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RULE NO. 424(b)(2)
REGISTRATION NO. 333-3359
PROSPECTUS
MOBIL CORPORATION
MOBIL G.B. 388 FINANCE INC.
TENDER FOR ALL OUTSTANDING PASS THROUGH CERTIFICATES,
SERIES 1995-A1 THROUGH 1995-A6 OF MOBIL CORPORATION IN EXCHANGE FOR PASS
THROUGH CERTIFICATES, SERIES 1995-B1 THROUGH 1995-B6
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON AUGUST 8,
1996, UNLESS EXTENDED.
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Mobil Corporation, a Delaware corporation ("Mobil"), and Mobil G.B. 388
Finance Inc., a Delaware corporation ("MGB"), hereby offer, upon the terms and
subject to the conditions set forth in this Prospectus (the "Prospectus") and
the accompanying Letter of Transmittal (the "Letter of Transmittal" which,
together with the Prospectus, constitute the "Exchange Offer"), to cause the
Pass Through Trustee (as defined herein) to exchange the Pass Through
Certificates, Series 1995-B1 through 1995-B6 (the "New Certificates"), which
have been registered under the Securities Act of 1933, as amended (the
"Securities Act"), pursuant to the Registration Statement of which this
Prospectus is a part, for a like principal amount of issued and outstanding
Pass Through Certificates, Series 1995-A1 through 1995-A6 (the "Old
Certificates"), of which an aggregate of $92,185,000 in principal amount is
outstanding. The New Certificates will evidence the same fractional undivided
interest in one of six Mobil Corporation 1995-A Pass Through Trusts (the "Pass
Through Trusts") which were formed pursuant to six separate pass through trust
agreements (the "Agreements") among Mobil, MGB and First Security Bank of
Utah, National Association, as Pass Through Trustee (the "Pass Through
Trustee") as was evidenced by the Old Certificates (which they replace) and
will be entitled to the benefits of the Agreements. The Old Certificates and
the New Certificates are referred to herein collectively as the
"Certificates." The Old Certificates were offered and sold in the Original
Offering (as defined herein) that closed on December 12, 1995. The form and
terms of the New Certificates will be identical in all material respects to
the form and terms of the Old Certificates except that the New Certificates
will have been registered under the Securities Act and, therefore, will not
bear legends restricting the transfer thereof and will not contain certain
provisions included in the terms of the Old Certificates relating to a
contingent increase in the interest rate and holders of the New Certificates
will not be entitled to any rights under the Registration Rights Agreement.
See "The Exchange Offer" and "Description of the New Certificates." Because
the Exchange Offer has been commenced prior to June 12, 1996, holders of Old
Certificates, whether or not tendered, will not be entitled to the contingent
increase in the interest rate provided for in the Old Certificates.
The property of the Pass Through Trusts consists of secured notes (the
"Secured Notes") issued on a nonrecourse basis by the Owner Trustee (as
defined herein) of an owner trust pursuant to a leveraged lease transaction
which financed 72.83% of the Lessor's Cost (as hereinafter defined) of a 40%
undivided interest (the "Undivided Interest") in an oil and gas drilling and
production system (the "Production System") that was acquired by the Owner
Trustee from MGB and leased to MGB. Although neither the Certificates nor the
Secured Notes are direct obligations of, or guaranteed by, MGB or Mobil, the
amounts unconditionally payable by MGB for the lease of the Undivided Interest
will be at least sufficient to pay in full when due all payments of principal
of, premium, if any, or interest on the Secured Notes held in the Pass Through
Trusts. Mobil has fully and unconditionally guaranteed to the holders from
time to time of Certificates the full and prompt payment of all amounts
payable by MGB under the Lease (as hereinafter defined) when and as the same
shall become due and payable.
The Secured Notes issued by the Owner Trustee were issued in six series.
Each of the Pass Through Trusts purchased Secured Notes of one series from the
Owner Trustee, and all of the Secured Notes held in each Pass Through Trust
have an interest rate corresponding to the interest rate applicable to
Certificates issued by such Pass Through Trust. The maturity dates of the
Secured Notes acquired by each Pass Through Trust occur on or before the final
distribution date applicable to the Certificates issued by such Pass Through
Trust. The Secured Notes are secured by a security interest in the Undivided
Interest and in the Lease relating thereto, including the right to receive
rentals payable in respect of the Undivided Interest by MGB. Interest paid on
the Secured Notes held in the Pass Through Trusts will be passed through to
the Certificateholders (as hereinafter defined) on each January 2 and July 2
of each year, commencing July 2, 1996, at the rate per annum set forth herein
for each Pass Through Trust until the final distribution date. Principal
payments on the Secured Notes held in Pass Through Trusts 1995-A1 through
1995-A5 will be passed through to the Certificateholders of each such Pass
Through Trust in full at their respective maturity dates. Principal payments
on the Secured Notes held in Pass Through Trust 1995-A6 will be passed through
to the Certificateholders of such Pass Through Trust in scheduled amounts on
January 2 or July 2, or both, of each year, commencing on January 2, 2002, and
continuing until the final distribution date, for such Pass Through
(Continued on next page)
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR BY 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 June 5, 1996
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(Cover Page Continued)
Trust set forth herein. For circumstances under which distributions to the
Certificateholders may be made prior to the final distribution date, see
"Description of the New Certificates--Payments and Distributions."
Any and all Old Certificates validly tendered (and not timely withdrawn)
prior to 5:00 p.m., New York City time, during the period ending on the date
that is 60 days after the date upon which notice of effectiveness of the
Registration Statement is mailed to each Certificateholder, unless extended by
Mobil and MGB (such date, or such later date to which the Exchange Offer may
be extended, the "Expiration Date") will be accepted for exchange. Tenders of
Old Certificates may be withdrawn at any time prior to 5:00 p.m., New York
City time, on the Expiration Date. The Exchange Offer is not conditioned upon
any minimum aggregate principal amount of Old Certificates being tendered for
exchange. However, the Exchange Offer is subject to certain customary
conditions, which may be waived by Mobil and MGB. See "The Exchange Offer."
Any waiver, extension or termination of the Exchange Offer will be publicly
announced by Mobil and MGB through a release to the Dow Jones News Service and
as otherwise required by applicable law or regulations.
Based on no-action letters issued by the staff of the Securities and
Exchange Commission (the "Commission") to unrelated parties, Mobil and MGB
believe that New Certificates issued pursuant to the Exchange Offer in
exchange for Old Certificates may be offered for resale, resold, and otherwise
transferred by a holder thereof (other than broker-dealers, as set forth
below, and any holder that is an "affiliate" of Mobil within the meaning of
Rule 405 under the Securities Act) without compliance with the registration
and prospectus delivery provisions of the Securities Act, provided that the
holder is acquiring the New Certificates in the ordinary course of its
business and has no arrangement or understanding with any person to
participate in the distribution of the New Certificates. Eligible holders of
Old Certificates wishing to accept the Exchange Offer must represent to Mobil
and MGB in the Letter of Transmittal that such conditions have been met. See
"The Exchange Offer--Purpose and Effect of the Exchange Offer." Each broker-
dealer that receives New Certificates for its own account pursuant to the
Exchange Offer must acknowledge that it will deliver a prospectus in
connection with any resale of such New Certificates. The Letter of Transmittal
states that by so acknowledging and by delivering such prospectus, such
broker-dealer will not be deemed to admit that it is an "underwriter" within
the meaning of the Securities Act. This Prospectus, as it may be amended or
supplemented from time to time, may be used by such broker-dealer in
connection with resale of New Certificates received for such broker-dealer's
own account in exchange for Old Certificates where such Old Certificates were
acquired by such broker-dealer as a result of market-making activities or
other trading activities. Mobil and MGB have agreed that, for a period of 90
days after the Expiration Date, they will make this Prospectus available to
any such broker-dealer for use in connection with any such resale. See "Plan
of Distribution."
The New Certificates constitute a new issue of securities with no
established trading market. Mobil and MGB do not intend to list the New
Certificates on any securities exchange or to seek approval for quotation
through any automated quotation system. Morgan Stanley & Co. Incorporated
("MS&Co.") has indicated to Mobil and MGB that it intends to effect offers and
sales of the New Certificates in market-making transactions at negotiated
prices related to prevailing market prices at the time of sales, but is not
obligated to do so and such market-making activities may be discontinued at
any time. MS&Co. may act as principal or agent in such transactions. There can
be no assurance that an active market for the New Certificates will develop.
Any Old Certificates not tendered and accepted in the Exchange Offer will
remain outstanding and will continue to accrue interest and be entitled to
distributions of principal and interest. Following consummation of the
Exchange Offer, the holders of Old Certificates will continue to be subject to
the existing restrictions upon transfer thereof and Mobil and MGB will have no
further obligation to such holders to provide for the registration under the
Securities Act of the Old Certificates held by them. To the extent that Old
Certificates are tendered and accepted in the Exchange Offer, a holder's
ability to sell untendered Old Certificates could be adversely affected. It is
not expected that an active market for the Old Certificates will develop while
they are subject to restrictions on transfer.
This Prospectus, together with the Letter of Transmittal, is being sent to
all registered holders of Old Certificates as of June 4, 1996.
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AVAILABLE INFORMATION
Mobil and MGB have filed with the Commission a Registration Statement on
Form S-4 (together with any amendments thereto, the "Registration Statement")
under the Securities Act covering the New Certificates offered hereby. This
Prospectus, which constitutes a part of the Registration Statement, omits
certain information contained in the Registration Statement as permitted by
the rules and regulations of the Commission. For further information with
respect to Mobil, MGB and the Exchange Offer, reference is made to the
Registration Statement and the exhibits and the financial statements, notes
and schedules filed as a part thereof, which may be inspected at the public
reference facilities of the Commission, at the addresses set forth below. With
respect to each such contract, agreement or other document filed as an exhibit
to the Registration Statement, the material terms of each of which are
summarized in this Prospectus, reference is made to the exhibit for a more
complete description of the document or matter involved, and each such
statement shall be deemed qualified in its entirety by such reference.
Mobil is subject to the reporting requirements of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), and in accordance therewith
files reports and other information with the Commission. The Registration
Statement, as well as such reports and other information filed by Mobil
pursuant to the Exchange Act, may be inspected and copied (at prescribed
rates) at the public reference facilities maintained by the Commission at Room
1024, 450 Fifth Street, N.W., Washington, D.C. 20549, and at the Regional
Offices of the Commission at 75 Park Place, New York, New York 10007 and at
Northwestern Atrium Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661. In addition, reports, proxy statements and other information
may be inspected at the offices of the New York Stock Exchange, 20 Broad
Street, New York, New York 10005, upon which the common stock of Mobil is
traded.
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 IN CONNECTION WITH THE EXCHANGE OFFER MADE BY THIS PROSPECTUS, AND,
IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON
AS HAVING BEEN AUTHORIZED BY THE COMPANY. NEITHER THE DELIVERY OF THIS
PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL UNDER ANY CIRCUMSTANCES CREATE
ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY
SINCE THE DATE HEREOF. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER OR A
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
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<S> <C>
AVAILABLE INFORMATION............... 3
SUMMARY............................. 4
USE OF PROCEEDS..................... 14
THE ORIGINAL OFFERING............... 14
MOBIL CORPORATION................... 17
MOBIL G.B. 388 FINANCE INC. ........ 18
RATIO OF EARNINGS TO FIXED CHARGES
OF MOBIL CORPORATION............... 18
SELECTED CONSOLIDATED FINANCIAL
INFORMATION OF MOBIL CORPORATION... 18
THE EXCHANGE OFFER.................. 19
DESCRIPTION OF THE NEW
CERTIFICATES....................... 26
</TABLE>
<TABLE>
<CAPTION>
PAGE
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<S> <C>
DESCRIPTION OF THE SECURED NOTES.... 37
FEDERAL INCOME TAX CONSEQUENCES..... 52
CERTAIN UTAH TAXES.................. 55
ERISA CONSIDERATIONS................ 56
PLAN OF DISTRIBUTION................ 57
LEGAL MATTERS....................... 57
EXPERTS............................. 57
DOCUMENTS INCORPORATED BY
REFERENCE.......................... 58
GLOSSARY OF CERTAIN TERMS........... 59
</TABLE>
3
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SUMMARY
The following summary does not purport to be complete and is qualified in its
entirety by the detailed information appearing elsewhere or incorporated by
reference herein.
MOBIL
Mobil was incorporated in March, 1976 in the State of Delaware and operates
primarily as a holding company. Mobil's principal business, which is conducted
primarily through wholly-owned subsidiaries, is in the United States and
international energy industries. Mobil is also a manufacturer and marketer of
petrochemicals, packaging films and specialty chemical products. Mobil, through
its subsidiaries, has business interests in over 125 countries as of December
31, 1995. Mobil's principal executive offices are located at 3225 Gallows Road,
Fairfax, Virginia 22037-0001, and its telephone number is (703) 846-3000.
MGB
MGB is a wholly-owned special purpose finance subsidiary of Mobil. MGB was
incorporated in the State of Delaware on March 10, 1994 under the name RTC Two,
Inc. On December 4, 1995 MGB filed a Certificate of Amendment with the State of
Delaware changing its name to Mobil G.B. 388 Finance Inc. MGB has no business
activities other than leasing the Undivided Interest (as defined herein) and
subleasing the Undivided Interest as permitted by the Lease (as defined
herein). MGB's offices are located at 3225 Gallows Road, Fairfax, Virginia
22037-0001, and its telephone number is (703) 846-3000.
THE ORIGINAL OFFERING
Glossary.................. Included at the end of this Prospectus as Appendix
I is a Glossary of certain of the significant
defined terms used herein.
Old Certificates.......... The Old Certificates were issued by Mobil and MGB
on December 12, 1995 to MS&Co. (in such capacity,
the "Placement Agent") pursuant to a Placement
Agreement, dated as of December 6, 1995 (the
"Placement Agreement"). The Placement Agent
subsequently resold the Old Certificates within
the United States to qualified institutional
buyers (as defined in Rule 144A under the
Securities Act) ("QIBs") in compliance with Rule
144A and to a limited number of institutional
accredited investors that agreed to comply with
certain transfer restrictions and other conditions
and outside the United States to persons other
than U.S. persons in reliance upon Regulation S
under the Securities Act (the "Original
Offering"). For the terms of the Old Certificates,
including the principal amount and interest rate
for each series of the Old Certificates, see "The
Original Offering."
Registration Rights
Agreement................ Pursuant to the Placement Agreement, Mobil, MGB and
the Placement Agent entered into a Registration
Rights Agreement, dated as of December 12, 1995
(the "Registration Rights Agreement"), which
grants the holders of the Old Certificates certain
exchange and registration rights. The Exchange
Offer is being made pursuant to the Registration
Rights Agreement and such exchange rights
terminate upon the consummation of the Exchange
Offer.
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THE EXCHANGE OFFER
Securities Offered........ $92,185,000 aggregate principal amount of Pass
Through Certificates, Series 1995-B1 through 1995-
B6 (the "New Certificates"), which have been
registered under the Securities Act.
The Exchange Offer........ $1,000 principal amount of New Certificates in
exchange for each $1,000 principal amount of Old
Certificates duly tendered and not withdrawn prior
to acceptance thereof. The Pass Through Trustee
will deliver the New Certificates to holders (who
have properly tendered and not withdrawn their Old
Certificates) as promptly as practicable after the
Expiration Date.
Transferability of New
Certificates Under
Federal Securities
Laws..................... Based on an interpretation by the staff of the
Commission set forth in no-action letters issued
to unrelated parties, Mobil and MGB believe that
the New Certificates issued pursuant to the
Exchange Offer in exchange for Old Certificates
may be offered for resale, resold and otherwise
transferred by any holder thereof (other than
broker- dealers, as set forth below, and any such
holder that is an "affiliate" of Mobil within the
meaning of Rule 405 under the Securities Act)
without compliance with the registration and
prospectus delivery provisions of the Securities
Act, provided that such New Certificates are
acquired in the ordinary course of such holder's
business, that such holder has no arrangement or
understanding with any person to participate in
the distribution of such New Certificates and that
such holder is not engaging in or intending to
engage in the distribution of the New
Certificates. Each broker-dealer that receives New
Certificates for its own account in exchange for
Old Certificates that were acquired as a result of
market-making or other trading activity must
acknowledge that it will deliver a prospectus in
connection with any resale of such New
Certificates. The Letter of Transmittal states
that by so acknowledging and by delivering a
prospectus, such broker-dealer will not be deemed
to admit that it is an "underwriter" within the
meaning of the Securities Act. This Prospectus, as
it may be amended or supplemented from time to
time, may be used by such broker-dealer in
connection with resales of New Certificates
received in exchange for Old Certificates where
such New Certificates were acquired by such
broker-dealer as a result of market-making
activities or other trading activities. Mobil and
MGB have agreed that, for a period of 90 days
after the Expiration Date, they will make this
Prospectus available to any such broker-dealer for
use in connection with any such resale. See "Plan
of Distribution." Any holder who tenders in the
Exchange Offer with the intention to participate,
or for the purpose of participating, in a
distribution of the New Certificates or who is an
affiliate of Mobil or MGB may not rely on the
position of the staff of the Commission enunciated
in Exxon Capital Holdings Corporation (available
May 13, 1988) or similar no-action letters and, in
the absence of an exemption therefrom, must comply
with the registration and prospectus delivery
requirements of the Securities Act in connection
with a secondary resale transaction. Failure to
comply with such requirements in such instance may
result in such holder incurring liability under
the Securities Act for which the holder is not
indemnified by Mobil or MGB.
5
<PAGE>
This Exchange Offer is not being made to, nor will
the Pass Through Trustee accept surrenders for
exchange from, any holder of Old Certificates in
any jurisdiction in which this Exchange Offer or
the acceptance thereof would not be in compliance
with the securities or blue sky laws of such
jurisdiction.
Expiration Date........... 5:00 p.m., New York City time, on the date that is
60 days after the date upon which notice of
effectiveness of the Registration Statement is
mailed to each Certificateholder, unless the
Exchange Offer is extended by Mobil and MGB, in
which case the term "Expiration Date" means the
latest date and time to which the Exchange Offer
is extended. Mobil and MGB have no current
intention to extend the Exchange Offer. Any
extension, if made, will be publicly announced
through a release to the Dow Jones News Services
and as otherwise required by applicable law or
regulations.
Accrued Interest on the
New Certificates and Old
Certificates............. Holders of Old Certificates that are accepted for
exchange will not receive any accrued interest
thereon. However, each New Certificate will bear
interest from the most recent date to which
interest has been paid on the Old Certificate for
which such New Certificate was exchanged.
Conditions to the
Exchange Offer........... The Exchange Offer is subject to certain customary
conditions, which may be waived by Mobil and MGB.
See "The Exchange Offer--Conditions to the
Exchange Offer" and "--Terms of the Exchange
Offer."
Procedures for Tendering
Certificates............. Each holder of an Old Certificate wishing to accept
the Exchange Offer must complete, sign and date
the Letter of Transmittal, or a facsimile thereof,
in accordance with the instructions contained
herein and therein, and mail or otherwise deliver
such Letter of Transmittal, or such facsimile,
together with the Old Certificates and any other
required documentation to the Exchange Agent (as
defined herein) at the address set forth herein
prior to 5:00 p.m., New York City time, on the
Expiration Date or comply with the procedure for
book-entry transfer or the guaranteed delivery
procedures described herein and in the Letter of
Transmittal. See "The Exchange Offer--Procedures
for Tendering."
By executing a Letter of Transmittal, each holder
represents to Mobil and MGB that, among other
things, the New Certificates acquired pursuant to
the Exchange Offer are being obtained in the
ordinary course of business of the person
receiving such new Certificates, whether or not
such person is the holder, that neither the
holders nor any such other person has any
arrangement or understanding with any person to
participate in the distribution of such New
Certificates, that such holder is not engaging in
or intending to engage in the distribution of the
New Certificates and that neither the holder nor
any such other person is an "affiliate" of Mobil,
as defined under Rule 405 of the Securities Act.
See "The Exchange Offer--Purpose and Effect of the
Exchange Offer."
6
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Special Procedure for
Beneficial Owners........ Any beneficial owner whose Old Certificates are
registered in the name of a broker, dealer,
commercial bank, trust company or other nominee
and who wishes to tender should contact such
registered holder promptly and instruct such
registered holder to tender on such beneficial
owner's behalf. If such beneficial owner wishes to
tender on such owner's own behalf, such owner
must, prior to completing and executing a Letter
of Transmittal and delivering Old Certificates,
either make appropriate arrangements to register
ownership of the Old Certificates in such owner's
name or obtain a properly completed bond power
from the registered holder. The transfer of
registered ownership may take considerable time
and may not be able to be completed prior to the
Expiration Date. See "The Exchange Offer--
Procedures for Tendering."
Guaranteed Delivery
Procedures............... Holders of Old Certificates who wish to tender
their Old Certificates and whose Old Certificates
are not immediately available or who cannot
deliver their Old Certificates, a Letter of
Transmittal or any other documents required by the
Letter of Transmittal to the Exchange Agent prior
to the Expiration Date, must tender their Old
Certificates according to the guaranteed delivery
procedures set forth in "The Exchange Offer--
Procedures for Tendering."
Withdrawal Rights......... Subject to the conditions set forth herein, tenders
of Old Certificates may be withdrawn at any time
prior to 5:00 p.m., New York City time, on the
Expiration Date. See "The Exchange Offer--
Withdrawal of Tenders."
Acceptance of Old
Certificates and
Delivery of New
Certificates............. Subject to the terms and conditions of the Exchange
Offer, including the reservation of certain rights
by Mobil and MGB, the Pass Through Trustee will
accept for exchange any and all Old Certificates
which are properly tendered in the Exchange Offer,
and not withdrawn, prior to 5:00 p.m., New York
City time, on the Expiration Date. Subject to such
terms and conditions, New Certificates issued
pursuant to the Exchange Offer will be delivered
promptly following the Expiration Date. See "The
Exchange Offer--Terms of the Exchange Offer" and
"--Conditions to the Exchange Offer."
Exchange Agent............ The First Security Bank of Utah, National
Association, is serving as Exchange Agent (the
"Exchange Agent") in connection with the Exchange
Offer. The Exchange Agent's telephone number is
(801) 246-5630.
Certain Federal Income
Tax Considerations....... Each Pass Through Trust is classified as a grantor
trust for federal income tax purposes. Thus, each
Certificateholder will be treated as the owner of
a pro rata undivided interest in the Secured Notes
and any other property held in the related Pass
Through Trust and will
7
<PAGE>
be required to report on its federal income tax
return its pro rata share of income from such
Secured Notes and any other property held in such
Pass Through Trust in accordance with such
Certificateholder's method of accounting.
Certificateholders will not recognize gain or loss
for federal income tax purposes in respect of the
exchange of Old Certificates for New Certificates.
Each Certificateholder will have the same adjusted
tax basis in the New Certificate as it had in the
Old Certificate exchanged therefor. Moreover, its
holding period of each New Certificate will
include its holding period for the Old Certificate
exchanged therefor. Persons considering the
exchange of Old Certificates for New Certificates
should consult their tax advisors with regard to
the application of the United States federal
income tax laws to their particular situations as
well as any tax consequences arising under the
laws of any state, local or foreign taxing
jurisdiction. See "Federal Income Tax
Consequences."
Untendered Certificates... Following the consummation of the Exchange Offer,
holders of Old Certificates will not have any
further registration rights and such Old
Certificates will continue to be subject to
certain restrictions on transfer. Accordingly, the
liquidity of the market for such Old Certificates
will be adversely affected. Old Certificates that
are not exchanged pursuant to the Exchange Offer
will remain outstanding and continue to accrue
interest and be entitled to distributions of
principal and interest.
Consequences of Failure
to Exchange.............. Old Certificates that are not exchanged pursuant to
the Exchange Offer will remain restricted
securities. Accordingly, such Old Certificates may
be resold only (i) to Mobil or MGB, (ii) inside
the United States pursuant to Rule 144A or Rule
144 under the Securities Act or pursuant to some
other exemption from registration under the
Securities Act, (iii) outside the United States to
a foreign person pursuant to the requirements of
Regulation S under the Securities Act or (iv)
pursuant to an effective registration statement
under the Securities Act. In addition, the
provisions in the Old Certificates providing for
an increase in the interest rate if the Exchange
Offer is not timely commenced will no longer be
applicable. See "The Exchange Offer--Other."
NEW CERTIFICATES
General................... The form and terms of the New Certificates are the
same as the form and terms of the Old Certificates
(which they replace) except that (i) the New
Certificates have been registered under the
Securities Act and, therefore, will not bear
legends restricting the transfer thereof, (ii) the
New Certificates do not include certain provisions
providing for an increase in the interest rate if
the Exchange Offer is not timely commenced and
(iii) the holders of New Certificates will not be
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<PAGE>
entitled to any rights under the Registration
Rights Agreement, which rights will terminate when
the Exchange Offer is commenced. New Certificates
will evidence the same fractional undivided
interest in one of six Mobil Corporation 1995-A
Pass Through Trusts as Old Certificates and will
be issued under and entitled to the benefits of
the Agreements. See "Description of New
Certificates."
Securities Offered........ $92,185,000 aggregate principal amount of Pass
Through Certificates, Series 1995-B1 through 1995-
B6, which have been registered under the
Securities Act.
Pass Through Trusts....... Each of the six Mobil Corporation 1995-A Pass
Through Trusts (each a "Pass Through Trust";
collectively, the "Pass Through Trusts") was
formed pursuant to one of six separate Pass
Through Trust Agreements (the "Agreements") among
Mobil, MGB and First Security Bank of Utah,
National Association (the "Pass Through Trustee"),
as trustee under each Pass Through Trust.
