<PAGE> 1
PROSPECTUS SUPPLEMENT
(To Prospectus Dated February 25, 1994)
$93,425,000 [LOGO]
GENERAL AMERICAN TRANSPORTATION CORPORATION
1994-1 PASS THROUGH TRUST
8.42% PASS THROUGH CERTIFICATES, SERIES 1994-1
Each Pass Through Certificate offered hereby will represent a fractional
undivided interest in the General American Transportation Corporation 1994-1
Pass Through Trust (the "Pass Through Trust") to be formed pursuant to a pass
through trust agreement and a trust supplement between General American
Transportation Corporation ("GATC" or the "Company") and The First National Bank
of Chicago (the "Pass Through Trustee"), as trustee under the Pass Through
Trust. The property of the Pass Through Trust will consist of four equipment
notes (the "Equipment Notes") issued on a nonrecourse basis by the trustee of a
separate owner trust (the "Owner Trustee") pursuant to a leveraged lease
transaction to finance not more than 80% of the equipment cost of certain
railroad tank cars and covered hopper cars (each railcar an "Equipment Unit" or
"Unit" and, collectively, the "Equipment") which will be leased to the Company.
Although neither the Pass Through Certificates nor the Equipment Notes are
direct obligations of, or guaranteed by, GATC, the amounts unconditionally
payable by GATC for the lease of the Equipment will be at least sufficient to
pay in full when due all payments of principal of, premium, if any, and interest
on the Equipment Notes held in the Pass Through Trust.
The Equipment Notes acquired by the Pass Through Trust will mature on or before
the final distribution date of the Pass Through Certificates. The Equipment
Notes will be issued under an indenture and will be secured by a security
interest in the Equipment leased by the Company under the lease relating to such
indenture and by an assignment of certain of the Owner Trustee's rights under
such lease, including the right to receive rentals payable by the Company in
respect of such Equipment pursuant to such lease.
Interest paid on the Equipment Notes held in the Pass Through Trust will be
passed through to the Certificateholders on January 1 and July 1 of each year,
commencing July 1, 1995, at the rate per annum set forth below until the final
distribution date for the Pass Through Trust. Principal payments on the
Equipment Notes held in the Pass Through Trust will be passed through to the
Certificateholders in scheduled amounts on January 1 or July 1, or both, of each
year, commencing on July 1, 1996, and continuing until the final distribution
date for the Pass Through Trust. The Equipment Notes may be prepaid under
certain circumstances.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------
INTEREST FINAL PRICE TO
PRINCIPAL RATE DISTRIBUTION DATE PUBLIC (1)(2)
AMOUNT
<S> <C> <C> <C> <C>
Series 1994-1.............................. $93,425,000 8.42% January 1, 2015 100%
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Plus accrued interest, if any, from August 16, 1994.
(2) The underwriting commission is $747,400, which constitutes 0.80% of the
principal amount of the Pass Through Certificates. The underwriting
commissions, and certain other expenses estimated at $400,000, will be
payable by the Owner Trustee in the leveraged lease transaction (other than
certain expenses to be paid directly by GATC). The proceeds from the sale of
the Pass Through Certificates will be used to purchase the Equipment Notes
from the Owner Trustee.
The Pass Through Certificates are offered subject to receipt and acceptance by
the Underwriters, to prior sale and to the Underwriters' right to reject any
order in whole or in part and to withdraw, cancel or modify the offer without
notice. It is expected that delivery of the Pass Through Certificates will be
made in book-entry form only through the facilities of The Depository Trust
Company on or about August 16, 1994 against payment therefor in same-day funds.
SALOMON BROTHERS INC MORGAN STANLEY & CO.
INCORPORATED
The date of this Prospectus Supplement is August 9, 1994.
<PAGE> 2
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE PASS THROUGH
CERTIFICATES OFFERED HEREBY AT LEVELS ABOVE THOSE WHICH MIGHT OTHERWISE PREVAIL
IN THE OPEN MARKET. SUCH TRANSACTIONS MAY BE EFFECTED IN THE OVER-THE-COUNTER
MARKET OR OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY
TIME.
S-2
<PAGE> 3
SUMMARY
The following summary does not purport to be complete and is qualified in
its entirety by reference to the detailed information appearing elsewhere in
this Prospectus Supplement and the accompanying Prospectus.
THE COMPANY
General American Transportation Corporation ("GATC" or the "Company"), a
New York corporation, is principally engaged in railcar leasing and management.
GATC, through its wholly owned subsidiary GATX Terminals Corporation
("Terminals"), is also engaged in the operation of public bulk liquid storage
terminals and domestic pipeline systems. GATC's principal executive office is
located at 500 West Monroe Street, Chicago, Illinois 60661 (telephone
312-621-6200). GATC is a wholly owned subsidiary of GATX Corporation ("GATX").
THE OFFERING
Glossary...................... Included at the end of the accompanying
Prospectus as Appendix I is a Glossary of
certain of the significant defined terms used
herein and in the Prospectus.
Pass Through Trust............ The General American Transportation Corporation
1994-1 Pass Through Trust (the "Pass Through
Trust") is to be formed pursuant to a trust
supplement (the "Trust Supplement") to be
entered into pursuant to the Pass Through Trust
Agreement (the "Basic Agreement") between GATC
and The First National Bank of Chicago (the
"Pass Through Trustee"), as trustee under the
Pass Through Trust.
Pass Through Trust Property... The property of the Pass Through Trust will
consist of four equipment notes (the "Equipment
Notes") issued on a nonrecourse basis by the
Owner Trustee pursuant to a leveraged lease
transaction to finance not more than 80% of the
equipment cost of certain railroad tank cars
and covered hopper cars (each railcar an
"Equipment Unit" or "Unit" and, collectively,
the "Equipment") which will be leased to the
Company. The Equipment securing the Equipment
Notes is described in "Use of Proceeds" in this
Prospectus Supplement. The Pass Through
Certificates, Series 1994-1 (the "Pass Through
Certificates") that will be issued by the Pass
Through Trust will bear interest at the same
rate as the rate on the Equipment Notes. The
final maturity date of the Equipment Notes
acquired by the Pass Through Trust is January
1, 2015, which is the final distribution date
of the Pass Through Certificates. The aggregate
principal amount of the Equipment Notes to be
held in the Pass Through Trust will be the same
as the aggregate principal amount of the Pass
Through Certificates issued by the Pass Through
Trust.
Pass Through Certificates
Offered;
Book-Entry Registration..... Each Pass Through Certificate will represent a
fractional undivided interest in the Pass
Through Trust. The Pass Through Certificates
will be issued in fully registered form and
will be registered in the name of Cede & Co.
("Cede"), as the nominee of The Depository
Trust Company ("DTC"). No person acquiring an
interest in the Pass Through Certificates will
be entitled to
S-3
<PAGE> 4
receive a definitive certificate (a "Definitive
Certificate") representing such person's
interest in the Pass Through Trust, unless
Definitive Certificates are issued, which only
occur under limited circumstances. See
"Description of the Pass Through
Certificates -- General" and "-- Book-Entry
Registration" in the accompanying Prospectus.
Regular Distribution Dates.... January 1 and July 1.
Special Distribution Dates.... The 1st day of any month, except in the case of
a refinancing as to which the Special
Distribution Date may be any Business Day.
Record Dates.................. The fifteenth day preceding a Regular
Distribution Date or a Special Distribution
Date.
Initial Average Life Date..... The initial average life date of the Pass
Through Certificates is March 20, 2008.
Distributions................. Payments of interest on each of the Equipment
Notes held in the Pass Through Trust are
scheduled to be received by the Pass Through
Trustee on January 1 and July 1 of each year,
commencing July 1, 1995, and are to be
distributed to the Certificateholders on such
dates. Payments of principal on each of the
Equipment Notes are scheduled to be received in
specified amounts by the Pass Through Trustee
on January 1 or July 1, or both, of each year,
commencing July 1, 1996, and are to be
distributed to the Certificateholders on the
corresponding Regular Distribution Dates.
Payments of principal of, Make-Whole Amount, if
any, and interest on each of the Equipment
Notes resulting from prepayments thereof, if
any, will be distributed on a Special
Distribution Date after not less than 20 days'
notice from the Pass Through Trustee to the
Certificateholders. See "Description of the
Pass Through Certificates -- Payments and
Distributions" in this Prospectus Supplement.
For a discussion of distributions upon an Event
of Default, see "Description of the Pass
Through Certificates -- Events of Default and
Certain Rights Upon an Event of Default" in the
accompanying Prospectus.
In the event that on the date of issuance of the
Pass Through Certificates all the proceeds from
the sale of the Pass Through Certificates are
not used to purchase the Equipment Notes, the
Pass Through Trustee will hold such unused
proceeds in an escrow account. To the extent
that the Equipment Notes are not purchased by
the Pass Through Trustee on or prior to August
30, 1994, the unexpended proceeds, together
with interest thereon at the rate applicable to
the Pass Through Certificates, but without
premium, will be distributed to
Certificateholders as a Special Payment on
October 1, 1994. See "Description of the Pass
Through Certificates -- Delayed Purchase" in
the accompanying Prospectus.
Same-Day Settlement........... The Pass Through Certificates will trade in
DTC's Same Day Funds Settlement System until
maturity, and secondary market trading
S-4
<PAGE> 5
activity in the Pass Through Certificates will
therefore be required by DTC to settle in
immediately available funds.
Method of Distributions....... So long as the Pass Through Certificates are
registered in the name of Cede, as nominee of
DTC, distributions by the Pass Through Trustee
will be made in same-day funds to DTC, which
will in turn make distributions to participants
in DTC ("DTC Participants") in same-day funds.
Responsibility for distributions by DTC
Participants to beneficial owners of the Pass
Through Certificates will be the responsibility
of such DTC Participants and will be made in
accordance with customary industry practices.
See "Description of the Pass Through
Certificates -- Book-Entry Registration" in the
accompanying Prospectus. At such time, if any,
as Definitive Certificates are issued
representing the Pass Through Certificates and
such Definitive Certificates are not registered
in the name of Cede, as nominee for DTC,
distributions by the Pass Through Trustee to
Certificateholders, other than the final
distribution, will be made by check mailed to
each Certificateholder of record on the
applicable record date at its address appearing
on the register maintained with respect to the
Pass Through Trust. The final distribution with
respect to the Pass Through Certificates will
be made only upon presentation and surrender
thereof at the office or agency of the Pass
Through Trustee. See "Description of the Pass
Through Certificates -- Payments and
Distributions" in the accompanying Prospectus.
Interest...................... Interest on the Pass Through Certificates will
be passed through to the Certificateholders at
the rate per annum indicated on the cover of
this Prospectus Supplement, which is the
interest rate borne by the Equipment Notes to
be held in the Pass Through Trust. Interest is
calculated on the basis of a 360-day year of
twelve 30-day months. See "Description of the
Pass Through Certificates -- General" in the
accompanying Prospectus.
Principal..................... The principal of each of the Equipment Notes is
payable in scheduled amounts on January 1 or
July 1, or both, of each year, commencing July
1, 1996. See "Description of the Pass Through
Certificates -- Payments and Distributions" and
"Description of the Equipment
Notes -- Principal Payments" in this Prospectus
Supplement.
Equipment Notes: General...... Interest will be payable on each of the
Equipment Notes on the unpaid principal amount
thereof on January 1 and July 1 of each year,
commencing July 1, 1995. The principal amounts
of the Equipment Notes are payable in
accordance with the principal repayment
schedule set forth herein under "Description of
the Equipment Notes -- Principal Payments."
Equipment Notes: Prepayment... One of more of the Equipment Notes may be
prepaid under the following circumstances:
(a) Upon the occurrence of an Event of Loss
with respect to an Equipment Unit, if such
Equipment Unit is not replaced, all or a
portion of the Equipment Note issued with
respect to such Equipment Unit is subject
to prepayment on a
S-5
<PAGE> 6
Regular Distribution Date (or, if
earlier, a Special Distribution Date if
prepayment is then required due to Events
of Loss as to fifteen or more Equipment
Units) at a price equal to the sum of (i)
as to principal, an amount equal to the
product obtained by multiplying the
unpaid principal amount of the related
Equipment Note as of such prepayment date
by a fraction, the numerator of which
shall be the Equipment Cost of such
Equipment Unit and the denominator of
which shall be the aggregate Equipment
Cost of all Equipment Units with respect
to which such Equipment Note was issued
immediately prior to such prepayment date
and (ii) as to interest, the aggregate
amount of interest accrued and unpaid in
respect of the principal amount to be
prepaid pursuant to clause (i) above on
such prepayment date, but without the
payment of any Make-Whole Amount.
(b) In the event the Company elects to
exercise its right to purchase the
Equipment as a result of the related Owner
Participant engaging in a business that is
in competition with the Company's full
service railcar leasing business, all of
the Equipment Notes will be prepaid on a
Special Distribution Date. In the event of
a refinancing of the Equipment Notes, all
of the Equipment Notes will be prepaid on
the date of such refinancing, which may be
any Business Day. In either such case the
prepayment price shall be equal to the
unpaid principal amount of the Equipment
Notes, together with accrued interest
thereon, plus, if such prepayment is made
prior to July 1, 2008, the Make-Whole
Amount (if any). See "Description of the
Equipment Notes -- Prepayments" in this
Prospectus Supplement for a description of
the manner of computing the Make-Whole
Amount.
(c) If, at any time on or after July 1, 2002,
the Company elects to exercise its right
to terminate the Lease with respect to any
Equipment Unit, a portion of the Equipment
Note which was issued with respect to such
Equipment Unit, computed as provided in
paragraph (a) above, would be prepaid on a
Regular Distribution Date (or, in certain
limited circumstances, a Special
Distribution Date) at a price equal to the
unpaid principal amount thereof, together
with accrued interest thereon plus, if
such prepayment is made prior to July 1,
2008, the Make-Whole Amount (if any)
referred to in paragraph (b) above.
(d) If under the Indenture (i) one or more
Lease Events of Default shall have
occurred and be continuing for 180 days or
more during which time the Equipment Notes
could, but shall not, have been
accelerated, (ii) the Equipment Notes
shall have been accelerated, (iii) the
exercise of remedies in respect of the
Equipment Units shall have commenced or
(iv) foreclosure of the lien of the
Indenture shall have commenced, the Owner
Trustee (except during any period
S-6
<PAGE> 7
in which the Company or an affiliate
owns more than 20% of the related owner
trust) may elect to purchase all of the
then outstanding Equipment Notes at a
price equal to the aggregate unpaid
principal amount thereof, together with
accrued interest thereon, but without the
payment of any Make-Whole Amount, except
in certain circumstances under clause (iv)
above.
See "Description of the Equipment
Notes -- Prepayments" in this Prospectus
Supplement.
Equipment Notes: Security..... All of the Equipment Notes will be equally and
ratably secured by a perfected security
interest in all of the Equipment leased by the
Company under the Lease and by an assignment to
the Indenture Trustee of certain of the Owner
Trustee's rights under the Lease covering such
Equipment, including the right to receive
rentals payable by the Company in respect of
such Equipment pursuant to such Lease. See
"Description of the Equipment
Notes -- Security" in the accompanying
Prospectus.
In the event of the bankruptcy of the Owner
Participant, it is possible that,
notwithstanding that the Equipment is owned by
an Owner Trustee in trust, the Equipment and
the Lease and the Equipment Notes related
thereto might become part of the bankruptcy
proceeding. In such event, payments on the
Equipment Notes might be interrupted and the
ability of the Indenture Trustee to exercise
its remedies under the Indenture might be
restricted, although the Indenture Trustee
would retain its status as a secured creditor
in respect of such Lease and the Equipment. See
"Description of the Equipment
Notes -- Indenture Events of Default and
Remedies" in the accompanying Prospectus.
If an Indenture Event of Default under the
Indenture occurs and is continuing, the Pass
Through Trustee will be entitled to exercise
certain remedies, including selling all or part
of the Equipment Notes. So long as the same
institution acts as Pass Through Trustee of the
Pass Through Trust and any other Trust formed
pursuant to the Basic Agreement it may be faced
with a conflict in deciding from which Trust to
sell Equipment Notes to any available buyers.
If the Trustee sells any of the Equipment Notes
for less than their outstanding principal
amount, the Certificateholders will receive a
smaller principal distribution than anticipated
and will not have any claim for the shortfall
against GATC, the Owner Trustee, the Owner
Participant or the Pass Through Trustee. See
"Description of the Pass Through
Certificates -- Events of Default and Certain
Rights Upon an Event of Default" in the
accompanying Prospectus.
Although the Equipment Notes are not direct
obligations of, or guaranteed by, the Company
or any affiliate thereof, the amounts
unconditionally payable by the Company under
the Lease will be sufficient to pay in full
when due all payments of principal of,
Make-Whole Amount, if any, and interest on the
S-7
<PAGE> 8
Equipment Notes. See "Description of the
Equipment Notes -- General" in the accompanying
Prospectus.
Use of Proceeds............... The proceeds from the sale of the Pass Through
Certificates will be used by the Pass Through
Trustee to purchase the Equipment Notes from
the Owner Trustee. The Owner Trustee will use
such proceeds to finance not more than 80% of
the equipment cost of the Equipment,
representing in the aggregate the entire debt
portion of a leveraged lease transaction. The
net proceeds to the Company from the sale of
the Equipment will be used by the Company for
general corporate purposes. See "Use of
Proceeds" in this Prospectus Supplement and in
the accompanying Prospectus.
Pass Through Trustee.......... The First National Bank of Chicago will act as
Pass Through Trustee, and as paying agent and
registrar for the Pass Through Certificates.
The First National Bank of Chicago also will
act as the Indenture Trustee under the
Indenture.
Federal Income Tax
Consequences................ The Pass Through Trust will be classified as a
grantor trust for federal income tax purposes,
and each Certificateholder will be treated as
the owner of a pro rata undivided interest in
each of the Equipment Notes and any other
property held in the Pass Through Trust and
will be required to report on its federal
income tax return its pro rata share of income
from such Equipment Notes and such other
property in accordance with such
Certificateholder's method of accounting. See
"Federal Income Tax Consequences" in the
accompanying Prospectus.
ERISA Considerations.......... The Pass Through Certificates, with certain
exceptions, are eligible for purchase by
employee benefit plans. See "ERISA
Considerations" in this Prospectus Supplement
and in the accompanying Prospectus.
S-8
<PAGE> 9
DIAGRAM OF PAYMENTS
The following diagram illustrates certain aspects of the payment flows in
the leveraged lease transaction among the Company, the Owner Trustee, the Owner
Participant, the Indenture Trustee, the Pass Through Trustee and the
Certificateholders.
In the leveraged lease transaction, the Company will lease the Equipment
from the Owner Trustee, as lessor for the Equipment under the Lease. Equipment
Notes with respect to the Equipment will be issued under the Indenture by the
Owner Trustee and will be purchased by the Pass Through Trustee for the benefit
of the Certificateholders. Rent is payable under the Lease to the Owner Trustee,
as lessor. However, as a result of the assignment of certain rights of the Owner
Trustee under the Lease to the Indenture Trustee, the Company will make rental
payments directly to the Indenture Trustee. From these rental payments the
Indenture Trustee will, on behalf of the Owner Trustee, first make payments to
the Pass Through Trustee as required to meet the Owner Trustee's obligations
under the Equipment Notes and will pay the remaining balance to the Owner
Trustee, for the benefit of the Owner Participant. The Pass Through Trustee will
distribute payments received in respect of the Equipment Notes to the
Certificateholders as required under the terms of the Pass Through Certificates.
The First National Bank of Chicago will act initially both as Pass Through
Trustee of the Pass Through Trust and as Indenture Trustee under the Indenture.
General American
Transportation Corporation
|
| Lease Rental Payments
| Assigned by Owner Trustee
| to Indenture Trustee
|
V
Indenture Trustee
for Equipment
| |
Excess | | Equipment Note
Owner Payments | | Payments
Trustee <------------------------ |
for |
Equipment |
| V
| Pass Through Trustee
| for 1994 - 1
| Pass Through Trust
| |
| | Pass Through
| | Certificate
V | Distributions
Owner |
Participant V
for Holders of Pass Through
Equipment Certificates, Series 1994 - 1
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<PAGE> 10
USE OF PROCEEDS
The Pass Through Certificates are being issued in order to facilitate the
financing by the Owner Trustee on behalf of the Owner Participant of its
purchase from the Company of the Equipment to be leased to the Company. All of
the proceeds from the sale of the Pass Through Certificates will be used by the
Pass Through Trustee on behalf of the Pass Through Trust to purchase the
Equipment Notes issued by the Owner Trustee which, in turn, will use the
proceeds, together with funds provided by the Owner Participant, to purchase the
Equipment from the Company, on behalf of the Owner Participant.
The Equipment Notes will be issued under a Trust Indenture and Security
Agreement (the "Indenture"), such Indenture being between The First National
Bank of Chicago, as trustee thereunder (in such capacity, the "Indenture
Trustee"), and State Street Bank and Trust Company, not in its individual
capacity (except as expressly set forth therein) but solely as Owner Trustee of
a separate trust for the benefit of the Owner Participant. The Owner Participant
will provide from sources other than the Equipment Notes at least 20% of the
Equipment Cost of the Equipment as an equity investment.
The following table sets forth information with respect to the Equipment
(consisting of an aggregate of 2,312 railcars, all of which were manufactured in
1993 or 1994) expected to be purchased by the Owner Trustee and leased to the
Company:
<TABLE>
<CAPTION>
AGGREGATE
FUNCTIONAL TYPE EQUIPMENT
GROUP OF CAR DESCRIPTION COST
- --- -------------------- ---------------------------- -------------
<S> <C> <C> <C>
A Covered Hopper Cars 4900 Cu. Ft. Airslide(R) $ 3,757,896
B Covered Hopper Cars 5125 Cu. Ft. Power Flo 8,083,806
C Tank Cars Misc. Large Alloy 10,830,161
D Tank Cars 13,000 Gallon 10,819,648
E Tank Cars 20,000 Gallon 2,724,905
F Tank Cars 13,000 Gallon 6,371,337
G Tank Cars 20,000 Gallon 6,875,092
H Tank Cars 23,000 Gallon 54,234,518
I Tank Cars 26,000 Gallon 1,097,721
J Tank Cars 26,000 Gallon 2,376,547
K Tank Cars 29,000 Gallon 8,433,204
L Tank Cars 25,000 Gallon 6,017,743
M Tank Cars Misc. Large Steel 1,404,056
N Tank Cars 33,500 Gallon 750,032
O Tank Cars 25,000 Gallon 3,290,975
P Tank Cars 33,500 Gallon 2,932,484
-------------
Total $130,000,125
=============
</TABLE>
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<PAGE> 11
CAPITALIZATION
The following table summarizes the capitalization of the Company as of
March 31, 1994:
<TABLE>
<CAPTION>
AT MARCH 31,
1994
------------
<S> <C>
(IN
MILLIONS)
Short-term debt............................................................... $ 154.0
Long-term debt:
Term debentures and notes, 5.16%-10.80%, due through 2004................... 640.7
Industrial revenue bonds, 6.65%-10.875%, due through 2023................... 88.0
Capital lease obligations................................................... 124.7
------------
Total debt.................................................................... 1,007.4
Deferred income taxes......................................................... 269.6
Shareholder's equity:
Common Stock -- par value $1 per share, 1,000 shares authorized, issued and
outstanding (wholly-owned by GATX)....................................... --
Additional capital.......................................................... 335.0
Reinvested earnings......................................................... 315.7
Cumulative foreign currency translation adjustment.......................... 5.8
------------
Total shareholder's equity.................................................... 656.5
------------
Total capitalization including short-term debt...................... $1,933.5
============
</TABLE>
The Company has entered into a $250 million revolving credit agreement with
a group of banks. Debt issued under this credit agreement will be unsecured. The
full amount of the facility can be used for general corporate purposes by the
Company. While at March 31, 1994 no borrowings were outstanding under the
agreement, the available line of credit was reduced by $74.3 million of
commercial paper outstanding. As of March 31, 1994, the Company had $175.7
million available under the revolving credit agreement.
