<PAGE> 1
Pursuant to Rule 424(b)(4)
Registration No. 33-54897
PROSPECTUS
$262,188,000
NEWMONT GOLD COMPANY
1994-A1 AND 1994-A2 PASS THROUGH TRUSTS
PASS THROUGH CERTIFICATES, SERIES 1994-A1 AND 1994-A2
The Pass Through Certificates offered hereby (the "Pass Through Certificates")
will represent fractional undivided interests in two Newmont Gold Company 1994-A
Pass Through Trusts (the "Pass Through Trusts"). The Pass Through Trusts are to
be formed pursuant to two separate pass through trust agreements between Newmont
Gold Company (the "Company"), and First National Bank of Chicago (the "Pass
Through Trustee"), not individually but solely as trustee under each Pass
Through Trust. The property of the Pass Through Trusts will consist of notes
(the "Lessor Notes") issued on a nonrecourse basis by the Owner Trustees
referred to below. The Lessor Notes will be issued to finance a portion of the
Owner Trustees' cost of their interests in the Company's refractory gold ore
treatment facility (the "Facility"). Undivided ownership interests in the
Facility aggregating 100% will be purchased by the Owner Trustees. Each of the
Owner Trustees will lease its undivided ownership interest in the Facility to
the Company pursuant to a separate lease (each a "Lease").
(Continued on next 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. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
NO EMPLOYEE BENEFIT PLAN SUBJECT TO PART 4 OF SUBTITLE B OF TITLE I OF THE
EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA"), OR PLAN
SUBJECT TO SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE
"CODE"), OR ANY TRUST CREATED UNDER ANY SUCH EMPLOYEE BENEFIT PLAN OR PLAN, OR
ANY GOVERNMENTAL PLAN (AS DEFINED IN SECTION 3(32) OF ERISA OR SECTION 414(D) OF
THE CODE) ORGANIZED IN A JURISDICTION HAVING PROHIBITIONS ON TRANSACTIONS WITH
SUCH GOVERNMENTAL PLAN SIMILAR TO THOSE CONTAINED IN SECTION 406 OF ERISA OR
SECTION 4975 OF THE CODE (SUCH EMPLOYEE BENEFIT PLAN, PLAN AND GOVERNMENTAL PLAN
ARE HEREINAFTER COLLECTIVELY REFERRED TO AS AN "ERISA PLAN"), OR A PERSON
TREATED AS HOLDING THE ASSETS OF AN ERISA PLAN, MAY ACQUIRE OR HOLD THE PASS
THROUGH CERTIFICATES. THE PURCHASE OR HOLDING BY ANY PERSON OF ANY PASS THROUGH
CERTIFICATE CONSTITUTES A REPRESENTATION BY SUCH PERSON TO THE COMPANY, THE
OWNER PARTICIPANTS, THE OWNER TRUSTEE, THE INDENTURE TRUSTEE AND THE PASS
THROUGH TRUSTEE THAT SUCH PERSON IS NOT AN ERISA PLAN AND THAT SUCH PERSON IS
NOT ACQUIRING, AND HAS NOT ACQUIRED, SUCH PASS THROUGH CERTIFICATE WITH ASSETS
OF AN ERISA PLAN.
<TABLE>
<CAPTION>
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<S> <C> <C> <C> <C> <C> <C>
PASS THROUGH FINAL DISTRIBUTION PRINCIPAL INTEREST PRICE TO DISCOUNTS AND PROCEEDS TO THE
CERTIFICATES DATE AMOUNT RATE INVESTORS(1)(2) COMMISSIONS(2) TRUSTEE(1)(2)
1994-A1 January 5, 2009 $175,436,000 8.91% 100.00% .65% 100.00%
1994-A2 July 5, 2012 86,752,000 9.25 100.00 .80 100.00
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</TABLE>
(1) Plus accrued interest, if any, from September 30, 1994.
(2) Underwriting commissions and certain other expenses related to the offering
described herein estimated to be $825,000 will be paid by the Owner
Participants described herein as transaction expenses. All proceeds from the
sale of the Pass Through Certificates will be used by the Pass Through
Trustees for the Pass Through Trusts to purchase the respective Lessor Notes
from the respective Indenture Trustee described herein.
The Pass Through Certificates are offered subject to receipt and acceptance by
the Underwriters, to prior sale and to the Underwriters' right to reject any
order in whole or in part and to withdraw, cancel or modify the offer without
notice. It is expected that delivery of the Pass Through Certificates will be
made through the facilities of The Depository Trust Company on or about
September 30, 1994 against payment therefor in same-day funds.
SALOMON BROTHERS INC
CS FIRST BOSTON
CHEMICAL SECURITIES INC.
LAZARD FRERES & CO.
The date of this Prospectus is September 26, 1994.
<PAGE> 2
(Continued from Prospectus Cover)
The Lessor Notes will be nonrecourse obligations of Shawmut Bank Connecticut,
National Association, not in its individual capacity, but solely as owner
trustee (the "Owner Trustee") with respect to each of two separate owner trusts.
The Lessor Notes held by each Pass Through Trustee will be pledged and assigned
as security for the Pass Through Certificates. The Lessor Notes issued by each
Owner Trustee will be secured by a lien on and security interest in (i) the
related Lease and the basic rentals and certain other amounts payable by the
Company thereunder and described herein, (ii) the undivided ownership interest
of such Owner Trustee in the Facility, and (iii) assignments by such Owner
Trustee of certain contract rights and other rights described herein. Although
neither the Pass Through Certificates nor the Lessor Notes are direct
obligations of or guaranteed by the Company, the amounts unconditionally payable
by the Company under the Leases will be sufficient to pay in full when due all
payments required to be made on the Lessor Notes held in the Pass Through
Trusts.
For each Pass Through Trust, all of the Lessor Notes purchased by the Pass
Through Trustee will have identical interest rates, in each case equal to the
rate applicable to the Pass Through Certificates of such Pass Through Trust, and
will have a maturity date on or before the final distribution date for such Pass
Through Trust. Interest paid on the Lessor Notes held in each Pass Through Trust
will be passed through to the holders of the Pass Through Certificates issued in
respect of such Pass Through Trust on January 5 and July 5 of each year,
commencing on July 5, 1995, at the applicable rate per annum for such Pass
Through Trust until the final distribution date for such Pass Through Trust.
Principal paid on the Lessor Notes held in each Pass Through Trust will be
passed through to the holders of the Pass Through Certificates issued in respect
of such Pass Through Trust in accordance with the principal repayment schedule
set forth in "Description of the Indentures -- Scheduled Payments." The Pass
Through Certificates will be in the aggregate principal amounts, will have the
final distribution dates and will bear interest at the rates shown in the table
below.
2
<PAGE> 3
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE PASS THROUGH
CERTIFICATES AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH TRANSACTIONS MAY BE EFFECTED IN THE OPEN MARKET OR OTHERWISE, AND
IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and, in accordance
therewith, files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information can be inspected and copied at the public
reference facilities maintained by the Commission at Judiciary Plaza, Room 1024,
450 Fifth Street, N.W., Washington, D.C. 20549 and at the following regional
offices of the Commission: Seven World Trade Center, Suite 1300, New York, New
York 10048; Citicorp Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661. Copies of such material can be obtained at prescribed rates by
writing to the Commission, Public Reference Section, 450 Fifth Street, N.W.,
Washington, D.C. 20549. Such material can also be inspected at the offices of
the New York Stock Exchange, Inc., 20 Broad Street, New York, New York 10005 on
which exchange the common stock of the Company is listed.
This Prospectus constitutes part of a registration statement filed by the
Company with the Commission under the Securities Act of 1933, as amended (the
"Securities Act"). This Prospectus omits certain of the information contained in
the registration statement, and reference is hereby made to the registration
statement and to the exhibits relating thereto for further information with
respect to the Company and the Pass Through Certificates offered hereby. Any
statements contained herein concerning the provisions of any document are not
necessarily complete, and, in each instance, reference is made to the copy of
such document filed as an exhibit to the registration statement or otherwise
filed with the Commission. Each such statement is qualified in its entirety by
such reference.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Company hereby incorporates by reference in this Prospectus the
Company's Annual Report on Form 10-K for the fiscal year ended December 31,
1993, the Company's Quarterly Reports on Form 10-Q for the quarters ended March
31, 1994 and June 30, 1994 and the Company's Current Report on Form 8-K dated
April 5, 1994, which have been filed with the Commission. All documents filed by
the Company pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act
after the date of this Prospectus 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 and to be a part hereof from the
date of filing of such documents. Any statement contained herein or in a
document all or a portion of which is 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.
THE COMPANY WILL PROVIDE WITHOUT CHARGE TO EACH PERSON, INCLUDING
BENEFICIAL OWNERS, TO WHOM A COPY OF THIS PROSPECTUS HAS BEEN DELIVERED, ON THE
REQUEST OF ANY SUCH PERSON, A COPY OF ANY OR ALL OF THE DOCUMENTS REFERRED TO
ABOVE WHICH HAVE BEEN OR MAY BE INCORPORATED IN THIS PROSPECTUS BY REFERENCE,
OTHER THAN EXHIBITS TO SUCH DOCUMENTS (UNLESS SUCH EXHIBITS ARE SPECIFICALLY
INCORPORATED BY REFERENCE INTO SUCH DOCUMENTS). REQUEST FOR SUCH COPIES SHOULD
BE DIRECTED TO THE OFFICE OF THE SECRETARY, NEWMONT GOLD COMPANY, 1700 LINCOLN
STREET, DENVER, COLORADO 80203, TELEPHONE: (303) 863-7414.
3
<PAGE> 4
REPORTS TO CERTIFICATEHOLDERS BY THE PASS THROUGH TRUSTEE
The First National Bank of Chicago, as Pass Through Trustee for the holders
of each series of the Pass Through Certificates (the "Certificateholders"),
pursuant to the Pass Through Agreements, will provide to Certificateholders
certain periodic statements concerning distributions made with respect to the
Pass Through Trusts. See "Description of the Pass Through Certificates --
Statements to Certificateholders."
4
<PAGE> 5
PROSPECTUS SUMMARY
The following summary of provisions relating to the Pass Through
Certificates does not purport to be complete and is qualified in its entirety by
the detailed information appearing elsewhere in this Prospectus.
Glossary................... Included at the end of this Prospectus as Appendix
I is a Glossary of certain of the significant
defined terms used herein.
Pass Through Trusts........ The Newmont Gold Company 1994-A1 Pass Through Trust
(the "1994-A1 Trust") and the Newmont Gold Company
1994-A2 Pass Through Trust (the "1994-A2 Trust,"
and together with the 1994-A1 Trust, the "Pass
Through Trusts") will be formed pursuant to two
separate Pass Through Agreements (each a "Pass
Through Agreement") between the Company and The
First National Bank of Chicago, not individually
but solely as trustee under such Pass Through
Agreement (the "Pass Through Trustee").
Pass Through Trust
Property................... The property of the Pass Through Trusts will
consist of notes (the "Lessor Notes") issued on a
nonrecourse basis by Shawmut Bank Connecticut,
National Association, not in its individual
capacity, but solely as owner trustee of two
separate owner trusts (each an "Owner Trustee"), in
each case for the benefit of one or more
institutional investors (each an "Owner
Participant") in connection with a leveraged lease
financing (the "Financing") of undivided interests
in the Company's refractory gold ore treatment
facility located approximately six miles north of
Carlin, Nevada (the "Facility"). Undivided
ownership interests in the Facility aggregating
100% will be purchased by the Owner Trustees on
behalf of the relevant Owner Participants from the
Company and leased to the Company pursuant to two
separate leases (each a "Lease"). The Owner
Trustees, as tenants in common, will lease the land
on which the Facility is located (the "Site
Interest") and accept a grant from the Company of
an easement relating to the adjacent Company
premises (the adjacent premises, together with the
Site Interest, the "Facility Site") pursuant to a
ground lease and easement (the "Ground Lease and
Easement"). Pursuant to the Leases, the Owner
Trustees will lease the undivided interests in the
Facility, and sublease the Site Interest, to the
Company.
The Lessor Notes will bear interest at the same
rate as the interest rate of the Pass Through
Certificates and will be payable as to principal on
each Regular Distribution Date for the Pass Through
Certificates in the amounts described under
"Description of the Pass Through
Certificates -- Pool Factors." The maturity dates
of the Lessor Notes purchased by each of the Pass
Through Trusts will occur on or before the final
distribution date applicable to the Pass Through
Certificates issued by such Pass Through Trust. The
aggregate principal amount of the Lessor Notes held
in each Pass Through Trust will be the same as the
aggregate principal amount of the Pass Through
Certificates issued by such Pass Through Trust.
5
<PAGE> 6
Pass Through
Certificates............... Each Certificate will represent a fractional
undivided interest in the related Pass Through
Trust. See "Description of the Pass Through
Certificates -- General."
Book-Entry Registration.... Each series of Pass Through Certificates will be
represented by one or more fully registered global
certificates. Each global certificate will be
deposited with, or on behalf of, DTC and registered
in the name of Cede. No person acquiring an
interest in the Pass Through Trust will be entitled
to receive a certificated Pass Through Certificate,
except to the limited extent described herein. See
"Description of the Pass Through Certificates --
Book-Entry Procedures."
Denominations.............. The Pass Through Certificates will be issued in
minimum denominations of $1,000 or any integral
multiple of $1,000. Each Pass Through Certificate
will represent a pro rata share of the outstanding
principal amount of the Lessor Notes and other
property held in the related Pass Through Trust.
See "Description of the Pass Through
Certificates -- General."
Average Life............... The average life for the Series 1994-A1 and Series
1994-A2 Pass Through Certificates will be 10 years
and 17 years, respectively.
Regular Distribution
Dates...................... January 5 and July 5.
Record Dates............... The fifteenth day preceding a Regular Distribution
Date or Special Distribution Date.
Distribution............... Payments of interest on the Lessor Notes held in
each Pass Through Trust are scheduled to be
received by the Pass Through Trustee on January 5
and July 5 of each year, commencing July 5, 1995,
and are to be distributed by the Pass Through
Trustee to the related Certificateholders on the
Regular Distribution Dates.
Payments of principal on the Lessor Notes are
scheduled to be received in specified amounts by
the Pass Through Trustee and are to be distributed
to the related Certificateholders in accordance
with the principal repayment schedule set forth in
"Description of the Indentures -- Scheduled
Payments." For each Pass Through Trust, any
payments of principal, Make-Whole Premium (as
defined in "Description of the Indentures --
Prepayment"), if applicable, or interest, other
than Scheduled Payments, received by the Pass
Through Trustee on any of the Lessor Notes held
in such Pass Through Trust will be distributed
on the twenty-eighth day of any month, except
that such distribution will be made on the date
of the receipt of proceeds by the Pass Through
Trustee in the case of an Event of Loss with
respect to the Facility or a refinancing of the
related Lessor Notes (the date of any such
distribution, a "Special Distribution Date" and,
together with the Regular Distribution Dates, the
"Distribution Dates").
Each Certificateholder will be entitled to receive
a pro rata share of any such distribution. If any
Distribution Date is not a Business Day,
distributions scheduled to be made on such
Distribution Date may be made on the next
succeeding Business Day without additional
interest.
6
<PAGE> 7
Method of Distribution..... Distributions by the Pass Through Trustee on any
Distribution Date will be paid to each
Certificateholder of record of such Pass Through
Trust on the applicable record date at its address
appearing on the register maintained for such Pass
Through Trust. Under the terms of the Pass Through
Agreement, the Company and the Pass Through Trustee
will treat the persons in whose names the Pass
Through Certificates are registered as the owners
of such Pass Through Certificates for the purpose
of receiving payments of principal, Make-Whole
Premium, if applicable, and interest on such Pass
Through Certificates and for all other purposes
whatsoever. Therefore, neither the Company nor the
Pass Through Trustee has any direct responsibility
or liability for distributions or payments to
owners of beneficial interests in the Pass Through
Certificates (the "Certificate Owners") represented
by permanent global certificates. With respect to
Pass Through Certificates registered in the name of
Cede, as nominee of DTC, distributions by the Pass
Through Trustee, including the final distribution
of principal with respect to such Pass Through
Certificates, will be made in same-day funds to
DTC. DTC will in turn make distributions in
same-day funds to those participants in DTC who are
credited with ownership of such Pass Through
Certificates ("DTC Participants") in amounts
proportionate to the principal amount of each such
DTC Participant's respective holdings of beneficial
interests in such Pass Through Certificates.
Corresponding payments by the DTC Participants to
the Certificate Owners will be the responsibility
of such DTC Participants and will be made in
accordance with customary industry practices. See
"Description of the Certificates -- Book-Entry
Registration." The final distribution for each Pass
Through Trust, however, will be made only upon
presentation and surrender of the Pass Through
Certificates for such Pass Through Trust at the
office or agency of the Pass Through Trustee. The
Pass Through Trustee will mail a notice to the
Certificateholders of such Pass Through Trust,
specifying the proposed date set for such final
distribution and the proposed amount of such
distribution. See "Description of Pass Through
Certificates -- Termination of Pass Through
Trusts."
Interest.................. Interest on each series of the Pass Through
Certificates will be passed through to the
Certificateholders at the rate per annum indicated
on the cover of this Prospectus, which is the
interest rate borne by the Lessor Notes held by the
relevant Pass Through Trustee. Interest will be
calculated on the basis of a 360-day year
consisting of twelve 30-day months. See
"Description of the Pass Through Certificates --
Payments and Distributions."
Principal................. Principal payments on the Lessor Notes held in each
Pass Through Trust will be passed through to the
Certificateholders of each such Pass Through Trust
in scheduled amounts in accordance with the
principal repayment schedule set forth in
"Description of the Indentures -- Scheduled
Payments."