Pass Through Trust
Property................. The property of each Pass Through Trust consists of
one or more secured notes (each a "Secured Note";
collectively, the "Secured Notes") issued on a
nonrecourse basis by the owner trustee of an owner
trust pursuant to a leveraged lease transaction
which financed 72.83% of the Lessor's Cost of a
40% undivided interest (the "Undivided Interest")
in an oil and gas drilling and production system
(the "Production System") which was acquired by
such owner trustee from MGB and leased to MGB. MGB
has subleased the Undivided Interest to Mobil
Producing Texas & New Mexico ("MPTN"). The
remaining 60% undivided interest in the Production
System is leased by Enserch Exploration, Inc.,
("Enserch") pursuant to an unrelated transaction.
Enserch also acts as the Operator (the "Operator")
for the Production System pursuant to a Unit
Operating Agreement between the Operator and MPTN
(the "Unit Operating Agreement").
The Undivided Interest securing the Secured Notes
is described under "The Original Offering--Use of
Proceeds." Each Pass Through Trust acquired those
Secured Notes having an interest rate
corresponding with the interest rate applicable to
the Old Certificates that were issued and the New
Certificates that are issuable by such Pass
Through Trust. The Secured Notes were issued in
six series. The maturity dates of the Secured
Notes acquired by each Pass Through Trust will
occur on or before the final distribution date
applicable to the New Certificates that are
issuable by such Pass Through Trust. The aggregate
principal amount of the Secured Notes purchased
and held in each Pass Through Trust is the same as
the aggregate principal amount of the New
Certificates issuable by such Pass Through Trust.
New Certificates; Book-
Entry Registration....... Each New Certificate will represent a fractional
undivided interest in the related Pass Through
Trust. The New Certificates will be issued
9
<PAGE>
in fully registered form and will be registered in
the name of Cede & Co. ("Cede") as nominee of the
Depository Trust Company ("DTC").
Certificateholders who are not permitted to hold
New Certificates through DTC will be issued
definitive New Certificates registered in the name
of such person or their nominee. See "Description
of New Certificates--Book-Entry; Delivery and
Form."
Denominations............. The New Certificates will be issued only in
integral multiples of $1,000. The denomination
signifies a Certificateholder's pro rata share of
the aggregate principal amount of the Secured
Notes held in the related Pass Through Trust. See
"Description of the New Certificates."
Regular Distribution
Dates.................... Each January 2 and July 2.
Special Distribution
Dates.................... The second day of any month.
Record Dates.............. The fifteenth day preceding a Regular Distribution
Date or a Special Distribution Date.
Distributions............. All payments of principal, premium, if any, or
interest received by the Pass Through Trustee on
the Secured Notes held in the related Pass Through
Trust will be distributed by the Pass Through
Trustee to the Certificateholders on the date such
receipt is confirmed by the Pass Through Trustee,
except in certain cases where such Secured Notes
are in default. Payments of principal and interest
on the Secured Notes held in such Pass Through
Trust are scheduled to be received in specified
amounts by the Pass Through Trustee on the Regular
Distribution Dates specified above and will be
distributed to the Certificateholders when
received on the corresponding Regular Distribution
Date. Payments of principal of, premium, if any,
and interest on the Secured Notes held in the
related Pass Through Trust 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. For a discussion of
distributions upon an Event of Default, see
"Description of the New Certificates--Events of
Default and Certain Rights Upon an Event of
Default."
Method of Distributions... Distributions by the Pass Through Trustee to
Certificateholders, other than the final
distribution, will be made (i) by a check mailed
to the Certificateholder at such
Certificateholder's registered address or (ii)
upon application to the Pass Through Trustee, by
wire transfer in immediately available funds to an
account maintained by a Certificateholder with a
bank. See "Description of the New Certificates--
Payments and Distributions."
Principal................. The Secured Notes purchased by Pass Through Trusts
1995-A1 through 1995-A5 pay interest only until
they mature on January 2, 1997, January 2, 1998,
January 2, 1999, January 2, 2000 and January 2,
10
<PAGE>
2001, respectively. Pass Through Trust 1995-A6
holds Secured Notes the principal of which is
payable in scheduled amounts on January 2 or July
2 or both, commencing January 2, 2002, in
accordance with the principal repayment schedule
set forth below under "Description of the Secured
Notes--Principal Payments."
Interest.................. Interest with respect to the New Certificates
accrues from the last date on which interest is
paid on the Old Certificate surrendered in
exchange therefor. Interest is calculated on the
basis of a 360-day year consisting of twelve 30-
day months.
Initial Average Life
Dates.................... Pass Through Trusts 1995-A1 through 1995-A5 hold
Secured Notes the principal of which is payable in
full at their respective maturity dates. The
initial average life date for New Certificates
issuable by Pass Through Trust 1995-A6 is March
23, 2005. The average life date for New
Certificates issuable by Pass Through Trust 1995-
A6 will change after principal repayments of the
related underlying Secured Notes commence.
Prepayment of the Secured
Notes at a Premium....... (a) Secured Notes held in Pass Through Trust 1995-
A6 may be prepaid in whole on any Special
Distribution Date, including upon the termination
of the Lease, at a price equal to the aggregate
unpaid principal amount thereof, together with
accrued interest thereon, plus, if such prepayment
is made prior to March 23, 2005, a premium equal
to the Make-Whole Amount (as defined below), if
any. See "Description of the Secured Notes--
Prepayments" for a description of the events
allowing the Lessee to terminate the Lease and the
manner of computing the Make-Whole Amount. The
Secured Notes held in Pass Through Trusts 1995-A1
through 1995-A5 are not subject to voluntary
prepayment by MGB prior to maturity.
(b) Secured Notes held in Pass Through Trust 1995-
A6 may be prepaid in part on any Special
Distribution Date upon the termination of the
Lease with respect to a Significant Portion of the
Undivided Interest, in a principal amount of
Secured Notes which is equal to the product of (x)
the entire principal amount of Secured Notes then
outstanding and (y) a fraction, the numerator of
which shall be the Original Cost of the
Significant Portion and the denominator of which
shall be the aggregate Lessor's Cost of the
Undivided Interest, at a price equal to the
aggregate unpaid principal amount thereof,
together with accrued interest thereon, plus, if
such prepayment is made prior to March 23, 2005, a
premium equal to the Make-Whole Amount (if any).
See "Description of the Secured Notes--
Prepayments."
(c) If an Indenture Event of Default resulting from
one or more Lease Events of Default shall have
occurred and be continuing for less than 270 days
during which time the Secured Notes could, but
shall not, have been accelerated, the Owner
Trustee (as hereinafter defined) or
11
<PAGE>
the Owner Participant (as hereinafter defined) may
elect to purchase all of the outstanding Secured
Notes at a price equal to the aggregate unpaid
principal amount thereof, together with accrued
interest thereon plus, if such prepayment is made
prior to March 23, 2005, a premium equal to the
Make-Whole Amount (if any). See "Description of
the Secured Notes--Prepayments."
Prepayment of the Secured
Notes at Par............. (a) Upon the occurrence of an Event of Loss with
respect to the Production System or a Significant
Portion thereof, then, unless, in the case of an
Event of Loss with respect to a Significant
Portion where such Significant Portion is rebuilt
or replaced or the Lessee has elected to purchase
the Undivided Interest, the Owner Trustee shall
(i) if the Event of Loss shall have occurred with
respect to the entire Production System, redeem
the entire unpaid principal amount of the Secured
Notes and (ii) if the Event of Loss shall have
occurred with respect to a Significant Portion of
the Production System, redeem such of the unpaid
principal amount of the Secured Notes which is
equal to the product of (x) the entire principal
amount of Secured Notes then outstanding and (y) a
fraction, the numerator of which shall be the
Original Cost of the Significant Portion of the
Undivided Interest suffering such Event of Loss
and the denominator of which shall be the
aggregate Lessor's Cost of the Undivided Interest,
plus in each case accrued and unpaid interest in
respect of the principal amount to be prepaid on
such loss payment date, but without the payment of
any Make-Whole Amount or other premium. See
"Description of the Secured Notes--Prepayments."
(b) If (i) an Indenture Event of Default resulting
from one or more Lease Events of Default shall
have occurred and be continuing for more than 270
days during which time the Secured Notes could,
but shall not, have been accelerated, (ii) the
Indenture Trustee (as defined herein) has given
the Owner Trustee or the Owner Participant notice
of its intent to accelerate the Secured Notes or
(iii) the Secured Notes have been accelerated, the
Owner Trustee or the Owner Participant may elect
to purchase all of the then outstanding Secured
Notes at a price equal to the aggregate unpaid
principal amount thereof, together with accrued
interest thereon, but without any Make-Whole
Amount or other premium. See "Description of the
Secured Notes--Prepayments."
Security for the Secured
Notes.................... The Secured Notes are secured by a mortgage on and
security interest in the Undivided Interest and an
assignment of the Owner Trustee's rights under the
Lease, including the right to receive rentals
payable in respect of the Undivided Interest and
the Owner Trustee's rights under the Guaranty. See
"Description of the New Certificates" and
"Description of the Secured Notes--Security."
Although the Secured Notes are not direct
obligations of, or guaranteed by, MGB or Mobil,
the amounts unconditionally payable by MGB
12
<PAGE>
pursuant to the Lease of the Undivided Interest,
which amounts are guaranteed by Mobil pursuant to
the Guaranty, will be sufficient to pay in full
when due all payments of principal of, premium, if
any, and interest on the Secured Notes. See
"Description of the Secured Notes--General."
Additional Notes.......... Under certain circumstances, additional notes
("Additional Notes") may be issued to persons or
entities other than holders of the New
Certificates to finance the Owner Trustee's 40%
share of the cost of certain alterations,
modifications, additions or improvements to the
Production System. Such Additional Notes, if
issued pursuant to the Trust Indenture, Mortgage,
Assignment of Lease and Security Agreement, dated
as of December 12, 1995, between the Owner Trustee
and First Security Bank of Utah, National
Association, as Indenture Trustee (the "Indenture
Trustee") (the "Indenture"), will be equally and
ratably secured with all outstanding Secured
Notes. No holder of New Certificates, as such,
will have any right to, or interest in, any
Additional Note. See "Description of the Secured
Notes--Additional Notes" and "--The Lease--Net
Lease; Use and Maintenance" and "--Modifications
and Additions."
Assumption of the Notes... Under certain limited circumstances, MGB shall have
the right (and under certain limited circumstances
the obligation) to assume the obligations of the
Lessor (as hereinafter defined) under the Secured
Notes subject to, among other things, Mobil
entering into a guaranty of the Secured Notes. In
such event, the Secured Notes will become full
recourse notes and will continue to be secured by
a mortgage on the Undivided Interest. See
"Description of the Secured Notes--Assumption of
Secured Notes Under Certain Circumstances."
The Guaranty.............. Mobil has entered into the Guaranty pursuant to
which it has irrevocably and unconditionally
guaranteed all obligations of MGB under the Lease
and the other Operative Documents. See
"Description of Secured Notes--The Guaranty."
Use of Proceeds........... Mobil and MGB will not receive any cash proceeds
from the Exchange Offer. The net proceeds from the
Original Offering were approximately $92.2 million
and were used to purchase the Secured Notes from
the Owner Trustee in order to finance 72.83% of
the Lessor's Cost of the Undivided Interest,
representing in the aggregate the entire debt
portion of the leveraged lease transaction. See
"The Original Offering--Use of Proceeds."
Pass Through Trustee...... First Security Bank of Utah, National Association,
acts as trustee, paying agent and registrar for
the New Certificates to be issued by each Pass
Through Trust. First Security Bank of Utah,
National Association, is indenture trustee for the
Secured Notes.
ERISA Considerations...... New Certificates, with certain exceptions, are
eligible for purchase by employee benefit plans.
See "ERISA Considerations."
13
<PAGE>
USE OF PROCEEDS
There will be no cash proceeds from the Exchange Offer. The net proceeds of
the Original Offering were approximately $92.2 million and were used to
finance the debt portion of a leverage lease transaction that was entered into
by MGB with respect to the Undivided Interest. See "The Original Offering--Use
of Proceeds."
THE ORIGINAL OFFERING
The Original Offering of the Old Certificates was made pursuant to the
Placement Agreement dated as of December 6, 1995 and closed on December 12,
1995. The Pass Through Trusts were formed pursuant to six separate Agreements
among the Pass Through Trustee, Mobil and MGB. Concurrently with the execution
and delivery of the Agreements, the Pass Through Trustee, on behalf of each
Pass Through Trust, entered into a participation agreement with respect to the
Undivided Interest (the "Participation Agreement"), pursuant to which the Pass
Through Trustee, on behalf of each Pass Through Trust, purchased Secured Notes
of one Series having an interest rate equal to the interest rate of the Old
Certificates issued by the related Pass Through Trust as indicated below. The
maturity date of the Secured Notes held in each Pass Through Trust will occur
on or prior to the final distribution date of the Old Certificates issued by
the related Pass Through Trust. A Certificateholder only has an ownership
interest in the related Pass Through Trust which is the issuer of such
Certificate. The Pass Through Trusts hold all of the Secured Notes originally
issued, representing in the aggregate the entire debt portion of the leveraged
lease transaction. The Pass Through Trustee distributes the amount of payments
of principal, premium, if any, and interest received by it as holder of the
Secured Notes to the Certificateholders of the Pass Through Trust in which
such Secured Notes are held.
<TABLE>
<CAPTION>
PRINCIPAL INTEREST INITIAL SCHEDULED FINAL
OLD CERTIFICATES AMOUNT RATE PRINCIPAL DISTRIBUTION DATE DISTRIBUTION DATE
- ---------------- ----------- -------- --------------------------- -----------------
<S> <C> <C> <C> <C>
1995-A1 $ 4,917,000 5.52% January 2, 1997 January 2, 1997
1995-A2 5,173,000 5.57 January 2, 1998 January 2, 1998
1995-A3 5,462,000 5.65 January 2, 1999 January 2, 1999
1995-A4 5,770,000 5.74 January 2, 2000 January 2, 2000
1995-A5 6,101,000 5.79 January 2, 2001 January 2, 2001
1995-A6 64,762,000 6.15 January 2, 2002 July 2, 2008
</TABLE>
14
<PAGE>
DESCRIPTION OF PAYMENT FLOWS
The following diagram illustrates certain aspects of the payment flows in
the Original Offering among Mobil, MGB, the Owner Trustee, the Indenture
Trustee, the Pass Through Trustee and the Certificateholders.
MGB leased the Undivided Interest from the Owner Trustee under a Lease.
Secured Notes were issued by the Owner Trustee and are secured by the
Undivided Interest and by an assignment of the Lease and the Guaranty. Rent is
payable under the Lease to the Owner Trustee; however, as a result of the
assignment of the Lease, MGB makes rental payments directly to the Indenture
Trustee. From these rental payments the Indenture Trustee first makes payments
to the Pass Through Trustee on the Secured Notes held in the related Pass
Through Trust and pays the remaining balance to the Owner Trustee for the
benefit of the Owner Participant. The Pass Through Trustee distributes to the
Certificateholders of each Pass Through Trust payments received on the Secured
Notes held in the related Pass Through Trust. First Security Bank of Utah,
National Association, currently acts as the Pass Through Trustee of each of
the Pass Through Trusts and as Indenture Trustee under the Indenture. Mobil
has entered into the Guaranty pursuant to which it irrevocably and
unconditionally guarantees all obligations of MGB under the Lease.
MGB (with Mobil Guaranty)
Lease Rental Payments Assigned
by Owner Trustee
Indenture Trustee
Excess Payments Secured Note Payments
Owner Trustee for Trustees for
Trustee Pass Through Pass Through
Trust 1995-A1 Trusts 1995-A2
through -A6*
Excess 1995-A Old Certificate
Payments Distributions
Owner Holders of Old Certificates Holders of Old Certificates
Participant Series 1995-A1 Series 1995-A2 through -A6*
* Each of the 1995-A2 through 1995-A6 Trusts are separate Pass Through
Trusts, pursuant to which distributions are made in the manner shown for
the 1995-A1 Trust.
Use of Proceeds
The Old Certificates were issued and sold in order to facilitate the
financing of the debt portion of a leveraged lease transaction which was
entered into by MGB, as Lessee, with respect to the Undivided Interest. MGB
sold the Undivided Interest to Fleet National Bank of Connecticut, not in its
individual capacity but solely as owner trustee (the "Owner Trustee") of a
separate trust for the benefit of an institutional investor (the "Owner
Participant"). The Owner Trustee leased the Undivided Interest to MGB pursuant
to a Production System Lease
15
<PAGE>
Agreement (the "Lease") between the Owner Trustee and MGB. The Owner
Participant financed 27.17% of the total cost to the Owner Trustee (such total
cost is referred to herein as the "Lessor's Cost") of the Undivided Interest
purchased by the Owner Trustee from MGB for a total purchase price of
$126,569,018, and 72.83% of such cost was financed through the issuance by the
Owner Trustee of Secured Notes pursuant to a separate Trust Indenture,
Mortgage, Assignment of Lease and Security Agreement with respect to the
Undivided Interest (the "Indenture") between the Owner Trustee and First
Security Bank of Utah, National Association, as indenture trustee (in such
capacity, the "Indenture Trustee"). The proceeds from the sale of the Old
Certificates were used by the Pass Through Trustee, on behalf of each Pass
Through Trust, to purchase the Secured Notes that were issued by the Owner
Trustee pursuant to the Indenture.
PRODUCTION SYSTEM
The Production System consists of a floating production and drilling
platform (the "Platform"), a subsea template (the "Template"), a free standing
production system (the "FSPR"), a subsea pipeline (the "Pipeline") and a
shallow water processing facility (the "SWF").
FLOATING PRODUCTION AND DRILLING PLATFORM
The Platform, designed by the Offshore Drilling and Exploration Company, was
originally named the Glomar Biscay I and was built in Norway in 1974. Enserch
purchased the rig from Exxon Corporation USA in December 1992 and had it towed
from its location in Malta to be refurbished in Pascagoula, Mississippi. In
order to reduce the cost of expensive drilling platforms and increase
operating flexibility, the Platform was converted to allow for simultaneous
drilling and production capabilities. In order to accommodate the added weight
of the production equipment on the rig, pontoon extensions were added to the
semisubmersible. The mooring system has been updated with a state-of-the-art
12 point mooring system to insure stability of operation in deep water. The
Platform is capable of handling up to 40,000 barrels of oil per day ("BOPD")
and 120 million cubic feet of gas per day ("MMCF/D"). As reconfigured, it can
house 117 persons which accommodates personnel connected with the planned
drilling and production activities of the Platform. The Platform was towed to
the field location in May 1995 and its mooring system has been deployed.
SUBSEA TEMPLATE
The Template was built and installed on the sea floor in the Unit Area in
August 1994. The Template provides the following functions: (1) a connection
hub for the template and satellite wells; (2) a flow path for produced fluids
and gasses to the FSPR; (3) a base for the FSPR; and (4) guidance for the
drilling of development wells.
The Template is designed to accommodate up to 24 wells, with the flexibility
to handle 14 of those wells as satellite completions. The Template's
dimensions are 180 feet long, 90 feet wide and 25 feet tall. The Template
weighs 1,280 tons. The Template was set in 2,190 feet of water and fastened to
the seabed using eight 42-inch piles. The piles provide a solid foundation for
development wells and the FSPR.
FREE STANDING PRODUCTION RISER SYSTEM
The FSPR is a Cooper/Cameron design that was used by Enserch and Placid Oil
Company in the Green Canyon 29 project, also in the Gulf of Mexico. Since
then, the FSPR has been completely refurbished. Eleven new joints have been
manufactured to make the FSPR usable in 2,200 feet of water. The FSPR is
attached to the Platform and the Template.
The FSPR is connected to the Template at the riser base. It provides two
flow-lines per well and supports the subsea control umbilical. The FSPR is
called "free standing" because it is buoyant and does not need the Platform
for support. The FSPR is connected to the Platform by a tether system which
insures that the top of the FSPR stays properly positioned below the Platform
regardless of weather conditions. The top of the FSPR is 150 feet below the
surface of the water. Production is transported through flexible flow-lines to
the Platform from the top of the FSPR.
16
<PAGE>
SUBSEA PIPELINE
The Pipeline was completed in the summer of 1994 with the installation of
two 54-mile, 12-inch pipelines. The pipelines, one for oil production and one
for natural gas production, run from the Template to the SWF located in the
Eugene Island Block 315. The pipelines and export pipelines connecting the SWF
to commercial pipelines were installed by the McDermott International
Corporation.
SHALLOW WATER PROCESSING FACILITY
The SWF was built in April 1995 to process oil and natural gas arriving
through the pipelines from the Platform. The process equipment on the SWF is
designed to handle 40,000 BOPD and 120 MMCF/D of natural gas. The oil will be
de-watered and stabilized to the oil sales specifications, and then pumped
through the oil export line to a commercial transport line near the SWF. Gas
from the gathering line will flow through the gas export line to a commercial
transport line, also near the SWF.
The SWF was installed in the Eugene Island Block 315 because of the shallow
water depth and its close proximity to both oil and gas commercial sales
lines. The SWF has living accommodations for 22 persons.
OPERATION OF THE PRODUCTION SYSTEM
MGB subleased the Undivided Interest to Mobil Producing Texas & New Mexico
Inc. ("MPTN") pursuant to a Production System Sublease Agreement dated as of
December 12, 1995 (the "Initial Sublease"). The remaining 60% undivided
interest in the Production System is owned by State Street Bank and Trust
Company of Connecticut, National Association ("State Street"), as trustee of
the Garden Banks Trust under a separate funding agreement pursuant to which
lenders made loans to the trustee to fund the acquisition and further
construction of the Production System. Enserch leases this 60% undivided
interest from the Garden Banks Trust. Exploration and production operations
involving the Production System, are conducted by Enserch pursuant to the Unit
Operating Agreement between MPTN and Enserch dated as of April 12, 1995. The
Unit Operating Agreement prescribes the procedures under which decisions
concerning the development and production of reserves in the Garden Banks 388
Unit Area (the "Unit Area") and management of facilities built for that
purpose, including the Production System, are to be made. The Unit Area is
located in the waters of the federally owned outer continental shelf (the
"OCS"), approximately 250 miles southwest of New Orleans, Louisiana. The Unit
Area is comprised of six contiguous leased blocks totaling 34,560 acres. Water
depth throughout the Unit Area ranges between 2,100 feet and 2,400 feet.
Enserch is obligated to perform its duties under the Unit Operating Agreement
in a good and workmanlike manner, as would a prudent operator under the same
or similar circumstances.
The Unit Operating Agreement permits the financing by Mobil described
herein, and requires that transferees of interests in the Production System,
including the Owner Trustee, agree that the Production System remains subject
to the Unit Operating Agreement and that they will not interfere with the use
of the Production System in the production of reserves produced from the Unit
Area. The Unit Operating Agreement will remain in effect, unless sooner
terminated by agreement of the parties, until the agreement pursuant to which
the Unit Area was created is cancelled and there is no longer any oil or gas
production contractually committed to use the Production System.
MOBIL CORPORATION
Mobil was incorporated in the State of Delaware in March 1976 and operates
primarily as a holding company. Mobil's principal business, which is conducted
primarily through wholly-owned subsidiaries, is in the United States and
international energy industries. Mobil is also a manufacturer and marketer of
petrochemicals, packaging films and specialty chemical products. Mobil,
through its subsidiaries, has business interests in over 125 countries as at
December 31, 1995. The principal executive offices of Mobil are located at
3225 Gallows Road, Fairfax, Virginia 22037-0001, and its telephone number is
(703) 846-3000.
17
<PAGE>
MOBIL G.B. 388 FINANCE INC.
MGB is a wholly-owned special purpose finance subsidiary of Mobil. MGB was
incorporated in the State of Delaware on March 10, 1994 under the name RTC
Two, Inc. On December 4, 1995, MGB filed a Certificate of Amendment with the
State of Delaware changing its name to Mobil G.B. 388 Finance Inc. MGB has no
business activities other than leasing the Undivided Interest and subleasing
the Undivided Interest as permitted by the Lease. MGB's offices are located at
3225 Gallows Road, Fairfax, Virginia 22037-0001, and its telephone number is
(703) 846-3000.
RATIO OF EARNINGS TO FIXED CHARGES OF MOBIL CORPORATION
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------
1991 1992 1993 1994 1995
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Ratio of Earnings to Fixed Charges.................. 4.6 3.9 5.7(a) 5.3 5.9
</TABLE>
- --------
(a) Excludes the favorable effect of $205 million of interest benefits from
the resolution of prior-period tax issues.
For the purpose of computing the consolidated ratio of earnings to fixed
charges, earnings represent income before change in accounting principle(s)
decreased or increased by the excess or short-fall of earnings over dividends
from equity affiliates plus income taxes and fixed charges, excluding
capitalized interest. Fixed charges represent interest and amortization of
debt discount expense (including capitalized interest) and the portion of
rents deemed representative of the interest factor.