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<PAGE> 12
SUMMARY FINANCIAL INFORMATION
The following table summarizes selected financial information of the
Company and has been derived from the Company's reports on Form 10-K and Form
10-Q. Certain amounts in the financial statements of prior periods have been
reclassified to conform to the current presentation.
<TABLE>
<CAPTION>
THREE MONTHS
ENDED
MARCH 31, YEAR ENDED DECEMBER 31,
------------------- ----------------------------------------------------
1994 1993 1993 1992 1991 1990 1989
-------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
(DOLLARS IN MILLIONS)
OPERATING DATA:
Gross income................................... $ 154.6 $ 147.3 $ 601.7 $ 579.2 $ 558.9 $ 540.5 $ 476.5
Costs and expenses:
Operating expenses........................... 70.6 64.5 271.9 255.8 230.7 208.3 169.9
Interest..................................... 18.2 21.4 78.8 96.0 100.7 106.3 90.8
Provision for depreciation and
amortization............................... 26.9 26.4 104.9 101.2 98.0 95.2 82.0
Selling, general and administrative.......... 11.3 9.6 41.5 38.0 41.0 36.0 30.3
-------- -------- -------- -------- -------- -------- --------
Total costs and expenses..................... 127.0 121.9 497.1 491.0 470.4 445.8 373.0
Income before income taxes, equity in net
earnings of affiliated companies and
cumulative effect of accounting changes...... 27.6 25.4 104.6 88.2 88.5 94.7 103.5
Income taxes................................... 10.6 9.4 45.1 31.7 29.0 29.9 34.7
-------- -------- -------- -------- -------- -------- --------
Income before equity in net earnings of
affiliated companies and cumulative effect of
accounting changes........................... 17.0 16.0 59.5 56.5 59.5 64.8 68.8
Equity in net earnings of affiliated
companies.................................... 3.7 3.4 14.6 16.3 14.7 11.8 8.0
-------- -------- -------- -------- -------- -------- --------
Income before cumulative effect of accounting
changes...................................... 20.7 19.4 74.1 72.8 74.2 76.6 76.8
Cumulative effect of accounting changes........ -- -- -- (6.7) -- -- --
-------- -------- -------- -------- -------- -------- --------
Net Income..................................... $ 20.7 $ 19.4 $ 74.1* $ 66.1 $ 74.2 $ 76.6 $ 76.8
======== ======== ======== ======== ======== ======== ========
Net cash provided by operating activities...... $ 51.1 $ 55.8 $ 206.5 $ 190.2 $ 177.1 $ 182.7 $ 171.0
Capital additions.............................. 87.0 57.9 273.1 192.8 187.5 301.3 233.6
BALANCE SHEET DATA (END OF PERIOD):
Property, plant and equipment -- net........... 1,616.0 1,568.3 1,557.3 1,538.0 1,543.7 1,536.7 1,475.6
Due from GATX Corporation...................... 366.3 364.4 361.5 358.7 338.8 307.7 310.8
Total Assets................................... 2,277.9 2,197.9 2,215.6 2,164.1 2,136.2 2,129.9 1,959.2
Debt:
Short-term debt.............................. 154.0 150.1 104.2 133.3 78.7 59.1 50.0
Long-term debt:
Equipment trust certificates............... -- -- -- -- 108.6 153.3 201.7
Other...................................... 728.7 727.2 731.9 723.8 700.2 720.2 556.4
Capital lease obligations.................. 124.7 133.1 126.8 135.0 139.0 142.6 146.1
Shareholder's equity........................... 656.5 625.1 643.9 618.9 593.9 553.7 534.8
RATIO OF EARNINGS TO FIXED CHARGES**............. 2.25x 2.06x 2.13x 1.83x 1.81x 1.85x 2.10x
</TABLE>
- ---------------
* Net income was reduced by $7.7 million as a result of a change in the federal
tax rate.
** The ratio of earnings to fixed charges represents the number of times "fixed
charges" are covered by "earnings." "Fixed charges" consist of interest on
outstanding debt and capitalized interest, one-third (the proportion deemed
representative of the interest factor) of rentals, amortization of debt
discount and expenses. "Earnings" consist of consolidated income before
income taxes, fixed charges, and in 1992 the cumulative effect of accounting
changes, less equity in net earnings of affiliated companies, net of
distributions received.
S-12
<PAGE> 13
DESCRIPTION OF BUSINESS
The Company is a wholly owned subsidiary of GATX and is engaged in railcar
leasing and management. Terminals is a wholly owned subsidiary of the Company
and is engaged in the operation of public bulk liquid storage terminals and
domestic pipeline systems. The Company is the largest lessor of railroad tank
cars in the United States, and Terminals is one of the largest independent
operators of public bulk liquid storage terminals in the world.
SUMMARY SEGMENT FINANCIAL INFORMATION
The table below sets forth gross income; income before income taxes, equity
in net earnings of affiliated companies and the cumulative effect of accounting
changes; net income; and identifiable assets for the Company's Railcar Leasing
and Management segment and for the Terminals and Pipelines segment for each of
the three months ended March 31, 1994 and 1993, and for each of the five years
ended December 31, 1993, 1992, 1991, 1990, and 1989.
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31, YEAR ENDED DECEMBER 31,
------------------- -----------------------------------------------------
1994 1993 1993 1992 1991 1990 1989
-------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
(DOLLARS IN MILLIONS)
GROSS INCOME:
Railcar leasing and
management.................. $ 78.0 $ 73.5 $ 302.2 $ 289.3 $ 285.3 $ 279.4 $ 261.2
Terminals and pipelines....... 72.3 69.2 281.1 266.5 249.7 229.7 181.1
-------- -------- -------- -------- -------- -------- --------
Subtotal.................... 150.3 142.7 583.3 555.8 535.0 509.1 442.3
Interest from GATX............ 4.3 4.6 18.4 23.4 23.9 31.4 34.2
-------- -------- -------- -------- -------- -------- --------
Total Gross Income.......... $ 154.6 $ 147.3 $ 601.7 $ 579.2 $ 558.9 $ 540.5 $ 476.5
======= ======= ======= ======= ======= ======= =======
INCOME BEFORE INCOME TAXES,
EQUITY IN NET EARNINGS OF
AFFILIATED COMPANIES AND
CUMULATIVE EFFECT OF
ACCOUNTING CHANGES:
Railcar leasing and
management.................. $ 19.2 $ 17.5 $ 74.4 $ 68.4 $ 73.6 $ 75.3 $ 73.1
Terminals and pipelines....... 8.4 7.9 30.2 19.8 14.9 19.4 30.4
-------- -------- -------- -------- -------- -------- --------
Total Income Before Income
Taxes, Equity in Net
Earnings of Affiliated
Companies and Cumulative
Effect of Accounting
Changes................... $ 27.6 $ 25.4 $ 104.6 $ 88.2 $ 88.5 $ 94.7 $ 103.5
======= ======= ======= ======= ======= ======= =======
NET INCOME:
Railcar leasing and
management.................. $ 13.2 $ 12.4 $ 47.6 $ 55.6 $ 55.2 $ 57.2 $ 53.0
Terminals and pipelines....... 7.5 7.0 26.5 18.7 19.0 19.4 23.8
Other......................... -- -- -- (8.2) -- -- --
-------- -------- -------- -------- -------- -------- --------
Total Net Income............ $ 20.7 $ 19.4 $ 74.1* $ 66.1** $ 74.2 $ 76.6 $ 76.8
======= ======= ======= ======= ======= ======= =======
IDENTIFIABLE ASSETS:
Railcar leasing and
management.................. $1,759.5 $1,720.0 $1,701.0 $1,694.7 $1,678.3 $1,695.1 $1,577.4
Terminals and pipelines....... 886.1 817.0 872.5 816.2 781.7 727.7 521.7
Other......................... 1.0 0.9 1.0 0.9 0.7 0.6 0.5
-------- -------- -------- -------- -------- -------- --------
Subtotal.................... 2,646.6 2,537.9 2,574.5 2,511.8 2,460.7 2,423.4 2,099.6
Intersegment amounts.......... (368.7) (340.0) (358.9) (347.7) (324.5) (293.5) (140.4)
-------- -------- -------- -------- -------- -------- --------
Total Identifiable Assets... $2,277.9 $2,197.9 $2,215.6 $2,164.1 $2,136.2 $2,129.9 $1,959.2
======= ======= ======= ======= ======= ======= =======
</TABLE>
- ---------------
* Net income was reduced by $7.7 million as a result of a change in the federal
tax rate.
** Net income was reduced by $6.7 million due to the Company's adoption of FAS
106 and FAS 109.
S-13
<PAGE> 14
RAILCAR LEASING AND MANAGEMENT
The Company is principally engaged in leasing specialized railcars,
primarily tank cars, under full service leases. As of March 31, 1994, its fleet
consisted of approximately 56,400 railcars, including approximately 48,600 tank
cars and 7,800 specialized freight cars, primarily Airslide(R) covered hopper
cars and plastic pellet cars. The Company has upgraded its fleet over time by
adding new, larger capacity cars and retiring older, smaller capacity cars. The
Company's railcars have a useful life of approximately 30 to 33 years. The
average age of the railcars in the Company's fleet is approximately 15 years.
The following table sets forth the approximate tank car fleet capacity of
the Company as of the end of each of the periods indicated and the number of
cars of all types added to the Company's fleet during such periods:
<TABLE>
<CAPTION>
THREE MONTHS
ENDED YEAR ENDED DECEMBER 31,
MARCH 31, -------------------------------------
1994 1993 1992 1991 1990 1989
------------ ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C>
Tank car fleet capacity (in millions of
gallons)................................ 1,038 1,024 993 977 964 939
Number of cars added to fleet............. 900 3,000 1,600 1,500 1,700 2,900
</TABLE>
The Company's customers use its railcars to ship over 700 different
commodities, primarily chemicals, petroleum, food products and minerals. For
1993, approximately 55% of railcar leasing revenue was attributable to shipments
of chemical products, 21% to petroleum products, 18% to food products and 6% to
other products. Many of these products require cars with special features; the
Company offers a wide variety of sizes and types of cars to meet these needs.
The Company leases railcars to over 700 customers, including major chemical,
oil, food and agricultural companies. No single customer accounted for more than
6% of total railcar leasing revenue in 1993.
The Company typically leases new equipment to its customers for a term of
five years or longer, whereas renewals or leases of used cars are typically for
periods ranging from less than a year to seven years with an average lease term
of about three years. The utilization rate of the Company's railcars as of March
31, 1994 was approximately 93%.
Under its full service leases, the Company maintains and services its
railcars, pays ad valorem taxes and provides many ancillary services. Through
its Car Status Service System, for example, the Company provides customers with
timely information about the location and readiness of their leased cars to
enhance and maximize the utilization of this equipment. The Company also
maintains a network of service centers consisting of four major service centers
and 23 mobile trucks in 16 locations. The Company also utilizes independent
third-party repair shops.
The Company purchases most of its new railcars from Trinity Industries,
Inc. ("Trinity"), a Dallas-based metal products manufacturer, under a contract
entered into in 1984 and extended from time to time thereafter, most recently in
1992. The Company anticipates that through this contract it will continue to be
able to satisfy its customers' new car lease requirements. The Company's
engineering staff provides Trinity with design criteria and equipment
specifications, and works with Trinity's engineers to develop new technology
where needed in order to upgrade or improve car performance or in response to
regulatory requirements.
The full service railcar leasing industry is comprised of the Company,
Union Tank Car Company, General Electric Railcar Service Corporation, Shippers
Car Line division of ACF Industries, Incorporated, and many smaller companies.
Of the approximately 192,000 tank cars owned and leased in the United States at
December 31, 1993, the Company had approximately 48,000. Principal competitive
factors include price, service and availability.
Because the railcars covered by the Lease are of relatively recent
manufacture, they have not had any significant operating history. For that
reason, and because the Company's obligation under the Lease to make payments
sufficient to pay in full the Equipment Notes will be unconditional, and not
affected by
S-14
<PAGE> 15
the financial performance of any of the railcars covered by the Lease, the
Company believes that historical financial information with respect to the
railcars covered by the Lease is not relevant to purchasers of the Pass Through
Certificates.
TERMINALS AND PIPELINES
Terminals is engaged in the storage, handling and intermodal transfer of
petroleum and chemical commodities at key points in the bulk liquid distribution
chain. All of its terminals are located near major distribution and
transportation points and most are capable of receiving and shipping bulk
liquids by ship, rail, barge and truck. Many of the terminals are also linked
with major interstate pipelines. In addition to storing, handling and
transferring bulk liquids, Terminals provides blending and testing services at
most of its facilities. Terminals also owns or holds interests in four refined
product pipeline systems. As of December 31, 1993, Terminals owned and operated
27 terminals in 14 states, nine of which are associated with Terminals' pipeline
interests, and eight facilities in the United Kingdom; Terminals also had joint
venture interests in 12 international facilities.
As of December 31, 1993, Terminals had a total storage capacity of 71
million barrels. This includes 53 million barrels of bulk liquid storage
capacity in the United States, 6 million barrels in the United Kingdom and an
equity interest in another 12 million barrels of storage capacity in Europe and
the Far East. Terminals' smallest bulk liquid facility has a storage capacity of
100,000 barrels while its largest facility, located in Pasadena, Texas, has a
capacity of over 12 million barrels. During 1993, Terminals handled
approximately 635 million barrels of product through its wholly-owned bulk
liquid storage facilities, with capacity utilization of 92% at the end of 1993.
During the first three months of 1994, throughput totaled 174 million barrels
and capacity utilization was 87%.
For 1993, 77% of Terminals' revenue was derived from petroleum products and
20% from a variety of chemical products. Demand for Terminals' facilities is
dependent in part upon the demand for petroleum and chemical products and is
also affected by refinery output, foreign imports and the expansion of its
customers into new geographical markets.
Terminals serves nearly 200 customers, including major oil and chemical
companies as well as trading firms and larger independent refiners. No single
customer accounted for more than 7% of Terminals' 1993 revenue. Customer service
contracts are both short term and long term.
Terminals along with two Dutch companies, Paktank N.V. and Van Ommeren
N.V., are the three major international public terminalling companies. The
domestic public terminalling industry consists of Terminals, Paktank
Corporation, International-Matex Tank Terminals, and many smaller independent
terminalling companies. In addition to public terminalling companies, oil and
chemical companies, which generally do not make their storage facilities
available to others, also have significant storage capacity in their own private
facilities. Terminals' pipelines compete with rail, trucks and other pipelines
for movement of liquid petroleum products. Principal competitive factors include
price, location relative to distribution facilities, and service.
RELATIONSHIP WITH GATX
All of the Company's outstanding common stock is owned by GATX. GATX will
not guarantee the Pass Through Certificates and does not guarantee any other
indebtedness of the Company. The Company, in the normal course of business,
declares dividends to GATX to provide for GATX's normal operating expenses.
Additional amounts have been advanced to GATX from time to time for corporate
purposes, the redemption of GATX preferred stock and the retirement of debt. In
addition, GATX may make advances to subsidiaries of the Company in the normal
course of business. Interest income on advances by the Company to GATX was $18.4
million in 1993, $23.4 million in 1992 and $23.9 million in 1991. The interest
rate, which is periodically adjusted in accordance with short-term commercial
paper rates, averaged 4.30% in 1993, 6.20% in 1992 and 6.34% in 1991. These
advances have no fixed maturity date.
S-15
<PAGE> 16
The Company and its subsidiaries contribute to GATX pension plans which
cover substantially all of the Company's employees. Costs are allocated to the
Company on the basis of payroll costs with respect to normal cost and on the
basis of actuarial determinations for prior service cost. In addition to pension
benefits, the Company's employees participate in life insurance and dental and
medical programs sponsored by GATX.
The Company and GATX have policies allocating income tax liabilities. These
policies provide generally for the filing of consolidated tax returns by GATX,
but with payments to or from the Company as though the Company had filed a
separate return, except that the Company might not benefit from its investment
tax credits and foreign taxes paid to the same extent as if separate returns had
been filed.
LEGAL PROCEEDINGS AND ENVIRONMENTAL MATTERS
The Company and its subsidiaries have been named as defendants in a number
of pending lawsuits. These lawsuits include approximately 30 lawsuits (most
involving multiple plaintiffs) that have been filed in the Superior Court for
the State of California naming Terminals or Calnev Pipe Line Company as
defendants and seeking an unspecified amount of damages arising out of a May
1989 explosion in San Bernardino, California, as well as a number of suits
arising out of an incident in July 1991, when a Company-owned railcar was
involved in a derailment near Dunsmuir, California that resulted in a spill of
metam sodium into the Sacramento River. As a result of the latter incident the
Company has also been named as a potentially responsible party by the State of
California with respect to the assessment and remediation of possible damages to
natural resources. The Company has entered into provisional settlement
agreements with the United States of America, the state of California, Southern
Pacific and certain other defendants settling all material claims arising out of
the above incident in an amount not material to the Company. Such settlement,
however, is conditional on further court action. It is the opinion of management
that if damages are assessed and taking into consideration the probable
insurance recoveries, these lawsuits will not have a material effect on the
Company's consolidated financial position or results of operations.
Certain of the Company's and Terminals' operations present potential
environmental risks principally through the transportation or storage of various
commodities. Recognizing that some risk to the environment is intrinsic to its
operations, the Company is committed to protecting the environment, as well as
complying with applicable environmental protection laws and regulations. The
Company, as well as its competitors, is subject to extensive regulation under
federal, state and local environmental laws which have the effect of increasing
the costs and liabilities associated with the conduct of its operations. In
addition, the Company's foreign operations are subject to environmental
regulations in effect in each respective jurisdiction.
The Company's policy is to monitor and actively address environmental
concerns in a responsible manner. As of December 31, 1993, the Company had
received notices from the U.S. Environmental Protection Agency (EPA) that it is
a potentially responsible party (PRP) for study and clean-up costs at 11 sites
under the requirements of the Federal Comprehensive Environmental Response,
Compensation and Liability Act of 1980 (Superfund). Under Superfund and
comparable state laws, the Company may be required to share in the cost to
clean-up various contaminated sites identified by the EPA and other agencies. In
all but one instance, the Company is one of several financially responsible PRPs
and has been identified as contributing only a small percentage of the
contamination at each of the sites. Due to various factors such as the required
level of remediation and participation in clean-up efforts by others, the
Company's total clean-up costs at these sites cannot be predicted with
certainty; however, the Company's best estimates for remediation and restoration
of these sites have been determined and are included in its environmental
reserves.
Future costs of environmental compliance are indeterminable due to unknowns
such as the magnitude of possible contamination, the timing and extent of the
corrective actions that may be required, the determination of the Company's
liability in proportion to other responsible parties, and the extent to which
such costs are recoverable from third parties including insurers. Also, the
Company may
S-16
<PAGE> 17
incur additional costs relating to facilities and sites where past operations
followed practices and procedures that were considered acceptable at the time
but in the future may require investigation and/or remedial work to ensure
adequate protection to the environment under current standards. If future laws
and regulations contain more stringent requirements than presently anticipated,
expenditures may be higher than current estimates, forecasts, and assessments of
potential environmental costs. However, these costs are expected to be at least
equal to the current level of expenditures.
The foregoing does not purport to be a complete summary of legal
proceedings and environmental matters involving the Company. For further
information concerning such legal proceedings and environmental matters,
reference is hereby made to Item 3 of Part I and Item 7 of Part II of the
Company's Annual Report on Form 10-K for the year ending December 31, 1993 and
to Item 1 of Part II of its Quarterly Report on Form 10-Q for the quarter ending
March 31, 1994.
RECENT DEVELOPMENTS
As noted in GATX's press release of quarterly earnings dated July 26, 1994,
the Company's Railcar Leasing and Management segment reported earnings of $13.5
million for the second quarter of 1994 compared to $13.3 million for the second
quarter of 1993. The number of cars on lease as of June 30, 1994 was 53,500, an
increase of more than 3,200 over the number of cars on lease as of June 30,
1993. At the end of the second quarter of 1994, utilization of the fleet was 94
percent, compared to 91 percent at the end of the second quarter of 1993.
Additionally, the Terminals and Pipelines segment earned $7.6 million for
the second quarter of 1994 compared to $7.0 million for the second quarter of
1993. Throughput was 168 million barrels for the quarter compared to 153 million
barrels for the comparable prior year period. Utilization at the end of the
second quarter of 1994 was 90 percent compared to 91 percent at the end of the
second quarter of 1993.
S-17
<PAGE> 18
DESCRIPTION OF THE PASS THROUGH CERTIFICATES
The Pass Through Certificates offered hereby will be issued pursuant to a
Trust Supplement, to be entered into between the Company and the Pass Through
Trustee pursuant to the terms of the Basic Agreement. The following summary of
the particular terms of the Pass Through Certificates offered hereby
supplements, and to the extent inconsistent therewith replaces, the description
of the general terms and provisions of the Pass Through Certificates set forth
in the accompanying Prospectus under the heading "Description of the Pass
Through Certificates" to which description reference is hereby made. The
statements under this caption are a summary and do not purport to be complete.
The summary makes use of terms defined in and is qualified in its entirety by
reference to all of the provisions of the Basic Agreement, a copy of which has
been filed as an exhibit to the Registration Statement of which the Prospectus
is a part, and to all of the provisions of the Trust Supplement which, together
with the forms of the related Equipment Notes, Indenture, Lease, Trust Agreement
and Participation Agreement, will be filed as exhibits to a Current Report on
Form 8-K to be filed by the Company with the Commission.
