<PAGE>
FILED PURSUANT TO RULE 424(b)(2)
(REGISTRATION NO. 333-13457)
(REGISTRATION NO. 333-13457-05)
PROSPECTUS SUPPLEMENT TO PROSPECTUS DATED NOVEMBER 12, 1996
$95,331,000
[LOGO OF MOBIL CORPORATION]
1997-A PASS THROUGH TRUST
PASS THROUGH CERTIFICATES, SERIES 1997-A
----------------
The Pass Through Certificates offered hereby consist of Mobil Corporation
Pass Through Certificates, Series 1997-A in the aggregate amount of
$95,331,000, which will represent fractional undivided interests in the Mobil
Corporation 1997-A Pass Through Trust (the "Pass Through Trust"). The Pass
Through Trust will be formed pursuant to a pass through trust agreement and a
trust supplement thereto among Mobil Corporation ("Mobil"), Mobil Chemical
Finance (Texas) Inc. (the "Lessee") and State Street Bank and Trust Company,
as trustee under the Pass Through Trust (the "Pass Through Trustee").
The property of the Pass Through Trust will consist of one or more secured
notes (the "Secured Notes") issued on a nonrecourse basis by an owner trustee
(the "Owner Trustee") on behalf of an owner trust pursuant to a leveraged
lease transaction to finance approximately 70% of the cost of certain
paraxylene production facility assets (the "Facility Assets") located at
Mobil's refinery complex in Beaumont, Texas, which will be acquired by the
Owner Trustee from an affiliate of Mobil and leased to the Lessee pursuant to
a lease agreement (the "Lease").
Prior to their issuance there has been no market for the Pass Through
Certificates and there can be no assurance that one will develop. See
"Underwriting" in this Prospectus Supplement.
(continued on following page)
----------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT OR
THE ACCOMPANYING PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
----------------
<TABLE>
<CAPTION>
INITIAL
SCHEDULED INITIAL
PASS PRINCIPAL FINAL PUBLIC
THROUGH DISTRIBUTION DISTRIBUTION AGGREGATE INTEREST OFFERING
CERTIFICATES DATE DATE AMOUNT RATE PRICE(1)(2)
------------ --------------- --------------- ----------- -------- -----------
<S> <C> <C> <C> <C> <C>
1997-A........ January 2, 1998 January 2, 2014 $95,331,000 7.29% 100%
</TABLE>
- --------
(1) Plus accrued interest, if any, from May 28, 1997.
(2) Underwriting commissions of $619,651.50 and certain other expenses
relating to the offering estimated at $691,348.50 will be paid by the
Owner Participant. All of the proceeds from the sale of the Pass Through
Certificates will be used to purchase the Secured Notes from the Owner
Trustee. Mobil and the Lessee have agreed to indemnify Goldman, Sachs &
Co. against certain liabilities, including liabilities under the
Securities Act of 1933, as amended.
----------------
The Pass Through Certificates offered hereby are offered by Goldman, Sachs &
Co., as specified herein, subject to receipt and acceptance by them and
subject to their right to reject any order in whole or in part. It is expected
that the Pass Through Certificates will be ready for delivery in New York, New
York, on or about May 28, 1997, against payment therefor in immediately
available funds.
GOLDMAN, SACHS & CO.
----------------
The date of this Prospectus Supplement is May 22, 1997.
<PAGE>
All of the Secured Notes purchased by the Pass Through Trustee will have an
interest rate corresponding to the rate applicable to the Pass Through
Certificates set forth on the cover of this Prospectus Supplement, and will
have a maturity date on or before the final distribution date for the Pass
Through Certificates. The Secured Notes will be secured by, among other
things, an assignment of certain rights under the Lease, including the right
to receive lease rent payable in respect thereof, and a security interest in
the Facility Assets. Although the Secured Notes will not be obligations of, or
guaranteed by, Mobil or the Lessee, the amounts unconditionally payable by the
Lessee under the Lease and irrevocably and unconditionally guaranteed by Mobil
will be sufficient to pay in full when due all principal of, premium, if any,
and interest on the Secured Notes.
Interest paid on the Secured Notes held in the Pass Through Trust will be
distributed to the Certificateholders on each January 2 and July 2, commencing
on July 2, 1997, at the rate per annum set forth on the cover of this
Prospectus Supplement until the final distribution date for the Pass Through
Trust. Principal paid on the Secured Notes held in the Pass Through Trust will
be distributed to the Certificateholders in scheduled amounts on January 2 of
certain years, commencing on January 2, 1998, until the final distribution
date of the Pass Through Certificates.
Prior to the maturity thereof, the Secured Notes may be purchased or
redeemed under the circumstances and at the prices described in this
Prospectus Supplement under "Description of the Secured Notes--Prepayments".
Any such purchase or redemption would result in an early distribution of
principal paid in respect of the Pass Through Certificates.
The Pass Through Certificates represent interests in the Pass Through Trust
only and all payments and distributions shall be made only from the property
of the Pass Through Trust. The Pass Through Certificates do not represent an
interest in, obligation of, or guarantee by, Mobil or the Lessee.
----------------
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE PASS THROUGH
CERTIFICATES, INCLUDING OVER-ALLOTMENT, STABILIZING AND SHORT-COVERING
TRANSACTIONS IN SUCH PASS THROUGH CERTIFICATES, AND THE IMPOSITION OF A
PENALTY BID, IN CONNECTION WITH THE OFFERING. FOR A DESCRIPTION OF THESE
ACTIVITIES, SEE "UNDERWRITING".
S-2
<PAGE>
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 in this Prospectus Supplement and in the accompanying Prospectus.
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, 1996. Mobil's principal executive offices are located at 3225 Gallows Road,
Fairfax, Virginia 22037-0001, and its telephone number is (703) 846-3000. Mobil
Chemical Finance (Texas) Inc. is a wholly-owned subsidiary of Mobil.
THE OFFERING
GLOSSARY.................... Included at the end of this Prospectus Supplement
as Appendix A is a Glossary of certain
significant defined terms used herein.
PASS THROUGH TRUST.......... The Mobil Corporation 1997-A Pass Through Trust
(the "Pass Through Trust") is to be formed
pursuant to a Pass Through Trust Supplement (the
"Trust Supplement") to be entered into pursuant
to the Pass Through Trust Agreement (the "Basic
Agreement" and, together with the Trust
Supplement, the "Agreement") among Mobil, the
Lessee and State Street Bank and Trust Company,
as trustee under the Pass Through Trust (the
"Pass Though Trustee").
PASS THROUGH TRUST
PROPERTY.................... The property of the Pass Through Trust will
consist of one or more secured notes (each, a
"Secured Note" and, collectively, the "Secured
Notes") issued on a nonrecourse basis by an owner
trustee (the "Owner Trustee") on behalf of an
owner trust in a leveraged lease transaction to
finance approximately 70% of the cost to the
Owner Trustee of certain paraxylene production
facility assets (the "Facility Assets") located
at Mobil's refinery and chemical complex in
Beaumont, Texas. The Facility Assets will be
acquired by the Owner Trustee and leased to the
Lessee pursuant to a lease agreement (the
"Lease"). See "The Facility Assets" in this
Prospectus Supplement.
The Secured Notes will be issued pursuant to a
Trust Indenture, Deed of Trust, Assignment of
Lease and Security Agreement (the "Indenture")
between the Owner Trustee and State Street Bank
and Trust Company, as indenture trustee (the
"Indenture Trustee"). The Pass Through Trust will
acquire the Secured Notes, which will bear
interest at the same rate as the Pass Through
Certificates, Series 1997-A (the "Pass Through
Certificates") to be issued by the Pass
S-3
<PAGE>
Through Trust. The maturity date of the Secured
Notes acquired by the Pass Through Trust will
occur on or before the final distribution date of
the Pass Through Certificates. The aggregate
principal amount of the Secured Notes purchased
and held in the Pass Through Trust will be the
same as the aggregate principal amount of the
Pass Through Certificates issued by the Pass
Through Trustee.
BOOK-ENTRY REGISTRATION..... The Pass Through Certificates will be issued in
fully registered form and will be registered in
the name of Cede & Co. as the nominee of The
Depository Trust Company. No person acquiring an
interest in the Pass Through Certificates will be
entitled to receive a definitive certificate
representing such person's interest in the Pass
Through Trust unless definitive certificates are
issued, which will only occur under limited
circumstances. See "Description of the
Certificates--Book-Entry Registration--General"
and "Description of the Certificates--Book-Entry
Registration--Definitive Certificates" in the
accompanying Prospectus.
REGULAR DISTRIBUTION DATES.. July 2, 1997, and thereafter each January 2 and
July 2.
SPECIAL DISTRIBUTION DATES.. Any Business Day on which a Special Payment is to
be distributed.
RECORD DATES................ The fifteenth day (whether or not a Business Day)
preceding a Regular Distribution Date or a
Special Distribution Date.
DISTRIBUTIONS............... All payments of principal, premium, if any, and
interest received by the Pass Through Trustee on
the Secured Notes will be distributed by the Pass
Through Trustee to holders of Pass Through
Certificates (the "Certificateholders") on the
dates specified below, except in certain cases
where such Secured Notes are in default. Payments
of principal of and interest on the Secured Notes
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 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
Indenture Event of Default, see "Description of
the Certificates--Events of Default and Certain
Rights Upon an Event of Default" in the
accompanying Prospectus.
PRINCIPAL................... The Pass Through Trust will hold Secured Notes
whose principal is payable in scheduled amounts
on January 2 of certain years, commencing January
2, 1998, in accordance with the principal
repayment schedule set forth under "Description
of the Secured Notes--Principal and Interest
Payments" in this Prospectus Supplement.
S-4
<PAGE>
INTEREST.................... Interest on the Pass Through Certificates will be
passed through at the rate per annum indicated on
the cover of this Prospectus Supplement, which is
the interest rate borne by the Secured Notes to
be held in the Pass Through Trust. Interest will
be calculated on the basis of a 360-day year
consisting of twelve 30-day months.
INITIAL AVERAGE LIFE DATE... The initial average life date for the Pass
Through Certificates is October 24, 2007. The
average life date for the Pass Through
Certificates will change after repayment of
principal of the Secured Notes commences.
DENOMINATIONS............... The Pass Through Certificates will be issued only
in integral multiples of $1,000.
PREPAYMENT OF THE SECURED
NOTES AT A PREMIUM.........
The Secured Notes may be redeemed in whole at any
time prior to maturity on a Special Distribution
Date at a price equal to the unpaid principal
amount thereof, together with accrued interest
thereon, plus a premium equal to the Make-Whole
Amount, if any, if such redemption occurs prior
to October 24, 2007 (the "Premium Termination
Date"). See "Description of the Secured Notes--
Prepayments" in this Prospectus Supplement for a
description of the events allowing the redemption
of the Secured Notes, and the manner of computing
the Make-Whole Amount, if any.
PREPAYMENT OF THE SECURED
NOTES WITHOUT A PREMIUM....
In the event that an Event of Loss with respect
to the Facility Assets shall occur and the
Facility Assets are not rebuilt, the Owner
Trustee shall redeem the Secured Notes in whole
on a Special Distribution Date at a price equal
to the unpaid principal amount thereof, together
with accrued interest thereon, but without
payment of any Make-Whole Amount or other
premium.
If (i) an Indenture Event of Default resulting
from one or more Lease Events of Default shall
have occurred and be continuing, during which
time the Secured Notes could, but shall not, have
been accelerated, (ii) the Indenture Trustee has
given the Owner Trustee or the Owner Participant
(as defined below) notice of its intent to
accelerate such Secured Notes or (iii) such
Secured Notes have been accelerated, the Owner
Trustee or the Owner Participant may elect to
redeem or purchase such Secured Notes, at a price
equal to the aggregate unpaid principal amount
thereof, together with accrued interest thereon,
but without payment of any Make-Whole Amount or
other premium.
The Secured Notes may be redeemed in whole at any
time prior to maturity on a Special Distribution
Date at a price equal to the unpaid principal
amount thereof, together with accrued
S-5
<PAGE>
interest thereon, but without payment of any
Make-Whole Amount or other premium, if such
redemption occurs on or after the Premium
Termination Date.
See "Description of the Secured Notes--
Prepayments" in this Prospectus Supplement.
SECURITY FOR THE SECURED
NOTES....................... The Secured Notes issued under the Indenture will
be secured by, among other things, an assignment
of certain of the Owner Trustee's rights under
the Lease, including the right to receive lease
rent, a security interest in the Facility Assets
and assignments of the Owner Trustee's rights
under the Parent Guaranty and the Ground Lease,
in each case excluding Excepted Payments. See
"Description of the Pass Through Certificates"
and "Description of the Secured Notes--Security"
in this Prospectus Supplement and "Description of
the Certificates" and "Description of the Secured
Notes--Security" in the accompanying Prospectus.
Although the Secured Notes are not direct
obligations of, or guaranteed by, the Lessee or
Mobil, the amounts unconditionally payable by the
Lessee to lease the Facility Assets pursuant to
the Lease, which amounts are irrevocably and
unconditionally guaranteed by Mobil pursuant to
the Parent Guaranty and assigned to the Indenture
Trustee, will be sufficient to pay in full when
due all scheduled payments of principal of,
premium, if any, and interest on the Secured
Notes. See "Description of the Secured Notes--
General" in this Prospectus Supplement and in the
accompanying Prospectus.
ADDITIONAL NOTES............ Under certain circumstances, additional Secured
Notes ("Additional Notes") may be issued under
the Indenture to finance the cost of certain
alterations, modifications, additions or
improvements to the Facility Assets. Any such
Additional Notes will not rank senior, but may be
subordinate, to the outstanding Secured Notes
issued in respect of this Offering. No
Certificateholder as such will have any right to,
or interest in, any Additional Note. See
"Description of the Secured Notes--Additional
Notes" and "Description of the Secured Notes--The
Lease--Modifications and Alterations" in this
Prospectus Supplement.
THE PARENT GUARANTY......... Mobil will enter into the Parent Guaranty
pursuant to which it will irrevocably and
unconditionally guarantee all obligations of the
Lessee under the Lease and the other Operative
Documents. See "Description of the Secured
Notes--The Parent Guaranty" in this Prospectus
Supplement.
USE OF PROCEEDS............. The proceeds from the sale of the Pass Through
Certificates will be used at the closing of the
Offering to purchase the Secured Notes issued by
the Owner Trustee in order to
S-6
<PAGE>
finance a portion of the cost of the Facility
Assets to the Owner Trustee. See "Use of Proceeds
and Outline of the Transaction" in this
Prospectus Supplement.
PASS THROUGH TRUSTEE........ State Street Bank and Trust Company will act as
Pass Through Trustee, paying agent and registrar
for the Pass Through Certificates. State Street
Bank and Trust Company will also act as Indenture
Trustee under the Indenture.
FEDERAL INCOME TAX
CONSEQUENCES............... The Pass Through Trust will be classified as a
grantor trust for federal income tax purposes.
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
Pass Through Trust and will be required to report
on its federal income tax return its pro rata
share of income from the Secured Notes and any
such other property held in the Pass Through
Trust in accordance with such Certificateholder's
method of accounting. See "Federal Income Tax
Consequences" in this Prospectus Supplement and
in the accompanying Prospectus.
ERISA CONSIDERATIONS........ The Pass Through Certificates, with certain
exceptions, are eligible for purchase by employee
benefit plans. See "ERISA Considerations" in this
Prospectus Supplement and in the accompanying
Prospectus.
S-7
<PAGE>
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 of
December 31, 1996. The principal executive offices of Mobil are located at
3225 Gallows Road, Fairfax, Virginia 22037-0001, and its telephone number is
(703) 846-3000.
MOBIL CHEMICAL FINANCE (TEXAS) INC.
The Lessee is a wholly-owned special purpose finance subsidiary of Mobil
incorporated in the State of Delaware. The Lessee has no business activities
other than leasing the Facility Assets pursuant to the Lease and subleasing
the Facility Assets as permitted by the Lease. Its offices are located at 3225
Gallows Road, Fairfax, Virginia 22037-0001, and its telephone number is
(703) 846-3000.
CAPITALIZATION OF MOBIL CORPORATION
The following table sets forth the unaudited capitalization of Mobil and its
consolidated subsidiaries as of March 31, 1997, prepared in accordance with
generally accepted accounting principles ("GAAP").
<TABLE>
<CAPTION>
AS OF
MARCH 31,
1997
-------------
(IN MILLIONS)
<S> <C>
Short-term debt.................................................. $ 3,971
Long-term debt................................................... 4,386
Preferred stock (ESOP-related), 102,894 shares authorized, 87,240
shares issued and outstanding(a)................................ 678
Unearned employee compensation (ESOP-related).................... (355)
Common stock, par value $2.00 per share, 600 million shares
authorized,
446,428,336 shares issued(a).................................... 893
Capital surplus.................................................. 1,512
Earnings retained in the business................................ 19,503
Cumulative foreign exchange translation adjustment............... (378)
Common stock held in treasury, at cost--52,425,850 shares........ (2,723)
-------
Total capitalization......................................... $27,487
=======
</TABLE>
- --------
(a) On May 8, 1997, Mobil's stockholders approved an increase in Mobil's
authorized Common Stock from 600,000,000 shares, par value $2.00 per
share, to 1,200,000,000 shares, par value $1.00 per share. With this
increase, Mobil split its Common Stock two-for-one with the record date
and the distribution date therefor being May 20, 1997 and June 24, 1997,
respectively. In conjunction with the stock split, a special dividend was
declared on Mobil's Preferred Stock that will double the number of
outstanding shares of that stock and halve the liquidation value per share
to $3,807.50. The capitalization table has not been adjusted to reflect
the increase in the authorized Common Stock and the effects of the stock
split.
S-8
<PAGE>
RATIO OF EARNINGS TO FIXED CHARGES OF MOBIL CORPORATION
<TABLE>
<CAPTION>
THREE MONTHS
ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
-------------------------- ------------
1992 1993 1994 1995 1996 1997
---- ----- ---- ---- ---- ------------
<S> <C> <C> <C> <C> <C> <C>
Ratio of Earnings to Fixed Charges...... 3.9 5.7(a) 5.3 5.9 7.8 8.6
</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 as of December 31, 1995 and
1996 and for the three years in the period ended December 31, 1996 are derived
from its audited consolidated financial statements. The following selected
financial data for the three-month period ended March 31, 1997 are derived
from unaudited condensed consolidated financial statements prepared in
accordance with GAAP. The unaudited condensed consolidated financial
statements include all adjustments, consisting of normal recurring accruals,
which Mobil considers necessary for a fair presentation of its financial
position and results of operations for this period. Operating results for the
three months ended March 31, 1997 are not necessarily indicative of the
results that may be expected for the entire year ending December 31, 1997. 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, THREE MONTHS ENDED
---------------------------------- MARCH 31,
1994 1995 1996 1997
------- --------- --------- ------------------
(IN MILLIONS) (IN MILLIONS)
<S> <C> <C> <C> <C>
Revenues................. $67,383 $ 75,370 $ 81,503 $16,186
Income before change in
accounting principle(a). 1,759 2,376(a) 2,964 826
Cumulative effect of
change in accounting
principle(b)............ (680)(b) -- -- --
Net income(a)............ 1,079 2,376(a) 2,964 826
<CAPTION>
AS OF DECEMBER 31,
---------------------- AS OF MARCH 31,
1995 1996 1997
--------- --------- ------------------
(IN MILLIONS) (IN MILLIONS)
<S> <C> <C> <C>
Total assets..................... $42,138 $46,408 $44,026
Long-term debt................... 4,629 4,450 4,386
</TABLE>
- --------
(a) In 1995, Mobil changed its method of accounting for the impairment of
long-lived assets.
(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.
S-9
<PAGE>
THE FACILITY ASSETS
The Facility Assets consist of those pipes, tanks, machinery, equipment and
other items that comprise a new paraxylene manufacturing facility located at
Mobil's refinery and chemical complex in Beaumont, Texas (the "Refinery"), and
will utilize a new proprietary process developed by Mobil to produce
paraxylene and benzene. Paraxylene is an aromatics product which is a basic
building block of polyester fibers and resins, and is used in the manufacture
of polyester textiles, cord, film, packaging materials and engineered
plastics. The principal feedstock for the Facility Assets will be toluene,
which will be supplied from the Refinery and third-party suppliers, as needed.
USE OF PROCEEDS AND OUTLINE OF THE TRANSACTION
The Pass Through Certificates are being issued and sold to finance the debt
portion of a leveraged lease transaction to be entered into by the Lessee with
respect to the Facility Assets.
Upon the closing of the Offering, the proceeds from the sale of the Pass
Through Certificates will be used by the Pass Through Trustee, on behalf of
the Pass Through Trust, to purchase the Secured Notes issued under the
Indenture by Wilmington Trust Company, acting not in its individual capacity
(except as expressly set forth in the Operative Documents), but solely in its
capacity as owner trustee (the "Owner Trustee") under a trust agreement
between it and an institutional investor (the "Owner Participant"). The
proceeds of the issuance of the Secured Notes will be applied by the Owner
Trustee to finance approximately 70% of the cost of the Facility Assets to the
Owner Trustee. The Facility Assets will be purchased by the Owner Trustee on
behalf of the Owner Participant from Mobil Oil Corporation ("Mobil Oil"), a
wholly-owned subsidiary of Mobil. The portion of the cost to the Owner Trustee
of the Facility Assets not provided from the proceeds of the issuance of the
Secured Notes will be provided by the Owner Participant. The Owner Participant
will not be personally liable for any amount payable under the Secured Notes.
Simultaneously with the sale of the Facility Assets to the Owner Trustee,
the Owner Trustee will lease the Facility Assets to the Lessee pursuant to the
Facility Assets Lease Agreement between the Owner Trustee and the Lessee (the
"Lease") for an initial term of approximately 20 years. Also simultaneously
with such sale, pursuant to a ground lease (the "Ground Lease"), Mobil Oil, as
ground lessor (the "Ground Lessor"), will lease the land on which the Facility
Assets are located and grant certain non-exclusive easements to premises at
the Refinery necessary for the operation of the Facility Assets in the manner
contemplated by the Lease (such easements, together with such land, the
"Site") to the Owner Trustee. The Ground Lease will have a term of
approximately 30 years. Pursuant to the Lease, the Owner Trustee will
immediately sublease the Site to the Lessee for a term coextensive with the
term of the Lease. The Owner Trustee's leasehold interest in the Site,
together with the Owner Trustee's title to the Facility Assets, is referred to
collectively as the "Facility". See "Description of the Secured Notes--The
Ground Lease" in this Prospectus Supplement. Because the Facility is located
at the Refinery, following a request by the Owner Trustee, the Lessee may be
required to enter into (or to cause an appropriate Mobil affiliate to enter
into) certain support agreements (the "Support Agreements") providing for the
grant of certain access rights and the supply of certain goods and services to
the Owner Trustee (or a permitted successor) for use in the production of
paraxylene at the Facility following the expiration or termination of the
Lease. See "Description of the Secured Notes--The Participation Agreement" in
this Prospectus Supplement. Mobil will enter into the Parent Guaranty pursuant
to which it will irrevocably and unconditionally guarantee the obligations of
the Lessee under the Lease and the other Operative Documents (including its
obligations in respect of the Support Agreements).
