2015 0.00 0.00 0.00 January 15, 2016 6,013,992.00 0.00 0.00 July 15, 2016 35,769.00 0.00 0.00 January 15, 2017 4,977,582.00 1,263,276.00 0.00 July 15, 2017 0.00 271,269.00 0.00 January 15, 2018 0.00 3,385,159.00 0.00
ARTICLE VII INDENTURE EVENTS OF DEFAULT; REMEDIES OF INDENTURE TRUSTEE AND HOLDERS Section 7.01. Indenture Event of Default. "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 Trustee shall notify the Indenture Trustee in writing that such failure shall constitute an Indenture Event of Default); or (ii) the failure of the Owner Trustee other than by reason of a Default or an Event of Default (i) to pay principal, interest or Make-Whole Premium, if any, on any Certificate when due, and such failure shall have continued unremedied for ten (10) Business Days after the date when due or (ii) to pay any other amounts hereunder or under the Certificates when due and such failure shall have continued unremedied for a period of thirty (30) days after the Owner Trustee and the Owner Participant shall receive written demand therefor from the Indenture Trustee or by the Holders of not less than 25% in aggregate principal amount of Outstanding Certificates; or (iii) (A) any representation or warranty made by SSB, the Owner Trustee or any Owner Trustee Guarantor, in any Operative Agreement or in any certificate of SSB or the Owner Trustee furnished to the Indenture Trustee or any Holder in connection herewith or therewith or pursuant hereto or thereto shall prove to have been incorrect when made and was and remains in any respect material to the Holders and if such misrepresentation is capable of being corrected as of a subsequent date and if such correction is being sought diligently, and such misrepresentation shall not have been corrected within 30 days following notice thereof identified as a "Notice of Indenture Event of Default" being given to the Owner Trustee and the Owner Participant by the Indenture Trustee or by a Majority in Interest of Holders; or (B) any (x) covenant made by the Owner Trustee in the fifth paragraph following the Habendum Clause hereof or Section 3.05(b)(iii) hereof or Section 7.02(b) (unless otherwise removed as Owner Trustee within 10 days after notice thereof to the Owner Participant) or 7.04(b) (unless such Lien is removed within the 30-day period set forth therein) of the Participation Agreement shall be breached in any respect or (y) other covenant made by the Owner Trustee, in its individual capacity or as Owner Trustee, or by any Owner Trustee Guarantor in any Operative Agreement shall be breached in any respect 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 (iv) the Owner Trustee, the Lessor's Estate, the Owner Participant, any Owner Participant Guarantor or any Owner Trustee Guarantor shall file any petition or answer seeking for itself any reorganization, arrangement, composition, readjustment, liquidation, dissolution or similar relief under any present or future bankruptcy, insolvency or similar statute, law or regulation; (v) an order for relief shall be entered in respect of the Owner Trustee or any Owner Trustee Guarantor or the Owner Participant or any Owner Participant Guarantor or the Lessor's Estate 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 Owner Trustee or any Owner Trustee Guarantor or the Owner Participant or any Owner Participant Guarantor or the Lessor's Estate shall file any answer admitting or not contesting the material allegations of a petition filed against the Owner Trustee or any Owner Trustee Guarantor or the Owner Participant or any Owner Participant Guarantor or the Lessor's Estate in any proceeding referred to in clause (vi) below or seek or consent or acquiesce in the appointment of any trustee, custodian, receiver or liquidator of the Owner Trustee or any Owner Trustee Guarantor or the Owner Participant or any Owner Participant Guarantor or the Lessor's Estate, as the case may be, or of all or any substantial part of its properties; or (vi) without the consent or acquiescence of the Owner Trustee or any Owner Trustee Guarantor or the Owner Participant or any Owner Participant Guarantor or the Lessor's Estate, as the case may be, an order shall be entered constituting an order for relief or approving a petition for relief or reorganization or any other petition seeking any reorganization, arrangement, composition, readjustment, liquidation, dissolution or other similar relief under any present or future bankruptcy, insolvency or similar statute, law or regulation, or if any such petition shall be filed against the Owner Trustee or any Owner Trustee Guarantor or the Owner Participant or any Owner Participant Guarantor or the Lessor's Estate, as the case may be, and such petition shall not be dismissed within 60 days, or if, without the consent or acquiescence of the Owner Trustee or any Owner Trustee Guarantor or the Owner Participant or any Owner Participant Guarantor or the Lessor's Estate, as the case may be, an order shall be entered appointing a trustee, custodian, receiver or liquidator of the Owner Trustee or any Owner Trustee Guarantor or the Owner Participant or any Owner Participant Guarantor or the Lessor's Estate, as the case may be, or of all or any substantial part of the properties of the Owner Trustee or any Owner Trustee Guarantor or the Owner Participant or any Owner Participant Guarantor or the Lessor's Estate, as the case may be, and such order shall not be dismissed within 60 days; or (vii) any Owner Trustee Guaranty or any Owner Participant Guaranty shall cease to be a valid and enforceable obligation of any Owner Trustee Guarantor or any Owner Participant Guarantor or otherwise shall not be in full force and effect. 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 clause (i) of Section 7.01 hereof, exercise any and all of the remedies pursuant to Article 17 of the Lease; provided that without the consent of the Owner Trustee such exercise of remedies shall not occur until after the latest date on which the Owner Trustee may cure the related Event of Default pursuant to Section 8.03 hereof. The Indenture Trustee may take possession of all or any part of the properties covered or intended to be covered by the Lien and security interest created hereby or pursuant hereto and may exclude the Owner Participant, the Owner Trustee, the Lessee and any transferee of the Lessee and all Persons claiming under any of them wholly or partly therefrom. In addition, the Indenture Trustee may exercise any other right or remedy in lieu of or in addition to the foregoing that may be available to it under applicable law, or proceed by appropriate court action to enforce the terms hereof, of the Lease, or both, or to rescind the Lease. Without limiting any of the foregoing, it is understood and agreed that the Indenture Trustee may exercise any right of sale of the Aircraft available to it, even though it shall not have taken possession of the Aircraft and shall not have possession thereof at the time of such sale. Notwithstanding the foregoing, it is understood and agreed that if the Indenture Trustee shall proceed to foreclose the Lien of this Indenture, it shall substantially simultaneously therewith, to the extent the Indenture Trustee is then entitled to do so hereunder and under the Lease, and is not then stayed or otherwise prevented from doing so, proceed (to the extent it has not already done so) to declare the Lease in default and commence the exercise in good faith of one or more of the remedies under Section 17.01(a)(i), (ii) or (vi) of the Lease (as the Indenture Trustee determines in its sole discretion). It is further understood and agreed that if the Indenture Trustee is unable to exercise one or more of such remedies under Article 17 of the Lease because of any stay or operation of law or otherwise, the Indenture Trustee shall not be entitled to foreclose the Lien of this Indenture (A) until the earlier of (i) 60 days from the date of any such stay or applicable order under Section 1110 of the Bankruptcy Code including any extension consented to by the Indenture Trustee or the Holders of Certificates of such period permitted under Section 1110(b) of the Bankruptcy Code and (ii) the date of actual repossession of the Aircraft by the Indenture Trustee or (B) if the Lessee has agreed to perform or assume the Lease and no Event of Default other than as specified in Section 16.01(e), (f) or (g) of the Lease shall be continuing. For the avoidance of doubt, it is expressly understood and agreed that except as aforesaid the above-described inability of the Indenture Trustee to exercise any right or remedy under the Lease shall in no event and under no circumstances prevent the Indenture Trustee from exercising all of its rights, powers and remedies under this Indenture, including, without limitation, this Article VII. The Indenture Trustee further agrees that notice of intent to foreclose shall be given to the Owner Trustee at the earlier of the commencement of any proceeding or at least 30 days prior to the consummation of foreclosure of the Lien of this Indenture. (b) If an Indenture Event of Default under clause (iv), (v) or (vi) of Section 7.01 hereof shall occur and be continuing, the unpaid principal of all Outstanding Certificates, together with interest accrued but unpaid thereon and all other amounts due thereunder, but without Make-Whole Premium, shall immediately become due and payable, without presentment, demand, protest or notice, all of which are hereby waived. (c) If any Indenture Event of Default not described in the preceding paragraph (b) shall have occurred and be continuing, then and in every such case, the Indenture Trustee may on its own accord or at the direction of Holders of not less than 25% in aggregate principal amount of Outstanding Certificates, at any time, by written notice to the Owner Trustee and the Lessee, declare the principal of all the Certificates to be due and payable, whereupon the unpaid principal amount of all Outstanding Certificates, together with accrued interest thereon and all other amounts due thereunder, but without Make-Whole Premium, shall immediately become due and payable without presentment, demand, protest or other notice, all of which are hereby waived. At any time after such declaration and prior to the sale or disposition of the Trust Indenture Estate, however, the Holders of not less than 50% in aggregate principal amount of Outstanding Certificates, by notice to the Indenture Trustee, the Owner Trustee and the Lessee, may rescind such declaration, whether made by the Indenture Trustee on its own accord or as directed, if (x) there has been paid or deposited with the Indenture Trustee a sum sufficient to pay all overdue installments of interest on all Certificates (together, to the extent permitted by law, with interest on such overdue installments of interest), the principal on any Certificates that has become due otherwise than by such declaration of acceleration, all sums paid or advanced by the Indenture Trustee hereunder and the reasonable compensation, expenses, disbursements and advances of the Indenture Trustee, its agents and counsel, or (y) all Indenture Events of Default (other than the nonpayment of principal that has become due solely because of such acceleration) have been either cured or waived as provided in Section 7.11 hereof. No such rescission shall affect any subsequent default or impair any right consequent thereon. (d) Each Holder shall be entitled at any sale to 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 (but only to the extent that an amount equal to such purchase price would have been paid to such Holder pursuant to Article V hereof if such purchase price were paid in cash and the foregoing provisions of this subsection (d) were not given effect). Section 7.03. Return of Aircraft, etc. Subject to Section 7.02 hereof: (a) If an Indenture Event of Default shall have occurred and be continuing, at the request of the Indenture Trustee, the Owner Trustee shall promptly execute and deliver to the Indenture Trustee such 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 under this Indenture. Subject to the foregoing, if the Owner Trustee shall for any reason fail to execute and deliver such documents after such request by the Indenture Trustee, the Indenture Trustee may (i) obtain a judgment conferring on the Indenture Trustee or an agent or representative designated by 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 or an agent or representative designated by the Indenture Trustee, to the entry of which judgment the Owner Trustee hereby specifically consents, and (ii) pursue all or part of such Trust Indenture Estate wherever it may be found and enter any of the premises of the Lessee or the Owner Trustee wherever such Trust Indenture Estate may be or be supposed to be and search for such Trust Indenture Estate and take possession of and remove such Trust Indenture Estate. All expenses of obtaining such judgment or of pursuing, searching for and taking such Trust Indenture Estate shall, until paid, be secured by the Lien of this Indenture. (b) Upon every such taking of possession, the Indenture Trustee may, from time to time, at the expense of the Trust Indenture Estate, make all such expenditures for maintenance, insurance and repairs to and of such Trust Indenture Estate, as the Indenture Trustee may reasonably deem proper. In each case subject to Section 7.02 hereof, 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 to exercise all rights and powers of the Owner Trustee relating to the Trust Indenture Estate, as the Indenture Trustee may reasonably deem best, including the right to enter into any and all such agreements with respect to the maintenance, insurance, use, operation, storage, leasing, control, management or disposition of all or any part of the Trust Indenture Estate as the Indenture Trustee may determine. Further, the Indenture Trustee shall be entitled to collect and receive directly all tolls, rents (including Rent), revenues, issues, income, products and profits of the Trust Indenture Estate other than Excepted Payments, without prejudice, however, to the right of the Indenture Trustee under any provision of this Indenture to collect and receive all cash held by, or required to be deposited with, the Indenture Trustee under this Indenture. Such tolls, 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 all maintenance and repairs, and to make all payments which the Indenture Trustee may be required or may reasonably elect to make for any taxes, assessments, insurance or other proper charges upon the Trust Indenture Estate (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 the Lessee), 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 for such purposes by the Indenture Trustee; provided, that any excess amounts shall be promptly distributed in accordance with Section 5.03 hereof. (c) If an Indenture Event of Default shall have occurred and be continuing and the Indenture Trustee shall be entitled to exercise remedies hereunder, and subject to Article VIII hereof, the Indenture Trustee, either with or without taking possession, and either before or after taking possession, and without instituting any legal proceedings whatsoever, may sell, assign, transfer and deliver the whole or, from time to time, to the extent permitted by law, any part of the Trust Indenture Estate, or any part thereof, or interest therein, at any private sale or public auction to the highest bidder, with or without demand, advertisement or notice, except that in respect of any private sale 20 days prior notice will be provided, for cash or, with the consent of the Owner Trustee, which shall not be unreasonably withheld, 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 exercising reasonable commercial discretion may determine; provided, that any such action shall be at the time lawful and that all mandatory legal requirements shall be complied with. Any notice required pursuant to the terms hereof in the case of a public sale, shall state the time and place fixed for such sale. Any such public sale shall be held at such time or times within ordinary business hours as the Indenture Trustee shall fix in the notice of such sale. At any such sale, the Trust Indenture Estate may be sold in one lot as an entirety or in separate lots. The Indenture Trustee shall not be obligated to make any sale pursuant to such notice. The Indenture Trustee may, without notice or publication, adjourn any public or private sale or cause the same to be adjourned from time to time by announcement at the time and place fixed for such sale, and any such sale may be made at any time or place to which the same may be so adjourned without further notice or publication. The Indenture Trustee may exercise such right of sale without possession or production of the Certificates or proof of ownership thereof, and as representative of the Holders may exercise such right without notice to the Holders or without including the Holders as parties to any suit or proceedings relating to the foreclosure of any part of the Trust Indenture Estate. The Owner Trustee shall execute any and all such bills of sale, assignments and other documents, and perform and do all other acts and things requested by the Indenture Trustee in order to permit consummation of any sale of the Trust Indenture Estate in accordance with this Section 7.03(c) and to effectuate the transfer or conveyance referred to in the first sentence of this Section 7.03(c). Notwithstanding any other provision of this Indenture, the Indenture Trustee shall not sell the Trust Indenture Estate or any part thereof unless the Certificates shall have been accelerated. (d) To the extent permitted by applicable law, the Indenture Trustee or any Holder may be a purchaser of the Trust Indenture Estate or any part thereof or any interest therein at any sale thereof, whether pursuant to foreclosure or power of sale or otherwise. The Indenture Trustee may apply against the purchase price therefor the amount then due hereunder or under any of the Certificates secured hereby and any Holder may apply against the purchase price therefor the amount then due to it hereunder, under any other Indenture Document or under the Certificates held by such Holder to the extent of 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 effective upon the occurrence and continuance of an Indenture Event of Default, the Owner Trustee hereby irrevocably appoints and constitutes the Indenture Trustee the true and lawful attorney-in-fact of the Owner Trustee in its name and stead and on its behalf, for the purpose of effectuating any sale, assignment, transfer or delivery for the enforcement of the Lien of this Indenture, whether pursuant to foreclosure or power of sale or otherwise, to execute and deliver all such bills of sale, assignments and other instruments as the Indenture Trustee may consider necessary or appropriate, with full power of substitution, and the Owner Trustee hereby ratifies and confirms all that such attorney or any substitute shall lawfully do by virtue hereof. Nevertheless, if so requested by the Indenture Trustee or any purchaser, the Owner Trustee shall ratify and confirm any such sale, assignment, transfer or delivery, by executing and delivering to the Indenture Trustee or such purchaser all bills of sale, assignments, releases and other proper instruments to effect such ratification and confirmation as may be designated in any such request. (f) The Indenture Trustee shall, as a matter of right, be entitled to the appointment of a receiver (who may be the Indenture Trustee or any successor or nominee) for all or any part of the Trust Indenture Estate, whether such receivership be incidental to a proposed sale of the Trust Indenture Estate or the taking of possession thereof or otherwise, and the Owner Trustee hereby consents to the appointment of such receiver and will not oppose any such appointment. Any receiver appointed for all or any part of the Trust Indenture Estate shall be entitled to exercise all of the rights and powers of the Indenture Trustee with respect to the Trust Indenture Estate. (g) Any sale of the Trust Indenture Estate or any part thereof or any interest therein, whether pursuant to foreclosure or power of sale or otherwise hereunder, shall be a perpetual bar against the Owner Trustee after the expiration of the period, if any, during which the Owner Trustee shall have the benefit of prepayment laws which may not be waived pursuant to Section 7.13 hereof. Section 7.04. Indenture Trustee May Prove Debt. If the Owner Trustee shall fail to pay any amount payable hereunder or under the Certificates, the Indenture Trustee, in its own name and as trustee of an express trust, shall be entitled and empowered to institute any action or proceedings at law or in equity for the collection of the sums so due and unpaid, and may prosecute any such action or proceedings to judgment or final decree, and may enforce any such judgment or final decree against the Owner Trustee and collect in the manner provided by law out of the property of the Owner Trustee wherever situated, the moneys adjudged or decreed to be payable; provided, that any sale of any portion of the Trust Indenture Estate shall be done in accordance with Section 7.03(c) hereof. In case there shall be pending proceedings relative to the Owner Trustee under the Bankruptcy Code or any other applicable Federal or state bankruptcy, insolvency or other similar law, or in case a receiver, assignee or trustee in bankruptcy or reorganization, liquidator, sequestrator or similar official shall have been appointed for or taken possession of the Owner Trustee or its property, or in case of any other comparable judicial proceedings relative to the Owner Trustee, or to the creditors or property of the Owner Trustee, the Indenture Trustee, irrespective of whether the principal of the Certificates shall then be due and payable as therein or herein expressed or by declaration or otherwise and irrespective of whether the Indenture Trustee shall have made any demand pursuant to the provisions of this Section, shall be entitled and empowered, by intervention in such proceedings or otherwise: (a) to file and prove a claim or claims for the whole amount of principal, interest and other amounts owing and unpaid in respect of the Certificates or hereunder, and to file such other papers or documents as may be necessary or advisable in order to have the claims of the Indenture Trustee (including any claim for reasonable compensation to the Indenture Trustee and each predecessor Indenture Trustee, and their respective agents, attorneys and counsel, and for reimbursement of the Indenture Trustee and each predecessor Indenture Trustee, except as a result of negligence or bad faith) and of the Holders allowed in any judicial proceedings relative to the Owner Trustee or to the creditors or property of the Owner Trustee, (b) unless prohibited by applicable law and regulations, to vote on behalf of the Holders in any election of a trustee or a standby trustee in arrangement, reorganization, liquidation or other bankruptcy or insolvency proceedings or person performing similar functions in comparable proceedings, and (c) to collect and receive any moneys or other property payable or deliverable on any such claims, and to distribute all amounts received with respect to the claims of the Holders and of the Indenture Trustee on their behalf; and any trustee, receiver, or liquidator, custodian or other similar official is hereby authorized by each of the Holders to make payments to the Indenture Trustee, and, in the event that the Indenture Trustee shall consent to the making of payments directly to the Holders, to pay to the Indenture Trustee such amounts as shall be sufficient to cover reasonable compensation to the Indenture Trustee, each predecessor Indenture Trustee and their respective agents, attorneys and counsel, and all other expenses and liabilities incurred, and all advances made, by the Indenture Trustee and each predecessor Indenture Trustee except as a result of negligence or willful misconduct. Nothing contained herein shall be deemed to authorize the Indenture Trustee to authorize or consent to or vote for or accept or adopt on behalf of any Holder any plan of reorganization, arrangement, adjustment or composition affecting the Certificates or the rights of any Holder thereof, or to authorize the Indenture Trustee to vote in respect of the claim of any Holder in any such proceeding except, as aforesaid, to vote for the election of a trustee in bankruptcy or similar person. All rights of action and rights to assert claims under this Indenture, or under any of the Certificates, may be enforced by the Indenture Trustee without the possession of such Certificates on any trial or other 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, as provided herein. In any proceedings brought by the Indenture Trustee (and also any proceedings involving the interpretation of any provision of this Indenture to which the Indenture Trustee shall be a party) the Indenture Trustee shall be held to represent all the Holders of the Certificates, and it shall not be necessary to make any Holders parties to such proceedings. Section 7.05. Remedies Cumulative. Each and every right, power and remedy given to the Indenture Trustee in this Indenture shall be cumulative and shall be in addition to every other right, power and remedy specifically given herein or now or hereafter existing at law, in equity or by statute, and each and every right, power and remedy whether specifically given herein or otherwise existing may be exercised from time to time and as often and in such order as may be deemed expedient by the Indenture Trustee or the Holders, and the exercise or the beginning of the exercise of any power or remedy shall not be construed to be a waiver of the right to exercise at the same time or later 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 in any such default. Section 7.06. Suits for Enforcement. If an Indenture Event of Default has occurred, has not been waived and is continuing, the Indenture Trustee may in its discretion and subject to its rights of appropriate indemnification under Sections 7.08 and 9.03 and Article XI hereof proceed to protect and enforce its rights and rights of the Holders by such appropriate judicial proceedings as the Indenture Trustee shall deem most effectual to protect and enforce any of such rights, either at law or in equity or in bankruptcy or otherwise, whether for the specific enforcement of any covenant or agreement contained in this Indenture or in aid of the exercise of any power granted in this Indenture or to enforce any other legal or equitable right vested in the Indenture Trustee or the Holders by this Indenture or by law; provided, that any sale of any portion of the Trust Indenture Estate shall be done in accordance with Section 7.03(c) hereof. Section 7.07. Discontinuance of Proceedings. In case the Indenture Trustee or any Holder shall have instituted any proceeding to enforce any right, power or remedy under this Indenture by foreclosure, entry or otherwise, and such proceeding shall have been discontinued or abandoned for any reason or shall have been determined adversely to the Indenture Trustee or such Holder, then the Owner Trustee, the Indenture Trustee, the Owner Participant, the Holders and the Lessee shall, subject to any binding determination in such proceeding, be restored to their former positions and rights under this Indenture with respect to the Trust Indenture Estate, and all rights, remedies and powers of the Indenture Trustee and the Holders shall continue as if no such proceeding had been instituted. Section 7.08. Limitations on Suits by Holders. No Holder of any Certificate shall have any right by virtue or by availing of any provision of this Indenture to institute any action or proceeding at law or in equity or in bankruptcy or otherwise upon or under or with respect to this Indenture, or for the appointment of a trustee, receiver, liquidator, custodian or other similar official or for any other remedy hereunder, unless such Holder previously shall have given to the Indenture Trustee written notice that an Indenture Event of Default shall then have occurred and be continuing, as hereinbefore provided, and the Holders of not less than 25% in aggregate principal amount of Outstanding Certificates shall have made written request upon the Indenture Trustee to institute such action or proceedings in its own name as trustee hereunder and shall have offered to the Indenture Trustee such reasonable indemnity as it may require against the costs, expenses and liabilities to be incurred therein or thereby and the Indenture Trustee for 60 days after its receipt of such notice, request and offer of indemnity shall have failed to institute any such action or proceedings and no direction inconsistent with such written request shall have been given to the Indenture Trustee pursuant to Section 7.10 hereof; it being understood and intended, and being expressly covenanted by the Holder of each Certificate with every other Holder of each other Certificate and the Indenture Trustee, that no one or more Holders shall have any right in any manner whatever to affect, disturb or prejudice the rights of any other Holder or the Lien of this Indenture or any part of the Trust Indenture Estate or to obtain or seek to obtain priority over or preference to any other such Holder or to enforce any right under this Indenture, except in the manner provided herein and for the equal, ratable and common benefit of all Holders. For the protection and enforcement of the provisions of this Section, each and every Holder and the Indenture Trustee shall be entitled to such relief as can be given either at law or in equity. Section 7.09. Unconditional Right of Holders to Receive Principal, Interest and Make-Whole Premium, and to Institute Certain Suits. Notwithstanding any other provision in this Indenture and any provision of any Certificate, the right of any Holder to receive payment of the principal of and interest and Make-Whole Premium, if any, on such Certificate on or after the respective due dates and in the manner expressed in such Certificate, or, subject to Section 7.08 hereof, to institute suit for the enforcement of any such payment on or after such respective dates as provided herein, shall not be impaired or affected without the consent of such Holder. Section 7.10. Control by Holders. The Majority in Interest of Certificate Holders shall have the right to direct the Indenture Trustee as to the time, method, and place of conducting any proceeding for any remedy available to the Indenture Trustee, or exercising any trust or power conferred on the Indenture Trustee by this Indenture; provided that such direction shall not be otherwise than in accordance with law and the provisions of this Indenture and the Indenture Trustee shall have received, to the extent provided in Sections 7.08 and 9.03 and Article XI hereof, such reasonable indemnification as it may require against the costs, expenses and liabilities to be incurred by the Indenture Trustee; and provided further that (subject to the provisions of Section 9.02 hereof) the Indenture Trustee shall have the right to decline to follow any such direction if the Indenture Trustee, being advised by counsel, shall determine that the action or proceeding so directed may not lawfully be taken or if the Indenture Trustee in good faith by its board of directors, the executive committee, or a trust committee of directors or Responsible Officers of the Indenture Trustee shall determine that the action or proceedings so directed would involve the Indenture Trustee in personal liability or if the Indenture Trustee in good faith shall so determine that the actions or forebearances specified in or pursuant to such direction shall be unduly prejudicial to the interests of Holders not joining in the giving of said direction, it being understood that (subject to Section 9.02 hereof) the Indenture Trustee shall have no duty to ascertain whether or not such actions or forebearances are unduly prejudicial to such Holders. Nothing in this Indenture shall impair the right of the Indenture Trustee in its discretion to take any action deemed proper by the Indenture Trustee and which is not inconsistent with the direction by the Majority in Interest of Certificate Holders. Section 7.11. Waiver of Past Indenture Default. Upon written instructions from the Majority in Interest of Certificate Holders, the Indenture Trustee shall waive any past Indenture Default and its consequences and upon any such waiver such Indenture Default shall cease to exist and any Indenture Event of Default arising therefrom shall be deemed to have been cured for every purpose of this Indenture, but no such waiver shall extend to any subsequent or other Indenture Default or impair any right consequent thereon; provided, however, that in the absence of written instructions from all Holders and each Liquidity Provider, 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 of this Indenture 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 any 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 except in the case of a default in the payment of the principal of or interest on any Certificate, under no circumstances shall the Indenture Trustee give such notice to the Holders until the expiration of a period of 60 days from the occurrence of such Indenture Default; and provided further that, except in the case of default in the payment of the principal of or interest on or any other amount due under any of the Certificates, the Indenture Trustee shall be protected in withholding such notice to the Holders if and so long as the board of directors, the executive committee, or a trust committee of directors or trustees and/or Responsible Officers of the Indenture Trustee in good faith determines that the withholding of such notice is in the interests of the Holders. Section 7.13. Waiver of Appraisement, etc.; Laws. The Owner Trustee covenants (to the extent that it may lawfully do so) that it will not at any time insist upon, or plead, or in any manner whatsoever claim or take the benefit or advantage of, any appraisement, valuation, stay, extension or prepayment law wherever enacted, now or at any time hereafter in force, in order to prevent or hinder the enforcement of this Indenture or the execution of any power granted herein to the Indenture Trustee, or the absolute sale of the Trust Indenture Estate, or any part thereof, or the possession thereof by any purchaser at any sale under this Article VII; and the Owner Trustee for itself and all who may claim under it, so far as it or any of them now or hereafter lawfully may, hereby waives the benefit of all such laws. The Owner Trustee for itself and all who may claim under it waives, to the extent that it lawfully may, all right to have the property in the Trust Indenture Estate marshalled upon any foreclosure hereof, and agrees that any court having jurisdiction to foreclose this Indenture may order the sale of the Trust Indenture Estate as an entirety. If any law referred to in this Section 7.13 and now in force, of which the Owner Trustee or its successors might take advantage despite this Section 7.13, shall hereafter be repealed or cease to be in force, such law shall not thereafter be deemed to constitute any part of the contract herein contained or to preclude the application of this Section 7.13. ARTICLE VIII RIGHTS OF THE OWNER TRUSTEE AND THE OWNER PARTICIPANTS Section 8.01. Certain Rights of Owner Trustee and Owner Participants. (a) Subject to Section 13.01 hereof, without the consent of a Majority in Interest of Certificate Holders, the respective parties to the Indenture Documents may not modify, amend or supplement any of said agreements, or give any consent, waiver, authorization or approval thereunder, for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions thereof or of modifying in any manner the rights of the respective parties thereunder; provided, however, that the actions specified in subsection (b) of this Section 8.01 and the amendments contemplated by Section 2.03 of the Participation Agreement (subject to the limitations set forth therein) may be taken without the consent of the Indenture Trustee or any Holder. (b) Subject to the provisions of subsection (c) of this Section 8.01, the respective parties to the Indenture Documents, 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 give any waiver 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 waiver 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 as in effect on the effective date hereof: 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, each Liquidity Provider, the Subordination Agent and the Indenture Trustee in its individual capacity), Section 3.05, Section 3.06 (except insofar as it relates to the address or account information of the Owner Trustee or the Indenture Trustee) (other than as such Sections 3.03, 3.05 and 3.06 may be amended pursuant to Section 3.04 of the Lease as in effect on the effective date hereof), 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 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, Section 26.03 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 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 (other than the place, time and manner of payment of Basic Rent constituting an Excepted Payment); (2) modify, amend or supplement the Trust Agreement and any other Indenture Document (other than the Lease and the Participation 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 in effect on the effective date hereof: Articles 6, 8 and 9 and Section 10.01(b) (insofar as such Articles 6, 8 and 9 and Section 10.01(b) relate to the Indenture Trustee, the Pass Through Trustee and the Holders), Article 7 and Sections 3.05 and 17.11 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); and (4) 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, and each Liquidity Provider, (1) modify, amend or supplement the Lease in such a way as to extend the time of payment of Basic Rent or Supplemental Rent or Stipulated Loss Value or any other amounts payable to the Indenture Trustee for its own account or for the account of the Holders (subject in any event to Section 3.05 of the Lease) upon the occurrence of an Event of Loss, or Termination Value or EBO Price and any other amounts payable to the Indenture Trustee for its own account or for the account of the Holders (subject in any event to Section 3.05 of the Lease) upon termination of the Lease with respect to the Aircraft payable under, or as provided in, the Lease as in effect on the effective date hereof, 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, and amounts due to each Liquidity Provider, 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 as in effect on the effective date hereof 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 or EBO Price and any other amounts payable under, or as provided in, the Lease as in effect on the effective date hereof 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 or EBO Date, as the case may be, 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 absolute and unconditional 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 (subject in any event to Section 3.05 of the Lease) upon the occurrence of an Event of Loss, or Termination Value or EBO Price and any other amounts payable to the Indenture Trustee for its own account or the account of the Holders (subject in any event to Section 3.05 of the Lease) of the Lease with respect to the Aircraft, payable under, or as provided in, the Lease as in effect on the effective date hereof, except for any such assignment pursuant to Section 2.12 hereof, and except as provided in the Lease as in effect on the effective date hereof. (d) At all times so long as this Indenture is in effect, the consent of the Owner Trustee (at the direction of the Owner Participant) shall be required in order (i) to amend, modify or supplement the Lease or any other Operative Document to which the Owner Trustee is a party or to waive compliance by the Lessee with any of its obligations thereunder and (ii) to grant any consent requested under the Lease. Notwithstanding the foregoing, but subject always to the provision of Section 15.05 hereof, the Indenture Trustee shall at all times have the right, to the exclusion of the Owner Trustee and the Owner Participant, to (A) declare the Lease to be in default under Article 17 (other than with respect to Excepted Payments) thereof and (B) subject only to the provisions of this Indenture, exercise the remedies set forth in such Article 17 of the Lease (other than in connection with Excepted Payments) and in Article 7 hereof. Nothing in this Indenture shall be deemed to prohibit the Owner Participant or the Owner Trustee from making demand on the Lessee for, or from commencing an action at law to obtain the payment of, or from receiving payment of, any Excepted Payment; provided, however, that if the Owner Trustee is proceeding under the Lease, the Owner Trustee shall proceed pursuant to Section 17.01(a)(v), and only Section 17.01(a)(v), of the Lease. Section 8.02. Owner Participant's Right to Elect to Prepay or Purchase the Certificates. (a) If (i) an Event of Default shall have occurred and be continuing for more than 180 days or the Certificates shall have become due and payable pursuant to Section 7.02(b) or (c) hereof or (ii) an Event of Default shall have occurred and be continuing for not more than 180 days and the Certificates shall not have become due and payable pursuant to Section 7.02(b) or (c) hereof, 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 Business Day and which shall be not less than 15 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 Business Day and which shall be not less than 15 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 applicable to each Outstanding Certificate (if such purchase occurs prior to the Premium Termination Date for such Outstanding Certificate) in the case of a purchase pursuant to clause (a)(ii) 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 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 and this Indenture 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 purchase date, 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 and this Indenture arising 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 on or prior to the date which is 15 Business Days after such Event of Default 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 or result in an Indenture Event of Default under this Indenture and any declaration based solely on the same shall be deemed to be automatically rescinded. Nothing contained in the preceding sentence shall be deemed to entitle the Owner Trustee to exercise any rights and powers or pursue any remedies pursuant to Article 17 of the Lease or otherwise except as set forth in this Indenture, and except that the Owner Trustee or the Owner Participant may attempt to recover any amount paid by it or them under this Indenture by demanding of the Lessee payment of such amount, or by commencing an action at law against the Lessee for the payment of such amount or taking appropriate action in a pending action at law against the Lessee pursuant to Section 17.01(a)(v), but only said Section 17.01(a)(v), of the Lease. Upon curing any such Event of Default pursuant to this Section 8.03, the Owner Trustee or the Owner Participant, as the case may be, shall, so long as no Indenture Event of Default shall have occurred and be continuing, be subrogated on an unsecured basis to all the rights of the Indenture Trustee under the Lease in respect of the payment giving rise to such Event of Default, and any right to any interest in respect of 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 and (B) the Owner Trustee shall have taken or caused to be taken such action necessary to cure and shall have cured such Event of Default prior to the date which is 15 Business Days after such Event of Default, 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 or result in an Indenture Event of Default under this Indenture and any declaration based solely on the same shall be deemed to be automatically rescinded. Nothing contained in the preceding sentence shall be deemed to entitle the Owner Trustee or the Owner Participant to exercise any rights and powers or pursue any remedies pursuant to Article 17 of the Lease or otherwise except as set forth in this Indenture, and 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, plus any interest due, or by commencing an action at law against the Lessee for the payment of such amount or taking appropriate action in a pending action at law against the Lessee pursuant to Section 17.01(a)(v), but only said Section 17.01(a)(v), of the Lease. Upon curing any such Event of Default pursuant to this Section 8.03(b), the Owner Trustee or the Owner Participant, as the case may be, shall be subrogated to all the rights of the Indenture Trustee under the Lease in respect of the payment, agreement or covenant giving rise to such Event of Default, and any right to any interest in respect of 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 in its individual capacity 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. So long as an Indenture Event of Default has occurred and 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 agrees that it will execute and the Owner Trustee agrees that it will file or cause to be filed such continuation statements with respect to financing statements relating to the security interest created hereunder in the Trust Indenture Estate as may be specified from time to time in written instructions of the Holders of not less than 25% in aggregate principal amount of Certificates (which instructions may, by their terms, be operative only at a future date and which shall be accompanied by the execution form of such continuation statement so to be filed); provided that, notwithstanding the foregoing, the Indenture Trustee may execute and file or cause to be filed any financing statement which it from time to time deems appropriate. (b) If any Event of Default shall have occurred and be continuing and, after the latest date on which the Owner Trustee may cure such Event of Default pursuant to Section 8.03 hereof, 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 Indenture Trustee's Liens on any part of the Trust Indenture Estate. (d) The Indenture Trustee will execute and deliver to the Lessee for filing in accordance with Article 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 furnished by the Lessee directly to such Holder. Section 9.03. Certain Rights of the Indenture Trustee. Subject to Section 9.02 hereof: (a) the Indenture Trustee may rely and shall be protected in acting or refraining from acting upon any resolution, 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 investigation is, in the opinion of the Indenture Trustee, not reasonably assured to the Indenture Trustee by the security afforded to it by the terms of this Indenture, the Indenture Trustee may require reasonable indemnity against such costs, 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 Officer's 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 Airframes and Replacement Engines. At any time and from time to time any Airframe or Engine which has been subject to an Event of Loss and may, or is required to, be replaced under Section 10.03, 11.03 or 11.04 of the Lease by a Replacement Airframe or Replacement Engine, as the case may be, shall be replaced in accordance with the provisions of this Section 9.08 and the provisions of said Sections of the Lease, the Owner Trustee shall, from time to time, direct the Indenture Trustee to execute and deliver to or as directed in writing by the Owner Trustee an appropriate instrument releasing such Airframe and/or Engine as appropriate from the Lien of this Indenture and the Indenture Trustee shall execute and deliver such instrument as aforesaid without recourse or warranty, but only upon receipt by or deposit with the Indenture Trustee of the following: (1) A written request from the Owner Trustee requesting such release and specifically describing the Airframe and/or Engine(s) to be so released. (2) A certificate signed by a duly authorized officer of the Lessee stating the following: A. With respect to the replacement of any Airframe: (i) a description of the Airframe subject to the Event of Loss including the manufacturer, model, FAA registration number (or other applicable registration information) and manufacturer's serial number; (ii) a description of the Replacement Airframe, including the manufacturer, model, FAA registration number (or other applicable registration information) and manufacturer's serial number; (iii) that on the date of the Indenture and Security Agreement Supplement relating to the Replacement Airframe the Owner Trustee will be the legal owner of and have good and marketable title to such Replacement Airframe free and clear of all Liens except Liens permitted under Section 6.01 of the Lease, that such Replacement Airframe will on such date be in at least as good operating condition and repair as required by the terms of the Lease, and that such Replacement Airframe has been or, substantially concurrently with such replacement, will be duly registered in the name of the Owner Trustee under the Transportation Code or under the law then applicable to the registration of the Airframe subject to the Event of Loss and that an airworthiness certificate has been duly issued under the Transportation Code (or such other applicable law) with respect to such Replacement Airframe and that such registration and certificate is, or will be, in full force and effect, and that the Lessee will have the full right and authority to use such Replacement Airframe; (iv) that the insurance required by Article 13 of the Lease is in full force and effect with respect to such Replacement Airframe and all premiums then due thereon have been paid in full; (v) that the Replacement Airframe is of the same or an improved make or model as the Airframe requested to be released from this Indenture; (vi) that the value of the Replacement Airframe as of the date of such certificate is not less than the value of the Airframe requested to be released (assuming such Airframe was in the condition and repair required to be maintained under the Lease); (vii) that no Event of Default has occurred and is continuing or would result from the making and granting of the request for release and the addition of a Replacement Airframe; (viii) that the release of the Airframe subject to the Event of Loss will not impair the security of the Indenture in contravention of any of the provisions of this Indenture; (ix) that upon such replacement, the Lien of this Indenture will apply to the Replacement Airframe and such Lien will be a first priority security interest in favor of the Indenture Trustee; and (x) that each of the conditions specified in Section 11.03 of the Lease with respect to such Replacement Airframe has been satisfied. B. With respect to the replacement of any Engine: (i) a description of the Engine subject to the Event of Loss including the manufacturer's serial number; (ii) a description of the Replacement Engine including the manufacturer's name, the engine model and serial number; (iii) that on the date of the Indenture 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 such Lien will be a first priority security interest in favor of the Indenture Trustee; and (vii) that each of the conditions specified in Section 10.03, 11.03 or 11.04 of the Lease with respect to such Replacement Engine has been satisfied. (3) The appropriate instruments (i) transferring to the Owner Trustee title to the Replacement Airframe or Replacement Engine to be received as consideration for the Airframe or Engine to be released and (ii) assigning to the Owner Trustee the benefit of all manufacturer's and vendor's warranties, if any, generally available with respect to such Replacement Airframe or Replacement Engine, and an Indenture and Security Agreement Supplement subjecting such Replacement Airframe or Replacement Engine to the Trust Agreement and to the Lien of this Indenture. (4) A certificate from a firm of independent aircraft appraisers of national standing satisfactory to the Indenture Trustee and the Owner Trustee confirming the accuracy of the information set forth in clause (2)A.(vi) of this Section 9.08. (5) The opinion of Davis Polk & Wardwell, special counsel to the Lessee, or other counsel reasonably satisfactory to the Indenture Trustee, stating that: (i) the certificates, opinions and other instruments and/or property which have been or are therewith delivered to and deposited with the Indenture Trustee conform to the requirements of this Indenture and the Lease and, upon the basis of such application, the property so sold or disposed of may be properly released from the Lien of this Indenture and all conditions precedent herein provided for relating to such release have been complied with; and (ii) the Replacement Airframe or Replacement Engine has been validly subjected to the Lien of this Indenture and covered by the Lease, the instruments subjecting such Replacement Airframe or Replacement Engine to the Lease and to the Lien of this Indenture, as the case may be, have been duly filed for recordation pursuant to the Transportation Code or any other law then applicable to the registration of the Aircraft, and no further action, filing or recording of any document is necessary or advisable in order to establish and perfect the title of the Owner Trustee to and the Lien of this Indenture on such Replacement Airframe or Replacement Engine and the Indenture Trustee would be entitled to the benefits of Section 1110 of the Bankruptcy Code with respect to such Replacement Airframe or Replacement Engine, provided, that such opinion need not be to the effect specified in the foregoing clause to the extent that the benefits of such Section 1110 would not have been, by reason of a change in law or governmental interpretation thereof after the date hereof, available to the Indenture Trustee with respect to the Aircraft immediately prior to such substitution had such Event of Loss not occurred. Section 9.09. Indenture and Security Agreement Supplement for Replacements. In the event of the substitution of a Replacement Airframe or a Replacement Engine as contemplated by Section 10.03 or Article 11 of the Lease, the Owner Trustee and the Indenture Trustee agree for the benefit of the Holders and the Lessee, subject to fulfillment of the conditions precedent and compliance by the Lessee with its obligations set forth in Section 10.03 or Article 11 of the Lease, to execute and deliver an Indenture and Security Agreement Supplement as contemplated by Section 9.08(3) hereof and, provided no Event of Default shall have occurred and be continuing, execute and deliver to the Lessee an appropriate instrument releasing the Airframe or Engine being replaced from the Lien of this Indenture. Section 9.10. Effect of Replacement. In the event of the substitution of a Replacement Airframe or a Replacement Engine as contemplated by Section 10.01 or Article 11 of the Lease and Section 9.08 hereof, all provisions of this Indenture relating to the Airframe or Engine or Engines being replaced shall be applicable to such Replacement Airframe or Replacement Engine or Engines with the same force and effect as if such Replacement Airframe or Replacement Engine or Engines were the same Airframe or engine or engines, as the case may be, as the Airframe or Engine or Engines being replaced but for the Event of Loss with respect to the Airframe or Engine or Engines being replaced. Section 9.11. Compensation. The Owner Trustee covenants and agrees to pay, and the Indenture Trustee shall be entitled to receive, reasonable compensation and payment or reimbursement for its reasonable advances, expenses and disbursements (including the reasonable compensation and expenses and disbursements of its counsel, agents and other persons not regularly in its employ) in connection with its services rendered hereunder or in any way relating to or arising out of the administration of the Trust Indenture Estate and shall have a priority claim on the Trust Indenture Estate for the payment of such compensation, advances, expenses and disbursements to the extent that such compensation, advances, expenses and disbursements shall not be paid by the Lessee, and shall have the right to use or apply any moneys held by it hereunder in the Trust Indenture Estate toward such payments; provided that, so long as the Lease is in effect, the Indenture Trustee shall not make any claim for payment under this Section 9.11 against the Owner Trustee without first making demand on the Lessee for payment of such claim. The Indenture Trustee agrees that it shall have no right against any Holder, SSB or the Owner Participant for any fee as compensation for its services as trustee under this Indenture. ARTICLE X CONCERNING THE HOLDERS Section 10.01. Evidence of Action Taken by Holders. (a) Any request, demand, authorization, direction, notice, consent, waiver or other action provided by this Indenture to be given or taken by Holders may be embodied in and evidenced by one or more instruments of substantially similar tenor signed by such Holders in person or by an agent duly appointed in writing, and, except as otherwise expressly provided herein, such action shall become effective when such instrument or instruments are delivered to the Indenture Trustee and, if expressly required herein, to the Owner Trustee. Proof of execution of any instrument or of a writing appointing any such agent shall be sufficient for any purpose of this Indenture and (subject to Sections 9.02 and 9.03 hereof) conclusive in favor of the Indenture Trustee and the Owner Trustee, if made in the manner provided in this Article. (b) For the purpose of determining the Holders entitled to vote or consent to any direction, waiver or other action of such Holders under Section 7.10 or 7.11 hereof, the Lessee may set a record date for such vote or consent by specifying such record date in an Officer's Certificate delivered to the Indenture Trustee. Such record date shall be a date not more than 15 days prior to the first solicitation of such vote or consent. Section 10.02. Proof of Execution of Instruments and of Holding of Certificates. Subject to Sections 9.02 and 9.03 hereof, the execution of any instrument by a Holder or his agent or proxy may be proved in accordance with such reasonable rules and regulations as may be prescribed by the Indenture Trustee. The holding of Certificates shall be proved by the Register or by a certificate of the Registrar. Section 10.03. Holders to Be Treated as Owners. Prior to due presentment for registration of transfer of any Certificate, the Owner Trustee, the Indenture Trustee, any agent of the Owner Trustee or the Indenture Trustee, the Paying Agent, if any, the Registrar and the Lessee shall deem and treat the Person in whose name such Certificate shall be registered upon the Register as the absolute owner of such Certificate (whether or not such Certificate shall be overdue and notwithstanding any notation of ownership or other writing thereon) for the purpose of receiving payment of or on account of the principal of and, subject to the provisions of this Indenture, interest on such Certificate and for all other purposes; and neither the Owner Trustee nor the Indenture Trustee (nor any agent of the Owner Trustee or the Indenture Trustee) nor the Paying Agent, if any, nor the Registrar nor the Lessee shall be affected by any notice to the contrary. All such payments so made to any such person, or upon his order, shall be valid, and, to the extent of the sum or sums so paid, effectual to satisfy and discharge the liability for moneys payable upon any such Certificate. Section 10.04. Certificates Owned by Owner Trustee and the Lessee Deemed Not Outstanding. In determining whether the Holders of the requisite aggregate principal amount of Certificates have concurred in any direction, consent or waiver under this Indenture, Certificates which are owned by the Owner Trustee, the Owner Participant, SSB, the Lessee or by any Affiliate thereof 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, SSB or the Lessee 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, SSB or the Owner Participant or by any Affiliate thereof, 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, SSB 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, SSB 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, SSB, or the Owner Participant are actually named in the Register. Upon request of the Indenture Trustee, the Owner Trustee, the Owner Participant, SSB 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, SSB 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 Administration 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. Any Person, other than the Subordination Agent, who is acquiring the Certificates will be deemed to represent and warrant that (i) no assets of an employee benefit plan subject to Title I of ERISA or an individual retirement account or plan subject to Section 4975 of the Code, or any trust established under any such plan or account, have been used to acquire or hold any of the Certificates, or (ii) that one or more administrative or statutory exemptions from the prohibited transaction rules under Section 406 of ERISA and Section 4975 of the Code applies to its purchase and holding of the Certificates such that its purchase and holding of the Certificates will not result in a non-exempt prohibited transaction under Section 406 of ERISA and Section 4975 of the Code. ARTICLE XI INDEMNIFICATION OF INDENTURE TRUSTEE BY OWNER TRUSTEE The Owner Trustee, not individually but solely in its capacity as Owner Trustee under the Trust Agreement, hereby agrees, whether or not any of the transactions contemplated hereby shall be consummated, to assume liability for, and does hereby indemnify, protect, save and keep harmless the Indenture Trustee, in its individual capacity, and its successors, assigns, agents and servants solely from the Lessor's Estate, with respect to the claims of the Indenture Trustee for payment or reimbursement under Section 9.11 hereof and from and against any and all liabilities, obligations, losses, damages, penalties, taxes (excluding any taxes payable by the Indenture Trustee on or measured by any compensation received by the Indenture Trustee for its services under this Indenture), claims, actions, suits, costs, expenses or disbursements (including legal fees and expenses) of any kind and nature whatsoever which may be imposed on, incurred by or asserted against the Indenture Trustee (whether or not also agreed to be indemnified against by any other person under any other document) in any way relating to or arising out of this Indenture, or any other Indenture Documents or the enforcement of any of the terms of any thereof, or in any way relating to or arising out of the manufacture, purchase, acceptance, nonacceptance, rejection, ownership, delivery, lease, possession, use, operation, condition, sale, return or other disposition of the Aircraft or any Engine (including, without limitation, latent and other defects, whether or not discoverable, and any claim for patent, trademark or copyright infringement), or in any way relating to or arising out of the administration of the Trust Indenture Estate or the action or inaction of the Indenture Trustee hereunder, except only (a) in the case of willful misconduct or gross negligence of the Indenture Trustee in the performance of its duties hereunder, (b) as may result from the inaccuracy of any representation or warranty of the Indenture Trustee in the Participation Agreement, (c) as otherwise provided in Section 9.02(c) hereof or (d) as otherwise excluded by the terms of Article 8 or Article 9 of the Participation Agreement from the Lessee's general indemnity or general tax indemnity to the Indenture Trustee under said Articles; 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 of such action 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 30 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 Holder; or (ii) the Indenture Trustee shall become incapable of acting, or shall be adjudged a bankrupt or insolvent, or a receiver or liquidator of the Indenture Trustee or of its property shall be appointed, or any public officer shall take charge or control of the Indenture Trustee or of its property or affairs for the purpose of rehabilitation, conservation or liquidation; then the Owner Trustee may remove the Indenture Trustee and, with the consent of the Lessee, appoint a successor trustee by written instrument, in duplicate, executed by a Responsible Officer of the Owner Trustee, one copy of which instrument shall be delivered to the Indenture Trustee so removed and one copy to the successor trustee, or, subject to the provisions of Section 7.13 hereof, any Holder who has been a bona fide Holder for at least six months may, on behalf of himself and all others similarly situated, petition any court of competent jurisdiction for the removal of the Indenture Trustee and the appointment of a successor trustee. Such court may thereupon, after such notice, if any, as it may deem proper and prescribe, remove the Indenture Trustee and appoint a successor trustee, which removal and appointment shall become effective upon acceptance of appointment by the successor trustee as provided in Section 12.04 hereof. The successor Indenture Trustee so appointed by such court shall immediately and without further act be superseded by any successor Indenture Trustee appointed as provided above within one year from the date of appointment by such court. Section 12.03. Persons Eligible for Appointment as Indenture Trustee. There shall at all times be an Indenture Trustee hereunder which shall be (i)(x) a bank or trust company organized and doing business under the laws of the United States of America or any state or the District of Columbia having a combined capital and surplus of at least $100,000,000 or (y) a bank or trust company whose obligations hereunder are fully guaranteed by a direct or indirect parent thereof having a combined capital and surplus of at least $100,000,000 and (ii) a Citizen of the United States authorized under applicable law to exercise corporate trust powers and 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, in form and substance reasonably satisfactory to the Owner Trustee, 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 liable either personally or in its capacity as such trustee, 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 right or power conferred herein upon the Owner Trustee or the Owner Participant; (e) to cure any ambiguity or to correct or supplement any provision contained herein or in any supplemental indenture which may be defective or inconsistent with any other provision contained herein or in any supplemental indenture; or to make such other provisions in regard to matters or questions arising under this Indenture or under any supplemental indenture as the Owner Trustee may deem necessary or desirable and which shall not adversely affect the interests of the Holders; (f) to correct or amplify the description of any property at any time subject to the Lien of this Indenture or better to assure, convey and confirm unto the Indenture Trustee any property subject or required to be subject to the Lien of this Indenture or to subject Replacement Airframe or Replacement Engines to the Lien of this Indenture in accordance with the provisions hereof or with the Lease or to release from the Lien of this Indenture property that has been substituted on or removed from the Aircraft as contemplated in Section 3.07 hereof; provided that supplements to this Indenture entered into for the purpose of subjecting Replacement Airframe or Replacement Engines to the Lien of this Indenture need only be executed by the Owner Trustee and the Indenture Trustee; (g) to provide for the issuance under this Indenture of Certificates in coupon form (including Certificates registrable as to principal only) and to provide for exchangeability of such Certificates with Certificates issued hereunder in fully registered form, and to make all appropriate changes for such purpose; (h) to effect the re-registration of the Aircraft pursuant to Section 6.03(b) of the Participation Agreement; (i) to add, eliminate or change any provision hereunder so long as such action shall not adversely affect the interests of the Holders; and (j) to effect the amendments contemplated by Section 2.03 of the Participation Agreement, subject to the limitations set forth therein. The Indenture Trustee is hereby authorized to join in the execution of any such supplemental indenture, to make any further appropriate agreements and stipulations which may be contained therein and to accept the conveyance, transfer, assignment, mortgage or pledge of any property thereunder, but the Indenture Trustee shall not be obligated to enter into any such supplemental indenture which adversely affects the Indenture Trustee's own rights, duties or immunities under this Indenture or otherwise. Any such supplemental indenture may be executed without the consent of the Holders of Outstanding Certificates, notwithstanding any of the provisions of Section 13.02 hereof. 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 and every Holder and each Liquidity Provider, 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 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 among Holders of different Series of Certificates or as between the Holder and the Owner Trustee or the Owner Participant or with respect to the amount or time of payment of any such distribution, or alter or modify the circumstances under which a Make-Whole Premium shall be payable, or alter the currency in which any amount payable under any Certificate is to be paid, or impair the right of any Holder to commence legal proceedings to enforce a right to receive payment hereunder, (c) reduce, modify or amend any indemnities in favor of any Holder or in favor of or to be paid by the Owner Participant (except as consented to by each Person adversely affected thereby), or (d) create or permit the creation of any Lien on the Trust Indenture Estate or any part thereof prior to or pari passu with the Lien of this Indenture, except as expressly permitted herein, or deprive any Holder of the benefit of the Lien of this Indenture on the Trust Indenture Estate, except as provided in Section 7.02 hereof or in connection with the exercise of remedies under Article VII. This Section 13.02 shall not apply to any indenture or indentures supplemental hereto permitted by, and complying with the terms of, Section 13.06 hereof. Upon the request of the Owner Trustee (at the direction of the Owner Participant) and upon the filing with the Indenture Trustee of evidence of the consent of Holders and other documents, if any, required by Section 10.01, the Indenture Trustee shall join with the Owner Trustee and the Lessee in the execution of such supplemental indenture unless such supplemental indenture affects the Indenture Trustee's own rights, duties or immunities under this Indenture or otherwise, in which case the Indenture Trustee may in its discretion, but shall not be obligated to, enter into such supplemental indenture. It shall not be necessary for the consent of the Holders under this Section to approve the particular form of any proposed supplemental indenture, but it shall be sufficient if such consent shall approve the substance thereof. Promptly after the execution by the Owner Trustee, the Indenture Trustee and the Lessee of any supplemental indenture pursuant to the provisions of this Section, the Indenture Trustee shall mail a notice thereof by first-class mail to the Holders at their addresses as they shall appear on the registry books of the Registrar, setting forth in general terms the substance of such supplemental indenture. Any failure of the Indenture Trustee to mail such notice, or any defect therein, shall not, however, in any way impair or affect the validity of any such supplemental indenture. Section 13.03. Effect of Supplemental Indenture. Upon the execution of any supplemental indenture pursuant to the provisions hereof, this Indenture shall be and be deemed to be modified and amended in accordance therewith and the respective rights, limitations of rights, obligations, duties and immunities under this Indenture of the Indenture Trustee, the Owner Trustee, the Lessee and the Holders shall thereafter be determined, exercised and enforced hereunder subject in all respects to such modifications and amendments, and all the terms and conditions of any such supplemental indenture shall be and be deemed to be part of the terms and conditions of this Indenture for any and all purposes. Section 13.04. Documents to Be Given to Indenture Trustee. The Indenture Trustee, subject to the provisions of Sections 9.02 and 9.03, may receive an 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 in accordance with the terms and conditions of the Lease to subject a Replacement Airframe or Replacement Engine thereto or to execute and deliver an Indenture and Security Agreement Supplement pursuant to the terms hereof. Section 13.07. Notices to Liquidity Providers. Any request made to any Holder for consent to any amendment, supplement or waiver pursuant to Section 7.11, 8.01 or this Article XIII shall be promptly furnished by the Indenture Trustee to each Liquidity Provider. ARTICLE XIV SATISFACTION AND DISCHARGE OF INDENTURE; UNCLAIMED MONEYS Section 14.01. Satisfaction and Discharge of Indenture; Termination of Indenture. If at any time after (a) the Owner Trustee shall have paid or caused to be paid the principal of and interest on all the Certificates outstanding hereunder, as and when the same shall have become due and payable, or (b) the Owner Trustee shall have delivered to the Indenture Trustee for cancellation all Certificates theretofore authenticated (other than any Certificates which shall have been destroyed, lost or stolen and which shall have been replaced or paid as provided in Section 2.07 hereof) or (c) (i) all such Certificates not theretofore delivered to the Indenture Trustee for cancellation shall have become due and payable, or are by their terms to become due and payable within one year or are to be called for prepayment within one year under arrangements satisfactory to the Indenture Trustee for the giving of notice of prepayment by the Indenture Trustee in the name and at the expense of the Owner Trustee, and (ii) the Owner Trustee shall have irrevocably deposited or caused to be deposited with the Indenture Trustee as trust funds the entire amount in cash (other than moneys repaid by the Indenture Trustee or any paying agent to the Owner Trustee in accordance with Section 14.04 hereof) or Government obligations maturing as to principal and interest in such amounts and at such times as will insure the availability of cash sufficient to pay at maturity all such Certificates not theretofore delivered to the Indenture Trustee for cancellation, including principal and interest due or to become due to such date of maturity as the case may be, and if, in any such case, the Owner Trustee shall also pay or cause to be paid all other sums then payable hereunder by the Owner Trustee, then this Indenture shall cease to be of further effect (except in the case of (c) above 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 (covering such matters reasonably requested by, and in form and substance reasonably satisfactory to, the Indenture Trustee) 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 Indenture Trustee hereunder or under the Participation Agreement or otherwise secured hereby, the Owner Trustee shall direct the Indenture Trustee to execute and deliver to or as directed in writing by the Owner Trustee an appropriate instrument releasing the Aircraft from the Lien of this Indenture and releasing the Indenture Documents from the assignment thereof hereunder, and the Indenture Trustee shall execute and deliver such instrument as aforesaid and, at the Owner Trustee's expense, will execute and deliver such other instruments or documents as may be reasonably requested by the Owner Trustee to give effect to such release; provided, however, that this Indenture and the trusts created hereby shall terminate earlier and this Indenture shall be of no further force or effect upon any sale or other final disposition by the Indenture Trustee of all property forming a part of the Trust Indenture Estate and the final distribution by the Indenture Trustee of all moneys or other property or proceeds constituting part of the Trust Indenture Estate in accordance with the terms hereof. Except as aforesaid otherwise provided, this Indenture and the trusts created hereby shall continue in full force and effect in accordance with the terms hereof. Section 14.02. Application by Indenture Trustee of Funds Deposited for Payment of Certificates. Subject to Section 14.04 hereof, all moneys deposited with the Indenture Trustee pursuant to Section 14.01 hereof shall be held in trust and applied by it to the prompt payment, either directly or through any Paying Agent, to the Holders of the particular Certificates for the payment or prepayment of which such moneys have been deposited with the Indenture Trustee, of all sums due and to become due thereon for principal, interest and Make-Whole Premium, if any, but such money need not be segregated from other funds except to the extent required by law. Section 14.03. Repayment of Moneys Held by Paying Agent. Upon the satisfaction and discharge of this Indenture all moneys then held by any Paying Agent under the provisions of this Indenture shall, upon demand of the Owner Trustee, be repaid to it or paid to the Indenture Trustee and thereupon such Paying Agent shall be released from all further liability with respect to such moneys. Section 14.04. Transfer of Moneys Held by Indenture Trustee and Paying Agent Unclaimed for Two Years and Eleven Months. Any moneys deposited with or paid to the Indenture Trustee or any Paying Agent for the payment of the principal of or interest or Make-Whole Premium on any Certificate and not applied but remaining unclaimed for two years and eleven months after the date upon which such principal, interest or Make-Whole Premium shall have become due and payable, shall, unless otherwise required by mandatory provisions of applicable escheat or abandoned or unclaimed property law, be paid to the Owner Trustee (or, if the Trust Agreement shall no longer be in effect, to the Owner Participant) 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 (or the Owner Participant) 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 SSB (or its permitted successors or assigns) and the Indenture Trustee acts hereunder not in its individual capacity but solely as trustee except as expressly provided herein and in the other Operative Documents, and, in the case of SSB (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, Holders and Liquidity Providers. Nothing in this Indenture, whether express or implied, shall be construed to give to any person other than SSB, the Owner Trustee, the Lessee, the Indenture Trustee, as trustee and in its individual capacity, the Owner Participant, each Liquidity Provider and the Holders any legal or equitable right, remedy or claim under or in respect of this Indenture. Upon termination of this Indenture pursuant to Article XIV hereof, the Indenture Trustee in connection with the satisfaction of the Indenture shall return to the Owner Trustee all property (and related documents and instruments) constituting or evidencing the Trust Indenture Estate. Section 15.05. No Action Contrary to the Lessee's Rights Under the Lease. Notwithstanding any of the provisions of this Indenture or the Trust Agreement to the contrary, so long as no Event of Default shall have occurred and be continuing, neither the Indenture Trustee nor the Owner Trustee will take any affirmative acts that interfere with the peaceful and quiet possession and enjoyment of the Aircraft by the Lessee. Section 15.06. Notices. Unless otherwise expressly specified or permitted by the terms hereof, all notices, requests, demands, authorizations, directions, consents, waivers or documents provided or permitted by this Indenture to be made, given, furnished or filed shall be in writing, mailed by certified mail, postage prepaid, or by confirmed telecopy, and (a) if to the Owner Trustee, addressed to it c/o State Street Bank and Trust Company, Two International Place, 4th Floor, Boston, Massachusetts 02110 (telephone: (617) 664-5526, facsimile: (617) 664-5371), 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 79 South Main Street, Salt Lake City, Utah 84111 (telephone: (801) 246-5630, facsimile: (801) 246-5053), Attention: Corporate Trust Department or (c) if to the Owner Participant, a Liquidity Provider 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 in Section 14.01 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 such Holder's 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 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 SSB 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 SSB, upon the certificate, statement or opinion of or representations by an officer or officers of the Lessee or SSB, 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 SSB 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; Counterparts. 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 as of the date first written above 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. STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT, NATIONAL ASSOCIATION, not in its individual capacity, except as specifically set forth herein but solely as Owner Trustee By_____________________________________________ Name: Paul D. Allen Title: Vice President FIRST SECURITY BANK, NATIONAL ASSOCIATION, not in its individual capacity, but solely as Indenture Trustee By_____________________________________________ Name: Greg A. Hawley Title: Vice President Exhibit A to Trust Indenture and Security Agreement Indenture and Security Agreement Supplement Indenture and Security Agreement Supplement (Federal Express Corporation Trust No. N584FE) dated ________, ____, of STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT, NATIONAL ASSOCIATION, a national banking association, not in its individual capacity but solely as owner trustee (herein called the "Owner Trustee") under the Trust Agreement dated as of May 1, 1997, as amended and restated as of February 1, 1998 (the "Trust Agreement") between State Street Bank and Trust Company of Connecticut, National Association and the Owner Participant named therein. W I T N E S 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 No. N584FE) dated as of May 1, 1997, as amended by Amendment Agreement No. 1 to Trust Indenture and Security Agreement (Federal Express Corporation Trust No. N584FE) dated September 30, 1997 and as amended and restated as of February 1, 1998 (the "Indenture") between the Owner Trustee and First Security Bank, National Association (herein called the "Indenture Trustee") provides for the execution and delivery of an Indenture and Security Agreement Supplement substantially in the form of this Indenture and Security Agreement Supplement No. __, which Supplement shall particularly describe the Aircraft included in the Trust Indenture Estate, and shall specifically mortgage such Aircraft to the Indenture Trustee. (1)WHEREAS, the Indenture relates to the Aircraft and the Engines described in the following paragraph and a counterpart of the Indenture is attached to and made a part of this Indenture and Security Agreement Supplement No. 1, and this Indenture and Security Agreement Supplement No. 1, together with such attachment, is being filed for recordation on or promptly after the date of this Supplement No. 1 with the Federal Aviation Administration as one document. - ------------ (1) This recital is to be included only in the first Indenture Supplement. (2)Whereas, the Indenture and Indenture and Security Agreement Supplement No. ___ dated _________________, ______ (the Indenture being attached to and made a part of such Indenture and Security Agreement Supplement and filed therewith) have been duly recorded pursuant to Subtitle VII of Title 49 of the United States Code, on ____________, _____, as one document and have been assigned Conveyance No. _________. - ------------ (2) This recital is not to be included in the first Indenture Supplement. NOW, THEREFORE, this Supplement witnesseth, that, to secure the prompt payment of the principal of and Make-Whole Premium, if any, and interest on, and all other amounts due with respect to, all Outstanding Certificates under the Indenture and all other amounts due hereunder and the performance and observance by the Owner Trustee of all the agreements, covenants and provisions for the benefit of the Holders contained in the Indenture, in the Lease, in the Participation Agreement and the Certificates, and the prompt payment of any and all amounts from time to time owing under the Participation Agreement by the Owner Trustee, the Owner Participant or the Lessee to the Holders and for the uses and purposes and subject to the terms and provisions of the Indenture and the Certificates, and in consideration of the premises and of the covenants contained in the Indenture, and of the purchase of the Certificates by the Holders, and of the sum of $1 paid to the Owner Trustee by the Indenture Trustee at or before the delivery of the Indenture, the receipt of which is hereby acknowledged, the Owner Trustee has granted, bargained, sold, assigned, transferred, conveyed, mortgaged, pledged, granted a security interest in, and confirmed, and does hereby grant, bargain, sell, assign, transfer, convey, mortgage, pledge, grant a security interest in, and confirm, unto the Indenture Trustee, its successors and assigns, in trust for the equal and ratable security and benefit of the Holders, in the trust created by the Indenture, and subject to all of the terms, conditions, provisions and limitations set forth in 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 Three (3) aircraft engines, each such engine having 750 or more rated takeoff horsepower or the equivalent thereof, identified as follows: Manufacturer's Serial Manufacturer Model Number - ------------ ----- -------------- together with all equipment and accessories belonging thereto, by whomsoever manufactured, owned by the Owner Trustee and installed in or appurtenant to said aircraft engines. Together with all substitutions, replacements and renewals of the property described above, and all property which shall hereafter become physically attached to or incorporated in the property described above, whether the same are now owned by the Owner Trustee or shall hereafter be acquired by it. As further security for the obligations referred to above and secured by the Indenture and hereby, the Owner Trustee has granted, bargained, sold, assigned, transferred, conveyed, mortgaged, pledged and confirmed, and does hereby grant, bargain, sell, assign, transfer, convey, mortgage, pledge and confirm, unto the Indenture Trustee, its successors and assigns, for the security and benefit of the Holders, in the trust created by the Indenture, and subject to all of the terms, conditions, provisions and limitations set forth in the Indenture, all of the estate, right, title and interest of the Owner Trustee in, to and under the Lease Supplement (other than Excepted Payments, if any) covering the property described above. TO HAVE AND TO HOLD all and singular the aforesaid property unto the Indenture Trustee, its successors and assigns, for the benefit and security of the Holders for the uses and purposes and subject to the terms and provisions set forth in the Indenture. This Supplement shall be construed as supplemental to the Indenture and shall form a part thereof, and the Indenture is hereby incorporated by reference herein and is hereby ratified, approved and confirmed. This Supplement is being delivered in the State of New York. AND, FURTHER, the Owner Trustee hereby acknowledges that the Aircraft/Engines referred to in this Supplement and the aforesaid Lease Supplement has been delivered to the Owner Trustee and is included in the property of the Owner Trustee and covered by all the terms and conditions of the Trust Agreement, subject to the Lien of the Indenture. IN WITNESS WHEREOF, the Owner Trustee has caused this Supplement to be duly executed as of the date first written above by one of its officers thereunto duly authorized. STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT, NATIONAL ASSOCIATION, not in its individual capacity, except as specifically set forth herein but solely as Owner Trustee By_____________________________________________ Name: Paul D. Allen Title: Vice President 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 No. N584FE) STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT, NATIONAL ASSOCIATION not in its individual capacity but solely as OWNER TRUSTEE UNDER TRUST AGREEMENT (Federal Express Corporation Trust No. N584FE) dated as of May 1, 1997, as amended and restated as of February 1, 1998 Interest Rate Maturity - ------------- -------- SERIES ___ State Street Bank and Trust Company of Connecticut, National Association, a national banking association, not in its individual capacity but solely as Owner Trustee (herein in such capacity called the "Owner Trustee") under that certain Trust Agreement (Federal Express Corporation Trust No. N584FE) dated as of May 1, 1997, as amended and restated as of February 1, 1998, between the Owner Participant named therein and State Street Bank and Trust Company of Connecticut, National Association (herein as such Trust Agreement may be amended or supplemented from time to time called the "Trust Agreement"), hereby promises to pay to FIRST SECURITY BANK, NATIONAL ASSOCIATION, as Subordination Agent, or its 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 January 15 and July 15, on said principal sum in like coin or currency at the rate per annum set forth above from the January 15 or the July 15, 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 January 15 or July 15 and before the following January 15 or July 15, as the case may be, this Certificate shall bear interest from such January 15 or July 15; provided that, if the Owner Trustee shall default in the payment of interest due on such January 15 or July 15, then this Certificate shall bear interest from the next preceding January 15 or July 15 to which interest on this Certificate has been paid or duly provided for. The interest so payable on any January 15 or July 15 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 January 15 or July 15 preceding such January 15 or July 15, 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 First Security Bank, National Association (the "Indenture Trustee") maintained for such purpose in immediately available funds prior to 10:30 A.M. (New York time) on the due date thereof and the Indenture Trustee shall remit all such amounts received by it to the Holders at such account or accounts at such financial institution or institutions as the Holders shall have designated to the Indenture Trustee in writing, in immediately available funds, such payment to be made if the payment was received prior to 10:30 A.M. New York time by the Indenture Trustee on any Business Day, by 12:00 noon New York time on such Business Day; otherwise, the Indenture Trustee shall make payment promptly, but not later than 11:00 A.M. New York time on the next succeeding Business Day; provided that, at the option of the Indenture Trustee or its Paying Agent, interest may be paid by mailing a check therefor payable to or upon the written order of 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. State Street Bank and Trust Company of Connecticut, National Association and First Security Bank, National Association are not acting individually hereunder, but solely as Owner Trustee and Indenture Trustee, respectively. Any Person, other than the Subordination Agent, who is acquiring the Certificates will be deemed to represent and warrant that (i) no assets of an employee benefit plan subject to Title I of ERISA or an individual retirement account or plan subject to Section 4975 of the Code, or any trust established under any such plan or account, have been used to acquire or hold any of the Certificates, or (ii) that one or more administrative or statutory exemptions from the prohibited transaction rules under Section 406 of ERISA and Section 4975 of the Code applies to its purchase and holding of the Certificates such that its purchase and holding of the Certificates will not result in a non-exempt prohibited transaction under Section 406 of ERISA and Section 4975 of the Code. 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 No. N584FE) dated as of May 1, 1997, as amended by Amendment Agreement No. 1 to Trust Indenture and Security Agreement (Federal Express Corporation Trust No. N584FE) dated September 30, 1997 and as amended and restated as of February 1, 1998 (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 No. N584FE) 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 Series Maturity Amount Interest Rate - ------ -------- --------- ------------- A ________________ $__________ ____% B ________________ $__________ ____% C ________________ $__________ ____% 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 given to them in the Indenture. The principal amounts of the Certificates are payable as set forth in Schedule I attached hereto. The Certificates are subject to redemption in part, pro rata (based on the face amount thereof), 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 on Schedule I attached hereto, together with interest accrued thereon to the applicable Sinking Fund Redemption Date, but without Make-Whole Premium. 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 neither the Owner Participant, the Owner Trustee, State Street Bank and Trust Company of Connecticut, National Association nor 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 State Street Bank and Trust Company of Connecticut, National Association, the Owner Trustee and the Indenture Trustee. 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 pursuant to Section 11.03 of the Lease and Section 9.08 of the Indenture replacement equipment is substituted therefor). (ii) If the Lessee, pursuant to Section 4.02(a) of the Lease, gives notice of purchase of the Aircraft. (iii) If the Owner Participant 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) At the option of the Owner Trustee with the prior written consent of the Lessee upon not less than 25 days' prior written notice. (vi) [Reserved]. (vii) With respect to the Series C Certificates only, as provided in Section 2.03(b) of the Participation Agreement. (viii) Pursuant to Section 15.01 of the Participation Agreement in connection with a Refinancing of the Certificates. In the case of a prepayment of the Certificates pursuant to clauses (ii), (iv) and (viii) above, the Lessee, in accordance with and subject to the terms (including timing of notice) of Section 4.02(a) or 10.01 of the Lease or Article 15 of the Participation Agreement, as the case may be, shall give irrevocable (subject to Section 6.02(c) of the Indenture) 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 clause (v) above, the Certificates shall be prepaid on the 25th date following the notice referred to therein. In the case of a prepayment of the Series C Certificates pursuant to clause (vii) above, the amount of such Series C Certificates to be prepaid shall be prepaid on the Delivery Date. In the case of a prepayment pursuant to Section 6.02(a)(viii) above, the Certificates shall be prepaid on the effective date of the Refinancing. 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) (i) if such prepayment is made under any provision of Section 6.02 of the Indenture on or after the applicable Premium Termination Date, or (ii) if such prepayment is made prior to the applicable Premium Termination Date pursuant to clause (i) or (iii) above (if clause (i) of the first sentence of Section 8.02(a) of the Indenture is applicable), clause (vii) above, the sum of (A) the aggregate principal amount of such Certificates then Outstanding, (B) accrued interest on the Certificates to the Prepayment Date and (C) all other aggregate sums due the Indenture Trustee under the Indenture or under the Participation Agreement or the Lease, but excluding any Make-Whole Premium or other premium or penalty, or (2) if such prepayment is made prior to the applicable Premium Termination Date pursuant to clause (ii), (iii) (if clause (ii) of the first sentence of Section 8.02(a) of the Indenture is applicable), (iv), (v) or (viii) 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 with respect to which the Premium Termination Date therefor has not occurred (the aggregate amount required to be paid pursuant to this sentence being herein referred to as the "Prepayment Price"). 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, but the Owner Trustee and the Owner Participant, collectively, may not cure more than three consecutive such failures or more than six such failures in total. The Owner Trustee or the Owner Participant may cure any other default by the Lessee in the performance of its obligations under the Lease. (A) If an Event of Default shall have occurred and be continuing for more than 180 days or the Certificates shall have been accelerated or (B) an Event of Default shall have occurred and be continuing for not more than 180 days and the Certificates shall not have been accelerated, 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 Outstanding 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 on such amount to the date of purchase and any Make-Whole Premium applicable to each Outstanding Certificate, if such purchase occurs prior to the Premium Termination Date for such Outstanding Certificate (in the case of a purchase pursuant to clause (ii) of the first sentence 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 Series and 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 Series and 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 shall 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. The indebtedness evidenced by this Certificate is, to the extent and in the manner provided in the Indenture, subordinate and subject in right of payment to the prior payment in full of the Secured Obligations (as defined in the Indenture) in respect of [Series A Certificate](1), [Series A and Series B Certificates](2) and this Certificate is issued subject to such provisions. The Holder of this Certificate, by accepting the same, (a) agrees to and shall be bound by such provisions, (b) authorizes and directs the Indenture Trustee on such Holder's behalf to take such action as may be necessary or appropriate to effectuate the subordination as provided in the Indenture and (c) appoints the Indenture Trustee such Holder's attorney-in-fact for such purpose.(*) - ------------ (1) To be inserted in the case of a Series B Certificate. (2) To be inserted in the case of a Series C Certificate. (*) To be inserted for each Certificate other than any Series A Certificate. The Owner Trustee shall have the right, on the Delivery Date to modify Schedule I attached hereto subject to the terms and conditions set forth in Section 2.03(b) of the Participation Agreement. To give effect to the foregoing the Indenture Trustee shall execute an amendment to the Indenture which shall amend Section 6.06 thereof to set forth the new schedule of principal payments and Schedule I attached hereto shall be amended accordingly. The Indenture Trustee shall deliver such amendments to the Subordination Agent on behalf of the Pass Through Trustee for each of the Pass Through Trusts. To the extent that such amendment of the Indenture occurs later than the Delivery Date, the Indenture, as amended, shall, if required, be duly filed for recordation with the Aeronautics Authority. 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 No. N584FE) to be duly executed in its corporate name by its officer thereunto duly authorized. Dated: __________________ STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT, NATIONAL ASSOCIATION, not in its individual capacity, but solely as Owner Trustee By __________________________________________ Name: Paul D. Allen Title: Vice President [FORM OF INDENTURE TRUSTEE'S CERTIFICATE OF AUTHENTICATION] This is one of the Equipment Trust Certificates (Federal Express Corporation Trust No. N584FE) referred to in the within mentioned Indenture. Dated: __________________ FIRST SECURITY BANK, NATIONAL ASSOCIATION, not in its individual capacity, but solely as Indenture Trustee By __________________________________________ Name: Greg A. Hawley Title: Vice President Schedule I to Certificate Principal Amount Series A Series B Series C Certificates Certificates Certificates with a with a with a Sinking Fund Maturity of Maturity of Maturity of Redemption Date January 15, 2017 January 15, 2018 January 15, 2014 - --------------------------- --------------------- --------------------- --------------------- July 15, 1998 0.00 0.00 0.00 January 15, 1999 0.00 0.00 2,431,531.00 July 15, 1999 748,202.00 147,200.00 508,981.00 January 15, 2000 748,267.00 280,600.00 802,524.00 July 15, 2000 0.00 0.00 0.00 January 15, 2001 748,266.00 280,600.00 521,645.00 July 15, 2001 0.00 0.00 0.00 January 15, 2002 748,267.00 280,600.00 643,430.00 July 15, 2002 0.00 0.00 0.00 January 15, 2003 748,267.00 280,600.00 774,902.00 July 15, 2003 0.00 0.00 0.00 January 15, 2004 748,266.00 280,600.00 1,034,047.00 July 15, 2004 0.00 0.00 0.00 January 15, 2005 748,267.00 1,258,198.00 94,728.00 July 15, 2005 0.00 0.00 0.00 January 15, 2006 748,267.00 1,412,649.00 0.00 July 15, 2006 0.00 0.00 0.00 January 15, 2007 748,266.00 1,366,709.00 0.00 July 15, 2007 0.00 0.00 0.00 January 15, 2008 748,267.00 1,008,514.00 0.00 July 15, 2008 0.00 0.00 0.00 January 15, 2009 832,209.00 2,100,026.00 0.00 July 15, 2009 0.00 0.00 0.00 January 15, 2010 2,735,672.00 0.00 0.00 July 15, 2010 0.00 0.00 0.00 January 15, 2011 2,822,009.00 0.00 0.00 July 15, 2011 0.00 0.00 0.00 January 15, 2012 2,958,343.00 0.00 0.00 July 15, 2012 0.00 0.00 0.00 January 15, 2013 3,101,317.00 0.00 0.00 July 15, 2013 0.00 0.00 0.00 January 15, 2014 91,784.00 0.00 5,079,212.00 July 15, 2014 0.00 0.00 0.00 January 15, 2015 5,613,721.00 0.00 0.00 July 15, 2015 0.00 0.00 0.00 January 15, 2016 6,013,992.00 0.00 0.00 July 15, 2016 35,769.00 0.00 0.00 January 15, 2017 4,977,582.00 1,263,276.00 0.00 July 15, 2017 0.00 271,269.00 0.00 January 15, 2018 0.00 3,385,159.00 0.00