GENERAL
Each Pass Through Certificate offered hereby will represent a fractional
undivided interest in the General American Transportation Corporation 1994-1
Pass Through Trust (the "Pass Through Trust") to be formed pursuant to the Trust
Supplement. The property of the Pass Through Trust will consist of four
Equipment Notes to be issued on a nonrecourse basis by the Owner Trustee in
connection with a leveraged lease transaction to finance not more than 80% of
the cost to the Owner Trustee of certain railroad tank cars and covered hopper
cars to be purchased by the Owner Trustees from the Company and leased to the
Company. See "Use of Proceeds" in this Prospectus Supplement. Each of the
Equipment Notes will be issued in connection with such leveraged lease
transaction under an Indenture. The Equipment Notes acquired by the Pass Through
Trust will have an interest rate equal to the interest rate of the Pass Through
Certificates and will mature on or before the final distribution date of the
Pass Through Certificates. The aggregate principal amount of the Equipment Notes
will be the same as the aggregate principal amount of the Pass Through
Certificates. For a description of the Equipment Notes and the Indenture, see
"Description of the Equipment Notes" in this Prospectus Supplement and the
accompanying Prospectus.
PAYMENTS AND DISTRIBUTIONS
Payments of interest on each of the Equipment Notes are scheduled to be
received by the Pass Through Trustee on January 1 and July 1 of each year,
commencing July 1, 1995, until the final distribution date for the Pass Through
Trust, and payments of principal on the Equipment Notes are scheduled to be
received in specified amounts by the Pass Through Trustee on January 1 or July
1, or both, of each year, commencing July 1, 1996 (such dates are herein
referred to as "Regular Distribution Dates").
Payments of principal, Make-Whole Amount, if any, and interest received by
the Pass Through Trustee on account of a partial or full prepayment, if any, of
the Equipment Notes, and payments received by the Pass Through Trustee following
a default in respect of the Equipment Notes (including payments received by the
Pass Through Trustee on account of the purchase by the Owner Trustee of such
Equipment Notes or payments received on account of the sale of such Equipment
Notes by the Pass Through Trustee) ("Special Payments") will be distributed on
the 1st day of a month (a "Special Distribution Date"), except in the case of a
refinancing of such Equipment Notes which will be distributed on the date of
such refinancing, which may occur on any Business Day. Not less than 20 days'
notice of such Special Payments or refinancing shall be provided by the Pass
Through Trustee to the holders of the Pass Through Certificates. See
"Description of the Pass Through Certificates -- Payments and Distributions" in
the accompanying Prospectus, "Description of the Equipment Notes -- Prepayments"
in this Prospectus Supplement and "Description of the Equipment Notes -- Events
of Default and Certain Rights Upon an Event of Default" in the accompanying
Prospectus.
S-18
<PAGE> 19
POOL FACTORS
As of the date of issuance of the Pass Through Certificates, and assuming
that no prepayment, purchase or default in respect of any Equipment Notes shall
occur, the scheduled repayments of principal of such Equipment Notes and the
resulting Pool Factors for the Pass Through Trust after taking into account each
such repayment are set forth below:
<TABLE>
<CAPTION>
EQUIPMENT NOTES
REGULAR SCHEDULED PASS THROUGH
DISTRIBUTION PAYMENTS OF TRUST POOL
DATE PRINCIPAL FACTOR
-------------------------------------------- --------------- ------------
<S> <C> <C>
July 1, 1996................................ $ 2,284,910 0.9755428
July 1, 1997................................ 2,074,261 0.9533404
July 1, 1998................................ 2,249,849 0.9292585
July 1, 1999................................ 2,438,549 0.9031569
July 1, 2000................................ 2,643,029 0.8748665
July 1, 2001................................ 2,864,811 0.8442022
July 1, 2002................................ 3,105,096 0.8109660
July 1, 2003................................ 2,910,224 0.7798156
July 1, 2004................................ 2,905,807 0.7487125
July 1, 2005................................ 3,039,617 0.7161771
January 1, 2006............................. 186,094 0.7141852
July 1, 2006................................ 3,198,784 0.6799461
January 1, 2007............................. 3,936,060 0.6378155
July 1, 2007................................ 409,541 0.6334318
January 1, 2008............................. 3,953,542 0.5911140
January 1, 2009............................. 7,193,751 0.5141137
January 1, 2010............................. 8,179,303 0.4265643
January 1, 2011............................. 8,908,330 0.3312116
January 1, 2012............................. 9,687,950 0.2275140
January 1, 2013............................. 10,535,906 0.1147400
January 1, 2014............................. 10,321,941 0.0042563
January 1, 2015............................. 397,645 0.0000000
</TABLE>
See "Description of the Pass Through Certificates -- Pool Factors" in the
accompanying Prospectus for information regarding the computation of the Pool
Factor.
DESCRIPTION OF THE EQUIPMENT NOTES
The following summary of the particular terms and provisions of the
Equipment Notes supplements, and to the extent inconsistent therewith replaces,
the description of the general terms and provisions of the Equipment Notes set
forth in the accompanying Prospectus under the heading "Description of the
Equipment Notes" to which description reference is hereby made. The statements
under this caption are summaries and do not purport to be complete. The
summaries make use of terms defined in and are qualified in their entirety by
reference to all of the provisions of the Equipment Notes, the Indenture, the
Lease, the Participation Agreement and the Trust Agreement, the forms of which
will be filed as exhibits to a Current Report on Form 8-K to be filed by the
Company with the Commission.
S-19
<PAGE> 20
GENERAL
The Equipment Notes with respect to the Equipment will be issued under an
Indenture between State Street Bank and Trust Company, as Owner Trustee of a
trust for the benefit of the Owner Participant who is the beneficial owner of
the Equipment, and The First National Bank of Chicago, as Indenture Trustee.
The Owner Trustee will lease the Equipment to GATC pursuant to a Lease
between the Owner Trustee and GATC. GATC is obligated to make or cause to be
made rental and other payments to the Indenture Trustee on behalf of the Owner
Trustee in amounts that will be at least sufficient to pay the principal of,
Make-Whole Amount, if any, and interest on the Equipment Notes issued with
respect to the Equipment when and as due and payable. The Equipment Notes are
not, however, direct obligations of, or guaranteed by, GATC or any affiliate
thereof. GATC's rental obligations under the Lease are general obligations of
GATC.
PRINCIPAL PAYMENTS
The aggregate principal amount of the Equipment Notes is $93,425,000.
Interest will be payable on each Equipment Note at the applicable rate per annum
on the unpaid principal amount thereof on January 1 and July 1 of each year,
commencing July 1, 1995. Such interest will be computed on the basis of a
360-day year of twelve 30-day months. Although all of the Equipment Notes will
be issued under a single Indenture and relate to a single Lease, four Equipment
Notes will be issued, each relating to particular Equipment under the Lease. The
principal of the four Equipment Notes will be payable as set forth below:
8.42% EQUIPMENT NOTES
<TABLE>
<CAPTION>
PAYMENT DATES 1994-1A 1994-1B 1994-1C 1994-1D TOTAL
- ------------------------------ ---------- ----------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C>
July 1, 1996.................. $ 199,458 $ 1,687,755 $ 250,625 $ 147,072 $ 2,284,910
July 1, 1997.................. 179,678 1,531,550 229,541 133,492 2,074,261
July 1, 1998.................. 194,889 1,661,214 248,957 144,789 2,249,849
July 1, 1999.................. 211,236 1,800,542 269,838 156,933 2,438,549
July 1, 2000.................. 228,953 1,951,511 292,470 170,095 2,643,029
July 1, 2001.................. 248,156 2,115,293 317,000 184,362 2,864,811
July 1, 2002.................. 268,970 2,292,711 343,589 199,826 3,105,096
July 1, 2003.................. 260,059 2,145,420 317,498 187,247 2,910,224
July 1, 2004.................. 256,146 2,147,102 315,481 187,078 2,905,807
July 1, 2005.................. 267,927 2,246,002 329,994 195,694 3,039,617
January 1, 2006............... 186,094 0 0 0 186,094
July 1, 2006.................. 117,350 2,497,182 366,677 217,575 3,198,784
January 1, 2007............... 384,497 3,176,289 223,570 151,704 3,936,060
July 1, 2007.................. 0 43,498 240,874 125,169 409,541
January 1, 2008............... 348,084 2,920,144 430,408 254,906 3,953,542
January 1, 2009............... 518,767 5,421,823 780,343 472,818 7,193,751
January 1, 2010............... 698,460 6,062,873 889,942 528,028 8,179,303
January 1, 2011............... 772,897 6,593,368 967,827 574,238 8,908,330
January 1, 2012............... 840,538 7,170,392 1,052,527 624,493 9,687,950
January 1, 2013............... 914,099 7,798,021 1,144,640 679,146 10,535,906
January 1, 2014............... 994,097 7,884,310 758,199 685,335 10,321,941
January 1, 2015............... 397,645 0 0 0 397,645
---------- ----------- ---------- ---------- -----------
Total.................... $8,488,000 $69,147,000 $9,770,000 $6,020,000 $93,425,000
========== ============ ========== ========== ============
</TABLE>
S-20
<PAGE> 21
If any date scheduled for any payment of principal of, Make-Whole Amount,
if any, or interest on the Equipment Notes is not a Business Day, such payment
will be made on the next succeeding Business Day without any additional
interest. (Indenture, Section 2.04(b))
PREPAYMENTS
Mandatory Prepayments. In the event of an Event of Loss with respect to an
Equipment Unit which is not replaced within a 90-day period following notice of
such Event of Loss, all or a portion of the Equipment Note issued with respect
to such Equipment Unit is required to be prepaid on the Regular Distribution
Date next succeeding the date 25 days after GATC gives notice of its election to
pay the Stipulated Loss Value of such Equipment Unit or fails to replace the
same within such 90-day period (or, if payment of the Stipulated Loss Value is
so required with respect to an aggregate of fifteen or more Equipment Units then
on the Special Distribution Date next occurring not less than 25 days after such
notice) at a price equal to the sum of (i) as to principal, an amount equal to
the product obtained by multiplying the unpaid principal amount of the related
Equipment Note by a fraction, the numerator of which shall be the Equipment Cost
of such Equipment Unit and the denominator of which shall be the aggregate
Equipment Cost of all Equipment Units with respect to which such Equipment Note
was issued immediately prior to such prepayment date and (ii) as to interest,
the aggregate amount of interest accrued and unpaid in respect of the principal
amount to be prepaid pursuant to clause (i) above on such prepayment date, but
without the payment of any Make-Whole Amount. See "Description of the Equipment
Notes -- The Leases -- Events of Loss" in this Prospectus Supplement. (Lease,
Sections 11.1 and 11.2; Indenture, Section 2.10(b))
In the event of a termination by GATC, at its option (which commences on
July 1, 2002), of the Lease with respect to any Equipment Unit, the Owner
Trustee is required to prepay a portion of the Equipment Note which was issued
with respect to such Equipment Unit. Such prepayment will be made on a Regular
Distribution Date (or, in certain limited circumstances, a Special Distribution
Date) upon at least 25 days' prior notice from the Owner Trustee to the
Indenture Trustee at a prepayment price equal to the unpaid principal amount
thereof (computed as provided in the preceding paragraph with respect to the
terminated Equipment Unit) together with accrued interest thereon to the date of
prepayment plus a premium, if applicable, as set forth below (a "Make-Whole
Amount"), if such prepayment is made prior to July 1, 2008 and thereafter
without premium. Such prepayment is to be made with net proceeds of the sale of
such Equipment received by the Owner Trustee and, to the extent such proceeds
are insufficient, with a portion of certain payments received by the Indenture
Trustee from GATC, or to be made with moneys deposited with the Indenture
Trustee by the Owner Trustee. See "Description of the Equipment Notes -- The
Lease -- Termination" in this Prospectus Supplement. (Lease, Section 10;
Indenture, Section 2.10(a))
Voluntary Prepayments. In the event the Company elects to exercise its
right to purchase the Equipment as a result of the Owner Participant (or an
affiliate thereof) engaging in a business that is in competition with the
Company's full service railcar leasing business, all of the Equipment Notes will
be prepaid on a Special Distribution Date. In the event of a refinancing of the
Equipment Notes, all of the Equipment Notes will be prepaid on the date of such
refinancing, which may be any Business Day. In either such case, the Indenture
Trustee shall receive at least 25 days' prior notice from the Owner Trustee and
the prepayment price shall be equal to the unpaid principal amount thereof,
together with accrued interest thereon, plus, if such prepayment is made prior
to July 1, 2008, the applicable Make-Whole Amount, if any. See "Description of
the Equipment Notes -- The Participation Agreement" in this Prospectus
Supplement. (Indenture, Section 2.10(c) and (d))
The Equipment Notes are also subject to purchase in whole by the Owner
Trustee (except during any period in which the Company or an affiliate thereof
owns more than 20% of the beneficial interest in the related owner trust), upon
at least 30 days' notice on a Special Distribution Date, in the case of (i) any
acceleration of such Equipment Notes, (ii) the Indenture Trustee, as assignee of
the Lease, having exercised (or given notice of its intention to exercise) any
remedy in respect of the Equipment Units under the Lease, (iii) one or more
Lease Events of Default having occurred under the Lease and
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continued for a period of 180 days or more during which period such Equipment
Notes could, but shall not, have been accelerated by the Indenture Trustee or
(iv) the Indenture Trustee having commenced foreclosure of the Lien of the
Indenture or otherwise exercised remedies which would result in the exclusion of
the Owner Trustee for the Indenture Estate or any part thereof (or given notice
of its intention to foreclose or exercise remedies). Such prepayment would be at
a price equal to the unpaid principal amount thereof and accrued interest on
such Equipment Notes to the date of payment, but without the payment of any
Make-Whole Amount except in the case of a purchase of the Equipment Notes
pursuant to clause (iv) above, if the right to exercise any remedies arises from
action attributable to the Owner Trustee or the Owner Participant. (Indenture,
Section 4.04(b))
The Make-Whole Amount, if any, payable with respect to the Equipment Notes
will be determined by an independent investment banking institution of national
standing (the "Investment Banker") selected by GATC or, if the Indenture Trustee
does not receive notice of such selection at least ten days prior to a scheduled
prepayment date or if a Lease Event of Default under the applicable Lease shall
have occurred and be continuing, selected by the Indenture Trustee.
The term "Make-Whole Amount" means, with respect to the principal amount of
any Equipment Note to be prepaid on any prepayment date, an amount to be
determined by the Investment Banker as of the third Business Day prior to the
applicable prepayment date, which amount shall equal the product obtained by
multiplying (a) the excess, if any, of (i) the sum of the present values of all
the remaining scheduled payments of principal and interest from the prepayment
date to maturity of such Equipment Note, discounted semiannually on each January
1 and July 1 at a rate equal to the Treasury Rate, based on a 360-day year of
twelve 30-day months, over (ii) the aggregate unpaid principal amount of such
Equipment Note plus any accrued but unpaid interest thereon by (b) a fraction,
the numerator of which shall be the principal amount of such Equipment Note to
be prepaid on such prepayment date and the denominator of which shall be the
aggregate unpaid principal amount of such Equipment Note; provided, that the
aggregate unpaid principal amount of such Equipment Note for the purpose of
clause (a)(ii) and (b) above shall be determined after deducting the principal
installment, if any, due on such prepayment date.
The "Treasury Rate" means, with respect to each Equipment Note to be
prepaid, a per annum rate (expressed as a semiannual 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 semiannual yield to
maturity of United States Treasury securities maturing on the Average Life Date
(as defined below) of such Equipment Note, as determined by interpolation
between the most recent weekly average yields to maturity for two series of
United States Treasury securities, (A) one maturing as close as possible to, but
earlier than, the Average Life Date of such Equipment Note and (B) the other
maturing as close as possible to, but later than, the Average Life Date of such
Equipment Note, in each case as published in the most recent H.15(519) (or, if a
weekly average yield to maturity of United States Treasury securities maturing
on the Average Life Date of such Equipment Note is reported in the most recent
H.15(519), as published in H.15(519)). "H.15(519)" means "Statistical Release
H.15(519), Selected Interest Rates," or any successor publication, published by
the Board of Governors of the Federal Reserve System. The most recent H.15(519)
means the latest H.15(519) which is published prior to the close of business on
the third Business Day preceding the scheduled prepayment date.
The "Average Life Date" of each Equipment Note shall be the date which
follows the prepayment date or, in the case of an Equipment Note not being
prepaid, the date of such determination, by a period equal to the Remaining
Weighted Average Life of such Equipment Note. The "Remaining Weighted Average
Life" of such Equipment Note, at the prepayment or determination date of such
Equipment Note, shall be the number of days equal to the quotient obtained by
dividing (a) the sum of the products obtained by multiplying (i) the amount of
each then remaining principal payment on such Equipment Note by (ii) the number
of days from and including the prepayment or determination date to but excluding
the scheduled payment date of such principal payment, by (b) the unpaid
principal amount of such Equipment Note.
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SECURITY
All of the Equipment Notes will be equally and ratably secured by (i) an
assignment by the Owner Trustee to the Indenture Trustee of the Owner Trustee's
rights (except for certain limited rights described below) under the Lease with
respect to the Equipment, including the right to receive payments of rent
thereunder, and (ii) a perfected security interest to the Indenture Trustee in
all of the Equipment, subject to the rights of GATC under such Lease. See
"Description of the Equipment Notes -- Security" in the accompanying Prospectus.
The assignment by the Owner Trustee to the Indenture Trustee of its rights under
the Lease excludes rights of the Owner Trustee and the Owner Participant
relating to indemnification by GATC for certain matters, insurance proceeds
payable to the Owner Trustee in its individual capacity and to the Owner
Participant under liability insurance maintained by GATC under the Lease or by
the Owner Trustee or the Owner Participant, insurance proceeds payable to the
Owner Trustee in its individual capacity or to the Owner Participant under
certain casualty insurance maintained by the Owner Trustee or the Owner
Participant under the Lease and certain reimbursement payments made by GATC to
the Owner Trustee. (Indenture, Granting Clause)
INDENTURE EVENTS OF DEFAULT, NOTICE AND WAIVER
Indenture Events of Default under the Indenture include: (a) a Lease Event
of Default, (b) default by the Owner Trustee in making payments when due of
principal of, premium, if any, or interest on any Equipment Note and continuance
of that default for 10 Business Days, (c) failure by the Owner Trustee or the
Owner Participant to perform any covenant contained in the Indenture, the
Equipment Notes or in the Participation Agreement continued for a period of 30
days after written notice by the Indenture Trustee or any holder of an Equipment
Note issued under the Indenture, (d) any representation or warranty made by the
Owner Trustee in the Indenture or made by the Owner Trustee (except to the
extent made with respect to State Street Bank and Trust Company in its
individual capacity) or the Owner Participant in the Participation Agreement or
in any document or certificate furnished to the Indenture Trustee being
incorrect in any material respect as of the date made and remaining material and
continuing unremedied for a period of 30 days after written notice to the Owner
Trustee and Owner Participant, and (e) the occurrence of certain events of
bankruptcy, reorganization or insolvency of the Owner Participant or the Owner
Trustee. (Indenture, Section 4.01)
In the event that (i) at any time one or more Lease Events of Default shall
occur and shall have continued for a period of 180 days or more during which
time the Equipment Notes could, but shall not, have been accelerated, (ii) the
Equipment Notes shall have been accelerated, (iii) the Indenture Trustee, as
assignee of the Lease, shall have exercised (or given notice of its intention to
exercise) any remedies in respect of the Equipment Units under the Lease or (iv)
the Indenture Trustee shall commence foreclosure of the Lien of the Indenture or
otherwise exercise remedies which would result in the exclusion of the Owner
Trustee from the Indenture Estate or any part thereof (or given notice of its
intention to foreclose or exercise remedies), upon 30 days' notice the Owner
Trustee (except during any period in which the Company or an affiliate thereof
owns more than 20% of the beneficial interest in the related owner trust) may
elect to purchase all, but not less than all, of the Equipment Notes then
outstanding under such Indenture from the holders thereof by paying to each such
holder an amount equal to the aggregate unpaid principal amount of all such
Equipment Notes then held by such holder, together with accrued and unpaid
interest thereon to the date of payment, but without the payment of any
Make-Whole Amount except in the case of a purchase of the Equipment Notes
pursuant to clause (iv) above if the right to exercise any remedies arises
because of action attributable to the Owner Trustee or the Owner Participant.
(Indenture, Section 4.04(b))
In the event GATC fails to make any semiannual basic rental payment within
10 Business Days after the date the same shall become due under a Lease, then
and as long as no other Indenture Event of Default under the Indenture (which is
not being concurrently cured) shall have occurred and be continuing the Owner
Participant or the Owner Trustee may, during the 10 Business Days after
receiving written notice of such failure from the Indenture Trustee, pay to the
Indenture Trustee the amount of such rental payment together with any interest
thereon on account of the delayed payment thereof, in which
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event such payment by the Owner Participant or the Owner Trustee shall be deemed
to cure any Indenture Event of Default which arose from such failure of GATC
(but such cure shall not relieve GATC of any of its obligations); provided, that
the Owner Participant and the Owner Trustee, collectively, shall not be entitled
to cure more than three consecutive or six total failures to make semiannual
basic rental payments. In the event there shall occur a Lease Event of Default
under the Lease in respect of any other payment of rent, or which is curable by
the payment of money, then and as long as no other Indenture Event of Default
under the Indenture (which is not being concurrently cured) shall have occurred
and be continuing the Owner Participant or the Owner Trustee may, during the 30
days after receiving written notice of such Lease Event of Default from the
Indenture Trustee, pay to the Indenture Trustee the amount of such rental
payment together with any interest thereon on account of the delayed payment
thereof, or otherwise make such payment as shall effect such cure, in which
event such payment by the Owner Participant or the Owner Trustee shall be deemed
to cure any Indenture Event of Default which arose as a result of such Lease
Event of Default (but such cure shall not relieve GATC of any of its
obligations); provided, that the Owner Participant and the Owner Trustee,
collectively, shall not be entitled to cure such other Lease Events of Default
if the unreimbursed amount of such payments shall exceed $5,000,000, as adjusted
annually for inflation. (Indenture, Section 4.04(a))
The Indenture provides that the Indenture Trustee shall, upon the
occurrence of any event known to it that is an Indenture Default or Indenture
Event of Default thereunder, give notice thereof to the holders of the Equipment
Notes issued thereunder, GATC, the Owner Trustee and the Owner Participant.
(Indenture, Section 5.01)
The holders of a majority in aggregate principal amount of the outstanding
Equipment Notes issued under the Indenture by notice to the Indenture Trustee
may on behalf of all holders thereof waive any past default under the Indenture
except a default in the payment of the principal of, premium, if any, or
interest on any Equipment Note issued thereunder or a default in respect of any
covenant or provision of such Indenture that cannot be modified or amended
without the consent of each holder of an Equipment Note affected thereby.