SELECTED CONSOLIDATED FINANCIAL INFORMATION OF MOBIL CORPORATION
The following selected financial data of Mobil for the five years ended
December 31, 1995 are derived from its audited consolidated financial
statements. The data should be read in conjunction with the consolidated
financial statements, related notes, and other financial information
incorporated by reference herein.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------------------------
1991 1992 1993 1994 1995
------- ------- ------- ------- -------
(IN MILLIONS, EXCEPT FOR PER-
SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C>
Revenues...................... $63,311 $64,456 $63,975 $67,383 $75,370
Income Before Change in
Accounting Principle(s)...... $ 1,920 $ 1,308 $ 2,084 $ 1,759 $ 2,376
Cumulative Effect of Change in
Accounting Principle(s)...... -- (446)(a) -- (680)(b) --
------- ------- ------- ------- -------
Net Income.................... $ 1,920 $ 862 $ 2,084 $ 1,079 $ 2,376
Income per Common Share
Income Before Change in
Accounting Principle(s)..... $ 4.65 $ 3.13 $ 5.07 $ 4.28 $ 5.87
Cumulative Effect of Change
in Accounting Principle(s).. -- (1.12)(a) -- (1.71)(b) --
------- ------- ------- ------- -------
Net Income.................... $ 4.65 $ 2.01 $ 5.07 $ 2.57 $ 5.87
Total Assets.................. $42,187 $40,561 $40,733 $41,542 $42,138
Long-term Debt................ $ 4,715 $ 5,042 $ 5,027 $ 4,714 $ 4,629
Common Stock Dividends per
Share........................ $ 3.125 $ 3.20 $ 3.25 $ 3.40 $ 3.625
</TABLE>
- --------
Note:
(a) Effective January 1, 1992, Mobil adopted FAS 106, Employers' Accounting
for Postretirement Benefits Other Than Pensions, and FAS 109, Accounting
for Income Taxes.
(b) Effective January 1, 1994, Mobil changed the method of accounting it uses
to apply the lower of cost or market test for its crude oil and product
inventories.
18
<PAGE>
THE EXCHANGE OFFER
PURPOSE AND EFFECT OF THE EXCHANGE OFFER
The Old Certificates were issued by Mobil and MGB to the Placement Agent on
December 12, 1995 pursuant to the Placement Agreement. The Placement Agent
subsequently resold the Old Certificates within the United States to QIBs in
compliance with Rule 144A and to a limited number of institutional accredited
investors that agreed to comply with certain transfer restrictions and other
conditions, and outside the United States to persons other than U.S. persons
in reliance upon Regulation S under the Securities Act. In connection
therewith, Mobil and MGB entered into the Registration Rights Agreement, which
grants the holders of the Old Certificates certain exchange and registration
rights. Mobil and MGB agreed to commence the Exchange Offer promptly after the
Registration Statement has been declared effective. A copy of the form of
Registration Rights Agreement has been filed as an exhibit to the Registration
Statement and is available from Mobil and MGB upon request. See "Available
Information." Unless the context requires otherwise, the term
"Certificateholder" with respect to the Exchange Offer means any person in
whose name Old Certificates are registered on the books of the Pass Through
Trustee or any other person who has obtained a properly completed bond power
from the registered holder, or any person whose Old Certificates are held of
record by DTC who desires to deliver such Old Certificates by book-entry
transfer at DTC.
Mobil and MGB have not requested, and do not intend to request, an
interpretation by the staff of the Commission with respect to whether the New
Certificates issued pursuant to the Exchange Offer in exchange for the Old
Certificates may be offered for sale, resold or otherwise transferred by any
holder without compliance with the registration and prospectus delivery
provisions of the Securities Act. Based on an interpretation by the staff of
the Commission set forth in no-action letters issued to unrelated parties,
Mobil and MGB believe that the New Certificates issued pursuant to the
Exchange Offer in exchange for Old Certificates may be offered for resale,
resold and otherwise transferred by any Certificateholder of such New
Certificates (other than any such Certificateholder that is an "affiliate" of
Mobil within the meaning of Rule 405 under the Securities Act and except in
the case of broker-dealers, as set forth below) without compliance with the
registration and prospectus delivery provisions of the Securities Act,
provided that such New Certificates are acquired in the ordinary course of
such Certificateholder's business, that such holder has no arrangement or
understanding with any person to participate in the distribution of such New
Certificates and that such holder is not engaging in or intending to engage in
the distribution of the New Certificates. Any Certificateholder who tenders in
the Exchange Offer for the purpose of participating in a distribution of the
New Certificates or who is an affiliate of Mobil may not rely on such
interpretation by the staff of the Commission and must comply with the
registration and prospectus delivery requirements of the Securities Act in
connection with any secondary resale transaction. Each broker-dealer that
receives New Certificates for its own account in exchange for Old
Certificates, where such Old Certificates were acquired by such broker-dealer
as a result of market-making activities or other trading activities, must
acknowledge that it will deliver a prospectus in connection with any resale of
such New Certificates. Any resales or other transfers of New Certificates must
also be conducted in compliance with applicable state securities or blue sky
laws. See "Plan of Distribution."
By tendering in the Exchange Offer, each Certificateholder of Old
Certificates will represent to Mobil and MGB that, among other things, (i) the
New Certificates acquired pursuant to the Exchange Offer are being obtained in
the ordinary course of business of the person receiving such New Certificates,
whether or not such person is such Certificateholder, (ii) neither the
Certificateholder of Old Certificates nor any such other person has an
arrangement or understanding with any person to participate in the
distribution of such New Certificates, (iii) such Certificateholder is not
engaging in or intending to engage in the distribution of the New Certificates
and (iv) neither the Certificateholder nor any such other person is an
"affiliate" of Mobil or MGB within the meaning of Rule 405 under the
Securities Act or, if such Certificateholder is an "affiliate," that such
Certificateholder will comply with the registration and prospectus delivery
requirements of the Securities Act to the extent applicable. If the tendering
Certificateholder is a broker-dealer (whether or not it is also an
"affiliate") that will receive New Certificates for its own account in
exchange for Old Certificates that were acquired as a result of market-making
activities or other trading activities, it will be required to acknowledge
that it will deliver a prospectus in connection with any resale of such New
Certificates.
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Following the consummation of the Exchange Offer, Certificateholders of Old
Certificates not tendered will not have any further registration rights and
the Old Certificates will continue to be subject to certain restrictions on
transfer. Accordingly, the liquidity of the market for the Old Certificates
will be adversely affected.
This Prospectus, together with the Letter of Transmittal, is being sent to
all registered Certificateholders as of June 4, 1996.
TERMS OF THE EXCHANGE OFFER
Upon the terms and subject to the conditions set forth in this Prospectus
and in the Letter of Transmittal, the Pass Through Trustee will accept any and
all Old Certificates validly tendered and not withdrawn prior to 5:00 p.m.,
New York City time, on the Expiration Date. Subject to the minimum
denomination requirements of the New Certificates, the Pass Through Trustee
will issue $1,000 principal amount of New Certificates in exchange for each
$1,000 principal amount of outstanding Old Certificates accepted in the
Exchange Offer. Certificateholders may tender some or all of their Old
Certificates pursuant to the Exchange Offer. However, Old Certificates may be
tendered only in integral multiples of $1,000. The Exchange Offer is not
conditioned upon any minimum aggregate principal amount of Old Certificates
being tendered for exchange. As of the date hereof, an aggregate of
$92,185,000 principal amount of the Old Certificates are outstanding.
The form and terms of the New Certificates will be identical in all material
respects to the form and terms of the Old Certificates except that (i) the New
Certificates will have been registered under the Securities Act and,
therefore, will not bear legends restricting the transfer thereof, (ii) the
New Certificates will not contain certain provisions included in the terms of
the Old Certificates providing for an increase in the interest rate if the
Exchange Offer is not timely commenced and (iii) the Certificateholders of New
Certificates will not be entitled to any rights under the Registrations Rights
Agreement. The New Certificates will evidence the same fractional undivided
interest in one of the six Pass Through Trusts as the Old Certificates and
will be issued under and entitled to the benefits of the Agreements.
Certificateholders of Old Certificates do not have any appraisal or
dissenters' rights under the General Corporation Law of the State of Delaware
or the Agreements in connection with the Exchange Offer. Mobil and MGB intend
to conduct the Exchange Offer in accordance with the applicable requirements
of the Exchange Act and the rules and regulations of the Commission
thereunder.
The Pass Through Trustee shall be deemed to have accepted validly tendered
Old Certificates when, as and if Mobil and MGB have given oral or written
notice thereof to the Exchange Agent. The Exchange Agent will act as agent for
the tendering Certificateholders for the purpose of receiving the New
Certificates from the Pass Through Trustee. If any tendered Old Certificates
are not accepted for exchange because of an invalid tender, the occurrence of
certain other events set forth herein or otherwise, any such unaccepted Old
Certificates will be returned, without expense, to the tendering
Certificateholder thereof as promptly as practicable after the Expiration
Date.
Certificateholders who tender Old Certificates in the Exchange Offer will
not be required to pay brokerage commissions or fees or, subject to the
instructions in the Letter of Transmittal, transfer taxes with respect to the
exchange of Old Certificates pursuant to the Exchange Offer. Mobil and MGB
will pay certain charges and expenses in connection with the Exchange Offer as
set forth more fully in "--Fees and Expenses."
EXPIRATION DATE; EXTENSIONS; AMENDMENTS
The term "Expiration Date" shall mean 5:00 p.m., New York City time, on the
date that is 60 days after the date upon which notice of effectiveness of the
Registration Statement is mailed to each Certificateholder, unless Mobil and
MGB, in their sole discretion, extend the Exchange Offer, in which case the
term "Expiration Date" shall mean the latest date and time to which the
Exchange Offer is extended. Although Mobil and MGB have no current intention
to extend the Exchange Offer, Mobil and MGB reserve the right to extend the
Exchange
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Offer at any time and from time to time by giving oral or written notice to
the Exchange Agent and by timely public announcement communicated, unless
otherwise required by applicable law or regulation, by making a release to the
Dow Jones News Service. During any extension of the Exchange Offer, all Old
Certificates previously tendered pursuant to the Exchange Offer and not
withdrawn will remain subject to the Exchange Offer.
Mobil and MGB expressly reserve the right (i) to terminate the Exchange
Offer and to cause the Pass Through Trustee to not accept for exchange any Old
Certificates if any of the events set forth below under "Conditions to the
Exchange Offer" shall have occurred and shall not have been waived by Mobil
and MGB and (ii) to amend the terms of the Exchange Offer in any manner.
INTEREST ON THE NEW CERTIFICATES
Certificateholders of Old Certificates that are accepted for exchange will
not receive accrued interest thereon. However, each New Certificate will bear
interest from the most recent date to which interest has been paid on the Old
Certificate for which such New Certificate was exchanged.
PROCEDURES FOR TENDERING
The tender to the Pass Through Trustee of Old Certificates by a
Certificateholder thereof pursuant to one of the procedures set forth below
will constitute an agreement among such Certificateholder, the Pass Through
Trustee and Mobil and MGB in accordance with the terms and subject to the
conditions set forth herein and in the Letter of Transmittal. A
Certificateholder of the Old Certificates may tender the same by (i) properly
completing and signing the Letter of Transmittal or a facsimile thereof (all
references in this Prospectus to the Letter of Transmittal shall be deemed to
include a facsimile thereof) and delivering the same, together with the
certificate or certificates representing the Old Certificates being tendered
(if in certificated form) and any required signature guarantees, to the
Exchange Agent at its address set forth in the Letter of Transmittal on or
prior to the Expiration Date (or complying with the procedure for book-entry
transfer described below) or (ii) complying with the guaranteed delivery
procedures described below.
If tendered Old Certificates are registered in the name of the signer of the
Letter of Transmittal and the New Certificates to be issued in exchange
therefor are to be issued (and any untendered Old Certificates are to be
reissued) in the name of the registered Certificateholder (which term, for the
purposes described herein, shall include any participant in DTC whose name
appears on a security listing as the owner of Old Certificates), the signature
of such signer need not be guaranteed. In any other case, the tendered Old
Certificates must be endorsed or accompanied by written instruments of
transfer in form satisfactory to Mobil and MGB and duly executed by the
registered Certificateholder and the signature on the endorsement or
instrument of transfer must be guaranteed by a commercial bank or trust
company located or having an office, branch, agency or correspondent in the
United States, or by a member firm of a national securities exchange or of the
National Association of Securities Dealers, Inc. (any of the foregoing
hereinafter referred to as an "Eligible Institution"). If the New Certificates
and/or Old Certificates not exchanged are to be delivered to an address other
than that of the registered Certificateholder appearing on the register for
the Old Certificates, the signature in the Letter of Transmittal must be
guaranteed by an Eligible Institution.
THE METHOD OF DELIVERY OF OLD CERTIFICATES AND ALL OTHER DOCUMENTS IS AT THE
ELECTION AND RISK OF THE CERTIFICATEHOLDER. IF SENT BY MAIL, IT IS RECOMMENDED
THAT REGISTERED MAIL, RETURN RECEIPT REQUESTED, BE USED, PRIOR INSURANCE
OBTAINED, AND THE MAILING BE MADE SUFFICIENTLY IN ADVANCE OF THE EXPIRATION
DATE TO PERMIT DELIVERY TO THE EXCHANGE AGENT ON OR BEFORE THE EXPIRATION
DATE. AS AN ALTERNATIVE TO DELIVERY BY MAIL, CERTIFICATEHOLDERS MAY WISH TO
CONSIDER OVERNIGHT OR HAND DELIVERY SERVICE. IN ALL CASES, SUFFICIENT TIME
SHOULD BE ALLOWED TO ASSURE DELIVERY TO THE EXCHANGE AGENT BEFORE THE
EXPIRATION DATE. NO LETTER OF TRANSMITTAL OR OLD
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CERTIFICATES SHOULD BE SENT TO MOBIL OR MGB. CERTIFICATEHOLDERS MAY REQUEST
THEIR RESPECTIVE BROKERS, DEALERS, COMMERCIAL BANKS, TRUST COMPANIES OR
NOMINEES TO EFFECT THE ABOVE TRANSACTIONS FOR SUCH CERTIFICATEHOLDERS.
Any beneficial owner whose Old Certificates are registered in the name of a
broker, dealer, commercial bank, trust company or other nominee and who wishes
to tender should contact the registered holder promptly and instruct such
registered holder to tender on such beneficial owner's behalf. See
"Instruction to Registered Certificateholder and/or Book-Entry Transfer
Facility Participant from Beneficial Owner" included with the Letter of
Transmittal.
Mobil and MGB understand that the Exchange Agent will make a request
promptly after the date of this Prospectus to establish an account with
respect to the Old Certificates at DTC for the purpose of facilitating the
Exchange Offer, and subject to the establishment thereof, any financial
institution that is a participant in DTC's system may make book-entry delivery
of Old Certificates by causing DTC to transfer such Old Certificates into the
Exchange Agent's account with respect to the Old Certificates in accordance
with DTC's procedure for such transfer. Although delivery of the Old
Certificates may be effected through book-entry transfer into the Exchange
Agent's account at DTC, an appropriate Letter of Transmittal with any required
signature guarantee and all other required documents must in each case be
transmitted to and received or confirmed by the Exchange Agent at the address
set forth in the Letter of Transmittal on or prior to the Expiration Date, or,
if the guaranteed delivery procedures described below are complied with,
within the time period provided under such procedures.
If the Certificateholder desires to accept the Exchange Offer and time will
not permit a Letter of Transmittal or Old Certificates to reach the Exchange
Agent before the Expiration Date or the procedure for book-entry transfer
cannot be completed on a timely basis, a tender may be effected if the
Exchange Agent has received at its office on or prior to the Expiration Date,
a letter, telegram or facsimile transmission from an Eligible Institution
setting forth the name and address of the tendering Certificateholder, the
name(s) in which the Old Certificates are registered and, if possible, the
certificate number(s) of the Old Certificates to be tendered, and stating that
the tender is being made thereby and guaranteeing that within three New York
Stock Exchange trading days after the date of execution of such letter,
telegram or facsimile transmission by the Eligible Institution, the Old
Certificates, in proper form for transfer (or a confirmation of book-entry
transfer of such Old Certificates into the Exchange Agent's account at DTC),
will be delivered by such Eligible Institution together with a properly
completed and duly executed Letter of Transmittal (and any other required
documents). Unless Old Certificates being tendered by the above-described
method are deposited with the Exchange Agent within the time period set forth
above (accompanied or preceded by a properly completed Letter of Transmittal
and any other required documents), Mobil and MGB may, at their option, cause
the Pass Through Trustee to reject the tender. Copies of a Notice of
Guaranteed Delivery which may be used by Eligible Institutions for the
purposes described in this paragraph are available from the Exchange Agent.
A tender will be deemed to have been received as of the date when (i) the
tendered Certificateholder's properly completed and duly signed Letter of
Transmittal (accompanied by the Old Certificates or a confirmation of book-
entry transfer of such Old Certificates into the Exchange Agent's account at
DTC) is received by the Exchange Agent, or (ii) a Notice of Guaranteed
Delivery or letter, telegram or facsimile transmission to similar effect (as
provided above) from an Eligible Institution is received by the Exchange
Agent. Issuances of New Certificates in exchange for Old Certificates tendered
pursuant to a Notice of Guaranteed Delivery or letter, telegram or facsimile
transmission to similar effect (as provided above) by an Eligible Institution
will be made only against deposit of the Letter of Transmittal (and any other
required documents) and the tendered Old Certificates.
All questions as to the validity, form, eligibility (including time of
receipt) and acceptance for exchange of any tender of Old Certificates will be
determined by Mobil and MGB, whose determination will be final and binding.
Mobil and MGB reserve the absolute right to reject any or all tenders not in
proper form or the acceptance for exchange of which may, in the opinion of
Mobil's and MGB's counsel, be unlawful. Mobil and
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MGB also reserve the absolute right to waive any of the conditions of the
Exchange Offer or any defect or irregularity in the tender of any Old
Certificates. None of Mobil, MGB, the Exchange Agent or any other person will
be under any duty to give notification of any defects or irregularities in
tenders or incur any liability for failure to give any such notification.
In addition, Mobil and MGB reserve the right in their sole discretion to (a)
purchase or make offers for any Old Certificates that remain outstanding
subsequent to the Expiration Date and (b) to the extent permitted by
applicable law, purchase Old Certificates in the open market, in privately
negotiated transactions or otherwise. The terms of any such purchases or
offers will differ from the terms of the Exchange Offer.
TERMS AND CONDITIONS OF THE LETTER OF TRANSMITTAL
The Letter of Transmittal contains, among other things, the following terms
and conditions, which are part of the Exchange Offer.
The party tendering Old Certificates for exchange (the "Transferor")
exchanges, assigns and transfers the Old Certificates to the Pass Through
Trustee and irrevocably constitutes and appoints the Exchange Agent as the
Transferor's agent and attorney-in-fact to cause the Old Certificates to be
assigned, transferred and exchanged. The Transferor represents and warrants
that it has full power and authority to tender, exchange, assign and transfer
the Old Certificates and to acquire New Certificates issuable upon the
exchange of such tendered Old Certificates, and that, when the same are
accepted for exchange, the Pass Through Trustee will acquire good and
unencumbered title to the tendered Old Certificates, free and clear of all
liens, restrictions, charges and encumbrances and not subject to any adverse
claim. The Transferor also warrants that it will, upon request, execute and
deliver any additional documents deemed by Mobil and MGB to be necessary or
desirable to complete the exchange, assignment and transfer of tendered Old
Certificates or transfer ownership of such Old Certificates on the account
books maintained by DTC. All authority conferred by the Transferor will
survive the death, bankruptcy or incapacity of the Transferor and every
obligation of the Transferor shall be binding upon the heirs, legal
representatives, successors, assigns, executors and administrators of such
Transferor.
By executing the Letter of Transmittal, each Certificateholder will make to
Mobil, MGB and the Pass Through Trustee the representations set forth above
under the heading "Purpose and Effect of the Exchange Offer."
WITHDRAWAL OF TENDERS
Tenders of Old Certificates pursuant to the Exchange Offer are irrevocable,
except that Old Certificates tendered pursuant to the Exchange Offer may be
withdrawn at any time prior to the Expiration Date.
To be effective, a written telegram, telex or facsimile transmission notice
of withdrawal must be received by the Exchange Agent at the address set forth
in the Letter of Transmittal not later than the close of business on the
Expiration Date. Any such notice of withdrawal must specify the
Certificateholder named in the Letter of Transmittal as having tendered Old
Certificates to be withdrawn, the numbers of the Old Certificates to be
withdrawn and the principal amount thereof, a statement that such
Certificateholder is withdrawing his election to have such Old Certificates
exchanged, and the name of the registered Certificateholder of such Old
Certificates, and must be signed by the Certificateholder in the same manner
as the original signature on the Letter of Transmittal (including any required
signature guarantees) or be accompanied by evidence satisfactory to Mobil and
MGB that the person withdrawing the tender has succeeded to the beneficial
ownership of the Old Certificates being withdrawn. The Exchange Agent will
return the properly withdrawn Old Certificates promptly following receipt of
notice of withdrawal. If Old Certificates have been tendered pursuant to the
procedure for book-entry transfer, any notice of withdrawal must specify the
name and number of the account at DTC to be credited with the withdrawn Old
Certificates or otherwise comply with DTC procedure. All questions as to the
validity of notices of withdrawal, including time of receipt, will be
determined by Mobil and MGB, and such determination will be final and binding
on all parties.
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CONDITIONS TO THE EXCHANGE OFFER
Notwithstanding any other provision of the Exchange Offer, or any extension
of the Exchange Offer, the Pass Through Trustee will not be required to issue
New Certificates in exchange for any properly tendered Old Certificates not
previously accepted and Mobil and MGB may terminate the Exchange Offer (by
oral or written notice to the Exchange Agent and by timely public announcement
communicated, unless otherwise required by applicable law or regulation, by
making a release to the Dow Jones News Service), or, at their option, modify
or otherwise amend the Exchange Offer, if either of the following events
occur:
(a) any statute, rule or regulation shall have been enacted, or any
action shall have been taken by any court or governmental authority,
including the staff of the Commission, which, in the sole judgment of Mobil
and MGB, would prohibit, restrict or otherwise render illegal consummation
of the Exchange Offer, or
(b) there shall occur a change in the current interpretation by the staff
of the Commission which permits the New Certificates issued pursuant to the
Exchange Offer in exchange for Old Certificates to be offered for resale,
resold and otherwise transferred by Certificateholders thereof (other than
broker-dealers and any such Certificateholder which is an "affiliate" of
Mobil or MGB within the meaning of Rule 405 under the Securities Act)
without compliance with the registration and prospectus delivery provisions
of the Securities Act provided that such New Certificates are acquired in
the ordinary course of such Certificateholders' business and such
Certificateholders have no arrangement or understanding with any person to
participate in the distribution of such New Certificates.
Mobil and MGB expressly reserve the right to terminate the Exchange Offer
and not accept for exchange any Old Certificates upon the occurrence of either
of the foregoing conditions. In addition, Mobil and MGB may amend the Exchange
Offer at any time prior to the Expiration Date if either of the conditions set
forth above occurs. Moreover, regardless of whether either of such conditions
has occurred, Mobil and MGB may amend the Exchange Offer in any manner which,
in their good faith judgment, is advantageous to Certificateholders of the Old
Certificates.
The foregoing conditions are for the sole benefit of Mobil and MGB and may
be waived by Mobil and MGB, in whole or in part, in their sole discretion. The
foregoing conditions must be either satisfied or waived prior to termination
of the Exchange Offer. Any determination made by Mobil and MGB concerning an
event, development or circumstance described or referred to above will be
final and binding on all parties.
EXCHANGE AGENT
First Security Bank of Utah, National Association, has been appointed as
Exchange Agent for the Exchange Offer. Questions and requests for assistance,
requests for additional copies of this Prospectus or of the Letter of
Transmittal and requests for Notices of Guaranteed Delivery should be directed
to the Exchange Agent addressed as follows:
By Mail (registered or certified By Overnight Courier or By Hand:
mail recommended):
First Security Bank of Utah,
First Security Bank of Utah, National Association
National Association 79 South Main Street
79 South Main Street Salt Lake City, Utah 84111
Salt Lake City, Utah 84111
Confirm by Telephone:
By Facsimile: 801-246-5630
801-246-5053
Delivery to an address other than as set forth above, or transmission of
instructions via a facsimile number other than the one set forth above, will
not constitute a valid delivery.
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FEES AND EXPENSES
Mobil and MGB have agreed in the Registration Rights Agreement to pay all
fees and expenses incident to the performance of the Registration Rights
Agreement, including, without limitation, federal registration and filing fees
with the SEC, stock exchange or National Association of Securities Dealers,
Inc., fees and expenses incurred in connection with compliance with state
securities or blue sky laws (including reasonable fees and disbursements not
to exceed $10,000 of counsel for any underwriters or holders in connection
with blue sky qualification of any of the New Certificates), all expenses of
any persons preparing the Registration Statement, any and all rating agency
fees and the reasonable fees and disbursements of counsel for Mobil and MGB,
Special Counsel to the holders of New Certificates (which shall not exceed
$25,000) and of the independent auditors of Mobil, including the expenses of
any special audits or "cold comfort" letters required by or incident to such
performance and compliance, but neither of Mobil or MGB shall pay any fees of
counsel to the underwriters or underwriting discounts and commissions and
transfer taxes, if any, relating to the sale or disposition of Certificates by
Certificateholders in an underwritten offering. The principal solicitation is
being made by mail; however, additional solicitation may be made by telephone
or in person by officers and regular employees of Mobil and MGB and their
affiliates. No additional compensation will be paid to any such officers and
employees who engage in soliciting tenders.
Mobil and MGB have not retained any dealer-manager or other soliciting agent
in connection with the Exchange Offer and will not make any payments to
brokers, dealers or others soliciting acceptances of the Exchange Offer. Mobil
and MGB, however, will pay the Exchange Agent reasonable and customary fees
for its services and will reimburse it for its reasonable out-of-pocket
expenses in connection therewith.