7
<PAGE> 8
Prepayment of
Lessor Notes............... The Lessor Notes issued by each Owner Trustee are
subject to prepayment, in whole but not in part, at
a price equal to the outstanding principal amount
thereof together with accrued and unpaid interest
thereon to the date fixed for prepayment (but
without any Make-Whole Premium) at any time upon
the occurrence of an Event of Loss under the
related Lease if the Company is required to
purchase the undivided ownership interest of the
relevant Owner Trustee in the Facility. The Lessor
Notes issued by each Owner Trustee are also subject
to mandatory prepayment, in whole but not in part,
at a price equal to the outstanding principal
amount thereof, together with interest accrued and
unpaid to the date fixed for prepayment, plus if
the prepayment is made prior to January 5, 2012, a
Make-Whole Premium, if any, in the following
circumstances: (i) on or after July 5, 2003 on the
appropriate rent payment date in connection with
the sale of the undivided ownership interest of the
relevant Owner Trustee in the Facility if the
Company exercises its early termination rights
after it determines that the Facility is obsolete
or surplus or uneconomic as described below under
"Description of the Leases -- Early Termination
Rights;" (ii) on January 5, 2012 if the Company
exercises its early purchase option as described
below under "Description of the Leases -- Special
Purchase Option;" or (iii) at any time on the date
specified in a redemption notice if the Company
elects to terminate the related Lease and purchase
such Owner Trustee's undivided ownership interest
in the Facility in certain circumstances if such
Owner Trustee fails to finance certain
modifications to the Facility proposed by the
Company as described in "Description of the
Leases -- Modifications." See "Description of the
Indentures -- Prepayment."
In addition, the Lessor Notes issued by each Owner
Trustee may be redeemed in whole, but not in part,
at the option of such Owner Trustee (acting upon
directions of the related Lessee) at any time in
connection with a refunding of such Lessor Notes,
at a redemption price equal to the outstanding
principal amount of such Lessor Notes, together
with accrued and unpaid interest thereon to the
date fixed for redemption, plus, if the prepayment
is made prior to January 5, 2012, a Make-Whole
Premium. See "Description of the
Indentures -- Prepayment."
The Lessor Notes issued by each Owner Trustee may
be redeemed in whole, but not in part, at the
option of such Owner Trustee at any time after an
Indenture Event of Default which is also a Lease
Event of Default has occurred and is continuing at
a redemption price equal to the outstanding
principal amount of such Lessor Notes, together
with accrued and unpaid interest thereon to the
date fixed for redemption, plus, if the prepayment
is made prior to January 5, 2012, a Make-Whole
Premium, if any; provided that if the Indenture
Trustee has given the Owner Trustee notice of its
intent to accelerate such Lessor Notes as a result
of such Lease Event of Default, any such prepayment
will be without any Make-Whole Premium. See
"Description of the Indentures -- Prepayment."
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<PAGE> 9
Security for the
Lessor Notes............... The Lessor Notes will be secured by a security
interest in the Facility and in the Lease related
thereto and an assignment to the Indenture Trustee
of certain of the Owner Trustee's rights under the
Lease, including the right to receive rentals
payable by the Company under the Lease.
The Lessor Notes are not cross-collateralized and,
consequently, the Lessor Notes issued in respect of
one undivided ownership interest are not secured by
the other undivided ownership interest or the Lease
related to the other undivided ownership interest.
There are no cross-defaults in the Indentures to
other debt instruments of the Company, but,
indirectly, the Leases are cross-defaulted insofar
as each would be treated as a Financing Lease and
each Lease would be defaulted if the Company is in
default under a Financing Lease. Consequently,
certain events resulting in an Indenture Event of
Default under one Indenture will effectively result
in an Indenture Event of Default occurring under
the other Indenture. See "Description of the
Indentures -- General" and "-- Indenture Events of
Default."
The exercise of remedies by the Indenture Trustee
upon an Indenture Event of Default is constrained
by the fact that, in certain instances, comparable
remedies must be exercised under the Lease and by
the cost and practical difficulties of selling
collateral such as the Facility.
Although the Lessor Notes are not obligations of,
or guaranteed by, the Company, the amounts payable
by the Company under the Lease will be sufficient
to pay in full when due all payments of principal
of, Make-Whole Premium, if applicable, and interest
on the Lessor Notes (unless the Lessor Notes have
been purchased or prepaid by the Owner Trustee).
Additional Lessor Notes.... Under certain circumstances, additional notes
("Supplemental Financing Notes") may be issued to
finance the cost of certain Modifications of the
Facility. No holder of a Pass Through Certificate,
as such, will have any right to, or interest in,
any Supplemental Financing Note. See "Description
of the Indentures -- Supplemental Financing Notes."
Use of Proceeds............ The proceeds from the sale of the Pass Through
Certificates by each Pass Through Trust will be
used by the Pass Through Trustee to purchase the
related Lessor Notes from the relevant Owner
Trustee. Each of the Owner Trustees will use the
proceeds from such sale of such Lessor Notes to
finance approximately 76.40% of such Owner
Trustee's cost of the Facility, representing the
entire debt portion of the purchase price to be
paid by the Owner Trustee in the Financing. The net
proceeds to the Company from the Financing will be
$343,199,000. Approximately $125 million of such
net proceeds will be used to repay borrowings under
the Company's revolving credit facility. The
balance will be used for general corporate
purposes, including the funding of the Company's
on-going and future capital expenditures. See "Use
of Proceeds."
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<PAGE> 10
Pass Through Trustee
and Indenture Trustee..... The First National Bank of Chicago will act as
trustee, paying agent and registrar for the Pass
Through Certificates, and will also act as the
Indenture Trustee for the Lessor Notes.
Facility.................. The Facility is a new refractory gold ore treatment
facility located adjacent to the Company's Gold
Quarry Mine approximately six miles north of
Carlin, Nevada. The purpose of the Facility is to
pretreat both the sulfidic and carbonaceous
refractory gold ore produced from the Company's
mines so that the ore may be processed to
gold-bearing carbon using conventional methods.
Without the Facility, the Company currently would
have no economically feasible alternative means for
pretreating its carbonaceous refractory gold ore.
Processing of the Company's sulfidic refractory
gold ore would still be possible using traditional
methods, but such processing would result in lower
recoveries than through use of the Facility. The
book value of the Facility, upon completion, is
estimated to be approximately $338 million. In
connection with the Financing, the Company has
obtained an appraisal indicating that the fair
market sales value of the Facility is $343,199,000.
There can be no assurance, however, that the
Facility could be sold for such amount in any sale,
including in a foreclosure sale.
Leases..................... Each of the Owner Trustees will lease its undivided
ownership interests in the Facility to the Company
pursuant to separate Leases, each having a lease
term expiring on September 28, 2015, unless earlier
terminated or extended. Basic rent payable under
the Leases on each payment date and any stipulated
loss value or termination value payable on any date
on which any such payment is due, are required to
be at least equal to all principal of, Make-Whole
Premium, if applicable, and interest on the Lessor
Notes of such Owner Trustee due and payable on such
date.
Although neither the Pass Through Certificates nor
the Lessor Notes are direct obligations of or are
guaranteed by the Company, under each of the
Leases, the Company will be unconditionally
obligated to make payments under such Lease in
amounts that will be at least sufficient to provide
for the payment of the principal of, Make-Whole
Premium, if applicable, and interest on the Lessor
Notes of the relevant Owner Trustee when due. The
rent payments under each Lease will be assigned
under the applicable Indenture by the Owner Trustee
to the Indenture Trustee to provide the funds
necessary to make the corresponding payments of
principal, premium, if any, and interest due from
the Owner Trustee on the Lessor Notes issued under
such Indenture. The Pass Through Trustee for each
Pass Through Trust will distribute to the
Certificateholders of such Pass Through Trust
payments received on the Lessor Notes held in such
Pass Through Trust as described herein. See
"Description of the Pass Through Certificates --
Payments and Distributions." The obligations of the
Company under each Lease will be those of a Lessee
under a "net lease." The Company's obligation to
pay all rent under the Leases is absolute and
unconditional and is not to be affected by
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<PAGE> 11
any set-off, abatement, counterclaim, suspension,
recoupment, reduction, defense, or any other right
which the Company may have against the Owner
Trustees, the Owner Participants, the Indenture
Trustees, or any other Person. See "Description of
the Leases."
Federal Income Tax
Considerations............. Each of the Pass Through Trusts should be
classified as a grantor trust for federal income
tax purposes and each Certificate Owner should be
treated as the owner of a pro rata undivided
interest in each of the Lessor Notes or any other
property held in such Pass Through Trust, and
should report on its federal income tax return its
pro rata share of income in each such Lessor Note
in accordance with such Certificate Owner's method
of accounting. See "Certain Federal Income Tax
Considerations."
ERISA Considerations....... No ERISA Plan or a person treated as holding the
assets of an ERISA Plan, may acquire or hold the
Pass Through Certificates. The purchase or holding
by any person of any Pass Through Certificate
constitutes a representation by such person to the
Company, the Owner Participants, the Owner Trustee,
the Indenture Trustee and the Pass Through Trustee
that such person is not an ERISA Plan and that such
person is not acquiring, and has not acquired such
Pass Through Certificate with assets of an ERISA
Plan. See "Certain ERISA Considerations."
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THE COMPANY
The Company is a worldwide company engaged in gold production, exploration
for gold and acquisition of gold properties. The Company currently produces gold
on the Carlin Trend in Nevada and through a 38% interest in a corporate joint
venture in Peru, which commenced production in August 1993. The Company
additionally has a 50% interest in a joint venture in Uzbekistan and an 80%
interest in two projects in Indonesia. The Company also owns exploration,
development and mining rights on properties in Oregon and Idaho. In addition to
exploration activities conducted in connection with the above-referenced
operations and projects, the Company continues to explore for gold and/or is
conducting joint venture discussions in various countries, including Laos,
Chile, Ecuador, Mexico and Canada. The Company's largest stockholder, Newmont
Mining Corporation ("Newmont Mining" or "NMC"), owns approximately 89.2% of the
outstanding common shares and 100% of the preferred shares of the Company.
Giving effect to the transaction described below, which became effective January
1, 1994, between the Company and Newmont Mining, the Company had approximately
26 million equity ounces of proven and probable reserves at December 31, 1993
and produced approximately 1.7 million ounces of gold in 1993.
Based on 1993 production as set forth in published reports, the Company was
the largest producer of gold from North American operations. The Company's North
American operations are located on the geographical feature known as the Carlin
Trend near Carlin, Nevada. The Carlin Trend is the largest gold district
discovered in North America this century. The Company owns or otherwise controls
mineral interests on approximately 685 square miles along the Carlin Trend. From
the Carlin Trend, the Company produced approximately 1,666,400 ounces of gold in
1993 compared with approximately 1,587,900 ounces in 1992 and approximately
1,576,900 ounces in 1991. Gold production at the Company's Nevada operations was
approximately 754,700 ounces in the six-month period ended June 30, 1994 and is
expected to be approximately 1.6 million ounces for the full year 1994. At the
end of 1993, the Company had 17.8 million ounces of gold in proven and probable
ore reserves on the Carlin Trend. The Company's cash cost of production in
Nevada (which is equal to operating costs, excluding general and administrative
expense, plus royalties and capitalized mining costs) was $214 per ounce sold in
1993 which, according to published industry sources, was lower than the cash
costs associated with approximately two-thirds of all gold produced in the
western world in 1992. The cash cost of production at the Company's Nevada
operations was $230 per ounce sold in the first six months of 1994. For the full
year 1994, the per ounce cash cost of production at the Company's Nevada
operations is expected to increase 5% to 10% over that incurred in 1993.
The Company also produces gold through Minera Yanacocha S.A. ("Minera
Yanacocha"), a 38% owned corporate joint venture in Peru in which it is the
operator. Minera Yanacocha has mining rights with respect to a 63,000 acre land
position, which includes the Carachugo deposit and numerous other deposits,
located in northwest Peru. Total proven and probable reserves for Minera
Yanacocha as of December 31, 1993 were 3,780,000 ounces. Minera Yanacocha's
operations commenced in August 1993, resulting in production of 81,500 ounces
from the Carachugo deposit for the five-month period ended December 31, 1993.
Total gold production at Minera Yanacocha was approximately 114,800 ounces in
the six-month period ended June 30, 1994 and is expected to be in excess of
250,000 ounces for the full year 1994. Minera Yanacocha is scheduled to commence
gold production from the Maqui Maqui deposit at an estimated annual rate of
180,000 ounces at the end of 1994. The additional production from the Maqui
Maqui deposit will increase total gold production at Minera Yanacocha in 1995 to
350,000 to 400,000 ounces.
In Uzbekistan, one of the Central Asian republics of the former Soviet
Union, the Company has a 50/50 joint venture ("Zarafshan-Newmont") with two
state entities of the Republic of Uzbekistan to produce gold by leaching
low-grade oxide ore from existing stockpiles from the Muruntau mine. The state
entities have guaranteed 242.5 million tons of ore with an average grade of
0.036 ounces of gold per ton, containing approximately 8.7 million ounces of
gold. Net recovery is expected to be approximately 4.8 million ounces of gold
over the life of the project, 50% of which will be attributable
12
<PAGE> 13
to the Company. The Company is managing the Zarafshan-Newmont joint venture.
Production is expected to commence in the first half of 1995 at an annual rate
of approximately 450,000 ounces of gold.
The Company also has two advanced gold projects in Indonesia, both of which
are 80% owned by the Company. The more advanced of these projects is Minahasa, a
multi-deposit project on the island of Sulawesi. The main deposit, Mesel, at
December 31, 1993 had 1.8 million ounces of proven and probable reserves. The
Mesel deposit is scheduled to commence production in early 1996 at an annual
total rate of approximately 140,000 ounces of gold. The second Indonesian
project is the Batu Hijau deposit, on the island of Sumbawa. Batu Hijau is a
porphyry gold/copper deposit that was discovered in 1990. While the economics of
the deposit have not been determined, it is one of the largest single
occurrences of gold mineralization ever discovered by the Company. A preliminary
feasibility study of the Batu Hijau deposit has been completed and a full
optimization feasibility study is anticipated to commence in early 1995 to
determine the economic potential of the property.
The Company also owns 100% of Newmont Exploration Limited ("NEL"), which,
together with various other affiliates, explore worldwide for gold. NEL was
responsible for discovering the Carlin Trend in Nevada in 1961. Over the past
four years, the Company has spent more than $200 million on exploration and
mineral development. In this time period, the Company has added approximately
13.4 million ounces in gold reserves. Management believes that its 1994
exploration and development budget is one of the largest in the minerals
industry based on published information. The Company's 1994 budget for
exploration and reserve development is $70 million, of which approximately $64
million will be expensed.
Effective January 1, 1994, the Company acquired all of Newmont Mining's
operations. The tax-free transaction (the "Transfer Transaction") included the
following: (a) the transfer by NMC to the Company of 8,649,899 shares of the
94,500,000 shares of common stock of the Company held by NMC; (b) the transfer
by NMC of all of its other assets to the Company; (c) the assumption by the
Company of all the liabilities (contingent or otherwise) of NMC, but not NMC's
obligations with respect to its $5.50 convertible preferred stock (the "NMC
Preferred Stock"), (except for accrued and unpaid dividends as of December 31,
1993) and its employee stock options exercisable for NMC's common stock; (d) the
issuance by the Company to NMC of 2,875,000 shares of $5.50 convertible
preferred stock with a par value of $5.00 per share, and having terms identical
to the NMC Preferred Stock (except that upon conversion, NMC will be entitled to
receive shares of the Company's common stock instead of NMC's common stock); and
(e) the issuance by the Company to NMC of stock options exercisable for the
Company's common stock. As a result of the Transfer Transaction, NMC's only
assets are (i) the remaining shares of common stock of the Company held by it,
which currently represents 89.2% of the Company's common stock outstanding, (ii)
the 2,875,000 shares of the Company's $5.50 convertible preferred stock issued
to it and (iii) the Company's stock options issued to it. Shares of both
companies continue to trade separately on the New York Stock Exchange and
certain other international exchanges. Both the Company and NMC have the same
per-share earnings, equity in assets and dividends.
The Company, incorporated under the laws of Delaware, maintains its
principal executive offices at 1700 Lincoln Street, Denver, Colorado 80203
(telephone: 303-863-7414).
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<PAGE> 14
RECENT DEVELOPMENTS
On September 8, 1994, Moody's Investors Service announced that the senior
unsecured debt rating of the Company had been downgraded to Baa3 from Baa2. The
senior unsecured debt of the Company is rated as of June 30, 1994, BBB+ by
Standard & Poor's Rating Group. A security rating is not a recommendation to
buy, sell or hold securities and may be subject to revision and withdrawal at
any time by the assigning rating agency and each rating should be evaluated
independently of any other rating.
CAPITALIZATION
The following table sets forth the capitalization of the Company at June
30, 1994 and as adjusted to give effect to the Financing and the application by
the Company of the net proceeds therefrom. See "Use of Proceeds."
<TABLE>
<CAPTION>
JUNE 30, 1994
------------------------------
AS ADJUSTED
ACTUAL FOR FINANCING
------ -------------
(IN THOUSANDS, EXCEPT PER
SHARE)
(UNAUDITED)
<S> <C> <C>
Short-term debt................................................ $ 15,739 $ 15,739
========== ===========
Long-term debt
Lease obligation............................................. $ -- $ 349,134
Other long-term debt......................................... 314,500 239,500
---------- -----------
Total long-term debt................................. 314,500 588,634
---------- -----------
Stockholders' equity:
Convertible preferred stock -- par value $5.00, authorized
5,000 shares; outstanding 2,875 shares.................... 14,375 14,375
Common stock -- par value $0.01, authorized 250,000 shares;
issued 104,875 shares..................................... 1,049 1,049
Capital in excess of par value............................... 208,414 208,414
Retained earnings............................................ 588,118 588,118
Treasury stock -- at cost, 8,548 shares...................... (75,312) (75,312)
---------- -----------
Total stockholders' equity........................... 736,644 736,644
---------- -----------
Total capitalization................................. $1,051,144 $ 1,325,278
========== ===========
</TABLE>
14
<PAGE> 15
SELECTED CONSOLIDATED FINANCIAL DATA
The following table sets forth certain selected consolidated historical
financial data of the Company for the respective periods presented. This data
should be read in conjunction with the consolidated financial statements of the
Company contained in the Company's Annual Report on Form 10-K for the year ended
December 31, 1993 and Quarterly Reports on Form 10-Q for the quarters ended
March 31, 1994 and June 30, 1994, each of which are incorporated herein by
reference. See "Incorporation of Certain Documents by Reference." The selected
financial data for the three years ended December 31, 1993, 1992 and 1991 are
derived from the Company's consolidated financial statements, which statements
have been audited by Arthur Andersen & Co., independent public accountants. The
data presented for the six months ended June 30, 1994 and 1993 are derived from
the Company's unaudited consolidated financial statements incorporated by
reference herein which, in the opinion of management, include all adjustments
necessary for the fair presentation of the Company's financial position and
results of operations. All adjustments were of a normal recurring nature except
for the following: (1) During the six months ended June 30, 1994, (a) a charge
of $20.0 million was taken to establish a valuation allowance for insurance
receivables related to environmental obligations associated with former mining
activities; (b) a charge of $7.1 million was taken to reflect a revised estimate
of the costs of the same environmental obligations; and (c) an income tax
benefit of $16.2 million resulting from the resolution of certain tax issues
associated with prior years; and (2) during the six months ended June 30, 1993 a
benefit to income of $2.7 million for the cumulative effect of a change in
accounting principle for income taxes. The operating results for interim periods
are not necessarily indicative of results to be expected for the full year.