(Indenture, Section 4.06)
REMEDIES
If an Indenture Event of Default shall occur and be continuing under the
Indenture, the Indenture Trustee thereunder may, and when instructed by the
holders of a majority in aggregate principal amount of the Equipment Notes
outstanding under such Indenture shall, declare the unpaid principal of all such
Equipment Notes issued thereunder to be due and payable, together with all
accrued interest thereon. The holders of a majority in aggregate principal
amount of Equipment Notes outstanding under the Indenture may annul any such
declaration by the Indenture Trustee at any time prior to the sale of the
Equipment after such an Indenture Event of Default if (i) there has been paid to
or deposited with the Indenture Trustee an amount sufficient to pay all overdue
installments of principal of, premium, if any, and interest on the Equipment
Notes outstanding under the Indenture that have become due otherwise than by
such declaration of acceleration, (ii) the rescission would not conflict with
any judgment or decree and (iii) all other Indenture Defaults and Indenture
Events of Default, other than nonpayment of principal and interest on the
Equipment Notes outstanding under the Indenture that have become due solely
because of such acceleration, have been cured or waived. (Indenture, Section
4.02)
The Indenture provides that, if an Indenture Event of Default thereunder
has occurred and is continuing, the Indenture Trustee may exercise certain
rights or remedies available to it under applicable law, including (if the Lease
has been declared in default) one or more of the remedies under the Indenture or
the Lease with respect to the Equipment subject to the Lease. The Indenture
Trustee's right to exercise remedies under the Indenture is subject in certain
circumstances to its having proceeded to exercise one or more remedies under the
Lease with respect to the Equipment, unless at the time, the Indenture Trustee
is stayed or otherwise prevented from doing so by operation of law, in which
case the Indenture Trustee has agreed to refrain from exercising remedies under
such Indenture for a period of 90 days. Further, the Indenture Trustee may not
exercise remedies under the Indenture in those circumstances in which GATC, as
the debtor in a bankruptcy proceeding, shall have affirmed the Lease and no
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Lease Event of Default (other than a Lease Event of Default arising from the
bankruptcy of GATC) has occurred and is continuing. See "Description of the
Equipment Notes -- The Lease -- Lease Events of Default" in this Prospectus
Supplement. Such remedies may be exercised by the Indenture Trustee to the
exclusion of the Owner Trustee and, subject to the terms of the Lease, GATC. Any
Equipment sold in the exercise of such remedies will be free and clear of any
rights of those parties including the rights of GATC under the Lease with
respect to such Equipment; provided that no exercise of any remedies by the
Indenture Trustee may affect the rights of GATC under the Lease unless a Lease
Event of Default under the Lease has occurred and is continuing. (Indenture,
Sections 4.03(a) and (c), 4.04(c) and 4.05; Lease, Section 15)
The holders of a majority in aggregate principal amount of the Equipment
Notes outstanding under the Indenture may instruct the Indenture Trustee to give
such notice, direction or consent, or exercise such right, remedy or power under
the Indenture or the Lease or in respect of the Indenture Estate or take such
other action as shall be specified in such instructions, but in such event the
Indenture Trustee shall not be required to take or refrain from taking any
action in connection therewith if it shall have reasonable grounds for believing
that adequate indemnity against such risk is not reasonably assured to it.
(Indenture, Sections 5.02 and 5.03)
If an Indenture Event of Default occurs and is continuing under the
Indenture and the Indenture Trustee (as security assignee) has declared the
Lease to be in default or the Equipment Notes outstanding under the Indenture
have been accelerated or the Indenture Trustee has exercised any remedies under
the Indenture, any sums held or received by the Indenture Trustee may be applied
to reimburse the Indenture Trustee for any tax, expense or other loss incurred
by it and to pay any other amounts then due the Indenture Trustee prior to any
payments to holders of the Equipment Notes. (Indenture, Section 3.03)
MODIFICATION OF INDENTURES AND LEASES
Without the consent of holders of a majority in aggregate principal amount
of the Equipment Notes outstanding under the Indenture, the provisions of the
Indenture and the Lease and the Participation Agreement may not be amended or
modified, except to the extent indicated below.
Certain provisions of the Lease and the Participation Agreement may be
amended or modified by the parties thereto without the consent of any holders of
the Equipment Notes outstanding under the Indenture so long as no Indenture
Event of Default shall have occurred and be continuing. In the case of the
Lease, such provisions include, among others, provisions relating to (i) rental
payments and other payments, except to the extent indicated in clause (a) of the
following paragraph, (ii) the maintenance of the Equipment covered by the Lease,
modifications to the Equipment Units and the return to the Owner Trustee of the
Equipment at the end of the term of the Lease and (iii) the renewal of the Lease
and the option of GATC at the end of the term of the Lease to purchase the
Equipment. (Indenture, Section 9.05)
Without the consent of the holder of each Equipment Note outstanding under
the Indenture, no amendment or modification of the Indenture may (a) change the
final maturity of, or reduce the principal amount of, or premium, if any, or
interest payable on any Equipment Notes issued under the Indenture or impair the
right to institute suit for the enforcement of any such payment or change the
date on which any principal or premium, if any, or interest is due and payable,
(b) create any lien with respect to the property subject to the Lien of the
Indenture ranking prior to or on a parity with the security interest created by
the Indenture, except as permitted in the Indenture, or deprive any holder of an
Equipment Note issued under the Indenture of the benefit of the Lien of the
Indenture or (c) reduce the percentage in principal amount of outstanding
Equipment Notes issued under such Indenture necessary to modify or amend any
provision of the Indenture or to waive compliance therewith. (Indenture, Section
9.01)
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THE LEASE
Term and Rentals. The Equipment will be leased by the Owner Trustee to
GATC for a term commencing on the delivery date thereof to the Owner Trustee and
expiring on January 1, 2017, unless previously terminated as permitted by the
Lease.
The basic rental payments by GATC under the Lease will be payable on each
January 1 and July 1 (or, if such day is not a Business Day, on the next
succeeding Business Day), commencing July 1, 1995, and will be used to make
payments of principal of and interest due on the Equipment Notes issued under
the Indenture, which will in turn furnish the funds to be distributed by the
Pass Through Trustee to the Certificateholders on January 1 and July 1 of each
year, commencing July 1, 1995. (Lease, Section 3.2; Indenture, Section 3.01)
Rental payments that GATC is obligated to make or cause to be made under the
Lease will not be less than the scheduled payments of principal of and interest
on the Equipment Notes issued under the Indenture. In certain cases, the
semiannual basic rent payments under the Lease may be adjusted, but, except as
described below, under no circumstances will such rent payments be less than the
scheduled payments of principal of and interest on the Equipment Notes issued
under the Indenture. The balance of any such semiannual basic rental payment
under the Lease, after payment of the scheduled principal of and interest on the
Equipment Notes issued under the Indenture, will be paid over to or for the
account of the Owner Participant as the beneficial owner of the Equipment
covered by the Lease. (Lease, Section 3)
Sublease; Possession and Use. GATC is in the business of leasing railcars
to third parties under operating leases. These leases vary in nature based on
the needs of the sublessee and GATC. GATC shall have the right to sublease the
Equipment to any railroad company incorporated in the United States, Canada or
Mexico or to any other responsible company which is not a railroad company for
use in its business; provided that the Equipment Units are used primarily on
domestic routes in the United States and that at no time shall more than 20% of
the Equipment Units be used (as determined by mileage records) outside the
continental United States (exclusive of Alaska) during specified years; and
further provided that if GATC subleases any Equipment Units to a sublessee which
operates primarily in Canada or Mexico, GATC shall make all filings and deposits
necessary or advisable under then-current prudent industry practice to protect
the interest of the Owner Trustee under the Lease and the Indenture Trustee
under the Indenture and, in the case of a sublease to a sublessee that operates
primarily in Canada, provide certain legal opinions of Canadian counsel
reasonably satisfactory to the Owner Trustee and Indenture Trustee. GATC may not
sublease any Equipment Unit for a term which extends beyond the term of the
Lease unless GATC replaces such Equipment Unit on or prior to the expiration of
the Lease term in accordance with the provisions of the Lease. No sublease will
discharge GATC of its obligations under the Lease. (Lease, Section 8.2 and 8.3)
If any Equipment Unit is leased or the possession is otherwise transferred, such
Equipment Unit will remain subject to the Lien of the Indenture.
Liens. The Equipment will be maintained free of any liens, other than the
rights of the Owner Participant, the Owner Trustee, the Indenture Trustee, the
holder of the Equipment Notes, GATC and any permitted sublessee arising under
the Lease, the Indenture, the Participation Agreement or the Trust Agreement
between the Owner Trustee and the Owner Participant pursuant to which the Owner
Trustee acts as trustee for the benefit of the Owner Participant, and other
than, in the case of the Equipment, certain limited liens permitted under the
Lease and Indenture, including liens for taxes either not yet due and payable or
being contested (so long as there exists no material risk of sale, forfeiture,
loss or loss of use of the Equipment or any interest therein), materialmen's,
mechanics' and other similar liens arising in the ordinary course of business
and either not yet due and payable or being contested (so long as there exists
no material risk of sale, forfeiture, loss or loss of use of the Equipment),
judgment liens that are being appealed and whose enforcement has been stayed
pending such appeal, and salvage rights of insurers. (Lease, Section 7)
Termination. So long as no Lease Event of Default or event which, with
notice or the lapse of time or both, would become a Lease Event of Default
thereunder shall have occurred and be continuing, GATC may terminate the Lease
at its option any time on or after July 1, 2002 with respect to any or all of
the
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Equipment Units (provided that if such termination is for less than all of the
Equipment Units in a Functional Group, the determination as to which Equipment
Units are subject to termination shall be made by GATC on a random or other
reasonable basis without regard to maintenance status or operating condition)
(the "Terminated Units") if GATC determines in good faith (as evidenced by a
certified copy of a resolution adopted by its Board of Directors and a
certificate executed by the Chief Financial Officer of GATC), either (i) that
such Terminated Units have become obsolete or surplus to its requirements or
(ii) that any Required Modification to such Terminated Units would be
economically impractical. GATC is required to give notice to the Owner Trustee
and the Indenture Trustee of its intention to exercise its right of termination
at least 120 days prior to the proposed date of termination, which date shall be
a Regular Distribution Date. GATC will act as agent for the Owner Trustee in
obtaining bids for the Terminated Units and, if GATC succeeds in locating the
eventual purchaser of the Terminated Units, the Owner Trustee shall transfer all
of its right, title and interest in and to the Terminated Units to the bidder
which has submitted the highest cash bid (who may not be GATC or any affiliate
of GATC but who may be the Owner Trustee or any affiliate of the Owner Trustee)
on the termination date. The net proceeds of such sale shall be paid to the
Owner Trustee. If the net proceeds received from such sale are less than the
Termination Value for the Terminated Units, GATC shall pay to the Owner Trustee
an amount equal to the difference between such proceeds and such Termination
Value, together with certain other amounts including, if applicable, the
Make-Whole Amount. All funds to be paid to or deposited with the Owner Trustee
as described in this paragraph shall, so long as the Indenture shall not have
been discharged, be deposited directly with the Indenture Trustee. Amounts in
excess of the outstanding principal amount of the Equipment Notes issued in
respect of such Terminated Units, any applicable premium thereon, and the then
accrued and unpaid interest thereon will be distributed by the Indenture Trustee
in accordance with the terms of the Indenture. The Lien of the Indenture shall
terminate with respect to the Terminated Units after the full Termination Value
has been received by the Indenture Trustee and, if all amounts due the Owner
Participant have also been paid, the Lease shall terminate with respect to such
Terminated Units and the obligation of GATC thereafter to make rental payments
with respect thereto shall cease. In the event any Terminated Unit is not sold
by its proposed termination date, the Lease, including all GATC's obligation
thereunder, shall continue in effect. (Lease, Sections 3.6, 10.1, 10.2 and 10.4;
Indenture, Section 3.02)
The Owner Trustee shall have the option to retain the Terminated Units, but
it may do so only if the Owner Trustee shall pay, or cause to be paid, to the
Indenture Trustee funds in an amount equal to the principal of and accrued
interest on the outstanding Equipment Notes with respect to such Terminated
Units and, if applicable, an amount equal to the Make-Whole Amount. (Lease,
Section 10.3)
Events of Loss. If an Event of Loss occurs with respect to an Equipment
Unit, GATC shall give notice thereof to the Owner Trustee and within 90 days of
such notice make an election to either (i) pay to the Owner Trustee the
Stipulated Loss Value of such Equipment Unit, together with certain additional
amounts, or (ii) if no Lease Event of Default or certain payment or bankruptcy
defaults have occurred, replace such Equipment Unit. In the event GATC elects to
replace such Equipment Unit, it must do so within 90 days after GATC gives
notice of such Event of Loss with equipment of the same car type and Department
of Transportation classification (or otherwise approved by the Owner Trustee,
which approval shall not be unreasonably withheld), the same or later year of
manufacture, and having a fair market sale value, utility, remaining economic
useful life, residual value and condition at least equal to the Equipment Unit
so replaced (assuming such Equipment Unit was in the condition required to be
maintained by the Lease). If GATC elects to pay the Stipulated Loss Value of an
Equipment Unit subject to an Event of Loss or fails to replace such Unit within
such 90-day period, it must pay the Stipulated Loss Value with respect to such
Unit on the Regular Distribution Date which next succeeds the 25th day following
the date of notice of the Company's election to pay the Stipulated Loss Value or
the end of such 90-day period, as the case may be (or if payment of the
Stipulated Loss Value is so required with respect to an aggregate of fifteen or
more Equipment Units, then on the Special Distribution Date which next succeeds
the 25th day following the date such prepayment becomes required). Upon making
such payment, together with certain additional amounts, which in all
circumstances will be at least sufficient to pay in full as of the date of
payment thereof that portion of the aggregate unpaid principal of the
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outstanding Equipment Notes issued with respect to such Equipment Unit, together
with all unpaid interest thereon accrued to the date on which such amount is
paid, but without the payment of any Make-Whole Amount, the Lien of the
Indenture and the Lease shall terminate with respect to such Equipment Unit,
title thereto shall be transferred to GATC or its designee and the obligation of
GATC thereafter to make rental payments with respect thereto shall cease. The
Stipulated Loss Value and other payments made by GATC shall be deposited with
the Indenture Trustee. Amounts in excess of the outstanding principal amount of
the Equipment Notes and the then accrued and unpaid interest thereon to be
prepaid as a result of such Event of Loss will be distributed by the Indenture
Trustee in accordance with the terms of the Indenture. (Lease, Sections 3.6 and
11.2; Indenture, Section 3.02)
An Event of Loss with respect to any Equipment Unit shall mean any of the
following events: (i) damage or contamination of such Equipment Unit which, in
GATC's reasonable judgment (as evidenced by an Officers' Certificate to such
effect), makes repair uneconomic or renders such Equipment Unit unfit for
commercial use, (ii) destruction of such Equipment Unit or theft or
disappearance thereof for a period exceeding twelve months, (iii) the permanent
return of such Equipment Unit to the manufacturer pursuant to any patent
indemnity provisions, (iv) the taking or appropriating of title to such
Equipment Unit by any governmental authority under the power of eminent domain
or otherwise, (v) the actual or constructive total loss of the Equipment Unit,
(vi) in the normal course of interstate rail transportation, the Equipment Unit
shall be prohibited from being used for a continuous period in excess of six
months as a result of any rule, regulation, order or other action by the United
States government or any agency or instrumentality thereof, (vii) the Equipment
Unit shall be subject to a sublease with any person which operates primarily
outside of the United States and shall not be returned to GATC within 60 days of
a demand by GATC for return of such Equipment Unit following the termination of
such sublease or (vii) the taking or requisitioning of such Equipment Unit for
use by any governmental authority or any agency or instrumentality thereof under
the power of eminent domain or otherwise and such taking or requisition is for a
period that exceeds the remaining Basic Term or any Renewal Term then in effect
(unless such taking or requisition is by Mexico or any governmental authority,
agency or instrumentality thereof, in which case such period shall be the lesser
of the period described above or 365 days). (Lease, Section 11.1)
Lease Events of Default. Events of default (each, a "Lease Event of
Default") under the Lease include, among other things: (a) failure by GATC to
make any payment of Basic Rent, any purchase price to be paid by GATC for any
Equipment Units pursuant to the Lease or the Participation Agreement, Stipulated
Loss Value or Termination Value, within 10 Business Days after the same shall
have become due, (b) failure by GATC to make any payment of Supplemental Rent,
including indemnity or tax indemnity payments, but not including any purchase
price to be paid by GATC for any Equipment Units pursuant to the Lease or the
Participation Agreement, Stipulated Loss Value or Termination Value, after the
same shall have become due and such failure shall continue unremedied for 10
Business Days after receipt by GATC of written notice of such failure from the
Owner Trustee or Indenture Trustee, (c) failure to maintain in effect insurance
as required by the Lease, such failure not having been waived, (d) GATC shall
make or permit any possession of the Equipment or any portion thereof not
permitted by the Lease, provided that such unauthorized possession shall not
constitute a Lease Event of Default for a period of 45 days after the occurrence
thereof, or GATC shall make or permit an unauthorized assignment or transfer of
the Lease, (e) failure by GATC to observe or perform any of the agreements or
covenants relating to the merger, consolidation or transfer of assets of GATC
and such failure continues unremedied for 30 days, (f) failure by GATC to
perform or observe any other covenant or agreement to be performed or observed
by it under any Lessee Agreement (other than the Tax Indemnity Agreement)
continuing for a period of 30 days after notice of such failure from the Owner
Trustee or the Indenture Trustee, or, if such failure is capable of being
remedied (and the remedy requires an action other than, or in addition to, the
payment of money), for a period of 90 days after receipt of such notice so long
as GATC is diligently proceeding to remedy such failure, (g) any representation
or warranty made by GATC in any Lessee Agreement (other than the Tax Indemnity
Agreement) being untrue or incorrect in any material respect at the time made
and such untruth or incorrectness continues to be material and unremedied for a
period of 30 days after notice thereof or, if such untruth or incorrectness is
capable of being remedied, for a period
S-28
<PAGE> 29
of 60 days after receipt of such notice so long as GATC is diligently proceeding
to remedy such untruth or incorrectness and any adverse effects thereof, and (h)
the occurrence of certain events of bankruptcy, reorganization or insolvency of
GATC. (Lease, Section 14)
If a Lease Event of Default under the Lease has occurred and is continuing
and the Lease has been declared to be in default (or deemed to have been
declared in default), the Indenture Trustee, as assignee of the Owner Trustee's
rights under the Lease, may, subject to a stay of such rights if GATC were to
become a debtor in a bankruptcy or reorganization case under the Bankruptcy
Code, exercise one or more of the remedies provided in the Lease. These remedies
include the right to repossess the Equipment Units, to terminate the Lease and
any sublease thereunder and to require GATC to pay as liquidated damages any
unpaid rent plus, at the Indenture Trustee's option, any one of the following
amounts: (i) the excess of the present value of all rental payments for such
Equipment Unit for the remainder of the Basic Term or any Renewal Term then in
effect over the present value of the then fair market rental value of such
Equipment Unit, (ii) the excess of the Stipulated Loss Value of such Equipment
Unit over the fair market sale value of such Equipment Unit or (iii) the higher
of the Stipulated Loss Value for such Equipment Unit or the fair market sales
value of such Unit. If payment is made pursuant to the foregoing clause (iii),
such Equipment Unit shall be transferred to GATC. (Lease, Section 15)
THE PARTICIPATION AGREEMENT
GATC is required to indemnify the Owner Participant, the Owner Trustee, the
Indenture Trustee and the Pass Through Trustee for certain losses, fees and
expenses and for certain other matters. (Participation Agreement, Section 7.2)
In addition, GATC is required to indemnify the Owner Participant, the Owner
Trustee and the Indenture Trustee for certain taxes in connection with the
ownership, lease, sale or use of the Equipment. (Participation Agreement,
Section 7.1)
The Participation Agreement provides that if the Owner Participant or any
affiliate thereof is or acquires, is acquired by, merges or otherwise
consolidates with any company or affiliate thereof engaged in full service
railcar leasing, whether or not a direct competitor of GATC or any affiliate of
GATC, or any person that has a material interest in an enterprise that engages
in a business that is in competition with GATC's full service railcar operating
leasing business, GATC may, on the Special Distribution Date which next succeeds
the 25th day following the date of notice to the Owner Trustee and the Indenture
Trustee, purchase the Equipment for a purchase price equal to the greater of
Termination Value or then appraised fair market value, each calculated as of
such Special Distribution Date, plus certain other amounts including, if
applicable, the Make Whole Amount. If GATC elects to exercise its right to
purchase the Equipment, the purchase price shall be used to prepay the Equipment
Notes and if such prepayment is prior to July 1, 2008, the applicable Make-Whole
Amount shall be paid. See "Description of the Equipment Notes--Prepayment" in
this Prospectus Supplement. (Participation Agreement, Section 6.9)
Under the Participation Agreement, GATC will be prohibited from
consolidating or merging with or into any other corporation or transferring
substantially all of its assets to another corporation unless (a) the successor
corporation, if other than GATC, shall be a corporation organized and existing
under the laws of the United States or any state or the District of Columbia and
shall expressly assume the due and punctual performance and observance of all
the covenants and conditions of the Operative Agreements to be performed by
GATC, (b) immediately prior to and immediately after giving effect to such
transaction, no Lease Event of Default, or event which with notice or the
passage of time or both would become a Lease Event of Default, shall have
occurred, whether as a result of such transaction or otherwise, and (c) GATC
shall have made all filings necessary or appropriate in the reasonable opinion
of the Owner Trustee and the Indenture Trustee in order to preserve and protect
the rights of the Owner Trustee under the Lease and of the Indenture Trustee
under the Indenture. (Participation Agreement, Section 6.8)
S-29
<PAGE> 30
ERISA CONSIDERATIONS
The United States Department of Labor has granted to each of Salomon
Brothers Inc and Morgan Stanley & Co. Incorporated an administrative exemption
(Prohibited Transaction Exemption 89-89, Exemption Application No. D-6446, 54
Fed. Reg. 42,589 (1989) as amended, 55 Fed. Reg. 48,939 (1990) and Prohibited
Transaction Exemption 90-24, Exemption Application No. D-8019, 55 Fed. Reg.