ACCOUNTING TREATMENT
The New Certificates will be recorded at the same carrying value as the Old
Certificates as reflected in Mobil's and MGB's accounting records on the date
of the exchange. Accordingly, no gain or loss for accounting purposes will be
recognized.
OTHER
Participation in the Exchange Offer is voluntary and Certificateholders
should carefully consider whether to accept. Certificateholders of the Old
Certificates are urged to consult their financial advisor in making their own
decisions on what action to take.
No person has been authorized to give any information or to make any
representations in connection with the Exchange Offer other than those
contained in this Prospectus. If given or made, such information or
representations should not be relied upon as having been authorized by Mobil
or MGB. Neither the delivery of this Prospectus nor any exchange made
hereunder shall, under any circumstances, create any implication that there
has been no change in the affairs of Mobil or MGB since the respective dates
as of which information is given herein. The Exchange Offer is not being made
to (nor will tenders be accepted from or on behalf of) Certificateholders of
Old Certificates in any jurisdiction in which the making of the Exchange Offer
or the acceptance thereof would not be in compliance with the laws of such
jurisdiction. However, Mobil and MGB may, at their discretion, take such
action as they may deem necessary to make the Exchange Offer in any such
jurisdiction and cause the Pass Through Trustee to extend the Exchange Offer
to Certificateholders of Old Certificates in such jurisdiction. In any
jurisdiction the securities laws or blue sky laws of which require the
Exchange Offer to be made by a licensed broker or dealer, the Exchange Offer
is being made on behalf of Mobil and MGB by one or more registered brokers or
dealers which are licensed under the laws of such jurisdiction.
As a result of the making of the Exchange Offer, Mobil and MGB will have
fulfilled a covenant in the terms of the Old Certificates and contained in the
Registration Rights Agreement. Certificateholders of the Old Certificates who
do not tender their certificates in the Exchange Offer will continue to hold
such certificates and will be entitled to all the rights, and limitations
applicable thereto under the Agreements except for certain registration rights
under the Registration Rights Agreement and except that the Old Certificates
will not be
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entitled to the increase in the interest rate provided for in the Old
Certificates in the event of a failure to commence the Exchange Offer on a
timely basis, and Certificateholders of New Certificates will not be entitled
to any rights under the Registration Rights Agreement. All untendered Old
Certificates will continue to be subject to the restrictions on transfer set
forth in the Agreements and the Old Certificates. To the extent that Old
Certificates are tendered and accepted in the Exchange Offer, liquidity in the
trading market, if any, for untendered Old Certificates will be adversely
affected.
FOR INFORMATION CONCERNING THE TAX CONSEQUENCES OF THE EXCHANGE OFFER AND OF
HOLDING THE NEW CERTIFICATES, SEE "FEDERAL INCOME TAX CONSIDERATIONS."
DESCRIPTION OF THE NEW CERTIFICATES
The Old Certificates were issued and the New Certificates are issuable
pursuant to six separate Agreements which were entered into among Mobil, MGB
and the Pass Through Trustee. Each Agreement contains substantially the same
terms and conditions, except that the interest rate and the maturity date
applicable to the Secured Notes held in each Pass Through Trust, the aggregate
principal amount of Secured Notes held in each Pass Through Trust, the
principal amortization schedule of the Secured Notes held in each Pass Through
Trust and the final distribution date applicable to each Pass Through Trust
differ. The form and terms of the New Certificates will be identical in all
material respects to the form and terms of the Old Certificates except that
the New Certificates will have been registered under the Securities Act and,
therefore, will not bear legends restricting the transfer thereof and will not
contain certain provisions included in the Old Certificates relating to an
increase in the interest rate in the event of a failure to commence the
Exchange Offer on a timely basis, and Certificateholders of New Certificates
will not be entitled to certain rights under the Registration Rights
Agreement. The statements under this caption are a summary only 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
Agreements, the Indenture, the Lease, the Participation Agreement and the
other Operative Documents, the forms of each of which have been filed as an
exhibit to the Registration Statement. Except as otherwise indicated, the
following summaries relate to each of the six Agreements, the six Pass Through
Trusts formed thereby and the Old Certificates issued and the New Certificates
issuable by each Pass Through Trust. Citations to the relevant sections of the
Agreements appear below in parentheses unless otherwise indicated.
GENERAL
The Old Certificates were issued and the New Certificates are issuable in
fully registered form. Each Old Certificate represents and each New
Certificate will represent the same fractional, undivided interest in the Pass
Through Trust created by the Agreement pursuant to which the Old Certificate
was issued. The property of each Pass Through Trust includes one or more
Secured Notes held in such Pass Through Trust, all monies at any time paid
thereon, all monies due and to become due thereunder and funds from time to
time deposited with the Pass Through Trustee in accounts relating to such Pass
Through Trust. Each New Certificate corresponds to a pro rata share of the
outstanding principal amount of the Secured Notes held in the related Pass
Through Trust and is issuable in minimum denominations of $1,000 or any
integral multiple of $1,000 in excess thereof. (Agreements, Sections 2.01 and
3.01) No person acquiring a beneficial interest in the New Certificates (a
"Certificate Owner") will be entitled to receive a definitive certificate
representing such person's interest in the New Certificates, except as set
forth below under "--Registered Certificates." Unless and until Registered
Certificates (as defined below) are issued under the limited circumstances
described herein, 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 its nominee, Cede, as
the registered holder of the Certificates, or to DTC Participants for
distribution to Certificate Owners in accordance with DTC procedures. See "--
Book-Entry; Delivery and Form." (Agreements, Sections 3.01 and 3.09)
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Interest will be passed through to Certificateholders of each of the Pass
Through Trusts at the rate per annum set forth below, calculated on the basis
of a 360-day year of twelve 30-day months.
The Certificates are subject to redemption when and to the extent that the
related Secured Notes are redeemed. See "Description of the Secured Notes--
Prepayments."
The Certificates represent interests in the Pass Through Trusts and do not
represent an interest in or obligation of Mobil, MGB, the Pass Through
Trustee, the Owner Trustee in its individual capacity, or any affiliate
thereof. (Agreements, Section 3.08)
The Agreements and the Indenture do not contain any (i) financial or
operating covenants or (ii) "event risk" provisions specifically designed to
afford Certificateholders protection in the event of a highly leveraged
transaction that may or may not result in a change of control of Mobil or MGB.
However, the Certificateholders have the benefit of a lien on the Undivided
Interest securing the Secured Notes.
BOOK-ENTRY; DELIVERY AND FORM
DTC is a limited-purpose trust company organized under the laws of the State
of New York, a "banking organization" within the meaning of the New York
Banking Law, 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 the provisions of Section 17A of the Securities
Exchange Act of 1934. DTC holds securities that its participants ("Direct
Participants") deposit with DTC. DTC also facilitates the settlement among
Participants of securities transactions, such as transfers and pledges, in
deposited securities through electronic computerized book-entry changes in
Participants' accounts, thereby eliminating the need for physical movement of
securities certificates. Direct Participants include securities brokers and
dealers (including MS&Co.), banks, trust companies, clearing corporations and
certain other organizations. DTC is owned by a number of its Direct
Participants and by the New York Stock Exchange, Inc., the American Stock
Exchange, Inc. and the National Association of Securities Dealers, Inc. Access
to the DTC system is also available to others, such as securities brokers and
dealers, banks and trust companies that clear through or maintain a custodial
relationship with a Direct Participant, either directly or indirectly
("Indirect Participants"). The rules applicable to DTC and its Participants
are on file with the Commission.
The certificates representing the Old Certificates were issued in fully
registered form without interest coupons. Old Certificates sold in offshore
transactions in reliance on Regulation S are represented by a single,
permanent global Old Certificate for each Pass Through Trust, in definitive,
fully registered form without interest coupons (the "Regulation S Global Old
Certificates") and were deposited with the Pass Through Trustee as custodian
for DTC and registered in the name of Cede for the accounts of Morgan Guaranty
Trust Company of New York, Brussels Office, as operator of the Euroclear
System ("Euroclear"), and Centrale de Livraison de Valeurs Mobilieres S.A.
("Cedel"). New Certificates replacing the Regulation S Global Old Certificates
will be represented by a single, permanent global New Certificate for each
Pass Through Trust, in definitive, fully registered form without interest
coupons (the "Regulation S Global New Certificates").
Old Certificates sold in reliance on Rule 144A were represented by a single,
permanent global Old Certificate for each Pass Through Trust, in definitive,
fully registered form without interest coupons (the "Restricted Global Old
Certificates"), which were deposited with the Pass Through Trustee as
custodian for DTC and registered in the name of Cede. New Certificates
replacing the Restricted Global Old Certificates will be represented by a
single, permanent global New Certificate for each Pass Through Trust, in
definitive, fully registered form without interest coupons (the "Registered
Global New Certificates") and will be similarly deposited. Except in the
limited circumstances described below under "--The Global New Certificates,"
owners of beneficial interests in Global New Certificates will not be entitled
to receive physical delivery of Certificated New Certificates (as defined
below). The New Certificates will not be issuable in bearer form.
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<PAGE>
Old Certificates originally held in or transferred to Institutional
Accredited Investors who are not QIBs ("Non-Global Purchasers") were issued in
registered form without coupons ("Certificated Old Certificates"). New
Certificates replacing the Certificated Old Certificates will be issued in
registered form without coupons ("Certificated New Certificates").
Certificated New Certificates replacing Certificated Old Certificates that
were initially issued to a Non-Global Purchaser and were transferred to a QIB
or in accordance with Regulation S, will, unless the relevant Global New
Certificate has previously been exchanged in whole for Certificated New
Certificates, be exchanged for an interest in the appropriate Global New
Certificate.
Purchases of New Certificates under the DTC system must be made by or
through Direct Participants, which will receive a credit for the New
Certificates on DTC's records. The ownership interest of each Certificate
Owner is in turn to be recorded on the Direct and Indirect Participants'
records. Certificate Owners will not receive written confirmation from DTC of
their purchase, but Certificate Owners are expected to receive written
confirmations providing details of the transaction, as well as periodic
statements of their holdings, from the Direct or Indirect Participant through
which the Certificate Owner entered into the transaction. Transfers of
ownership interests in the New Certificates are to be accomplished by entries
made on the books of Participants acting on behalf of Certificate Owners.
To facilitate subsequent transfers, all New Certificates deposited by
Participants with DTC are registered in the name of Cede. The deposit of New
Certificates with DTC and their registration in the name of Cede effect no
change in beneficial ownership. DTC has no knowledge of the actual Certificate
Owners; DTC's records reflect only the identity of the Direct Participants to
whose accounts such New Certificates are credited, which may or may not be the
Certificate Owners. The Participants will remain responsible for keeping
account of their holdings on behalf of their customers.
Conveyance of notices and other communications by DTC to Direct
Participants, by Direct Participants to Indirect Participants, and by Direct
Participants and Indirect Participants to Certificate Owners will be governed
by arrangements among them, subject to any statutory or regulatory
requirements as may be in effect from time to time. Redemption notices shall
be sent to Cede.
Payments of principal, interest and premium, if any, on the New Certificates
will be made to DTC. DTC's practice is to credit Direct Participants' accounts
on the payable date in accordance with their respective holdings shown on
DTC's records unless DTC has reason to believe that it will not receive
payment on such date. Payments by Participants to Certificate Owners will be
governed by standing instructions and customary practices, as is the case with
securities held for the accounts of customers in bearer form or registered in
"street name," and will be the responsibility of such Participant and not of
DTC, the Pass Through Trustee, MGB or Mobil, subject to any statutory or
regulatory requirements as may be in effect from time to time. Payment of
principal, interest and premium, if any, to DTC is the responsibility of the
Pass Through Trustee, disbursement of such payments to Direct Participants
shall be the responsibility of DTC, and disbursement of such payments to the
Certificate Owners shall be the responsibility of Direct and Indirect
Participants.
Because DTC can act only on behalf of Direct Participants, who in turn act
on behalf of Indirect Participants and Certificate Owners, the ability of a
Certificate Owner to pledge New Certificates to persons or entities that do
not participate in the DTC system, or to otherwise act with respect to such
New Certificates, may be limited due to the lack of a physical certificate for
such New Certificates.
Transfers between Participants will be effected in the ordinary way in
accordance with DTC rules and will be settled in same-day funds. If a
Certificateholder requires physical delivery of a Certificated New Certificate
for any reason, including to sell New Certificates to persons in states which
require such delivery of such New Certificates or to pledge such New
Certificates, such holder must transfer its interest in the Registered Global
New Certificate in accordance with the normal procedures of DTC and the
procedures set forth in the Agreements. Transfers between participants in
Euroclear and Cedel will be effected in the ordinary way in accordance with
their respective rules and operating procedures.
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<PAGE>
The information in this section concerning DTC and DTC's book-entry system
has been obtained from sources that Mobil and MGB believe to be reliable, but
neither Mobil nor MGB takes any responsibility for the accuracy thereof. None
of Mobil, MGB or any 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 New Certificates held by Cede, as nominee for DTC,
or for maintaining, supervising or reviewing any records relating to such
beneficial ownership interests.
Although DTC, Euroclear and Cedel have agreed to the foregoing procedures in
order to facilitate transfers of interests in the Global New Certificates
among participants of DTC, Euroclear and Cedel, they are under no obligation
to perform or continue to perform such procedures, and such procedures may be
discontinued at any time. None of Mobil, MGB or any Pass Through Trustee will
have any responsibility for the performance by DTC, Euroclear or Cedel or
their respective participants or indirect participants of their respective
obligations under the rules and procedures governing their operations.
THE GLOBAL NEW CERTIFICATES
Upon the issuance of each Regulation S Global New Certificate and each
Registered Global New Certificate with respect to each Pass Through Trust
(each a "Global New Certificate" and together the "Global New Certificates"),
DTC or its custodian will credit, on its internal system, the respective
principal amount of the individual beneficial interests represented by such
Global New Certificates to the accounts of persons who have accounts with such
depositary. Such accounts initially will be designated by or on behalf of
MS&Co. Ownership of beneficial interests in a Global New Certificate will be
limited to Direct Participants or persons who hold interests through Direct
Participants. Ownership of beneficial interests in a Global New Certificate
will be shown on, and the transfer of that ownership will be effected only
through records maintained by DTC or its nominee (with respect to interests of
Direct Participants) and the records of Direct Participants (with respect to
interests of persons other than Direct Participants). QIBs may hold their
interests in a Global New Certificate directly through DTC if they are Direct
Participants or indirectly through organizations which are Direct
Participants.
Investors may hold their interest in a Regulation S Global New Certificate
directly through Cedel or Euroclear, if they are participants in such system,
or indirectly through organizations that are participants in such system.
Investors may also hold such interests through organizations other than Cedel
or Euroclear that are Participants. Cedel and Euroclear will hold interests in
a Regulation S Global New Certificate on behalf of their participants through
DTC.
So as long as DTC, or its nominee, is the registered owner or holder of a
Global New Certificate, DTC or such nominee, as the case may be, will be
considered the sole owner or holder of the New Certificates represented by
such Global New Certificate for all purposes under the Agreements and the New
Certificates. No beneficial owner of an interest in a Global New Certificate
will be able to transfer that interest except in accordance with DTC's
applicable procedures, in addition to those provided for under the Indenture
and, if applicable, those of Euroclear and Cedel.
Payments of the principal of, premium, if any, and interest on, each Global
New Certificate will be made to DTC or its nominee, as the case may be, as the
registered owner thereof. None of Mobil, MGB, the Pass Through Trustee or any
Paying Agent will have any responsibility or liability for any aspect of the
records relating to or payments made on account of beneficial ownership
interests in the Global New Certificates or for maintaining, supervising or
reviewing any records relating to such beneficial ownership interests.
REGISTERED CERTIFICATES
The New Certificates will be issued in fully registered, certificated form
("Registered Certificates") to Certificate Owners or their nominees, rather
than to DTC or its nominee, only if (i) MGB advises the Pass Through Trustee
in writing that DTC is no longer willing or able to discharge properly its
responsibilities as depository with respect to the New Certificates and MGB is
unable to locate a qualified successor, (ii) MGB, at
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<PAGE>
its option, elects to terminate the book-entry system through DTC or (iii)
after the occurrence of an Event of Default, Certificate Owners of New
Certificates evidencing fractional undivided interests aggregating not less
than a majority in interest in the applicable Pass Through Trust advise the
Pass Through Trustee and DTC through Direct Participants in writing that the
continuation of a book-entry system through DTC (or a successor thereto) is no
longer in the Certificate Owners' best interests. (Agreements, 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 Certificate
Owners through Direct Participants of the availability of Registered
Certificates. Upon surrender by DTC of the certificates representing the
Certificates and receipt of instructions for re-registration, the Pass Through
Trustee will reissue the Certificates as Registered Certificates to
Certificate Owners. (Agreements, Section 3.09)
Distributions of principal of, premium, if any, or interest on the New
Certificates will thereafter be made by the Pass Through Trustee directly to
holders of Registered Certificates in accordance with the procedures set forth
in the Agreements. Such distributions will be made (i) by check mailed to the
address of such holder as it appears on the register maintained by the Pass
Through Trustee or (ii) upon application to the Pass Through Trustee, by wire
transfer in immediately available funds to an account maintained by a holder
of a Registered Certificate with a bank. The final payment on any New
Certificate, however, will be made only upon presentation and surrender of
such New Certificate at the office or agency specified in the notice of final
distribution to certificateholders. (Agreements, Sections 4.02 and 11.01)
Registered Certificates will be transferable and exchangeable at the office
of the Pass Through Trustee upon compliance with the requirements set forth in
the applicable Agreements. No service charge will be imposed for any
registration of transfer or exchange, but payment of a sum sufficient to cover
any transfer tax or other governmental charge payable in connection therewith
may be required. (Agreements, Section 3.04)
SAME-DAY SETTLEMENT AND PAYMENT
All payments made by MGB under the Lease to the Indenture Trustee (as
assignee of the Lessor) will be in immediately available funds and will be
passed through 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, secondary
trading in pass through certificates (such as the New Certificates offered
hereby) is generally settled in immediately available funds. The New
Certificates will trade in DTC's Same-Day Funds Settlement System until
maturity, and secondary market trading activity in such New 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 New Certificates.
PAYMENTS AND DISTRIBUTIONS
All Scheduled Payments (as defined below) of principal and interest on the
Secured Notes held in the Pass Through Trusts received by the Pass Through
Trustee will be distributed by the Pass Through Trustee to Certificateholders
on the date such receipt is confirmed, except in certain cases when some or
all of such Secured Notes are in default. See "--Events of Default and Certain
Rights Upon an Event of Default." Payments of interest on the unpaid principal
amount of the Secured Notes held in the Pass Through Trusts are scheduled to
be received by the Pass Through Trustee on each January 2 and July 2 of each
year, commencing July 2, 1996, at the applicable rate per annum for such Pass
Through Trust until the final distribution date for each Pass Through Trust.
The Secured Notes purchased by Pass Through Trusts 1995-A1 through 1995-A5
will pay interest only until they mature on January 2, 1997, January 2, 1998,
January 2, 1999, January 2, 2000 and January 2, 2001, respectively. Payments
of principal on the Secured Notes held in Pass Through Trust 1995-A6 are
scheduled to be received in specified amounts by the Pass Through Trustee on
January 2 or July 2, or both, of each year, commencing January 2, 2002 (such
scheduled payments of interest and principal on the Secured
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<PAGE>
Notes are herein referred to as "Scheduled Payments," and each January 2 and
July 2 of each year, commencing July 2, 1996, are herein referred to as
"Regular Distribution Dates"). Each Certificateholder is entitled to receive a
pro rata share of any distribution in respect of Scheduled Payments of
principal and interest made on the Secured Notes held in the related Pass
Through Trust. Scheduled Payments of principal on the Secured Notes held in
the Pass Through Trusts are set forth below under "Description of the Secured
Notes--Principal Payments." The Pass Through Trustee will distribute on each
Regular Distribution Date to the Certificateholders 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 related New
Certificates on the fifteenth day preceding such Regular Distribution Date,
subject to certain exceptions. (Agreements, Sections 4.01, 4.02 and 4.03) 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.
In addition to Scheduled Payments with respect to principal, the Secured
Notes, and consequently the New Certificates, are subject to partial or full
prepayment under certain circumstances. See "Description of Secured Notes--
Prepayments." 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 Secured Notes held in the related Pass Through Trust, and payments
received by the Pass Through Trustee following a default in respect of the
Secured Notes held in the related Pass Through Trust (including payments
received by the Pass Through Trustee on account of the purchase by the Owner
Trustee of such Secured Notes or payments received on account of the sale of
such Secured Notes by the Pass Through Trustee) ("Special Payments") will be
distributed on the second day of a month (a "Special Distribution Date"). The
Pass Through Trustee will mail notice to the Certificateholders of record 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 for each
Pass Through Trust stating such anticipated Special Distribution Date.
(Agreements, Section 4.02) Each distribution of a Special Payment on a Special
Distribution Date for each Pass Through Trust will be made by the Pass Through
Trustee to the holders of record of such New Certificates on the fifteenth day
preceding such Special Distribution Date. See "Description of the Secured
Notes--Prepayments" and "--Events of Default and Certain Rights Upon an Event
of Default."
After partial or full prepayment or default in respect of some or all of the
Secured Notes or other Special Distribution, a Certificateholder should refer
to the information with respect to the Pool Balance and the Pool Factor for
the related Pass Through Trust reported periodically by the Pass Through
Trustee. See "--Pool Factors" and "--Reports to Certificateholders."
The Agreements require that the Pass Through Trustee establish and maintain
with itself, for the Pass Through Trusts and for the benefit of the
Certificateholders, one or more accounts (the "Certificate Account") for the
deposit of payments representing Scheduled Payments on the Secured Notes held
in the related Pass Through Trust. (Agreements, Section 4.01) The Agreements
also require that the Pass Through Trustee establish and maintain with itself,
for each Pass Through Trust and for the benefit of the Certificateholders, one
or more accounts (the "Special Payments Account") for the deposit of payments
representing Special Payments. Pursuant to the terms of the Agreements, the
Pass Through Trustee is required to deposit any Scheduled Payments received by
it in the Certificate Account and to deposit any Special Payments so received
by it in the Special Payments Account. (Agreements, 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. (Agreements,
Section 4.02)
Distributions by the Pass Through Trustee from the Certificate Account or
the Special Payments Account of the related Pass Through Trust on a Regular
Distribution Date or a Special Distribution Date will be made by (i) check
mailed to each Certificateholder of record on the applicable record date at
its address appearing on the register maintained for the related Pass Through
Trust or (ii) upon application to the Pass Through Trustee, by wire transfer
in immediately available funds to an account maintained by a Certificateholder
with a bank. (Agreements, Section 4.02) The final distribution for each Pass
Through Trust, however, will be made only upon presentation and surrender of
the New Certificates at the office or agency of the Pass Through Trustee
specified in the notice given by such Pass Through Trustee of such final
distribution. The applicable Pass Through Trustee will
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mail such notice of the final distribution to the Certificateholders,
specifying the date set for such final distribution and the amount of such
distribution. (Agreements, Section 11.01) See "--Termination of the Pass
Through Trust."
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 any additional interest accruing during the intervening period.
(Agreements, Section 12.09)
POOL FACTORS
Unless there has been a prepayment or a default in respect of the Secured
Notes held in the related Pass Through Trust, the Pool Factor for such Pass
Through Trust will decline in proportion to the scheduled repayments of
principal on the Secured Notes held in such Pass Through Trust, as described
under "Description of the Secured Notes--Principal Payments." In the event of
partial or full prepayment or default or a Special Payment, if any, the Pool
Factor and the Pool Balance of such Pass Through Trust will be recomputed
after giving effect thereto and notice thereof will be mailed to
Certificateholders.
The "Pool Balance" for each Pass Through Trust indicates, as of any Regular
Distribution Date or Special Distribution Date, if any, the aggregate unpaid
principal amount of the Secured Notes held in the related Pass Through Trust
on such date plus any amounts in respect of principal on such Secured Notes
held by the Pass Through Trustee and not yet distributed. The Pool Balance for
each Pass Through Trust as of any Regular Distribution Date or Special
Distribution Date, if any, shall be computed after giving effect to the
payment of principal, if any, of the Secured Notes held in the related Pass
Through Trust and distribution thereof to be made on that date.
The "Pool Factor" for each Pass Through Trust as of any Regular Distribution
Date or Special Distribution Date, if any, is the quotient (rounded to the
seventh decimal place) computed by dividing (i) the aggregate unpaid principal
amount of the Secured Notes held in such Pass Through Trust on such date plus
any amounts in respect of principal on such Secured Notes held by the Pass
Through Trustee and not yet distributed by (ii) the aggregate original
principal amount of Certificates issued by such Pass Through Trust. The Pool
Factor for each Pass Through Trust as of any Regular Distribution Date or
Special Distribution Date, if any, shall be computed after giving effect to
the payment of principal, if any, on the Secured Notes held in such Pass
Through Trust and distribution thereof to be made on that date. The amount of
a Certificateholder's pro rata share of the Pool Balance of such Pass Through
Trust can be determined by multiplying the original denomination of the
holder's Certificate by the Pool Factor as of the applicable Regular
Distribution Date or Special Distribution Date, if any. The Pool Factor and
the Pool Balance for each Pass Through Trust will be mailed to
Certificateholders of record on each Regular Distribution Date and Special
Distribution Date, if any.