S-10
<PAGE>
DIAGRAM OF PAYMENTS
The following diagram illustrates certain aspects of the ongoing payment
flows in this transaction among Mobil, the Lessee, the Owner Trustee, the
Indenture Trustee, the Pass Through Trustee and the Certificateholders.
The Lessee will lease the Facility Assets from the Owner Trustee under the
Lease, pursuant to which the Lessee will pay periodic rent and certain other
amounts to the Owner Trustee. The Secured Notes issued by the Owner Trustee
under the Indenture will be secured by, among other things, an assignment to
the Indenture Trustee of certain rights of the Owner Trustee under the Lease
and the Parent Guaranty and a security interest in the Facility Assets. See
"Description of the Secured Notes--Security" in this Prospectus Supplement. As
a result of this assignment of the Lease, the Lessee will make periodic rental
payments for the Facility Assets directly to the Indenture Trustee, which, in
turn, will apply such payments to pay the scheduled payments of principal and
interest on the Secured Notes issued under the Indenture and held in the Pass
Through Trust. The balance of payments under the Lease will be paid over by the
Indenture Trustee to the Owner Trustee for the benefit of the Owner
Participant. The Pass Through Trustee will distribute to Certificateholders all
payments received in respect of the Secured Notes held in the Pass Through
Trust, including payments, if any, made by Mobil under the Parent Guaranty.
[Diagram of Payments]
S-11
<PAGE>
DESCRIPTION OF THE PASS THROUGH CERTIFICATES
The Pass Through Certificates offered hereby will be issued by the Pass
Through Trustee pursuant to the terms of the Agreement. The following summary
of the particular terms of the Pass Through Certificates supplements and, to
the extent inconsistent therewith, replaces the description of the general
terms and provisions of the Pass Through Certificates set forth in the
accompanying Prospectus under the caption "Description of the Certificates".
The statements under this caption are a summary and do not purport to be
complete. The summary makes use of terms defined in, and is qualified in its
entirety by reference to all of, the provisions of the Basic Agreement, a form
of which has been filed as an exhibit to the Registration Statement of which
the accompanying Prospectus is a part, and to all of the provisions of the
Trust Supplement, a form of which, together with the forms of the
Participation Agreement, the Secured Notes, the Indenture, the Lease, the
Parent Guaranty, the Ground Lease and the Trust Agreement, will be filed by
Mobil with the Commission as exhibits to a Current Report on Form 8-K. The
summary should be read in conjunction with the statements under the caption
"Description of the Certificates" in the accompanying Prospectus.
PAYMENTS AND DISTRIBUTIONS
The Pass Through Certificates will be issued in fully registered form and
will be registered in the name of Cede & Co., as the nominee of The Depository
Trust Company. No person acquiring an interest in the Pass Through
Certificates will be entitled to receive a definitive certificate representing
such person's interest in the Pass Through Trust unless definitive
certificates are issued under the limited circumstances described under the
caption "Description of the Certificates--Book-Entry Registration--Definitive
Certificates" in the accompanying Prospectus.
Payments of principal, premium, if any, and interest on the Secured Notes
held in the Pass Through Trust will be distributed by the Pass Through Trustee
to Certificateholders on each Regular Distribution Date and each Special
Distribution Date as described in the following two paragraphs, except in
certain cases when the Secured Notes are in default. See "Description of the
Certificates--Events of Default and Certain Rights Upon an Event of Default"
in the accompanying Prospectus. Payments of interest on the Secured Notes are
scheduled to be received by the Pass Through Trustee on January 2 and July 2
of each year, commencing on July 2, 1997, until the final distribution date
for the Pass Through Trust. Payments of principal on the Secured Notes are
scheduled to be received by the Pass Through Trustee on January 2 in certain
years, commencing on January 2, 1998 (such scheduled payments of principal and
interest on the Secured Notes are herein referred to as "Scheduled Payments",
and January 2 and July 2 of each year (until the final distribution date) are
herein referred to as "Regular Distribution Dates"). Scheduled Payments of
principal on the Secured Notes held in the Pass Through Trust are set forth in
this Prospectus Supplement under the caption "Description of the Secured
Notes--Principal and Interest Payments".
The Pass Through Trustee will distribute on each Regular Distribution Date
all Scheduled Payments the receipt of which is confirmed by the Pass Through
Trustee on such Regular Distribution Date. Each Certificateholder will be
entitled to receive a pro rata share of any distribution in respect of a
Scheduled Payment of principal and interest made on the Secured Notes. Each
such distribution in respect of a Scheduled Payment will be made by the Pass
Through Trustee to the holders of record of the Pass Through Certificates on
the 15th day preceding such Regular Distribution Date, subject to certain
exceptions. 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 by the Pass Through Trustee 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.
Payments of principal, premium, if any, and interest received by the Pass
Through Trustee on account of the redemption, if any, of the Secured Notes,
and payments received by the Pass Through
S-12
<PAGE>
Trustee following a default in respect of the Secured Notes (including
payments received by the Pass Through Trustee on account of the purchase by
the Owner Trustee or the Owner Participant of the Secured Notes, the sale by
the Pass Through Trustee of the Secured Notes or the exercise of remedies
under the Indenture by the Indenture Trustee) ("Special Payments") will be
distributed on, in the case of a redemption or a purchase, the date of such
redemption or purchase, which shall be a Business Day, and otherwise, except
as described in the next paragraph, 20 days after the Pass Through Trustee has
confirmed receipt of the funds for such Special Payment (or the next Business
Day after such 20th day if such date is not a Business Day) (each, a "Special
Distribution Date"). The Pass Through Trustee will mail notice to the
Certificateholders not less than 20 days prior to the Special Distribution
Date on which any Special Payment is scheduled to be distributed by the Pass
Through Trustee stating such anticipated Special Distribution Date. Each
distribution of a Special Payment, other than the final distribution, on a
Special Distribution Date will be made by the Pass Through Trustee to the
Certificateholders of record on the 15th day next preceding such Special
Distribution Date. See "Description of the Secured Notes--Prepayments" in this
Prospectus Supplement and "Description of the Certificates--Events of Default
and Certain Rights Upon an Event of Default" in the accompanying Prospectus.
In the event that, on the issuance date of the Pass Through Certificates,
all of the proceeds from the sale of the Pass Through Certificates are not
used to purchase the Secured Notes, such Secured Notes may be purchased by the
Pass Through Trustee at any time on or prior to July 28, 1997. In such event,
the Pass Through Trustee will hold such proceeds from the sale of the Pass
Through Certificates that are not used to purchase Secured Notes in an escrow
account pending the purchase of the Secured Notes not so purchased. Such
proceeds will be invested in certain specified investments having maturity
dates in no event later than July 28, 1997 at the discretion and risk of, and
for the account of, the Lessee, which will be responsible for any losses on
such investments. To the extent that any amount of the proceeds from the sale
of any Pass Through Certificates held in the escrow account referred to above
is not used to purchase Secured Notes on or prior to July 28, 1997, such
amount will be distributed by the Pass Through Trustee to the holders of
record of the Pass Through Certificates on a pro rata basis upon not less than
20 days' prior notice to them as a Special Payment on a Special Distribution
Date not later than August 17, 1997, together with interest thereon at a rate
equal to the rate applicable to such Pass Through Certificates, but without
premium, and the Lessee will pay to the Pass Through Trustee on such date an
amount equal to such interest.
S-13
<PAGE>
POOL FACTORS
As of the date of issuance of the Pass Through Certificates by the Pass
Through Trustee, and assuming that all proceeds are used to purchase Secured
Notes on or before July 28, 1997 and that no redemption, purchase, default or
certain actions taken following a default thereon in respect of the Secured
Notes shall occur, the aggregate scheduled repayments of principal of the
Secured Notes for the Pass Through Trust, and the resulting Pool Factors for
the Pass Through Trust after taking into account each such repayment, are set
forth below:
PASS THROUGH TRUST, 1997-A
<TABLE>
<CAPTION>
SCHEDULED PRINCIPAL
REGULAR DISTRIBUTION DATE PAYMENTS ON SECURED NOTES POOL FACTOR
------------------------- ------------------------- -----------
<S> <C> <C>
July 2, 1997........................ $ 0 1.0000000
January 2, 1998..................... 1,614,162 0.9830678
July 2, 1998........................ 0 0.9830678
January 2, 1999..................... 2,837,144 0.9533068
July 2, 1999........................ 0 0.9533068
January 2, 2000..................... 3,038,046 0.9214384
July 2, 2000........................ 0 0.9214384
January 2, 2001..................... 3,259,594 0.8872461
July 2, 2001........................ 0 0.8872461
January 2, 2002..................... 3,497,263 0.8505606
July 2, 2002........................ 0 0.8505606
January 2, 2003..................... 3,752,262 0.8112002
July 2, 2003........................ 0 0.8112002
January 2, 2004..................... 9,815,020 0.7082430
July 2, 2004........................ 0 0.7082430
January 2, 2005..................... 4,919,940 0.6566339
July 2, 2005........................ 0 0.6566339
January 2, 2006..................... 5,292,171 0.6011203
July 2, 2006........................ 0 0.6011203
January 2, 2007..................... 7,921,045 0.5180304
July 2, 2007........................ 0 0.5180304
January 2, 2008..................... 3,853,628 0.4776067
July 2, 2008........................ 0 0.4776067
January 2, 2009..................... 0 0.4776067
July 2, 2009........................ 0 0.4776067
January 2, 2010..................... 7,744,398 0.3963698
July 2, 2010........................ 0 0.3963698
January 2, 2011..................... 9,395,839 0.2978096
July 2, 2011........................ 0 0.2978096
January 2, 2012..................... 10,106,558 0.1917942
July 2, 2012........................ 0 0.1917942
January 2, 2013..................... 10,871,036 0.0777595
July 2, 2013........................ 0 0.0777595
January 2, 2014..................... 7,412,894 0.0000000
</TABLE>
S-14
<PAGE>
DESCRIPTION OF THE SECURED NOTES
The following summary of the particular terms and provisions of the Secured
Notes supplements, and, to the extent inconsistent therewith, replaces, the
description of the general terms and provisions of the Secured Notes set forth
in the accompanying Prospectus under the heading "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 Participation
Agreement, the Secured Notes, the Indenture, the Lease, the Parent Guaranty,
the Ground Lease and the Trust Agreement, forms of which will be filed by
Mobil with the Commission as exhibits to a Current Report on Form 8-K. The
summaries should be read in conjunction with the statements under the heading
"Description of the Secured Notes" in the accompanying Prospectus.
GENERAL
The Secured Notes will be issued under an Indenture between the Owner
Trustee and State Street Bank and Trust Company, as Indenture Trustee.
The Owner Trustee will lease the Facility Assets to the Lessee pursuant to
the Lease. Under the Lease, the Lessee is obligated to pay rent ("Basic Rent")
to the Indenture Trustee on behalf of the Owner Trustee in installments that
are at least sufficient to pay the scheduled installments of principal and
interest due and payable on the Secured Notes. The Secured Notes are not,
however, a direct obligation of, or guaranteed by, the Lessee or Mobil. The
Lessee's obligations under the Lease and the other Operative Documents to
which it is a party are general obligations of the Lessee and are irrevocably
and unconditionally guaranteed by Mobil under the Parent Guaranty.
PRINCIPAL AND INTEREST PAYMENTS
The Maturity Date and aggregate principal amount of the Series 1997-A
Secured Notes to be held in the Pass Through Trust are January 2, 2014 and
$95,331,000, respectively.
S-15
<PAGE>
Interest on each Secured Note will be payable on the unpaid principal amount
of such Secured Note at the rate per annum indicated on the face of such
Secured Note on each Regular Distribution Date for which interest is payable
thereon. Such interest will be computed on the basis of a 360-day year of
twelve 30-day months. The principal on the Secured Notes held in the Pass
Through Trust will be payable as set forth below.
SCHEDULE OF PRINCIPAL PAYMENTS ON THE SECURED NOTES
<TABLE>
<CAPTION>
SCHEDULED PAYMENTS
REGULAR DISTRIBUTION DATE OF PRINCIPAL
------------------------- ------------------
<S> <C>
July 2, 1997.......................................... $ 0
January 2, 1998....................................... 1,614,162
July 2, 1998.......................................... 0
January 2, 1999....................................... 2,837,144
July 2, 1999.......................................... 0
January 2, 2000....................................... 3,038,046
July 2, 2000.......................................... 0
January 2, 2001....................................... 3,259,594
July 2, 2001.......................................... 0
January 2, 2002....................................... 3,497,263
July 2, 2002.......................................... 0
January 2, 2003....................................... 3,752,262
July 2, 2003.......................................... 0
January 2, 2004....................................... 9,815,020
July 2, 2004.......................................... 0
January 2, 2005....................................... 4,919,940
July 2, 2005.......................................... 0
January 2, 2006....................................... 5,292,171
July 2, 2006.......................................... 0
January 2, 2007....................................... 7,921,045
July 2, 2007.......................................... 0
January 2, 2008....................................... 3,853,628
July 2, 2008.......................................... 0
January 2, 2009....................................... 0
July 2, 2009.......................................... 0
January 2, 2010....................................... 7,744,398
July 2, 2010.......................................... 0
January 2, 2011....................................... 9,395,839
July 2, 2011.......................................... 0
January 2, 2012....................................... 10,106,558
July 2, 2012.......................................... 0
January 2, 2013....................................... 10,871,036
July 2, 2013.......................................... 0
January 2, 2014....................................... 7,412,894
</TABLE>
If any date scheduled for any payment of principal of, premium, if any, or
interest on any Secured Note 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))
PREPAYMENTS
In the event that an Event of Loss shall occur with respect to the Facility
Assets (unless the Lessee shall have elected to rebuild the Facility Assets in
accordance with the Lease), the Owner
S-16
<PAGE>
Trustee shall redeem, on a Special Distribution Date, all the outstanding
Secured Notes, at a redemption price equal to 100% of the unpaid principal
amount thereof, together with any accrued and unpaid interest thereon to, but
not including, the date of redemption, but without the payment of any Make-
Whole Amount or other premium. See "Description of the Secured Notes--The
Lease--Event of Loss" in this Prospectus Supplement. (Indenture, Section
3.02(a); Lease, Section 12.2(a))
In the event that the Lessee exercises any of its rights to terminate the
Lease or to purchase the Facility Assets (without assuming the rights and
obligations of the Owner Trustee with respect to the Secured Notes), the Owner
Trustee shall redeem, on a Special Distribution Date, all the outstanding
Secured Notes, at a redemption price equal to 100% of the unpaid principal
amount thereof, together with any accrued and unpaid interest thereon to, but
not including, the date of redemption, plus, if such redemption is made prior
to the Premium Termination Date, a premium equal to the Make-Whole Amount, if
any, with respect to such Secured Notes, and otherwise without premium. See
"Description of the Secured Notes--The Lease--Termination" and "Description of
the Secured Notes--The Lease--Lessee Purchase Options" in this Prospectus
Supplement. (Indenture, Section 3.02; Lease, Sections 6 and 7) If, in the case
of certain early terminations of the Lease, a proposed sale of the Facility
Assets on a lease termination date is not completed, the corresponding
redemption will not take place and any notice of redemption will be deemed
revoked. (Indenture, Section 3.10)
At any time the Owner Trustee may, with the prior written consent of the
Lessee, redeem in whole all the outstanding Secured Notes, at a redemption
price equal to 100% of the unpaid principal amount thereof, together with any
accrued and unpaid interest thereon to, but not including, the date of
redemption, plus, if such redemption is made prior to the Premium Termination
Date, a premium equal to the Make-Whole Amount, if any, with respect to such
Secured Notes, and otherwise without premium. (Indenture, Section 3.05) If
notice of such a redemption shall have been given in connection with a
refinancing of the Secured Notes, such notice may be revoked not later than
three Business Days prior to the proposed redemption date. (Indenture, Section
3.10)
In addition, the Secured Notes are subject to purchase or redemption in
whole by the Owner Trustee or 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, during which time the
Secured Notes could, but shall not, have been accelerated, (ii) the Indenture
Trustee shall have given the Owner Trustee or the Owner Participant notice of
its intent to accelerate the Secured Notes or (iii) the Secured Notes shall
have been accelerated, at a price equal to the aggregate unpaid principal
amount thereof, together with any accrued and unpaid interest thereon to, but
not including, the date of purchase or redemption, but without the payment of
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 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 the 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. The Make-Whole Amount, if any, payable
with respect to any Secured Note will be determined by an independent
investment banking institution of national standing selected by the Lessee.
The "Treasury Rate" means, with respect to each Secured Note to be redeemed
or purchased, a per annum rate (expressed as a semiannual equivalent and as a
decimal and, in the case of U.S. Treasury bills, converted to a bond
equivalent yield) determined to be the per annum rate equal to the semiannual
yield to maturity of U.S. Treasury securities maturing on the Average Life
Date (as defined
S-17
<PAGE>
below) of such Secured Note, as determined by interpolation between the most
recent weekly average yields to maturity for two series of U.S. 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 redemption date.
The "Average Life Date" for any Secured Note to be redeemed shall be the
date which follows the redemption date by a period equal to the Remaining
Weighted Average Life at the redemption date of such Secured Note. The
"Remaining Weighted Average Life" of such Secured Note at the redemption date
of such Secured Note is the number of days determined by dividing (a) the sum
of the products obtained by multiplying (i) the amount of each remaining
principal payment on such Secured Note by (ii) the number of days from and
including the redemption 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 issued under the Indenture are secured by, among other
things, (i) an assignment by the Owner Trustee to the Indenture Trustee of the
Owner Trustee's rights under the Lease (other than rights in respect of
Excepted Payments), including the right to receive all payments of rent
thereunder, (ii) a security interest granted by the Owner Trustee to the
Indenture Trustee in the Facility Assets (other than the interests of the
Lessee under the Lease), (iii) an assignment by the Owner Trustee to the
Indenture Trustee of certain of the Owner Trustee's rights under the Parent
Guaranty (other than rights in respect of Excepted Payments) and (iv) an
assignment by the Owner Trustee to the Indenture Trustee of the Owner
Trustee's leasehold and easement interests in the Site created by the Ground
Lease. (Indenture, Granting Clause)
So long as no Indenture Event of Default has occurred and is continuing, the
Owner Trustee will be entitled to exercise all of its rights under the Lease
and the other Operative Documents, subject to certain specific exceptions
(including with respect to amendments, waivers, modifications and consents
relating to specified provisions of certain of the Operative Documents). The
assignment by the Owner Trustee to the Indenture Trustee of its rights under
the Lease and the other Operative Documents also excludes its rights in
respect of Excepted Payments. (Indenture, Granting Clause, Sections 6.08
and 9.02)
Funds, if any, held from time to time by the Indenture Trustee pursuant to
any Operative Document will be invested and reinvested in Permitted
Investments by the Indenture Trustee at the direction of the Lessee acting as
agent of the Owner Trustee. The Lessee, on behalf and as agent of the Owner
Trustee, is required to pay on demand to the Indenture Trustee the amount of
any loss resulting from any such investment. So long as no Lease Event of
Default has occurred and is continuing under the Lease, the Lessee is entitled
to receive any profits made from such investments. (Lease, Section 19.7;
Indenture, Section 7.04)
ADDITIONAL NOTES
Additional Secured Notes ("Additional Notes") may be issued under and
secured by the Indenture, at any time and from time to time, to finance the
cost of certain modifications, alterations, additions
S-18
<PAGE>
and improvements to the Facility Assets ("Modifications"); provided that
certain conditions set forth in the Indenture are satisfied, including, among
other things, that (i) after giving effect to the issuance of the Additional
Notes, the aggregate principal amount of all Secured Notes outstanding will
not exceed 85% of the Fair Market Sales Value of the Facility Assets (after
giving effect to such Modifications), (ii) the date of maturity of the
Additional Notes will not extend beyond the end of the Basic Lease Term (or if
the Lessee shall have exercised an option to renew the Lease, the applicable
Renewal Term), (iii) no Lease Event of Default or Indenture Event of Default
will have occurred and be continuing on the date of issuance of the Additional
Notes, (iv) the Indenture Trustee will have received opinions as to the
enforceability of the transaction and the creation and perfection of the
security interest in such Modifications and (v) the terms of the Additional
Notes, except for the terms of payment, will be substantially the same as the
other outstanding Secured Notes. Any such Additional Notes may be issued to
persons or entities other than the Pass Through Trustee. (Indenture, Section
2.08)
The terms, conditions and designations of any Additional Notes will be set
forth in a supplement to the Indenture. Additional Notes will not rank senior
in any respect, but may be subordinate, to the outstanding Secured Notes
issued in respect of the Pass Through Certificates sold pursuant to this
Offering. (Indenture, Section 2.08)
LIMITATION OF LIABILITY
The Secured Notes issued under the Indenture are not direct obligations of,
or guaranteed by, the Lessee, the Owner Trustee, the Owner Participant, or
Mobil. None of the Owner Trustee, the Owner Participant or the Indenture
Trustee, or any affiliates thereof, shall be personally liable to any holder
of the Secured Notes or, in the case of the Owner Trustee and the Owner
Participant, to the Indenture Trustee for any amounts payable under any
Secured Notes or, except as provided in the Operative Documents, 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 payments made by the Lessee under the Lease and payments,
if any, made by Mobil under the Parent Guaranty). (Indenture, Section 2.02)
MERGER, CONSOLIDATION AND TRANSFER OF ASSETS
The Lessee will be prohibited from consolidating with or merging with any
other corporation or transferring substantially all of its assets to another
corporation unless, among other things, (a) the Lessee is the continuing
corporation or the successor corporation shall be a corporation organized and
existing under the laws of the United States or any State thereof or the
District of Columbia and shall assume the due and punctual performance and
observance of all of the covenants and obligations of the Lessee under each
Operative Document to which the Lessee is a party, (b) on the date of such
transaction, certain material Lease Events of Default shall not have occurred
and be continuing and (c) after giving effect to such transaction, the Parent
Guaranty remains in full force and effect and constitutes a full and
unconditional guaranty by Mobil of the successor corporation's obligations
under the Lease and each other Operative Document to which the Lessee is a
party. (Participation Agreement, Section 10.4)
Pursuant to the Parent Guaranty, Mobil will be prohibited from consolidating
with or merging into any other corporation or transferring substantially all
of its assets to another corporation, unless Mobil is the continuing
corporation or such successor or transferee expressly and unconditionally
assumes the due and punctual performance and observance of all covenants and
obligations of Mobil under the Parent Guaranty.