Also set forth below is certain pro forma income statement data for the
year ended December 31, 1993 and the six months ended June 30, 1993 and certain
pro forma balance sheet data at December 31, 1993, in each case giving effect to
the Transfer Transaction. The pro forma income statement data for the year ended
December 31, 1993 and the six months ended June 30, 1993 reflect the Transfer
Transaction as if it had occurred as of the beginning of 1993 and the pro forma
balance sheet data for December 31, 1993 reflect the Transfer Transaction as if
it had occurred December 31, 1993. The pro forma financial data are presented
for illustrative purposes only, and are not necessarily indicative of the
Company's future operating results or financial condition. The selected pro
forma financial data for the year ended December 31, 1993 are derived from the
Company's pro forma condensed statement of income for the year ended December
31, 1993 and the Company's pro forma condensed balance sheet at December 31,
1993 contained in the Company's Annual Report on Form 10-K for the year ended
December 31, 1993, which is incorporated herein by reference. The selected pro
forma financial data for the six months ended June 30, 1993 are derived from the
Company's unaudited pro forma condensed statement of income for the six months
ended June 30, 1993 contained in the Company's Quarterly Report on Form 10-Q for
the quarter ended June 30, 1994, which is incorporated herein by reference. The
pro forma financial data set forth below should be read in conjunction with the
pro forma condensed consolidated financial statements referred to above and the
notes thereto. See "Incorporation of Certain Documents by Reference."
15
<PAGE> 16
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30, FOR THE YEARS ENDED DECEMBER 31,
-------------------------- -----------------------------------------
PRO PRO
FORMA FORMA
1994(1) 1993 1993 1993 1993 1992 1991
------- ---- ----- ---- ----- ---- ----
(IN MILLIONS, EXCEPT PER SHARE)
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C>
FINANCIAL DATA:
INCOME STATEMENT DATA:
Sales............................................ $ 289.1 $278.0 $292.5 $ 601.6 $ 634.3 $ 546.4 $ 572.7
Income before cumulative effect of changes in
accounting principles.......................... $ 42.7 $ 47.5 $ 57.1 $ 113.1 $ 106.1 $ 87.4 $ 125.9
Net income....................................... $ 42.7 $ 50.2 N/A $ 115.8 N/A $ 81.1 $ 125.9
Earnings per common share:
Income before cumulative effect of changes in
accounting principles...................... $ 0.36 $ 0.45 $ 0.51 $ 1.08 $ 0.94 $ 0.83 $ 1.20
Net income................................... $ 0.36 $ 0.47 N/A $ 1.10 N/A $ 0.77 $ 1.20
Dividends declared per common share(2)........... $ 0.24 $ -- $ 0.24 $ 0.05 $ 0.48 $ 0.05 $ 0.05
BALANCE SHEET DATA (AT PERIOD END):
Total assets..................................... $1,326.6 $942.6 N/A $1,021.9 $1,186.4 $ 905.3 $ 816.7
Total debt....................................... $ 330.2 $ -- N/A $ -- $ 207.8 $ -- $ --
Stockholders' equity............................. $ 736.6 $860.6 N/A $ 924.0 $ 721.2 $ 810.4 $ 734.6
PRODUCTION DATA:
Production ('000 of equity ounces)(3)............ 798.3 803.0 806.7 1,666.4 1,705.1 1,587.9 1,576.9
Realized gold price (per ounce).................. $ 383 $ 346 $ 362 $ 361 $ 376 $ 344 $ 363
Cash cost per equity ounce(3)(4)................. $ 223 $ 207 $ 207 $ 214 $ 213 $ 201 $ 190
</TABLE>
- ---------------
(1) Reflects the Transfer Transaction which was effective January 1, 1994.
(2) Prior to the Transfer Transaction, the Company paid an annual dividend of
$0.05 per share. Upon consummation of the Transfer Transaction, the Company
began paying dividends on a quarterly basis and increased its annual
dividend to the level paid prior to the Transfer Transaction by Newmont
Mining on its common stock (after adjusting for a stock split effected in
connection with the Transfer Transaction). The amount of dividend declared
for the six-month period ended June 30, 1994 reflects this new dividend
policy.
(3) Equity ounces refers to ounces produced at the Company's Nevada operations
and the proportionate share, based on the Company's equity ownership, of
ounces produced by Minera Yanacocha.
(4) Cash cost represents the sum of costs applicable to sales and capitalized
mining costs.
16
<PAGE> 17
RATIO OF EARNINGS TO FIXED CHARGES
Presented herein, are the ratios of earnings to fixed charges for the
Company for the six months ended June 30, 1994, and for the Company's parent,
Newmont Mining, for the five years ended December 31, 1993. As a result of the
Transfer Transaction, the Company's capital structure is essentially the same as
Newmont Mining's. In that the Company's financial results had been fully
consolidated into Newmont Mining's and the Company's capital structure is now
essentially that of Newmont Mining, management believes that Newmont Mining's
historical consolidated ratio of earnings to fixed charges for the five years
ended December 31, 1993 is more relevant than the Company's and thus they are
presented herein. They represent essentially what the Company's ratios would
have been had it acquired Newmont Mining's assets and assumed its liabilities at
the beginning of 1989. The last year the Company itself had significant fixed
charges was 1989, and the ratio of earnings to fixed charges for that year was
11.6.
The ratio of earnings to fixed charges for the Company was 1.2 for the six
months ended June 30, 1994. The ratio of earnings to fixed charges for Newmont
Mining was 6.3, 6.5, 10.3, 6.6 and 2.2 for the years ended December 31, 1993,
1992, 1991, 1990 and 1989, respectively. The ratio of earnings to fixed charges
was calculated based on information from the Company's and Newmont Mining's
books and records. In computing the ratio of earnings to fixed charges,
"earnings" consists of income from continuing operations before provision for
income taxes and extraordinary items with adjustments for interest expense
(excluding capitalized interest), the amortization of previously capitalized
interest, minority interests of subsidiaries with fixed charges and
undistributed income of less than fifty percent owned affiliates. "Fixed
charges" consists of interest expense (including amortization of debt issuance
expense), capitalized interest and one-third of rental expense (which the
Company believes is a reasonable approximation of the interest factor of such
rental expense). The Company guarantees certain third party debt which had total
interest obligations of $0.4 million, $0.8 million, $3.3 million, $4.0 million,
$4.5 million and $5.0 million for the six months ended June 30, 1994 and the
years ended December 31, 1993, 1992, 1991, 1990 and 1989, respectively. The
Company and Newmont Mining have not been required to pay any of these amounts,
nor does the Company expect to have to pay any amounts; therefore, such amounts
have not been included in the ratio of earnings to fixed charges.
DESCRIPTION OF THE FACILITY
The Facility is a new refractory gold ore treatment facility located
adjacent to the Company's Gold Quarry mine approximately six miles north of
Carlin, Nevada. The Facility will be used to pretreat the refractory gold ore
produced from the Company's mines to make such ore amenable to conventional
cyanide leaching. The Facility is estimated to have an average throughput
capacity of 2.9 million tons of refractory ores per year.
The Facility is designed to enable the Company to oxidize and treat
refractory ores that contain both sulfides and active carbon. The Facility
includes a cone crusher, a double rotator mill, a reactor and an acid plant, all
of which are newly (or in the process of being) built, as well as portions of
the Company's existing Mill #2. Ore processed in the Facility is crushed and
then dried and ground in the double rotator mill. After drying and grinding, the
refractory ore is roasted in the reactor to oxidize carbonaceous and sulfidic
materials. The sulfidic materials are then removed in the acid plant. The
remaining ore is then processed to gold-bearing carbon using conventional
methods. Without the Facility, the Company currently would have no economically
feasible alternative means for pretreating its carbonaceous refractory gold ore.
Processing of the Company's sulfidic refractory gold ore would still be possible
using traditional methods, but such processing would result in lower recoveries
than through use of the Facility.
Precommissioning testing of substantially all of the components of the
Facility has been successfully completed. The Facility, however, is not
currently operational because of a defect that
17
<PAGE> 18
occurred in the mill riding ring. The repair of the affected portion is expected
to be completed by the end of October, 1994. The Company does not believe that
such repair or the delay in the operation of the Facility caused thereby will
have a material adverse effect on the Company and its subsidiaries taken as a
whole.
The book value of the Facility, upon completion, is estimated to be
approximately $338 million. In connection with the sale of the Facility to the
Owner Trustees, the Company has obtained an appraisal indicating that the fair
market sales value of the Facility is $343,199,000. However, there can be no
assurance that the Facility could be sold for such amount in a sale, including
in a foreclosure sale.
DESCRIPTION OF THE TRANSACTION
GENERAL
The Pass Through Certificates offered hereby will represent fractional
undivided interests in two Pass Through Trusts to be formed pursuant to two
separate Pass Through Agreements between the Company and the Pass Through
Trustee. The property of the Pass Through Trust will consist of notes (the
"Lessor Notes") to be issued on a nonrecourse basis by the Owner Trustees of two
separate owner trusts (each an "Owner Trust") established for the benefit of one
or more institutional investors (the "Owner Participants") and held by the Pass
Through Trusts pursuant to a leveraged lease financing (the "Financing") of the
Facility. The Facility will be purchased by the Owner Trustees on behalf of the
Owner Participants. The Owner Trustees, as tenants in common, will lease the
land on which the Facility is located (the "Site Interest") and accept a grant
from the Company of an easement relating to the adjacent Company premises
(together with the Site Interest, the "Facility Site") pursuant to a ground
lease and easement (the "Ground Lease and Easement"). Pursuant to the Leases,
the Owner Trustees will lease the undivided interests in the Facility, and
sublease the Site Interest, to the Company. The Lessor Notes issued by each
Owner Trustee will be secured by a security interest in the related undivided
ownership interest and in the Lease relating thereto (other than certain
excepted rights reserved to each Owner Trustee), including the right to receive
rentals payable by the Company under such Lease. See "Description of the
Leases."
The Lessor Notes will be issued under two separate Trust Indenture and
Security Agreements (each an "Indenture"), each entered into by The First
National Bank of Chicago, as trustee thereunder (the "Indenture Trustee"), and
the related Owner Trustee. The Lessor Notes will be acquired from the Owner
Trustees by the Pass Through Trustee with the proceeds from the sale of the Pass
Through Certificates. The Lessor Notes will be nonrecourse obligations of the
Owner Participant, the Owner Trustees or the Owner Trusts payable solely from
basic rent and other amounts paid under the Leases and amounts realized from the
exercise of the Indenture Trustees' remedies under the Indentures. The rents and
other amounts payable by the Company under the Leases will be sufficient to pay
in full when due all payments of principal, the Make-Whole Premium, if
applicable, and interest on the Lessor Notes. See "Description of the
Indentures."
FORMATION OF THE PASS THROUGH TRUST
The Pass Through Trusts will be formed pursuant to the Pass Through
Agreements between the Company and the Pass Through Trustee. Each Pass Through
Trustee, on behalf of the related Pass Through Trust, will purchase Lessor Notes
under both Indentures which have the same maturity and interest as the Pass
Through Certificates issued by such Pass Through Trust. The final distribution
date of the Pass Through Certificates will be the maturity date of the Lessor
Notes. Each Pass Through Trustee will distribute the amount of payments of
principal, Make-Whole Premium, if applicable, and interest received by it as
holder of the Lessor Notes to the Certificateholders.
18
<PAGE> 19
See "Description of the Pass Through Certificates -- General" and "Description
of the Indentures -- General."
USE OF PROCEEDS
The Pass Through Certificates are being issued in order to facilitate the
financing by the Owner Trustees of their purchase of the Facility. The proceeds
from the sale of the Pass Through Certificates by each Pass Through Trust will
be used by the Pass Through Trustee to purchase the related Lessor Notes from
the relevant Owner Trustee. Each of the Owner Trustees will use the proceeds
from such sale of such Lessor Notes to finance approximately 76.40% of such
Owner Trustee's cost of the Facility, representing the entire debt portion of
the purchase price to be paid by the Owner Trustee in the Financing. See
"Description of the Transaction." The net proceeds to the Company from the
Financing will be $343,199,000. Approximately $125 million of the net proceeds
will be used to repay borrowings by the Company under its revolving credit
facility, which borrowings bear interest at an average rate of 4.7% and has a
maturity of less than one year. Such borrowings were made to finance a portion
of the construction costs for the Facility and to finance other capital
expenditures. The balance of the net proceeds will be used for general corporate
purposes, including the funding of the Company's on-going and future capital
expenditures.
19
<PAGE> 20
DIAGRAM OF PAYMENTS
The diagram below illustrates certain aspects of the payment flows among
the Company, the Owner Trustees, the Indenture Trustees, the Pass Through
Trustees and the Certificateholders.
(DIAGRAM)
20
<PAGE> 21
DESCRIPTION OF THE PASS THROUGH CERTIFICATES
In connection with the offering of the Pass Through Certificates, two
separate Pass Through Trusts will be formed, and two corresponding Series of
Pass Through Certificates will be issued, pursuant to two Pass Through
Agreements to be entered into between the Company and the Pass Through Trustees.
The following summary relates to each Pass Through Agreement, the Pass Through
Trusts to be formed thereby and the Pass Through Certificates to be issued by
each Pass Through Trust, except as otherwise described herein. This Prospectus
contains a glossary of the material terms used with respect to the specific
series of Pass Through Certificates being offered hereby. Citations which appear
below in parentheses are to the relevant sections of the Pass Through Agreement
unless otherwise indicated.
The discussion that follows is a summary and does not purport to be
complete. The summary includes descriptions of the material terms of the Pass
Through Agreement, the form of which has been filed as an exhibit to the
Registration Statement of which this Prospectus forms a part. This summary makes
use of terms defined in and is qualified in its entirety by reference to the
Pass Through Agreements.
GENERAL
The Pass Through Certificates offered hereby will be issued by the 1994-A1
Trust and the 1994-A2 Trust to be formed pursuant to the related Pass Through
Agreement, to be entered into between the Company and the Pass Through Trustee
on the date of issuance of the related Pass Through Certificates. Each Pass
Through Agreement will contain substantially the same terms and conditions,
except that the interest rate, the scheduled repayments of principal, the
maturity date applicable to the Lessor Notes held in each Pass Through Trust,
the aggregate principal amount of such Lessor Notes and the final distribution
date applicable to each Pass Through Trust will differ.
The Pass Through Certificates will be issued in fully registered,
certificated form only. Each Pass Through Certificate will represent a
fractional undivided interest in the separate Pass Through Trust formed by the
Pass Through Agreement pursuant to which such Pass Through Certificate is
issued. The property of each Pass Through Trust will include the Lessor Notes
held in such Pass Through Trust, all monies at any time paid thereon, all monies
due and to become due thereunder and funds from time to time deposited with the
Pass Through Trustee in accounts relating to such Pass Through Trust. Each Pass
Through Certificate will represent a pro rata share of the outstanding principal
amount of the Lessor Notes and other property held in the related Pass Through
Trust and will be issued in minimum denominations of $1,000 or any integral
multiple of $1,000. (Pass Through Agreement, Article II)
Pass Through Certificates will be registered in the name of Cede & Co.
("Cede") as the nominee of The Depository Trust Company ("DTC") and no person
acquiring an interest in Pass Through Certificates (a "Certificate Owner") will
be entitled to receive a certificated Pass Through Certificate representing such
person's interest in the related Pass Through Trust unless such certificates are
issued as described below. Unless certificated Pass Through Certificates are
issued, all references to actions by Certificateholders shall refer to actions
taken by DTC upon instructions from DTC Participants (as defined below), and all
references herein to distributions, notices, reports and settlements to
Certificateholders shall refer, as the case may be, to distributions, notices,
reports and statements to DTC or Cede, as the registered holder of the Pass
Through Certificates, or to DTC Participants for distribution to Certificate
Owners in accordance with DTC procedures. See "Book-Entry Procedures" below.
The Pass Through Certificates represent interests in the related Pass
Through Trust only and all payments and distributions shall be made only from
the Trust Property of such Pass Through Trust. The Pass Through Certificates do
not represent an interest in or obligation of the Company, the Pass Through
Trustee, any related Owner Participant, the Owner Trustee in its individual
capacity or any affiliate of any of the foregoing. Each Certificateholder by its
acceptance of a Pass Through
21
<PAGE> 22
Certificate agrees to look solely to the income and proceeds from the property
held in the related Pass Through Trust as provided in the Pass Through
Agreement. (Pass Through Agreement, Section 3.06)
Neither the Pass Through Agreements nor the Indentures will contain any
debt covenants or provisions that would afford Certificateholders protection in
the event of a highly leveraged transaction involving the Company.
BOOK-ENTRY PROCEDURES
The statements set forth in this section include summaries of certain rules
and operating procedures of DTC which affect, among other matters, transfers of
interests in the Pass Through Certificates. The information in this section
concerning DTC has been obtained from DTC.
General. Upon issuance, each Series of Pass Through Certificates will be
represented by one or more fully registered global certificates. Each global
certificate will be deposited with, or on behalf of, DTC, and registered in the
name of Cede, its nominee. No Certificate Owner will be entitled to receive a
certificated Pass Through Certificate, except as set forth below. (Pass Through
Agreement, Section 2.12)
DTC has advised the Company that DTC is a limited-purpose trust company
organized under the laws of the State of New York, a member of the Federal
Reserve System, a "clearing corporation" within the meaning of the New York
Uniform Commercial Code and a "clearing agency" registered pursuant to Section
17A of the Exchange Act. DTC was created to hold securities for its participants
("DTC Participants") and to facilitate the clearance and settlement of
securities transactions among DTC Participants through electronic book-entries,
thereby eliminating the need for physical movement of certificates. DTC
Participants include securities brokers and dealers, banks, trust companies,
clearing corporations and certain other organizations. Access to DTC's
book-entry system is also 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.