SCHEDULE I [Reserved] SCHEDULE II DEFINITIONS (FEDERAL EXPRESS CORPORATION TRUST NO. N584FE) GENERAL PROVISIONS The following terms shall have the following meanings for all purposes of the Operative Agreements (other than the Intercreditor Agreement and the Liquidity Facilities) referred to below, unless otherwise defined in an Operative Agreement or the context thereof shall otherwise require. In the case of any conflict between the provisions of this Schedule and the provisions of any Operative Agreement, the provisions of such Operative Agreement shall control the construction of such Operative Agreement. Unless the context otherwise requires, (i) references to agreements shall be deemed to mean and include such agreements as amended and supplemented from time to time, and (ii) references to parties to agreements shall be deemed to include the successors and permitted assigns of such parties. DEFINED TERMS: Additional Insured. As defined in Article 13 of the Lease. Aeronautics Authority. As appropriate, the Federal Aviation Administration and/or the Administrator of the Federal Aviation Administration, any successor to the former United States Civil Aeronautics Board, or any Person, governmental department, bureau, commission or agency located in the United States succeeding to the functions of any of the foregoing. Affidavits. The affidavits of citizenship of the Owner Trustee and the Owner Participant. Affiliate. With respect to any Person, any other Person directly or indirectly controlling, controlled by or under common control with such Person. For the purposes of this definition, "control" (including "controlled by" and "under common control with") shall mean the power, directly or indirectly, to direct or cause the direction of the management and policies of such Person whether through the ownership of voting securities or by contract or otherwise. In no event shall the Owner Trustee or the Lessor be deemed an Affiliate of the Owner Participant. After-Tax Basis. A basis such that any payment received or deemed to have been received by a Person shall be supplemented by a further payment to such Person so that the sum of the two payments, after deduction of all Taxes resulting from the receipt or accrual of such payments, shall be equal to the payment received or deemed to have been received. In the case of amounts payable to the Lessor, the Owner Participant, or any corporate Affiliate of the Owner Participant, it shall be presumed that such Person is at all times subject to Federal income tax at the maximum marginal rate generally applicable to corporations from time to time and actual state, local and foreign income taxes. Air Carrier. Any U.S. Air Carrier and any "foreign air carrier" (as defined in the Transportation Code) as to which there is in force a permit granted under Section 41302 of the Transportation Code. Aircraft. The Airframe to be sold by the Lessee to the Owner Trustee pursuant to the Participation Agreement and to be leased under the Lease (or any permitted substitute airframe thereunder) together with three Engines (or any Replacement Engine or Engines) whether or not any of such initial or Replacement Engines may from time to time be installed on such Airframe or may be installed on any other airframe or on any other aircraft, including any aircraft substituted pursuant to Section 11.03 of the Lease. Airframe. The McDonnell Douglas MD-11F aircraft (excluding the Engines or engines from time to time installed thereon) to be leased by the Lessor to the Lessee pursuant to the Lease and the initial Lease Supplement and having the United States FAA Registration Number and manufacturer's serial number specified in the initial Lease Supplement, including (i) all Parts in respect thereof and (ii) any Replacement Airframe which may be substituted pursuant to Section 11.03 of the Lease. Amendment. The Amendment Agreement No. 1 to Trust Indenture and Security Agreement (Federal Express Corporation Trust No. N584FE) dated September 30, 1997 between the Indenture Trustee and the Owner Trustee. Ancillary Agreement I. The Ancillary Agreement I (Federal Express Corporation Trust No. N584FE), dated the Delivery Date, among the Lessee, the Owner Trustee, not in its individual capacity, but solely as Owner Trustee, the Owner Participant and the Indenture Trustee not in its individual capacity, but solely as Indenture Trustee, as originally executed or as amended, modified or supplemented with the consent of all the parties thereto. Application. The application for registration of the Aircraft with the FAA in the name of the Owner Trustee. Appraisal. The report prepared by BK Associates, Inc. and to be delivered to the Owner Participant (with a copy of such report to the Lessee) on the Delivery Date pursuant to Section 4.01(n) of the Participation Agreement. Average Life Date. For any Certificate, the date which follows the prepayment date by a period equal to the Remaining Weighted Average Life of such Certificate. Bankruptcy Code. The Federal Bankruptcy Code of 1978, as amended, and any successor thereto. Bankruptcy Default. An event specified in Section 16.01(e), (f) or (g) of the Lease which either does or, with the giving of notice or lapse of time or both, would constitute an Event of Default. Basic Rent. The aggregate periodic rent payable for the Aircraft throughout the Basic Term pursuant to Section 3.02 of the Lease, adjusted pursuant to Article 3 of the Lease. Basic Term. The period commencing at the beginning of the day on the Delivery Date and ending at the end of the day on the day immediately preceding the date 22 years from the Delivery Date, or such earlier date on which the Lease shall be terminated as provided therein. Beneficial Interest. The interest of the Owner Participant (or the Initial Owner Participant, as the case may be) under the Trust Agreement. Bills of Sale. Collectively, the FAA Bill of Sale and the Warranty Bill of Sale. Business Day. Except as provided in the next succeeding sentence, any day other than a Saturday or Sunday or day on which commercial banks are authorized or required to close in New York, New York, Albany, New York, Memphis, Tennessee and the city in the United States in which the office or agency is maintained by the Pass Through Trustee for the payment of the Pass Through Certificates, and after the Lien of the Indenture has been discharged, Hartford, Connecticut. With respect to notices and other communications to the Lessee, Business Day shall mean any day other than a Saturday, Sunday or day on which commercial banks are authorized to close in New York, New York and Memphis, Tennessee. Certificate Closing Date. May 28, 1997. Certificates. The Equipment Trust Certificates (Federal Express Corporation Trust No. N584FE), issued by the Owner Trustee pursuant to the Indenture and any certificate issued in exchange therefor or replacement thereof pursuant to the Indenture. Change in Tax Law. Any change in the Code or the Treasury regulations promulgated thereunder or the publication of any revenue ruling, revenue procedure or any informational release by the Internal Revenue Service or the Department of Treasury after execution of the Participation Agreement but on or before the Delivery Date, either of which would change or would allow a change in the tax assumptions or structure upon which the lease economics in the Commitment Letter were based (for example, but not limited to, the ability of the Lessor to incorporate a lessor-paid interim), provided that the Owner Participant or the Lessee has notified the other party of such change in writing prior to the Delivery Date. Citizen of the United States. A citizen of the United States as defined in Section 40102(a)(15) of the Transportation Code, or any analogous part of any successor or substituted legislation or regulation at the time in effect. Commitment Letter. Has the meaning specified in Section 3.02(a) of the Participation Agreement. Class A Liquidity Provider. Has the meaning specified in Section 1.01 of the Intercreditor Agreement. Class B Liquidity Provider. Has the meaning specified in Section 1.01 of the Intercreditor Agreement. Code. Except as otherwise provided, references to the Code shall mean the Internal Revenue Code of 1986, as amended from time to time. Collateral Account. The deposit account established and maintained pursuant to Section 2.13 of the Indenture. Collateral Account Control Agreement. The Collateral Account Control Agreement dated as of May 1, 1997 among State Street Bank and Trust Company, the Indenture Trustee and the Owner Trustee. Commitment. The amount of the Owner Participant's participation in the Purchase Price required to be made available or paid on the Delivery Date, as provided in Section 3.02 of the Participation Agreement and as set forth in Schedule I of the Participation Agreement. Corporate Trust Administration. The Corporate Trust Administration office of the Owner Trustee located at 225 Asylum Street, Goodwin Square, Hartford, Connecticut 06103, Attention: Corporation Trust Administration, or such other office at which the Owner Trustee's corporate trust business shall be administered which the Owner Trustee shall have specified by notice in writing to the Lessee, the Owner Participant and the Indenture Trustee. Corporate Trust Department. The Corporate Trust Department office of the Indenture Trustee located at 79 South Main Street, Salt Lake City, Utah 84111, Attention: Corporate Trust Department, or such other office at which the Indenture Trustee's corporate trust business shall be administered which the Indenture Trustee shall have specified by notice in writing to the Lessee, the Owner Participant and the Owner Trustee. CRAF Program. Has the meaning specified in Section 7.01(f) of the Lease. Cut-Off Date. April 15, 1998. Debt Portion. The amount specified as such on Schedule I to the Participation Agreement. Debt Rate. The weighted average (based on Outstanding principal amount) rate of interest on the Certificates issued pursuant to the Indenture. Default. Any event or condition which, with the lapse of time or the giving of notice, or both, would constitute an Event of Default. Delivery Date. The date on which the Aircraft is delivered and sold by the Lessee to the Lessor and leased by the Lessor to the Lessee under the Lease, which date shall also be the date of the initial Lease Supplement. Delivery Notice. Notice of the Aircraft's Delivery Date, given by the Lessee as provided in Section 3.01 of the Participation Agreement and including any notice with respect to a postponed Delivery Date given by the Lessee pursuant to Section 3.03(c) of the Participation Agreement. EBO Date. Has the meaning specified in Section 4.02(a)(F) of the Lease. EBO Price. Has the meaning specified in Section 4.02(a)(F) of the Lease. Eligible Deposit Account. Either (a) a segregated account with an Eligible Institution or (b) a segregated trust account with the corporate trust department of a depository institution with corporate trust powers organized under the laws of the United States or any state thereof, or the District of Columbia, and whose deposits are insured by the Federal Deposit Insurance Corporation, provided that such institution also has a combined capital and surplus of at least $100,000,000 and a rating of A or better from the Thomson Bank Watch. Eligible Institution. A depository institution organized under the laws of the United States or any one of the states thereof, or the District of Columbia, or any domestic branch of a foreign bank, which in any such case at all times (a) has either (x) a long-term unsecured debt rating of at least Aa2 by Moody's or (y) a short-term certificate of deposit rating of P-1 by Moody's, (b) has either (x) a long-term unsecured debt rating of a least AA by S&P or (y) a short-term certificate of deposit rating of A-1+ by S&P and (c) is a member of the Federal Deposit Insurance Corporation. Engine. Each of the three General Electric CF6-80C2-D1F engines listed by its manufacturer's serial number in the initial Lease Supplement and leased pursuant to the Lease, whether or not from time to time installed on the Airframe or installed on any other airframe or on any other aircraft, and any Replacement Engine which may from time to time be substituted for an Engine pursuant to Section 7.02(a)(vii), 10.03, 11.03, 11.04 or 12.02 of the Lease, together with all Parts related thereto. Except as otherwise provided, at such time as a Replacement Engine shall be so substituted and the Engine for which the substitution is made shall be released from the Lien of the Indenture, such replaced Engine shall cease to be an "Engine" under the Lease. The term "Engines" means, as of any date of determination, all Engines then leased to the Lessee pursuant to the Lease. Engine Consent. The Engine Consent dated as of February 1, 1998, executed by the Engine Manufacturer. Engine Manufacturer. General Electric Company, a New York corporation. Engine Warranty Assignment. The Engine Warranty Assignment (Federal Express Corporation Trust No. N584FE), dated as of February 1, 1998, between the Lessor and the Lessee. ERISA. The Employee Retirement Income Security Act of 1974, as amended. ERISA Plan. As defined in Section 15.01(e)(viii) of the Participation Agreement. Estimated Expense Amount. Has the meaning specified in Section 10.01(a) of the Participation Agreement. Event of Default. Each of the events specified in Article 16 of the Lease. Event of Loss. Any of the following events with respect to the Aircraft, the Airframe or any Engine: (i)(A) loss of such property or its use due to theft or disappearance for a period in excess of 30 days (or such longer period not to exceed 60 days from the end of such 30 day period if and so long as the location of such property is known and the Lessee is pursuing the recovery thereof) or to the end of the Term, if less, unless such event constitutes an Event of Loss under clause (i)(B), clause (i)(C) or clause (ii) below, (B) loss of such property or its use due to the destruction thereof or (C) loss of such property or its use due to damage beyond economic repair or rendition of such property permanently unfit for normal use by Lessee for any reason whatsoever for a period in excess of 30 days; (ii) any damage to such property which results in an insurance settlement with respect to such property on the basis of a total loss, or constructive or compromised total loss; (iii) (1) condemnation, confiscation or seizure of, or requisition of title to such property by the Government, any foreign government or purported government or any agency or instrumentality thereof, or (2) condemnation, confiscation, or seizure of, or requisition or taking of, use of such property (A) by a foreign government, or instrumentality or agency of any such foreign government, or any purported government or instrumentality or agency thereof for a period in excess of 180 days or the end of the Term, if less, 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 or the Airframe or any 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; or (iv) as a result of any law, rule, regulation, order or other action by the Aeronautics Authority or other governmental body having jurisdiction, (A) the use of the Aircraft or Airframe in the normal course of air transportation of cargo shall have been prohibited 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 and desirable to permit the normal use of the Aircraft or Airframe, (B) the use of the Aircraft or Airframe shall have been prohibited for a period of twelve (12) consecutive months, unless the Lessee shall have conformed at least one McDonnell Douglas MD-11F series aircraft (but not necessarily the Aircraft or the Airframe) to the requirements of any such law, rule, regulation, order or other action and shall have commenced regular commercial use of such aircraft 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 or (C) the use of the Aircraft or Airframe shall have been prohibited for a period of twenty-four (24) months. The date of such Event of Loss shall be (s) the 30th day or the 90th day, as the case may be, following loss of such property or its use due to theft or disappearance; (t) the date of any destruction of such property; (u) the 30th day following the date of damage beyond economic repair or rendition of such property permanently unfit for normal use; (v) the date of any insurance settlement on the basis of a total loss or constructive or compromised total loss; (w) the date of any condemnation, confiscation, seizure or requisition of title of such property; (x) the 181st day following condemnation, confiscation, seizure or requisition for use of such property by a foreign government referred to in clause (iii)(2)(A) above and the date of such condemnation, confiscation, seizure or requisition in the case of any other foreign government or instrumentality or agency thereof; (y) the last day of the Term in the case of requisition for use of such property by the Government or (z) the last day of the 6 month, 12 month or 24 month period, referred to in clause (iv) above. An Event of Loss with respect to the Aircraft shall be deemed to have occurred if any Event of Loss occurs with respect to the Airframe. Excepted Payments. Collectively, (i) indemnity or other payments (and interest thereon to the extent provided in the Operative Agreements) paid or payable by the Lessee in respect of the Owner Participant, the Owner Trustee in its individual capacity, their Affiliates or any of their respective successors, permitted assigns, directors, officers, employees, servants and agents, pursuant to Article 8, 9, or 10 and Section 15.01 of the Participation Agreement or any indemnity hereafter granted to the Owner Participant or the Owner Trustee in its individual capacity pursuant to Section 7.01(f), Article 9, Section 11.03(a) or 13.01(b) of the Lease or Sections 6.03(b)(i)(F), 7.04(c), 7.05(c), 8.04 and 15.01 of the Participation Agreement, (ii) proceeds of public liability insurance (or government indemnities in lieu thereof) in respect of the Aircraft payable as a result of insurance claims paid for the benefit of, or losses suffered by, the Owner Trustee or the Indenture Trustee in their respective individual capacities or by the Owner Participant, or their respective successors, permitted assigns or Affiliates, (iii) proceeds of insurance maintained with respect to the Aircraft by the Owner Participant (whether directly or through the Owner Trustee) maintained in accordance with the provisions of but not required under Article 13 of the Lease, (iv) payments of Supplemental Rent by the Lessee in respect of any amounts payable under the Tax Indemnity Agreement, (v) any amounts payable by the Lessee to the Owner Participant or the Owner Trustee in its individual capacity, after the release thereof from the Lien of the Indenture, (vi) subject to Section 3.05 of the Lease, payments constituting increases in Basic Rent attributable to payments arising pursuant to Section 5 of the Tax Indemnity Agreement, (vii) all costs and expenses payable or reimbursable by the Lessee to the Owner Participant or the Owner Trustee pursuant to Section 17.04 of the Lease, (viii) the right to retain amounts distributed to the Owner Participant under Article V of the Indenture and (ix) any right to demand, collect or otherwise receive and enforce the payment of any amount described in clauses (i) through (viii) above and any interest or late charges on the foregoing. Expense; Expenses. Have the meaning specified in Section 9.01(a) of the Participation Agreement. FAA. The United States Federal Aviation Administration and any successor agency or agencies thereto. FAA Bill of Sale. The bill of sale for the Airframe on AC Form 8050-2, or such other form as may be approved by the Aeronautics Authority, executed by the Lessee in favor of the Owner Trustee and to be dated the Delivery Date. Fair Market Renewal Term. A term with respect to which the Lessee has exercised its option to renew the Lease pursuant to the second paragraph of Section 4.01(a) thereof and with respect to which the conditions set forth in the third paragraph of Section 4.01(a) are met. Fair Market Rental. An amount determined on the basis of, and equal in amount to, the rental which would be obtained in an arm's-length transaction between an informed and willing lessee and an informed and willing lessor unaffiliated with such lessee, neither being under any compulsion to lease. In such determination, except for purposes of Section 17.01 of the Lease, 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 and Fair Market Rental shall be determined in accordance with the provisions of Section 4.03 of the Lease. For purposes of Section 17.01 of the Lease, such determination shall be made on an "as is, where is" basis by a qualified independent appraiser selected by the Lessor and the costs and expenses of the appraisal shall be borne by the Lessee, unless the Lessor does not obtain possession of the Aircraft pursuant to such Section 17.01, in which case an appraiser shall not be appointed and such Fair Market Rental shall be deemed to be zero. Fair Market Value. An amount determined on the basis of, and equal in amount to, the value which would be obtained in an arm's-length transaction between an informed and willing purchaser under no compulsion to buy and an informed and willing seller unaffiliated with such purchaser and under no compulsion to sell, assuming the Aircraft (or other property) is unencumbered by the Lease. In such determination, except for purposes of Section 17.01 of the Lease, 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 and Fair Market Value shall be determined in accordance with the provisions of Section 4.03 of the Lease. For purposes of Section 17.01 of the Lease, such determination shall be made on an "as is, where is" basis by a qualified independent appraiser selected by the Lessor and the costs and expenses of the appraisal shall be borne by the Lessee, unless the Lessor does not obtain possession of the Aircraft free and clear of all Liens and unencumbered by the Lease pursuant to such Section 17.01, in which case an appraiser shall not be appointed and such Fair Market Value shall be deemed to be zero. Federal Aviation Administration. The United States Federal Aviation Administration and any successor agency or agencies thereto. FedEx. Federal Express Corporation. Final Drawing. Has the meaning specified in Section 1.01 of the Intercreditor Agreement. Fixed Renewal Rent. Semi-annual payments of rent during the Fixed Renewal Term equal to the amount set forth in Ancillary Agreement I. Fixed Renewal Term. A renewal term or terms provided for under the second paragraph of Section 4.01(a) of the Lease. FSB. First Security Bank, National Association, a national banking association. Government. The United States of America or an agency or instrumentality thereof the obligations of which bear the full faith and credit of the United States of America. GTA. The General Terms Agreement dated as of July 3, 1991 between the Engine Manufacturer and the Lessee related to the purchase by the Lessee of the Engines as originally executed or as modified, amended or supplemented in accordance with the terms thereof, but only insofar as the General Terms Agreement relates to the Engines, to the extent assigned to the Owner Trustee pursuant to the Engine Warranty Assignment. Holder of a Certificate; Certificate Holder; Holder. As of any particular time, the Person in whose name a Certificate shall be registered (but not including the holder of any Pass Through Certificate). Indemnitee. Each of SSB, in its individual capacity and as Owner Trustee and Lessor, the Subordination Agent, in its individual capacity and in its capacity as Subordination Agent, each Liquidity Provider, the Owner Participant, the Indenture Trustee, 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 and the Trust Indenture Estate. Neither the Pass Through Trustee nor any holder of a Pass Through Certificate shall be deemed to be an Indemnitee. Indenture. The Trust Indenture and Security Agreement (Federal Express Corporation Trust No. N584FE), dated as of May 1, 1997, as amended by the Amendment and as amended and restated as of February 1, 1998, between the Lessor and the Indenture Trustee, as supplemented by the Indenture and Security Agreement Supplement. Indenture and Security Agreement Supplement. The Indenture and Security Agreement Supplement No. 1 (Federal Express Corporation Trust No. N584FE) to be dated the Delivery Date, substantially in the form of Exhibit A to the Indenture. Indenture Default. Any event or condition which, with the lapse of time or the giving of notice, or both, would constitute an Indenture Event of Default. Indenture Documents. Has the meaning specified in the Granting Clause of the Indenture. Indenture Event of Default. Each of the events specified in Section 7.01 of the Indenture. Indenture Trustee. First Security Bank, National Association, a national banking association, not in its individual capacity but solely as Indenture Trustee under the Indenture. Indenture Trustee's Liens. Any Lien against, on or with respect to the Aircraft, the Lessor's Estate or the Trust Indenture Estate or any part thereof resulting from (i) claims against the Indenture Trustee not related to the administration of the Trust Indenture Estate or any transactions pursuant to the Indenture or any document included in the Trust Indenture Estate, (ii) any act or omission of the Indenture Trustee which is not related to the transactions contemplated by the Operative Agreements or is in violation of any of the terms of the Operative Agreements or (iii) Taxes imposed against the Indenture Trustee in its individual capacity or its Affiliates against which the Lessee has not indemnified (and is not obligated to indemnify) the Indenture Trustee in such capacity. 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, "Independent Investment Banker" shall mean such an institution appointed by the Indenture Trustee. Initial Owner Participant. Federal Express Corporation, a Delaware corporation. Intercreditor Agreement. The Intercreditor Agreement dated as of May 1, 1997, among the Pass Through Trustee, the Class A Liquidity Provider, the Class B Liquidity Provider and the Subordination Agent. Interest Drawing. Has the meaning specified in Section 1.01 of the Intercreditor Agreement. Invoice. The invoice for the Aircraft given by the Lessee to the Lessor. Lease. The Lease Agreement (Federal Express Corporation Trust No. N584FE) dated as of May 1, 1997, as amended and restated as of February 1, 1998, entered into by the Lessor and the Lessee concurrently with the execution and delivery of the Indenture, including, without limitation, supplementation by one or more Lease Supplements entered into pursuant to the applicable provisions of the Lease. Lease Supplement. The Lease Supplement No. 1 (Federal Express Corporation Trust No. N584FE) to be dated the Delivery Date, substantially in the form of Exhibit A to the Lease. Lease Term. The period commencing on the Delivery Date and ending at the end of the Basic Term. Lessee. Federal Express Corporation, a Delaware corporation. Lessee Documents. Has the meaning set forth in Section 6.01(b) of the Participation Agreement. Lessor. State Street Bank and Trust Company of Connecticut, National Association, a national banking association, not in its individual capacity but solely as Owner Trustee under the Trust Agreement. Lessor's Estate. All estate, right, title and interest of the Owner Trustee in and to the Collateral Account, the Liquid Collateral, the Aircraft, the Lease, any Lease Supplement, the Participation Agreement, the Bills of Sale, the Modification Agreement, the GTA, the Engine Warranty Assignment, the Engine Consent, any warranty with respect to the Airframe and the Engines, all amounts of Basic Rent, Renewal Rent and Supplemental Rent, including without limitation, insurance proceeds (other than insurance proceeds payable to or for the benefit of either the Owner Trustee in its individual capacity or the Owner Participant) and requisition, indemnity or other payments of any kind for or with respect to the Aircraft (except amounts owing to the Owner Participant or 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 not include any Excepted Payment. Lessor's Liens. Liens against, on or with respect to the Aircraft, the Lessor's Estate or the Trust Indenture Estate or any part thereof, title thereto or any interest therein arising as a result of (i) claims against the Lessor, in its individual capacity or as Owner Trustee, the Owner Participant or any Affiliate of the Owner Participant, in each case not related to the transactions contemplated by the Operative Agreements, (ii) acts or omissions of the Lessor in its individual capacity or as Owner Trustee, and, in the case of the Lessor in its individual capacity, arising from its gross negligence or willful misconduct either not related to the transactions contemplated by or expressly prohibited under the Operative Agreements and any act or omission of the Owner Participant or any Affiliate 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, or the Owner Participant or any Affiliate of the Owner Participant, the Lessor's Estate or the trust created by the Trust Agreement which are not required to be indemnified against by the Lessee pursuant to the Tax Indemnity Agreement or by reason of Section 8.01(b) or 9.01(b) of the Participation Agreement, or (iv) claims against the Lessor or the Owner Participant arising from the voluntary transfer by the Lessor or the Owner Participant of its interests in the Aircraft other than a transfer of the Aircraft pursuant to Section 4.02(a) or Article 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. Lien. Any mortgage, pledge, lien, charge, encumbrance, lease or security interest or other similar interest. Liquid Collateral. All amounts and securities deposited from time to time in the Collateral Account and all the products, investments, earnings and proceeds of the foregoing, including, but not limited to, all proceeds of the investment or conversion thereof, voluntary or involuntary, into cash, Specified Investments or other property, all rights to payment of any and every kind, and other forms of obligations, and instruments and other property which at any time constitute all or part or are included in the proceeds of any of the foregoing. Liquidity Facility. Has the meaning specified in Section 1.01 of the Intercreditor Agreement. Liquidity Provider. Has the meaning specified in Section 1.01 of the Intercreditor Agreement. Losses. Has the meaning specified in Section 17.02(a) of the Participation Agreement. Loss Payee. Has the meaning specified in Section 13.02(b)(i) of the Lease. Majority in Interest of Certificate Holders. As of a particular date of determination, the Holders of more than 50% of the aggregate unpaid principal amount of all Certificates outstanding as of such date excluding for purposes of this definition any Certificates held by (i) the Owner Trustee or the Owner Participant unless all Certificates then outstanding shall be held by such Owner Participant, (ii) the Lessee or (iii) any Affiliate of any thereof. Make-Whole Premium. An amount determined as of the 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, if any, of (i) the present value of the remaining scheduled payments of such principal amount or portion thereof and interest thereon (excluding interest accrued from the immediately preceding Payment Date to such Prepayment Date 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 the Treasury Yield, all as determined by the Independent Investment Banker over (ii) the outstanding principal amount of such Certificate plus accrued interest. Mandatory Document Terms. The terms set forth on Schedule V to the Original Participation Agreement. Mandatory Economic Terms. The terms set forth on Schedule VI to the Original Participation Agreement. Manufacturer. McDonnell Douglas Corporation, a Maryland corporation. 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 Aircraft Modification Agreement dated as of December 1, 1995 between the Lessee and the Manufacturer providing for the refurbishing and reconfiguration of the Aircraft including any warranties relating thereto, but only to the extent that the foregoing relates to the Aircraft, to the extent assigned to the Owner Trustee pursuant to the Warranty Bill of Sale. Moody's. Moody's Investors Service, Inc. Net Present Value of Rents. The net present value, as of the Delivery Date, of Basic Rent set forth in Schedule II of the Lease, discounted at a rate per semi-annual period equal to the Debt Rate. 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, (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. Officer's Certificate. When delivered pursuant to the Indenture, a certificate signed by a Responsible Officer of the Lessee or the Owner Trustee, as the case may be, and delivered to the Indenture Trustee. Each such certificate shall include the statements provided for in Section 15.07 of the Indenture. Operative Agreements. The Participation Agreement, the Trust Agreement, the Bills of Sale, the Modification Agreement, the GTA, the Engine Warranty Assignment, the Lease, the Lease Supplement, the Owner Participant Guaranty, if any, the Owner Trustee Guaranty, if any, the Ancillary Agreement I, the Certificates outstanding at the time of reference, the Indenture, the Indenture and Security Agreement Supplement, the Engine Consent, each Liquidity Facility, the Intercreditor Agreement, the Collateral Account Control Agreement and the Tax Indemnity Agreement. Opinion of Counsel. When delivered pursuant to the Indenture, a written opinion of legal counsel, who in the case of counsel (a) for the Lessee may be (i) an attorney employed by the Lessee who is generally empowered to deliver such written opinions, (ii) Davis Polk & Wardwell or a successor firm or (iii) other counsel designated by the Lessee and reasonably satisfactory to the Indenture Trustee and (b) for the Owner Trustee or the Indenture Trustee, an attorney selected by such Person and, in the case of the Owner Trustee, reasonably satisfactory to the Indenture Trustee. Original Agreements. The documents and instruments delivered on the Certificate Closing Date in connection with the transactions contemplated by the Original Participation Agreement. Original Indenture. The Trust Indenture and Security Agreement (Federal Express Corporation Trust No. N584FE), dated as of May 1, 1997, between the Owner Trustee and the Indenture Trustee originally executed and delivered on the Certificate Closing Date and amended by the Amendment. Original Lease. The Lease Agreement (Federal Express Corporation Trust No. N584FE), dated as of May 1, 1997, between the Owner Trustee as lessor, and the Lessee originally executed and delivered on the Certificate Closing Date. Original Participation Agreement. The Participation Agreement (Federal Express Corporation Trust No. N584FE), dated as of May 1, 1997, among the Lessee, the Initial Owner Participant, the Indenture Trustee, the Owner Trustee, the Pass Through Trustee and the Subordination Agent originally executed and delivered on the Certificate Closing Date. Original Trust Agreement. The Trust Agreement (Federal Express Corporation Trust No. N584FE), dated as of May 1, 1997, between the Initial Owner Participant and the Owner Trustee originally executed and delivered on the Certificate Closing Date. Outstanding. When used with respect to Certificates, as of the date of determination and subject to the provisions of Section 10.04 of the Indenture, all Certificates theretofore executed and delivered under the Indenture, with the exception of the following: (i) Certificates theretofore cancelled by the Indenture Trustee or delivered to the Indenture Trustee for cancellation pursuant to Section 2.08 of the Indenture or otherwise; (ii) Certificates for which prepayment money in the necessary amount has been theretofore deposited with the Indenture Trustee in trust for the Holders of such Certificates pursuant to Section 14.01 of the Indenture; provided, that if such Certificates are to be prepaid, notice of such prepayment has been duly given pursuant to the Indenture or provision therefor satisfactory to the Indenture Trustee has been made; and (iii) Certificates in exchange for or in lieu of which other Certificates have been executed and delivered pursuant to Article II of the Indenture. Owner Participant. The Person to whom on the Delivery Date the Initial Owner Participant shall transfer its Beneficial Interest pursuant to Section 3.02 of the Original Participation Agreement and any successors thereto, and any Person to which the Owner Participant transfers, in accordance with the Trust Agreement, its right, title and interest in and to the Operative Agreements and the Lessor's Estate. Owner Participant Guarantor. The provider, if any, of an Owner Participant Guaranty. Owner Participant Guaranty. Any guaranty delivered in compliance with Article 5 of the Trust Agreement. Owner Trustee. SSB, not in its individual capacity except as otherwise expressly stated, but solely as Owner Trustee under the Trust Agreement. Owner Trustee Guarantor. The provider, if any, of an Owner Trustee Guaranty. Owner Trustee Guaranty. Any guaranty delivered in compliance with Section 11.01(b)(ii) of the Participation Agreement. Owner's Economic Return. The Owner Participant's anticipated net after-tax yield and aggregate after-tax cash in the Basic Term, utilizing the multiple investment sinking fund method of analysis, computed on the basis of the same methodology and assumptions as were utilized by the Owner Participant in determining Basic Rent, Stipulated Loss Value and Termination Value percentages and EBO Price, as such assumptions may be adjusted for events which have been the basis of adjustments to Rent pursuant to Section 3.04 of the Lease. Participation Agreement. The Participation Agreement (Federal Express Corporation Trust No. N584FE), dated as of May 1, 1997, as amended and restated as of February 1, 1998, among the Lessee, the Owner Trustee not in its individual capacity except as otherwise expressly provided therein, but solely as owner trustee, the Owner Participant, the Indenture Trustee not in its individual capacity except as otherwise expressly provided therein, but solely as indenture trustee, the Pass Through Trustee not in its individual capacity except as otherwise expressly provided therein, but solely as pass through trustee and the Subordination Agent not in its individual capacity except as otherwise expressly provided therein, but solely as subordination agent. Parts. All appliances, parts, components, instruments, appurtenances, accessories, furnishings and other equipment of whatever nature (other than complete Engines or engines) which may from time to time be incorporated or installed in or attached to the Airframe or any Engine or, prior to replacement thereof in accordance with the Lease, which may be removed therefrom. Pass Through Agreement. The Pass Through Trust Agreement dated as of May 1, 1997, between the Lessee and the Pass Through Trustee. Pass Through Certificates. Any of the Pass Through Certificates, 1997-1-A, the Pass Through Certificates, 1997-1-B or the Pass Through Certificates, 1997-1-C, in each case as issued by the related Pass Through Trust; and "Pass Through Certificates" means all of the Pass Through Certificates issued by each of the Pass Through Trusts. Pass Through Closing Date. May 28, 1997. Pass Through Trust. The Federal Express Corporation 1997-1 Pass Through Trust Class A, Federal Express Corporation 1997-1 Pass Through Trust Class B and Federal Express Corporation 1997-1 Pass Through Trust Class C, in each case formed pursuant to the related Series Supplement in accordance with the Pass Through Agreement; and "Pass Through Trusts" means all of such Pass Through Trusts. Pass Through Trustee. First Security Bank, National Association, a national banking association, in its capacity as Pass Through Trustee under the Pass Through Agreement and each Pass Through Trust. Past Due Rate. In respect of (A) any amount payable to the Owner Participant or the Owner Trustee a rate per annum during the period from and including the due date to but excluding the date on which such amount is paid in full equal to 2% plus the Debt Rate and (B) any principal of or interest on any Certificate or any other amount payable under the Indenture, any Certificate or any other Operative Agreement that is not paid when due (whether at Maturity, by acceleration, by optional or mandatory prepayment or otherwise) to any Holder, the Indenture Trustee or the Pass Through Trustee, a rate per annum during the period from and including the due date to but excluding the date on which such amount is paid in full equal to (i) in the case of any such amount payable to the Holder of any Certificate, 2% plus the interest rate applicable to such Certificate and (ii) in the case of any other such amount, 2% plus the Debt Rate. Payment Date. Each January 15 and July 15 commencing on July 15, 1997. Payment Default. Any event specified in Section 16.01(a) or 16.01(b) of the Lease which with the giving of notice or lapse of time or both would constitute an Event of Default. Permitted Investments. Those investments enumerated in Section 23.01(a) (i), (ii), (iii) and (iv) of the Lease. Person. Any individual, sole proprietorship, partnership, joint venture, joint stock company, trust, unincorporated organization, association, corporation, institution, entity or government (federal, state, local, foreign or any agency, instrumentality, division or body thereof). Pool Balance. Has the meaning specified in Article I to the Series Supplement. Pool Factors. Has the meaning specified in Article I to the Series Supplement. Preliminary Notice. Has the meaning specified in Section 4.01(a) of the Lease. Premium Termination Date. With respect to the Series A Certificates, December 27, 2011, with respect to the Series B Certificates, February 5, 2010 and with respect to the Series C Certificates, March 22, 2007. Prepayment Date. Has the meaning specified in Section 6.02(b) of the Indenture. Prepayment Price. Has the meaning specified in Section 6.02(b) of the Indenture. Principal Amount. With respect to a Certificate means the stated original principal amount of such Certificate and, with respect to all Certificates, means the aggregate stated original principal amounts of all Certificates. Property. Any right or interest in or to property of any kind whatsoever, whether real, personal or mixed and whether tangible or intangible. Proposed Termination Date. Has the meaning specified in Section 10.01(a) of the Lease. Purchase Price. The amount specified as such in Ancillary Agreement I. Rating Agencies. Collectively, at any time, each nationally recognized rating agency which shall have been requested to rate the Pass Through Certificates and which shall then be rating the Pass Through Certificates. The initial Rating Agencies will be Moody's and S&P. Rating Agency Confirmation. With respect to any Operative Agreement that is to be modified in any material respect on the Delivery Date or the Transfer Date, if applicable, a written confirmation from each of the Rating Agencies that the use of such Operative Agreement with such modifications would not result in (i) a reduction of the rating for any Class of Pass Through Certificates below the then current rating for such Class of Pass Through Certificates or (ii) a withdrawal or suspension of the rating of any Class of Pass Through Certificates. Record Date. With respect to Payment Dates under the Indenture (except a date for payment of defaulted interest), December 31 for January 15 Payment Dates and June 30 for July 15 Payment Dates, whether or not such date is a Business Day. Recourse Amount. Has the meaning specified in Section 17.10 of the Participation Agreement. Refinancing. A non-recourse loan to the Lessor arranged pursuant to Section 15.01 of the Participation Agreement. Register. Has the meaning set forth in Section 3.02 of the Indenture. Registrar. Has the meaning set forth in Section 3.02 of the Indenture. Regulation D. Regulation D of the Board of Governors of the Federal Reserve System (or any successor), as the same may be modified and supplemented and in effect from time to time. Remaining Weighted Average Life. On a given date with respect to any Certificate the number of days equal to the quotient obtained by dividing (i) the sum of each of the products obtained by multiplying (a) the amount of each then remaining scheduled payment of principal of such Certificate by (b) the number of days from and including such prepayment date to but excluding the dates on which each such payment of principal is scheduled to be made; by (ii) the then outstanding principal amount of such Certificate. Renewal Rent. The amount payable by the Lessee as rent in accordance with Section 4.01 of the Lease during any Renewal Term. Renewal Term. Any Fixed Renewal Term or Fair Market Renewal Term with respect to which the Lessee has exercised its option to renew the Lease pursuant to Section 4.01(a) thereof. Rent. All payments due from the Lessee under the Lease as Basic Rent, Renewal Rent and Supplemental Rent, collectively. Rent Payment Date. February 26, 2020 and each January 15 and July 15 commencing on July 15, 1998, and continuing thereafter during the Term. Replacement Aircraft. Any aircraft substituted for the Aircraft pursuant to Section 11.03(a) of the Lease. Replacement Airframe. Has the meaning set forth in Section 11.03 of the Lease. Replacement Engine. A General Electric CF6-80C2-D1F engine (or an engine of the same or another manufacturer) of the same or of equal or greater value, remaining useful life and utility as the Engine being replaced, together with all Parts relating to such engine; provided, however, that if such replacement engine is not a General Electric CF6-80C2-D1F engine, such replacement engine must then be commonly used in the commercial aviation industry on McDonnell Douglas MD-11 airframes. Responsible Officer. With respect to the Owner Trustee (except for purposes of the Trust Agreement in which case the definition of Responsible Officer set forth in Section 3.10 of the Trust Agreement is applicable) or the Indenture Trustee, any officer in its Corporate Trust Department), as the case may be, designated by such Person to perform obligations under the Operative Agreements, and with respect to any other party, any corporate officer or (except in the case of the Owner Participant) other employee of a party who, in the normal performance of his or her operational responsibilities, with respect to the subject matter of any covenant, agreement or obligation of such party pursuant to any Operative Agreement, would have responsibility for and knowledge of such matter and the requirements of any Operative Agreement with respect thereto. S&P. Standard & Poor's Ratings Group. Scheduled Delivery Date. The Delivery Date specified in the Delivery Notice pursuant to Section 3.01 of the Participation Agreement. SEC. The Securities and Exchange Commission of the United States and any successor agencies or authorities. Secured Obligations. Has the meaning specified in the Granting Clause of the Indenture. Securities Act. The Securities Act of 1933, as amended. Series "A" or "Series A Certificates". Certificates issued and designated as "Series A" under the Indenture, in the Principal Amount and maturities and bearing interest as specified in Exhibit B to the Indenture under the heading "Series A". Series "B" or "Series B Certificates". Certificates issued and designated as "Series B" under the Indenture, in the Principal Amount and maturities and bearing interest as specified in Exhibit B to the Indenture under the heading "Series B". Series "C" or "Series C Certificates". Certificates issued and designated as "Series C" under the Indenture, in the Principal Amount and maturities and bearing interest as specified in Exhibit B to the Indenture under the heading "Series C". Series Supplements. The Series Supplement 1997-1-A, the Series Supplement 1997-1-B and the Series Supplement 1997-1-C, each dated the Certificate Closing Date, between the Lessee and the Pass Through Trustee. Sinking Fund Redemption Date. Has the meaning specified in Section 6.06 of the Indenture. Sinking Fund Redemption Price. Has the meaning specified in Section 6.06 of the Indenture. Special Aviation Counsel. Daugherty, Fowler & Peregrin. Special Distribution Date. Has the meaning specified in Article I to the Series Supplement. Specified Investments. Shall mean (a) direct obligations of the United States of America or obligations fully guaranteed by the United States of America; (b) commercial paper rated A-1/P-1 by S&P and Moody's, respectively or, if such ratings are unavailable, rated by any nationally recognized rating organization in the United States equal to the highest rating assigned by such rating organization; (c) investments in negotiable certificates of deposit, time deposits, banker's acceptances, commercial paper or other direct obligations of, or obligations guaranteed by, commercial banks organized under the laws of the United States or of any political subdivision thereof (or any U.S. branch of a foreign bank) with issuer ratings of at least B/C by Thomson Bankwatch, having maturities no later than 90 days following the date of such investment; (d) overnight federal funds transactions with members of the Federal Reserve System arranged by federal funds brokers; or (e) overnight repurchase agreements with respect to the securities described in clause (a) above entered into with an office of a bank or trust company which is located in the United States of America or any bank or trust company which is organized under the laws of the United States or any state thereof and has capital, surplus and undivided profits aggregating at least $500 million. SSB. State Street Bank and Trust Company of Connecticut, National Association, a national banking association. Stipulated Loss Value. As of any Stipulated Loss Value Determination Date during the Basic Term, the amount determined by multiplying the Purchase Price by the percentage set forth in Schedule III of the Lease under the heading "Stipulated Loss Value Factor" opposite such date (as such Schedule III may be adjusted from time to time as provided in Section 3.04 of the Lease), and during any Renewal Term, the amount determined pursuant to Section 4.01(b) of the Lease. Notwithstanding any other provisions of the Lease, the Participation Agreement or the Indenture, each Stipulated Loss Value for the Aircraft shall be, under any circumstances and in any event, an amount, together with the arrears portion of Basic Rent due and owing through the date of payment of Stipulated Loss Value and not constituting an Excepted Payment, at least sufficient to pay in full as of such date of payment the aggregate unpaid principal amount of and accrued interest on the Certificates outstanding on such date of payment. Subject to the immediately preceding sentence, it is understood and agreed that the amounts set forth on Schedule III of the Lease, for Stipulated Loss Value Determination Dates other than Rent Payment Dates, fully reflect appropriate Basic Rent accruals and credits of unearned Basic Rent as of such Stipulated Loss Value Determination Date and, accordingly, no further accrual or credit shall be required whenever Stipulated Loss Value is to be calculated with reference to any such date. Stipulated Loss Value Determination Date. Each date set forth on Schedule III of the Lease under the heading "Stipulated Loss Value Date." Supplemental Rent. (a) All amounts, liabilities and obligations which the Lessee assumes or agrees to perform or pay under the Lease or under the Participation Agreement or Tax Indemnity Agreement or Ancillary Agreement I or any other Operative Agreement to SSB, the Lessor, the Owner Participant, the Indenture Trustee, the Subordination Agent, any Liquidity Provider or others, including, without limitation, payments of Stipulated Loss Value, EBO Price and amounts calculated by reference to Termination Value, and all amounts required to be paid by Lessee under the agreements, covenants and indemnities contained in the Lease or in the Participation Agreement or the Tax Indemnity Agreement or any other Operative Agreement, but excluding Basic Rent and (b) all amounts that the Owner Trustee is obligated to pay in accordance with clause (b) of the last paragraph of Section 2.04 of the Indenture. Tax. Shall have the meaning set forth in Section 8.01(a) of the Participation Agreement. Tax Indemnity Agreement. The Tax Indemnity Agreement (Federal Express Corporation Trust No. N584FE), dated as of February 1, 1998, between the Lessee and the Owner Participant. Term. The Basic Term and any Renewal Term unless the Lease is terminated earlier pursuant to its terms. Termination Date. A Rent Payment Date during the Basic Term that is on or after the seventh anniversary of the Delivery Date in the case of Article 10 of the Lease, and in the case of (i) Section 4.02(a)(A) of the Lease the Rent Payment Date falling on July 15, 2011 or January 15, 2014, as the case may be, (ii) Section 4.02(a)(D) or (E) of the Lease, a Rent Payment Date that is on or after the seventh anniversary of the Delivery Date and (iii) Section 4.02(a)(F) of the Lease, January 15, 2016. Termination Value. As of any Termination Date, the amount determined by multiplying the Purchase Price by the percentage set forth in Schedule IV of the Lease under the heading "Termination Value Factor" opposite such Termination Date (as such Schedule IV may be adjusted from time to time as provided in Section 3.04 of the Lease). Notwithstanding any other provisions of the Lease, the Participation Agreement or the Indenture, each Termination Value shall be, under any circumstances and in any event, an amount, together with the arrears portion of Basic Rent due and owing through the date of payment of any amount calculated by reference to Termination Value and not constituting an Excepted Payment, at least sufficient to pay in full as of such date of payment the aggregate unpaid principal amount of and accrued interest on the Certificates outstanding on such date of payment. Subject to the immediately preceding sentence, it is understood and agreed that the amounts set forth on Schedule IV of the Lease, for dates other than Rent Payment Dates, fully reflect appropriate Basic Rent accruals and credits of unearned Basic Rent and, accordingly, no further accrual or credit shall be required whenever Termination Value is to be calculated with reference to any such date. Transaction Costs. Those costs and expenses set forth in Section 10.01(a) of the Participation Agreement. Transportation Code. Title 49 of the United States Code, as amended and in effect on the date of the Lease or as subsequently amended, or any successor or substituted legislation at the time in effect and applicable, and the regulations promulgated pursuant thereto. Treasury Yield. At the time of determination with respect to any Certificate, the interest rate (expressed as a semi-annual equivalent and as a decimal and, in the case of United States Treasury bills, converted to a bond equivalent yield) determined to be the per annum rate equal to the semi-annual yield to maturity for United States Treasury securities maturing on the Average Life Date on such Certificate and trading in the public securities markets either as determined by interpolation between the most recent weekly average yield to maturity for two series of United States Treasury securities, trading in public securities markets, (i) one maturing as close as possible to, but earlier than, the Average Life Date of such Certificate and (ii) the other maturing as close as possible to, but later than, the Average Life Date of such Certificate. In each case as published in the most recent H.15(519) or, if a weekly average yield to maturity for United States Treasury securities maturing on the Average Life Date of such Certificate is reported on the most recent H.15 (519), such weekly average yield to maturity as published in such H.15(919). "H.15(519)" means the weekly statistical release designated as such, or any successor publication, published by the Board of Governors of the Federal Reserve System. The date of determination of a Make-Whole Premium will be the third Business Day prior to the applicable prepayment date and the "most recent H.15(519)" means the H.15(519) published prior to the close of business on the third Business Day prior to the applicable prepayment date. Trust Agreement. The Trust Agreement (Federal Express Corporation Trust No. N584FE), dated as of May 1, 1997, as amended and restated as of February 1, 1998, between the Owner Participant and the Owner Trustee in its individual capacity. Trust Estate. The Lessor's Estate. Trust Indenture Act. The Trust Indenture Act of 1939, as amended. Trust Indenture Estate. All estate, right, title and interest of the Indenture Trustee in and to any of the property, rights, interests and privileges granted to the Indenture Trustee pursuant to the Granting Clause of the Indenture, other than Excepted Payments and any and all other rights of the Owner Trustee or the Owner Participant expressly reserved to the Owner Trustee or the Owner Participant pursuant to the Indenture. UCC. Uniform Commercial Code. Underwriters. Morgan Stanley & Co. Incorporated, First Chicago Capital Markets, Inc., Goldman, Sachs & Co. and J.P. Morgan & Co. Underwriting Agreement. The Underwriting Agreement dated May 22, 1997 among the Lessee and the Underwriters. United States, U.S. or US. The United States of America. U.S. Air Carrier. Any United States air carrier as to which there is in force a certificate issued pursuant to Section 41102(a) or Section 41103 of the Transportation Code, and as to which there is in force an air carrier operating certificate issued pursuant to Chapter 447 of the Transportation Code and Part 121 of the regulations under such Transportation Code, for aircraft capable of carrying ten (10) or more individuals or 6,000 pounds or more of cargo, or which may operate as an air carrier by certification or otherwise under any successor or substitute provision thereof or in absence thereof. U.S. Person. A Person described in Section 7701(a)(30) of the Code. Warranty Bill of Sale. The full warranty bill of sale covering the Aircraft (and specifically referring to each Engine) executed by the Lessee, as seller in favor of the Owner Trustee, as buyer, and to be dated the Delivery Date. EX-4.C 3 Exhibit 4.c - ------------------------------------------------------------------------------- PARTICIPATION AGREEMENT (FEDERAL EXPRESS CORPORATION TRUST NO. N584FE) Dated as of May 1, 1997 as amended and restated as of February 1, 1998 among FEDERAL EXPRESS CORPORATION, Lessee and Initial Owner Participant KEY CORPORATE CAPITAL INC., Owner Participant STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT, NATIONAL ASSOCIATION, Not in Its Individual Capacity Except as Otherwise Expressly Set Forth Herein, but Solely as Owner Trustee, Owner Trustee FIRST SECURITY BANK, NATIONAL ASSOCIATION, Indenture Trustee FIRST SECURITY BANK, NATIONAL ASSOCIATION, Pass Through Trustee and FIRST SECURITY BANK, NATIONAL ASSOCIATION, Subordination Agent ______________________________ LEVERAGED LEASE OF ONE MCDONNELL DOUGLAS MD-11F AIRCRAFT SERIAL NO. 48436, REGISTRATION NO. N584FE - ------------------------------------------------------------------------------- TABLE OF CONTENTS Page Initial Recitals........................................................... 1 ARTICLE 1 DEFINITIONS............................................................. 3 ARTICLE 2 AMENDMENTS; ADJUSTMENTS Section 2.01. [Reserved]............................................... 3 Section 2.02. [Reserved]............................................... 3 Section 2.03. Amendments on Delivery Date.............................. 3 ARTICLE 3 PARTICIPATION IN INVESTMENT ON DELIVERY DATE; DELIVERY OF AIRCRAFT Section 3.01. Lessee's Notice of Delivery Date......................... 5 Section 3.02. Commitments to Participate in Purchase Price............. 5 Section 3.03. Postponement of Delivery Date............................ 8 Section 3.04. Closing.................................................. 9 Section 3.05. Owner Participant's Instructions to Owner Trustee........ 9 Section 3.06. Transaction Costs........................................ 9 Section 3.07. Termination of Commitment................................ 9 ARTICLE 4 CONDITIONS PRECEDENT Section 4.01. Conditions Precedent..................................... 10 Section 4.02. Opinion of Special Aviation Counsel Upon Registration.... 20 ARTICLE 5 CONDITIONS PRECEDENT TO LESSEE'S OBLIGATIONS Section 5.01. Conditions Precedent to Lessee's Obligations............. 21 ARTICLE 6 LESSEE'S REPRESENTATIONS, WARRANTIES AND COVENANTS Section 6.01. Lessee's Representations and Warranties.................. 21 Section 6.02. Offering by Lessee....................................... 27 Section 6.03. Certain Covenants of Lessee.............................. 28 Section 6.04. Survival of Representations and Warranties............... 36 ARTICLE 7 OTHER PARTIES' REPRESENTATIONS, WARRANTIES AND COVENANTS Section 7.01. Acquisitions and Offerings of Interests in Lessor's Estate................................................... 36 Section 7.02. Citizenship.............................................. 37 Section 7.03. Representations, Warranties and Covenants of Owner Participant.............................................. 38 Section 7.04. Representations, Covenants and Warranties of SSB and the Owner Trustee............................................ 41 Section 7.05. Representations, Warranties and Covenants of the Indenture Trustee........................................ 44 Section 7.06. Indenture Trustee's Notice of Default.................... 45 Section 7.07. Releases from Indenture.................................. 45 Section 7.08. Covenant of Quiet Enjoyment.............................. 45 Section 7.09. Pass Through Trustee's Representations and Warranties.... 46 Section 7.10. Survival of Representations, Warranties and Covenants.... 46 Section 7.11. Lessee's Assumption of the Certificates.................. 47 Section 7.12. Indebtedness of Owner Trustee............................ 49 Section 7.13. Compliance with Trust Agreement, Etc..................... 49 Section 7.14. Subordination Agent's Representations, Warranties and Covenants................................................ 49 ARTICLE 8 TAXES Section 8.01. Lessee's Obligation to Pay Taxes......................... 51 Section 8.02. After-Tax Basis.......................................... 56 Section 8.03. Time of Payment.......................................... 57 Section 8.04. Contests................................................. 57 Section 8.05. Refunds.................................................. 60 Section 8.06. Lessee's Reports......................................... 60 Section 8.07. Survival of Obligations.................................. 61 Section 8.08. Payment of Taxes......................................... 61 Section 8.09. Reimbursements by Indemnitees Generally.................. 61 ARTICLE 9 GENERAL INDEMNITY Section 9.01. Generally................................................ 62 Section 9.02. After-Tax Basis.......................................... 65 Section 9.03. Subrogation.............................................. 66 Section 9.04. Notice and Payment....................................... 66 Section 9.05. Refunds.................................................. 66 Section 9.06. Defense of Claims........................................ 67 Section 9.07. Survival of Obligations.................................. 67 Section 9.08. Effect of Other Indemnities.............................. 68 Section 9.09. Interest................................................. 68 ARTICLE 10 TRANSACTION COSTS Section 10.01. Transaction Costs and Other Costs....................... 68 ARTICLE 11 SUCCESSOR OWNER TRUSTEE Section 11.01. Appointment of Successor Owner Trustee.................. 71 ARTICLE 12 LIABILITIES AND INTERESTS OF THE OWNER PARTICIPANT AND HOLDERS Section 12.01. Liabilities of Owner Participant........................ 72 Section 12.02. Interest of Holders of Certificates..................... 73 ARTICLE 13 OTHER DOCUMENTS Section 13.01. Consent of Lessee to Other Documents.................... 73 Section 13.02. Further Assurances...................................... 73 Section 13.03. Pass Through Trustee's and Subordination Agent's Acknowledgement......................................... 73 Section 13.04. No Retroactive Application.............................. 74 ARTICLE 14 NOTICES Section 14.01. Notices................................................. 74 ARTICLE 15 REFINANCING Section 15.01. Refinancing............................................. 75 ARTICLE 16 [RESERVED] ARTICLE 17 MISCELLANEOUS Section 17.01. Owner for Federal Tax Purposes.......................... 79 Section 17.02. Collateral Account...................................... 79 Section 17.03. Counterparts............................................ 80 Section 17.04. No Oral Modifications................................... 80 Section 17.05. Captions................................................ 80 Section 17.06. Successors and Assigns.................................. 80 Section 17.07. Concerning the Owner Trustee, the Indenture Trustee and the Pass Through Trustee............................ 81 Section 17.08. Severability............................................ 81 Section 17.09. Public Release of Information........................... 81 Section 17.10. Certain Limitations on Reorganization................... 81 Section 17.11. GOVERNING LAW........................................... 82 Section 17.12. Section 1110 Compliance................................. 82 Section 17.13. Reliance of Liquidity Provider.......................... 82 ARTICLE 18 CONFIDENTIALITY Section 18.01. Confidentiality......................................... 83 SCHEDULE I Owner Participant's Commitment; Debt Portion SCHEDULE II Definitions SCHEDULE III Permitted Country List EXHIBIT A(1)(a) Opinion of Lessee's Counsel EXHIBIT A(1)(b) Opinion of Lessee's Special Counsel EXHIBIT A(2)(a) Opinion of Owner Participant's Special New York Counsel EXHIBIT A(2)(b) Opinion of Owner Participant's Special Michigan Counsel EXHIBIT A(3) Opinion of Indenture Trustee's Special Counsel EXHIBIT A(4) Opinion of Special Aviation Counsel EXHIBIT A(5) Opinion of Owner Trustee's Special Counsel EXHIBIT A(6) Opinion of Engine Manufacturer's Counsel EXHIBIT A(7) Opinion of Pass Through Trustee's and Subordination Agent's Special Counsel EXHIBIT B Form of Lease Agreement EXHIBIT C Form of Indenture EXHIBIT D Form of Trust Agreement EXHIBIT E Form of Engine Warranty Assignment and Engine Consent PARTICIPATION AGREEMENT (FEDERAL EXPRESS CORPORATION TRUST NO. N584FE) PARTICIPATION AGREEMENT (FEDERAL EXPRESS CORPORATION TRUST NO. N584FE) dated as of May 1, 1997, as amended and restated as of February 1, 1998 (this "Agreement") among FEDERAL EXPRESS CORPORATION, a Delaware corporation (herein, together with its successors and permitted assigns, the "Lessee" and the "Initial Owner Participant"), KEY CORPORATE CAPITAL INC., a Michigan corporation (herein, together with its successors and permitted assigns, the "Owner Participant"), STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT, NATIONAL ASSOCIATION, a national banking association, not in its individual capacity, except as otherwise expressly stated herein, but solely as owner trustee under the Trust Agreement referred to below (in such capacity as trustee, together with its successors and permitted assigns, the "Owner Trustee"), FIRST SECURITY BANK, NATIONAL ASSOCIATION, a national banking association, not in its individual capacity, except as otherwise expressly stated herein, but solely as indenture trustee under the Indenture referred to below (in such capacity as trustee, together with its successors and permitted assigns, the "Indenture Trustee"), FIRST SECURITY BANK, NATIONAL ASSOCIATION, a national banking association, not in its individual capacity, except as otherwise expressly stated herein, but solely as pass through trustee of three separate Pass Through Trusts (in such capacity as trustee, together with its successors and permitted assigns, the "Pass Through Trustee"), and FIRST SECURITY BANK, NATIONAL ASSOCIATION, a national banking association, not in its individual capacity, except as otherwise expressly stated herein, but solely as subordination agent (in such capacity as trustee, together with its successors and permitted assigns, the "Subordination Agent"). W I T N E S S E T H : WHEREAS, on the Certificate Closing Date, the Lessee, the Initial Owner Participant, the Owner Trustee, the Indenture Trustee, the Pass Through Trustee and the Subordination Agent entered into the Original Participation Agreement (such term, and all other terms not heretofore defined, having the meanings assigned thereto as provided in Article 1 below); WHEREAS, immediately prior to the execution and delivery of the Original Participation Agreement, the Initial Owner Participant entered into the Original Trust Agreement relating to the Aircraft with SSB, pursuant to which SSB agreed, among other things, to hold the Lessor's Estate for the benefit of the Initial Owner Participant on the terms specified in the Trust Agreement, subject to the Lien of the Indenture; WHEREAS, on the Pass Through Closing Date, a closing occurred with respect to the public offering of Pass Through Certificates issued by each Pass Through Trust, an allocable amount of the proceeds of which offering was used by the Pass Through Trustee to purchase for each such Pass Through Trust the Certificates of the Series and Maturity applicable thereto; WHEREAS, concurrently with the execution and delivery of the Original Participation Agreement, the Owner Trustee and the Indenture Trustee entered into the Original Indenture for the benefit of the Pass Through Trustee, pursuant to which the Owner Trustee issued the Certificates to the Subordination Agent on behalf of the Pass Through Trustee as evidence of the loans made by the Pass Through Trustee to the Owner Trustee, the proceeds of which loans were deposited by the Indenture Trustee on behalf of the Owner Trustee in the Collateral Account; WHEREAS, the Certificates are held by the Subordination Agent pursuant to the Intercreditor Agreement on behalf of the Pass Through Trustee for each of the Pass Through Trusts; WHEREAS, concurrently with the execution and delivery of the Original Participation Agreement, (i) Kredietbank N.V., acting through its New York Branch entered into two revolving credit agreements (each, a "Liquidity Facility"), one for the benefit of the holders of Pass Through Certificates of each of the Pass Through Trusts for the Series A Certificates and the Series B Certificates, with the Subordination Agent, as agent for the Pass Through Trustee on behalf of each such Pass Through Trust; and (ii) the Pass Through Trustee, each Liquidity Provider and the Subordination Agent entered into the Intercreditor Agreement; WHEREAS, concurrently with the execution and delivery of the Original Participation Agreement, the Owner Trustee and the Lessee entered into the Original Lease relating to the Aircraft, whereby, subject to the terms and conditions set forth in said Lease, the Owner Trustee agreed to lease the Aircraft to the Lessee on the Delivery Date, and the Lessee agreed to lease the Aircraft from the Owner Trustee on the Delivery Date; WHEREAS, the Initial Owner Participant wishes to transfer its Beneficial Interest to the Owner Participant on the Delivery Date and the Owner Participant wishes to acquire such Beneficial Interest from the Initial Owner Participant; WHEREAS, pursuant to the terms of the Trust Agreement, the Owner Trustee will be authorized and directed by the Owner Participant to purchase the Aircraft from the Lessee on the Delivery Date subject to the terms and conditions of this Agreement, the Engine Warranty Assignment and the Bills of Sale; WHEREAS, to fund the Owner Trustee's purchase of the Aircraft on the Delivery Date, the Indenture Trustee will, subject to the conditions precedent set forth herein, release the amounts held in the Collateral Account; and WHEREAS, the Lessee, the Owner Participant, the Owner Trustee, the Indenture Trustee, the Pass Through Trustee and the Subordination Agent have agreed, to the extent they are parties thereto and, subject to the terms and conditions hereinafter provided, to amend and restate the Original Participation Agreement, the Original Indenture, the Original Lease and the Original Trust Agreement. NOW, THEREFORE, in consideration of the mutual covenants contained in this Agreement and other good and valuable consideration, receipt of which is hereby acknowledged, the parties hereto agree, subject to the terms and conditions hereinafter provided, that the Original Participation Agreement be and the same is hereby amended and restated in its entirety as follows: ARTICLE 1 DEFINITIONS Unless 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 AMENDMENTS; ADJUSTMENTS Section 2.01. [Reserved]. Section 2.02. [Reserved]. Section 2.03. Amendments on Delivery Date. (a) Amendment and Restatement of Certain Documents. Upon transfer by the Initial Owner Participant of its Beneficial Interest on the Delivery Date (as contemplated by Section 3.02(a) hereof), the parties hereto shall enter into amendments and restatements of the Trust Agreement, the Lease and the Indenture, which amendments and restatements shall reflect such changes as shall have been requested by the Owner Participant, agreed to by the Lessee and, if modified in any material respect, as to which Rating Agency Confirmation shall have been obtained from each Rating Agency by the Lessee (to be delivered by the Lessee to the Pass Through Trustee on or before the Delivery Date); provided, however, that in any event such amended and restated documents shall not vary the Mandatory Economic Terms and shall contain the Mandatory Document Terms. The Lessee agrees to furnish to each Liquidity Provider and to Milbank, Tweed, Hadley & McCloy (the initial Liquidity Provider's special New York counsel) at its New York office, attention: Drew S. Fine, as soon as practicable but in no event less than 7 Business Days prior to the estimated Delivery Date, true and complete copies of this Agreement and drafts of any such amended and restated Lease Agreement and amended and restated Indenture. The Lessee further agrees to furnish to each Liquidity Provider and to the counsel identified in the preceding sentence (i) each and every subsequent draft of such documents and (ii) promptly following the execution thereof, true and complete copies of such documents. (b) Pre-Delivery Date Adjustments to Basic Rent, Stipulated Loss Values, Termination Values, EBO Price, Initial Amount of Series C Certificates and the Debt Amortization for Series A, B and C Certificates. On or prior to the Delivery Date, the percentages for Basic Rent referred to in Schedule II of the Lease and for Stipulated Loss Value and Termination Value in Schedule III and Schedule IV, respectively, of the Lease, the EBO Price and the initial amount of the Series C Certificates and the debt amortization for the Series A, B and C Certificates shall be adjusted (upward or downward) (maintaining the Owner's Economic Return and the Mandatory Economic Terms), subject to the procedures set forth in Section 3.04 of the Lease and the minimum value established by Section 3.05 of the Lease and the definitions of Stipulated Loss Value and Termination Value, to reflect changes in the pricing assumptions with respect to (i) the Delivery Date being other than February 20, 1998, (ii) Transaction Costs being other than as assumed in Section 10.01 hereof and (iii) a Change in Tax Law which occurs after the date of the execution of this Agreement but on or prior to the Delivery Date. The adjusted Net Present Value of Rents discounted at 7.55% shall not be increased by more than 100 basis points. If the adjusted Net Present Value of Rents is increased by more than 100 basis points, the Owner Participant shall have the right to terminate its commitment, in which case the Lessee will be responsible for Transaction Costs as described in Section 3.06 hereof, unless the Lessee elects to make the required adjustment to maintain the Owner's Economic Return. In connection with the foregoing adjustments, on the Delivery Date (i) the Subordination Agent, on behalf of the Pass Through Trustee, shall submit the Certificates to the Indenture Trustee, on behalf of the Owner Trustee, for attachment thereto of an amended Schedule I and the making of other related amendments and (ii) the Pass Through Trustee shall mail to the holders of Pass Through Certificates a statement pursuant to Section 5.03 of the Pass Through Agreement setting forth the revised Pool Balance and Pool Factors as if the Delivery Date were a Special Distribution Date. In connection with any such amendments, the Owner Trustee may prepay on the Delivery Date part of the Series C Certificates. The Owner Trustee will give not less than 10 days' notice of any such proposed amendment. The Certificates and the amendments and restatements of the Original Lease and the Original Indenture shall each reflect the amendments contemplated by this Section 2.03(b). ARTICLE 3 PARTICIPATION IN INVESTMENT ON DELIVERY DATE; DELIVERY OF AIRCRAFT Section 3.01. Lessee's Notice of Delivery Date. The Lessee agrees to give the Owner Participant, the Indenture Trustee, the Owner Trustee, the Subordination Agent, each Liquidity Provider and the Pass Through Trustee at least three (3) Business Days' written or facsimile notice prior to the Delivery Date (which notice shall be effective only if received not later than 10:00 a.m. (New York City time) on the date that is at least three (3) Business Days prior to the Delivery Date), which Delivery Notice shall specify the amount of the Purchase Price, the amount of the Owner Participant's Commitment, the Debt Portion, the Delivery Date for the Aircraft, the serial number of the Airframe and each Engine, and the Aeronautics Authority registration number for the Aircraft. Section 3.02. Commitments to Participate in Purchase Price. (a) Participation in Purchase Price. Subject to the terms and conditions of this Agreement and of the Commitment Letter dated July 29, 1997 between the Lessee and the Owner Participant (the "Commitment Letter"), which Commitment Letter shall remain in full force and effect through the Delivery Date, on the Delivery Date, (i) subject to the proviso to this Section 3.02(a), the Indenture Trustee agrees to release the Debt Portion or such lesser amount as may then be held in the Collateral Account together with the Lessee Shortfall (as defined in clause (iii) below), if any, to the Owner Trustee for application to the Purchase Price as provided below, (ii) the Initial Owner Participant agrees to transfer its Beneficial Interest to the Owner Participant in consideration for the Owner Participant's participation in the Lessor's payment of the Purchase Price through an investment in the Lessor's Estate in an amount equal to the amount set forth opposite the Owner Participant's name in Schedule I hereto, (iii) subject to the proviso to this Section 3.02(a), the Lessee agrees to pay to the Indenture Trustee the excess, if any, of (I) the Debt Portion over (II) such amount as may then be held in the Collateral Account (the "Lessee Shortfall") as provided in Section 17.02(a) hereof, and (iv) the Lessee shall sell the Aircraft to the Owner Trustee and the Owner Trustee shall immediately thereafter lease the Aircraft to the Lessee pursuant to the Lease. In consideration for the assignment to the Owner Trustee by the Lessee of any warranties under the Modification Agreement, the transfer by the Initial Owner Participant to the Owner Participant of its Beneficial Interest and the transfer of title to the Aircraft from the Lessee to the Owner Trustee, the following cash payments will be made by wire transfer of immediately available funds on the Delivery Date: (A) [reserved], (B) [reserved], (C) subject to fifteen (15) days' notice to each Series C Certificateholder, by the Owner Trustee to the Indenture Trustee in the amount of $1,253,000.00 as partial prepayment of the Series C Certificates, and (D) in connection with the transfer to the Owner Participant by the Initial Owner Participant of its Beneficial Interest as contemplated by clause (ii) of this Section 3.02(a), by the Owner Trustee to the Lessee, an amount equal to the Purchase Price (or if the proviso to this Section 3.02(a) is applicable, the amount received from the Owner Participant); provided, however, that if (1) the Delivery Date has been postponed, (2) the investments contemplated by Section 2.14(b) of the Original Indenture have been made, (3) such investments do not mature on the rescheduled Delivery Date and (4) the Lessee elects not to break such investments, then the Indenture Trustee shall not release amounts in the Collateral Account to the Owner Trustee and the Lessee shall accept as payment of the Purchase Price by the Owner Trustee an amount equal to the Owner Participant's Commitment and the Indenture Trustee shall pay to the Lessee at the end of the applicable investment period referred to in Section 2.14(b) of the Original Indenture all amounts then held in the Collateral Account. (b) No Obligation to Increase Commitments; Delayed Delivery. (i) If the Indenture Trustee shall default in its obligation to make the amount of its Debt Portion available pursuant hereto, the Owner Participant shall have no obligation to make any portion of such Debt Portion available or to increase the amount of its Commitment, but the obligations of the Owner Participant shall nevertheless remain subject to the terms and conditions of this Agreement, until no later than March 30, 1998. (ii) Subject to the provisions of Section 3.03 hereof, if the closing of the transactions contemplated by the Operative Agreements shall not have been consummated by 2:00 p.m. (New York City time), or such earlier time as directed by the Lessee, on the Delivery Date set forth in the Delivery Notice, the Owner Trustee shall, if instructed in writing by the Owner Participant, use its reasonable efforts to invest the Owner Participant's Commitment received by it in overnight Eurodollar deposits. If such closing shall not have been consummated by 2:00 p.m. (New York City time) on such next succeeding Business Day or on the Business Day to which the Delivery Date is postponed under Section 3.03(a) hereof, the Owner Trustee shall forthwith return, by wire transfer in immediately available funds, the Owner Participant's Commitment received by it, to the Owner Participant together with the interest earned and accrued thereon from and including the Delivery Date. Alternatively, if the Owner Participant instructs the Owner Trustee (in writing or orally) on or prior to 2:00 p.m. (New York City time) on the Delivery Date to return the Owner Participant's Commitment to an account specified by the Owner Participant in the event that the transactions contemplated by the Operative Agreements are not consummated on or prior to 2:00 p.m. (New York City time) on the Delivery Date, the Owner Trustee shall, during business hours (for New York City) on the Delivery Date, transfer the amount of such Commitment, together with interest earned or accrued thereon, to the account so specified. Interest earned or accrued on any such investments and paid to the Owner Participant under this paragraph shall be applied to the Lessee's payment obligations, if any, to such Owner Participant pursuant to the next succeeding paragraph, and the balance, if any, of such earnings remaining after such application shall be paid in accordance with the Lessee's written instructions. If for any reason (i) the Operative Agreements shall not be executed and delivered by the respective parties thereto and/or the delayed Delivery Date shall not occur (whether by reason of a failure to meet a condition precedent thereto set forth in Article 4 hereof or otherwise) on or before the third Business Day after the Scheduled Delivery Date (or earlier if requested by the Owner Participant) or, if earlier, March 30, 1998, or (ii) the Lessee has notified the Owner Trustee (with a copy to the Owner Participant) prior to 2:00 p.m. (New York City time) on any date after the Scheduled Delivery Date that it does not intend to go forward to close the transactions contemplated hereby for such Delivery Date, the Owner Participant may cancel any funding arrangements made to fund its Commitment on the Scheduled Delivery Date but the Owner Participant's Commitment hereunder with respect to the Aircraft shall not be terminated thereby until March 30, 1998, whereupon the Owner Participant's Commitment hereunder shall terminate. On such third Business Day (or such earlier date) or March 30, 1998, as the case may be, or the earliest practicable Business Day thereafter, the Owner Trustee shall return the amounts held by it hereunder to the Owner Participant, provided that the Owner Trustee shall have had a reasonable time to liquidate any Permitted Investments it has been authorized to invest in pursuant to the preceding paragraph and to obtain the proceeds therefrom in funds of the type originally received, and the Lessee shall pay interest on such funds to the Owner Participant at the Debt Rate, such interest to be payable for the period from and including such Scheduled Delivery Date to but excluding the date such funds are returned to the Owner Participant in accordance with the terms hereof; provided that if any such funds are returned to the Owner Participant after 2:00 p.m. (New York City time) on any such date, such funds shall be deemed for purposes of this paragraph to have been returned on the next succeeding Business Day. The Lessee shall reimburse the Owner Trustee on demand for any loss incurred by the Owner Trustee as a result of the investment of funds by the Owner Trustee in accordance with the terms of this Section 3.02(b). Further, the Lessee shall indemnify the Owner Trustee and hold it harmless from and against any cost or expense the Owner Trustee may incur as a result of any investment of funds or transfer of funds referred to herein in accordance with the terms hereof. The Owner Trustee shall not be liable for failure to invest such funds except as otherwise provided herein or for any losses incurred on such investments except for any losses arising out of its own gross negligence or willful misconduct. (c) Payment of Commitments. The Owner Participant agrees, subject to the terms and conditions of this Agreement and the Commitment Letter, to make the amount of its Commitment available for and on account of the Owner Trustee on the Delivery Date specified in the Delivery Notice pursuant to Section 3.01 hereof by wire transfer, initiated by 10:00 a.m. New York City time on such day, of such amount in immediately available funds, to the Owner Trustee for deposit in its account at State Street Bank and Trust Company, Boston, Massachusetts, ABA Number: 011-000-028, Account Name: FedEx Equity Payments, Account Number: HT5632, Attention: Christy O'Connor, Re: FedEx Equity Payment Account. The amount of the Owner Participant's Commitment shall be held for the account of the Owner Participant by the Owner Trustee until released by the Owner Participant or its special counsel at closing or until returned to the Owner Participant in accordance with Section 3.02(b) hereof. Section 3.03. Postponement of Delivery Date. (a) If the Owner Participant shall for any reason fail or refuse to make the full amount of its Commitment available on the Scheduled Delivery Date in accordance with the terms of Section 3.02 hereof, the Lessee shall during the period until the Cut-Off Date endeavor to identify another equity investor to whom it can assign its Beneficial Interest. If the Lessee identifies an equity investor, the Lessee shall assign its interest in the Lessor's Estate as provided above. In case of any such conveyance (but subject to the satisfaction of the conditions precedent specified in an amendment hereto), the Indenture Trustee shall release the Debt Portion or such lesser amount as may then be held in the Collateral Account for application to the payments contemplated in the last sentence of Section 3.02(a) hereof, subject to the proviso to Section 3.02(a) hereof. (b) Release of Obligations. If the Scheduled Delivery Date has not occurred on or prior to the Cut-Off Date, then, in such event, the Owner Trustee shall not purchase the Aircraft from the Lessee, and the parties to the Operative Agreements shall have no further obligations or liabilities under any of said Operative Agreements with respect to the Aircraft, including the obligation of the Owner Participant to participate in the payment of the Purchase Price, and such documents shall terminate and have no further force or effect with respect to the Aircraft; provided, however, that the Lessee shall provide, no later than the Cut-Off Date, notice of prepayment to the Indenture Trustee and the Certificates shall be prepaid on the 15th day following the Cut-Off Date as provided in Section 6.02(a)(vi) of the Original Indenture and Section 17.02(c) hereof and provided further, that (i) neither the Owner Participant's nor the Lessee's obligation to pay any Transaction Costs as provided herein and in the Commitment Letter and to indemnify such parties to the extent provided in such documents, shall be diminished or modified in any respect and (ii) the obligations of the Owner Trustee, the Indenture Trustee and the Lessee to return funds and pay interest, costs, expenses and other amounts thereon or in respect thereof as provided in Section 3.02 hereof and the Commitment Letter shall continue. (c) Optional Postponement. Without limiting the provisions of Section 3.02(b) hereof, the Scheduled Delivery Date may be postponed from time to time (but in no event shall the Delivery Date be later than the Cut-Off Date) for any reason, other than pursuant to Section 3.03(a) hereof, if the Lessee gives the Owner Participant, the Indenture Trustee, the Owner Trustee and the Pass Through Trustee confirmed facsimile notice (or telephone notice followed by written confirmation) of such postponement and notice of the date to which the Delivery Date has been postponed, such notice of postponement to be received by each party no later than 11:00 a.m. (New York City time) on the Business Day preceding the Scheduled Delivery Date. Section 3.04. Closing. The closing with respect to the purchase and lease of the Aircraft on the Delivery Date shall take place at the offices of Davis Polk & Wardwell, 450 Lexington Avenue, New York, New York 10017. Section 3.05. Owner Participant's Instructions to Owner Trustee. The Owner Participant agrees that the release of its Commitment in accordance with the terms hereof shall constitute, without further act, authorization and direction by the Owner Participant to the Owner Trustee to take the action specified in Section 1.01 of the Trust Agreement and confirmation that all conditions to closing set forth in Article 4 hereof were either met to the satisfaction of the Owner Participant or, if not so met, were waived by it. Section 3.06. Transaction Costs. If the transactions contemplated by this Article 3 are consummated, as and when any portion of Transaction Costs becomes due and payable, the Owner Participant shall as soon as practicable upon receipt of bills or invoices for the amounts payable make such payments or shall, as soon as practicable, furnish the Owner Trustee funds sufficient to, and the Owner Trustee shall, as soon as practicable, make payment to the Person or Persons entitled to payment upon presentation to the Owner Trustee of bills or invoices for the amount of such payment. If the Lessee shall have already made payment of any Transaction Cost, the Owner Participant shall reimburse the Lessee therefor or shall furnish the Owner Trustee funds sufficient to reimburse the Lessee therefor. If the transactions contemplated by this Agreement are not consummated, the Lessee shall pay or cause to be paid all the Transaction Costs; provided, however that if the failure of such transactions to be consummated is due to the Owner Participant's breach of the Commitment Letter, the Lessee shall have no obligation to pay any costs and expenses incurred by the Owner Participant (including costs and expenses of its counsel) in connection with the transactions contemplated by this Agreement, but the Lessee shall be obligated to pay all other Transaction Costs. Section 3.07. Termination of Commitment. Notwithstanding the other provisions of this Article 3 (including, without limitation, Section 3.02), Key Corporate Capital Inc. shall not be under any obligation to make its Commitment available after March 30, 1998 and such Commitment hereunder shall terminate at 3:00 p.m. (New York City time) on such date, and such time shall be of the essence under this Agreement. ARTICLE 4 CONDITIONS PRECEDENT Section 4.01. Conditions Precedent. Subject to the last paragraph of this Section 4.01, the obligations of the Owner Trustee, the Owner Participant, the Indenture Trustee, the Subordination Agent and the Pass Through Trustee on behalf of each Pass Through Trust to participate in the transactions contemplated hereby on the Delivery Date are subject to the fulfillment to the satisfaction of each party (or waiver by such party), prior to or on the Delivery Date, of the following conditions precedent (it being understood that the receipt by the Lessee of any of the following documents shall not be a condition precedent to the obligation of any party): (a) Notice, Etc. Each party hereto shall have received a Delivery Notice pursuant to Section 3.01 hereof at least three (3) Business Days prior to the Scheduled Delivery Date. (b)(i) Certificates. The Certificates shall have been amended as contemplated in Section 2.03 hereof. (b)(ii) Certificate Prepayment. The Series C Certificates shall have been prepaid in part. (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 Owner Participant, the Pass Through Trustee, the Subordination Agent or the Indenture Trustee or their special counsel, would make it illegal for the Owner Participant, the Lessee, the Owner Trustee, the Pass Through Trustee, the Subordination Agent or the Indenture Trustee, and no change in circumstances 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, the Subordination Agent or the Indenture Trustee, to participate in the transactions to be consummated on the Delivery Date; and no action or proceeding shall have been instituted nor shall governmental action before any court, governmental authority or agency be threatened which in the opinion of counsel for the Owner Participant, the Lessee, the Owner Trustee, the Pass Through Trustee, the Subordination Agent or the Indenture Trustee is not frivolous, nor shall any order have been issued or proposed to be issued by any court, or governmental authority or agency, as of the Delivery Date, to set aside, restrain, enjoin or prevent the consummation of any of the transactions contemplated by this Agreement or by any of the other Operative Agreements. (d) Other Commitments; Approvals. The Owner Participant shall have made available the amount of its Commitment. 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. (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 Lessee, the Owner Trustee, the Indenture Trustee, the Pass Through Trustee, the Subordination Agent and the Owner Participant (each acting directly or by authorization to its special counsel) and shall each be in full force and effect; there shall not have occurred any default thereunder, or any event which with the lapse of time or the giving of notice or both would be a default thereunder, and copies executed or certified as requested by the Lessee, the Owner Trustee, the Indenture Trustee, the Pass Through Trustee or the Owner Participant, as the case may be, of such documents shall have been delivered to the Owner Participant, the Lessee, the Indenture Trustee, the Pass Through Trustee, the Subordination Agent, each Liquidity Provider and the Owner Trustee (provided that the sole chattel-paper original of each of the Lease, the Lease Supplement and Ancillary Agreement I shall be delivered to the Indenture Trustee): (i) the Lease, as amended and restated as of the date hereof; (ii) the Trust Agreement, as amended and restated as of the date hereof; (iii) the Indenture, as amended and restated as of the date hereof; (iv) the Lease Supplement covering the Aircraft, dated the Delivery Date; (v) the Indenture and Security Agreement Supplement covering the Aircraft, dated the Delivery Date; (vi) in the case of the Owner Participant only, the Tax Indemnity Agreement; (vii) the Ancillary Agreement I; (viii) the Invoice; (ix) the Engine Warranty Assignment; (x) the Engine Consent; and (xi) the Bills of Sale. (f) Insurance. Each of the Indenture Trustee, the Pass Through Trustee, the Owner Trustee, the Owner Participant and each Liquidity Provider shall have received such evidence as it deems appropriate, including, without limitation, an independent insurance broker's report, together with certificates of insurance from such broker, in form and substance satisfactory to the Indenture Trustee, the Pass Through Trustee, the Owner Trustee, the Owner Participant and each Liquidity Provider to establish that the insurance required by Article 13 of the Lease is in effect. (g) Financing Statements. (i) Uniform Commercial Code ("UCC") financing statement covering all the security interests (and other interests) created by or pursuant to the Granting Clause of the Original Indenture shall have been executed and delivered by the Owner Trustee, as debtor, and by the Indenture Trustee, as secured party, for and on behalf of the Holders, and such financing statement shall have been duly filed in the State of Connecticut; (ii) a form UCC-3 financing statement to amend and restate the financing statement referred to in the immediately preceding sentence shall have been executed and delivered by the Owner Trustee, as debtor, and by the Indenture Trustee as secured party, and a form UCC-1 financing statement covering all the security interests (and other interests) created by or pursuant to the Granting Clause of the Indenture shall have been executed and delivered by the Owner Trustee, as debtor, and by the Indenture Trustee, as secured party, for and on behalf of the Holders, and concurrently with the transactions contemplated on the Delivery Date such UCC-3 financing statement and UCC-1 financing statement shall have been duly filed or duly submitted for filing in the State of Connecticut, and all other actions shall have been taken which, in the opinion of special counsel for the Pass Through Trustee or for the Underwriters, are necessary or desirable to maintain the perfection of the security interest created by or pursuant to the Granting Clause of the Indenture, and (iii) a UCC notice filing describing the Lease as a lease shall have been executed and delivered by the Owner Trustee, as lessor, and the Lessee, as lessee (which filing shall name the Indenture Trustee as assignee of the Owner Trustee), and shall have been duly filed in the State of Tennessee. (h) Corporate Documents. Except when such Person is the delivering party, the Owner Participant, the Owner Trustee, the Pass Through Trustee, the Lessee and the Indenture Trustee (acting directly or by authorization to its special counsel) shall have received the following, in each case in form and substance satisfactory to it: (i) a copy of the certificate of incorporation and by-laws of the Lessee, certified by the Secretary or an Assistant Secretary of the Lessee as of the Delivery Date, and a copy of the minutes of the regular meeting of the board of directors of the Lessee, certified as such as of the Delivery Date by such Secretary or Assistant Secretary, duly authorizing the lease by the Lessee of the Aircraft under the Lease and the execution, delivery and performance by the Lessee of this Agreement, the Lease, the Tax Indemnity Agreement, the 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; (ii) a copy of the articles of incorporation and bylaws of the Owner Participant, certified by the Secretary or an Assistant Secretary of the Owner Participant as of the Delivery Date and a copy of the resolutions of the board of directors of the Owner Participant, certified as such as of the Delivery Date by such Secretary or Assistant Secretary, duly authorizing the execution and delivery by the Owner Participant of this Agreement, the Tax Indemnity Agreement, the Trust Agreement and the other Operative Agreements to which the Owner Participant is or is to be a party and each other document to be executed and delivered by the Owner Participant in connection with the transactions contemplated hereby; (iii) a copy of the articles of association and by-laws and other instruments of the Owner Trustee, certified by the Secretary or an Assistant Secretary of the Owner Trustee as of the Delivery Date (or other like instruments satisfactory to the Lessee and the Owner Participant) and evidence authorizing the execution, delivery and performance by the Owner Trustee in its individual capacity or as Owner Trustee, as the case may be, of this Agreement, the Trust Agreement and each of the other Operative Agreements to which it is or is to be a party, whether in its individual capacity or as Owner Trustee, and each other document to be executed and delivered by the Owner Trustee in connection with the transactions contemplated hereby; (iv) a copy of the articles of association and by-laws and other instruments of the Indenture Trustee, certified by the Secretary or an Assistant Secretary of the Indenture Trustee as of the Delivery Date (or other like instruments satisfactory to the Lessee and the Owner Participant) and evidence authorizing the execution, delivery and performance by the Indenture Trustee of each of this Agreement, the Indenture and each of the other Operative Agreements to which it is or is to be a party, and each other document to be executed and delivered by the Indenture Trustee in connection with the transactions contemplated hereby; (v) a copy of the articles of association and by-laws and other instruments of the Pass Through Trustee, certified by the Secretary or an Assistant Secretary of the Pass Through Trustee as of the Delivery Date (or other like instruments satisfactory to the Lessee and the Owner Participant) and evidence authorizing the execution, delivery and performance by the Pass Through Trustee of this Agreement, the Pass Through Agreement, the Series Supplements and each of the other Operative Agreements to which it is or is to be a party, and each other document to be executed and delivered by the Pass Through Trustee in connection with the transactions contemplated hereby; (vi) a copy of the articles of association and by-laws and other instruments of the Subordination Agent, certified by the Secretary or an Assistant Secretary of the Subordination Agent as of the Delivery Date (or other like instruments satisfactory to the Lessee and the Owner Participant) and evidence authorizing the execution, delivery and performance by the Subordination Agent of this Agreement, the Intercreditor Agreement and each of the other Operative Agreements to which it is or is to be a party, and each other document to be executed and delivered by the Subordination Agent in connection with the transactions contemplated hereby; and (vii) such other documents, evidences, materials, and information with respect to the Lessee, the Owner Trustee, the Indenture Trustee, the Pass Through Trustee and the Owner Participant as the Indenture Trustee, the Pass Through Trustee or the Owner Participant may reasonably request in order to establish the consummation of the transactions contemplated by this Agreement. (i) Title, Airworthiness and Registration. On the Delivery Date, the following statements shall be true, and the Owner Participant, the Indenture Trustee, the Pass Through Trustee and the Owner Trustee shall have received evidence from the Lessee reasonably satisfactory to the Owner Participant, the Indenture Trustee, the Pass Through Trustee and the Owner Trustee to the effect that: (i) the Owner Trustee has good and marketable title (subject to the filing and recording of the FAA Bill of Sale with the Aeronautics Authority) to the Aircraft, free and clear of Liens, except the rights of the Owner Trustee and the Lessee under the Lease and the Lease Supplement covering the Aircraft, the rights of the Indenture Trustee under the Indenture and the beneficial interest of the Owner Participant created by the Trust Agreement and the interest of the Certificate Holders created by the Indenture and the Indenture and Security Agreement Supplement covering the Aircraft, which evidence shall include the Bills of Sale; (ii) the Aircraft has been duly certificated by the Aeronautics Authority as to type and airworthiness in accordance with the terms of the Operative Agreements; (iii) the FAA Bill of Sale, the Lease and the Lease Supplement covering the Aircraft, the Indenture and the Indenture and Security Agreement Supplement covering the Aircraft and the Trust Agreement shall have been duly filed for recordation (or shall be in the process of being so duly filed for recordation) with the Aeronautics Authority pursuant to the Transportation Code; and (iv) application to the Aeronautics Authority for registration of the Aircraft in the name of the Owner Trustee shall have been duly made and the Lessee shall have temporary or permanent authority to operate the Aircraft. (j) Officer's Certificate of Lessee. On the Delivery Date, the following statements shall be true, and the Owner Participant, the Owner Trustee, the Pass Through Trustee and the Indenture Trustee shall have received a certificate signed by the Vice President and Treasurer or any other duly authorized officer of the Lessee, dated the Delivery Date, stating that: (i) the representations and warranties of the Lessee contained in the Operative Agreements to which it is a party (excluding the Tax Indemnity Agreement) and in any certificate delivered at the closing pursuant hereto or thereto are true and correct on and as of the Delivery Date as though made on and as of such date (except to the extent that such representations and warranties relate solely to an earlier date, in which case such certificate shall state that such representations and warranties were true and correct on and as of such earlier date); (ii) except for the matters described (i) under "Legal Proceedings" in the Lessee's Annual Report on Form 10-K for the fiscal year ended May 31, 1997 (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, 1997 and November 30, 1997), and (ii) in the Lessee's Current Report on Form 8-K dated June 11, 1997, 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 consolidated financial statements of the Lessee as of November 30, 1997 and nothing has occurred which will, in the judgment of such officer, materially adversely affect the ability of the Lessee to carry on its business or to perform its obligations under this Agreement and each other Operative Agreement to which it is or is to be a party; and (iii) no event has occurred and is continuing, or would result from the purchase, sale, mortgage, or lease of the Aircraft, which constitutes an Event of Loss (or event which with the passage of time would become an Event of Loss) with respect to the Airframe or any Engine, or a Default or an Event of Default under the Lease. (k) Officer's Certificate of Owner Participant. On the Delivery Date, the following statements shall be true, and the Lessee, the Pass Through Trustee, the Owner Trustee and the Indenture Trustee shall have received a certificate from the Owner Participant, signed by a duly authorized officer of the Owner Participant dated the Delivery Date, stating that: (i) the representations and warranties of the Owner Participant contained in this Agreement, the Trust Agreement and any other Operative Agreement to which it is a party and in any certificate delivered at the closing pursuant hereto or thereto, are true and correct on and as of the Delivery Date as though made on and as of such date (except to the extent that such representations and warranties relate solely to an earlier date, in which case such certificate shall state that such representations and warranties were true and correct on and as of such earlier date); (ii) no Lessor's Liens attributable to the Owner Participant exist; and (iii) no event has occurred and is continuing which constitutes or, with notice or lapse of time or both would constitute, due to any action or inaction on the part of the Owner Participant, an Indenture Event of Default other than an Indenture Event of Default attributable to a Lease Event of Default. (l) Other Officer's Certificates. On the Delivery Date, the following statements shall be true, and the Owner Participant, the Lessee, the Pass Through Trustee, the Owner Trustee, the Subordination Agent and the Indenture Trustee shall have received a certificate from each of SSB and the Owner Trustee (in the case of the Lessee, the Pass Through Trustee, the Owner Participant, the Subordination Agent and the Indenture Trustee), FSB and the Indenture Trustee (in the case of the Lessee, the Pass Through Trustee, the Owner Participant, the Subordination Agent and the Owner Trustee), FSB and the Pass Through Trustee (in the case of the Lessee, the Indenture Trustee, the Owner Participant, the Subordination Agent and the Owner Trustee) and FSB and the Subordination Agent (in the case of the Lessee, the Indenture Trustee, the Owner Participant, the Pass Through Trustee and the Owner Trustee) signed by a duly authorized officer of SSB and FSB, respectively, dated the Delivery Date, stating with respect to SSB and the Owner Trustee, with respect to FSB and the Indenture Trustee, with respect to FSB and the Pass Through Trustee or with respect to FSB and the Subordination Agent, as the case may be, that: (i) the representations and warranties of SSB in its individual capacity and as Owner Trustee, of FSB in its individual capacity and as Indenture Trustee, of FSB in its individual capacity and as Pass Through Trustee or of FSB in its individual capacity and as Subordination Agent contained in this Agreement, the Lease, the Trust Agreement and the Indenture and in any certificate delivered at the closing pursuant hereto or thereto are true and correct on and as of the Delivery Date as though made on and as of such date (except to the extent that such representations and warranties relate solely to an earlier date, in which case such certificate shall state that such representations and warranties were true and correct on and as of such earlier date); (ii) to the best of its knowledge, no event has occurred and is continuing, which constitutes or which, but for the lapse of time or the giving of notice, or both, would constitute, due to any action or omission on the part of SSB in its individual capacity or as Owner Trustee, of FSB in its individual capacity or as Indenture Trustee, of FSB in its individual capacity or as Pass Through Trustee, an Event of Default or an Indenture Event of Default or of FSB in its individual capacity or as Subordination Agent, an Event of Default or an Indenture Event of Default; and (iii) there are no Lessor's Liens attributable to the Owner Trustee or SSB and no Indenture Trustee's Liens affecting the Trust Indenture Estate or the Lessor's Estate or any part thereof. (m) Legal Opinions. The Owner Participant, the Underwriters, the Lessee, the Owner Trustee, the Pass Through Trustee, the Indenture Trustee and each Liquidity Provider (acting directly or by authorization to its special counsel) shall have received from the following counsel their respective legal opinions in each case satisfactory to the Owner Participant, the Underwriters, the Lessee, the Owner Trustee, the Pass Through Trustee, the Indenture Trustee or each Liquidity Provider, as the case may be, as to scope and substance (and covering such other matters as the recipient may reasonably request) and dated the Delivery Date: (i) Karen M. Clayborne, Senior Vice President and General Counsel of the Lessee, in the form of Exhibit A(1)(a) hereto and addressed to the Underwriters, the Owner Participant, the Indenture Trustee, the Owner Trustee, the Pass Through Trustee and each Liquidity Provider; (ii) Davis Polk & Wardwell, special counsel for the Lessee, in the form of Exhibit A(1)(b) hereto and addressed to the Underwriters, the Owner Participant, the Indenture Trustee, the Owner Trustee, the Pass Through Trustee, each Liquidity Provider and the Lessee; (iii) Chadbourne & Parke LLP, special New York counsel for the Owner Participant, in the form of Exhibit A(2)(a) hereto and Bodman, Longley & Greenhalgh LLP, special Michigan counsel to the Owner Participant, in the form of Exhibit A(2)(b) hereto, each addressed to the Underwriters, the Owner Participant, the Indenture Trustee, the Owner Trustee, the Pass Through Trustee, each Liquidity Provider and the Lessee; (iv) Ray, Quinney & Nebeker, special counsel for the Indenture Trustee, in the form of Exhibit A(3) hereto and addressed to the Underwriters, the Owner Participant, the Indenture Trustee, the Owner Trustee, the Pass Through Trustee, each Liquidity Provider and the Lessee; (v) Daugherty, Fowler & Peregrin, special aviation counsel, in the form of Exhibit A(4) hereto and addressed to the Underwriters, the Owner Participant, the Indenture Trustee, the Owner Trustee, the Pass Through Trustee, each Liquidity Provider and the Lessee; (vi) Bingham Dana LLP, special counsel for the Owner Trustee, in the form of Exhibit A(5) hereto and addressed to the Underwriters, the Owner Participant, the Indenture Trustee, the Owner Trustee, the Pass Through Trustee, each Liquidity Provider and the Lessee; (vii) counsel for the Engine Manufacturer, in the form of Exhibit A(6) hereto and addressed to the Underwriters, the Owner Participant, the Indenture Trustee, the Owner Trustee, the Pass Through Trustee, each Liquidity Provider and the Lessee; (viii) Ray, Quinney & Nebeker, special counsel for the Pass Through Trustee and the Subordination Agent, in the form of Exhibit A(7) hereto and addressed to the Underwriters, the Owner Participant, the Indenture Trustee, the Owner Trustee, the Pass Through Trustee, each Liquidity Provider and the Lessee; and (ix) in the case of the Owner Participant only, Chadbourne & Parke LLP, tax counsel to the Owner Participant, addressed to the Owner Participant, with respect to certain tax matters. (n) Report of Aircraft Expert. The Owner Participant shall have received a report prepared by BK Associates, Inc. addressed to the Owner Participant (with a copy of such report to the Lessee) which report shall be in form and substance satisfactory to the Owner Participant. (o) Pass Through Certificate Prepayment. The Pass Through Trustee shall have received $1,253,000.00 as partial prepayment of the Series C Certificates, which shall constitute a Special Payment (as defined in the Pass Through Agreement) within the provisions of the Pass Through Agreement and the Pass Through Trustee shall provide notice of such Special Payment (as defined in the Pass Through Agreement) and distribute to each certificateholder of the related Pass Through Certificates such certificateholders' pro rata share of the aggregate amount of the Special Payment (as defined in the Pass Through Agreement), in each case as more fully set forth in Article V of the Pass Through Agreement. (p) Payment of Taxes. (A) All taxes, fees, charges, assessments, costs and other expenses then due and payable in connection with the execution, delivery, recording and filing of all financing statements and the documents and instruments referred to in subparagraphs (g) and (i) of this Section 4.01, or in connection with the purchase of the Aircraft by the Owner Trustee and the making by the Owner Participant of its equity investment shall have been duly paid or caused to be paid in full; and (B) all sales or use taxes and duties related to the consummation of the transactions contemplated by the Operative Agreements on the Delivery Date which are then due and payable shall have been duly paid in full. (q) No Indenture Event of Default. No Indenture Event of Default or Indenture Default attributable to either SSB or the Owner Trustee shall have occurred and be continuing. (r) Event of Default; Default; Event of Loss. No Default or Event of Default under the Lease or Event of Loss or event, which with the passage of time or if continued unremedied or unaltered would constitute an Event of Loss, shall have occurred or be in existence. (s) Governmental Compliance. All appropriate action required to have been taken by the FAA, or any governmental or political agency, subdivision or instrumentality of the United States, prior to the Delivery Date in connection with the transactions contemplated by this Agreement shall have been taken, and all orders, permits, waivers, authorizations, exemptions and approvals (collectively "permits") of such entities required to be in effect on the Delivery Date in connection with the transactions contemplated by this Agreement shall have been issued, and all such permits shall be in full force and effect on the Delivery Date. (t) Section 131.3 of the New York State Banking Law Filing. SSB shall have delivered evidence of its filing made with the New York Superintendent of Banking pursuant to Section 131.3 of the New York State Banking Law. (u) Release of Debt Portion. The Indenture Trustee shall have released the Debt Portion from the Collateral Account. (v) Officer's Certificate of Lessee Regarding Mandatory Economic Terms and Mandatory Document Terms. The Lessee shall have delivered a certificate to the Pass Through Trustee and the Liquidity Providers signed by the Vice President and Treasurer or any other duly authorized officer of the Lessee stating that (i) the Operative Agreements which are amended and restated as of the Delivery Date do not vary the Mandatory Economic Terms and contain the Mandatory Document Terms and (ii) any substantive modification of such documents from those in effect on the Certificate Closing Date does not materially and adversely affect the Holders of Pass Through Certificates and each Liquidity Provider and such certification shall be true and correct. (w) Rating Agency Confirmation. A Rating Agency Confirmation shall have been delivered to the Pass Through Trustee. Notwithstanding anything else to the contrary in this Section 4.01, it shall not be a condition precedent to the obligations of the Indenture Trustee, the Pass Through Trustee or the Subordination Agent that the conditions in Section 4.01(j) and (k) be satisfied if the Lessee certifies that the failure to fulfill such condition precedent is not reasonably likely to materially adversely affect the holders of Pass Through Certificates and, in the event of such failure, there has been delivered to the Indenture Trustee written confirmation from both Moody's and S&P of the rating on any class of Pass Through Certificates. Section 4.02. Opinion of Special Aviation Counsel Upon Registration. Promptly upon the registration of the Aircraft and the filing and, where appropriate, recordation pursuant to the Transportation Code, of the FAA Bill of Sale, the Trust Agreement, the Lease (with the Lease Supplement covering the Aircraft, the Indenture and the Indenture and Security Agreement Supplement covering the Aircraft attached as exhibits) and the Indenture (with the Indenture and Security Agreement Supplement covering the Aircraft attached as an exhibit), the Lessee shall cause Special Aviation Counsel to deliver to the Owner Participant, the Lessee, the Owner Trustee, the Pass Through