S-19
<PAGE>
INDENTURE EVENTS OF DEFAULT, CURE, NOTICE AND WAIVER
Indenture Events of Default include: (a) a Lease Event of Default (other
than a Lease Event of Default arising from the failure to make an Excepted
Payment) that shall have occurred and be continuing, (b) a default by the
Owner Trustee in making payments when due of principal of, Make-Whole Amount,
if any, or interest on any Secured Notes 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 from holders of Secured Notes owning at least 25% in principal
amount of Secured Notes outstanding specifying such failure and requiring it
to be remedied (or if such failure is remediable and the Owner Trustee or the
Owner Participant 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 Trustee or the Owner Participant or
any material adverse effect is cured or corrected within 30 days after receipt
of written notice to the Owner Trustee or the Owner Participant from the
Indenture Trustee or from holders of Secured Notes owning at least 25% in
principal amount of Secured Notes outstanding; provided that, if such material
adverse effect is capable of being remedied and the Owner Trustee or the Owner
Participant is diligently attempting to remedy such effect, such person 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 the Lessee fails to make any Basic Rent payment under the Lease within 10
Business Days after the same has become due, the Indenture Trustee may not
exercise remedies under the Lease or declare the Secured Notes to be due and
payable or exercise any other remedies under the Indenture until 11 days after
the 10th Business Day of such failure. If the Owner Trustee furnishes to the
Indenture Trustee the amount of such Basic Rent payment, together with
interest thereon on account of the delayed payment thereof, within such 11-day
period, the Indenture Trustee and holders of the outstanding Secured Notes may
not exercise any remedies otherwise available under the Indenture or the Lease
as the result of such failure. The Owner Trustee's rights to cure an Indenture
Event of Default resulting from the failure of the Lessee to pay Basic Rent
under the Lease will be limited to the right to cure an aggregate of six such
defaults, or three such consecutive defaults, under the Lease and may only be
exercised as long as no Indenture Event of Default has occurred and is
continuing under the Indenture (other than arising from such failure to pay
Basic Rent). The Owner Trustee or the Owner Participant may also cure any
other default by the Lessee 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 under the Indenture at any time prior
to the day which is the later of (x) the 11th day subsequent to the date
notice of such default or Lease Event of Default is delivered by the Indenture
Trustee to the Owner Trustee or the Owner Participant and (y) the 11th day
subsequent to the expiration of any applicable grace period with respect to
such default or Lease Event of Default; provided that neither the Owner
Participant nor the Owner Trustee shall have any right to cure any such Lease
Event of Default if the amounts previously expended (and unreimbursed by the
Lessee or Mobil) to cure such Lease Events of Default and the amount that
would be expended in connection with such Lease Event of Default would exceed
in the aggregate 3% of the cost to the Owner Trustee of the Facility Assets.
During such 11-day period, the Indenture Trustee may not exercise remedies
under the Lease or declare the Secured Notes to be payable or otherwise
exercise remedies under the Indenture. (Indenture, Section 5.03)
S-20
<PAGE>
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 the 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, or interest on, any Secured Notes or a default
in respect of any covenant or provision of such Indenture that cannot be
modified or amended without the consent of each holder of Secured Notes.
(Indenture, Section 5.08)
The Lessee is required to furnish annually to the Pass Through Trustee a
statement as to the fulfillment of its covenants under the Agreement, and to
the Indenture Trustee as to the fulfillment of its covenants under the Lease
and the other Operative Documents to which the Lessee is a party during the
preceding year. (Agreement, Section 8.4; Participation Agreement, Section
10.1)
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 the 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 the 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 monies 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 Lease with
respect to the Indenture Estate subject to the Lease. See "Description of the
Secured Notes--The Lease--Lease Events of Default" in this Prospectus
Supplement. 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 and the Lessee 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. (Indenture, Section
5.04)
The Indenture Trustee's right to exercise foreclosure remedies under the
Indenture is subject in certain circumstances to its having proceeded to
declare the Lease to be in default and to exercise remedies seeking to
terminate 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 until the later of (i) the expiration of a period of 90
days from the commencement of such prohibition and (ii) the expiration of an
additional period commencing on the day immediately following the expiration
of such 90-day period and ending on the earliest of (x) the 180th day after
the relevant stay or prohibition is imposed, (y) the occurrence of any
additional Indenture Event of Default during such additional period and (z)
rejection of the Lease. (Indenture, Section 5.04) In the event the Lessee were
a debtor in a proceeding under Title 11, United States Code (the "Bankruptcy
Code"), the automatic stay provisions of the Bankruptcy Code would bar the
Indenture Trustee from exercising remedies under the Lease, and the Indenture
Trustee would thus be restricted from exercising remedies under the Indenture.
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In addition, in a proceeding under the Bankruptcy Code, the Lessee or its
bankruptcy trustee could seek to reject the Lease. In such event, the
Indenture Trustee would continue to have a security interest in the Facility
Assets and, subject to the restriction described in the immediately preceding
paragraph, could exercise foreclosure and other remedies against the Facility
Assets under the Indenture. The ability of the Indenture Trustee to realize
proceeds from the Facility Assets sufficient to pay the full amounts owed in
respect of the Secured Notes, however, could be subject to practical
constraints, such as a potential scarcity of buyers, potential environmental
concerns or the inability of the Lessee, Mobil or other Mobil affiliates to
perform their obligations under the Support Agreements and the Ground Lease.
In the event the Lease were determined to be a lease of real property,
furthermore, the Indenture Trustee's and the Owner Trustee's claim for damages
as a result of a rejection of the Lease would be limited by Section 502(b)(6)
of the Bankruptcy Code 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
and unpaid. As so limited, it is unlikely that such claim for damages would be
sufficient for the repayment in full of the Secured Notes. Although the Lease
provides that it is not a lease of real property, a court could conclude
otherwise and apply the foregoing limitation. The ability of the Indenture
Trustee and the Owner Trustee to collect liquidated damages under the Lease
may also be limited by Texas law.
The sale of the Indenture Estate in the exercise of remedies under the
Indenture will be free and clear of any rights of the Owner Trustee and the
Lessee, including the rights of the Lessee under the Lease; provided that no
exercise of any remedies by the Indenture Trustee may affect the rights of the
Lessee 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 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 the Lease or in respect of the Indenture Estate or take
such other action as shall be specified in such instructions, but in such
event the Indenture Trustee shall not be required to take or refrain from
taking any action in connection therewith if it shall have reasonable grounds
for believing that adequate indemnity against such risk is not assured to it.
(Indenture, Sections 6.02 and 6.04)
If an Indenture Event of Default occurs and is continuing under the
Indenture and the Indenture Trustee (as security assignee) has declared the
Lease to be in default or the Secured Notes have been accelerated, any sums
held or received by the Indenture Trustee will be applied, first, 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, second, to reimburse the
holders of the Secured Notes for any amounts paid to indemnify the Indenture
Trustee as provided in the Indenture, third, to payment in full of the
aggregate unpaid principal amount of the Secured Notes then outstanding and
all accrued but unpaid interest thereon to the date of distribution, fourth,
to payment of all other amounts payable to the holders of Secured Notes
pursuant to the Participation Agreement or any other Operative Document, and
fifth, for distribution to the Owner Trustee in accordance with the Trust
Agreement. (Indenture, Section 4.03)
In the event of the bankruptcy, insolvency, receivership or like proceedings
involving the Owner Participant, it is possible that, notwithstanding that the
Facility Assets are owned by the Owner Trustee in trust, the Facility Assets,
the Lease, the Parent Guaranty and the Secured Notes could become part of such
proceeding. In such event, payments under the Lease, the Parent Guaranty or
the Secured Notes could 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 Parent Guaranty and the Facility Assets.
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MODIFICATION OF INDENTURE, LEASE AND OTHER AGREEMENTS
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, the Lease, the Participation Agreement and the Trust Agreement may
not be amended or modified, except to the extent indicated below.
Certain provisions of the Lease, the Participation Agreement and the Trust
Agreement may be modified, amended or supplemented by the parties thereto
without the consent of holders of the Secured Notes outstanding under the
Indenture so long as no Indenture Event of Default shall have occurred and be
continuing thereunder. (Indenture, Section 9.02(c))
With the consent of holders of a majority in aggregate principal amount of
the Secured Notes and the written request of the Owner Trustee, the Indenture
Trustee shall execute an amendment to or supplement to, or give a consent,
waiver, authorization or approval, to add to or change or eliminate any
provisions of the Operative Documents; provided that without the consent of
each holder of Secured Notes outstanding under the Indenture, no such action
may (a) change the stated maturity or reduce the principal amount of, or
premium, if any, or interest payable on any Secured Note issued under the
Indenture or impair the right to institute suit for the enforcement of any
such payment or change the provisions relating to redemptions or change the
date or place on which, or the coin or currency in 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, except as
permitted in the Indenture, or deprive any holder of a Secured Note issued
thereunder of the benefit of the lien of the Indenture, (c) change the
percentage in principal amount of any outstanding Secured Notes issued under
the Indenture necessary to modify or amend any provision of the Indenture or
any other Operative Document or to approve any action therewith, (d) modify
the definitions of "Indenture Default", "Indenture Event of Default",
"Majority in Interest of Holders of Notes", "Lease Default", or "Lease Event
of Default", (e) modify the order of priority of payments under the Indenture,
(f) modify the requirements for supplementing or amending the Indenture, (g)
reduce the amount or change the time of any payment of Basic Rent or certain
other obligations of the Lessee under the Lease, except as provided therein or
in the Participation Agreement, (h) amend the Lease or the Parent Guaranty
releasing the Lessee or Mobil from its respective payment obligations
thereunder or changing the absolute and unconditional character of such
obligations or (i) modify the indemnity provisions of any Operative Documents
in any manner materially adverse to the interests of the holders of the
Secured Notes. (Indenture, Section 9.02(b))
Without the consent of any holders of Secured Notes, and at any time from
time to time, the Indenture Trustee and the Owner Trustee may enter into one
or more supplements or amendments to the Indenture, among other things, (i) to
subject additional property to the lien of the Indenture, (ii) to correct or
amplify the description of any property subject to the lien of the Indenture,
(iii) to add to the covenants of the Owner Trustee and to surrender any right
or power conferred upon the Owner Trustee, the Owner Participant or the
Lessee, (iv) to cure any ambiguity or to correct any mistake in the Secured
Notes which may be inconsistent with other provisions of the Indenture, (v) to
provide for the assumption by the Lessee of the obligations of the Owner
Trustee under the Indenture as described under "Description of the Secured
Notes--Assumption of Secured Notes Under Certain Circumstances" in this
Prospectus Supplement, (vi) to evidence the succession of a new Owner Trustee
or Indenture Trustee, (vii) to add to the rights of the holders of Secured
Notes or (viii) to provide for the establishment and issuance of Additional
Notes as described under "Description of the Secured Notes--Additional Notes"
in this Prospectus Supplement, or refunding Secured Notes in connection with a
refinancing of the Secured Notes. (Indenture, Section 9.01)
ASSUMPTION OF SECURED NOTES UNDER CERTAIN CIRCUMSTANCES
If the Lessee purchases the Facility Assets upon the exercise of its
purchase options described below under "Description of the Secured Notes--The
Lease--Lessee Purchase Options", the Lessee
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may assume all of the rights and obligations of the Owner Trustee under the
Indenture (other than its obligations in its individual capacity), including
the obligation to make payments in respect of the Secured Notes issued
thereunder. In such event, certain relevant provisions of the Lease, including
(among others) provisions relating to maintenance, possession and use of the
Facility Assets, 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 Facility
Assets. Upon such assumption the Owner Trustee will be released from all
obligations with respect to the Secured Notes. As a condition to such
assumption, the Lessee must deliver to the Indenture Trustee an opinion of
counsel to the effect that holders of the Secured Notes will not recognize
income, gain or loss for United States federal income tax purposes as a result
of such assumption. The Lessee 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 LEASE
Term and Rent. The Owner Trustee will lease the Facility Assets and sublease
the Site to the Lessee pursuant to the Lease for a term commencing on the
Closing Date and expiring on the 20th anniversary of the Closing Date, unless
earlier terminated or extended as described therein. (Lease, Sections 2.1 and
2.4) The Lessee will have the sole responsibility and obligation to make all
payments due under the Lease, including, without limitation, any and all
payments of Basic Rent, Supplemental Rent, Stipulated Loss Value and
Termination Value. (Lease, Section 3.6)
Payments of Basic Rent under the Lease will be payable on each January 2 and
July 2 and on the scheduled expiration date of the Lease term (or, if such day
is not a Business Day, on the next succeeding Business Day without interest),
commencing July 2, 1997, and will be paid directly to the Indenture Trustee,
as assignee of the Owner Trustee. (Lease, Sections 3.1, 3.3 and 14.1;
Indenture, Section 4.01) Basic Rent and other amounts payable under the Lease
will be sufficient to pay in full all payments of principal and interest on
the Secured Notes. (Lease, Section 3.5) In certain cases, Basic Rent payments
under the Lease may be adjusted, but adjusted Basic Rent payments may never be
less than the scheduled periodic installment payments of principal of and
interest on the Secured Notes. (Lease, Section 4.1) The balance of any
payments of Basic Rent under the Lease, after payment of the scheduled
principal of and interest payments on the Secured Notes, will be paid by the
Indenture Trustee to the Owner Trustee or as the Owner Trustee may direct.
(Indenture, Section 4.01) The Lessee's obligation to pay Rent and to cause
other payments to be made under the Lease is an absolute, irrevocable and
unconditional obligation of the Lessee, 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 the Lessee under the
Lease shall be those of a lessee under a "net lease". (Lease, Section 3.6)
Accordingly, the Lessee shall be obligated, at its expense, to pay all costs
and expenses of operating and maintaining the Facility Assets. (Lease, Section
11.1) The Lessee must maintain the Facility Assets as may be required to (a)
comply in all material respects with all Government Rules and Government
Actions (subject to certain contest rights and other exceptions) and (b) keep
the Facility Assets in good working order and good physical condition
(ordinary wear and tear excepted), and in compliance with applicable insurance
requirements under the Lease. (Lease, Section 11.1)
Modifications and Alterations. So long as the Lease is in effect, subject to
certain exceptions in the Lease, the Lessee shall make (or cause to be made)
all Modifications to the Facility Assets as may be required from time to time
to comply in all material respects with all applicable Governmental Rules and
Governmental Actions and to maintain any insurance coverage required under the
Lease. The Lessee shall complete all such required Modifications in a good and
workmanlike manner, with reasonable dispatch and (but only to the extent
practicable) in a manner which does not decrease the
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Fair Market Sales Value of the Facility Assets or decrease the remaining
useful life or utility of the Facility Assets or cause the Facility Assets to
become "limited use property". The Lessee may make (or cause or allow to be
made) other Modifications to the Facility Assets, at its own cost and expense
and without the consent of the Owner Trustee, provided that such other
Modifications (i) are done in a good and workmanlike manner, (ii) do not
reduce the Fair Market Sales Value of the Facility Assets below such value
immediately prior to the time such other Modifications are made and (iii) do
not cause the Facility Assets to become "limited use property" or reduce their
utility or useful life. (Lease, Sections 11.3 and 11.4) Under certain
circumstances, the Owner Participant may participate in the financing of
certain Modifications. As described under "Description of the Secured Notes--
Additional Notes" in this Prospectus Supplement, Modifications under certain
circumstances may also be financed through the issuance of Additional Notes.
Sublease and Assignment. The Lessee may, without the consent of the Owner
Trustee, the Indenture Trustee, the Owner Participant, the holders of the
Secured Notes or any other Person, at any time and from time to time, assign
the Lease and all or any of its interests and rights thereunder, to any Person
so long as, (i) after giving effect to such assignment, the Parent 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 the Lessee's obligations under the Lease prior to giving
effect to any such assignment, and (ii) certain material Lease Events of
Default are not continuing on the date any such assignment is effected or
after giving effect thereto. The Lessee may, without the consent of the Owner
Trustee, the Indenture Trustee, the Owner Participant, the holders of the
Secured Notes or any other Person, at any time and from time to time, sublease
the Facility to another Person or Persons; provided that among other things,
(i) such sublease is expressly subject and subordinate to the Lease and in no
event continues beyond the Lease Term, (ii) the Lessee remains primarily
liable under the Lease as though no such sublease was in existence, (iii) the
Parent Guaranty remains in full force and effect and (iv) certain material
Lease Events of Default are not continuing at the commencement of such
sublease. Any sublessee under a sublease permitted under the Lease may sub-
sublease the Facility to another person under a sub-sublease that otherwise
complies with the provisions of the Lease applicable to a sublease thereunder.
On the Closing Date the Lessee will sublease the Facility to Mobil Oil as the
initial operator of the Facility Assets. (Lease, Section 14.2)
Liens. The Facility Assets will be maintained free of liens other than the
respective rights of the Lessee, the Owner Participant, the Owner Trustee, the
Indenture Trustee and the holders of the Secured Notes arising under the Lease
and the other Operative Documents and other than certain limited liens
permitted under the Lease relating to the Facility, including Lessor liens,
Owner Participant liens, Indenture Trustee liens, Loan Participant liens and
Pass Through Trustee liens; liens for taxes either not yet due and payable 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 Facility); materialmen's, mechanics' and other similar
liens arising in the ordinary course of business and either not yet due and
payable 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 Facility); liens arising out of
judgments or awards that are being appealed in good faith and whose
enforcement has been stayed pending such appeal (so long as during such
proceedings there is no material danger of the sale, forfeiture or loss of any
part of the Facility); other liens that do not materially adversely affect the
use of the Facility for its intended purposes, do not secure the payment or
performance of any obligation with respect to borrowed money, and do not
create any material risk of loss of title to or possession of the Site or the
Facility Assets; liens, assignments and subleases permitted by the Lease and
the rights of Mobil Oil under the initial sublease; and the rights and
interests of the Ground Lessor as permitted by the Ground Lease.
Insurance. The Lessee will, at its cost and expense, maintain (i) "all-risk"
(including against loss or damage by fire and lightning) property insurance
with respect to the Facility Assets, in such amounts
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and forms consistent with the practice of the Lessee or its Affiliates for
similar properties owned or leased by the Lessee's Affiliates and (ii) public
liability, including personal injury and property damage, and comprehensive
general liability insurance applicable to the Facility Assets, including,
without limitation, environmental claims arising out of or connected with the
possession, use, leasing, operation or condition of the Facility Assets, to
the extent such insurance is available, in such amounts and in such forms as
is consistent with the practice of the Lessee or its Affiliates for other
properties similar to the Facility Assets owned or leased by the Lessee's
Affiliates. Any insurance policy maintained by or on behalf of the Lessee
shall among other things name the Indenture Trustee as an additional insured.
All proceeds of insurance on account of any damage or destruction of the
Facility Assets or any part thereof shall be paid over to, or retained by, the
Lessee or as it may direct. In addition, Wilmington Trust Company (both in its
individual capacity and as Owner Trustee), the Lessee, the Owner Participant
and the Indenture Trustee will be each entitled to maintain additional
insurance coverage with respect to the Facility Assets for its own benefit and
at its own expense. (Lease, Section 13)
Termination. The Lessee shall have the right to terminate the Lease with
respect to the Facility Assets on any Basic Rent Payment Date (a "Termination
Date") if the Lessee determines in good faith that the Facility Assets are
obsolete, uneconomic or surplus to the needs of the Lessee or Mobil for any
reason. If the Lessee elects so to terminate the Lease and delivers to the
Owner Trustee an Officer's Certificate stating that (i) the premises of the
Site or the Facility or any portion thereof, as the case may be, are required
in connection with another business of Mobil and (ii) no subsidiary or
affiliate of Mobil intends to operate the Facility as a paraxylene and benzene
production facility, the Lessee shall have the right to purchase the Facility
on the Termination Date for a purchase price equal to the higher of the
Termination Value as of the Termination Date and the Fair Market Sales Value
of the Facility as of the Termination Date (the "Termination Purchase Price").
If the Lessee elects to terminate the Lease and shall have exercised its
rights to purchase the Facility on the Termination Date, the Owner Trustee
shall be obligated to transfer its interest in the Facility to the Lessee upon
receipt by the Owner Trustee (or, in the case of Supplemental Rent, by the
Persons entitled thereto) on the Termination Date of the Termination Purchase
Price, all accrued, due and unpaid Basic Rent and all Supplemental Rent then
due and owing (including the Make-Whole Amount, if any). (Lease, Sections 7.1,
7.2 and 7.3)
If the Lessee elects so to terminate the Lease and shall not have exercised
its rights to purchase the Facility, subject to the Owner Trustee's election
to retain the Facility as described below, the Lessee shall, as agent for the
Owner Trustee, use commercially reasonable efforts to solicit bids for the
cash purchase of the Facility on the Termination Date. On the Termination
Date, the Owner Trustee shall be obligated to transfer its interest in the
Facility to the highest bona fide cash bidder, unless the Owner Trustee has
duly elected to retain its interest in the Facility. If the Facility is sold,
the Owner Trustee will retain the total net sales price thereof and in
addition the Lessee shall be obligated to pay to the Owner Trustee an amount
equal to the excess, if any, of the Termination Value of the Facility over the
net proceeds realized from such sale. The Lessee also shall be obligated to
pay to the Owner Trustee (or, in the case of Supplemental Rent, to the Persons
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 Owner Trustee elects to retain the Facility, the
Lessee shall only be 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 Owner Trustee shall be obligated to pay to the Indenture
Trustee an amount equal to the unpaid principal amount of and any accrued but
unpaid interest on the Secured Notes. All funds to be paid to or deposited
with the Owner Trustee as described in this paragraph shall, so long as the
Indenture shall not have been discharged, be deposited directly with the
Indenture Trustee and shall be applied to prepay 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
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of the Indenture. The lien of the Indenture will terminate with respect to the
Facility after full payment to the Indenture Trustee of the Termination
Purchase Price or Termination Value, as the case may be, and all other amounts
then due and payable under the Indenture. The Lessee will be entitled, subject
to certain limitations, to revoke its termination election prior to the
Termination Date.