Certificate Owners that are not DTC Participants but desire to purchase,
sell or otherwise transfer ownership of, or other interests in, Pass Through
Certificates may do so only through DTC Participants. In addition, Certificate
Owners will receive all distributions of principal and interest from the Pass
Through Trustee through the DTC Participants. Under the rules, regulations and
procedures creating and affecting DTC and its operation, DTC is required to make
book-entry transfers of Pass Through Certificates among DTC Participants on
whose behalf it acts and to receive and transmit distributions of principal of,
and interest on, the Pass Through Certificates. Under the book-entry system,
Certificate Owners may experience some delay in their receipt of payments, since
such payments will be forwarded by the Pass Through Trustee to Cede, as nominee
for DTC, and DTC in turn will forward the payments to the appropriate DTC
Participants. Distributions by DTC Participants to Certificate Owners will be
the sole responsibility of such DTC Participants and will be made in accordance
with customary industry practices. Accordingly, although Certificate Owners will
not have possession of the Pass Through Certificates, the rules of DTC provide a
mechanism by which DTC Participants will receive payments and will be able to
transfer their interests. Although the DTC Participants are expected to convey
the rights represented by their interests in any global security to the related
Certificate Owners, because DTC can only act on behalf of DTC Participants, the
ability of Certificate Owners to pledge Pass Through Certificates to persons or
entities that are not DTC Participants, or to otherwise act with respect to such
Pass Through Certificates, may be limited due to the lack of physical
certificates for such Pass Through Certificates.
None of the Company, the Pass Through Trustee or any other agent of the
Company or the Pass Through Trustee will have any responsibility or liability
for any aspect of the records relating to, or payments made on account of,
beneficial ownership interests in the Pass Through Certificates or for
supervising or reviewing any records relating to such beneficial ownership
interests. Since the
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<PAGE> 23
only "Certificateholder" will be Cede, as nominee of DTC, Certificate Owners
will not be recognized by the Pass Through Trustee as Certificateholders, as
such term is used in the Pass Through Agreement, and Certificate Owners will be
permitted to exercise the rights of Certificateholders only indirectly through
DTC and DTC Participants.
The Pass Through Certificates will be issued in fully registered,
certificated form to Certificate Owners, or their nominees, rather than to DTC
or its nominee, only if DTC advises the Pass Through Trustee in writing that it
is no longer willing or able or qualified to discharge properly its
responsibilities as depository with respect to the Pass Through Certificates and
the Company is unable to locate a qualified successor or if the Company, at its
option, elects to terminate the book-entry system through DTC. In such event,
the Pass Through Trustee will notify all Certificate Owners through DTC
Participants of the availability of such certificated Pass Through Certificates.
Upon surrender by DTC of the registered global certificate or certificates
representing the series of Pass Through Certificates and receipt of instructions
for reregistration, the Pass Through Trustee will reissue the Pass Through
Certificates in certificated form to Certificate Owners or their nominees. Such
certificated Pass Through Certificates will be freely transferable and
exchangeable at the office of the Pass Through Trustee upon compliance with the
requirements set forth in the related Pass Through Agreement. 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 may be required.
(Pass Through Agreement, Sections 2.08 and 2.12)
Same-Day Settlement and Payment. All payments made by the Company under
any Lease will be in immediately available funds. Payments by the Indenture
Trustee with respect to Lessor Notes will be passed through to DTC in
immediately available funds.
Secondary trading in long-term notes and debentures of corporate issuers is
generally settled in clearinghouse or next-day funds. In contrast, secondary
trading in pass through certificates is generally settled in immediately
available or same-day funds. Any Pass Through Certificates registered in the
name of Cede, as nominee for DTC, will trade in DTC's Same-Day Funds Settlement
System until maturity, and secondary market trading activity in the Pass Through
Certificates will therefore be required by DTC to settle in immediately
available funds. No assurance can be given as to the effect, if any, of
settlement in same-day funds on trading activity in the Pass Through
Certificates.
PAYMENTS AND DISTRIBUTIONS
The Company will make scheduled rental payments for the Facility under the
related Leases. These scheduled rental payments will be assigned under the
applicable Indenture by the Owner Trustee to the Indenture Trustee to provide
the funds necessary to make the corresponding payments of principal and interest
due from the Owner Trustee on the Lessor Notes issued under such Indenture.
After the Indenture Trustee has made such principal and interest payments to the
Pass Through Trustee for each of the Pass Through Trusts on the Lessor Notes
held in such Pass Through Trust, the Indenture Trustee will, except under
certain circumstances, pay the remaining balance, if any, to the Owner Trustee
for the benefit of the related Owner Participant. The Pass Through Trustee for
each such Pass Through Trust will distribute to the Certificateholders of such
Pass Through Trust payments received on the Lessor Notes held in such Pass
Through Trust as described below.
Payments of principal of, and interest on the unpaid amount of, the Lessor
Notes held in each Pass Through Trust will be scheduled to be received by the
Pass Through Trustee on the dates specified below (such scheduled payments of
principal of, and interest on, the Lessor Notes are referred to herein as
"Scheduled Payments," and the dates specified for distributions of Scheduled
Payments to the Pass Through Trustee are referred to herein as "Regular
Distribution Dates"). Interest on the Pass Through Certificates will be passed
through to the Certificateholders at the rate per annum indicated on the cover
of this Prospectus, which is the interest rate borne by the Lessor
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<PAGE> 24
Notes. Interest will be calculated on the basis of a 360-day year consisting of
twelve 30-day months. For each Pass Through Trust, the Pass Through Trustee will
distribute on each Regular Distribution Date to the related Certificateholders
any Scheduled Payment received by the Pass Through Trustee on such Regular
Distribution Date. If a Scheduled Payment is not received by the Pass Through
Trustee on or before a Regular Distribution Date but is received within five
Business Days thereafter, it will be distributed on the date received to the
Certificateholders. Each such distribution of a Scheduled Payment will be made
by the Pass Through Trustee to the Certificateholders of record of such Pass
Through Trust on the fifteenth day prior to such Regular Distribution Date,
subject to certain exceptions. Each such Certificateholder will be entitled to
receive a pro rata share of any such distribution. (Pass Through Agreement,
Sections 5.01 and 5.02) If a Scheduled Payment is received more than five
Business Days after the applicable Regular Distribution Date, it will be treated
as a Special Payment and will be distributed as described below.
The Regular Distribution Dates for each Pass Through Trust are January 5
and July 5. Payments of interest on the Lessor Notes held in each Pass Through
Trust are scheduled to be received by the Pass Through Trustee on each January 5
and July 5, commencing on July 5, 1995, and are to be distributed to the related
Certificateholders on the corresponding Regular Distribution Dates. For each
Pass Through Trust, the Lessor Notes held in such Pass Through Trust will accrue
interest on the unpaid principal amount thereof at the rate per annum set forth
on the cover of this Prospectus applicable to the related Pass Through
Certificates, which is calculated on the basis of a 360-day year consisting of
twelve 30-day months.
Payments of principal on the Lessor Notes held in each Pass Through Trust
are scheduled to be received by the Pass Through Trustee and are to be
distributed to the related Certificateholders in accordance with the principal
repayment schedule set forth in "Description of the Indentures -- Scheduled
Payments."
After any prepayment of principal, any redemption or any default in respect
of some or all of the Lessor Notes held in any Pass Through Trust, any
Certificateholder of such Pass Through Trust should refer to the Pool Balance
and the Pool Factor (as such terms are defined below) for such Pass Through
Trust reported periodically by the Pass Through Trustee in order to calculate
such Certificateholder's pro rata share of such Pass Through Trust. See "-- Pool
Factors" and "-- Statements to Certificateholders" below.
For each Pass Through Trust, any payments of principal, Make-Whole Premium,
if applicable, or interest, other than Scheduled Payments, received by the Pass
Through Trustee on any of the Lessor Notes held in such Pass Through Trust,
including payments received (i) for the prepayment of such Lessor Notes in
connection with certain events specified in this Prospectus, (ii) upon the
prepayment by the related Owner Trustee of such Lessor Notes following a default
in respect of such Lessor Notes, and (iii) on account of the sale of such Lessor
Notes by the Pass Through Trustee (such payments are referred to herein as
"Special Payments"), will be distributed on the dates determined as set forth
below (each, a "Special Distribution Date" and, together with the Regular
Distribution Dates, the "Distribution Dates"). Prior to any Special Payment for
any Pass Through Trust, the Pass Through Trustee will notify the
Certificateholders of record of such Pass Through Trust of such Special Payment
and the anticipated Special Distribution Date therefor in accordance with the
related Pass Through Agreement. Each distribution of a Special Payment, other
than the final distribution, for any Pass Through Trust will be made by the Pass
Through Trustee to the Certificateholders of record of such Pass Through Trust
on the fifteenth day prior to such Special Distribution Date. Each such
Certificateholder will be entitled to receive a pro rata share of any such
distribution. (Pass Through Agreement, Section 5.02) See "-- Events of Default
and Certain Rights Upon an Event of Default" below.
For each Pass Through Trust, the Special Distribution Dates will be the
twenty-eighth day of any month, except that the Special Distribution Date will
correspond to the date of the receipt of proceeds by the Pass Through Trustee in
the case of a refinancing of the related Lessor Notes.
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<PAGE> 25
Each Pass Through Agreement requires that the Pass Through Trustee
establish and maintain, for the related Pass Through Trust and for the benefit
of the related Certificateholders, one or more non-interest bearing accounts
(the "Certificate Account") for the deposit of Scheduled Payments on the Lessor
Notes held in such Pass Through Trust and one or more accounts (the "Special
Payments Account") which will, except in connection with Pass Through Permitted
Investments as discussed below, be non-interest bearing for the deposit of
Special Payments on such Lessor Notes. The Pass Through Trustee is required to
deposit any Scheduled Payments relating to a Pass Through Trust received by it
in the related Certificate Account and to deposit any Special Payments so
received by it in the related Special Payments Account pending distribution
thereof. (Pass Through Agreement, Section 5.01) Special Payments that are not
promptly distributed by the Pass Through Trustee will, to the extent
practicable, be invested by the Pass Through Trustee in Pass Through Permitted
Investments pending the distribution of such funds on a Special Distribution
Date, and the income and earnings on such investment will be distributed with
such Special Payment. "Pass Through Permitted Investments" are non-callable
direct obligations of the United States of America maturing on or prior to the
day required for the distribution of any such funds on a Special Distribution
Date. (Pass Through Agreement, Article I and Section 5.04)
Distributions by the Pass Through Trustee from the Certificate Account or
the Special Payments Account of any Pass Through Trust on any Distribution Date
will be paid to each Certificateholder of record of such Pass Through Trust on
the applicable record date at its address appearing on the register maintained
for such Pass Through Trust. (Pass Through Agreement, Section 5.02) The final
distribution for each Pass Through Trust, however, will be made only upon
presentation and surrender of the Pass Through Certificates for such Pass
Through Trust at the office or agency of the Pass Through Trustee specified in
the notice given by the Pass Through Trustee of such final distribution. The
Pass Through Trustee will mail such notice of the final distribution to the
Certificateholders of such Pass Through Trust, specifying the date set for such
final distribution and the amount of such distribution. (Pass Through Agreement,
Section 12.01) See "-- Termination of Pass Through Trusts" below.
If any Distribution Date is not a Business Day, distributions scheduled to
be made on such Distribution Date may be made on the next succeeding Business
Day without additional interest. (Pass Through Agreement, Section 13.15)
POOL FACTORS
Except as provided below, the Pool Factor (as defined below) for any Pass
Through Trust will decline in proportion to the scheduled repayments of
principal on the Lessor Notes held in such Pass Through Trust as described below
in "Description of the Indentures -- Scheduled Payments." Where any Lessor Note
held in a Pass Through Trust has been prepaid, a scheduled repayment of
principal thereon has not been made or certain actions have been taken following
a default thereon, as discussed below in "-- Events of Default and Certain
Rights Upon an Event of Default" below, the Pool Factor and the Pool Balance (as
defined below) of such Pass Through Trust 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.
The "Pool Balance" for each Pass Through Trust indicates, as of any date,
the aggregate unpaid principal amount of the Lessor Notes held in such Pass
Through Trust on such date plus any amounts in respect of the principal of such
Lessor Notes held by the Pass Through Trustee and not yet distributed. The Pool
Balance for each Pass Through Trust as of any Distribution Date will be computed
after giving effect to the payment of principal, if any, on the Lessor Notes
held in such Pass Through Trust and the distribution thereof being made on that
date. (Pass Through Agreement, Article I)
The "Pool Factor" for each Pass Through Trust as of any Distribution Date
is the quotient (rounded to the seventh decimal place) computed by dividing (i)
the Pool Balance, by (ii) the
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<PAGE> 26
aggregate original principal amount of the Lessor Notes held in such Pass
Through Trust. The Pool Factor for each Pass Through Trust as of any
Distribution Date will be computed after giving effect to the payment of
principal, if any, on the Lessor Notes held in such Pass Through Trust and the
distribution thereof being 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 herein to reflect reductions in the
Pool Balance of such Pass Through Trust. For any Pass Through Trust, the amount
of any Certificateholder's pro rata share of the Pool Balance of such Pass
Through Trust can be determined by multiplying the original denomination of such
Certificateholder's Pass Through Certificate by the Pool Factor for such Pass
Through Trust as of the applicable Distribution Date. (Pass Through Agreement,
Article I)
As of the date of issuance of the Pass Through Certificates by the Pass
Through Trustee, and assuming that no prepayment or default in respect of any
Lessor Notes shall occur, the aggregate scheduled repayments of principal on
such Lessor Notes for each Pass Through Trust, and the resulting Pool Factors
for such Pass Through Trusts after taking into account each such repayment, are
set forth below:
<TABLE>
<CAPTION>
1994-A1 TRUST 1994-A2 TRUST
------------------------------- -------------------------------
SCHEDULED SCHEDULED
REGULAR PRINCIPAL PRINCIPAL
DISTRIBUTION PAYMENTS PAYMENTS
DATE ON LESSOR NOTES POOL FACTOR ON LESSOR NOTES POOL FACTOR
- --------------- --------------- ----------- --------------- -----------
<S> <C> <C> <C> <C>
July 5, 1996 $ 6,050,829 0.9655098 $ 0 1.0000000
July 5, 1997 6,589,958 0.9279464 0 1.0000000
July 5, 1998 7,177,123 0.8870362 0 1.0000000
July 5, 1999 5,371,616 0.8564176 0 1.0000000
July 5, 2000 8,291,829 0.8091535 0 1.0000000
July 5, 2001 9,034,017 0.7576588 0 1.0000000
January 5, 2002 8,374,320 0.7099245 0 1.0000000
July 5, 2002 2,753 0.7099088 0 1.0000000
January 5, 2003 7,089,257 0.6694994 0 1.0000000
January 5, 2004 10,050,586 0.6122102 0 1.0000000
January 5, 2005 12,677,278 0.5399487 0 1.0000000
January 5, 2006 19,953,116 0.4262142 0 1.0000000
January 5, 2007 22,629,516 0.2972241 0 1.0000000
January 5, 2008 24,739,819 0.1562050 0 1.0000000
January 5, 2009 27,403,983 0.0000000 0 1.0000000
January 5, 2010 0 0.0000000 836,376 0.9903590
January 5, 2011 0 0.0000000 32,334,636 0.6176340
January 5, 2012 0 0.0000000 31,351,992 0.2562361
July 5, 2012 0 0.0000000 22,228,996 0.0000000
</TABLE>
STATEMENTS TO CERTIFICATEHOLDERS
On each Distribution Date, the Pass Through Trustee will include with each
distribution of a Scheduled Payment or Special Payment to Certificateholders of
record of the related Pass Through Trust a statement, giving effect to such
distribution being made on such Distribution Date, setting forth the following
information (per $1,000 in aggregate amount of Pass Through Certificates for
such Pass Through Trust, as to (i) and (ii) below):
(i) the amount of such distribution allocable to principal and
allocable to the Make-Whole Premium, if applicable;
(ii) the amount of such distribution allocable to interest; and
(iii) the Pool Balance and the Pool Factor for such Pass Through
Trust.
In addition, after the end of each calendar year, the Pass Through Trustee
will prepare for each Certificateholder of each Pass Through Trust at any time
during the preceding calendar year a
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<PAGE> 27
report containing the sum of the amounts determined pursuant to clauses (i) and
(ii) above with respect to each such Pass Through Trust for such calendar year
or, in the event such person was a Certificateholder during a portion of such
calendar year, for the applicable portion of such calendar year. (Pass Through
Agreement, Section 5.03)
VOTING OF THE LESSOR NOTES
The Pass Through Trustee, as holder of the Lessor Notes held in each Pass
Through Trust, has the right to vote and give consents and waivers in respect of
such Lessor Notes under the related Indentures. The Pass Through Agreement sets
forth the circumstances in which the Pass Through Trustee shall direct any
action or cast any vote as the holder of the Lessor Notes held in the applicable
Pass Through Trust at its own discretion and the circumstances in which the Pass
Through Trustee shall seek instructions from the Certificateholders of such Pass
Through Trust. Prior to an Event of Default (as defined below) with respect to
any Pass Through Trust, the principal amount of the Lessor Notes held in such
Pass Through Trust directing any action or being voted for or against any
proposal will be in proportion to the principal amount of Pass Through
Certificates held by the Certificateholders of such Pass Through Trust taking
the corresponding position. (Pass Through Agreement, Section 11.08)
EVENTS OF DEFAULT AND CERTAIN RIGHTS UPON AN EVENT OF DEFAULT
Each of the Pass Through Agreements defines an event of default for the
related Pass Through Trust (an "Event of Default") as the occurrence and
continuance of an event of default under the related Indenture (an "Indenture
Event of Default"). The Indenture Events of Default under each Indenture are
described under "Description of the Indentures -- Indenture Events of Default"
and will include events of default under the related Lease ("Lease Events of
Default"). Since the Lessor Notes outstanding 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 with respect to each such
Pass Through Trust. All of the Lessor Notes issued under the same Indenture,
however, will relate to a specific Owner Trust and there are no cross-defaults
to other debt instruments of the Company in the Indenture but, indirectly, the
Leases are cross-defaulted insofar as each would be treated as a Financing Lease
and each Lease would be defaulted if the Company is in default under a Financing
Lease. Consequently, 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 Indenture. If an Indenture Event of Default
occurs in fewer than all of the Indentures related to a Pass Through Trust, the
Lessor Notes issued pursuant to the related Indentures with respect to which an
Indenture Event of Default has not occurred will continue to be held in such
Pass Through Trust and payments of principal of, Make-Whole Premium, if
applicable, and interest on such Lessor Notes will continue to be distributed to
the Certificateholders of such Pass Through Trust as originally scheduled.