As of the date of issuance of the Old Certificates and assuming that no
early redemption, default or purchase of any Secured Notes shall occur, the
Pool Factor for each Pass Through Trust will initially be 1.0000000 and (i)
with respect to Pass Through Trusts 1995-A1 through 1995-A5, will not decline
until the single payment of principal of Secured Notes held in each such Pass
Through Trust is distributed on the final distribution date applicable to such
Pass Through Trust and (ii) the aggregate scheduled repayment of principal of
the Secured Notes to be held in Pass Through Trust 1995-A6 and the resulting
Pool Factor for such Pass Through Trust after taking into account each such
repayment will be as follows:
<TABLE>
<CAPTION>
PASS THROUGH TRUST 1995-A6
REGULAR SECURED NOTES PASS THROUGH TRUST 1995-A6
DISTRIBUTION DATES SCHEDULED PAYMENTS OF PRINCIPAL POOL FACTOR
------------------ ------------------------------- --------------------------
<S> <C> <C>
January 2, 2002......... $ 6,462,445 0.9002124
January 2, 2003......... 9,171,023 0.7586012
January 2, 2004......... 9,735,041 0.6082810
January 2, 2005......... 10,333,746 0.4487160
January 2, 2006......... 3,509,092 0.3945316
July 2, 2006............ 9,343,261 0.2502608
July 2, 2007............ 12,123,211 0.0630645
July 2, 2008............ 4,084,181 0.0000000
</TABLE>
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The Pool Factors will be unaffected by the Exchange Offer or the exchange of
Old Certificates for New Certificates pursuant thereto.
REPORTS 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, if any, to Certificateholders of record of the
related Pass Through Trust a statement, giving effect to such distribution to
be made on such Regular Distribution Date or Special Distribution Date, as the
case may be, setting forth the following information (per $1,000 in aggregate
principal amount New Certificate, 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 Pass Through Trust.
In addition, within a reasonable time after the end of each calendar year,
the Pass Through Trustee will furnish to each Certificateholder of record at
any time during the preceding calendar year a statement containing the sum of
the amounts determined pursuant to clauses (i) and (ii) above with respect to
the related Pass Through 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.
(Agreements, 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.
At such time, if any, as the New Certificates are issued in the form of
Registered Certificates, each Pass Through Trustee will prepare and deliver
the information described above to each Certificateholder of record as the
name and period of beneficial ownership of such Certificateholder appears on
the records of the Registrar of the New Certificates.
Mobil and MGB are each required to furnish annually to the Pass Through
Trustee a statement as to the fulfillment of its covenants and obligations
under the Agreements. (Agreements, Section 5.03)
VOTING OF SECURED NOTES
The Pass Through Trustee of each Pass Through Trust, as holder of the
Secured Notes in such Pass Through Trust, has the right under certain
circumstances to vote and give consents and waivers in respect of the Secured
Notes held in such Pass Through Trust under the Indenture. Each Agreement sets
forth the circumstances in which the related Pass Through Trustee shall direct
any action or cast any vote as the holder of the Secured Notes at its own
discretion and the circumstances in which such Pass Through Trustee shall seek
instructions from the Certificateholders. Prior to an Event of Default (as
defined below) with respect to any Pass Through Trust, the principal amount of
the Secured Notes held in the Pass Through Trust directing any action or being
voted for or against any proposal shall be in proportion to the principal
amount of Certificates held by the Certificateholders taking the corresponding
position. (Agreements, Sections 6.01, 6.04, 6.05 and 10.01)
EVENTS OF DEFAULT AND CERTAIN RIGHTS UPON AN EVENT OF DEFAULT
An event of default under the Agreements (an "Event of Default") is defined
as the occurrence and continuance of an event of default under the Indenture
(an "Indenture Event of Default"). For a description of the Indenture Events
of Default, see "Description of the Secured Notes--Indenture Events of
Default, Notice and Waiver." A continuing Indenture Event of Default will
result in an Event of Default under the Agreements.
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Under the Indenture, the Lessor has the right under certain circumstances to
cure Indenture Events of Defaults that result from the occurrence of a Lease
Event of Default. If the Lessor chooses to exercise such cure right, the
Indenture Events of Default and consequently the Event of Default will be
deemed to be cured.
Each Agreement provides that, as long as an Indenture Event of Default shall
have occurred and be continuing, the Pass Through Trustee may vote all of the
Secured Notes that are held in the related Pass Through Trust, and upon the
direction of the holders of Certificates evidencing fractional undivided
interests aggregating not less than a majority in interest of the related Pass
Through Trust, the Pass Through Trustee shall vote a corresponding majority of
such Secured Notes in favor of directing the Indenture Trustee to declare the
unpaid principal amount of all Secured Notes then outstanding and any accrued
and unpaid interest thereon to be due and payable. Each Agreement in addition
provides that, if an Indenture Event of Default shall have occurred and be
continuing, the Pass Through Trustee may, and upon the direction of the
holders of Certificates evidencing fractional undivided interests aggregating
not less than a majority in interest of such Pass Through Trust shall, vote
all of the Secured Notes that are held in such Pass Through Trust in favor of
directing the Indenture Trustee as to the time, method and place of conducting
any proceeding for any remedy available to the Indenture Trustee or of
exercising any trust or power conferred on the Indenture Trustee, provided
that if an Indenture Event of Default shall have occurred and be continuing,
such direction by the Certificateholders shall not obligate the Pass Through
Trustee to vote more than a corresponding majority of the Secured Notes held
by the related Pass Through Trust in favor of directing any action by the
Indenture Trustee with respect to such Indenture Event of Default.
(Agreements, Sections 6.01 and 6.04)
The Indenture provides that, if an Indenture Event of Default shall occur
and be continuing thereunder, the Indenture Trustee will declare the unpaid
principal amount of the Secured Notes to be due and payable, together with any
accrued and unpaid interest thereon, upon the instructions of the holders of a
majority in aggregate principal amount of the Secured Notes outstanding.
(Indenture, Section 5.04) The Indenture further provides that, if an Indenture
Event of Default shall occur and be continuing thereunder, the holders of a
majority in aggregate principal amount of the Secured Notes outstanding may
direct the Indenture Trustee with respect to the exercise of remedies
thereunder. See "Description of the Secured Notes--Remedies." Accordingly, the
ability of the holders of the Certificates issued with respect to any one Pass
Through Trust to cause the Indenture Trustee to accelerate the Secured Notes
issued under the Indenture or to direct the exercise of remedies by the
Indenture Trustee under the Indenture will depend, in part, upon the
proportion between the aggregate principal amount of the Secured Notes issued
under the Indenture and held in such Pass Through Trust and the aggregate
principal amount of all Secured Notes issued under the Indenture. Each Pass
Through Trust holds Secured Notes with different terms from the Secured Notes
held in the other Pass Through Trusts and therefore the Certificateholders of
one Pass Through Trust may have divergent or conflicting interests from those
of the Certificateholders of the other Pass Through Trusts. In addition, so
long as the same institution acts as Pass Through Trustee of each Pass Through
Trust, in the absence of instructions from the Certificateholders of any such
Pass Through Trust, the Pass Through Trustee for such Pass Through Trust could
for the same reason be faced with a potential conflict of interest upon an
Indenture Event of Default.
As an additional remedy, if an Indenture Event of Default shall have
occurred and be continuing, the Agreements provide that the Pass Through
Trustee may, and upon the direction of the Certificateholders evidencing
fractional undivided interests aggregating not less than a majority in
interest of the related Pass Through Trust shall, sell all or part of the
Secured Notes that are held in such Pass Through Trust for cash to any person.
(Agreements, Sections 6.01 and 6.02) In addition, if the Lessor elects to
purchase or redeem the Secured Notes, the Pass Through Trustee shall sell the
Secured Notes held in the related Pass Through Trust to the Lessor at a price
equal to the unpaid principal amount thereof, together with accrued but unpaid
interest thereon, plus any other amounts then due and payable with respect to
the Secured Notes held in the related Pass Through Trust, plus, if such
redemption is made prior to the Premium Termination Date, the Make-Whole
Amount, if any; provided that no Make-Whole Amount shall be payable after the
earlier of (i) the expiration of 270 days after an Indenture Event of Default
has occurred during which time the Secured Notes held in the related Pass
Through Trust could, but shall not, have been accelerated, (ii) the Indenture
Trustee has given the
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Owner Trustee or Owner Participant notice of its intent to accelerate the
Secured Notes and (iii) the Indenture Trustee has declared the unpaid amount
of the Secured Notes to be immediately due and payable. (Indenture, Section
3.06). Any proceeds received by the Pass Through Trustee upon any such sale
shall be deposited in the Special Payments Account with respect to such Pass
Through Trust and shall be distributed to the Certificateholders with respect
to such Pass Through Trust on a Special Distribution Date. The market for
Secured Notes in default may be very limited and there can be no assurance
that they could be sold for a reasonable price. If a Pass Through Trustee
sells any such Secured Notes held in the related Pass Through Trust with
respect to which an Indenture Event of Default exists for less than their
outstanding principal amount, the Certificateholders with respect to such Pass
Through Trust will receive a smaller amount of principal distributions than
anticipated and will not have any claim for the shortfall against MGB, the
Owner Trustee or the Pass Through Trustee. Neither the Pass Through Trustee
nor the Certificateholders, furthermore, could take any action with respect to
any remaining Secured Notes held in the related Pass Through Trust so long as
no Indenture Events of Default existed with respect thereto. (Agreements,
Sections 4.01, 4.02 and 6.02)
Any amount distributed to the Pass Through Trustee by the Indenture Trustee
on account of the Secured Notes held in the related Pass Through Trust
following an Indenture Event of Default shall be deposited in the Special
Payments Account with respect to such Pass Through Trust and shall be
distributed to the Certificateholders with respect to such Pass Through Trust
on a Special Distribution Date. In addition, if, following an Indenture Event
of Default, the Owner Trustee or the Owner Participant exercises its option to
purchase the outstanding Secured Notes held in the related Pass Through Trust
as described below under "Description of the Secured Notes--Prepayments," the
purchase price paid by the Owner Trustee or the Owner Participant to the Pass
Through Trustee for the Secured Notes held in such Pass Through Trust shall be
deposited in the Special Payments Account with respect to such Pass Through
Trust and shall be distributed to the Certificateholders with respect to such
Pass Through Trust on a Special Distribution Date. (Agreements, Sections 4.01
and 4.02)
Any funds representing payments received with respect to any Secured Notes
held in a Pass Through Trust in default, or the proceeds from the sale by the
Pass Through Trustee of any such Secured Notes held by the Pass Through
Trustee in the Special Payments Account with respect to such Pass Through
Trust shall, to the extent practicable, be invested and reinvested by the Pass
Through Trustee in Permitted Investments pending the distribution of such
funds on a Special Distribution Date. Permitted Investments are defined as
being obligations of the United States maturing in not more than 90 days or
such lesser time as is required for the distribution of any such funds on a
Special Distribution Date. (Agreements, Sections 4.01 and 4.04)
Each Agreement provides that the Pass Through Trustee shall, within 90 days
after the occurrence of a default (as defined below) in respect of the Pass
Through Trust created under the Agreement, give to the Certificateholders
notice, transmitted by mail, of all uncured or unwaived defaults under the
Agreement known to it; provided that, except in the case of default in the
payment of principal, premium, if any, or interest on any of the Secured Notes
held in such Pass Through 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 interests of such Certificateholders with respect to
such Pass Through Trust. The term "default," for the purpose of the provision
described in this paragraph only, shall mean the occurrence of any Event of
Default under the Agreements specified above, except that in determining
whether any Event of Default has occurred any grace period or notice in
connection therewith shall be disregarded. (Agreements, Section 7.02)
Each Agreement contains a provision entitling the Pass Through Trustee,
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 Certificateholders
before proceeding to exercise any right or power under the Agreement at the
request of such Certificateholders. (Agreements, Sections 7.01 and 7.03)
In certain cases, Certificateholders of a Pass Through Trust evidencing
fractional undivided interests aggregating not less than a majority in
interest of such Pass Through Trust may on behalf of all Certificateholders
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<PAGE>
with respect to such Pass Through Trust waive any past default or Event of
Default under the Agreement with respect to such Pass Through Trust and
thereby annul any direction given by such holders to the 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 Secured Notes and (iii) a default in respect of any covenant or
provision of the Agreement that cannot be modified or amended without the
consent of each Certificateholder affected thereby. (Agreements, Section 6.05)
The Indenture provides that, with certain exceptions, the holders of a
majority in aggregate unpaid principal amount of the Secured Notes may on
behalf of all such holders waive any past default or Indenture Event of
Default. (Indenture, Section 5.08) For a discussion of waivers of Indenture
Events of Default, see "Description of the Secured Notes--Indenture Events of
Default, Notice and Waiver."
MODIFICATION OF THE AGREEMENTS
Each Agreement contains provisions permitting Mobil, MGB and the Pass
Through Trustee to enter into a supplemental trust agreement, without the
consent of any Certificateholders, (i) to evidence the succession of another
corporation to Mobil or MGB and the assumption by such corporation of Mobil's
or MGB's obligations under such Agreement, (ii) to add to the covenants of
Mobil or MGB for the benefit of such Certificateholders, or (iii) to cure any
ambiguity in, or to correct or supplement any defective or inconsistent
provision of, the Agreement or any supplemental trust agreement, or to make
such provisions with respect to matters or questions arising under the
Agreement as may be necessary or desirable, provided such actions shall not
adversely affect the interest of such Certificateholders. (Agreements, Section
9.01)
Each Agreement also contains provisions permitting Mobil, MGB and the Pass
Through Trustee, with the consent of the holders of Certificates evidencing
fractional undivided interests aggregating not less than a majority in
interest of the related Pass Through Trust, and with the consent of the Owner
Trustee (such consent not to be unreasonably withheld), to execute
supplemental trust agreements adding any provisions to or changing or
eliminating any of the provisions of the Agreement or modifying the rights of
the Certificateholders, except that no such supplemental trust agreement may,
without the consent of each Certificateholder 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 Secured Notes held in such Pass Through Trust, or
distributions in respect of any Certificate, or make distributions payable in
coin or currency other than that provided for in the Certificates, or impair
the right of any Certificateholder to institute suit for the enforcement of
any such payment when due, (b) permit the disposition of any Secured Note held
in the related Pass Through Trust, except as provided in such Agreement, or
(c) reduce the percentage of the aggregate fractional undivided interest of
the related Pass Through Trust provided for in the Agreement, the consent of
the holders of which is required for any such supplemental trust agreement or
for any waiver provided for in the Agreement. (Agreements, Section 9.02)
MODIFICATION OF LEVERAGED LEASE AGREEMENTS
In the event that the Pass Through Trustee, as the holder of the Secured
Notes held in a Pass Through Trust, receives a request for its consent to any
amendment, modification, waiver or supplement under the Indenture, the Lease
or other related document, the Pass Through Trustee shall mail a notice of
such proposed amendment, modification, waiver or supplement to each
Certificateholder of such Pass Through Trust of record as of such date. The
Pass Through Trustee shall request instructions from the Certificateholders of
such Pass Through Trust as to whether or not to consent to such amendment,
modification, waiver or supplement. The Pass Through Trustee shall vote or
consent with respect to the Secured Notes held in the related Pass Through
Trust in the same proportion as the Certificates were actually voted by the
Certificateholders of such Pass Through Trust by a certain date.
Notwithstanding the foregoing, if an Event of Default under the Agreement
shall have occurred and be continuing, the Pass Through Trustee, subject to
the voting instructions referred to under "--Events of Default and Certain
Rights Upon an Event of Default," may in its own discretion consent to such
amendment, modification, waiver or supplement, and may so notify the Indenture
Trustee. (Agreements, Section 10.01)
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<PAGE>
TERMINATION OF THE PASS THROUGH TRUSTS
The obligations of Mobil, MGB and the Pass Through Trustee created by the
Agreements, and the Pass Through Trusts, will terminate upon the distribution
to Certificateholders of all amounts required to be distributed to them
pursuant to the Agreements and the disposition of all property held in the
Pass Through Trusts. The Pass Through Trustee will mail to each
Certificateholder of record notice of the termination of the related Pass
Through Trust, the amount of the proposed final payment and the proposed date
for the distribution of such final payment for such Pass Through Trust. The
final distribution to any Certificateholder will be made only upon surrender
of such Certificateholder's Certificates at the office or agency of the Pass
Through Trustee specified in such notice of termination. (Agreements, Section
11.01)
THE PASS THROUGH TRUSTEE
First Security Bank of Utah, National Association, is the Pass Through
Trustee for each Pass Through Trust. The Pass Through Trustee and any of its
affiliates may hold Certificates in their own names. (Agreements, Section
7.05) With certain exceptions, the Pass Through Trustee makes no
representations as to the validity or sufficiency of the Agreements, the New
Certificates, the Secured Notes, the Indenture, the Lease or other related
documents. (Agreements, Section 7.04) First Security Bank of Utah, National
Association is also the Indenture Trustee for the Secured Notes issued with
respect to the Undivided Interest under the Indenture.
The Pass Through Trustee may resign with respect to any or all of the Pass
Through Trusts at any time, in which event Mobil and MGB will be obligated to
appoint a successor trustee. If the Pass Through Trustee ceases to be eligible
to continue as such under the Agreements or becomes insolvent, Mobil and MGB
may remove such Pass Through Trustee, or any Certificateholder which has held
such Certificate for at least six months may, on behalf of himself and all
others similarly situated, petition any court of competent jurisdiction for
the removal of such Pass Through Trustee and the appointment of a successor
trustee. Any resignation or removal of the Pass Through Trustee and
appointment of a successor trustee for a Pass Through Trust does not become
effective until acceptance of the appointment by the successor trustee.
(Agreements, Sections 7.09 and 7.10)
Each Agreement provides that Mobil and MGB will pay the Pass Through
Trustee's fees and expenses. (Agreements, Section 7.07) Each Agreement further
provides that the Pass Through Trustee will be entitled to indemnification by
Mobil and MGB for, and will be held harmless against, any loss, liability or
expense incurred by the Pass Through Trustee (other than through its own
willful misconduct, bad faith or negligence or by reason of a breach of any of
its representations or warranties set forth in the Agreement), except to the
extent that such loss, liability or expense is for or with respect to taxes,
in which case the Pass Through Trustee may be entitled to be reimbursed by the
related Pass Through Trust. (Agreements, Section 7.07)
DESCRIPTION OF THE SECURED NOTES
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 Secured Notes, the
Indenture, the Lease, and the Participation Agreement. Except as otherwise
indicated, the following summaries relate to the Secured Notes, the Indenture,
the Lease and the Participation Agreement.
GENERAL
The Secured Notes were issued in six series under an Indenture between Fleet
National Bank of Connecticut, as Owner Trustee of a Trust for the benefit of
the Owner Participant who is the beneficial owner of the Undivided Interest,
and First Security Bank of Utah, National Association, as Indenture Trustee.
The Owner Trustee leased the Undivided Interest to MGB pursuant to a Lease
between the Owner Trustee and MGB. MGB is obligated to make or cause to be
made rental and other payments to the Owner Trustee under
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the Lease in amounts that will be at least sufficient to pay the principal of,
premium, if any, and interest on the Secured Notes when and as due and payable
(except principal and interest payable upon an Indenture Event of Default that
is not caused by a Lease Event of Default and except any premium payable by
the Owner Participant or the Owner Trustee in connection with the election by
the Owner Trustee or the Owner Participant to purchase or redeem the Secured
Notes upon the occurrence of a Lease Event of Default as described below in
"Voluntary Prepayments"). The Secured Notes are not, however, direct
obligations of, or guaranteed by, MGB (except to the extent that MGB may, in
certain circumstances described herein, assume the obligations of the Owner
Trustee thereunder) or Mobil. Payments under the Lease in excess of the
amounts required to make required payments on the Secured Notes will be paid
by the Indenture Trustee to the Owner Trustee for distribution to the Owner
Participant and will not be available for distribution to the
Certificateholders of the Pass Through Trusts except in certain cases upon the
occurrence of an Indenture Event of Default. MGB's rental obligations under
the Lease and the other Operative Documents to which it is a party are general
obligations of MGB and are irrevocably and unconditionally guaranteed by Mobil
under the Guaranty.
PRINCIPAL PAYMENTS
The aggregate principal amount of the Secured Notes held in each of the Pass
Through Trusts is as follows:
<TABLE>
<CAPTION>
PASS PASS PASS PASS PASS PASS
THROUGH THROUGH THROUGH THROUGH THROUGH THROUGH
TRUST TRUST TRUST TRUST TRUST TRUST
1995-A1 1995-A2 1995-A3 1995-A4 1995-A5 1995-A6
5.52% 5.57% 5.65% 5.74% 5.79% 6.15%
SECURED SECURED SECURED SECURED SECURED SECURED
NOTES NOTES NOTES NOTES NOTES NOTES TOTAL
---------- ---------- ---------- ---------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Total................... $4,917,000 $5,173,000 $5,462,000 $5,770,000 $6,101,000 $64,762,000 $92,185,000
========== ========== ========== ========== ========== =========== ===========
</TABLE>
Interest will be payable on each Secured Note at the rate applicable to such
Secured Note on the unpaid principal amount thereof on each January 2 and July
2 in each year, commencing July 2, 1996. Such interest will be computed on the
basis of a 360-day year of twelve 30-day months.
The principal of each Secured Note held in Pass Through Trusts 1995-A1
through 1995-A5 will be paid in full at maturity on January 2, 1997, January
2, 1998, January 2, 1999, January 2, 2000 and January 2, 2001, respectively.
The principal of each Secured Note held in Pass Through Trust 1995-A6 will be
payable as set forth below:
PASS THROUGH TRUST 1995-A6
6.15% SECURED NOTES
<TABLE>
<CAPTION>
REGULAR DISTRIBUTION DATES AMOUNT
-------------------------- -----------
<S> <C>
January 2, 2002.............................................. $ 6,462,445
January 2, 2003.............................................. 9,171,023
January 2, 2004.............................................. 9,735,041
January 2, 2005.............................................. 10,333,746
January 2, 2006.............................................. 3,509,092
July 2, 2006................................................. 9,343,261
July 2, 2007................................................. 12,123,211
July 2, 2008................................................. 4,084,181
-----------
Total...................................................... $64,762,000
===========
</TABLE>
If any date scheduled for any payment of principal of, premium, if any, or
interest on the Secured Notes is not a Business Day, such payment may be made
on the next succeeding Business Day without any additional interest.
(Indenture, Section 2.03(b))
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PREPAYMENTS
Mandatory Prepayments. Upon the occurrence of an Event of Loss with respect
to the Production System or a Significant Portion thereof, then, unless, in
the case of an Event of Loss with respect to a Significant Portion where such
Significant Portion is rebuilt or replaced or the Lessee has elected to
purchase the Undivided Interest, the Owner Trustee shall (i) if the Event of
Loss shall have occurred with respect to the entire Production System, redeem
the entire unpaid principal amount of the Secured Notes and (ii) if the Event
of Loss shall have occurred with respect to a Significant Portion, redeem such
of the unpaid principal amount of the Secured Notes which is equal to the
product of (x) the entire principal amount of Secured Notes then outstanding
and (y) a fraction, the numerator of which shall be the Original Cost of the
Significant Portion of the Undivided Interest suffering such Event of Loss and
the denominator of which shall be the aggregate Lessor's Cost of the Undivided
Interest, plus in each case accrued and unpaid interest in respect of the
principal amount to be prepaid on the loss payment date, but without the
payment of any Make-Whole Amount or other premium. (Indenture, Section 3.02)
Voluntary Prepayment. Secured Notes held in Pass Through Trust A-6 are
subject to prepayment prior to maturity, in whole only, at any time (i) after
January 1, 2001 if MGB notifies the Lessor that it has determined that the
Undivided Interest is obsolete, uneconomic or surplus to the needs of MGB for
any reason or the parties to the Operating Agreement have determined to
withdraw from or to terminate the Operating Agreement, (ii) at the option of
MGB following its acquisition of the Undivided Interest, other than in
connection with an Event of Loss described above and (iii) on any Special
Distribution Date after January 1, 2001 upon the agreement of MGB and the
Owner Trustee. Secured Notes held in Pass Through Trust A-6 are also subject
to prepayment, in part, prior to maturity at any time after January 1, 2001,
if MGB notifies the Lessor that it has determined that a Significant Portion
of the Undivided Interest is obsolete, uneconomic or surplus to the needs of
MGB for any reason, in which case the principal amount of Secured Notes to be
redeemed will be equal to the product of (x) the entire principal amount of
Secured Notes then outstanding and (y) a fraction, the numerator of which
shall be the Original Cost of the Significant Portion and the denominator of
which shall be the aggregate Lessor's Cost of the Undivided Interest. The
prepayment price of the Secured Notes in any such events shall be equal to the
unpaid principal amount thereof, together with accrued but unpaid interest
thereon, plus if such redemption is prior to the Premium Termination Date, the
Make-Whole Amount, if any. (Indenture, Section 3.02; Lease, Sections 6 and 7)
In addition, the Secured Notes are subject to purchase or prepayment in
whole by the Owner Trustee or the Owner Participant, on any Special
Distribution Date, if (i) an Indenture Event of Default resulting from one or
more Lease Events of Default shall have occurred and be continuing for less
than 270 days during which time the Secured Notes could, but shall not have
been, accelerated, at a price equal to the aggregate unpaid principal amount
thereof, together with accrued interest thereon plus a premium equal to the
Make-Whole Amount (if any) or (ii) (x) an Indenture Event of Default resulting
from one or more Lease Events of Default shall have occurred and be continuing
for more than 270 days during which time the Secured Notes could, but shall
not have been, accelerated, (y) the Indenture Trustee has given the Owner
Trustee or Owner Participant notice of its intent to accelerate the Secured
Notes, or (z) the Secured Notes have been accelerated, at a price equal to the
aggregate unpaid principal amount thereof, together with accrued interest
thereon, but without any Make-Whole Amount or other premium. (Indenture,
Section 3.06)
The "Make-Whole Amount," if any, with respect to the Secured Notes, shall be
determined as of the fourth Business Day prior to the applicable Redemption
Date and shall equal (a) with respect to any Secured Note to be redeemed in
whole or purchased, the excess, if any, of (i) the sum of the present values
of all remaining scheduled payments of principal and interest from the
applicable Redemption Date to maturity of the Secured Notes, discounted
semiannually on each January 2 and July 2 at a rate equal to the Treasury Rate
(as defined below) plus .10%, based on a 360-day year of twelve 30-day months,
over (ii) the aggregate unpaid principal amount of the Secured Notes plus
accrued but unpaid interest on the Secured Notes (but not any accrued interest
in default) to the Redemption Date and (b) with respect to the principal
amount of any Secured Notes to be redeemed, in part, the excess, if any, of
(x) the sum of that portion of all of the remaining scheduled payments of
principal and interest from the Redemption Date to maturity of such Secured
Notes representing the principal
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<PAGE>
that is to be redeemed on such Redemption Date and the interest that would
have accrued thereon, discounted semi-annually on each January 2 and July 2 at
a rate equal to the Treasury Rate plus .10%, based on a 360-day year of twelve
30-day months, over (y) an amount equal to the principal amount of such
Secured Notes to be redeemed plus accrued but unpaid interest on such
principal amount (but not any accrued interest in default) to the Redemption
Date. The Make-Whole Amount premium, if any, payable with respect to the
Secured Notes will be determined by an independent investment banking
institution of national standing (the "Investment Banker") selected by MGB.