If no sale or retention of the Facility as described above shall have
occurred by the Termination Date, the Lessee's termination election will be
deemed to be revoked, and the Lease will continue in full force and effect.
The Lessee shall have the right to terminate the Lease if the Refinery or
any portion thereof becomes the subject of a sale, assignment or other
transfer agreement to a third party over which Mobil, directly or through a
Subsidiary, does not exercise majority control and the inclusion of the Site
or the Facility or any portion thereof in such transfer is determined by the
Lessee or Mobil to be an operational or economic prerequisite to the
conclusion of the transactions contemplated by such transfer. If the Lessee
shall elect so to terminate the Lease, on the Termination Date, the Owner
Trustee shall be obligated to transfer the Facility to the Lessee (or its
designee) upon receipt by the Owner Trustee (or, in the case of Supplemental
Rent, by the Persons entitled thereto) of the Termination Purchase Price for
the Facility, all accrued, due and unpaid Basic Rent, and all Supplemental
Rent then due and owing (including the Make-Whole Amount, if any). All funds
to be paid to or deposited with the Owner Trustee as described in this
paragraph shall, so long as the Indenture shall not have been discharged, be
deposited directly with the Indenture Trustee and shall be applied to prepay
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
Facility after full payment to the Indenture Trustee of the Termination
Purchase Price and all other amounts then due and payable under the Indenture.
The Lessee will be entitled, subject to certain limitations, to revoke its
termination election prior to the Termination Date. (Lease, Sections 7.1 and
7.2)
Lessee Purchase Options. The Lessee shall have certain options to purchase
the Facility at the end of the term of the Lease. During the term of the
Lease, in addition to the options described above under "Description of the
Secured Notes--The Lease--Termination", the Lessee shall have the option to
purchase the Facility:
(a) on July 2, 2002 or July 2, 2008;
(b) on any one of several Special Distribution Dates following notice by
the Lessee to the Owner Trustee that certain Modifications are proposed to
be made with respect to the Facility Assets and (x) such Modifications are
prohibited by the terms of the Lease or are not permitted by certain tax
rules, or (y) such Modifications will not be financed through the issuance
of Additional Notes;
(c) on any one of several Special Distribution Dates following notice by
the Lessee to the Owner Trustee that the Facility Assets or any portion
thereof have suffered certain damage not constituting an Event of Loss
which the Lessee has elected not to repair, restore or rebuild as required
by the Lease; or
(d) on any one of several Special Distribution Dates, under certain
circumstances, following notice by the Lessee to the Owner Trustee that as
a result of a change in United States federal or Texas law, there is a
material risk that the Lessee would be required to pay or indemnify for
certain taxes.
In each case the purchase price payable by the Lessee, together with the
other amounts payable by the Lessee in connection with such purchase shall be
sufficient to pay the unpaid principal of, accrued interest on and, if
termination of the Lease occurs prior to the Premium Termination Date, the
Make-Whole Amount, if any, on the Secured Notes.
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Event of Loss. In the event the Facility Assets suffer an Event of Loss, the
Lessee is obligated either to purchase, within 180 days of the occurrence of
such Event of Loss, the Facility Assets for the Stipulated Loss Value thereof
(together with all accrued and unpaid Basic Rent and Supplemental Rent then
due and owing) or rebuild or cause to be rebuilt the Facility Assets suffering
such Event of Loss so that the Facility Assets will have at least the same
value, utility and remaining useful life as the Facility Assets had
immediately prior to such Event of Loss. (Lease, Section 12) All funds to be
paid to or deposited with the Owner Trustee as described in this paragraph
shall, so long as the Indenture shall not have been discharged, be deposited
directly with the Indenture Trustee and shall be applied to redeem the Secured
Notes as provided in the Indenture. Amounts in excess of amounts applied to
redeem 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 Facility after full
payment to the Indenture Trustee of the Stipulated Loss Value and all other
amounts then due and payable under the Indenture. (Indenture, Sections 3.02
and 6.03)
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 Facility Assets or a Significant Portion thereof; (b) the permanent
condemnation, confiscation or seizure of, or requisition of title to, the
Facility Assets or a Significant Portion thereof by any Governmental
Authority; (c) the requisition of use of the Facility Assets or a Significant
Portion thereof by any Governmental Authority and which (i) has been ongoing
for a period of one year and which is reasonably expected to exceed the
remaining portion of the Basic Lease Term or (ii) extends for a period beyond
the date which is twelve months prior to the scheduled expiration of the Basic
Lease Term or any Renewal Term; or (d) the receipt of insurance proceeds based
upon an actual or constructive total loss of the Facility Assets or a
Significant Portion thereof. The occurrence of any of the events described in
(a), (b), (c), or (d) above with respect to the Site or a Significant Portion
of the Site may constitute, in the Lessee's reasonable discretion, an Event of
Loss with respect to the Facility Assets.
Lease Events of Default. Lease Events of Default shall include, among other
things: (a) the failure to make any payment of Basic Rent, Stipulated Loss
Value, Termination Value, any purchase price payable pursuant to the Lease or
Supplemental Rent in respect of the Make-Whole Amount, if any, within 10
Business Days after the date such payment becomes due, (b) the failure to make
payments of Supplemental Rent or any other payment (other than Basic Rent,
Stipulated Loss Value, Termination Value, any purchase price payable pursuant
to the Lease, Supplemental Rent in respect of the Make-Whole Amount, if any,
or payments relating to the Site sublease or Excepted Payments (unless the
Owner Trustee elects to have such failure to make such Excepted Payment
constitute a Lease Event of Default)) under the Lease or any other Operative
Document and such failure continues for a period of 15 Business Days after the
Lessee has received written notice of such failure from the Owner Trustee or
the Indenture Trustee, (c) failure by the Lessee in any material respect 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 and such failure shall continue for a period of 30 days after the
Lessee has received written notice thereof from the Owner Trustee or the
Indenture Trustee (or 365 days after such notice, if such default is
susceptible of cure or correction and the Lessee is diligently attempting to
cure or correct such default), (d) failure by Mobil to perform or observe in
any material respect any covenant or agreement to be performed or observed by
it under the Parent Guaranty and such failure shall continue for a period of
30 days after Mobil has received written notice thereof from the Owner Trustee
or the Indenture Trustee (or 365 days after such notice, if such default is
susceptible of cure or correction and Mobil is diligently attempting to cure
or correct such default), (e) the occurrence of certain events of bankruptcy,
reorganization or insolvency of the Lessee or Mobil, (f) any material
representation or warranty made by the Lessee under the Operative Documents
(other than the Tax Indemnity Agreement) or by Mobil under the Parent Guaranty
shall have been materially inaccurate when made and any material adverse
impact thereof shall not have been cured or corrected within 30 days after
written notice thereof from the Owner Trustee or the
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Indenture Trustee (or 180 days after such notice if such material adverse
impact is susceptible of cure or correction, so long as the Lessee or Mobil,
as applicable, is diligently attempting to cure or correct 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 Parent Guaranty shall cease to be in full force and effect
or to be the valid, binding and enforceable agreement of Mobil or Mobil shall
repudiate its material obligations thereunder or (h) the Lessee shall fail to
maintain the insurance coverage required by the Lease. (Lease, Section 15)
If a Lease Event of Default has occurred and is continuing, and the Lease
has been declared to be in default, the Indenture Trustee, as assignee of the
Owner Trustee's rights under the Lease, may exercise one or more of the
remedies provided in the Lease. These remedies include the right to repossess
and use or operate the Facility Assets, to sell or re-lease the Facility
Assets free and clear of the Lessee's rights and retain the proceeds and to
require the Lessee to pay certain liquidated damage amounts, including an
amount equal to the excess of the Stipulated Loss Value of the Facility Assets
plus the accrued rent due and payable on such date, if any, over the fair
market sales value of the Facility Assets. (Lease, Section 16.1) Such
liquidated damages may be limited by Texas law. See "Description of the
Secured Notes--Remedies" in this Prospectus Supplement.
THE GROUND LEASE
Pursuant to the Ground Lease, the Ground Lessor will lease the Site to the
Owner Trustee. The Ground Lease will have a term of approximately 30 years.
So long as the Lease has not expired or terminated, the covenants of the
Owner Trustee under the Ground Lease with respect to the payment of rent to
the Ground Lessor and the operation, maintenance and repair of the Site
generally will be satisfied by the Lessee's performance of its Lease
obligations. (Ground Lease, Sections 5.1 and 9.1)
THE PARENT GUARANTY
Pursuant to the Parent Guaranty, Mobil has irrevocably and unconditionally
guaranteed the full and prompt payment of all amounts payable by the Lessee
under the Lease, the Participation Agreement and each of the other Operative
Documents to which the Lessee is a party when and as the same shall become due
and payable. The Parent Guaranty is an unsecured obligation of Mobil and is
enforceable without any need first to enforce the Lease against the Lessee.
THE PARTICIPATION AGREEMENT
The Lessee 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, the Lessee is required to indemnify the
Owner Participant, the Owner Trustee and the Indenture Trustee for certain
taxes in connection with the ownership, lease, sale or use of the Facility
Assets. (Participation Agreement, Section 12.2) Subject to certain
restrictions, the Owner Participant may transfer its interest in the Facility
Assets. (Participation Agreement, Section 13) The Participation Agreement
provides that, following a request by the Owner Trustee under certain
circumstances (including during an existing Lease Event of Default), the
Lessee will enter into, or cause an appropriate Mobil affiliate to enter into,
the Support Agreements. The Support Agreements will provide for the Lessee or
such affiliate to grant certain necessary access or similar rights to the
extent not provided under the Ground Lease and to supply certain goods and
services, including certain utility services and "start-up" technical support
and training, to the Owner Trustee (or a permitted successor owner of the
Facility Assets at such time) for use in the production of paraxylene at the
Facility, generally at fair market rates. Mobil will unconditionally guarantee
the obligations of its affiliates under the Support Agreements. (Participation
Agreement, Section 10.9)
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FEDERAL INCOME TAX CONSEQUENCES
Prospective investors should consult the section entitled "Federal Income
Tax Consequences" in the accompanying Prospectus for a discussion of the
anticipated material federal income tax consequences of the purchase,
ownership and disposition of the Pass Through Certificates.
ERISA CONSIDERATIONS
Pass Through Certificates may be purchased by an employee benefit plan (a
"Plan") subject to the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"). A fiduciary of a Plan must determine that the purchase of a
Pass Through Certificate is consistent with its fiduciary duties under ERISA
and does not result in a non-exempt prohibited transaction as defined in
Section 406 of ERISA or Section 4975 of the Code. Employee benefit plans which
are governmental plans (as defined in Section 3(32) of ERISA) and certain
church plans (as defined in Section 3(33) of ERISA) are not subject to the
fiduciary responsibility provisions of ERISA. Any Plan that purchases a Pass
Through Certificate must be an "accredited investor" as defined in Rule
501(a)(1) of Regulation D of the Securities Act of 1933, as amended (the
"Securities Act").
The United States Department of Labor (the "DOL") has granted to Goldman,
Sachs & Co. an administrative exemption (Prohibited Transaction Exemption 89-
88, Exemption Application No. D-7573, 54 Fed. Reg. 42581 (1989)) (the
"Exemption") from certain, but not all, 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
secured credit instruments that bear interest (including, but not limited to,
qualified equipment notes secured by leases and obligations secured by
leasehold interests on commercial real property). The Exemption does not in
certain circumstances exempt the acquisition and holding of Pass Through
Certificates by plans sponsored by Mobil, Goldman Sachs, the Pass Through
Trustee, the Owner Trustee, the Owner Participant or any of their affiliates.
In addition, 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 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 Rating Group, Moody's Investors Service, Inc., Fitch Investors Service,
Inc. or Duff & Phelps Inc. The Exemption also requires that the acquisition of
certificates by a Plan be on terms (including the price for the Pass Through
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 Pass Through 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 consider that, under regulations promulgated by the
DOL, 29 C.F.R. Section 2510.3-101 (the "Regulation"), if a Plan acquires a
Pass Through Certificate, then the Plan's assets may include both the Pass
Through Certificate it acquires and an undivided interest in the underlying
assets of the Pass Through Trust (because the 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 Pass Through Certificates is not "significant" within the meaning of the
Regulation.
Under the terms of the Regulation, if the Pass Through Trust were deemed to
hold assets of an employee benefit plan by reason of a Plan's investment in a
Pass Through Certificate, such Plan assets would include an undivided interest
in the Pass Through Trust, the Secured Notes and other
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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.
Insurance companies considering the purchase of Pass Through Certificates
should also consult their own counsel as to the application of the decision by
the United States Supreme Court in John Hancock Mutual Life Insurance Co. v.
Harris Trust and Savings Bank, 114 S. Ct. 517 (1993) to such a purchase. Under
that decision, assets held in an insurance company's general account may be
deemed plan assets under certain 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 Pass Through
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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UNDERWRITING
Subject to the terms and conditions set forth in the Underwriting Agreement,
Mobil and the Lessee have agreed to sell to Goldman, Sachs & Co. ("Goldman
Sachs"), and Goldman Sachs have agreed to purchase, the entire principal
amount of the Pass Through Certificates.
Under the terms and conditions of the Underwriting Agreement, Goldman Sachs
are committed to take and pay for all of the Pass Through Certificates, if any
are taken.
Goldman Sachs propose to offer the Pass Through Certificates in part
directly to the public at the offering price set forth on the cover page of
this Prospectus Supplement and in part to certain securities dealers at such
price less a concession of 0.65% of the principal amount of the Pass Through
Certificates. Goldman Sachs may allow, and such dealers may reallow, a
concession not to exceed 0.25% of the principal amount of the Pass Through
Certificates to certain brokers and dealers. After the Pass Through
Certificates are released for sale to the public, the offering price and other
selling terms may from time to time be varied by Goldman Sachs.
The Pass Through Certificates are a new issue of securities with no
established trading market. Mobil and the Lessee have been advised by Goldman
Sachs that they intend to make a market in the Pass Through Certificates but
are not obligated to do so and may discontinue market making at any time
without notice. No assurance can be given as to the liquidity of the trading
market for the Pass Through Certificates.
Mobil and the Lessee have agreed to indemnify Goldman Sachs against certain
liabilities, including liabilities under the Securities Act of 1933.
Goldman Sachs and certain of their affiliates have performed, and may in the
future perform, investment banking and other financial services for Mobil and
the Lessee and their affiliates in the ordinary course of business.
In connection with the offering, Goldman Sachs may purchase and sell the
Pass Through Certificates in the open market. These transactions may include
over-allotment and stabilizing transactions and purchases to cover short
positions created by Goldman Sachs in connection with the Offering.
Stabilizing transactions consist of certain bids or purchases for the purpose
of preventing or retarding a decline in the market price of the Pass Through
Certificates; and short positions created by Goldman Sachs involve the sale by
Goldman Sachs of a greater number of Pass Through Certificates than they are
required to purchase from the Pass Through Trustee in the Offering. Goldman
Sachs also may impose a penalty bid, whereby selling concessions allowed to
broker-dealers in respect of the securities sold in the offering may be
reclaimed by Goldman Sachs if such Pass Through Certificates are repurchased
by Goldman Sachs in stabilizing or covering transactions. These activities may
stabilize, maintain or otherwise affect the market price of the Pass Through
Certificates, which may be higher than the price that might otherwise prevail
in the open market; and these activities, if commenced, may be discontinued at
any time. These transactions may be effected in the over-the-counter market or
otherwise.
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LEGAL OPINIONS
The validity of the Pass Through Certificates offered hereby will be passed
upon for Mobil and the Lessee by Ralph N. Johanson, Jr., Managing Counsel,
Corporate, Finance and Securities of Mobil, and by Debevoise & Plimpton, New
York, New York, and for Goldman Sachs by Shearman & Sterling, New York, New
York. Mr. Johanson, Debevoise & Plimpton and Shearman & Sterling will rely on
the opinion of Bingham, Dana & Gould LLP, counsel for the Pass Through Trustee
as to certain matters relating to the authorization, execution and delivery of
such Pass Through Certificates by, and the valid and binding effect thereof
on, the Pass Through Trustee.
DOCUMENTS INCORPORATED BY REFERENCE
Mobil's Annual Report on Form 10-K for the year ended December 31, 1996, its
Report on Form 10-Q for the three months ended March 31, 1997 and its Current
Reports on Form 8-K filed on January 3, 1997, January 27, 1997, January 31,
1997, March 27, 1997 and April 23, 1997, heretofore filed with the Commission
pursuant to the Securities Exchange Act of 1934, as amended (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 Supplement and
prior to the termination of the Offering of the Pass Through Certificates
offered hereby shall be deemed to be incorporated by reference in this
Prospectus Supplement 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 Supplement 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 Supplement and the accompanying Prospectus.
Mobil will provide without charge to each person to whom this Prospectus
Supplement and the accompanying 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 A
GLOSSARY OF CERTAIN TERMS
The following is a glossary of certain terms used in this Prospectus
Supplement. The definitions of terms used in this glossary that are also used
in the Agreement, the Indenture, the Lease, the Ground Lease or the
Participation Agreement are qualified in their entirety by reference to the
definitions of such terms contained therein.
"Additional Notes" means Secured Notes issued under and secured by the
Indenture to finance the cost of certain Modifications.
"Agreement" means the Basic Agreement as supplemented by the Trust
Supplement.
"Basic Agreement" means the Pass Through Trust Agreement, among the Pass
Through Trustee, Mobil, the Lessee and certain other Mobil subsidiaries party
thereto.
"Basic Lease Term" means the period commencing on the Closing Date and
ending on the 20th anniversary of the Closing Date, or such shorter period as
may result from earlier termination of the Lease.
"Basic Rent Payment Dates" means each January 2 and July 2 during, and the
scheduled expiration date of, the Basic Lease Term or any Renewal Term,
including July 2, 1997.
"Business Day" means any day other than a Saturday or Sunday or any other
day on which banks located in New York, New York, Fairfax, Virginia, the city
in which the corporate trust department of the Indenture Trustee is located,
the city in which the corporate trust department of the Owner Trustee is
located or the city in which the corporate trust department of the Pass
Through Trustee is located, are required or authorized to remain closed.
Unless otherwise expressly stated, all references to "day" or "days" shall
refer to calendar days.
"Certificateholder" means the person in whose name a Certificate is
registered.
"Code" means the U.S. Internal Revenue Code of 1986, as amended.
"Commission" means the U.S. Securities and Exchange Commission.
"Event of Loss" means each of the events defined as such in the Lease. See
"Description of the Secured Notes--The Lease--Event of Loss" in this
Prospectus Supplement.
"Excepted Payments" means certain rights of the Owner Trustee and the Owner
Participant under the Operative Documents, including, among others, rights
relating to indemnification by the Lessee for certain matters and insurance
proceeds payable to the Owner Trustee and the Owner Participant under
liability insurance maintained by the Lessee under the Lease.
"Facility" means the Facility Assets and the leasehold estate created by the
Ground Lease in the Site.
"Facility Assets" means those pipes, tanks, machinery, equipment and other
items that comprise a new paraxylene manufacturing facility located at Mobil's
refinery and chemical complex in Beaumont, Texas.
"Ground Lease" means the ground lease pursuant to which the Ground Lessor
leases the Site to the Ground Lessee.
"Ground Lessee" means the Owner Trustee and its successors and permitted
assigns, as lessee under the Ground Lease.
"Ground Lessor" means Mobil Oil Corporation as lessor under the Ground
Lease.
"Indenture" means the Trust Indenture, Deed of Trust, Assignment of Lease,
and Security Agreement to be entered into between the Owner Trustee and the
Indenture Trustee, as such agreement may be amended or supplemented from time
to time.
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"Indenture Estate" means all of the right, title and interest of the Owner
Trustee in its property, rights, interests and privileges, including, without
limitation, the Facility Assets, the Lease and the Parent Guaranty (other than
the right to receive Excepted Payments), as the same is assigned and pledged
under the Indenture.
"Indenture Event of Default" means each of the events designated as an event
of default under the Indenture. See "Description of the Secured Notes--
Indenture Events of Default, Cure, Notice and Waiver" in this Prospectus
Supplement.
"Indenture Trustee" means State Street Bank and Trust Company, a
Massachusetts trust company, as indenture trustee under the Indenture; and
each other person that may be acting from time to time as Indenture Trustee in
accordance with the provisions thereof.
"Lease" means the Lease Agreement with respect to the Facility Assets
between the Owner Trustee, as lessor, and the Lessee, as lessee, as such
agreement may be amended or supplemented from time to time.
"Lease Event of Default" means each of the events designated as an event of
default under the Lease. See "Description of the Secured Notes--The Lease--
Lease Events of Default" in this Prospectus Supplement.
"Lessee" means Mobil Chemical Finance (Texas) Inc., a Delaware corporation,
and its permitted successors and assigns.
"Mobil" means Mobil Corporation, a Delaware corporation.
"Modifications" means certain alterations, modifications, additions or
improvements to the Facility Assets (other than replacement components) made
at the option of the Lessee, or to comply with requirements of applicable law
or to maintain the insurance coverage required by the Lease.
"Operative Documents" means, among others, the Indenture, the Secured Notes,
the Ground Lease, the Parent Guaranty, the Lease, the Participation Agreement,
and the Trust Agreement.
"Owner Trustee" means Wilmington Trust Company, not in its individual
capacity except as expressly provided in the Operative Documents, but solely
as Owner Trustee; and each person that may be acting from time to time as
Owner Trustee in accordance with the provisions of the Trust Agreement.
"Parent Guaranty" means the irrevocable and unconditional guaranty by Mobil
of payments by, and certain obligations of, the Lessee under the Lease and the
other Operative Documents.
"Participation Agreement" means the Participation Agreement, among the Owner
Trustee, the Lessee, the Owner Participant, the Indenture Trustee and the Pass
Through Trustee in connection with the leveraged lease financing of the
Facility Assets and the other transactions described therein, as such
agreement may be amended or supplemented from time to time.
"Pass Through Certificates" means the Pass Through Certificates, Series
1997-A issued pursuant to the Agreement, each representing a fractional
undivided interest in the Pass Through Trust.