20,548 (1990)) (the "Exemptions") from certain of the prohibited transaction
rules of ERISA and the Code with respect to the purchase, both upon their
initial issuance and in the secondary market, the holding and the subsequent
resale by an employee benefit plan of certificates in certain pass through
trusts, the assets of which consist of secured credit instruments that bear
interest, including qualified equipment notes secured by leases. A number of
conditions must be satisfied in order for the Exemptions to apply, including the
requirement that the certificates have, at the time of their purchase by an
employee benefit plan, a specified credit rating. Under the Exemptions, an
equipment note secured by a lease will be considered qualified only if it is a
note (a) which is secured by equipment which is leased, (b) which is secured by
the obligation of the lessee to pay rent under the equipment lease and (c) with
respect to which the trust's security interest is at least as protective of the
rights of the trust as the trust would have if the equipment note were secured
only by the equipment and not by the lease. Any plan that purchases a Pass
Through Certificate must be an "accredited investor" as defined in Rule
501(a)(1) of Regulation D promulgated under the Securities Act. The Exemptions
from Section 406(b) or 407(a) of ERISA do not apply to the acquisition, holding
or disposition of Pass Through Certificates by plans sponsored by the Company,
the Underwriters, the Pass Through Trustee, the Owner Trustee, the Owner
Participant or any of their affiliates.
It is not clear whether the Exemptions apply to participant directed plans
described in Section 404(c) of ERISA or plans that are subject to Section 4975
of the Code but that are not subject to Title I of ERISA, such as certain Keogh
plans and certain individual retirement accounts. In addition, there are various
other terms and conditions to the applicability of the Exemptions. Accordingly,
each fiduciary of a Plan should independently determine if its purchase of a
Pass Through Certificate will require an exemption and, if so, whether the
Exemptions apply to the purchase, or whether any other prohibited transaction
exemption is available. See "ERISA Considerations" in the accompanying
Prospectus.
UNDERWRITING
Under the terms of and subject to the conditions contained in the
Underwriting Agreement, Salomon Brothers Inc and Morgan Stanley & Co.
Incorporated (the "Underwriters") have agreed to purchase from the Pass Through
Trustee the principal amount of Pass Through Certificates set forth opposite its
name below.
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT OF
UNDERWRITER PASS THROUGH CERTIFICATES
----------- -------------------------
<S> <C>
Salomon Brothers Inc....................................... $46,713,000
Morgan Stanley & Co. Incorporated.......................... 46,712,000
-------------------------
Total...................................................... $93,425,000
=======================
</TABLE>
The Underwriting Agreement provides that the obligation of the Underwriters
to pay for and accept delivery of the Pass Through Certificates is subject to,
among other things, the approval of certain legal matters by counsel and certain
other conditions. The Underwriters are obligated to take and pay for all of the
Pass Through Certificates to be purchased by them if any are taken.
The Underwriters initially propose to offer all or part of the Pass Through
Certificates directly to the public at the public offering price per Pass
Through Certificate set forth on the cover page of this Prospectus Supplement
and may offer a portion of the Pass Through Certificates to dealers at a price
which represents a concession not in excess of .450% of the principal amount of
the Pass Through Certificates. The Underwriters may allow, and such dealers may
reallow, a concession not in excess of .250% of the principal amount of the Pass
Through Certificates to certain other dealers. After the initial
S-30
<PAGE> 31
public offering, the public offering prices and such concessions may from time
to time be varied by the Underwriters.
The Company has agreed to indemnify the Underwriters against certain civil
liabilities, including liabilities under the Securities Act of 1933.
The Company does not intend to apply for listing of the Pass Through
Certificates on a national securities exchange, but has been advised by the
Underwriters that the Underwriters presently intend to make a market in the Pass
Through Certificates, as permitted by applicable laws and regulations. No
Underwriter is obligated, however, to make a market in the Pass Through
Certificates and any such market making may be discontinued at any time at the
sole discretion of such Underwriter. Accordingly, no assurance can be given as
to the liquidity of, or trading markets for, the Pass Through Certificates.
S-31
<PAGE> 32
PROSPECTUS
$650,000,000 [LOGO]
GENERAL AMERICAN TRANSPORTATION CORPORATION
PASS THROUGH CERTIFICATES
Up to $650,000,000 aggregate principal amount of Pass Through Certificates may
be offered for sale from time to time pursuant to this Prospectus and related
Prospectus Supplements. Pass Through Certificates may be issued in one or more
series in amounts, at prices and on terms to be determined at the time of the
offering. In respect of each offering of Pass Through Certificates, a separate
General American Transportation Corporation Pass Through Trust for each series
of Pass Through Certificates being offered (each, a "Trust") will be formed
pursuant to the Pass Through Trust Agreement (the "Basic Agreement") and a
supplement thereto (a "Trust Supplement") relating to such Trust between General
American Transportation Corporation ("GATC" or the "Company") and, unless
otherwise specified in the Prospectus Supplement, The First National Bank of
Chicago (the "Pass Through Trustee"), as pass through trustee under each Trust.
Each Pass Through Certificate in a series will represent a fractional undivided
interest in the related Trust and will have no rights, benefits or interest in
respect of any other Trust. The property of each Trust will consist of equipment
notes (the "Equipment Notes") issued on a nonrecourse basis by one or more owner
trustees pursuant to separate leveraged lease transactions to finance a portion
of the equipment cost to such owner trustee of certain railcars (the "Equipment
Units") that will be acquired by such owner trustee and leased to GATC. The
Prospectus Supplement relating to each offering of Pass Through Certificates
will describe certain terms of the Pass Through Certificates being offered, the
Trust relating thereto, the Equipment Notes to be purchased by such Trust and
the leveraged lease transactions and Equipment Units relating to such Equipment
Notes.
Equipment Notes may be issued in respect of Equipment Units in one or more
series, each series having a different interest rate and final maturity date. A
separate Trust will purchase one or more series of the Equipment Notes issued
with respect to each group of Equipment Units (an "Equipment Group"). All of the
Equipment Notes held in such Trust will have an interest rate equal to the
interest rate applicable to the Pass Through Certificates issued by such Trust
and maturity dates occurring on or before the final distribution date applicable
to such Pass Through Certificates. The Equipment Notes issued with respect to
each Equipment Group will be secured by a security interest in such Equipment
Group and by the Lease relating thereto, including the right to receive rentals
payable in respect of such Equipment Group by GATC. Although neither the Pass
Through Certificates nor the Equipment Notes will be direct obligations of, or
guaranteed by, GATC, the amounts unconditionally payable by GATC for lease of
the Equipment Group will be sufficient to pay in full when due all payments of
principal of, premium, if any, and interest on the related Equipment Notes held
in the related Trust.
Interest paid on the Equipment Notes held in each Trust will be passed through
to the holders of the Pass Through Certificates relating to such Trust on the
dates and at the rate per annum set forth in the Prospectus Supplement relating
to such Pass Through Certificates until the final distribution date for such
Trust. Principal paid on the Equipment Notes held in each Trust will be passed
through to the holders of the Pass Through Certificates relating to such Trust
in scheduled amounts on the dates set forth in the Prospectus Supplement
relating to such Pass Through Certificates until the final distribution date for
such Trust.
The Pass Through Certificates may be sold through underwriters, dealers or
agents or directly to purchasers. See "Plan of Distribution." The Prospectus
Supplement will set forth the names of any underwriters, dealers or agents
involved in the sale of the Pass Through Certificates in respect of which this
Prospectus is being delivered and any applicable fee, commission or discount
arrangements with them.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The date of this Prospectus is February 25, 1994
<PAGE> 33
AVAILABLE INFORMATION
General American Transportation Corporation, a New York corporation ("GATC"
or the "Company") is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith, files reports and other information with the Securities and Exchange
Commission (the "Commission"). Such reports and other information filed by GATC
with the Commission can be inspected and copied at the Public Reference Section
of the Commission, Room 1024, Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549, and at the public reference facilities of the
Commission's Regional Offices at 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661, and Seven World Trade Center, New York, New York 10048. Copies
of such material can be obtained from the Public Reference Section of the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed
rates. GATC has filed with the Commission a registration statement on Form S-3
(herein, together with all amendments and exhibits, referred to as the
"Registration Statement") under the Securities Act of 1933, as amended (the
"Securities Act"). This Prospectus does not contain all of the information set
forth in the Registration Statement, certain parts of which are omitted in
accordance with the rules and regulations of the Commission. For further
information, reference is hereby made to the Registration Statement.
DOCUMENTS INCORPORATED BY REFERENCE
GATC's Annual Report on Form 10-K for the year ended December 31, 1992, its
Quarterly Reports on Form 10-Q for the quarters ended March 31, 1993, June 30,
1993, and September 30, 1993, respectively, and its Current Report on Form 8-K
dated July 28, 1993 heretofore filed with the Commission pursuant to the
Exchange Act, are hereby incorporated by reference.
All documents filed by GATC pursuant to Section 13(a), 13(c), 14 or 15(d)
of the Exchange Act subsequent to the date of this Prospectus and prior to the
termination of the offering of the securities offered hereby shall be deemed to
be incorporated by reference in this Prospectus and to be a part hereof from the
date of filing of such documents. Any statement contained in a document
incorporated or deemed to be incorporated by reference herein shall be deemed to
be modified or superseded for purposes of this Prospectus to the extent that a
statement contained herein or in any other subsequently filed document which
also is or is deemed to be incorporated by reference herein modifies or
supersedes such statement. Any such statement so modified or superseded shall
not be deemed, except as so modified and superseded, to constitute a part of
this Prospectus.
GATC will provide without charge to each person, including any beneficial
owner, to whom this Prospectus is delivered, upon the written or oral request of
such person, a copy of any or all of the foregoing documents incorporated herein
by reference (other than exhibits unless specifically incorporated therein).
Requests for such documents should be directed to General American
Transportation Corporation, 500 West Monroe Street, Chicago, Illinois
60661-3676, Attention: Secretary (telephone 312-621-6200).
THE COMPANY
GATC is a wholly owned subsidiary of GATX Corporation ("GATX") and is
principally engaged in railcar leasing and management. GATX Terminals
Corporation ("Terminals"), a wholly owned subsidiary of the Company, is engaged
in the operation of public bulk liquid terminals and domestic pipeline systems.
The Company is the largest lessor of railroad tank cars in the United States,
and Terminals is one of the largest independent operators of public bulk liquid
terminals in the world. The principal offices of the Company are located at 500
West Monroe Street, Chicago, Illinois 60661-3676 (telephone: (312) 621-6200).
The Company leases specialized railcars, primarily tank cars and to a
lesser extent Airslide(R) covered hoppers and plastic pellet cars, under full
service leases. The Company's railcars have a useful life of approximately 30 to
33 years. The average age of the railcars in the Company's fleet is
approximately
2
<PAGE> 34
15 years. The Company's customers typically lease new equipment for a term of
five years or longer, whereas renewals or leases of used cars are typically for
periods ranging from less than a year to seven years with an average lease term
of about three years. Under its full service leases, the Company maintains and
services its railcars, pays ad valorem taxes and provides many ancillary
services.
Terminals is engaged in the storage, handling and intermodal transfer of
petroleum and chemical commodities at key points in the bulk liquid distribution
chain. Terminals owns and operates terminals in the United States and the United
Kingdom; Terminals also has joint venture interests in facilities in Europe and
the Pacific Rim. All of its terminals are located near major distribution and
transportation points and most are capable of receiving and shipping bulk
liquids by ship, rail, barge and truck. Many of the terminals are also linked
with major interstate pipelines. In addition to storing, handling and
transferring bulk liquids, Terminals also provides blending and testing services
at most of its facilities.
RELATIONSHIP WITH GATX
All of the Company's outstanding common stock is owned by GATX. GATX is
also the parent of American Steamship Company, a shipping company which operates
self-unloading vessels on the Great Lakes, GATX Logistics, Inc., which provides
distribution and logistics support services throughout North America and
develops and operates warehouses, and GATX Financial Services, which through its
principal subsidiary, GATX Capital Corporation as well as its subsidiaries and
joint ventures, arranges and services the financing of equipment and other
capital assets on a worldwide basis.
GATX will not guarantee the Pass Through Certificates and does not
guarantee any other indebtedness of the Company. The Company, in the normal
course of business, pays dividends to GATX to provide for GATX's normal
operating expenses. Additional amounts have been advanced to GATX from time to
time for general corporate purposes, the redemption of GATX preferred stock and
the retirement of debt. In addition, GATX may make advances to subsidiaries of
the Company in the normal course of business. These advances have no fixed
maturity date.
3
<PAGE> 35
FORMATION OF THE TRUSTS
In respect of each offering of Pass Through Certificates, one or more
Trusts will be formed, and the related Pass Through Certificates will be issued,
pursuant to separate Trust Supplements to be entered into between the Pass
Through Trustee and GATC in accordance with the terms of the Basic Agreement.
All Pass Through Certificates with respect to each Trust will represent
fractional undivided interests in such Trust and the property held in such
Trust, and will have no rights, benefits or interest in respect of any other
Trust or the property held therein. Concurrently with the execution and delivery
of each Trust Supplement, the Pass Through Trustee, on behalf of the Trust
formed thereby, will enter into one or more participation agreements (each such
agreement being herein referred to as a "Participation Agreement") relating to
one or more Equipment Groups described in the applicable Prospectus Supplement.
Pursuant to the applicable Participation Agreement, the Pass Through Trustee, on
behalf of such Trust, will purchase the Equipment Notes issued with respect to
each such Equipment Group so that all of the Equipment Notes held in such Trust
will have an interest rate equal to the interest rate applicable to the Pass
Through Certificates issued by such Trust. The maturity dates of the Equipment
Notes acquired by each Trust will occur on or before the final distribution date
applicable to the Pass Through Certificates issued with respect to such Trust.
The Pass Through Trustee will distribute the amount of payments of principal,
premium, if any, and interest received by it as holder of the Equipment Notes to
the Certificateholders of the Pass Through Certificates with respect to the
Trust in which such Equipment Notes are held. See "Description of the Pass
Through Certificates" and "Description of the Equipment Notes."
USE OF PROCEEDS
The Pass Through Certificates offered pursuant to any Prospectus Supplement
will be issued in order to facilitate the financing of the debt portion of one
or more separate leveraged lease transactions entered into by GATC, as lessee,
with respect to one or more separate Equipment Groups described in such
Prospectus Supplement. The proceeds from the sale of such Pass Through
Certificates will be used by the Pass Through Trustee on behalf of the
applicable Trust to purchase, at par, the Equipment Notes to be issued by the
respective Owner Trustee or Owner Trustees to finance a portion (as specified in
the applicable Prospectus Supplement) of the equipment cost of such Equipment
Group or Groups. Simultaneously with the acquisition of each such Equipment
Group, the respective Owner Trustee will lease such Equipment Group to GATC.
Unless otherwise specified in the applicable Prospectus Supplement, GATC will
use the proceeds of each separate leveraged lease transaction for general
corporate purposes.
The Equipment Notes with respect to each Equipment Group will be issued
under a separate Trust Indenture and Security Agreement (each, an "Indenture")
between a bank or trust company as trustee thereunder (each, an "Indenture
Trustee") and an owner trustee, not in its individual capacity (except as
expressly set forth therein) but solely as trustee (each, an "Owner Trustee"),
of a separate trust for the benefit of one or more institutional or corporate
investors (each, an "Owner Participant"). Each Owner Participant will provide,
from sources other than the Equipment Notes, the balance of the equipment cost
of the related Equipment Group. No Owner Participant, however, will be
personally liable for any amount payable under the related Indenture or the
Equipment Notes issued thereunder. Subject to certain restrictions, each Owner
Participant may transfer its interest in the related Equipment Group.
Except as otherwise described in the Prospectus Supplement, each Equipment
Group will be purchased by the Owner Trustee from GATC and will consist of
railroad tank cars and freight cars of relatively recent manufacture that have
been, or are to be, subleased to GATC's customers, but which are otherwise not
subject to any encumbrances. Because the railcars within each Equipment Group
will be of relatively recent manufacture, they will not have had any significant
operating history at the time of the leveraged lease transaction. In light of
the foregoing, and because GATC's obligation under the leases to make payments
sufficient to pay in full the Equipment Notes will be unconditional, and not
affected by the financial performance of the railcars within the related
Equipment Group, GATC believes that historical financial information with
respect to the Equipment Groups will not be relevant to purchasers of the Pass
Through Certificates.
4
<PAGE> 36
DESCRIPTION OF THE PASS THROUGH CERTIFICATES
In connection with each offering of Pass Through Certificates, a separate
Trust will be formed and a series of Pass Through Certificates will be issued
pursuant to the Basic Agreement and a Trust Supplement to be entered into
between GATC and the Pass Through Trustee. The following summary relates to the
Basic Agreement and each of the Trust Supplements, the Trusts to be formed
thereby and the Pass Through Certificates to be issued by each Trust except to
the extent, if any, described in the applicable Prospectus Supplement. Citations
to the relevant sections of the Basic Agreement appear below in parentheses. The
statements under this caption are a summary and do not purport to be complete.
This summary makes use of terms defined in and is qualified in its entirety by
reference to all of the provisions of the Basic Agreement, the form of which has
been filed as an exhibit to the Registration Statement of which this Prospectus
is a part. The form of the Trust Supplement relating to each series of Pass
Through Certificates and the forms of the Leases, Participation Agreements,
Indentures and Equipment Notes relating thereto will be filed as exhibits to a
report by the Company on Form 8-K, 10-Q, or 10-K, as applicable, to be filed
with the Commission following the offering of such series of Pass Through
Certificates.
GENERAL
The Pass Through Certificates of each Trust will be issued in fully
registered form only. Each Pass Through Certificate will represent a fractional
undivided interest in the separate Trust created by the Trust Supplement
pursuant to which such Pass Through Certificate is issued. The property of each
Trust will include the Equipment Notes held in such Trust, all monies at any
time paid thereon and all monies due and to become due thereunder and funds from
time to time deposited with the Pass Through Trustee in accounts relating to
such Trust. Each Pass Through Certificate will correspond to a pro rata share of
the outstanding principal amount of the Equipment Notes and other property held
in the related Trust and will be issued in denominations of $1,000 or any
integral multiple of $1,000. (Sections 2.01, 2.02 and 3.01)
Except as otherwise provided in the applicable Trust Supplement, Pass
Through Certificates will be registered in the name of Cede & Co. ("Cede") as
the nominee of The Depository Trust Company ("DTC") and no person acquiring an
interest in Pass Through Certificates (a "Certificate Owner") will be entitled
to receive a certificate representing such person's interest in the related
Trust unless "Definitive Certificates" are issued as described below. Unless
Definitive Certificates are issued, all references to actions by
Certificateholders shall refer to actions taken by DTC upon instructions from
DTC Participants (as defined below), and all references herein to distributions,
notices, reports and statements to Certificateholders shall refer, as the case
may be, to distributions, notices, reports and statements to DTC or Cede, as the
registered holder of the Pass Through Certificates, or to DTC Participants for
distribution to Certificate Owners in accordance with DTC procedures. See
"Description of the Pass Through Certificates -- Book-Entry Registration."
(Section 3.09)
Interest will be passed through to Certificateholders of each Trust at the
rate per annum set forth on the cover page of the applicable Prospectus
Supplement and will be calculated on the basis of a 360-day year of twelve
30-day months.
The Pass Through Certificates of each series represent interests only in
the related Trust and all payments and distributions shall be made only from the
related Trust Property. (Section 3.08) The Pass Through Certificates do not
represent an interest in or obligation of GATC, the Pass Through Trustee, any
Owner Trustee in its individual capacity, any Owner Participant or any affiliate
of any thereof.
The Basic Agreement does not and, except as otherwise described in the
applicable Prospectus Supplement, the Indentures will not, include financial
covenants or "event risk" provisions specifically designed to afford
Certificateholders protection in the event of a highly leveraged transaction
affecting GATC. However, the Certificateholders of each series will have the
benefit of a lien on the specific Equipment Group securing the related Equipment
Notes held in the related Trust, as discussed under the caption "Description of
the Equipment Notes -- Security."
5
<PAGE> 37
BOOK-ENTRY REGISTRATION
Except as otherwise described in the applicable Prospectus Supplement, Pass
Through Certificates will be subject to the provisions described under this
caption for book-entry registration with DTC.
DTC. DTC is a limited purpose trust company organized under the laws of the
State of New York, a member of the Federal Reserve System, a "clearing
corporation" within the meaning of the New York Uniform Commercial Code and a
"clearing agency" registered pursuant to Section 17A of the Exchange Act. DTC
was created to hold securities for its participants ("DTC Participants") and to
facilitate the clearance and settlement of securities transactions between DTC
Participants through electronic book-entries, thereby eliminating the need for
physical movement of certificates. DTC Participants include securities brokers
and dealers, banks, trust companies and clearing corporations. Indirect access
to the DTC system also is available to others such as banks, brokers, dealers
and trust companies that clear through or maintain a custodial relationship with
a DTC Participant either directly or indirectly ("Indirect Participants").
Certificate Owners that are not DTC Participants or Indirect Participants
but desire to purchase, sell or otherwise transfer ownership of, or other
interests in, Pass Through Certificates may do so only through DTC Participants
and Indirect Participants. In addition, Certificate Owners will receive all
distributions of principal, premium, if any, and interest from the Pass Through
Trustee through DTC Participants or Indirect Participants, as the case may be.
Under a book-entry format, Certificate Owners may experience some delay in their
receipt of payments, because such payments will be forwarded by the Pass Through
Trustee to Cede, as nominee for DTC. DTC will forward such payments to DTC
Participants, which thereafter will forward them to Indirect Participants or
Certificate Owners, as the case may be, in accordance with customary industry
practices. The forwarding of such distributions to the Certificate Owners will
be the responsibility of such DTC Participants. The only "Certificateholder"
will be Cede, as nominee of DTC. Certificate Owners will not be recognized by
the Pass Through Trustee as Certificateholders, as such term is used in the
Basic Agreement, and Certificate Owners will be permitted to exercise the rights
of Certificateholders only indirectly through DTC and DTC Participants.
Under the rules, regulations and procedures creating and affecting DTC and
its operations (the "Rules"), DTC is required to make book-entry transfers of
Pass Through Certificates among DTC Participants on whose behalf it acts with
respect to the Pass Through Certificates and to receive and transmit
distributions of principal of, premium, if any, and interest on the Pass Through
Certificates. DTC Participants and Indirect Participants with which Certificate
Owners have accounts with respect to the Pass Through Certificates similarly are
required to make book-entry transfers and receive and transmit such payments on
behalf of their respective Certificate Owners. Accordingly, although Certificate
Owners will not possess Pass Through Certificates, the Rules provide a mechanism
by which Certificate Owners will receive payments and will be able to transfer
their interests.
Because DTC can only act on behalf of DTC Participants, who in turn act on
behalf of Indirect Participants, the ability of a Certificate Owner to pledge
Pass Through Certificates to persons or entities that do not participate in the
DTC system, or to otherwise act with respect to such Pass Through Certificates,
may be limited due to the lack of a physical certificate for such Pass Through
Certificates.
GATC understands that DTC will take any action permitted to be taken by
Certificateholders only at the direction of one or more DTC Participants to
whose accounts with DTC the Pass Through Certificates are credited.