Trustee and the Indenture Trustee an opinion as to (i) the due registration of the Aircraft in the name of the Owner Trustee, (ii) the due filing and, where appropriate, recording pursuant to the Transportation Code of the FAA Bill of Sale, the Trust Agreement, 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), and (iii), subject to customary qualifications, the lack of any intervening documents with respect to the Aircraft. ARTICLE 5 CONDITIONS PRECEDENT TO LESSEE'S OBLIGATIONS Section 5.01. Conditions Precedent to Lessee's Obligations. The Lessee's obligation to lease the Aircraft from the Owner Trustee pursuant to the Lease is subject to the conditions that, prior to or on the Delivery Date, the Lessee shall have received the certificates and other documents which are referred to in, or the opinions to be addressed to it under, as the case may be, Sections 4.01(e), (h)(ii)-(vii), (i)(ii)-(iv), (k), (l), (m)(ii)-(viii), (t) and (u) hereof, the Owner Participant shall have made its Commitment available in accordance with the terms of Section 3.02 hereof. ARTICLE 6 LESSEE'S REPRESENTATIONS, WARRANTIES AND COVENANTS Section 6.01. Lessee's Representations and Warranties. The Lessee represents and warrants to the Owner Participant, the Owner Trustee (in its individual capacity and as Owner Trustee), the Pass Through Trustee (in its individual capacity and as Pass Through Trustee), each Liquidity Provider and the Indenture Trustee (in its individual capacity and as Indenture Trustee) that as of the Delivery Date: (a) the Lessee is a corporation duly organized and validly existing and is in good standing under the laws of the State of Delaware with its principal place of business and chief executive office (as such terms are used in Article 9 of the Uniform Commercial Code) in Memphis, Tennessee, and is duly qualified to do business as a foreign corporation and is in good standing in all jurisdictions in which it has intrastate routes, or offices or major overhaul facilities or in which other activities of the Lessee require such qualification; (b) the Lessee has full power, authority and legal right to conduct its business and operations as currently conducted and to own or hold under lease its Properties and to enter into and perform its obligations under this Agreement, the Original Agreements to which it is a party, the other Operative Agreements to which it is a party, the Pass Through Agreement and the Series Supplements (the "Lessee Documents"); (c) the Lessee is an "air carrier" within the meaning of the Transportation Code and a holder of a certificate under Sections 41102(a) and 41103 of the Transportation Code and a "citizen of the United States" within the meaning of Section 40102(a)(15) of the Transportation Code holding an "air carrier operating certificate" issued under Chapter 447 of the Transportation Code for aircraft capable of carrying ten (10) or more individuals or 6,000 pounds or more of cargo, and each such certificate is in full force and effect; (d) the Lessee possesses all necessary certificates, franchises, licenses, permits, rights and concessions and consents (collectively "permits") which are material to the operation of the routes flown by it and the conduct of its business and operations as currently conducted and each such permit is in full force and effect; (e) the execution, delivery and performance of the Lessee Documents by the Lessee have been duly authorized by all necessary corporate action on the part of the Lessee and do not require any stockholder approval, or approval or consent of any trustee or holder of any indebtedness or obligations of the Lessee, and each such document has been duly executed and delivered by the Lessee and constitutes the legal, valid and binding obligations of the Lessee enforceable against it in accordance with the terms thereof except as such enforceability may be limited by bankruptcy, insolvency, moratorium, reorganization or other similar laws or equitable principles of general application to or affecting the enforcement of creditors' rights generally (regardless of whether enforceability is considered in a proceeding in equity or at law); (f) no authorization, consent or approval of or other action by, and no notice to or filing with, any United States federal or state governmental authority or regulatory body (other than the SEC) is required for the execution, delivery or performance by the Lessee of the Lessee Documents or for the use and maintenance of the Aircraft except for such registrations, applications and recordings referred to in the opinions of Special Aviation Counsel delivered or to be delivered pursuant to Sections 4.01(m)(v) and 4.02 hereof and except for the filings referred to in Section 4.01(g) hereof, all of which shall have been duly obtained or made and shall be in full force and effect on and as of the Delivery Date, or as contemplated by said Sections; (g) neither the execution, delivery or performance by the Lessee of the Lessee Documents nor compliance with the terms and provisions hereof or thereof, conflicts or will conflict with or results or will result in a breach or violation of any of the terms, conditions or provisions of, or will require any consent or approval under, any law, governmental rule or regulation or the charter documents, as amended, or bylaws, as amended, of the Lessee or any order, writ, injunction or decree of any court or governmental authority against the Lessee or by which it or any of its Properties is bound or any indenture, mortgage or contract or other agreement or instrument to which the Lessee is a party or by which it or any of its Properties is bound, or constitutes or will constitute a default thereunder or results or will result in the imposition of any Lien upon any of its Properties; (h) there are no pending or, to the knowledge of the Lessee, threatened actions, suits, investigations or proceedings (whether or not purportedly on behalf of the Lessee) against or affecting the Lessee or any of its Property before or by any court or administrative agency which (A) involve the Aircraft, (B) except for the matters described (i) under "Legal Proceedings" in the Lessee's Annual Report on Form 10-K for the fiscal year ended May 31, 1997 (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, 1997 and November 30, 1997) and (ii) in the Lessee's Current Report on Form 8-K dated June 11, 1997, as to which no representation is made concerning the Lessee's liability (if any) or the effect of any adverse determination upon the consolidated financial condition, business or operations of the Lessee, if adversely determined, would materially and adversely affect the consolidated financial condition, business or operations of the Lessee, or (C) if adversely determined would adversely affect the ability of the Lessee to perform its obligations under the Lessee Documents; (i) the Lessee has filed or caused to be filed all tax returns which are required to be filed and has paid or caused to be paid all taxes shown to be due and payable pursuant to such returns or pursuant to any assessment received by the Lessee (other than assessments the payment of which is being contested in good faith by the Lessee by appropriate proceedings that do not involve any material danger of sale, forfeiture or loss of the Aircraft or any part thereof), and the Lessee has no knowledge of any related actual or proposed deficiency or additional assessment which either in any case or in the aggregate would materially adversely affect the Lessee's consolidated financial condition (other than, in any such case, assessments, the payment of which is being contested in good faith by the Lessee, as to which no representation is made concerning the Lessee's liability (if any) or the effect of any adverse determination upon the Lessee's consolidated financial condition); (j) except for (A) the registration in the Owner Trustee's name of the Aircraft pursuant to the Transportation Code to be accomplished by filing with the FAA Bill of Sale, the Trust Agreement, the Affidavits and the Application, (B) the filing with and, where appropriate, recordation by the FAA pursuant to the Transportation Code of the Indenture, the Indenture and Security Agreement Supplement covering the Aircraft, the Lease and the Lease Supplement covering the Aircraft, (C) the filing of the financing statements referred to in Section 4.01(g) hereof and (D) the taking of possession by the Indenture Trustee of the original counterpart of the Lease, the Lease Supplement covering the Aircraft and Ancillary Agreement I, no further action, including any filing or recording of any document, is necessary or advisable in order (i) to establish the Owner Trustee's title to and interest in the Aircraft and the Lessor's Estate as against the Lessee and any third parties, or (ii) to perfect the first security interest in and mortgage Lien on the Trust Indenture Estate in favor of the Indenture Trustee; (k) on the Delivery Date, the Owner Trustee will receive good and marketable title to the Aircraft, free and clear of all Liens, except the rights of the Owner Trustee and the Lessee under the Lease and the Lease Supplement, the rights of the Indenture Trustee under the Indenture and the beneficial interest of the Owner Participant created by the Trust Agreement; (l) the Lessee has heretofore delivered to the Owner Participant true and correct copies of the Lessee's Annual Report on Form 10-K for the fiscal year ended May 31, 1997 and Quarterly Reports on Form 10-Q for the fiscal quarters ended August 31, 1997 and November 30, 1997, and of the audited consolidated balance sheets of the Lessee for the fiscal year ended May 31, 1997 and the unaudited consolidated balance sheets of the Lessee as of August 31, 1997 and November 30, 1997, and the related consolidated statements of income, changes in common stockholders' investment and cash flows for the fiscal year and interim reporting periods ended on such dates, accompanied (except in the case of such interim reporting periods) by a report thereon containing opinions without qualification, except as therein noted, by Arthur Andersen LLP, independent public accountants; said financial statements have been prepared in accordance with generally accepted accounting principles consistently applied and present fairly the financial position of the Lessee as of such dates and the results of its operations and cash flows for such periods and such Annual Report, Quarterly Reports and financial statements did not, as of their respective dates of filing with the SEC, contain any untrue statement of a material fact or omit a material fact necessary to make the statements contained therein not misleading; (m) with respect to ERISA, except as otherwise disclosed: (i) none of the Pension Plans (as hereinafter defined) nor their related trusts have been terminated in a distress termination pursuant to Section 4041(c) of ERISA or by the PBGC (as hereinafter defined) pursuant to Section 4042 of ERISA, nor have any actions been taken to so terminate any Pension Plan or related trust and neither the Lessee nor any ERISA Affiliate (as hereinafter defined) 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) to the best of the Lessee's knowledge, neither the Lessee nor any ERISA Affiliate has engaged in a "prohibited transaction" (within the meaning of Section 4975 of the Code or Section 406 of ERISA) which could reasonably be expected to subject the Lessee to the tax or penalties on prohibited transactions imposed by Section 4975 of the Code or Section 502 of ERISA; and (viii) assuming the truth of the representations contained in Section 7.09 hereof and compliance with Section 10.06 of the Indenture, the execution and delivery of this Agreement and the other Operative Agreements and the consummation of the transactions contemplated hereby and thereby will not involve any transaction which is prohibited by Section 406 of ERISA or in connection with which a tax could be imposed pursuant to Section 4975 of the Code. No part of the funds to be used by the Lessee in satisfaction of its obligations under this Agreement or any other of the Operative Agreements to which the Lessee is a party or to which the Lessee is bound are the assets of any employee benefit plan subject to Title I of ERISA, or any individual retirement account or an employee benefit plan subject to Section 4975 of the Code. As used in this Section 6.01(m), the term "Pension Plan" means an employee pension benefit plan as defined in Section 3(2) of ERISA (other than a multiemployer plan as defined in Section 4001(a)(3) of ERISA) which is covered by Title IV of ERISA or subject to the minimum funding standards under Section 412 of the Code and which is maintained, or contributed to, by the Lessee or any ERISA Affiliate; the term "PBGC" means Pension Benefit Guaranty Corporation and any successor agency or instrumentality thereto; and the term "ERISA Affiliate" means any entity which together with the Lessee would be treated as a single employer under Section 414(b), (c), (m) or (o) of the Code; (n) the Lessee is a Citizen of the United States; (o) except for the filings referred to in Sections 4.01(g) and 4.02 hereof, no governmental approval of any kind is required of the Owner Participant or for the Owner Participant's execution of or performance under this Agreement or any agreement contemplated hereby by reason of any fact or circumstance of the Lessee, the nature of the Aircraft or the Lessee's proposed operations or use of the Aircraft; (p) on the Delivery Date, all premiums with respect to the insurance required to be provided by the Lessee on or prior to the Delivery Date under Article 13 of the Lease shall have been paid by the Lessee; (q) on the Delivery Date, all sales or use taxes relating to the sale of the Aircraft by the Lessee to the Owner Trustee which are then or were theretofore due shall have been paid; (r) the Lessee is not in default under any mortgage, deed of trust, indenture, lease or other instrument or agreement to which the Lessee is a party or by which it or any of its Properties or assets may be bound, or in violation of any applicable law, which default or violation would have a material adverse effect on the financial condition, business or operations of the Lessee or its ability to perform any of its obligations under the Lessee Documents; (s) no Default or Event of Default or Event of Loss or event, which with the passage of time or if continued unremedied or unaltered would constitute an Event of Loss, has occurred or exists; (t) on the Delivery Date, the Aircraft will be in such condition so as to enable the airworthiness certificate of such Aircraft to be in good standing under the Transportation Code; the Aircraft will have been duly certificated by the FAA as to type and airworthiness; there will be in effect with respect to the Aircraft a current and valid airworthiness certificate issued by the FAA pursuant to the Transportation Code; and there is no fact known to the Lessee which materially adversely affects the value, utility or condition of the Aircraft; (u) on the Delivery Date, the Lessee shall not be in material default in the performance of any term or condition of the Engine Warranty Assignment, the Modification Agreement or the GTA; (v) neither the Lessee nor any subsidiary of the Lessee is an "investment company" or a company "controlled by an investment company" within the meaning of the Investment Company Act of 1940, as amended; (w) on the Delivery Date, the Aircraft will, upon delivery, be fully equipped to operate in commercial service and will comply with all governmental requirements governing such service; (x) there are no broker's or underwriter's fees payable on behalf of the Lessee in connection with the transactions contemplated in the Operative Agreements other than those of the Underwriters, First Chicago Leasing Corporation and Key Global Finance Inc. referred to in Article 10 hereof; (y) neither the Lessee nor any Affiliate of the Lessee has any agreement, arrangement or understanding other than as set forth in, permitted by or described in the Operative Agreements or in any agreement, document or instrument expressly contemplated thereby with any Person regarding the transactions contemplated by the Operative Agreements; and (z) the representations and warranties of the Lessee set forth in the Original Agreements to which it is a party were correct on and as of the Certificate Closing Date (except to the extent such representations expressly related solely to a specified earlier date, in which case such warranties and representations were correct on and as of such earlier date). Section 6.02. Offering by Lessee. The Lessee represents and warrants that it has authorized no one to act on its behalf in connection with the offer or sale of any interest in the Lessor's Estate or the Trust Agreement other than First Chicago Leasing Corporation. The Lessee represents and warrants that neither it, nor, based on representations of First Chicago Leasing Corporation, First Chicago Leasing Corporation acting on its behalf, has taken or will take any action which would subject the issuance or sale of the Certificates or any interest in the Lessor's Estate or the Trust Agreement to the provisions of Section 5 of the Securities Act of 1933, as amended. Neither the Lessee nor, based on representations of First Chicago Leasing Corporation, anyone acting on its behalf has directly or indirectly offered any interest in the Lessor's Estate or the Trust Agreement, or similar interests, for sale to, or solicited any offer to acquire any of the same from, anyone other than the Owner Participant and no more than 25 other accredited investors (as such term is defined in Regulation D promulgated under the Securities Act of 1933, as amended). Section 6.03. Certain Covenants of Lessee. The Lessee covenants and agrees with the Owner Participant, the Owner Trustee (in its individual capacity and as Owner Trustee), the Pass Through Trustee (in its individual capacity and as Pass Through Trustee) and the Indenture Trustee (in its individual capacity and as Indenture Trustee) as follows: (a) The Lessee will cause to be done, executed, acknowledged and delivered at the Lessee's cost and expense all such further acts, conveyances and assurances as the Owner Trustee, the Indenture Trustee, the Pass Through Trustee or the Owner Participant shall reasonably require for accomplishing the purposes of this Agreement, the Trust Agreement, the GTA, the Engine Warranty Assignment, the Indenture, the Indenture and Security Agreement Supplement, the Tax Indemnity Agreement, the Lease and the Lease Supplement and the other Operative Agreements to which it is a party. Without limiting the generality of this Section 6.03(a), the Lessee will promptly take, or cause to be taken, at the Lessee's cost and expense, such action with respect to the recording, filing, re-recording and re-filing of the Indenture, each Indenture and Security Agreement Supplement, the Lease, each Lease Supplement and any financing statements or other instruments as may be necessary or as requested by the Indenture Trustee or the Owner Participant and appropriate, to maintain the perfection of the first security interest and the Lien created by the Indenture, and the Owner Trustee's title to and interest in the Aircraft and the Lessor's Estate as against the Lessee and any third parties or if the Lessee cannot take, or cause to be taken, such action, will furnish to the Indenture Trustee and the Owner Trustee timely notice of the necessity of such action, together with such instruments, in execution form, and such other information as may be required to enable either of them to take such action at the Lessee's cost and expense in a timely manner. (b) The Lessee shall maintain the certificates referred to in Section 7.01 of the Lease and shall cause the Aircraft to be duly registered, and at all times to remain duly registered, in the name of the Owner Trustee, under the Transportation Code, 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, so long as no Payment Default, Bankruptcy Default or Event of Default shall have occurred and be continuing, if, at any time after December 31, 2004, the Lessee has requested their consent to the registration of the Aircraft in the name of the Owner Trustee (or, if appropriate, in the name of the Lessee or a sublessee as a "lessee" or a "sublessee"), at the Lessee's expense, in a country listed in Schedule III hereto with which the United States then maintains normal diplomatic relations, the Owner Participant, the Owner Trustee 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 and opinion shall constitute reasonable grounds to withhold such consent). As a condition to any change in the registration of the Aircraft, the Owner Participant, the Owner Trustee in its individual and trust capacities, and the Indenture Trustee shall have received, all at the Lessee's cost and expense: (i) assurances satisfactory to them: (A) to the effect that the insurance provisions of the Lease have been and will be complied with and are and shall be in full force and effect upon such change of registry; (B) 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 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; (C) that such new country of registry (x) would provide substantially equivalent protection for the rights of owner participants, lessors or lenders in similar transactions as provided under United States law (except that, in the absence of restrictions under the laws of such country on rights and remedies of lessors and secured parties similar to those imposed by Sections 362 and 363 of the Bankruptcy Code, rights and remedies similar to those available under Section 1110 of the Bankruptcy Code shall not be required), and (y)(i) if such change in registration is made at the request of the Lessee or an Affiliate thereof, imposes maintenance standards at least comparable to those of the FAA, and (ii) if such change in registration is made in connection with a sublease permitted under Section 7.02(a)(i) of the Lease, imposes maintenance standards in conformity with those set forth in Section 7.02(a)(i) of the Lease; (D) that import and export certificates and any exchange permits necessary to allow all Rent and other payments provided for under the Lease, if required, shall have been procured at the Lessee's own cost and expense by the Lessee; (E) that duties and tariffs, if applicable, shall have been paid for 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 Pass Through Trustee (in its individual capacity, and as trustee under the Pass Through Agreement) and the other Indemnitees under this Agreement, the Indenture, the Pass Through Agreement and (in the case of the Owner Participant only) the Tax Indemnity Agreement, afford each such party substantially the same protection as provided prior to such change of registry and if the sublessee, if any, is a government or governmental body, such sublessee shall have effectively waived any rights to sovereign immunity; (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) and the Trust Estate pursuant to Article 8 hereof or for which the Lessee has not agreed to indemnify such parties in a manner satisfactory to such parties; (H) of the payment by the Lessee of any reasonable fees and expenses of the Owner Participant, the Owner Trustee, the Indenture Trustee and the Pass Through Trustee in connection with such change of registry, including any reasonable attorneys' fees and expenses; (I) that the Lessee shall maintain the registration of the Aircraft under the laws of such country unless and until the registration of the Aircraft is changed as provided herein, and shall cause to be done at all times all other acts (including, if applicable, the filing, recording and delivery of any document or instrument and the payment of any sum) necessary or, by reference to prudent industry practice in such country, advisable in order to create, preserve and protect the interests of the Lessor and the Indenture Trustee as against the Lessee or any third parties in such jurisdiction; (J) as to the continuation of the Lien of the Indenture as a first priority, duly perfected Lien on the Aircraft and the Trust Indenture Estate, that all recordings and filings required to so perfect the Lien of the Indenture have been duly effected, and that no Liens (except Liens permitted under Section 6.01 of the Lease) shall arise by reason of such registration; and (K) that appropriate deregistration powers of attorney in favor of the Owner Trustee and the Indenture Trustee have been executed and delivered by the Lessee and any sublessee and, if necessary or desirable for the effectiveness thereof, filed with the relevant aeronautics authority. (ii) a favorable opinion of counsel (reasonably satisfactory to the Owner Trustee, the Indenture Trustee and the Owner Participant) in the new jurisdiction of registry, addressed and reasonably satisfactory to such parties in scope, form and substance, to the effect: (A) that the terms (including, without limitation, the governing law, service-of-process and jurisdictional-submission provisions thereof) of the Lease and the Indenture are legal, valid, binding and enforceable in such jurisdiction against the Lessee, any sublessee, the Owner Trustee and the Indenture Trustee, respectively; (B) that it is not necessary for the Owner Participant, the Owner Trustee, the Indenture Trustee or the Pass Through Trustee to register or qualify to do business or meet other requirements not already met in such jurisdiction in connection with the registration in the new jurisdiction (and the filing and/or recordation therein of the Indenture or the Lease) and the exercise of any rights or remedies with respect to the Aircraft pursuant to the Lease or the Indenture or in order to maintain such registration and the Lien of the Indenture; (C) that the courts of such jurisdiction would provide substantially equivalent protection to the Lessor, the Owner Participant, the Pass Through Trustee and the Indenture Trustee as provided under United States law (with the exception described in paragraph (b)(i)(C)(x) of this Section 6.03) in respect of the transactions contemplated hereby, including, without limitation, the remedies provided in the Indenture and the Lease; (D) that there is no tort liability of the beneficial owner, record owner, lessor or mortgagee of an aircraft not in possession thereof under the laws of such jurisdiction, other than such 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 Trustee, the Owner Participant and the Indenture Trustee, such opinion shall be waived, if insurance reasonably satisfactory to the Owner Participant, the Indenture Trustee and the Owner Trustee, in its individual capacity, is provided, at the Lessee's expense, to cover such risk and the Lessee undertakes to keep such insurance in full force and effect); (E) that the laws of such jurisdiction (i) will not impair the rights of the Lessor in and to the Aircraft and (ii) (unless the Lessee shall have agreed to provide insurance reasonably satisfactory to the Indenture Trustee and the Owner Participant covering the risk of requisition of use of the Aircraft by the government of registry of the Aircraft) require fair compensation by the government of such jurisdiction payable in currency freely convertible into United States dollars for the loss of use of the Aircraft in the event of such requisition; (F) that the Owner Trustee's title to the Aircraft is recognized and fully enforceable in such jurisdiction, that such jurisdiction will give effect to the title of the Aircraft therein substantially to the same extent as does the Government, and that the Lien of the Indenture shall continue as a first priority, duly perfected lien on the Aircraft; (G) as to the continuation of the Lien of the Indenture as a first priority, duly perfected Lien on the Aircraft; (H) that the rights of the Lessor in and to the Aircraft will not be impaired in such new jurisdiction of registry; and (I) to such further effect with respect to such other matters as the Owner Participant, the Owner Trustee or the Indenture Trustee may reasonably request. (c) The Lessee shall promptly file any reports, or furnish to the Owner Trustee and the Owner Participant such information as may be required to enable the Owner Trustee and the Owner Participant timely to file any reports required to be filed by the Owner Trustee as the Lessor and the Owner Participant under the Lease with any governmental authority. (d) The Lessee will cause the Special Aviation Counsel to file, and where appropriate record, with the Aeronautics Authority on the Delivery Date, the FAA Bill of Sale, the Application, the Affidavits, the Lease, the Lease Supplement, the Trust Agreement, the Indenture and the Indenture and Security Agreement Supplement in the following order of priority: first, the FAA Bill of Sale, second, the Application with the Trust Agreement and the Affidavits attached thereto, third, the Indenture with the Indenture and Security Agreement Supplement attached thereto, and fourth, the Lease with the Lease Supplement, the Indenture and the Indenture and Security Agreement Supplement attached thereto. (e) The Lessee will furnish at its expense to the Owner Participant, the Owner Trustee and the Indenture Trustee annually after the execution of this Agreement, by March 15 of each year, commencing with the year 1999, an opinion, reasonably satisfactory to the Owner Participant and the Indenture Trustee, of Special Aviation Counsel, or other counsel specified from time to time by the Lessee acceptable to the Lessor and the Indenture Trustee: (i) stating either (1) that in the opinion of such counsel such action has been taken with respect to the recording, filing, re-recording and re-filing of the Lease, the Indenture, the Trust Agreement, and any supplements to any of them and any financing statements, continuation statements or other instruments, and all other action has been taken, as is necessary to maintain the Owner Trustee's title to and interest in the Aircraft and the Lessor's Estate as against the Lessee and any third parties and to maintain the perfection of the security interests created by said documents and reciting the details of such action, or (2) that in the opinion of such counsel no such action is necessary to maintain such title or the perfection of such security interests; (ii) specifying all other action which needs to be taken during the succeeding 14 months in order to maintain such title and the perfection of such security interests (which the Lessee agrees timely to take); and (iii) stating that the Owner Trustee is the owner of legal title to the Aircraft, and the Aircraft is free and clear of all Liens, except the security interest created by the Indenture and such as are permitted by the Lease and the Indenture. (f) The Lessee shall at all times maintain its corporate existence except as permitted by Section 6.03(g) hereof and all of its rights, privileges and franchises necessary in the normal conduct of its business, except for any corporate right, privilege or franchise (i) that it determines, in its 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 or the Owner Participant or the ability of the Lessee to perform its obligations under the Operative Agreements. (g) The Lessee shall not enter into any merger or consolidation, or convey, transfer or lease all or substantially all of its assets as an entirety to any Person, unless the surviving corporation or Person which acquires by conveyance, transfer or lease all or substantially all of the assets of the Lessee as an entirety (i) is a domestic corporation organized and existing under the laws of the United States or a political subdivision thereof, (ii) is a Citizen of the United States, (iii) is a U.S. Air Carrier, (iv) expressly assumes by an instrument in writing in form and substance satisfactory to the Owner Participant, 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 outside counsel to the Lessee which counsel shall be reasonably satisfactory to the Owner Participant and the Indenture Trustee and which opinion shall be reasonably satisfactory to the Owner Participant and the Indenture Trustee, and an officer's certificate, each stating that such merger, consolidation, conveyance, transfer or lease and the instrument noted in clause (iv) above comply with this Section 6.03(g), that such instrument is a legal, valid and binding obligation of, and is enforceable against, such survivor or Person (except as such enforceability may be limited by bankruptcy, insolvency, moratorium, reorganization or other similar laws or equitable principles of general application to or affecting the enforcement of creditors' rights generally), and 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 a Default not capable of cure within the applicable grace period therefor or an Event of Default. Upon any consolidation or merger, or any conveyance, transfer or lease of all or substantially all of the assets of the Lessee and the satisfaction of the conditions specified in this Section 6.03(g), the successor corporation formed by such consolidation or into which the Lessee is merged or the Person to which such conveyance, transfer or lease is made shall succeed to, and be substituted for, and may exercise every right and power of, the Lessee under this Agreement and the Lease and each other Operative Agreement and any other document contemplated hereby and thereby to which the Lessee is a party with the same effect as if such successor corporation had been named as the Lessee herein and therein. No such conveyance, transfer or lease of all or substantially all of the assets of the Lessee as an entirety shall have the effect of releasing the Lessee or any successor corporation which shall theretofore have become the Lessee hereunder in the manner prescribed in this Section 6.03(g) from its liability hereunder or under the other Operative Agreements. Nothing contained herein shall permit any lease, sublease, or other arrangement for the use, operation or possession of the Aircraft except in compliance with the applicable provisions of the Lease. (h) The Lessee agrees to give prompt written notice to the Owner Participant, the Owner Trustee 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 (and in any event within five (5) Business Days after) any officer of the Lessee obtaining knowledge of any condition or event which constitutes a Default or 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; (F) promptly, notice of all legal or arbitral proceedings, and of all proceedings by or before any governmental or regulatory authority or agency, and of any material development in respect of such legal or other proceedings affecting the Lessee, which in each case, if adversely determined, would, in the Lessee's reasonable judgment, materially impair the ability of the Lessee to perform its obligations under the Operative Agreements or consummate the transactions contemplated hereby and thereby; and (G) from time to time, such other financial information as the Lessor, the Owner Participant or the Indenture Trustee may reasonably request. Concurrently with the delivery of the financial statements referred to in clause (A) above, the Lessee shall deliver to the Lessor, the Owner Participant, the Indenture Trustee and the Pass Through 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 any Default or any Event of Default or if a Default or an Event of Default exists or did exist, specifying the nature thereof, the period of existence thereof and what action the Lessee has taken or proposes to take with respect thereto. Section 6.04. Survival of Representations and Warranties. The representations and warranties of the Lessee provided in Sections 6.01 and 6.02 hereof and in any other Operative Agreement shall survive the making available by the Owner Participant of its Commitment, 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) [Reserved]. (b) Owner Participant. The Owner Participant represents and warrants that its interest in the Lessor's Estate and the Trust Agreement is being acquired by it for its own account and not with a view to resale or distribution thereof; provided, however, that the disposition by the Owner Participant of its interest in the Lessor's Estate and the Trust Agreement shall, subject to the terms and provisions of Article 5 of the Trust Agreement, at all times be within its control and the foregoing representation shall neither expand nor limit the Owner Participant's right to transfer or sell such interests pursuant to the terms of this Agreement. The Owner Participant further represents and warrants that neither the Owner Participant nor anyone else authorized to act on its behalf has directly or indirectly offered any interest in the Lessor's Estate or the Trust Agreement, or in any similar security, for sale to, or solicited any offer to acquire any of the same from, anyone. The Owner Participant further represents and warrants that neither it nor anyone authorized to act on its behalf has made or will make any offer, solicitation or sale of any interest in the Lessor's Estate or the Trust Agreement in violation of the provisions of Section 5 of the Securities Act of 1933, as amended. (c) Owner Trustee. The Owner Trustee represents and warrants, both in its individual capacity and as trustee, that neither it nor anyone authorized to act on its behalf (i) has directly or indirectly offered or sold or will directly or indirectly offer or sell any interest in the Lessor's Estate, or in any similar security relating to the Lessor's Estate, or in any security the offering of which for purposes of the Securities Act of 1933, as amended, would be deemed to be part of the same offering as the offering of the aforementioned securities to, or solicited any offer to acquire any of the same from, any Person (other than the Initial Owner Participant and the Owner Participant) and (ii) except as contemplated in Section 8.02(a) of the Indenture, shall own Certificates. Section 7.02. Citizenship. (a) Generally. Each of the Owner Trustee, in its individual capacity and as Trustee, and the Owner Participant severally represents and warrants that it is or will be a Citizen of the United States on the Delivery Date. If the Owner Participant or Owner Trustee in its individual capacity does not comply with the requirements of this Section 7.02, the Owner Trustee, the Indenture Trustee and the Owner Participant hereby agree that a Default or an Event of Default shall not be deemed to have occurred and be continuing under the Lease due to non-compliance by the Lessee with the registration requirements in the Lease occasioned by the noncompliance of the Owner Participant or the Owner Trustee. (b) Owner Trustee. The Owner Trustee, in its individual capacity, covenants that if at any time on or after the Delivery Date it shall cease to be a Citizen of the United States, it will resign immediately as the Owner Trustee if such citizenship is necessary under the Transportation Code as in effect at such time or, if it is not necessary under the Transportation Code as in effect at such time, if it is informed in writing by the Lessee, the Indenture Trustee or the Owner Participant that such lack of United States citizenship would have any adverse effect on the Lessee, the Indenture Trustee, the Holders or the Owner Participant. The Owner Trustee, in its individual capacity, further covenants that if at any time it appears reasonably probable that it will cease to be a Citizen of the United States based on information that is (i) known to a Responsible Officer or (ii) generally known to the public, it will promptly (and in any event within fifteen (15) days of such Responsible Officer's acquiring knowledge thereof or the event giving rise to such public knowledge (such as a press release or publication in a leading newspaper or journal), as the case may be) so notify, to the extent permitted by law, all parties to this Agreement. (c) Owner Participant. The Owner Participant agrees, solely for the benefit of the Lessee, the Pass Through Trustee, the Indenture Trustee and the Owner Trustee, that if at any time on or after the Delivery Date when the Aircraft is registered or the Lessee proposes to register the Aircraft in the United States (i) it shall fail 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 Transportation Code and regulations then applicable thereunder, then the Owner Participant shall give notice thereof to the Lessee, the Owner Trustee and the Indenture Trustee and shall (at its own expense and without any reimbursement or indemnification from the Lessee) promptly but in any event within fifteen (15) days (x) effect a voting trust or other similar arrangement, (y) transfer in accordance with the terms of this Agreement and the Trust Agreement all its rights, title and interest in and to such Trust Agreement, the Lessor's Estate and this Agreement, or (z) take any other alternative action that would prevent any deregistration, or maintain the United States registration, of the Aircraft; or (ii) it determines that there is a reasonable likelihood that it will in the future fail to qualify as a Citizen of the United States, and the Aircraft would as a result thereof become ineligible for registration in the name of the Owner Trustee under the Act, then the Owner Participant shall give notice of such determination to the Lessee and the Indenture Trustee and shall (at its own expense and without reimbursement or indemnification from the Lessee and on such timetable as shall be reasonable under the circumstances and consistent with its obligations under this Section 7.02(c)) prepare such documentation and establish such procedures as shall be required to effect the voting trust, arrangements, transfer or other action referred to in the preceding clause (i) in each case to be effective on the date upon which the Owner Participant fails to qualify as a Citizen of the United States (but in no event later than fifteen (15) days after such date) so as to prevent any deregistration of and to maintain the 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 incurred by any such other party or Holder as the result of the representation and warranty of the Owner Participant in the first sentence of Section 7.02(a) hereof proving to be untrue as of the Delivery Date; and (B) to the Lessee, the Indenture Trustee or the Pass Through Trustee for any damages actually incurred by the Lessee, the Indenture Trustee or the Pass Through Trustee as a result of the Owner Participant's failure to comply with its obligations pursuant to the first sentence of this Section 7.02(c). Each other party hereto agrees, upon the request and at the sole expense of the Owner Participant, to cooperate with the Owner Participant in making any filings required in order for the Owner Participant to comply with its obligations under the first sentence of this Section 7.02(c), but without any obligation on the part of such other party to incur any expense for which the Owner Participant has not agreed to reimburse such party or to take any action believed by it in good faith to be adverse to such party's business interests. Section 7.03. Representations, Warranties and Covenants of Owner Participant. (a) Representations, Warranties and Covenants. In addition to and without limiting its other representations and warranties provided for in this Article 7, the Owner Participant represents and warrants as of the Delivery Date, that: (i) it is a corporation duly incorporated and validly existing in good standing under the laws of its jurisdiction of incorporation and it has full corporate 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 the Operative Agreements; (ii) the execution, delivery and performance by it of this Agreement and the other Operative Agreements to which it is or is to be a party have been duly authorized by all necessary corporate action on its part and, assuming the accuracy of the Lessee's representations in Section 6.01(o) hereof, do not require any governmental approvals that would be required to be obtained by the Owner Participant; (iii) based on the representations, warranties and covenants contained in Sections 6.01(m)(viii) and 6.02 hereof and compliance with Section 10.06 of the Indenture, neither the execution, delivery or performance by the Owner Participant of this Agreement and the other Operative Agreements to which it is or is to be a party nor compliance with the terms and provisions hereof or thereof, conflicts or will conflict with or results or will result in a breach or violation of any of the terms, conditions or provisions of, or will require any consent or approval under any law, governmental rule or regulation applicable to the Owner Participant or the charter documents, as amended, or by-laws, 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 other Operative Agreements to which it is or is to be a party have been or on the Delivery Date will be duly executed and delivered by the Owner Participant and constitute or on the Delivery Date will constitute the legal, valid and binding obligation of the Owner Participant enforceable against it in accordance with their terms except as such enforceability may be limited by bankruptcy, insolvency, moratorium, reorganization or other similar laws or equitable principles of general application to or affecting the enforcement of creditors' rights (regardless of whether enforceability is considered in a proceeding in equity or at law); (v) 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 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 adversely affect 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; (vii) neither the execution and delivery by it of this Agreement or the other Operative Agreements to which it is or is to be a party nor the performance of its obligations hereunder or thereunder requires the consent or approval of or the giving of notice to, the registration with, or the taking of any other action in respect of, any governmental authority or agency that would be required to be obtained or taken by the Owner Participant except for filings contemplated by this Agreement; (viii) no part of the funds to be used by it to acquire the interests to be acquired by the Owner Participant under this Agreement constitutes assets (within the meaning of ERISA and any applicable rules and regulations) of any employee benefit plan subject to Title I of ERISA or of any plan or individual retirement account subject to Section 4975 of the Code; (ix) it is a "U.S. Person" as defined in Section 7701(a)(30) of the Code and if it shall at any time cease to be such a "U.S. Person", it shall furnish to each Certificate Holder an indemnity, in form and substance reasonably satisfactory to such Certificate Holder, for any Taxes that may be imposed on such Holder as a result of the Owner Participant's failure to be such a "U.S. Person"; and (x) it has a consolidated tangible net worth of not less than $75,000,000. Notwithstanding the foregoing or anything else contained in this Agreement, the Owner Participant makes no representation or warranty in this Agreement with respect to laws, rules or regulations relating to aviation or to the nature or use of the equipment owned by the Owner Trustee, other than such laws, rules or regulations relating to the citizenship requirements of the Owner Participant under applicable aviation law and the other matters set forth in Section 7.02(c). (b) Lessor's Liens. The Owner Participant further represents, warrants and covenants that there are no Lessor's Liens attributable to it (or an Affiliate thereof) and that there will not be any Lessor's Lien attributable to it (or an Affiliate thereof) on the Delivery Date. The Owner Participant agrees with and for the benefit of the Lessee, the Owner Trustee, the Indenture Trustee and the Pass Through Trustee and any subsequent Holders of the Certificates that the Owner Participant will, at its own cost and expense, take such action as may be necessary (by bonding or other appropriate actions, so long as neither the Lessee's operation and use of the Aircraft nor the validity and priority of the Lien of the Indenture is impaired) to duly discharge and satisfy in full, promptly and in any event within 30 days after the same first becomes known to the Owner Participant, any Lessor's Lien attributable to the Owner Participant (or an Affiliate thereof), provided, however, that the Owner Participant shall not be required to discharge or satisfy such Lessor's Lien which is being contested by the Owner Participant in good faith and by appropriate proceedings so long as such proceedings do not involve any material danger of the sale, forfeiture or loss of the Aircraft or the Lessor's Estate or the Trust Indenture Estate or any interest in any thereof or otherwise materially adversely affect the validity or priority of the Lien of the Indenture. (c) Indemnity for Lessor's Liens. The Owner Participant agrees to indemnify and hold harmless each other party hereto from and against any loss, cost, expense or damage which may be suffered by any such party as the result of the failure of the Owner Participant to discharge and satisfy any Lessor's Liens attributable to the Owner Participant or any of its Affiliates or to the Lessor (to the extent arising from acts or omissions of 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, as in effect on the date hereof or as amended in accordance with the terms of the Operative Agreements. (e) Actions with Respect to Lessor's Estate, Etc. The Owner Participant agrees that it will not take any action to subject the Lessor's Estate or the trust established by the Trust Agreement, as debtor, to the reorganization or liquidation provisions of the Bankruptcy Code or any other applicable bankruptcy or insolvency statute. Section 7.04. Representations, Covenants and Warranties of SSB and the Owner Trustee. (a) In addition to and without limiting its other representations and warranties provided for in this Article 7, SSB represents and warrants, in its individual capacity with respect to items (i), (ii), (iii)(A), (iv), (v), (vi) and (vii) below, and as the Owner Trustee with respect to items (iii)(B) and (iv) as of the Delivery Date that: (i) it is a national banking association duly organized and validly existing in good standing under the laws of the United States of America with its principal place of business and chief executive office (as such terms are used in Article 9 of the Uniform Commercial Code) at 225 Asylum Street, Goodwin Square, Hartford, Connecticut 06103, Attention: Corporate Trust Department and has full corporate power and authority, in its individual capacity or (assuming the Trust Agreement has been duly authorized, executed and delivered by the Owner Participant) as the Owner Trustee, as the case may be, to carry on its business as now conducted, and to execute, deliver and perform this Agreement and the other Operative Agreements to which it is or is to be a party; (ii) the execution, delivery and performance by SSB, either in its individual capacity or as the Owner Trustee, as the case may be, of this Agreement and the Operative Agreements to which it is or is to be party have been duly authorized by all necessary corporate action on its part, and do not contravene its articles of association or by-laws; each of this Agreement and the other Operative Agreements to which it is or is to be a party has been duly authorized, executed and delivered by SSB, either in its individual capacity or as the Owner Trustee, as the case may be, and neither the execution and delivery thereof nor SSB's performance of or compliance with any of the terms and provisions thereof will violate any Federal or Connecticut law or regulation governing SSB's banking or trust powers; (iii) (A) assuming due authorization, execution and delivery by each other party thereto, each of the Operative Agreements to which it is or is to be party when duly executed and delivered will, to the extent each such document is entered into by SSB in its individual capacity, constitute the legal, valid and binding obligation of SSB in its individual capacity enforceable against it in such capacity in accordance with its respective terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization or other similar laws or equitable principles of general application to or affecting the enforcement of creditors' rights (regardless of whether enforceability is considered in a proceeding in equity or at law), and the performance by SSB in its individual capacity of any of its obligations thereunder does not contravene any lease, regulation or contractual restriction binding on SSB in its individual capacity; (B) assuming due authorization, execution and delivery by each other party thereto, each of the Operative Agreements to which it is or is to be party when duly executed and delivered will, to the extent each such document is entered into by the Owner Trustee in its trust capacity, constitute the legal, valid and binding obligation of the Owner Trustee enforceable against it in such capacity in accordance with its respective terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization or other similar laws or equitable principles of general application to or affecting the enforcement of creditors' rights (regardless of whether enforceability is considered in a proceeding in equity or at law), and the performance by the Owner Trustee of any of its obligations thereunder does not contravene any lease, regulation or contractual restriction binding on the Owner Trustee; (iv) there are no pending or, to its knowledge, threatened actions or proceedings against SSB before any court or administrative agency which would materially and adversely affect the ability of SSB, either in its individual capacity or as the Owner Trustee, as the case may be, to perform its obligations under the Operative Agreements to which it is or is to be party; (v) it shall give the Lessee, the Indenture Trustee and the Owner Participant at least thirty (30) days' prior written notice in the event of any change in its chief executive office or name; (vi) neither the execution and delivery by it, either in its individual capacity or as the Owner Trustee, as the case may be, of any of the Operative Agreements to which it is or is to be a party, requires on the part of SSB in its individual capacity or any of its Affiliates the consent or approval of or the giving of notice to, the registration with, or the taking of any other action in respect of, any Federal or Connecticut governmental authority or agency governing its banking or trust powers; and (vii) on the Delivery Date the Owner Trustee shall be holding whatever title to the Aircraft as was conveyed to it by the Lessee, the Aircraft shall be free of Lessor's Liens attributable to SSB in its individual capacity and SSB in its individual capacity is a Citizen of the United States. (b) Lessor's Liens. SSB, in its individual capacity, further represents, warrants and covenants that there are no Lessor's Liens attributable to it in its individual capacity and that there will not be any such Lessor's Liens on the Delivery Date. The Owner Trustee, in its trust capacity, and at the cost and expense of the Lessee, covenants that it will in its trust capacity promptly, and in any event within 30 days after the same shall first become known to it, take such action as may be necessary to discharge duly any Lessor's Liens attributable to it in its trust capacity. SSB, in its individual capacity, covenants and agrees that it will at its own expense take such action as may be necessary to duly discharge and satisfy in full, promptly, and in any event within 30 days after the same shall first become known to it, any Lessor's Liens attributable to it in its individual capacity or the consolidated group of taxpayers of which it (in such capacity) is a part which may arise at any time after the date of this Agreement. (c) Indemnity for Lessor's Liens. SSB, in its individual capacity, agrees to indemnify and hold harmless the Lessee, the Indenture Trustee, the Owner Participant, the Pass Through Trustee and the Owner Trustee from and against any loss, cost, expense or damage which may be suffered by the Lessee, the Indenture Trustee, the Owner Participant, the Pass Through Trustee or the Owner Trustee as a result of the failure of SSB to discharge and satisfy any Lessor's Liens attributable to it in its individual capacity or the consolidated group of taxpayers of which it (in such capacity) is a part which may arise at any time after the date of this Agreement, as described in Section 7.04(b) hereof. (d) Actions With Respect to Lessor's Estate, Etc. Neither SSB, in its individual capacity, nor the Owner Trustee will take any action to subject the Lessor's Estate or the trust established by the Trust Agreement, as debtor, to the reorganization or liquidation provisions of the Bankruptcy Code or any other applicable bankruptcy or insolvency statute. Section 7.05. Representations, Warranties and Covenants of the Indenture Trustee. (a) The Indenture Trustee in its individual capacity (other than as the Pass Through Trustee) represents as of the Delivery Date as follows: (i) it is a national banking association duly organized and validly existing in good standing under the laws of the United States of America and has the corporate power and authority to enter into and perform its obligations under the Indenture, this Agreement and the other Operative Agreements to which it is a party and to authenticate the Certificates delivered on the Certificate Closing Date; (ii) the Indenture and this Agreement and the other Operative Agreements to which it is or is to be a party, and the authentication of the Certificates delivered on the Certificate Closing Date, have been duly authorized by all necessary corporate action on its part, and neither the execution and delivery thereof nor its performance of any of the terms and provisions thereof will violate any Federal or Utah law or regulation relating to its banking or trust powers or contravene or result in any breach of, or constitute any default under, its articles of association or by-laws; (iii) each of the Indenture and this Agreement, and the other Operative Agreements to which it is or is to be a party, has been duly executed and delivered by it and, assuming that each such agreement is the legal, valid and binding obligation of each other party thereto, is the legal, valid and binding obligation of the Indenture Trustee, enforceable against the Indenture Trustee in accordance with its terms except as such enforceability may be limited by bankruptcy, insolvency, reorganization or other similar laws or equitable principles of general application to or affecting the enforcement of creditors' rights (regardless of whether enforceability is considered in a proceeding in equity or at law); (iv) neither the execution and delivery by it of the Indenture and this Agreement and the other Operative Agreements to which it is or is to be a party, nor the performance by it of any of the transactions contemplated hereby or thereby, requires the consent or approval of, the giving of notice to, the registration with, or the taking of any other action in respect of, any Federal or state governmental authority or agency governing its banking and trust powers; (v) on the Delivery Date, the Indenture Trustee will hold the original counterparts of the Lease, the Lease Supplement and Ancillary Agreement I; and (vi) the representations and warranties of the Indenture Trustee set forth in the Original Agreements to which it is a party were correct on and as of the Certificate Closing Date (except to the extent such representations expressly related solely to a specified earlier date, in which case such warranties and representations were correct on and as of such earlier date). (b) Indenture Trustee's Liens. The Indenture Trustee, in its individual capacity, further represents, warrants and covenants that there are no Indenture Trustee's Liens attributable to it in its individual capacity and that there will not be any Indenture Trustee's Liens or the consolidated group of taxpayers of which it (in such capacity) is a part which may arise at any time after the date of this Agreement on the Aircraft. The Indenture Trustee, in its individual capacity, covenants and agrees that it will at its own expense take such action as may be necessary to duly discharge and satisfy in full, promptly, and in any event within 30 days, after the same shall first become known to it, any Indenture Trustee's Liens. (c) Indemnity for Indenture Trustee's Liens. The Indenture Trustee, in its individual capacity, agrees to indemnify and hold harmless the Lessee, the Owner Participant, the Owner Trustee and the Pass Through Trustee from and against any loss, cost, expense or damage which may be suffered by the Lessee, the Indenture Trustee, the Owner Participant, the Owner Trustee or the Pass Through Trustee as a result of the failure of the Indenture Trustee to discharge and satisfy any Indenture Trustee's Liens attributable to it in its individual capacity or the consolidated group of taxpayers of which it (in such capacity) is a part which may arise at any time after the date of this Agreement, as described in Section 7.05(b) hereof. Section 7.06. Indenture Trustee's Notice of Default. The Indenture Trustee agrees to give the Owner Participant notice of any Payment Default or Event of Default promptly upon a Responsible Officer of the Indenture Trustee having actual knowledge thereof. Section 7.07. Releases from Indenture. The Indenture Trustee covenants and agrees, for the benefit of the Lessee and the Owner Participant, to execute and deliver the instruments of release from the Lien of the Indenture which it is required to execute and deliver in accordance with the provisions of Article XIV of the Indenture, and the Owner Participant agrees, for the benefit of the Lessee, to cause the Owner Trustee to request the Indenture Trustee to execute and deliver such instruments of release. Section 7.08. Covenant of Quiet Enjoyment. Each of the Owner Participant, the Indenture Trustee, the Pass Through Trustee and the Owner Trustee covenants and agrees as to itself only that, so long as no Event of Default under the Lease has occurred and is continuing, neither such Person nor any Person lawfully claiming through such Person (other than in the case of the Owner Participant, the Indenture Trustee, the Pass Through Trustee or the Owner Trustee) shall interfere with the Lessee's or any permitted sublessee's right to quietly enjoy the Aircraft during the Term without hindrance or disturbance by such Person; provided, however, that the Owner Trustee shall not be liable for any act or omission of the Indenture Trustee or the Pass Through Trustee or any other Person claiming through the Indenture Trustee or the Pass Through Trustee. Section 7.09. Pass Through Trustee's Representations and Warranties. The Pass Through Trustee, in its individual capacity (except with respect to clause (iii) below), represents and warrants as of the Delivery Date that: (i) it is a national banking association duly organized and validly existing in good standing under the laws of the United States of America and has the corporate power and authority to enter into and perform its obligations under this Agreement; (ii) the execution, delivery and performance of this Agreement and the performance of its obligations hereunder have been fully authorized by all necessary corporate action on its part, and neither the execution and delivery hereof nor its performance of any of the terms and provisions hereof will violate any Federal or Utah law or regulation relating to its banking or trust powers or contravene or result in any breach of, or constitute any default under its articles of association, or bylaws or the provisions of any indenture, mortgage, contract or other agreement to which it is a party or by which it or its properties may be bound or affected; (iii) this Agreement has been duly executed and delivered by it (in its individual and trust capacities) and, assuming that this Agreement is the legal, valid and binding obligation of each other party thereto, is or will be, as the case may be, the legal, valid and binding obligation of the Pass Through Trustee (in its individual and trust capacities), enforceable in accordance with its respective terms except as limited by bankruptcy, insolvency, moratorium, reorganization or other similar laws or equitable principles of general application to or affecting the enforcement of creditors' rights generally (regardless of whether such enforceability is considered in a proceeding in equity or at law); and (iv) the representations and warranties of the Pass Through Trustee set forth in the Original Agreements to which it is a party were correct on and as of the Certificate Closing Date (except to the extent such representations expressly related solely to a specified earlier date, in which case such warranties and representations were correct on and as of such earlier date). Section 7.10. Survival of Representations, Warranties and Covenants. The representations, warranties and covenants of the Owner Participant, the Owner Trustee (in its individual or trust capacity), the Pass Through Trustee (in its individual or trust capacity), the Indenture Trustee (in its individual or trust capacity) and the Subordination Agent (in its individual or trust capacity) provided for in this Article 7, and their respective obligations under any and all of them, shall survive the making available by the Participants of their respective Commitments, the lease of the Aircraft and the expiration or other termination of this Agreement, and the other Operative Agreements. Section 7.11. Lessee's Assumption of the Certificates. (a) Subject to compliance by the Lessee with all of its obligations under the Operative Agreements, each of the Owner Participant, the Owner Trustee, the Indenture Trustee, the Pass Through Trustee and the Lessee covenants and agrees that if the Lessee elects to terminate the Lease and to purchase the Aircraft pursuant to Section 4.02(a)(A), (D), (E) or (F) of the Lease, and so long as no 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 Lien of the Indenture, all of the Owner Trustee's right, title and interest in and to the Aircraft, and if the Lessee, in connection with such purchase, elects pursuant to Section 4.02(a)(A), (D), (E) or (F) of the Lease to assume the obligations of the Owner Trustee to the Indenture Trustee and the Holders under the Indenture, the Certificates and hereunder, and 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 7.11, such documentation shall become effective and the Owner Participant and the Owner Trustee shall be released from all obligations in respect of the Certificates, the Indenture, this Agreement and all other Operative Agreements, except any obligations which shall have arisen (or with respect to events which shall have occurred) prior to such assumption, and take all such other actions, at the Lessee's expense, as are reasonably necessary to permit such assumption by the Lessee. (b) In connection with such assumption: (i) the Lessee shall execute and deliver an instrument satisfactory in form and substance to the Indenture Trustee (A) pursuant to which the Lessee irrevocably and unconditionally assumes and undertakes, with full recourse to the Lessee, to pay, satisfy and discharge when and as due (at the stated maturity thereof, by acceleration or otherwise) the principal of, Make-Whole Premium, if any, interest and all other sums owing on all Outstanding Certificates (or on the Lessee's substituted obligations) in accordance with their terms and to punctually perform and observe all of the covenants and obligations hereunder and under the Indenture and the Certificates (as the same may be amended in connection with such assumption) to be performed or observed by the Owner Trustee and (B) which contains amendments to the Indenture, in form and substance satisfactory to the Indenture Trustee and the Holders, that incorporate therein such provisions from the Lease and this Agreement as may be appropriate, including, without limitation, events of default substantially identical in scope and effect to those set forth in the Lease and covenants substantially identical to the covenants of the Lessee hereunder and under the Lease; (ii) the instrument referred to in paragraph (i) of this Section 7.11(b), any 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 (or the Lessee's substituted obligations) shall be filed in such form, manner and places as are necessary or, in the reasonable opinion of the Indenture Trustee, advisable for such purpose; (iii) the Indenture Trustee shall have received an insurance report dated the effective date of such assumption of an independent insurance broker and certificates of insurance, each in form and substance satisfactory to the Indenture Trustee, as to the due compliance as of the effective date of such assumption with the terms of Article 13 of the Lease (as it relates to the Indenture Trustee) relating to the insurance with respect to the Aircraft; (iv) the Indenture Trustee shall have received evidence that as of the effectiveness of the assignment on the date of such assumption the Aircraft is free and clear of all Liens other than the Lien of the Indenture and other Permitted Liens; (v) the Indenture Trustee shall have received a certificate from the Lessee that no Event of Default shall have occurred and be continuing as of the effective date of such assumption; and (vi) the Indenture Trustee shall have received (A) from counsel for the Lessee (who may be the Lessee's General Counsel) a legal opinion, in form and substance satisfactory to the Indenture Trustee (w) with respect to the compliance of the assumption contemplated hereby with the terms, provisions and conditions hereof, (x) with respect to the due authorization, execution, delivery, validity and enforceability of the instrument referred to in paragraph (i) of this Section 7.11(b), (y) with respect to the continued perfection of the first and prior Lien and security interest in the Aircraft for the benefit of the Holders of the Certificates (or the Lessee's substituted obligations) referred to in paragraph (ii) of this Section 7.11(b) and (z) with respect to the continued availability of the benefits of Section 1110 of the Bankruptcy Code to the Indenture Trustee for the benefit of the Holders with respect to the Aircraft after giving effect to such assumption, (B) from counsel to the Indenture Trustee and Special Aviation Counsel, a legal opinion comparable to the respective opinions delivered on the Delivery Date with such changes therein as may be appropriate in light of such assumption, and (C) in the case of each opinion described in clause (A) or (B) above, covering such additional matters as the Indenture Trustee shall reasonably request. (c) The Lessee shall pay all reasonable expenses (including reasonable fees and expenses of counsel) of the Indenture Trustee, the Owner Trustee, the Pass Through Trustee and the Owner Participant in connection with such assumption. Section 7.12. Indebtedness of Owner Trustee. So long as the Indenture is in effect, the Owner Trustee, not in its individual capacity, but solely as trustee under the Trust Agreement, shall not incur any indebtedness for borrowed money except as expressly contemplated herein or in any other Operative Agreement (excluding the Tax Indemnity Agreement) and shall not engage in any business or other activity other than the transactions contemplated herein or in any other Operative Agreement (excluding the Tax Indemnity Agreement) and all necessary or appropriate activity related thereto. Section 7.13. Compliance with Trust Agreement, Etc. Each of the Owner Participant, SSB and the Owner Trustee agrees with the Lessee, the Indenture Trustee and the Pass Through Trustee that so long as the Lien of the Indenture shall be in effect it will (i) comply with all of the terms of the Trust Agreement applicable to it in its respective capacity, the noncompliance with which would materially adversely affect any such party and (ii) not take any action, or cause any action to be taken, to amend, modify or supplement any other 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 Indenture Trustee and the Pass Through Trustee that it will comply with the provisions of Article 2 of the Trust Agreement. Notwithstanding anything else to the contrary in the Trust Agreement, so long as the Lease or the Indenture remains in effect, the Owner Participant agrees not to terminate or revoke the trust created by the Trust Agreement without the consent of the Lessee (except in connection with the exercise of remedies pursuant to Article 17 of the Lease). Section 7.14. Subordination Agent's Representations, Warranties and Covenants. (a) Representations and Warranties. The Subordination Agent represents and warrants as of the Delivery Date that: (i) it is a national banking association duly organized and validly existing in good standing under the laws of the United States of America and has the corporate power and authority to enter into and perform its obligations under this Agreement; (ii) the execution, delivery and performance of this Agreement and the performance of its obligations hereunder have been fully authorized by all necessary corporate action on its part, and, neither the execution and delivery thereof nor its performance of any of the terms and provisions thereof will violate any Federal or Utah law or regulation relating to its banking or trust powers or contravene or result in any breach of, or constitute any default under its articles of association, or bylaws or the provisions of any indenture, mortgage, contract or other agreement to which it is a party or by which it or its properties may be bound or affected; (iii) this Agreement has been duly executed and delivered by it and, assuming that each such agreement is the legal, valid and binding obligation of each other party thereto, is or will be, as the case may be, the legal, valid and binding obligation of the Subordination Agent, enforceable in accordance with its respective terms except as limited by bankruptcy, insolvency, moratorium, reorganization or other similar laws or equitable principles of general application to or affecting the enforcement of creditors' rights generally (regardless of whether such enforceability is considered in a proceeding in equity or at law); (iv) there are no Taxes payable by the Subordination Agent imposed by the State of Utah or any political subdivision or taxing authority thereof in connection with the execution, delivery and performance by the Subordination Agent of this Agreement, any of the Liquidity Facilities or the Intercreditor Agreement (other than franchise or other taxes based on or measured by any fees or compensation received by the Subordination Agent for services rendered in connection with the transactions contemplated by the Intercreditor Agreement or any of the Liquidity Facilities), and there are no Taxes payable by the Subordination Agent imposed by the State of Utah or any political subdivision thereof in connection with the acquisition, possession or ownership by the Subordination Agent of any of the Certificates other than franchise or other taxes based on or measured by any fees or compensation received by the Subordination Agent for services rendered in connection with the transactions contemplated by the Intercreditor Agreement or any of the Liquidity Facilities); (v) there are no pending or threatened actions or proceedings against the Subordination Agent before any court or administrative agency which individually or in the aggregate, if determined adversely to it, would materially adversely affect the ability of the Subordination Agent to perform its obligations under this Agreement, the Intercreditor Agreement or any Liquidity Facility; (vi) the Subordination Agent has not directly or indirectly offered any Certificate for sale to any Person or solicited any offer to acquire any Certificates from any Person, nor has the Subordination Agent authorized anyone to act on its behalf to offer directly or indirectly any Certificate for sale to any Person, or to solicit any offer to acquire any Certificate from any Person; and the Subordination Agent is not in default under any Liquidity Facility; (vii) the Subordination Agent is not directly or indirectly controlling, controlled by or under common control with the Owner Participant, the Owner Trustee, any Underwriter or the Lessee; and (viii) the representations and warranties of the Subordination Agent set forth in the Original Agreements to which it is a party were correct on and as of the Certificate Closing Date (except to the extent such representations expressly related solely to a specified earlier date, in which case such warranties and representations were correct on and as of such earlier date). (b) Covenants. (i) The Subordination Agent agrees not to amend any Liquidity Facility without the consent of the Lessee (so long as no Event of Default shall have occurred and be continuing) and of the Owner Participant (such consents not to be unreasonably withheld). (ii) In connection with the deposit in the applicable Cash Account of amounts drawn pursuant to any Downgrade Drawing under a Liquidity Facility, the Subordination Agent agrees, so long as no Event of Default shall have occurred and be continuing, to pay to the Lessee promptly following each Regular Distribution Date any Investment Earnings on the amount so deposited which remain after application of such Investment Earnings pursuant to Section 2.06 of such Liquidity Facility to the interest payable on such Downgrade Drawing under Section 3.07 of such Liquidity Facility. Capitalized terms used in this Section shall have the meanings specified in the Intercreditor Agreement. ARTICLE 8 TAXES Section 8.01. Lessee's Obligation to Pay Taxes. (a) Generally. The Lessee agrees promptly to pay when due, and to indemnify and hold each Indemnitee harmless from all license, recording, documentary, registration and other fees and all taxes (including, without limitation, income, gross receipts, sales, rental, use, value added, property (tangible and intangible), ad valorem, excise and stamp taxes), fees, levies, imposts, recording duties, charges, assessments or withholdings of any nature whatsoever, together with any assessments, penalties, fines, additions to tax or interest thereon (individually, a "Tax," and collectively called "Taxes"), however imposed (whether imposed upon any Indemnitee, the Lessee, all or any part of the Aircraft, Airframe, any Engine or any Part or the Lessor's Estate, the Trust Indenture Estate, Rent, the Certificates or otherwise), by any Federal, state or local government or taxing authority in the United States, or by any government or taxing authority of a foreign country or of any political subdivision or taxing authority thereof or by a territory or possession of the United States or an international taxing authority, upon or with respect to, based upon or measured by: (i) the Aircraft, the Airframe, any Engine or any Part; (ii) the location, replacement, control, purchase, improvement, maintenance, manufacture, acquisition, financing, refinancing, mortgaging, ownership, delivery, nondelivery, acceptance, rejection, leasing, subleasing, transport, insuring, inspection, registration, reregistration, assembly, abandonment, repossession, redelivery, installment, preparation, possession, use, operation, return, presence, storage, repair, transfer of title, modification, rebuilding, export, import, alteration, replacement, substitution, assignment, overhaul, transfer of registration or title, imposition of any Lien, sale or other disposition of the Aircraft, Airframe, any Engine or any Part thereof or interest therein; (iii) the rentals (including Basic Rent and Supplemental Rent), receipts or earnings arising from the Operative Agreements; (iv) the Property attributable to the transactions contemplated by the Operative Agreements, or the income or other proceeds received with respect to such Property, held by the Owner Trustee under the Trust Agreement or by the Indenture Trustee under the Indenture; (v) the Original Agreements or the Operative Agreements or otherwise with respect to or by reason of the transactions described in or contemplated by the Original Agreements or the Operative Agreements or the Pass Through Agreement; (vi) the payment of the principal or interest or other amounts payable with respect to the Pass Through Certificates or the Certificates or the right thereto as it accrues; (vii) the Pass Through Certificates or the Certificates or the issuance, sale, acquisition, reamortization or refinancing thereof or the beneficial interests in the Trust Estate or the Trust Indenture Estate or the creation thereof under the Trust Agreement or the Indenture, or the security interest created or perfected thereby or by any filing thereof; (viii) any assumption by the Lessee pursuant to Section 7.11 of this Agreement and Section 2.12 of the Indenture; or (ix) the Collateral Account and the Liquid Collateral. (b) Exceptions. The indemnity provided for in Section 8.01(a) shall not extend to any of the following: (i) With respect to an Indemnitee, Taxes based upon, measured by or with respect to the net or gross income, items of tax preference or minimum tax or excess profits, receipts, value-added taxes, capital, franchise, net worth or conduct of business or other similarly-based Taxes of such Indemnitee (other than any Taxes in the nature of sales, use, transfer, excise, rental, license, ad valorem, property or other similarly based Taxes) (the "Income Taxes"); provided, however that the provisions of this paragraph (b)(i) shall not exclude from the indemnity described in Section 8.01(a) hereof, any Income Taxes to the extent such Income Taxes are imposed by any jurisdiction in which the Indemnitee would not be subject to such Income Taxes but for the operation, registration, location, presence, or use of the Aircraft, Airframe, any Engine or any Part thereof (it being understood that any such indemnity would be payable only to the extent of the net harm incurred by the Indemnitee from such Income Taxes, taking into account any incremental Tax benefit in another tax jurisdiction resulting from payment of such Income Taxes); provided, further, that the provisions of this paragraph (b)(i) relating to Income Taxes shall not exclude from the indemnity described in Section 8.01(a) hereof any Income Taxes for which the Lessee would be required to indemnify an Indemnitee (x) so that any payment under the Operative Agreements, otherwise required to be made on an After-Tax Basis, is made on an After-Tax Basis or (y) pursuant to the last sentence of Section 8.02, 8.05, 9.02 or 9.05 of this Agreement; (ii) Any value-added Tax imposed by any Federal taxing authority in the United States; (iii) Taxes arising out of or measured by acts, omissions, events or periods of time (or any combination of the foregoing) which occur after (and are not attributable to acts, omissions or events occurring, or fines, penalties or interest resulting from any such act, omission or event having occurred, 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 under and in accordance with the Lease and the other Operative Agreements (and the Certificates in the case of the Indenture Trustee or the Trust Indenture Estate if the Lessee shall have assumed the Certificates pursuant to Section 7.11 of this Agreement and Section 2.12 of the Indenture), and the earliest of (x) the expiration of the Term of the Lease and return of the Aircraft in accordance with Article 12 of the Lease, (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 and while it is continuing shall not be excluded from the indemnity described in Section 8.01(a) hereof; (iv) As to the Owner Trustee, Taxes imposed against the Owner Trustee upon or with respect to any fees for services rendered in its capacity as Owner Trustee under the Trust Agreement or, as to the Indenture Trustee, Taxes imposed against the Indenture Trustee upon or with respect to any fees received by it for services rendered in its capacity as Indenture Trustee under the Indenture; (v) Taxes imposed on an Indemnitee that would not have been imposed but for the willful misconduct or gross negligence of such Indemnitee (other than gross negligence or willful misconduct not actually committed by but instead imputed to such Indemnitee by reason of such Indemnitee's participation in the transactions contemplated by the Operative Agreements) or the breach by such Indemnitee of any representation, warranty or covenant contained in the Operative Agreements or any document delivered in connection therewith (unless attributable to a breach of representation, warranty or covenant of the Lessee), provided that in the case of a breach by the Owner Participant or the Owner Trustee of any representation, warranty or covenant, timely written notice requesting compliance was received by the Owner Participant or the Owner Trustee as the case may be; (vi) Taxes imposed on the Owner Trustee or the Owner Participant or any successor, assign or Affiliate thereof which became payable by reason of any voluntary or involuntary transfer or disposition by such Indemnitee subsequent to the Delivery Date, including revocation by such Indemnitee of the trust created by the Trust Agreement and any disposition in connection with a bankruptcy or similar proceeding involving either the Lessor or the Owner Participant, of any interest in some or all of the Aircraft, Airframe, Engines or Parts thereof, or its interest in the Lessor's Estate, other than (A) Taxes that result from transfers or dispositions which occur while an Event of Default under the Lease has occurred and is continuing at the time of such transfer or disposition, (B) Taxes that result from any transfer pursuant to the Lessor's exercise of remedies under the Lease, or (C) Taxes (other than Income Taxes) that result from any transfer or disposition pursuant to Section 4.02 (other than clauses B or C thereof) or Article 7, 8, 9, 10, 11 or 13 of the Lease or any replacement or substitution not required by the Operative Agreements; (vii) Taxes imposed on the Owner Participant for which the Lessee is obligated to indemnify the Owner Participant pursuant to the Tax Indemnity Agreement; (viii) Notwithstanding anything herein to the contrary, Taxes imposed on a successor, assign or other transferee (including, without limitation, a transferee which is a new lending office of an original Indemnitee) of any Person which on the Delivery Date is an Indemnitee (for purposes of this clause (viii), an "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, the trust created by the Trust Agreement, the Certificates or otherwise; provided, however, that the exclusion provided by this clause (viii) shall not apply in the case of a succession, transfer or disposition (A) while an Event of Default under the Lease has occurred and is continuing at the time of such transfer, or disposition, (B) which is an actual or deemed transfer pursuant to Section 7.11 hereof or (in the case of Taxes imposed on the Owner Trustee or the Owner Participant) as a consequence of a refinancing under Article 15 hereof, or any actual or deemed transfer of a Certificate that as part of a refinancing under Article 15 hereof is not retired, but only to the extent the Taxes attributable to such transfer exceed the amount of Taxes that would have been imposed on such transferor if the debt had instead been retired, (C) to the extent necessary to make payments with respect to such Taxes on an After-Tax Basis or (D) to the extent such Taxes are directly attributable to the failure of the Lessee to take administrative actions as have been reasonably requested of it in writing in a timely manner and which will result in no after-tax cost or expense to the Lessee; (ix) [Reserved]; (x) Any Taxes which have been included in the Purchase Price; (xi) Any Taxes which would not have been imposed on the Owner Participant but for a Lessor's Lien attributable to the Owner Participant; (xii) Taxes imposed by any jurisdiction that would have been imposed on the Lessor or the Owner Participant for activities in such jurisdiction unrelated to the transactions contemplated by the Operative Agreement; and (xiii) Any Taxes imposed on the Owner Participant or any person who is a "disqualified person", within the meaning of Section 4975(e)(2) of the Code, or a "party in interest", within the meaning of Section 3(14) of ERISA, by virtue of such person's relationship to such Owner Participant, as the result of any prohibited transaction, within the meaning of Section 406 of ERISA or Section 4975(c)(1) of the Code, occurring with respect to the purchase or holding of any Pass Through Certificate (or any funded participation therein) (i) over which purchase or holding the Owner Participant or any Affiliate thereof has discretion or control (other than in the capacity of a directed trustee or custodian), or (ii) by an employee benefit plan, within the meaning of Section 3(3) of ERISA, or individual retirement account or plan subject to Section 4975 of the Code with respect to which the Owner Participant (or any Affiliate thereof) has the power, directly or indirectly, to appoint or terminate, or to negotiate the terms of the management agreement with, the person or persons having discretion or control (other than in the capacity of a directed trustee or custodian), over such purchase or holding. (c) Withholding. The Pass Through Trustee shall withhold any Taxes required to be withheld on payments to any holder of a Pass Through Certificate who is a Non-U.S. Person except to the extent that such a holder of a Pass Through Certificate has furnished evidence to the Pass Through Trustee sufficient under applicable law to entitle such holder of a Pass Through Certificate to any exemption from withholding on interest claimed by such holder of a Pass Through Certificate. The Indenture Trustee shall withhold any Taxes required to be withheld on any payment to a Holder pursuant to Section 5.09 of the Indenture. If the Indenture Trustee or the Pass Through Trustee fails to withhold a Tax required to be withheld with respect to any Holder of a Certificate or any holder of a Pass Through Certificate or any claim is otherwise asserted by a taxing authority against the Owner Trustee or Owner Participant for or on account of any amount required to be withheld from a payment in respect of a Certificate, the Lessee will indemnify (after taking into account any payments made by a Holder to or for the benefit of the Owner Participant or the Owner Trustee pursuant to the preceding sentence) the Owner Trustee and the Owner Participant (without regard to the exclusions set forth in Section 8.01(b) hereof) on an After-Tax Basis against any Taxes required to be withheld and any interest, penalties and additions to tax with respect thereto, along with any other costs (including attorneys' fees) incurred in connection with any such claim. The Indenture Trustee or the Pass Through Trustee, as the case may be, in its individual capacity (and without recourse to the Trust Indenture Estate), shall indemnify the Lessee on an After-Tax Basis for any payment the Lessee shall have made pursuant to the preceding sentence. Section 8.02. After-Tax Basis. The amount which the Lessee shall be required to pay with respect to any Tax indemnified against under Section 8.01 shall be an amount sufficient to restore the Indemnitee, on an After-Tax Basis, to the same position such party would have been in had such Tax not been incurred. If any Indemnitee actually realizes a Tax benefit by reason of the payment of any Tax paid or indemnified against by the Lessee, such Indemnitee shall promptly pay to the Lessee, to the extent such Tax benefit was not previously taken into account in computing such payment, an amount equal to the lesser of (x) the sum of such 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, and (y) the amount of the payment required to be made under Section 8.01 hereof and this Section 8.02 by the Lessee to such Indemnitee plus the amount of any other payments by the Lessee to such Indemnitee theretofore required to be made under this Section 8.02 and Sections 8.01 and 8.05 hereof (and the excess, if any, of the amount described in clause (x) above over the amount described in clause (y) above shall be carried forward and applied to reduce pro tanto any subsequent obligations of the Lessee to make payments pursuant to this Section 8.02 and Section 8.01 hereof); provided, however, that notwithstanding the foregoing portions of this sentence, such Indemnitee shall not be obligated to make any payment to the Lessee pursuant to this sentence as long as a Payment Default or 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 subsequent to such payment (including the expiration of any tax credit carryovers or carrybacks of such Indemnitee that would not otherwise have expired). Section 8.03. Time of Payment. Any amount payable to an Indemnitee pursuant to this Article 8 shall be paid within 30 days after receipt of a written demand therefor from such Indemnitee accompanied by a written statement describing in reasonable detail the basis for such indemnity and the computation of the amount so payable, provided that in the case of amounts which are being contested by the Lessee in good faith or by the Indemnitee in either case pursuant to Section 8.04 hereof, such amount shall be payable 30 days after the time such contest is finally resolved. Section 8.04. Contests. If a written claim is made against any Indemnitee for Taxes with respect to which the Lessee may be liable for a payment or indemnity hereunder, such Indemnitee shall promptly give the Lessee notice in writing of such claim and shall furnish the Lessee with copies of any requests for information from any taxing authority relating to such Taxes with respect to which the Lessee may be required to indemnify hereunder; provided, however, that the failure of an Indemnitee to give such notice or furnish such copy shall not terminate any of the rights of such Indemnitee under this Article 8, except to the extent that the Lessee's contest rights have been materially and adversely impaired by the failure to provide such notice. With respect to claims relating to Taxes in the nature of Income Taxes, 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 not permitted under Section 6.01 of the Lease on the Aircraft, Airframe or any Engine or any risk of criminal liability; or (ii) if the payment is 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; provided, however, that if the Indemnitee determines in its sole discretion that such participation will not adversely affect such Indemnitee's contest of any Taxes not indemnified hereunder, the Lessee shall have the right to participate in such contest, including, among other rights, the right to attend governmental or judicial conferences (to the extent unrelated issues are not discussed) concerning such claim and the right to review and approve (such approval not to be unreasonably withheld) all submissions to any governmental or other authority insofar as they relate to the Tax for which indemnification is sought. With respect to claims relating to Taxes not in the nature of Income Taxes, the Lessee may, at its option and in its sole discretion, contest in its own name (if legally permitted to do so) or, if required by law, require the Indemnitee to contest in good faith, with due diligence and at the Lessee's expense, if timely requested in writing by the Lessee, 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 not permitted under Section 6.01 of the Lease on the Aircraft, Airframe or any Engine or any risk of criminal liability; or (ii) if the payment is made, using reasonable efforts to obtain a refund thereof in appropriate administrative and judicial proceedings. The Lessee shall control any such contest and shall determine in its sole discretion the manner in which to contest such Taxes and shall periodically and upon the Indemnitee's request advise the Indemnitee of the progress of such contest; the Lessee shall consider in good faith any suggestion made by the Indemnitee as to the method of pursuing 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 indemnify the Indemnitee in a manner reasonably satisfactory to such Indemnitee, (ii) agreed in writing to pay and shall pay the Indemnitee on demand and on an After-Tax Basis for the net after-tax amount of any liability or expense which such Indemnitee may incur as a result of contesting such Taxes including without limitation (y) 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, (iii) delivered to the Indemnitee a written acknowledgment of the Lessee's obligation to such Indemnitee pursuant to this Agreement to the extent that the contest is not successful and of the inapplicability of any exclusion or defenses thereto, provided, however, that such acknowledgement shall not preclude the Lessee from raising defenses to liability under this Agreement if a decision in such contest is rendered which clearly articulates the cause of such Tax and the cause, as so articulated, is not one for which the Lessee is responsible to pay an indemnity hereunder, and (iv) 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 (or continue a 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) if a Payment Default, Bankruptcy Default or 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 (which security shall be promptly refunded after such Payment Default, Bankruptcy Default or Event of Default is cured), (iii) 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, (iv) 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 any Lien not permitted under Section 6.01 of the Lease on, the Aircraft or any part thereof or interest therein or in a risk of criminal liability, 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 relevant circumstances or applicable law has changed and, in light thereof, there is substantial authority ("Substantial Authority") within the meaning of Section 6662 of the Code (if applicable), 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 (v) the amount of the indemnity payment that would be required of the Lessee, when aggregated with related and correlative claims, is at least $50,000. The Indemnitee shall not be required to appeal any judicial decision unless it receives an opinion of Tax Counsel to the effect that there is Substantial Authority supporting the position taken on appeal. Nothing contained in this Section 8.04 shall require any Indemnitee to contest or continue to contest, or permit Lessee to contest, a claim which such Indemnitee would otherwise be required to contest pursuant to this Section 8.04, if such Indemnitee shall waive payment by Lessee of any amount that might otherwise be payable by Lessee under this Article 8 in connection with such claim. Section 8.05. Refunds. Upon receipt by an Indemnitee of a refund of all or any part of any Taxes which the Lessee shall have paid for such Indemnitee or for which the Lessee shall have reimbursed or indemnified such Indemnitee, and provided there shall not have occurred and be continuing any Payment Default or Event of Default by the Lessee hereunder or under the Lease (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 an amount equal to the amount of such refund less Taxes imposed with respect to the accrual or receipt thereof, including interest received attributable thereto, plus any Tax benefit actually realized by such Indemnitee as a result of any payment by such Indemnitee made pursuant to this sentence; provided, however, that such amount shall not be payable (a) before such time as the Lessee shall have made all payments or indemnities then due and payable to such Indemnitee under this Article 8 and (b) to the extent that the amount of such payment would exceed (i) the amount of all prior payments by the Lessee to such Indemnitee pursuant to this Article 8 plus (ii) the amount of any interest referred to in the preceding clause received by the Indemnitee from any taxing authority less (iii) the amount of all prior payments by such Indemnitee to the Lessee pursuant to this Article 8, with any such excess to be carried forward and applied to reduce any future obligation of the Lessee under 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 (without regard to Section 8.01(b)(i), (iii) or (viii) hereof). Section 8.06. Lessee's Reports. In case any report or return is required to be made with respect to any Tax for which Lessee is obligated to indemnify under this Article 8, the Lessee shall make such report or return, except for any such report or return that the Indemnitee has notified the Lessee that it intends to file, in such manner as will show the ownership of the Aircraft in the Owner Trustee and shall send a copy of the applicable portions of such report or return to the Indemnitee and the Owner Trustee or will notify the Indemnitee of such requirement and make such report or return in such manner as shall be satisfactory to such Indemnitee and the Owner Trustee. The Lessee will provide such information reasonably available to the Lessee as the Indemnitee may reasonably require from the Lessee to enable the Indemnitee to fulfill its tax filing requirements with respect to the transactions contemplated by the Operative Agreements (without duplication of the requirements of Section 3 of the Tax Indemnity Agreement) and any audit information request arising from any such filing. The Indemnitee will provide such information (other than copies of any of its tax returns) as the Lessee may reasonably require from such Indemnitee to enable the Lessee to fulfill its tax filing requirements with respect to the transactions contemplated by the Operative Agreements and any audit information request arising from such filing. The Lessee shall hold the Indemnitee harmless on an After-Tax Basis from and against the net after-tax amount of any liabilities, including penalties, additions to tax, fines and interest, imposed upon such Indemnitee to the extent directly attributable to any insufficiency or inaccuracy in any return, statement, or report prepared by the Lessee or information supplied by the Lessee, or directly attributable to the Lessee's failure to supply reasonably available information to such Indemnitee as required by this Section 8.06. Section 8.07. Survival of Obligations. The representations, warranties, indemnities and agreements of the Lessee provided for in this Article 8 and the Lessee's obligations under any and all of them shall survive the making available by the Owner Participant of its Commitment and 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 and if such direct payment is not permitted or feasible under the circumstances, pay an amount equal to such Tax to the Indemnitee at least 2 Business Days prior to the time such Indemnitee pays such Tax; provided, however, that the Lessee shall not make any statements or take any action which would indicate that the Lessee or any Person other than the Owner Trustee or the Owner Participant is the owner of the Aircraft, the Airframe, any Engine or any Part or which would otherwise be inconsistent with the terms of the Lease (including the Purchase Price being equal to the fair market value of the Aircraft on the Delivery Date) 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 of any part thereof, which Taxes are not the responsibility of the Lessee with respect to such Indemnitee, then such Indemnitee shall pay to the Lessee within 30 days of the Lessee's demand therefor an amount which equals the amount actually paid by the Lessee with respect to such Taxes. ARTICLE 9 GENERAL INDEMNITY Section 9.01. Generally. (a) The Lessee agrees to indemnify each Indemnitee against and agrees to protect, defend, save and keep harmless each Indemnitee from any and all liabilities, obligations, losses, damages (including if, as a result of an Indenture Event of Default described in Section 7.01(a)(i) of the Indenture, the Indenture Trustee shall have sold all or any portion of the Indenture Estate and the proceeds thereof were less than an amount equal to accrued and unpaid Basic Rent on the date of sale plus the Stipulated Loss Value as of such date, damages equal to such shortfall together with interest thereon to the extent permitted by law at the Debt Rate until such shortfall is paid in full), penalties, claims, actions, suits, costs, disbursements and expenses (including legal fees and expenses and all costs and expenses relating to amendments, supplements, adjustments, consents, refinancings and waivers under the Operative Agreements except as otherwise provided in Section 10.01(c)(i) hereof) of every kind and nature (whether or not any of the transactions contemplated by this Agreement are consummated) (individually, an "Expense," collectively, "Expenses"), which may be imposed on, incurred or suffered by or asserted against any Indemnitee, in any way relating to, based on or arising out of: (i) the Original Agreements, this Agreement, the Lease, the Indenture, the Trust Agreement, the Intercreditor Agreement, the Liquidity Facilities, the Pass Through Agreement, the Bills of Sale or any other Operative Agreement or any other document entered into in connection herewith or therewith or any sublease or transfer or any transactions contemplated hereby or thereby; (ii) the operation, possession, ownership, use, non-use, maintenance, storage, delivery, non-delivery, control, testing, overhaul or repair 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, ownership, use, non-use, maintenance, storage, delivery, non-delivery, control, testing, overhaul or repair 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 and claims relating to any laws, rules or regulations; (iii) the manufacture, design, purchase, condition, repair, modification, airworthiness, return, lease, sale, acceptance, rejection, servicing, rebuilding, registration, alteration, merchantability, substitution, replacement, fitness for use, transfer or sublease of any Airframe, Engine, or Part under the Lease, the GTA or the Engine Warranty Assignment or other transfer of use or possession, or other disposition of the Aircraft, the Airframe, any Engine or any Part, latent or other defects whether or not discoverable, strict tort liability, and any claims for patent, trademark or copyright infringement; (iv) any breach of or failure to perform or observe, or any other non-compliance with, any condition, covenant or agreement to be performed, or other obligations of the Lessee under any of the Operative Agreements or the Original Agreements, or the falsity or inaccuracy of any representation or warranty of the Lessee in any of the Operative Agreements or the Original Agreements (other than representations and warranties in the Tax Indemnity Agreement); (v) the Collateral Account and the Liquid Collateral; (vi) the enforcement of the terms of the Operative Agreements or the Original Agreements and the administration of the Trust Indenture Estate; and (vii) the offer, issuance, sale or delivery of any Certificate or any Pass Through Certificate, or any refunding or refinancing thereof, or interest in the Lessor's Estate or the Trust Agreement or the Original Trust Agreement or any similar interest or in any way relating to or arising out of the Trust Agreement or the Original Trust Agreement and the Lessor's Estate, the Indenture or the Original Indenture or the Trust Indenture Estate (including, without limitation, any claim arising out of the Securities Act of 1933, as amended, the Securities Exchange Act of 1934, as amended, or any other federal or state statute, law or regulation, or at common law or otherwise relating to securities), or the action or inaction of the Owner Trustee or Indenture Trustee as trustees, in the manner contemplated by this Agreement, the Original Participation Agreement, the Indenture, the Original Indenture, the Indenture and Security Agreement Supplement, the Trust Agreement or the Original Trust Agreement and in the case of the Owner Participant or the Initial Owner Participant, as the case may be, its obligations arising under Section 6.01 of the Trust Agreement or the Original Trust Agreement. The foregoing indemnity by the Lessee is intended to include and cover, but is not limited to, any Expense to which the Indemnitees may be subject as a result of their respective ownership or leasing of any interest in or holding of any Lien on the Aircraft, Airframe, any Engine or Part during the Term, whether or not in the Lessee's possession or control, insofar as such Expense relates to any activity or event whatsoever involving such item while it is under lease to the Lessee (or after termination of the Lease in connection with the exercise of remedies thereunder to the extent that such Expense is attributable to the transactions contemplated hereby and by the other Operative Agreements and the Original Agreements), and such Expense does not fall within any of the exceptions listed in Section 9.01(b) hereof. (b) Exceptions. The indemnity provided for in Section 9.01(a) shall not extend to any Expense of any Indemnitee: (i) to the extent attributable to the willful misconduct or gross negligence of such Indemnitee; (ii) in respect of the Aircraft and to the extent attributable to acts or events which occur after the Aircraft is no longer part of the Lessor's Estate or leased under the Lease or, if the Aircraft remains a part of the Lessor's Estate, after the expiration of the Term (other than pursuant to Article 17 of the Lease, in which case the indemnity provided in Section 9.01(a) hereof shall survive for so long as Lessor or the Indenture Trustee shall be entitled to exercise remedies under such Article 17), or to acts or events which occur after return of possession of the Aircraft by the Lessee in accordance with the provisions of the Lease but in any such case only to the extent not fairly attributable to acts or omissions of the Lessee prior to expiration of the Term, including without limitation the Lessee's failure to fully discharge all of its obligations under the Lease or the other Operative Agreements or the Original Agreements; (iii) 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; (iv) which is a cost or expense expressly required to be paid by the Owner Participant or its permitted transferees (and not by the Lessee) pursuant to this Agreement or any other Operative Agreement; (v) to the extent that such Expenses would not have been incurred by such Indemnitee if such Indemnitee had not been in breach of its representations or warranties, or had not defaulted in the observance and performance of the terms and provisions required to be observed and performed by it, in this Agreement, the Engine Warranty Assignment, the Lease, the Indenture, the Trust Agreement, the Original Agreements or any other Operative Agreement to which it is a party unless such breach or default shall be a result of the breach or default of any of the foregoing by the Lessee or another Indemnitee; (vi) [reserved]; (vii) in the case of the Owner Participant, which is attributable to Lessor's Liens attributable to the Owner Participant; in the case of SSB or the Owner Trustee, which is attributable to Lessor's Liens attributable to SSB or the Owner Trustee, as the case may be; and in the case of the Indenture Trustee, which is attributable to an 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 Delivery Date of any interest in the Aircraft, the Lessor's Estate or the Trust Agreement or any similar interest (including an offer or sale resulting from bankruptcy or other proceedings for the relief of debtors in which such Indemnitee is the debtor), unless in each case such offer or sale shall occur (w) in connection with a Refinancing, (x) 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 pursuant to Section 4.02 of the Lease or Article 10 of the Lease; or (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, as the result of any prohibited transaction, within the meaning of Section 406 of ERISA or Section 4975(c)(1) of the Code, occurring with respect to the purchase or holding of any Pass Through Certificate (or any funded participation therein) (i) over which purchase or holding the Owner Participant or any Affiliate thereof has discretion or control (other than in the capacity of a directed trustee or custodian), or (ii) by an employee benefit plan, within the meaning of Section 3(3) of ERISA, or individual retirement account or plan subject to Section 4975 of the Code with respect to which the Owner Participant (or any Affiliate thereof) has the power, directly or indirectly, to appoint or terminate, or to negotiate the terms of the management agreement with, the person or persons having discretion or control (other than in the capacity of a directed trustee or custodian), over such purchase or holding. Section 9.02. After-Tax Basis. The amount which the Lessee shall be required to pay with respect to any Expense indemnified against under Section 9.01 hereof shall be an amount sufficient to restore the Indemnitee, on an After-Tax Basis, to the same position such party would have been in had such Expense not been incurred. If any Indemnitee actually realizes a permanent Tax benefit by reason of the payment of such Expense paid or indemnified against by the Lessee which was not considered in the computation thereof, such Indemnitee shall promptly pay to the Lessee, but not before the Lessee shall have made all payments theretofore due such Indemnitee under this Agreement, the Original Agreements, the Tax Indemnity Agreement and any other Operative Agreement, an amount equal to the lesser of (x) the sum of such Tax benefit plus any other permanent Tax benefit actually realized by such Indemnitee as the result of any payment made by such Indemnitee pursuant to this sentence and (y) the amount of such payment pursuant to this Section 9.02 by the Lessee to such Indemnitee plus the amount of any other payments by the Lessee to such Indemnitee theretofore made pursuant to this Section 9.02 less the amount of any payments by such Indemnitee to the Lessee theretofore made pursuant to this Section 9.02 (and the excess, if any, of the amount described in clause (x) above over the amount described in clause (y) above shall be carried forward and applied to reduce pro tanto any subsequent obligations of the Lessee to make payments to such Indemnitee pursuant to this Section 9.02), it being intended that no Indemnitee should realize a net Tax benefit pursuant to this Section 9.02 unless the Lessee shall first have been made whole for any payments by it to such Indemnitee pursuant to this Section 9.02; provided, however, that notwithstanding the foregoing portions of this sentence, such Indemnitee shall not be obligated to make any payment to the Lessee pursuant to this sentence so long as any Payment Default, Bankruptcy Default or Event of Default shall have occurred and be continuing. Any Taxes that are imposed on any Indemnitee as a result of the disallowance or reduction of such Tax benefit referred to in the next preceding sentence in a taxable year subsequent to the year of allowance and utilization by such Indemnitee (including the expiration of any tax credit carryovers or carrybacks of such Indemnitee that would not otherwise have expired) shall be indemnifiable pursuant to the provisions of Section 8.01 hereof (without regard to Section 8.01(b)(i), (iii) or (viii) hereof). Section 9.03. Subrogation. Upon the payment in full of any indemnity pursuant to this Article 9 by the Lessee (but not earlier), the Lessee shall be subrogated to any right of the Indemnitee, other than with respect to any of such Indemnitee's insurance policies or in connection with any indemnity claim the Person indemnified may have against any other Indemnitee in respect of the matter against which such indemnity has been made. Section 9.04. Notice and Payment. Each Indemnitee and the Lessee shall give prompt written notice one to the other of any liability of which such party has knowledge for which the Lessee is, or may be, liable under this Article 9; provided, however, that failure to give such notice shall not terminate any of the rights of the Indemnitees under this Article 9, except (with respect to such Indemnitee) to the extent that the Lessee has been materially prejudiced by the failure to provide such notice. Unless otherwise provided in the Operative Agreements, any amount payable to an Indemnitee pursuant to this Article 9 shall be paid within 30 days after receipt of a written demand therefor from such Indemnitee accompanied by a written statement describing in reasonable detail the basis for such indemnity and the computation of the amount so payable. Section 9.05. Refunds. If any Indemnitee shall obtain a recovery of all or any part of any amount which the Lessee shall have paid to such Indemnitee or for which the Lessee shall have reimbursed such Indemnitee under this Article 9, and provided there shall not have occurred a Payment Default, Bankruptcy Default or an Event of Default (in which case payment shall not be made to the Lessee until such Payment Default, Bankruptcy Default or Event of Default shall have been cured) such Indemnitee shall pay to the Lessee, within ten (10) Business Days of receipt thereof by such Indemnitee, the amount of any such recovery, including interest received with respect to the recovery, net of any Taxes paid or payable as a result of the receipt of the recovery and interest, plus any net additional permanent Income Tax benefits actually realized by Indemnitee as the result of any payment made pursuant to this sentence less any reasonable costs and expense of any Indemnitee not reimbursed by the Lessee; provided, however, that such amount shall not be payable (a) before such time as the Lessee shall have made all payments or indemnities then due and payable to such Indemnitee under this Article 9 or (b) to the extent that the amount of such payment would exceed the amount of all prior payments by the Lessee to such Indemnitee pursuant to this Article 9, less the amount of all prior payments by such Indemnitee to the Lessee pursuant to this Article 9. Any subsequent loss of such recovery or Tax benefit shall be subject to indemnification under Article 8 or this Article 9, as the case may be. Section 9.06. Defense of Claims. The Lessee or its insurers shall have the right (in each such case at the Lessee's sole expense) to investigate or, provided that (i) the Lessee or its insurers shall not reserve the right to dispute liability with respect to any insurance policies pursuant to which coverage is sought, (ii) in the case of the Lessee, no Event of Default shall have occurred and be continuing and (iii) the Lessee shall have first acknowledged in writing to such Indemnitee the Lessee's obligation to indemnify such Indemnitee hereunder in respect of such claim, defend any claim covered by insurance for which indemnification is sought pursuant to this Article 9 and each Indemnitee shall cooperate with the Lessee or its insurers with respect thereto, and provided, further, the Lessee shall not be entitled to assume and control the defense of any such claim if and to the extent such Indemnitee reasonably objects to such control on the ground that an actual or potential material conflict of interest exists where it is advisable for such Indemnitee to be represented by separate counsel. Subject to the immediately foregoing sentence, where the Lessee or the insurers under a policy of insurance maintained by the Lessee undertake the defense of an Indemnitee with respect to such a claim, no additional legal fees or expenses of such Indemnitee in connection with the defense of such claim shall be indemnified hereunder unless the fees or expenses were incurred at the written request of the Lessee or such insurers. Subject to the requirement of any policy of insurance applicable to a claim, an Indemnitee may participate at its own expense at any judicial proceeding controlled by the Lessee or its insurers pursuant to the preceding provisions, provided that such party's participation does not, in the opinion of the independent counsel appointed by the Lessee or its insurers to conduct such proceedings, interfere with such control; and such participation shall not constitute a waiver of the indemnification provided in this Section 9.06. No Indemnitee shall enter into any settlement or other compromise with respect to any claim described in this Section 9.06 without the prior written consent of the Lessee, which consent shall not unreasonably be withheld or delayed, unless such Indemnitee waives its right to be indemnified under this Article 9 with respect to such claim. The Lessee shall not enter into any settlement or compromise which admits any criminal violation, gross negligence or willful misconduct on the part of any Indemnitee without the prior written consent of such Indemnitee. 