"Pass Through Trust" means the Mobil Corporation 1997-A Pass Through Trust
to be formed pursuant to the Agreement.
"Pass Through Trustee" means State Street Bank and Trust Company, a
Massachusetts trust company, in its capacity as Pass Through Trustee under the
Agreement, and each other person that may from time to time act as successor
Pass Through Trustee under the Agreement.
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"Premium Termination Date" means October 24, 2007.
"Refinery" means Mobil's refinery and chemical complex, located in Beaumont,
Texas, but excluding the Facility.
"Regular Distribution Date" means July 2, 1997 and, thereafter, January 2
and July 2 of each year, until the final distribution date for the Pass
Through Trust.
"Scheduled Payment" means each payment of principal of or interest on a
Secured Note scheduled to be received by the Pass Through Trustee on a Regular
Distribution Date.
"Secured Note" means a Secured Note issued on a nonrecourse basis by the
Owner Trustee pursuant to the Indenture.
"Site" means the land on which the Facility Assets are located, together
with certain non-exclusive easements to premises at the Refinery necessary for
the operation of the Facility Assets in the manner contemplated by the Lease.
"Special Distribution Date" means any date on which a Special Payment will
be distributed by the Pass Through Trustee to the Certificateholders, which
date shall be a Business Day.
"Special Payment" means (i) 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 Pass Through Trust, (ii) any payment
received by the Pass Through Trustee following an Indenture Event of Default
in respect of the Secured Notes held in the Pass Through Trust, including
payments, if any, received by the Pass Through Trustee on account of the
purchase by the Owner Trustee or the Owner Participant of the Secured Notes,
(iii) payments received by the Pass Through Trustee on account of the sale by
it of the Secured Notes and (iv) any Scheduled Payment which is not in fact
paid within five days of the Regular Distribution Date applicable thereto.
"Support Agreements" means one or more agreements, which the Lessee or an
appropriate Mobil affiliate may be required to enter into, providing for
certain access rights and for the supply of certain goods and services for use
in the production of paraxylene using the Facility Assets at the Site
following the expiration or termination of the Lease.
"Termination Value" means the amount required to be received by the Owner
Trustee under the Lease following certain early terminations of such Lease,
which amount shall in all circumstances be at least sufficient together with
other amounts then due under such Lease to pay in full as of the date of
payment thereof the aggregate unpaid principal of the outstanding Secured
Notes issued under the Indenture, together with all unpaid interest thereon
accrued and to accrue to such date of payment.
"Trust Agreement" means the Trust Agreement dated between the Owner Trustee
and the Owner Participant, pursuant to which the Trust Estate is to be created
and established for the benefit of the Owner Participant, as such agreement
may be amended or supplemented from time to time.
"Trust Supplement" means the supplement to the Basic Agreement, among Mobil,
the Lessee and the Pass Through Trustee, creating the Pass Through Trust.
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<PAGE>
PROSPECTUS
$650,000,000
PASS THROUGH CERTIFICATES
MOBIL MARINE FINANCE COMPANY I INC.
MOBIL MARINE FINANCE COMPANY II INC.
MOBIL LEASE FINANCE COMPANY INC.
MOBIL CHEMICAL FINANCE (TEXAS) INC.
MOBIL CHEMICAL FINANCE (LOUISIANA) INC.
MOBIL PETRORAIL FINANCE INC.
MOBIL TRANSPORT FINANCE COMPANY INC.
MOBIL EQUIPMENT FINANCE COMPANY INC.
----------------
APPLICABLE UNDERLYING PAYMENTS FULLY AND UNCONDITIONALLY
GUARANTEED BY
MOBIL CORPORATION
Up to $650,000,000 aggregate public offering price of Pass Through
Certificates (the "Certificates") (or its equivalent (based on the applicable
exchange rate at the time of sale) in one or more foreign currencies or units
based on or related to currencies, including European Currency Units) may be
offered for sale from time to time pursuant to this Prospectus and related
Prospectus Supplements (as defined below). Certificates may be issued in one
or more series in amounts, at prices and on terms to be determined at the time
of the offering. In respect of each offering of Certificates, a separate Mobil
Pass Through Trust for each series of Certificates being offered (each, a
"Pass Through Trust") will be formed pursuant to a Pass Through Trust
Agreement (the "Basic Agreement"), among Mobil Marine Finance Company I Inc.,
Mobil Marine Finance Company II Inc., Mobil Lease Finance Company Inc., Mobil
Chemical Finance (Texas) Inc., Mobil Chemical Finance (Louisiana) Inc., Mobil
Petrorail Finance Inc., Mobil Transport Finance Company Inc., Mobil Equipment
Finance Company Inc. (each, a "Lessee"), Mobil Corporation ("Mobil") and State
Street Bank and Trust Company (the "Trustee"), as trustee under each Pass
Through Trust, and a supplement thereto (each, a "Trust Supplement") relating
to such Pass Through Trust to be entered into among one or more of the
Lessees, Mobil and the Trustee. Each Certificate in a series will represent a
fractional undivided interest in the related Pass Through Trust and will have
no rights, benefits or interests in respect of any other Pass Through Trust.
The property of each Pass Through Trust will consist of notes (the "Secured
Notes") issued on a nonrecourse basis by one or more owner trustees (each, an
"Owner Trustee") of one or more separate owner trusts (each, an "Owner Trust")
in connection with one or more separate leveraged lease transactions to
finance or refinance all or a portion of the cost of certain real or personal
property to be specified in a Prospectus Supplement, which property may
consist of title to, an estate for years or a leasehold or similar interest in
equipment, manufacturing, drilling or production facilities, marine tankers,
rail cars, corporate aircraft (including engines), drilling platforms,
refineries, pipelines, chemical plants, and other real or personal property or
undivided interests therein (each such specified property, "Leased Property").
Each Leased Property has been or will be leased or chartered to a Lessee
pursuant to separate lease agreements, sublease agreements, charters or
similar agreements (each, a "Lease"). Although neither the Certificates nor
the Secured Notes will be obligations of, or guaranteed by, any Lessee or
Mobil, the amounts unconditionally payable under the Lease or Leases related
to a Pass Through Trust will be at least sufficient to pay in full when due
all payments of principal and interest and, except in the limited
circumstances set forth in the applicable Prospectus Supplement, premium, if
any, due in respect of the Secured Notes held in that Pass Through Trust.
Mobil will fully and unconditionally guarantee (in each case pursuant to a
"Parent Guaranty") to the holders of Certificates from time to time the full
and prompt payment of amounts payable by the Lessee under a related Lease when
and as the same shall become due and payable.
<PAGE>
The specific terms of the particular Certificates in respect of which this
Prospectus is being delivered will be set forth in a supplement to this
Prospectus (each, a "Prospectus Supplement") which will be delivered together
with this Prospectus, and which will include, where applicable, the specific
designation, form, aggregate principal amount, initial public offering price
and distribution dates relating to such Certificates, the currency in which
such Certificates will be payable, and the use of the net proceeds from the
offering of such Certificates. The Prospectus Supplement will also describe
the Pass Through Trust or Pass Through Trusts relating to such Certificates,
the Secured Notes to be purchased by such Pass Through Trust or Pass Through
Trusts, each Leased Property relating to such Secured Notes, the leveraged
lease transactions relating to such Secured Notes and other special terms
relating to such Certificates.
If so specified in a Prospectus Supplement related to an offering of
Certificates, the Trust Property (as defined below) of a Pass Through Trust
will consist of Secured Notes related to Leased Property which are
subordinated in right of payment to other Secured Notes related to the same
Leased Property. In respect of such offering, only Secured Notes having the
same priority of payment may be held in the same Pass Through Trust. In
addition, the related Prospectus Supplement may provide that the Trustees on
behalf of the applicable Pass Through Trusts may enter into an intercreditor
or subordination agreement establishing priorities among series of
Certificates or that one or more payments of interest on the related Secured
Notes of one or more series or distributions made by the Trustee of the
related Pass Through Trust will be supported by a liquidity facility issued by
an institution identified in the related Prospectus Supplement.
Secured Notes may be issued in respect of one or more items of Leased
Property. Secured Notes in respect of a particular item of Leased Property may
be issued in one or more series, each of which may have a different interest
rate and different final maturity dates. For each series of Certificates, the
Trustee will purchase one or more Secured Notes issued with respect to one or
more items of Leased Property such that all of the Secured Notes held in the
related Pass Through Trust will have identical interest rates (in each case
equal to the rate applicable to the Certificates issued by such Pass Through
Trust), and such that the latest maturity date for such Secured Notes will
occur on or before the final distribution date for such Certificates. Interest
paid on the Secured Notes held in each Pass Through Trust will be passed
through to the holders of the Certificates relating to such Pass Through Trust
on the dates and at the rate per annum set forth in the Prospectus Supplement
relating to such Certificates until the final distribution date for such Pass
Through Trust. Principal paid on the Secured Notes held in each Pass Through
Trust will be passed through to the holders of the Certificates relating to
such Pass Through Trust in scheduled amounts on the dates set forth in the
Prospectus Supplement relating to such Certificates until the final
distribution date for such Pass Through Trust. The Secured Notes to be held in
a Pass Through Trust will be secured by (i) an assignment of certain of the
issuing Owner Trustee's rights as lessor or charterer under the Lease relating
to the Leased Property to which such Secured Notes relate, including the right
to receive rentals and certain other payments from the Lessee, (ii) an
assignment of certain of such Owner Trustee's rights under the Parent Guaranty
relating to such Leased Property and (iii) to the extent specified in the
applicable Prospectus Supplement, a mortgage or other security interest in
such Leased Property or in construction contracts or other agreements,
collateral accounts or other security, in each case subject to the rights of
the Lessee under the related Lease and other rights, if any, described in the
applicable Prospectus Supplement.
The Certificates may be sold to or through underwriters, through dealers or
agents or directly to purchasers. See "Plan of Distribution." Each Prospectus
Supplement will set forth the names of any underwriters, dealers or agents
involved in the sale of the Certificates in respect of which that Prospectus
Supplement is being delivered, the proposed amounts, if any, to be purchased
by underwriters and the compensation, if any, of such underwriters or agents.
See "Plan of Distribution" for information concerning secondary trading of the
Certificates.
----------------
THIS PROSPECTUS MAY NOT BE USED TO CONSUMMATE SALES OF CERTIFICATES UNLESS
ACCOMPANIED BY A PROSPECTUS SUPPLEMENT. THESE SECURITIES HAVE NOT BEEN
APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY
STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE
COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
----------------
The Date of this Prospectus is November 12, 1996.
<PAGE>
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THESE CONTAINED OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS OR ANY RELATED PROSPECTUS
SUPPLEMENT IN CONNECTION WITH THE OFFER CONTAINED IN THIS PROSPECTUS AND SUCH
PROSPECTUS SUPPLEMENT AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY MOBIL,
ANY LESSEE OR ANY UNDERWRITERS, AGENTS OR DEALERS. THIS PROSPECTUS AND ANY
RELATED PROSPECTUS SUPPLEMENT DO NOT CONSTITUTE AN OFFER TO SELL OR
SOLICITATION OF AN OFFER TO BUY SECURITIES IN ANY JURISDICTION TO ANY PERSON
TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. NEITHER THE
DELIVERY OF THIS PROSPECTUS AND ANY RELATED PROSPECTUS SUPPLEMENT NOR ANY SALE
MADE HEREUNDER OR THEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE AN
IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF MOBIL OR ANY
LESSEE SINCE THE DATE HEREOF OR THEREOF OR THAT THE INFORMATION CONTAINED
HEREIN OR THEREIN IS CORRECT AT ANY TIME SUBSEQUENT TO THE DATE HEREOF.
----------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available
Information................................. 4
Documents
Incorporated by
Reference................................... 4
Formation of
the Trusts.................................. 5
Outline of the
Leveraged Lease
Structure................................... 5
Use of
Proceeds.................................... 5
Mobil
Corporation................................. 6
The Lessees................................. 6
Ratio of
Earnings to
Fixed Charges
of Mobil
Corporation................................. 7
Description of
the
Certificates................................ 7
Description of
the Secured
Notes....................................... 19
Federal Income
Tax
Consequences................................ 23
Certain
Massachusetts
Taxes....................................... 26
Erisa
Considerations.............................. 27
Plan of
Distribution................................ 27
Legal Opinions.............................. 29
Experts..................................... 29
</TABLE>
3
<PAGE>
AVAILABLE INFORMATION
Mobil and the Lessees have filed with the Securities and Exchange Commission
(the "Commission") a registration statement on Form S-3 (together with any
amendments thereto, the "Registration Statement") under the Securities and
Exchange Act of 1933, as amended (the "Securities Act"), with respect to
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, the Lessees or the
Certificates offered hereby, reference is made to the Registration Statement,
exhibits, financial statements, notes and schedules filed as part thereof,
which may be inspected at the public reference facilities of the Commission at
the addresses set forth below. Statements made in this Prospectus as to the
contents of any contract, agreement or other document referred to are not
necessarily complete. With respect to each such contract, agreement or other
document filed as an exhibit to the Registration Statement, reference is made
to the exhibit for a more complete description of the document or matter
involved, and each such statement made herein with respect to such contract,
agreement or document 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 7 World Trade Center, Suite 1300, New York, New
York 10048 and at 500 West Madison Street, Suite 1400, Chicago, Illinois
60661. The Commission also maintains a site on the World Wide Web at
http://www.sec.gov that contains reports, proxy and information statements and
other information filed electronically by Mobil. In addition, such 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 separate financial statements of any of the Lessees have been included or
incorporated by reference herein. Mobil and the Lessees do not consider that
such financial statements would be material to holders of the Certificates
because (i) all of the voting securities of each Lessee will be owned,
directly or indirectly, by Mobil, a reporting company under the Exchange Act,
(ii) each of the Lessees is a newly-formed special purpose entity, has no
independent operations and will not engage in any activity other than leasing
Leased Property and (iii) the obligations of each of the Lessees are fully and
unconditionally guaranteed by Mobil as and to the extent described herein. See
"The Lessees," "Description of the Certificates," and "Parent Guaranties."
DOCUMENTS INCORPORATED BY REFERENCE
Mobil's Annual Report on Form 10-K for the year ended December 31, 1995, its
Quarterly Reports on Form 10-Q for the quarters ended March 31, 1996, June 30,
1996 and September 30, 1996, and its Current Reports on Form 8-K filed on
January 22, 1996, February 14, 1996, February 29, 1996, April 23, 1996, May
13, 1996, May 17, 1996, July 22, 1996, August 7, 1996, September 3, 1996 and
October 21, 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 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
4
<PAGE>
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).
FORMATION OF THE TRUSTS
In respect of each offering of Certificates, a separate Pass Through Trust
for each series of Certificates being offered will be formed pursuant to the
Basic Agreement and a Trust Supplement to be entered into among Mobil, the
Trustee and one or more Lessees (each Lessee that is liable under one or more
related Leases, an "Applicable Lessee"). Following the execution and delivery
of a Trust Supplement, the Trustee, on behalf of the related Pass Through
Trust, will purchase the Secured Notes to be held in such Pass Through Trust
having an interest rate (or, in the case of Secured Notes with a zero coupon,
accrual rate) equal to the interest rate (or accrual rate) applicable to the
Certificates evidencing interests in such Pass Through Trust. The maturity
date of the Secured Notes acquired by a Pass Through Trust will occur not
later than the final scheduled distribution date applicable to the
Certificates evidencing an interest in such Pass Through Trust. The Trustee
will distribute all payments of principal, premium, if any, and interest
received by it as holder of such Secured Notes to the holders of Certificates
evidencing an interest in the Pass Through Trust in which such Secured Notes
are held. See "Description of the Certificates."
OUTLINE OF THE LEVERAGED LEASE STRUCTURE
Unless otherwise specified in the applicable Prospectus Supplement, the
Certificates offered pursuant to any Prospectus Supplement will be issued to
facilitate the acquisition by one or more Owner Trustees, each acting not in
its individual capacity (except as expressly set forth in such Prospectus
Supplement) but solely as trustee under a separate trust agreement (each, an
"Owner Trust Agreement") for one or more equity investors (each, an "Owner
Participant"), of certain items of Leased Property. Owner Participants may
include affiliates of Mobil. Not later than the delivery date of the
applicable Leased Property to an Owner Trustee, such Owner Trustee will lease
or charter such Leased Property to a Lessee pursuant to a separate Lease. Such
Lessee may initially sublease or subcharter such Leased Property to an
affiliate of Mobil.
The Owner Trustees will obtain a portion of the funding for the Leased
Property from the equity investments of the related Owner Participants, which
will be the beneficiaries of the related Owner Trusts, and will obtain the
remainder of the funding from the issuance on a non-recourse basis of the
Secured Notes to be held in the related Pass Through Trusts and, to the extent
set forth in the applicable Prospectus Supplement, additional debt secured by
such Leased Property or other sources. The Secured Notes to be held in the
Pass Through Trusts will be acquired by the Trustee with the proceeds from the
sale of Certificates.
Secured Notes relating to a particular Leased Property will be issued under
a separate indenture and security agreement or a similar agreement (each, an
"Indenture") with respect to such Leased Property. Each Indenture will be
entered into by and among a financial institution (the "Corporate
5
<PAGE>
Indenture Trustee") and, where required by applicable law, an individual who
may be an officer or employee of the Corporate Indenture Trustee (the
"Individual Indenture Trustee"), as trustees thereunder (the Corporate
Indenture Trustee and the Individual Indenture Trustee, in such capacities,
the "Indenture Trustees"), and the issuing Owner Trustee. No Owner Trustee or
Owner Participant will be personally liable for any amount payable under the
related Indenture or the Secured Notes issued thereunder.
The Secured Notes issued under each Indenture and held in each Pass Through
Trust will be secured by (i) an assignment of certain of the related Owner
Trustee's rights as lessor or charterer under the Lease with respect to the
applicable Leased Property, including the right to receive certain rentals and
other payments from the Applicable Lessee, (ii) an assignment of certain of
such Owner Trustee's rights under the Parent Guaranty relating to such Leased
Property, and (iii) to the extent specified in the applicable Prospectus
Supplement, a mortgage or other security interest in such Leased Property, or
in construction contracts or other agreements, collateral accounts or other
security, in each case subject to the rights of the Applicable Lessee under
the related Lease and other rights, if any, described in the applicable
Prospectus Supplement. (Such security with respect to each Indenture shall be
referred to as the "Indenture Estate.") Unless otherwise set forth in the
applicable Prospectus Supplement, the Secured Notes issued under an Indenture
will not be secured by any of the Leased Properties securing the Secured Notes
issued under any other Indenture (including any other Leased Properties
acquired by the related Owner Trustee) and will not be cross-defaulted with
Secured Notes issued under any other Indenture (including any other Indenture
entered into by such Owner Trustee).
The rents and other amounts payable by the Applicable Lessee under the
related Lease will be sufficient to pay in full when due all payments of
principal and interest and, except in the limited circumstances set forth in
the applicable Prospectus Supplement, premium, if any, due in respect of the
Secured Notes issued under the Indenture. The Secured Notes will not be
recourse obligations of any Owner Participant or issuing Owner Trustee, but
will be payable solely from the rents or charter hire and other amounts
payable under the Lease of the Leased Property securing such Secured Notes and
amounts realized from the exercise of the Indenture Trustee's remedies under
the Indenture against the related Indenture Estate. Pursuant to a Parent
Guaranty, Mobil will fully and unconditionally guarantee the full and prompt
payments payable by the Applicable Lessee under the related Lease when and as
the same shall become due and payable. See "Description of the Secured Notes."
USE OF PROCEEDS
The Certificates offered pursuant to this Prospectus and a related
Prospectus Supplement will be issued in order to facilitate the financing or
refinancing of all or a portion of the cost of certain Leased Property
specified in such Prospectus Supplement. The proceeds from the sale of
Certificates in respect of such Leased Property is not expected to exceed 90%
of the value of such Leased Property at the time of financing or refinancing,
which may be established by appraisal or by reference to its original cost.
Except as set forth in a Prospectus Supplement for a specific offering of
Certificates, the proceeds from the sale of the Certificates will be used by
the Trustee or Trustees on behalf of the applicable Pass Through Trust or Pass
Through Trusts to purchase Secured Notes. See "Description of the
Certificates" and "Description of the Secured Notes." In the event that, at
the time Certificates are issued, the Secured Notes to be purchased by the
applicable Pass Through Trust or Pass Through Trusts are not available for
purchase, the proceeds of the sale of such Certificates may be used by the
Trustee to purchase certain limited investments on an interim basis, as
described in the applicable Prospectus Supplement. In such event, any portion
of the proceeds of the sale of such Certificates not used for the purchase of
Secured Notes on or prior to the date set forth in such Prospectus Supplement
will be distributed on a Special Distribution Date (as defined below) to the
applicable
6
<PAGE>
Certificateholders, together with interest, but without premium. See
"Description of the Certificates--Delayed Purchase."
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, had 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.
THE LESSEES
Each Lessee is a wholly-owned special purpose finance subsidiary of Mobil.
Each Lessee has no business activities other than leasing and subleasing
Leased Property as permitted by the Applicable Lease. Each Lessee'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
The following table sets forth the consolidated ratio of earnings to fixed
charges for Mobil for the periods indicated.
<TABLE>
<CAPTION>
NINE MONTHS
ENDED
YEAR ENDED DECEMBER 31, SEPTEMBER 30,
--------------------------- -------------
1991 1992 1993 1994 1995 1996
---- ---- ---- ---- ---- -------------
<S> <C> <C> <C> <C> <C> <C>
Ratio of Earnings to Fixed Charges... 4.6 3.9 5.7(a) 5.3 5.9 8.1
</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.
DESCRIPTION OF THE CERTIFICATES
In connection with each offering of Certificates, one or more separate Pass
Through Trusts will be formed and one or more series of Certificates will be
issued pursuant to the Basic Agreement and one or more separate Trust
Supplements to be entered into among Mobil, the Applicable Lessee or
Applicable Lessees and the Trustee on behalf of the related Pass Through
Trust. The statements made under this caption are summaries and do not purport
to be complete. Reference is made to, and the summaries are qualified in their
entirety by reference to, the detailed provisions of the Basic Agreement, the
form of which has been filed as an exhibit to the Registration Statement of
which this
7
<PAGE>
Prospectus is a part and which will be qualified under the Trust Indenture Act
of 1939, as amended (the "Trust Indenture Act"). The summaries relate to the
Basic Agreement to be entered into and each of the Trust Supplements, the Pass
Through Trusts to be formed thereby and the Certificates to be issued by each
Pass Through Trust except to the extent, if any, described in the applicable
Prospectus Supplement. Reference is also made to, and the summaries are
qualified in their entirety by reference to, the detailed provisions of the
form of Parent Guaranty, which has been filed as an exhibit to the
Registration Statement of which this Prospectus is a part. The Trust
Supplement relating to each series of Certificates and the forms of the
related Indenture, Lease, Participation Agreement or similar agreements will
be filed as exhibits to a post-effective amendment to the Registration
Statement of which this Prospectus is a part, a Current Report on Form 8-K, a
Quarterly Report on Form 10-Q or an Annual Report on Form 10-K, as applicable,
to be filed by Mobil with the Commission.