Additionally, GATC understands that DTC will take such actions with respect to
any specified percentage of the beneficial interest of Certificateholders held
in each Trust only at the direction of and on behalf of DTC Participants whose
holders include undivided interests that satisfy any such percentage. DTC may
take conflicting actions with respect to other undivided interests to the extent
that such actions are taken on behalf of DTC Participants whose holders include
such undivided interests.
Neither GATC nor the Pass Through Trustee will have any liability for any
aspect of the records relating to or payments made on account of beneficial
ownership interests of the Pass Through
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Certificates held by Cede, as nominee for DTC, or for maintaining, supervising
or reviewing any records relating to such beneficial ownership interests.
The information contained in this section concerning DTC and DTC's
book-entry system has been obtained from sources that the Company believes to be
reliable, but the Company takes no responsibility for the accuracy thereof.
DEFINITIVE CERTIFICATES. With respect to each Trust, the related Pass
Through Certificates will be issued in fully registered, certificated form
("Definitive Certificates") to Certificate Owners or their nominees, rather than
to DTC or its nominee, only if (i) GATC advises the Pass Through Trustee in
writing that DTC is no longer willing or able to properly discharge its
responsibilities as depository with respect to such Pass Through Certificates
and the Pass Through Trustee or GATC is unable to locate a qualified successor,
(ii) GATC, at its option, elects to terminate the book-entry system through DTC
or (iii) after the occurrence of an Event of Default, Certificate Owners
representing an aggregate percentage interest in such Trust of not less than a
majority advise the Pass Through Trustee through DTC in writing that the
continuation of a book-entry system through DTC (or a successor thereto) is no
longer in the Certificate Owners' best interest. (Section 3.09)
Upon the occurrence of any event described in the immediately preceding
paragraph, the Pass Through Trustee will be required to notify all affected
Certificate Owners through DTC Participants of the availability of Definitive
Certificates. Upon surrender by DTC of the certificates representing the Pass
Through Certificates and receipt of instructions for re-registration, the Pass
Through Trustee will reissue the Pass Through Certificates as Definitive
Certificates to Certificate Owners. (Section 3.09)
Distributions of principal of, premium, if any, and interest on the Pass
Through Certificates will thereafter be made by the Pass Through Trustee in
accordance with the procedures set forth in the Basic Agreement and the
applicable Trust Supplements, directly to holders of Definitive Certificates in
whose names such Definitive Certificates were registered at the close of
business on the applicable record date. Such distributions will be made by check
mailed to the address of each such holder as it appears on the register
maintained with respect to the applicable Trust. The final payment on any Pass
Through Certificate, however, will be made only upon presentation and surrender
of such Pass Through Certificate at the office or agency specified in the notice
of final distribution to Certificateholders. (Section 4.02)
Definitive Certificates will be freely transferable and exchangeable at the
office of the Pass Through Trustee upon compliance with the requirements set
forth in the Basic Agreement and the applicable Trust Supplements. No service
charge will be imposed for any registration of transfer or exchange, but payment
of a sum sufficient to cover any tax or other governmental charge shall be
required. (Section 3.04)
SAME-DAY SETTLEMENT AND PAYMENT. Settlement for the Pass Through
Certificates will be required to be made in immediately available funds. So long
as the Pass Through Certificates are registered in the name of Cede, all
payments made by GATC to the Indenture Trustees, as assignees of the Owner
Trustees' rights under the Leases, will be in immediately available funds and
will be passed through by the Pass Through Trustee to DTC in immediately
available funds.
Secondary trading in long-term notes and debentures of corporate issuers is
generally settled in clearinghouse or next-day funds. In contrast, the Pass
Through Certificates will trade in DTC's Same Day Funds Settlement System until
maturity, and secondary market trading activity in the Pass Through Certificates
will therefore be required by DTC to settle in immediately available funds. No
assurance can be given as to the effect, if any, of settlement in immediately
available funds on trading activity in the Pass Through Certificates.
PAYMENTS AND DISTRIBUTIONS
Payments received by the Pass Through Trustee of principal of, premium, if
any, and interest on the Equipment Notes held in each Trust will be distributed
by the Pass Through Trustee to the Certificateholders of such Trust on the date
such receipt is confirmed, except in certain cases when some or all of
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such Equipment Notes are in default. See "Description of the Pass Through
Certificates -- Events of Default and Certain Rights Upon an Event of Default."
Payments of principal of, and interest on the unpaid principal amount of,
the Equipment Notes held in each Trust will be scheduled to be received by the
Pass Through Trustee on the dates specified in the applicable Prospectus
Supplement (such scheduled payments of principal of, and interest on, the
Equipment Notes are herein referred to as "Scheduled Payments," and the dates
specified therefor in the applicable Prospectus Supplement are herein referred
to as "Regular Distribution Dates"). The Pass Through Trustee of each Trust will
distribute on each Regular Distribution Date to the Certificateholders of such
Trust all Scheduled Payments, the receipt of which is confirmed by the Pass
Through Trustee on such Regular Distribution Date. Each such distribution of
Scheduled Payments will be made by the Pass Through Trustee to the holders of
record of the Pass Through Certificates of such Trust on the fifteenth day
immediately preceding such Regular Distribution Date, subject to certain
exceptions. (Sections 4.01 and 4.02) If a Scheduled Payment is not received by
the Pass Through Trustee on a Regular Distribution Date but is received within
five days thereafter, it will be distributed on the date received to such
holders of record. If it is received after such five-day period, it will be
treated as a Special Payment and distributed as described below.
Each Certificateholder of each Trust will be entitled to receive a pro rata
share of any distribution in respect of Scheduled Payments of principal and
interest made on the Equipment Notes held in such Trust. Scheduled Payments of
principal on the Equipment Notes held in each Trust will be set forth in the
applicable Prospectus Supplement. After a partial or full prepayment or default
in respect of some or all of such Equipment Notes, a Certificateholder should
refer to the information with respect to the Pool Balance and the Pool Factor
for such Trust reported periodically by the Pass Through Trustee. See
"Description of the Pass Through Certificates -- Pool Factors" and "Description
of the Pass Through Certificates -- Statements to Certificateholders."
Payments of principal, premium, if any, and interest received by the Pass
Through Trustee on account of a partial or full prepayment, if any, of the
Equipment Notes held in a Trust, and payments received by the Pass Through
Trustee following a default in respect of the Equipment Notes held in a Trust
(including payments received by the Pass Through Trustee on account of the
purchase by the related Owner Trustee of such Equipment Notes or payments
received on account of the sale of such Equipment Notes by the Pass Through
Trustee) ("Special Payments") will be distributed on the dates specified
therefor in the applicable Prospectus Supplement (a "Special Distribution
Date"). In general, the Pass Through Trustee will mail notice to the
Certificateholders of record of any Trust not less than 20 days prior to the
Special Distribution Date on which any Special Payment is scheduled to be
distributed by the Pass Through Trustee stating such anticipated Special
Distribution Date. (Section 4.02) Each distribution of a Special Payment, other
than a final distribution, on a Special Distribution Date for any Trust will be
made by the Pass Through Trustee to the holders of record of the Pass Through
Certificates of such Trust on the fifteenth day preceding such Special
Distribution Date. See "Description of the Equipment Notes -- Prepayments" and
"Description of the Pass Through Certificates -- Events of Default and Certain
Rights Upon an Event of Default."
The Basic Agreement requires that the Pass Through Trustee establish and
maintain, for each Trust and for the benefit of the Certificateholders of such
Trust, one or more non-interest bearing accounts (the "Certificate Account") for
the deposit of payments representing Scheduled Payments on the Equipment Notes
held in such Trust. (Section 4.01) The Basic Agreement also requires that the
Pass Through Trustee establish and maintain, for each Trust and for the benefit
of the Certificateholders of such Trust, one or more accounts (the "Special
Payments Account") for the deposit of payments representing Special Payments.
Pursuant to the terms of the Basic Agreement, the Pass Through Trustee is
required to deposit any Scheduled Payments relating to the applicable Trust
received by it in the Certificate Account of such Trust and to deposit any
Special Payments so received by it in the Special Payments Account of such
Trust. (Section 4.01) All amounts so deposited will be distributed by the Pass
Through Trustee on a Regular Distribution Date or a Special Distribution Date as
appropriate. (Section 4.02)
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At such time, if any, as the Pass Through Certificates of any Trust are
issued in the form of Definitive Certificates and not to Cede, as nominee for
DTC, distributions by the Pass Through Trustee from the Certificate Account or
the Special Payments Account of such Trust on a Regular Distribution Date or a
Special Distribution Date, as appropriate, will be made by check mailed to each
Certificateholder of such Trust of record on the applicable record date at its
address appearing on the register maintained with respect to such Trust.
(Section 4.02) The final distribution for each Trust, however, will be made only
upon presentation and surrender of the Pass Through Certificates for such Trust
at the office or agency of the Pass Through Trustee specified in the notice
given by the Pass Through Trustee of such final distribution. The Pass Through
Trustee will mail such notice of the final distribution to the
Certificateholders of such Trust, specifying the date set for such final
distribution and the amount of such distribution. (Section 11.01) See
"Description of the Pass Through Certificates -- Termination of the Trusts."
If any Regular Distribution Date or Special Distribution Date is not a
Business Day, distributions scheduled to be made on such Regular Distribution
Date or Special Distribution Date may be made on the next succeeding Business
Day without additional interest. (Section 12.10)
POOL FACTORS
Unless there has been a prepayment, or a default in respect of one or more
issues of the Equipment Notes held in a Trust, as described in the applicable
Prospectus Supplement or below in "Description of the Pass Through Certificates
- -- Events of Default and Certain Rights Upon an Event of Default," the Pool
Factor for such Trusts will decline in proportion to the scheduled repayments of
principal on the Equipment Notes held in such Trust as described in the
applicable Prospectus Supplement. In the event of a partial or full prepayment
or default, the Pool Factor and the Pool Balance of each Trust so affected will
be recomputed after giving effect thereto and notice thereof will be mailed to
Certificateholders of such Trust. Each Trust will have a separate Pool Factor
and Pool Balance.
Unless otherwise described in the applicable Prospectus Supplement, the
"Pool Balance" for each Trust indicates, as of any date, the aggregate unpaid
principal amount of the Equipment Notes held in such Trust on such date plus any
amounts in respect of principal on such Equipment Notes held by the Pass Through
Trustee and not yet distributed plus the amount of any moneys held in the
related escrow account (other than earnings thereon). The Pool Balance for each
Trust as of any Regular Distribution Date or Special Distribution Date shall be
computed after giving effect to the payment of principal, if any, on the
Equipment Notes held in such Trust and distribution thereof to be made on that
date.
Unless otherwise described in the applicable Prospectus Supplement, the
"Pool Factor" for each Trust, as of any date, is the quotient (rounded to the
seventh decimal place) computed by dividing (i) the Pool Balance of such Trust,
by (ii) the aggregate original principal amount of the Equipment Notes held in
such Trust. The Pool Factor for each Trust as of any Regular Distribution Date
or Special Distribution Date shall be computed after giving effect to the
payment of principal, if any, on the Equipment Notes held in such Trust and
distribution thereof to be made on that date. The Pool Factor for each Trust
will initially be 1.0000000; thereafter, the Pool Factor for each Trust will
decline as described above to reflect reductions in the Pool Balance of such
Trust. The amount of a Certificateholder's pro rata share of the Pool Balance of
a Trust can be determined by multiplying the original denomination of the
Certificateholder's Pass Through Certificate of such Trust by the Pool Factor
for such Trust as of the applicable Regular Distribution Date or Special
Distribution Date. The Pool Factor and the Pool Balance for each Trust will be
mailed to Certificateholders of record of such Trust on each Regular
Distribution Date and Special Distribution Date.
STATEMENTS TO CERTIFICATEHOLDERS
On each Regular Distribution Date and Special Distribution Date, if any,
the Pass Through Trustee will include with each distribution of a Scheduled
Payment or Special Payment to Certificateholders of record of the related Trust
a statement, giving effect to such distribution to be made on such Regular
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Distribution Date or Special Distribution Date, if any, setting forth the
following information (per $1,000 in aggregate principal amount of Pass Through
Certificates for such Trust, as to (i) and (ii) below):
(i) the amount of such distribution allocable to principal and the amount
allocable to premium, if any;
(ii) the amount of such distribution allocable to interest; and
(iii) the Pool Balance and the Pool Factor for such Trust.
So long as the Pass Through Certificates of any Trust are registered in the
name of Cede, as nominee for DTC, on the applicable record date prior to each
Regular Distribution Date and Special Distribution Date, the Pass Through
Trustee will request from DTC a Securities Position Listing setting forth the
names of all DTC Participants reflected on DTC's books as holding interests in
the Pass Through Certificates of such Trust on such record date. On each Regular
Distribution Date and Special Distribution Date, the Pass Through Trustee will
mail to each such DTC Participant the statement described above, and will make
available additional copies as requested by such DTC Participant, to be
available for forwarding to Certificate Owners. (Section 3.09)
In addition, after the end of each calendar year, the Pass Through Trustee
will prepare for each Certificateholder of record of each Trust at any time
during the preceding calendar year a report containing the sum of the amounts
determined pursuant to clauses (i) and (ii) above with respect to the Trust for
such calendar year or, in the event such person was a Certificateholder of
record during a portion of such calendar year, for the applicable portion of
such calendar year, and such other items as are readily available to the Pass
Through Trustee and which a Certificateholder shall reasonably request as
necessary for the purpose of such Certificateholder's preparation of its federal
income tax returns. (Section 4.03) Such report and such other items shall be
prepared on the basis of information supplied to the Pass Through Trustee by the
DTC Participants, and shall be delivered by the Pass Through Trustee to such DTC
Participants to be available for forwarding by such DTC Participants to
Certificate Owners in the manner described above.
At such time, if any, as the Pass Through Certificates of a Trust are
issued in the form of Definitive Certificates, the Pass Through Trustee will
prepare and deliver the information described above to each Certificateholder of
record of such Trust as the name and period of record ownership of such
Certificateholder appears on the records of the Registrar of the Pass Through
Certificates.
VOTING OF EQUIPMENT NOTES
The Pass Through Trustee, as holder of the Equipment Notes held in each
Trust, has the right to vote and give consents and waivers in respect of such
Equipment Notes under the applicable Indenture. The Basic Agreement sets forth
the circumstances in which the Pass Through Trustee shall direct any action or
cast any vote as the holder of the Equipment Notes held in the applicable Trust
at its own discretion and the circumstances in which the Pass Through Trustee
shall seek instructions from the Certificateholders of such Trust. Prior to an
Event of Default (as defined below) with respect to any Trust, the principal
amount of the Equipment Notes held in such Trust directing any action or being
voted for or against any proposal shall be in proportion to the principal amount
of Pass Through Certificates held by the Certificateholders of such Trust taking
the corresponding position. (Sections 6.01 and 10.01)
EVENTS OF DEFAULT AND CERTAIN RIGHTS UPON AN EVENT OF DEFAULT
The Basic Agreement defines an event of default with respect to a Trust (an
"Event of Default") as the occurrence and continuance of an event of default
under one or more of the related Indentures (an "Indenture Event of Default").
The Indenture Events of Default will be described in the applicable Prospectus
Supplement and will include events of default under the related Lease. There
will be, however, no cross-default provisions in the Indentures and events
resulting in an Indenture Event of Default under any particular Indenture (or a
default under any other indebtedness of the Company) will not necessarily result
in an Indenture Event of Default occurring under any other Indenture. If an
Indenture
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Event of Default occurs in fewer than all of the Indentures related to a Trust,
the Equipment Notes issued pursuant to the related Indentures with respect to
which an Indenture Event of Default has not occurred will continue to be held in
such Trust and payments of principal and interest on such Equipment Notes will
continue to be distributed to the holders of the Pass Through Certificates of
such Trust as originally scheduled.
The Owner Trustee and the Owner Participant under each Indenture will have
the right under certain circumstances to cure an Indenture Event of Default that
results from the occurrence of a Lease Event of Default under the related Lease.
If the Owner Trustee or the Owner Participant chooses to exercise such cure
right, the Indenture Event of Default and consequently the Event of Default with
respect to the related Trust or Trusts will be deemed to be cured.
The Basic Agreement provides that, as long as an Indenture Event of Default
under any Indenture relating to Equipment Notes held in a Trust shall have
occurred and be continuing, the Pass Through Trustee of such Trust may vote all
of the Equipment Notes issued under such Indenture that are held in such Trust,
and upon the direction of the holders of Pass Through Certificates evidencing
fractional undivided interests aggregating not less than a majority in interest
of such Trust, shall vote not less than a corresponding majority of such
Equipment Notes in favor of directing the related Indenture Trustee to declare
the unpaid principal amount of all Equipment Notes issued under such Indenture
and any accrued and unpaid interest thereon to be due and payable. The Basic
Agreement also provides that, if an Indenture Event of Default under any
Indenture relating to Equipment Notes held in a Trust shall have occurred and be
continuing, the Pass Through Trustee of such Trust may, and upon the direction
of the holders of Pass Through Certificates evidencing fractional undivided
interests aggregating not less than a majority in interest of such Trust shall,
subject to certain conditions, vote all of the Equipment Notes issued under such
Indenture that are held in such Trust in favor of directing the related
Indenture Trustee as to the time, method and place of conducting any proceeding
for any remedy available to such Indenture Trustee or of exercising any trust or
power conferred on such Indenture Trustee under such Indenture. (Sections 6.01
and 6.04)
As an additional remedy, if an Indenture Event of Default shall have
occurred and be continuing, the Basic Agreement provides that the Pass Through
Trustee of a Trust holding Equipment Notes issued under such Indenture may, and
upon the direction of the holders of Pass Through Certificates evidencing
fractional undivided interests aggregating not less than a majority in interest
of such Trust shall, sell all or part of such Equipment Notes for cash to any
person. (Sections 6.01 and 6.02) Any proceeds received by the Pass Through
Trustee upon any such sale shall be deposited in the Special Payments Account
for such Trust and shall be distributed to the Certificateholders of such Trust
on a Special Distribution Date. (Sections 4.01 and 4.02) The market for
Equipment Notes in default may be very limited and there can be no assurance
that they could be sold for a reasonable price. Furthermore, so long as the same
institution acts as Trustee of each Trust, it may be faced with a conflict in
deciding from which Trust to sell Equipment Notes to available buyers. If the
Pass Through Trustee sells any such Equipment Notes with respect to which an
Indenture Event of Default exists for less than their outstanding principal
amount, the Certificateholders of such Trust will receive a smaller amount of
principal distributions than anticipated and will not have any claim for the
shortfall against GATC, the related Owner Trustee, the related Owner Participant
or the Pass Through Trustee. Furthermore, neither the Pass Through Trustee nor
the Certificateholders of such Trust could take any action with respect to any
remaining Equipment Notes held in such Trust so long as no Indenture Event of
Default existed with respect thereto.
Any amount distributed to the Pass Through Trustee of any Trust by the
Indenture Trustee under any Indenture on account of the Equipment Notes held in
such Trust following an Indenture Event of Default under such Indenture shall be
deposited in the Special Payments Account for such Trust and shall be
distributed to the Certificateholders of such Trust on a Special Distribution
Date. In addition, if, following an Indenture Event of Default under any
Indenture, the related Owner Trustee exercises its option, if any, to purchase
the outstanding Equipment Notes issued under such Indenture as described in the
related Prospectus Supplement, the price paid by such Owner Trustee to the Pass
Through Trustee of any Trust for the Equipment Notes issued under such Indenture
and held in such Trust shall be deposited in the
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Special Payments Account for such Trust and shall be distributed to the
Certificateholders of such Trust on a Special Distribution Date. (Sections 4.01
and 4.02)
Any funds held by the Pass Through Trustee in the Special Payments Account
for such Trust representing either payments received with respect to any
Equipment Notes held in a Trust following an Indenture Event of Default or
proceeds from the sale by the Pass Through Trustee of any such Equipment Notes,
shall, to the extent practicable, be invested and reinvested by the Pass Through
Trustee in Permitted Government Investments pending the distribution of such
funds on a Special Distribution Date. Permitted Government Investments are
defined as being obligations of the United States and agencies thereof maturing
in not more than 60 days or such lesser time as is required for the distribution
of any such funds on a Special Distribution Date. (Sections 4.01 and 4.04)
The Basic Agreement provides that the Pass Through Trustee of each Trust
shall, within 90 days after the occurrence of a default (as defined below) in
respect of such Trust, give to the Certificateholders of such Trust notice,
transmitted by mail, of all uncured or unwaived defaults with respect to such
Trust known to it; provided that, except in the case of default in the payment
of principal of, premium, if any, or interest on any of the Equipment Notes held
in such Trust, the Pass Through Trustee shall be protected in withholding such
notice if it in good faith determines that the withholding of such notice is in
the interest of such Certificateholders. The term "default," for the purpose of
the provision described in this paragraph only, shall mean the occurrence of any
Event of Default with respect to a Trust as specified above, except that in
determining whether any such Event of Default has occurred any grace period or
notice in connection therewith shall be disregarded. (Section 7.02)
The Basic Agreement contains a provision entitling the Pass Through Trustee
of each Trust, subject to the duty of the Pass Through Trustee during a default
to act with the required standard of care, to be indemnified by the holders of
the Pass Through Certificates of such Trust before proceeding to exercise any
right or power under the Basic Agreement at the request of such
Certificateholders. (Section 7.03)
In certain cases, the holders of Pass Through Certificates of a Trust
evidencing fractional undivided interests aggregating not less than a majority
in interest of such Trust may on behalf of the holders of all Pass Through
Certificates of such Trust waive any past default or Event of Default with
respect to such Trust and thereby annul any direction given by the Pass Through
Trustee on behalf of such holders to the related Indenture Trustee with respect
thereto, except (i) a default in the deposit of any Scheduled Payment or Special
Payment or in the distribution of any such payment, (ii) a default in payment of
the principal of, premium, if any, or interest on any of the Equipment Notes
held in such Trust, and (iii) a default in respect of any covenant or provision
of the Basic Agreement or the related Trust Supplement that cannot be modified
or amended without the consent of each Certificateholder of such Trust affected
thereby. (Section 6.05) Each Indenture will provide that, with certain
exceptions, the holders of a majority in aggregate unpaid principal amount of
the Equipment Notes issued thereunder may on behalf of all such holders waive
any past default or Indenture Event of Default thereunder. In the event of a
waiver with respect to a Trust as described above, the principal amount of the
Equipment Notes issued under the related Indenture held in such Trust shall be
counted as waived in the determination of the majority in aggregate unpaid
principal amount of Equipment Notes required to waive a default or an Indenture
Event of Default under such Indenture. Therefore, if the Certificateholders of a
Trust waive a past default or Event of Default such that the principal amount of
the Equipment Notes held in such Trust constitutes the required majority in
aggregate unpaid principal amount under the applicable Indenture, such past
default or Indenture Event of Default under such Indenture shall be waived. For
a discussion of waivers of Indenture Events of Default under the Indentures, see
"Description of the Equipment Notes -- Indenture Events of Default and
Remedies."