The "Treasury Rate" means, with respect to each Secured 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 Secured 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 Secured Note and (B) the other
maturing as close as possible to, but later than, the Average Life Date of
such Secured Note, in each case as published in the most recent H.15(519) (or,
if a weekly average yield to maturity for United States Treasury securities
maturing on the Average Life Date of such Secured 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 fourth Business Day prior to the prepayment date.
The "Average Life Date" for any Secured Note to be prepaid shall be the date
which follows the prepayment date by a period equal to the Remaining Weighted
Average Life at the prepayment date of such Secured Note. The "Remaining
Weighted Average Life" of such Secured Note, at the prepayment date of such
Secured Note, is the number of days determined by dividing (A) the sum of the
products obtained by multiplying (1) the amount of each remaining principal
payment on such Secured Note by (2) the number of days from and including the
prepayment date to but excluding the scheduled payment date of such principal
payment by (B) the then unpaid principal amount of such Secured Note.
SECURITY
The Secured Notes are secured by, among other things, (i) an assignment by
the Lessor to the Indenture Trustee of the Lessor's rights under the Lease
including the right to receive payments of Rent thereunder (other than certain
Excepted Payments reserved to the Lessor) and the Lessor's rights under the
Guaranty and (ii) a mortgage of the Undivided Interest. (Indenture, Granting
Clause)
So long as no Indenture Event of Default shall have occurred and be
continuing, the Lessor is entitled to exercise all of the rights of the Lessor
under the Operative Documents, subject to certain specific exceptions
(including with respect to amendments, waivers, modifications and consents
under specified provisions of certain of the Operative Documents). The
Lessor's rights, however, do not include the right to receive payments of
Basic Rent and Supplemental Rent (other than Excepted Payments) due under the
Lease, which payments will be made directly to the Indenture Trustee. The
assignment by the Lessor to the Indenture Trustee of its rights under the
Lease and the other Operative Documents also excludes certain rights of the
Lessor, including rights relating to indemnification by the Lessee for certain
matters and insurance proceeds payable to the Lessor under liability insurance
maintained by the Lessee under the Lease. (Indenture, Granting Clause) For a
description of certain other rights of the Lessor, see "--The Lease--Lease
Events of Default."
Funds, if any, held from time to time by the Indenture Trustee pursuant to
the Operative Documents will be invested and reinvested by the Indenture
Trustee, so long as no Indenture Event of Default has occurred and is
continuing, at the direction of MGB acting as agent of the Lessor in Permitted
Investments. MGB, on behalf and as agent of the Lessor, is required on demand
to pay to the Indenture Trustee the amount of any loss resulting
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from any such investment. So long as no Lease Event of Default has occurred
and is continuing, MGB is entitled to receive any profit made from any such
investment. (Lease, Section 19.7; Indenture, Section 7.04)
ADDITIONAL NOTES
Additional Notes may be issued under and secured by the Indenture, at any
time and from time to time, for the purpose of providing funds to finance the
cost of the Lessor's Share of certain modifications, alterations, additions
and improvements to the Production System (the "Modifications"). The Owner
Participant will have the right to participate in the financing of any such
Modifications on terms and conditions mutually acceptable to the Owner
Participant and MGB. If mutually acceptable terms and conditions are not
agreed to by the Owner Participant and MGB, MGB may cause the financing of
such cost through the issuance and sale by the Owner Trustee of Additional
Notes provided that certain conditions set forth in the Participation
Agreement and the Indenture are satisfied, including, among other things, that
(i) the principal amount of all Secured Notes after the issuance of such
Additional Notes shall not exceed 85% of the Fair Market Sales Value of the
Undivided Interest (taking into account such Modifications), (ii) the date of
maturity of such Additional Notes shall not extend beyond the end of the Basic
Term of the Lease (January 2, 2011), (iii) the Owner Participant will not
suffer any adverse consequences resulting from the issuance of such Additional
Notes or the Owner Participant shall have received an indemnity from the
Lessee with respect to any such adverse consequences, (iv) no Lease Event of
Default or Indenture Event of Default shall have occurred and be continuing on
the date of issuance of the Additional Notes, (v) the Owner Participant shall
have received an opinion to the effect that the issuance of the Additional
Notes will not result in any unindemnified adverse tax consequences to the
Owner Participant and (vi) the terms of such Additional Notes, except for the
terms of payment, shall be substantially the same as the Secured Notes.
(Indenture, Section 2.08; Participation Agreement, Section 14)
The terms, conditions and designations of such Additional Notes will be set
forth in a supplement to the Indenture. (Indenture, Section 2.08) In addition,
Basic Rent and other amounts payable by MGB under the Lease will be adjusted
to the extent necessary to provide for Basic Rent payments and certain other
payments sufficient to provide for the payment, when due, of all scheduled
payments of principal of, premium (except for those instances where MGB shall
not be responsible for such premium), if any, and interest on the Secured
Notes as well as any Additional Notes. (Participation Agreement, Section 14)
All Secured Notes issued and outstanding under the Indenture, including any
Additional Notes, will be equally and ratably secured thereunder, without
preference, priority or distinction. (Indenture, Section 2.10)
LIMITATION OF LIABILITY
The Secured Notes are not direct obligations of, or guaranteed by, Mobil,
MGB or the Owner Trustee. None of the Owner Trustee, the Owner Participant or
the Indenture Trustee, or any affiliates thereof, shall be personally liable
to any holder of a Secured Note or, in the case of the Owner Trustee and the
Owner Participant, to the Indenture Trustee for any amounts payable under the
Secured Notes or, except as provided in the Indenture, for any liability under
the Indenture. All payments of principal of, premium, if any, and interest on
the Secured Notes (other than payments made in connection with an optional
redemption or purchase by the Owner Trustee or the Owner Participant) will be
made only from the assets subject to the Lien of the Indenture or the income
and proceeds received by the Indenture Trustee therefrom (including Rent
payable by MGB under the Lease and payments made by Mobil under the Guaranty).
(Indenture, Section 2.02)
Except as otherwise provided in the Indenture, neither the Indenture Trustee
nor the Owner Trustee in its individual capacity shall be answerable or
accountable under the Indenture or under the Secured Notes under any
circumstances except for, when applicable to either the Indenture Trustee or
the Owner Trustee (a) its own willful misconduct or gross negligence, (b)
failure to exercise reasonable care in safeguarding securities held by it
under the Indenture, (c) in case of any inaccuracy of any representation or
warranty made by the Indenture Trustee under the Operative Documents, (d) for
any tax based on or measured by any fees, commissions or compensation received
by it for acting as trustee, (e) subject to certain exceptions, for failure to
use reasonable care in disbursing funds in accordance with the Indenture and
(f) for failure to remove certain liens in accordance
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with the Participation Agreement. (Indenture, Sections 7.01 and 7.03;
Participation Agreement, Sections 11.4 and 17.10). The Owner Participant will
not have any duty or responsibility under the Indenture or the Secured Notes
to the Indenture Trustee or to any holder of any Secured Notes. (Indenture,
Section 2.02)
MERGER, CONSOLIDATION AND TRANSFER OF ASSETS
MGB is prohibited from consolidating with or merging into any other
corporation or transferring substantially all of its assets to another
corporation unless MGB is the continuing corporation or, among other things,
(a) the successor corporation shall be a corporation organized and existing
under the laws of the United States or any State or the District of Columbia,
(b) shall expressly assume the due and punctual performance and observance of
all the covenants and conditions of the Operative Documents to which MGB is a
party and which are to be performed by MGB, (c) immediately after giving
effect to such transaction, no Lease Event of Default shall be continuing, and
(d) after giving effect to such transaction the Guaranty remains in full force
and effect and constitutes a full and unconditional guaranty of the successor
corporation's obligation under the Operative Documents to which it is a party.
(Participation Agreement, Section 10.4)
INDENTURE EVENTS OF DEFAULT, NOTICE AND WAIVER
Indenture Events of Default include: (a) a Lease Event of Default (other
than nonpayment of any Excepted Payment) that shall have occurred and be
continuing, (b) default by the Owner Trustee in making payments when due of
principal of, premium, if any, or interest on any Secured Note and continuance
of that default for 10 Business Days, (c) failure by the Owner Trustee or the
Owner Participant to perform or observe in any material respect any covenant
or agreement contained in the Indenture or any other Operative Document (other
than the Tax Indemnity Agreement) which shall have continued for a period of
30 days after receipt of notice by the Owner Trustee or the Owner Participant
from the Indenture Trustee or the Pass Through Trustee specifying such failure
and requiring it to be remedied (or if such failure is remediable and the
Owner Participant or the Owner Trustee is diligently attempting to remedy such
failure, such failure shall continue for a period of 180 days after receipt of
notice thereof), (d) any representation or warranty made by the Owner Trustee
or the Owner Participant in the Participation Agreement being inaccurate in
any material respect as of the date made unless such inaccurate representation
or warranty shall not be material to the recipient thereof at the time the
notice referred to below is received by the Owner Participant or the Owner
Trustee or any material adverse effect is cured or corrected within 30 days
after receipt of written notice by the Owner Trustee and the Owner Participant
from the Indenture Trustee; provided that if such material adverse effect is
capable of being remedied and the Owner Participant or the Owner Trustee is
diligently attempting to remedy such effect, the Owner Participant or Owner
Trustee shall have 90 days after receipt of written notice thereof to remedy
such material adverse effect, and (e) the occurrence of certain events of
bankruptcy, reorganization or insolvency of the Owner Participant or the Owner
Trustee. (Indenture, Section 5.02)
If MGB fails to make any Basic Rent payment within ten Business Days after
the same shall become due, the Indenture Trustee shall not exercise remedies
under the Lease or declare the Secured Notes to be due and payable or exercise
other remedies under the Indenture until eleven days after the tenth Business
Day of such failure. If the Lessor furnishes to the Indenture Trustee the
amount of such Basic Rent payment, together with any interest thereon on
account of the delayed payment thereof, within such eleven day period, the
Indenture Trustee and the holders of outstanding Secured Notes may not
exercise any remedies otherwise available under the Indenture or the Lease as
the result of such failure to make such rental payment. The Lessor's rights to
cure an Indenture Event of Default resulting from the failure by MGB to pay
Basic Rent is limited to the right to cure an aggregate of six such defaults,
or three consecutive such defaults, under the Lease and may only be exercised
as long as no other Indenture Event of Default has occurred and is continuing.
The Lessor may also cure any other default by MGB in the performance of its
obligations under the Lease and the other Operative Documents and any other
Lease Event of Default if (but only if) the performance or observance of such
obligations or the cure of such Lease Event of Default can be effected by the
payment of money alone. Such cure rights may be exercised as long as no other
Indenture Event of Default has occurred and is continuing at any time prior to
the day which is the later of (x) the 11th day subsequent to notice of such
default or such Lease Event of Default
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by the Indenture Trustee to the Owner Trustee or the Owner Participant and (y)
the 11th day subsequent to the expiration of the grace period, if any,
provided with respect to such default or such Lease Event of Default. During
such eleven day period, the Indenture Trustee may not exercise remedies under
the Lease or declare the Secured Notes payable or exercise other remedies
under the Indenture. Neither the Lessor nor the Owner Participant shall have
the right to cure any such Lease Event of Default if the total amount
outstanding and not reimbursed to such parties exceeds in the aggregate
$10,000,000. (Indenture, Section 5.03)
During the occurrence and continuance of an Indenture Event of Default of
which the Indenture Trustee has actual knowledge, the Indenture Trustee shall
withhold any portion of the Basic Rent otherwise payable to the Lessor until
the earlier to occur of (i) the first Business Day following the date that is
180 days after the Indenture Trustee shall have received such amount and (ii)
the date there shall no longer be continuing an Indenture Event of Default (in
each of which cases described in clauses (i) and (ii) such Basic Rent shall be
distributed to the Lessor, unless, prior thereto, the Secured Notes shall have
been accelerated or the Indenture Trustee has given notice to declare the
Lease to be in default (in which case such amounts shall be applied as
provided in the Indenture)). (Indenture, Section 4.01(c))
The holders of a majority in aggregate principal amount of the outstanding
Secured Notes, by written directive to the Indenture Trustee, may on behalf of
all holders of Secured Notes direct the Indenture Trustee to waive any past
default under the Indenture, except a default in the payment of the principal
of, premium, if any, interest on, or other amounts due under, any Secured Note
or a default in respect of any covenant or provision of the Indenture that
cannot be modified or amended without the consent of each holder of a Secured
Note. (Indenture, Section 5.08)
The Indenture provides that the Owner Trustee shall, upon the occurrence of
any subsisting event known to it that is an Indenture Event of Default, or
that after notice or lapse of time or both would become an Indenture Event of
Default give notice thereof to MGB, the Indenture Trustee and the Owner
Trustee. (Indenture, Section 5.01)
REMEDIES
If an Indenture Event of Default (other than certain Lease Events of
Default) shall occur and be continuing, the Indenture Trustee may, and when
instructed by the holders of a majority in aggregate principal amount of the
Secured Notes outstanding under such Indenture shall, declare the unpaid
principal of all such Secured Notes issued thereunder due and payable,
together with all accrued but unpaid interest thereon. (Indenture, Section
5.04) The holders of a majority in aggregate principal amount of Secured Notes
outstanding under such Indenture may rescind and annul any such declaration by
the Indenture Trustee at any time before any judgment or decree for the
payment of the moneys due, or any portion thereof, shall be entered, 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 any Secured Notes that have become due otherwise than by such
declaration of acceleration and (ii) all other Indenture Events of Default
have been cured or waived. (Indenture, Section 5.04(c))
The Indenture provides that, if an Indenture Event of Default 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 Indenture Estate subject to the Lease. The
Indenture Trustee's right to exercise foreclosure remedies under the Indenture
is subject in certain circumstances to its having proceeded to exercise one or
more material remedies under the Lease seeking to dispossess the Lessee under
the Lease, 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 the Indenture for
a period of 180 days from the date of the commencement of such prohibition. If
MGB were a debtor in a proceeding under Title 11, United States Code (the
"Bankruptcy Code") during a Lease Event of Default, the condition described in
the immediately preceding sentence could not be met by the Indenture Trustee
during the period when certain actions against the bankrupt Lessee, including
action to dispossess the Lessee, would be barred by the automatic stay
provisions of the
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Bankruptcy Code. See "--The Lease--Lease Events of Default." In addition, the
Indenture Trustee is not allowed to sell, assign, transfer or deliver any of
the Indenture Estate or take possession of the Indenture Estate unless the
Secured Notes shall have been accelerated. The Indenture Trustee is required
to give the Owner Trustee 10 Business Days' advance notice (five Business
Days' advance notice of its intent to accelerate the Secured Notes except in
the case of certain bankruptcy accelerations) of its intent to exercise
remedies. Remedies under the Lease may be exercised by the Indenture Trustee
to the exclusion of the Owner Trustee. The sale of the Indenture Estate in the
exercise of such remedies will be free and clear of any rights of those
parties including the rights of MGB under the Lease with respect to the
Undivided Interest; provided that no exercise of any remedies by the Indenture
Trustee may affect the rights of MGB under the Lease unless a Lease Event of
Default has occurred and is continuing and the Lease shall have been declared
in default in accordance therewith. (Indenture, Sections 5.04, 5.05 and 5.09;
Lease, Sections 9 and 16.1)
The holders of a majority in aggregate principal amount of the Secured 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 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 assured to it.
(Indenture, Sections 6.02 and 6.04)
If an Indenture Event of Default occurs and is continuing and the Indenture
Trustee (as security assignee) has declared the Lease to be in default or the
Secured Notes have been accelerated, 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 Secured
Notes. (Indenture, Section 4.03)
Although the Lessor has been structured as a special-purpose entity the
activities of which are expressly limited to the sale-leaseback transaction
contemplated by the Operative Documents, it is not impossible that the Lessor
could become the subject of a proceeding under the Bankruptcy Code. In such
event, receipt of payments by the Indenture Trustee under the Lease and the
Secured Notes may be interrupted and the exercise of remedies by the Indenture
Trustee, including foreclosure of the Indenture, would be stayed during the
pendency of the bankruptcy proceedings. Subject to certain procedural and
substantive safeguards provided by the Bankruptcy Code (such as the
requirement that the debtor-in-possession or trustee provide adequate
protection of the interests of the holders of the Secured Notes), a bankruptcy
court could permit the use or disposition of Rent payments and the Indenture
Estate for purposes other than making payments on the Secured Notes or could
modify the interest rate, maturity and payment terms of the Secured Notes.
In the event of the bankruptcy of the Owner Participant, it is possible
that, notwithstanding that the Undivided Interest is owned by the Owner
Trustee in trust, such Undivided Interest, the Lease, the Guaranty and the
Secured Notes might become part of the bankruptcy proceeding. In such event,
payments under the Lease or the Guaranty or on the Secured 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 the Lease, the Guaranty
and the Undivided Interest.
POSSIBLE REJECTION OF THE LEASE BY A TRUSTEE IN BANKRUPTCY
If MGB were to become a debtor in a liquidation or reorganization case under
the Bankruptcy Code, MGB or its bankruptcy trustee could seek to reject the
Lease. Rejection of the Lease would constitute a breach of the Lease and, as
provided in applicable nonbankruptcy law, deprive MGB of the use of the
Undivided Interest. If the Lease were rejected, rental payments thereunder
would terminate, thereby leaving the Lessor or the Indenture Trustee without
regular rent payments and with a claim for damages for breach of the Lease.
There can be no assurance that any such claim for damages that would, if the
bankruptcy court treated the Lease as a true lease and authorized its
rejection, be sufficient to provide for the repayment of the Secured Notes.
Section 502(b)(6) of the Bankruptcy Code limits the claim of lessors under
unexpired leases of real property. If the argument were
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made and sustained that the Lease is a lease of real property, the Owner
Trustee's claim in the bankruptcy proceeding of MGB would be limited to an
amount equal to the rent reserved under the Lease, without acceleration, for
the greater of one year or 15% (but not more than three years) of the
remaining term of the Lease, plus rent already due but unpaid. The Indenture
Trustee could also, subject to the limitation discussed below, realize upon
its lien on and security interest in the Undivided Interest, which would not
be affected by such rejection, to recover any additional unpaid amounts on the
Secured Notes. Since the Undivided Interest represents a 40% undivided
interest in the Production System, any realization upon the lien and security
interest of the Indenture Trustee in the Undivided Interest would be limited
because the Undivided Interest is subject to the rights of Enserch under the
Operating Agreement pursuant to which the parties have agreed to waive their
right to any partition of the property included in the Production System and
have covenanted that the financing arrangements made by one party thereto with
respect to the Production System will not interfere with the other party's use
of the Production System or with their ability to provide clear title to their
respective interests in the Production System in connection with any
withdrawal, abandonment or termination under the Operating Agreement. Mobil
has guaranteed the obligations of MGB under the Lease, and therefore, the
bankruptcy of MGB should not affect the ability of the Lessor or Indenture
Trustee to receive rental payments from Mobil.
MODIFICATION OF LEASE, INDENTURE AND PARTICIPATION AGREEMENT
Without the consent of holders of a majority in aggregate principal amount
of the Secured 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 Indenture, the Lease and the Participation
Agreement may be amended or modified by the parties thereto without the
consent of any holders of the Secured 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 Undivided Interest, modifications to the Production System and the return
to the Owner Trustee of the Undivided Interest at the end of the term of the
Lease and (iii) the renewal of the Lease. (Indenture, Section 9.02)
Without the consent of the holder of each Secured Note outstanding under the
Indenture, no amendment or modification of the Indenture may (a) reduce the
principal amount of, or premium, if any, or interest payable on any Secured
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 a Secured Note issued
under the Indenture of the benefit of the Lien of the Indenture or (c) reduce
the percentage in principal amount of outstanding Secured Notes issued under
the Indenture necessary to modify or amend any provision of the Indenture or
to waive compliance therewith. (Indenture, Section 9.02(b))
ASSUMPTION OF SECURED NOTES UNDER CERTAIN CIRCUMSTANCES
If MGB purchases the Undivided Interest upon the exercise of its purchase
options described below under "--The Lease--MGB Purchase Options," MGB may
(and if it purchases the Undivided Interest prior to January 2, 2001, shall)
assume all of the rights and obligations of the Lessor under the Indenture
with respect to the Secured Notes. Such assumption shall be subject to certain
terms and conditions, including, among other things, that (i) MGB shall pay
all Rent and any other amounts due to the Lessor under the Operative Documents
through the date of such assumption; (ii) MGB shall execute, acknowledge and
deliver to the Indenture Trustee, and cause to be recorded, a supplement to
the indenture (the "Indenture Supplement") whereby, among other things, MGB
shall assume all the obligations of the Lessor with respect to the Secured
Notes as full recourse obligations of MGB and MGB will agree that it is
purchasing the Undivided Interest subject to the mortgage lien and security
interest on the Undivided Interest in favor of the Indenture Trustee; (iii)
MGB shall deliver or cause to be delivered to the Indenture Trustee an opinion
of counsel to the effect that, among other things, the Indenture, as
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amended by the Indenture Supplement, has been accomplished and all filings and
recordings and other actions necessary or appropriate to protect the interests
of the Indenture Trustee have been accomplished; and (iv) Mobil shall have
entered into a full and unconditional guaranty of MGB's obligations under the
Secured Notes. After giving effect to such assumption, no lien, other than
certain permitted liens, shall exist on the Undivided Interest. In such event,
certain relevant provisions of the Lease, including (among others) provisions
relating to maintenance, possession and use of the Undivided Interest, Liens,
insurance and events of default will be incorporated into the Indenture, and
the outstanding Secured Notes issued under the Indenture will not be redeemed
and will continue to be secured by the Undivided Interest. Upon such
assumption the Lessor will be released from all obligations with respect to
the Secured Notes. MGB may not effect such assumption if any event which
constitutes an Indenture Event of Default shall be continuing after giving
effect to such assumption. (Indenture, Section 3.04; Participation Agreement,
Section 11.6)
THE GUARANTY
Pursuant to the Guaranty, Mobil has irrevocably and unconditionally
guaranteed the full and prompt payment of all amounts payable by MGB under the
Lease, the Participation Agreement and the other Operative Documents when and
as the same shall become due and payable. The Guaranty is enforceable without
any need first to enforce the Lease against MGB.