The Certificates offered pursuant to this Prospectus will be limited to
$650,000,000 aggregate public offering price (or its equivalent (based on the
applicable exchange rate at the time of sale) in one or more foreign
currencies or units based on or related to currencies, including European
Currency Units).
Certain provisions of the description of the Certificates in this Prospectus
do not necessarily apply to one Certificate of each Pass Through Trust which
may be issued in a denomination of less than $1,000.
To the extent that any provision in any Prospectus Supplement is
inconsistent with any provision in this summary, the provision of such
Prospectus Supplement will control.
GENERAL
Each Certificate will represent a fractional undivided interest in the Pass
Through Trust created by the Trust Supplement pursuant to which such
Certificate was issued and all payments and distributions shall be made only
from the related Trust Property (as defined below). The property of each Pass
Through Trust (the "Trust Property") will include the Secured Notes held in
such Pass Through Trust, all monies at any time paid thereon and all monies
due and to become due thereunder and funds from time to time deposited with
the Trustee in accounts relating to such Pass Through Trust. Each Certificate
will represent a pro rata share of the outstanding principal amount of the
Secured Notes held in the related Pass Through Trust and, unless otherwise
specified in the applicable Prospectus Supplement, will be issued in minimum
denominations of $1,000 or any integral multiple thereof. The Certificates do
not represent an interest in or obligation of Mobil, any Lessee, the Trustee,
any of the Indenture Trustees or Owner Trustees in their individual
capacities, any Owner Participant, or any of their respective affiliates. Each
Certificateholder by its acceptance of a Certificate agrees to look solely to
the income and proceeds from the Trust Property as provided in the Basic
Agreement and the applicable Trust Supplement.
No holder of a Certificate issued with respect to a Pass Through Trust will
have any rights, benefits or interests in respect of any other Pass Through
Trust or in the property held by any other Pass Through Trust. All payments
and distributions on the Certificates will be made only from the related Trust
Property, or pursuant to intercreditor, subordination or similar agreements to
which the related Trustee may be a party.
Secured Notes issued under an Indenture may be held in more than one Pass
Through Trust and one Pass Through Trust may hold Secured Notes issued under
more than one Indenture.
Interest will be passed through to Certificateholders of each Pass Through
Trust at the rate per annum payable on the Secured Notes held in such Pass
Through Trust, as set forth for such Pass Through Trust on the cover page of
the applicable Prospectus Supplement.
8
<PAGE>
None of the Basic Agreement, the Indentures nor the Leases will include
financial covenants or "event risk" provisions that would afford
Certificateholders protection in the event of a highly leveraged or other
transaction involving Mobil or the Lessees. The Certificateholders will have
the benefit of a lien on the Leased Property and the other property in each
Indenture Estate securing the Secured Notes held in the related Pass Through
Trust, as discussed under "Description of the Secured Notes--Security."
Reference is made to the Prospectus Supplement that accompanies this
Prospectus for a description of the specific series of Certificates being
offered thereby, including: (1) the specific designation and title of such
Certificates; (2) the Regular Distribution Dates (as defined below) and
Special Distribution Dates (as defined below) applicable to such Certificates;
(3) the currency or currencies (including currency units) in which such
Certificates may be denominated; (4) the specific form of such Certificates,
including whether or not such Certificates are to be issued in accordance with
a book-entry system; (5) a description of the Secured Notes to be purchased by
the related Pass Through Trust, including the period or periods within which,
the price or prices at which, and the terms and conditions upon which such
Secured Notes may or must be redeemed, purchased or defeased in whole or in
part, by the Applicable Lessee or the related Owner Trustee or Owner
Participant, (6) a description of the related Leased Property and the rights
and interests of the related Owner Trustee, the Applicable Lessee and others
therein; (7) a description of the related Indenture, including a description
of the events of default under the related Indenture, the remedies exercisable
upon the occurrence of such events of default and any limitations on the
exercise of such remedies with respect to such Secured Notes; (8) a
description of the related Lease, Owner Trust Agreement and Participation
Agreement, including (a) the names of the related Owner Trustees, (b) a
description of the events of default under the related Leases, the remedies
exercisable upon the occurrence of such events of default and any limitations
on the exercise of such remedies with respect thereto, and (c) the rights of
the related Owner Trustee, if any, and/or Owner Participant, if any, to cure
failures of the Applicable Lessee to pay rent under the related Lease; (9) the
extent, if any, to which the provisions of the operative documents applicable
to such Secured Notes may be amended by the parties thereto without the
consent of the holders of, or only upon the consent of the holders of a
specified percentage of aggregate principal amount of, such Secured Notes;
(10) the terms of the related Parent Guaranty; (11) the terms of any
intercreditor, subordination or similar agreement relating to the Certificates
or Secured Notes or of any liquidity or credit facility and (12) any other
special terms pertaining to such Certificates or Secured Notes, including any
modification of the terms set forth herein.
If any Certificates are denominated in one or more foreign currencies or
currency units, the restrictions, certain United States federal income tax
considerations, specific terms and other information with respect to such
Certificates and such foreign currency or currency units will be set forth in
the applicable Prospectus Supplement.
If any Certificates relate to Secured Notes that were sold at a substantial
discount below the stated principal amount of such Secured Notes, certain
United States federal income tax considerations, specific terms and other
information with respect to such Certificates will be set forth in the
applicable Prospectus Supplement.
BOOK-ENTRY REGISTRATION
General
If specified in the applicable Prospectus Supplement, the Certificates
issued thereunder will be subject to the provisions described below and under
the caption "--Definitive Certificates." Upon issuance, each series of
Certificates will be represented by one fully registered global certificate.
Each global certificate will be deposited with, or on behalf of, The
Depository Trust Company ("DTC") and registered in the name of Cede & Co.
("Cede"), or its nominee. No person acquiring an interest in such
9
<PAGE>
Certificates ("Certificate Owner") will be entitled to receive a certificate
representing such person's interest in such Certificates, except as set forth
below under "--Definitive Certificates." Unless and until Definitive
Certificates (as defined below) are issued under the limited circumstances
described herein and in the applicable Prospectus Supplement, all references
to actions by Certificateholders shall refer to actions taken by DTC upon
instructions from DTC Participants (as defined below), and all references
herein to distributions, notices, reports and statements to Certificateholders
shall refer, as the case may be, to distributions, notices, reports and
statements to DTC or Cede, as the registered holder of such Certificates, or
to DTC Participants for distribution to Certificate Owners in accordance with
DTC procedures.
DTC is a limited purpose trust company organized under the laws of the State
of New York, a member of the Federal Reserve System, a "clearing corporation"
within the meaning of the New York Uniform Commercial Code and a "clearing
agency" registered pursuant to section 17A of the Exchange Act. DTC holds
securities for its participants ("DTC Participants") and facilitates the
clearance and settlement of securities transactions between DTC Participants
through electronic computerized book-entries in DTC Participants' accounts,
thereby eliminating the need for physical movement of certificates. DTC
Participants include securities brokers and dealers, banks, trust companies
and clearing corporations. Indirect access to the DTC system also is available
to others such as banks, brokers, dealers and trust companies that clear
through or maintain a custodial relationship with a DTC Participant either
directly or indirectly ("Indirect Participants").
Certificate Owners that are not DTC Participants or Indirect Participants
but desire to purchase, sell or otherwise transfer ownership of, or other
interests in, the Certificates may do so only through DTC Participants and
Indirect Participants. In addition, Certificate Owners will receive all
distributions of principal and interest from the Trustee through DTC
Participants or Indirect Participants, as the case may be. Under a book-entry
format, Certificate Owners may experience some delay in their receipt of
payments, because such payments will be forwarded by the Trustee to Cede, as
nominee for DTC. DTC will forward such payments in same-day funds to DTC
Participants who are credited with ownership of the Certificates in amounts
proportionate to the principal amount of each such DTC Participant's
respective holdings of beneficial interests in the Certificates. DTC
Participants will thereafter forward payments to Indirect Participants or
Certificate Owners, as the case may be, in accordance with customary industry
practices. The forwarding of such distributions to the Certificate Owners will
be the responsibility of such DTC Participants. Unless and until the
Definitive Certificates are issued under the limited circumstances described
herein, the only "Certificateholder" will be Cede, as nominee of DTC.
Certificate Owners will not be recognized by the Trustee as
Certificateholders, as such term is used in the Basic Agreement, and
Certificate Owners will be permitted to exercise the rights of
Certificateholders only indirectly through DTC and DTC Participants.
Under the rules, regulations and procedures creating and affecting DTC and
its operations (the "Rules"), DTC is required to make book-entry transfers of
the Certificates among DTC Participants on whose behalf it acts with respect
to the Certificates and to receive and transmit to DTC Participants
distributions of principal, premium, if any, and interest with respect to the
Certificates. DTC Participants and Indirect Participants with which
Certificate Owners have accounts with respect to the Certificates similarly
are required to make book-entry transfers and receive and transmit such
payments on behalf of their respective customers. Accordingly, although
Certificate Owners will not possess the Certificates, the Rules provide a
mechanism by which Certificate Owners will receive payments and will be able
to transfer their interests.
Because DTC can only act on behalf of DTC Participants, who in turn act on
behalf of Indirect Participants, the ability of a Certificate Owner to pledge
the Certificates to persons or entities that do not participate in the DTC
system, or to otherwise act with respect to such Certificates, may be limited
due to the lack of a physical certificate for such Certificates.
10
<PAGE>
DTC will take any action permitted to be taken by a Certificateholder under
the Basic Agreement only at the direction of one or more DTC Participants to
whose accounts with DTC the Certificates are credited. Additionally, in the
event any action requires approval by Certificateholders of a certain
percentage of beneficial interest in each Pass Through Trust, DTC will take
such action only at the direction of and on behalf of DTC Participants whose
holders include undivided interests that satisfy any such percentage. DTC may
take conflicting actions with respect to other undivided interests to the
extent that such actions are taken on behalf of DTC Participants whose holders
include such undivided interests.
None of Mobil, the Lessees or the Trustee will have any liability for any
aspect of the records relating to or payments made on account of beneficial
ownership interests in the Certificates held by Cede, as nominee for DTC, or
for maintaining, supervising or reviewing any records relating to such
beneficial ownership interests.
The applicable Prospectus Supplement will specify any additional book-entry
registration procedures applicable to Certificates denominated in a currency
other than United States dollars.
The information in this section concerning DTC and DTC's book-entry system
has been attained from sources that Mobil believes to be reliable, but neither
Mobil nor any Lessee has independently verified such information or takes
responsibility for its accuracy.
Definitive Certificates
Certificates will be issued in fully registered certificated form
("Definitive Certificates") to Certificate Owners or their nominees, rather
than to DTC or its nominee, only if (i) the Applicable Lessee advises the
Trustee in writing that DTC is no longer willing or able to discharge properly
its responsibilities as depository with respect to such Certificates and the
Trustee or such Lessee is unable to locate a qualified successor, (ii) the
Applicable Lessee, at its option, elects to terminate the book-entry system
through DTC or (iii) after the occurrence of certain events of default or
other events specified in the related Prospectus Supplement, Certificate
Owners of Certificates evidencing fractional undivided interests aggregating
not less than a majority in interest in the related Pass Through Trust advise
the Trustee, the Applicable Lessee and DTC through DTC 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 interest.
Upon the occurrence of any event described in the immediately preceding
paragraph, the Trustee will be required to notify all Certificate Owners
through DTC Participants of the availability of Definitive Certificates. Upon
surrender by DTC of the global certificates representing the Certificates and
receipt of instructions for re-registration, the Trustee will reissue the
Certificates as Definitive Certificates to Certificate Owners.
Distributions of principal, premium, if any, and interest with respect to
Certificates will thereafter be made by the Trustee directly in accordance
with the procedures set forth in the Basic Agreement and the applicable Trust
Supplements, to holders in whose names the Definitive Certificates were
registered at the close of business on the applicable record date. Such
distributions will be made by check mailed to the address of such holder as it
appears on the register maintained by the Trustee. The final payment on any
Certificate, however, will be made only upon presentation and surrender of
such Certificate at the office or agency specified in the notice of final
distribution to Certificateholders.
Definitive Certificates will be freely transferable and exchangeable at the
office of the Trustee upon compliance with the requirements set forth in the
Basic Agreement and the applicable Trust Supplements. No service charge will
be imposed for any registration of transfer or exchange, but payment of a sum
sufficient to cover any tax or other governmental charge shall be required.
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PAYMENTS AND DISTRIBUTIONS
Payments of principal, premium, if any, and interest with respect to the
Secured Notes held in each Pass Through Trust will be distributed by the
Trustee, upon receipt, to Certificateholders of such Pass Through Trust on the
dates and in the currency specified in the applicable Prospectus Supplement,
except in certain cases when some or all of such Secured Notes are in default
as described in the applicable Prospectus Supplement. Payments of principal
of, and interest on, the Secured Notes held in each Pass Through Trust will be
scheduled to be received by the Trustee on the dates specified in the
applicable Prospectus Supplement (such scheduled payments of interest and
principal on the Secured Notes to the Trustee are herein referred to as
"Scheduled Payments," and the dates specified in the applicable Prospectus
Supplement for distribution of Scheduled Payments by the Trustee are herein
referred to as "Regular Distribution Dates"). Each Certificateholder of each
Pass Through Trust will be entitled to receive a pro rata share of any
distribution in respect of Scheduled Payments of principal and interest made
on the Secured Notes held in such Pass Through Trust. The Regular Distribution
Dates on which, and the amounts in which, Scheduled Payments of principal on
the Secured Notes held in each Pass Through Trust are payable will be set
forth in the accompanying Prospectus Supplement.
Payments of principal, premium, if any, and interest received by the Trustee
on account of the redemption or purchase, if any, of any of the Secured Notes
held in a Pass Through Trust, and payments received by the Trustee following
an Event of Default (as defined below) in respect of any of the Secured Notes
held in a Pass Through Trust (including payments received by the Trustee on
account of the purchase by the related Owner Trustees or Owner Participants of
such Secured Notes or payments received on account of the sale of such Secured
Notes by the Trustee) ("Special Payments") will be distributed on a date or
dates described in the accompanying Prospectus Supplement (each, a "Special
Distribution Date"). The Trustee will mail notice to the Certificateholders of
record of the related Pass Through Trust not less than 20 days prior to the
Special Distribution Date on which any Special Payment is scheduled to be
distributed by the Trustee in the event the Secured Notes are to be redeemed
or purchased prior to their maturity and, in all other instances, as soon as
practicable after the Trustee has received the Special Payment. The notice
will specify the anticipated Special Distribution Date, the amount of such
anticipated Special Payment, the reason for the Special Payment and the total
amount to be distributed if such Special Distribution Date is the same date as
a Regular Distribution Date. Each distribution of a Special Payment, other
than a final distribution, on a Special Distribution Date for a Pass Through
Trust will be made by the Trustee to the Certificateholders of such Pass
Through Trust on the record date prior to such Special Distribution Date.
The Basic Agreement requires that the Trustee establish and maintain, for
the benefit of the Certificateholders of each Pass Through Trust, one or more
non-interest bearing accounts (with respect to each such Pass Through Trust,
the "Certificate Account") for the deposit of payments representing Scheduled
Payments on the Secured Notes held in the related Pass Through Trust. The
Basic Agreement also requires that the Trustee establish and maintain, for the
benefit of the Certificateholders of each Pass Through Trust, one or more non-
interest bearing accounts (with respect to each such Pass Through Trust, the
"Special Payments Account") for the deposit of payments representing Special
Payments. Pursuant to the terms of the Basic Agreement, the Trustee is
required to deposit any Scheduled Payments on the Secured Notes held in the
applicable Pass Through Trust received by it in the Certificate Account for
such Pass Through Trust and to deposit any Special Payments so received by it
in the Special Payments Account for such Pass Through Trust. All amounts so
deposited will be distributed by the Trustee on a Regular Distribution Date or
a Special Distribution Date, as the case may be, to the Certificateholders of
such 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 interest.
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POOL FACTORS
Unless there has been an early redemption, or a purchase of one or more of
the Secured Notes held in a Pass Through Trust by the related Owner Trustee or
Owner Participant after an Indenture Event of Default (as defined below), a
default in the payment of principal in respect of one or more issues of the
Secured Notes held in a Pass Through Trust or certain actions have been taken
following a default thereon, as described in the applicable Prospectus
Supplement, the Pool Factor (as defined below) for each 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 in the applicable
Prospectus Supplement. In the event of such redemption, purchase or default,
the Pool Factor and the Pool Balance (as defined below) of each Pass Through
Trust so affected will be recomputed after giving effect thereto and notice
thereof will be mailed to the Certificateholders of such Pass Through Trust.
Each Pass Through Trust will have a separate Pool Factor.
Unless otherwise described in the applicable Prospectus Supplement, the
"Pool Balance" for each Pass Through Trust indicates, as of any Regular
Distribution Date or Special Distribution Date, 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 Trustee
and not yet distributed. The Pool Balance for each Pass Through Trust as of
any Regular Distribution Date or Special Distribution Date shall be computed
after giving effect to the payment of principal, if any, on the Secured Notes
held in such Pass Through Trust and the distribution thereof to be made on
that date.
Unless otherwise described in the applicable Prospectus Supplement, the
"Pool Factor" for each Pass Through Trust as of any Regular Distribution Date
or Special Distribution Date is the quotient (rounded to the seventh decimal
place) computed by dividing (i) the then outstanding Pool Balance by (ii) the
aggregate original principal amount of the 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 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 Pool
Factor for each Pass Through Trust will initially be 1.0000000; thereafter,
the Pool Factor for each Pass Through Trust will decline as described above to
reflect reductions in the Pool Balance of such Pass Through Trust. The amount
of a Certificateholder's pro rata share of the Pool Balance of a Pass Through
Trust can be determined by multiplying the original denomination of the
holder's Certificate of such Pass Through Trust by the Pool Factor for such
Pass Through Trust as of the applicable Regular Distribution Date or Special
Distribution Date. The Pool Factor and the Pool Balance for each Pass Through
Trust will be mailed to Certificateholders of such Pass Through Trust on each
Regular Distribution Date and Special Distribution Date.
REPORTS TO CERTIFICATEHOLDERS
On each Regular Distribution Date and Special Distribution Date, the Trustee
will include with each distribution of a Scheduled Payment or Special Payment
to Certificateholders 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 aggregate principal amount of Certificate for such
Pass Through Trust, as to (i) and (ii) below):
(i) the amount of such distribution allocable to principal and the
amount allocable to premium, if any;
(ii) the amount of such distribution allocable to interest; and
(iii) the Pool Balance and the Pool Factor for such Pass Through
Trust.
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So long as the Certificates are registered in the name of Cede, as nominee
for DTC, on the record date prior to each Regular Distribution Date and
Special Distribution Date, the Trustee will request from DTC a Securities
Position Listing setting forth the names of all DTC Participants reflected on
DTC's books as holding interests in the Certificates on such record date. On
each Regular Distribution Date and Special Distribution Date, the Trustee will
mail to each such DTC Participant the statement described above and will make
available additional copies as requested by such DTC Participant for
forwarding to Certificate Owners.
In addition, after the end of each calendar year, the Trustee will prepare
for each Certificateholder of each Pass Through Trust at any time during the
preceding calendar year a report containing the sum of the amounts determined
pursuant to clauses (i) and (ii) above with respect to the Pass Through Trust
for such calendar year or, in the event such person was a Certificateholder
during only a portion of such calendar year, for the applicable portion of
such calendar year, and such other items as are readily available to the
Trustee and which a Certificateholder shall reasonably request as necessary
for the purpose of such Certificateholder's preparation of its federal income
tax returns. Such report and such other items shall be prepared on the basis
of information supplied to the Trustee by the DTC Participants and shall be
delivered by the Trustee to such DTC Participants to be available for
forwarding by such DTC Participants to Certificate Owners in the manner
described above.
At such time, if any, as the Certificates are issued in the form of
Definitive Certificates, the Trustee will prepare and deliver the information
described above to each Certificateholder of record of each Pass Through Trust
as the name and period of beneficial ownership of such Certificateholder
appears on the records of the registrar of the Certificates.
VOTING OF SECURED NOTES
The Trustee, as holder of the Secured Notes held in a Pass Through Trust,
will have the right to vote and give consents and waivers with respect to such
Secured Notes under the related Indenture. The Basic Agreement and related
Trust Supplement will set forth (i) the circumstances in which a Trustee may
direct any action or cast any vote, as the holder of the Secured Notes held in
the applicable Pass Through Trust, in its own discretion, (ii) the
circumstances in which such Trustee shall seek instructions from the
Certificateholders of such Pass Through Trust and (iii) the percentage of
Certificateholders required to direct such Trustee to take any such action.
EVENTS OF DEFAULT AND CERTAIN RIGHTS UPON AN EVENT OF DEFAULT
The Basic Agreement defines an event of default with respect to a Trust (an
"Event of Default") as the occurrence and continuance of an event of default
under one or more of the related Indentures (an "Indenture Event of Default").
The Prospectus Supplement for a series of Certificates will specify the
Indenture Events of Default under the related Indentures. Certain of the
Indenture Events of Default will arise with reference to events of default
under the relevant Lease (a "Lease Event of Default"). Since the Secured Notes
issued under an Indenture may be held in more than one Pass Through Trust, a
continuing Indenture Event of Default under such Indenture would result in an
Event of Default under each Pass Through Trust holding such Secured Notes.