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, subject to Section 9.01(b) hereof, survive the making available by the Owner Participant of its Commitment and the expiration or other termination of this Agreement, the Tax Indemnity Agreement, the Trust Agreement, the Indenture, the Engine Warranty Assignment, the Lease and the other Operative Agreements but, as to such indemnities, only with respect to losses, liabilities, obligations, damages, penalties, claims, actions, suits, costs, Expenses and disbursements caused by events occurring or existing prior to or incurred in the process of (i) the return or disposition of the Aircraft under Article 12 or Article 17 of the Lease, or (ii) the termination of the Lease or the Indenture or, if later, the return of the Aircraft. Section 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 and an Indemnitee who obtains a recovery under Section 9.05 hereof that is required to be paid to the Lessee shall pay to the Lessee on demand, interest on any amount not paid to the Lessee when due pursuant to such Section 9.05, until the same shall be paid, at the Past Due Rate. ARTICLE 10 TRANSACTION COSTS Section 10.01. Transaction Costs and Other Costs. (a) Transaction Costs. The Owner Participant shall pay (or reimburse the Lessee if the Lessee shall have previously made such payment) the Transaction Costs which are assumed to be 1.40% of the Purchase Price (the "Estimated Expense Amount") and which shall include, without limitation, all fees and expenses of the following persons relating to the public offering of the Pass Through Certificates contemplated by the Underwriting Agreement and related to the transactions contemplated hereby: (i) the fees and expenses of counsel for the Owner Participant; (ii) the fees and expenses of the transaction documentation counsel for the Lessee and counsel for the Owner Trustee, the Indenture Trustee, the Pass Through Trustee, the Subordination Agent, each Liquidity Provider and the Underwriters (other than those fees, expenses and disbursements payable by the Underwriters pursuant to the Underwriting Agreement); (iii) the fees and expenses of Daugherty, Fowler & Peregrin; (iv) any initial fees and expenses of the Pass Through Trustee and each Liquidity Provider and the fees and expenses of the Owner Trustee, the Subordination Agent and the Indenture Trustee; (v) any compensation, commissions and discounts payable to the Underwriters pursuant to the Underwriting Agreement; (vi) the fees, if any, incurred in printing the Pass Through Certificates; (vii) the fees and expenses incurred in connection with printing any amendment to the Registration Statement on Form S-3 bearing Registration No. 333-07691, printing any Preliminary Prospectus or Prospectus (as such terms are defined in the Underwriting Agreement) for the offering of the Pass Through Certificates; (viii) the fees and expenses of Arthur Andersen LLP; (ix) the fees and expenses of Moody's and S&P; (x) the fees and expenses of First Chicago Leasing Corporation; (xi) reimbursement to the Owner Participant, the Owner Trustee, the Indenture Trustee, the Subordination Agent, each Liquidity Provider and the Pass Through Trustee for any and all fees, expenses and disbursements of the character referred to above or otherwise incurred in connection with the negotiation, preparation, execution and delivery, filing and recording of the Operative Agreements and the documents contemplated thereby, including, without limitation, travel expenses and disbursements which shall have been paid by such party and including, without limitation, any amounts paid in connection with the Appraisal; (xii) printing and duplicating expenses and all fees, taxes and other charges payable in connection with the recording or filing on or before the Delivery Date of the instruments described in this Agreement; (xiii) initial fees, initial expenses, initial disbursements and the initial costs of distributing the Certificates (but not the continuing fees, expenses, disbursements and costs of distribution) of SSB, as lessor under the Lease and as Owner Trustee under the Trust Agreement and with respect to the administration of the Lease and the Lessor's Estate, of the Indenture Trustee as trustee under the Indenture with respect to the administration of the Trust Indenture Estate and of the Subordination Agent acting under the Intercreditor Agreement; and (xiv) any other amounts approved by the Lessee and the Owner Participant. The fees and expenses described in clauses (ii) through (xiv) of this paragraph shall be allocable to the Owner Participant under this Agreement (1) to the extent incurred specifically with respect to the Owner Participant, and (2) to the extent such fees and expenses are incurred but are not specifically attributable to the Owner Participant, in the proportion that the principal amount of the Certificates bears to the total amount of the Pass Through Certificates. (b) Continuing Expenses. The continuing fees, expenses and disbursements (including reasonable counsel fees and expenses) of the entity acting as Owner Trustee, as lessor under the Lease and as Owner Trustee under the Trust Agreement with respect to the administration of the Lease and the Lessor's Estate and the continuing fees, expenses and disbursements (including reasonable counsel fees and expenses and initial fees relating to the establishment of any replacement trustee) of the Indenture Trustee, as trustee under the Indenture with respect to the administration of the Trust Indenture Estate, the continuing fees, expenses and disbursements (including reasonable counsel fees and initial fees relating to the establishment of a replacement trustee) of the Pass Through Trustee and the Subordination Agent and the continuing fees, expenses and disbursements (including reasonable counsel fees and initial fees relating to the establishment of a replacement liquidity provider) of the Liquidity Provider under each Liquidity Facility shall be paid as Supplemental Rent by the Lessee, including without limitation any amounts payable to the Indenture Trustee or on account of requests by the Indenture Trustee for indemnification under Article XI of the Indenture. (c) Amendments, Supplements and Appraisal. Without limitation of the foregoing, the Lessee agrees: (i) to pay as Supplemental Rent to the Owner Trustee, the Owner Participant, the Indenture Trustee, the Subordination Agent, each Liquidity Provider and the Pass Through Trustee all costs and expenses (including reasonable legal fees and expenses) incurred by any of them in connection with (a) any Default or Event of Default and any enforcement or collection proceedings resulting therefrom or (b) the 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 (whether or not consummated), including without limitation, any amendment, waiver, modification or consent resulting from any work-out, restructuring or similar proceeding relating to the performance or nonperformance by the Lessee of its obligations under the Operative Agreements or (c) any amendment, supplement, waiver or consent (whether or not entered into) under the Original Agreements, this Agreement, the Lease, the Indenture, the Certificates, the Tax Indemnity Agreement, the Engine Warranty Assignment or any other Operative Agreement or document or instrument delivered pursuant to any of them, which amendment, supplement, waiver or consent is required by any provision of any Operative Agreement or is requested by the Lessee or necessitated by the action or inaction of the Lessee; provided, however, that the Lessee shall not be responsible for fees and expenses of the other parties hereto incurred in connection with the offer, sale or other transfer (whether pursuant to Article 5 of the Trust Agreement or otherwise) by the Owner Participant or the Owner Trustee after the Delivery Date of any interest in the Aircraft, the Lessor's Estate, the Beneficial Interest, the Trust Agreement or any similar interest (and the Owner Participant shall be responsible for all such fees and expenses), unless such offer, sale or transfer shall occur (A) during a period when an Event of Default has occurred and is continuing under the Lease, (B) during a period following an Event of Loss, (C) in connection with the termination of the Lease or (D) as a result of an action or direction of the Lessee pursuant to Section 4.02 or Article 8, 9, 10 or 11 of the Lease; and (ii) to pay the fees, costs and expenses of all appraisers involved in an independent appraisal of the Aircraft to the extent required under Section 4.03 of the Lease. ARTICLE 11 SUCCESSOR OWNER TRUSTEE Section 11.01. Appointment of Successor Owner Trustee. (a) Resignation and Removal. The Owner Trustee or any successor Owner Trustee may resign or may be removed by the Owner Participant, and a successor Owner Trustee may be appointed under the Trust Agreement only in accordance with the provisions of Section 3.11 of the Trust Agreement and the provisions of paragraphs (b) and (c) of this Section 11.01. (b) Conditions to Appointment. The appointment in any manner of a successor Owner Trustee pursuant to Section 3.11 of the Trust Agreement shall be subject to the following conditions: (i) Such successor Owner Trustee shall be a Citizen of the United States; (ii) Such successor Owner Trustee shall be a bank or a trust company having combined capital, surplus and undivided profits of at least $100,000,000 or a bank or trust company fully guaranteed by a direct or indirect parent thereof having a combined capital, surplus and undivided profits of at least $100,000,000; (iii) Such appointment shall not violate any provisions of the Transportation Code or any applicable rule or regulation of the applicable regulatory agency or body of any other jurisdiction in which the Aircraft may then be registered or create a relationship which would be in violation of the Transportation Code or any applicable rule or regulation of the applicable regulatory agency or body of any other jurisdiction in which the Aircraft may then be registered; (iv) Such successor Owner Trustee shall enter into an agreement or agreements, in form and substance satisfactory to the Lessee, the Owner Participant and the Indenture Trustee whereby such successor Owner Trustee confirms that it shall be deemed a party to this Agreement, the Trust Agreement, the Lease, the Lease Supplement, the Engine Warranty Assignment, the Indenture, the Indenture Supplement and any other Operative Agreement to which the Owner Trustee is a party and agrees to be bound by all the terms of such documents applicable to the Owner Trustee and makes the representations and warranties contained in Section 7.04 hereof (except that it may be duly incorporated, validly existing and in good standing under the laws of the United States of America or any State thereof); and (v) All filings of UCC financing and continuation statements, filings in accordance with the Transportation Code and amendments thereto shall be made and all further actions taken in connection with such appointment as may be necessary in connection with maintaining the validity, perfection and priority of the Lien of the Indenture and the valid and continued registration of the Aircraft in accordance with the Transportation Code. (c) Appointment. For so long as the Aircraft remains registered under the Transportation Code, the Owner Participant agrees to promptly appoint a successor Owner Trustee meeting the requirements of Section 11.01(b) hereof in the event the Owner Participant has knowledge that the Owner Trustee at any time shall not be a Citizen of the United States. (d) Costs of Appointment. If the Owner Trustee is removed by the Owner Participant, the costs and expenses of all parties to the Operative Agreements in connection with such removal and the appointment of a successor owner trustee (including the initial fees of such successor owner trustee) shall be paid by the Owner Participant, unless prior to such removal the Owner Trustee ceases (or the Owner Participant reasonably believes that the Owner Trustee will within the following sixty days cease) to be qualified as Owner Trustee or is in default of its obligations in its capacity as Owner Trustee or in its individual capacity under the Operative Agreements in which case (and in the case of any voluntary resignation of the Owner Trustee) all such costs and expenses shall be paid by the Lessee. ARTICLE 12 LIABILITIES AND INTERESTS OF THE OWNER PARTICIPANT AND HOLDERS Section 12.01. Liabilities of Owner Participant. No Owner Participant shall have any obligation or duty to the Lessee or to any Holder with respect to the transactions contemplated by this Agreement, except those obligations or duties expressly set forth in this Agreement, the Indenture, the Trust Agreement, the Tax Indemnity Agreement, the Bills of Sale, the Lease or any other Operative Agreement to which the Owner Participant is a party and the Owner Participant shall be liable for the performance by any party hereto of such other party's obligations or duties hereunder. Under no circumstances shall the Owner Participant as such be liable to the Lessee, nor shall the Owner Participant be liable to any Holder, for any action or inaction on the part of the Owner Trustee or the Indenture Trustee in connection with this Agreement, the Indenture, the Lease, the Trust Agreement, the Engine Warranty Assignment, any other Operative Agreement, any Original Agreement, the ownership of the Aircraft, the administration of the Lessor's Estate or the Trust Indenture Estate or otherwise, whether or not such action or inaction is caused by the willful misconduct or gross negligence of the Owner Trustee or the Indenture Trustee. Section 12.02. Interest of Holders of Certificates. A Holder of a Certificate shall have no further interest in, or other right with respect to, the Trust Indenture Estate when and if the principal and interest on all Certificates held by such Holder and all other sums payable to such Holder under this Agreement, under the Indenture and under such Certificates shall have been paid in full. ARTICLE 13 OTHER DOCUMENTS Section 13.01. Consent of Lessee to Other Documents. The Lessee hereby consents in all respects to the execution and delivery of the Indenture, the Intercreditor Agreement and the Liquidity Facilities and to all of the terms of said documents, and the Lessee acknowledges receipt of an executed counterpart of such documents; it being agreed that such consent shall not be construed to require the Lessee's consent to any future supplement to, or amendment, waiver or modification of the terms of the Indenture, the Intercreditor Agreement, the Liquidity Facilities or the Certificates, except that prior to the occurrence and continuance of an Event of Default, no section of the Indenture or the Trust Agreement, the Intercreditor Agreement and the Liquidity Facilities shall be amended or modified in any manner materially adverse to the Lessee without its consent. Section 13.02. Further Assurances. The Lessee hereby confirms to the Owner Participant its covenants set forth in and obligations under the Lease. The Lessee agrees that, except as otherwise provided in the Indenture, the Owner Trustee may not enter into any amendment, modification or supplement of, or give any waiver or consent with respect to, or approve any matter or document as being satisfactory under the Lease without the prior consent of the Indenture Trustee and the Owner Participant and that, except as otherwise provided in the Indenture, upon an Indenture Event of Default, the Indenture Trustee may act as the Lessor under the Lease to the exclusion of the Owner Trustee. The Lessee further agrees to deliver to the Indenture Trustee and the Owner Participant a copy of each notice, statement, request, report or other communication given or required to be given to the Owner Trustee under the Lease. Section 13.03. Pass Through Trustee's and Subordination Agent's Acknowledgement. The Pass Through Trustee and the Subordination Agent hereby acknowledge and agree to be bound by all of the terms and conditions of the Indenture, including without limitation, Section 8.01 thereof regarding the rights of the Owner Participant to purchase the Certificates under circumstances specified therein. Section 13.04. No Retroactive Application. This Agreement, the Lease, the Indenture, Ancillary Agreement I and the Trust Agreement each amend and restate, and the Tax Indemnity Agreement amends, the respective original agreements with no intention of retroactive application. The applicable original agreements have been restated for the convenience of the parties and such amendments and restatements, and such amendment in the case of the Tax Indemnity Agreement, are not intended to waive or modify the obligations of any party which accrued or were to have been performed on or prior to the Delivery Date under such unamended agreements (or, in the case of this Agreement, the effective date hereof) or to deprive any party of its rights and remedies in respect thereof and no provisions of such Original Agreements shall in any way affect or be binding on the Owner Trustee and the Owner Participant hereunder or under the other Operative Agreements except to the extent restated therein with respect to periods following the Delivery Date. ARTICLE 14 NOTICES Section 14.01. Notices. All notices, demands, declarations and other communications required by this Agreement shall be in writing and shall be deemed received (a) if given by telecopier, when transmitted and the appropriate telephonic confirmation received if transmitted on a Business Day and during normal business hours of the recipient, and otherwise on the next Business Day following transmission, (b) if given by certified mail, return receipt requested, postage prepaid three Business Days after being deposited in the United States mail, and (c) if given by FedEx service or other courier or messenger service, when received or personally delivered, addressed: (a) If to the Lessee, to its office at 2007 Corporate Avenue, Memphis, Tennessee 38132, Attention: Vice President and Treasurer with a copy to Senior Vice President and General Counsel at 1980 Nonconnah Boulevard, Memphis, Tennessee 38132, telephone (901) 395-3388, facsimile (901) 395-4758; or to such other address as the Lessee shall from time to time designate in writing to the Lessor, the Indenture Trustee and the Owner Participant; (b) If to the Lessor or the Owner Trustee, to it c/o State Street Bank and Trust Company, Two International Place, 4th Floor, Boston, Massachusetts 02110, Attention: Corporate Trust Department, telephone (617) 664-5526, facsimile (617) 664-5371; or to such other address as the Lessor shall from time to time designate in writing to the Lessee and the Indenture Trustee, with a copy to the Owner Participant; (c) If to the Owner Participant, to it c/o KeyCorp Leasing Ltd., 54 State Street, Albany, New York 12207, Attention: Vice President, Leveraged Leasing, telephone (518) 487-4462, facsimile (518) 487-4761; or to such other address as the Owner Participant may from time to time designate in writing to the Lessee and the Indenture Trustee; (d) If to the Indenture Trustee, the Subordination Agent or the Pass Through Trustee, to its office at 79 South Main Street, Salt Lake City, Utah 84111, Attention: Corporate Trust Department, telephone (801) 246-5053, facsimile (801) 246-5630; or to such other address as the Indenture Trustee or the Pass Through Trustee, as the case may be, shall from time to time designate in writing to the Lessor, the Lessee and the Owner Participant; and (e) If to a Liquidity Provider, to its office at 125 West 55th Street, New York, New York 10019, Attention: General Manager, telephone (212) 541-0600, facsimile (212) 956-5580; or to such other address as a Liquidity Provider shall from time to time designate in writing to the Lessor, the Lessee and the Indenture Trustee. ARTICLE 15 REFINANCING Section 15.01. Refinancing. (a) Subject to the terms and conditions of this Section 15.01, the Lessee may, at any time after the third anniversary of the Delivery Date, request the Owner Participant to participate in up to two (2) refinancings in whole but not in part, of the Certificates during the Basic Term (a "Refinancing") provided that on the date of such Refinancing no Payment Default, Bankruptcy Default or Event of Default shall have occurred and be continuing. Such Refinancing may be placed in either the private or public markets in the United States or outside the United States and shall be denominated in United States dollars or any other currency provided that there is no foreign currency risk to the Owner Participant, and shall not materially adversely affect the Owner Participant. The Owner Participant agrees to negotiate promptly in good faith to conclude an agreement with the Lessee as to the terms of any such Refinancing transaction (including the terms of any debt to be issued in connection with such refinancing and the documentation to be executed in connection therewith). Without the consent of the Owner Participant, the prospectus and other offering materials relating to any Refinancing in the form of a public offering shall not identify the Owner Participant and shall not include any financial statements of the Owner Participant or any Affiliate thereof. In connection with any such Refinancing in the form of a public offering, the Lessee shall indemnify the Owner Participant for any liabilities under federal, state or foreign securities laws resulting from such offering. The aggregate principal amount of the new Certificates issued in connection with each Refinancing shall be the same as the aggregate principal amount outstanding on the Certificates being refinanced (assuming no principal on the old Certificates was due on the date of such Refinancing) and the final maturity of the new Certificates shall be no later than that of the old Certificates. (b) (i) Notwithstanding anything herein to the contrary, no Refinancing will be permitted unless the Owner Participant shall have received at least 15 Business Days' prior written notice of the closing date of such Refinancing, the Owner Participant shall have been provided such longer period required for a reasonable opportunity to review the relevant documentation and the Owner Participant shall have determined in good faith that neither it nor the Owner Trustee shall suffer any loss or expense or bear any increased risk as a result of such Refinancing (including, without limitation, any risk with respect to taxes or other adverse consequences to the Owner Participant including the application of Revenue Procedures 75-21 and 75-28 and Section 467 of the Code) for which (in the case of such loss, expense or tax) it has not been or will not have been indemnified in connection with such Refinancing by the Lessee in a manner reasonably satisfactory to the Owner Participant. (ii) Prior to the consummation of any Refinancing pursuant to this Section 15.01, the Owner Participant and the Lessee shall agree upon a schedule setting forth each installment of Basic Rent, Stipulated Loss Values, Termination Values and EBO Price payable pursuant to the Lease as a result of the Refinancing in accordance with Section 3.04 of the Lease, and thereafter the amounts set forth in such schedule shall become the amounts payable under the Lease. Upon the consummation of the Refinancing, the evidence of indebtedness issued pursuant to the Refinancing shall be considered "Certificates" for purposes of this Agreement, the Lease and the Indenture. (c) Notwithstanding the foregoing, the Owner Participant shall have no obligation to proceed with any Refinancing transaction as contemplated by this Section 15.01 unless the Lessee indemnifies the Owner Trustee and the Owner Participant by agreement in form and substance reasonably satisfactory to each of them, for any liability, obligation (other than the obligation to pay principal and interest in respect of the refinanced indebtedness), cost or expense (including, without limitation, reasonable attorneys' fees and Make-Whole Premium or other amounts due under the Indenture), including any adverse tax consequences or impact, related to or arising out of any such Refinancing transaction. (d) Without the prior written consent of the Owner Participant, which consent may be withheld in its sole discretion, no such refinancing shall cause the weighted average life of such indebtedness to be different by more than 6 months than the remaining weighted average life of the then outstanding Certificates. (e) Each party agrees to take or cause to be taken, at the Lessee's sole cost and expense, all action reasonably requested by the Lessee, including, without limitation, the execution and delivery of any documents and instruments, including, without limitation, amendments or supplements to the Lease, which may be reasonably necessary or desirable to effect such Refinancing, including, in the case of the Owner Participant, direction to the Owner Trustee by the Owner Participant to prepay the Certificates then outstanding; provided, however, that such Refinancing shall be subject to the satisfaction of each of the following conditions: (i) Payment of principal, accrued interest, Make-Whole Premium and breakage costs, if any, and all other sums due and owing on the Certificates payable under the Indenture; (ii) Payment in full of all other amounts then due and owing by the Lessee under this Agreement, the Indenture, the Lease, the Trust Agreement, and the Certificates then outstanding shall have been made by the Lessee; (iii) Such party shall have received such opinions of counsel (including, without limitation, an opinion received by the Owner Participant from independent tax counsel reasonably satisfactory to the Lessee that such Refinancing shall not result in any adverse tax consequences to such Owner Participant), certificates and other documents as it may reasonably request, each in form and substance reasonably satisfactory to such party; (iv) All authorizations, approvals and consents which in the reasonable judgment of the Owner Participant are necessary for such Refinancing shall have been obtained; (v) The Lessee shall have provided or agreed to provide to the Owner Participant, as Supplemental Rent under the Lease, sufficient funds to pay any breakage costs, Make-Whole Premium and any other amounts due under the Indenture; (vi) The satisfaction or waiver by each other party to this Agreement of the conditions set forth in this Section 15.01 to such party's obligations under this Section 15.01; (vii) No Payment Default, Bankruptcy Default or Event of Default shall have occurred and be continuing or would occur immediately after giving effect to such Refinancing; (viii) In the event the Lessee shall not prohibit the purchase of the Refinancing loan certificates by, or with the assets of, an employee benefit plan, as defined in Section 3(3) of ERISA, which is subject to Title I of ERISA or a plan or individual retirement account, which is subject to Section 4975(c) of the Code, (individually or collectively, an "ERISA Plan"), the Lessee will permit the placement of the Refinancing loan certificates with an ERISA Plan only if either (A) if such placement is in the form of pass through certificates, the sole underwriter or the manager or co-manager of the underwriting syndicate or the selling or placement agent of the Refinancing loan certificates represents to the Lessee that it has a prohibited transaction exemption from the U.S. Department of Labor with respect to pass through certificates (such as Prohibited Transaction Exemption 89-88 or any other comparable exemption) or (B) purchasers of the Refinancing loan certificates provide a representation (which may be in the form of a deemed representation) regarding their source of funds used in acquiring the Refinancing loan certificates and, if such purchasers represent that they are using funds of an ERISA Plan (which may be in the form of a deemed representation) in acquiring the Refinancing loan certificates, such purchasers further represent that (1) either they are relying on a prohibited transaction exemption from the U.S. Department of Labor with respect to their purchase and holding of the Refinancing loan certificates and they provide representations regarding the satisfaction of the relevant conditions of such an exemption or (2) their purchase and holding of the Refinancing loan certificates will not constitute a non-exempt prohibited transaction under Section 406 of ERISA or Section 4975 of the Code. The reliance on any such exemption will not be conditional on the Owner Participant's representation concerning its party in interest or other status with respect to ERISA Plans. The Lessee shall indemnify the Owner Participant pursuant to, and to the extent provided for, under Sections 8 and 9 hereof for Taxes and Expenses 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 placement of the Refinancing loan certificates with, or the holding of the Refinancing loan certificates by, any ERISA Plan with respect to which the Owner Participant is a party in interest, within the meaning of Section 3(14) of ERISA, or a disqualified person, within the meaning of Section 4975 of the Code, provided, however, that if the Lessee shall fail to obtain either of the representations set forth in clause (A) or (B) of this paragraph (viii), such indemnity shall not be subject to the exceptions set forth under Sections 8.01(b)(xiii) and 9.01(b)(ix) hereof. ARTICLE 16 [RESERVED] ARTICLE 17 MISCELLANEOUS Section 17.01. 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 17.02. Collateral Account. (a) The Indenture Trustee shall notify the Owner Trustee and the Lessee of any losses incurred on the Specified Investments in the Collateral Account promptly upon the realization thereof, as well as any fees, commissions and other costs, Taxes (other than income taxes) and expenses, if any, incurred by the Indenture Trustee in connection with its administration of the Collateral Account (collectively, "Losses"). Promptly upon receipt of such notification but, in any event, no later than the earlier of the Delivery Date (or, if later, the last day of any investment period referred to in Section 2.14(b) of the Original Indenture during which the Delivery Date occurs) and the 15th day after the Cut-Off Date, the Lessee shall pay to the Indenture Trustee, on behalf of the Owner Trustee, for deposit into the Collateral Account, an amount equal to such Losses (net of any investment earnings). (b) The Lessee shall pay to the Indenture Trustee, on behalf of the Owner Trustee (A) on each Payment Date prior to the Delivery Date an amount equal to the aggregate amount of interest accrued on the Certificates from (and including) the Certificate Closing Date or previous Payment Date, as the case may be, to, but excluding, such Payment Date and (B) on the first Payment Date subsequent to the Delivery Date, interest accrued on the Certificates from and including the last Payment Date (or, if none, the Certificate Closing Date), to, but excluding, the Delivery Date. In addition, the Lessee will pay to the Indenture Trustee on behalf of the Owner Trustee all amounts owed by the Owner Trustee pursuant to clause (b) of the last paragraph of Section 2.04 of the Indenture. (c) If the Aircraft has not been purchased by the Owner Trustee on the Delivery Date, the Lessee agrees to pay to the Indenture Trustee, on behalf of the Owner Trustee, on the 15th day following the Cut-Off Date the excess, if any, of the amounts payable under Section 6.02(b)(1) of the Original Indenture over the amounts released from the Collateral Account under Section 2.16 of the Original Indenture. (d) All amounts payable by the Lessee pursuant to this Section 17.02 shall be paid to the Indenture Trustee at its principal office at 79 South Main Street, Salt Lake City, Utah, 84111, Attention: Corporate Trust Department, or as the Indenture Trustee may otherwise direct within the United States, by wire transfer of immediately available funds in U.S. Dollars no later than 10:30 a.m., New York City time, on the due date of such payment. Section 17.03. Counterparts. This Agreement may be executed by the parties in separate counterparts, each of which when so executed and delivered shall be an original, but all such counterparts shall together constitute but one and the same instrument. Section 17.04. No Oral Modifications. Neither this Agreement nor any of its terms may be terminated, amended, supplemented, waived or modified orally, but only by an instrument in writing signed by the party against which the enforcement of the termination, amendment, supplement, waiver or modification is sought. No such written termination, amendment, supplement, waiver or modification shall be effective unless a signed copy shall have been delivered to and executed by the Owner Trustee and the Indenture Trustee. A copy of each such termination, amendment, supplement, waiver or modification shall also be delivered to each other party to this Agreement. The consent of the Pass Through Trustee and the Subordination Agent, in its respective 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 and Section 2.03 hereof, provided that the Pass Through Trustee shall be entitled to receive an Opinion of Counsel (as defined in the Pass Through Agreement) necessary, in its sole discretion, to establish that the Indenture Trustee's consent would not be required under such circumstances. Section 17.05. Captions. The table of contents preceding this Agreement and the headings of the various Articles and Sections of this Agreement are for convenience of reference only and shall not modify, define, expand or limit any of the terms or provisions of this Agreement. Section 17.06. Successors and Assigns. The terms of this Agreement shall be binding upon, and shall inure to the benefit of, the Lessee and its successors and permitted assigns, the Subordination Agent and its successors and permitted assigns, the Owner Trustee and its successors as Owner Trustee (and any additional owner trustee appointed) under the Trust Agreement, the Indenture Trustee and its successors as Indenture Trustee (and any additional indenture trustee appointed) under the Indenture and the Pass Through Trustee and its successors as Pass Through Trustee (and any additional pass through trustee appointed). Section 17.07. Concerning the Owner Trustee, the Indenture Trustee and the Pass Through Trustee. Each of SSB and FSB is entering into this Agreement solely in their respective capacities (except to the extent otherwise expressly indicated), in the case of SSB, not in its individual capacity but solely as Owner Trustee under the Trust Agreement, in the case of FSB, not in its individual capacity but solely as Indenture Trustee under the Indenture and as Pass Through Trustee under the Pass Through Agreement, and except as otherwise expressly provided in this Agreement or in the Lease, the Indenture, the Pass Through Agreement or the Trust Agreement, neither SSB, nor FSB, shall be personally liable for or on account of its statements, representations, warranties, covenants or obligations under this Agreement; provided, however, that each of SSB and FSB accepts the benefits running to it under this Agreement, and each agrees that (except as otherwise expressly provided in this Agreement or any other Operative Agreement to which it is a party) it shall be liable in its individual capacity for (a) its own gross negligence or willful misconduct (whether in its capacity as trustee or in its individual capacity), (b) any breach of representations and warranties or any breach of covenants made in its individual capacity pursuant to or in connection with this Agreement or the other Operative Agreements to which it is a party, (c) any breach, in the case of the Owner Trustee, of its covenants contained in Sections 3.05 and 3.08 of the Indenture, (d) the failure to use ordinary care in receiving, handling and disbursing funds, (e) in the case of the Owner Trustee, Lessor's Liens attributable to it in its individual capacity, (f) in the case of the Indenture Trustee, Indenture Trustee's Liens and (g) taxes, fees or other charges on, or based on, or measured by, any fees, commissions or compensation received by it in connection with the transactions contemplated by the Operative Agreements. Section 17.08. Severability. Any provision of this Agreement which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. Section 17.09. Public Release of Information. Subject to applicable legal requirements (including, without limitation, securities laws requirements, other regulatory requirements and other legally compelled disclosures), so long as there shall not have occurred an Event of Default or Indenture Event of Default, each party to this Agreement shall in each instance obtain the prior written approval of each other party to this Agreement concerning the exact text and timing of news releases, articles and other information releases to the public media concerning any Operative Agreements. Section 17.10. Certain Limitations on Reorganization. The Indenture Trustee and the Pass Through Trustee agree that, if (i) the Owner Trustee becomes or all or any part of the Lessor's Estate or the trust created by the Trust Agreement becomes the property of, a debtor subject to the reorganization provisions of the Bankruptcy Code or any other applicable bankruptcy or insolvency statutes, (ii) pursuant to any such reorganization provisions, the Owner Participant is held to have recourse liability to the debtor, the Owner Trustee or the trustee of the debtor directly or indirectly on account of any amount payable as Make-Whole Premium, principal or interest on the Certificates, or any other amount payable on any Certificate that is provided in the Operative Agreements to be nonrecourse to the Owner Participant and (iii) the Indenture Trustee actually receives any Recourse Amount which reflects any payment by an Owner Participant on account of (ii) above, then the Indenture Trustee, as the case may be, shall promptly refund to the Owner Participant such Recourse Amount. For purposes of this Section 17.10, "Recourse Amount" means the amount by which the portion of such payment by the Owner Participant on account of clause (ii) above received by the Indenture Trustee exceeds the amount which would have been received by the Indenture Trustee if the Owner Participant had not become subject to the recourse liability referred to in (ii) above. Nothing contained in this Section shall prevent the Indenture Trustee from enforcing any individual obligation (and retaining the proceeds thereof) of the Owner Participant under this Agreement or any other Operative Agreement to the extent herein or therein provided, for which the Owner Participant has expressly agreed by the terms of this Agreement to accept individual responsibility. Section 17.11. GOVERNING LAW. THIS AGREEMENT SHALL IN ALL RESPECTS BE GOVERNED BY, AND 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 17.12. 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 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 from time to time with respect to the right to repossess the Airframe, the Engines and any Parts as provided herein, and in any circumstances where more than one construction of the terms and conditions of this Agreement is possible, a construction which would preserve such benefits shall control over any construction which would not preserve such benefits or would render them doubtful. Section 17.13. Reliance of Liquidity Provider. Each of the parties hereto agrees and acknowledges that each Liquidity Provider shall be a third party beneficiary of each of the representations and warranties made herein by such party, and that each Liquidity Provider may rely on such representations and warranties to the same extent as if such representations and warranties were made to such Liquidity Provider directly. The terms of this Agreement shall inure to the benefit of each Liquidity Provider, their respective successors and permitted assigns. ARTICLE 18 CONFIDENTIALITY Section 18.01. Confidentiality. Each party hereto agrees (on behalf of itself and each of its Affiliates, agents, directors, officers, employees and representatives) to use reasonable precautions to keep confidential, in accordance with its customary procedures for handling confidential information of this nature, any non-public information supplied to it pursuant to this Agreement which is identified by the Person supplying the same as being confidential at the time the same is delivered to such party, provided that nothing herein shall limit the disclosure of any such information (i) to the extent required by statute, rule, regulation or judicial process, (ii) to counsel for any of the parties hereto, (iii) to bank examiners or similar regulatory authorities, auditors or accountants, (iv) in connection with any litigation to which any one or more of the parties hereto is a party relating to the transactions contemplated hereby or by any of the Operative Agreements, (v) to an Affiliate of the parties hereto, (vi) to any assignee or participant (or prospective assignee or participant) or other transferee so long as such assignee or participant (or prospective assignee or participant) or other transferee 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 18.01 or (vii) in the case of the Owner Participant or the Owner Trustee (in its individual or trust capacity) to the Owner Trustee (in its individual or trust capacity) or to the Owner Participant, as the case may be. IN WITNESS WHEREOF, the parties have caused this Participation Agreement to be executed by their respective, duly authorized officers as of the date first above written. LESSEE: FEDERAL EXPRESS CORPORATION By:__________________________________________ Name: Robert D. Henning Title: Vice President and Treasurer INITIAL OWNER PARTICIPANT: FEDERAL EXPRESS CORPORATION By:__________________________________________ Name: Robert D. Henning Title: Vice President and Treasurer OWNER PARTICIPANT: KEY CORPORATE CAPITAL INC. By:__________________________________________ Name: Title: INDENTURE TRUSTEE: FIRST SECURITY BANK, NATIONAL ASSOCIATION, not in its individual capacity except as otherwise expressly provided herein, but solely as Indenture Trustee By:__________________________________________ Name: Greg A. Hawley Title: Vice President PASS THROUGH TRUSTEE: FIRST SECURITY BANK, NATIONAL ASSOCIATION, not in its individual capacity except as otherwise expressly provided herein, but solely as Pass Through Trustee By:__________________________________________ Name: Greg A. Hawley Title: Vice President SUBORDINATION AGENT: FIRST SECURITY BANK, NATIONAL ASSOCIATION, not in its individual capacity except as otherwise expressly provided herein, but solely as Subordination Agent By:__________________________________________ Name: Greg A. Hawley Title: Vice President OWNER TRUSTEE: STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT, NATIONAL ASSOCIATION, not in its individual capacity, except as otherwise expressly provided herein, but solely as Owner Trustee By:__________________________________________ Name: Paul D. Allen Title: Vice President SCHEDULE I OWNER PARTICIPANT'S COMMITMENT; DEBT PORTION Owner Participant's Commitment $19,578,000.00 - ------------------------------ Debt Portion $62,172,000.00 - ------------ SCHEDULE II DEFINITIONS (FEDERAL EXPRESS CORPORATION TRUST NO. N584FE) GENERAL PROVISIONS The following terms shall have the following meanings for all purposes of the Operative Agreements (other than the Intercreditor Agreement and the Liquidity Facilities) referred to below, unless otherwise defined in an Operative Agreement or the context thereof shall otherwise require. In the case of any conflict between the provisions of this Schedule and the provisions of any Operative Agreement, the provisions of such Operative Agreement shall control the construction of such Operative Agreement. Unless the context otherwise requires, (i) references to agreements shall be deemed to mean and include such agreements as amended and supplemented from time to time, and (ii) references to parties to agreements shall be deemed to include the successors and permitted assigns of such parties. DEFINED TERMS: Additional Insured. As defined in Article 13 of the Lease. Aeronautics Authority. As appropriate, the Federal Aviation Administration and/or the Administrator of the Federal Aviation Administration, any successor to the former United States Civil Aeronautics Board, or any Person, governmental department, bureau, commission or agency located in the United States succeeding to the functions of any of the foregoing. Affidavits. The affidavits of citizenship of the Owner Trustee and the Owner Participant. Affiliate. With respect to any Person, any other Person directly or indirectly controlling, controlled by or under common control with such Person. For the purposes of this definition, "control" (including "controlled by" and "under common control with") shall mean the power, directly or indirectly, to direct or cause the direction of the management and policies of such Person whether through the ownership of voting securities or by contract or otherwise. In no event shall the Owner Trustee or the Lessor be deemed an Affiliate of the Owner Participant. After-Tax Basis. A basis such that any payment received or deemed to have been received by a Person shall be supplemented by a further payment to such Person so that the sum of the two payments, after deduction of all Taxes resulting from the receipt or accrual of such payments, shall be equal to the payment received or deemed to have been received. In the case of amounts payable to the Lessor, the Owner Participant, or any corporate Affiliate of the Owner Participant, it shall be presumed that such Person is at all times subject to Federal income tax at the maximum marginal rate generally applicable to corporations from time to time and actual state, local and foreign income taxes. Air Carrier. Any U.S. Air Carrier and any "foreign air carrier" (as defined in the Transportation Code) as to which there is in force a permit granted under Section 41302 of the Transportation Code. Aircraft. The Airframe to be sold by the Lessee to the Owner Trustee pursuant to the Participation Agreement and to be leased under the Lease (or any permitted substitute airframe thereunder) together with three Engines (or any Replacement Engine or Engines) whether or not any of such initial or Replacement Engines may from time to time be installed on such Airframe or may be installed on any other airframe or on any other aircraft, including any aircraft substituted pursuant to Section 11.03 of the Lease. Airframe. The McDonnell Douglas MD-11F aircraft (excluding the Engines or engines from time to time installed thereon) to be leased by the Lessor to the Lessee pursuant to the Lease and the initial Lease Supplement and having the United States FAA Registration Number and manufacturer's serial number specified in the initial Lease Supplement, including (i) all Parts in respect thereof and (ii) any Replacement Airframe which may be substituted pursuant to Section 11.03 of the Lease. Amendment. The Amendment Agreement No. 1 to Trust Indenture and Security Agreement (Federal Express Corporation Trust No. N584FE) dated September 30, 1997 between the Indenture Trustee and the Owner Trustee. Ancillary Agreement I. The Ancillary Agreement I (Federal Express Corporation Trust No. N584FE), dated the Delivery Date, among the Lessee, the Owner Trustee, not in its individual capacity, but solely as Owner Trustee, the Owner Participant and the Indenture Trustee not in its individual capacity, but solely as Indenture Trustee, as originally executed or as amended, modified or supplemented with the consent of all the parties thereto. Application. The application for registration of the Aircraft with the FAA in the name of the Owner Trustee. Appraisal. The report prepared by BK Associates, Inc. and to be delivered to the Owner Participant (with a copy of such report to the Lessee) on the Delivery Date pursuant to Section 4.01(n) of the Participation Agreement. Average Life Date. For any Certificate, the date which follows the prepayment date by a period equal to the Remaining Weighted Average Life of such Certificate. Bankruptcy Code. The Federal Bankruptcy Code of 1978, as amended, and any successor thereto. Bankruptcy Default. An event specified in Section 16.01(e), (f) or (g) of the Lease which either does or, with the giving of notice or lapse of time or both, would constitute an Event of Default. Basic Rent. The aggregate periodic rent payable for the Aircraft throughout the Basic Term pursuant to Section 3.02 of the Lease, adjusted pursuant to Article 3 of the Lease. Basic Term. The period commencing at the beginning of the day on the Delivery Date and ending at the end of the day on the day immediately preceding the date 22 years from the Delivery Date, or such earlier date on which the Lease shall be terminated as provided therein. Beneficial Interest. The interest of the Owner Participant (or the Initial Owner Participant, as the case may be) under the Trust Agreement. Bills of Sale. Collectively, the FAA Bill of Sale and the Warranty Bill of Sale. Business Day. Except as provided in the next succeeding sentence, any day other than a Saturday or Sunday or day on which commercial banks are authorized or required to close in New York, New York, Albany, New York, Memphis, Tennessee and the city in the United States in which the office or agency is maintained by the Pass Through Trustee for the payment of the Pass Through Certificates, and after the Lien of the Indenture has been discharged, Hartford, Connecticut. With respect to notices and other communications to the Lessee, Business Day shall mean any day other than a Saturday, Sunday or day on which commercial banks are authorized to close in New York, New York and Memphis, Tennessee. Certificate Closing Date. May 28, 1997. Certificates. The Equipment Trust Certificates (Federal Express Corporation Trust No. N584FE), issued by the Owner Trustee pursuant to the Indenture and any certificate issued in exchange therefor or replacement thereof pursuant to the Indenture. Change in Tax Law. Any change in the Code or the Treasury regulations promulgated thereunder or the publication of any revenue ruling, revenue procedure or any informational release by the Internal Revenue Service or the Department of Treasury after execution of the Participation Agreement but on or before the Delivery Date, either of which would change or would allow a change in the tax assumptions or structure upon which the lease economics in the Commitment Letter were based (for example, but not limited to, the ability of the Lessor to incorporate a lessor-paid interim), provided that the Owner Participant or the Lessee has notified the other party of such change in writing prior to the Delivery Date. Citizen of the United States. A citizen of the United States as defined in Section 40102(a)(15) of the Transportation Code, or any analogous part of any successor or substituted legislation or regulation at the time in effect. Commitment Letter. Has the meaning specified in Section 3.02(a) of the Participation Agreement. Class A Liquidity Provider. Has the meaning specified in Section 1.01 of the Intercreditor Agreement. Class B Liquidity Provider. Has the meaning specified in Section 1.01 of the Intercreditor Agreement. Code. Except as otherwise provided, references to the Code shall mean the Internal Revenue Code of 1986, as amended from time to time. Collateral Account. The deposit account established and maintained pursuant to Section 2.13 of the Indenture. Collateral Account Control Agreement. The Collateral Account Control Agreement dated as of May 1, 1997 among State Street Bank and Trust Company, the Indenture Trustee and the Owner Trustee. Commitment. The amount of the Owner Participant's participation in the Purchase Price required to be made available or paid on the Delivery Date, as provided in Section 3.02 of the Participation Agreement and as set forth in Schedule I of the Participation Agreement. Corporate Trust Administration. The Corporate Trust Administration office of the Owner Trustee located at 225 Asylum Street, Goodwin Square, Hartford, Connecticut 06103, Attention: Corporation Trust Administration, or such other office at which the Owner Trustee's corporate trust business shall be administered which the Owner Trustee shall have specified by notice in writing to the Lessee, the Owner Participant and the Indenture Trustee. Corporate Trust Department. The Corporate Trust Department office of the Indenture Trustee located at 79 South Main Street, Salt Lake City, Utah 84111, Attention: Corporate Trust Department, or such other office at which the Indenture Trustee's corporate trust business shall be administered which the Indenture Trustee shall have specified by notice in writing to the Lessee, the Owner Participant and the Owner Trustee. CRAF Program. Has the meaning specified in Section 7.01(f) of the Lease. Cut-Off Date. April 15, 1998. Debt Portion. The amount specified as such on Schedule I to the Participation Agreement. Debt Rate. The weighted average (based on Outstanding principal amount) rate of interest on the Certificates issued pursuant to the Indenture. Default. Any event or condition which, with the lapse of time or the giving of notice, or both, would constitute an Event of Default. Delivery Date. The date on which the Aircraft is delivered and sold by the Lessee to the Lessor and leased by the Lessor to the Lessee under the Lease, which date shall also be the date of the initial Lease Supplement. Delivery Notice. Notice of the Aircraft's Delivery Date, given by the Lessee as provided in Section 3.01 of the Participation Agreement and including any notice with respect to a postponed Delivery Date given by the Lessee pursuant to Section 3.03(c) of the Participation Agreement. EBO Date. Has the meaning specified in Section 4.02(a)(F) of the Lease. EBO Price. Has the meaning specified in Section 4.02(a)(F) of the Lease. Eligible Deposit Account. Either (a) a segregated account with an Eligible Institution or (b) a segregated trust account with the corporate trust department of a depository institution with corporate trust powers organized under the laws of the United States or any state thereof, or the District of Columbia, and whose deposits are insured by the Federal Deposit Insurance Corporation, provided that such institution also has a combined capital and surplus of at least $100,000,000 and a rating of A or better from the Thomson Bank Watch. Eligible Institution. A depository institution organized under the laws of the United States or any one of the states thereof, or the District of Columbia, or any domestic branch of a foreign bank, which in any such case at all times (a) has either (x) a long-term unsecured debt rating of at least Aa2 by Moody's or (y) a short-term certificate of deposit rating of P-1 by Moody's, (b) has either (x) a long-term unsecured debt rating of a least AA by S&P or (y) a short-term certificate of deposit rating of A-1+ by S&P and (c) is a member of the Federal Deposit Insurance Corporation. Engine. Each of the three General Electric CF6-80C2-D1F engines listed by its manufacturer's serial number in the initial Lease Supplement and leased pursuant to the Lease, whether or not from time to time installed on the Airframe or installed on any other airframe or on any other aircraft, and any Replacement Engine which may from time to time be substituted for an Engine pursuant to Section 7.02(a)(vii), 10.03, 11.03, 11.04 or 12.02 of the Lease, together with all Parts related thereto. Except as otherwise provided, at such time as a Replacement Engine shall be so substituted and the Engine for which the substitution is made shall be released from the Lien of the Indenture, such replaced Engine shall cease to be an "Engine" under the Lease. The term "Engines" means, as of any date of determination, all Engines then leased to the Lessee pursuant to the Lease. Engine Consent. The Engine Consent dated as of February 1, 1998, executed by the Engine Manufacturer. Engine Manufacturer. General Electric Company, a New York corporation. Engine Warranty Assignment. The Engine Warranty Assignment (Federal Express Corporation Trust No. N584FE), dated as of February 1, 1998, between the Lessor and the Lessee. ERISA. The Employee Retirement Income Security Act of 1974, as amended. ERISA Plan. As defined in Section 15.01(e)(viii) of the Participation Agreement. Estimated Expense Amount. Has the meaning specified in Section 10.01(a) of the Participation Agreement. Event of Default. Each of the events specified in Article 16 of the Lease. Event of Loss. Any of the following events with respect to the Aircraft, the Airframe or any Engine: (i)(A) loss of such property or its use due to theft or disappearance for a period in excess of 30 days (or such longer period not to exceed 60 days from the end of such 30 day period if and so long as the location of such property is known and the Lessee is pursuing the recovery thereof) or to the end of the Term, if less, unless such event constitutes an Event of Loss under clause (i)(B), clause (i)(C) or clause (ii) below, (B) loss of such property or its use due to the destruction thereof or (C) loss of such property or its use due to damage beyond economic repair or rendition of such property permanently unfit for normal use by Lessee for any reason whatsoever for a period in excess of 30 days; (ii) any damage to such property which results in an insurance settlement with respect to such property on the basis of a total loss, or constructive or compromised total loss; (iii) (1) condemnation, confiscation or seizure of, or requisition of title to such property by the Government, any foreign government or purported government or any agency or instrumentality thereof, or (2) condemnation, confiscation, or seizure of, or requisition or taking of, use of such property (A) by a foreign government, or instrumentality or agency of any such foreign government, or any purported government or instrumentality or agency thereof for a period in excess of 180 days or the end of the Term, if less, 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 or the Airframe or any 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; or (iv) as a result of any law, rule, regulation, order or other action by the Aeronautics Authority or other governmental body having jurisdiction, (A) the use of the Aircraft or Airframe in the normal course of air transportation of cargo shall have been prohibited 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 and desirable to permit the normal use of the Aircraft or Airframe, (B) the use of the Aircraft or Airframe shall have been prohibited for a period of twelve (12) consecutive months, unless the Lessee shall have conformed at least one McDonnell Douglas MD-11F series aircraft (but not necessarily the Aircraft or the Airframe) to the requirements of any such law, rule, regulation, order or other action and shall have commenced regular commercial use of such aircraft 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 or (C) the use of the Aircraft or Airframe shall have been prohibited for a period of twenty-four (24) months. The date of such Event of Loss shall be (s) the 30th day or the 90th day, as the case may be, following loss of such property or its use due to theft or disappearance; (t) the date of any destruction of such property; (u) the 30th day following the date of damage beyond economic repair or rendition of such property permanently unfit for normal use; (v) the date of any insurance settlement on the basis of a total loss or constructive or compromised total loss; (w) the date of any condemnation, confiscation, seizure or requisition of title of such property; (x) the 181st day following condemnation, confiscation, seizure or requisition for use of such property by a foreign government referred to in clause (iii)(2)(A) above and the date of such condemnation, confiscation, seizure or requisition in the case of any other foreign government or instrumentality or agency thereof; (y) the last day of the Term in the case of requisition for use of such property by the Government or (z) the last day of the 6 month, 12 month or 24 month period, referred to in clause (iv) above. An Event of Loss with respect to the Aircraft shall be deemed to have occurred if any Event of Loss occurs with respect to the Airframe. Excepted Payments. Collectively, (i) indemnity or other payments (and interest thereon to the extent provided in the Operative Agreements) paid or payable by the Lessee in respect of the Owner Participant, the Owner Trustee in its individual capacity, their Affiliates or any of their respective successors, permitted assigns, directors, officers, employees, servants and agents, pursuant to Article 8, 9, or 10 and Section 15.01 of the Participation Agreement or any indemnity hereafter granted to the Owner Participant or the Owner Trustee in its individual capacity pursuant to Section 7.01(f), Article 9, Section 11.03(a) or 13.01(b) of the Lease or Sections 6.03(b)(i)(F), 7.04(c), 7.05(c), 8.04 and 15.01 of the Participation Agreement, (ii) proceeds of public liability insurance (or government indemnities in lieu thereof) in respect of the Aircraft payable as a result of insurance claims paid for the benefit of, or losses suffered by, the Owner Trustee or the Indenture Trustee in their respective individual capacities or by the Owner Participant, or their respective successors, permitted assigns or Affiliates, (iii) proceeds of insurance maintained with respect to the Aircraft by the Owner Participant (whether directly or through the Owner Trustee) maintained in accordance with the provisions of but not required under Article 13 of the Lease, (iv) payments of Supplemental Rent by the Lessee in respect of any amounts payable under the Tax Indemnity Agreement, (v) any amounts payable by the Lessee to the Owner Participant or the Owner Trustee in its individual capacity, after the release thereof from the Lien of the Indenture, (vi) subject to Section 3.05 of the Lease, payments constituting increases in Basic Rent attributable to payments arising pursuant to Section 5 of the Tax Indemnity Agreement, (vii) all costs and expenses payable or reimbursable by the Lessee to the Owner Participant or the Owner Trustee pursuant to Section 17.04 of the Lease, (viii) the right to retain amounts distributed to the Owner Participant under Article V of the Indenture and (ix) any right to demand, collect or otherwise receive and enforce the payment of any amount described in clauses (i) through (viii) above and any interest or late charges on the foregoing. Expense; Expenses. Have the meaning specified in Section 9.01(a) of the Participation Agreement. FAA. The United States Federal Aviation Administration and any successor agency or agencies thereto. FAA Bill of Sale. The bill of sale for the Airframe on AC Form 8050-2, or such other form as may be approved by the Aeronautics Authority, executed by the Lessee in favor of the Owner Trustee and to be dated the Delivery Date. Fair Market Renewal Term. A term with respect to which the Lessee has exercised its option to renew the Lease pursuant to the second paragraph of Section 4.01(a) thereof and with respect to which the conditions set forth in the third paragraph of Section 4.01(a) are met. Fair Market Rental. An amount determined on the basis of, and equal in amount to, the rental which would be obtained in an arm's-length transaction between an informed and willing lessee and an informed and willing lessor unaffiliated with such lessee, neither being under any compulsion to lease. In such determination, except for purposes of Section 17.01 of the Lease, 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 and Fair Market Rental shall be determined in accordance with the provisions of Section 4.03 of the Lease. For purposes of Section 17.01 of the Lease, such determination shall be made on an "as is, where is" basis by a qualified independent appraiser selected by the Lessor and the costs and expenses of the appraisal shall be borne by the Lessee, unless the Lessor does not obtain possession of the Aircraft pursuant to such Section 17.01, in which case an appraiser shall not be appointed and such Fair Market Rental shall be deemed to be zero. Fair Market Value. An amount determined on the basis of, and equal in amount to, the value which would be obtained in an arm's-length transaction between an informed and willing purchaser under no compulsion to buy and an informed and willing seller unaffiliated with such purchaser and under no compulsion to sell, assuming the Aircraft (or other property) is unencumbered by the Lease. In such determination, except for purposes of Section 17.01 of the Lease, 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 and Fair Market Value shall be determined in accordance with the provisions of Section 4.03 of the Lease. For purposes of Section 17.01 of the Lease, such determination shall be made on an "as is, where is" basis by a qualified independent appraiser selected by the Lessor and the costs and expenses of the appraisal shall be borne by the Lessee, unless the Lessor does not obtain possession of the Aircraft free and clear of all Liens and unencumbered by the Lease pursuant to such Section 17.01, in which case an appraiser shall not be appointed and such Fair Market Value shall be deemed to be zero. Federal Aviation Administration. The United States Federal Aviation Administration and any successor agency or agencies thereto. FedEx. Federal Express Corporation. Final Drawing. Has the meaning specified in Section 1.01 of the Intercreditor Agreement. Fixed Renewal Rent. Semi-annual payments of rent during the Fixed Renewal Term equal to the amount set forth in Ancillary Agreement I. Fixed Renewal Term. A renewal term or terms provided for under the second paragraph of Section 4.01(a) of the Lease. FSB. First Security Bank, National Association, a national banking association. Government. The United States of America or an agency or instrumentality thereof the obligations of which bear the full faith and credit of the United States of America. GTA. The General Terms Agreement dated as of July 3, 1991 between the Engine Manufacturer and the Lessee related to the purchase by the Lessee of the Engines as originally executed or as modified, amended or supplemented in accordance with the terms thereof, but only insofar as the General Terms Agreement relates to the Engines, to the extent assigned to the Owner Trustee pursuant to the Engine Warranty Assignment. Holder of a Certificate; Certificate Holder; Holder. As of any particular time, the Person in whose name a Certificate shall be registered (but not including the holder of any Pass Through Certificate). Indemnitee. Each of SSB, in its individual capacity and as Owner Trustee and Lessor, the Subordination Agent, in its individual capacity and in its capacity as Subordination Agent, each Liquidity Provider, the Owner Participant, the Indenture Trustee, 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 and the Trust Indenture Estate. Neither the Pass Through Trustee nor any holder of a Pass Through Certificate shall be deemed to be an Indemnitee. Indenture. The Trust Indenture and Security Agreement (Federal Express Corporation Trust No. N584FE), dated as of May 1, 1997, as amended by the Amendment and as amended and restated as of February 1, 1998, between the Lessor and the Indenture Trustee, as supplemented by the Indenture and Security Agreement Supplement. Indenture and Security Agreement Supplement. The Indenture and Security Agreement Supplement No. 1 (Federal Express Corporation Trust No. N584FE) to be dated the Delivery Date, substantially in the form of Exhibit A to the Indenture. Indenture Default. Any event or condition which, with the lapse of time or the giving of notice, or both, would constitute an Indenture Event of Default. Indenture Documents. Has the meaning specified in the Granting Clause of the Indenture. Indenture Event of Default. Each of the events specified in Section 7.01 of the Indenture. Indenture Trustee. First Security Bank, National Association, a national banking association, not in its individual capacity but solely as Indenture Trustee under the Indenture. Indenture Trustee's Liens. Any Lien against, on or with respect to the Aircraft, the Lessor's Estate or the Trust Indenture Estate or any part thereof resulting from (i) claims against the Indenture Trustee not related to the administration of the Trust Indenture Estate or any transactions pursuant to the Indenture or any document included in the Trust Indenture Estate, (ii) any act or omission of the Indenture Trustee which is not related to the transactions contemplated by the Operative Agreements or is in violation of any of the terms of the Operative Agreements or (iii) Taxes imposed against the Indenture Trustee in its individual capacity or its Affiliates against which the Lessee has not indemnified (and is not obligated to indemnify) the Indenture Trustee in such capacity. 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, "Independent Investment Banker" shall mean such an institution appointed by the Indenture Trustee. Initial Owner Participant. Federal Express Corporation, a Delaware corporation. Intercreditor Agreement. The Intercreditor Agreement dated as of May 1, 1997, among the Pass Through Trustee, the Class A Liquidity Provider, the Class B Liquidity Provider and the Subordination Agent. Interest Drawing. Has the meaning specified in Section 1.01 of the Intercreditor Agreement. Invoice. The invoice for the Aircraft given by the Lessee to the Lessor. Lease. The Lease Agreement (Federal Express Corporation Trust No. N584FE) dated as of May 1, 1997, as amended and restated as of February 1, 1998, entered into by the Lessor and the Lessee concurrently with the execution and delivery of the Indenture, including, without limitation, supplementation by one or more Lease Supplements entered into pursuant to the applicable provisions of the Lease. Lease Supplement. The Lease Supplement No. 1 (Federal Express Corporation Trust No. N584FE) to be dated the Delivery Date, substantially in the form of Exhibit A to the Lease. Lease Term. The period commencing on the Delivery Date and ending at the end of the Basic Term. Lessee. Federal Express Corporation, a Delaware corporation. Lessee Documents. Has the meaning set forth in Section 6.01(b) of the Participation Agreement. Lessor. State Street Bank and Trust Company of Connecticut, National Association, a national banking association, not in its individual capacity but solely as Owner Trustee under the Trust Agreement. Lessor's Estate. All estate, right, title and interest of the Owner Trustee in and to the Collateral Account, the Liquid Collateral, the Aircraft, the Lease, any Lease Supplement, the Participation Agreement, the Bills of Sale, the Modification Agreement, the GTA, the Engine Warranty Assignment, the Engine Consent, any warranty with respect to the Airframe and the Engines, all amounts of Basic Rent, Renewal Rent and Supplemental Rent, including without limitation, insurance proceeds (other than insurance proceeds payable to or for the benefit of either the Owner Trustee in its individual capacity or the Owner Participant) and requisition, indemnity or other payments of any kind for or with respect to the Aircraft (except amounts owing to the Owner Participant or 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 not include any Excepted Payment. Lessor's Liens. Liens against, on or with respect to the Aircraft, the Lessor's Estate or the Trust Indenture Estate or any part thereof, title thereto or any interest therein arising as a result of (i) claims against the Lessor, in its individual capacity or as Owner Trustee, the Owner Participant or any Affiliate of the Owner Participant, in each case not related to the transactions contemplated by the Operative Agreements, (ii) acts or omissions of the Lessor in its individual capacity or as Owner Trustee, and, in the case of the Lessor in its individual capacity, arising from its gross negligence or willful misconduct either not related to the transactions contemplated by or expressly prohibited under the Operative Agreements and any act or omission of the Owner Participant or any Affiliate 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, or the Owner Participant or any Affiliate of the Owner Participant, the Lessor's Estate or the trust created by the Trust Agreement which are not required to be indemnified against by the Lessee pursuant to the Tax Indemnity Agreement or by reason of Section 8.01(b) or 9.01(b) of the Participation Agreement, or (iv) claims against the Lessor or the Owner Participant arising from the voluntary transfer by the Lessor or the Owner Participant of its interests in the Aircraft other than a transfer of the Aircraft pursuant to Section 4.02(a) or Article 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. Lien. Any mortgage, pledge, lien, charge, encumbrance, lease or security interest or other similar interest. Liquid Collateral. All amounts and securities deposited from time to time in the Collateral Account and all the products, investments, earnings and proceeds of the foregoing, including, but not limited to, all proceeds of the investment or conversion thereof, voluntary or involuntary, into cash, Specified Investments or other property, all rights to payment of any and every kind, and other forms of obligations, and instruments and other property which at any time constitute all or part or are included in the proceeds of any of the foregoing. Liquidity Facility. Has the meaning specified in Section 1.01 of the Intercreditor Agreement. Liquidity Provider. Has the meaning specified in Section 1.01 of the Intercreditor Agreement. Losses. Has the meaning specified in Section 17.02(a) of the Participation Agreement. Loss Payee. Has the meaning specified in Section 13.02(b)(i) of the Lease. Majority in Interest of Certificate Holders. As of a particular date of determination, the Holders of more than 50% of the aggregate unpaid principal amount of all Certificates outstanding as of such date excluding for purposes of this definition any Certificates held by (i) the Owner Trustee or the Owner Participant unless all Certificates then outstanding shall be held by such Owner Participant, (ii) the Lessee or (iii) any Affiliate of any thereof. Make-Whole Premium. An amount determined as of the 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, if any, of (i) the present value of the remaining scheduled payments of such principal amount or portion thereof and interest thereon (excluding interest accrued from the immediately preceding Payment Date to such Prepayment Date 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 the Treasury Yield, all as determined by the Independent Investment Banker over (ii) the outstanding principal amount of such Certificate plus accrued interest. Mandatory Document Terms. The terms set forth on Schedule V to the Original Participation Agreement. Mandatory Economic Terms. The terms set forth on Schedule VI to the Original Participation Agreement. Manufacturer. McDonnell Douglas Corporation, a Maryland corporation. 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 Aircraft Modification Agreement dated as of December 1, 1995 between the Lessee and the Manufacturer providing for the refurbishing and reconfiguration of the Aircraft including any warranties relating thereto, but only to the extent that the foregoing relates to the Aircraft, to the extent assigned to the Owner Trustee pursuant to the Warranty Bill of Sale. Moody's. Moody's Investors Service, Inc. Net Present Value of Rents. The net present value, as of the Delivery Date, of Basic Rent set forth in Schedule II of the Lease, discounted at a rate per semi-annual period equal to the Debt Rate. 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, (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. Officer's Certificate. When delivered pursuant to the Indenture, a certificate signed by a Responsible Officer of the Lessee or the Owner Trustee, as the case may be, and delivered to the Indenture Trustee. Each such certificate shall include the statements provided for in Section 15.07 of the Indenture. Operative Agreements. The Participation Agreement, the Trust Agreement, the Bills of Sale, the Modification Agreement, the GTA, the Engine Warranty Assignment, the Lease, the Lease Supplement, the Owner Participant Guaranty, if any, the Owner Trustee Guaranty, if any, the Ancillary Agreement I, the Certificates outstanding at the time of reference, the Indenture, the Indenture and Security Agreement Supplement, the Engine Consent, each Liquidity Facility, the Intercreditor Agreement, the Collateral Account Control Agreement and the Tax Indemnity Agreement. Opinion of Counsel. When delivered pursuant to the Indenture, a written opinion of legal counsel, who in the case of counsel (a) for the Lessee may be (i) an attorney employed by the Lessee who is generally empowered to deliver such written opinions, (ii) Davis Polk & Wardwell or a successor firm or (iii) other counsel designated by the Lessee and reasonably satisfactory to the Indenture Trustee and (b) for the Owner Trustee or the Indenture Trustee, an attorney selected by such Person and, in the case of the Owner Trustee, reasonably satisfactory to the Indenture Trustee. Original Agreements. The documents and instruments delivered on the Certificate Closing Date in connection with the transactions contemplated by the Original Participation Agreement. Original Indenture. The Trust Indenture and Security Agreement (Federal Express Corporation Trust No. N584FE), dated as of May 1, 1997, between the Owner Trustee and the Indenture Trustee originally executed and delivered on the Certificate Closing Date and amended by the Amendment. Original Lease. The Lease Agreement (Federal Express Corporation Trust No. N584FE), dated as of May 1, 1997, between the Owner Trustee as lessor, and the Lessee originally executed and delivered on the Certificate Closing Date. Original Participation Agreement. The Participation Agreement (Federal Express Corporation Trust No. N584FE), dated as of May 1, 1997, among the Lessee, the Initial Owner Participant, the Indenture Trustee, the Owner Trustee, the Pass Through Trustee and the Subordination Agent originally executed and delivered on the Certificate Closing Date. Original Trust Agreement. The Trust Agreement (Federal Express Corporation Trust No. N584FE), dated as of May 1, 1997, between the Initial Owner Participant and the Owner Trustee originally executed and delivered on the Certificate Closing Date. Outstanding. When used with respect to Certificates, as of the date of determination and subject to the provisions of Section 10.04 of the Indenture, all Certificates theretofore executed and delivered under the Indenture, with the exception of the following: (i) Certificates theretofore cancelled by the Indenture Trustee or delivered to the Indenture Trustee for cancellation pursuant to Section 2.08 of the Indenture or otherwise; (ii) Certificates for which prepayment money in the necessary amount has been theretofore deposited with the Indenture Trustee in trust for the Holders of such Certificates pursuant to Section 14.01 of the Indenture; provided, that if such Certificates are to be prepaid, notice of such prepayment has been duly given pursuant to the Indenture or provision therefor satisfactory to the Indenture Trustee has been made; and (iii) Certificates in exchange for or in lieu of which other Certificates have been executed and delivered pursuant to Article II of the Indenture. Owner Participant. The Person to whom on the Delivery Date the Initial Owner Participant shall transfer its Beneficial Interest pursuant to Section 3.02 of the Original Participation Agreement and any successors thereto, and any Person to which the Owner Participant transfers, in accordance with the Trust Agreement, its right, title and interest in and to the Operative Agreements and the Lessor's Estate. Owner Participant Guarantor. The provider, if any, of an Owner Participant Guaranty. Owner Participant Guaranty. Any guaranty delivered in compliance with Article 5 of the Trust Agreement. Owner Trustee. SSB, not in its individual capacity except as otherwise expressly stated, but solely as Owner Trustee under the Trust Agreement. Owner Trustee Guarantor. The provider, if any, of an Owner Trustee Guaranty. Owner Trustee Guaranty. Any guaranty delivered in compliance with Section 11.01(b)(ii) of the Participation Agreement. Owner's Economic Return. The Owner Participant's anticipated net after-tax yield and aggregate after-tax cash in the Basic Term, utilizing the multiple investment sinking fund method of analysis, computed on the basis of the same methodology and assumptions as were utilized by the Owner Participant in determining Basic Rent, Stipulated Loss Value and Termination Value percentages and EBO Price, as such assumptions may be adjusted for events which have been the basis of adjustments to Rent pursuant to Section 3.04 of the Lease. Participation Agreement. The Participation Agreement (Federal Express Corporation Trust No. N584FE), dated as of May 1, 1997, as amended and restated as of February 1, 1998, among the Lessee, the Owner Trustee not in its individual capacity except as otherwise expressly provided therein, but solely as owner trustee, the Owner Participant, the Indenture Trustee not in its individual capacity except as otherwise expressly provided therein, but solely as indenture trustee, the Pass Through Trustee not in its individual capacity except as otherwise expressly provided therein, but solely as pass through trustee and the Subordination Agent not in its individual capacity except as otherwise expressly provided therein, but solely as subordination agent. Parts. All appliances, parts, components, instruments, appurtenances, accessories, furnishings and other equipment of whatever nature (other than complete Engines or engines) which may from time to time be incorporated or installed in or attached to the Airframe or any Engine or, prior to replacement thereof in accordance with the Lease, which may be removed therefrom. Pass Through Agreement. The Pass Through Trust Agreement dated as of May 1, 1997, between the Lessee and the Pass Through Trustee. Pass Through Certificates. Any of the Pass Through Certificates, 1997-1-A, the Pass Through Certificates, 1997-1-B or the Pass Through Certificates, 1997-1-C, in each case as issued by the related Pass Through Trust; and "Pass Through Certificates" means all of the Pass Through Certificates issued by each of the Pass Through Trusts. Pass Through Closing Date. May 28, 1997. Pass Through Trust. The Federal Express Corporation 1997-1 Pass Through Trust Class A, Federal Express Corporation 1997-1 Pass Through Trust Class B and Federal Express Corporation 1997-1 Pass Through Trust Class C, in each case formed pursuant to the related Series Supplement in accordance with the Pass Through Agreement; and "Pass Through Trusts" means all of such Pass Through Trusts. Pass Through Trustee. First Security Bank, National Association, a national banking association, in its capacity as Pass Through Trustee under the Pass Through Agreement and each Pass Through Trust. Past Due Rate. In respect of (A) any amount payable to the Owner Participant or the Owner Trustee a rate per annum during the period from and including the due date to but excluding the date on which such amount is paid in full equal to 2% plus the Debt Rate and (B) any principal of or interest on any Certificate or any other amount payable under the Indenture, any Certificate or any other Operative Agreement that is not paid when due (whether at Maturity, by acceleration, by optional or mandatory prepayment or otherwise) to any Holder, the Indenture Trustee or the Pass Through Trustee, a rate per annum during the period from and including the due date to but excluding the date on which such amount is paid in full equal to (i) in the case of any such amount payable to the Holder of any Certificate, 2% plus the interest rate applicable to such Certificate and (ii) in the case of any other such amount, 2% plus the Debt Rate. Payment Date. Each January 15 and July 15 commencing on July 15, 1997. Payment Default. Any event specified in Section 16.01(a) or 16.01(b) of the Lease which with the giving of notice or lapse of time or both would constitute an Event of Default. Permitted Investments. Those investments enumerated in Section 23.01(a) (i), (ii), (iii) and (iv) of the Lease. Person. Any individual, sole proprietorship, partnership, joint venture, joint stock company, trust, unincorporated organization, association, corporation, institution, entity or government (federal, state, local, foreign or any agency, instrumentality, division or body thereof). Pool Balance. Has the meaning specified in Article I to the Series Supplement. Pool Factors. Has the meaning specified in Article I to the Series Supplement. Preliminary Notice. Has the meaning specified in Section 4.01(a) of the Lease. Premium Termination Date. With respect to the Series A Certificates, December 27, 2011, with respect to the Series B Certificates, February 5, 2010 and with respect to the Series C Certificates, March 22, 2007. Prepayment Date. Has the meaning specified in Section 6.02(b) of the Indenture. Prepayment Price. Has the meaning specified in Section 6.02(b) of the Indenture. Principal Amount. With respect to a Certificate means the stated original principal amount of such Certificate and, with respect to all Certificates, means the aggregate stated original principal amounts of all Certificates. Property. Any right or interest in or to property of any kind whatsoever, whether real, personal or mixed and whether tangible or intangible. Proposed Termination Date. Has the meaning specified in Section 10.01(a) of the Lease. Purchase Price. The amount specified as such in Ancillary Agreement I. Rating Agencies. Collectively, at any time, each nationally recognized rating agency which shall have been requested to rate the Pass Through Certificates and which shall then be rating the Pass Through Certificates. The initial Rating Agencies will be Moody's and S&P. Rating Agency Confirmation. With respect to any Operative Agreement that is to be modified in any material respect on the Delivery Date or the Transfer Date, if applicable, a written confirmation from each of the Rating Agencies that the use of such Operative Agreement with such modifications would not result in (i) a reduction of the rating for any Class of Pass Through Certificates below the then current rating for such Class of Pass Through Certificates or (ii) a withdrawal or suspension of the rating of any Class of Pass Through Certificates. Record Date. With respect to Payment Dates under the Indenture (except a date for payment of defaulted interest), December 31 for January 15 Payment Dates and June 30 for July 15 Payment Dates, whether or not such date is a Business Day. Recourse Amount. Has the meaning specified in Section 17.10 of the Participation Agreement. Refinancing. A non-recourse loan to the Lessor arranged pursuant to Section 15.01 of the Participation Agreement. Register. Has the meaning set forth in Section 3.02 of the Indenture. Registrar. Has the meaning set forth in Section 3.02 of the Indenture. Regulation D. Regulation D of the Board of Governors of the Federal Reserve System (or any successor), as the same may be modified and supplemented and in effect from time to time. Remaining Weighted Average Life. On a given date with respect to any Certificate the number of days equal to the quotient obtained by dividing (i) the sum of each of the products obtained by multiplying (a) the amount of each then remaining scheduled payment of principal of such Certificate by (b) the number of days from and including such prepayment date to but excluding the dates on which each such payment of principal is scheduled to be made; by (ii) the then outstanding principal amount of such Certificate. Renewal Rent. The amount payable by the Lessee as rent in accordance with Section 4.01 of the Lease during any Renewal Term. Renewal Term. Any Fixed Renewal Term or Fair Market Renewal Term with respect to which the Lessee has exercised its option to renew the Lease pursuant to Section 4.01(a) thereof. Rent. All payments due from the Lessee under the Lease as Basic Rent, Renewal Rent and Supplemental Rent, collectively. Rent Payment Date. February 26, 2020 and each January 15 and July 15 commencing on July 15, 1998, and continuing thereafter during the Term. Replacement Aircraft. Any aircraft substituted for the Aircraft pursuant to Section 11.03(a) of the Lease. Replacement Airframe. Has the meaning set forth in Section 11.03 of the Lease. Replacement Engine. A General Electric CF6-80C2-D1F engine (or an engine of the same or another manufacturer) of the same or of equal or greater value, remaining useful life and utility as the Engine being replaced, together with all Parts relating to such engine; provided, however, that if such replacement engine is not a General Electric CF6-80C2-D1F engine, such replacement engine must then be commonly used in the commercial aviation industry on McDonnell Douglas MD-11 airframes. Responsible Officer. With respect to the Owner Trustee (except for purposes of the Trust Agreement in which case the definition of Responsible Officer set forth in Section 3.10 of the Trust Agreement is applicable) or the Indenture Trustee, any officer in its Corporate Trust Department), as the case may be, designated by such Person to perform obligations under the Operative Agreements, and with respect to any other party, any corporate officer or (except in the case of the Owner Participant) other employee of a party who, in the normal performance of his or her operational responsibilities, with respect to the subject matter of any covenant, agreement or obligation of such party pursuant to any Operative Agreement, would have responsibility for and knowledge of such matter and the requirements of any Operative Agreement with respect thereto. S&P. Standard & Poor's Ratings Group. Scheduled Delivery Date. The Delivery Date specified in the Delivery Notice pursuant to Section 3.01 of the Participation Agreement. SEC. The Securities and Exchange Commission of the United States and any successor agencies or authorities. Secured Obligations. Has the meaning specified in the Granting Clause of the Indenture. Securities Act. The Securities Act of 1933, as amended. Series "A" or "Series A Certificates". Certificates issued and designated as "Series A" under the Indenture, in the Principal Amount and maturities and bearing interest as specified in Exhibit B to the Indenture under the heading "Series A". Series "B" or "Series B Certificates". Certificates issued and designated as "Series B" under the Indenture, in the Principal Amount and maturities and bearing interest as specified in Exhibit B to the Indenture under the heading "Series B". Series "C" or "Series C Certificates". Certificates issued and designated as "Series C" under the Indenture, in the Principal Amount and maturities and bearing interest as specified in Exhibit B to the Indenture under the heading "Series C". Series Supplements. The Series Supplement 1997-1-A, the Series Supplement 1997-1-B and the Series Supplement 1997-1-C, each dated the Certificate Closing Date, between the Lessee and the Pass Through Trustee. Sinking Fund Redemption Date. Has the meaning specified in Section 6.06 of the Indenture. Sinking Fund Redemption Price. Has the meaning specified in Section 6.06 of the Indenture. Special Aviation Counsel. Daugherty, Fowler & Peregrin. Special Distribution Date. Has the meaning specified in Article I to the Series Supplement. Specified Investments. Shall mean (a) direct obligations of the United States of America or obligations fully guaranteed by the United States of America; (b) commercial paper rated A-1/P-1 by S&P and Moody's, respectively or, if such ratings are unavailable, rated by any nationally recognized rating organization in the United States equal to the highest rating assigned by such rating organization; (c) investments in negotiable certificates of deposit, time deposits, banker's acceptances, commercial paper or other direct obligations of, or obligations guaranteed by, commercial banks organized under the laws of the United States or of any political subdivision thereof (or any U.S. branch of a foreign bank) with issuer ratings of at least B/C by Thomson Bankwatch, having maturities no later than 90 days following the date of such investment; (d) overnight federal funds transactions with members of the Federal Reserve System arranged by federal funds brokers; or (e) overnight repurchase agreements with respect to the securities described in clause (a) above entered into with an office of a bank or trust company which is located in the United States of America or any bank or trust company which is organized under the laws of the United States or any state thereof and has capital, surplus and undivided profits aggregating at least $500 million. SSB. State Street Bank and Trust Company of Connecticut, National Association, a national banking association. Stipulated Loss Value. As of any Stipulated Loss Value Determination Date during the Basic Term, the amount determined by multiplying the Purchase Price by the percentage set forth in Schedule III of the Lease under the heading "Stipulated Loss Value Factor" opposite such date (as such Schedule III may be adjusted from time to time as provided in Section 3.04 of the Lease), and during any Renewal Term, the amount determined pursuant to Section 4.01(b) of the Lease. Notwithstanding any other provisions of the Lease, the Participation Agreement or the Indenture, each Stipulated Loss Value for the Aircraft shall be, under any circumstances and in any event, an amount, together with the arrears portion of Basic Rent due and owing through the date of payment of Stipulated Loss Value and not constituting an Excepted Payment, at least sufficient to pay in full as of such date of payment the aggregate unpaid principal amount of and accrued interest on the Certificates outstanding on such date of payment. Subject to the immediately preceding sentence, it is understood and agreed that the amounts set forth on Schedule III of the Lease, for Stipulated Loss Value Determination Dates other than Rent Payment Dates, fully reflect appropriate Basic Rent accruals and credits of unearned Basic Rent as of such Stipulated Loss Value Determination Date and, accordingly, no further accrual or credit shall be required whenever Stipulated Loss Value is to be calculated with reference to any such date. Stipulated Loss Value Determination Date. Each date set forth on Schedule III of the Lease under the heading "Stipulated Loss Value Date." Supplemental Rent. (a) All amounts, liabilities and obligations which the Lessee assumes or agrees to perform or pay under the Lease or under the Participation Agreement or Tax Indemnity Agreement or Ancillary Agreement I or any other Operative Agreement to SSB, the Lessor, the Owner Participant, the Indenture Trustee, the Subordination Agent, any Liquidity Provider or others, including, without limitation, payments of Stipulated Loss Value, EBO Price and amounts calculated by reference to Termination Value, and all amounts required to be paid by Lessee under the agreements, covenants and indemnities contained in the Lease or in the Participation Agreement or the Tax Indemnity Agreement or any other Operative Agreement, but excluding Basic Rent and (b) all amounts that the Owner Trustee is obligated to pay in accordance with clause (b) of the last paragraph of Section 2.04 of the Indenture. Tax. Shall have the meaning set forth in Section 8.01(a) of the Participation Agreement. Tax Indemnity Agreement. The Tax Indemnity Agreement (Federal Express Corporation Trust No. N584FE), dated as of February 1, 1998, between the Lessee and the Owner Participant. Term. The Basic Term and any Renewal Term unless the Lease is terminated earlier pursuant to its terms. Termination Date. A Rent Payment Date during the Basic Term that is on or after the seventh anniversary of the Delivery Date in the case of Article 10 of the Lease, and in the case of (i) Section 4.02(a)(A) of the Lease the Rent Payment Date falling on July 15, 2011 or January 15, 2014, as the case may be, (ii) Section 4.02(a)(D) or (E) of the Lease, a Rent Payment Date that is on or after the seventh anniversary of the Delivery Date and (iii) Section 4.02(a)(F) of the Lease, January 15, 2016. Termination Value. As of any Termination Date, the amount determined by multiplying the Purchase Price by the percentage set forth in Schedule IV of the Lease under the heading "Termination Value Factor" opposite such Termination Date (as such Schedule IV may be adjusted from time to time as provided in Section 3.04 of the Lease). Notwithstanding any other provisions of the Lease, the Participation Agreement or the Indenture, each Termination Value shall be, under any circumstances and in any event, an amount, together with the arrears portion of Basic Rent due and owing through the date of payment of any amount calculated by reference to Termination Value and not constituting an Excepted Payment, at least sufficient to pay in full as of such date of payment the aggregate unpaid principal amount of and accrued interest on the Certificates outstanding on such date of payment. Subject to the immediately preceding sentence, it is understood and agreed that the amounts set forth on Schedule IV of the Lease, for dates other than Rent Payment Dates, fully reflect appropriate Basic Rent accruals and credits of unearned Basic Rent and, accordingly, no further accrual or credit shall be required whenever Termination Value is to be calculated with reference to any such date. Transaction Costs. Those costs and expenses set forth in Section 10.01(a) of the Participation Agreement. Transportation Code. Title 49 of the United States Code, as amended and in effect on the date of the Lease or as subsequently amended, or any successor or substituted legislation at the time in effect and applicable, and the regulations promulgated pursuant thereto. Treasury Yield. At the time of determination with respect to any Certificate, the interest rate (expressed as a semi-annual equivalent and as a decimal and, in the case of United States Treasury bills, converted to a bond equivalent yield) determined to be the per annum rate equal to the semi-annual yield to maturity for United States Treasury securities maturing on the Average Life Date on such Certificate and trading in the public securities markets either as determined by interpolation between the most recent weekly average yield to maturity for two series of United States Treasury securities, trading in public securities markets, (i) one maturing as close as possible to, but earlier than, the Average Life Date of such Certificate and (ii) the other maturing as close as possible to, but later than, the Average Life Date of such Certificate. In each case as published in the most recent H.15(519) or, if a weekly average yield to maturity for United States Treasury securities maturing on the Average Life Date of such Certificate is reported on the most recent H.15 (519), such weekly average yield to maturity as published in such H.15(919). "H.15(519)" means the weekly statistical release designated as such, or any successor publication, published by the Board of Governors of the Federal Reserve System. The date of determination of a Make-Whole Premium will be the third Business Day prior to the applicable prepayment date and the "most recent H.15(519)" means the H.15(519) published prior to the close of business on the third Business Day prior to the applicable prepayment date. Trust Agreement. The Trust Agreement (Federal Express Corporation Trust No. N584FE), dated as of May 1, 1997, as amended and restated as of February 1, 1998, between the Owner Participant and the Owner Trustee in its individual capacity. Trust Estate. The Lessor's Estate. Trust Indenture Act. The Trust Indenture Act of 1939, as amended. Trust Indenture Estate. All estate, right, title and interest of the Indenture Trustee in and to any of the property, rights, interests and privileges granted to the Indenture Trustee pursuant to the Granting Clause of the Indenture, other than Excepted Payments and any and all other rights of the Owner Trustee or the Owner Participant expressly reserved to the Owner Trustee or the Owner Participant pursuant to the Indenture. UCC. Uniform Commercial Code. Underwriters. Morgan Stanley & Co. Incorporated, First Chicago Capital Markets, Inc., Goldman, Sachs & Co. and J.P. Morgan & Co. Underwriting Agreement. The Underwriting Agreement dated May 22, 1997 among the Lessee and the Underwriters. United States, U.S. or US. The United States of America. U.S. Air Carrier. Any United States air carrier as to which there is in force a certificate issued pursuant to Section 41102(a) or Section 41103 of the Transportation Code, and as to which there is in force an air carrier operating certificate issued pursuant to Chapter 447 of the Transportation Code and Part 121 of the regulations under such Transportation Code, for aircraft capable of carrying ten (10) or more individuals or 6,000 pounds or more of cargo, or which may operate as an air carrier by certification or otherwise under any successor or substitute provision thereof or in absence thereof. U.S. Person. A Person described in Section 7701(a)(30) of the Code. Warranty Bill of Sale. The full warranty bill of sale covering the Aircraft (and specifically referring to each Engine) executed by the Lessee, as seller in favor of the Owner Trustee, as buyer, and to be dated the Delivery Date. SCHEDULE III PERMITTED COUNTRY LIST Australia Malaysia Austria Mexico Belgium Netherlands Canada New Zealand Denmark Norway Finland Philippines France Portugal Germany Singapore Ireland Spain Italy Sweden Japan Switzerland Luxembourg United Kingdom EXHIBIT A(1)(a) [Letterhead of Federal Express] [Delivery Date] To the Addressees Listed on Schedule A Attached Re: Federal Express Corporation Trust No. N584FE -------------------------------------------- Ladies and Gentlemen: I am the Vice President - Law of Federal Express Corporation, a Delaware corporation ("Federal"), and am familiar with the transactions contemplated by the Participation Agreement (Federal Express Corporation Trust No. N584FE), dated as of May 1, 1997, as amended and restated as of February 1, 1998 (the "Participation Agreement"), among Federal, as Lessee and Initial Owner Participant, Key Corporate Capital Inc., as Owner Participant, State Street Bank and Trust Company of Connecticut, National Association, not in its individual capacity, except as otherwise stated, but solely as Owner Trustee, and First Security Bank, National Association, not in its individual capacity, except as otherwise stated, but solely as Indenture Trustee, Pass Through Trustee and Subordination Agent, relating to the Aircraft. This opinion is being delivered pursuant to Section 4.01(m)(i) of the Participation Agreement. Capitalized terms not otherwise defined herein have the meaning assigned thereto in the Participation Agreement. The Participation Agreement provides, among other things, for the financing on the Delivery Date of a portion of the Owner Trustee's payment of the Purchase Price of one McDonnell Douglas MD-11F aircraft (the "Aircraft"), using the proceeds from the public offering of the Pass Through Certificates. Three Classes of Pass Through Certificates were issued by three Pass Through Trusts formed to acquire, among other securities, the Certificates bearing a particular interest rate and having a particular Maturity that were issued under the Indenture, as supplemented by the related Indenture and Security Agreement Supplement. In connection with the opinions expressed below, I have examined or caused to be examined by attorneys under my supervision, executed counterparts of the Operative Agreements. We have relied upon originals or copies, certified or otherwise identified to our satisfaction, of such corporate records, documents and other instruments as in our judgment are relevant to rendering the opinions expressed below. As to any facts material to the opinions expressed below (other than any thereof relating to Federal), we have relied upon the representations and warranties made in the Operative Agreements, the accuracy of which we have not independently investigated or verified. In such examination, we have assumed the genuineness of all signatures (other than the signatures of Federal) and the authenticity of all documents submitted to us as originals and the conformity with the originals of all documents submitted to us as copies. We have also assumed that each of the parties to each of the Operative Agreements, other than Federal, has full power, authority and legal right to enter into such Operative Agreements and that each such Operative Agreement has been duly authorized, executed and delivered by each of such parties. Based on the foregoing, it is my opinion that: 1. Federal is a corporation duly incorporated, validly existing and in good standing under the laws of the State of Delaware, is a "citizen of the United States" within the meaning of Section 40102(a)(15) of the Transportation Code, and has the corporate power and authority to carry on its business as currently conducted and to enter into and perform its obligations under the Operative Agreements to which it is a party. Federal is duly qualified to do business and is in good standing in the State of Tennessee and each other state of the United States in which its operations or the nature of its business requires Federal to so qualify, except where the failure to so qualify would not have a material adverse impact on Federal or its business. 