The Lessor Notes in any Pass Through Trust, and therefore the related Pass
Through Certificates, will not have the benefit of any debt covenants or
provisions in the Indentures relating to such Lessor Notes or Pass Through
Certificates that would afford the holders thereof protection in the event of a
highly leveraged transaction involving the Company.
Under each Indenture, the Owner Trustee will have the right under certain
circumstances to cure an Indenture Event of Default that results from the
occurrence of a Lease Event of Default under the related Lease. If the Owner
Trustee chooses to exercise such cure right, the Indenture Event of Default and
consequently the Event of Default under any Pass Through Trust holding the
related Lessor Notes will be deemed to be cured. See "Description of the
Indentures -- Indenture Events of Default" for a more detailed discussion of
certain provisions described in this paragraph.
Each Pass Through Agreement provides that if an Indenture Event of Default
under an Indenture relating to Lessor Notes held in a Pass Through Trust shall
have occurred and be
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continuing, the Pass Through Trustee (i) may vote all of the Lessor Notes issued
under such Indenture that are held in such Pass Through Trust, and (ii) upon the
direction of the Certificateholders evidencing fractional undivided interests
aggregating not less than a majority in interest of such Pass Through Trust
shall vote a corresponding majority of such Lessor Notes, in each case in favor
of directing the related Indenture Trustee to declare the unpaid principal
amount of all Lessor Notes issued under such Indenture and any accrued and
unpaid interest thereon to be due and payable. Each Pass Through Agreement also
provides that if an Indenture Event of Default under an Indenture relating to
Lessor Notes held in the related Pass Through Trust shall have occurred and be
continuing, the Pass Through Trustee may, and upon the direction of the
Certificateholders evidencing fractional undivided interests aggregating not
less than a majority in interest of such Pass Through Trust shall, vote all of
the Lessor Notes issued under such Indenture that are held in such Pass Through
Trust in favor of directing the related Indenture Trustee as to the time, method
and place of conducting any proceeding for any remedy available to such
Indenture Trustee or of exercising any trust or power conferred on such
Indenture Trustee under such Indenture. (Pass Through Agreement, Sections 7.01
and 7.09)
The ability of the Certificateholders of any one Pass Through Trust to
cause the Indenture Trustee for any Lessor Notes held in such Pass Through Trust
to accelerate the payment on such Lessor Notes under the related Indenture or to
direct the exercise of remedies by such Indenture Trustee under the related
Indenture will depend, in part, upon the proportion between the aggregate
principal amount of the Lessor Notes outstanding under such Indenture and held
in such Pass Through Trust and the aggregate principal amount of all Lessor
Notes outstanding under such Indenture. Each Pass Through Trust will hold Lessor
Notes outstanding under such Indenture. Each Pass Through Trust will hold Lessor
Notes with different maturities and interest rates from those of the Lessor
Notes held in any other Pass Through Trust 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 Lessor Notes relating to the same Indenture. In addition, so long as the
same institution or an affiliate of such institution acts as Pass Through
Trustee of each Pass Through Trust, in the absence of instructions from the
Certificateholders of any such Pass Through Trust, the Pass Through Trustee for
such Pass Through Trust could for the same reason be faced with a potential
conflict of interest upon an Indenture Event of Default. In such event, the
initial Pass Through Trustee has indicated that it would resign as Pass Through
Trustee of one or all of such Pass Through Trusts, and a successor pass through
trustee would be appointed in accordance with the terms of the Pass Through
Agreement. See "The Pass Through Trustee" below for a discussion of resignation
procedures.
As an additional remedy, if an Indenture Event of Default under an
Indenture has occurred and is continuing, each Pass Through Agreement provides
that the Pass Through Trustee of a Pass Through Trust holding Lessor Notes
issued under such Indenture may, and upon the direction of the
Certificateholders evidencing fractional undivided interests aggregating not
less than a majority in interest of such Pass Through Trust will, sell all or
part of such Lessor Notes for cash to any person at a price or prices that it
may reasonably deem advisable. Any proceeds received by the Pass Through Trustee
upon any such sale will be deposited in the Special Payments Account for such
Pass Through Trust and will be distributed to the Certificateholders of such
Pass Through Trust on a Special Distribution Date. (Pass Through Agreement,
Sections 7.01 and 7.02) The market for Lessor 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 or an affiliate of such
institution acts as Pass Through Trustee of each Pass Through Trust, it may be
faced with a conflict in deciding from which Pass Through Trust to sell Lessor
Notes to available buyers. If the Pass Through Trustee sells any such Lessor
Notes with respect to which an Indenture Event of Default exists for less than
the outstanding principal amount thereof, 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 the Pass
Through Trustee, the Company, the Owner Trustee or any related Owner
Participants. Furthermore, neither the Pass Through Trustee nor the Certifi-
28
<PAGE> 29
cateholders of such Pass Through Trust could take any action with respect to any
remaining Lessor Notes held in such Pass Through Trust so long as no Indenture
Event of Default existed with respect thereto.
For any Pass Through Trust, any amount distributed to the Pass Through
Trustee by the Indenture Trustee under any Indenture on account of the Lessor
Notes held in such Pass Through Trust following an Indenture Event of Default
under such Indenture will be deposited in the Special Payments Account for such
Pass Through Trust and will be distributed to the Certificateholders of such
Pass Through Trust on a Special Distribution Date. In addition, if, following an
Indenture Event of Default, the related Owner Trustee exercises its option to
redeem the outstanding Lessor Notes issued under such Indenture, the price paid
by such Owner Trustee to the Pass Through Trustee for such Lessor Notes held in
such Pass Through Trust will be deposited in the related Special Payments
Account and will be distributed to the Certificateholders of such Pass Through
Trust on a Special Distribution Date. (Pass Through Agreement, Sections 5.01 and
5.02)
Any funds representing payments received with respect to any Lessor Notes
held in a Pass Through Trust in default, or the proceeds from the sale by the
Pass Through Trustee of any such Lessor Notes, held by the Pass Through Trustee
in the Special Payments Account for such Pass Through Trust will, to the extent
practicable, be invested by the Pass Through Trustee in Pass Through Permitted
Investments pending the distribution of such funds on a Special Distribution
Date. (Pass Through Agreement, Article I and Section 5.04)
Each Pass Through Agreement provides that the Pass Through Trustee will,
within 90 days after the occurrence of a default (as defined below) under any
Pass Through Trust, notify the Certificateholders of such Pass Through Trust by
mail of all uncured or unwaived defaults with respect to such Pass Through Trust
known to it. The Pass Through Trustee will 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, except in the case of default in the
payment of principal of, Make-Whole Premium, if applicable, or interest on any
of the Lessor Notes held in such Pass Through Trust. The term "default," for the
purpose of the provision described in this paragraph only, means the occurrence
of any 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. (Pass
Through Agreement, Section 7.11)
Each Pass Through Agreement provides that for the related Pass Through
Trust, subject to the duty of the Pass Through Trustee during a default to act
with the required standard of care, the Pass Through Trustee is entitled to be
indemnified by the Certificateholders of such Pass Through Trust before
proceeding to exercise any right or power under such Pass Through Trust at the
request of such Certificateholders. (Pass Through Agreement, Section 8.03)
In certain cases, the Certificateholders of a Pass Through Trust evidencing
fractional undivided interests aggregating not less than a majority in interest
of such Pass Through Trust may on behalf of all the Certificateholders of such
Pass Through Trust waive any past default or Event of Default with respect to
such Pass Through Trust and thereby annul any direction given by such
Certificateholders to the Pass Through Trustee or the related Indenture Trustee
with respect thereto, except (i) a default in payment of the principal of,
Make-Whole Premium, if applicable, or interest on any of the Lessor Notes held
in such Pass Through Trust and (ii) a default in respect of any covenant or
provision of the related Pass Through Agreement that cannot be modified or
amended without the consent of each Certificateholder of such Pass Through Trust
affected thereby. Any such waiver, however, will be effective to waive any such
past default or Event of Default if, but only if, the correlative Indenture
Event of Default has been waived under the related Indenture by the requisite
holders of the Lessor Notes outstanding thereunder. (Pass Through Agreement,
Section 7.10) Each Indenture will provide that, with certain exceptions, the
holders of two-thirds of the aggregate unpaid principal amount of the Lessor
Notes issued thereunder may on behalf of all such holders
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<PAGE> 30
waive any past default or Indenture Event of Default thereunder. (Indenture,
Section 4.07) If, as described above, the Certificateholders of a Pass Through
Trust elect to waive a past default or Event of Default with respect to such
Pass Through Trust, the principal amount of the Lessor Notes issued under the
related Indenture and held in such Pass Through Trust will be counted in favor
of the waiver of the corresponding past default or Indenture Event of Default
under the related Indenture when the Indenture Trustee determines whether such
past default or Indenture Event of Default has been waived by the requisite
majority in aggregate unpaid principal amount of Lessor Notes under such
Indenture. If, for example, the Lessor Notes issued under an Indenture held in a
Pass Through Trust constitute only 30% in aggregate unpaid principal amount of
the Lessor Notes issued and unpaid under such Indenture, even if all the
Certificateholders of such Pass Through Trust were to instruct the Pass Through
Trustee not to waive a past default or Event of Default with respect to such
Pass Through Trust and, consequently, to vote such Lessor Notes against the
waiver of the corresponding past default or Indenture Event of Default under
such Indenture, the Lessor Notes so voted by the Pass Through Trustee on behalf
of such Pass Through Trust would not alone be sufficient under the terms of such
Indenture to compel the Indenture Trustee to refrain from giving such waiver.
Moreover, there would be no assurance that the Certificateholders of any other
Pass Through Trust holding Lessor Notes issued under such Indenture would at
such time vote such Lessor Notes against such waiver. Therefore, if the
Certificateholders of a Pass Through Trust or Trusts waive a past default or
Event of Default such that the principal amount of the Lessor Notes held either
individually in such Pass Through Trust or in the aggregate in such Pass Through
Trusts constitutes the required two-thirds of the aggregate unpaid principal
amount under the applicable Indenture, such past default or Indenture Event of
Default under such Indenture will be waived whether or not the
Certificateholders of any other Pass Through Trust holding Lessor Notes issued
under such Indenture waive such past default or Event of Default with respect to
such other Pass Through Trust.
MODIFICATIONS OF THE PASS THROUGH AGREEMENTS
The Pass Through Agreement contains provisions permitting the Company and
the Pass Through Trustee to enter into an agreement supplemental to any Pass
Through Trust, without the consent of the Certificateholders of such Pass
Through Trust, to (i) evidence the succession of another corporation to the
Company and the assumption by such corporation of the Company's obligations
under the Pass Through Agreement, (ii) add to the covenants of the Company for
the protection of the related Certificateholders, (iii) surrender any right or
power conferred upon the Company in the Pass Through Agreement, (iv) cure any
ambiguity or correct or supplement any defective or inconsistent provision of
such Pass Through Agreement, or make any other provisions in regard to matters
or questions arising thereunder that will not adversely affect the interests of
the related Certificateholders, (v) correct or amplify the description of
property that constitutes Trust Property or the conveyance of such property to
the Pass Through Trustee, (vi) evidence and provide for a successor Pass Through
Trustee, (vii) modify, eliminate or add to the provisions of the Pass Through
Agreement to the extent necessary to continue to qualify such Pass Through
Agreement under the Trust Indenture Act or any similar Federal statute enacted
thereafter; or (viii) add, eliminate or change any provision under the Pass
Through Agreement that will not adversely affect the interests of the
Certificateholders, provided that in each case such modification does not cause
the Pass Through Trust to become taxable as an "association," within the meaning
of Treasury Regulation Section 301.7701-4. (Pass Through Agreement, Section
11.01)
Each Pass Through Agreement also provides that the Company and the Pass
Through Trustee, with the consent of the Certificateholders evidencing
fractional undivided interests aggregating not less than a majority in interest
of the affected Pass Through Trust, may execute supplemental agreements adding
any provisions to or changing or eliminating any of the provisions of the Pass
Through Agreement or modifying the rights of such Certificateholders. No such
supplemental agreement may, however, without the consent of each
Certificateholder so affected, (a) reduce in any manner the amount of, or delay
the timing of, any receipt by the Pass Through Trustee of
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payments on the Lessor Notes held in such Pass Through Trust, or distributions
in respect of any Pass Through Certificate of such Pass Through Trust, or make
distributions payable in coin or currency other than that provided for in such
Pass Through Certificates, or impair the right of any such Certificateholder to
institute suit for the enforcement of any payment when due, (b) permit the
disposition of any Lessor Note held in such Pass Through Trust, except as
provided in the Pass Through Agreement, or permit the creation of any lien on
the Trust Property or deprive any holder of any such Lessor Note of the benefit
of the Lien of the related Indenture, except as provided therein, (c) reduce the
percentage of the aggregate fractional undivided interests of the Pass Through
Trust that is required to approve any supplemental agreement or any waiver
provided for in the Pass Through Agreement or (d) cause the Pass Through Trust
to become taxable as an "association," within the meaning of Treasury Regulation
Section 301.7701-4. (Pass Through Agreement, Section 11.02)
MODIFICATION, CONSENTS AND WAIVERS UNDER THE INDENTURE AND RELATED AGREEMENTS
If the Pass Through Trustee, as the holder of any Lessor Notes held in a
Pass Through Trust, receives a request for its consent to any amendment,
modification or waiver under the relevant Indenture, or other document relating
to such Lessor Notes (including any Lease), the Pass Through Trustee will mail a
notice of such proposed amendment, modification or waiver to each
Certificateholder of such Pass Through Trust as of the date of such notice. The
Pass Through Trustee will request instructions from such Certificateholders as
to whether or not to consent to such amendment, modification or waiver. The Pass
Through Trustee will vote or consent with respect to such Lessor Notes in the
same proportion as the Pass Through Certificates of such Pass Through Trust are
actually voted by such Certificateholders by a certain date. If an Event of
Default relating to such Indenture has occurred and is continuing under such
Pass Through Trust, the Pass Through Trustee may, in the absence of instructions
from Certificateholders holding fractional undivided interests aggregating not
less than a majority in interest of such Pass Through Trust, in its own
discretion consent to such amendment, modification or waiver, and may so notify
the related Indenture Trustee. (Pass Through Agreement, Section 11.08)
TERMINATION OF PASS THROUGH TRUSTS
The obligations of the Company and the Pass Through 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 related Pass Through Agreement and the
disposition of all property held in such Pass Through Trust. The Pass Through
Trustee will notify each Certificateholder of record of such Pass Through Trust
by mail of, among other things, 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 for
each Certificateholder of such Pass Through Trust will be made only upon
surrender of such Certificateholder's Pass Through Certificates at the office or
agency of the Pass Through Trustee specified in such termination notice. (Pass
Through Agreement, Section 12.01)
THE PASS THROUGH TRUSTEE
The First National Bank of Chicago ("FNBC") will be the Pass Through
Trustee for each of the Pass Through Trusts. The Pass Through Trustee and any of
its affiliates may hold Pass Through Certificates in their own names. (Pass
Through Agreement, Section 8.05)
FNBC also will be the Indenture Trustee under the Indentures under which
the Lessor Notes have been or will be issued. The Company from time to time
borrows from, and maintains deposit accounts with, FNBC and its affiliates.
The Pass Through Trustee may resign as trustee under either or both of the
Pass Through Trusts at any time. If the Pass Through Trustee ceases to be
eligible to continue as Pass Through
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Trustee with respect to a Pass Through Trust or becomes incapable of acting as
Pass Through Trustee or becomes insolvent, the Company may remove such Pass
Through Trustee for such Pass Through Trust, 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 Pass Through Trustee and the appointment of a successor trustee.
In addition, the Pass Through Trustee of any Pass Through Trust may be removed
without cause by the related Certificateholders holding in the aggregate amount
not less than a majority of the aggregate fractional undivided interests then
outstanding in the Pass Through Trust. In the case of the resignation or removal
of the Pass Through Trustee, the Certificateholders holding in the aggregate not
less than a majority of the aggregate fractional undivided interests then
outstanding in the Pass Through Trust may appoint a successor Pass Through
Trustee. The resignation or removal of the Pass Through Trustee for any Pass
Through Trust and the appointment of the successor trustee for such Pass Through
Trust does not become effective until acceptance of the appointment by the
successor trustee. (Pass Through Agreement, Article X) 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. All references in this Prospectus to the Pass Through
Trustee are to the trustee acting in such capacity under each of the Pass
Through Trusts and should be read to take into account the possibility that each
of the Pass Through Trusts could have a different successor trustee in the event
of such a resignation or removal.
The Pass Through Agreement provides that the Company will pay the Pass
Through Trustee's fees and expenses and that the Pass Through Trustee will have
a priority claim on the related Trust Property to the extent such fees and
expenses are not paid. The Pass Through Agreement further provides that the Pass
Through Trustee in its individual capacity will be entitled to indemnification
by the Company for, and will be held harmless against, any loss, liability or
expenses (other than income or similar taxes) incurred by the Pass Through
Trustee in its individual capacity in connection with the administration of any
Pass Through Trust, except to the extent incurred through its own willful
misconduct, bad faith or negligence or by reason of a breach of any of its
representations or warranties set forth in the Pass Through Agreement or any
related documents. In certain circumstances, the Pass Through Trustee will be
entitled to be reimbursed from the applicable Pass Through Trust for any tax
(other than income or similar taxes) incurred in its trust capacity in
connection with the administration of any Pass Through Trust. (Pass Through
Agreement, Articles VIII and IX) See "Certain Federal Income Tax
Considerations."