MODIFICATIONS OF THE BASIC AGREEMENT
The Basic Agreement contains provisions permitting GATC and the Pass
Through Trustee of each Trust to enter into supplemental trust agreements,
without the consent of the holders of any of the Pass Through Certificates of
such Trust, (i) to evidence the succession of another corporation to GATC and
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the assumption by such corporation of GATC's obligations under the Basic
Agreement and the applicable Trust Supplement, (ii) to add to the covenants of
GATC for the benefit of the holders of such Pass Through Certificates, (iii) to
cure any ambiguity, to correct any manifest error or to correct or supplement
any defective or inconsistent provision of such Basic Agreement, the applicable
Trust Supplement or any supplemental trust agreement, or to make any other
provisions with respect to matters or questions arising thereunder, provided
such action shall not adversely affect the interest of the holders of such Pass
Through Certificates, (iv) to evidence and provide for a successor Trustee for
some or all of the Trusts, or (v) to make any other amendments or modifications
which shall only apply to Pass Through Certificates of one or more series to be
issued thereafter. (Section 9.01)
The Basic Agreement also contains provisions permitting GATC and the Pass
Through Trustee of each Trust, with the consent of the Certificateholders of
such Trust evidencing fractional undivided interests aggregating not less than a
majority in interest of such Trust, to execute supplemental trust agreements
adding any provisions to or changing or eliminating any of the provisions of the
Basic Agreement, to the extent relating to such Trust, and the applicable Trust
Supplement, or modifying the rights of such Certificateholders, except that no
such supplemental trust agreement may, without the consent of the holder of each
such Pass Through Certificate so affected, (a) reduce in any manner the amount
of, or delay the timing of, any receipt by the Pass Through Trustee of payments
on the Equipment Notes held in such Trust, or distributions in respect of any
Pass Through Certificate of such Trust, or make distributions payable in coin or
currency other than that provided for in such Pass Through Certificates, or
impair the right of any Certificateholder of such Trust to institute suit for
the enforcement of any such payment when due, (b) permit the disposition of any
Equipment Note held in such Trust, except as provided in the Basic Agreement or
the applicable Trust Supplement, or (c) reduce the percentage of the aggregate
fractional undivided interests of the Trust provided for in the Basic Agreement
or the applicable Trust Supplement, the consent of the holders of which is
required for any such supplemental trust agreement or for any waiver provided
for in the Basic Agreement or such Trust Supplement. (Section 9.02)
MODIFICATION AND CONSENTS AND WAIVERS UNDER THE INDENTURES AND RELATED
AGREEMENTS
In the event that the Pass Through Trustee, as the holder of any Equipment
Notes held in a Trust, receives a request for its consent to any amendment,
modification or waiver under the Indenture, Lease or other document relating to
such Equipment Notes, which requires the consent of the Certificateholders of
such Trust, the Pass Through Trustee shall mail a notice of such proposed
amendment, modification or waiver to each Certificateholder of such Trust as of
the date of such notice. The Pass Through Trustee shall request instructions
from the Certificateholders of such Trust as to whether or not to consent to
such amendment, modification or waiver. The Pass Through Trustee shall vote or
consent with respect to such Equipment Notes in such Trust in the same
proportion as the Pass Through Certificates of such Trust were actually voted by
the holders thereof by a certain date. Notwithstanding the foregoing, if an
Event of Default in respect of such Trust shall have occurred and be continuing,
the Pass Through Trustee, subject to the voting instructions referred to under
"Description of the Pass Through Certificates -- Events of Default and Certain
Rights Upon an Event of Default," may in its own discretion consent to such
amendment, modification or waiver, and may so notify the Indenture Trustee to
which such consent relates. (Section 10.01)
TERMINATION OF THE TRUSTS
The obligations of GATC and the Pass Through Trustee with respect to a
Trust will terminate upon the distribution to Certificateholders of such Trust
of all amounts required to be distributed to them pursuant to the Basic
Agreement and the applicable Trust Supplement and the disposition of all
property held in such Trust. The Pass Through Trustee will mail to each
Certificateholder of record of such Trust notice of the termination of such
Trust, the amount of the proposed final payment and the proposed date for the
distribution of such final payment for such Trust. The final distribution to any
Certificateholder of
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such Trust will be made only upon surrender of such Certificateholder's Pass
Through Certificates at the office or agency of the Pass Through Trustee
specified in such notice of termination. (Section 11.01)
DELAYED PURCHASE
In the event that, on the date of issuance of any Pass Through
Certificates, all of the proceeds from the sale of such Pass Through
Certificates are not used to purchase the Equipment Notes contemplated to be
held in the related Trust, such Equipment Notes may be purchased by the Pass
Through Trustee at any time on or prior to the date specified in the applicable
Prospectus Supplement. In such event, the Pass Through Trustee will hold the
proceeds from the sale of such Pass Through Certificates not used to purchase
Equipment Notes in an escrow account pending the purchase of the Equipment Notes
not so purchased. Such proceeds will be invested in Specified Investments at the
direction and risk of, and for the account of, GATC. Earnings on Specified
Investments in the escrow account for each Trust will be paid to GATC
periodically, and GATC will be responsible for any losses realized on such
Specified Investments. (Section 2.02)
On the Regular Distribution Date occurring after the issuance of such Pass
Through Certificates, GATC will pay to the Pass Through Trustee an amount equal
to the interest that would have accrued on any Equipment Notes which are
purchased after the date of the issuance of such Pass Through Certificates from
the date of the issuance of such Pass Through Certificates to, but excluding,
the date of the purchase of such Equipment Notes by the Pass Through Trustee.
(Section 2.02)
To the extent that Equipment Notes are not purchased by the Pass Through
Trustee on or prior to the date specified in the applicable Prospectus
Supplement, the unexpended proceeds from the sale of such Pass Through
Certificates, together with interest thereon at the rate applicable to such Pass
Through Certificates, will be distributed to the holders of such Pass Through
Certificates as a Special Payment.
MERGER, CONSOLIDATION AND TRANSFER OF ASSETS
GATC will be prohibited from consolidating with or merging into any other
corporation or transferring substantially all of its assets as an entirety to
any other corporation unless any successor or transferee corporation shall be a
corporation organized and existing under the laws of the United States or any
state or the District of Columbia and shall expressly assume all the obligations
of GATC contained in the Basic Agreement, the Participation Agreements and the
Leases, and both immediately prior to and after giving effect to such
consolidation, merger or transfer, no Lease Event of Default shall have occurred
and be continuing. (Section 5.02)
THE PASS THROUGH TRUSTEE
Unless otherwise specified in the applicable Prospectus Supplement, The
First National Bank of Chicago will be the Pass Through Trustee for each of the
Trusts. The Pass Through Trustee and any of its affiliates may hold Pass Through
Certificates in their own names. (Section 7.05) With certain exceptions, the
Pass Through Trustee makes no representations as to the validity or sufficiency
of the Basic Agreement, the Trust Supplements, the Pass Through Certificates,
the Equipment Notes, the Indentures, the Leases or other related documents.
(Section 7.04) Unless otherwise specified in a Prospectus Supplement, The First
National Bank of Chicago will also be the Indenture Trustee of the Indentures
under which the Equipment Notes are issued.
The Pass Through Trustee may resign with respect to any or all of the
Trusts at any time, in which event GATC will be obligated to appoint a successor
trustee. If the Pass Through Trustee ceases to be eligible to continue as
Trustee with respect to a Trust or becomes incapable of acting as Trustee or
becomes insolvent, GATC may remove such Trustee. In addition, any holder of Pass
Through Certificates of such Trust for at least six months may in such
circumstances, on behalf of himself and all others similarly situated, petition
any court of competent jurisdiction for the removal of such Trustee and the
appointment of a successor trustee. Any resignation or removal of the Pass
Through Trustee with respect
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to a Trust and appointment of the successor trustee for such Trust does not
become effective until acceptance of the appointment by the successor trustee.
(Section 7.09) Pursuant to such resignation and successor trustee provisions, it
is possible that a different trustee could be appointed to act as the successor
trustee with respect to each Trust. All references in this Prospectus to the
Pass Through Trustee are to the trustee acting in such capacity under each of
the Trusts and should be read to take into account the possibility that each of
the Trusts could have a different successor trustee in the event of such a
resignation or removal.
The Basic Agreement provides that GATC will pay the Pass Through Trustee's
fees and expenses and will indemnify the Pass Through Trustee in accordance with
the Participation Agreement with respect to certain taxes. To the extent not
indemnified by GATC with respect to such taxes, the Pass Through Trustee may be
entitled to be reimbursed by the applicable Trust. (Section 7.07)
DESCRIPTION OF THE EQUIPMENT NOTES
The statements under this caption are summaries and do not purport to be
complete. Except as otherwise indicated below or as described in the applicable
Prospectus Supplement, the following summaries will apply to the Equipment
Notes, the Indenture, the Lease and the Participation Agreement relating to each
Equipment Group. Additional provisions with respect to the Equipment Notes, the
Indentures, the Leases and the Participation Agreements relating to any
particular Equipment Group will be described in the applicable Prospectus
Supplement.
GENERAL
Each Equipment Note issued under the same Indenture will relate to a single
Equipment Group. The Equipment Notes with respect to each Equipment Group will
be issued under a separate Indenture between the related Owner Trustee of a
trust for the benefit of the Owner Participant which is the beneficial owner of
such Equipment Group and the related Indenture Trustee.
Each Owner Trustee will lease an Equipment Group to GATC pursuant to a
separate Lease between such Owner Trustee and GATC. GATC will be obligated to
make or cause to be made rental and other payments to the related Owner Trustee
under such Lease in respect of such Equipment Group in amounts that will be at
least sufficient to pay when due all payments required to be made on the
Equipment Notes issued with respect to such Equipment Group. The Equipment Notes
will not be, however, direct obligations of, or guaranteed by, GATC. GATC's
rental obligations under each Lease will be general obligations of GATC.
PRINCIPAL AND INTEREST PAYMENTS
Interest paid on the Equipment Notes held in each Trust will be passed
through to the Certificateholders of such Trust on the dates and at the rate per
annum set forth in the applicable Prospectus Supplement until the final
distribution date for such Trust. Principal paid on the Equipment Notes held in
each Trust will be passed through to the Certificateholders of such Trust in
scheduled amounts on the dates set forth in the applicable Prospectus Supplement
until the final distribution date for such Trust.
If any date scheduled for any payment of principal of, premium, if any, or
interest on the Equipment Notes is not a Business Day, such payment may be made
on the next succeeding Business Day without any additional interest.
PREPAYMENTS
The applicable Prospectus Supplement will describe the circumstances,
whether voluntary or involuntary, under which the related Equipment Notes may be
prepaid or purchased, the premium (if any) related to certain prepayments or
purchases and other terms applying to prepayments or purchases of such Equipment
Notes.
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SECURITY
The Equipment Notes issued with respect to each Equipment Group will be
secured by (i) an assignment by the related Owner Trustee to the related
Indenture Trustee of such Owner Trustee's rights (except for certain limited
rights described in the Prospectus Supplement) under the Lease with respect to
such Equipment Group, including the right to receive payments of rent thereunder
and (ii) a perfected security interest to such Indenture Trustee in such
Equipment Group, subject to the rights of GATC under such Lease. The Equipment
Notes will not be cross-collateralized and consequently the Equipment Notes
issued in respect of any one Equipment Group will not be secured by any other
Equipment Group or the Lease related thereto. Unless and until an Indenture
Event of Default with respect to an Equipment Group has occurred and is
continuing, the Indenture Trustee may not exercise the rights of the Owner
Trustee under the related Lease, except the right to receive payments of rent
due thereunder.
GATC will be required to file each Indenture, any indenture supplement,
each Lease and any lease supplement with respect to each Equipment Group under
the Interstate Commerce Act and will be further required to deposit such
documents with the Registrar General of Canada under the Railway Act of Canada
and to publish notice of such deposit in accordance with such Act. Such
Interstate Commerce Act filing gives the Indenture Trustee a perfected security
interest in each Equipment Unit in such Equipment Group whenever it is located
in the United States and in the Lease. Such deposit and publication in Canada
will be done in order to protect the lien of the Indenture Trustee in and to the
Lease and the Equipment Units created by the Indenture in Canada or any province
or territory thereof, to the extent provided for in the Railway Act of Canada.
Each Equipment Unit may be operated by GATC or, subject to certain
limitations, under sublease or interchange arrangements in the United States,
Canada or Mexico. The extent to which the Indenture Trustee's security interest
would be recognized in an Equipment Unit located in countries other than the
United States is uncertain.
Funds, if any, held from time to time by the Indenture Trustee with respect
to any Equipment Units, including funds held as the result of the loss or
destruction of such Equipment Units or termination of the Lease relating
thereto, will be invested and reinvested by such Indenture Trustee, at the
direction of GATC (except in the case of a Lease Event of Default under the
applicable Lease), in Specified Investments. GATC will pay the amount of any
loss resulting from any such investment directed by it.
LIMITATION OF LIABILITY
The Equipment Notes will not be direct obligations of, or guaranteed by,
GATC or the Owner Trustees. None of the Owner Trustees, the Owner Participants
or the Indenture Trustees, or any affiliates thereof, shall be personally liable
to any holder of an Equipment Note or, in the case of the Owner Trustees and the
Owner Participants, to the Indenture Trustees for any amounts payable under the
Equipment Notes or, except as provided in each Indenture, for any liability
under such Indenture. All payments of principal of, premium, if any, and
interest on the Equipment Notes issued with respect to any Equipment Group
(other than payments made in connection with an optional prepayment or purchase
by the related Owner Trustee) will be made only from the assets subject to the
lien of the Indenture with respect to such Equipment Group or the income and
proceeds received by the related Indenture Trustee therefrom (including rent
payable by GATC under the Lease with respect to such Equipment Group).
Except as otherwise provided in the Indentures, each Owner Trustee in its
individual capacity shall not be answerable or accountable under the Indentures
or under the Equipment Notes under any circumstances except for its own wilful
misconduct or gross negligence. None of the Owner Participants will have any
duty or responsibility under any of the Indentures or the Equipment Notes to the
Indenture Trustees or to any holder of any Equipment Note.
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INDENTURE EVENTS OF DEFAULT AND REMEDIES
The applicable Prospectus Supplement will describe the Indenture Events of
Default under the related Indentures, the remedies that the Indenture Trustee
may exercise with respect to the related Equipment Group, either at its own
initiative or upon instruction from holders of the related Equipment Notes, and
other provisions relating to the occurrence of an Indenture Event of Default and
the exercise of remedies. There will be no cross-default provisions in the
Indentures and events resulting in an Indenture Event of Default under any
particular Indenture (or a default under any other indebtedness of the Company)
will not necessarily result in an Indenture Event of Default under any other
Indenture.
In the event of the bankruptcy of an Owner Participant, it is possible
that, notwithstanding that the related Equipment Group is owned by an Owner
Trustee in trust, such Equipment Group and the Lease and the Equipment Notes
related thereto might become part of the bankruptcy proceeding. In such event,
payments on such Equipment Notes might be interrupted and the ability of the
Indenture Trustee to exercise its remedies under the applicable Indenture might
be restricted, although the Indenture Trustee would retain its status as a
secured creditor in respect of such Lease and the related Equipment Group. In
addition, in the event of an Owner Participant bankruptcy, the estate might seek
court approval to reject the related Lease as an executory contract. Such a
Lease rejection, if successful, would leave the Indenture Trustee as a secured
creditor in respect of the related Equipment Group with a claim for damages
against the estate.
THE LEASES
TERM AND RENTALS. Each Equipment Group will be leased separately by the
related Owner Trustee to GATC for a term commencing on the delivery date thereof
to such Owner Trustee and expiring on a date not earlier than the latest
maturity date of the Equipment Notes issued with respect to such Equipment Group
unless previously terminated as permitted by the related Lease. The basic rental
payments by GATC under each Lease will be payable on the dates specified in the
applicable Prospectus Supplement, and will be assigned by the Owner Trustee
under the related Indenture to provide the funds necessary to make payments of
principal and interest due from such Owner Trustee on the Equipment Notes issued
under such Indenture. Although in certain cases the basic rental payments under
the Leases may be adjusted, under no circumstances will rental payments be less
than the scheduled payments of principal and interest on the Equipment Notes
issued under the Indenture relating to such Lease. The balance of any basic
rental payments under each Lease, after payment of the scheduled principal and
interest on the Equipment Notes issued under the Indenture relating to such
Lease, will be paid over to the related Owner Trustee. GATC's obligation to pay
rent and to cause other payments to be made under each Lease will be a general
obligation of GATC.
NET LEASE. GATC's obligations in respect of each Equipment Group will be
those of a lessee under a "net lease." Accordingly, GATC will be obligated, at
its cost and expense, to maintain, repair and keep each Equipment Unit in an
Equipment Group in accordance with prudent industry maintenance practices and in
compliance in all material respects with all laws and regulations and consistent
with maintenance practices used by GATC in respect of equipment owned or leased
by GATC similar in type to such Equipment Unit. Subject to certain exceptions,
GATC will, at its expense, make all alterations, replacements or modifications
required to be made by the Association of American Railroads, the United States
Department of Transportation, or any other United States, state or local
governmental agency. GATC reserves the right to contest the validity or
applicability of any required alterations, replacements or modifications. GATC
shall have the right to make alterations, modifications and improvements with
respect to each Equipment Unit in an Equipment Group, provided that no such
alteration, modification or improvement shall diminish the fair market value,
utility or remaining economic useful life of such Unit.
INSURANCE. Unless waived or otherwise excused by the terms of any Lease,
GATC will be required to procure from reputable insurance companies, property
damage and public liability insurance, and, subject to certain limited
exceptions, maintain such insurance in such amounts and for such risks and with
such insurance companies and subject to such deductibles and self insurance no
less comprehensive in
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amounts and against risks customarily insured against by GATC in respect of
equipment owned or leased by it similar in type to the Equipment Units and
consistent with prudent industry standards for companies engaged in full service
leasing of railcars, if any.
LEASE EVENTS OF DEFAULT; REMEDIES. The applicable Prospectus Supplement
will describe the Lease Events of Default under the related Lease, the remedies
that the Owner Trustee, or Indenture Trustee as assignee of the Owner Trustee,
may exercise with respect to an Equipment Group, and other provisions relating
to the occurrence of a Lease Event of Default and the exercise of remedies.
Lease Events of Default under each Lease will include, among other things,
(a) failure by GATC to make rental payments under the Lease, (b) failure to
maintain insurance as required by the Lease, (c) use of the Equipment Group in
contravention of the Lease, (d) breach of any representation or warranty made by
GATC in the Lease or in the related Participation Agreement and (e) the
occurrence of certain events of bankruptcy, reorganization or insolvency of
GATC. Upon the occurrence of a Lease Event of Default under any Lease, the
related Indenture Trustee, as assignee of the related Owner Trustee's rights
under such Lease, will be entitled to repossess the Equipment Units and use or
sell such Equipment Units free and clear of GATC's rights therein.
If GATC were to become a debtor in a bankruptcy or reorganization case
under the Bankruptcy Code, GATC or its bankruptcy trustee could reject any or
all Leases to which it is a party. In such event, there could be no assurance
that the amount of any claim for damages under such Leases that would be allowed
in such bankruptcy case would be in an amount sufficient to provide for the
repayment of the related Equipment Notes. In any case, rejection of a Lease by
GATC or its bankruptcy trustee would not deprive the related Indenture Trustee
of its security interest in the related Equipment Group.
GATC is not a railroad, and the protections against the automatic stay in
bankruptcy under Section 1168 of the Bankruptcy Code which are granted to
lessors, conditional vendors and purchase money financiers of rolling stock to a
common carrier by railroad will not be available to an Indenture Trustee upon
the occurrence of a Lease Event of Default.
THE PARTICIPATION AGREEMENTS
GATC will be required to indemnify each Owner Participant, each Owner
Trustee, each Indenture Trustee and the Pass Through Trustee for certain losses
and claims and for certain other matters. Each Owner Participant will be
required to discharge certain liens or claims on or against the assets subject
to the lien of the related Indenture that arise out of any act of or failure to
act by or claim against such Owner Participant. Subject to certain restrictions,
each Owner Participant may transfer its interest in the related Equipment Group.
ERISA CONSIDERATIONS
Unless otherwise indicated in the applicable Prospectus Supplement, Pass
Through Certificates may be purchased by an employee benefit plan (a "Plan")
subject to the Employee Retirement Income Security Act of 1974, as amended
("ERISA"). A fiduciary of a Plan must determine that the purchase of a Pass
Through Certificate is consistent with its fiduciary duties under ERISA and does
not result in a non-exempt prohibited transaction as defined in Section 406 of
ERISA or Section 4975 of the Code. Employee benefit plans which are governmental
plans (as defined in Section 3(32) of ERISA) and certain church plans (as
defined in Section 3(33) of ERISA) are not subject to the fiduciary
responsibility provisions of ERISA.
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FEDERAL INCOME TAX CONSEQUENCES
The following is a general discussion by GATC of the anticipated material
federal income tax consequences of the purchase, ownership and disposition of
Pass Through Certificates. The summary is based on laws, regulations, rulings
and decisions now in effect, all of which are subject to change, possibly with
retroactive effect, or different interpretation. The discussion below does not
purport to address federal income tax consequences applicable to particular
categories of investors, some of which (for example, insurance companies,
dealers in securities, financial institutions or foreign investors) may be
subject to special rules. In addition, this summary is generally limited to
investors who will hold the Pass Through Certificates as "capital assets"
(generally, property held for investment) within the meaning of Section 1221 of
the Internal Revenue Code of 1986, as amended (the "Code"). Investors should
consult their own tax advisors in determining the federal, state, local, and any
other tax consequences to them of the purchase, ownership and disposition of
Pass Through Certificates, including the advisability of making any election
discussed below. Prospective investors should note that no rulings have been or
will be sought from the Internal Revenue Service (the "IRS") with respect to any
of the federal income tax consequences discussed below, and no assurance can be
given that the IRS will not take contrary positions. It is anticipated that the
Trusts will not be indemnified for any federal income taxes that may be imposed
upon them, and the imposition of any such taxes on any Trust could result in a
reduction in the amounts available for distribution to the Certificateholders of
such Trust.
Mayer, Brown & Platt, counsel to GATC, has advised GATC that, in its
opinion, based upon its interpretation of analogous authorities under currently
applicable law, the Trusts will not be classified as associations taxable as
corporations, but, rather will be classified as grantor trusts under subpart E,
Part I of Subchapter J of the Code, and that each Certificateholder of a Trust
will be treated as the owner of a pro rata undivided interest in each of the
Equipment Notes or any other property held in such Trust.