Unless otherwise provided in a Prospectus Supplement, all of the Secured Notes
issued under the same Indenture will relate only to specified Leased Property,
there will be no cross-collateralization or cross-default provisions in the
Indentures, and events resulting in an Indenture Event of Default under any
particular Indenture will not necessarily result in an Indenture Event of
Default occurring under any other Indentures. If an Indenture Event of Default
occurs in fewer than all of the Indentures related to a Pass Through Trust,
notwithstanding the treatment of Secured Notes issued under any related
Indenture under which an Indenture Event of Default has occurred, payments of
principal and interest on the Secured Notes issued pursuant to any related
Indenture with respect to which an Indenture Event of Default has not occurred
will continue to be made as originally scheduled.
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The ability of the applicable Owner Trustee or Owner Participant under the
related Indenture to cure Indenture Events of Default, including Indenture
Events of Default that result from the occurrence of a Lease Event of Default
under the related Lease, will be described in the applicable Prospectus
Supplement.
The ability of the Certificateholders with respect to any one Pass Through
Trust to cause the Indenture Trustee with respect to any Secured Notes held in
such Pass Through Trust to accelerate the Secured Notes under the related
Indenture or to direct the exercise of remedies by the Indenture Trustee under
the related Indenture will depend, in part, upon the proportion between the
aggregate principal amount of the Secured Notes outstanding under such
Indenture and held in such Pass Through Trust and the aggregate principal
amount of all Secured Notes outstanding under such Indenture. If Secured Notes
outstanding under an Indenture are held by more than one Pass Through Trust,
then each Pass Through Trust will hold Secured Notes with different terms from
the Secured Notes held in the other Pass Through Trusts and therefore the
Certificateholders of a Pass Through Trust may have divergent or conflicting
interests from those of the Certificateholders of the other Pass Through
Trusts holding Secured Notes relating to the same Indenture. In addition, so
long as the same institution acts as Trustee of each Pass Through Trust, in
the absence of instructions from the Certificateholders of any such Pass
Through Trust, the 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. In such event, the Basic Agreement will provide that the Trustee
will resign as trustee of one or all such Pass Through Trusts, and a successor
trustee will be appointed in accordance with the terms of the Basic Agreement.
As an additional remedy, if an Indenture Event of Default under an Indenture
shall have occurred and be continuing, the Basic Agreement provides that the
Trustee of a Pass Through Trust holding Secured Notes issued under such
Indenture 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, sell all or part of such Secured
Notes for cash to any person. Any proceeds received by the Trustee upon any
such sale shall be deposited in the Special Payments Account for the
Certificateholders of such series and shall be distributed to the
Certificateholders of the related 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.
Furthermore, so long as the same institution acts as Trustee of multiple Pass
Through Trusts, it may be faced with a conflict in deciding from which Pass
Through Trust to sell Secured Notes to available buyers. If the Trustee sells
any such Secured Notes with respect to which an Indenture Event of Default
exists for less than their outstanding principal amount, the
Certificateholders of such Pass Through Trust will receive a smaller amount of
principal distributions than anticipated and will not have any claim for the
shortfall against Mobil, any Lessee, any Owner Trustee, any Owner Participant
or the Trustee. Furthermore, neither the Trustee nor the Certificateholders of
such Pass Through Trust could take any action with respect to any remaining
Secured Notes held in such Pass Through Trust so long as no Indenture Events
of Default exist with respect thereto.
Any amount, other than Scheduled Payments received on a Regular Distribution
Date, distributed to the Trustee of any Pass Through Trust by the Indenture
Trustee under any Indenture on account of the Secured Notes held in such Pass
Through Trust following an Indenture Event of Default under such Indenture
shall be deposited in the Special Payments Account for such Pass Through Trust
and shall be distributed to the Certificateholders of such Pass Through Trust
on a Special Distribution Date. In addition, if a Prospectus Supplement
provides that the applicable Owner Trustee or Owner Participant may, under
circumstances specified therein, redeem or purchase the outstanding Secured
Notes issued under the related Indenture, the price paid by such Owner Trustee
or Owner Participant to the Trustee of any Pass Through Trust for the Secured
Notes issued under such Indenture and held in such Pass Through Trust shall be
deposited in the Special Payments Account for such Pass
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Through Trust and shall be distributed to the Certificateholders of such Pass
Through Trust on a Special Distribution Date.
Any funds representing payments received with respect to any Secured Notes
in default held in a Pass Through Trust, or the proceeds from the sale by the
Trustee of any such Secured Notes, held by the Trustee in the Special Payments
Account for such Pass Through Trust shall, to the extent practicable, be
invested and reinvested by the Trustee in Permitted Investments pending the
distribution of such funds on a Special Distribution Date. "Permitted
Investments" are obligations of the United States maturing in not more than 60
days or such lesser time as is required for the distribution of any such funds
on a Special Distribution Date.
The Basic Agreement will provide that the Trustee of a Pass Through Trust
shall, within 90 days after the occurrence of a default in respect of such
Pass Through Trust, give to the Certificateholders of such Pass Through Trust
notice, transmitted by mail, of all uncured or unwaived defaults with respect
to such Pass Through Trust 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 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. The
term "default" as used in this paragraph only means the occurrence of an Event
of Default with respect to a Pass Through Trust as described above, except
that in determining whether any such Event of Default has occurred, any grace
period or notice in connection therewith shall be disregarded.
The Basic Agreement contains a provision entitling the Trustee of each Pass
Through Trust, subject to the duty of the Trustee during a default to act with
the required standard of care, to be offered reasonable security or indemnity
by the Certificateholders of such Pass Through Trust before proceeding to
exercise any right or power under the Basic Agreement at the request of such
Certificateholders.
In certain cases, the holders of Certificates 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 the holders of all
Certificates of such Pass Through Trust waive any past default or Event of
Default with respect to such Pass Through Trust and its consequences, except
(i) a default in payment of the principal of, premium, if any, or interest on
any of the Secured Notes held in such Pass Through Trust and (ii) a default in
respect of any covenant or provision of the Basic Agreement or the related
Trust Supplement that cannot be modified or amended without the consent of
each Certificateholder of such Pass Through Trust affected thereby. Each
Indenture will provide that, with certain exceptions, the holders of a
majority in aggregate unpaid principal amount of the Secured Notes issued
thereunder and held in a related Pass Through Trust may on behalf of all such
holders waive any past default or Indenture Event of Default thereunder. In
the event of a waiver with respect to a Pass Through Trust as described above,
the principal amount of the Secured Notes issued under the related Indenture
held in such Pass Through Trust shall be counted as waived in the
determination of the majority in aggregate unpaid principal amount of Secured
Notes required to waive a default or an Indenture Event of Default under such
Indenture. Therefore, if the Certificateholders of a Pass Through Trust or
Pass Through Trusts waive a past default or Event of Default such that the
principal amount of the Secured Notes held either individually in such Pass
Through Trust or in the aggregate in such Pass Through Trusts constitutes the
required majority in aggregate unpaid principal amount under the applicable
Indenture, such past default or Indenture Event of Default under such
Indenture shall be waived.
MODIFICATIONS OF THE BASIC AGREEMENT
The Basic Agreement contains provisions permitting Mobil, the Applicable
Lessee or Applicable Lessees and the Trustee of each Pass Through Trust to
enter into a supplemental trust agreement,
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without the consent of the holders of any of the Certificates of such Pass
Through Trust, (i) to provide for the formation of such Pass Through Trust and
the issuance of a series of Certificates, (ii) to evidence the succession of
another corporation to Mobil or a Lessee and the assumption by such
corporation of Mobil's or such Lessee's obligations with respect to one or
more series of Certificates under the Basic Agreement and the applicable Trust
Supplement, (iii) to add to the covenants of Mobil or a Lessee for the benefit
of holders of such Certificates, or to surrender any right or power in the
Basic Agreement conferred upon Mobil or a Lessee, (iv) to cure any ambiguity
or correct or supplement any defective or inconsistent provision of the Basic
Agreement or the applicable Trust Supplement or to make any other provisions
with respect to matters or questions arising under the Basic Agreement as may
be necessary or desirable, provided such action shall not adversely affect the
interests of the holders of such Certificates, or to correct any mistake, (v)
to modify, eliminate or add to the provisions of the Basic Agreement or the
applicable Trust Supplement to the extent as shall be necessary to continue
the qualification of the Basic Agreement (including any supplemental
agreement) under the Trust Indenture Act and to add to the Basic Agreement
such other provisions as may be expressly permitted by the Trust Indenture
Act, (vi) to provide for a successor Trustee or to add to or change any
provision of the Basic Agreement or the applicable Trust Supplement as shall
be necessary to facilitate the administration of the Pass Through Trusts
thereunder by more than one Trustee, (vii) to correct or supplement the
description of any property constituting property of such Pass Through Trust
and (viii) to make any other amendments or modifications to the Basic
Agreement or applicable Trust Supplement, provided such amendments or
modifications shall only apply to Certificates issued thereafter.
The Basic Agreement also contains provisions permitting Mobil, the
Applicable Lessee or Applicable Lessees and the Trustee of a related Pass
Through Trust, with the consent of the Certificateholders of such Pass Through
Trust evidencing fractional undivided interests aggregating not less than a
majority in interest of such Pass Through Trust, and, with respect to any
Leased Property, with the consent of the applicable 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 Basic Agreement, to the extent relating to such Pass Through
Trust and the applicable Trust Supplement, or modifying the rights of the
Certificateholders, except that no such supplemental trust agreement may,
without the consent of each Certificateholder so affected thereby, (a) reduce
in any manner the amount of, or delay the timing of, any receipt by the
Trustee of payments on the Secured Notes held in such Pass Through Trust or
distributions in respect of any Certificate related to such Pass Through
Trust, or change the date or place of any payment in respect of any such
Certificate, or make distributions payable in coin or currency other than that
provided for in such Certificates, or impair the right of any
Certificateholder of such Pass Through Trust to institute suit for the
enforcement of any such payment when due, (b) permit the disposition of any
Secured Note held in such Pass Through Trust, except as provided in the Basic
Agreement or the applicable Trust Supplement, or otherwise deprive any
Certificateholder of the benefit of the ownership of the applicable Secured
Notes, (c) reduce the percentage of the aggregate fractional undivided
interests of such Pass Through Trust provided for in the Basic Agreement or
the applicable Trust Supplement, the consent of the holders of which is
required for any such supplemental trust agreement or for any waiver provided
for in the Basic Agreement or such Trust Supplement, or (d) modify any of the
provisions relating to the rights of the Certificateholders in respect of the
waiver of events of default or receipt of payment except to increase the
percentage of the aggregate fractional undivided interests of such Pass
Through Trust required for such a waiver.
MODIFICATION OF INDENTURE AND RELATED AGREEMENTS
In the event that the Trustee, as the holder of any Secured Notes held in a
Pass Through Trust, receives a request for its consent to any amendment,
modification or waiver under the Lease or other document relating to such
Secured Notes, the Trustee shall mail a notice of such proposed
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amendment, modification or waiver to each Certificateholder of such Pass
Through Trust as of the date of such notice. The Trustee shall request
instructions from the Certificateholders of such Pass Through Trust as to
whether or not to consent to such amendment, modification or waiver. The
Trustee shall vote or consent with respect to such Secured Notes in such Past
Through Trust in the same proportion as the Certificates of such Pass Through
Trust were actually voted by the holders thereof by a certain date.
Notwithstanding the foregoing, if an Event of Default in respect of such Pass
Through Trust shall have occurred and be continuing, the Trustee may in its
own discretion consent to such amendment, modification or waiver, and may so
notify the Indenture Trustee to which such consent relates.
TERMINATION OF THE PASS THROUGH TRUSTS
The obligations of Mobil, the Applicable Lessee and the Trustee with respect
to a Pass Through Trust will terminate upon the distribution to the
Certificateholders of such Pass Through Trust of all amounts required to be
distributed to them pursuant to the Basic Agreement and the applicable Trust
Supplement and the disposition of all property held in such Pass Through
Trust. The Trustee will send to each Certificateholder of record of such Pass
Through Trust notice of the termination of such 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 of such Pass Through Trust will be made only upon surrender
of such Certificateholder's Certificates at the office or agency of the
Trustee specified in such notice of termination.
DELAYED PURCHASE
A Prospectus Supplement may specify that, pending availability of some or
all of the Secured Notes intended to be purchased with the proceeds of an
issuance of Certificates, such proceeds may, as more fully described in such
Prospectus Supplement, be (a) invested by the Trustee in United States
government obligations or certain other limited investments described in such
Prospectus Supplement ("Specified Investments"), in which event Mobil or the
Applicable Lessee would be responsible for paying to the Trustee amounts equal
to any loss on such investments and any deficiency in the earnings of such
investments under the amount scheduled to be distributed on such Certificates
in respect of interest and would be entitled to receive any earnings on such
investments in excess of the amount so needed for distribution on the
Certificates, or (b) used by the Trustee to acquire debt instruments issued on
an interim basis by Mobil or by one or more of the Applicable Lessees and
guaranteed by Mobil, in each case having an interest rate and payment
provisions corresponding to the interest rate and payment provisions of the
Secured Notes intended to be purchased with such proceeds and requiring
repayment to the Trustee at the time the Trustee is to purchase such Secured
Notes. Any such debt instruments will be secured by a collateral account that
may be invested in Specified Investments or by other security described in the
applicable Prospectus Supplement.
To the extent that the full amount of the proceeds from the sale of any
Certificates is not used to purchase Secured Notes on or prior to the date set
forth in the applicable Prospectus Supplement, an amount equal to the unused
proceeds will be distributed by the Trustee to the holders of record of such
Certificates on a pro rata basis on a Special Distribution Date, together with
interest thereon at a rate equal to the rate applicable to such Certificates,
but without premium.
THE TRUSTEE
Except as otherwise provided in the Prospectus Supplement, State Street Bank
and Trust Company will be the Trustee for each of the Pass Through Trusts.
With certain exceptions, the Trustee will make no representations as to the
validity or sufficiency of the Basic Agreement, the Trust Supplements, the
Certificates, the Secured Notes, the Indentures, the Leases or other related
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documents. The Trustee shall not be liable with respect to any series of
Certificates for any action taken or omitted to be taken by it in good faith
in accordance with the direction of the holders of a majority in principal
amount of outstanding Certificates of such series. Subject to such provisions,
such Trustee shall be under no obligation to exercise any of its rights or
powers under the Basic Agreement at the request of any holders of Certificates
issued thereunder unless they shall have offered to the Trustee indemnity
satisfactory to it. The Basic Agreement provides that the Trustee in its
individual or any other capacity may acquire and hold Certificates issued
thereunder and, subject to certain conditions, may otherwise deal with Mobil
and the Lessees and, with respect to the Leased Property, with any Owner
Trustee and Owner Participant with the same rights it would have if it were
not the Trustee.
The Trustee may resign with respect to any or all of the Pass Through Trusts
at any time, in which event Mobil and the Applicable Lessee will be obligated
to appoint a successor trustee. If the Trustee ceases to be eligible to
continue as Trustee with respect to a Pass Through Trust or becomes incapable
of acting as Trustee or becomes insolvent, Mobil and the Applicable Lessee may
remove such Trustee, or any Certificateholder of such Pass Through Trust 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
Trustee and the appointment of a successor trustee. Any resignation or removal
of the Trustee with respect to a Pass Through Trust and appointment of a
successor trustee for such Pass Through Trust does not become effective until
acceptance of the appointment by the successor trustee. Pursuant to such
resignation and successor trustee provisions, it is possible that a different
trustee could be appointed to act as the successor trustee with respect to
each Pass Through Trust related to a single offering of Certificates. All
references in this Prospectus to the Trustee should be read to take into
account the possibility that the Pass Through Trusts could have different
successor trustees in the event of such a resignation or removal.
The Basic Agreement provides that Mobil or the Applicable Lessee will pay
the Trustee's fees and expenses and indemnify the Trustee against certain
liabilities.
DESCRIPTION OF THE SECURED NOTES
The statements made under this caption are summaries and do not purport to
be complete. Such statements are qualified in their entirety by, and reference
is made to, the entire Prospectus and detailed information appearing in the
applicable Prospectus Supplement.
To the extent that any provision in any Prospectus Supplement is
inconsistent with any provision in this summary, the provision of such
Prospectus Supplement will control.
GENERAL
All Secured Notes related to a Leased Property and held in a Pass Through
Trust will be issued under a separate Indenture between the related Owner
Trustee of an Owner Trust for the benefit of the related Owner Participant,
and the related Indenture Trustee. Such Secured Notes will be nonrecourse
obligations of the applicable Owner Trust. Each such Secured Note will be
authenticated under an Indenture by the Indenture Trustee.
With respect to each Leased Property, the related Owner Trustee has acquired
or will acquire such Leased Property and, unless otherwise provided in the
Prospectus Supplement, has granted or will grant a lien on and a security
interest in such Leased Property to the related Indenture Trustee as security
for the payments of the related Secured Notes, and has leased or will lease
such Leased Property to the Applicable Lessee pursuant to the related Lease
which has been or will be assigned to the related Indenture Trustee. Pursuant
to each such Lease, the Applicable Lessee will be obligated
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to make or cause to be made rental and other payments to the related Indenture
Trustee on behalf of the related Owner Trustee in amounts that will be
sufficient to make payments of the principal and interest and, except in the
limited circumstances set forth in the applicable Prospectus Supplement,
premium, if any, due in respect of such Secured Notes when and as due and
payable.
PRINCIPAL AND INTEREST PAYMENTS
Interest received by the Trustee on the Secured Notes held in each Pass
Through Trust will be passed through to the Certificateholders of such Pass
Through Trust on the dates and at the rate per annum set forth in the
applicable Prospectus Supplement until the final distribution date for such
Pass Through Trust. Principal received by the Trustee on the Secured Notes
held in each Pass Through Trust will be passed through to the
Certificateholders of such Pass Through Trust in scheduled amounts on the
dates set forth in the applicable Prospectus Supplement until the final
distribution date for such Pass Through Trust.
If any date scheduled for any payment of principal, premium, if any, or
interest with respect to the Secured Notes is not a business day, such payment
will be made on the next succeeding business day without any additional
interest.
REDEMPTION
The applicable Prospectus Supplement will describe the circumstances,
whether voluntary or involuntary, under which the Secured Notes may be
redeemed or purchased prior to the stated maturity date thereof, in whole or
in part, the premium, if any, applicable upon certain redemptions or purchases
and other terms applying to the redemptions or purchases of such Secured
Notes.
SECURITY
The Secured Notes to be held in the Pass Through Trusts will be secured by
(i) an assignment by the related Owner Trustee to the related Indenture
Trustee of such Owner Trustee's rights (except for certain rights, including
those described below) under the Lease or Leases with respect to the related
Leased Property including the right to receive payments of rent thereunder,
(ii) an assignment of certain of such Owner Trustee's rights under the Parent
Guaranty relating to such Leased Property, and (iii) to the extent provided in
the applicable Prospectus Supplement, a mortgage or other security interest in
such Leased Property or in construction contracts or other agreements,
collateral accounts or other security, in each case subject to the rights of
the Lessee under the Lease related thereto and other rights, if any, described
in the applicable Prospectus Supplement.
Under the terms of each Lease, the Applicable Lessee's obligations in
respect of the related Leased Property will be those of a lessee under a "net
lease." Accordingly, such Lessee will be obligated, among other things, to pay
all costs and expenses of operating and maintaining the Leased Property. With
respect to the Leased Property, the assignment by the related Owner Trustee to
the related Indenture Trustee of its rights under the related Lease will
exclude, among other things, rights of such Owner Trustee and the related
Owner Participant relating to indemnification by such Lessee for certain
matters, insurance proceeds payable to such Owner Trustee in its individual
capacity and to such Owner Participant under liability insurance maintained by
such Lessee pursuant to such Lease or by such Owner Trustee or such Owner
Participant, insurance proceeds payable to such Owner Trustee in its
individual capacity or to such Owner Participant under certain casualty
insurance maintained by such Owner Trustee or such Owner Participant pursuant
to such Lease and any rights of such Owner Participant or such Owner Trustee
to enforce payment of the foregoing amounts and their respective rights to the
proceeds of the foregoing. Such rights excluded from the assignment shall be
referred to as "Excepted Payments."
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The applicable Prospectus Supplement will specify the required insurance
coverage, if any, with respect to the Leased Property.
Unless otherwise specified in the applicable Prospectus Supplement, the
Secured Notes will not be cross-collateralized and consequently the Secured
Notes issued in respect of any Leased Property will not be secured by any
other Leased Property or the Lease related thereto. Unless and until an
Indenture Event of Default with respect to a Leased Property has occurred and
is continuing, the related Indenture Trustee may exercise only limited rights
of the related Owner Trustee under the related Lease.
Funds, if any, held from time to time by the Indenture Trustee with respect
to any Leased Property, prior to the distribution thereof, will be invested
and reinvested by such Indenture Trustee. Such investment and reinvestment
will be at the direction of the Applicable Lessee, as agent for the related
Owner Trustee (except in the case of a related Lease Event of Default under
the applicable Lease) in certain investments described in the related
Indenture. The net amount of any loss resulting from any such investments will
be paid by such Lessee, as agent for such Owner Trustee.
ADDITIONAL NOTES
Under certain circumstances and conditions as described in the applicable
Prospectus Supplement, for the purpose of providing funds to finance the cost
of certain modifications, alterations, additions, improvements or replacement
parts to any particular item of Leased Property, a Lessee may cause the
financing of such additional costs through the issuance and sale by the Owner
Trustee of additional Secured Notes (the "Additional Notes").
The terms, conditions and designations of such Additional Notes will be set
forth in a supplement to the related Indenture. All rent and other amounts
payable by the Applicable Lessee under the related Lease will be adjusted to
the extent necessary to provide for rent and other amounts sufficient to
provide for the payment, when due, of all scheduled payments of principal of,
premium (except for those instances where such Lessee shall not be responsible
for such premium), if any, and interest on the Secured Notes, including the
Additional Notes so issued.
PAYMENTS AND LIMITATION OF LIABILITY
Each Leased Property will be leased by the applicable Owner Trustee to the
Applicable Lessee pursuant to a Lease for a term commencing not later than the
delivery date thereof to such Owner Trustee and expiring on a date not earlier
than the latest maturity date of the related Secured Notes, unless previously
terminated as permitted by the terms of such Lease. The basic rent or hire and
other payments under each such Lease will be payable by the Applicable Lessee
in accordance with the terms specified in such Lease and will be described in
the applicable Prospectus Supplement, and (other than Excepted Payments) will
be assigned by the applicable Owner Trustee under the applicable Indenture to
an Indenture Trustee to provide the funds necessary to pay principal and
interest and, except in the limited circumstances set forth in the applicable
Prospectus Supplement, premium, if any, due in respect of the Secured Notes
issued under such Indenture. In certain cases, the basic rent payments under a
Lease may be adjusted, but each Lease will provide that under no circumstances
will the rental payments which the Applicable Lessee is obligated to make or
cause to be made be less than the scheduled payments of principal and interest
on the related Secured Notes. The balance of any basic rent payment under each
Lease, after payment of amounts due on the Secured Notes issued under the
Indenture corresponding to such Lease, will be paid over to the applicable
Owner Trustee. The Applicable Lessee's obligation to pay rent and to cause
other payments to be made under each Lease will be general obligations of such
Lessee.