DESCRIPTION OF THE INDENTURES
The statements under this caption are summaries and do not purport to be
complete. The summaries are qualified in their entirety by reference to the
Indentures, a copy of the form of which has been filed as an exhibit to the
Registration Statement.
GENERAL
The Lessor Notes are to be issued under separate Trust Indentures and
Security Agreements, each to be dated as of July 15, 1994, between the
respective Owner Trustees and The First National Bank of Chicago, as Indenture
Trustee (the "Indentures"). The Lessor Notes will be issued to The First
National Bank of Chicago, as Pass Through Trustee, which will hold the Owner
Trustees' Lessor Notes for the benefit of Certificateholders.
The aggregate principal amount of the Lessor Notes will equal the aggregate
principal amount of the Pass Through Certificates. The Lessor Notes will bear
interest at rates with respect to the principal amounts thereof which are equal
to the interest rates on the Pass Through Certificates of corresponding
principal amounts. Payments of the principal of, Make-Whole Premium, if
applicable, and interest on, the Lessor Notes will be due in such amounts and at
such times as match exactly
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the required payment dates, for the principal of, Make-Whole Premium, if
applicable, and interest on, the Pass Through Certificates.
PREPAYMENT
The outstanding Lessor Notes shall be redeemed in full, (i) on the
appropriate rent payment date at any time after the issuance thereof in
connection with the occurrence of an Event of Loss under the related Lease if
the Company is required to purchase the undivided ownership interest of an Owner
Trustee in the Facility; (ii) on the appropriate rent payment date occurring on
or after July 5, 2003 in connection with the sale of the undivided ownership
interest of an Owner Trustee in the Facility if the Company exercises its early
termination rights after it determines that the Facility is obsolete or surplus
or uneconomic as described below under "Description of the Leases -- Early
Termination Rights;" (iii) if the Company exercises its early purchase option as
described below under "Description of the Leases -- Special Purchase Option," in
which case each Lessor Note will be repayable commencing on January 5, 2012; or
(iv) at any time after the issuance thereof on the date specified in a
redemption notice, in connection with the Company's election to terminate the
Leases and purchase the Facility in certain circumstances if the related Owner
Trustee fails to finance certain modifications proposed for the Facility by the
Company as described below in the third paragraph under "Description of the
Leases -- Modifications." Under any of the above mandatory redemptions, the
Company is obligated to pay a redemption price equal to the outstanding
principal amount of such Lessor Notes plus accrued and unpaid interest on the
Lessor Notes of such Owner Trustee to the date fixed for prepayment, together,
if the prepayment occurs prior to January 5, 2012, with a Make-Whole Premium, if
any, in the case of a redemption of the type contemplated by clause (ii) or (iv)
above but without a Make-Whole Premium or other prepayment penalty of any kind
in the case of a redemption of the type contemplated by clause (i) or (iii)
above or any other redemption occurring on or after January 5, 2012. If for any
reason the Company fails to terminate the related Lease or exercise its purchase
option thereunder as described in clauses (i), (iii) and (iv) above on the date
provided therefor in the related Lease, the related Lessor Notes would not be
redeemed and would remain outstanding and no Indenture Default and Indenture
Event of Default would occur as a result of such redemption not occurring.
(Indenture, Section 2.13; Lease, Sections 8(h), 9(b), 14 and 15)
In addition to the foregoing, without the consent of the related Holders,
the Lessor Notes outstanding under each Indenture may at the option of the
related Owner Trustee (acting upon directions of the related Lessee) be redeemed
in whole, but not in part, at any time after the issuance thereof in connection
with a refunding of such Lessor Notes, at a Redemption Price equal to the
outstanding principal amount of such Lessor Notes plus accrued and unpaid
interest thereon, together, if the prepayment occurs prior to January 5, 2012,
with a Make-Whole Premium, if any. To the extent that any such refunding
transaction were not to be consummated, the related Lessor Notes would not be
redeemed and would remain outstanding and no Indenture Default or Indenture
Event of Default would occur as a result of such redemption not occurring or
such refunding transaction not being consummated. (Indenture, Section 2.14)
In addition to the foregoing, each Owner Trustee may, but will not be
obligated to, cause the redemption of all, but not less than all, of the Lessor
Notes issued and outstanding under the related Indenture after an Indenture
Event of Default which is also a Lease Event of Default has occurred and is
continuing at a Redemption Price equal to the outstanding principal amount of
such Lessor Notes, together with interest accrued and unpaid thereon to the date
fixed for prepayment, plus, prior to January 5, 2012, a Make-Whole Premium;
provided that if the Indenture Trustee has given the Owner Trustee the requisite
notice of its intent to accelerate such Lessor Notes as a result of such Lease
Event of Default, any such prepayment will be without any Make-Whole Premium or
other prepayment penalty of any kind. (Indenture, Section 2.12)
The "Make-Whole Premium" means the excess, if any, of (a) the net present
value of the remaining scheduled principal and interest payments in respect of
the outstanding Lessor Notes
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discounted to the applicable redemption date on a semiannual basis at the
Treasury Rate (as defined below) over (b) the aggregate principal amount of the
Lessor Notes to be redeemed on such redemption date plus any accrued and unpaid
interest thereon, as calculated by an independent investment banking institution
of national standing appointed by the Company on behalf of the Owner Trustee (or
directly by the Owner Trustee if any Lease Event of Default exists).
The "Treasury Rate" means, with respect to the determination of a
Make-Whole Premium, (i) in the case of a Lessor Note bearing a final stated
maturity of less than one year after the related redemption date, a rate of
interest per annum, determined by the independent investment banking institution
as of the third Business Day preceding the applicable redemption date, equal to
the average yield to maturity of, and resulting from the bidding for (on
government bond equivalent basis), the applicable United States Treasury Bill
due the week in which such final stated maturity occurs or (ii) in the case of
all other Lessor Notes, a rate of interest per annum determined by the
independent investment banking institution as of the third Business Day
preceding the applicable redemption date, to be equal to the average yield to
maturity of, and resulting from the bidding for, the most comparable United
States Treasury Notes, as identified by the independent investment banking
institution, corresponding in maturity to the Weighted Average Life to Maturity
(as described below) of the Lessor Notes then subject to the related redemption
(or, if there is no maturity corresponding to such Weighted Average Life to
Maturity, an interpolation, on a straight-line basis, between the yield on (a)
the United States Treasury Note with a constant maturity closest to and greater
than the Weighted Average Life to Maturity of such Lessor Notes and (b) the
United State Treasury Note with a constant maturity closest to and less than
such Weighted Average Life to Maturity); such yield to be determined by the
independent investment banking institution by reference to the yield of the
relevant United States Treasury Notes as published in "Statistical Release H.15
(519), Selected Interest Rates" (or any successor publication) by the Board of
Governors of the Federal Reserve System at or prior to 12:00 noon, New York
time, on the third Business Day preceding the applicable redemption date.
The "Weighted Average Life to Maturity" means, with respect to any
indebtedness as at the time of determination thereof, the number of years
obtained by dividing the then Remaining Dollar Years of such indebtedness by the
then outstanding principal amount of such indebtedness. The term "Remaining
Dollar Years" of any indebtedness means the amount obtained by (i) multiplying
the amount of each then remaining sinking fund, serial maturity or other
required repayment of principal, including repayment at final maturity, by the
number of years (calculated to the nearest 1/12) which will elapse between the
date of determination and the date of that required repayment, and (ii)
totalling all the products obtained in the preceding clause (i).
INDENTURE EVENTS OF DEFAULT
"Events of default" under each Indenture ("Indenture Events of Default")
include: (a) any Lease Event of Default under the related Lease (other than the
failure of the Company to pay certain amounts to the Owner Trustees which are
not assigned as security for the Lessor Notes ("Excepted Payments") and subject
to the rights of the Owner Trustee to cure defaults in the payment of rent
described below and to purchase the Lessor Notes as described under
"-- Prepayment," (b) a failure by the Owner Trustee to pay any amount of
principal of, Make-Whole Premium, if applicable, or interest on any Lessor Note
within five Business Days after the same becomes due under such Lessor Note or
under the Indenture; (c) any representation or warranty made by any Owner
Participant in the Participation Agreement or by the Owner Trustee in the
Indenture or in the Participation Agreement proves to have been false or
incorrect in any material respect when made or given and remains a
misrepresentation or breach of warranty which is material and adverse to the
Holders or their interests in the related Indenture Estate at the time such
matter is brought to the attention of the related Indenture Trustee; provided,
however, that such misrepresentation or breach of warranty shall not be an
Indenture Event of Default unless all consequences thereof are not cured within
60 calendar days after written notice of the matter is given to the related
Owner Trustee and
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Owner Participants by the Indenture Trustee; (d) a failure by the Owner Trustee
to observe or perform certain covenants or obligations to be performed or
observed by it under the Participation Agreement or any failure by the Owner
Participants to observe or perform certain covenants or obligations of the Owner
Participants under the Participation Agreement which are to or for the benefit
of the Indenture Trustee or the Holder of any Lessor Note and are not remedied
within a period of 60 calendar days after notice thereof has been given to the
Owner Trustee and the Owner Participant by the Indenture Trustee; provided that
if such failure to comply cannot be cured by the payment of money within such 60
day period, such failure to comply will not be an Indenture Event of Default so
long as the Owner Trustee or the Owner Participant, as the case may be,
diligently pursues such cure (but such cure period may not exceed 360 days); or
(e) the occurrence of certain specified bankruptcy, insolvency, reorganization
or similar events with respect to the related Trust Estate or the Owner Trustee.
(Indenture, Section 4.01)
There are no cross-defaults to other debt instruments of the Company in the
Indentures, but, indirectly, the Leases are cross-defaulted insofar as each
would be treated as a Financing Lease and each Lease would be defaulted if the
Company is in default under a Financing Lease. Consequently, any event resulting
in an Indenture Event of Default under one Indenture will not, in and of itself,
result in the occurrence of an Indenture Event of Default under any other
Indenture.
RIGHTS OF OWNER TRUSTEES TO CURE, PREPAY AND ACCELERATE THE LESSOR NOTES
Each Indenture provides that an Indenture Event of Default thereunder is to
be deemed cured (i) if such Indenture Event of Default results from a
non-payment of interim or basic rent under the related Lease, if the Owner
Trustee, upon instruction from the Owner Participant, pays a sum equal to the
amount of all principal and interest then due and payable on the related Lessor
Notes within 15 Business Days after notice of such Indenture Event of Default
has been given by the Indenture Trustee to the related Owner Trustee and Owner
Participants or (ii) if such Indenture Event of Default relates to a default by
the Company in any obligation under such Lease other than the payment of interim
or basic rent, if the Owner Trustee, upon instructions of the Owner
Participants, performs such obligation on behalf of the Company at any time
prior to 15 Business Days after notice of such Indenture Event of Default has
been given by the Indenture Trustee to the related Owner Trustee and Owner
Participants. For purposes of determining whether an Indenture Event of Default
shall have occurred, timely payment or performance by the related Owner Trustee
of the amounts or obligations referred to in the two preceding sentences shall,
to the extent of such payment or performance, be deemed to remedy any Lease
Event of Default with respect thereto or any default by such Owner Trustee in
the payment of any amount due and payable under the related Lessor Notes or
Indenture. In such event, the Owner Participants are subrogated to the rights of
the Holders of the Lessor Notes under the related Indenture to receive the
relevant rent payments from the Indenture Trustee in accordance with the
Indenture and is entitled to receive payment of such upon receipt thereof by the
Indenture Trustee, provided that such Lessor Notes have not been accelerated
pursuant to Section 4.03 of the Indenture. Notwithstanding the foregoing, such
Owner Trustee shall not be permitted to cure more than three consecutive or six
cumulative defaults in the payment of interim rent or basic rent. The Indenture
Trustee shall not exercise any remedies under the Indenture or under the lease
during any period in which the Owner Trustee may cure a default by the Company
as provided in Section 4.02 of the Indenture. (Indenture, Section 4.02)
Each Owner Trustee also has the right to prepay the related Lessor Notes
during the continuance of an Indenture Event of Default which is the result of a
Lease Event of Default as described above under "-- Prepayment."
Each Owner Trustee may also declare the related Lease in default after a
Lease Event of Default and exercise its right to demand payment of the
stipulated loss value of its interest in the Facility. In such event, upon
receipt by the Indenture Trustee of such stipulated loss value, the principal
amount of the related Lessor Notes will be deemed to have been declared due and
payable.
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NOTICE OF EVENTS OF DEFAULT; ACTION BY TRUSTEE; WAIVER
In the event the Indenture Trustee has knowledge of a default, or event of
default under its Indenture, the Indenture Trustee is required to give prompt
written notice thereof to the related Owner Participants, Lessee, Holders and
Owner Trustee. The Indenture Trustee will only be deemed to have such knowledge
if an officer in its Corporate Trust Services Division has actual knowledge
thereof unless notified in writing by the Company, the Owner Trustee or one or
more related Holders, except that the failure of the Company to pay any
installment of interim rent or basic rent due under the Lease within one
Business Day will constitute such knowledge. Notwithstanding the foregoing, if
such Indenture Trustee exercises any remedies under the related Lease or elects
to foreclose or otherwise enforce its Indenture, it will be required to notify
the related Owner Participants, Owner Trustee, Lessee and Holders. Subject to
the terms of each Indenture dealing with the enforcement of remedies and the
rights of the Indenture Trustee to indemnification in the taking of any action,
and further subject to the right of the Owner Trustee to cure defaults as
described above, the related Indenture Trustee will be required to take, or
refrain from taking, such action as shall be instructed in writing by a Majority
in Interest of Holders of the Lessor Notes or, in the absence of such
instructions, may (but shall be under no duty to) take such action, or refrain
from taking such action, as it shall determine to be advisable and in the best
interests of the Holders. In the event that an Indenture Event of Default has
occurred and is continuing, such Indenture Trustee will be required to exercise
such of the rights and powers vested in it under its Indenture, and use the same
degree of care and skill in the exercise thereof, as a prudent man would
exercise or use under the circumstances in the conduct of his own affairs. Any
action that an Indenture Trustee may take, whether or not in respect of
instructions received from the related Holders, will be subject to the
provisions and limitations of the Transaction Documents and applicable law. Such
limitations will include, as well as the matters discussed above and the matters
discussed below under the caption "-- Remedies," provisions in each Indenture to
the effect that the Indenture Trustee thereunder will not be required to take
any action or refrain from taking any action thereunder unless it has been
indemnified against any liability, cost or expense (including counsel fees)
which may be incurred in connection therewith. No Indenture Trustee shall be
under any obligation to take any action under its Indenture, and nothing therein
shall require it to expend or risk its own funds or otherwise incur any
financial liability in the performance of any of its duties or in the exercise
of any of its rights or powers, if it has reasonable grounds for believing that
repayment of such funds or adequate indemnity against such risk or liability is
not reasonably assured. In addition, no Indenture Trustee will be required to
take any action under its Indenture if it has been advised by counsel that such
action is contrary to the terms thereof or of the related Transaction Documents,
or is otherwise contrary to law. (Indenture, Sections 5.01, 5.02 and 5.03)
If an Indenture Event of Default occurs and is continuing, any sums held or
received by the related Indenture Trustee may be applied to reimburse such
Indenture Trustee and the related Pass Through Trustee for any tax, expense or
other loss incurred by them and to pay any other amounts due to them prior to
any payments to the related Holders. (Indenture, Article III)
A Majority in Interest of Holders of the Lessor Notes issued under an
Indenture may on behalf of all Holders direct the related Indenture Trustee to
waive any past default under such Indenture and its consequences, except that
consent from each related Holder is required with respect to a waiver of such a
default in respect of the payment of the principal of, Make-Whole Premium, if
applicable, or interest or other amounts due on any Lessor Note then outstanding
under such Indenture or in respect of any covenant or provision of such
Indenture that, pursuant to the provisions thereof, could not be modified or
amended without the consent of each such Holder. (Indenture, Section 4.07)
Each Lessee is required under the provisions of the related Participation
Agreement to furnish an annual certificate stating whether, to the knowledge of
the officer delivering such certificate, there exists any Lease Event of
Default, Lease Default or Event of Loss, and if any such event exists,
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stating its nature and period of existence and what action such Lessee is taking
and proposes to take with respect thereto. (Participation Agreement, Section
10(b)(i)(D))
REMEDIES
Each Indenture provides that, after the expiration of the periods in which
an Owner Trustee may exercise its cure rights as described above under the
caption "-- Rights of Owner Trustees to Cure, Prepay and Accelerate the Lessor
Notes," and subject to the matters described below, if any Indenture Event of
Default has occurred and is continuing thereunder, upon the giving of any
requisite notice to the Owner Trustee and the Owner Participant the related
Indenture Trustee may at any time, and, upon instructions from the Majority in
Interest of the Holders of the related Lessor Notes, will, declare all such
Lessor Notes to be due and payable. Notwithstanding the foregoing, if, prior to
such declaration the related Owner Trustee delivers the requisite notice
exercising its right to redeem the relevant Lessor Notes as described in
"-- Prepayment" above, the Indenture Trustee's right to declare all such Lessor
Notes due and payable shall be suspended until the relevant redemption date. If
an Owner Trustee has declared the related Lease in default after a Lease Event
of Default and the Indenture Trustee has received payment of the related
stipulated loss value, the principal amount of the related Lessor Notes will be
deemed to have been declared due and payable. If at any time after the principal
of such Lessor Notes is declared due and payable, and before any judgment or
decree for the payment of the money so due, or any thereof, is entered, all
overdue payments of interest upon such Lessor Notes and all other amounts
payable under such Lessor Notes (except the principal of such Lessor Notes which
by such declaration shall have become payable) shall have been duly paid, and
every other Indenture Event of Default with respect to any covenant or provision
of the related Indenture shall have been cured, then and in every case such a
Majority in Interest of Holders of such Lessor Notes may rescind and annul the
Indenture Trustee's declaration and its consequences; but no such rescission or
annulment will extend to or affect any subsequent Indenture Event of Default or
impair any right consequent thereon or require any Holder to repay any amount
received as a result of such declaration. (Indenture, Section 4.03)
If the Lessor Notes have been accelerated and so long as such acceleration
is not rescinded, the related Indenture Trustee may exercise certain rights or
remedies available to it under applicable law and, if a Lease Event of Default
under the related Lease has occurred, one or more of the remedies afforded to
the related Owner Trustee under its Lease in respect of Events of Default
thereunder, provided that such Indenture Trustee is required to give the related
Owner Participants and Owner Trustee at least thirty calendar days notice of any
public or private auction of the related Undivided Interest and other properties
covered by such Indenture. Any sale or other transfer of such properties will be
at such prices, on such terms and in such manner as may be deemed appropriate by
the related Indenture Trustee. Any properties sold in the exercise of such
remedies will be free and clear of any rights or interests of the related Owner
Trustee. (Indenture, Section 4.03)
Notwithstanding the rights and powers of each Indenture Trustee described
above, so long as an Indenture Event of Default that is also a Lease Event of
Default has occurred and is continuing, the Indenture Trustee shall not proceed
to foreclose the Lien of its Indenture or exercise any other remedies
thereunder, unless it proceeds (to the extent it has not already done so) to
declare such Lease to be in default and commence the exercise of remedies
thereunder to terminate such Lease, dispossess the Company of its leasehold
estate with the undivided ownership interest or take contemporaneous comparable
action (whether or not its ability to exercise any such remedies is limited by
any bankruptcy or insolvency proceedings affecting the Company).