2. Federal possesses all necessary certificates, franchises, licenses, permits, rights and concessions and consents which are material to the operation of the routes flown by it and the conduct of its business and operations as currently conducted, and each such certificate, franchise, license, permit, right and concession and consent is in full force and effect. 3. Each of the Operative Agreements to which Federal is a party has been duly authorized, executed and delivered by Federal and each constitutes the legal, valid and binding obligation of Federal enforceable against Federal in accordance with its terms. 4. Neither the execution and delivery by Federal of the Operative Agreements to which Federal is a party, nor the consummation of any of the transactions by Federal contemplated thereby, nor the performance of the obligations thereunder by Federal (a) requires any stockholder approval or violates the certificate of incorporation or by-laws of Federal or (b) conflicts with or contravenes the provisions of, or constitutes a default under, or results in the creation of any Lien (other than Liens permitted under Section 6.01(a) of the Lease) upon the property of Federal under any law, governmental rule or regulation, or the charter or bylaws of Federal or any order, writ, injunction or decree of any court or governmental authority against Federal or by which any of its properties may be bound or any indenture, mortgage, contract or other agreement known to me to which Federal is a party or by which it may be bound or, requires 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, (a) requires 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 Delivery Date and which shall have been accomplished on or prior to the Delivery Date) the registration with, or the taking of any other action in respect of, the Aeronautics Authority, the Securities and Exchange Commission or any other authority or agency of the federal government or of the State of Tennessee other than (i) the registration of the issuance and sale of the Pass Through Certificates under the Securities Act, (ii) compliance with the securities laws of each applicable state and (iii) the filings and recordings referred to in paragraph 7 below, or (b) contravenes any judgment or order applicable to or binding on Federal or any law or governmental rule or regulation of the United States or of the State of Tennessee. 6. There is no pending, or to my knowledge, threatened action or proceeding before any court or administrative agency which individually (or in the aggregate in the case of any group of related lawsuits) (i) is expected to have a material adverse effect on (A) the financial condition of Federal except for the matters described (a) under "Legal Proceedings" in Federal's Annual Report on Form 10-K for the fiscal year ended May 31, 1997 (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, 1997 and November 30, 1997), and (b) in Federal's Current Report on Form 8-K dated June 11, 1997, 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 or (B) the ability of Federal to perform its obligations under the Operative Agreements or (ii) involves the Aircraft. 7. Except for the registration in the Owner Trustee's name of the Aircraft pursuant to the Transportation Code, and except for the filing and, where appropriate, recording, pursuant to the Transportation Code of (A) the FAA Bill of Sale, (B) the Trust Agreement, (C) the Lease (with the Lease Supplement covering the Aircraft, the Indenture and the Indenture and Security Agreement Supplement covering the Aircraft attached as exhibits) and (D) the Indenture (with the Indenture and Security Agreement Supplement covering the Aircraft attached as an exhibit), no further action, including any filing or recording of any document is necessary or advisable in order to establish and perfect the Owner Trustee's title to and interest in the Aircraft as against Federal and any third parties, or to perfect the first mortgage lien on the Aircraft in favor of the Indenture Trustee in each case with respect to such portion of the Aircraft as is covered by the recording system established by the Transportation Code. 8. Federal is a duly certificated "air carrier" within the meaning of the Transportation Code, and a holder of a certificate under Sections 41102(a) and 41103 of the Transportation Code, and an "air carrier operating certificate" issued under Chapter 447 of the Transportation Code for aircraft capable of carrying ten (10) or more individuals or 6,000 pounds or more of cargo, and each such certificate is in full force and effect. 9. On the date hereof, the Owner Trustee received good and valid title to the Aircraft free and clear of all Liens on file with the FAA, except for liens permitted under Section 6.01(a) of the Lease. 10. Federal's principal place of business and chief executive office (as such term is defined in the Uniform Commercial Code in effect in the State of Tennessee) are located at 2005 Corporate Avenue, Memphis, Shelby County, Tennessee. 11. Federal is not, and is not directly or indirectly controlled by or acting on behalf of any Person which is, an "investment company" within the meaning of the Investment Company Act of 1940, as amended. The opinions expressed in paragraph 3 above as to the enforceability of the Operative Agreements to which Federal is a party are based upon the assumption for purposes of such opinions and without independent analysis that, notwithstanding the respective choice of laws clauses in the Operative Agreements, the governing law with respect to each of the Operative Agreements is identical in all relevant respects to the law of the State of Tennessee. Insofar as the foregoing opinion relates to the enforceability of any instrument, such enforceability is subject to applicable bankruptcy, insolvency and other similar laws affecting the enforcement of creditors' rights generally (whether such enforceability is considered in a proceeding in equity or at law). The enforceability of the remedies provided under the Lease may also be limited by applicable laws which may affect the remedies provided therein but which do not in my opinion affect the validity of the Lease or make such remedies inadequate for the practical realization of the benefits intended to be provided thereby. I do not express any opinion as to matters governed by any law other than the Federal laws of the United States of America, the corporation law of the State of Delaware and the laws of the State of Tennessee. As to the matters referred to in paragraphs 5, 7 and 9, I have relied on the opinion of Daugherty, Fowler & Peregrin of even date herewith, to the extent such matters are addressed in such counsel's opinion and subject to the assumptions and qualifications expressed therein. This opinion is delivered to you solely for your use in connection with the transaction described herein, and may not be used for any other purpose, and may not be relied upon by any other person, without my prior written consent. Very truly yours, SCHEDULE A ---------- Owner Trustee - ------------- State Street Bank and Trust Company of Connecticut, National Association Two International Place 4th Floor Boston, Massachusetts 02110 Owner Participant - ----------------- Key Corporate Capital Inc. c/o KeyCorp Leasing Ltd. 54 State Street Albany, New York 12207 Indenture Trustee, Pass Through Trustee & Subordination Agent - ------------------------------------------------------------- First Security Bank, National Association 79 South Main Street Salt Lake City, Utah 84111 Underwriters - ------------ Morgan Stanley & Co. Incorporated 1585 Broadway New York, New York 10036 First Chicago Capital Markets, Inc. Corporate Securities One First National Plaza Chicago, Illinois 60670 Goldman, Sachs & Co. 85 Broad Street New York, New York 10004 J.P. Morgan & Co. 60 Wall Street New York, New York 10260 Liquidity Provider - ------------------ Kredietbank N.V., New York Branch 125 West 55th Street New York, New York 10019 EXHIBIT A(1)(b) [Letterhead of Davis Polk & Wardwell] [Delivery Date] To Each of the Parties named on Schedule A Hereto Re: Federal Express Corporation Trust No. N584FE -------------------------------------------- Ladies and Gentlemen: We have acted as special counsel for Federal Express Corporation, a Delaware corporation ("Federal Express"), in connection with the transactions contemplated by the Participation Agreement (Federal Express Corporation Trust No. N584FE), dated as of May 1, 1997, as amended and restated as of February 1, 1998 (the "Participation Agreement"), among Federal Express, as Lessee and Initial Owner Participant, Key Corporate Capital Inc., as Owner Participant, State Street Bank and Trust Company of Connecticut, National Association, not in its individual capacity but solely as Owner Trustee, and First Security Bank, National Association, not in its individual capacity, except as otherwise stated, but solely as Indenture Trustee, Pass Through Trustee and Subordination Agent, relating to the Aircraft. This opinion is being delivered pursuant to Section 4.01(m)(ii) of the Participation Agreement. Capitalized terms not otherwise defined herein have the meanings assigned thereto in the Participation Agreement. The Participation Agreement provides, among other things, for the financing on the Delivery Date of the Owner Trustee's payment of a portion of the Purchase Price of one McDonnell Douglas MD-11F Aircraft (the "Aircraft") using the proceeds from the public offering of the Pass Through Certificates. On the Certificate Closing Date, three Classes of Pass Through Certificates were issued by separate Pass Through Trusts, each formed to acquire, among other securities, the Certificates bearing a particular interest rate and having a particular Maturity issued under the Indenture. The Aircraft is to be leased to Federal Express by the Owner Trustee pursuant to the Lease and subjected to the Lien of the Indenture, and is to be delivered by the Owner Trustee to the Lessee on this date, and in connection with the delivery of the Aircraft, the Owner Trustee and Federal Express will execute and deliver the Lease Supplement, and the Owner Trustee will execute and deliver the Indenture and Security Agreement Supplement. In connection with the opinions expressed below, we have examined executed counterparts of the Operative Agreements. We have also examined originals, or copies certified to our satisfaction, of such other agreements, documents, certificates and statements of governmental officials and corporate officers as we have deemed necessary or advisable as a basis for such opinions. In such examination, we have assumed the genuineness of all signatures and the authenticity of all documents submitted to us as originals and the conformity with the originals of all documents submitted to us as copies. As to any facts material to our opinions expressed below, we have, with your consent, relied on the representations and warranties made in or pursuant to the Participation Agreement and the other documents referred to therein, the accuracy of which we have not independently verified. In addition, we have, when relevant facts were not independently established by us, relied, to the extent we deemed such reliance proper, upon certificates of public officials and certificates, telegrams and other written or telephoned statements of officers of the parties referred to herein. Based on the foregoing, it is our opinion that: 1. With respect to that portion, if any, of the Aircraft and the other property included in the Lessor's Estate as may not be covered by the recording system established by the FAA pursuant to Section 44107 of the Transportation Code, no filing or recording of any document or other action was or is necessary in order to establish the Owner Trustee's title thereto and interest therein as against Federal Express and any third parties. 2. Subject to execution and delivery of the Lease Supplement and the Indenture and Security Agreement Supplement for the Aircraft and to the registration of the Aircraft with the FAA in the name of the Owner Trustee, the Lease, as supplemented, will create a valid leasehold interest in the Aircraft, the entitlement thereof to the benefits of recordation under the Transportation Code being subject to the due and timely filing and, where appropriate, recording of (A) the FAA Bill of Sale, (B) the Trust Agreement, (C) the Lease (with the Lease Supplement covering the Aircraft, the Indenture and the Indenture and Security Agreement Supplement covering the Aircraft attached as exhibits) and (D) the Indenture (with the Indenture and Security Agreement Supplement covering the Aircraft attached as an exhibit), pursuant to the Transportation Code, and assuming that at the time of such filing no other documents relating to the Aircraft have been filed pursuant to the Transportation Code. 3. Assuming (i) the due authorization, execution and delivery of the Operative Agreements by each of the parties to each such document (other than Federal Express), (ii) each such party has full power and legal right to enter into and perform its respective obligations under the Operative Agreements, (iii) that the execution, delivery and performance of each of the Operative Agreements by each of the parties thereto will not violate the respective parties' constituent documents, (iv) the due authorization, execution, issuance and delivery by the Owner Trustee, and the due authentication by the Indenture Trustee, of the Certificates issued under the Indenture in accordance with the terms of the Indenture, and (v) that the form of each Operative Agreement is in compliance with all applicable laws and governmental rules and regulations (other than the laws of the United States and the State of New York), then: (A) to the extent governed by New York law, each Operative Agreement constitutes a legal, valid and binding agreement of each party thereto enforceable against each such party in accordance with its terms; (B) the Indenture creates, for the benefit of the Holders, the security interest in the Trust Indenture Estate that it purports to create; (C) the Certificates are legal, valid and binding obligations of the Owner Trustee enforceable against the Owner Trustee in accordance with their terms and the terms of the Indenture and are entitled to the benefits of the Indenture, including the benefit of the security interest created thereby; and (D) the beneficial interest of the Owner Participant under the Trust Agreement in and to the properties which are part of the Trust Indenture Estate is subject, to the extent provided in the Indenture, as supplemented by the Indenture and Security Agreement Supplement, to the Lien of the Indenture in favor of the Holders. The opinions set forth in this paragraph 3 are subject to the due filing and recording, where appropriate, with the FAA of the documents referred to in paragraph 2 above. 4. (a) Each of the Operative Agreements to which Federal Express is a party has been duly authorized, executed and delivered by Federal Express. (b) The execution, delivery and performance by Federal Express of each of the Operative Agreements to which Federal Express is a party do not violate, and fully comply with, any laws and governmental rules and regulations of the State of New York that may be applicable to Federal Express. The opinion set forth in this paragraph 4(b) is rendered without regard to the taking of any action or the conduct of any other business by Federal Express in the State of New York other than the transactions contemplated by the Operative Agreements. 5. The execution, delivery and performance of the Operative Agreements (other than the Certificates) by the Owner Trustee in its individual or trust capacity, as the case may be, and the issuance, execution, delivery and performance of the Certificates by the Owner Trustee in its trust capacity do not violate, and fully comply with, any laws and governmental rules and regulations of the State of New York that may be applicable to the Owner Trustee in its individual or trust capacity, as the case may be. The opinion set forth in this paragraph 5 is rendered without regard to the effect, if any, on such issuance (in the case of the Certificates), execution, delivery or performance, of the taking of any action, the conduct of any business or the exercise of any other powers by State Street Bank and Trust Company of Connecticut, National Association in its individual or trust capacity in the State of New York not related to the transactions contemplated by the Operative Agreements. We have assumed that State Street Bank and Trust Company of Connecticut, National Association has made the filings necessary to comply with Section 131.3 of the Banking Law of the State of New York, however we express no opinion as to whether State Street Bank and Trust Company of Connecticut, National Association is required to comply with said Section 131.3. 6. All the properties which are part of the Trust Indenture Estate (including all right, title and interest of the Owner Trustee pledged and mortgaged by it pursuant to the Indenture in and to the Aircraft and the Lease) have been pledged and mortgaged with the Indenture Trustee as part of the Trust Indenture Estate (subject to the due filing and, where appropriate, recording of those documents referred to in paragraph 2 above and the financing statements referred to in Section 4.01(g) of the Participation Agreement), and the beneficial interest of the Owner Participant under the Trust Agreement in and to such properties are subject, to the extent provided in the Indenture, to the Lien of the Indenture in favor of the Holders of the Certificates issued and to be issued under the Indenture. 7. The Indenture and Security Agreement Supplement, pursuant to the Granting Clause of the Indenture, creates, as security for the Certificates duly issued and to be issued under the Indenture, the first priority security interest in the Aircraft it purports to create, the perfection and rank thereof being subject to the registration with the FAA of the Aircraft in the name of the Owner Trustee and the due filing and, where appropriate, recording in accordance with the Transportation Code of the documents referred to in paragraph 2 above. We express no opinion with respect to the status of any security interest in any portion of the Aircraft which does not constitute an "aircraft" or "aircraft engine", as defined in paragraphs (6) and (7) of Section 40102(a) of the Transportation Code. 8. Except for (i) the filings and recordings referred to in paragraph 2 above, (ii) the registration of the issuance and sale of the Pass Through Certificates under the Securities Act and (iii) compliance with the securities laws of each applicable state, neither the execution and delivery by Federal Express of the Participation Agreement or any other Operative Agreement to which it is a party, nor the consummation of any of the transactions by Federal Express contemplated thereby, requires the consent or approval of, the giving of notice to, or the registration with, or the taking of any other action in respect of, the Department of Transportation, the FAA, the Securities and Exchange Commission or any other Federal or New York State governmental authority. 9. It is not necessary, in connection with the creation of the beneficial interest of the Owner Participant in the Trust Indenture Estate under the circumstances contemplated by the Participation Agreement to register such beneficial interest under the Securities Act of 1933, as amended, or to qualify the Trust Agreement under the Trust Indenture Act of 1939, as amended. 10. The provisions of Section 1110 of the United States Bankruptcy Code will apply to the Aircraft for the benefit of the Lessor, as lessor under and by reason of the Lease. The Lease, including the rights under Section 1110 of the United States Bankruptcy Code, has been assigned to the Indenture Trustee pursuant to the Indenture as part of the collateral for the Certificates and, as assignee, the Indenture Trustee has the benefit of Section 1110. The foregoing opinions are subject to the following qualifications: (a) We have relied, with your consent, without independent investigation and verification and subject to the assumptions and qualifications contained therein, upon the opinions of Daugherty, Fowler & Peregrin and George W. Hearn, Vice President - Law of Federal Express to be delivered to you and dated the date hereof, for purposes of the matters covered thereby. (b) We are qualified to practice law in the State of New York, and we do not purport to be experts on, or to express any opinion herein concerning, any laws other than the laws of the State of New York, the laws of the United States and the General Corporation Law of the State of Delaware. We express no opinion as to any matters involving aviation law. (c) The opinion contained in paragraph 3(A) above as to enforceability is subject to (i) applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditors' rights generally and (ii) general principles of equity which may affect the remedies provided in the agreements referred to in said opinions, which laws and principles, however, do not in our opinion make the remedies provided in said agreements inadequate for the practical realization of the benefits of the security intended to be provided thereby. (d) This opinion is rendered solely to you at Federal Express's request in connection with the above matter. This opinion may not be relied upon by you for any other purpose or relied upon by any other Person without our prior written consent. Very truly yours, SCHEDULE A ---------- Lessee - ------ Federal Express Corporation 2007 Corporate Avenue Memphis, Tennessee 38132 Owner Trustee - ------------- State Street Bank and Trust Company of Connecticut, National Association Two International Place 4th Floor Boston, Massachusetts 02110 Owner Participant - ----------------- Key Corporate Capital Inc. c/o KeyCorp Leasing Ltd. 54 State Street Albany, New York 12207 Indenture Trustee, Pass Through Trustee & Subordination Agent - ------------------------------------------------------------- First Security Bank, National Association 79 South Main Street Salt Lake City, Utah 84111 Underwriters - ------------ Morgan Stanley & Co. Incorporated 1585 Broadway New York, New York 10036 First Chicago Capital Markets, Inc. Corporate Securities One First National Plaza Chicago, Illinois 60670 Goldman, Sachs & Co. 85 Broad Street New York, New York 10004 J.P. Morgan & Co. 60 Wall Street New York, New York 10260 Liquidity Provider - ------------------ Kredietbank N.V., New York Branch 125 West 55th Street New York, New York 10019 EXHIBIT A(2)(a) [Letterhead of Chadbourne & Parke LLP] [Delivery Date] To Each of the Parties named on Schedule A Hereto Re: Federal Express Corporation Trust No. N584FE -------------------------------------------- Ladies and Gentlemen: We have acted as special counsel to Key Corporate Capital Inc., a Michigan corporation (the "Owner Participant"), in connection with the transactions contemplated by: 1. the Participation Agreement (Federal Express Corporation Trust No. N584FE) dated as of May 1, 1997, as amended and restated as of February 1, 1998 among (i) the Owner Participant, (ii) Federal Express Corporation (the "Company"), (iii) First Security Bank, National Association, not in its individual capacity, except as otherwise expressly provided in the Participation Agreement, but solely as Indenture Trustee, Pass Through Trustee and Subordination Agent, and (iv) State Street Bank and Trust Company of Connecticut, National Association, not in its individual capacity, except as otherwise set forth in the Participation Agreement, but solely as Owner Trustee (the "Participation Agreement"); 2. the Trust Agreement (Federal Express Corporation Trust No. N584FE) dated as of May 1, 1997, as amended and restated as of February 1, 1998 between the Owner Participant and the Owner Trustee (the "Trust Agreement"); 3. the Tax Indemnity Agreement (Federal Express Corporation Trust No. N584FE) dated as of May 1, 1997, as amended and restated as of February 1, 1998 between the Owner Participant and the Company (the "Tax Indemnity Agreement"); and 4. the Ancillary Agreement I (Federal Express Corporation Trust No. N584FE) dated the date hereof among (i) the Owner Participant, (ii) Company, (iii) the Indenture Trustee, and (iv) the Owner Trustee (the "Ancillary Agreement I") (collectively, the "Agreements"). The Owner Participant has requested that we deliver this opinion to you pursuant to the Participation Agreement and we understand and agree that you may rely on the opinions expressed herein. Capitalized terms used herein without definition shall have the meanings set forth in Schedule II to the Participation Agreement. As such counsel, we have examined the Agreements and have examined and relied upon the representations and warranties as to factual matters contained therein and upon the originals or copies, certified to our satisfaction, of such records, documents and other instruments as we have deemed necessary or advisable for the purposes of rendering this opinion. Based on and in reliance upon the foregoing, we are of the opinion that: 1. Assuming the due authorization, execution and delivery by the parties thereto other than the Owner Participant (and as to the Owner Participant assuming due authorization and execution only), the Agreements constitute the legal, valid and binding obligations of the Owner Participant, enforceable against the Owner Participant in accordance with their terms, except as to the enforceability thereof may be limited by (a) applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the rights of creditors generally, and (b) by general principles of equity whether considered in a proceeding at law or in equity. 2. No approval or consent of, notice to, or filing or registration with any United States Federal or New York regulatory body is necessary in connection with the execution, delivery and performance by the Owner Participant or compliance by the Owner Participant with any of the provisions of the Agreements, the failure of which to obtain would have a material adverse effect upon the ability of the Owner Participant to enter into and perform its obligations under the Agreements, except for such filings as may be required with the Federal Aviation Administration, as to which we express no opinion. 3. Neither the execution and delivery of the Agreements by the Owner Participant, nor the consummation by the Owner Participant of any of the transactions contemplated thereby, violates any law, governmental rule or regulation of the State of New York or the Federal government of the United States of America or any governmental subdivision of either thereof. 4. The Owner Participant has duly delivered the Agreements. No opinion is expressed herein concerning any laws other than the laws of the State of New York and the laws of the United States of America. No opinion is expressed herein as to the matters governed by (i) any Federal or state securities laws, (ii) any Federal or state banking laws, (iii) any Federal or state tax laws, or (iv) the Federal Aviation Act, as amended, or any other laws, statutes, rules or regulations relating to the acquisition, ownership, registration, leasing, use or sale of the Aircraft. This opinion is being delivered pursuant to Section 4.01(m)(iii) of the Participation Agreement for your sole benefit, and no other person or entity shall be entitled to rely upon this opinion without our express written consent. This opinion is limited to the matters stated herein, and no opinion is implied or may be inferred beyond the matters expressly stated herein. Very truly yours, SCHEDULE A ---------- Lessee - ------ Federal Express Corporation 2007 Corporate Avenue Memphis, Tennessee 38132 Owner Trustee - ------------- State Street Bank and Trust Company of Connecticut, National Association Two International Place 4th Floor Boston, Massachusetts 02110 Owner Participant - ----------------- Key Corporate Capital Inc. c/o KeyCorp Leasing Ltd. 54 State Street Albany, New York 12207 Indenture Trustee, Pass Through Trustee & Subordination Agent - ------------------------------------------------------------- First Security Bank, National Association 79 South Main Street Salt Lake City, Utah 84111 Underwriters - ------------ Morgan Stanley & Co. Incorporated 1585 Broadway New York, New York 10036 First Chicago Capital Markets, Inc. Corporate Securities One First National Plaza Chicago, Illinois 60670 Goldman, Sachs & Co. 85 Broad Street New York, New York 10004 J.P. Morgan & Co. 60 Wall Street New York, New York 10260 Liquidity Provider - ------------------ Kredietbank N.V., New York Branch 125 West 55th Street New York, New York 10019 EXHIBIT A(2)(b) [Letterhead of Bodman, Longley & Dahling LLP] [Delivery Date] To Each of the Addressees Listed on Schedule A Attached Hereto: Ladies and Gentlemen: We have acted as special Michigan counsel to Key Corporate Capital Inc., a Michigan corporation (the "Company"), in connection with: 1. The Participation Agreement (Federal Express Corporation Trust No. N584FE) dated as of May 1, 1997, as amended and restated as of February 1, 1998 among Federal Express Corporation, as Lessee (the "Lessee"); the Company, as Owner Participant; First Security Bank, National Association, not in its individual capacity, except as otherwise expressly set forth therein, but solely as Indenture Trustee, Pass Through Trustee and Subordination Agent; State Street Bank and Trust Company of Connecticut, National Association, not in its individual capacity, except as otherwise set forth therein, but solely as Owner Trustee (the "Owner Trustee") (the "Participation Agreement"); 2. The Trust Agreement (Federal Express Corporation Trust No. N584FE) dated as of May 1, 1997, as amended and restated as of February 1, 1998 between the Owner Participant and the Owner Trustee (the "Trust Agreement"); 3. The Tax Indemnity Agreement (Federal Express Corporation Trust No. N584FE) dated as of February 1, 1998 between the Owner Participant and the Lessee (the "Tax Indemnity Agreement"); and 4. The Ancillary Agreement I (Federal Express Corporation Trust No. N584FE) dated the date hereof among (i) the Lessee, (ii) the Owner Participant, (iii) the Indenture Trustee, and (iv) the Owner Trustee (the "Ancillary Agreement I"). The Participation Agreement, the Trust Agreement, the Tax Indemnity Agreement and the Ancillary Agreement I are referred to herein as the "Owner Participant Documents". Capitalized terms used herein and not otherwise defined herein are used as defined in Schedule II to the Participation Agreement. As such counsel, we have examined executed counterparts of the Owner Participant Documents. We have also reviewed the following (the "Company Corporate Documents"): 1. Good Standing Certificate certified by the Corporation, Securities and Land Development Bureau of the Michigan Department of Consumer and Industries Services (the "Bureau") as of February 12, 1998; 2. Articles of Incorporation and Certificate of Merger/Consolidation of the Company, certified by the Bureau as of February 12, 1998; and 3. Certificates of the Assistant Secretary of the Company dated February ___, 1998, attaching copies of (a) the Company's Articles of Incorporation, By-Laws, Resolutions of the Board of Directors and Incumbency and Signature Certificates for certain of the officers of the Company and (b) Delegation of Signing Authority. We call to your attention the fact that we have been engaged by the Company solely for the purpose of rendering this opinion, and that we have not reviewed any of the Company's business or corporate records, other than the Company Corporate Documents. Accordingly, and with your approval, our opinion is based solely on a review of the Owner Participant Documents and the Company Corporate Documents. Based on and subject to the foregoing, we are of the opinion that: 1. The Company is a Michigan corporation duly organized, validly existing and in good standing under the laws of the State of Michigan with the full corporate power and authority to execute, deliver and perform its obligations under the Owner Participant Documents. 2. The execution, delivery and performance of each of the Owner Participant Documents have been duly authorized by all necessary corporate action on the part of the Company. 3. Neither the execution, delivery or performance by the Company of any of the Owner Participant Documents nor the consummation or performance by the Company of the transactions contemplated thereby (a) requires the approval of the shareholders of the Company, or (b) does or will result in (i) any violation of the Articles of Incorporation or By-Laws of the Company or (ii) any violation of any law of the State of Michigan. 4. The Company has duly executed the Owner Participant Documents. 5. No approval, consent, notice to, or filing or registration with any Michigan regulatory body is necessary in connection with the execution and delivery and, on the date hereof, the performance by the Company or compliance by the Company with any of the provisions of any of the Owner Participant Documents, the failure of which to obtain or make would have a materially adverse effect upon the ability of the Company to enter into and perform its obligations under the Owner Participant Documents. No opinion is expressed herein concerning any laws other than the laws of the State of Michigan and the laws of the United States of America. No opinion is expressed herein as to any matters governed by (i) any Federal or state securities laws, (ii) any Federal or state banking laws, or (iii) any Federal or state tax laws. This opinion is given as of the date hereof. We assume no responsibility to supplement or update this opinion to reflect changes in laws or circumstances. This opinion is being delivered pursuant to Section 4.01(m)(iii) of the Participation Agreement for your sole benefit and the benefit of your permitted successors and assigns, and no other person or entity shall be entitled to rely upon this opinion without our express written consent. This opinion is limited to the matters stated herein, and no opinion is implied or may be inferred beyond the matters expressly stated herein. Very truly yours, SCHEDULE A ---------- Lessee - ------ Federal Express Corporation 2007 Corporate Avenue Memphis, Tennessee 38132 Owner Trustee - ------------- State Street Bank and Trust Company of Connecticut, National Association Two International Place 4th Floor Boston, Massachusetts 02110 Owner Participant - ----------------- Key Corporate Capital Inc. c/o KeyCorp Leasing Ltd. 54 State Street Albany, New York 12207 Indenture Trustee, Pass Through Trustee & Subordination Agent - ------------------------------------------------------------- First Security Bank, National Association 79 South Main Street Salt Lake City, Utah 84111 Underwriters - ------------ Morgan Stanley & Co. Incorporated 1585 Broadway New York, New York 10036 First Chicago Capital Markets, Inc. Corporate Securities One First National Plaza Chicago, Illinois 60670 Goldman, Sachs & Co. 85 Broad Street New York, New York 10004 J.P. Morgan & Co. 60 Wall Street New York, New York 10260 Liquidity Provider - ------------------ Kredietbank N.V., New York Branch 125 West 55th Street New York, New York 10019 EXHIBIT A(3) [Letterhead of Ray, Quinney & Nebeker] [Delivery Date] To the Persons Listed in Schedule A Attached Hereto Re: Federal Express Corporation Trust No. N584FE -------------------------------------------- Ladies and Gentlemen: We have acted as special counsel to First Security Bank, National Association, a national banking association ("First Security"), in connection with the Participation Agreement (Federal Express Corporation Trust No. N584FE), dated as of May 1, 1997, as amended and restated as of February 1, 1998 (the "Participation Agreement"), among Federal Express Corporation, as Lessee and Initial Owner Participant, Key Corporate Capital Inc., as Owner Participant, State Street Bank and Trust Company of Connecticut, National Association, not in its individual capacity, except as otherwise stated, but solely as Owner Trustee, and First Security, not in its individual capacity, except as otherwise stated, but solely as Indenture Trustee, Pass Through Trustee and Subordination Agent. Pursuant to the Participation Agreement, one McDonnell Douglas MD-11F aircraft bearing U.S. Registration No. N584FE (the "Aircraft") is being financed. This opinion is furnished pursuant to Section 4.01(m)(iv) of the Participation Agreement. Capitalized terms used herein and not otherwise defined are used as defined in the Participation Agreement, except that references herein to any instrument shall mean such instrument as in effect on the date hereof. We have examined executed counterparts or copies otherwise identified to our satisfaction of the following documents: (a) The Participation Agreement; (b) The Indenture; (c) The Ancillary Agreement I; and (d) The Certificates. (each of the documents identified in paragraphs (a) through (d) above are collectively referred to as the "Indenture Trustee Documents"). We have also examined originals or copies of such other documents, 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 Indenture Trustee Documents. Based upon the foregoing and upon an examination of such questions of law as we have considered necessary or appropriate, and subject to the assumptions, exceptions and qualifications set forth below, we advise you that, in our opinion: 1. First Security is a national banking association duly organized and validly existing under the laws of the United States of America holding a valid certificate to do business as a national banking association, with banking and trust powers, and each of First Security and the Indenture Trustee, as the case may be, has full corporate power, authority and legal right to execute, deliver and perform each of the Indenture Trustee Documents to which it is or is to be a party and to authenticate the Certificates delivered on the Delivery Date. 2. Each of First Security and the Indenture Trustee, as the case may be, has duly authorized, executed and delivered each Indenture Trustee Document to which it is a party; each such document constitutes a legal, valid and binding obligation of the Indenture Trustee (and, to the extent set forth in the respective Indenture Trustee Document, of First Security) enforceable against the Indenture Trustee (and, to the extent set forth in the respective Indenture Trustee Document, against First Security) in accordance with its terms. 3. The Certificates issued and dated the Delivery Date have been duly authenticated and delivered by the Indenture Trustee pursuant to the terms of the Indenture. 4. Neither the authorization, execution and delivery by the Indenture Trustee or First Security, as the case may be, of the Indenture Trustee Documents, nor the authentication and delivery by the Indenture Trustee of the Certificates nor the fulfillment or compliance by the Indenture Trustee or First Security with the respective terms and provisions thereof nor the consummation of any of the transactions by the Indenture Trustee or First Security, as the case may be, contemplated thereby, requires the consent or approval of, the giving of notice to, the registration with, or the taking of any other action in respect of, any court or administrative or governmental authority or agency of the State of Utah or the United States of America governing the banking or trust powers of First Security. 5. The execution, delivery and performance by the Indenture Trustee or First Security, as the case may be, of each of the Indenture Trustee Documents and the authentication and delivery of the Certificates by the Indenture Trustee are not in violation of the charter or by-laws of First Security or of any law, governmental rule, or regulation of the State of Utah or the United States of America governing the banking or trust powers of First Security or, to our knowledge, of any indenture, mortgage, bank credit agreement, note or bond purchase agreement, long-term lease, license or other agreement or instrument to which it is a party or by which it is bound or, to our knowledge, of any judgment or order of the State of Utah or the United States of America relating to the banking or trust powers of First Security. 6. There are no fees, taxes or other governmental charges payable by the Owner Trustee, the Indenture Trustee (except taxes imposed on fees payable to First Security) or the Certificate Holders to the State of Utah or any political subdivision thereof in connection with the execution, delivery or performance of any of the Operative Agreements or in connection with the issuance and acquisition of the Certificates by the Certificate Holders or the beneficial interests of the Certificate Holders in the Trust Indenture Estate solely because First Security (a) has its principal place of business in the State of Utah, (b) performs (in its individual capacity or as Indenture Trustee) any or all of its duties under the Indenture Trustee Documents in the State of Utah, and (c) engages in any activities unrelated to the transactions contemplated by the Indenture Trustee Documents in the State of Utah. Neither the Indenture Trustee nor the trust created under the Indenture will be subject to any fee, tax or other governmental charge (except for taxes imposed on fees payable to First Security) under the laws of the State of Utah or any political subdivision thereof in existence on the date hereof, on, based on or measured by, directly or indirectly, the gross receipts, net income or value of the Trust Indenture Estate solely because First Security (a) has its principal place of business in the State of Utah, (b) performs (in its individual capacity or as Indenture Trustee) any or all of its duties under the Indenture Trustee Documents in the State of Utah, and (c) engages in any activities unrelated to the transactions contemplated by the Indenture Trustee Documents in the State of Utah. There is no fee, tax or other governmental charge (except for taxes imposed on fees payable to First Security) under the laws of the State of Utah or any political subdivision thereof in existence on the date hereof, on, based on or measured by any payments under the Certificates by reason of the creation of the trust under the Indenture solely because First Security (a) has its principal place of business in the State of Utah, (b) performs (in its individual capacity or as Indenture Trustee) any or all of its duties under the Indenture Trustee Documents in the State of Utah, and (c) engages in any activities unrelated to the transactions contemplated by the Indenture Trustee Documents in the State of Utah. We express no opinion as to whether or not any fees, taxes or other charges are now or hereafter may be payable by the Owner Participant to the State of Utah or any political subdivision thereof in connection with (a) the execution, delivery or performance by any of the Indenture, the Participation Agreement or any of the other Operative Agreements and (b) the making by the Owner Participant of its investment in the Aircraft. 7. There are no actions, suits, investigations or proceedings pending or, to our knowledge, threatened against or affecting First Security or the Indenture Trustee, as the case may be, or any of its properties in any court or before any administrative agency or arbitrator, which, if adversely determined, would materially adversely affect the ability of First Security or the Indenture Trustee, as the case may be, to perform its obligations under any of the Indenture Trustee Documents, and there are no pending or, to our knowledge, threatened actions or proceedings before any court, administrative agency or tribunal involving First Security or the Indenture Trustee, as the case may be, in connection with the transactions contemplated by any of the Indenture Trustee Documents. The foregoing opinions are subject to the following assumptions, exceptions and qualifications: A. We are admitted to practice law in the State of Utah and we do not hold ourselves out as being experts on the laws of any other jurisdiction. The foregoing opinions are limited to the laws of the State of Utah and the federal laws of the United States of America governing the banking and trust powers of First Security. In addition, we express no opinion with respect to (i) federal securities laws, including the Securities Act of 1933, as amended, the Securities Exchange Act of 1934, as amended, and the Trust Indenture Act of 1939, as amended, (ii) the Federal Aviation Act of 1958, as amended and (iii) state securities or blue sky laws. Insofar as the foregoing opinions relate to the validity and enforceability in the State of Utah of the Certificates and the other Indenture Trustee Documents expressed to be governed by the laws of the State of New York, we have assumed that the laws of New York are identical to the laws of Utah in all material respects, and that the Certificates and such Indenture Trustee Documents constitute legal, valid, binding and enforceable documents or instruments under such laws (as to which we express no opinion). No opinion is expressed as to the priority of any security interest or as to title to any part of the Trust Estate. B. The foregoing opinions regarding enforceability of any document or instrument, are subject to (i) applicable bankruptcy, insolvency, moratorium, reorganization, receivership and similar laws affecting the rights and remedies of creditors generally, and (ii) general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law). C. We have assumed the due authorization, execution and delivery by each of the parties thereto, other than First Security and the Indenture Trustee, of the Indenture Trustee Documents to which each is a party and that each of such parties has the full power, authority and legal right to execute and deliver each such document. D. We have assumed that all signatures (other than those of the Indenture Trustee or First Security) on documents and instruments examined by us are genuine, that all documents and instruments submitted to us as originals are authentic, and that all documents and instruments submitted to us as copies conform with the originals, which facts we have not independently verified. E. We have assumed that the Participation Agreement and the transactions contemplated thereby are not within the prohibitions of Section 406 of the Employee Retirement Income Security Act of 1974. F. We do not purport to be experts in respect of, or express any opinion concerning laws, rules or regulations applicable to the particular nature of the equipment involved in these transactions. G. We have made no investigation of, and we express no opinion concerning, the nature of the title to any part of the equipment involved in these transactions or the priority of any mortgage or security interest. This opinion is rendered solely for your benefit and may not be relied upon by any other person or entity for any purpose without our prior written consent. Very truly yours, SCHEDULE A ---------- Lessee and Initial Owner Participant - ------------------------------------ Federal Express Corporation 2007 Corporate Avenue Memphis, Tennessee 38132 Owner Trustee - ------------- State Street Bank and Trust Company of Connecticut, National Association Two International Place 4th Floor Boston, Massachusetts 02110 Owner Participant - ----------------- Key Corporate Capital Inc. c/o KeyCorp Leasing Ltd. 54 State Street Albany, New York 12207 Indenture Trustee, Pass Through Trustee & Subordination Agent - ------------------------------------------------------------- First Security Bank, National Association 79 South Main Street Salt Lake City, Utah 84111 Underwriters - ------------ Morgan Stanley & Co. Incorporated 1585 Broadway New York, New York 10036 First Chicago Capital Markets, Inc. Corporate Securities One First National Plaza Chicago, Illinois 60670 Goldman, Sachs & Co. 85 Broad Street New York, New York 10004 J.P. Morgan & Co. 60 Wall Street New York, New York 10260 Liquidity Provider - ------------------ Kredietbank N.V., New York Branch 125 West 55th Street New York, New York 10019 EXHIBIT A(4) [Letterhead of Daugherty, Fowler & Peregrin] [Delivery Date] To the Parties Named on Schedule A attached hereto Re: Federal Express Corporation Trust No. N584FE -------------------------------------------- Ladies and Gentlemen: This opinion is furnished to you pursuant to Section 4.01(m)(v) of the Participation Agreement (Federal Express Corporation Trust No. N584FE), dated as of May 1, 1997, as amended and restated as of February 1, 1998 (the "Participation Agreement") among Federal Express Corporation, as Lessee (the "Lessee") and Initial Owner Participant, Key Corporate Capital Inc., as Owner Participant (the "Owner Participant"), State Street Bank and Trust Company of Connecticut, National Association, as Owner Trustee ("Owner Trustee"), First Security Bank, National Association, as Indenture Trustee ("Indenture Trustee"), Pass Through Trustee and Subordination Agent, with respect to that portion of Subtitle VII of Title 49 of the United States Code relative to the recordation of instruments and the registration of aircraft thereunder. The capitalized terms herein shall, unless otherwise defined, have the same meanings given them in the Participation Agreement or in Annex I attached hereto. We have examined and filed on this date with the Federal Aviation Administration (the "FAA") the following described instruments at the respective times listed below: (a) AC Form 8050-2 Aircraft Bill of Sale dated _____________ (the "FAA Bill of Sale") from the Lessee, as seller, conveying title to the Airframe to the Owner Trustee, which FAA Bill of Sale was filed at ____ _.m., C.D.T.; (b) AC Form 8050-1 Aircraft Registration Application dated _____________ (the "Aircraft Registration Application") by the Owner Trustee as applicant, covering the Airframe, which Aircraft Registration Application was filed at ____ _.m., C.D.T.; (c) Affidavit of the Owner Trustee dated _____________ (the "Owner Trustee Affidavit") pursuant to Section 47.7(c)(2)(ii) of Part 47 of the Federal Aviation Regulations together with Affidavit of the Owner Participant dated _____________ (the "Owner Participant Affidavit") attached thereto, which Owner Trustee Affidavit with the Owner Participant Affidavit attached was filed at ____ _.m., C.D.T.; (d) executed counterpart of Trust Agreement (Federal Express Corporation Trust No. N584FE) dated as of May 1, 1997, as amended and restated as of February 1, 1998 (the "Trust Agreement") between the Owner Participant and the Owner Trustee, which Trust Agreement was filed at ____ _.m., C.D.T.; (e) executed counterpart of Trust Indenture and Security Agreement (Federal Express Corporation Trust No. N584FE) dated as of May 1, 1997, as amended and restated as of February 1, 1998 (the "Trust Indenture") between the Owner Trustee and the Indenture Trustee, with executed counterpart of Indenture and Security Agreement Supplement No. 1 (Federal Express Corporation Trust No. N584FE) dated _____________ (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.D.T.; and, (f) executed counterpart of Lease Agreement (Federal Express Corporation Trust No. N584FE) dated as of May 1, 1997, as amended and restated as of February 1, 1998 (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. N584FE) dated _____________ (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.D.T. The Confidential Omissions were intentionally omitted from the FAA filing counterparts 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, the Trust Indenture with the Trust Indenture Supplement attached and the Lease with the Lease Attachments attached are in due form for recordation by and have been duly filed for recordation with the FAA pursuant to and in accordance with the provisions of 49 U.S.C. Section 44107; 2. the Aircraft Registration Application, the Owner Trustee Affidavit with the Owner Participant Affidavit attached and the Trust Agreement are in due form for filing and have been duly filed with the FAA pursuant to and in accordance with the provisions of 49 U.S.C. Section 44103(a) and Section 47.7(c) of the Federal Aviation Regulations; 3. the Airframe is eligible for registration under 49 U.S.C. Section 44102 in the name of the Owner Trustee and the filing with the FAA of the FAA Bill of Sale, the Aircraft Registration Application, the Owner Trustee Affidavit with the Owner Participant Affidavit attached and the Trust Agreement will cause the FAA to register the Airframe, in due course, in the name of the Owner Trustee and to issue to the Owner Trustee an AC Form 8050-3 Certificate of Aircraft Registration for the Airframe, and the Airframe will be duly registered pursuant to and in accordance with the provisions of 49 U.S.C. Section 44103(a); 4. the Owner Trustee has valid legal title to the Airframe and the Aircraft is free and clear of all Liens, except (i) the security interest created by the Trust Indenture, as supplemented by the Trust Indenture Supplement, and (ii) the rights of the parties under the Lease, as supplemented by the Lease Supplement; 5. the rights of the Owner Trustee and the Lessee under the Lease, as supplemented by the Lease Supplement, with respect to the Aircraft, are perfected; 6. the Trust Indenture, as supplemented by the Trust Indenture Supplement, constitutes a duly perfected first priority security interest in the Aircraft and a duly perfected first assignment of all the right, title and interest of the Owner Trustee in, to and under the Lease and the Lease Supplement (insofar as such assignment affects an interest covered by the recording system established by the FAA pursuant to 49 U.S.C. Section 44107), and no other registration of the Airframe or filings other than filings with the FAA (which have been duly effected) are necessary in order to perfect in any applicable jurisdiction in the United States (A) the Owner Trustee's title to the Airframe or (B) such security interest and assignment (insofar as such assignment affects an interest covered by the recording system established by the FAA pursuant to 49 U.S.C. Section 44107), it being understood that no opinion is herein expressed as to the validity, priority or enforceability of such security interest and assignment under local law or as to the recognition of the perfection of such security interest and assignment as against third parties in any legal proceeding outside the United States; 7. no authorization, approval, consent, license or order of, or registration with, or the giving of notice to, the FAA is required for the valid authorization, delivery and performance of the Lease, as supplemented by the Lease Supplement, the Trust Indenture, as supplemented by the Trust Indenture Supplement, or the Trust Agreement except for such filings as are referred to above; and, 8. neither the execution and delivery by the Owner Participant of the Participation Agreement or the Trust Agreement, nor other consummation of the transactions contemplated thereby by 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 Owner Participant Affidavit and the Trust Agreement to the FAA and (y) the filings for recordation specified elsewhere in this opinion. No opinion is expressed as to the Airframe during any period or periods of time during which it has not been subject to United States registration. No opinion is expressed as to laws other than Federal laws of the United States. In rendering this opinion, we were subject to the accuracy of the FAA, its employees and agents, in the filing, indexing and recording of instruments filed with the FAA and in the search for encumbrance cross-reference index cards for the Engines. Further, in rendering this opinion we are assuming the validity and enforceability of the above described instruments under local law. Since our examination was limited to records maintained by the FAA, our opinion does not cover liens which are perfected without the filing of notice thereof with the FAA, such as federal tax liens, liens arising under Section 1368(a) of Title 29 of the United States Code, possessory artisan's liens, or matters of which the parties had actual notice. In rendering this opinion we are assuming that there are no documents with respect to the Aircraft which have been filed for recording under the recording system of the FAA but have not yet been listed in the available records of such system as having been so filed. In rendering this opinion we have relied upon the opinion of the Assistant Chief Counsel of the Aeronautical Center dated _____________, a copy of which is attached hereto. Very truly yours, Annex I Certain Definitions ------------------- Airframe, Engines and Aircraft ------------------------------ One (1) McDonnell Douglas MD-11F aircraft bearing manufacturer's serial number 48436 and U.S. Registration No. N584FE (the "Airframe") and three (3) General Electric CF6-80C2-D1F aircraft engines bearing manufacturer's serial numbers 702-835, 702-701 and 702-631 (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 Basic Rent (Schedule II), (ii) the Stipulated Loss Values (Schedule III), (iii) the Termination Values (Schedule IV) and (iv) the Purchase Option Schedule (Schedule V) omitted from the FAA filing counterpart thereof as containing confidential financial information; and (v) the purchase price under Section 4.02(a)(F) set forth in Ancillary Agreement II, 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 2007 Corporate Avenue Memphis, Tennessee 38132 Owner Trustee - ------------- State Street Bank and Trust Company of Connecticut, National Association Two International Place 4th Floor Boston, Massachusetts 02110 Owner Participant - ----------------- Key Corporate Capital Inc. c/o KeyCorp Leasing Ltd. 54 State Street Albany, New York 12207 Indenture Trustee, Pass Through Trustee & Subordination Agent - ------------------------------------------------------------- First Security Bank, National Association 79 South Main Street Salt Lake City, Utah 84111 Underwriters - ------------ Morgan Stanley & Co. Incorporated 1585 Broadway New York, New York 10036 First Chicago Capital Markets, Inc. Corporate Securities One First National Plaza Chicago, Illinois 60670 Goldman, Sachs & Co. 85 Broad Street New York, New York 10004 J.P. Morgan & Co. 60 Wall Street New York, New York 10260 Liquidity Provider - ------------------ Kredietbank N.V., New York Branch 125 West 55th Street New York, New York 10019 EXHIBIT A(5) [Letterhead of Bingham Dana LLP] [Delivery Date] To Each of the Parties Listed on Schedule A Hereto Re: Federal Express Corporation Trust No. N584FE -------------------------------------------- Ladies and Gentlemen: We have acted as counsel to State Street Bank and Trust Company of Connecticut, National Association, a national banking association in its individual capacity ("State Street") and its capacity as Owner Trustee (the "Owner Trustee") under the Trust Agreement (Federal Express Corporation Trust No. N584FE) dated as of May 1, 1997, as amended and restated as of February 1, 1998 between State Street and Key Corporate Capital Inc., as Successor Owner Participant ("Owner Participant") (the "Trust Agreement") in connection with the transactions contemplated by that certain Participation Agreement (Federal Express Corporation Trust No. N584FE) dated as of May 1, 1997, as amended and restated as of February 1, 1998 (the "Participation Agreement") by and among Federal Express Corporation, as Lessee (the "Lessee") and Initial Owner Participant; State Street, in its individual capacity and Owner Trustee; the Owner Participant; and First Security Bank, National Association, in its individual capacity and as Indenture Trustee (the "Indenture Trustee"), Pass Through Trustee and Subordination Agent. Except as otherwise defined herein, all capitalized terms used herein shall have the respective meanings set forth in, or by reference to, the Participation Agreement. The Owner Trustee has requested that we deliver this opinion to you in accordance with Section 4.01(m)(vi) of the Participation Agreement. Our representation of State Street has been as special counsel for the purposes stated above. As to all matters of fact (including factual conclusions and characterizations and descriptions of purpose, intention or other state of mind), we have relied entirely upon (i) the representations of the parties set forth in the Operative Agreements and (ii) certificates delivered to us by the management of State Street and have assumed, without independent inquiry, the accuracy of those representations and certificates. We have examined each of the Operative Agreements to which State Street or the Owner Trustee, as applicable, is a party (the "Owner Trustee Documents"), the Certificate of the Comptroller of the Currency relating to State Street and originals, or copies certified or otherwise identified to our satisfaction, of such other corporate records, documents, certificates and other instruments as we have deemed necessary or advisable for the purposes of rendering this opinion. We have assumed the genuineness of all signatures (other than those on behalf of State Street and the Owner Trustee), the conformity to the originals of all documents reviewed by us as copies, the authenticity and completeness of all original documents reviewed by us in original or copy form and the legal competence of each individual executing any document (other than on behalf of State Street and the Owner Trustee). When an opinion set forth below is given to the best of our knowledge, or to our knowledge, or with reference to matters of which we are aware or which are known to us, or with another similar qualification, the relevant knowledge or awareness is limited to the actual knowledge or awareness of the individual lawyer in the firm that signed this opinion, the individual lawyers in the firm who have participated directly in the specific transactions to which this opinion relates or in the preparation of this opinion and the partner of the firm responsible for State Street corporate trust matters, and without any special or additional investigation undertaken for the purposes of this opinion. Each opinion set forth below relating to the enforceability of any agreement or instrument against State Street, the Owner Trustee or the Owner Participant, as applicable, is subject to the following general qualifications: (i) as to any agreement to which State Street or the Owner Trustee, as applicable, is a party, we assume that such agreement is the legal, valid and binding obligation or each other party thereto (except, with respect to the Trust Agreement, the Owner Participant); (ii) except as otherwise set forth in our opinions in paragraphs 14 and 15 below, the enforceability of any obligation of State Street, the Owner Trustee and the Owner Participant, may be limited by bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium, marshaling or other similar laws and rules of law affecting the enforcement generally of creditors' rights and remedies (including such as may deny giving effect to waivers of debtors' or guarantors' rights); (iii) no opinion is given herein as to the enforceability of any particular provision of any of the Owner Trustee Documents relating to remedies after default or as to the availability of any specific or equitable relief of any kind. However, we are of the opinion that, subject to the other limitations and qualifications contained in this opinion, the remedies provided in the Owner Trustee Documents, taken as a whole, are adequate for the realization of the principal benefits or security of said agreements (except for the economic consequences of procedural or other delay); and (iv) the enforcement of any rights and the availability of any specific or equitable relief of any kind may in all cases be subject to an implied duty of good faith and to general principles of equity (regardless of whether such enforceability or relief is considered in a proceeding at law or in equity) and, as to any of your rights to collateral security, will be subject to a duty to act in a commercially reasonable manner. Subject to the limitations set forth herein, we have made such examination of law as we have deemed necessary for the purposes of this opinion. The opinions expressed herein are limited solely to the internal substantive laws of the State of Connecticut and the Federal laws of the United States of America. No opinion is expressed herein as to the application or effect of federal securities laws or as to the securities or so-called "Blue Sky" laws of any state or other jurisdiction. In addition, no opinion is expressed as to matters governed by the Transportation Code, or by any other law, statute, rule or regulation of the United States relating to the acquisition, ownership, registration, use, operation, maintenance, repair, replacement or sale of or the nature of the Aircraft, Airframe or the Engines. Except as set forth in paragraph 12 below, we have made no examination of, and no opinion is given herein as to the Owner Trustee's or Owner Participant's title to or other ownership rights in, or the existence of any liens, charges or encumbrances on, or adverse claims against, any of the Indenture Estate. Other than as expressed in paragraph 5 below, we express no opinion as to the creation, attachment, perfection or priority of any mortgage, security interest or lien in any of the Indenture Estate. Nor do we express any opinion as to the attachment or perfection of any security interest in any of the Trust Estate excluded from, or in which the attachment or perfection of a security interest is not governed by Article 9 of the Uniform Commercial Code of the State of Connecticut (the "UCC"). In addition, there exist certain limitations, resulting from the operation of Section 9-306 of the UCC, on the perfection of the security interests in proceeds created by the Operative Agreements. Article 9 of the UCC requires the filing of continuation statements within the period of six months prior to the expiration of five years from the date of original filing of UCC financing statements to maintain effectiveness of such financing statements and perfection of security interests. Further, additional financing statements may be required to be filed to maintain the perfection of a security interest if any grantor thereof changes its name or location or the location of collateral, or makes certain other changes, as provided in the UCC. With your permission and without investigation, with respect to paragraphs 2, 3 and 4 below in connection with our opinion relating to the legality, validity and binding effect of the documents there referred to, to the extent that the laws of the State of Connecticut do not govern such documents, we have assumed that the laws of the jurisdictions whose laws govern such documents are not materially different from the internal substantive laws of the State of Connecticut. In rendering our opinion in paragraphs 14 and 15 below, we have assumed that the Owner Participant acquired its interest in the Trust Estate for fair consideration and in good faith without any intention to hinder, defraud or delay the Owner Participant's creditors. This opinion is rendered solely for the benefit of those institutions listed on Schedule A hereto and their respective successors and assigns in connection with the transactions contemplated by the Operative Agreements and may not be used or relied upon by any other person or for any other purpose. Based upon the foregoing, we are of the opinion that: 1. State Street is a national banking association duly organized, validly existing and in good standing with the Comptroller of the Currency under the laws of the United States of America, is a "citizen of the United States" within the meaning of Section 40102(a)(15) of Title 49 of the United States Code, as amended and has full corporate power, authority and legal right to execute, deliver and perform its obligations under the Trust Agreement and, as Owner Trustee under the Trust Agreement, to execute, deliver and perform its obligations under the other Owner Trustee Documents and to issue, execute, deliver and perform its obligations under the Certificates. 2. The Owner Trustee has the power and authority to accept title to and delivery of the Aircraft, and a representative of the Owner Trustee has been duly authorized to accept title to and delivery of the Aircraft on behalf of the Owner Trustee. 3. State Street has duly authorized, executed, and delivered the Participation Agreement and the Trust Agreement and the Participation Agreement and the Trust Agreement constitute the legal, valid and binding obligation of State Street, enforceable against it in its individual capacity in accordance with the terms thereof. 4. The Owner Trustee is duly authorized under the Trust Agreement to execute, deliver and perform each of the Owner Trustee Documents and each such Owner Trustee Document constitutes a legal, valid and binding obligation of the Owner Trustee enforceable against the Owner Trustee in accordance with its terms. The Certificates have been duly issued, executed and delivered by the Owner Trustee, pursuant to authorization contained in the Trust Agreement, and assuming due authentication thereof by the Indenture Trustee, the Pass Through Trustee and the Subordination Agent, constitutes the legal, valid and binding obligation of the Owner Trustee enforceable against the Owner Trustee in accordance with its terms and the terms of the Indenture; and the Certificates are entitled to the benefits and security afforded by the Indenture in accordance with its terms and the terms of the Indenture. 5. Assuming the due authorization, execution and delivery of the Trust Agreement by the Owner Participant and that the Owner Participant has the requisite corporate power and authority to enter into and perform its obligations under the Trust Agreement, said Trust Agreement constitutes the legal, valid and binding obligation of the Owner Participant, enforceable against the Owner Participant in accordance with the terms thereof. 6. To the extent that the UCC is applicable, except for the Indenture Trustee's taking possession of all monies and securities (including instruments) constituting part of the Trust Indenture Estate, no action, including the filing or recording of any document, is necessary (i) to create under the UCC the security interest in the Trust Indenture Estate (including the grant and assignment unto the Indenture Trustee of the security interest in all estate, right, title and interest of the Owner Trustee in, to and under the Lease and the Participation Agreement) which the Indenture by its terms purports to create in favor of the Indenture Trustee, and (ii) to perfect in the State of Connecticut such security interest, except for the filing of a UCC financing statement complying with the formal requisites of Section 9-402 of the UCC in the office of the Division of Corporations and Commercial Code of the State of Connecticut with respect to the security interest, and the filing of continuation statements with respect thereto required to be filed at periodic intervals under the UCC. 7. The Trust Agreement duly creates a legal and valid trust under Connecticut law; the trust created by the Trust Agreement exists for the benefit of the Owner Participant as provided therein and creates for the benefit of the Owner Participant the interest in the Trust Estate which the Trust Agreement by its terms purports to create, subject however to the provisions of, and the Liens created by, the Indenture and the Lease. 8. Neither the execution, delivery or performance by the Owner Trustee, in its individual capacity or as Owner Trustee, as the case may be, of the Certificates or the Owner Trustee Documents, the consummation by the Owner Trustee, in its individual capacity or as Owner Trustee, as the case may be, of any of the transactions contemplated thereby nor the compliance by the Owner Trustee, in its individual capacity or as Owner Trustee, as the case may be, with any of the terms and provisions thereof (i) requires any approval of its stockholders, any consent or approval of or the giving of notice to any trustees or holders of any indebtedness or obligations of it known to us, or (ii) violates its charter documents or by-laws, or contravenes or will contravene any provision of, or constitutes a default under, or results in any breach of, or results in the creation of any Lien (other than as permitted under the Operative Agreements) upon property under, any indenture, mortgage, chattel mortgage, deed of trust, conditional sales contract, bank loan or credit agreement, license or other agreement or instrument, in each case, known to us to which it is a party or by which it is bound or contravenes any Connecticut or United States applicable law governing the banking or trust powers of the Owner Trustee, or any judgment or order in each case, known to us applicable to or binding on it. 9. To our knowledge, there are no proceedings or actions pending or threatened against or affecting the Owner Trustee, in its individual capacity or as Owner Trustee, before any governmental authority which, individually or in the aggregate, if adversely determined, would materially and adversely affect the ability of the Owner Trustee, in its individual capacity or as Owner Trustee, as the case may be, to enter into or to perform its obligations under the Owner Trustee Documents or the Certificates. 10. No consent, approval, order or authorization of, giving of notice to, or registration with, or taking of any other action in respect of, any Connecticut or United States governmental authority regulating the banking or trust powers of the Owner Trustee, in its individual capacity, is required for the execution and delivery of, or the carrying out by, the Owner Trustee in its individual capacity or as Owner Trustee, as the case may be, of any of the transactions contemplated by the Owner Trustee Documents, other than any such consent, approval, order, authorization, registration, notice or action as has been duly obtained, given or taken. 11. There are no fees, taxes or other charges payable by the Owner Trustee, the Trust Estate or the trust created by the Trust Agreement imposed by the State of Connecticut or any political subdivision or taxing authority thereof in connection with the execution, delivery and performance by State Street, individually or as Owner Trustee, of the Owner Trust Documents (other than franchise or other taxes based on or measured by any fees or compensation received by State Street, acting as the Owner Trustee, for services rendered in connection with the transactions contemplated by the Operative Agreements) and, assuming that the trust created by the Trust Agreement will not be taxable as a corporation, but, rather, will be characterized as a grantor trust under subpart E, Part I of Subchapter J of the Internal Revenue Code of 1986, as amended, (i) such trust will not be subject to any fees, taxes or other charges imposed by the State of Connecticut or any political subdivision thereof based on income, receipts, value or otherwise, (ii) Holders that are not residents of or otherwise subject to tax in Connecticut will not be subject to any taxes imposed by the State of Connecticut or any political subdivision thereof as a result of purchasing, holding (including receiving payments with respect to) or selling a Certificate and (iii) assuming the Owner Participant is not a Connecticut resident or otherwise subject to tax in Connecticut and further assuming that the assets of the trust created by the Trust Agreement are not deemed to be located in Connecticut, the Owner Participant will not be subject to any taxes imposed by the State of Connecticut or any political subdivision thereof solely as a result of being the beneficial owner of the trust created by the Trust Agreement. 12. The Owner Trustee has received such title to the Aircraft as has been conveyed to it subject to the rights of the Owner Trustee and the Lessee under the Lease and the security interest created pursuant to the Indenture and the Lease; and to our knowledge, there exist no liens or encumbrances affecting the right, title and interest of the Owner Trustee in and to the Trust Estate resulting from claims against State Street not related to the ownership of the Trust Estate or any other transaction contemplated by the Operative Agreements. 13. All the properties which are part of the Indenture Estate (including all right, title and interest of the Owner Trustee pledged and mortgaged by it pursuant to the Indenture) have been pledged and mortgaged with the Indenture Trustee as part of the Indenture Estate, and the beneficial interest of the Owner Participant under the Trust Agreement in and to such properties is subject, to the extent provided in the Indenture, to the liens of the Indenture in favor of the holders from time to time of the Certificates. 14. Neither a Connecticut court nor a Federal court applying federal law or Connecticut law, if properly presented with the issue and after having properly considered such issue, would permit the Owner Participant to terminate the Trust Agreement, except as otherwise provided therein, until the Lien of the Indenture on the Indenture Estate has been released and until payment in full of the principal of, and premium, if any, and interest on, the Certificates and all other sums due the holders of the Certificates have been made. 15. Under the laws of the State of Connecticut, as long as the Trust Agreement has not been terminated in accordance with its terms, creditors of any person that is an Owner Participant, holders of a lien against the assets of any such person and representatives of creditors of any such person, such as trustees, receivers or liquidators (whether or not any insolvency proceeding has been commenced) (collectively the "Creditors") may acquire legal, valid and enforceable claims and liens, as to the Trust Estate, only against the beneficial interest of such person in the Trust Estate, and do not have, and may not through the enforcement of such Creditors' rights acquire, any other legal, valid, and enforceable claim or lien against the Trust Estate. Very truly yours, SCHEDULE A ---------- Lessee - ------ Federal Express Corporation 2007 Corporate Avenue Memphis, Tennessee 38132 Owner Trustee - ------------- State Street Bank and Trust Company of Connecticut, National Association Two International Place 4th Floor Boston, Massachusetts 02110 Owner Participant - ----------------- Key Corporate Capital Inc. c/o KeyCorp Leasing Ltd. 54 State Street Albany, New York 12207 Indenture Trustee, Pass Through Trustee & Subordination Agent - ------------------------------------------------------------- First Security Bank, National Association 79 South Main Street Salt Lake City, Utah 84111 Underwriters - ------------ Morgan Stanley & Co. Incorporated 1585 Broadway New York, New York 10036 First Chicago Capital Markets, Inc. Corporate Securities One First National Plaza Chicago, Illinois 60670 Goldman, Sachs & Co. 85 Broad Street New York, New York 10004 J.P. Morgan & Co. 60 Wall Street New York, New York 10260 Liquidity Provider - ------------------ Kredietbank N.V., New York Branch 125 West 55th Street New York, New York 10019 EXHIBIT A(6) [Letter of General Electric Company] [Delivery Date] To Each of the Parties named on Schedule A Hereto Re: Federal Express Corporation Trust No. N584FE -------------------------------------------- Reference is made to (i) that certain Participation Agreement (Federal Express Corporation Trust No. N584FE), dated as of May 1, 1997, as amended and restated as of February 1, 1998 (the "Participation Agreement") by and among Federal Express Corporation, as Lessee ("Fed Ex") and Initial Owner Participant, Key Corporate Capital Inc., as Owner Participant, State Street Bank and Trust Company of Connecticut, National Association ("SSB") (not in its individual capacity, except as otherwise expressly set forth therein, but solely as Owner Trustee), First Security Bank, National Association ("FSB") (not in its individual capacity, except as otherwise expressly set forth therein, but solely as Indenture Trustee, Pass Through Trustee and Subordination Agent); (ii) that certain Lease Agreement (Federal Express Corporation Trust No. N584FE), dated as of May 1, 1997, as amended and restated as of February 1, 1998 (the "Lease") between SSB (not in its individual capacity, but solely as Owner Trustee), as Lessor and Fed Ex, as Lessee; (iii) that certain Trust Indenture and Security Agreement (Federal Express Corporation Trust No. N584FE), dated as of May 1, 1997, as amended and restated as of February 1, 1998 (the "Trust Indenture") between SSB (not in its individual capacity), as Owner Trustee and FSB (not in its individual capacity), as Indenture Trustee; and (iv) that certain Trust Agreement (Federal Express Corporation Trust No. N584FE), dated as of May 1, 1997 (the "Trust Agreement") between SSB (not in its individual capacity), as Owner Trustee and Key Corporate Capital Inc., as Trustor. I am an attorney employed by General Electric Company, a New York corporation (the "Engine Manufacturer"), and as such have acted as counsel for the Engine Manufacturer in connection with the execution and delivery by the Engine Manufacturer of the Consent (the "Consent"), and the Engine Warranty Assignment (Federal Express Corporation Trust No. N584FE) (the "Engine Warranty Assignment"), each attached to the Participation Agreement as Exhibit E and dated as of February 1, 1998. The Consent and the Engine Warranty Assignment covers three GE CF6-80C2-D1F series engines bearing Engine Manufacturer's serial numbers 702-835, 702-701 and 702-631, respectively. In this connection, I have, or an attorney under my supervision has, reviewed such documents as I have deemed necessary for the purpose of this opinion, including, but without limiting the generality of the foregoing, the General Terms Agreement No. 6-6327A, dated as of June 28, 1991 between the Engine Manufacturer and American Airlines, Inc. (the "General Terms Agreement"), the Engine Product Support Plan forming a part thereof (the "Engine Product Support Plan"), the Participation Agreement, the Lease, the Trust Indenture and the Trust Agreement. In making such examinations, I have relied upon the accuracy of original, certified, conformed, photocopied or telecopied copies of such records, agreements, certificates and other documents as I have deemed necessary or appropriate to enable me to render the opinions expressed herein. In all such examinations, I have assumed the genuineness of signatures on original documents and the conformity to such original documents of all copies submitted to me as certified, conformed, photocopied or telecopied copies, and as to certificates and telegraphic and telephonic confirmations given by public officials, I have assumed the same to have been properly given and to be accurate. As to various questions of fact material to such opinions, I have relied, when such relevant facts were not independently established by me, solely upon the accuracy of the statements, representations and warranties made in the Participation Agreement, the Lease, the Trust Indenture and the Trust Agreement. With your consent, and for the purposes of this opinion, I have assumed (other than with respect to the Engine Manufacturer), the accuracy of the following matters, but I have not made any independent investigation or inquiry with respect thereto and I render no opinion on such matters: (a) each of the Participation Agreement, the Lease, the Trust Indenture, and the Trust Agreement have been duly and validly authorized, executed and delivered by all parties thereto and constitutes the legal, valid and binding obligations of each of such parties in accordance with the respective terms thereof; and (b) the respective parties to the Participation Agreement, the Lease, the Trust Indenture, and the Trust Agreement have obtained, and there are in full force and effect, any and all federal, state, local or foreign governmental agencies and authorities in connection with the transactions contemplated thereby, to the extent necessary for the legality, validity and binding effect or enforceability of the Consent and the Engine Warranty Assignment. Based upon the foregoing, and subject to the specific assumptions, qualifications and reliances herein set forth, and on the basis of my consideration of such facts and law as I have deemed necessary for purposes of this letter, it is my opinion that: (1) The Engine Manufacturer has the full corporate power, authority and the legal right to enter into and perform its obligations under the General Terms Agreement, the Consent and the Engine Warranty Assignment. The execution, delivery and performance by the Engine Manufacturer of each of the General Terms Agreement, the Consent and the Engine Warranty Assignment was duly authorized by all necessary corporate action on the part of the Engine Manufacturer. (2) Each of the General Terms Agreement, the Consent and Engine Warranty Assignment has been duly authorized, executed and delivered by and constitutes a legal, valid and binding obligation of the Engine Manufacturer, enforceable against the Engine Manufacturer in accordance with the respective terms thereof, except as the enforceability thereof may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the rights of creditors generally and by general equity principles. (3) The Engine Product Support Plan insofar as it relates to the Engine Warranties (as such term is defined in the Engine Warranty Assignment), constitutes a legal, valid and binding obligation of the Engine Manufacturer, enforceable against the Engine Manufacturer in accordance with the terms thereof, except as the enforceability thereof may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the rights of creditors generally and by general equity principles. The foregoing opinions are limited to the laws of the State of New York and the federal laws of the United States of America, but no opinion is expressed as to matters governed by the Transportation Code (Title 49 of the United States Code), as amended, or by any other law, statute, rule or regulation of the United States relating to the acquisition, ownership, registration, use, operation, maintenance, repair, replacement or sale of aircraft. Further, no opinion is expressed as to title to any engines or other property. This opinion is furnished by me at your request for your sole benefit and no other person or entity shall be entitled to rely on this opinion without our express written consent. My opinion is limited to the matters stated herein and no opinion is implied or may be inferred beyond the matters expressly stated herein. Very truly yours, SCHEDULE A ---------- Lessee - ------ Federal Express Corporation 2007 Corporate Avenue Memphis, Tennessee 38132 Owner Trustee - ------------- State Street Bank and Trust Company of Connecticut, National Association Two International Place 4th Floor Boston, Massachusetts 02110 Owner Participant - ----------------- Key Corporate Capital Inc. c/o KeyCorp Leasing Ltd. 54 State Street Albany, New York 12207 Indenture Trustee, Pass Through Trustee & Subordination Agent - ------------------------------------------------------------- First Security Bank, National Association 79 South Main Street Salt Lake City, Utah 84111 Underwriters - ------------ Morgan Stanley & Co. Incorporated 1585 Broadway New York, New York 10036 First Chicago Capital Markets, Inc. Corporate Securities One First National Plaza Chicago, Illinois 60670 Goldman, Sachs & Co. 85 Broad Street New York, New York 10004 J.P. Morgan & Co. 60 Wall Street New York, New York 10260 Liquidity Provider - ------------------ Kredietbank N.V., New York Branch 125 West 55th Street New York, New York 10019 EXHIBIT A(7) [Letterhead of Ray, Quinney & Nebeker] [Delivery Date] To the Persons Listed in Schedule A Attached Hereto Re: Federal Express Corporation Trust No. N584FE -------------------------------------------- Ladies and Gentlemen: We have acted as special counsel to First Security Bank, National Association, a national banking association ("First Security"), in connection with the Pass Through Trust Agreement dated as of May 1, 1997 (the "Pass Through Trust Agreement"), as supplemented by the Series Supplements dated May 28, 1997, between Federal Express Corporation and First Security, not in its individual capacity, except as otherwise stated, but solely as Pass Through Trustee, designated as Series Supplement 1997-1-A, 1997-1-B and 1997-1-C, respectively (the "Series Supplements") and the Participation Agreement (Federal Express Corporation Trust No. N584FE), dated as of May 1, 1997, as amended and restated as of February 1, 1998 (the "Participation Agreement"), among Federal Express Corporation, as Lessee and Initial Owner Participant, Key Corporate Capital Inc., as Owner Participant, State Street Bank and Trust Company of Connecticut, National Association, not in its individual capacity, except as otherwise stated, but solely as Owner Trustee, and First Security, not in its individual capacity, except as otherwise stated, but solely as Indenture Trustee, Pass Through Trustee and Subordination Agent. Pursuant to the Participation Agreement, one McDonnell Douglas MD-11F aircraft bearing U.S. Registration No. N584FE (the "Aircraft") is being financed. This opinion is furnished pursuant to Section 4.01(m)(viii) of the Participation Agreement. Capitalized terms used herein and not otherwise defined are used as defined in the Participation Agreement, except that references herein to any instrument shall mean such instrument as in effect on the date hereof. We have examined executed counterparts or copies otherwise identified to our satisfaction of the following documents: (a) The Pass Through Trust Agreement; (b) The Series Supplements; (c) The Pass Through Certificates; (d) The Participation Agreement; (e) The Intercreditor Agreement; and (f) Each Liquidity Facility. (each of the documents identified in paragraphs (a) through (e) are being collectively referred to as the "Pass Through Trustee Documents" and each of the documents identified in paragraphs (d) through (f) are being collectively referred to as the "Subordination Agent Documents"). We have also examined originals or copies of such other documents, 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 Pass Through Trustee Documents or the Subordination Agent Documents, as the case may be. Based upon the foregoing and upon an examination of such questions of law as we have considered necessary or appropriate, and subject to the assumptions, exceptions and qualifications set forth below, we advise you that, in our opinion: With respect to the opinions set forth in paragraph 8 below, with your permission we have relied upon, and this opinion is limited by, the assumptions set forth in the discussion entitled "Certain Utah Taxes" in the Prospectus Supplement to the Prospectus forming part of Registration Number No. 333-07691 (the "Registration Statement") for the registration of the Pass Through Certificates with the Securities and Exchange Commission. We express no opinion as to the correctness of the foregoing assumptions and we have conducted no independent investigation in this regard. 1. First Security is a national banking association duly organized and validly existing under the laws of the United States of America holding a valid certificate to do business as a national banking association, with banking and trust powers. 2. Each of First Security, the Pass Through Trustee and the Subordination Agent, as the case may be, has or had, on the date of execution thereof, full corporate power, authority and legal right to execute, deliver and perform each of the Pass Through Trustee Documents and the Subordination Agent Documents, as the case may be, and to authenticate the Pass Through Certificates delivered on the Certificate Closing Date. 3. Each of First Security, the Pass Through Trustee and the Subordination Agent has duly authorized, executed and delivered each Pass Through Trustee Document or Subordination Agent Document, as the case may be; each such document constitutes a legal, valid and binding obligation of the Pass Through Trustee or the Subordination Agent, as the case may be (and, to the extent set forth in the respective Pass Through Trustee Document or Subordination Agent Document, of First Security) enforceable against the Pass Through Trustee or the Subordination Agent, as the case may be (and, to the extent set forth in the respective Pass Through Trustee Document or Subordination Agent Document, against First Security) in accordance with its terms. 4. The Pass Through Certificates issued and dated the Certificate Closing Date have been duly authorized and validly executed, issued, delivered and authenticated by the Pass Through Trustee pursuant to the Pass Through Trust Agreement and the Series Supplements; and the Pass Through Certificates acquired by the Underwriters under the Underwriting Agreement are enforceable against the Pass Through Trustee and are entitled to the benefits of the related Pass Through Trust Agreement and the related Series Supplements. 5. No order, license, consent, permit, authorization or approval of or exemption by, and no notice to or filing with, or the taking of any other action in respect of, any Utah or Federal governmental authority governing the banking or trust powers of First Security, the Pass Through Trustee or the Subordination Agent, and no filing, recording, publication or registration in any public office is required under Utah or Federal law pertaining to its banking or trust powers for the due execution, delivery or performance by First Security, individually or as Pass Through Trustee or Subordination Agent, as the case may be, of the Pass Through Trustee Documents (other than the Pass Through Trust Agreement) or the Subordination Agent Documents, as the case may be, and of the certificate of authentication, as Pass Through Trustee, on the Pass Through Certificates, or for the legality, validity, binding effect or enforceability thereof against First Security, the Pass Through Trustee or the Subordination Agent, as the case may be. 6. The execution, delivery and performance by the Pass Through Trustee or First Security, as the case may be, of each of the Pass Through Documents and the Subordination Agent or First Security, as the case may be, of each of the Subordination Agent Documents, and the issuance, execution, delivery and performance of the Pass Through Certificates by the Pass Through Trustee are not or were not, on the date of execution thereof, in violation of the charter or by-laws of First Security or of any law, governmental rule, or regulation of the State of Utah or the United States of America governing the banking or trust powers of First Security or, to our knowledge, of any indenture, mortgage, bank credit agreement, note or bond purchase agreement, long-term lease, license or other agreement or instrument to which it is a party or by which it is bound or, to our knowledge, of any judgment or order of the State of Utah or the United States of America relating to the banking or trust powers of First Security. 7. There are no actions, suits, investigations or proceedings pending or, to our knowledge, threatened against or affecting First Security, the Pass Through Trustee or the Subordination Agent or any of its properties in any court or before any administrative agency or arbitrator, which, if adversely determined, would materially adversely affect the ability of First Security, the Pass Through Trustee or the Subordination Agent, as the case may be, to perform its obligations under any of the Pass Through Trustee Documents or the Subordination Agent Documents, as the case may be, and there are no pending or, to our knowledge, threatened actions or proceedings before any court, administrative agency or tribunal involving First Security, the Pass Through Trustee or the Subordination Agent in connection with the transactions contemplated by any of the Pass Through Trustee Documents or the Subordination Agent Documents, as the case may be. 8. Neither the trusts created by the Pass Through Trust Agreement and the Series Supplements nor the Pass Through Trustee, in its individual or trust capacity, as the case may be, nor the Owner Participant, nor the Owner Trustee nor their respective Affiliates, successors or assigns, will be subject to any tax (including, without limitation, net or gross income, tangible or intangible property, net worth, capital, franchise or doing business tax), governmental fee or similar charge under the laws of the State of Utah or any political subdivision thereof (other than taxes imposed on the fees received by First Security for acting as Pass Through Trustee under the Series Supplements). Certificate holders who are not residents of or otherwise subject to tax in Utah will not be subject to any tax (including, without limitation, net or gross income, tangible or intangible property, net worth, capital, franchise or doing business tax), governmental fee or similar charge under the laws of the State of Utah or any political subdivision thereof as a result of purchasing, owning (including receiving payments with respect to) or selling a Pass Through Certificate. There are no applicable taxes under the laws of the State of Utah or any political subdivision thereof upon or with respect to (a) the construction, mortgaging, financing, refinancing, purchase, acquisition, acceptance, rejection, delivery, nondelivery, transport, location, ownership, insurance, control, assembly, possession, repossession, operation, use, condition, maintenance, repair, sale, return, abandonment, replacement, preparation, installation, storage, redelivery, manufacture, leasing, subleasing, modification, rebuilding, importation, transfer of title, transfer of registration, exportation or other application or disposition of the Aircraft or any interest in any thereof, (b) payments of Rent or other receipts, income or earnings arising therefrom or received with respect to the Aircraft or any interest in any thereof or payable pursuant to the Lease, (c) any amount paid or payable pursuant to any Operative Agreements, (d) the Aircraft or any interest therein or the applicability of the Lease to the Aircraft or any interest in any thereof, (e) any or all of the Operative Agreements, any or all of the Pass Through Certificates or any interest in any or all thereof or the offering, registration, reregistration, issuance, acquisition, modification, assumption, reissuance, refinancing or refunding of any or all thereof, and any other documents contemplated thereby and amendments or supplements hereto and thereto, (f) the payment of the principal of, or interest or premium on, or other amounts payable with respect to, any or all of the Pass Through Certificates, whether as originally issued or pursuant to any refinancing, refunding, assumption, modification or reissuance, or any other obligation evidencing any loan in replacement of the loan evidenced by any or all of the Pass Through Certificates, or (g) otherwise with respect to or in connection with the transactions contemplated by the Pass Through Trust Agreement, the Series Supplements, the Pass Through Certificates and the Operative Agreements, which would not have been imposed if the Pass Through Trustee had not had its principal place of business in, had not performed (either in its individual capacity or as Pass Through Trustee) any or all of its administrative duties under the Pass Through Trust Agreement, the Series Supplements, the Pass Through Certificates and the Operative Agreements in, and had not engaged in any activities unrelated to the transactions contemplated by the Pass Through Trust Agreement, the Series Supplements, the Pass Through Certificates and the Operative Agreements in, the State of Utah. 9. Each of the Certificates to be delivered to and registered in the name of the Subordination Agent on the date hereof pursuant to the Participation Agreement and the Intercreditor Agreement will be held by the Subordination Agent in trust for the Pass Through Trustee under the applicable Pass Through Trust Agreement. The foregoing opinions are subject to the following assumptions, exceptions and qualifications: A. We are admitted to practice law in the State of Utah and we do not hold ourselves out as being experts on the laws of any other jurisdiction. The foregoing opinions are limited to the laws of the State of Utah and the federal laws of the United States of America governing the banking and trust powers of First Security. In addition, we express no opinion with respect to (i) federal securities laws, including the Securities Act of 1933, as amended, the Securities Exchange Act of 1934, as amended, and the Trust Indenture Act of 1939, as amended, (ii) the Federal Aviation Act of 1958, as amended and (iii) state securities or blue sky laws. Insofar as the foregoing opinions relate to the validity and enforceability in the State of Utah of the Certificates and the other Pass Through Trustee Documents expressed to be governed by the laws of the State of New York, we have assumed that the laws of New York are identical to the laws of Utah in all material respects, and that the Certificates and such Pass Through Trustee Documents constitute legal, valid, binding and enforceable documents or instruments under such laws (as to which we express no opinion). No opinion is expressed as to the priority of any security interest or as to title to any part of the Trust Estate. B. The foregoing opinions regarding enforceability of any document or instrument, are subject to (i) applicable bankruptcy, insolvency, moratorium, reorganization, receivership and similar laws affecting the rights and remedies of creditors generally, and (ii) general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law). C. We have assumed the due authorization, execution and delivery by each of the parties thereto, other than First Security and the Pass Through Trustee, of the Pass Through Trustee Documents to which each is a party and that each of such parties has the full power, authority and legal right to execute and deliver each such document. D. We have assumed that all signatures (other than those of the Pass Through Trustee or First Security) on documents and instruments examined by us are genuine, that all documents and instruments submitted to us as originals are authentic, and that all documents and instruments submitted to us as copies conform with the originals, which facts we have not independently verified. E. We have assumed that the Participation Agreement and the transactions contemplated thereby are not within the prohibitions of Section 406 of the Employee Retirement Income Security Act of 1974. F. We do not purport to be experts in respect of, or express any opinion concerning laws, rules or regulations applicable to the particular nature of the equipment involved in these transactions. G. We have made no investigation of, and we express no opinion concerning, the nature of the title to any part of the equipment involved in these transactions or the priority of any mortgage or security interest. This opinion is rendered solely for your benefit and may not be relied upon by any other person or entity for any purpose without our prior written consent. Very truly yours, SCHEDULE A ---------- Lessee - ------ Federal Express Corporation 2007 Corporate Avenue Memphis, Tennessee 38132 Owner Trustee - ------------- State Street Bank and Trust Company of Connecticut, National Association Two International Place 4th Floor Boston, Massachusetts 02110 Owner Participant - ----------------- Key Corporate Capital Inc. c/o KeyCorp Leasing Ltd. 54 State Street Albany, New York 12207 Indenture Trustee, Pass Through Trustee & Subordination Agent - ------------------------------------------------------------- First Security Bank, National Association 79 South Main Street Salt Lake City, Utah 84111 Underwriters - ------------ Morgan Stanley & Co. Incorporated 1585 Broadway New York, New York 10036 First Chicago Capital Markets, Inc. Corporate Securities One First National Plaza Chicago, Illinois 60670 Goldman, Sachs & Co. 85 Broad Street New York, New York 10004 J.P. Morgan & Co. 60 Wall Street New York, New York 10260 Liquidity Provider - ------------------ Kredietbank N.V., New York Branch 125 West 55th Street New York, New York 10019 EXHIBIT B [Form of Lease Agreement - See Exhibit 4.e] EXHIBIT C [Form of Trust Indenture and Security Agreement - See Exhibit 4.b.1] EXHIBIT D [Form of Trust Agreement - See Exhibit 4.d] EXHIBIT E ENGINE WARRANTY ASSIGNMENT (FEDERAL EXPRESS CORPORATION TRUST NO. N584FE) Words and phrases appearing in this Engine Warranty Assignment (the "Assignment") shall have the respective meanings as defined below: A. General Terms Agreement means that agreement No. 6-6327A dated as of June 28, 1991 (the "GTA") by and between the Engine Manufacturer and American Airlines, Inc. ("American"), including the Engine Product Support Plan at Exhibit B, insofar as such Product Support Plan relates to the Engine Warranties (the "Product Support Plan"), but excluding any and all letter agreements attached thereto. B. Engine Warranties means the Engine Manufacturer's New Engine Warranty, New Parts Warranty, Ultimate Life Warranty and Campaign Change Warranty, as set forth in the Engine Manufacturer's Product Support Plan which forms a part of the GTA, and as limited by the applicable terms of such GTA and Product Support Plan; such Engine Warranties having been assigned to Federal Express Corporation ("Fed Ex" or the "Assignor") by American on October 17, 1997. C. Engine means each of the CF6-80C2-D1F series engines installed on the aircraft at the time of delivery to the Assignor, each bearing Engine Manufacturer's serial numbers 702-835, 702-701 and 702-631, respectively. D. Replacement Engine means each of the CF6-80C2-D1F series engines which are not subject to this Assignment and are a replacement or substitute for an Engine, excluding, however, any engines obtained from the Engine Manufacturer's lease pool which are installed on the aircraft for the limited purpose of permitting the continued operation of the aircraft during the period necessary to effect or complete repairs or overhaul of an Engine. E. Lease means the Lease Agreement (Federal Express Corporation Trust No. N584FE), dated as of May 1, 1997, as amended and restated as of February 1, 1998 (the "Lease") between State Street Bank and Trust Company of Connecticut, National Association (not in its individual capacity, but solely as Owner Trustee), as Lessor ("Lessor" or the "Assignee") and Fed Ex, as Lessee, as amended, modified or supplemented from time to time. All other capitalized terms used and not defined herein that are in the Lease shall, when used herein, have the meanings specified in the Lease. 