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Except in certain circumstances involving a Lessee's purchase of Leased
Property and the assumption of the Secured Notes related thereto, the Secured
Notes will not be obligations of, or guaranteed by, any Lessee or Mobil. None
of the Owner Trustees, the Owner Participants or the Indenture Trustees shall
be personally liable to any holder of such Secured Notes for amounts payable
under such Secured Notes, or, except as provided in the Indentures relating
thereto in the case of the Owner Trustees and the Indenture Trustees, for any
liability under such Indentures. Except in the circumstances referred to
above, all amounts payable under any Secured Notes (other than payments made
in connection with an optional redemption or purchase by the related Owner
Trustee or the related Owner Participant) will be made only from the assets
subject to the lien of the related Indenture with respect to such Leased
Property or the income and proceeds received by the related Indenture Trustee
therefrom (including rent payable by the Applicable Lessee under the related
Lease).
Except as otherwise provided in the related Indentures, no Owner Trustee
shall be personally liable for any amount payable or for any statements,
representations, warranties, agreements or obligations under such Indentures
or under the Secured Notes except for its own willful misconduct or gross
negligence. None of the Owner Participants shall have any duty or
responsibility under the Indentures or under such Secured Notes to the related
Indenture Trustee or to any holder of any such Secured Note.
MERGER, CONSOLIDATION AND TRANSFER OF ASSETS
Each Lessee and Mobil is prohibited from consolidating with or merging into
any other corporation or transferring substantially all of its assets to
another corporation unless such Lessee or Mobil, as the case may be, 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 or, in the case of Mobil, any
other jurisdiction, and (b) the successor corporation shall expressly assume
the due and punctual performance and observance of all the covenants and
conditions of the operative documents to which such Lessee or Mobil, as the
case may be, is a party and which are to be performed thereby.
DEFEASANCE OF THE INDENTURES AND THE SECURED NOTES IN CERTAIN CIRCUMSTANCES
Unless otherwise specified in the applicable Prospectus Supplement, the
applicable Indenture will provide that the obligations of the related
Indenture Trustee and the related Owner Trustee in respect of any series of
Secured Notes issued in accordance with the terms of such Indenture shall be
deemed to have been discharged and paid in full (except for certain
obligations, including the obligations to register the transfer or exchange of
Secured Notes, to replace stolen, lost, destroyed or mutilated Secured Notes
and to maintain paying agencies and hold money for payment in trust) upon the
irrevocable deposit with the related Indenture Trustee of money or certain
obligations of the United States or any agency or instrumentality thereof the
payment of which is backed by the full faith and credit of the United States
which, through the payment of principal and interest in respect thereof in
accordance with their terms, will provide money in an aggregate amount
sufficient to pay when due (including as a consequence of redemption in
respect of which notice is given on or prior to the date of such deposit)
principal of, premium, if any, and interest on such Secured Notes. Such
discharge may occur only if, among other things, there has been published by
the Internal Revenue Service a ruling to the effect that holders of such
Secured Notes will not recognize income, gain or loss for federal income tax
purposes as a result of such deposit, defeasance and discharge and will be
subject to federal income tax on the same amount and in the same manner and at
the same time as would have been the case if such deposit, defeasance and
discharge had not occurred.
Upon such defeasance, or upon payment in full of the principal of, premium,
if any, and interest on all Secured Notes issued under any Indenture on the
maturity date therefor or deposit with the applicable Indenture Trustee of
money sufficient therefor no earlier than one year prior to the date of
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such maturity, the holders of such Secured Notes will have no beneficial
interest in or other rights with respect to the related Leased Property or
other assets subject to the lien of such Indenture (other than amounts or
obligations deposited to effect such discharge) and such lien shall terminate.
ASSUMPTION OF OBLIGATIONS BY LESSEE
A Prospectus Supplement may specify that, with respect to any Leased
Property and subject to the satisfaction of the conditions described in such
Prospectus Supplement, the Applicable Lessee may, upon the exercise of any
purchase and certain other termination options it may have under the related
Lease, assume on a full recourse basis all of the obligations of the related
Owner Trustee under the Indenture with respect to such Leased Property,
including the obligations to make payments in respect of the related Secured
Notes. In such event, such Lessee shall execute a supplemental indenture to
the related Indenture (such supplemental indenture, together with the related
Indenture, a "Company Indenture"). The Parent Guaranty will continue to apply
to such Lessee's obligations. Unless otherwise specified in the applicable
Prospectus Supplement, the Leased Property will continue to be subject to the
lien of the Company Indenture, and the Company Indenture will incorporate
certain relevant provisions of the Lease so terminated, including (among
others) provisions relating to maintenance, possession and use of the related
Leased Property, liens, insurance, possession and events of default.
THE PARENT GUARANTIES
As described in the applicable Prospectus Supplement, Mobil will
unconditionally guarantee the full and prompt payment of all amounts payable
by the Applicable Lessee under the related Lease when and as the same shall
become due and payable. Each Parent Guaranty will be enforceable without any
need first to enforce any Lease against the Applicable Lessee. Each Parent
Guaranty will be an unsecured obligation of Mobil.
FEDERAL INCOME TAX CONSEQUENCES
The following is a general discussion of the anticipated material federal
income tax consequences of the purchase, ownership and disposition of the
Certificates by a Certificate Owner purchasing Certificates in the initial
offering thereof and should be read in conjunction with any additional
discussion of federal income tax consequences included in the applicable
Prospectus Supplement. 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. The Pass Through Trusts are not
indemnified for any federal income taxes that may be imposed upon them, and
the imposition of any such taxes could result in a reduction in the amounts
available for distribution to the Certificate Owners of a Pass Through Trust.
In connection with each offering of Certificates, Mobil and the Applicable
Lessee will receive an opinion from Debevoise & Plimpton, or other counsel
specified in the applicable Prospectus Supplement, that, based upon the
applicable law then in effect, the following discussion, as amended or
supplemented by the applicable Prospectus Supplement, properly describes in
general the anticipated principal United States federal income tax
consequences of acquiring, holding and disposing of the Certificates.
INVESTORS SHOULD CONSULT THEIR OWN TAX ADVISORS AS TO THE FEDERAL, STATE,
LOCAL, FOREIGN AND ANY OTHER TAX CONSEQUENCES TO THEM OF THE PURCHASE,
OWNERSHIP AND DISPOSITION OF THE CERTIFICATES, INCLUDING THE ADVISABILITY OF
MAKING ANY ELECTION DISCUSSED BELOW, IN LIGHT OF THEIR OWN PARTICULAR
CIRCUMSTANCES.
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GENERAL
Based upon an interpretation of analogous authorities under currently
applicable law, each Pass Through Trust will be classified as a grantor trust
(and not as an association taxable as a corporation) and each Certificate
Owner will be treated as the owner of a pro rata undivided interest in the
Secured Notes or any other property held in the applicable Pass Through Trust.
Each Certificate Owner will be required to report on its federal income tax
return its pro rata share of the entire income from the Secured Notes and any
other property in the applicable Pass Through Trust, in accordance with such
Certificate Owner's method of accounting. Thus, a Certificate Owner using the
cash method of accounting will take into account its pro rata share of income
as and when received by the Trustee in respect of the applicable Pass Through
Trust, and a Certificate Owner using an accrual method of accounting will take
into account its pro rata share of income as it accrues or is received by the
Trustee in respect of the applicable Pass Through Trust, whichever is earlier.
If a Pass Through Trust will hold more than one Secured Note, a purchaser of
a Certificate will be treated as purchasing an interest in each Secured Note
and any other property in the related Pass Through Trust at a price determined
by allocating the purchase price paid for the Certificate among such Secured
Notes and other property in proportion to their fair market values at the time
of purchase of the Certificate.
SALES OF CERTIFICATES
A Certificate Owner that sells a 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 will be taxable
as interest income) and the Certificate Owner's adjusted tax basis in the
Certificate. Subject to the market discount provisions of the Internal Revenue
Code of 1986, as amended (the "Code") (described below), any such gain or loss
will be capital gain or loss if the Certificate was held as a capital asset
and, if the 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 a
Certificate at the offering price set forth in the applicable Prospectus
Supplement) will be considered to have acquired an interest in a Secured Note
held in the applicable Pass Through Trust at a "market discount" to the extent
the remaining principal amount of such Secured Note allocable to such
Certificate exceeds the purchaser's tax basis allocable to such Secured Note,
unless the excess does not exceed a prescribed de minimis amount. In the event
such excess exceeds the de minimis amount, the Certificate Owner 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 must be
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 in ordinary income
as if the Certificate Owner had sold the 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
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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, 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 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 a loan 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 regarding the
treatment of certain gain as ordinary income and the deferral of interest
expense will not apply to the taxpayer.
PREMIUM
A Certificate Owner generally will be considered to have acquired an
interest in a Secured Note held in the applicable Pass Through Trust at a
premium to the extent the Certificate Owner's tax basis allocable to such
Secured Note exceeds the remaining principal amount of the Secured Note
allocable to such Certificate Owner's Certificate. In that event, a
Certificate Owner who holds such Certificate as a capital asset may elect to
amortize that premium as an offset to interest income with corresponding
reductions in the Certificate Owner's tax basis in its interest in the Secured
Note. This election is made by claiming the bond premium on the Certificate
Owner's tax return. Generally, if the foregoing election is made such
amortization is taken on a constant yield basis. However, in the case of
amortizing obligations, 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."
Under current Treasury regulations, in the case of Secured Notes that may be
called at a premium prior to maturity, amortizable bond premium may be
determined by reference to an early call date. Under proposed Treasury
regulations issued in June 1996, a holder of an obligation that may be called
at a premium prior to maturity generally would not be entitled to determine
the amount of amortizable bond premium by reference to an early call date, but
may be allowed, if an early call occurred, to deduct all or part of any
unamortized bond premium in the year of such call. The proposed regulations
provide that they will apply with respect to debt instruments issued on or
after 60 days following the date final regulations are published in the
Federal Register. Any Prospectus Supplement to which such final regulations
may apply will so indicate.
Due to the complexities of the amortizable premium rules, particularly if
there is more than one possible call date and the amount of any premium is
uncertain, Certificate Owners are urged to consult
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their own tax advisors as to the amount of any such amortizable premium and
the advisability of making an amortization election.
ORIGINAL ISSUE DISCOUNT
Unless otherwise specified in the applicable Prospectus Supplement, subject
to the aggregation rules discussed below, the Secured Notes will not be issued
with original issue discount. Under the aggregation rules set forth in the
current Treasury Regulations, if one investor purchases Certificates issued by
more than one Pass Through Trust, certain of that investor's interests in the
Secured Notes in those Trusts must in certain circumstances be treated
together as a single debt instrument, which, for purposes of calculating and
amortizing any original issue discount, has a single issue price, maturity
date, stated redemption price at maturity, and yield to maturity. If such
aggregation rules were applicable to an investor, such Secured Notes could be
treated with respect to such investor as having been issued with original
issue discount. Generally, a holder of a debt instrument issued with original
issue discount that is not de minimis must include such original issue
discount in income for federal income tax purposes as it accrues, in advance
of the receipt of the cash attributable to such income, under a method that
takes into account the compounding of interest. Certificate Owners are urged
to consult their own tax advisors regarding the application of the aggregation
rules.
BACKUP WITHHOLDING
Payments made on the Certificates, and proceeds from the sale of the
Certificates to or through certain brokers, may be subject to a "backup"
withholding tax of 31% unless the Certificate Owner complies with certain
reporting procedures or is exempt from such requirements. Any such withheld
amounts are allowed as a credit against the Certificate Owner's federal income
tax and may entitle such Certificate Owner 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 Certificate
Owner who is required to supply information but who does not do so in the
proper manner.
CERTAIN MASSACHUSETTS TAXES
The Trustee is a Massachusetts trust company with its corporate trust office
at Two International Place, Boston, Massachusetts 02110. Bingham, Dana & Gould
LLP, counsel to the Trustee, has advised Mobil that, in its opinion, under
currently applicable law, assuming that each 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 Trusts 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
Commonwealth of Massachusetts or any political subdivision thereof, and (ii)
Certificate Owners who are not residents of or otherwise subject to tax in
Massachusetts 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 Commonwealth of Massachusetts or any political subdivision thereof
as a result of purchasing, holding (including receiving payments with respect
to) or selling a Certificate. Neither the Pass Through Trusts nor the
Certificate Owners 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
Certificate Owners of such Pass Through Trust. In general, should a
Certificate Owner or a Pass Through Trust be subject to any state or local tax
which would not be imposed if the Trustee were located in a different
jurisdiction in the United States, the Trustee will resign and a new trustee
in such other jurisdiction will be appointed.
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ERISA CONSIDERATIONS
Unless otherwise indicated in the applicable Prospectus Supplement, the
Certificates may, subject to certain legal restrictions, be purchased and held
by an employee benefit plan (a "Plan") subject to Title I of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), or an individual
retirement account or an employee benefit plan subject to section 4975 of the
Code. A fiduciary of a Plan must determine that the purchase and holding of a
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 Title I of
ERISA or section 4975 of the Code. The Certificates may, subject to certain
legal restrictions, be purchased and held by such plans.
PLAN OF DISTRIBUTION
Certificates may be sold to one or more underwriters for public offering and
sale by them or to investors or other persons directly or through one or more
dealers or agents. Any such underwriter, dealer or agent involved in the offer
and sale of the Certificates will be named in the applicable Prospectus
Supplement.
The Certificates may be sold at a fixed price or prices, which may be
changed, or from time to time at market prices prevailing at the time of sale,
at prices related to such prevailing market prices or at negotiated prices.
Dealer trading may take place in certain of the Certificates, including
Certificates not listed on any securities exchange. Neither Mobil nor the
Lessees intend to apply for listing of the Certificates on a national
securities exchange. Mobil and the Lessees also may, from time to time,
authorize underwriters acting as their agents to offer and sell the
Certificates upon the terms and conditions as shall be set forth in any
Prospectus Supplement. In connection with the sale of Certificates,
underwriters may be deemed to have received compensation from Mobil and the
Applicable Lessee in the form of underwriting discounts or commissions and may
also receive commissions from purchasers of Certificates for whom they may act
as agent. Underwriters may sell Certificates to or through dealers, and such
dealers may receive compensation in the form of discounts, concessions or
commissions from the underwriters and/or commissions (which may be changed
from time to time) from the purchasers for whom they may act as agent.
If a dealer is used directly by Mobil or a Lessee in the sale of
Certificates in respect of which this Prospectus is delivered, such
Certificates will be sold to the dealer, as principal. The dealer may then
resell such Certificates to the public at varying prices to be determined by
such dealer at the time of resale. Any such dealer and the terms of any such
sale will be set forth in the Prospectus Supplement relating thereto.
Certificates may be offered and sold through agents designated by Mobil and
the Applicable Lessee from time to time. Any such agent involved in the offer
or sale of the Certificates in respect of which this Prospectus is delivered
will be named in, and any commissions payable by Mobil and such Lessee to such
agent will be set forth in, the applicable Prospectus Supplement. Unless
otherwise indicated in the applicable Prospectus Supplement, any such agent
will be acting on a best efforts basis for the period of its appointment.
Offers to purchase Certificates may be solicited directly by Mobil and the
Applicable Lessees and sales thereof may be made by Mobil and the Applicable
Lessees directly to institutional investors or others who may be deemed to be
underwriters within the meaning of the Securities Act with respect to any
resale thereof. The terms of any such sales will be described in the
Prospectus Supplement relating thereto. Except as set forth in the applicable
Prospectus Supplement, no director, officer or
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employee of Mobil or the Lessees will solicit or receive a commission in
connection with direct sales by Mobil or the Lessees of the Certificates,
although such persons may respond to inquiries by potential purchasers and
perform ministerial and clerical work in connection with any such direct
sales.
Any underwriting compensation paid by Mobil and the Applicable Lessee to
underwriters, dealers or agents in connection with the offering of
Certificates, and any discounts, concessions or commissions allowed by
underwriters to participating dealers, will be set forth in an applicable
Prospectus Supplement. Underwriters, dealers and agents participating in the
distribution of the Certificates may be deemed to be underwriters, and any
discounts and commissions received by them and any profit realized by them on
resale of the Certificates may be deemed to be underwriting discounts and
commissions under the Securities Act. Underwriters, dealers and agents may be
entitled, under agreements with Mobil and the Applicable Lessee, to
indemnification against and contribution toward certain civil liabilities,
including liabilities under the Securities Act, and to reimbursement by Mobil
and such Lessee for certain expenses.
Underwriters, dealers and agents and their affiliates may engage in
transactions with, or perform services for, Mobil and its subsidiaries from
time to time.
If so indicated in an applicable Prospectus Supplement and subject to
existing market conditions, Mobil and the Applicable Lessee will authorize
dealers acting as Mobil's and such Lessee's agents to solicit offers by
certain institutions to purchase Certificates at the public offering price set
forth in such Prospectus Supplement pursuant to Delayed Delivery Contracts
("Contracts") providing for payment and delivery on the date or dates stated
in such Prospectus Supplement. Each Contract will be for an amount not less
than, and the aggregate principal amount of Certificates sold pursuant to
Contracts shall not be less nor more than, the respective amounts stated in
such Prospectus Supplement. Institutions with whom Contracts, when authorized,
may be made include commercial and savings banks, insurance companies, pension
funds, investment companies, educational and charitable institutions and other
institutions, but will in all cases be subject to the approval of Mobil and
the Applicable Lessee. Contracts will not be subject to any conditions except
the purchase by an institution of the Certificates covered by its Contracts
shall not at the time of delivery be prohibited under the laws of any
jurisdiction in the United States to which such institution is subject. A
commission indicated in the applicable Prospectus Supplement will be granted
to underwriters and agents soliciting purchases of Certificates pursuant to
Contracts accepted by Mobil and the Applicable Lessee. Agents and underwriters
will have no responsibility in respect of the delivery or performance of
Contracts.
If an underwriter or underwriters are utilized in the sale of any
Certificates, the applicable Prospectus Supplement will contain a statement as
to the intention, if any, of such underwriters at the date of such Prospectus
Supplement to make a market in the Certificates. No assurances can be given
that there will be a market for the Certificates.
The place and time of delivery for the Certificates in respect of which this
Prospectus is delivered will be set forth in the applicable Prospectus
Supplement.
28
<PAGE>
LEGAL OPINIONS
Unless otherwise indicated in the applicable Prospectus Supplement, the
validity of the Certificates and the Parent Guaranties will be passed upon for
Mobil and the Lessees by Ralph N. Johanson, Jr., Managing Counsel, Corporate,
Finance and Securities of Mobil and by Debevoise & Plimpton, 875 Third Avenue,
New York, New York 10022, and for any agents or underwriters by Shearman &
Sterling, 599 Lexington Avenue, New York, New York 10022. Unless otherwise
indicated in the applicable Prospectus Supplement, Mr. Johanson, Debevoise &
Plimpton and Shearman & Sterling will rely on the opinion of counsel for the
Trustee as to certain matters relating to the authorization, execution and
delivery of such Certificates by, and the valid and binding effect thereof on,
such Trustee.
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.
29
<PAGE>
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NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESEN-
TATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS SUPPLEMENT OR THE PRO-
SPECTUS, AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE
RELIED UPON AS HAVING BEEN AUTHORIZED. THIS PROSPECTUS SUPPLEMENT AND THE PRO-
SPECTUS DO NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO
BUY ANY SECURITIES OTHER THAN THE SECURITIES DESCRIBED IN THIS PROSPECTUS SUP-
PLEMENT OR AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY SUCH SECURI-
TIES IN ANY CIRCUMSTANCES IN WHICH SUCH OFFER OR SOLICITATION IS UNLAWFUL. NEI-
THER THE DELIVERY OF THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS NOR ANY SALE
MADE HEREUNDER OR THEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLI-
CATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF MOBIL OR THE LESSEE
SINCE THE DATE HEREOF OR THAT THE INFORMATION CONTAINED HEREIN OR THEREIN IS
CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE.
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TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT
<TABLE>
<CAPTION>
PAGE
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<S> <C>
Summary.................................................................... S-3
Mobil Corporation.......................................................... S-8
Mobil Chemical Finance (Texas) Inc. ....................................... S-8
Capitalization of Mobil Corporation........................................ S-8
Ratio of Earnings to Fixed Charges of
Mobil Corporation......................................................... S-9
Selected Consolidated Financial Information of
Mobil Corporation......................................................... S-9
The Facility Assets........................................................ S-10
Use of Proceeds and Outline of
the Transaction........................................................... S-10
Diagram of Payments........................................................ S-11
Description of the Pass Through Certificates............................... S-12
Description of the Secured Notes........................................... S-15
Federal Income Tax Consequences............................................ S-30
ERISA Considerations....................................................... S-30
Underwriting............................................................... S-32
Legal Opinions............................................................. S-33
Documents Incorporated by Reference........................................ S-33
Appendix A--Glossary of Certain Terms...................................... A-1
PROSPECTUS
Available Information...................................................... 4
Documents Incorporated by Reference........................................ 4
Formation of the Trusts.................................................... 5
Outline of the Leveraged Lease Structure................................... 5
Use of Proceeds............................................................ 6
Mobil Corporation.......................................................... 7
The Lessees................................................................ 7
Ratio of Earnings to Fixed Charges of
Mobil Corporation......................................................... 7
Description of the Certificates............................................ 7
Description of the Secured Notes........................................... 19
Federal Income Tax Consequences............................................ 23
Certain Massachusetts Taxes................................................ 26
ERISA Considerations....................................................... 27
Plan of Distribution....................................................... 27
Legal Opinions............................................................. 29
Experts.................................................................... 29
</TABLE>
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$95,331,000
MOBIL CORPORATION
1997-A PASS THROUGH TRUST
PASS THROUGH CERTIFICATES,
SERIES 1997-A
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[LOGO OF MOBIL CORPORATION]
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GOLDMAN, SACHS & CO.
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