GENERAL
GATC believes that each Certificateholder in a Trust will be required to
report on its federal income tax return its pro rata share of the entire income
from the Equipment Notes or any other property held in such Trust, in accordance
with such Certificateholder's method of accounting. A Certificateholder using
the cash method of accounting should take into account its pro rata share of
income as and when received by the Pass Through Trustee of such Trust. A
Certificateholder using an accrual method of accounting should take into account
its pro rata share of income as it accrues or is received by such Trustee,
whichever is earlier.
A purchaser of a Pass Through Certificate will be treated as purchasing an
interest in each Equipment Note and any other property in a Trust at a price
determined by allocating the purchase price paid for the Pass Through
Certificate among such Equipment Notes and other property in proportion to their
fair market values at the time of purchase of such Pass Through Certificate.
GATC believes that at the time of formation of a particular Trust, the purchase
price paid for a Pass Through Certificate with respect to such Trust by an
original purchaser of a Pass Through Certificate will be allocated among the
Equipment Notes in such Trust in proportion to their respective principal
amounts. The portion of such Certificateholder's purchase price allocated to
each Equipment Note will constitute such Certificateholder's initial tax basis
in such Equipment Note.
SALES OF PASS THROUGH CERTIFICATES
A Certificateholder's tax basis in a Pass Through Certificate will equal
its cost of such Pass Through Certificate, reduced by any amortized premium (as
described below) and any payments other than interest made on such Pass Through
Certificate and increased by any market discount or original issue discount
included in the Certificateholder's income. A Certificateholder that sells a
Pass Through Certificate will recognize gain or loss (in the aggregate) in an
amount equal to the difference between its adjusted tax basis in the Pass
Through Certificate and the amount realized on the sale (except to the extent
attributable to accrued interest, which should be taxable as interest income)
and, if an Equipment
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Note or other asset of the related Trust is disposed of, or an Equipment Note of
the related Trust is prepaid, a Certificateholder will recognize gain or loss
(in the aggregate) in an amount equal to the difference between such
Certificateholder's adjusted tax basis in such Equipment Note or other asset and
the Certificateholder's pro rata portion of the amount realized on the
disposition by the Trust or upon such prepayment (except to the extent
attributable to accrued interest, which should be taxable as interest income).
Subject to the market discount provisions of the Code (described below), any
such gain or loss will be capital gain or loss if the Pass Through Certificate
was held as a capital asset and, if the Pass Through Certificate was held for
more than one year, will be long-term capital gain or loss to the extent the
Equipment Notes have been held by a Trust for more than one year. Any long-term
capital gains realized will be taxable under current law to corporate taxpayers
at the rates applicable to ordinary income, and to individual taxpayers at a
maximum marginal rate of 28%. Any capital losses realized will be deductible by
a corporate taxpayer only to the extent of capital gains and by an individual
taxpayer only to the extent of capital gains plus $3,000 of other income.
MARKET DISCOUNT
A purchaser of a Pass Through Certificate will be considered to have
acquired an interest in an Equipment Note held in a Trust at a "market discount"
to the extent the remaining principal amount of such Equipment Note allocable to
the Pass Through Certificate exceeds the Certificateholder's tax basis allocable
to such Equipment Note, unless the excess does not exceed a prescribed de
minimis amount. In the event such excess exceeds the de minimis amount, the
Certificateholder will be subject to the market discount rules of Sections 1276
and 1278 of the Code with regard to its interest in the Equipment Note.
In the case of a sale or other disposition of a Certificateholder's
interest in an Equipment Note subject to the market discount rules, Section 1276
of the Code requires that gain, if any, from such sale or disposition be treated
as ordinary income to the extent such gain represents market discount that has
accrued during the period in which the interest was held by such
Certificateholder. In addition, a disposition of a Certificateholder's interest
in an Equipment Note by gift (and in certain other circumstances), could result
in the recognition of market discount income, computed as if such Note had been
sold for its fair market value.
In the case of a partial principal payment on a Certificateholder's
interest in an Equipment Note subject to the market discount rules, Section 1276
of the Code requires that such payment be included in gross income as ordinary
income to the extent such payment does not exceed the market discount that has
accrued during the period such interest was held by such Certificateholder. The
amount of any accrued market discount later required to be included in income
upon a disposition or subsequent partial principal payment, will be reduced by
the amount of accrued market discount previously included in income.
Generally, market discount accrues under a straight line method, or, at the
election of the taxpayer, under a constant interest rate method. However, in the
case of bonds the principal of which may be paid in two or more installments
(such as the Equipment Notes), the manner in which market discount is to be
accrued will be described in Treasury regulations that have yet to be issued.
Until such Treasury regulations are issued, the explanatory Conference Committee
Report to the Tax Reform Act of 1986 (the "Conference Report") indicates that
holders of such obligations may elect to accrue market discount either on the
basis of a constant interest rate or as follows: (1) for those obligations that
have OID, market discount shall be deemed to accrue in proportion to the accrual
of OID for any accrual period, and (2) for those obligations which do not have
OID, the amount of market discount that is deemed to accrue is the amount of
market discount that bears the same ratio to the total amount of remaining
market discount that the amount of stated interest paid in the accrual period
bears to the total amount of stated interest remaining to be paid on the
obligation as of the beginning of such period.
Under Section 1277 of the Code, if in any taxable year interest paid or
accrued by a Certificateholder on indebtedness incurred or continued to purchase
or carry its interest in an Equipment Note subject to
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the market discount rules exceeds the interest (including OID) currently
includible in income with respect to such interest in an Equipment Note,
deduction of such interest must be deferred to the extent of the market discount
allocable to the taxable year. The deferred portion of any interest expense will
generally be deductible when such market discount is included in income upon the
sale or other disposition (including repayment) of the indebtedness.
Section 1278 of the Code allows a taxpayer to make an election to include
market discount in its gross income currently. If such election is made, the
rules of Sections 1276 and 1277 (described above) will not apply to the
taxpayer.
Due to the complexity of the market discount rules, prospective
Certificateholders are advised to consult their tax advisors as to the
applicability and operation of the market discount rules as they may apply to a
Certificateholder's interest in the Equipment Notes held by a Trust.
PREMIUM
A Certificateholder will generally be considered to have acquired an
interest in an Equipment Note at a premium to the extent the Certificateholder's
tax basis allocable to such interest exceeds the remaining principal amount of
the Equipment Note allocable to such interest. In that event, a
Certificateholder who holds a Pass Through Certificate as a capital asset may
amortize that premium as an offset to interest income under Section 171 of the
Code, with corresponding reductions in the Certificateholder's tax basis in its
interest in the Equipment Note if an election under Section 171 of the Code is
or has been made with respect to all debt instruments held by the taxpayer
(including the Pass Through Certificates). Generally, such amortization is on a
constant yield basis. However, in the case of bonds the principal of which may
be paid in two or more installments (such as the Equipment Notes), the
Conference Report indicates a Congressional intent that amortization will be in
accordance with the same rules that will apply to the accrual of market discount
on such obligations (see the discussion of market discount above).
In the case of obligations which may be called at a premium prior to
maturity, amortizable bond premium may be determined by reference to an early
call date. Due to the complexities of the amortizable premium rules,
particularly where there is more than one possible call date and the amount of
any premium is uncertain, Certificateholders are urged to consult their own tax
advisors as to the amount of any amortizable premium and the advisability of
making the election.
BACKUP WITHHOLDING
Payments made on the Pass Through Certificates and proceeds from the sale
of the Pass Through Certificates to or through certain brokers may be subject to
a "backup" withholding tax of 31% unless the Certificateholder complies with
certain reporting procedures or is an exempt recipient under Section 6049(b)(4)
of the Code. Any such withheld amounts will be allowed as a credit against the
Certificateholder's federal income tax.
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CERTAIN ILLINOIS TAXES
Mayer, Brown & Platt has advised GATC that, in its opinion, under existing
Illinois law as of the date hereof (i) the Trusts will not be classified as
associations taxable as corporations for purposes of franchise and income
taxation by the State of Illinois or any political subdivision thereof; (ii)
Certificateholders will be treated as the owners of undivided interests in the
assets of the Trusts for purposes of franchise and income taxation by the State
of Illinois and any political subdivision thereof; (iii) the Trusts will not be
subject to taxation or any other governmental fee or charge by the State of
Illinois or any political subdivision thereof; (iv) neither the Equipment Notes
nor the Pass Through Certificates will be subject to ad valorem taxation or any
other tax on intangible property by the State of Illinois or any political
subdivision thereof; (v) neither the delivery of the Equipment Notes to the
Trusts nor the acquisition, ownership or disposition of the interest of any
Certificateholder in any Pass Through Certificate will be subject to any sales,
use or transfer taxes imposed by the State of Illinois or any political
subdivision thereof; and (vi) a Certificateholder will not be subject to
taxation or any governmental fee or charge by the State of Illinois or any
political subdivision thereof, if a Certificateholder (a) is not a resident of
the State of Illinois, or otherwise subject to any tax, governmental charge or
fee imposed by the State of Illinois or any political subdivision thereof, (b)
does not otherwise have part of its receipt or income includible (either
directly or indirectly) in a tax return filed by a Certificateholder (or an
affiliate of the Certificateholder) in the State of Illinois, and (c) would not
be subject to taxation or any governmental fee or charge by the State of
Illinois if, instead of owning said Pass Through Certificates, the
Certificateholder owned its share of the assets of a Trust directly.
Neither the Trusts nor the Certificateholders will be indemnified for any
state or local taxes imposed on them, and the imposition of any such taxes on a
Trust could result in a reduction in the amounts available for the distribution
to the Certificateholders of such Trust. In general, should a Certificateholder
or a Trust be subject to any state or local tax which would not be imposed if
the Pass Through Trustee were located in a different jurisdiction in the United
States, the Pass Through Trustee will resign and a new Trustee in such other
jurisdiction will be appointed.
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PLAN OF DISTRIBUTION
The Company may sell the Pass Through Certificates being offered hereby:
(i) through agents, (ii) to or through underwriters, (iii) through dealers, (iv)
directly to purchasers or (v) through a combination of any such methods of sale.
The distribution of the Pass Through Certificates may be effected from time
to time in one or more transactions either (i) at a fixed price or prices, which
may be changed, or (ii) at market prices prevailing at the time of sale, or
(iii) at prices related to such prevailing market prices, or (iv) at negotiated
prices.
Offers to purchase the Pass Through Certificates may be solicited directly
by the Company or by agents designated by the Company from time to time. Any
such agent, which may be deemed to be an underwriter as that term is defined in
the Securities Act, involved in the offer or sale of the Pass Through
Certificates in respect of which this Prospectus is delivered will be named, and
any commissions payable by the Company to such agent will be set forth, in the
applicable Prospectus Supplement. Unless otherwise indicated in the Prospectus
Supplement, any such agent will be acting on a best efforts basis for the period
of its appointment.
If an underwriter or underwriters are utilized in the sale, the Company
will execute an underwriting agreement with such underwriters at the time of
sale to them and the names of the underwriters and the terms of the transaction,
including commissions, discounts and other compensation of the underwriters and
dealers, if any, will be set forth in the Prospectus Supplement, which will be
used by the underwriters to make resales of the Pass Through Certificates in
respect of which this Prospectus is delivered to the public.
If a dealer is utilized in the sale of the Pass Through Certificates in
respect of which this Prospectus is delivered, the Company or the Pass Through
Trustee, as the case may be, will sell such Pass Through Certificates to the
dealer, as principal. The dealer may then resell such Pass Through Certificates
to the public at varying prices to be determined by such dealer at the time of
resale.
Underwriters, dealers, agents and other persons may be entitled, under
agreements which may be entered into with the Company, to indemnification
against certain civil liabilities, including liabilities under the Securities
Act.
Underwriters, dealers and agents may be customers of, engage in
transactions with or perform services for the Company in the ordinary course of
business.
LEGAL OPINIONS
The validity of the Pass Through Certificates will be passed upon for GATC
by Mayer, Brown & Platt, Chicago, Illinois, and for any underwriters or agents,
by Winston & Strawn, Chicago, Illinois. Both Mayer, Brown & Platt and Winston &
Strawn will rely on the opinion of the Law Department of The First National Bank
of Chicago, as to basic matters relating to the authorization, execution and
delivery of the Pass Through Certificates under the Basic Agreement.
EXPERTS
The consolidated financial statements and related schedules of GATC
appearing in GATC's Annual Report (Form 10K) for the year ended December 31,
1992, have been audited by Ernst & Young, independent auditors, as set forth in
their report thereon included therein and incorporated herein by reference. Such
consolidated financial statements are incorporated herein by reference in
reliance upon such report given upon the authority of such firm as experts in
accounting and auditing.
23
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APPENDIX I
GLOSSARY OF CERTAIN TERMS
The following is a glossary of certain terms used in this Prospectus
relating to the Pass Through Certificates. The definitions of terms used in this
glossary that are also used in the Basic Agreement, Trust Supplements,
Indentures, Leases or Participation Agreements are qualified in their entirety
by reference to the definitions of such terms contained therein. Additional
terms or changes in the terms defined below may appear in the applicable
Prospectus Supplement.
"Basic Agreement" means the Pass Through Trust Agreement, dated as of
August 1, 1992, between GATC and the Pass Through Trustee.
"Business Day," when used with respect to the Pass Through Certificates of
any series, means any day other than a Saturday, a Sunday, or a day on which
commercial banking institutions in New York, New York, Chicago, Illinois or a
city and state in which the Pass Through Trustee or any related Indenture
Trustee maintains its Corporate Trust Office are authorized or obligated by law,
regulation or executive order to be closed.
"Certificate Account" means the one or more non-interest-bearing accounts
established and maintained by the Pass Through Trustee pursuant to the Basic
Agreement on behalf of the Certificateholders of each Trust for the deposit of
payments representing Scheduled Payments on the Equipment Notes held in such
Trust.
"Certificate Owner" means a person acquiring an interest in a Pass Through
Certificate registered in the name of Cede & Co. as the nominee of The
Depositary Trust Company.
"Certificateholder" means the Person in whose name a Pass Through
Certificate is registered.
"Code" means the United States Internal Revenue Code of 1986, as amended.
"Commission" means the Securities and Exchange Commission.
"Equipment Group" means all the railcars (which may include various types
or categories of standard gauge rolling stock) leased by an Owner Trustee to
GATC pursuant to a Lease.
"Equipment Notes" means the equipment notes issued on a nonrecourse basis
by the Owner Trustees to the Indenture Trustees under the Indentures.
"Equipment Units" or "Units" means an individual railcar.
"Event of Default" means, with respect to the Equipment Notes held in any
Trust, the occurrence and continuance of an Indenture Event of Default under one
or more of the related Indentures.
"Indenture" means each of the separate trust indenture and security
agreements entered into from time to time between an Owner Trustee and a
Indenture Trustee with respect to the issuance of Equipment Notes, as such
agreement may be amended or supplemented in accordance with its respective
terms.
"Indenture Event of Default" means each of the events designated as an
event of default in an Indenture, as described in the applicable Prospectus
Supplement.
"Indenture Trustee," when used with respect to any Equipment Note or the
Indenture applicable thereto, means the bank or trust company designated as
indenture trustee under such Indenture, and any successor to such Indenture
Trustee as such trustee.
"Lease" means each of the lease agreements entered into with respect to an
Equipment Group between an Owner Trustee and GATC, as each such lease agreement
may from time to time be amended or supplemented.
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<PAGE> 56
"Lease Event of Default" means each of the events designated as an event of
default in a Lease, as described in the applicable Prospectus Supplement.
"Owner Participant" means each of the owner participants for whose benefit
an Owner Trustee owns an Equipment Group leased to GATC pursuant to a Lease and
its permitted successors and assigns.
"Owner Trustee," when used with respect to any Equipment Note or the
Indenture applicable thereto or the Lease related thereto, means the "Owner
Trustee" referred to in the applicable Indenture, not in its individual capacity
but solely as trustee; and each other Person which may from time to time be
acting as Owner Trustee in accordance with the provisions of the applicable
Indenture, Lease or Participation Agreement.
"Participation Agreement" when used with respect to any Equipment Note,
means the agreement to which GATC and the Pass Through Trustee are parties,
providing for, among other things, the purchase of Equipment Notes by the Pass
Through Trustee.
"Pass Through Certificate" means each of the Pass Through Certificates to
be issued by each of the Trusts pursuant to the Basic Agreement and the related
Trust Supplement.
"Pass Through Trustee" means, unless otherwise specified in a Prospectus
Supplement, The First National Bank of Chicago, in its capacity as Pass Through
Trustee under each Trust, and each other person which may from time to time act
as successor Pass Through Trustee under such Trust.
"Pool Balance" means, for each Trust, as of any date, the aggregate unpaid
principal amount of the Equipment Notes held in such Trust on such date plus any
amounts in respect of principal on such Equipment Notes held by the Pass Through
Trustee and not yet distributed plus the amount of any moneys held in the
related escrow account (other than earnings thereon). The Pool Balance for each
Trust as of any Regular Distribution Date or Special Distribution Date shall be
computed after giving effect to the payment of principal, if any, on the
Equipment Notes held in such Trust and distribution thereof to be made on that
date.
"Pool Factor" means, for each Trust, as of any date, the quotient (rounded
to the seventh decimal place) computed by dividing (i) the Pool Balance of such
Trust by (ii) the aggregate original principal amount of such Equipment Notes
held in such Trust. The Pool Factor for each Trust as of any Regular
Distribution Date or Special Distribution Date shall be computed after giving
effect to the payment of principal, if any, on the Equipment Notes held in such
Trust and distribution thereof to be made on that date.
"Regular Distribution Date" means the dates specified in the applicable
Prospectus Supplement.
"Scheduled Payment" means each payment of interest or principal on an
Equipment Note scheduled to be received by the Pass Through Trustee on the
Regular Distribution Dates specified in the applicable Prospectus Supplement.
"Special Distribution Date" means each date on which a Special Payment will
be distributed, as specified in the applicable Prospectus Supplement.
"Special Payment" means (i) any payment of principal, premium, if any, and
interest resulting from the prepayment or purchase of an Equipment Note held in
a Trust, (ii) any payment of principal and interest (including any interest
accruing upon default) on or any other amount in respect of an Equipment Note
held in a Trust upon an Indenture Event of Default in respect of, or upon
acceleration relating to, such Equipment Note, (iii) any payment of principal,
premium, if any, and interest on an Equipment Note which is not in fact paid
within five days of a Regular Distribution Date, (iv) any proceeds from the sale
of any Equipment Note upon an Event of Default, or (v) the amounts available for
distribution from a Trust as a result of the failure to apply such amounts to
the purchase of Equipment Notes on or prior to the date specified in the
applicable Prospectus Supplement.
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<PAGE> 57
"Special Payments Account" means the one or more accounts established and
maintained by the Pass Through Trustee pursuant to the Basic Agreement on behalf
of the Certificateholders of each Trust for the deposit of payments representing
Special Payments on the Equipment Notes held in such Trust.
"Specified Investments" when used with respect to any Trust, means, unless
otherwise specified in the related Prospectus Supplement, (i) direct obligations
of the United States of America and agencies thereof for which the full faith
and credit of the United States of America is pledged, (ii) obligations fully
guaranteed by the United States of America, (iii) certificates of deposit issued
by, or bankers' acceptances of, or time deposits 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 the states thereof having combined
capital and surplus and retained earnings of at least $500,000,000 (including
any Indenture Trustee or Owner Trustee if such conditions are met) and (iv)
repurchase agreements with any financial institution having a combined capital
and surplus of at least $750,000,000 fully collateralized by obligations of the
type described in clauses (i) through (iii) above; provided that if all of the
above investments are unavailable, the entire amounts to be invested may be used
to purchase Federal funds from an entity described in clause (iii) above; and
provided further that no investment shall be eligible as a "Specified
Investment" unless the final maturity or date of return of such investment is 91
days or less from the date of purchase thereof.
"Trust" means each of the General American Transportation Corporation Pass
Through Trusts to be formed pursuant to the Basic Agreement and a Trust
Supplement.
"Trust Supplement" means each of the Pass Through Trust Supplements between
GATC and the Pass Through Trustee, pursuant to each of which a Trust is formed
and a series of Pass Through Certificates is issued to evidence fractional
undivided ownership interests in the Trust Property held in such Trust.
"Trust Property" means the Equipment Notes held as the property of a Trust
and all funds from time to time deposited in the related Certificate Account,
the related Special Payments Account and any other account maintained as a part
of such Trust, including any proceeds from the sale by the Pass Through Trustee
of any such Equipment Note in connection with an Event of Default.
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<PAGE> 58
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS IN CONNECTION WITH THE
OFFER MADE BY THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS AND, IF
GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY THE COMPANY OR BY THE UNDERWRITERS. NEITHER THE
DELIVERY OF THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS NOR ANY
SALE MADE HEREUNDER SHALL UNDER ANY CIRCUMSTANCES CREATE AN IMPLICATION THAT
THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF.
THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS DO NOT CONSTITUTE AN
OFFER OR SOLICITATION BY ANYONE IN ANY JURISDICTION IN WHICH SUCH OFFER OR
SOLICITATION IS NOT AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH OFFER OR
SOLICITATION IS NOT QUALIFIED TO DO SO OR TO ANYONE TO WHOM IT IS UNLAWFUL TO
MAKE SUCH OFFER OR SOLICITATION.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
PROSPECTUS SUPPLEMENT
Summary.............................. S-3
Diagram of Payments.................. S-9
Use of Proceeds...................... S-10
Capitalization....................... S-11
Summary Financial Information........ S-12
Description of Business.............. S-13
Recent Developments.................. S-17
Description of the Pass Through
Certificates....................... S-18
Description of the Equipment Notes... S-19
ERISA Considerations................. S-30
Underwriting......................... S-30
PROSPECTUS
Available Information................ 2
Documents Incorporated By
Reference.......................... 2
The Company.......................... 2
Formation Of The Trusts.............. 4
Use Of Proceeds...................... 4
Description Of The Pass Through
Certificates....................... 5
Description Of The Equipment Notes... 15
ERISA Considerations................. 18
Federal Income Tax Consequences...... 19
Certain Illinois Taxes............... 22
Plan of Distribution................. 23
Legal Opinions....................... 23
Experts.............................. 23
Glossary of Certain Terms..........Appendix I
</TABLE>
$93,425,000
[LOGO]
GENERAL AMERICAN
TRANSPORTATION CORPORATION
1994-1 PASS THROUGH TRUST
8.42% PASS THROUGH
CERTIFICATES,
SERIES 1994-1
SALOMON BROTHERS INC
MORGAN STANLEY & CO.
INCORPORATED
PROSPECTUS SUPPLEMENT
DATED AUGUST 9, 1994