1 Fed Ex, pursuant to the terms and conditions herein, hereby sells, assigns, transfers and sets over unto the Lessor all of its rights, claims and interests in and under the GTA and the Product Support Plan, as such apply to the Engines, to enforce in the Lessor's own name such rights as Fed Ex may have with respect to the Engine Warranties, to the extent the same relate to the Engines, and to retain any benefit resulting therefrom. Fed Ex shall, during the term of the Lease (but only so long as no Event of Default shall have occurred and be continuing), have the benefit of and shall be entitled to enforce (as it shall deem appropriate), either in its own name or (at the cost of Fed Ex) in the name of the Lessor for the use and benefit of Fed Ex, any and all Engine Warranties available to the Lessor under the GTA in respect of the Engines and each Part thereof, and the Lessor agrees (but only so long as no Event of Default shall have occurred and be continuing) at Fed Ex's expense to do, execute and deliver such further acts, deeds, matters or things as may be reasonably requested by Fed Ex and necessary to enable Fed Ex to obtain customary warranty services furnished for the Engines or any Part thereof pursuant to the Engine Warranties. Fed Ex shall, at the Lessor's expense, cooperate with the Lessor and take such action as the Lessor reasonably deems necessary to enable the Lessor to enforce such rights, claims and interests as assigned herein. 2 Notwithstanding anything in this Assignment or the Consent attached hereto and incorporated herein to the contrary, Fed Ex and the Lessor confirm expressly for the benefit of the Engine Manufacturer that: A. The Lessor agrees that it will not, without the prior written consent of the Engine Manufacturer, disclose, directly or indirectly, to any third party, any of the terms of the Engine Warranties disclosed to it by the Engine Manufacturer incident to effecting the assignment herein; provided, however, that (1) the Lessor may use, retain and disclose such information on a confidential basis to its special counsel, independent insurance brokers, bank examiners or similar regulatory authorities, auditors and public accountants, (2) the Lessor may use, retain and disclose on a confidential basis such information to the Owner Participant, the Indenture Trustee, the Pass Through Trustee and any Certificate Holder, as the case may be, and their special counsel, independent insurance brokers, bank examiners or similar regulatory authorities, auditors and public accountants, (3) the Lessor may disclose such information as required by applicable laws, governmental regulations, subpoena, or other written demand under color of legal right, but it shall first, as soon as practicable upon receipt of such demand and to the extent permitted by applicable laws, furnish a copy thereof to Fed Ex and to the Engine Manufacturer, and the Lessor, to the extent permitted by applicable law, shall afford Fed Ex and the Engine Manufacturer reasonable opportunity, at the moving party's cost and expense, to obtain a protective order or other assurance reasonably satisfactory to the Engine Manufacturer of confidential treatment of the information required to be disclosed, (4) the Lessor may disclose such information as required to enforce its rights under the Engine Warranties assigned to it pursuant to this Assignment, and (5) the Lessor may disclose such information to any bona fide potential purchaser of the Aircraft and/or Engines or any beneficial interest therein (subject to the execution by such prospective purchaser of a written confidentiality statement setting forth the same or substantially similar terms as those referred to in this paragraph). B. The Lessor agrees that, insofar as the provisions of the GTA relate to the Engines, in exercising any rights under such Engine Warranties or in making any claim with respect thereto, the applicable terms and conditions of the GTA, including Article Thirteen (Limitation of Liability) and the Product Support Plan, shall apply to, and be binding upon, the Lessor to the same extent as Fed Ex. C. Insofar as the provisions of the GTA relate to the Engines, in exercising any rights under the Engine Warranties or in making any claim with respect thereto, the applicable terms and conditions of the GTA and the Product Support Plan or the Consent attached hereto and incorporated herein shall apply to, and be binding upon, the Lessor to the same extent as if named "Airline" therein. The performance by the Lessor of any of the rights assigned hereunder shall not release Fed Ex from any of its duties or obligations to the Engine Manufacturer except to the extent that such exercise by the Lessor shall constitute performance of such duties and obligations. D. Nothing contained in this Assignment shall subject the Engine Manufacturer to any obligation or liability to which it would not otherwise be subject under the GTA or modify in any respect the Engine Manufacturer's contract rights thereunder, or subject the Engine Manufacturer to any multiple or duplicative liability or obligation under the GTA. The Engine Manufacturer recognizes and it is consented to by all parties to this Assignment that the Lessor shall collaterally assign its rights under the Lease and this Assignment and will mortgage the Aircraft and Engines, to First Security Bank, National Association, as Indenture Trustee under the Trust Indenture and Security Agreement (Federal Express Corporation Trust No. N584FE), dated as of May 1, 1997, as amended and restated as of February 1, 1998 (on the terms set forth therein); however, no further extension or assignment (except to a successor indenture trustee under such agreement) of any remaining Engine Warranties, including but not limited to extensions or assignments for security purposes, are permitted without the prior written consent of the Engine Manufacturer. E. Exclusive of the assignment noted in Section 2D above, the Engine Manufacturer shall not be deemed to have knowledge of any change in the authority of Fed Ex or the Lessor, as the case may be, to exercise the rights established hereunder until the Engine Manufacturer has received written notice thereof from the Indenture Trustee or the Lessor. Such notice shall be sent to: Commercial Contracts Director, GE Aircraft Engines, Mail Drop F17, One Neumann Way, Box 156301, Cincinnati, Ohio 45215-6301, facsimile: (513) 243-8068. F. This Assignment shall apply only in respect to each Engine and shall not extend to any replacement or substitute engine. If, during the term of this Assignment and the Lease, it becomes necessary to replace or substitute an Engine due to a Failure (as such term is defined in the Engine Product Support Plan, excluding normal wear, tear and deterioration which can be restored by overhaul and repair), damage or loss, the Assignor (or the Lessor) shall give the Engine Manufacturer written notice of such Failure, damage or loss. The notice shall include (i) a description of the event or circumstances which constitute a Failure, damage or loss, and (ii) the serial numbers of the (a) failed, damaged or lost Engine and (b) Replacement Engine and shall be sent to: Customer Support Manager, GE Aircraft Engines, 111 Merchant Street, Room 450, Cincinnati, Ohio 45246. The Engine Manufacturer shall not be deemed to have knowledge of the need for a replacement engine until it has received the aforementioned notice. In the event an Engine subject to this Assignment fails, is damaged or lost, and such Engine is replaced by a Replacement Engine, the Assignor and the Assignee shall, prior to, or contemporaneous with, the delivery of such Replacement Engine, obtain the written consent of the Engine Manufacturer (which it shall be obligated to give) that the Engine Warranties as set forth in the Engine Product Support Plan shall apply to such Replacement Engines. The Engine Manufacturer shall not incur any obligation or liability for a Replacement Engine under the Engine Warranties until the execution of the aforementioned consent. G. At any time and upon the written request of the Engine Manufacturer, Fed Ex and the Lessor shall promptly and duly execute and deliver any and all such further assurances, instruments and documents and take all such further action, at the expense of Fed Ex, as the Engine Manufacturer may reasonably request in order to obtain the full benefit of Fed Ex and the Lessor's agreement as set forth in this Assignment and the Consent attached hereto and incorporated herein. Any performance by the Engine Manufacturer that discharges its obligation under the Engine Warranties will satisfy the respective interests of Fed Ex and the Lessor. So long as the Engine Manufacturer acts in good faith in accordance with this Assignment, the Engine Manufacturer may rely conclusively on any notice given pursuant to this Assignment without inquiring as to the accuracy of, or the entitlement of the party to give, such notice. 3 The Engine Manufacturer warrants each new Reverser (as such is defined in the Engine Product Support Plan) installed on the Aircraft at the time of delivery to Fed Ex under the terms of the New Engine Warranty; however, administration of such New Engine Warranty, with respect to both installed and replacement Reversers, shall be performed by Martin Marietta. 4 If at some point in time, the Engine Manufacturer receives written notification from the Indenture Trustee or the Lessor that the Lessor is or becomes entitled to possession of the Engines, pursuant to an Event of Default or otherwise, and desires to sell or lease the Engines to a party who is not currently a party to a General Terms Agreement with the Engine Manufacturer, the Engine Manufacturer agrees if such agreement is permissible under applicable U.S. law, that it will offer to such purchaser or lessee, subject to the execution of an agreement to sell or lease such Engines, a General Terms Agreement on the Engine Manufacturer's standard terms and conditions. If, however, such purchaser or lessee is currently a party to a General Terms Agreement with the Engine Manufacturer, the remaining portion of the terms of such General Terms Agreement shall be extended to and apply to such subsequent purchase or lease; provided, however, that the written consent of the Engine Manufacturer to such an extension is obtained prior to the transaction's occurrence. This Assignment shall be governed by the laws of the State of New York, including all matters of construction, validity and performance, as applicable to contracts between citizens of that state to be performed wholly within that state, and without reference to conflicts of law principles. In witness whereof, the parties hereto have caused this Engine Warranty Assignment to be duly executed and delivered as of the date hereof. General Electric Company _____________________________ Name: Title: Federal Express Corporation _____________________________ Name: Robert D. Henning Title: Vice President and Treasurer State Street Bank and Trust Company of Connecticut, National Association not in its individual capacity, but solely as Owner Trustee _____________________________ Name: Paul D. Allen Title: Vice President CONSENT (FEDERAL EXPRESS CORPORATION TRUST NO. N584FE) The Engine Manufacturer, General Electric Company (the "Engine Manufacturer"), a New York corporation, hereby consents to the Engine Warranty Assignment attached hereto and acknowledges notice of (i) the Lease Agreement (Federal Express Corporation Trust No. N584FE), dated as of May 1, 1997, as amended and restated as of February 1, 1998 and entered into by and between Fed Ex, as Lessee and State Street Bank and Trust Company of Connecticut, National Association, as Lessor (as in effect from time to time, the "Lease") and (ii) the Trust Indenture and Security Agreement (Federal Express Corporation Trust No. N584FE), dated as of May 1, 1997, as amended and restated as of February 1, 1998 (the "Indenture"), between the Lessor and First Security Bank, National Association, as Indenture Trustee ("Indenture Trustee"). The Lease covers three GE CF6-80C2-D1F series engines bearing Engine Manufacturer's serial numbers 702-835, 702-701 and 702-631, respectively, (the "Engines") as installed on the McDonnell Douglas MD-11F series aircraft bearing Manufacturer's serial number 48436 (the "Aircraft"). In connection with such Lease, reference is made to the General Terms Agreement No. 6-6327A dated as of June 28, 1991, between the Engine Manufacturer and American Airlines, Inc. (the "General Terms Agreement"), under which the Engine Manufacturer agreed to support certain GE CF6-80C2-D1F series engines, including the Engines and spare parts therefor to be purchased by Fed Ex from the Engine Manufacturer, as installed on certain McDonnell Douglas MD-11F series aircraft, including the Aircraft. Recognizing that (i) American Airlines, Inc. has assigned all rights to the Engine Warranties in respect of the Engines to Fed Ex and (ii) the Lessor and Fed Ex have entered into the Lease which provides for the lease by the Lessor to Fed Ex of the Aircraft and Engines and that the Lessor has granted a security interest in the Engines and assigned certain of its rights under the Lease to the Indenture Trustee, the Engine Manufacturer agrees that in furtherance of the Lease, it will so support such Engines and spare parts therefor, subject to the applicable terms and conditions of the General Terms Agreement, including Article Thirteen (Limitation of Liability). The Engine Manufacturer represents and warrants that: 1. it is a corporation existing in good standing under the laws of the State of New York; 2. the making and performance of this Consent in accordance with its terms has been duly authorized by all necessary corporate action on the part of the Engine Manufacturer, does not require any shareholder approval and does not contravene its certificate of incorporation or by-laws or any debenture, credit agreement or other contractual agreement to which the Engine Manufacturer is a party or by which it is bound or any law binding on the Engine Manufacturer; 3. the making and performance of the Engine Warranties, as defined in the Engine Warranty Assignment attached hereto (the "Engine Warranties") in accordance with their terms have been duly authorized by all necessary corporate action on the part of the Engine Manufacturer, do not require any shareholder approval and do not contravene the Engine Manufacturer's certificate of incorporation or by-laws or any debenture, credit agreement or other contractual agreement to which the Engine Manufacturer is a party or by which it is bound or any law binding on the Engine Manufacturer; and 4. the Engine Warranties constitute, as of the date on which they were made and at all times thereafter, and this Consent and the Engine Warranty Assignment attached hereto are, binding obligations of the Engine Manufacturer enforceable against the Engine Manufacturer in accordance with its terms subject to: (a) the limitation of applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the rights of creditors generally; and (b) general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law). This Consent shall be governed by the laws of the State of New York, including all matters of construction, validity and performance, as applicable to contracts between citizens of that state to be performed wholly within that state, and without reference to conflicts of law principles. General Electric Company ______________________________ Name: Title: EX-4.D 4 Exhibit 4.d - ------------------------------------------------------------------------------- TRUST AGREEMENT (FEDERAL EXPRESS CORPORATION TRUST NO. N584FE) Dated as of May 1, 1997 as amended and restated as of February 1, 1998 between KEY CORPORATE CAPITAL INC., Trustor and STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT, NATIONAL ASSOCIATION, Owner Trustee COVERING ONE MCDONNELL DOUGLAS MD-11F AIRCRAFT SERIAL NO. 48436, REGISTRATION NO. N584FE - ------------------------------------------------------------------------------- TABLE OF CONTENTS Page ---- PARTIES.................................................................... 1 RECITALS................................................................... 1 ARTICLE 1 THE LESSOR'S ESTATE Section 1.01. Authorization and Direction to Owner Trustee............. 1 Section 1.02. Declaration of Trust..................................... 2 Section 1.03. Conditions Precedent and Advances by Trustor............. 2 ARTICLE 2 DISTRIBUTIONS Section 2.01. Rent, Etc................................................ 2 Section 2.02. Excepted Payments........................................ 3 Section 2.03. Other Receipts........................................... 3 Section 2.04. Distributions after Default.............................. 4 Section 2.05. Distributions after Release of Lien of Indenture......... 4 Section 2.06. Manner of Making Distributions........................... 4 ARTICLE 3 THE OWNER TRUSTEE Section 3.01. Acceptance of Trust and Duties........................... 5 Section 3.02. Limitation on Authority of Owner Trustee................. 5 Section 3.03. Notice of Default........................................ 6 Section 3.04. Action Upon Instructions................................. 6 Section 3.05. Certain Duties and Responsibilities of Owner Trustee..... 7 Section 3.06. Certain Rights of Owner Trustee.......................... 8 Section 3.07. No Representations or Warranties as to Certain Matters... 10 Section 3.08. Status of Moneys Received................................ 11 Section 3.09. Self-Dealing............................................. 11 Section 3.10. Definition of a Responsible Officer...................... 11 Section 3.11. Resignation or Removal of Owner Trustee.................. 12 Section 3.12. Estate and Rights of Successor Owner Trustee............. 12 Section 3.13. Merger or Consolidation of SSB........................... 13 Section 3.14. Co-Trustees.............................................. 13 Section 3.15. Interpretation of Agreements............................. 14 Section 3.16. Not Acting in Individual Capacity........................ 14 Section 3.17. Tax Returns.............................................. 15 ARTICLE 4 TERMINATION OF TRUST Section 4.01. Termination.............................................. 15 Section 4.02. Distribution of Lessor's Estate upon Termination......... 16 ARTICLE 5 TRANSFER OF BENEFICIAL INTEREST ARTICLE 6 MISCELLANEOUS Section 6.01. Indemnification.......................................... 18 Section 6.02. Supplements and Amendments............................... 20 Section 6.03. Nature of Title of Trustor............................... 20 Section 6.04. Power of Owner Trustee to Convey......................... 20 Section 6.05. Notices.................................................. 21 Section 6.06. Situs of Trust; Applicable Law; Severability............. 21 Section 6.07. Successors and Assigns................................... 22 Section 6.08. Headings and Table of Contents........................... 22 Section 6.09. Definitions.............................................. 22 Section 6.10. Identification of Trust.................................. 22 Section 6.11. Counterparts............................................. 22 Schedule I Definitions TRUST AGREEMENT (FEDERAL EXPRESS CORPORATION TRUST NO. N584FE) TRUST AGREEMENT (FEDERAL EXPRESS CORPORATION TRUST NO. N584FE) dated as of May 1, 1997, as amended and restated as of February 1, 1998 (this "Agreement") between STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT, NATIONAL ASSOCIATION, a national banking association (in its individual capacity, "SSB", and not in its individual capacity but solely as trustee hereunder, the "Owner Trustee"), and KEY CORPORATE CAPITAL INC., a Michigan corporation (together with its successors and permitted assigns, the "Trustor"); W I T N E S S E T H : WHEREAS, the Initial Owner Participant and SSB have heretofore entered into the Original Trust Agreement; WHEREAS, the Original Trust Agreement was not filed with the Federal Aviation Administration; WHEREAS, the Initial Owner Participant has transferred its Beneficial Interest to the Owner Participant; and WHEREAS, the Initial Owner Participant and SSB have agreed that the Original Trust Agreement be amended and restated in its entirety as herein provided. NOW THEREFORE, in consideration of the mutual covenants and agreements contained herein, SSB and the Trustor agree that the Original Trust Agreement be and the same is hereby amended and restated in its entirety as follows: ARTICLE 1 THE LESSOR'S ESTATE Section 1.01. Authorization and Direction to Owner Trustee. The Trustor hereby authorizes and directs the Owner Trustee, not individually but solely as the Owner Trustee hereunder: (a) on the Delivery Date to execute and deliver each of the Operative Agreements to be executed and delivered on such date and to enter into and perform the transactions contemplated thereby, including, without limitation, accepting title to, and delivery of, the Aircraft from the Lessee on the Delivery Date, and to take all appropriate action to cause the Airframe to be registered with the Federal Aviation Administration in the name of the Owner Trustee; (b) to execute and deliver from time to time the Certificates in the manner and subject to the terms and conditions provided in the Participation Agreement and the Indenture; (c) to execute and deliver each other document referred to in the Operative Agreements to which the Owner Trustee is a party or which the Owner Trustee is required to deliver pursuant to the Operative Agreements; (d) subject to the terms of this Agreement, to perform the obligations and duties and, upon instruction of the Trustor, exercise the rights of the Owner Trustee under the Operative Agreements; and (e) to execute and deliver all such other instruments, documents or certificates and take all such other actions in accordance with the directions of the Trustor, as the Trustor may deem necessary or advisable in connection with the transactions contemplated hereby, the taking of any such action by the Owner Trustee in the presence of the Trustor or its counsel to evidence, conclusively, the direction of the Trustor. Section 1.02. Declaration of Trust. SSB hereby confirms, in its individual capacity, that it holds and will continue to hold, in its capacity as the Owner Trustee, the Lessor's Estate upon the trust herein set forth for the use and benefit of the Trustor, subject, however, to the provisions of, and the Lien created by, the Indenture. This Agreement is not intended by the Trustor to create, and the trust created hereby is not intended by the Trustor and the other parties interested herein to constitute a business trust for purposes of the Bankruptcy Code. Section 1.03. Conditions Precedent and Advances by Trustor. The Trustor agrees to make advances to the Owner Trustee in such amounts and at such times as may be necessary to permit the Owner Trustee to satisfy its obligations under Section 3.02 of the Participation Agreement, subject to the conditions set forth therein. The right and obligation of the Owner Trustee to take the actions required by Section 1.01 hereof shall be subject to the condition that the Trustor shall have made the full amount of the advances required to be made by the Trustor pursuant to Section 3.02(a) of the Participation Agreement. ARTICLE 2 DISTRIBUTIONS Section 2.01. Rent, Etc. The Trustor and the Owner Trustee acknowledge that the Lease will be security for the Certificates pursuant to the Indenture which provides that all moneys payable by the Lessee to the Owner Trustee under the Lease (other than Excepted Payments) are to be paid to the Indenture Trustee while the Lien of the Indenture is in effect. Except as otherwise provided in Section 2.04 hereof, the Owner Trustee shall promptly apply each payment (other than Excepted Payments) of Rent, Stipulated Loss Value, Termination Value, and any proceeds from the sale, requisition or disposition of the Aircraft received by it as follows: (a) prior to the release of the Lien of the Indenture, each such payment shall be payable directly to the Indenture Trustee (and if any of the same is received by the Owner Trustee shall, upon receipt, be paid over to the Indenture Trustee without deduction, set off or adjustment of any kind) for distribution in accordance with the provisions of Article V of the Indenture; provided, that any payments received by the Owner Trustee from (i) the Lessee with respect to SSB's or 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 the 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 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 Indenture Trustee under the terms of the Indenture, the balance, if any, remaining shall be paid to the Trustor. Section 2.02. Excepted Payments. All Excepted Payments at any time received by the Owner Trustee shall be distributed promptly to the applicable Person, and such payment shall not be deemed under any circumstances to be part of the Lessor's Estate. Section 2.03. Other Receipts. Except as otherwise provided in Section 2.04 hereof, any payment received by the Owner Trustee, other than those referred to in Sections 2.01 and 2.02 hereof, shall be payable prior to the release of the Lien of the Indenture directly to the Indenture Trustee (and if any of the same are received by the Owner Trustee shall, upon receipt, be paid over to the Indenture Trustee without deduction, set off or adjustment of any kind) for distribution in accordance with the provisions of Article V of the Indenture; and following such application or release of Lien, any such payment for which provision as to the application thereof is made in the other Operative Agreements shall be applied promptly to the purpose for which such payment shall have been made in accordance with the terms of the other Operative Agreements, and any such payment received by the Owner Trustee for which no provision as to the application thereof is made in the Operative Agreements or in this Article 2 shall, unless the Trustor shall have otherwise instructed the Owner Trustee in writing, be distributed promptly to the Trustor. Section 2.04. Distributions after Default. Subject to the provisions of Section 2.02 hereof, (i) all payments received and amounts realized by the Owner Trustee after an Indenture Event of Default shall have occurred and shall be continuing and after the Certificates shall have become or been declared due and payable pursuant to Section 7.02(b) or 7.02(c) of the Indenture or the Lease shall have become or been declared in default (including, without limitation, any amounts realized by the Owner Trustee or the Trustor from the exercise of any remedies pursuant to Section 17.01 of the Lease), as well as (ii) all funds then held or thereafter received by the Owner Trustee as part of this Trust Agreement, the Lease or otherwise, shall be distributed to the Indenture Trustee. Section 2.05. Distributions after Release of Lien of Indenture. Except as otherwise provided in Sections 2.01, 2.02, 2.03 and 2.04 hereof: (a) all payments received and amounts realized by the Owner Trustee under the Lease or otherwise with respect to the Aircraft or any part thereof (including, without limitation, all payments received pursuant to Section 17.01 of the Lease and amounts realized upon the sale or lease of the Aircraft or any part thereof after the termination of the Lease with respect thereto), to the extent received or realized at any time after the Lien of the Indenture shall have been released pursuant to the terms of the Indenture, and (b) moneys not included in paragraph (a) of this Section 2.05 remaining as part of the Lessor's Estate after payment in full of amounts described in paragraph (a), shall, to the extent required, be retained by the Owner Trustee as reimbursement for all expenses hereunder or under the Lease not theretofore reimbursed under this Agreement, the Lease or otherwise and to which the Owner Trustee is entitled to be reimbursed pursuant to the provisions thereof, and any balance remaining thereafter shall be distributed to the Trustor. Section 2.06. Manner of Making Distributions. The Owner Trustee shall make distributions or cause distributions to be made to (i) the Trustor pursuant to this Article 2 by transferring by wire transfer in immediately available funds the amount to be distributed to such 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 Indenture Trustee pursuant to this Article 2 by paying the amount to be distributed to the Indenture Trustee in the manner specified in the Indenture; provided, that the Owner Trustee shall invest overnight, for the benefit of the Trustor, in investments that would be permitted by Article 23 of the Lease (but only to the extent funds are received on or prior to 1:00 P.M. (Eastern Time) and such investments are available and, if such investments are not available to the Owner Trustee, in investments which, after consultation with the Trustor, the Trustor shall direct) all funds not transferred by wire transfer on the same day as they were received. Notwithstanding the foregoing but subject always to the provisions of, and the Lien created by, the Indenture, the Owner Trustee will, if so requested by the Trustor by written notice, pay any and all amounts payable by the Owner Trustee hereunder to the Trustor either (i) by crediting, or causing the Indenture Trustee to credit, such amount or amounts to an account or accounts maintained by the Trustor with the Owner Trustee in its individual capacity or with the Indenture Trustee in its individual capacity, as the case may be, in immediately available funds, or (ii) by wire transfer of immediately available funds to such other bank account as the Trustor shall notify the Owner Trustee in writing 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. SSB accepts the trust hereby created and, subject to Section 1.03 hereof, in its capacity as the Owner Trustee agrees to perform the same, including without limitation, subject to Section 1.03 hereof, the actions specified in Section 1.01 hereof as herein provided. The Owner Trustee agrees to disburse all monies that it receives under the Operative Agreements in accordance with the terms hereof. The Owner Trustee shall not be answerable or accountable in its individual capacity except as a result of or arising from (a) the Owner Trustee's willful misconduct or gross negligence (in its individual capacity or as trustee), (b) any breach by the Owner Trustee of its representations, warranties and covenants given in its individual capacity in this Agreement, Article 5 of the Lease, Sections 7.01(c), 7.02(a) and (b) and 7.04 of the Participation Agreement or its representations, warranties and covenants given in its individual capacity in Section 3.05 of the Indenture or elsewhere in the Operative Agreements, (c) the failure to use ordinary care in receiving, handling and disbursing funds, (d) Lessor's Liens attributable to it in its individual capacity, and (e) taxes, fees, or other charges on, based on, or measured by, any fees, commissions or compensation received by SSB or the Owner Trustee in connection with the transactions contemplated by the Lease, the Indenture and the Operative Agreements 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 the Aircraft, Airframe, Engines, any Part thereof or any other property at any time constituting a part of the Lessor's Estate, or otherwise to take or refrain from taking any action under or in connection with the Operative Agreements, except (i) to execute and deliver the Operative Agreements, (ii) to exercise and carry out or cause to be exercised or carried out the rights, duties and obligations of the Owner Trustee hereunder and under the other Operative Agreements, or (iii) as expressly provided in written instructions from the Trustor given pursuant to Section 1.01, 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 Operative Agreements or the obligations of the Owner Trustee under this Agreement. Section 3.03. Notice of Default. In the event that a Responsible Officer in the Corporate Trust Administration of the Owner Trustee shall have actual knowledge of a Default or an Event of Default, or an Indenture Default or an Indenture Event of Default, the Owner Trustee shall give or cause to be given to the Trustor and the Indenture Trustee prompt notice (in any event, within one Business Day of the discovery thereof) of such 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 in accordance with Article 14 of the Participation Agreement. Subject to the terms of Section 3.06(e) hereof and the rights of the Indenture Trustee and the Holders of the Certificates under the Indenture, the Owner Trustee shall take such action with respect to such 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 Trustor within 20 days after giving notice of such 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 in the event the Owner Trustee shall not have received instructions from the Trustor. For all purposes of this Agreement and the Lease, in the absence of actual knowledge of a Responsible Officer of the Owner Trustee, the Owner Trustee shall not be deemed to have knowledge of a Default, Event of Default, Indenture Default or Indenture Event of Default unless notified in writing by the Lessee, the Trustor, the Indenture Trustee or any Certificate Holder. Section 3.04. Action Upon Instructions. Subject in all respects to the terms of the Operative Agreements, and 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 (which such Trustor agrees shall not be inconsistent with the provisions of the Indenture so long as the Lien of the Indenture has not been discharged), the Owner Trustee will take such of the following actions as may be specified in such instructions: (a) give such notice or direction or exercise such right, remedy or power under the Operative Agreements, or take such other action, as shall be specified in such instructions; (b) take such action to preserve or protect the Lessor's Estate (including the discharge of Liens and encumbrances) as may be specified in such instructions; (c) approve as satisfactory to it all matters required by the terms of the Operative Agreements to be satisfactory to the Owner Trustee (it being understood that without written instructions of the Trustor, the Owner Trustee shall not approve any matter as satisfactory to it), except such approvals as may be required with respect to the Trustor's transfer of its Beneficial Interest pursuant to Article 5; (d) upon or after the expiration or earlier termination of the Term of the Lease, convey in accordance with such instructions, the Aircraft and all of the Owner Trustee's right, title and interest in and to the Aircraft or any part thereof for such amount, on such terms and to such purchaser or purchasers as shall be designated in such instructions, or retain, lease or otherwise dispose of the Aircraft or any part thereof as shall be specified in such instructions; (e) execute and file any financing statement (and any continuation statement with respect to any such financing statement) or any other similar document relating to the Lessor's Estate or the security interests and assignments created by the Operative Agreements, as may be specified in such instructions (which instructions shall be accompanied by an execution form of such financing statement or such continuation statement, as the case may be); and (f) any other action as specified by the Trustor. Section 3.05. Certain Duties and Responsibilities of Owner Trustee. (a)(i) The Owner Trustee undertakes to perform such duties and only such duties as are specifically set forth herein, and with the degree of care specified in Section 3.01 hereof, and in accordance with instructions given by the Trustor hereunder, and no implied duties, covenants or obligations shall be read into this Agreement, any such instructions or the Operative Agreements against the Owner Trustee, and the Owner Trustee agrees that it will not manage, control, possess, use, sell, lease, dispose of or otherwise deal with the Aircraft or any part of the Lessor's Estate except as required by the terms of the Operative Agreements, any such instructions and as otherwise provided herein; and (ii) in the absence of bad faith on its part, the Owner Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Owner Trustee and conforming to the requirements of this Agreement or the other Operative Agreements, but in the case of any such certificates or opinions which by any provisions hereof or thereof are specifically required to be furnished to the Owner Trustee, the Owner Trustee shall be under a duty to examine the same to determine whether or not they conform to the requirements of this Trust Agreement or the Operative Agreements. (b) No provision hereof shall require SSB in its individual capacity 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, SSB agrees in its individual capacity that it will, at its own cost and expense, promptly take such action as may be necessary to discharge duly all Lessor's Liens attributable to it in its individual capacity and will claim no indemnity therefor hereunder, or under the Participation Agreement or any Operative Agreement. (c) Whether or not therein expressly so provided, every provision of this Agreement relating to the conduct or affecting the liability of or affording protection to the Owner Trustee shall be subject to the provisions of this Section 3.05, except that in the event of a conflict between this Section 3.05 and Section 3.01 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 other Operative Agreements or the Original Agreements (including those furnished to the Indenture Trustee pursuant to the terms of the 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 the Owner Trustee shall have the power and authority to fulfill its obligations under Section 2.06 hereof and Article 23 of the 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 Operative Agreement shall be sufficiently evidenced by a request, direction or authorization in writing, delivered to the Owner Trustee, and signed in the name of such party by any of the Chairman of the Board, the President, any Vice President, the Treasurer or Assistant Treasurer or the Secretary or Assistant Secretary or other duly authorized officer of such party; and any resolution of the Board of Directors or committee thereof of such party shall be sufficiently evidenced by a copy of such resolution certified by the Secretary or an Assistant Secretary of such party, to have been duly adopted and to be in full force and effect on the date of such certification, and delivered to the Owner Trustee; (c) whenever in the administration of this Agreement the Owner Trustee shall deem it desirable that a matter be proved or established prior to taking, suffering or omitting any action hereunder or under any of the other Operative Agreements, the Owner Trustee (unless other evidence be herein or therein specifically prescribed), absent actual knowledge of a Responsible Officer of the Owner Trustee to the contrary, may rely in good faith upon a certificate in writing, delivered to the Owner Trustee and signed by any of the Chairman of the Board, the President, any Vice President, the Treasurer or Assistant Treasurer or the Secretary or Assistant Secretary of the Lessee, the Trustor, or the Indenture Trustee and notice of such need for such proof or establishment shall be delivered to the Trustor, who may advise the Owner Trustee in respect of such matter and the Owner Trustee shall act in conformity with such advice; (d) the Owner Trustee may exercise its powers and perform its duties by or through such attorneys, agents and servants as it shall appoint with due care, and it shall be entitled to rely upon the advice of counsel reasonably selected by it with due care and shall be protected by the advice of such counsel in anything done or omitted to be done in accordance with such advice; (e) the Owner Trustee shall not be under any obligation to take any action under this Agreement or under any of the other Operative Agreements at the request or direction of the Trustor unless the Persons making such request or direction shall have offered to the Owner Trustee reasonable security or indemnity against the costs, expenses and liabilities which might be incurred by it in compliance with such request or direction; nor shall the Owner Trustee be required to take any action and this Agreement shall not be deemed to impose on the Owner Trustee any obligation to take any action, if the Owner Trustee shall have been advised by its counsel that such action is unlawful or is contrary to the terms of this Agreement or the other Operative Agreements; (f) the Owner Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order or other paper or document unless a Responsible Officer of the Owner Trustee has actual knowledge that the facts or matters stated therein are false or inaccurate, but the Owner Trustee in its discretion may make such further inquiry or investigation into such facts or matters as it may see fit, and, if the Owner Trustee shall determine to make such further inquiry or investigation, it shall be entitled, to the same extent permitted to the Lessor under the Lease, to examine the books and records of the Lessee to reasonably determine whether the Lessee is in compliance with the terms and conditions of the Lease and to examine the Aircraft, Airframe, Engines or any 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 Indenture or the Participation Agreement, the Owner Trustee shall not have any duty (i) to see to any recording or filing of the Lease or of this Agreement or any financing statement or other notice or document relating thereto or contemplated under the Operative Agreements or to see to the maintenance of any such recording or filing (other than FAA reporting requirements contained in 14 C.F.R. Sections 47.45 and 47.51), (ii) to see to any insurance on the Aircraft or any part thereof or to effect or maintain any such insurance, whether or not the Lessee shall be in default with respect thereto, other than to forward to the Trustor and (to the extent provided in the Indenture) the Indenture Trustee copies of all certificates, reports and other written information which it receives from the Lessee pursuant to the Lease, (iii) to see to the payment or discharge of any tax, assessment or other governmental charges or any Lien (except any Lessor's Lien attributable to it in its individual capacity) owing with respect to, or assessed or levied against any part of the Lessor's Estate, (iv) to confirm or verify any financial statements or reports of the Lessee, or (v) to inspect the Aircraft at any time or ascertain or inquire as to the performance or observance of any of the Lessee's covenants under the Lease. Section 3.07. No Representations or Warranties as to Certain Matters. NEITHER THE OWNER TRUSTEE NOR SSB MAKES OR SHALL BE DEEMED TO HAVE MADE (a) ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AS TO THE TITLE, AIRWORTHINESS, VALUE, CONDITION, WORKMANSHIP, DESIGN, COMPLIANCE WITH SPECIFICATIONS, CONSTRUCTION, OPERATION, MERCHANTABILITY OR FITNESS FOR USE FOR A PARTICULAR PURPOSE OF THE AIRCRAFT, AS TO THE ABSENCE OF LATENT OR OTHER DEFECTS, WHETHER OR NOT DISCOVERABLE, AS TO THE ABSENCE OF ANY INFRINGEMENT OF ANY PATENT, TRADEMARK OR COPYRIGHT, AS TO THE ABSENCE OF OBLIGATIONS BASED ON STRICT LIABILITY IN TORT, OR ANY OTHER REPRESENTATION OR WARRANTY WHATSOEVER, EXPRESS OR IMPLIED, WITH RESPECT TO THE AIRCRAFT OR ANY PART THEREOF, except that SSB represents and warrants that on the Delivery Date the Owner Trustee shall have received whatever right, title and interests in, to and under the Aircraft were conveyed to it by the Lessee and SSB represents, warrants and covenants that at all times on and after the Delivery Date the Aircraft shall be free of all Lessor's Liens attributable to it, and that the Owner Trustee shall comply with the last sentence of Section 3.05(b) hereof, or (b) any representation or warranty as to the validity, legality or enforceability of this Agreement or any other Operative Agreement to which the Owner Trustee is a party, or any other document or instrument, or as to the correctness of any statement contained in any thereof, except to the extent that any such representation, warranty or statement is expressly made herein or therein as a representation or warranty by the Owner Trustee or SSB and except that SSB hereby represents and warrants that this Agreement has been, and (assuming the due authorization, execution and delivery of this Agreement by the Trustor) the other Operative Agreements to which the Owner Trustee is a party have been (or at the time of execution and delivery of any such instrument by the Owner Trustee hereunder or pursuant to the terms of the Participation Agreement that such an instrument will be) duly executed and delivered by one of its officers who is or will be, as the case may be, duly authorized to execute and deliver such instruments on behalf of the Owner Trustee and that this Agreement has been duly authorized, executed and delivered by SSB and (assuming due authorization, execution and delivery of this Trust Agreement by the Trustor) constitutes the legal, valid and binding obligation of SSB 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 or any Operative Agreement shall constitute trust funds for the purpose for which they were paid or are held, but need not be segregated in any manner from any other moneys except to the extent required by law and may be deposited by the Owner Trustee under such conditions as may be prescribed or permitted by law for trust funds, or may be invested in direct obligations of the United States. Section 3.09. Self-Dealing. SSB in its individual capacity, or any corporation in or with which SSB 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 SSB 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 and (b) may resign at any time without cause by giving at least 60 days' prior written notice to the Trustor and the Indenture Trustee, such resignation 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, but subject to Section 11.01 of the Participation Agreement, the Trustor may at any time remove the Owner Trustee without cause by an instrument in writing delivered to the Owner Trustee and the Indenture Trustee, such removal to be effective only upon the appointment by the Trustor of a successor Owner Trustee and the acceptance of such appointment by such successor. Upon the giving of notice of resignation or removal of the Owner Trustee, the Trustor may appoint a successor Owner Trustee by an instrument signed by the Trustor. If the Trustor shall not have so appointed a successor Owner Trustee within 30 days after such resignation or removal, the Owner Trustee, the Indenture Trustee or the Trustor may apply to any court of competent jurisdiction to appoint a successor Owner Trustee to act until such time, if any, as a successor or successors shall have been appointed by the Trustor as above provided. Any successor Owner Trustee so appointed by a court shall be superseded by any successor Owner Trustee subsequently appointed by the Trustor. The appointment of any successor Owner Trustee shall be subject to the conditions set forth in Section 11.01 of the Participation Agreement. Section 3.12. Estate and Rights of Successor Owner Trustee. Any successor Owner Trustee, however appointed, shall execute and deliver to the predecessor Owner Trustee, with a copy to the Trustor and the Indenture Trustee, an instrument accepting such appointment, and thereupon each successor Owner Trustee, without further act, shall become vested with all the estates, properties, rights, powers, duties and trust of the predecessor Owner Trustee in the trust 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 trust herein expressed. Upon any such transfer by a predecessor Owner Trustee, such predecessor Owner Trustee shall provide the successor Owner Trustee and Trustor an accounting of the Lessor's Estate and the trust hereunder. Upon the appointment of any successor Owner Trustee hereunder, the predecessor Owner Trustee will use its best efforts to cause registration of the Aircraft included in the Lessor's Estate to be transferred upon the records of the Aeronautics Authority or other registry where the Aircraft may then be registered into the name of the successor Owner Trustee and shall otherwise use its best efforts to comply, or assist the successor Owner Trustee in complying, with the provisions of Section 11.01 of the Participation Agreement. Section 3.13. Merger or Consolidation of SSB. Any corporation into which SSB may be merged or with which it may be consolidated, or any corporation resulting from any merger or consolidation to which SSB shall be a party, or any corporation to which substantially all the corporate trust business of the Owner Trustee in its individual capacity may be transferred, shall, subject to Section 3.12 hereof, be the Owner Trustee under this Agreement without further act; provided, that such corporation shall not also be the Indenture Trustee. Section 3.14. Co-Trustees. At any time, subject to Section 7.13 of the Participation Agreement, if the Owner Trustee and the Trustor shall deem it necessary or prudent or desirable in order to conform to legal requirements of any jurisdiction in which any part of the Lessor's Estate may at the time be located, the Trustor and the Owner Trustee jointly shall have the power, and shall execute and deliver all instruments, to appoint one or more Persons approved by the Trustor and the Owner Trustee, to act as co-trustee, or co-trustees, jointly with the Owner Trustee, or separate trustee or separate trustees (except insofar as local law makes it necessary or prudent or desirable for any such co-trustee or separate trustee to act alone), of all or any part of the Lessor's Estate, and to vest in such Person or Persons, in such capacity, such title to the Lessor's Estate or any part thereof, and such rights, powers, duties, trusts or obligations as the Trustor and the Owner Trustee may consider necessary or prudent or desirable. 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. No appointment of, or action by, any co-trustee or separate trustee appointed under this Section 3.14 will relieve the Owner Trustee of any of its obligations under any Operative Agreement or otherwise affect any of the terms of the Indenture or adversely affect the interests of the Indenture Trustee or the Certificate Holders in the Trust Indenture Estate. Any co-trustee or separate trustee may, at any time by an instrument in writing, constitute the Owner Trustee its or his attorney-in-fact and agent with full power and authority to do all acts and things and to exercise all discretion on its or his behalf and in its or his name 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 or under the Participation Agreement shall be exercised solely by the Owner Trustee; (B) all other rights, powers, duties and obligations conferred or imposed upon the Owner Trustee shall be conferred or imposed upon and exercised or performed by the Owner Trustee and such additional trustee jointly, except to the extent that under any law of any jurisdiction in which any particular act or acts are to be performed (including the holding of title to the Lessor's Estate) the Owner Trustee shall be incompetent or unqualified to perform such act or acts, in which event such rights, powers, duties and obligations shall be exercised and performed by such additional trustee; (C) no power given to, or which is provided hereby may be exercised by, any such additional trustee, except jointly with, or with the consent in writing of, the Owner Trustee; (D) no trustee hereunder shall be personally liable by reason of any act or omission of any other trustee hereunder 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 or any other Operative Agreement or any other agreement relating to the transactions contemplated by the Operative Agreements or such provision is ambiguous as to its application, or is, or appears to be, in conflict with any other applicable provision, or in the event that this Agreement or any other Operative Agreement permits any determination by the Owner Trustee or is silent or incomplete as to the course of action which the Owner Trustee is required to take with respect to a particular set of facts, the Owner Trustee shall request in writing instructions of the Trustor and, to the extent that the Owner Trustee acts in good faith in accordance with any instructions received from the Trustor, shall not be liable to any Person; provided, that in the event that no response is made to the Owner Trustee by the Trustor within 25 Business Days after such request, the Owner Trustee shall not be liable to any Person for acts taken by the Owner Trustee in good faith or for any failure to act, except to the extent provided in the last sentence of Section 3.01 hereof. Section 3.16. Not Acting in Individual Capacity. In carrying out the trust hereby created, the Owner Trustee will act solely as trustee hereunder and not in its individual capacity except as expressly provided herein or in the other Operative Agreements to which it is a party; and all Persons, other than the Trustor as provided in this Agreement, having any claim against the Owner Trustee by reason of the transactions contemplated hereby shall look only to the Lessor's Estate for payment or satisfaction thereof, except to the extent provided in the last sentence of Section 3.01 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 or any Operative Agreement. 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 of the Trustor and at the expense of the Lessee, will furnish the Trustor with all such information as may be reasonably required or advisable from the Owner Trustee in connection with the preparation of such tax returns and 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 of the Trustor, but at the expense of the Lessee, all income tax returns required to be filed with respect to the trust created hereby and shall execute and file such returns; provided, that the Owner Trustee shall deliver a completed copy of all such returns to the Trustor not more than 60 nor less than 30 days prior to the due date of the return (provided that the Owner Trustee shall have timely received all necessary information to complete such return). 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 date stated in such notice, which date shall not be less than ten nor more than thirty days from the date of mailing such notice, then on the date specified in such notice the trust created and provided for hereby shall cease and terminate; provided, that this trust shall not be subject to revocation or termination by the Trustor prior to the payment in full and discharge of the Certificates and all other indebtedness secured by the Indenture and the release of the Lien of the Indenture and the security interest granted thereby without the consent of the Indenture Trustee and shall not be subject to revocation or termination by the Trustor prior to termination of the Lease without the consent of the Lessee; provided, further, that such notice shall be accompanied by the written agreement of the Trustor to assume all of the obligations of the Owner Trustee (but not of SSB) under the Operative Agreements and all other obligations of the Owner Trustee (but not of SSB) incurred by it hereunder in its role as the Owner Trustee arising in connection with the revocation or termination of the trust or this Agreement by the Trustor; (b) The sale or other final disposition by the Owner Trustee of all of its interest in all property constituting or included in the Lessor's Estate and, if the Indenture shall then be in effect, the sale or other disposition by the Indenture Trustee of all of its interest in all property constituting or included in the Lessor's Estate, and the final disposition by the Owner Trustee and, if the Indenture shall then be in effect, the Indenture Trustee, of all moneys or other property or proceeds constituting part of the Lessor's Estate in accordance with the terms hereof; or (c) 21 years less one day from the death of the last survivor of the descendants of Queen Victoria of England living on the date of this Agreement; provided, however, that if the Trust shall be or become valid under applicable law for a period subsequent to 21 years less one day from the death of the last survivor of the descendants of Queen Victoria of England living on the date of this Agreement 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 is still in effect, the Trustor will promptly and duly execute and deliver to the 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 the Indenture Trustee may from time to time reasonably request and furnish in order to protect the rights and remedies created or intended to be created in favor of the Indenture Trustee under the Indenture and to create for the benefit of the Certificate Holders a valid first mortgage Lien with respect to, and a first and prior perfected security interest in, the 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 hereof, the Owner Trustee shall convey the Lessor's Estate (subject to all obligations, if any, of the Owner Trustee then existing under the Operative Agreements to which the Owner Trustee is a party) 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 remains in force and effect, then the Lessor's Estate shall be sold as a unit (and not in parcels) and subject to the Lease, and (ii) in the event such written instructions are not delivered to the Owner Trustee on or before the date of termination, the Owner Trustee shall transfer title to the Lessor's Estate to the Trustor. Upon making such transfer or sale and accounting for all funds which have come into its hands, the Owner Trustee shall be entitled to receipt of any sums due and owing to the Owner Trustee for expenses incurred pursuant hereto as set forth in Section 2.05 hereof. ARTICLE 5 TRANSFER OF BENEFICIAL INTEREST The Trustor may assign, convey or otherwise transfer to a single institutional investor all (but not less than all) of the Beneficial Interest, provided that it gives the Lessee, the Indenture Trustee and the Owner Trustee at least 10 Business Days' notice of such assignment, conveyance or other transfer and provided further that the Trustor agrees by a written instrument in form and substance reasonably satisfactory to the Lessee, the Indenture Trustee and the Owner Trustee to remain liable for all obligations of the Trustor under this Agreement and the other Operative Agreements to which the Trustor is a party to the extent (but only to the extent) incurred on or before the date of such transfer and provided that the transferee agrees by a written instrument in form and substance reasonably satisfactory to the Lessee, the Indenture Trustee and the Owner Trustee to assume primary liability for all obligations as a trustor under this Agreement and the other Operative Agreements to which such trustor is a party incurred after the date of transfer; provided, further, that (a) such transferee is (i) a bank, savings institution, finance company, leasing company or trust company or 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 $75,000,000, (ii) a subsidiary of any Person described in clause (i) where such Person provides (A) support for the obligations assumed by such transferee subsidiary satisfactory to the Lessee, the Owner Trustee and the Indenture Trustee or (B) an unconditional guaranty satisfactory to the Lessee, the Owner Trustee and the Indenture Trustee of such transferee subsidiary's obligations, or (iii) an Affiliate of the original Trustor, so long as such Affiliate has a combined capital and surplus (or, if applicable, consolidated tangible net worth or its equivalent) of not less than $75,000,000, (b) such transferee is legally capable of binding itself to the obligations of the Trustor and expressly agrees to assume all obligations of the Trustor under the Participation Agreement and this Agreement and (c) such transferee shall provide representations substantially similar to those contained in Section 7.03(a) of the Participation Agreement. In the event of any such assignment, conveyance or transfer, the transferee shall become a party to this Agreement and shall agree to be bound by all the terms of and will undertake all of the obligations of the Trustor contained in this Agreement and the other Operative Agreements in such manner as is reasonably satisfactory to the Lessee, the Owner Trustee and the Indenture Trustee. A transferee hereunder shall be (i) a "U.S. Person" as defined in Section 7701(a)(30) of the Code (or any successor provision thereto) or if the transferee shall not be such a "U.S. Person" then each Certificate Holder shall be provided an indemnity (from the transferee trustor or the Trustor but not from the Lessee) in form and substance satisfactory to each such Certificate Holder, for any Taxes that may be imposed on such Certificate Holders (currently or in the future) due to such transferee's failure to be such a "U.S. Person" and (ii) a Citizen of the United States or shall have established a voting trust, voting powers or other arrangement reasonably satisfactory to the Indenture Trustee to permit the Owner Trustee to be the registered owner of the Aircraft under the Transportation Code. Assuming the truth of the representations made in Section 6.01(m)(viii) of the Participation Agreement and compliance with Section 10.06 of the Indenture, no such assignment, conveyance or transfer shall violate any provision of law or regulation or create a relationship which would be in violation thereof. The Owner Trustee shall not be on notice of or otherwise bound by any such assignment, conveyance or transfer unless and until it shall have received an executed counterpart of the instrument of such assignment, conveyance or transfer. Upon any such disposition by the Trustor to a transferee as above provided, the transferee shall be deemed the "Trustor" for all purposes hereof, and shall be deemed to have made all the payments previously made by its transferor and to have acquired the same interest in the Lessor's Estate as theretofore held by its transferor; and each reference herein to the "Trustor" shall thereafter be deemed a reference to such transferee. Notwithstanding anything to the contrary contained in this Article 5, in no event shall the Trustor transfer its interest in the Beneficial Interest to 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 in one of its principal lines of business (except for any line of business in the financial services industry). ARTICLE 6 MISCELLANEOUS Section 6.01. Indemnification. The Trustor agrees to reimburse and save SSB harmless against any and all loss, damage, liability, claims, demands, disbursements and expenses, including taxes (excluding taxes imposed against SSB upon or with respect to any fees or compensation for services rendered by the Owner Trustee and SSB hereunder) and reasonable counsel fees (any "Loss"), which may be incurred by reason of its being the Owner Trustee or acting hereunder or under the Operative Agreements, but solely by reason thereof and arising out of or relating solely to this Agreement or the other Operative Agreements or the Aircraft or the Rent and other sums payable therefor, or by reason of any occurrence directly relating thereto while so acting, and to secure the payment thereof, the Owner Trustee, in its individual capacity, shall have a Lien on the Lessor's Estate and the proceeds thereof, including income, prior to any interest therein of the Trustor and its assigns (but subject to the rights of the Lessee under the Operative Agreements and subject and subordinate to the Lien of the Indenture); provided, that the Trustor shall have no obligation hereunder to indemnify SSB for any Losses arising from or the result of (A) the Owner Trustee's willful misconduct or gross negligence (in its individual capacity or as trustee), (B) any inaccuracy of any representation of the Owner Trustee or any breach by the Owner Trustee of its warranties and covenants given in its individual capacity in this Agreement, Article 5 of the Lease, Sections 7.01(c), 7.02(a) and (b) and 7.04 of the Participation Agreement and its representations and warranties in Section 3.05 of the Indenture or elsewhere in the Operative Agreements, (C) the failure to use ordinary care in receiving, handling and disbursing funds, (D) Lessor's Liens attributable to it in its individual capacity, (E) taxes, fees, or other charges on, based on, or measured by, any fees, commissions or compensation received by SSB or the Owner Trustee in connection with the transactions contemplated by the Lease, the Indenture and this Agreement, (F) any Loss for which the Lessee is not required to indemnify SSB pursuant to Sections 8.01 and 9.01 of the Participation Agreement (disregarding for the purposes of this Section 6.01, subsections (iii) and (vi) of Section 8.01(b) of the Participation Agreement) and subsections (ii), (iv), (vi), and (viii) of Section 9.01(b) of the Participation Agreement); provided, that, before asserting any right to payment or indemnification hereunder, the Owner Trustee shall first demand (but need not exhaust its remedies with respect to) its corresponding right to payment or indemnification from the Lessee pursuant to the Participation Agreement. It is further understood that the distribution by the Owner Trustee of all or any part of the Lessor's Estate as provided in Section 4.02 of this Agreement shall not impair the right of SSB to indemnity, payment and reimbursement as herein provided. In the event SSB makes any advances at any time to pay or to provide for the payment of any such Loss, then SSB 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 Prime 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 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 the Indenture) the Trust Indenture Estate for any fee as compensation for its services hereunder. Section 6.02. Supplements and Amendments. At any time and from time to time, only upon the written request of the Trustor (a) SSB and the Trustor shall execute a supplement hereto for the purpose of adding provisions to, or changing or eliminating provisions of, this Agreement as specified in such request and (b) the Owner Trustee shall, subject to the provisions of Article XIII of the Indenture, enter into or consent to such written amendment or modification of or supplement to any of the Operative Agreements as the Indenture Trustee and any other necessary parties may agree to in writing and as may be specified in such request, or execute and deliver such written waiver of the terms of any of the Operative Agreements as may be agreed to in writing by the Indenture Trustee and as may be specified in such request; provided, that (i) the Owner Trustee shall not execute any such supplement, amendment, waiver or modification without the prior written consent of the Trustor, (ii) if in the reasonable opinion of the Owner Trustee any document required to be executed by it pursuant to this Section adversely affects any right or duty of, or immunity or indemnity in favor of, the Owner Trustee under this Agreement or any other Operative Agreement, the Owner Trustee may in its discretion decline to execute such document and (iii) any amendment or supplement to this Agreement that would adversely affect the rights of the Indenture Trustee or the Holders shall be subject to the prior written consent of the Indenture Trustee. It shall not be necessary that any request pursuant to this Section specify the particular form of the proposed document to be executed pursuant to such request, but it shall be sufficient if such request shall indicate the substance thereof. Promptly after the execution by SSB or the Owner Trustee of any document pursuant to this Section, the Owner Trustee shall mail a conformed copy thereof to the Trustor and the Indenture Trustee, but the failure of the Owner Trustee to mail such conformed copies shall not impair or affect the validity of such document. Section 6.03. Nature of Title of Trustor. The Trustor shall not have any legal title to any part of the Lessor's Estate. No transfer, by operation of law or otherwise, of the right, title and interest of the Trustor in and to the Lessor's Estate or the trust hereunder shall operate to terminate this Agreement or Lessor's Estate, except as provided in Section 4.01 hereof. Section 6.04. Power of Owner Trustee to Convey. Any assignment, sale, transfer or other conveyance by the Owner Trustee of the interest of the Owner Trustee in the Operative Agreements or in the Aircraft or any part thereof pursuant to and in compliance with the terms of this Agreement or the Operative Agreements shall bind the Trustor and shall be effective to transfer or convey all right, title and interest of the Owner Trustee and the Trustor in and to the Operative Agreements or the Aircraft or such part thereof. No purchaser or other grantee shall be required to inquire as to the authorization, necessity, expediency or regularity of such assignment, sale, transfer or conveyance or as to the application of any sale or other proceeds with respect thereto by the Owner Trustee. Section 6.05. Notices. All notices, demands, declarations and other communications required by this Agreement shall be in writing and shall be deemed received (a) if given by telecopier, when transmitted and the appropriate telephonic confirmation received if transmitted on a Business Day and during normal business hours of the recipient, and otherwise on the next Business Day following transmission, (b) if given by certified mail, return receipt requested, postage prepaid, three Business Days after being deposited in the United States mail, and (c) if given by FedEx service or other delivery service of established reputation, or other means, when received or personally delivered, addressed: If to the Owner Trustee: State Street Bank and Trust Company of Connecticut, National Association c/o State Street Bank and Trust Company Two International Place 4th Floor Boston, Massachusetts 02110 Attention: Corporate Trust Department Telephone: (617) 664-5526 Facsimile: (617) 664-5371 If to the Trustor: Key Corporate Capital Inc. c/o KeyCorp Leasing Ltd. 54 State Street Albany, New York 12207 Attention: Vice President, Leveraged Leasing Telephone: (518) 487-4462 Facsimile: (518) 487-4761 If to the Indenture Trustee: First Security Bank, National Association 79 South Main Street Salt Lake City, Utah 84111 Attention: Corporate Trust Department Telephone: (801) 246-5630 Facsimile: (801) 246-5053 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 CONNECTICUT, INCLUDING ALL MATTERS OF VALIDITY, CONSTRUCTION AND PERFORMANCE. If any provision of this Agreement shall be invalid or unenforceable, the remaining provisions hereof shall continue to be fully effective; provided, that such remaining provisions do not increase the obligations or liabilities of the Owner Trustee or the Trustor. Section 6.07. Successors and Assigns. This Agreement shall be binding upon and shall inure to the benefit of, and shall be enforceable by, the parties hereto and their respective successors and permitted assigns, including any successive holder of the Beneficial Interest, but only to the extent the Beneficial Interest has been transferred or assigned in accordance with the limitations of Article 5 of this Agreement. Section 6.08. Headings and Table of Contents. The headings of the Articles and Sections of this Agreement and the Table of Contents are inserted for convenience only and shall not affect the meaning or construction of any of the provisions hereof. Section 6.09. Definitions. The capitalized terms used herein, unless otherwise herein defined or the context hereof shall otherwise require, shall have the respective meanings set forth in Schedule I attached hereto. Section 6.10. Identification of Trust. This trust may for convenience be referred to as the "Federal Express Corporation Trust No. N584FE." Section 6.11. Counterparts. This instrument may be executed in any number of counterparts or upon separate signature pages bound together in several counterparts, each of which when so executed shall be deemed to be an original, and such counterparts together shall constitute and be one and the same instrument. IN WITNESS WHEREOF, SSB and the Trustor have caused this Agreement to be duly executed all as of the date first above written. KEY CORPORATE CAPITAL INC. By: ____________________________________________ Name: Title: STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT, NATIONAL ASSOCIATION By: ____________________________________________ Name: Paul D. Allen Title: Vice President SCHEDULE I DEFINITIONS (FEDERAL EXPRESS CORPORATION TRUST NO. N584FE) GENERAL PROVISIONS The following terms shall have the following meanings for all purposes of the Operative Agreements (other than the Intercreditor Agreement and the Liquidity Facilities) referred to below, unless otherwise defined in an Operative Agreement or the context thereof shall otherwise require. In the case of any conflict between the provisions of this Schedule and the provisions of any Operative Agreement, the provisions of such Operative Agreement shall control the construction of such Operative Agreement. Unless the context otherwise requires, (i) references to agreements shall be deemed to mean and include such agreements as amended and supplemented from time to time, and (ii) references to parties to agreements shall be deemed to include the successors and permitted assigns of such parties. DEFINED TERMS: Additional Insured. As defined in Article 13 of the Lease. Aeronautics Authority. As appropriate, the Federal Aviation Administration and/or the Administrator of the Federal Aviation Administration, any successor to the former United States Civil Aeronautics Board, or any Person, governmental department, bureau, commission or agency located in the United States succeeding to the functions of any of the foregoing. Affidavits. The affidavits of citizenship of the Owner Trustee and the Owner Participant. Affiliate. With respect to any Person, any other Person directly or indirectly controlling, controlled by or under common control with such Person. For the purposes of this definition, "control" (including "controlled by" and "under common control with") shall mean the power, directly or indirectly, to direct or cause the direction of the management and policies of such Person whether through the ownership of voting securities or by contract or otherwise. In no event shall the Owner Trustee or the Lessor be deemed an Affiliate of the Owner Participant. After-Tax Basis. A basis such that any payment received or deemed to have been received by a Person shall be supplemented by a further payment to such Person so that the sum of the two payments, after deduction of all Taxes resulting from the receipt or accrual of such payments, shall be equal to the payment received or deemed to have been received. In the case of amounts payable to the Lessor, the Owner Participant, or any corporate Affiliate of the Owner Participant, it shall be presumed that such Person is at all times subject to Federal income tax at the maximum marginal rate generally applicable to corporations from time to time and actual state, local and foreign income taxes. Air Carrier. Any U.S. Air Carrier and any "foreign air carrier" (as defined in the Transportation Code) as to which there is in force a permit granted under Section 41302 of the Transportation Code. Aircraft. The Airframe to be sold by the Lessee to the Owner Trustee pursuant to the Participation Agreement and to be leased under the Lease (or any permitted substitute airframe thereunder) together with three Engines (or any Replacement Engine or Engines) whether or not any of such initial or Replacement Engines may from time to time be installed on such Airframe or may be installed on any other airframe or on any other aircraft, including any aircraft substituted pursuant to Section 11.03 of the Lease. Airframe. The McDonnell Douglas MD-11F aircraft (excluding the Engines or engines from time to time installed thereon) to be leased by the Lessor to the Lessee pursuant to the Lease and the initial Lease Supplement and having the United States FAA Registration Number and manufacturer's serial number specified in the initial Lease Supplement, including (i) all Parts in respect thereof and (ii) any Replacement Airframe which may be substituted pursuant to Section 11.03 of the Lease. Amendment. The Amendment Agreement No. 1 to Trust Indenture and Security Agreement (Federal Express Corporation Trust No. N584FE) dated September 30, 1997 between the Indenture Trustee and the Owner Trustee. Ancillary Agreement I. The Ancillary Agreement I (Federal Express Corporation Trust No. N584FE), dated the Delivery Date, among the Lessee, the Owner Trustee, not in its individual capacity, but solely as Owner Trustee, the Owner Participant and the Indenture Trustee not in its individual capacity, but solely as Indenture Trustee, as originally executed or as amended, modified or supplemented with the consent of all the parties thereto. Application. The application for registration of the Aircraft with the FAA in the name of the Owner Trustee. Appraisal. The report prepared by BK Associates, Inc. and to be delivered to the Owner Participant (with a copy of such report to the Lessee) on the Delivery Date pursuant to Section 4.01(n) of the Participation Agreement. Average Life Date. For any Certificate, the date which follows the prepayment date by a period equal to the Remaining Weighted Average Life of such Certificate. Bankruptcy Code. The Federal Bankruptcy Code of 1978, as amended, and any successor thereto. Bankruptcy Default. An event specified in Section 16.01(e), (f) or (g) of the Lease which either does or, with the giving of notice or lapse of time or both, would constitute an Event of Default. Basic Rent. The aggregate periodic rent payable for the Aircraft throughout the Basic Term pursuant to Section 3.02 of the Lease, adjusted pursuant to Article 3 of the Lease. Basic Term. The period commencing at the beginning of the day on the Delivery Date and ending at the end of the day on the day immediately preceding the date 22 years from the Delivery Date, or such earlier date on which the Lease shall be terminated as provided therein. Beneficial Interest. The interest of the Owner Participant (or the Initial Owner Participant, as the case may be) under the Trust Agreement. Bills of Sale. Collectively, the FAA Bill of Sale and the Warranty Bill of Sale. Business Day. Except as provided in the next succeeding sentence, any day other than a Saturday or Sunday or day on which commercial banks are authorized or required to close in New York, New York, Albany, New York, Memphis, Tennessee and the city in the United States in which the office or agency is maintained by the Pass Through Trustee for the payment of the Pass Through Certificates, and after the Lien of the Indenture has been discharged, Hartford, Connecticut. With respect to notices and other communications to the Lessee, Business Day shall mean any day other than a Saturday, Sunday or day on which commercial banks are authorized to close in New York, New York and Memphis, Tennessee. Certificate Closing Date. May 28, 1997. Certificates. The Equipment Trust Certificates (Federal Express Corporation Trust No. N584FE), issued by the Owner Trustee pursuant to the Indenture and any certificate issued in exchange therefor or replacement thereof pursuant to the Indenture. Change in Tax Law. Any change in the Code or the Treasury regulations promulgated thereunder or the publication of any revenue ruling, revenue procedure or any informational release by the Internal Revenue Service or the Department of Treasury after execution of the Participation Agreement but on or before the Delivery Date, either of which would change or would allow a change in the tax assumptions or structure upon which the lease economics in the Commitment Letter were based (for example, but not limited to, the ability of the Lessor to incorporate a lessor-paid interim), provided that the Owner Participant or the Lessee has notified the other party of such change in writing prior to the Delivery Date. Citizen of the United States. A citizen of the United States as defined in Section 40102(a)(15) of the Transportation Code, or any analogous part of any successor or substituted legislation or regulation at the time in effect. Commitment Letter. Has the meaning specified in Section 3.02(a) of the Participation Agreement. Class A Liquidity Provider. Has the meaning specified in Section 1.01 of the Intercreditor Agreement. Class B Liquidity Provider. Has the meaning specified in Section 1.01 of the Intercreditor Agreement. Code. Except as otherwise provided, references to the Code shall mean the Internal Revenue Code of 1986, as amended from time to time. Collateral Account. The deposit account established and maintained pursuant to Section 2.13 of the Indenture. Collateral Account Control Agreement. The Collateral Account Control Agreement dated as of May 1, 1997 among State Street Bank and Trust Company, the Indenture Trustee and the Owner Trustee. Commitment. The amount of the Owner Participant's participation in the Purchase Price required to be made available or paid on the Delivery Date, as provided in Section 3.02 of the Participation Agreement and as set forth in Schedule I of the Participation Agreement. Corporate Trust Administration. The Corporate Trust Administration office of the Owner Trustee located at 225 Asylum Street, Goodwin Square, Hartford, Connecticut 06103, Attention: Corporation Trust Administration, or such other office at which the Owner Trustee's corporate trust business shall be administered which the Owner Trustee shall have specified by notice in writing to the Lessee, the Owner Participant and the Indenture Trustee. Corporate Trust Department. The Corporate Trust Department office of the Indenture Trustee located at 79 South Main Street, Salt Lake City, Utah 84111, Attention: Corporate Trust Department, or such other office at which the Indenture Trustee's corporate trust business shall be administered which the Indenture Trustee shall have specified by notice in writing to the Lessee, the Owner Participant and the Owner Trustee. CRAF Program. Has the meaning specified in Section 7.01(f) of the Lease. Cut-Off Date. April 15, 1998. Debt Portion. The amount specified as such on Schedule I to the Participation Agreement. Debt Rate. The weighted average (based on Outstanding principal amount) rate of interest on the Certificates issued pursuant to the Indenture. Default. Any event or condition which, with the lapse of time or the giving of notice, or both, would constitute an Event of Default. Delivery Date. The date on which the Aircraft is delivered and sold by the Lessee to the Lessor and leased by the Lessor to the Lessee under the Lease, which date shall also be the date of the initial Lease Supplement. Delivery Notice. Notice of the Aircraft's Delivery Date, given by the Lessee as provided in Section 3.01 of the Participation Agreement and including any notice with respect to a postponed Delivery Date given by the Lessee pursuant to Section 3.03(c) of the Participation Agreement. EBO Date. Has the meaning specified in Section 4.02(a)(F) of the Lease. EBO Price. Has the meaning specified in Section 4.02(a)(F) of the Lease. Eligible Deposit Account. Either (a) a segregated account with an Eligible Institution or (b) a segregated trust account with the corporate trust department of a depository institution with corporate trust powers organized under the laws of the United States or any state thereof, or the District of Columbia, and whose deposits are insured by the Federal Deposit Insurance Corporation, provided that such institution also has a combined capital and surplus of at least $100,000,000 and a rating of A or better from the Thomson Bank Watch. Eligible Institution. A depository institution organized under the laws of the United States or any one of the states thereof, or the District of Columbia, or any domestic branch of a foreign bank, which in any such case at all times (a) has either (x) a long-term unsecured debt rating of at least Aa2 by Moody's or (y) a short-term certificate of deposit rating of P-1 by Moody's, (b) has either (x) a long-term unsecured debt rating of a least AA by S&P or (y) a short-term certificate of deposit rating of A-1+ by S&P and (c) is a member of the Federal Deposit Insurance Corporation. Engine. Each of the three General Electric CF6-80C2-D1F engines listed by its manufacturer's serial number in the initial Lease Supplement and leased pursuant to the Lease, whether or not from time to time installed on the Airframe or installed on any other airframe or on any other aircraft, and any Replacement Engine which may from time to time be substituted for an Engine pursuant to Section 7.02(a)(vii), 10.03, 11.03, 11.04 or 12.02 of the Lease, together with all Parts related thereto. Except as otherwise provided, at such time as a Replacement Engine shall be so substituted and the Engine for which the substitution is made shall be released from the Lien of the Indenture, such replaced Engine shall cease to be an "Engine" under the Lease. The term "Engines" means, as of any date of determination, all Engines then leased to the Lessee pursuant to the Lease. Engine Consent. The Engine Consent dated as of February 1, 1998, executed by the Engine Manufacturer. Engine Manufacturer. General Electric Company, a New York corporation. Engine Warranty Assignment. The Engine Warranty Assignment (Federal Express Corporation Trust No. N584FE), dated as of February 1, 1998, between the Lessor and the Lessee. ERISA. The Employee Retirement Income Security Act of 1974, as amended. ERISA Plan. As defined in Section 15.01(e)(viii) of the Participation Agreement. Estimated Expense Amount. Has the meaning specified in Section 10.01(a) of the Participation Agreement. Event of Default. Each of the events specified in Article 16 of the Lease. Event of Loss. Any of the following events with respect to the Aircraft, the Airframe or any Engine: (i)(A) loss of such property or its use due to theft or disappearance for a period in excess of 30 days (or such longer period not to exceed 60 days from the end of such 30 day period if and so long as the location of such property is known and the Lessee is pursuing the recovery thereof) or to the end of the Term, if less, unless such event constitutes an Event of Loss under clause (i)(B), clause (i)(C) or clause (ii) below, (B) loss of such property or its use due to the destruction thereof or (C) loss of such property or its use due to damage beyond economic repair or rendition of such property permanently unfit for normal use by Lessee for any reason whatsoever for a period in excess of 30 days; (ii) any damage to such property which results in an insurance settlement with respect to such property on the basis of a total loss, or constructive or compromised total loss; (iii) (1) condemnation, confiscation or seizure of, or requisition of title to such property by the Government, any foreign government or purported government or any agency or instrumentality thereof, or (2) condemnation, confiscation, or seizure of, or requisition or taking of, use of such property (A) by a foreign government, or instrumentality or agency of any such foreign government, or any purported government or instrumentality or agency thereof for a period in excess of 180 days or the end of the Term, if less, 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 or the Airframe or any 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; or (iv) as a result of any law, rule, regulation, order or other action by the Aeronautics Authority or other governmental body having jurisdiction, (A) the use of the Aircraft or Airframe in the normal course of air transportation of cargo shall have been prohibited 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 and desirable to permit the normal use of the Aircraft or Airframe, (B) the use of the Aircraft or Airframe shall have been prohibited for a period of twelve (12) consecutive months, unless the Lessee shall have conformed at least one McDonnell Douglas MD-11F series aircraft (but not necessarily the Aircraft or the Airframe) to the requirements of any such law, rule, regulation, order or other action and shall have commenced regular commercial use of such aircraft 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 or (C) the use of the Aircraft or Airframe shall have been prohibited for a period of twenty-four (24) months. The date of such Event of Loss shall be (s) the 30th day or the 90th day, as the case may be, following loss of such property or its use due to theft or disappearance; (t) the date of any destruction of such property; (u) the 30th day following the date of damage beyond economic repair or rendition of such property permanently unfit for normal use; (v) the date of any insurance settlement on the basis of a total loss or constructive or compromised total loss; (w) the date of any condemnation, confiscation, seizure or requisition of title of such property; (x) the 181st day following condemnation, confiscation, seizure or requisition for use of such property by a foreign government referred to in clause (iii)(2)(A) above and the date of such condemnation, confiscation, seizure or requisition in the case of any other foreign government or instrumentality or agency thereof; (y) the last day of the Term in the case of requisition for use of such property by the Government or (z) the last day of the 6 month, 12 month or 24 month period, referred to in clause (iv) above. An Event of Loss with respect to the Aircraft shall be deemed to have occurred if any Event of Loss occurs with respect to the Airframe. Excepted Payments. Collectively, (i) indemnity or other payments (and interest thereon to the extent provided in the Operative Agreements) paid or payable by the Lessee in respect of the Owner Participant, the Owner Trustee in its individual capacity, their Affiliates or any of their respective successors, permitted assigns, directors, officers, employees, servants and agents, pursuant to Article 8, 9, or 10 and Section 15.01 of the Participation Agreement or any indemnity hereafter granted to the Owner Participant or the Owner Trustee in its individual capacity pursuant to Section 7.01(f), Article 9, Section 11.03(a) or 13.01(b) of the Lease or Sections 6.03(b)(i)(F), 7.04(c), 7.05(c), 8.04 and 15.01 of the Participation Agreement, (ii) proceeds of public liability insurance (or government indemnities in lieu thereof) in respect of the Aircraft payable as a result of insurance claims paid for the benefit of, or losses suffered by, the Owner Trustee or the Indenture Trustee in their respective individual capacities or by the Owner Participant, or their respective successors, permitted assigns or Affiliates, (iii) proceeds of insurance maintained with respect to the Aircraft by the Owner Participant (whether directly or through the Owner Trustee) maintained in accordance with the provisions of but not required under Article 13 of the Lease, (iv) payments of Supplemental Rent by the Lessee in respect of any amounts payable under the Tax Indemnity Agreement, (v) any amounts payable by the Lessee to the Owner Participant or the Owner Trustee in its individual capacity, after the release thereof from the Lien of the Indenture, (vi) subject to Section 3.05 of the Lease, payments constituting increases in Basic Rent attributable to payments arising pursuant to Section 5 of the Tax Indemnity Agreement, (vii) all costs and expenses payable or reimbursable by the Lessee to the Owner Participant or the Owner Trustee pursuant to Section 17.04 of the Lease, (viii) the right to retain amounts distributed to the Owner Participant under Article V of the Indenture and (ix) any right to demand, collect or otherwise receive and enforce the payment of any amount described in clauses (i) through (viii) above and any interest or late charges on the foregoing. Expense; Expenses. Have the meaning specified in Section 9.01(a) of the Participation Agreement. FAA. The United States Federal Aviation Administration and any successor agency or agencies thereto. FAA Bill of Sale. The bill of sale for the Airframe on AC Form 8050-2, or such other form as may be approved by the Aeronautics Authority, executed by the Lessee in favor of the Owner Trustee and to be dated the Delivery Date. Fair Market Renewal Term. A term with respect to which the Lessee has exercised its option to renew the Lease pursuant to the second paragraph of Section 4.01(a) thereof and with respect to which the conditions set forth in the third paragraph of Section 4.01(a) are met. Fair Market Rental. An amount determined on the basis of, and equal in amount to, the rental which would be obtained in an arm's-length transaction between an informed and willing lessee and an informed and willing lessor unaffiliated with such lessee, neither being under any compulsion to lease. In such determination, except for purposes of Section 17.01 of the Lease, 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 and Fair Market Rental shall be determined in accordance with the provisions of Section 4.03 of the Lease. For purposes of Section 17.01 of the Lease, such determination shall be made on an "as is, where is" basis by a qualified independent appraiser selected by the Lessor and the costs and expenses of the appraisal shall be borne by the Lessee, unless the Lessor does not obtain possession of the Aircraft pursuant to such Section 17.01, in which case an appraiser shall not be appointed and such Fair Market Rental shall be deemed to be zero. Fair Market Value. An amount determined on the basis of, and equal in amount to, the value which would be obtained in an arm's-length transaction between an informed and willing purchaser under no compulsion to buy and an informed and willing seller unaffiliated with such purchaser and under no compulsion to sell, assuming the Aircraft (or other property) is unencumbered by the Lease. In such determination, except for purposes of Section 17.01 of the Lease, 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 and Fair Market Value shall be determined in accordance with the provisions of Section 4.03 of the Lease. For purposes of Section 17.01 of the Lease, such determination shall be made on an "as is, where is" basis by a qualified independent appraiser selected by the Lessor and the costs and expenses of the appraisal shall be borne by the Lessee, unless the Lessor does not obtain possession of the Aircraft free and clear of all Liens and unencumbered by the Lease pursuant to such Section 17.01, in which case an appraiser shall not be appointed and such Fair Market Value shall be deemed to be zero. Federal Aviation Administration. The United States Federal Aviation Administration and any successor agency or agencies thereto. FedEx. Federal Express Corporation. Final Drawing. Has the meaning specified in Section 1.01 of the Intercreditor Agreement. Fixed Renewal Rent. Semi-annual payments of rent during the Fixed Renewal Term equal to the amount set forth in Ancillary Agreement I. Fixed Renewal Term. A renewal term or terms provided for under the second paragraph of Section 4.01(a) of the Lease. FSB. First Security Bank, National Association, a national banking association. Government. The United States of America or an agency or instrumentality thereof the obligations of which bear the full faith and credit of the United States of America. GTA. The General Terms Agreement dated as of July 3, 1991 between the Engine Manufacturer and the Lessee related to the purchase by the Lessee of the Engines as originally executed or as modified, amended or supplemented in accordance with the terms thereof, but only insofar as the General Terms Agreement relates to the Engines, to the extent assigned to the Owner Trustee pursuant to the Engine Warranty Assignment. Holder of a Certificate; Certificate Holder; Holder. As of any particular time, the Person in whose name a Certificate shall be registered (but not including the holder of any Pass Through Certificate). Indemnitee. Each of SSB, in its individual capacity and as Owner Trustee and Lessor, the Subordination Agent, in its individual capacity and in its capacity as Subordination Agent, each Liquidity Provider, the Owner Participant, the Indenture Trustee, 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 and the Trust Indenture Estate. Neither the Pass Through Trustee nor any holder of a Pass Through Certificate shall be deemed to be an Indemnitee. Indenture. The Trust Indenture and Security Agreement (Federal Express Corporation Trust No. N584FE), dated as of May 1, 1997, as amended by the Amendment and as amended and restated as of February 1, 1998, between the Lessor and the Indenture Trustee, as supplemented by the Indenture and Security Agreement Supplement. Indenture and Security Agreement Supplement. The Indenture and Security Agreement Supplement No. 1 (Federal Express Corporation Trust No. N584FE) to be dated the Delivery Date, substantially in the form of Exhibit A to the Indenture. Indenture Default. Any event or condition which, with the lapse of time or the giving of notice, or both, would constitute an Indenture Event of Default. Indenture Documents. Has the meaning specified in the Granting Clause of the Indenture. Indenture Event of Default. Each of the events specified in Section 7.01 of the Indenture. Indenture Trustee. First Security Bank, National Association, a national banking association, not in its individual capacity but solely as Indenture Trustee under the Indenture. Indenture Trustee's Liens. Any Lien against, on or with respect to the Aircraft, the Lessor's Estate or the Trust Indenture Estate or any part thereof resulting from (i) claims against the Indenture Trustee not related to the administration of the Trust Indenture Estate or any transactions pursuant to the Indenture or any document included in the Trust Indenture Estate, (ii) any act or omission of the Indenture Trustee which is not related to the transactions contemplated by the Operative Agreements or is in violation of any of the terms of the Operative Agreements or (iii) Taxes imposed against the Indenture Trustee in its individual capacity or its Affiliates against which the Lessee has not indemnified (and is not obligated to indemnify) the Indenture Trustee in such capacity. 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, "Independent Investment Banker" shall mean such an institution appointed by the Indenture Trustee. Initial Owner Participant. Federal Express Corporation, a Delaware corporation. Intercreditor Agreement. The Intercreditor Agreement dated as of May 1, 1997, among the Pass Through Trustee, the Class A Liquidity Provider, the Class B Liquidity Provider and the Subordination Agent. Interest Drawing. Has the meaning specified in Section 1.01 of the Intercreditor Agreement. Invoice. The invoice for the Aircraft given by the Lessee to the Lessor. Lease. The Lease Agreement (Federal Express Corporation Trust No. N584FE) dated as of May 1, 1997, as amended and restated as of February 1, 1998, entered into by the Lessor and the Lessee concurrently with the execution and delivery of the Indenture, including, without limitation, supplementation by one or more Lease Supplements entered into pursuant to the applicable provisions of the Lease. Lease Supplement. The Lease Supplement No. 1 (Federal Express Corporation Trust No. N584FE) to be dated the Delivery Date, substantially in the form of Exhibit A to the Lease. Lease Term. The period commencing on the Delivery Date and ending at the end of the Basic Term. Lessee. Federal Express Corporation, a Delaware corporation. Lessee Documents. Has the meaning set forth in Section 6.01(b) of the Participation Agreement. Lessor. State Street Bank and Trust Company of Connecticut, National Association, a national banking association, not in its individual capacity but solely as Owner Trustee under the Trust Agreement. Lessor's Estate. All estate, right, title and interest of the Owner Trustee in and to the Collateral Account, the Liquid Collateral, the Aircraft, the Lease, any Lease Supplement, the Participation Agreement, the Bills of Sale, the Modification Agreement, the GTA, the Engine Warranty Assignment, the Engine Consent, any warranty with respect to the Airframe and the Engines, all amounts of Basic Rent, Renewal Rent and Supplemental Rent, including without limitation, insurance proceeds (other than insurance proceeds payable to or for the benefit of either the Owner Trustee in its individual capacity or the Owner Participant) and requisition, indemnity or other payments of any kind for or with respect to the Aircraft (except amounts owing to the Owner Participant or 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 not include any Excepted Payment. Lessor's Liens. Liens against, on or with respect to the Aircraft, the Lessor's Estate or the Trust Indenture Estate or any part thereof, title thereto or any interest therein arising as a result of (i) claims against the Lessor, in its individual capacity or as Owner Trustee, the Owner Participant or any Affiliate of the Owner Participant, in each case not related to the transactions contemplated by the Operative Agreements, (ii) acts or omissions of the Lessor in its individual capacity or as Owner Trustee, and, in the case of the Lessor in its individual capacity, arising from its gross negligence or willful misconduct either not related to the transactions contemplated by or expressly prohibited under the Operative Agreements and any act or omission of the Owner Participant or any Affiliate 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, or the Owner Participant or any Affiliate of the Owner Participant, the Lessor's Estate or the trust created by the Trust Agreement which are not required to be indemnified against by the Lessee pursuant to the Tax Indemnity Agreement or by reason of Section 8.01(b) or 9.01(b) of the Participation Agreement, or (iv) claims against the Lessor or the Owner Participant arising from the voluntary transfer by the Lessor or the Owner Participant of its interests in the Aircraft other than a transfer of the Aircraft pursuant to Section 4.02(a) or Article 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. Lien. Any mortgage, pledge, lien, charge, encumbrance, lease or security interest or other similar interest. Liquid Collateral. All amounts and securities deposited from time to time in the Collateral Account and all the products, investments, earnings and proceeds of the foregoing, including, but not limited to, all proceeds of the investment or conversion thereof, voluntary or involuntary, into cash, Specified Investments or other property, all rights to payment of any and every kind, and other forms of obligations, and instruments and other property which at any time constitute all or part or are included in the proceeds of any of the foregoing. Liquidity Facility. Has the meaning specified in Section 1.01 of the Intercreditor Agreement. Liquidity Provider. Has the meaning specified in Section 1.01 of the Intercreditor Agreement. Losses. Has the meaning specified in Section 17.02(a) of the Participation Agreement. Loss Payee. Has the meaning specified in Section 13.02(b)(i) of the Lease. Majority in Interest of Certificate Holders. As of a particular date of determination, the Holders of more than 50% of the aggregate unpaid principal amount of all Certificates outstanding as of such date excluding for purposes of this definition any Certificates held by (i) the Owner Trustee or the Owner Participant unless all Certificates then outstanding shall be held by such Owner Participant, (ii) the Lessee or (iii) any Affiliate of any thereof. Make-Whole Premium. An amount determined as of the 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, if any, of (i) the present value of the remaining scheduled payments of such principal amount or portion thereof and interest thereon (excluding interest accrued from the immediately preceding Payment Date to such Prepayment Date 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 the Treasury Yield, all as determined by the Independent Investment Banker over (ii) the outstanding principal amount of such Certificate plus accrued interest. Mandatory Document Terms. The terms set forth on Schedule V to the Original Participation Agreement. Mandatory Economic Terms. The terms set forth on Schedule VI to the Original Participation Agreement. Manufacturer. McDonnell Douglas Corporation, a Maryland corporation. 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 Aircraft Modification Agreement dated as of December 1, 1995 between the Lessee and the Manufacturer providing for the refurbishing and reconfiguration of the Aircraft including any warranties relating thereto, but only to the extent that the foregoing relates to the Aircraft, to the extent assigned to the Owner Trustee pursuant to the Warranty Bill of Sale. Moody's. Moody's Investors Service, Inc. Net Present Value of Rents. The net present value, as of the Delivery Date, of Basic Rent set forth in Schedule II of the Lease, discounted at a rate per semi-annual period equal to the Debt Rate. 