WITHHOLDING TAXES
Each Indenture provides that the Indenture Trustee is required, to the
extent required by law, to deduct withholding taxes (and deposit the same with
the relevant governmental authorities) from any payments in respect of a Lessor
Note. For all purposes of the related Transaction Documents,
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any amounts so withheld by such Indenture Trustee from a payment due to a Holder
shall be deemed to have been received by such Holder, and such Holder shall not
be entitled to any indemnification in respect of such withholding from any party
to such Transaction Documents. Purchasers should consult with their tax advisers
with respect to withholding tax matters. (Indenture, Sections 2.04 and 5.02)
MODIFICATION OF TRANSACTION DOCUMENTS;
CERTAIN WAIVERS
Subject to the next two paragraphs, the respective parties to the Basic
Documents may, at any time and from time to time, without the consent of either
the Indenture Trustee or any Holder of Lessor Notes under the relevant
Indenture, amend, waive or modify any of the provisions of such agreements;
provided that the provisions of each Lease with respect to Events of Default and
remedies may not be amended, waived or modified without the consent of a
Majority in Interest of the Holders of the Lessor Notes under the relevant
Indenture. (Indenture, Section 8.01(a))
Notwithstanding the foregoing, without the consent of the Holder of each
outstanding Lessor Note under the relevant Indenture, no modification or
amendment with respect to any Basic Document shall (1) modify or amend the
related Lease in such a way as to extend the time of payment of Basic Rent,
Stipulated Loss Value, Termination Value, the Early Buy-out Price, or any other
amount payable under, or provided in, such Lease which would be required to be
paid to such Holders, (2) reduce the amount of any installment of Basic Rent so
that the same is less than the payment of principal of and interest on the
Lessor Notes to be made from such installment or payment, (3) reduce the
aggregate amount of Stipulated Loss Value or Termination Value or amounts
payable in respect of the Early Buy-Out Price of any other amounts payable
under, or as provided in, such Lease upon the occurrence of an Event of Loss, on
the Termination Date or the Early Buy-Out Date or in respect of any other
termination of the Lease so that the same is less, together with any other
amounts payable under, or as provided in, such Lease, than the Redemption Price
payable under the applicable Indenture at the applicable Redemption Date, or (4)
release the Lessee from its obligations in respect of the payment of Basic Rent,
Stipulated Loss Value (and any other amounts payable upon the occurrence of an
Event of Loss), Termination Value, the Early Buy-Out Price or any amounts
payable under Section 8(h) of such Lease in consequence of the failure of the
Lessor to finance certain Modifications. (Indenture, Section 8.01(b))
With the consent of a Majority in Interest of Holders of the Lessor Notes
under the applicable Indenture and, so long as no Event of Default or Bankruptcy
Default shall have occurred and be continuing, the Company, the Owner Trustee
and the Indenture Trustee may enter into an Indenture Supplement to add to or to
change or eliminate any provisions of the relevant Indenture or to modify the
rights of such Holders; provided, however, that, without the consent of each
Holder under the relevant Indenture affected thereby, no amendment to the
relevant Indenture or any other Basic Document may (1) reduce the principal
amount of any Lessor Note or the amount of any payment of principal, premium or
interest due on any Lessor Note or extend the time of payment of any amount
owing or payable in respect of such Lessor Note, (2) change the dates on which
any principal, premium, if any, or interest is due on any Lessor Note, (3)create
any Lien on the Indenture Estate prior to or pari passu with the Lien on such
Indenture Estate under the relevant Indenture, except as contemplated by such
Indenture, or deprive any Holder of the benefit of the Lien on the Indenture
Estate created by such Indenture, or (4) reduce the percentage in principal
amount of the Lessor Notes, the consent of whose Holders is required for any
action or waiver under such Indenture. (Indenture, Section 8.01A)
With respect to each Indenture, without the consent of any of the Holders
of the Lessor Notes then outstanding, the Indenture Trustee and the Owner
Trustee (in certain circumstances with the consent of the Company) may enter
into any indenture supplements (i) to evidence the appointment of a successor
Owner Trustee or Indenture Trustee; (ii) to subject to the Lien of the Indenture
the related Owner Trustee's Share of Components or Modifications to the
Facility; (iii) to make such
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<PAGE> 39
modifications requested by such Owner Trustee as are appropriate in the event
that there are multiple Owner Participants; (iv) to cure any ambiguity, to
correct or supplement any provision in the related Indenture which may be
inconsistent with any other provision therein; (v) to provide for the issuance
of Supplemental Financing Notes as contemplated by the Indenture; or (vi) to add
to the rights of the Holders or the Indenture Trustee. (Indenture, Section 8.02)
LIMITATION OF LIABILITY OF OWNER TRUSTEES
The Lessor Notes which secure the Pass Through Certificates are not direct
obligations of, or guaranteed by, the Company. Neither any Owner Participant nor
The First National Bank of Chicago shall be liable to any holder of a Lessor
Note or for any amounts payable under the Lessor Notes or, except as provided in
the Indentures, for any obligation under the Indentures. All payments of
principal of, Make-Whole Premium, if applicable, and interest on, the Lessor
Notes will be made only from the assets subject to the Lien of the respective
Indentures or the income and proceeds received by the Indenture Trustee
therefrom (including basic rent and certain other amounts payable by the Company
under the Leases). (Indenture, Section 2.05)
SUPPLEMENTAL FINANCING NOTES
With respect to each Indenture, at the request of the Company and so long
as no Indenture Event of Default that constitutes a Lease Event of Default
exists, the Owner Trustee and the Indenture Trustee shall execute and deliver an
Indenture Supplement providing for the creation of supplemental financing notes
("Supplemental Financing Notes") in connection with the financing of any
alteration, modification, additions or improvements to the Facility. Such
Indenture Supplement shall set forth the maximum principal amount, text,
maturity date, rate of interest on, terms for repayment, prepayment or
redemption and any other particulars necessary to describe and define such
Supplemental Financing Notes. (Indenture, Section 2.15(a))
No Supplemental Financing Notes may be issued under an Indenture without
the consent of the holders of two-thirds of the aggregate unpaid principal
amount of the Lessor Notes issued under such Indenture if (i) the Weighted
Average Life to Maturity of such Supplemental Financing Notes as of the date of
issuance of such Supplemental Financing Notes would be shorter than that of the
related Lessor Notes then outstanding; (ii) such Supplemental Financing Notes
would be issued for an amount less than 100% of face amount thereof; (iii) such
Supplemental Financing Notes would benefit from the same collateral security,
guarantees, indemnity rights or other support or rights securing, supporting or
applicable to the Lessor Notes then outstanding; or (iv) the following
conditions set forth in the Lease have not been satisfied: (x) both such Lessor
Notes and the Supplemental Financing Notes will be rated BBB-or higher in the
case of Standard & Poor's or Baa3 or higher in the case of Moody's upon
completion of the Supplemental Financing, and the Company will not be on credit
watch for a possible downgrade, (y) the term of the Supplemental Financing Notes
will not extend beyond the Basic Lease Term and (z) the Supplemental Financing
Notes issued under both Indentures are in a principal amount in excess of
$10,000,000 and the principal amount of such Supplemental Financing Notes issued
under both Indentures, together with all prior issues of the Supplemental
Financing Notes issued under both Indentures, is less than $40,000,000. Such
Supplemental Financing Notes will be subject to the Lien of the applicable
Indenture and will be issued pari passu with the other Lessor Notes. No holder
of a Pass Through Certificate, as such, will have any right to, or interest in,
any Supplemental Financing Note. (Indenture, Section 2.15(b))
INDENTURE TRUSTEES
If the Lessor Notes have been accelerated and such acceleration has not
been rescinded, any sums held or received by the Indenture Trustee may be
applied to the payment of obligations incurred by the Indenture Trustee and the
Pass Through Trustee prior to any payments to holders of Lessor Notes.
(Indenture, Section 3.03) Subject to certain limitations, if there is an
Indenture Event
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<PAGE> 40
of Default when the Indenture Trustee receives a rent installment, then the
Indenture Trustee may retain such payments until the earlier of certain
conditions have been met. (Indenture 3.03(b))
Each Indenture provides that the Indenture Trustee shall not be answerable
or accountable under any circumstances, unless for its own wilful misconduct or
gross negligence, and except for liabilities on account of representations,
warranties or covenants made by it in its individual capacity. Each Indenture
further provides that, in the case of any event of default under any Indenture
and the acceleration of the Lessor Notes, the Indenture Trustee shall exercise
such of the rights and remedies vested in it by such Indenture and shall use the
same degree of care in their exercise as a prudent man would exercise or use in
the circumstances in the conduct of his own affairs, provided that if in the
opinion of the Indenture Trustee such action may tend to involve expense or
liability, it shall not be obligated to take such action unless it is furnished
with an indemnity satisfactory to it. (Indenture, Sections 3.07, 5.02 and 5.04)
SCHEDULED PAYMENTS
The following table sets forth the principal repayment schedule on the
Lessor Notes:
SCHEDULE OF PRINCIPAL PAYMENT DATES
AND PRINCIPAL PAYMENTS
<TABLE>
<CAPTION>
1994-A1 TRUST 1994-A2 TRUST
PRINCIPAL PAYMENT DATE (INTEREST PRINCIPAL AMOUNT PRINCIPAL AMOUNT
PAYMENT DATE OCCURRING ON) TO BE PAID TO BE PAID
- -------------------------------- ---------------- ----------------
<S> <C> <C>
July 5, 1996 $ 6,050,829 $ 0
July 5, 1997 6,589,958 0
July 5, 1998 7,177,123 0
July 5, 1999 5,371,616 0
July 5, 2000 8,291,829 0
July 5, 2001 9,034,017 0
January 5, 2002 8,374,320 0
July 5, 2002 2,753 0
January 5, 2003 7,089,257 0
January 5, 2004 10,050,586 0
January 5, 2005 12,677,278 0
January 5, 2006 19,953,116 0
January 5, 2007 22,629,516 0
January 5, 2008 24,739,819 0
January 5, 2009 27,403,983 0
January 5, 2010 0 836,376
January 5, 2011 0 32,334,636
January 5, 2012 0 31,351,992
July 5, 2012 0 22,228,996
</TABLE>
CERTAIN CONSIDERATIONS IN THE EVENT OF BANKRUPTCY
In the event a bankruptcy case is filed with respect to the Company,
Section 365 of the Bankruptcy Code gives to a trustee in bankruptcy or a
debtor-in-possession acting for the Company the right to reject the Lease and
disaffirm any further obligations thereunder. In the event of such a rejection,
the Owner Trustee and the Indenture Trustee would be entitled to possession of
the Facility and could assert an unsecured claim against the Company for damages
because of the early termination of the lease. Although the Company and the
Owner Trustee have agreed that the Facility shall be deemed to be severed from
the Site Interest, if the Lease were determined to be a lease of real property,
the amount of such claim would be limited under Section 502 of the Bankruptcy
Code to the sum of (i) any accrued and unpaid rent (without giving effect to any
early termination
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<PAGE> 41
penalties) as of the commencement date of the bankruptcy proceeding plus (ii)
rent payable under the Lease (without giving effect to any early termination
penalties) for a period equal to the greater of one year or 15% of the remaining
term of the Lease from the date of commencement of the bankruptcy proceedings
(assuming the Company was in possession of the Facility on that date).
In the event of a bankruptcy of an Owner Participant, it is possible that,
notwithstanding that such Owner Participant's interest in the Facility is owned
by the Owner Trustee in trust, the related Leases, the related Owner Trustee and
the Lessor Notes might become affected by the bankruptcy proceedings. In such
event, payments under the related Leases or on the Lessor Notes might be
interrupted and the ability of the Indenture Trustee to exercise its remedies
under the related Indenture might be restricted, although the Indenture Trustee
would retain its status as a secured creditor in respect of the related Lease
and the related undivided ownership interest in the Facility.
DESCRIPTION OF THE LEASES
The statements under this caption are summaries and do not purport to be
complete. The summaries are qualified in their entirety by reference to the
Leases, a copy of the form of which has been filed as an exhibit to the
Registration Statement.
TERM AND RENTALS
The Owner Trustees will acquire separate undivided ownership interests in
the Facility aggregating 100% and will lease such interests to the Company
pursuant to separate Leases, each having a lease term expiring on September 28,
2015, unless earlier terminated or extended as described below (the "Basic Lease
Term"). Basic rent is required to be paid by the Company under the Leases in
immediately available funds on each January 5 and July 5, commencing on and
after January 5, 1995 unless the scheduled due date is not a business day, in
which case such basic rent is required to be paid in immediately available
funds, together with interest thereon, on the next business day with the same
effect as though made on the due date. (Lease, Section 3(a) and 3(d)) The basic
rent payable under each Lease on each payment date and any stipulated loss value
or termination value (both of which are predetermined amounts required to be
paid to the related Owner Trustee upon termination of its investment in the
Facility, plus amounts necessary to prepay the Lessor Notes of each Owner
Trustee) payable on any date on which such payment is due, is required to be at
least equal to all principal of, Make-Whole Premium, if applicable, and interest
on the Lessor Notes of such Owner Trustee then due and payable on such date.
(Lease, Section 3(g)) Except in the case of a default or event of default under
the related Indenture, each payment of basic rent by the Company during such
time as such Indenture is in effect will be made and applied, first, to the
payment of principal and interest due from a Owner Trustee on its Lessor Notes
on each January 5 and July 5, unless the scheduled payment date is not a
business day, in which case such payment is required to be made on the next
business day with the same effect as though made on the date due. (Indenture,
Sections 2.06 and 3.01) The balance of any payments of basic rent under the
Leases, after payment of the scheduled principal and interest on the Lessor
Notes, will be paid over to the respective Owner Participants, as beneficial
owners of the undivided ownership interests in the Facility. (Indenture, Section
3.01)
NET LEASE
The obligations of the Company under each Lease will be those of a Lessee
under a "net lease." Accordingly, the Company will agree that it will, at its
own cost and expense, (i) operate, service, repair and maintain the Facility and
Site Interest (including replacement of components and the making of required
modifications) so that the condition and operating efficiency thereof will be
maintained and preserved, ordinary wear and tear excepted, in accordance with
(x) prudent mining industry practice for property or systems of a similar size
and nature in the western region of the United States of America, (y) such
operating standards as shall be required to enforce warranty
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<PAGE> 42
claims against any contractor, vendor, manufacturer, or subcontractor, and (z)
the terms and conditions of all insurance policies in effect at any time with
respect to the Facility, the Site Interest, any component incorporated therein
or the undivided ownership interest, and (ii) comply with any applicable laws,
whether pertaining to health, safety, the environment or otherwise, affecting
the Facility, the Site Interest, any component incorporated therein or the
undivided ownership interest, and the use, operation and maintenance thereof
unless the validity or applicability of any such law is being contested as
permitted under such Lease. (Lease, Sections 8(a), 8(c), 8(d) and 8(k))
The Company's obligation to pay all rents under the Leases is absolute and
unconditional and is not to be affected by any set-off, abatement, counterclaim,
suspension, recoupment, reduction, defense, or any other right which the Company
may have against the Owner Trustees, the Owner Participants, the Indenture
Trustees, or any other Person. (Lease, Section 4)
LIENS
Other than certain permitted liens, the Company may not create, incur,
assume or suffer to exist any Liens on or with respect to the Facility, any
component incorporated therein or the undivided ownership interest, or the Owner
Trustee's title thereto or any interest of the Owner Trustee therein. The
Company will, promptly, at its own expense, take such action as may be necessary
to discharge any such Lien created. (Lease, Section 7)
MODIFICATIONS
The Company has the right to make optional alterations, modifications,
additions or improvements to the Facility, provided, among other things, that no
such alterations, modifications, additions or improvements impair the value,
utility or useful life of the Facility. (Lease, Section 8(d)) At its expense,
the Company must make any alterations, modifications, additions or improvements
to the Facility as may reasonably be required from time to time to maintain the
Facility in accordance with prudent mining industry practice for property or
facilities of a similar size and nature in the Western region of the United
States of America or to meet the requirements of any applicable laws. (Lease,
Section 8(d)) Title to alterations, modifications, additions and improvements
vests in the Owner Trustees to the extent of their undivided interests in the
Facility unless such alteration, modification, addition or improvement (i) was
not required to be made by the Leases, (ii) may be removed without reducing the
value, utility or condition which the Facility would have had if the same had
not been made, and (iii) was not financed by the Owner Trustees as provided in
the Leases. (Lease, Section 8(f))
With respect to each Lease the Company may request that the Owner Trustee
provide financing to the extent of its undivided interests in any alteration,
modification, addition or improvement incorporated in the Facility
("Supplemental Financing"). Provided no Bankruptcy Default, Payment Default or
Lease Event of Default exists, and the Company elects to effect, and arranges,
such a transaction, the Owner Trustee may issue one or more Supplemental
Financing Notes under the related Indenture, which notes shall be pari passu
with the other Lessor Notes issued on the Closing Date. The Supplemental
Financing Notes will only be issued upon satisfaction of certain conditions
contained in the Lease.