THE LEASE
Term and Rent. The Lessor leased the Undivided Interest to MGB pursuant to
the Lease for a term commencing on December 12, 1995 and expiring on January
2, 2011, unless earlier terminated as described herein or extended as
described herein. (Lease, Section 2.1) MGB has, subject to Mobil's obligations
under the Guaranty, the sole responsibility and obligation to make all
payments due under the Lease, including any and all payments of Basic Rent,
Supplemental Rent, Stipulated Loss Value and Termination Value. (Lease,
Section 3.6)
Interest expense on the Secured Notes accrued during the Interim Lease Term
was paid by the Owner Trustee from amounts contributed by the Owner
Participant and not derived from Basic Rent under the Lease. Payments of Basic
Rent under the Lease will be payable on January 2 and July 2 (or, if such day
is not a Business Day, on the next succeeding Business Day without interest)
commencing July 2, 1996, and will be paid directly to the Indenture Trustee as
assignee of the Lessor. (Lease, Section 3.1) Such payments will be used to
make payments of principal (other than principal due by reason of prepayment
or acceleration) and accrued interest (as well as interest on overdue
principal) then due and unpaid on the Secured Notes, which in turn will
furnish the funds to be distributed to the Pass Through Trustee and thereafter
to the Certificateholders. Amounts payable under the Lease will be sufficient
to pay in full all payments of principal of, premium, if any, and interest on,
the Secured Notes (except where MGB is not responsible for such payments as
described in "--General" above). In certain cases, the semi-annual Basic Rent
payments under the Lease may be adjusted, but adjusted Basic Rent payments may
never be less than the scheduled payments of principal of and interest on the
Secured Notes. (Lease, Sections 4.1 and 4.2) The balance of any payments of
Basic Rent under the Lease, after payment of the principal and interest
payments on the Secured Notes, will be paid by the Indenture Trustee to the
Lessor or as the Lessor may direct. (Indenture, Section 4.01) MGB's obligation
to pay Rent and to cause other payments to be made under the Lease is an
absolute, irrevocable and unconditional obligation of MGB, not subject to any
set-off, abatement, defense or counterclaim (except as expressly provided in
the Lease). (Lease, Section 3.6)
Net Lease; Use and Maintenance. The obligations of MGB under the Lease are
those of a lessee under a "net lease," and MGB is obligated, at its expense,
to pay all costs and expenses of operating and maintaining the Production
System. (Lease, Section 11.1) MGB must, so long as the Operating Agreement is
in effect, cause MPTN to use reasonable efforts to enforce the Operator's
obligations thereunder with respect to the maintenance and operation of the
Production System. At all other times, MGB must maintain the Production System
as may be required to (a) comply with all Government Rules and Government
Actions (except to the extent (i) MGB is
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permitted to contest such Government Rules and Government Actions, (ii) an
exemption from compliance therewith is obtained, (iii) good faith efforts and
appropriate steps to comply are taken and such compliance is effected prior to
the date the Undivided Interest is returned to the Lessor, or (iv)
noncompliance does not result in any material adverse consequence to the
Lessee; so long as, in the case of clauses (i)-(iv), that such contest or
failure or failure of compliance does not result in any material risk of (x)
the sale, forfeiture or loss of any material part of or interest in the
Production System or the Undivided Interest, the Trust Estate or the Indenture
Estate, (y) interference of Rent Payments when due or (z) any criminal
liability on the part of or other material adverse effect on the Lessor, the
Owner Participant, the Trust Estate, the Indenture Estate or the Undivided
Interest) and (b) keep the Undivided Interest in good working order and
condition (ordinary wear and tear excepted). (Lease, Section 11.1)
Modifications and Additions--Alterations to the Property. So long as the
Operating Agreement is in effect, MGB shall have the right to propose or
approve all Modifications to the Production System in accordance with the
provisions of the Operating Agreement, and MGB shall cause to be taken all
actions thereunder which may be required to permit the Operator to make (or
cause to be made) all Severable and Nonseverable Modifications to the
Production System as may be required from time to time to comply in all
material respects with the requirements of all applicable Governmental Rules
and Governmental Actions. At all other times, MGB shall make (or cause to be
made) all Modifications to the Production System as may be required from time
to time to meet its maintenance requirements under the Lease or to maintain
any insurance coverage required under the Lease unless MGB shall have elected
to terminate the Lease. So long as the Operating Agreement is in effect, MGB
shall, at its own expense, use reasonable efforts to cause MPTN to enforce the
obligations of the Operator thereunder with respect to such Modifications. At
all other times, MGB shall complete all such Modifications in a good and
workmanlike manner, with reasonable dispatch and in a manner which does not
decrease the Fair Market Sales Value of the Production System or decrease the
remaining useful life or utility of the Production System or cause the
Production System to become "limited use property." MGB may make (or allow to
be made) other Modifications to the Production System, at its own cost and
expense and without the consent of the Lessor, provided that (i) such other
Modifications do not reduce the Fair Market Sales Value of the Production
System below such value immediately prior to the other Modifications being
made and (ii) such Modifications do not cause the Production System to become
"limited use property" or reduce its useful life.
Sublease and Assignment. MGB may, without the consent of the Lessor, the
Indenture Trustee, the Owner Participant or the Pass Through Trustee, at any
time and from time to time, assign the Lease and its interests and rights
thereunder to any Person so long as, (i) after giving effect to such
assignment, the Guaranty remains in full force and effect and constitutes a
full and unconditional guaranty of the obligations of the assignee under the
Lease to the same extent as the guaranty of MGB's obligations under the Lease
prior to giving effect to any such assignment, (ii) certain material Lease
Events of Default and bankruptcy Lease Defaults are not continuing on the date
any such assignment to any Affiliate of MGB is effected and no Lease Event of
Default is continuing on the date such assignment to any other Person is
effected and (iii) such assignment does not result in any unindemnified tax on
the Lessor or the Owner Participant or subject the Lessor or the Owner
Participant to regulation by any Governmental Authority to which the Owner
Participant would not have been subject but for such assignment. MGB may,
without the consent of the Lessor, the Indenture Trustee, the Owner
Participant or the Pass Through Trustee, at any time and from time to time,
sublease the Undivided Interest to another Person; provided that (i) such
sublease is expressly subject and subordinate to the Lease (and such sublease
contains a provision providing that any sublease permitted thereunder shall be
so subject and subordinate) and in no event continues beyond the Lease Term,
(ii) MGB remains primarily liable under the Lease as though no such sublease
was in existence, (iii) the Guaranty remains in full force and effect, (iv)
such sublease does not result in any unindemnified tax on the Lessor or the
Owner Participant or subject the Lessor or the Owner Participant to regulation
by any Governmental Authority to which the Owner Participant would not have
been subject but for such sublease and (v) certain Lease Events of Default and
bankruptcy Lease Defaults are not continuing at the commencement of such
sublease. Any sublessee under a sublease permitted under the Lease may sub-
sublease the Undivided Interest to another Person under a sub-sublease that
otherwise complies with the provisions of
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the Lease applicable to a sublease thereunder. MGB has subleased the Undivided
Interest to MPTN pursuant to the Initial Sublease.
Liens. The Undivided Interest will be maintained free of Liens other than
(a) the respective rights and interests of MGB, the Owner Participant, the
Lessor, the Indenture Trustee and the holders of the Secured Notes, as
provided in the Operative Documents, (b) Lessor's Liens, Owner Participant's
Liens and Indenture Trustee's Liens, (c) Liens for Taxes either not delinquent
or being contested in good faith and by appropriate proceedings, so long as
such proceedings do not involve any material danger of the sale, forfeiture or
loss of any part of the Production System, the Trust Estate or the Indenture
Estate, or title thereto or any interest therein or any material danger of the
interference with the payment of Rent, (d) materialmen's, mechanics',
workers', repairmen's, employees' or other like Liens, arising in the ordinary
course of business, or arising in the course of constructing, repairing,
equipping or installing, modifying or expanding the Production System or any
part thereof, for amounts either not more than 60 days past due or being
contested in good faith and by appropriate proceedings so long as such
proceedings do not involve any material danger of the sale, forfeiture or loss
of any part of the Production System, the Trust Estate or the Indenture
Estate, or title thereto or any interest therein and any material danger of
the interference with the payment of Rent, (e) Liens arising out of judgments
or awards against MGB with respect to which at the time an appeal or
proceeding for review is being prosecuted in good faith so long as such
judgment, award or appeal does not involve any material danger of the sale,
forfeiture or loss of any part of the Production System, the Trust Estate or
the Indenture Estate, or title thereto or any interest therein or any material
danger of the interference with the payment of Rent, (f) the rights and
interests of any Governmental Authority of the United States pursuant to the
Federal Leases, (g) Liens for current crew's wages, for general average or
salvage (including contract salvage) or for wages of stevedores employed
directly by MGB, MPTN, the Operator, or the operator, agent or master of the
Platform which in each case (A) are unclaimed or covered by insurance or (B)
for amounts either not more than 60 days past due or being contested in good
faith and by appropriate proceedings so long as such proceedings do not
involve any material danger of the sale, forfeiture or loss of any part of the
Production System, the Trust Estate or the Indenture Estate, or title thereto
or any interest therein or any material danger of the interference with the
payment of Rent and Liens which, under the laws of Panama, take priority over
a duly registered first naval mortgage and which are for amounts either not
more than 60 days past due or being contested in good faith and by appropriate
proceedings so long as such proceedings do not involve any material danger of
the sale, forfeiture or loss of any part of the Production System, the Trust
Estate or the Indenture Estate, or title thereto or any interest therein and
any material danger of the interference with the payment of Rent, (h) Liens,
assignments and subleases permitted by the Lease and the rights of MPTN under
the Initial Sublease and the rights of any other sublessee or any sub-
sublessor under any other sublease (or sub-sublease) permitted by the Lease
and (i) the Operating Agreement and the rights of the Operator and the other
owner of the undivided interest in the Production System thereunder and the
rights of their successors, assigns or mortgagees.
Insurance. MGB will, at its cost and expense, maintain (i) "all-risk"
(including fire and lightning) property insurance with respect to the
Undivided Interest, in such amounts and forms consistent with MPTN's practice
for similar properties owned or leased by MPTN and (ii) public liability,
including personal injury and property damage, and comprehensive general
liability insurance applicable to the Undivided Interest, including, without
limitation, environmental claims arising out of or connected with the
possession, use, leasing, operation or condition of the Undivided Interest in
such amounts and in such forms as is consistent with MPTN's practice for other
properties similar to the Undivided Interest owned or leased by MPTN. Any
insurance policy maintained by or on behalf of MGB shall name the Indenture
Trustee and the Pass Through Trustee as Additional Insureds, unless such
endorsement will result in material cost to MGB or the Operator. All proceeds
of insurance on account of any damage or destruction of the Undivided Interest
or any part thereof shall be paid over to MGB or as it may direct. In
addition, the Lessor, MGB, the Owner Participant and the Indenture Trustee are
each entitled to maintain additional insurance coverage with respect to the
Undivided Interest for its own benefit and at its own expense. (Lease, Section
13)
Voluntary Termination. (i) Obsolescence Termination. At any time following
January 1, 2001 MGB has the right, upon at least 90 days' prior written notice
to the Lessor, to terminate the Lease with respect to the
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Undivided Interest or, subject to certain constraints, a Significant Portion
thereof, on any Basic Rent Payment Date (a "Termination Date") if MGB
determines in good faith that the Undivided Interest or such Significant
Portion thereof is obsolete, uneconomic or surplus to the needs of MGB for any
reason. If MGB elects so to terminate the Lease, MGB shall, as agent for the
Lessor, use reasonable efforts to solicit bids for the cash purchase of the
Undivided Interest or the Significant Portion thereof, as the case may be, on
the Termination Date. On the Termination Date, the Lessor is obligated to
transfer its interest in the Undivided Interest or the Significant Portion
thereof to the highest bona fide cash bidder, unless in the case of MGB's
election to terminate the Lease with respect to the Undivided Interest, the
Lessor has duly elected to retain its interest in the Undivided Interest. If
the Undivided Interest or a Significant Portion thereof is sold, the Lessor
retains the total net sales price thereof and in addition MGB is obligated to
pay to the Lessor an amount equal to the excess of the Termination Value of
the Undivided Interest or the Significant Portion thereof over the net
proceeds realized from the sale thereof. MGB is also obligated to pay to the
Lessor (or, in the case of Supplemental Rent, to the Person entitled thereto)
on the Termination Date all accrued, due and unpaid Basic Rent and all
Supplemental Rent then due and owing (including the Make-Whole Amount, if
any). If the Lessor elects to retain the Undivided Interest, MGB is only
obligated to pay all accrued, due and unpaid Basic Rent and all Supplemental
Rent then due and owing (including the Make-Whole Amount, if any), and the
Lessor is obligated to pay to the Indenture Trustee an amount equal to the
unpaid principal on the Secured Notes. If the Lessor fails to make such
payment, MGB's termination election is deemed to have been revoked. All funds
to be paid or deposited with the Lessor as described in this paragraph shall,
so long as the Indenture shall not have been discharged be deposited directly
with the Indenture Trustee and shall be applied to prepay all or a portion of
the Secured Notes as provided in the Indenture. Amounts in excess of amounts
applied to prepay the Secured Notes in accordance with the Indenture will be
distributed by the Indenture Trustee in accordance with the terms of the
Indenture. The Lien of the Indenture will terminate with respect to the
Undivided Interest or the Significant Portion thereof after full payment of
the Termination Value thereof and all other amounts then due and payable have
been paid and, if all amounts due the Owner Participant have also been paid,
the Lease shall also terminate with respect to the Undivided Interest or such
Significant Portion. MGB is entitled, subject to certain limitations to revoke
its termination election prior to the Termination Date.
If no sale or retention of the Undivided Interest or the Significant Portion
thereof shall have occurred by the Termination Date, the Lease will continue
in full force and effect.
(ii) Special Terminations. At any time following January 2, 2001, MGB shall
have the right, upon 90 days' prior written notice to the Lessor, to terminate
the Lease with respect to the Undivided Interest if the parties to the
Operating Agreement have determined to withdraw from or terminate the
Operating Agreement. If MGB elects so to terminate the Lease, on the
Termination Date, the Lessor is obligated to transfer the Undivided Interest
to MGB (or its designee) upon receipt by the Lessor (or, in the case of
Supplemental Rent, to the Person entitled thereto) of the Termination Value
for the Undivided Interest, the payment of all accrued, due and unpaid Basic
Rent, and the payment of all Supplemental Rent then due (including the Make-
Whole Amount, if any). All funds to be paid or deposited with the Lessor as
described in this paragraph shall, so long as the Indenture shall not have
been discharged be deposited directly with the Indenture Trustee and shall be
applied to prepay all or a portion of the Secured Notes as provided in the
Indenture. Amounts in excess of amounts applied to prepay the Secured Notes in
accordance with the Indenture will be distributed by the Indenture Trustee in
accordance with the terms of the Indenture. The Lien of the Indenture will
terminate with respect to the Undivided Interest after full payment of the
Termination Value thereof and all other amounts then due and payable have been
paid and, if all amounts due the Owner Participant have also been paid, the
Lease shall also terminate with respect to the Undivided Interest. Any
election by MGB to terminate the Lease as described in this paragraph is,
subject to certain limitations, revocable.
(iii) MGB Purchase Options. MGB has several options to purchase the
Undivided Interest including the right to purchase the Undivided Interest:
(i) on January 2, 2001, January 2, 2006 or January 2, 2008;
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(ii) on any one of several Special Distribution Dates following notice by
MGB to the Lessor that certain Modifications are proposed to be made with
respect to the Production System and either (x) such Modifications will not
be financed through the issuance of Additional Notes, or (y) the issuance
of Additional Notes with respect to such Modifications would result in an
unfavorable adjustment of the Basic Rent percentages due to certain tax
constraints, or (z) such Modifications are prohibited by the terms of the
Lease or are not permitted by a certain published Revenue Procedure;
(iii) on any one of several Special Distribution Dates following the
Production System or any portion thereof having suffered material damage
not constituting an Event of Loss with respect to which the Operator has
elected not to repair, restore or rebuild the Production System as required
by the Lease; or
(iv) on certain Basic Rent Payment Dates following the election by MGB to
pay Stipulated Loss Value with respect to a Significant Portion of the
Undivided Interest that has suffered an Event of Loss if such election is
deemed revoked pursuant to the Lease due to the constraints set forth
therein.
In each case the purchase price payable by MGB, together with the other
amounts payable by MGB in connection with such purchase shall be sufficient to
pay the unpaid principal of, accrued interest on and the Make-Whole Amount, if
any, on the Secured Notes.
Upon the exercise by MGB of any of the purchase options set forth above, the
Lessor is obligated to transfer the Undivided Interest to MGB upon receipt by
the Lessor (or, in the case of Supplemental Rent, by the Person entitled
thereto) of the purchase price therefor, all accrued, due and unpaid Basic
Rent and all Supplemental Rent then due and owing (including, the Make-Whole
Amount, if any, on the Secured Notes, provided that no Make-Whole Amount or
other premium shall be payable in connection with the purchase options
described in (iv) above). In the case of the exercise of the purchase option
on the second date set forth in paragraph (i) above, MGB is entitled to pay
the purchase price in installments. The first installment will be sufficient
to pay in full all unpaid principal and interest accrued on the Secured Notes.
Event of Loss. In the event the Undivided Interest suffers an Event of Loss,
MGB is obligated to purchase the Undivided Interest for the applicable
Stipulated Loss Value thereof. In the event a Significant Portion of the
Undivided Interest suffers an Event of Loss, MGB is obligated either to (i)
restore or repair the portion of the Production System suffering the Event of
Loss or (ii) purchase the Significant Portion of the Undivided Interest
suffering the Event of Loss at the Stipulated Loss Value thereof. MGB is
obligated to determine whether it will repair or restore the Production System
or purchase such Significant Portion within 120 days of the occurrence of the
Event of Loss. MGB's right to repair or restore the Production System is
conditioned on the absence of certain Lease Events of Default and Lease
Defaults. In addition, MGB's right to purchase such Significant Portion is
subject to certain constraints. If an Event of Default shall be continuing and
MGB is prohibited from purchasing such Significant Portion due to such
constraints, the Undivided Interest will be deemed to have suffered an Event
of Loss. All funds to be paid or deposited with the Lessor as described in
this paragraph shall, so long as the Indenture shall not have been discharged
be deposited directly with the Indenture Trustee and shall be applied to
prepay all or a portion of the Secured Notes as provided in the Indenture.
Amounts in excess of amounts applied to prepay the Secured Notes in accordance
with the Indenture will be distributed by the Indenture Trustee in accordance
with the terms of the Indenture. The Lien of the Indenture will terminate with
respect to the Undivided Interest or the Significant Portion thereof after
full payment of the Stipulated Loss Value thereof and all other amounts then
due and payable have been paid and, if all amounts due the Owner Participant
have also been paid, the Lease shall also terminate with respect to the
Undivided Interest or such Significant Portion.
Event of Loss is defined to include (a) the loss, theft, destruction or
disappearance of, or the occurrence of damage (which, in the Lessee's
reasonable, good faith opinion, renders repair or replacement uneconomic) to,
the Production System (or substantially the entirety of the Production System)
or a Significant Portion thereof; (b) the permanent condemnation, confiscation
or seizure of, or requisition of title to, the Production System or a
Significant Portion thereof by any Governmental Authority; (c) the requisition
of use of the Production System or a Significant Portion thereof by any
Governmental Authority for a period (i) which exceeds the remaining
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portion of the Lease Term or (ii) which is longer than three years and which
extends beyond the date which is twelve months prior to the scheduled
expiration of the Lease Term; (d) the receipt of insurance proceeds based upon
an actual or constructive total loss of the Production System or a Significant
Portion thereof; (e) at any time after January 1, 2001, the parties to the
Operating Agreement have determined to abandon the Production System or a
Significant Portion thereof; or (f) at any time after January 1, 1998 and
prior to January 2, 2001, the parties to the Operating Agreement have
determined to abandon the Production System or a Significant Portion thereof
after MPTN has taken all commercially reasonable steps to exercise its rights
under the Operating Agreement to prevent such abandonment.
Lease Events of Default. Lease Events of Default include, among other
things: (a) the failure to make any payment of Basic Rent, Stipulated Loss
Value, Termination Value or purchase price payable pursuant to the Lease and
such failure shall continue for 10 Business Days after the date such payment
was due, (b) the failure to make payments of Supplemental Rent or any other
payment (other than Basic Rent, Stipulated Loss Value, Termination Value or
purchase price payable pursuant to the Lease or Excepted Payments (unless the
Lessor elects to make the failure to make such Excepted Payment constitute a
Lease Event of Default)) or any other amount payable under the Lease and such
failure continues for a period of 15 Business Days after notice of such
failure to MGB from the Lessor or the Indenture Trustee, (c) failure by MGB to
perform or observe any material covenant or agreement (not included in clause
(a) or (b) above) to be performed or observed by it under any Operative
Document other than any covenant or agreement to make an Excepted Payment
(unless the Lessor elects to make the failure to make such Excepted Payment
constitute a Lease Event of Default) and such failure shall continue for a
period of thirty (30) days after written notice thereof from the Lessor or the
Indenture Trustee (or 365 days after such notice, if such default is
susceptible of cure and MGB is diligently attempting to cure such default),
(d) failure by Mobil to perform or observe any covenant or agreement to be
performed or observed by it hereunder or under the Guaranty in any material
respect (other than any covenant or agreement in respect of the Lessee's
obligations under the Operative Documents) and such failure shall continue for
a period of 30 days after written notice thereof from the Lessor or the
Indenture Trustee (or 365 days after such notice, if such default is
susceptible of cure and Mobil is diligently attempting to cure such default),
(e) the occurrence of certain events of bankruptcy, reorganization or
insolvency of MGB or Mobil, (f) any material representation or warranty made
by MGB or Mobil in certain sections of the Participation Agreement or in the
Guaranty or in certain certificates delivered pursuant to the Participation
Agreement shall have been materially false when made and any material adverse
impact thereof shall remain incorrect for 30 days after notice thereof from
the Lessor or the Indenture Trustee (or 365 days after such notice if such
material adverse impact is susceptible of cure, so long as MGB or Mobil, as
applicable, is diligently attempting to cure such misrepresentation) unless
such inaccuracy shall not be material to the recipient of the representation
or warranty at the time such notice was received, (g) the Guaranty shall cease
to be in full force and effect or to be the valid, binding and enforceable
agreement of the Guarantor or (h) the Lessee shall fail to maintain the
insurance policies required by the Lease. (Lease, Section 15)
Upon the occurrence and continuance of any Lease Event of Default, the
Lessor may declare the Lease to be in default. Except as provided below, the
Lessor may at any time thereafter exercise one or more of the remedies set
forth in the Lease, including the right to terminate the Lease, repossess the
Undivided Interest, to sell the Undivided Interest or any part thereof free
and clear of MGB's rights, except MGB's rights under the Agency and Support
Agreement, and, under certain circumstances, retain the proceeds, and, so long
as the Undivided Interest has not been sold, to require MGB to pay as
liquidated damages unpaid Rent and accrued interest plus any one of the
following: (a) an amount equal to the excess of the Stipulated Loss Value over
the Fair Market Sales Value of the Undivided Interest, as of the payment date
specified by the Lessor by written notice to the Lessee (or the last day of
the Basic Lease Term, if earlier), (b) an amount equal to the excess of the
Stipulated Loss Value as of such date over the present value of the Fair
Market Rental Value of the Undivided Interest, for the balance of the Basic
Term (discounted semi-annually at the Debt Rate), (c) an amount equal to the
excess of the present value as of such date of all installments of Basic Rent
payable on or after such date during the remaining balance of the Basic Lease
Term (or any Renewal Term then in effect), (discounted semi-annually at the
Debt Rate) over the present value as of such date of the Fair Market Rental
Value of the
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Undivided Interest during the remaining balance of the Basic Lease Term (or
any Renewal Term then in effect), (discounted semi-annually at the Debt Rate),
or (d) an amount equal to the greatest of (A) Stipulated Loss Value for the
Undivided Interest determined as of such date, (B) the discounted Fair Market
Rental Value of the Undivided Interest for the remaining useful life thereof
(discounted semiannually at the Debt Rate), and (C) the Fair Market Sales
Value of the Undivided Interest upon which payment, in the case of this clause
(d), the Lessor shall convey the Undivided Interest to MGB. If the Undivided
Interest has been sold, the Lessor may require MGB to pay as liquidated
damages an amount equal to the sum of (x) all accrued and unpaid Rent, plus
(y) the amount of any excess of the Stipulated Loss Value over the net
proceeds of such sale, plus (z) interest at the Overdue Rate plus 3% on all of
the foregoing amounts from the date of such sale until the date of payment.
(Lease, Section 16)
THE SHIP MORTGAGE
The Platform is considered a ship under applicable law. The Owner Trustee
has granted to the Indenture Trustee a first priority naval mortgage (the
"Ship Mortgage") in the Owner Trustee's 40% undivided interest in the Platform
to secure the payment of the Secured Notes. Upon a default under the
Indenture, the Ship Mortgage gives the Indenture Trustee the rights and
remedies provided in the Indenture as well as the remedies established by the
laws of the Republic of Panama where the Platform is registered. The Ship
Mortgage and the estate and rights contained therein terminate upon the
satisfaction and discharge of the Secured Notes.
THE PARTICIPATION AGREEMENT
MGB 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
12.1) In addition, MGB is required to indemnify the Owner Participant for
certain taxes in connection with the ownership, lease, sale or use of the
Production System. (Participation Agreement, Section 12.2)
FEDERAL INCOME TAX CONSEQUENCES
The following is a general discussion of the anticipated material federal
income tax consequences of the exchange, purchase, ownership and disposition
of the New Certificates. This summary is based on laws, regulations, rulings
and decisions now in effect, all of which are subject to change by
legislative, administrative or judicial action. 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 or
foreign investors) may be subject to special rules. Investors should consult
their own tax advisors in determining the federal, state, local, foreign and
any other tax consequences to them of the purchase, ownership and disposition
of the New Certificates, including the advisability of making any election
discussed below. The Pass Through Trust is not indemnified for any federal
income taxes that may be imposed upon it, and the imposition of any such taxes
could result in a reduction in the amounts available for distribution to the
Certificateholders of a Pass Through Trust. Dewey Ballantine, counsel to Mobil
and MGB, is of the opinion that, based upon currently applicable law, the
following discussion properly describes in general the principal United States
federal income tax consequences of acquiring, holding and disposing of the New
Certificates. This discussion applies only to a holder of Old Certificates
that acquired such Old Certificates in the Original Offering and that will be
an initial holder of New Certificates pursuant to the exchange of the Old
Certificates for the New Certificates hereunder.
GENERAL
Each Pass Through Trust is classified as a grantor trust and each
Certificateholder is treated as the owner of a pro rata undivided interest in
the Secured Notes or any other property held in each such Pass Through Trust.