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, (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. Officer's Certificate. When delivered pursuant to the Indenture, a certificate signed by a Responsible Officer of the Lessee or the Owner Trustee, as the case may be, and delivered to the Indenture Trustee. Each such certificate shall include the statements provided for in Section 15.07 of the Indenture. Operative Agreements. The Participation Agreement, the Trust Agreement, the Bills of Sale, the Modification Agreement, the GTA, the Engine Warranty Assignment, the Lease, the Lease Supplement, the Owner Participant Guaranty, if any, the Owner Trustee Guaranty, if any, the Ancillary Agreement I, the Certificates outstanding at the time of reference, the Indenture, the Indenture and Security Agreement Supplement, the Engine Consent, each Liquidity Facility, the Intercreditor Agreement, the Collateral Account Control Agreement and the Tax Indemnity Agreement. Opinion of Counsel. When delivered pursuant to the Indenture, a written opinion of legal counsel, who in the case of counsel (a) for the Lessee may be (i) an attorney employed by the Lessee who is generally empowered to deliver such written opinions, (ii) Davis Polk & Wardwell or a successor firm or (iii) other counsel designated by the Lessee and reasonably satisfactory to the Indenture Trustee and (b) for the Owner Trustee or the Indenture Trustee, an attorney selected by such Person and, in the case of the Owner Trustee, reasonably satisfactory to the Indenture Trustee. Original Agreements. The documents and instruments delivered on the Certificate Closing Date in connection with the transactions contemplated by the Original Participation Agreement. Original Indenture. The Trust Indenture and Security Agreement (Federal Express Corporation Trust No. N584FE), dated as of May 1, 1997, between the Owner Trustee and the Indenture Trustee originally executed and delivered on the Certificate Closing Date and amended by the Amendment. Original Lease. The Lease Agreement (Federal Express Corporation Trust No. N584FE), dated as of May 1, 1997, between the Owner Trustee as lessor, and the Lessee originally executed and delivered on the Certificate Closing Date. Original Participation Agreement. The Participation Agreement (Federal Express Corporation Trust No. N584FE), dated as of May 1, 1997, among the Lessee, the Initial Owner Participant, the Indenture Trustee, the Owner Trustee, the Pass Through Trustee and the Subordination Agent originally executed and delivered on the Certificate Closing Date. Original Trust Agreement. The Trust Agreement (Federal Express Corporation Trust No. N584FE), dated as of May 1, 1997, between the Initial Owner Participant and the Owner Trustee originally executed and delivered on the Certificate Closing Date. Outstanding. When used with respect to Certificates, as of the date of determination and subject to the provisions of Section 10.04 of the Indenture, all Certificates theretofore executed and delivered under the Indenture, with the exception of the following: (i) Certificates theretofore cancelled by the Indenture Trustee or delivered to the Indenture Trustee for cancellation pursuant to Section 2.08 of the Indenture or otherwise; (ii) Certificates for which prepayment money in the necessary amount has been theretofore deposited with the Indenture Trustee in trust for the Holders of such Certificates pursuant to Section 14.01 of the Indenture; provided, that if such Certificates are to be prepaid, notice of such prepayment has been duly given pursuant to the Indenture or provision therefor satisfactory to the Indenture Trustee has been made; and (iii) Certificates in exchange for or in lieu of which other Certificates have been executed and delivered pursuant to Article II of the Indenture. Owner Participant. The Person to whom on the Delivery Date the Initial Owner Participant shall transfer its Beneficial Interest pursuant to Section 3.02 of the Original Participation Agreement and any successors thereto, and any Person to which the Owner Participant transfers, in accordance with the Trust Agreement, its right, title and interest in and to the Operative Agreements and the Lessor's Estate. Owner Participant Guarantor. The provider, if any, of an Owner Participant Guaranty. Owner Participant Guaranty. Any guaranty delivered in compliance with Article 5 of the Trust Agreement. Owner Trustee. SSB, not in its individual capacity except as otherwise expressly stated, but solely as Owner Trustee under the Trust Agreement. Owner Trustee Guarantor. The provider, if any, of an Owner Trustee Guaranty. Owner Trustee Guaranty. Any guaranty delivered in compliance with Section 11.01(b)(ii) of the Participation Agreement. Owner's Economic Return. The Owner Participant's anticipated net after-tax yield and aggregate after-tax cash in the Basic Term, utilizing the multiple investment sinking fund method of analysis, computed on the basis of the same methodology and assumptions as were utilized by the Owner Participant in determining Basic Rent, Stipulated Loss Value and Termination Value percentages and EBO Price, as such assumptions may be adjusted for events which have been the basis of adjustments to Rent pursuant to Section 3.04 of the Lease. Participation Agreement. The Participation Agreement (Federal Express Corporation Trust No. N584FE), dated as of May 1, 1997, as amended and restated as of February 1, 1998, among the Lessee, the Owner Trustee not in its individual capacity except as otherwise expressly provided therein, but solely as owner trustee, the Owner Participant, the Indenture Trustee not in its individual capacity except as otherwise expressly provided therein, but solely as indenture trustee, the Pass Through Trustee not in its individual capacity except as otherwise expressly provided therein, but solely as pass through trustee and the Subordination Agent not in its individual capacity except as otherwise expressly provided therein, but solely as subordination agent. Parts. All appliances, parts, components, instruments, appurtenances, accessories, furnishings and other equipment of whatever nature (other than complete Engines or engines) which may from time to time be incorporated or installed in or attached to the Airframe or any Engine or, prior to replacement thereof in accordance with the Lease, which may be removed therefrom. Pass Through Agreement. The Pass Through Trust Agreement dated as of May 1, 1997, between the Lessee and the Pass Through Trustee. Pass Through Certificates. Any of the Pass Through Certificates, 1997-1-A, the Pass Through Certificates, 1997-1-B or the Pass Through Certificates, 1997-1-C, in each case as issued by the related Pass Through Trust; and "Pass Through Certificates" means all of the Pass Through Certificates issued by each of the Pass Through Trusts. Pass Through Closing Date. May 28, 1997. Pass Through Trust. The Federal Express Corporation 1997-1 Pass Through Trust Class A, Federal Express Corporation 1997-1 Pass Through Trust Class B and Federal Express Corporation 1997-1 Pass Through Trust Class C, in each case formed pursuant to the related Series Supplement in accordance with the Pass Through Agreement; and "Pass Through Trusts" means all of such Pass Through Trusts. Pass Through Trustee. First Security Bank, National Association, a national banking association, in its capacity as Pass Through Trustee under the Pass Through Agreement and each Pass Through Trust. Past Due Rate. In respect of (A) any amount payable to the Owner Participant or the Owner Trustee a rate per annum during the period from and including the due date to but excluding the date on which such amount is paid in full equal to 2% plus the Debt Rate and (B) any principal of or interest on any Certificate or any other amount payable under the Indenture, any Certificate or any other Operative Agreement that is not paid when due (whether at Maturity, by acceleration, by optional or mandatory prepayment or otherwise) to any Holder, the Indenture Trustee or the Pass Through Trustee, a rate per annum during the period from and including the due date to but excluding the date on which such amount is paid in full equal to (i) in the case of any such amount payable to the Holder of any Certificate, 2% plus the interest rate applicable to such Certificate and (ii) in the case of any other such amount, 2% plus the Debt Rate. Payment Date. Each January 15 and July 15 commencing on July 15, 1997. Payment Default. Any event specified in Section 16.01(a) or 16.01(b) of the Lease which with the giving of notice or lapse of time or both would constitute an Event of Default. Permitted Investments. Those investments enumerated in Section 23.01(a) (i), (ii), (iii) and (iv) of the Lease. Person. Any individual, sole proprietorship, partnership, joint venture, joint stock company, trust, unincorporated organization, association, corporation, institution, entity or government (federal, state, local, foreign or any agency, instrumentality, division or body thereof). Pool Balance. Has the meaning specified in Article I to the Series Supplement. Pool Factors. Has the meaning specified in Article I to the Series Supplement. Preliminary Notice. Has the meaning specified in Section 4.01(a) of the Lease. Premium Termination Date. With respect to the Series A Certificates, December 27, 2011, with respect to the Series B Certificates, February 5, 2010 and with respect to the Series C Certificates, March 22, 2007. Prepayment Date. Has the meaning specified in Section 6.02(b) of the Indenture. Prepayment Price. Has the meaning specified in Section 6.02(b) of the Indenture. Principal Amount. With respect to a Certificate means the stated original principal amount of such Certificate and, with respect to all Certificates, means the aggregate stated original principal amounts of all Certificates. Property. Any right or interest in or to property of any kind whatsoever, whether real, personal or mixed and whether tangible or intangible. Proposed Termination Date. Has the meaning specified in Section 10.01(a) of the Lease. Purchase Price. The amount specified as such in Ancillary Agreement I. Rating Agencies. Collectively, at any time, each nationally recognized rating agency which shall have been requested to rate the Pass Through Certificates and which shall then be rating the Pass Through Certificates. The initial Rating Agencies will be Moody's and S&P. Rating Agency Confirmation. With respect to any Operative Agreement that is to be modified in any material respect on the Delivery Date or the Transfer Date, if applicable, a written confirmation from each of the Rating Agencies that the use of such Operative Agreement with such modifications would not result in (i) a reduction of the rating for any Class of Pass Through Certificates below the then current rating for such Class of Pass Through Certificates or (ii) a withdrawal or suspension of the rating of any Class of Pass Through Certificates. Record Date. With respect to Payment Dates under the Indenture (except a date for payment of defaulted interest), December 31 for January 15 Payment Dates and June 30 for July 15 Payment Dates, whether or not such date is a Business Day. Recourse Amount. Has the meaning specified in Section 17.10 of the Participation Agreement. Refinancing. A non-recourse loan to the Lessor arranged pursuant to Section 15.01 of the Participation Agreement. Register. Has the meaning set forth in Section 3.02 of the Indenture. Registrar. Has the meaning set forth in Section 3.02 of the Indenture. Regulation D. Regulation D of the Board of Governors of the Federal Reserve System (or any successor), as the same may be modified and supplemented and in effect from time to time. Remaining Weighted Average Life. On a given date with respect to any Certificate the number of days equal to the quotient obtained by dividing (i) the sum of each of the products obtained by multiplying (a) the amount of each then remaining scheduled payment of principal of such Certificate by (b) the number of days from and including such prepayment date to but excluding the dates on which each such payment of principal is scheduled to be made; by (ii) the then outstanding principal amount of such Certificate. Renewal Rent. The amount payable by the Lessee as rent in accordance with Section 4.01 of the Lease during any Renewal Term. Renewal Term. Any Fixed Renewal Term or Fair Market Renewal Term with respect to which the Lessee has exercised its option to renew the Lease pursuant to Section 4.01(a) thereof. Rent. All payments due from the Lessee under the Lease as Basic Rent, Renewal Rent and Supplemental Rent, collectively. Rent Payment Date. February 26, 2020 and each January 15 and July 15 commencing on July 15, 1998, and continuing thereafter during the Term. Replacement Aircraft. Any aircraft substituted for the Aircraft pursuant to Section 11.03(a) of the Lease. Replacement Airframe. Has the meaning set forth in Section 11.03 of the Lease. Replacement Engine. A General Electric CF6-80C2-D1F engine (or an engine of the same or another manufacturer) of the same or of equal or greater value, remaining useful life and utility as the Engine being replaced, together with all Parts relating to such engine; provided, however, that if such replacement engine is not a General Electric CF6-80C2-D1F engine, such replacement engine must then be commonly used in the commercial aviation industry on McDonnell Douglas MD-11 airframes. Responsible Officer. With respect to the Owner Trustee (except for purposes of the Trust Agreement in which case the definition of Responsible Officer set forth in Section 3.10 of the Trust Agreement is applicable) or the Indenture Trustee, any officer in its Corporate Trust Department), as the case may be, designated by such Person to perform obligations under the Operative Agreements, and with respect to any other party, any corporate officer or (except in the case of the Owner Participant) other employee of a party who, in the normal performance of his or her operational responsibilities, with respect to the subject matter of any covenant, agreement or obligation of such party pursuant to any Operative Agreement, would have responsibility for and knowledge of such matter and the requirements of any Operative Agreement with respect thereto. S&P. Standard & Poor's Ratings Group. Scheduled Delivery Date. The Delivery Date specified in the Delivery Notice pursuant to Section 3.01 of the Participation Agreement. SEC. The Securities and Exchange Commission of the United States and any successor agencies or authorities. Secured Obligations. Has the meaning specified in the Granting Clause of the Indenture. Securities Act. The Securities Act of 1933, as amended. Series "A" or "Series A Certificates". Certificates issued and designated as "Series A" under the Indenture, in the Principal Amount and maturities and bearing interest as specified in Exhibit B to the Indenture under the heading "Series A". Series "B" or "Series B Certificates". Certificates issued and designated as "Series B" under the Indenture, in the Principal Amount and maturities and bearing interest as specified in Exhibit B to the Indenture under the heading "Series B". Series "C" or "Series C Certificates". Certificates issued and designated as "Series C" under the Indenture, in the Principal Amount and maturities and bearing interest as specified in Exhibit B to the Indenture under the heading "Series C". Series Supplements. The Series Supplement 1997-1-A, the Series Supplement 1997-1-B and the Series Supplement 1997-1-C, each dated the Certificate Closing Date, between the Lessee and the Pass Through Trustee. Sinking Fund Redemption Date. Has the meaning specified in Section 6.06 of the Indenture. Sinking Fund Redemption Price. Has the meaning specified in Section 6.06 of the Indenture. Special Aviation Counsel. Daugherty, Fowler & Peregrin. Special Distribution Date. Has the meaning specified in Article I to the Series Supplement. Specified Investments. Shall mean (a) direct obligations of the United States of America or obligations fully guaranteed by the United States of America; (b) commercial paper rated A-1/P-1 by S&P and Moody's, respectively or, if such ratings are unavailable, rated by any nationally recognized rating organization in the United States equal to the highest rating assigned by such rating organization; (c) investments in negotiable certificates of deposit, time deposits, banker's acceptances, commercial paper or other direct obligations of, or obligations guaranteed by, commercial banks organized under the laws of the United States or of any political subdivision thereof (or any U.S. branch of a foreign bank) with issuer ratings of at least B/C by Thomson Bankwatch, having maturities no later than 90 days following the date of such investment; (d) overnight federal funds transactions with members of the Federal Reserve System arranged by federal funds brokers; or (e) overnight repurchase agreements with respect to the securities described in clause (a) above entered into with an office of a bank or trust company which is located in the United States of America or any bank or trust company which is organized under the laws of the United States or any state thereof and has capital, surplus and undivided profits aggregating at least $500 million. SSB. State Street Bank and Trust Company of Connecticut, National Association, a national banking association. Stipulated Loss Value. As of any Stipulated Loss Value Determination Date during the Basic Term, the amount determined by multiplying the Purchase Price by the percentage set forth in Schedule III of the Lease under the heading "Stipulated Loss Value Factor" opposite such date (as such Schedule III may be adjusted from time to time as provided in Section 3.04 of the Lease), and during any Renewal Term, the amount determined pursuant to Section 4.01(b) of the Lease. Notwithstanding any other provisions of the Lease, the Participation Agreement or the Indenture, each Stipulated Loss Value for the Aircraft shall be, under any circumstances and in any event, an amount, together with the arrears portion of Basic Rent due and owing through the date of payment of Stipulated Loss Value and not constituting an Excepted Payment, at least sufficient to pay in full as of such date of payment the aggregate unpaid principal amount of and accrued interest on the Certificates outstanding on such date of payment. Subject to the immediately preceding sentence, it is understood and agreed that the amounts set forth on Schedule III of the Lease, for Stipulated Loss Value Determination Dates other than Rent Payment Dates, fully reflect appropriate Basic Rent accruals and credits of unearned Basic Rent as of such Stipulated Loss Value Determination Date and, accordingly, no further accrual or credit shall be required whenever Stipulated Loss Value is to be calculated with reference to any such date. Stipulated Loss Value Determination Date. Each date set forth on Schedule III of the Lease under the heading "Stipulated Loss Value Date." Supplemental Rent. (a) All amounts, liabilities and obligations which the Lessee assumes or agrees to perform or pay under the Lease or under the Participation Agreement or Tax Indemnity Agreement or Ancillary Agreement I or any other Operative Agreement to SSB, the Lessor, the Owner Participant, the Indenture Trustee, the Subordination Agent, any Liquidity Provider or others, including, without limitation, payments of Stipulated Loss Value, EBO Price and amounts calculated by reference to Termination Value, and all amounts required to be paid by Lessee under the agreements, covenants and indemnities contained in the Lease or in the Participation Agreement or the Tax Indemnity Agreement or any other Operative Agreement, but excluding Basic Rent and (b) all amounts that the Owner Trustee is obligated to pay in accordance with clause (b) of the last paragraph of Section 2.04 of the Indenture. Tax. Shall have the meaning set forth in Section 8.01(a) of the Participation Agreement. Tax Indemnity Agreement. The Tax Indemnity Agreement (Federal Express Corporation Trust No. N584FE), dated as of February 1, 1998, between the Lessee and the Owner Participant. Term. The Basic Term and any Renewal Term unless the Lease is terminated earlier pursuant to its terms. Termination Date. A Rent Payment Date during the Basic Term that is on or after the seventh anniversary of the Delivery Date in the case of Article 10 of the Lease, and in the case of (i) Section 4.02(a)(A) of the Lease the Rent Payment Date falling on July 15, 2011 or January 15, 2014, as the case may be, (ii) Section 4.02(a)(D) or (E) of the Lease, a Rent Payment Date that is on or after the seventh anniversary of the Delivery Date and (iii) Section 4.02(a)(F) of the Lease, January 15, 2016. Termination Value. As of any Termination Date, the amount determined by multiplying the Purchase Price by the percentage set forth in Schedule IV of the Lease under the heading "Termination Value Factor" opposite such Termination Date (as such Schedule IV may be adjusted from time to time as provided in Section 3.04 of the Lease). Notwithstanding any other provisions of the Lease, the Participation Agreement or the Indenture, each Termination Value shall be, under any circumstances and in any event, an amount, together with the arrears portion of Basic Rent due and owing through the date of payment of any amount calculated by reference to Termination Value and not constituting an Excepted Payment, at least sufficient to pay in full as of such date of payment the aggregate unpaid principal amount of and accrued interest on the Certificates outstanding on such date of payment. Subject to the immediately preceding sentence, it is understood and agreed that the amounts set forth on Schedule IV of the Lease, for dates other than Rent Payment Dates, fully reflect appropriate Basic Rent accruals and credits of unearned Basic Rent and, accordingly, no further accrual or credit shall be required whenever Termination Value is to be calculated with reference to any such date. Transaction Costs. Those costs and expenses set forth in Section 10.01(a) of the Participation Agreement. Transportation Code. Title 49 of the United States Code, as amended and in effect on the date of the Lease or as subsequently amended, or any successor or substituted legislation at the time in effect and applicable, and the regulations promulgated pursuant thereto. Treasury Yield. At the time of determination with respect to any Certificate, the interest rate (expressed as a semi-annual equivalent and as a decimal and, in the case of United States Treasury bills, converted to a bond equivalent yield) determined to be the per annum rate equal to the semi-annual yield to maturity for United States Treasury securities maturing on the Average Life Date on such Certificate and trading in the public securities markets either as determined by interpolation between the most recent weekly average yield to maturity for two series of United States Treasury securities, trading in public securities markets, (i) one maturing as close as possible to, but earlier than, the Average Life Date of such Certificate and (ii) the other maturing as close as possible to, but later than, the Average Life Date of such Certificate. In each case as published in the most recent H.15(519) or, if a weekly average yield to maturity for United States Treasury securities maturing on the Average Life Date of such Certificate is reported on the most recent H.15 (519), such weekly average yield to maturity as published in such H.15(919). "H.15(519)" means the weekly statistical release designated as such, or any successor publication, published by the Board of Governors of the Federal Reserve System. The date of determination of a Make-Whole Premium will be the third Business Day prior to the applicable prepayment date and the "most recent H.15(519)" means the H.15(519) published prior to the close of business on the third Business Day prior to the applicable prepayment date. Trust Agreement. The Trust Agreement (Federal Express Corporation Trust No. N584FE), dated as of May 1, 1997, as amended and restated as of February 1, 1998, between the Owner Participant and the Owner Trustee in its individual capacity. Trust Estate. The Lessor's Estate. Trust Indenture Act. The Trust Indenture Act of 1939, as amended. Trust Indenture Estate. All estate, right, title and interest of the Indenture Trustee in and to any of the property, rights, interests and privileges granted to the Indenture Trustee pursuant to the Granting Clause of the Indenture, other than Excepted Payments and any and all other rights of the Owner Trustee or the Owner Participant expressly reserved to the Owner Trustee or the Owner Participant pursuant to the Indenture. UCC. Uniform Commercial Code. Underwriters. Morgan Stanley & Co. Incorporated, First Chicago Capital Markets, Inc., Goldman, Sachs & Co. and J.P. Morgan & Co. Underwriting Agreement. The Underwriting Agreement dated May 22, 1997 among the Lessee and the Underwriters. United States, U.S. or US. The United States of America. U.S. Air Carrier. Any United States air carrier as to which there is in force a certificate issued pursuant to Section 41102(a) or Section 41103 of the Transportation Code, and as to which there is in force an air carrier operating certificate issued pursuant to Chapter 447 of the Transportation Code and Part 121 of the regulations under such Transportation Code, for aircraft capable of carrying ten (10) or more individuals or 6,000 pounds or more of cargo, or which may operate as an air carrier by certification or otherwise under any successor or substitute provision thereof or in absence thereof. U.S. Person. A Person described in Section 7701(a)(30) of the Code. Warranty Bill of Sale. The full warranty bill of sale covering the Aircraft (and specifically referring to each Engine) executed by the Lessee, as seller in favor of the Owner Trustee, as buyer, and to be dated the Delivery Date. EX-4.E 5 Exhibit 4.e - ------------------------------------------------------------------------------- LEASE AGREEMENT (FEDERAL EXPRESS CORPORATION TRUST NO. N584FE) Dated as of May 1, 1997 as amended and restated as of February 1, 1998 between STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT, NATIONAL ASSOCIATION, Not in its Individual Capacity, but Solely as Owner Trustee, Lessor and FEDERAL EXPRESS CORPORATION, Lessee COVERING ONE MCDONNELL DOUGLAS MD-11F AIRCRAFT SERIAL NO. 48436, REGISTRATION NO. N584FE CERTAIN OF THE RIGHT, TITLE AND INTEREST IN AND TO THIS LEASE AGREEMENT OF STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT, NATIONAL ASSOCIATION, AS OWNER TRUSTEE, HAS BEEN ASSIGNED TO AND IS SUBJECT TO A LIEN AND SECURITY INTEREST IN FAVOR OF FIRST SECURITY BANK, NATIONAL ASSOCIATION, AS INDENTURE TRUSTEE UNDER THE TRUST INDENTURE AND SECURITY AGREEMENT (FEDERAL EXPRESS CORPORATION TRUST NO. N584FE) DATED AS OF MAY 1, 1997, AS AMENDED AND RESTATED AS OF FEBRUARY 1, 1998 FOR THE BENEFIT OF THE HOLDERS OF THE CERTIFICATES REFERRED TO IN SUCH TRUST INDENTURE AND SECURITY AGREEMENT. THIS LEASE AGREEMENT HAS BEEN EXECUTED IN SEVERAL COUNTERPARTS. ONLY THE CHATTEL-PAPER "ORIGINAL" COUNTERPART CONTAINS THE RECEIPT THEREFOR EXECUTED BY FIRST SECURITY BANK, NATIONAL ASSOCIATION, AS INDENTURE TRUSTEE ON THE SIGNATURE PAGES THEREOF. - ------------------------------------------------------------------------------- TABLE OF CONTENTS Page Initial Recitals........................................................... 1 ARTICLE 1 DEFINITIONS ARTICLE 2 ACCEPTANCE UNDER THE LEASE Section 2.01. Sale and Lease of Aircraft; Term......................... 2 ARTICLE 3 RENT AND RENT ADJUSTMENT Section 3.01. [Reserved]............................................... 2 Section 3.02. Basic Rent............................................... 2 Section 3.03. Supplemental Rent........................................ 3 Section 3.04. Adjustments to Basic Rent, Stipulated Loss Value, Termination Value and EBO Price.......................... 3 Section 3.05. Minimum Basic Rent....................................... 4 Section 3.06. Payment to Indenture Trustee............................. 5 Section 3.07. Costs and Expenses....................................... 5 ARTICLE 4 RENEWAL OPTIONS AND PURCHASE OPTIONS Section 4.01. Renewal Options.......................................... 5 Section 4.02. Purchase Options......................................... 6 Section 4.03. Appraisal Procedures..................................... 8 ARTICLE 5 REPRESENTATIONS AND WARRANTIES Section 5.01. Disclaimer of Representations and Warranties............. 9 Section 5.02. No Modification of Other Warranties...................... 10 Section 5.03. Certain Agreements of the Lessee......................... 11 ARTICLE 6 LIENS Section 6.01. Liens.................................................... 11 ARTICLE 7 AIRCRAFT REGISTRATION, MAINTENANCE AND OPERATION Section 7.01. Registration, Maintenance and Operation.................. 12 Section 7.02. Possession and Permitted Transfer and Sublease........... 15 Section 7.03. Insignia................................................. 19 ARTICLE 8 REPLACEMENT AND POOLING OF PARTS Section 8.01. Replacement of Parts..................................... 20 Section 8.02. Pooling of Parts......................................... 21 ARTICLE 9 ALTERATIONS, MODIFICATIONS AND ADDITIONS Section 9.01. Required Alterations and Modifications................... 21 Section 9.02. Other Alterations and Modifications...................... 22 ARTICLE 10 VOLUNTARY TERMINATION Section 10.01. Right of Termination Upon Obsolescence or Surplus....... 23 Section 10.02. Retention of Aircraft by the Lessor..................... 26 Section 10.03. Voluntary Termination as to Engines..................... 27 ARTICLE 11 LOSS, DESTRUCTION, REQUISITION Section 11.01. Lessee's Election Rights................................ 28 Section 11.02. Payment of Stipulated Loss Value........................ 28 Section 11.03. Replacement of Airframe and Engines..................... 29 Section 11.04. Event of Loss with Respect to an Engine................. 32 Section 11.05. Application of Payments from the Government or Others... 35 Section 11.06. Requisition of an Airframe and the Installed Engines for Use by Government....................................... 36 Section 11.07. Requisition for Use by Government of an Engine Not Installed on the Airframe............................... 36 Section 11.08. Application of Payments During Existence of Certain Defaults................................................ 36 ARTICLE 12 RETURN OF AIRCRAFT Section 12.01. Return of Aircraft...................................... 37 Section 12.02. Return of Engines....................................... 37 Section 12.03. Return of Manuals....................................... 38 Section 12.04. Condition of Aircraft................................... 38 Section 12.05. Delayed Return of Aircraft.............................. 40 Section 12.06. Storage................................................. 41 Section 12.07. Special Markings........................................ 41 Section 12.08. Lessor's Option to Purchase Parts....................... 41 ARTICLE 13 INSURANCE Section 13.01. Comprehensive Airline Liability and Property Damage Liability Insurance..................................... 42 Section 13.02. Insurance Against Loss or Damage to Aircraft and Engines................................................. 44 Section 13.03. Application of Insurance Proceeds....................... 46 Section 13.04. Reports................................................. 47 Section 13.05. Lessor's Insurance...................................... 48 Section 13.06. Self-Insurance.......................................... 48 ARTICLE 14 INSPECTION Section 14.01. Right of Inspection..................................... 49 Section 14.02. No Obligation to Inspect................................ 49 ARTICLE 15 ASSIGNMENT Section 15.01. Lessee's Right to Assign................................ 50 Section 15.02. Citizenship............................................. 50 ARTICLE 16 EVENTS OF DEFAULT Section 16.01. Events of Default....................................... 50 ARTICLE 17 REMEDIES Section 17.01. Remedies Upon Lessee's Default.......................... 52 Section 17.02. Cumulative Remedies..................................... 55 Section 17.03. Waiver.................................................. 55 Section 17.04. Lessor's Right to Perform for Lessee.................... 56 ARTICLE 18 COVENANT OF QUIET ENJOYMENT Section 18.01. Quiet Enjoyment......................................... 56 ARTICLE 19 FURTHER ASSURANCES Section 19.01. Further Assurances...................................... 56 ARTICLE 20 NET LEASE Section 20.01. Nature of Lease......................................... 57 ARTICLE 21 SUCCESSOR LESSOR Section 21.01. Successor Lessor........................................ 58 ARTICLE 22 SECURITY FOR LESSOR'S OBLIGATIONS Section 22.01. Security for Lessor's Obligations to Holders............ 59 Section 22.02. [Reserved].............................................. 59 Section 22.03. Consent of Lessee to Assignment of Lease as Security.... 59 ARTICLE 23 SECURITY FUNDS Section 23.01. Investment of Security Funds............................ 60 ARTICLE 24 CONCERNING THE LESSOR Section 24.01. Lessor's Entry Into Lease............................... 61 ARTICLE 25 NOTICES Section 25.01. Notices................................................. 62 ARTICLE 26 MISCELLANEOUS Section 26.01. Section Heading and Captions............................ 62 Section 26.02. References.............................................. 62 Section 26.03. APPLICABLE LAW.......................................... 62 Section 26.04. Severability............................................ 62 Section 26.05. No Oral Modification.................................... 62 Section 26.06. Agreement as Chattel Paper.............................. 63 Section 26.07. Counterparts............................................ 63 ARTICLE 27 TRUE LEASE Section 27.01. Intent of the Parties................................... 63 Section 27.02. Section 1110 Compliance................................. 63 Section 27.03. Finance Lease........................................... 63 Schedule I Definitions Schedule II Basic Rent Schedule III Stipulated Loss Values Schedule IV Termination Values Schedule V Additional Purchase Option Provisions Exhibit A Form of Lease Supplement LEASE AGREEMENT (FEDERAL EXPRESS CORPORATION TRUST NO. N584FE) LEASE AGREEMENT (FEDERAL EXPRESS CORPORATION TRUST NO. N584FE) dated as of May 1, 1997, as amended and restated as of February 1, 1998 (this "Lease") between STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT, NATIONAL ASSOCIATION, a national banking association, not in its individual capacity but solely as Owner Trustee under the Trust Agreement (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, all capitalized terms used herein shall have the meanings assigned thereto as provided in Article 1 below; WHEREAS, the Lessor and the Lessee have heretofore entered into the Original Lease dated as of May 1, 1997; WHEREAS, the Original Lease was not filed with the Federal Aviation Administration; and WHEREAS, subject to the terms and conditions set forth in the Participation Agreement (as hereinafter defined), the Lessee desires, on the Delivery Date (as hereinafter defined), to sell to and to lease from the Lessor and the Lessor is willing to purchase from and lease to the Lessee the Aircraft (as hereinafter defined) in accordance with the terms and conditions set forth in this Lease. NOW, THEREFORE, in consideration of the mutual promises herein, and other good and valuable consideration, the receipt and adequacy of which is hereby acknowledged by the parties, the Lessor and the Lessee agree that the Original Lease be and the same is hereby amended and restated in its entirety as follows: ARTICLE 1 DEFINITIONS Unless the context otherwise requires, the capitalized terms herein shall have the meanings given in Schedule I hereto, for all purposes of this Lease and shall be equally applicable to both the singular and the plural forms of the terms defined. ARTICLE 2 ACCEPTANCE UNDER THE LEASE Section 2.01. Sale and Lease of Aircraft; Term. The Lessor, subject to satisfaction or waiver of the conditions set forth in this Lease and in the Participation Agreement, hereby agrees to purchase the Aircraft from the Lessee, and the Lessee agrees to sell the Aircraft to the Lessor on the Delivery Date and agrees immediately thereafter to lease the Aircraft to the Lessee pursuant to this Lease, and the Lessee hereby agrees to lease the Aircraft from the Lessor, such lease to be evidenced by the execution by the Lessor and the Lessee of a Lease Supplement leasing the Aircraft hereunder. The Lessee agrees that the Lessor will authorize one or more employees of the Lessee, designated by the Lessee in writing, as the authorized representative or representatives of the Lessor to accept delivery of the Aircraft pursuant to the sale of the Aircraft described in the Participation Agreement. The Lessee hereby agrees that in the event delivery of the Aircraft shall be accepted by an employee or employees of the Lessee pursuant to such authorization by the Lessor, such acceptance of delivery by such employee or employees on behalf of the Lessor shall, without further act, irrevocably constitute acceptance by the Lessee of the Aircraft for all purposes of this Lease. Such lease shall last for the Term, at all times during which full legal title to the Aircraft shall remain vested with the Lessor to the exclusion of the Lessee, notwithstanding the possession and use thereof by the Lessee or any other Person. ARTICLE 3 RENT AND RENT ADJUSTMENT Section 3.01. [Reserved]. Section 3.02. Basic Rent. The Lessee agrees to pay to the Lessor in immediately available funds, on each Rent Payment Date, Basic Rent for the Aircraft during the Basic Term, each payment being set forth on Schedule II hereto opposite the applicable Rent Payment Date, subject to increase or decrease as provided in Section 3.04 of this Lease. Each payment of Basic Rent shall be made in arrears or in advance, all as stated in Schedule II hereto. Each payment of Basic Rent designated as advance rent shall be allocated over the six-month period beginning on the Rent Payment Date on which such advance rent payment is scheduled to be made, and each installment of Basic Rent that is designated as payable in arrears 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 is scheduled to be made. Section 3.03. Supplemental Rent. The Lessee agrees to pay or cause to be paid to the Lessor, or to whomever shall be entitled to it, any and all Supplemental Rent promptly as the same shall become due. If the Lessee fails to pay any Supplemental Rent when due, the Lessor shall have all rights, powers and remedies provided for in this Lease or in any other Operative Agreement, 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, the Lessee will pay to the Lessor, as Supplemental Rent, in the case of any prepayment of the Certificates pursuant to Section 6.02 of the Indenture (other than in connection with any prepayment or purchase of the Certificates following an Indenture Event of Default not attributable to an Event of Default), an amount equal to the aggregate amount of any Make-Whole Premium payable on such prepayment or purchase. 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, except as otherwise provided in the Operative Agreements. Section 3.04. Adjustments to Basic Rent, Stipulated Loss Value, Termination Value and EBO Price. Pursuant to and subject to the conditions contained in Section 2.03 of the Participation Agreement, the percentages for Basic Rent referred to in Schedule II hereto and the percentages for Stipulated Loss Value and Termination Value referred to in Schedule III and Schedule IV hereto, respectively, and the EBO Price shall be adjusted (upward or downward) subject to the minimum value established by Section 3.05 hereof and the definitions of Stipulated Loss Value, Termination Value and EBO Price, to reflect (i) any costs and expenses paid by the Lessor or the Owner Participant pursuant to Section 10.01 of the Participation Agreement being greater or less than the Estimated Expense Amount, (ii) any Refinancing pursuant to Section 15.01 of the Participation Agreement or (iii) the Delivery Date being other than February 26, 1998. Each such adjustment pursuant to the first sentence of this Section 3.04 shall maintain the Owner's Economic Return through the EBO Date and the Basic Term (and, while maintaining such Owner's Economic Return, minimize the aggregate Net Present Value of Rents to the Lessee); provided, that in no event may the EBO Price be an amount less than the estimate set forth in the Appraisal of the Fair Market Value of the Aircraft at the time of exercise of the purchase option under Section 4.02(a)(F) hereof and provided further that, in calculating the Owner's Economic Return, aggregate after-tax cash through the date on which the Lessee may exercise the purchase option set forth in Section 4.02(a)(F) hereof may be reduced by not more than 5%. The Owner Participant shall promptly notify the Lessee and the Lessor and the Lessee shall promptly notify the Owner Participant and the Lessor of the need for any such adjustment. As promptly as feasible after any such notification, the Lessor shall furnish the Lessee with a notice setting forth the amount of any such adjustments together with the calculations upon which the adjustments are based; provided, however, that the Lessor and the Owner Participant shall not be required to disclose to the Lessee in such notice any confidential or proprietary information (including methodology or assumptions) relating to such calculations. At the request and, subject to the next succeeding sentence, expense of the Lessee, the accuracy of the calculation of such adjustments and the consistency of the calculation with the calculation used to determine Basic Rent, Stipulated Loss Values, Termination Values and EBO Price shall be verified first, by First Chicago Leasing Corporation or such other financial advisor chosen by the Lessee and reasonably acceptable to the Lessor (it being agreed that the Owner Participant shall not be obligated to provide to First Chicago Leasing Corporation or such other financial advisor any information reasonably deemed confidential by the Owner Participant) and second, if such adjustments are still believed to be in error and are not reconciled with the Owner Participant within fifteen (15) Business Days, by a firm of nationally recognized independent public accountants selected by the Lessee and reasonably acceptable to the Owner Participant and, in order to enable them to verify such adjustments, the Owner Participant shall make available to such accountants (for their own confidential use and not to be disclosed to the Lessee or any other Person and subject to the execution of a confidentiality agreement reasonably satisfactory to the Owner Participant) all information reasonably necessary for such verification, including the name of the lease analysis program used by the Owner Participant to calculate such adjustments. The Lessee will pay the reasonable costs and expenses of the verification process by the independent public accountants under this Section 3.04 unless as a result of such verification process by the independent public accountants Basic Rent is adjusted and such adjustment causes the Net Present Value of Rents to decline by 10 or more basis points (in which event the Owner Participant shall pay the reasonable costs and expenses of such verification process by the independent public accountants). The Lessor and the Lessee shall execute and deliver an amendment to this Lease to reflect each adjustment under this Section 3.04. All adjustments under this Section 3.04 shall be in compliance with the requirements of Revenue Procedure 75-21, 1975-1 C.B. 715 and Sections 4.02(5), 4.07(1), 4.07(2) and 4.08(1) of Revenue Procedure 75-28, 1975-1 C.B. 752 and shall be structured so as to not cause the Lease to be a "disqualified leaseback or long-term agreement" within the meaning of Section 467 of the Code. Section 3.05. Minimum Basic Rent. Notwithstanding any other provisions of the Operative Agreements to the contrary, each installment of Basic Rent due on each Rent Payment Date and not constituting an Excepted Payment shall be, under any and all circumstances, an amount at least sufficient to pay in full any installment of principal of and interest on the Certificates required to be paid pursuant to the Certificates (other than amounts becoming due on account of the exercise of remedies pursuant to Article 17 hereof) on such Rent Payment Date. Section 3.06. Payment to Indenture Trustee. All Rent payable by the Lessee to the Lessor shall be paid to the Lessor c/o State Street Bank and Trust Company, Two International Place, 4th Floor, Boston, Massachusetts 02110, Attention: Corporate Trust Department, 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 10:30 a.m., New York time on the due date of such payment; provided, however, that so long as the Lien of the Indenture shall not have been discharged the Lessor hereby directs, and the Lessee agrees, that all Rent (other than Excepted Payments, which shall be paid by the Lessee directly to the Person entitled thereto) shall be paid directly to the Indenture Trustee at its principal office at 79 South Main Street, Salt Lake City, Utah 84111, Attention: Corporate Trust Department, or as the Indenture Trustee may otherwise direct by wire transfer of immediately available funds in U.S. dollars no later than 10:30 a.m., New York 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 without interest thereon for the period of such extension (provided that payment is made on such next succeeding Business Day). Section 3.07. 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 (each a "Preliminary Notice") not more than 360 and not less than 180 days prior to the end of the Basic Term or, if applicable, any Renewal 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)(B) or (C) hereof, as applicable. Provided that (i) no Payment Default, Bankruptcy 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 timely delivered the respective Preliminary Notice, the Lessee may, by irrevocable written notice delivered to the Lessor not less than 30 days prior to the end of the Basic Term, extend the Term for a Fixed Renewal Term of one (1) or two (2) periods up to an aggregate of two and one-half years commencing on the expiration of the Basic Term. The Lessee shall pay the Fixed Renewal Rent during any Fixed Renewal Term. In addition, provided that (i) no Payment Default, Bankruptcy 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 timely delivered the respective Preliminary Notice, the Lessee may by irrevocable written notice delivered to the Lessor not less than 30 days prior to the end of the Basic Term or any Fixed Renewal Term, elect to extend the Term for a Fair Market Renewal Term of one (1), two (2) or three (3) years. The Lessee shall pay the Fair Market Rental during any Fair Market Renewal Term. (b) Terms and Conditions. Any such renewal shall be on the same terms and conditions as provided herein, except that (i) rent for the Aircraft due during any Renewal Term shall be payable semi-annually in arrears on the dates corresponding to the Rent Payment Dates during such Renewal Term, and (ii) during any Renewal Term, the Stipulated Loss Value for the Aircraft shall as of any Stipulated Loss Value Determination Date during the Renewal Term be equal to the greater of the 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 Options. (a) Election to Purchase. Provided that (i) this Lease has not otherwise expired or terminated, (ii) the Lessee shall have previously given the Preliminary Notice under Section 4.01(a) hereof in the case of paragraphs (B) and (C) below or the applicable notice for each other paragraph below, as the case may be, and (iii) if the Lessee shall have elected to assume the Certificates in accordance with Section 7.11 of the Participation Agreement, no Default or Event of Default shall have occurred and be continuing on the applicable Termination Date, the Lessee may: (A) by written notice delivered to the Lessor, the Indenture Trustee and the Owner Participant, not more than 360 days and not less than 45 days prior to the applicable Termination Date, elect to terminate the Lease and purchase the Aircraft on the Rent Payment Date falling on either July 15, 2011 or January 15, 2014, for, at the Lessee's option, either (1) an amount in immediately available funds equal to the greater of the Fair Market Value and the Termination Value on the applicable Termination Date or (2)(i) the assumption by the Lessee, upon compliance with the provisions of Section 7.11 of the Participation Agreement and Section 2.12 of the Indenture, of all of the obligations of the Lessor under the Indenture, the Certificates and Section 7.04 of the Participation Agreement and under the other Operative Agreements and (ii) the payment to the Lessor of an amount in immediately available funds equal to the excess of (A) the greater of (I) the Termination Value for the Aircraft, computed as of the applicable Termination Date and (II) the Fair Market Value of the Aircraft on the Termination Date, over (B) the unpaid principal of the Certificates plus accrued interest as of such Termination Date. Such notice shall either direct the Lessor to prepay the Certificates in full on such Termination Date pursuant to Section 6.02 of the Indenture or state that the Lessee shall exercise its option to assume the Certificates pursuant to Section 7.11 of the Participation Agreement and Section 2.12 of the Indenture; or (B) by irrevocable written notice delivered to the Lessor and the Owner Participant not less than 30 days prior to the end of the Basic Term, elect to purchase the Aircraft on the last day of the Basic Term for an amount equal to the Fair Market Value thereof on such day; or (C) by irrevocable written notice delivered to the Lessor and the Owner Participant not less than 30 days prior to the end of any Renewal Term, elect to 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 (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 shall be an option to purchase for an amount not less than the greater of the amount specified in Schedule V hereto and the Fair Market Value of the Aircraft at the time of exercise of the purchase option under this Section 4.02(a)(D); or (E) exercise the purchase option in this Section 4.02(a)(E) which is more particularly described in Schedule V hereto by reference to this Section 4.02(a)(E) and which shall be an option to purchase for an amount not less than the greater of the amount specified in Schedule V hereto and the Fair Market Value of the Aircraft at the time of exercise of the purchase option under this Section 4.02(a)(E); or (F) elect to purchase the Aircraft on January 15, 2016 (the "EBO Date") for an amount specified therefor in Ancillary Agreement I (the "EBO Price") and which amount shall not be less than the greater of (i) the Termination Value as of such Rent Payment Date and (ii) the estimate set forth in the Appraisal and Ancillary Agreement I of the Fair Market Value of the Aircraft at the time of exercise of the purchase option under this Section 4.02(a)(F). The Lessee shall give the Lessor, the Owner Participant and the Indenture Trustee not more than 120 days' and not less than 45 days' prior written notice of its election to purchase pursuant to Section 4.02(a)(D), 4.02(a)(E) or 4.02(a)(F) hereof. Such notice shall either direct the Lessor to prepay the Certificates in full on the applicable Termination Date pursuant to Section 6.02 of the Indenture or state that the Lessee shall exercise its option to assume the Certificates upon compliance with the provisions of Section 7.11 of the Participation Agreement and Section 2.12 of the Indenture. In the event that the Lessee shall have given notice to purchase the Aircraft under Section 4.02(a)(A), 4.02(a)(D), 4.02(a)(E) or 4.02(a)(F) hereof and shall fail to make payment (and, if applicable, assume the Certificates) on the applicable Termination Date, the Lease shall continue and the Lessee shall pay to the Owner Trustee any losses, costs and expenses of the Owner Participant incurred in connection with such failure. (b) Terms and Conditions. If the Lessee elects to purchase the Aircraft pursuant to Section 4.02(a) hereof, the Lessee shall pay to the Lessor on the applicable Termination Date by wire transfer of immediately available funds any Basic Rent payable on such Termination Date (if payable in arrears but not if in advance), the applicable purchase price together with any amounts past due hereunder and all other Supplemental Rent then due under this Lease including, without limitation, the aggregate amount of any Make-Whole Premium applicable to any Certificate (if such purchase occurs prior to the Premium Termination Date for such Certificate) and amounts due under the Participation Agreement and the Tax Indemnity Agreement, whereupon (and upon discharge of the Lien of the Indenture in accordance with Section 14.01 thereof), the Lessor will transfer to the Lessee, without recourse or warranty (except as to the absence of Lessor's Liens (it being understood that, in connection with such transfer, the Owner Participant shall be responsible for removal of Lessor's Liens attributable to it, SSB shall be responsible for removal of Lessor's Liens attributable to it and the Owner Trustee shall be responsible for removal of Lessor's Liens attributable to the Owner Trustee, all in accordance with Section 7.03(b) or 7.04(b) as the case may be, of the Participation Agreement)), all of the Lessor's right, title and interest in and to the Aircraft on an "as-is, where is" basis. In connection with such transfer, the Lessee shall prepare and the Lessor shall execute or arrange for the execution of a bill of sale evidencing such transfer and such other documents as the Lessee may reasonably require. In connection with any termination or proposed termination of this 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 Schedule I hereto. The Lessor and the Lessee shall proceed to determine Fair Market Value or Fair Rental Value no later than 90 days prior to the date upon which the Lessee is required to give notice of its election under Section 4.02 hereof. If the Lessee and the Lessor cannot agree within twenty (20) days, such amount shall be determined by independent appraisal conducted by appraisers selected pursuant to Section 4.03(b) hereof. (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 Lessor and the Lessee. Otherwise, the average of all three determinations shall be final and binding upon the Lessor 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, so long as no Event of Default shall have occurred and be continuing, 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 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, in which case the Lessee shall pay all such fees, costs and expenses. 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 EACH 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, THE OWNER PARTICIPANT OR ANY HOLDER. THE LESSOR LEASES THE AIRFRAME AND EACH ENGINE, AS-IS, WHERE-IS, AND, EXCEPT AS PROVIDED IN THE LAST SENTENCE OF THIS SECTION 5.01, NEITHER THE LESSOR, THE INDENTURE TRUSTEE, THE OWNER PARTICIPANT NOR ANY HOLDER 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, AIRWORTHINESS, WORKMANSHIP, CONDITION, VALUE, FITNESS FOR ANY PARTICULAR USE OR PURPOSE, DESIGN, OPERATION OR MERCHANTABILITY OF THE AIRFRAME, EACH ENGINE OR ANY PART THEREOF, (B) THE ABSENCE OF LATENT OR OTHER DEFECTS, WHETHER OR NOT DISCOVERABLE, (C) THE ABSENCE OF ANY INFRINGEMENT OF ANY PATENT, TRADEMARK OR COPYRIGHT, (D) THE ABSENCE OF OBLIGATIONS BASED ON STRICT LIABILITY IN TORT, (E) THE LESSOR'S TITLE THERETO, (F) THE LESSEE'S OR ANY SUBLESSEE'S RIGHT TO THE QUIET ENJOYMENT THEREOF (EXCEPT AS PROVIDED IN ARTICLE 18 HEREOF) OR (G) ANY OTHER MATTER WHATSOEVER. IT IS AGREED THAT ALL RISKS INCIDENT TO THE MATTERS DISCUSSED IN THE PRECEDING SENTENCE, AS AMONG THE LESSOR, THE INDENTURE TRUSTEE, THE OWNER PARTICIPANT AND THE LESSEE, ARE TO BE BORNE BY THE LESSEE. The provisions of this Section 5.01 have been negotiated by the Lessor and the Lessee and, except as provided in Article 7 of the Participation Agreement, are intended to be a complete exclusion and negation of any representations or warranties of the Lessor, the Indenture Trustee and the Owner Participant, express or implied, with respect to the Airframe and each Engine that may arise pursuant to any law now or hereafter in effect, or otherwise. Section 5.02. 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, the Manufacturer or the Engine Manufacturer or any of their respective subcontractors or suppliers, with respect to the Airframe, the Engines or any Parts incorporated or installed in or attached to the Airframe or Engines, which, in the case of the Manufacturer or the Engine Manufacturer, have been assigned to the Lessor by the Lessee, or to release the Lessee, the Manufacturer or the Engine Manufacturer or any of their respective subcontractors or suppliers from any such representation, warranty or obligation. So long as an Event of Default shall not have occurred and be continuing under this Lease and to the extent permitted under the applicable warranty, patent indemnity, or service-life policy, (i) the Lessor shall assign or otherwise make available to the Lessee such rights as the Lessor may have under any warranty, patent indemnity, or service-life policy made or given by the Manufacturer or the Engine Manufacturer or any of their respective subcontractors or suppliers, and any other claims against the Manufacturer and the 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 Manufacturer and the Engine Manufacturer are obligated to provide and do provide pursuant to the Modification Agreement or the GTA with respect to the Aircraft; and (ii) all payments pursuant to any manufacturer's or subcontractor's warranty, patent indemnity, or service-life policy obligation shall be paid to the Lessee 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. Section 5.03. Certain Agreements of the Lessee. The Lessee agrees with the Lessor for the benefit of the Owner Participant 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, 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 Section 7.03(b), 7.04(b) or 7.05(b) of the Participation Agreement; (d) 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 (i) any material risk of the sale, forfeiture or loss of the Lessor's Estate, the Aircraft, the Airframe or any Engine or any interest therein, (ii) any material risk of civil liabilities or (iii) any risk of the assertion of criminal charges against the Lessor, the Owner Participant, the Indenture Trustee or any Holder; (e) 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 material risk of the sale, forfeiture or loss of the Lessor's Estate, the Aircraft, the Airframe or any Engine or any interest therein; and (f) Liens arising from judgments 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 material risk of the sale, forfeiture or loss of the Lessor's Estate, the Aircraft, Airframe or any Engine or any interest therein. ARTICLE 7 AIRCRAFT REGISTRATION, MAINTENANCE AND OPERATION Section 7.01. Registration, Maintenance and Operation. The Lessee, at its own cost and expense, shall: (a) upon payment by the Lessor of the Purchase Price on the Delivery Date, cause the Aircraft to be duly registered in the name of the Lessor as owner, pursuant to the Transportation Code and, subject to the proviso to Section 6.03(b) of the Participation Agreement, to remain at all times duly registered pursuant to the Transportation Code and at all times act in accordance with the rules and regulations of the Aeronautics Authority or the applicable laws, rules and regulations of any other jurisdiction in which the Aircraft may then be registered in accordance with Section 6.03(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 Aircraft) in as good operating condition as when delivered to the Lessor on the Delivery Date, ordinary wear and tear excepted, and in any event (i) in accordance with all applicable laws and regulations and all requirements of the Aeronautics Authority or of the regulatory agency or body of any other jurisdiction in which the Aircraft may then be registered and the Lessee's maintenance program approved by the Aeronautics Authority or such agency or body, (ii) in the same manner and with the same care used by the Lessee with respect to other McDonnell Douglas MD-11F series aircraft and CF6-80C2-D1F series engines (or other engines permitted by the terms of this Lease to be used on the Aircraft) owned, operated or leased 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 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, and (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 Transportation Code or any applicable law, rule or regulation of the applicable regulatory agency or body of any other jurisdiction in which the Aircraft may then be registered; (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 Transportation Code and in the case of regularly maintained logs and major check cards, to be maintained in the English language, regardless of the requirements of the Federal Aviation Act (all of which records, logs and other materials shall, as between the Lessor and the Lessee and all parties claiming through the Lessee, be the property of the Lessor but shall become the property of the Lessee upon purchase by the Lessee of the Aircraft pursuant to the terms of this Lease or upon the occurrence of an Event of Loss and the Lessee's compliance with Section 11.03 hereof); (d) promptly furnish to the Lessor and the Owner Participant such information within the Lessee's possession as may be required to enable the Lessor and the Owner Participant to file any reports to be filed by the Lessor and the Owner Participant with any governmental authority because of the Lessor's ownership of or the Owner Participant's interest in the Aircraft; (e) not maintain, service, repair, overhaul, use or operate the Aircraft or any Engine (or permit same with respect to the Aircraft or any Engine) in violation of any airworthiness certificate or registration relating thereto, or in violation of any law or any license, treaty, rule, regulation or order of or by any government or governmental authority having jurisdiction over the Lessee or the Aircraft or any Engine or for any purpose for which the Aircraft or any Engine is not designed; provided, however, that the Lessee (or if a sublease shall then be in effect, the sublessee thereunder) may in good faith contest the validity or application of any such law, license, treaty, rule, regulation or order in any manner that does not adversely affect the Lessor, its right, title or interest in the Aircraft or any Engine or the interests of the Indenture Trustee or the Owner Participant therein, or in any Operative Agreement (excluding any interests indemnified for under the Tax Indemnity Agreement) and such contest or non-compliance will not result in any material risk of loss, forfeiture or damage to the Aircraft or in any risk of criminal liability to the Lessor, 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 the same therewith at its own cost and expense and will maintain the Aircraft or any Engine in compliance with such law, license, rule, regulation or order; and (f) not operate or locate the Airframe or any Engine, or suffer the Airframe or any Engine to be operated or located in any area excluded from coverage by any insurance policy required by the terms of Article 13 hereof, unless such operation or location is pursuant to the Civil Reserve Air Fleet Program administrated pursuant to Executive Order No. 12056, as amended (the "CRAF Program") or other use of the Aircraft by the Government and (unless in the case of insurance, the Lessee certifies that such insurance is unobtainable after diligent effort or is obtainable only on unduly financially burdensome terms and conditions, which may include unreasonably high rates), the Lessee has obtained, prior to the operation or location of the Airframe or any Engine in such area, indemnification from the Government, or other insurance, against the risks and in the amounts required by, and in compliance with, Article 13 hereof covering such area (and naming the Lessor, or so long as this Lease is assigned to the Indenture Trustee, the Indenture Trustee, as sole loss payee in respect of indemnification or insurance payable in respect of casualties to the Aircraft) or unless the Aircraft is only temporarily located in such area as a result of an isolated occurrence attributable to a hijacking, medical emergency, equipment malfunction, weather conditions, navigational error or other similar unforeseen circumstances and the Lessee is using its good faith efforts to remove the Aircraft from such area. The Lessor hereby agrees for the benefit of each lessor, conditional seller, indenture trustee or secured party of any engine leased to, or purchased by, the Lessee or any sublessee subject to a lease, conditional sale, trust indenture or other security agreement that the Lessor, its successors and assigns will not acquire or claim, as against such lessor, conditional seller, indenture trustee or secured party, any right, title or interest in any engine as the result of such engine being installed on the Airframe at any time while such engine is subject to such lease, conditional sale, trust indenture or other security agreement and owned by such lessor or conditional seller or subject to a trust indenture or security interest in favor of such indenture trustee or secured party. 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)(A) in respect of subparagraph (i) of this Section 7.02(a), no Event of Default shall have occurred and be continuing on the date the sublease is entered into and (B) in respect of subparagraphs (v), (vi), (vii) and (viii) of this Section 7.02(a), no Payment Default, Bankruptcy Default or Event of Default shall have occurred and be continuing, (ii) the Lessee shall comply with the provisions of Article 13 hereof, (iii) the Lien of the Indenture is not impaired thereby, and (iv) all applicable governmental approvals in connection therewith have been obtained, the Lessee may without the prior written consent of the Lessor: (i) after the seventh anniversary of the Commencement Date and 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, reorganization or similar laws on the date the sublease is entered into, (A) sublease the Aircraft or any Engine to a U.S. Air Carrier, (B) sublease the Aircraft to an Air Carrier which is principally based in and domiciled in one of the countries listed on Schedule III of the Participation Agreement, (C) sublease the Aircraft to an Air Carrier that is principally based in and is a domiciliary of a country which is a party to the International Convention on the Recognition of Rights in Aircraft or (D) sublease the Aircraft to any other Air Carrier not described in this Section which shall be reasonably acceptable to the Lessor as evidenced by its prior written consent; provided, that, with respect to clauses (B) and (C) above, at the time of any such sublease the United States of America maintains normal diplomatic relations with the country in which such Air Carrier is principally based and domiciled. In the case of any sublease (w) if the sublessee is a government or governmental body, such sublessee shall have effectively waived its rights to sovereign immunity, (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 further sublease or 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 any applicable Renewal Term with respect to which the Lessee has given irrevocable written notice and the Renewal Rent has been determined pursuant to Section 4.01(a) hereof, unless the Lessee shall have given irrevocable written notice of its election to purchase the Aircraft pursuant to Section 4.02 hereof. Prior to any sublease to an Air Carrier permitted under clause (C) or (D) of this Section 7.02(a)(i): (I) the Lessee will provide opinions of counsel (such counsel and the form and substance of such opinions to be reasonably satisfactory to the Lessor) (A) with respect to the legality, validity and enforceability of the Operative Agreements and the sublease in such country, (B) that 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 Aircraft in the event of a requisition of use or title by such government, (C) that the Lessor's title to the subleased equipment will be recognized, (D) that 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), (E) that 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 such Owner Participant, the Lessor or the Indenture Trustee to enforce the terms and conditions of the Operative Agreements, (F) that 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 to the Owner Participant and is provided at or before the execution of such a sublease (and is maintained throughout the term of such sublease), at the Lessee's cost and expense) and (G) that there exist no possessory rights in favor of such sublessee under the laws of such jurisdiction which would, upon bankruptcy or insolvency of the Lessee (and assuming that at such time the sublessee is not bankrupt or insolvent) prevent the return of the Aircraft in accordance with the terms of Article 12 hereof; (II) all necessary governmental approvals required for the subleased equipment, the Airframe or any Engine, as the case may be, to be imported and, to the extent reasonably obtainable, exported from the applicable country of domicile upon repossession of such subleased equipment by the Lessor (and the Lessee as sublessor), shall have been procured at the Lessee's own cost and expense by the Lessee prior to commencement of any such sublease; (III) duties and tariffs, if applicable, shall be paid for by the Lessee; (IV) the Lessee shall effect or cause to be effected at the Lessee's own cost and expense all recordings and filings that are required to continue the Lessor's right, title and interest to the Aircraft and rights under the Lease (and sublease) and to perfect and maintain the priority of the Lien of the Indenture; and (V) the Lessor shall have received assurances satisfactory to it that the insurance provisions of Article 13 hereof have been complied with; (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 or (x) any United States air carrier certificated under Section 41102(a) of the Transportation Code or any successor provision or (y) any "foreign air carrier" (as such term is defined in the Transportation Code) as to which there is in force a permit granted under Section 41302 of the Transportation Code and 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, (III) is a party to the Convention on the International Recognition of Rights in Aircraft or (IV) otherwise provides equivalent protection to owners, lessors and mortgagees of aircraft satisfactory to the Lessor; 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 (but in no case the Airframe) shall nonetheless be divested under any such agreement or arrangement, such divestiture shall be deemed to be an Event of Loss with respect to such Engine and the Lessee shall comply with Section 11.04 of this Lease in respect of such Engine; (iii) deliver or permit the delivery of possession of the Airframe or any Engine to their respective manufacturers or certified maintenance providers for testing, service, repair, maintenance or overhaul work or for alterations or modifications in or additions to the Airframe or any 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 CRAF Program or any similar or substitute programs of the Government, 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; (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 and all the other Operative Agreements shall remain in effect. Any such sublease shall include appropriate provisions for the 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 shall not further sublease any of such equipment. The Lessee shall notify the Lessor, the Owner Participant and the Indenture Trustee within ten (10) Business Days after consummation of any sublease of the Airframe with a term in excess of twelve (12) months. The Lessee shall promptly provide the Lessor, the Owner Participant and the Indenture Trustee a copy of any sublease having a term of twelve (12) months or more, and, in the case of any other sublease, promptly after a request therefor from any such Person. (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 any 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 Indenture Trustee or the Owner Participant 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. Subject to the terms and conditions of this Lease, the Lessee will retain the right to cure any default by any sublessee permitted pursuant to this Section 7.02 and to terminate such sublease upon such default. The Lessee shall pay all costs of the Owner Participant, the Indenture Trustee and the Lessor incurred in connection with any subleasing or proposed subleasing. Section 7.03. Insignia. (a) Nameplate. On or prior to the Delivery Date 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 "STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT, NATIONAL ASSOCIATION, AS OWNER TRUSTEE, OWNER AND LESSOR," and, so long as such Airframe or Engines shall be subject to the Lien of the Indenture, the additional inscription "FIRST SECURITY BANK, NATIONAL ASSOCIATION, AS INDENTURE TRUSTEE, MORTGAGEE" (such nameplate to be replaced, if necessary, with a nameplate reflecting the name of any successor Lessor or successor Indenture Trustee, in each case as permitted under the Operative Agreements). (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 the Aircraft to be lettered "Federal Express Corporation" or may letter, paint or mark it in some other appropriate manner for convenience of identification of the Lessee's interest or the interest of any permitted sublessee (including but not limited to the Lessee's or any permitted sublessee's customary colors and insignia) and to bear insignia plates or other markings identifying the supplier or manufacturer of the Airframe or the Engines or any Parts of either. ARTICLE 8 REPLACEMENT AND POOLING OF PARTS Section 8.01. Replacement of Parts. (a) Generally. The Lessee, at its own cost and expense, will replace or cause to be replaced as promptly as practicable all Parts which may from time to time be incorporated or installed in or attached to the Airframe or any Engine and which may from time to time become worn out, lost, stolen, destroyed, seized, confiscated, damaged beyond repair or permanently rendered unfit for use for any reason, except as otherwise provided in Section 9.01 or 9.02 hereof. In addition, the Lessee may, at its own cost and expense, remove or cause to be removed in the ordinary course of maintenance, service, repair, overhaul or testing, any Parts, whether or not worn out, lost, stolen, destroyed, seized, confiscated, damaged beyond repair or permanently rendered unfit for use, provided that the Lessee, except as otherwise provided in Sections 9.01 or 9.02 hereof, will, at its own cost and expense, replace such Parts as promptly as practicable. All replacement parts shall be free and clear of Liens (except for pooling arrangements to the extent permitted by Section 8.02 hereof and Liens permitted under Section 6.01 hereof, other than clauses (d) and (f) thereof) 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 hereof (other than clauses (d) and (f) thereof) and shall thereupon be and become a Part; 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 U.S. 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 hereof (other than clauses (d) and (f) thereof)); or (b) replaces such replacement part by incorporating or installing in or attaching to the Airframe or such Engine a further replacement part owned by the Lessee free and clear of all Liens (other than Liens permitted under Section 6.01 hereof (other than clauses (d) and (f) thereof)) 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 comply with all applicable laws and 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 contest the validity or application of any such requirements in any reasonable manner that does not involve any material risk of civil liabilities or any risk of criminal penalties being imposed on or against the Indenture Trustee, the Owner Participant or the Lessor, that does not involve any material risk of loss, forfeiture or sale of the Aircraft or any Engine and that does not in the Lessor's sole discretion adversely affect the Lessor (including the ability of the Lessor to remarket the Aircraft), its title or interest in the Aircraft or any Engine, the first and prior perfected Lien and security interest of the Indenture, or the interests of the Indenture Trustee or the Owner Participant in the Airframe or any Engine, or in any Operative Agreement (excluding any interests indemnified for under the Tax Indemnity Agreement). All such alterations, modifications or additions shall be made on or before the date mandated therefor, taking into account authorized 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 (without replacement) of Obsolete Parts, provided that the aggregate original cost of all Obsolete Parts so removed and not replaced shall not exceed $500,000, provided further 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, remaining useful life, or utility of the Airframe or the value, utility and remaining useful life of any Engine or impair its condition or airworthiness below its value, remaining useful life, 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 state of airworthiness required to be maintained by the terms of this Lease, or cause the Airframe or any Engine to become "limited use property" within the meaning of Revenue Procedure 76-30, 1976-2 C.B. 647, except that the value (but not the remaining useful life, utility, condition or airworthiness) of the Aircraft may be reduced by the value, if any, of any such Obsolete Parts which shall have been removed and not replaced, to the extent permitted above, and provided further that the Aircraft may not be converted to a passenger configuration. (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 9.01 or 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 (without replacing such Part) at any time during the Term if: (i) such Part is in addition to, and not in replacement of or substitution for, any Part originally incorporated or installed in or attached or added to the Airframe or such Engine on the Delivery Date or any Part in replacement of, or substitution for, any such Part; (ii) such Part is not required to be incorporated or installed in or attached or added to the Airframe or such Engine pursuant to the terms of Article 7 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, remaining useful life, condition or airworthiness required to be maintained by the terms of this Lease or (B) diminishing the value, utility or remaining useful life 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 Aircraft to the Lessor hereunder shall remain the property of the Lessor and subject to this Lease. ARTICLE 10 VOLUNTARY TERMINATION Section 10.01. Right of Termination Upon Obsolescence or Surplus. (a) Option to Terminate. So long as no Event of Default shall have occurred and be continuing, the Lessee shall have the right, at its option, on any Termination Date, on at least 90 days' prior written notice (which notice shall state the proposed Termination Date (the "Proposed Termination Date")) to the Lessor and the Owner Participant, to terminate this Lease as of a Termination Date if the Aircraft shall have become obsolete or surplus to the operations of the Lessee; provided that the Lessee shall have furnished to the Lessor, the Indenture Trustee and the Owner Participant a certificate of the Lessee's Assistant Treasurer or more senior financial officer stating the determination of the Lessee that the Aircraft is obsolete or surplus to its needs. Unless the Lessor has elected to retain the Aircraft as herein provided, the Lessee shall have the right to revoke its notice of termination not less than ten (10) days prior to the Proposed Termination Date whereupon this Lease shall continue in full force and effect provided however, the Lessee may not give more than three (3) additional termination notices pursuant to this Section 10.01. (b) Sale Procedure. During the period from the giving of notice pursuant to Section 10.01(a) hereof until the Proposed Termination Date, the Lessee, as non-exclusive agent for the Lessor, at the Lessee's expense, shall use its reasonable efforts to obtain bids for the cash purchase on the Proposed Termination Date (or such earlier date of sale as shall be consented to in writing by the Lessor) of the Aircraft. On the Proposed Termination Date (or such earlier date of sale), 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 three). 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 with respect to the Aircraft, 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. The Lessee will provide the Lessor with copies of bids received by the Lessee promptly upon the Lessee's receipt thereof. No bid may be submitted by the Lessee or any Person 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, the aggregate amount of any Make-Whole Premium and all other expenses incurred by the Lessor, the Owner Participant and the Indenture Trustee in connection with the sale. 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 three 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) in the same manner and condition 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 to the Lessor 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 and upon discharge of the Lien of the Indenture in accordance with Article 7 thereof, sell the Airframe and Engines or engines to such bidder without recourse or warranty (except as to the absence of Lessor's Liens (it being understood that, in connection with such transfer, the Owner Participant shall be responsible for removal of Lessor's Liens attributable to it, SSB shall be responsible for removal of Lessor's Liens attributable to it and the Owner Trustee shall be responsible for removal of Lessor's Liens attributable to the Owner Trustee, all in accordance with Section 7.03(b) or 7.04(b) as the case may be, of the Participation Agreement)). (c) Payments to the Lessor. The total selling price realized at a sale 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: (1) the excess, if any, of the Termination Value for the Aircraft computed as of the Proposed Termination Date (whether or not the date of sale is on or prior to such Termination Date) over the Net Sales Price; plus (2) the installment of Basic Rent due with respect to the Aircraft on the Proposed Termination Date if payable in arrears but not if payable in advance (whether or not the date of sale is on or prior to such Proposed Termination Date); plus (3) all other amounts then due and payable by the Lessee (including, without limitation, the aggregate amount of any Make-Whole Premium, if the Proposed Termination Date occurs prior to the applicable Premium Termination Date) under this Lease or any other Operative Agreement. (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, the Lessor will transfer to the Lessee, without recourse or warranty (except as to the absence of Lessor's Liens (it being understood that, in connection with such transfer, the Owner Participant shall be responsible for removal of Lessor's Liens attributable to it, SSB shall be responsible for removal of Lessor's Liens attributable to it and the Owner Trustee shall be responsible for removal of Lessor's Liens attributable to the Owner Trustee, all in accordance with Section 7.03(b) or 7.04(b) as the case may be, of the Participation Agreement)), 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 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 (it being understood that, in connection with such transfer, the Owner Participant shall be responsible for removal of Lessor's Liens attributable to it, SSB shall be responsible for removal of Lessor's Liens attributable to it and the Owner Trustee shall be responsible for removal of Lessor's Liens attributable to the Owner Trustee, all in accordance with Section 7.03(b) or 7.04(b) as the case may be, of the Participation Agreement)), all of the Lessor's right, title and interest in and to the Aircraft, against receipt by the Lessor of the payments provided for. (f) Termination of the Lessee's Obligations. Upon the sale of the Aircraft pursuant to this Section 10.01 and upon compliance by the Lessee with the further provisions of this Article 10, the obligation of the Lessee to pay Basic Rent with respect to the Aircraft shall cease for any Rent Payment Date occurring after the Proposed Termination Date and the Term shall end effective as of the Proposed Termination Date. If no sale shall have occurred on or before the Proposed Termination Date specified in the notice delivered by the Lessee pursuant to Section 10.01(a) hereof, 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 revoked its notice of termination, and the Lessee shall pay the expenses incurred by the Lessor, the Indenture Trustee and the Owner Participant in connection with the proposed sale. Section 10.02. Retention of Aircraft by the Lessor. (a) Generally. Notwithstanding Section 10.01 hereof, 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) hereof, by giving the Lessee and the Indenture Trustee written irrevocable notice of such election not less than forty-five (45) days prior to the Proposed Termination Date. If the Lessor so elects, the Lessee shall pay to the Lessor on the Proposed Termination Date, by wire transfer of immediately available funds the sum of: (1) the installment of Basic Rent due with respect to the Aircraft on the Proposed Termination Date if payable in arrears but not if payable in advance; plus (2) all other amounts then due and payable by the Lessee under this Lease and any other Operative Agreement including, the aggregate amount of any Make- Whole Premium (if the Proposed Termination Date occurs prior to the applicable Premium Termination Date), on or prior to the Proposed Termination Date. (b) Payment of the Certificates. It shall be an absolute condition precedent to the Lessor's right to retain the Aircraft and to the termination of the Term pursuant to this Section 10.02 that the Lessor (or the Lessee to the extent set forth in Section 10.02(a) hereof) shall have paid to the Holders and such Holders shall have received the entire outstanding principal amount of, the aggregate amount of any Make-Whole Premium and accrued interest on the Certificates on the Proposed Termination Date and all other sums due and owing to the Indenture Trustee and the Holders on or prior to the Proposed Termination Date under this Lease, the Indenture or any other Operative Agreement. (c) Delivery of Aircraft to Lessor; Title to Engines. If the Lessor elects to retain the Aircraft pursuant to this Section 10.02, the Lessee shall deliver the Airframe and the Engines (provided that the Airframe may be delivered with engines meeting the requirements set forth herein for Replacement Engines in lieu of the Engines so long as the aggregate number of Engines and engines being delivered with the Airframe equals three 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 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 (it being understood that, in connection with such transfer, the Owner Participant shall be responsible for removal of Lessor's Liens attributable to it, SSB shall be responsible for removal of Lessor's Liens attributable to it and the Owner Trustee shall be responsible for removal of Lessor's Liens attributable to the Owner Trustee, all in accordance with Section 7.03(b) or 7.04(b) as the case may be, of the Participation Agreement)), all of the Lessor's right, title and interest in and to any Engines which were replaced by engines pursuant to this Section 10.02(c), and shall deliver to the Lessee such instrument as the Lessor shall have received from the Indenture Trustee releasing such Engines from the Lien of the Indenture. (d) Termination of the Lessee's Obligations. Upon compliance by the Lessor and the Lessee with the provisions of this Section 10.02 and upon compliance by the Lessee with the further provisions of this Article 10, the obligation of the Lessee to pay Basic Rent with respect to the Aircraft shall cease for any Rent Payment Date occurring after the Proposed 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 thirty (30) days' prior written notice to the Lessor, to terminate this Lease with respect to any Engine not then installed or held for use on the Airframe, provided that prior to the date of such termination, the Lessee shall comply with the terms of Section 11.04 hereof to the same extent as if an Event of Loss had occurred with respect to such Engine. ARTICLE 11 LOSS, DESTRUCTION, REQUISITION Section 11.01. Lessee's Election Rights. The Lessee shall notify the Lessor, the Indenture Trustee and the Owner Participant as soon as practicable but in no event more than 10 Business Days following the occurrence of an event which constitutes or might constitute an Event of Loss with respect to the Airframe or with respect to the Airframe and the Engines or engines then installed on the Airframe. By written notice to the Lessor, the Indenture Trustee and the Owner Participant given within 60 days of the occurrence of any Event of Loss, the Lessee shall elect the alternative set forth in Section 11.02 hereof or the alternative set forth in Section 11.03 hereof. The Lessee's failure to make such election within said 60-day period shall be deemed to be an election of the alternative set forth in Section 11.02 hereof. Section 11.02. Payment of Stipulated Loss Value. (a) The Lessee shall, if it has so elected or is deemed to have so elected under Section 11.01 hereof, pay to the Lessor, by wire transfer of immediately available funds on the earlier of (i) the fifteenth 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 120th 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 for the Aircraft, determined as of the Stipulated Loss Value Determination Date next preceding the Loss Payment Date (or, if the Loss Payment Date occurs on a Stipulated Loss Value Determination Date, determined as of such Stipulated Loss Value Determination Date) together with interest on such amount at the Debt Rate from such Stipulated Loss Value Determination Date to the Loss Payment Date, plus (B) any and all Basic Rent due and payable on or prior to the relevant Stipulated Loss Value Determination Date and unpaid, plus (C) any and all Supplemental Rent due and payable on or prior to such Loss Payment Date and all Supplemental Rent accrued through such date, plus (D) all other amounts owing by the Lessee or the Owner Trustee to the Indenture Trustee or the Holders under the Indenture and the other Operative Agreements, plus (E) 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, minus (F) if the relevant Stipulated Loss Value Determination Date is a Rent Payment Date, the portion, if any, of the Basic Rent installment due and paid by the Lessee on such Stipulated Loss Value Determination Date pursuant to Section 3.02 hereof to the extent such Basic Rent installment (or portion thereof) is designated on Schedule II hereto as being payable in advance, together with an imputed interest amount in respect of such advance payment of Basic Rent (or portion thereof) at the Debt Rate from the date of payment of such Basic Rent installment (or portion thereof) by the Lessee to the Loss Payment Date; provided that in no event shall there be subtracted pursuant to clause (F) an amount such that the Holders shall not be paid in full. (b) Termination of Lease; Title Transfer. The obligation of the Lessee to pay Basic Rent on any Rent Payment Date occurring subsequent to the Loss Payment Date shall, upon payment of the amounts specified in Section 11.02(a) hereof, terminate and the Term shall end on such Loss Payment Date. Further, upon such payment, the Lessor will transfer to the Lessee, without recourse or warranty (except as to the absence of Lessor's Liens (it being understood that, in connection with such transfer, the Owner Participant shall be responsible for removal of Lessor's Liens attributable to it, SSB shall be responsible for removal of Lessor's Liens attributable to it and the Owner Trustee shall be responsible for removal of Lessor's Liens attributable to the Owner Trustee, all in accordance with Section 7.03(b) or 7.04(b) as the case may be, of the Participation Agreement)), all of the Lessor's right, title and interest in and to the Airframe and Engines with respect to which such Event of Loss occurred, as well as all of the Lessor's right, title and interest in and to any Engines constituting part of the Aircraft but not installed on the Airframe when such Event of Loss occurred, and will deliver to the Lessee such instrument as the Lessor shall have received from the Indenture Trustee, releasing the Aircraft from the Lien of the Indenture. Section 11.03. Replacement of Airframe and Engines. (a) Generally. So long as no Payment Default, Bankruptcy Default or Event of Default shall have occurred and be continuing, and subject to Section 11.01 hereof, if the Lessee has elected to replace the Airframe and Engines suffering an Event of Loss pursuant to this Section 11.03, the Lessee shall cause to be duly conveyed to the Lessor within one hundred twenty (120) days after the occurrence of such Event of Loss, as replacement for the Airframe and Engines with respect to which such Event of Loss has occurred, good and marketable title to a McDonnell Douglas MD-11F airframe (the "Replacement Airframe") and good and marketable title to a number of Replacement Engines equal to the number of Engines with respect to which an Event of Loss has occurred, provided that following compliance with all other terms of this Section 11.03 all three Engines shall be of identical make and model and, in the case of such Replacement Airframe and each such Replacement Engine, owned by the Lessee free and clear of all Liens not excepted in Section 6.01 hereof, other than Sections 6.01(b),(d) and (f) hereof, duly certified as an airworthy aircraft by the Aeronautics Authority, and having a value, remaining useful life and utility, at least equal to, and being in as good operating condition as, the Airframe and Engines with respect to which such Event of Loss occurred, assuming that the Airframe and Engines were then in the condition and state of airworthiness required to be maintained by the terms of this Lease immediately prior to the occurrence of such Event of Loss. In such case and as a condition to such substitution the Lessee, at its own cost and expense, will also promptly: (i) furnish the Indenture Trustee with originals of, and the Lessor with copies of, full warranty bills of sale, in form and substance satisfactory to the Lessor and the Indenture Trustee, with respect to such Replacement Airframe and Replacement Engines 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 or manufacturers to such assignment; (ii) cause such Replacement Airframe and Replacement Engines to be duly registered in the name of the Lessor pursuant to the Transportation Code or the applicable laws of any other jurisdiction in which the Aircraft may then be registered in accordance with Section 6.03(b) of the Participation Agreement; (iii) cause a Lease Supplement with respect to such Replacement Airframe and Replacement Engines to be duly executed by the Lessee and recorded pursuant to the Transportation Code, or the applicable laws, rules and regulations of any other jurisdiction in which the Aircraft may then be registered as permitted by Section 6.03(b) of the Participation Agreement; (iv) furnish the Lessor, the Indenture Trustee and the Owner Participant with an appraisal or other report of a nationally recognized aircraft appraiser based on an inspection of such Replacement Airframe and Replacement Engines reasonably satisfactory to the Indenture Trustee and the Owner Participant certifying that such Replacement Airframe and such Replacement Engines have a value, remaining useful life and utility, at least equal to, and are in as good operating condition as, the Airframe and Engines replaced, assuming such Airframe and Engines were in the condition and repair required by the terms of this Lease immediately prior to the occurrence of such Event of Loss; (v) furnish the Lessor, the Indenture Trustee and the Owner Participant with such evidence as the Lessor or the Indenture Trustee may reasonably request of compliance with the insurance provisions of Article 13 hereof with respect to such Replacement Airframe and Replacement Engines; (vi) 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 the Owner Participant and the Lessor will suffer no adverse tax consequence not otherwise indemnified for as of the Delivery Date as a result of such substitution or (B) an indemnity reasonably acceptable to the Owner Participant and the Lessor against such consequences; (vii) comply with the provisions of Section 9.08 of the Indenture; (viii) cause an Indenture and Security Agreement Supplement with respect to such Replacement Airframe and Replacement Engines to be duly executed by the Lessor and the Indenture Trustee and recorded pursuant to the Transportation Code, or the applicable laws, rules and regulations of any other jurisdiction in which the Aircraft may then be registered as permitted by Section 6.03(b) of the Participation Agreement in order that the Lien of the Indenture shall constitute a first priority, duly perfected Lien and security interest on and in respect of such Replacement Airframe and Replacement Engines; (ix) take such other action, including the filing of UCC financing statements naming the Indenture Trustee as a secured party with the Secretary of State of Connecticut and the filing of a notice with the Secretary of State of Tennessee, as the Lessor or the Indenture Trustee may reasonably request in order that such Replacement Airframe and Replacement Engines shall 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 Airframe and Engines; (x) furnish 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 and the Owner Participant to the effect that (A) the Lessor has good title to such Replacement Airframe and Replacement Engines free and clear of all Liens (except for Liens permitted under Section 6.01 hereof, other than Sections 6.01(b),(d) and (f) thereof) and (B) such Replacement Airframe and Replacement Engines have been validly subjected to the Lien of the Indenture (with the effect and result that the Indenture constitutes a first priority duly perfected security interest and Lien on such Replacement Airframe and Replacement Engines); and (xi) cause to be delivered to the Lessor, the Owner Participant and the Indenture Trustee an opinion of counsel to the Lessee addressed to the Lessor, the Owner Participant and the Indenture Trustee as to the due registration of the Aircraft and the due recordation of the requisite documents or instruments and the validity and perfection of the Lien in such Replacement Airframe and Replacement Engines. (b) Title to Replaced Equipment. Upon compliance by the Lessee with the terms of Section 11.03(a) hereof, the Lessor will transfer to the Lessee (subject to any insurer's salvage rights), without recourse or warranty (except as to the absence of Lessor's Liens (it being understood that, in connection with such transfer, the Owner Participant shall be responsible for removal of Lessor's Liens attributable to it, SSB shall be responsible for removal of Lessor's Liens attributable to it and the Owner Trustee shall be responsible for removal of Lessor's Liens attributable to the Owner Trustee, all in accordance with Section 7.03(b) or 7.04(b) as the case may be, of the Participation Agreement)), all of the Lessor's right, title and interest, if any, in and to the Airframe and Engines with respect to which such Event of Loss occurred. In connection with such transfer, the Lessee will prepare, and the Lessor will execute or forward to the Indenture Trustee for execution, as the case may be, a bill of sale evidencing such transfer and 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. Any Engine constituting part of the Aircraft, but not installed on the Airframe when such Event of Loss occurred, shall continue to be property of the Lessor and leased under this Lease as part of the same equipment as the Replacement Airframe and Replacement Engines. (c) Definitions. Each Replacement Airframe and Replacement Engine shall be deemed part of the property leased under this Lease, each such Replacement Airframe shall be deemed an "Airframe," each such Replacement Engine shall be deemed an "Engine" and each such Replacement Airframe and Replacement Engine shall be deemed part of the same Aircraft as was the Airframe or Engine replaced. (d) Rent Adjustments. An Event of Loss covered by this Section 11.03 shall not result in any change in Basic Rent, Stipulated Loss Values or Termination Values but may result in payments pursuant to the Tax Indemnity Agreement and the Participation Agreement. (e) Time Limitations. If the Lessee has elected to proceed under this Section 11.03 but has not fully performed its obligations under this Section 11.03 within 120 days of the occurrence of the applicable Event of Loss, in the event that any amounts held by the Lessor (or, so long as the Indenture shall be in effect, the Indenture Trustee) in respect of such Event of Loss are less than the Stipulated Loss Value otherwise payable in respect thereof, the Lessee will deposit with the Lessor or the Indenture Trustee, as the case may be, the amount of any deficiency as security on such 120th day. If the Lessee has elected to proceed under this Section 11.03 but has not fully performed its obligations under this Section 11.03 within 180 days of the occurrence of such Event of Loss, the Lessee shall be deemed to have elected to proceed under Section 11.02 hereof and shall immediately perform its obligations thereunder, and the Lessor (or the Indenture Trustee, as the case may be), shall apply the amounts held by it pursuant to the preceding sentence as a credit against such obligations. 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 Engine for the Engine with respect to which such Event of Loss occurred, good and marketable title to a Replacement Engine, free and clear of all Liens not excepted in Section 6.01 hereof, other than Sections 6.01(b),(d) and (f) hereof, and having a value, remaining useful life 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, remaining useful life 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, all three Engines shall be of identical make and model and any Replacement Engines of a different manufacturer than the original Engines shall then be commonly in use in the commercial aviation industry on McDonnell Douglas MD-11 airframes. 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 Indenture Trustee with an original of, and the Lessor with a copy of, a full warranty bill of sale, in form and substance satisfactory to the Lessor, 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 Transportation Code, or the applicable laws, rules and regulations of any other jurisdiction in which the Aircraft may then be registered as permitted by Section 6.03(b) of the Participation Agreement and, if the Engine being replaced was registered under the applicable laws of 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 a nationally recognized aircraft appraiser reasonably satisfactory to the Lessor certifying that such Replacement Engine has a value, utility and remaining useful life 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) comply with the provisions of Section 9.08 of the Indenture; (vi) cause an Indenture and Security Agreement Supplement with respect to such Replacement Engine to be duly executed by the Lessor and the Indenture Trustee and recorded pursuant to the Transportation Code, or the applicable laws, rules and regulations of any other jurisdiction in which the Aircraft may be registered as permitted by Section 6.03(b) of the Participation Agreement in order that the Indenture shall constitute a first priority duly perfected Lien and security interest on and in respect of such Replacement Engine; (vii) take such other action, including the filing of UCC financing statements naming the Indenture Trustee as Secured Party with the Secretary of State of Connecticut and a notice filing with the Secretary of State of Tennessee, 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; (viii) 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 and the Owner Participant to the effect that (A) the Lessor has good title to such Replacement Engine free and clear of all Liens (except for Liens permitted under Section 6.01 hereof, other than Sections 6.01(b), (d) and (f) hereof), 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 priority duly perfected security interest and Lien on such Replacement Engine); and (ix) 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 (it being understood that, in connection with such transfer, the Owner Participant shall be responsible for removal of Lessor's Liens attributable to it, SSB shall be responsible for removal of Lessor's Liens attributable to it and the Owner Trustee shall be responsible for removal of Lessor's Liens attributable to the Owner Trustee, all in accordance with Section 7.03(b) or 7.04(b) as the case may be, of the Participation Agreement)), 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 will prepare, and the Lessor will execute or forward to the Indenture Trustee for execution, as the case may be, a bill of sale evidencing such transfer and 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. 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, 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 Person, foreign or domestic, with respect to an Event of Loss resulting from the condemnation, confiscation, theft or seizure of, or requisition of title to or use of, the Airframe or any Engine will be applied, as appropriate, in accordance with Section 11.05(b) or Section 11.05(c) hereof. (b) Payments of Stipulated Loss Value. If the payments described in Section 11.05(a) hereof are received with respect to the Airframe or with respect to the Airframe and Engines or engines then installed on the Airframe and the Lessee has elected the alternative set forth in Section 11.02 hereof, so much of such payments as shall not exceed the amount required to be paid by the Lessee pursuant to Section 11.02 hereof shall be paid to the Lessor (or, if the Lien of the Indenture has not been discharged, the Indenture Trustee) 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, subject to Section 11.08 hereof, 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. The excess, if any, remaining after such application shall be divided between the Lessor and the Lessee as their respective interests may appear. (c) Payment if the Lessee Elects Replacement. If the payments described in Section 11.05(a) hereof are received with respect to the Airframe or with respect to the Airframe and the Engines or engines then installed on the Airframe and the Lessee has elected the alternative set forth in Section 11.03 hereof, or if such payments are received with respect to an Engine not then installed on the Airframe under the circumstances contemplated by Section 11.04 hereof, all such payments shall, 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 11.03 or Section 11.04 hereof, as the case may be, with respect to the Event of Loss for which such payments are made. Section 11.06. Requisition of an Airframe and the Installed Engines for Use by Government. In the event of the requisition for use by the Government or any other government of registry of the Aircraft, or any agency or instrumentality 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 with respect to such Airframe and Engines or engines shall continue to the same extent as if such requisition had not occurred except to the extent that any failure or delay in the performance or observance of such obligations (other than obligations for the payment of Rent) by the Lessee shall have been caused by such requisition. All payments received by the Lessor, the Lessee or any permitted sublessee or transferee from the 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). 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 or retainable by 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, a 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 to the extent not theretofore applied as provided herein, shall be paid to the Lessee. ARTICLE 12 RETURN OF AIRCRAFT Section 12.01. Return of Aircraft. Unless the Aircraft is purchased by the Lessee as provided in Section 4.02 hereof, at the end of the Term, or upon the termination of this Lease pursuant to Article 10 or Article 17 hereof or otherwise (including termination as a result of a rejection hereof pursuant to any provision of the Bankruptcy Code applicable to the Lessee), the Lessee, at its own cost and expense, will return the Aircraft by delivering it to the Lessor on the last day of the Term or upon such earlier termination of the Term, as the case may be, at a location on the Lessee's route system, as in effect on the date of return, in the forty-eight (48) contiguous states of the United States, as designated by the Lessor and reasonably acceptable to the Lessee or, if such location designated by the Lessor is not reasonably acceptable to the Lessee, at Memphis, Tennessee, and the Airframe shall be fully equipped with three Engines of the same or an improved make and model as were delivered on the Delivery Date (or Replacement Engines), free and clear of all Liens (other than Lessor's Liens (it being understood that, in connection with such transfer, the Owner Participant shall be responsible for removal of Lessor's Liens attributable to it, SSB shall be responsible for removal of Lessor's Liens attributable to it and the Owner Trustee shall be responsible for removal of Lessor's Liens attributable to the Owner Trustee, all in accordance with Section 7.03(b) or 7.04(b) as the case may be, of the Participation Agreement)), including any rights of third parties under pooling, interchange, overhaul, repair or similar agreements or arrangements, it being understood that all 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, remaining useful life and utility as the Engines being replaced, assuming such Engines were in the condition required hereunder. The Lessor will give the Lessee at least thirty (30) days' (or five (5) Business Days' in the case of a return pursuant to Article 17 hereof) prior written notice of the place of such return; provided, however, that if the Lessor shall have made the request for storage pursuant to Section 12.06 hereof, the Lessee shall return the Aircraft to the Lessor at the site of the storage. Section 12.02. Return of Engines. If any engine not owned by the Lessor shall be delivered with the Airframe as set forth in Section 12.01 hereof, the Lessee, concurrently with such delivery, will, at its own cost and expense furnish the Lessor with (i) a full warranty bill of sale, in form and substance reasonably satisfactory to the Lessor, with respect to such engine, (ii) an opinion of the Lessee's counsel to the effect that, upon such return, the Lessor will acquire full right, title and interest to such engine free and clear of all Liens (other than Lessor's Liens (it being understood that, in connection with such transfer, the Owner Participant shall be responsible for removal of Lessor's Liens attributable to it, SSB shall be responsible for removal of Lessor's Liens attributable to it and the Owner Trustee shall be responsible for removal of Lessor's Liens attributable to the Owner Trustee, all in accordance with Section 7.03(b) or 7.04(b) as the case may be, of the Participation Agreement)) 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 (it being understood that, in connection with such transfer, the Owner Participant shall be responsible for removal of Lessor's Liens attributable to it, SSB shall be responsible for removal of Lessor's Liens attributable to it and the Owner Trustee shall be responsible for removal of Lessor's Liens attributable to the Owner Trustee, all in accordance with Section 7.03(b) or 7.04(b) as the case may be, of the Participation Agreement)), and the Lessor will then (i) transfer to the Lessee, without recourse or warranty (except as to the absence of Lessor's Liens (other than Lessor's Liens (it being understood that, in connection with such transfer, the Owner Participant shall be responsible for removal of Lessor's Liens attributable to it and SSB shall be responsible for removal of Lessor's Liens attributable to it and the Owner Trustee shall be responsible for removal of Lessor's Liens attributable to the Owner Trustee, all in accordance with Section 7.03(b) or 7.04(b) as the case may be, of the Participation Agreement)), 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" and (ii) deliver to the Lessee such instrument as the Lessor shall have received from the Indenture Trustee, releasing such Engine from the Lien of the Indenture. Section 12.03. Return of Manuals. Upon the return of the Aircraft, the Lessee shall deliver to the Lessor all original (or photocopied or microfilmed copies thereof) logs, manuals, certificates and technical data, and inspection, modification, maintenance and overhaul records pertaining to the Airframe, Engines or engines, which are required to be maintained or are actually maintained with respect thereto under applicable rules and regulations of the Aeronautics Authority or pursuant to the Lessee's or any permitted sublessee's Aeronautics Authority-approved maintenance program and all original (or photocopied or microfilmed copies thereof) records maintained with respect to the Aircraft under the maintenance program approved by the aeronautical authority of any other country of registry of the Aircraft. All records shall be returned in the format necessary to allow the Lessee or any sublessee to comply with Section 12.04(a)(i) hereof. Section 12.04. Condition of Aircraft. (a) Required Condition. The Aircraft when returned to the Lessor shall, at the Lessee's own cost and expense, meet the following requirements: (i) it shall be duly registered in the name of the Lessor or its designee pursuant to the Transportation Code, unless the Lessor or the Owner Participant shall have given the Lessee at least 90 days' prior written notice that the then-existing registration shall be retained; (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 three Engines or engines (as 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 Delivery Date or replacements therefor (as herein authorized) and alterations, modifications and additions thereto made in accordance with the provisions of this Lease; (iv) it shall be in the condition required by Section 7.01(b) hereof, and otherwise be in as good operating condition and in as good physical condition as when delivered to the Lessor by the Lessee, ordinary wear and tear excepted; (v) it shall have a currently effective airworthiness certificate issued by the Aeronautics Authority; (vi) it shall comply with any then applicable rules and regulations imposed by the Aeronautics Authority and, without limitation of the foregoing, terminate all airworthiness directives of the Aeronautics Authority applicable to the Aircraft and required to be terminated within 6 months after the end of the Term of the Lease and each Engine (including any Replacement Engine) shall be serviceable in accordance with the Lessee's FAA-approved maintenance program; (vii) it shall be free and clear of all Liens and rights of others (other than Lessor's Liens (it being understood that, in connection with such transfer, the Owner Participant shall be responsible for removal of Lessor's Liens attributable to it, SSB shall be responsible for removal of Lessor's Liens attributable to it and the Owner Trustee shall be responsible for removal of Lessor's Liens attributable to the Owner Trustee, all in accordance with Section 7.03(b) or 7.04(b) as the case may be, of the Participation Agreement)) 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) it shall be in a standard cargo configuration; and (ix) it shall not be subject to a use prohibition of the character described in clause (iv) of the definition of "Event of Loss". (b) Remaining Time. If, at the time of return of the Aircraft, the Airframe is not being maintained under a continuous maintenance program, then the Airframe shall have remaining until the next scheduled "C" check at least 25% of the allowable hours between "C" checks permitted under the Lessee's FAA-approved maintenance program. If, at the time of return of the Aircraft, the Airframe is subject to a continuous maintenance program, there will be no time-before-overhaul requirement. If, at the time of return of the Aircraft, the Engines are not being maintained under an on-condition maintenance program, then the average number of hours on such Engines remaining until the next scheduled engine heavy maintenance visit shall be at least 25% of the allowable hours between engine heavy maintenance visits permitted under the Lessee's FAA-approved maintenance program. If, at the time of return of the Aircraft, the Engines are subject to an on-condition maintenance program, there will be no time-before-overhaul requirement. The Lessee shall have maintained the Aircraft in a non-discriminatory manner with other McDonnell Douglas MD-11F series aircraft in the Lessee's fleet (whether owned, operated or leased), and the Aircraft shall be in compliance in every material respect with the Lessee's maintenance program as if the Term were not ending. Section 12.05. Delayed Return of Aircraft. (a) If the return of the Aircraft to the Lessor in compliance with the terms of this Lease shall be delayed beyond the scheduled end of the Term because of the occurrence of an event described in clause (iii)(2)(B) of the definition of Event of Loss, this Lease shall not terminate but shall continue in full force and effect until the earlier to occur of the return of the Aircraft hereunder or the expiration of the six-month period (or such shorter period referred to in said clause (iii)(2)(B)) after the scheduled end of the Term, provided that (i) Stipulated Loss Value and Termination Value during such extension shall be an amount determined in accordance with Section 4.01(b) hereof, (ii) the Lessee shall pay on demand, as Basic Rent for each day of such delay and for each day this Lease shall continue, an amount equal to the daily equivalent of the average Basic Rent paid during the Basic Term and any Renewal Term, or such higher compensation being paid by the Government pursuant to the CRAF 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 CRAF Program. (b) If, in the case of a delay in return pursuant to paragraph (a) above, at the expiration of the six-month period following the scheduled end of the Term the Aircraft has not been returned to the Lessor, an Event of Loss shall be deemed to have occurred on the date of expiration of such six-month period (or such shorter period referred to in paragraph (a) above) and on such date (or at such earlier date as an Event of Loss shall otherwise 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 hereof) or is returned but there has not been compliance in all material respects with the provisions of Article 12 hereof, 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 Rent per diem at a rate equal to the greater of average Basic Rent or the Fair Market Rental; 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. Section 12.06. Storage. Upon any expiration or termination of this Lease, at the written request of the Lessor given at least fifteen (15) days prior to such expiration or termination, the Lessee will arrange, or will cause to be arranged, at no charge to the Lessor, storage at a ramp storage facility for the Aircraft located in the forty-eight (48) contiguous states of the United States and selected by the Lessee and reasonably acceptable to the Lessor if not at one of the Lessee's principal maintenance bases for a period of up to thirty (30) days commencing on the date the Aircraft is returned substantially in the condition required under this Section 12 and if the Lessor so requests the Lessee in writing ten (10) days before expiration of such thirty (30) day period, the Lessee shall continue to provide or cause to be provided storage at the Lessor's cost for a further period of sixty (60) days. 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, 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 such property (including, if possible, coverage through its fleet policy). Section 12.07. Special Markings. Upon any expiration or termination of the Term, 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 matching exterior colors in accordance with industry standards. 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) of Section 9.02(b) hereof as the Lessor may request and if not so removed, title to such Parts shall, without further action, fully vest in the Lessor. ARTICLE 13 INSURANCE Section 13.01. Comprehensive Airline Liability and Property Damage Liability Insurance. (a) Comprehensive Airline Liability and Property Damage Liability Insurance. The Lessee, at its own cost and expense, will maintain or cause to be maintained with respect to the Aircraft, (i) comprehensive airline 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 allied perils liability but excluding war risk insurance (except as required under the second sentence of this Section 13.01(a)), with such retentions (subject to the limitations set forth in Section 13.06 hereof) and on such terms and conditions (including coverage for cost of claims) as the Lessee customarily maintains with respect to similar aircraft and engines which comprise the fleet of the Lessee, and (ii) 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 in no event shall the limits of liability for all such insurance be less than the amount, per occurrence, as set forth on the insurance certificate delivered on the Delivery Date unless and only so long as the Aircraft is not operated and all risk-ground insurance for the Aircraft on the ground is maintained in the same manner and covering the same risks as is from time to time applicable to other aircraft owned or operated by the Lessee on the ground and not in operation. The Lessee will be required to maintain war risk insurance if the Aircraft is operated in a war zone and if it is the custom for major international Air Carriers flying comparable routes to carry such insurance, but only to the extent that such insurance is available on commercially reasonable terms. All insurance required by this Section 13.01(a) shall be maintained with insurers of recognized responsibility. (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 Indenture Trustee in its individual capacity and as trustee/mortgagee of the Aircraft, the Owner Participant, each Liquidity Provider and each of their respective officers and directors in their respective capacities as such as additional insureds (hereinafter in this paragraph (c) sometimes referred to as "Additional Insured"); (ii) provide that, in respect of the interest of any Additional Insured in such policies, the insurance shall not be invalidated by any action or inaction of the Lessee, any sublessee, any transferee 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 or applications therefor by the Lessee, any sublessee, any transferee 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 cancelled 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 in the aviation insurance industry) 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 any Additional Insured, to the extent that the Lessee has waived its rights under this Lease or any other Operative Agreement; 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 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 the country of registry) with such retentions (subject to the limitations set forth in Section 13.06 hereof) and in such form, and upon such terms and conditions (including coverage for cost of claims), and in 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 (i) allied perils, hijacking (air piracy) and governmental confiscation and expropriation insurance (except with respect to 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 and (ii) war risk insurance only if the Aircraft is operated in a war zone and if it is the custom for major international Air Carriers flying comparable routes to carry such insurance, and then only to the extent that such insurance is available on commercially reasonable terms), provided that such insurance shall at all times while the Aircraft is subject to this Lease and the Lien of the Indenture be on an agreed-value basis for an amount not less than an amount equal to the Stipulated Loss Value for the Aircraft from time to time. (b) Policy Terms. Any policies carried and maintained in accordance with this Section 13.02 and any policies taken out in substitution or replacement for any such policies subject to the terms, conditions and limitations thereof shall: (i) name or be amended to name the Lessor in its individual capacity and as owner of the Aircraft, the Indenture Trustee in its individual capacity and as trustee/mortgagee of the Aircraft, the Owner Participant and each Liquidity Provider as additional insureds (hereinafter in this paragraph (b) sometimes referred to as "Additional Insureds"), and the Lessor (or, so long as the Indenture 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 $6,000,000, the proceeds in respect of such loss up to an amount equal to the Stipulated Loss Value for the Aircraft shall be payable to the Lessor (or, so long as the Indenture shall not have been discharged, the Indenture Trustee), it being understood and agreed that in the case of any payment to the Lessor (or the Indenture Trustee) otherwise than in respect of an Event of Loss, the Lessor (or the Indenture Trustee) shall in the aggregate 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 $6,000,000 or less or the amount of any proceeds of any loss in excess of the Stipulated Loss Value for the Aircraft shall be paid to the Lessee or its order; (iii) provide that if such insurance is cancelled 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 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 in the aviation insurance industry) 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 sublessee, any transferee, any Additional Insured or the Loss Payee (other than any action or inaction of such Additional Insured or such Loss Payee) and shall insure the Lessor (in its individual capacity and as Owner Trustee), the Owner Participant and the Indenture Trustee regardless of any breach or violation of any warranty, declaration or condition in such policies or applications therefor by the Lessee, any sublessee, any transferee or any other Additional Insured as defined under the policy of insurance required under this Section 13.02 (other than such Additional Insured); (v) provide that the insurers shall waive any rights to be subrogated to the rights of the Lessor (in its individual capacity and as Owner Trustee), the Owner Participant and the Indenture Trustee to the extent that the Lessee has waived its rights under this Lease or any other Operative Agreement; 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 (except in the case of insurance with respect to Engines and spare parts that have been removed from the Aircraft and replaced with other Engines or engines or spare parts, as the case may be) 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; (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; provided that, the parties hereto understand that in the case of insurance with respect to Engines and spare parts that have been removed from the aircraft and replaced with other engines or spare parts, as the case may be, such insurance may be maintained by other than the Lessee's primary insurer; and (ix) in the event that separate policies are maintained to cover all-risk ground and flight aircraft, hull and war risks and allied perils insurance, include a 50/50 provisional claims settlement clause as contained in the policies of insurance maintained by the Lessee with respect to all other aircraft in the Lessee's fleet, and a copy of the 50/50 provisional claims settlement clause in effect on the Delivery Date shall be attached to the insurance certificate issued on the Delivery Date. Section 13.03. Application of Insurance Proceeds. (a) Generally. All insurance proceeds (other than proceeds from policies carried by the Lessor, the Indenture Trustee or the Owner Participant) received under policies described in Section 13.02 hereof as the result of the occurrence of an Event of Loss with respect to the Airframe or an Engine will be applied as follows: (i) if such proceeds are received with respect to the Airframe or with respect to the Airframe and the Engines or engines then installed on the Airframe and the Lessee has elected or is deemed to have elected the alternative set forth in Section 11.02 hereof, so much of such proceeds as shall not exceed the amounts required to be paid by the Lessee pursuant to said Section 11.02 hereof shall be applied in reduction of the Lessee's obligation to pay such amounts if not already paid by the Lessee, or if already paid by the Lessee, shall be applied to reimburse the Lessee for its payment of such amounts; or (ii) if such proceeds are received with respect to the Airframe or the Airframe and the Engines or engines then installed on the Airframe and the Lessee has elected the alternative set forth in Section 11.03 hereof, or if such proceeds are received with respect to an Engine not then installed on the Airframe and not replaced by an Engine or engine under the circumstances contemplated by Section 11.04 hereof, all such proceeds shall be paid to the Indenture Trustee (unless the Indenture has been discharged in which case paid to the Lessor) for disbursement to the order of the Lessee, after the Lessee shall have fully performed the terms of Section 11.03 or 11.04 hereof, as applicable, with respect to the Event of Loss for which such proceeds are paid. (b) Payment if no Event of Loss. The insurance proceeds of any property damage loss not constituting an Event of Loss with respect to the Airframe or an Engine will be applied in payment (or to reimburse the Lessee) for repairs or for replacement property in accordance with Articles 7 and 8 hereof, if not already paid for by the Lessee, and any balance remaining after compliance with said Articles 7 and 8 hereof with respect to such loss shall be paid to the order of the Lessee. (c) Application of Payments During Existence of an Event of Default. Any amount referred to in this Article 13 which is payable to or retainable by the Lessee shall not be paid to or retained by the Lessee if at the time of such payment or retention a Payment Default, Bankruptcy Default or an Event of Default shall have occurred and be continuing, but shall be held by or paid over to the Indenture Trustee (unless the Indenture has been discharged in which case such amount shall be paid to the Lessor) to be held in accordance with Article 23 hereof, as security for the obligations of the Lessee under this Lease and, if an Event of Default shall have occurred and be continuing, applied against the Lessee's obligations hereunder as and when due. 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 to the extent not previously applied in accordance with the preceding sentence. (d) Information. If any Additional Insured becomes subject to any claim covered by any insurance policy maintained pursuant to this Article 13, the Lessee shall make available any information required by such Additional Insured in connection with such claim. Section 13.04. Reports. On or before the Delivery Date and thereafter annually on or before the scheduled expiration date for such policy during the Term, the Lessee will cause its aviation insurance broker to furnish to the Lessor, the Owner Participant 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 such 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 Indenture Trustee and the Owner Participant in writing if and when it becomes evident to such broker that any insurance policy carried and maintained on the Aircraft pursuant to this Article 13 will not be renewed at the scheduled expiration date for such policy. 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, the Indenture Trustee or the Owner Participant 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, the Indenture Trustee or the Owner Participant 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, the Indenture Trustee or the Owner Participant 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 manner and 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 policy 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 aggregate insured value from time to time of the Lessee's entire aircraft fleet. The foregoing shall not permit the Lessee to discriminate as between insurance coverage on the Aircraft and insurance which the 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 reasonable times, and upon at least ten (10) Business Days' prior written notice (provided that at any time during the existence of a Payment Default, Bankruptcy Default or Event of Default, no more than three (3) days' notice shall be required) to the Lessee, the Lessor, the Indenture Trustee or the Owner Participant, or their respective authorized representatives, may inspect the Aircraft and upon at least ten (10) Business Days' prior written notice (provided that at any time during the existence of a Payment Default, Bankruptcy Default or Event of Default, no more than three (3) days' notice shall be required) may inspect and copy all Aeronautics Authority-required books and records of the Lessee and any sublessee relating to the maintenance of the Aircraft and such Persons shall keep any information obtained thereby confidential and shall not disclose the same to any Person except to a Person described in Section 18.01 of the Participation Agreement and any technical consultant in connection with remarketing activities of the Lessor. Any such inspection of the Aircraft may be undertaken during any letter check or heavy maintenance visit with respect to the Aircraft and shall be a visual, walk-around inspection of the interior and exterior of the Aircraft and shall not include opening any panel, bays or the like without the express consent of the Lessee (except to the extent any such inspection takes place when any such panel, bays or the like are open). Notwithstanding the previous sentence, the Lessor, the Indenture Trustee, the Owner Participant or their respective authorized representatives shall, so long as no Payment Default, Bankruptcy Default or Event of Default shall have occurred and be continuing, each be entitled to inspect the Aircraft only one time during any consecutive twelve month period (except in the last year of the Term when such inspection may be made twice by such Person), and in any such other case as often as required to ensure such Payment Default, Bankruptcy Default or Event of Default has been remedied. The Lessee shall make any permitted sublease or transfer permitted under Section 7.02 hereof expressly subject to inspection rights consistent with this Article 14. The Lessee agrees to respond in a timely fashion to any of the Owner Trustee's, Indenture Trustee's or the Owner Participant's inquiries regarding (x) the location of the Aircraft or any Engine or (y) the scheduling of any letter check or heavy maintenance visit with respect to the Aircraft and agrees to fully cooperate to permit the Lessor to exercise its inspection rights in accordance with this Section 14.01. Section 14.02. No Obligation to Inspect. None of the Lessor, the Indenture Trustee or the Owner Participant shall have any duty to make any inspection pursuant to Section 14.01 hereof and no such party shall incur any liability or obligation by reason of making or 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 (ii) to a wholly-owned subsidiary of the Lessee which shall be a certificated U.S. Air Carrier. Any such assignment, conveyance or sublease shall in no way relieve the Lessee from any obligation under any Operative Agreement, which shall be and remain primary obligations of the Lessee. The Lessor agrees that it will not assign or convey its right, title and interest in and to this Lease or the Aircraft except as contemplated by or provided in this Lease, the Trust Agreement, the Indenture or the Participation Agreement. The terms and provisions of this Lease shall be binding upon and inure to the benefit of the Lessor and the Lessee and their respective successors and permitted assigns, and shall inure, to the extent expressly provided herein and therein, 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 permitted assigns. Section 15.02. Citizenship. The Lessee will at all times be a duly certificated U.S. Air Carrier under the Transportation Code. ARTICLE 16 EVENTS OF DEFAULT Section 16.01. Events of Default. After the Delivery Date, 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, or any payment pursuant to Section 17.02 of the Participation Agreement, as the case may be, within five (5) Business Days after the date when due (except that with respect to any failure to pay Excepted Payments, such failure shall constitute an Event of Default at the discretion of the Owner Participant); or (b) the Lessee shall fail to make any payment of Supplemental Rent (other than amounts described in clause (a) above) within thirty (30) days after the Lessee has received written notice from the Person entitled to receive such payment stating that such payment is due; or (c) 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 or such insurance lapses or is cancelled, provided that if the Aircraft is grounded, as long as the Aircraft is insured as required while on the ground and not operated, no such lapse or cancellation shall constitute an Event of Default until the earlier of thirty (30) days (or seven (7) days or such shorter time as may be standard in the industry with respect to war risk coverage) after receipt by any Additional Insured of written notice of such lapse or cancellation or the date that such lapse or cancellation is effective as to any Additional Insured; 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 the Tax Indemnity Agreement) or any other written agreement of the Lessee entered into in connection with the transactions contemplated by the Operative Agreements and such failure shall continue unremedied for a period of thirty (30) days from the date on which the Lessee shall have actual knowledge thereof (whether by reason of notice from the Lessor or the Owner Participant of such failure or otherwise), provided, that in the event such failure is curable and so long as (but for no longer than 90 days after such 30-day period) the Lessee shall be diligently attempting to cure such failure, 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 Transportation Code pursuant to the Lessee's covenants and agreement in Section 6.03(b) of the Participation Agreement and in Section 7.01(a) of this Lease, when the lapse of such registration is solely because the Owner Participant or the Lessor has ceased to be a Citizen of the United States, shall not constitute a Default or an Event of Default; 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 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) 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 the other Operative Agreements and shall remain material and unremedied for a period of thirty (30) days after the Lessee shall have actual knowledge thereof (whether by reason of receipt of written notice thereof or otherwise). 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 paragraph (e), (f) or (g) of Section 16.01 hereof and this Lease shall be deemed declared in default without any further act or notice), and at any time thereafter the Lessor may do, and the Lessee shall comply with, one or more of the following with respect to all or any part of the Airframe and the Engines, as the Lessor in its sole discretion shall elect, to the extent permitted by, and subject to compliance with, any mandatory requirements of applicable law then in effect: (i) Demand in writing that the Lessee shall, and upon such written demand the Lessee shall, at the Lessee's own cost and expense, return promptly to the Lessor all or such part of the Airframe and the Engines as the Lessor may demand in the manner and condition required by, and otherwise in accordance with all of the provisions of, Article 12 hereof, or the Lessor, at its option, may enter upon the premises where such Airframe or Engines are located or believed to be located and take immediate possession of and remove such Airframe and Engines (together with any engine which is not an Engine but is installed on the Airframe, subject to all of the rights of the owner, lessor, Lien holder or secured party of such engine) without the necessity for first instituting proceedings, or by summary proceedings or otherwise, all without liability of the Lessor to the Lessee for or by reason of such entry or taking of possession, whether for the restoration of damage to property caused by such action or otherwise; (ii) With or without taking possession thereof, sell or otherwise dispose of the Airframe or any Engine, at public or private sale and with or without advertisement or notice to the Lessee, as the Lessor may determine, and the Lessor may hold the Lessee liable for any installment of Basic Rent and Renewal Rent due on or before the date of such sale (and, if Basic Rent or Renewal Rent is payable in arrears, the pro rata portion of the installment of Basic Rent or Renewal Rent due on the next succeeding Rent Payment Date in respect of any period commencing on the immediately preceding Rent Payment Date to the date of such sale), or hold, use, operate, lease to others or keep idle all or any part of the Airframe or any Engine as the Lessor, in its sole discretion, may determine, in any such case free and clear of any rights of the Lessee except as otherwise set forth in this Article 17, and without any duty to account to the Lessee with respect to such action or inaction or for any proceeds except to the extent required by Section 17.01(a)(iv) hereof; in the event the Lessor elects to exercise its rights under said Section, and in connection with any sale of the Aircraft or any part thereof pursuant to this Article 17, the Lessor, the Indenture Trustee, the Owner Participant or any Holder 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 5 days from the date of such notice, may demand that the Lessee pay to the Lessor, and the Lessee shall pay to the Lessor on the payment date specified in such notice, as liquidated damages for loss of a bargain and not as a penalty (in lieu of the Basic Rent or Renewal Rent due on Rent Payment Dates occurring after the payment date specified in such notice), any installment of Basic Rent, Renewal Rent and any Supplemental Rent due on or before such payment date, and any other Supplemental Rent accrued through such date (and, if Basic Rent or Renewal Rent is payable in arrears, the pro rata portion of the installment of Basic Rent or Renewal Rent due on the next succeeding Rent Payment Date in respect of the period commencing on the Stipulated Loss Value Determination Date referred to below and ending on the date of such payment), plus an amount equal to the excess, if any, of the Stipulated Loss Value for the Aircraft, computed as of the Stipulated Loss Value Determination Date on or next preceding the payment date specified in such notice over, at the Lessor's option, the Fair Market Value or the Fair Market Rental (in each case, on an "as-is, where-is" basis) of the Aircraft for the remainder of the Term applicable thereto, after discounting such Fair Market Rental semi-annually to the present value as of such Rent Payment Date at the Debt Rate computed as of the Stipulated Loss Value Determination Date on or next preceding the payment date specified in such notice, together in each case, with interest, to the extent permitted by applicable law, at the Past Due Rate on the excess of such Stipulated Loss Value over such Fair Market Value or Fair Market Rental, from the date as of which such Stipulated Loss Value is payable to the date of actual payment of such amount, 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 (it being understood that, in connection with such transfer, the Owner Participant shall be responsible for removal of Lessor's Liens attributable to it, SSB shall be responsible for removal of Lessor's Liens attributable to it and the Owner Trustee shall be responsible for removal of Lessor's Liens attributable to the Owner Trustee, all in accordance with Section 7.03(b) or 7.04(b) as the case may be, of the Participation Agreement)) all of its right, title and interest in the Aircraft or such portion, to the Lessee; (iv) In the event the Lessor, pursuant to Section 17.01(a)(ii) hereof, shall have sold the Airframe and/or any Engine, the Lessor, in lieu of exercising its rights under Section 17.01(a)(iii) hereof, may, if it shall so elect, demand that the Lessee pay the Lessor, and the Lessee shall pay to the Lessor, on the date of such sale, as liquidated damages for loss of a bargain and not as a penalty (in lieu of the Basic Rent or Renewal Rent due after the date on which such sale occurs) any unpaid Basic Rent or Renewal Rent due on or before the date on which such sale occurs (and, if Basic Rent or Renewal Rent is payable in arrears, the pro rata portion of the installment of Basic Rent or Renewal Rent due on the next succeeding Rent Payment Date in respect of any period commencing on the Stipulated Loss Value Determination Date referred to below and ending on the date of such sale), and any Supplemental Rent due on or before the date (and any other Supplemental Rent accrued through such date) on which such sale occurs, plus an amount equal to the excess, if any, of (A) the Stipulated Loss Value for the Aircraft, computed as of the Stipulated Loss Value Determination Date next preceding the sale date, over (B) the net proceeds of such sale (after deduction of all of the Lessor's costs and expenses of such sale, including, without limitation, 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, the Indenture Trustee or the Owner Participant 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 hereof or in placing the Airframe or Engines in the condition and state of airworthiness required by such Article or in connection with any inspection, use, operation, maintenance, insurance, 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 any Engine in mitigation of the Lessor's damages or which may otherwise limit or modify any of the Lessor's rights or remedies under this Article 17. 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 Supplemental 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 Supplemental 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, the Lessor 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 or, to the extent of any sublease permitted under Section 7.02 of the Lease, any permitted sublessee's right quietly to enjoy the Aircraft and to possess, use and operate the Aircraft in accordance with this Lease and the other Operative Agreements, in each case without hindrance or disturbance by it or any such other Person. ARTICLE 19 FURTHER ASSURANCES Section 19.01. Further Assurances. Promptly upon the execution and delivery of the Lease Supplement and the Indenture and Security Agreement Supplement, the Lessee will cause each of them and this Lease, the Trust Agreement and the Indenture, to be duly filed for recordation in accordance with the Transportation Code 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, at the request of the Lessor, the Owner Participant or the Indenture Trustee, as the case may be, 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 the Indenture, in recordable form, subjecting to this Lease and the Indenture any Replacement Airframe and/or Replacement Engines delivered by the Lessee pursuant to Section 11.03 hereof and any Replacement Engine delivered by the Lessee pursuant to Section 11.04 hereof 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, except as expressly provided therein, 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 that the obligations of the Lessee to pay all costs and expenses of every character in connection with the use, operation, maintenance and repair 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. The Lessee's 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 notice of Supplemental Rent) shall be paid without notice or demand, and such obligation shall not be affected by any circumstance whatsoever, including, without limitation: (i) any set-off, 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 or the Owner Participant or 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 Transportation Code (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 or any doctrine of force majeure or impossibility of performance; (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; (iv) any Liens, encumbrances or rights of any other Person with respect to the Aircraft, the invalidity or unenforceability or lack of due authorization or other infirmity of this Lease or any other Operative Agreement or document or instrument executed pursuant hereto or thereto, or any lack of right, power or authority of the Lessor or the Lessee or any sublessee or any other party to any other Operative Agreement to enter into this Lease or any other Operative Agreement or any such document or instrument; or (v) 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 thereof, other than in accordance with the terms hereof. (c) Except as expressly provided herein, each payment of Rent made by the Lessee shall be final as to the 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 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 and the Trust 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 a 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. [Reserved]. Section 22.03. Consent of Lessee to Assignment of Lease as Security. The Lessee hereby accepts and consents to, pursuant to the terms of the Indenture, the Indenture Trustee's rights to receive payments (other than Excepted Payments not constituting Basic Rent) due under this Lease, the right to transfer or assign title to the Aircraft subject to this Lease, to make all waivers and agreements except as otherwise provided in the Indenture, to give all notices, consents and releases and to take all action upon the happening of a Default or Event of Default under this Lease (except as otherwise specifically provided in the Indenture), or to do any and all other things whatsoever which the Lessor is or may become entitled to do under this Lease (except as otherwise provided in the Indenture); all or any of which rights, obligations, benefits and interests may, pursuant to the terms of the Indenture, be reassigned or retransferred by the Indenture Trustee at any time and from time to time (except as otherwise provided in the Indenture); provided, however, that the Lessor, except to the extent, and for such time as, it is unable to do so by virtue of the Indenture, shall remain liable for the performance of all the terms, conditions, covenants and provisions for which it is obligated under this Lease notwithstanding such assignment. ARTICLE 23 SECURITY FUNDS Section 23.01. Investment of Security Funds. (a) Any amounts otherwise payable to the Lessee shall, to the extent so required under the terms of this Lease or any other Operative Agreement, be held by the Lessor as security for, and may be applied by the Lessor against, the obligations of the Lessee under this Lease and any other Operative Agreement during such time as there shall have occurred and be continuing a Payment Default, Bankruptcy Default or Event of Default, and, at such times as there shall not be continuing a Payment Default, Bankruptcy Default or Event of Default, such amounts, net of any amounts which have been applied by the Lessor against the Lessee's obligations hereunder and thereunder, 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 and thereunder, be invested by the Lessor, as directed from time to time, in writing (and in the absence of a written direction by the Lessee, 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 "A" or better from Moody's or S&P; or (iv) commercial paper rated A-1/P-1 by S&P or Moody's, respectively (or if neither such organization shall rate such commercial paper at any time, a rating 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 expenses, fees or commissions incurred by the Lessor in connection with such investment), unless a Payment Default, Bankruptcy 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 expenses, fees or commissions incurred by the Indenture Trustee or the Lessor in connection with such investment), such amount to be disposed of in accordance with the terms of the Indenture or the Lease, as the case may be. ARTICLE 24 CONCERNING THE LESSOR Section 24.01. Lessor's Entry Into Lease. Except as expressly provided herein, the Lessor and the Lessee agree that this Lease is executed by SSB 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 the Lessor herein are for the purpose and with the intention of binding only the Lessor's Estate, and that in no case whatsoever shall SSB 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 obligations hereunder may, in certain instances, be taken by the Lessor only upon specific authority of the Owner Participant, that nothing herein contained shall be construed as creating any liability on SSB, 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 of SSB, and that so far as SSB, 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 by the Lessor of any of its obligations 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 SSB in its individual capacity set forth in the Participation Agreement and the Trust Agreement. The term "Lessor" as used in this Lease shall include any trustee succeeding SSB as Owner Trustee under the Trust Agreement. Any obligation of the Lessor hereunder may be performed by the Owner Participant, and any such performance shall not be construed as revocation of the trust created by the Trust Agreement. Nothing contained in this Lease shall restrict the operation of the provisions of the Trust Agreement with respect to its revocation of the resignation or removal of the Owner Trustee hereunder. ARTICLE 25 NOTICES Section 25.01. Notices. All notices, demands, declarations and other communications required by this Lease shall be in writing and shall be deemed received (a) if given by telecopier, when transmitted and the appropriate telephonic confirmation received if transmitted on a Business Day and during normal business hours of the recipient, and otherwise on the next Business Day following transmission, (b) if given by certified mail, return receipt requested, postage prepaid, three Business Days after being deposited in the United States mail, and (c) if given by FedEx service or other delivery service of established reputation or other means, when received or personally delivered, addressed in accordance with the terms of Article 14 of the Participation Agreement. 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 provisions of Section 8.01 and Article XIII 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 chattel-paper counterpart, which shall be the counterpart containing the receipt executed by the Indenture Trustee on its signature page. Section 26.07. Counterparts. This Lease may be executed in any number of counterparts, each of which shall be an original (except that only the counterpart bearing the receipt executed by the Indenture Trustee shall be the original for purposes of perfecting a security interest therein as chattel paper under the Uniform Commercial Code), but all of which taken together shall constitute one and the same instrument and any of the parties hereto may execute this Lease by signing any such counterpart. ARTICLE 27 TRUE LEASE Section 27.01. Intent of the Parties. It is the intent of the parties to this Lease that for all purposes (including without limitation U.S. federal income tax purposes) this Lease will be a true lease, and that this Lease conveys to the Lessee no right, title or interest in the Aircraft except as a lessee. Section 27.02. Section 1110 Compliance. Notwithstanding any provision herein or elsewhere contained to the contrary, it is understood and agreed among the parties hereto that the transactions contemplated by this Lease 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 from time to time with respect to the right to repossess the Airframe, the Engines and any Parts as provided herein, and in any circumstances where more than one construction of the terms and conditions of the Lease is possible, a construction which would preserve such benefits shall control over any construction which would not preserve such benefits or would render them doubtful. Section 27.03. Finance Lease. This Lease is a "finance lease" within the meaning of Section 2-A-103(g) of the Uniform Commercial Code. IN WITNESS WHEREOF, the Lessor and the Lessee have each caused this Lease to be duly executed as of the date first above written. LESSOR: STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT, NATIONAL ASSOCIATION, not in its individual capacity, but solely as Owner Trustee By: _______________________________________________ Name: Paul D. Allen Title: Vice President LESSEE: FEDERAL EXPRESS CORPORATION By: _______________________________________________ Name: Robert D. Henning Title: Vice President and Treasurer Receipt of this original counterpart of the Lease is hereby acknowledged on this __ day of February, 1998. Indenture Trustee: FIRST SECURITY BANK, NATIONAL ASSOCIATION, not in its individual capacity, but solely as Indenture Trustee By: _____________________________________________ Name: Greg A. Hawley Title: Vice President SCHEDULE I DEFINITIONS (FEDERAL EXPRESS CORPORATION TRUST NO. N584FE) GENERAL PROVISIONS The following terms shall have the following meanings for all purposes of the Operative Agreements (other than the Intercreditor Agreement and the Liquidity Facilities) referred to below, unless otherwise defined in an Operative Agreement or the context thereof shall otherwise require. In the case of any conflict between the provisions of this Schedule and the provisions of any Operative Agreement, the provisions of such Operative Agreement shall control the construction of such Operative Agreement. Unless the context otherwise requires, (i) references to agreements shall be deemed to mean and include such agreements as amended and supplemented from time to time, and (ii) references to parties to agreements shall be deemed to include the successors and permitted assigns of such parties. DEFINED TERMS: Additional Insured. As defined in Article 13 of the Lease. Aeronautics Authority. As appropriate, the Federal Aviation Administration and/or the Administrator of the Federal Aviation Administration, any successor to the former United States Civil Aeronautics Board, or any Person, governmental department, bureau, commission or agency located in the United States succeeding to the functions of any of the foregoing. Affidavits. The affidavits of citizenship of the Owner Trustee and the Owner Participant. Affiliate. With respect to any Person, any other Person directly or indirectly controlling, controlled by or under common control with such Person. For the purposes of this definition, "control" (including "controlled by" and "under common control with") shall mean the power, directly or indirectly, to direct or cause the direction of the management and policies of such Person whether through the ownership of voting securities or by contract or otherwise. In no event shall the Owner Trustee or the Lessor be deemed an Affiliate of the Owner Participant. After-Tax Basis. A basis such that any payment received or deemed to have been received by a Person shall be supplemented by a further payment to such Person so that the sum of the two payments, after deduction of all Taxes resulting from the receipt or accrual of such payments, shall be equal to the payment received or deemed to have been received. In the case of amounts payable to the Lessor, the Owner Participant, or any corporate Affiliate of the Owner Participant, it shall be presumed that such Person is at all times subject to Federal income tax at the maximum marginal rate generally applicable to corporations from time to time and actual state, local and foreign income taxes. Air Carrier. Any U.S. Air Carrier and any "foreign air carrier" (as defined in the Transportation Code) as to which there is in force a permit granted under Section 41302 of the Transportation Code. Aircraft. The Airframe to be sold by the Lessee to the Owner Trustee pursuant to the Participation Agreement and to be leased under the Lease (or any permitted substitute airframe thereunder) together with three Engines (or any Replacement Engine or Engines) whether or not any of such initial or Replacement Engines may from time to time be installed on such Airframe or may be installed on any other airframe or on any other aircraft, including any aircraft substituted pursuant to Section 11.03 of the Lease. Airframe. The McDonnell Douglas MD-11F aircraft (excluding the Engines or engines from time to time installed thereon) to be leased by the Lessor to the Lessee pursuant to the Lease and the initial Lease Supplement and having the United States FAA Registration Number and manufacturer's serial number specified in the initial Lease Supplement, including (i) all Parts in respect thereof and (ii) any Replacement Airframe which may be substituted pursuant to Section 11.03 of the Lease. Amendment. The Amendment Agreement No. 1 to Trust Indenture and Security Agreement (Federal Express Corporation Trust No. N584FE) dated September 30, 1997 between the Indenture Trustee and the Owner Trustee. Ancillary Agreement I. The Ancillary Agreement I (Federal Express Corporation Trust No. N584FE), dated the Delivery Date, among the Lessee, the Owner Trustee, not in its individual capacity, but solely as Owner Trustee, the Owner Participant and the Indenture Trustee not in its individual capacity, but solely as Indenture Trustee, as originally executed or as amended, modified or supplemented with the consent of all the parties thereto. Application. The application for registration of the Aircraft with the FAA in the name of the Owner Trustee. Appraisal. The report prepared by BK Associates, Inc. and to be delivered to the Owner Participant (with a copy of such report to the Lessee) on the Delivery Date pursuant to Section 4.01(n) of the Participation Agreement. Average Life Date. For any Certificate, the date which follows the prepayment date by a period equal to the Remaining Weighted Average Life of such Certificate. Bankruptcy Code. The Federal Bankruptcy Code of 1978, as amended, and any successor thereto. Bankruptcy Default. An event specified in Section 16.01(e), (f) or (g) of the Lease which either does or, with the giving of notice or lapse of time or both, would constitute an Event of Default. Basic Rent. The aggregate periodic rent payable for the Aircraft throughout the Basic Term pursuant to Section 3.02 of the Lease, adjusted pursuant to Article 3 of the Lease. Basic Term. The period commencing at the beginning of the day on the Delivery Date and ending at the end of the day on the day immediately preceding the date 22 years from the Delivery Date, or such earlier date on which the Lease shall be terminated as provided therein. Beneficial Interest. The interest of the Owner Participant (or the Initial Owner Participant, as the case may be) under the Trust Agreement. Bills of Sale. Collectively, the FAA Bill of Sale and the Warranty Bill of Sale. Business Day. Except as provided in the next succeeding sentence, any day other than a Saturday or Sunday or day on which commercial banks are authorized or required to close in New York, New York, Albany, New York, Memphis, Tennessee and the city in the United States in which the office or agency is maintained by the Pass Through Trustee for the payment of the Pass Through Certificates, and after the Lien of the Indenture has been discharged, Hartford, Connecticut. With respect to notices and other communications to the Lessee, Business Day shall mean any day other than a Saturday, Sunday or day on which commercial banks are authorized to close in New York, New York and Memphis, Tennessee. Certificate Closing Date. May 28, 1997. Certificates. The Equipment Trust Certificates (Federal Express Corporation Trust No. N584FE), issued by the Owner Trustee pursuant to the Indenture and any certificate issued in exchange therefor or replacement thereof pursuant to the Indenture. Change in Tax Law. Any change in the Code or the Treasury regulations promulgated thereunder or the publication of any revenue ruling, revenue procedure or any informational release by the Internal Revenue Service or the Department of Treasury after execution of the Participation Agreement but on or before the Delivery Date, either of which would change or would allow a change in the tax assumptions or structure upon which the lease economics in the Commitment Letter were based (for example, but not limited to, the ability of the Lessor to incorporate a lessor-paid interim), provided that the Owner Participant or the Lessee has notified the other party of such change in writing prior to the Delivery Date. Citizen of the United States. A citizen of the United States as defined in Section 40102(a)(15) of the Transportation Code, or any analogous part of any successor or substituted legislation or regulation at the time in effect. Commitment Letter. Has the meaning specified in Section 3.02(a) of the Participation Agreement. Class A Liquidity Provider. Has the meaning specified in Section 1.01 of the Intercreditor Agreement. Class B Liquidity Provider. Has the meaning specified in Section 1.01 of the Intercreditor Agreement. Code. Except as otherwise provided, references to the Code shall mean the Internal Revenue Code of 1986, as amended from time to time. Collateral Account. The deposit account established and maintained pursuant to Section 2.13 of the Indenture. Collateral Account Control Agreement. The Collateral Account Control Agreement dated as of May 1, 1997 among State Street Bank and Trust Company, the Indenture Trustee and the Owner Trustee. Commitment. The amount of the Owner Participant's participation in the Purchase Price required to be made available or paid on the Delivery Date, as provided in Section 3.02 of the Participation Agreement and as set forth in Schedule I of the Participation Agreement. Corporate Trust Administration. The Corporate Trust Administration office of the Owner Trustee located at 225 Asylum Street, Goodwin Square, Hartford, Connecticut 06103, Attention: Corporation Trust Administration, or such other office at which the Owner Trustee's corporate trust business shall be administered which the Owner Trustee shall have specified by notice in writing to the Lessee, the Owner Participant and the Indenture Trustee. Corporate Trust Department. The Corporate Trust Department office of the Indenture Trustee located at 79 South Main Street, Salt Lake City, Utah 84111, Attention: Corporate Trust Department, or such other office at which the Indenture Trustee's corporate trust business shall be administered which the Indenture Trustee shall have specified by notice in writing to the Lessee, the Owner Participant and the Owner Trustee. CRAF Program. Has the meaning specified in Section 7.01(f) of the Lease. Cut-Off Date. April 15, 1998. Debt Portion. The amount specified as such on Schedule I to the Participation Agreement. Debt Rate. The weighted average (based on Outstanding principal amount) rate of interest on the Certificates issued pursuant to the Indenture. Default. Any event or condition which, with the lapse of time or the giving of notice, or both, would constitute an Event of Default. Delivery Date. The date on which the Aircraft is delivered and sold by the Lessee to the Lessor and leased by the Lessor to the Lessee under the Lease, which date shall also be the date of the initial Lease Supplement. Delivery Notice. Notice of the Aircraft's Delivery Date, given by the Lessee as provided in Section 3.01 of the Participation Agreement and including any notice with respect to a postponed Delivery Date given by the Lessee pursuant to Section 3.03(c) of the Participation Agreement. EBO Date. Has the meaning specified in Section 4.02(a)(F) of the Lease. EBO Price. Has the meaning specified in Section 4.02(a)(F) of the Lease. Eligible Deposit Account. Either (a) a segregated account with an Eligible Institution or (b) a segregated trust account with the corporate trust department of a depository institution with corporate trust powers organized under the laws of the United States or any state thereof, or the District of Columbia, and whose deposits are insured by the Federal Deposit Insurance Corporation, provided that such institution also has a combined capital and surplus of at least $100,000,000 and a rating of A or better from the Thomson Bank Watch. Eligible Institution. A depository institution organized under the laws of the United States or any one of the states thereof, or the District of Columbia, or any domestic branch of a foreign bank, which in any such case at all times (a) has either (x) a long-term unsecured debt rating of at least Aa2 by Moody's or (y) a short-term certificate of deposit rating of P-1 by Moody's, (b) has either (x) a long-term unsecured debt rating of a least AA by S&P or (y) a short-term certificate of deposit rating of A-1+ by S&P and (c) is a member of the Federal Deposit Insurance Corporation. Engine. Each of the three General Electric CF6-80C2-D1F engines listed by its manufacturer's serial number in the initial Lease Supplement and leased pursuant to the Lease, whether or not from time to time installed on the Airframe or installed on any other airframe or on any other aircraft, and any Replacement Engine which may from time to time be substituted for an Engine pursuant to Section 7.02(a)(vii), 10.03, 11.03, 11.04 or 12.02 of the Lease, together with all Parts related thereto. Except as otherwise provided, at such time as a Replacement Engine shall be so substituted and the Engine for which the substitution is made shall be released from the Lien of the Indenture, such replaced Engine shall cease to be an "Engine" under the Lease. The term "Engines" means, as of any date of determination, all Engines then leased to the Lessee pursuant to the Lease. Engine Consent. The Engine Consent dated as of February 1, 1998, executed by the Engine Manufacturer. Engine Manufacturer. General Electric Company, a New York corporation. Engine Warranty Assignment. The Engine Warranty Assignment (Federal Express Corporation Trust No. N584FE), dated as of February 1, 1998, between the Lessor and the Lessee. ERISA. The Employee Retirement Income Security Act of 1974, as amended. ERISA Plan. As defined in Section 15.01(e)(viii) of the Participation Agreement. Estimated Expense Amount. Has the meaning specified in Section 10.01(a) of the Participation Agreement. Event of Default. Each of the events specified in Article 16 of the Lease. Event of Loss. Any of the following events with respect to the Aircraft, the Airframe or any Engine: (i)(A) loss of such property or its use due to theft or disappearance for a period in excess of 30 days (or such longer period not to exceed 60 days from the end of such 30 day period if and so long as the location of such property is known and the Lessee is pursuing the recovery thereof) or to the end of the Term, if less, unless such event constitutes an Event of Loss under clause (i)(B), clause (i)(C) or clause (ii) below, (B) loss of such property or its use due to the destruction thereof or (C) loss of such property or its use due to damage beyond economic repair or rendition of such property permanently unfit for normal use by Lessee for any reason whatsoever for a period in excess of 30 days; (ii) any damage to such property which results in an insurance settlement with respect to such property on the basis of a total loss, or constructive or compromised total loss; (iii) (1) condemnation, confiscation or seizure of, or requisition of title to such property by the Government, any foreign government or purported government or any agency or instrumentality thereof, or (2) condemnation, confiscation, or seizure of, or requisition or taking of, use of such property (A) by a foreign government, or instrumentality or agency of any such foreign government, or any purported government or instrumentality or agency thereof for a period in excess of 180 days or the end of the Term, if less, 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 or the Airframe or any 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; or (iv) as a result of any law, rule, regulation, order or other action by the Aeronautics Authority or other governmental body having jurisdiction, (A) the use of the Aircraft or Airframe in the normal course of air transportation of cargo shall have been prohibited 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 and desirable to permit the normal use of the Aircraft or Airframe, (B) the use of the Aircraft or Airframe shall have been prohibited for a period of twelve (12) consecutive months, unless the Lessee shall have conformed at least one McDonnell Douglas MD-11F series aircraft (but not necessarily the Aircraft or the Airframe) to the requirements of any such law, rule, regulation, order or other action and shall have commenced regular commercial use of such aircraft 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 or (C) the use of the Aircraft or Airframe shall have been prohibited for a period of twenty-four (24) months. The date of such Event of Loss shall be (s) the 30th day or the 90th day, as the case may be, following loss of such property or its use due to theft or disappearance; (t) the date of any destruction of such property; (u) the 30th day following the date of damage beyond economic repair or rendition of such property permanently unfit for normal use; (v) the date of any insurance settlement on the basis of a total loss or constructive or compromised total loss; (w) the date of any condemnation, confiscation, seizure or requisition of title of such property; (x) the 181st day following condemnation, confiscation, seizure or requisition for use of such property by a foreign government referred to in clause (iii)(2)(A) above and the date of such condemnation, confiscation, seizure or requisition in the case of any other foreign government or instrumentality or agency thereof; (y) the last day of the Term in the case of requisition for use of such property by the Government or (z) the last day of the 6 month, 12 month or 24 month period, referred to in clause (iv) above. An Event of Loss with respect to the Aircraft shall be deemed to have occurred if any Event of Loss occurs with respect to the Airframe. Excepted Payments. Collectively, (i) indemnity or other payments (and interest thereon to the extent provided in the Operative Agreements) paid or payable by the Lessee in respect of the Owner Participant, the Owner Trustee in its individual capacity, their Affiliates or any of their respective successors, permitted assigns, directors, officers, employees, servants and agents, pursuant to Article 8, 9, or 10 and Section 15.01 of the Participation Agreement or any indemnity hereafter granted to the Owner Participant or the Owner Trustee in its individual capacity pursuant to Section 7.01(f), Article 9, Section 11.03(a) or 13.01(b) of the Lease or Sections 6.03(b)(i)(F), 7.04(c), 7.05(c), 8.04 and 15.01 of the Participation Agreement, (ii) proceeds of public liability insurance (or government indemnities in lieu thereof) in respect of the Aircraft payable as a result of insurance claims paid for the benefit of, or losses suffered by, the Owner Trustee or the Indenture Trustee in their respective individual capacities or by the Owner Participant, or their respective successors, permitted assigns or Affiliates, (iii) proceeds of insurance maintained with respect to the Aircraft by the Owner Participant (whether directly or through the Owner Trustee) maintained in accordance with the provisions of but not required under Article 13 of the Lease, (iv) payments of Supplemental Rent by the Lessee in respect of any amounts payable under the Tax Indemnity Agreement, (v) any amounts payable by the Lessee to the Owner Participant or the Owner Trustee in its individual capacity, after the release thereof from the Lien of the Indenture, (vi) subject to Section 3.05 of the Lease, payments constituting increases in Basic Rent attributable to payments arising pursuant to Section 5 of the Tax Indemnity Agreement, (vii) all costs and expenses payable or reimbursable by the Lessee to the Owner Participant or the Owner Trustee pursuant to Section 17.04 of the Lease, (viii) the right to retain amounts distributed to the Owner Participant under Article V of the Indenture and (ix) any right to demand, collect or otherwise receive and enforce the payment of any amount described in clauses (i) through (viii) above and any interest or late charges on the foregoing. Expense; Expenses. Have the meaning specified in Section 9.01(a) of the Participation Agreement. FAA. The United States Federal Aviation Administration and any successor agency or agencies thereto. FAA Bill of Sale. The bill of sale for the Airframe on AC Form 8050-2, or such other form as may be approved by the Aeronautics Authority, executed by the Lessee in favor of the Owner Trustee and to be dated the Delivery Date. Fair Market Renewal Term. A term with respect to which the Lessee has exercised its option to renew the Lease pursuant to the second paragraph of Section 4.01(a) thereof and with respect to which the conditions set forth in the third paragraph of Section 4.01(a) are met. Fair Market Rental. An amount determined on the basis of, and equal in amount to, the rental which would be obtained in an arm's-length transaction between an informed and willing lessee and an informed and willing lessor unaffiliated with such lessee, neither being under any compulsion to lease. In such determination, except for purposes of Section 17.01 of the Lease, 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 and Fair Market Rental shall be determined in accordance with the provisions of Section 4.03 of the Lease. For purposes of Section 17.01 of the Lease, such determination shall be made on an "as is, where is" basis by a qualified independent appraiser selected by the Lessor and the costs and expenses of the appraisal shall be borne by the Lessee, unless the Lessor does not obtain possession of the Aircraft pursuant to such Section 17.01, in which case an appraiser shall not be appointed and such Fair Market Rental shall be deemed to be zero. Fair Market Value. An amount determined on the basis of, and equal in amount to, the value which would be obtained in an arm's-length transaction between an informed and willing purchaser under no compulsion to buy and an informed and willing seller unaffiliated with such purchaser and under no compulsion to sell, assuming the Aircraft (or other property) is unencumbered by the Lease. In such determination, except for purposes of Section 17.01 of the Lease, 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 and Fair Market Value shall be determined in accordance with the provisions of Section 4.03 of the Lease. For purposes of Section 17.01 of the Lease, such determination shall be made on an "as is, where is" basis by a qualified independent appraiser selected by the Lessor and the costs and expenses of the appraisal shall be borne by the Lessee, unless the Lessor does not obtain possession of the Aircraft free and clear of all Liens and unencumbered by the Lease pursuant to such Section 17.01, in which case an appraiser shall not be appointed and such Fair Market Value shall be deemed to be zero. Federal Aviation Administration. The United States Federal Aviation Administration and any successor agency or agencies thereto. FedEx. Federal Express Corporation. Final Drawing. Has the meaning specified in Section 1.01 of the Intercreditor Agreement. Fixed Renewal Rent. Semi-annual payments of rent during the Fixed Renewal Term equal to the amount set forth in Ancillary Agreement I. Fixed Renewal Term. A renewal term or terms provided for under the second paragraph of Section 4.01(a) of the Lease. FSB. First Security Bank, National Association, a national banking association. Government. The United States of America or an agency or instrumentality thereof the obligations of which bear the full faith and credit of the United States of America. GTA. The General Terms Agreement dated as of July 3, 1991 between the Engine Manufacturer and the Lessee related to the purchase by the Lessee of the Engines as originally executed or as modified, amended or supplemented in accordance with the terms thereof, but only insofar as the General Terms Agreement relates to the Engines, to the extent assigned to the Owner Trustee pursuant to the Engine Warranty Assignment. Holder of a Certificate; Certificate Holder; Holder. As of any particular time, the Person in whose name a Certificate shall be registered (but not including the holder of any Pass Through Certificate). Indemnitee. Each of SSB, in its individual capacity and as Owner Trustee and Lessor, the Subordination Agent, in its individual capacity and in its capacity as Subordination Agent, each Liquidity Provider, the Owner Participant, the Indenture Trustee, 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 and the Trust Indenture Estate. Neither the Pass Through Trustee nor any holder of a Pass Through Certificate shall be deemed to be an Indemnitee. Indenture. The Trust Indenture and Security Agreement (Federal Express Corporation Trust No. N584FE), dated as of May 1, 1997, as amended by the Amendment and as amended and restated as of February 1, 1998, between the Lessor and the Indenture Trustee, as supplemented by the Indenture and Security Agreement Supplement. Indenture and Security Agreement Supplement. The Indenture and Security Agreement Supplement No. 1 (Federal Express Corporation Trust No. N584FE) to be dated the Delivery Date, substantially in the form of Exhibit A to the Indenture. Indenture Default. Any event or condition which, with the lapse of time or the giving of notice, or both, would constitute an Indenture Event of Default. Indenture Documents. Has the meaning specified in the Granting Clause of the Indenture. Indenture Event of Default. Each of the events specified in Section 7.01 of the Indenture. Indenture Trustee. First Security Bank, National Association, a national banking association, not in its individual capacity but solely as Indenture Trustee under the Indenture. Indenture Trustee's Liens. Any Lien against, on or with respect to the Aircraft, the Lessor's Estate or the Trust Indenture Estate or any part thereof resulting from (i) claims against the Indenture Trustee not related to the administration of the Trust Indenture Estate or any transactions pursuant to the Indenture or any document included in the Trust Indenture Estate, (ii) any act or omission of the Indenture Trustee which is not related to the transactions contemplated by the Operative Agreements or is in violation of any of the terms of the Operative Agreements or (iii) Taxes imposed against the Indenture Trustee in its individual capacity or its Affiliates against which the Lessee has not indemnified (and is not obligated to indemnify) the Indenture Trustee in such capacity. 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, "Independent Investment Banker" shall mean such an institution appointed by the Indenture Trustee. Initial Owner Participant. Federal Express Corporation, a Delaware corporation. Intercreditor Agreement. The Intercreditor Agreement dated as of May 1, 1997, among the Pass Through Trustee, the Class A Liquidity Provider, the Class B Liquidity Provider and the Subordination Agent. Interest Drawing. Has the meaning specified in Section 1.01 of the Intercreditor Agreement. Invoice. The invoice for the Aircraft given by the Lessee to the Lessor. Lease. The Lease Agreement (Federal Express Corporation Trust No. N584FE) dated as of May 1, 1997, as amended and restated as of February 1, 1998, entered into by the Lessor and the Lessee concurrently with the execution and delivery of the Indenture, including, without limitation, supplementation by one or more Lease Supplements entered into pursuant to the applicable provisions of the Lease. Lease Supplement. The Lease Supplement No. 1 (Federal Express Corporation Trust No. N584FE) to be dated the Delivery Date, substantially in the form of Exhibit A to the Lease. Lease Term. The period commencing on the Delivery Date and ending at the end of the Basic Term. Lessee. Federal Express Corporation, a Delaware corporation. Lessee Documents. Has the meaning set forth in Section 6.01(b) of the Participation Agreement. Lessor. State Street Bank and Trust Company of Connecticut, National Association, a national banking association, not in its individual capacity but solely as Owner Trustee under the Trust Agreement. Lessor's Estate. All estate, right, title and interest of the Owner Trustee in and to the Collateral Account, the Liquid Collateral, the Aircraft, the Lease, any Lease Supplement, the Participation Agreement, the Bills of Sale, the Modification Agreement, the GTA, the Engine Warranty Assignment, the Engine Consent, any warranty with respect to the Airframe and the Engines, all amounts of Basic Rent, Renewal Rent and Supplemental Rent, including without limitation, insurance proceeds (other than insurance proceeds payable to or for the benefit of either the Owner Trustee in its individual capacity or the Owner Participant) and requisition, indemnity or other payments of any kind for or with respect to the Aircraft (except amounts owing to the Owner Participant or 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 not include any Excepted Payment. Lessor's Liens. Liens against, on or with respect to the Aircraft, the Lessor's Estate or the Trust Indenture Estate or any part thereof, title thereto or any interest therein arising as a result of (i) claims against the Lessor, in its individual capacity or as Owner Trustee, the Owner Participant or any Affiliate of the Owner Participant, in each case not related to the transactions contemplated by the Operative Agreements, (ii) acts or omissions of the Lessor in its individual capacity or as Owner Trustee, and, in the case of the Lessor in its individual capacity, arising from its gross negligence or willful misconduct either not related to the transactions contemplated by or expressly prohibited under the Operative Agreements and any act or omission of the Owner Participant or any Affiliate 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, or the Owner Participant or any Affiliate of the Owner Participant, the Lessor's Estate or the trust created by the Trust Agreement which are not required to be indemnified against by the Lessee pursuant to the Tax Indemnity Agreement or by reason of Section 8.01(b) or 9.01(b) of the Participation Agreement, or (iv) claims against the Lessor or the Owner Participant arising from the voluntary transfer by the Lessor or the Owner Participant of its interests in the Aircraft other than a transfer of the Aircraft pursuant to Section 4.02(a) or Article 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. Lien. Any mortgage, pledge, lien, charge, encumbrance, lease or security interest or other similar interest. Liquid Collateral. All amounts and securities deposited from time to time in the Collateral Account and all the products, investments, earnings and proceeds of the foregoing, including, but not limited to, all proceeds of the investment or conversion thereof, voluntary or involuntary, into cash, Specified Investments or other property, all rights to payment of any and every kind, and other forms of obligations, and instruments and other property which at any time constitute all or part or are included in the proceeds of any of the foregoing. Liquidity Facility. Has the meaning specified in Section 1.01 of the Intercreditor Agreement. Liquidity Provider. Has the meaning specified in Section 1.01 of the Intercreditor Agreement. Losses. Has the meaning specified in Section 17.02(a) of the Participation Agreement. Loss Payee. Has the meaning specified in Section 13.02(b)(i) of the Lease. Majority in Interest of Certificate Holders. As of a particular date of determination, the Holders of more than 50% of the aggregate unpaid principal amount of all Certificates outstanding as of such date excluding for purposes of this definition any Certificates held by (i) the Owner Trustee or the Owner Participant unless all Certificates then outstanding shall be held by such Owner Participant, (ii) the Lessee or (iii) any Affiliate of any thereof. Make-Whole Premium. An amount determined as of the 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, if any, of (i) the present value of the remaining scheduled payments of such principal amount or portion thereof and interest thereon (excluding interest accrued from the immediately preceding Payment Date to such Prepayment Date 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 the Treasury Yield, all as determined by the Independent Investment Banker over (ii) the outstanding principal amount of such Certificate plus accrued interest. Mandatory Document Terms. The terms set forth on Schedule V to the Original Participation Agreement. Mandatory Economic Terms. The terms set forth on Schedule VI to the Original Participation Agreement. Manufacturer. McDonnell Douglas Corporation, a Maryland corporation. 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 Aircraft Modification Agreement dated as of December 1, 1995 between the Lessee and the Manufacturer providing for the refurbishing and reconfiguration of the Aircraft including any warranties relating thereto, but only to the extent that the foregoing relates to the Aircraft, to the extent assigned to the Owner Trustee pursuant to the Warranty Bill of Sale. Moody's. Moody's Investors Service, Inc. Net Present Value of Rents. The net present value, as of the Delivery Date, of Basic Rent set forth in Schedule II of the Lease, discounted at a rate per semi-annual period equal to the Debt Rate. 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, (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. Officer's Certificate. When delivered pursuant to the Indenture, a certificate signed by a Responsible Officer of the Lessee or the Owner Trustee, as the case may be, and delivered to the Indenture Trustee. Each such certificate shall include the statements provided for in Section 15.07 of the Indenture. Operative Agreements. The Participation Agreement, the Trust Agreement, the Bills of Sale, the Modification Agreement, the GTA, the Engine Warranty Assignment, the Lease, the Lease Supplement, the Owner Participant Guaranty, if any, the Owner Trustee Guaranty, if any, the Ancillary Agreement I, the Certificates outstanding at the time of reference, the Indenture, the Indenture and Security Agreement Supplement, the Engine Consent, each Liquidity Facility, the Intercreditor Agreement, the Collateral Account Control Agreement and the Tax Indemnity Agreement. Opinion of Counsel. When delivered pursuant to the Indenture, a written opinion of legal counsel, who in the case of counsel (a) for the Lessee may be (i) an attorney employed by the Lessee who is generally empowered to deliver such written opinions, (ii) Davis Polk & Wardwell or a successor firm or (iii) other counsel designated by the Lessee and reasonably satisfactory to the Indenture Trustee and (b) for the Owner Trustee or the Indenture Trustee, an attorney selected by such Person and, in the case of the Owner Trustee, reasonably satisfactory to the Indenture Trustee. Original Agreements. The documents and instruments delivered on the Certificate Closing Date in connection with the transactions contemplated by the Original Participation Agreement. Original Indenture. The Trust Indenture and Security Agreement (Federal Express Corporation Trust No. N584FE), dated as of May 1, 1997, between the Owner Trustee and the Indenture Trustee originally executed and delivered on the Certificate Closing Date and amended by the Amendment. Original Lease. The Lease Agreement (Federal Express Corporation Trust No. N584FE), dated as of May 1, 1997, between the Owner Trustee as lessor, and the Lessee originally executed and delivered on the Certificate Closing Date. Original Participation Agreement. The Participation Agreement (Federal Express Corporation Trust No. N584FE), dated as of May 1, 1997, among the Lessee, the Initial Owner Participant, the Indenture Trustee, the Owner Trustee, the Pass Through Trustee and the Subordination Agent originally executed and delivered on the Certificate Closing Date. Original Trust Agreement. The Trust Agreement (Federal Express Corporation Trust No. N584FE), dated as of May 1, 1997, between the Initial Owner Participant and the Owner Trustee originally executed and delivered on the Certificate Closing Date. Outstanding. When used with respect to Certificates, as of the date of determination and subject to the provisions of Section 10.04 of the Indenture, all Certificates theretofore executed and delivered under the Indenture, with the exception of the following: (i) Certificates theretofore cancelled by the Indenture Trustee or delivered to the Indenture Trustee for cancellation pursuant to Section 2.08 of the Indenture or otherwise; (ii) Certificates for which prepayment money in the necessary amount has been theretofore deposited with the Indenture Trustee in trust for the Holders of such Certificates pursuant to Section 14.01 of the Indenture; provided, that if such Certificates are to be prepaid, notice of such prepayment has been duly given pursuant to the Indenture or provision therefor satisfactory to the Indenture Trustee has been made; and (iii) Certificates in exchange for or in lieu of which other Certificates have been executed and delivered pursuant to Article II of the Indenture. Owner Participant. The Person to whom on the Delivery Date the Initial Owner Participant shall transfer its Beneficial Interest pursuant to Section 3.02 of the Original Participation Agreement and any successors thereto, and any Person to which the Owner Participant transfers, in accordance with the Trust Agreement, its right, title and interest in and to the Operative Agreements and the Lessor's Estate. Owner Participant Guarantor. The provider, if any, of an Owner Participant Guaranty. Owner Participant Guaranty. Any guaranty delivered in compliance with Article 5 of the Trust Agreement. Owner Trustee. SSB, not in its individual capacity except as otherwise expressly stated, but solely as Owner Trustee under the Trust Agreement. Owner Trustee Guarantor. The provider, if any, of an Owner Trustee Guaranty. Owner Trustee Guaranty. Any guaranty delivered in compliance with Section 11.01(b)(ii) of the Participation Agreement. Owner's Economic Return. The Owner Participant's anticipated net after-tax yield and aggregate after-tax cash in the Basic Term, utilizing the multiple investment sinking fund method of analysis, computed on the basis of the same methodology and assumptions as were utilized by the Owner Participant in determining Basic Rent, Stipulated Loss Value and Termination Value percentages and EBO Price, as such assumptions may be adjusted for events which have been the basis of adjustments to Rent pursuant to Section 3.04 of the Lease. Participation Agreement. The Participation Agreement (Federal Express Corporation Trust No. N584FE), dated as of May 1, 1997, as amended and restated as of February 1, 1998, among the Lessee, the Owner Trustee not in its individual capacity except as otherwise expressly provided therein, but solely as owner trustee, the Owner Participant, the Indenture Trustee not in its individual capacity except as otherwise expressly provided therein, but solely as indenture trustee, the Pass Through Trustee not in its individual capacity except as otherwise expressly provided therein, but solely as pass through trustee and the Subordination Agent not in its individual capacity except as otherwise expressly provided therein, but solely as subordination agent. Parts. All appliances, parts, components, instruments, appurtenances, accessories, furnishings and other equipment of whatever nature (other than complete Engines or engines) which may from time to time be incorporated or installed in or attached to the Airframe or any Engine or, prior to replacement thereof in accordance with the Lease, which may be removed therefrom. Pass Through Agreement. The Pass Through Trust Agreement dated as of May 1, 1997, between the Lessee and the Pass Through Trustee. Pass Through Certificates. Any of the Pass Through Certificates, 1997-1-A, the Pass Through Certificates, 1997-1-B or the Pass Through Certificates, 1997-1-C, in each case as issued by the related Pass Through Trust; and "Pass Through Certificates" means all of the Pass Through Certificates issued by each of the Pass Through Trusts. Pass Through Closing Date. May 28, 1997. Pass Through Trust. The Federal Express Corporation 1997-1 Pass Through Trust Class A, Federal Express Corporation 1997-1 Pass Through Trust Class B and Federal Express Corporation 1997-1 Pass Through Trust Class C, in each case formed pursuant to the related Series Supplement in accordance with the Pass Through Agreement; and "Pass Through Trusts" means all of such Pass Through Trusts. Pass Through Trustee. First Security Bank, National Association, a national banking association, in its capacity as Pass Through Trustee under the Pass Through Agreement and each Pass Through Trust. Past Due Rate. In respect of (A) any amount payable to the Owner Participant or the Owner Trustee a rate per annum during the period from and including the due date to but excluding the date on which such amount is paid in full equal to 2% plus the Debt Rate and (B) any principal of or interest on any Certificate or any other amount payable under the Indenture, any Certificate or any other Operative Agreement that is not paid when due (whether at Maturity, by acceleration, by optional or mandatory prepayment or otherwise) to any Holder, the Indenture Trustee or the Pass Through Trustee, a rate per annum during the period from and including the due date to but excluding the date on which such amount is paid in full equal to (i) in the case of any such amount payable to the Holder of any Certificate, 2% plus the interest rate applicable to such Certificate and (ii) in the case of any other such amount, 2% plus the Debt Rate. Payment Date. Each January 15 and July 15 commencing on July 15, 1997. Payment Default. Any event specified in Section 16.01(a) or 16.01(b) of the Lease which with the giving of notice or lapse of time or both would constitute an Event of Default. Permitted Investments. Those investments enumerated in Section 23.01(a) (i), (ii), (iii) and (iv) of the Lease. Person. Any individual, sole proprietorship, partnership, joint venture, joint stock company, trust, unincorporated organization, association, corporation, institution, entity or government (federal, state, local, foreign or any agency, instrumentality, division or body thereof). Pool Balance. Has the meaning specified in Article I to the Series Supplement. Pool Factors. Has the meaning specified in Article I to the Series Supplement. Preliminary Notice. Has the meaning specified in Section 4.01(a) of the Lease. Premium Termination Date. With respect to the Series A Certificates, December 27, 2011, with respect to the Series B Certificates, February 5, 2010 and with respect to the Series C Certificates, March 22, 2007. Prepayment Date. Has the meaning specified in Section 6.02(b) of the Indenture. Prepayment Price. Has the meaning specified in Section 6.02(b) of the Indenture. Principal Amount. With respect to a Certificate means the stated original principal amount of such Certificate and, with respect to all Certificates, means the aggregate stated original principal amounts of all Certificates. Property. Any right or interest in or to property of any kind whatsoever, whether real, personal or mixed and whether tangible or intangible. Proposed Termination Date. Has the meaning specified in Section 10.01(a) of the Lease. Purchase Price. The amount specified as such in Ancillary Agreement I. Rating Agencies. Collectively, at any time, each nationally recognized rating agency which shall have been requested to rate the Pass Through Certificates and which shall then be rating the Pass Through Certificates. The initial Rating Agencies will be Moody's and S&P. Rating Agency Confirmation. With respect to any Operative Agreement that is to be modified in any material respect on the Delivery Date or the Transfer Date, if applicable, a written confirmation from each of the Rating Agencies that the use of such Operative Agreement with such modifications would not result in (i) a reduction of the rating for any Class of Pass Through Certificates below the then current rating for such Class of Pass Through Certificates or (ii) a withdrawal or suspension of the rating of any Class of Pass Through Certificates. Record Date. With respect to Payment Dates under the Indenture (except a date for payment of defaulted interest), December 31 for January 15 Payment Dates and June 30 for July 15 Payment Dates, whether or not such date is a Business Day. Recourse Amount. Has the meaning specified in Section 17.10 of the Participation Agreement. Refinancing. A non-recourse loan to the Lessor arranged pursuant to Section 15.01 of the Participation Agreement. Register. Has the meaning set forth in Section 3.02 of the Indenture. Registrar. Has the meaning set forth in Section 3.02 of the Indenture. Regulation D. Regulation D of the Board of Governors of the Federal Reserve System (or any successor), as the same may be modified and supplemented and in effect from time to time. Remaining Weighted Average Life. On a given date with respect to any Certificate the number of days equal to the quotient obtained by dividing (i) the sum of each of the products obtained by multiplying (a) the amount of each then remaining scheduled payment of principal of such Certificate by (b) the number of days from and including such prepayment date to but excluding the dates on which each such payment of principal is scheduled to be made; by (ii) the then outstanding principal amount of such Certificate. Renewal Rent. The amount payable by the Lessee as rent in accordance with Section 4.01 of the Lease during any Renewal Term. Renewal Term. Any Fixed Renewal Term or Fair Market Renewal Term with respect to which the Lessee has exercised its option to renew the Lease pursuant to Section 4.01(a) thereof. Rent. All payments due from the Lessee under the Lease as Basic Rent, Renewal Rent and Supplemental Rent, collectively. Rent Payment Date. February 26, 2020 and each January 15 and July 15 commencing on July 15, 1998, and continuing thereafter during the Term. Replacement Aircraft. Any aircraft substituted for the Aircraft pursuant to Section 11.03(a) of the Lease. Replacement Airframe. Has the meaning set forth in Section 11.03 of the Lease. Replacement Engine. A General Electric CF6-80C2-D1F engine (or an engine of the same or another manufacturer) of the same or of equal or greater value, remaining useful life and utility as the Engine being replaced, together with all Parts relating to such engine; provided, however, that if such replacement engine is not a General Electric CF6-80C2-D1F engine, such replacement engine must then be commonly used in the commercial aviation industry on McDonnell Douglas MD-11 airframes. Responsible Officer. With respect to the Owner Trustee (except for purposes of the Trust Agreement in which case the definition of Responsible Officer set forth in Section 3.10 of the Trust Agreement is applicable) or the Indenture Trustee, any officer in its Corporate Trust Department), as the case may be, designated by such Person to perform obligations under the Operative Agreements, and with respect to any other party, any corporate officer or (except in the case of the Owner Participant) other employee of a party who, in the normal performance of his or her operational responsibilities, with respect to the subject matter of any covenant, agreement or obligation of such party pursuant to any Operative Agreement, would have responsibility for and knowledge of such matter and the requirements of any Operative Agreement with respect thereto. S&P. Standard & Poor's Ratings Group. Scheduled Delivery Date. The Delivery Date specified in the Delivery Notice pursuant to Section 3.01 of the Participation Agreement. SEC. The Securities and Exchange Commission of the United States and any successor agencies or authorities. Secured Obligations. Has the meaning specified in the Granting Clause of the Indenture. Securities Act. The Securities Act of 1933, as amended. Series "A" or "Series A Certificates". Certificates issued and designated as "Series A" under the Indenture, in the Principal Amount and maturities and bearing interest as specified in Exhibit B to the Indenture under the heading "Series A". Series "B" or "Series B Certificates". Certificates issued and designated as "Series B" under the Indenture, in the Principal Amount and maturities and bearing interest as specified in Exhibit B to the Indenture under the heading "Series B". Series "C" or "Series C Certificates". Certificates issued and designated as "Series C" under the Indenture, in the Principal Amount and maturities and bearing interest as specified in Exhibit B to the Indenture under the heading "Series C". Series Supplements. The Series Supplement 1997-1-A, the Series Supplement 1997-1-B and the Series Supplement 1997-1-C, each dated the Certificate Closing Date, between the Lessee and the Pass Through Trustee. Sinking Fund Redemption Date. Has the meaning specified in Section 6.06 of the Indenture. Sinking Fund Redemption Price. Has the meaning specified in Section 6.06 of the Indenture. Special Aviation Counsel. Daugherty, Fowler & Peregrin. Special Distribution Date. Has the meaning specified in Article I to the Series Supplement. Specified Investments. Shall mean (a) direct obligations of the United States of America or obligations fully guaranteed by the United States of America; (b) commercial paper rated A-1/P-1 by S&P and Moody's, respectively or, if such ratings are unavailable, rated by any nationally recognized rating organization in the United States equal to the highest rating assigned by such rating organization; (c) investments in negotiable certificates of deposit, time deposits, banker's acceptances, commercial paper or other direct obligations of, or obligations guaranteed by, commercial banks organized under the laws of the United States or of any political subdivision thereof (or any U.S. branch of a foreign bank) with issuer ratings of at least B/C by Thomson Bankwatch, having maturities no later than 90 days following the date of such investment; (d) overnight federal funds transactions with members of the Federal Reserve System arranged by federal funds brokers; or (e) overnight repurchase agreements with respect to the securities described in clause (a) above entered into with an office of a bank or trust company which is located in the United States of America or any bank or trust company which is organized under the laws of the United States or any state thereof and has capital, surplus and undivided profits aggregating at least $500 million. SSB. State Street Bank and Trust Company of Connecticut, National Association, a national banking association. Stipulated Loss Value. As of any Stipulated Loss Value Determination Date during the Basic Term, the amount determined by multiplying the Purchase Price by the percentage set forth in Schedule III of the Lease under the heading "Stipulated Loss Value Factor" opposite such date (as such Schedule III may be adjusted from time to time as provided in Section 3.04 of the Lease), and during any Renewal Term, the amount determined pursuant to Section 4.01(b) of the Lease. Notwithstanding any other provisions of the Lease, the Participation Agreement or the Indenture, each Stipulated Loss Value for the Aircraft shall be, under any circumstances and in any event, an amount, together with the arrears portion of Basic Rent due and owing through the date of payment of Stipulated Loss Value and not constituting an Excepted Payment, at least sufficient to pay in full as of such date of payment the aggregate unpaid principal amount of and accrued interest on the Certificates outstanding on such date of payment. Subject to the immediately preceding sentence, it is understood and agreed that the amounts set forth on Schedule III of the Lease, for Stipulated Loss Value Determination Dates other than Rent Payment Dates, fully reflect appropriate Basic Rent accruals and credits of unearned Basic Rent as of such Stipulated Loss Value Determination Date and, accordingly, no further accrual or credit shall be required whenever Stipulated Loss Value is to be calculated with reference to any such date. Stipulated Loss Value Determination Date. Each date set forth on Schedule III of the Lease under the heading "Stipulated Loss Value Date." Supplemental Rent. (a) All amounts, liabilities and obligations which the Lessee assumes or agrees to perform or pay under the Lease or under the Participation Agreement or Tax Indemnity Agreement or Ancillary Agreement I or any other Operative Agreement to SSB, the Lessor, the Owner Participant, the Indenture Trustee, the Subordination Agent, any Liquidity Provider or others, including, without limitation, payments of Stipulated Loss Value, EBO Price and amounts calculated by reference to Termination Value, and all amounts required to be paid by Lessee under the agreements, covenants and indemnities contained in the Lease or in the Participation Agreement or the Tax Indemnity Agreement or any other Operative Agreement, but excluding Basic Rent and (b) all amounts that the Owner Trustee is obligated to pay in accordance with clause (b) of the last paragraph of Section 2.04 of the Indenture. Tax. Shall have the meaning set forth in Section 8.01(a) of the Participation Agreement. Tax Indemnity Agreement. The Tax Indemnity Agreement (Federal Express Corporation Trust No. N584FE), dated as of February 1, 1998, between the Lessee and the Owner Participant. Term. The Basic Term and any Renewal Term unless the Lease is terminated earlier pursuant to its terms. Termination Date. A Rent Payment Date during the Basic Term that is on or after the seventh anniversary of the Delivery Date in the case of Article 10 of the Lease, and in the case of (i) Section 4.02(a)(A) of the Lease the Rent Payment Date falling on July 15, 2011 or January 15, 2014, as the case may be, (ii) Section 4.02(a)(D) or (E) of the Lease, a Rent Payment Date that is on or after the seventh anniversary of the Delivery Date and (iii) Section 4.02(a)(F) of the Lease, January 15, 2016. Termination Value. As of any Termination Date, the amount determined by multiplying the Purchase Price by the percentage set forth in Schedule IV of the Lease under the heading "Termination Value Factor" opposite such Termination Date (as such Schedule IV may be adjusted from time to time as provided in Section 3.04 of the Lease). Notwithstanding any other provisions of the Lease, the Participation Agreement or the Indenture, each Termination Value shall be, under any circumstances and in any event, an amount, together with the arrears portion of Basic Rent due and owing through the date of payment of any amount calculated by reference to Termination Value and not constituting an Excepted Payment, at least sufficient to pay in full as of such date of payment the aggregate unpaid principal amount of and accrued interest on the Certificates outstanding on such date of payment. Subject to the immediately preceding sentence, it is understood and agreed that the amounts set forth on Schedule IV of the Lease, for dates other than Rent Payment Dates, fully reflect appropriate Basic Rent accruals and credits of unearned Basic Rent and, accordingly, no further accrual or credit shall be required whenever Termination Value is to be calculated with reference to any such date. Transaction Costs. Those costs and expenses set forth in Section 10.01(a) of the Participation Agreement. Transportation Code. Title 49 of the United States Code, as amended and in effect on the date of the Lease or as subsequently amended, or any successor or substituted legislation at the time in effect and applicable, and the regulations promulgated pursuant thereto. Treasury Yield. At the time of determination with respect to any Certificate, the interest rate (expressed as a semi-annual equivalent and as a decimal and, in the case of United States Treasury bills, converted to a bond equivalent yield) determined to be the per annum rate equal to the semi-annual yield to maturity for United States Treasury securities maturing on the Average Life Date on such Certificate and trading in the public securities markets either as determined by interpolation between the most recent weekly average yield to maturity for two series of United States Treasury securities, trading in public securities markets, (i) one maturing as close as possible to, but earlier than, the Average Life Date of such Certificate and (ii) the other maturing as close as possible to, but later than, the Average Life Date of such Certificate. In each case as published in the most recent H.15(519) or, if a weekly average yield to maturity for United States Treasury securities maturing on the Average Life Date of such Certificate is reported on the most recent H.15 (519), such weekly average yield to maturity as published in such H.15(919). "H.15(519)" means the weekly statistical release designated as such, or any successor publication, published by the Board of Governors of the Federal Reserve System. The date of determination of a Make-Whole Premium will be the third Business Day prior to the applicable prepayment date and the "most recent H.15(519)" means the H.15(519) published prior to the close of business on the third Business Day prior to the applicable prepayment date. Trust Agreement. The Trust Agreement (Federal Express Corporation Trust No. N584FE), dated as of May 1, 1997, as amended and restated as of February 1, 1998, between the Owner Participant and the Owner Trustee in its individual capacity. Trust Estate. The Lessor's Estate. Trust Indenture Act. The Trust Indenture Act of 1939, as amended. Trust Indenture Estate. All estate, right, title and interest of the Indenture Trustee in and to any of the property, rights, interests and privileges granted to the Indenture Trustee pursuant to the Granting Clause of the Indenture, other than Excepted Payments and any and all other rights of the Owner Trustee or the Owner Participant expressly reserved to the Owner Trustee or the Owner Participant pursuant to the Indenture. UCC. Uniform Commercial Code. Underwriters. Morgan Stanley & Co. Incorporated, First Chicago Capital Markets, Inc., Goldman, Sachs & Co. and J.P. Morgan & Co. Underwriting Agreement. The Underwriting Agreement dated May 22, 1997 among the Lessee and the Underwriters. United States, U.S. or US. The United States of America. U.S. Air Carrier. Any United States air carrier as to which there is in force a certificate issued pursuant to Section 41102(a) or Section 41103 of the Transportation Code, and as to which there is in force an air carrier operating certificate issued pursuant to Chapter 447 of the Transportation Code and Part 121 of the regulations under such Transportation Code, for aircraft capable of carrying ten (10) or more individuals or 6,000 pounds or more of cargo, or which may operate as an air carrier by certification or otherwise under any successor or substitute provision thereof or in absence thereof. U.S. Person. A Person described in Section 7701(a)(30) of the Code. Warranty Bill of Sale. The full warranty bill of sale covering the Aircraft (and specifically referring to each Engine) executed by the Lessee, as seller in favor of the Owner Trustee, as buyer, and to be dated the Delivery Date. SCHEDULE II BASIC RENT (As a Percentage of Purchase Price) Rent Payment Date Advance Arrears ------- ------- ------- [On each 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 Payment Date, together with the accrued and unpaid interest thereon.] SCHEDULE III STIPULATED LOSS VALUES Stipulated Loss Date Value Factor ---- --------------- [Stipulated Loss Value will be an amount at least sufficient to pay in full, as of the date of payment thereof, the aggregate unpaid principal amount of the Certificates outstanding on such date of payment, together with the accrued and unpaid interest thereon.] SCHEDULE IV TERMINATION VALUES Termination Termination Date Value Factor ----------- ------------ [Termination Value will be 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 ADDITIONAL PURCHASE OPTION PROVISIONS [Intentionally Left Blank As Containing Confidential Financial Information] Exhibit A to Lease Agreement --------------- THE INTEREST OF LESSOR UNDER THIS LEASE SUPPLEMENT NO. __ IS SUBJECT TO A SECURITY INTEREST LEASE SUPPLEMENT NO. __ (Federal Express Corporation Trust No. N584FE) LEASE SUPPLEMENT NO. __ (Federal Express Corporation Trust No. N584FE), dated _________, ____, between STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT, NATIONAL ASSOCIATION, a national banking association, not in its individual capacity, but solely as Owner Trustee under the Trust Agreement (Federal Express Corporation Trust No. N584FE) dated as of May 1, 1997, as amended and restated as of February 1, 1998 (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 (Federal Express Corporation Trust No. N584FE) dated as of May 1, 1997, as amended and restated as of February 1, 1998 (the "Lease", the defined terms in the Lease being used in this Lease Supplement with the same meaning as in the Lease), which provides for the execution and delivery of a Lease Supplement, substantially in the form of this Lease Supplement No. __, for the purpose of leasing under the Lease the aircraft and engines described below ("Aircraft") as and when delivered by the Lessor to the Lessee in accordance with the terms of the Lease; WHEREAS, the Lease relates to the Aircraft; WHEREAS, a counterpart of the Lease is attached to and made a part of this Lease Supplement, and this Lease Supplement, together with such attachment, is being filed for recordation on this date with the FAA as one document. NOW, THEREFORE, for and in consideration of the premises and other good and sufficient consideration, the Lessor and the Lessee agree as follows: Section 1. Delivered Aircraft. The Lessor hereby delivers and leases to the Lessee under the Lease, and the Lessee hereby accepts and leases from the Lessor under the Lease, the following described McDonnell Douglas MD-11F Aircraft (the "Delivered Aircraft"), which Delivered Aircraft as of the date of this Lease Supplement consists of the following: (a) McDonnell Douglas MD-11F Airframe; U.S. Registration Number ______; Manufacturer's Serial No. _____; and (b) Three (3) General Electric CF6-80C2-D1F Engines bearing, respectively, Manufacturer's Serial Nos. _______, _______ and _______ (each of which engines has 750 or more rated takeoff horsepower or the equivalent of such horsepower). Section 2. Delivery Date. The Delivery Date of the Delivered Aircraft is the date of this Lease Supplement. Section 3. Purchase Price. The Purchase Price of the Delivered Aircraft shall be the amount set forth in Schedule II to the Participation Agreement. Section 4. Term. The Term for the Delivered Aircraft shall commence on the Delivery Date, and shall terminate on __________________, unless earlier terminated or extended pursuant to the terms of the Lease. Section 5. Rent. The Lessee hereby agrees to pay the Lessor Rent for the Delivered Aircraft throughout the Term thereof in accordance with the terms and provisions of the Lease. Section 6. Lessee's Acceptance of Delivered Aircraft. The Lessee hereby confirms to the Lessor that the Delivered Aircraft has been duly marked in accordance with Section 7.03 of the Lease and that the Lessee has accepted the Delivered Aircraft for all purposes hereof and of the Lease, and 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, the Engine Manufacturer or any vendor of equipment included in the Aircraft. Section 7. Incorporation of Lease By Reference. All the provisions of the Lease are hereby incorporated by reference in this Lease Supplement to the same extent as if fully set forth in this Lease Supplement. Section 8. Governing Law. THIS LEASE SUPPLEMENT SHALL IN ALL 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 9. Agreement as Chattel Paper. To the extent that this Lease Supplement 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 Supplement may be created through the transfer or possession of any counterpart other than the original chattel-paper counterpart, which shall be the counterpart containing the receipt executed by the Indenture Trustee on its signature page. Section 10. 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 each caused this Lease Supplement to be duly executed as of the date first above written. LESSOR: STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT, NATIONAL ASSOCIATION, not in its individual capacity, but solely as Owner Trustee By: _______________________________________________ Name: Paul D. Allen Title: Vice President LESSEE: FEDERAL EXPRESS CORPORATION By: _______________________________________________ Name: Robert D. Henning Title: Vice President and Treasurer Receipt of this original counterpart of the Lease Supplement is hereby acknowledged on this __ day of _________ 199_. Indenture Trustee: FIRST SECURITY BANK, NATIONAL ASSOCIATION, not in its individual capacity, but solely as Indenture Trustee By: _____________________________________________ Name: Greg A. Hawley Title: Vice President EX-4.F 6 Exhibit 4.f ADDENDUM TO EQUIPMENT TRUST CERTIFICATE (FEDERAL EXPRESS CORPORATION TRUST NO. N584FE) SERIES A February 26, 1998 The above-described Certificate shall be deemed amended as follows: 1. References in the first paragraph of the Certificate to the date of the Certificate shall be deemed to be references to the date of this Addendum. 2. The phrase "limited in aggregate initial principal amount to $60,892,000 consisting" following the second parenthetical in the sixth paragraph of the Certificate shall be deemed replaced with the phrase "the aggregate principal amount of which consists". 3. The table set forth in the sixth paragraph of the Certificate shall be deemed to read as follows: Aggregate Series Maturity Principal Amount Interest Rate - --------- ------------------ ------------------ --------------- A January 15, 2017 $36,665,000 7.50% B January 15, 2018 $13,616,000 7.52% C January 15, 2014 $13,144,000 7.65%
4. Schedule I to the Certificate shall be deemed replaced by the Schedule I attached hereto. 5. All capitalized terms used herein shall have the respective meanings assigned thereto in Schedule II to the Trust Indenture and Security Agreement (Federal Express Corporation Trust No. N584FE) dated as of May 1, 1997. 6. Except as amended hereby, the Certificate shall remain unmodified and in full force and effect and is hereby ratified and confirmed. 7. THIS ADDENDUM IS BEING DELIVERED IN THE STATE OF NEW YORK AND SHALL IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE BUT WITHOUT GIVING EFFECT TO THE CONFLICT OF LAWS PROVISIONS THEREOF. IN WITNESS WHEREOF, the Owner Trustee has caused this Addendum to be duly executed in its corporate name by its officer thereunto duly authorized. Dated: February 26, 1998 STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT, NATIONAL ASSOCIATION, not in its individual capacity, but solely as Owner Trustee By: _______________________________ Name: Paul D. Allen Title: Vice President AUTHENTICATION AND ACKNOWLEDGMENT Dated: February 26, 1998 FIRST SECURITY BANK, NATIONAL ASSOCIATION, not in its individual capacity but as Indenture Trustee, Pass Through Trustee and Subordination Agent By: _______________________________ Name: Greg A. Hawley Title: Vice President ADDENDUM TO EQUIPMENT TRUST CERTIFICATE (FEDERAL EXPRESS CORPORATION TRUST NO. N584FE) SERIES B February 26, 1998 The above-described Certificate shall be deemed amended as follows: 1. References in the first paragraph of the Certificate to the date of the Certificate shall be deemed to be references to the date of this Addendum. 2. The phrase "limited in aggregate initial principal amount to $60,892,000 consisting" following the second parenthetical in the sixth paragraph of the Certificate shall be deemed replaced with the phrase "the aggregate principal amount of which consists". 3. The table set forth in the sixth paragraph of the Certificate shall be deemed to read as follows: Aggregate Series Maturity Principal Amount Interest Rate - --------- ------------------ ------------------ --------------- A January 15, 2017 $36,665,000 7.50% B January 15, 2018 $13,616,000 7.52% C January 15, 2014 $13,144,000 7.65%
4. Schedule I to the Certificate shall be deemed replaced by the Schedule I attached hereto. 5. All capitalized terms used herein shall have the respective meanings assigned thereto in Schedule II to the Trust Indenture and Security Agreement (Federal Express Corporation Trust No. N584FE) dated as of May 1, 1997. 6. Except as amended hereby, the Certificate shall remain unmodified and in full force and effect and is hereby ratified and confirmed. 7. THIS ADDENDUM IS BEING DELIVERED IN THE STATE OF NEW YORK AND SHALL IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE BUT WITHOUT GIVING EFFECT TO THE CONFLICT OF LAWS PROVISIONS THEREOF. IN WITNESS WHEREOF, the Owner Trustee has caused this Addendum to be duly executed in its corporate name by its officer thereunto duly authorized. Dated: February 26, 1998 STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT, NATIONAL ASSOCIATION, not in its individual capacity, but solely as Owner Trustee By: _______________________________ Name: Paul D. Allen Title: Vice President AUTHENTICATION AND ACKNOWLEDGMENT Dated: February 26, 1998 FIRST SECURITY BANK, NATIONAL ASSOCIATION, not in its individual capacity but as Indenture Trustee, Pass Through Trustee and Subordination Agent By: _______________________________ Name: Greg A. Hawley Title: Vice President ADDENDUM TO EQUIPMENT TRUST CERTIFICATE (FEDERAL EXPRESS CORPORATION TRUST NO. N584FE) SERIES C February 26, 1998 The above-described Certificate shall be deemed amended as follows: 1. The face amount of the Certificate shall be $13,144,000 (Thirteen Million, One Hundred Forty-Four Thousand Dollars). 2. References in the first paragraph of the Certificate to the date of the Certificate shall be deemed to be references to the date of this Addendum. 3. The phrase "limited in aggregate initial principal amount to $60,892,000 consisting" following the second parenthetical in the sixth paragraph of the Certificate shall be deemed replaced with the phrase "the aggregate principal amount of which consists". Aggregate Series Maturity Principal Amount Interest Rate - --------- ------------------ ------------------ --------------- A January 15, 2017 $36,665,000 7.50% B January 15, 2018 $13,616,000 7.52% C January 15, 2014 $13,144,000 7.65%
5. Schedule I to the Certificate shall be deemed replaced by the Schedule I attached hereto. 6. All capitalized terms used herein shall have the respective meanings assigned thereto in Schedule II to the Trust . 7. Except as amended hereby, the Certificate shall remain unmodified and in full force and effect and is hereby ratified and confirmed. 8. THIS ADDENDUM IS BEING DELIVERED IN THE STATE OF NEW YORK AND SHALL IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE BUT WITHOUT GIVING EFFECT TO THE CONFLICT OF LAWS PROVISIONS THEREOF. IN WITNESS WHEREOF, the Owner Trustee has caused this Addendum to be duly executed in its corporate name by its officer thereunto duly authorized. Dated: February 26, 1998 STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT, NATIONAL ASSOCIATION, not in its individual capacity, but solely as Owner Trustee By: _______________________________ Name: Paul D. Allen Title: Vice President AUTHENTICATION AND ACKNOWLEDGMENT Dated: February 26, 1998 FIRST SECURITY BANK, NATIONAL ASSOCIATION, not in its individual capacity but as Indenture Trustee, Pass Through Trustee and Subordination Agent By: _______________________________ Name: Greg A. Hawley Title: Vice President -----END PRIVACY-ENHANCED MESSAGE-----