Each Certificateholder is required to report on its federal income tax return
its pro rata share of the entire income from the Secured Note and any other
property in the applicable Pass Through Trust, in accordance with such
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Certificateholder's method of accounting. Thus, 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 in respect of the
applicable Pass Through Trust while 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 the Pass Through Trustee in respect of the
applicable Pass Through Trust, whichever is earlier.
EXCHANGE OF OLD CERTIFICATES FOR NEW CERTIFICATES
A holder of Old Certificates will not recognize gain or loss for federal
income tax purposes in respect of the exchange of Old Certificates for New
Certificates. Each New Certificate received in such exchange will have the
same adjusted tax basis as the Old Certificate exchanged therefor. The holding
period of each such New Certificate will include the holding period of the Old
Certificate exchanged therefor.
SALES OF NEW CERTIFICATES
A Certificateholder that sells or exchanges a New Certificate will recognize
gain or loss (in the aggregate) equal to the difference between the amount
realized on the sale (except to the extent attributable to accrued interest,
which should be taxable as interest income) and its adjusted tax basis in the
New Certificate. Subject to the market discount provisions of the Code
(described below), any such gain or loss will be capital gain or loss provided
if the New Certificate was held as a capital asset and, if the New Certificate
was held for more than one year, will be long-term capital gain or loss. Any
long-term capital gains realized will be taxable 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 Certificate (other than an original purchaser of an Old
Certificate) will be considered to have acquired an interest in the Secured
Notes held in the applicable Pass Through Trust at a "market discount" to the
extent the remaining principal amount of such Secured Notes allocable to such
Certificate exceeds the purchaser's tax basis allocable to such 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 with regard to its interest in the Secured Note.
In the case of a sale or other disposition of indebtedness subject to the
market discount rules, gain, if any, from such sale or disposition is treated
as ordinary income to the extent such gain represents market discount that has
accrued during the period in which the indebtedness was held. If such
indebtedness is disposed of in a nontaxable transaction, the accrued market
discount (subject to certain exceptions) will be includible as ordinary income
as if the Certificateholder had sold the New Certificate at its then market
value.
In the case of a partial principal payment on indebtedness subject to the
market discount rules, such payment must 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 indebtedness was held. 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 method. However, in the
case of amortizing obligations (such as the Secured Notes held by Pass Through
Trust A-6), until Treasury regulations are issued, the explanatory Conference
Committee Report to the Tax Reform Act of 1986 (the "Conference Report")
indicates that holders of amortizing obligations with market discount (that do
not also have original issue discount) may elect to accrue market discount
either on the basis of a constant interest rate or as follows: 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
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amount of stated interest paid in the accrual period bears to the total amount
of stated interest remaining to be paid on the amortizing obligation as of the
beginning of such period.
If in any taxable year interest paid or accrued on indebtedness incurred or
continued to purchase or carry indebtedness subject to the market discount
rules exceeds the interest currently includible in income with respect to such
indebtedness, deduction of the excess 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.
A taxpayer may elect to include market discount in its gross income
currently. If such election is made, the rules described above relating to
deferral of interest expense will not apply to the taxpayer.
PREMIUM
A Certificateholder will be considered to have acquired an interest in the
Secured Notes held in the applicable Pass Through Trust at a premium to the
extent the Certificateholder's tax basis allocable to such interest exceeds
the remaining principal amount of the Secured Notes allocable to such
interest. In that event, a Certificateholder who holds a New Certificate as a
capital asset may elect to amortize that premium as an offset to interest
income with corresponding reductions in the Certificateholder's tax basis in
its interest in the Secured Notes. This election is made by claiming the bond
premium on the Certificateholder's tax return. If the election is not made,
the premium represents an increase in the tax basis of the Certificate and is
therefore accounted for under general tax principles only when the Certificate
is sold or redeemed. Generally, if the foregoing election is made such
amortization is taken on a constant yield basis. However, in the case of
amortizing obligations (such as one of the Secured Notes) the Conference
Report indicates a Congressional intent that amortization should be in
accordance with the same rules that apply to the accrual of market discount on
amortizing obligations. See "Market Discount."
In the case of obligations that may be called at a premium prior to maturity
(such as the Secured Notes held by Pass Through Trust A-6), 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 such amortizable premium.
ASSUMPTION OF SECURED NOTES
Under certain circumstances, beneficial ownership of the Undivided Interest
may be transferred by the original Owner Participant to another owner
participant. In addition, under certain limited circumstances, MGB may assume
the obligations of the Lessor under the Secured Notes. In such event, the
Secured Notes will become full recourse notes, will continue to be secured by
a mortgage on the Production System and will be guaranteed directly by Mobil.
See "Description of the Secured Notes--Assumption of Secured Notes Under
Certain Circumstances."
A number of federal income tax considerations are raised by such transfer or
assumption of the Secured Notes including whether that event would be a
taxable event in which a Certificateholder would recognize gain or loss, the
determination of the amount realized upon such events and whether any original
issue discount would arise upon such events. There is substantial support,
including certain proposed regulations (which are not yet effective, however),
for the position that the transfer of the interest of an Owner Participant in
the Owner Trust to another owner participant should not be treated as a
taxable event to a Certificateholder. Under the proposed regulations, an
assumption of the Secured Notes by MGB should not be treated as a taxable
event. However, until such time as these proposed regulations become
effective, there is a material risk that such assumption would be a taxable
event to the Certificateholders. In light of the foregoing, each
Certificateholder should consult its own tax advisor as to the potential tax
consequences of such events.
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BACKUP WITHHOLDING
Payments made on the New Certificates, and proceeds from the sale of the New
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 exempt from such requirements. Any such withheld
amounts are allowed as a credit against the Certificateholder's federal income
tax and may entitle such Certificateholder to a refund, provided the required
information is furnished to the Internal Revenue Service (the "IRS").
Furthermore, certain penalties may be imposed by the IRS on a
Certificateholder who is required to supply information but who does not do so
in the proper manner.
PENDING LEGISLATION
The Revenue Reconciliation Act of 1995 ("RRA") would allow individuals a
deduction equal to 50 percent of net capital gain (which is the excess of net
long-term capital gains over net short term capital losses for the taxable
year). The effect of this provision would be to reduce the tax rate on net
capital gains of individuals from a maximum rate of 28 percent to a maximum
rate of 19.8 percent. As described above, under current law up to $3,000 of
ordinary income of an individual may be offset, on a dollar-for-dollar basis,
by long term capital losses. The RRA would require that in allowing such
offset two dollars of such capital losses would be required to offset each
dollar of ordinary income ("2 for 1 rule"). The provisions would generally be
applicable to sales or exchanges after December 31, 1994, except that the 2
for 1 rule would not apply to capital losses arising in taxable years
beginning before 1996. At the present time, it is not clear whether the RRA
will be enacted, or, if it is not enacted, whether similar provisions will be
included in subsequent legislation.
THE FOREGOING SUMMARY DOES NOT DISCUSS ALL ASPECTS OF FEDERAL INCOME
TAXATION THAT MAY BE RELEVANT TO A PARTICULAR CERTIFICATEHOLDER IN LIGHT OF
ITS CIRCUMSTANCES AND INCOME TAX SITUATION. EACH CERTIFICATEHOLDER SHOULD
CONSULT ITS TAX ADVISOR AS TO THE SPECIFIC TAX CONSEQUENCES TO SUCH
CERTIFICATEHOLDER OF THE OWNERSHIP AND DISPOSITION OF THE NEW CERTIFICATES,
INCLUDING THE PROPRIETY OF MAKING ANY ELECTION DESCRIBED ABOVE AND THE
APPLICATION AND EFFECT OF STATE, LOCAL, FOREIGN AND OTHER TAX LAWS.
CERTAIN UTAH TAXES
The Pass Through Trustee is a national banking association with its
corporate trust office at 79 South Main Street, Salt Lake City, Utah. Ray,
Quinney & Nebeker, counsel to the Pass Through Trustee, has advised Mobil
that, in its opinion, under currently applicable law, assuming that the Pass
Through Trust will not be taxable as a corporation, but, rather, will be
classified as a grantor trust for federal income tax purposes, (i) the Pass
Through Trust will not be subject to any tax (including, without limitation,
net or gross income, tangible or intangible property, net worth, capital,
franchise or doing business tax), fee or other governmental charge under the
laws of the State of Utah or any political subdivision thereof and (ii)
Certificateholders who are not residents of or otherwise subject to tax in
Utah will not be subject to any tax (including, without limitation, net or
gross income, tangible or intangible property, net worth, capital franchise or
doing business tax), fee or other governmental charge under the laws of the
State of Utah or any political subdivision thereof as a result of acquiring
pursuant to the Exchange Offer, purchasing, holding (including receiving
payments with respect to) or selling a New Certificate. Neither the Pass
Through Trusts nor the Certificateholders will be indemnified for any state or
local taxes imposed on them, and the imposition of any such taxes on any Pass
Through Trust could result in a reduction in the amounts available for
distribution to the Certificateholders of such Pass Through Trust. In general,
should a Certificateholder or the Pass Through 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 Pass Through Trustee in such other jurisdiction
will be appointed.
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ERISA CONSIDERATIONS
New 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 New
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. Any Plan that purchases a New Certificate
must be an "accredited investor" as defined in Rule 501(a)(1) of Regulation D
of the Securities Act.
The United States Department of Labor (the "DOL") has granted to MS&Co. an
administrative exemption (Prohibited Transaction Exemption 90-24 et al.,
Exemption Application No. D-8019 et al., 55 Fed. Reg. 20,548 (1990)) (the
"Exemption") from certain of the prohibited transaction rules of ERISA and the
Code with respect to the initial purchase, the holding, and the subsequent
resale by a Plan (including an individual retirement account or other plan
subject to Section 4975 of the Code) of certificates in certain pass through
trusts, the assets of which pass through trusts consist of obligations that
bear interest or are purchased at a discount and which are secured by
commercial real property (including obligations secured by leasehold interests
on commercial real property) or by equipment. The limited relief provided by
the DOL in the Exemption from certain provisions of ERISA and the Code is
subject to several other conditions, including a requirement that New
Certificates acquired by a Plan under the Exemption have received a rating at
the time of acquisition by the Plan that is in one of the three highest rating
categories from either Standard & Poor's, Moody's Investors Service, Inc.,
Fitch Investors Service, Inc. or Duff & Phelps Inc. The New Certificates have
received such a rating from Moody's and Standard & Poor's. The Exemption also
requires that the acquisition of New Certificates by a Plan be on terms
(including the price for the New Certificates) that are at least as favorable
to a Plan as they would be in an arm's length transaction with an unrelated
party.
Each fiduciary of a Plan should independently determine if its purchase or
holding of a New Certificate will require an exemption, and if so, whether the
Exemption applies to such purchase or holding, or whether any other prohibited
transaction exemption is available.
A fiduciary should also be aware that under regulations promulgated by the
DOL, 29 C.F.R. Section 2510.3-101 (the "Regulation"), if a Plan acquires a New
Certificate, then the Plan's assets may include both the New Certificate it
acquires and an undivided interest in the underlying assets of the related
Pass Through Trust (because such Pass Through Trust is deemed to hold assets
of the Plan) unless the actual level of investment by employee benefit plans
(and certain entities in which employee benefit plans invest) in the New
Certificates is not "significant" within the meaning of the Regulation.
Under the terms of the Regulation, if a Pass Through Trust were deemed to
hold assets of an employee benefit plan by reason of a Plan's investment in a
New Certificate, such plan assets would include an undivided interest in such
Pass Through Trust, the Secured Notes and other assets held by such Pass
Through Trust. In such an event, the persons providing services with respect
to the assets of such Pass Through Trust, including the Secured Notes, may be
subject to the fiduciary responsibility provisions of Title I of ERISA and be
subject to the prohibited transaction provisions of ERISA and the Code with
respect to transactions involving such assets unless such transactions are
subject to a statutory or administrative exemption. The Exemption may provide
prohibited transaction relief under these circumstances.
The foregoing discussion is general in nature and is not intended to be all
inclusive. Any fiduciary of a Plan considering the purchase of New
Certificates should consult its legal advisors regarding the consequences of
such purchase under ERISA and the Code (and, particularly in the case of non-
ERISA plans, concerning any state law consideration).
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PLAN OF DISTRIBUTION
Except as described below, a broker-dealer may not participate in the
Exchange Offer in connection with a distribution of the New Certificates. Such
broker-dealer would be deemed an underwriter in connection with such
distribution, and such broker-dealer would be required to comply with the
registration and prospectus delivery requirements of the Securities Act in
connection with any secondary resale transactions. A broker-dealer may,
however, receive New Certificates for its own account pursuant to the Exchange
Offer in exchange for Old Certificates where such Old Certificates were
acquired as a result of market-making activities or other trading activities.
Each such broker-dealer must acknowledge that it will deliver a prospectus in
connection with any resale of such New Certificates. This Prospectus, as it
may be amended or supplemented from time to time, may be used by a broker-
dealer (other than an "affiliate" of Mobil or MGB) in connection with resales
of such New Certificates. Mobil and MGB have agreed that, for a period of 90
days after the Expiration Date, they will make this Prospectus available to
any such broker-dealer for use in connection with any such resale.
Mobil and MGB will not receive any proceeds from any sale of New
Certificates by broker-dealers. New Certificates received by broker-dealers
for their own account pursuant to the Exchange Offer may be sold from time to
time in one or more transactions in the over-the-counter market, in negotiated
transactions, through the writing of options on the New Certificates or a
combination of such methods of resale, at market prices prevailing at the time
of resale, at prices related to such prevailing market prices or negotiated
prices. Any such resale may be made directly to purchasers or to or through
brokers or dealers who may receive compensation in the form of commissions or
concessions from any such broker-dealer and/or the purchasers of any such New
Certificates. Any broker-dealer that resells New Certificates that were
received by it for its own account pursuant to the Exchange Offer may be
deemed to be an "underwriter" within the meaning of the Securities Act and any
profit on any such resale of New Notes and any commissions or concessions
received by any such persons may be deemed to be underwriting compensation
under the Securities Act. The Letter of Transmittal states that by
acknowledging that it will deliver and by delivering a prospectus, a broker-
dealer will not be deemed to admit that it is an "underwriter" within the
meaning of the Securities Act.
For a period of 90 days after the Expiration Date, Mobil and MGB will
promptly send additional copies of this Prospectus and any amendment or
supplement to this Prospectus to any broker-dealer that requests such
documents in the Letter of Transmittal.
MS&Co. has indicated to Mobil and MGB that it intends to effect offers and
sales of the New Certificates in market-making transactions at negotiated
prices related to prevailing market prices at the time of sale, but is not
obligated to do so and such market-making activities may be discontinued at
any time. MS&Co. may act as principal or agent in such transactions. There can
be no assurance that an active market for the New Certificates will develop.
LEGAL MATTERS
Certain legal matters with respect to the New Certificates offered in
exchange hereby will be passed upon for Mobil and MGB by Ralph N. Johanson,
Jr., Assistant General Counsel of Mobil, and by Dewey Ballantine, New York,
New York, and by Ray, Quinney & Nebeker, Salt Lake City, Utah.
EXPERTS
The consolidated financial statements of Mobil incorporated by reference in
Mobil's Annual Report (Form 10-K) for the year ended December 31, 1995, have
been audited by Ernst & Young LLP, independent auditors, as set forth in their
report thereon incorporated by reference 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.
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DOCUMENTS INCORPORATED BY REFERENCE
Mobil's Annual Report on Form 10-K for the year ended December 31, 1995, and
its Current Reports on Form 8-K filed on January 22, 1996, February 14, 1996,
February 29, 1996 and April 23, 1996 heretofore filed with the Commission
pursuant to the Exchange Act are hereby incorporated by reference.
All documents filed by Mobil 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 New Certificates 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
herein or 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 or
superseded, to constitute a part of this Prospectus.
Mobil will provide without charge to each person to whom this Prospectus is
delivered, upon the 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 Mobil Corporation, 3225 Gallows Road, Fairfax, Virginia 22037-
0001, Attention: Secretary (telephone (703) 846-3000).
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APPENDIX I
GLOSSARY OF CERTAIN TERMS
The following is a glossary of certain terms used in this Prospectus. The
definitions of terms used in this glossary that are also used in the
Agreement, Indenture, Lease or Participation Agreement are qualified in their
entirety by reference to the definitions of such terms contained therein.
"Agreement" means each Pass Through Trust Agreement among First Security
Bank of Utah, National Association, as Pass Through Trustee, Mobil and MGB
pursuant to which the Mobil Corporation 1995-A Pass Through Trusts were
formed.
"Certificate Account" means the one or more accounts established and
maintained pursuant to the Agreement by the Pass Through Trustee with itself
for the related Pass Through Trust and for the benefit of the
Certificateholders, for the deposit of payments representing Scheduled
Payments on the Secured Notes held in such Pass Through Trust.
"Certificateholder" means any holder of a New Certificate or Old
Certificate.
"Code" means the United States Internal Revenue Code of 1986, as amended.
"Event of Default" means, with respect to the Agreement, the occurrence and
continuance of an Indenture Event of Default.
"Event of Loss" means each of the events designated as such in the Lease.
Certain other events specified in the Lease constitute a deemed Event of Loss.
Upon the occurrence of an Event of Loss or deemed Event of Loss with respect
to a Significant Portion of the Production System, MGB is obligated to either
rebuild such Significant Portion or pay the applicable Stipulated Loss Value
for such Significant Portion. For a description of certain events constituting
an Event of Loss or deemed Event of Loss, see "Description of the Secured
Notes--The Lease--Events of Loss."
"Guaranty" means the Guaranty entered into with respect to MGB's payment and
other obligations under the leveraged lease transaction by Mobil in favor of
the Owner Trustee, the Indenture Trustee, the Pass Through Trustee and the
holders from time to time of any New Certificate or Old Certificate.
"Indenture" means the Trust Indenture, Mortgage, Assignment of Lease and
Security Agreement entered into with respect to the Undivided Interest between
the Owner Trustee and the Indenture Trustee and pursuant to which the Owner
Trustee has issued the Secured Notes with respect to the Undivided Interest,
as such Trust Indenture, Mortgage, Assignment of Lease and Security Agreement
may from time to time be amended or supplemented.
"Indenture Estate" means a security interest in and mortgage on all the
right, title and interest of the Owner Trustee in certain property, rights,
interests and privileges, including without limitation the Undivided Interest,
the Lease and the Guaranty.
"Indenture Event of Default" means each of the events designated as an event
of default in the Indenture. For a description of certain events constituting
Indenture Events of Default, see "Description of the Secured Notes--Indenture
Events of Default, Notice and Waiver."
"Indenture Trustee" means First Security Bank of Utah, National Association,
in its capacity as Indenture Trustee under the Indenture, and its successors
and assigns thereunder.
"Lease" means the Production System Lease Agreement entered into with
respect to the Undivided Interest between the Owner Trustee and MGB, as such
Lease Agreement may from time to time be amended or supplemented.
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"Lease Event of Default" means each of the events designated as an event of
default in the Lease. For a description of certain events constituting Lease
Events of Default, see "Description of the Secured Notes--The Lease--Lease
Events of Default."
"Lessor's Cost" means the cost to the Owner Trustee of the Undivided
Interest purchased by it from MGB, as it may be adjusted as the result of a
termination of the Lease with respect to a Significant Portion of the
Undivided Interest in respect of which Stipulated Loss Value or Termination
Value has been paid.
"New Certificate" means the Pass Through Certificates, Series 1995-B that
were issued in exchange for the Pass Through Certificates, Series 1995-A
pursuant to the Exchange Offer.
"Old Certificate" means the Pass Through Certificates, Series 1995-A that
were issued by the Pass Through Trustee pursuant to the Agreements.
"Operator" means Enserch Exploration, Inc., as the operator of the
Production System pursuant to the Unit Operating Agreement.
"Owner Participant" means the owner participant for whose benefit the Owner
Trustee holds legal title to the Undivided Interest leased to MGB pursuant to
the Lease and its permitted successors and assigns.
"Owner Trustee" means Fleet National Bank of Connecticut, not in its
individual capacity but solely as trustee of the owner trust for the benefit
of the Owner Participant, and its successors and assigns.
"Participation Agreement" means the Participation Agreement entered into in
connection with the leveraged lease financing of the Undivided Interest.
"Pass Through Trusts" means the Mobil Corporation 1995-A Pass Through Trusts
formed pursuant to the Agreements.
"Pass Through Trustee" means First Security Bank of Utah, National
Association, in its capacity as Pass Through Trustee under each Agreement and
its successors and assigns thereunder.
"Pool Balance" means for each Pass Through Trust, as of any Regular
Distribution Date or Special Distribution Date, if any, the aggregate unpaid
principal amount of the Secured Notes held in such Pass Through Trust plus any
amounts in respect of principal on the Secured Notes held by the Pass Through
Trustee and not yet distributed. The Pool Balance as of any Regular
Distribution Date or Special Distribution Date, if any, shall be computed
after giving effect to the payment of principal, if any, of the Secured Notes
and distribution thereof to be made on that date.
"Pool Factor" means for each Pass Through Trust, as of any Regular
Distribution Date or Special Distribution Date, if any, the quotient (rounded
to the seventh decimal place) computed by dividing (i) the aggregate unpaid
principal amount of the Secured Notes held in such Pass Through Trust on such
date, plus any amounts in respect of principal on such Secured Notes held by
the Pass Through Trustee and not yet distributed by (ii) the aggregate
original principal amount of New Certificates issued by such Pass Through
Trust. The Pool Factor for each Pass Through Trust as of any Regular
Distribution Date or Special Distribution Date, if any, shall be computed
after giving effect to the payment of principal, if any, on the Secured Notes
held in such Pass Through Trust and distribution thereof to be made on that
date.
"Regular Distribution Date" means each January 2 and July 2 of each year,
commencing July 2, 1996.
"Secured Notes" means the Secured Notes issued on a nonrecourse basis by the
Owner Trustee pursuant to the Indenture.
"Scheduled Payment" means each payment of principal of or interest on a
Secured Note scheduled to be received by the Pass Through Trustee on each
January 2 or July 2 of each year commencing July 2, 1996, until
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the final distribution date for the relevant Pass Through Trust which payment
represents the payment of principal at stated maturity of, or the scheduled
repayment of principal of such Secured Note, or the regularly scheduled
payment of interest accrued on such Secured Note.
"Special Distribution Date" means the date on which a Special Payment will
be distributed, which date will be the second day of a month.
"Special Payment" means any payment of principal, premium, if any, and
interest received by the Pass Through Trustee on account of the prepayment, if
any, of the Secured Notes held in the related Pass Through Trust; any payment
received by the Pass Through Trustee following an Indenture Event of Default
in respect of the Secured Notes held in such Pass Through Trust, including
payments received by the Pass Through Trustee on account of the purchase by
the Owner Trustee of such Secured Notes and payments received by the Pass
Through Trustee on account of the sale by it of such Secured Notes; and any
Scheduled Payment which is not in fact paid within five days of the Regular
Distribution Date applicable thereto.
"Special Payments Account" means the one or more accounts established and
maintained pursuant to an Agreement by the Pass Through Trustee thereunder
with itself, for the Pass Through Trust created by such Agreement and for the
benefit of the Certificateholders of such Pass Through Trust, for the deposit
of payments representing Special Payments.
"Specified Investments" means (i) direct obligations of the United States of
America and agencies thereof for which the full faith and credit of the United
States 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), (iv) commercial paper of companies,
banks, trust companies or national banking associations incorporated or doing
business under the laws of the United States of America or one of the states
thereof and in each case having a rating assigned to such commercial paper by
Standard & Poor's Corporation or Moody's Investors Service, Inc. (or, if
neither such organization shall rate such commercial paper at any time, by any
nationally recognized rating organization in the United States of America)
equal to the highest rating assigned by such organization, and (v) purchase
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 (iv) above; provided that if all of the
above investments are unavailable, the entire amount to be invested may be
used to purchase Federal Funds from an entity described in (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.
"Stipulated Loss Value" means the amount payable under the Lease upon the
occurrence of an Event of Loss with respect to the Production System or a
Significant Portion thereof, which amount shall in all circumstances be at
least sufficient together with other amounts then due under the Lease to pay
in full as of the date of payment thereof the aggregate unpaid principal of
the outstanding Secured Notes issued with respect to the Undivided Interest
(or in the case of an Event of Loss with respect to a Significant Portion of
the Undivided Interest, the portion of aggregate unpaid principal of the
outstanding Secured Notes relating to such Significant Portion), together with
all unpaid interest thereon accrued and to accrue to such date of payment.
"Termination Value" means the amount required to be received by the Owner
Trustee under the Lease following certain early terminations of the Lease,
which amount shall in all circumstances be at least sufficient together with
other amounts then due under the Lease to pay in full as of the date of
payment thereof the aggregate unpaid principal of the outstanding Secured
Notes with respect to the Undivided Interest (or, in the case of a termination
with respect to a Significant Portion of the Undivided Interest, the portion
of the aggregate unpaid principal of the outstanding Secured Notes relating to
such Significant Portion), together with all unpaid interest thereon accrued
and to accrue to such date of payment. The Owner Trustee may receive
Termination
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Value either from the proceeds of the sale of the Undivided Interest or such
Significant Portion upon termination of the Lease or, if such proceeds are
insufficient, from payments by MGB.
"Undivided Interest" means the 40% undivided interest in the Production
System.
"Unit Operating Agreement" means the agreement between the Operator and MPTN,
dated as of April 12, 1995, pursuant to which the Operator operates the
Production System.
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LOGO