The Company has the right to terminate either Lease and purchase the
Facility for (i) the applicable termination value if the Company shall propose
financing of required modifications having an aggregate capital cost greater
than $20,000,000, or (ii) the higher of fair market value or termination value
if the Company shall propose optional, non-severable modifications having an
aggregate cost greater than $20,000,000. In either case, the Company has such
right to terminate such Lease only if the related Owner Trustee declines to
effect a Supplemental Financing or the Company and such Owner Trustee are unable
to reach agreement on financing with respect to such modifications. (Lease,
Section 8(h)) The Company may only exercise its right to purchase the
42
<PAGE> 43
Facility as described above, if it concurrently exercises its parallel right
under the other Lease. (Lease, Section 21(f))
POSSESSION, SUBLEASE AND TRANSFER
The Company is not permitted to assign its leasehold interest under either
Lease to any person without the prior written consent of the related Owner
Trustee, provided, however, that the Company may assign its leasehold interest
to any of its affiliates, but unless the related Owner Participants and
Indenture Trustee have consented to such assignment, the Company shall remain
primarily liable for the performance of its obligations under such Lease. So
long as the senior unsecured debt of the Company shall be rated BBB-or higher in
the case of Standard & Poor's or Baa3 or higher in the case of Moody's, the
Company may, without the consent of the Owner Trustees, sublease the undivided
interests or Facility to any person. Notwithstanding any such sublease, the
Company shall remain primarily liable for the performance of its obligations
under the Leases. (Lease, Section 12) The Company may only assign or sublease
its interest in the Facility as described above, if it concurrently takes the
same action under the other Lease. (Lease, Section 21(f))
INSURANCE
The Company is required under the Leases, at its own cost and expense, to
cause to be carried and maintained property insurance, with financially sound
and reputable insurers satisfactory to the Owner Trustees, against damage or
destruction of the Facility and covering full replacement cost, and general
liability insurance with respect to third party bodily injury and property
damage, in each case in amounts (after deductibles or self-insurance amounts)
and against risks (i) consistent with prudent mining industry practice for
property or facilities of a similar size and nature in the western region of the
United States of America, (ii) at least comparable in amounts and against risks
customarily insured against by the Company for its other properties in the
western region of the United States of America and (iii) sufficient to prevent
each Owner Trustee or Indenture Trustee from becoming at any time a co-insurer
with respect to any loss relating to events or occurrences covered under any
policy.
Provided no Bankruptcy Default, Payment Default or Lease Event of Default
exists, all insurance proceeds (except under insurance separately maintained by
the Owner Participants) up to $10,000,000 on account of any physical loss or
damage to the Facility, the Owner Trustees' interest in the Easements or the
Site Interest or any part thereof (less the actual costs, fees and expenses
incurred in the collection thereof) will be paid to the Company, and all
insurance proceeds (except under insurance separately maintained by the Owner
Participants) equal to or greater than $10,000,000 in the aggregate on account
of physical loss or damage will be paid to the Indenture Trustee and all such
proceeds shall be applied and dealt with as follows: (i) except as provided in
clause (ii) below, all such proceeds shall be paid over, upon the satisfaction
of certain requirements, to the Company as restoration progresses, to pay (or
reimburse the Company for) the cost of restoration and (ii) all such proceeds in
respect of an Event of Loss for which no election by the Company to restore or
replace the damaged or lost portion of the Facility has been (or can be) made as
described under "-- Event of Loss" below shall be applied to pay the stipulated
loss value of the Facility and any excess loss proceeds shall be paid to the
Company or the Owner Trustees as their respective interests may appear. (Lease,
Sections 10(a) and 10(b))
SPECIAL PURCHASE OPTION
The Company has the option under each of the Leases to purchase each Owner
Trustee's undivided ownership interest in the Facility in certain circumstances,
including on January 5, 2012, exercisable by giving not less than 180 days'
written notice, for a purchase price in immediately available funds in an amount
equal to the Early Buy-Out Price (being a predetermined percentage of the
Facility Cost), plus any other rent then due.
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<PAGE> 44
The Company may only exercise this right to purchase the Facility if it
concurrently exercises its parallel right under the other Lease. (Lease, Section
21(f))
Each Indenture requires, as a condition to the release of the Lien of such
Indenture upon the exercise of this right, among other things, that the
Indenture Trustee has received full payment of all principal of, and interest
on, the Lessor Notes. (Indenture, Section 9.01)
EARLY TERMINATION RIGHTS
After July 5, 2003, the Company may terminate each Lease if (i) it, in its
sole discretion, determines that the Facility is obsolete or surplus or
uneconomic for the Company's needs, (ii) the Facility is in the requisite
condition and repair, and (iii) no Lease Event of Default, Payment Default or
Bankruptcy Default exists. Such termination shall occur on a rent payment date
and is exercisable not less than 6 months after the Company has given written
notice of its termination. Upon such termination, the Company (unless the
relevant Owner Trustee elects to retain the undivided ownership interest in the
Facility as described below) shall pay the Owner Trustee the termination value
of its interest in the Facility plus all unpaid rent then due and payable. If no
sale of the undivided ownership interests shall have been completed on the
termination date, the Lease will continue in full force and effect. (Lease,
Section 15(a)) The Company may only exercise its early termination rights as
described above, if it concurrently exercises its parallel rights under the
other Lease. (Lease, Section 21(f))
If by 45 days' notice prior to the termination date, the Owner Trustee
elects to retain, rather than sell the undivided ownership interests, which it
may do only with the consent of the related Owner Participants, then the Owner
Trustee will pay to the Indenture Trustee an amount equal to the principal
amount of the outstanding Lessor Notes to be redeemed in connection with such
termination plus all interest accrued, and if prepayment is made prior to
January 5, 2012, a Make-Whole Premium, if any, as provided for in the Indenture.
If the Owner Trustee elects to retain the undivided ownership interest, the
Company shall not be required to pay any termination value. (Lease, Section
15(b); Indenture, Section 3.02)
EVENTS OF LOSS
If any Event of Loss occurs with respect to the Facility, the Easements or
the Site Interest, the Company shall purchase either Owner Trustees' undivided
ownership interests in the Facility by paying or causing to be paid to each
Owner Trustee on the first following rent payment date occurring at least 20
days after such Event of Loss the stipulated loss value of such Owner Trustee's
undivided ownership interest in the Facility (being a predetermined amount
required to be paid to the related Owner Participant upon termination of its
investment in the Facility, plus amounts necessary to prepay the Lessor Notes of
each Owner Trustee); provided that where such Event of Loss results from loss,
damage or destruction of the Facility or Site Interest, the Company may, under
certain circumstances, not later than 60 days prior to such scheduled payment
date, irrevocably elect to and shall thereafter rebuild and restore the Facility
and Site Interest to the condition in which it was required to be maintained at
the time of such Event of Loss, in which case each Lease shall continue to be in
full force and effect. If the Company pays the stipulated loss value then
required to be paid (which in all circumstances will be in excess of the
principal of, and interest on, the Lessor Notes then outstanding), the Lien of
each Indenture and each Lease will terminate with respect to the Facility, title
thereto shall be transferred to the Company, the obligation of the Company
thereafter to make rental payments with respect to the Facility will cease, and
the aggregate of the stipulated loss value payments made by the Company shall be
applied as provided in the Indenture to the payment of all amounts then due and
payable to the Indenture Trustee and the Pass Through Trustee under the
Transaction Documents and the prepayment of the Lessor Notes. (Lease, Section
9(b); Indenture, Sections 3.02 and 9.01) The Company may only purchase an Owner
Trustee's undivided ownership interest in the Facility as described above, if it
concurrently takes the same action under the other Lease. (Lease, Section 21(f))
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<PAGE> 45
An Event of Loss under each Lease means any of the following events:
(a) the Facility (including the undivided ownership interests) or the
Site Interest is, or the rights in the Easements are, (i) destroyed,
damaged beyond repair or, in the good faith and reasonable opinion of the
Company (confirmed by an independent engineer reasonably satisfactory to
the Owner Participant) rendered permanently unfit for normal use for any
reason whatsoever, (ii) condemned, confiscated or seized in whole or any
significant part, for a period which extends beyond the expiration of the
Basic Lease Term, or (iii) not operated by the Company for its intended use
for a period exceeding two years; or
(b) title to the Facility or the Site Interest or any material portion
thereof is, or the rights in the Easements are, requisitioned.
LEASE EVENTS OF DEFAULT
Lease Events of Default under each Lease include, among other things: (i)
failure by the Company to pay basic rent, stipulated loss value, termination
value or certain indemnities to the related Owner Participants within 5 days
after the same becomes due; (ii) failure by the Company to pay any other rent
within 20 business days after receipt by the Company of written notice from the
Owner Trustee; (iii) failure by the Company to perform or observe in any
material respect any other covenant, condition or agreement in such Lease or in
any related document for 30 days after written notice by the Owner Trustee or
the Indenture Trustee requiring that the same be cured, unless (a) such failure
is curable but cannot be cured within 30 days, and (b) the Company is diligently
pursuing the cure of such failure (provided that, unless the Company exercises
its purchase option in accordance with the following paragraph, such failure
must be cured within 365 days, except that certain failures which would
materially reduce the value of the Facility or expose the related Owner
Participants or the Owner Trustee to recourse liability, must be cured within 90
days); (iv) certain material misrepresentations by the Company which remain
uncured for 30 days following receipt of written notice from Owner Trustee
(unless the Company is trying to cure and actually cures within 180 days from
notice); (v) certain bankruptcy and insolvency events shall occur with respect
to the Company; (vi) declaration of an event of default under any lease of
equipment or real property which had a cost to the lessor exceeding $80,000,000
and having a term of not less than 15 years to which the Company is a party, as
lessee; (vii) termination of the Ground Lease and Easement; or (viii) failure by
the Company to maintain certain requisite insurance within five Business Days
after notice from the related Owner Trustee. (Lease, Section 16)
Under each Lease, an event which, after the giving of notice or lapse of
time, or both, would become a Lease Event of Default is a lease default (a
"Lease Default"). With respect to each Lease, if (i) the Company is diligently
pursuing the cure of a Lease Default which has remained unremedied for a period
of at least (x) 270 days, in the case of Lease Defaults described in clause
(iii) of the preceding paragraph (70 days, if the applicable cure period is 90
days), or (y) 100 days in the case of a Lease Default described in clause (iv)
of the preceding paragraph, (ii) the Company does not reasonably believe that
such Lease Default can be cured within the applicable cure period, and (iii) the
Company has demonstrated to the reasonable satisfaction of the Owner Participant
its inability to cure such Lease Default within such applicable cure period, the
Company shall have the right to purchase the undivided interest ownership at the
end of the applicable cure period following the occurrence of such Lease
Default. On the first Business Day following such applicable cure period, the
Company shall pay to the Owner Trustee the higher of the then fair market value
of the Facility or the stipulated loss value.
If a Lease Event of Default shall have occurred and be continuing, and the
Owner Trustee has declared the Lease to be in default, the Owner Trustee may
exercise one or more of the remedies provided in the Lease with respect to its
undivided ownership interest in the Facility. These remedies include the right
to repossess and use such interest, to sell such interest free and clear of the
rights of the Company and to retain the proceeds of such sale and to require the
Company to pay as
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<PAGE> 46
liquidated damages any unpaid basic rent due under such Lease through the
payment date, specified in a written notice to the Company given at least ten
days before such date plus whichever of the following amounts the Owner Trustee
shall select, with interest on such amounts:
(i) an amount equal to the excess, if any, of (A) the stipulated loss
value as of such payment date, over (B) the aggregate fair market rental
value of the Owner Trustee's undivided ownership interest in the Facility
until the end of the basic term or the then current renewal term of the
Lease, after discounting such rental value to present worth at the discount
rate specified in the Lease;
(ii) an amount equal to the excess, if any, of the stipulated loss
value as of such payment date, over the fair market value of the Owner
Trustee's undivided ownership interest in the Facility;
(iii) an amount equal to the highest of (A) such stipulated loss
value, (B) such discounted fair market rental value and (C) such fair
market value, and, upon full payment by the Company of all sums due under
the Lease, the Owner Trustee shall, at its option, either (x) exercise its
reasonable best efforts promptly to sell its undivided ownership interest
in the Facility and its interest under the Facility Agreements and other
Transaction Documents and pay over to the Company the net proceeds of such
sale (after deducting all reasonable costs and expenses) up to the amount
set forth in clause (A), (B) or (C) above actually paid by the Company or
(y) transfer its undivided ownership interest in the Facility to the
Company and terminate its interest in the Facility Agreements and other
Transaction Documents, whereupon the Lease shall terminate; or
(iv) an amount equal to the excess of (A) the aggregate present worth
of all installments of basic rent as of such payment date to the end of the
basic term, discounted at the rate specified in the Lease over (B) the
present worth of the aggregate fair market rental value of the Owner
Trustee's undivided ownership interest in the Facility for the remainder of
such basic term, discounted at the rate specified in the Lease. (Lease,
Section 17)
MERGER; CONSOLIDATION; MAINTENANCE OF CORPORATE EXISTENCE
Pursuant to the Participation Agreements, the Company has agreed that it
will at all times maintain its existence as a corporation. The Company may
consolidate with or merge into, or sell all or substantially all of its assets
to, any person, so long as, (i) after giving effect thereto, no Lease Event of
Default shall have occurred and be continuing, (ii) no Payment Default or
Bankruptcy Default shall have occurred and be continuing, (iii) in the case of
any transaction among affiliates of the Company, after giving effect to such
transaction, the successor corporation shall (a) own all of the gold reserves
and resources, and the related mining equipment, theretofore owned by the
Company, and (b) have no material increase in liabilities in relation to the
liabilities of the Company immediately prior thereto, (iv) in the case of any
transaction other than one among affiliates of the Company, after giving effect
thereto, the successor corporation shall have a tangible net worth equal to or
in excess of the tangible net worth of the Company immediately prior thereto,
and (v) in the case of a sale of assets, the purchaser shall have assumed the
payment and performance obligations of the Company under the Lease and the other
transaction documents. Any such transaction herein described shall be
consummated in accordance with documents, and on the basis of legal opinions,
which are, in both cases, in form and scope satisfactory to the Owner
Participant, the Owner Trustee and the Indenture Trustee. (Participation
Agreement, Sections 10(b)(iii) and 10(b)(iv))
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<PAGE> 47
DESCRIPTION OF OTHER FACILITY DOCUMENTS
The statements under this caption are summaries and do not purport to be
complete. The summaries are qualified in their entirety by reference to the
Ground Lease and Easement and the Assignment of Contracts, copies of the form of
which have been filed as exhibits to the Registration Statement.
GROUND LEASE AND EASEMENT
Pursuant to the Ground Lease and Easement, the Company will lease to the
Owner Trustees, as tenants in common, the land on which the Facility is located
(the "Site Interest") and accept a grant from the Company of an easement
relating to the adjacent Company premises for a fixed term of 32 years. Pursuant
to the Ground Lease and Easement, the Company will retain certain rights with
respect to the adjacent premises and the convey or plot. The Site Interest will
be subleased back to the Company under the Leases.
ASSIGNMENT OF CONTRACTS
Pursuant to two separate and identical Assignments of Contracts between the
Company and each Owner Trustee, the Company assigns to such Owner Trustee, to
the extent of its undivided ownership interest, as security for the payment of
rent under each Lease and any other obligations owed by the Company under the
transaction documents, all of the Company's right, title and interest with
respect to certain specified construction contracts and an oxygen supply
agreement. So long as there is no Event of Default or Bankruptcy Default, the
Company will retain all of its rights under such contracts. Each Assignment of
Contracts expressly recognizes that it will be assigned to the Indenture
Trustee, as collateral for the payment of the Owner Trustee's obligations under
each Lessor Note.
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
The following is a general discussion of the anticipated material federal
income tax consequences of the purchase, ownership and disposition of Pass
Through Certificates. This summary is based on the Internal Revenue Code of
1986, as amended (the "Code"), Treasury regulations promulgated thereunder,
rulings and decisions, all as in effect on the date of this Registration
Statement, and all of which are subject to change by legislative, administrative
or judicial action, possibly with retroactive effect. The statements of law and
legal conclusions contained herein are based on the opinion of White & Case,
counsel to the Company. The discussion below does not purport to address federal
income tax consequences applicable to particular categories of investors, some
of which (for example, banks, tax exempt organizations, insurance companies or
foreign investors) may be subject to special rules. Investors should consult
their own tax advisors in determining the federal, state, local and foreign tax
consequences to them of the purchase, ownership and disposition of Pass Through
Certificates, including the advisability of making any election discussed below.
The Pass Through Trust is not indemnified for any federal, state or local income
taxes that may be imposed upon it, the imposition of which could reduce the
amounts available for distribution to the Certificate Owners of the Pass Through
Trust.
GENERAL
Based upon an interpretation of analogous authorities under currently
applicable law, the Pass Through Trust, if operated in accordance with the Pass
Through Agreement, should not be classified as an association taxable as a
corporation, but rather should be classified as a grantor trust for purposes of
Sections 671 through 679 of the Code, and each Certificate Owner of the Pass
Through Trust should be treated as owning a pro rata undivided interest in each
Lessor Note and any other property held in the Pass Through Trust.
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<PAGE> 48
Accordingly, each Certificate Owner should report on its federal income tax
return its pro rata share of the entire income from the Lessor Notes and any
other property in the Pass Through Trust, in accordance with such Certificate
Owner's method of accounting. Subject to the rules on Original Issue Discount, a
Certificate Owner using the cash method of accounting should take into account
its pro rata share of income as and when received by the Pass Through Trustee. A
Certificate Owner using an accrual method of accounting should take into account
its pro rata share of income as such income is accrued or is received by the
Pass Through Trustee, whichever is earlier.
A purchaser of a Pass Through Certificate should be treated as purchasing
an interest in each Lessor Note and any other property in the Pass Through Trust
at a price determined by allocating the purchase price paid for the Pass Through
Certificate among the related Lessor Notes and other property in proportion to
their fair market values at the time of purchase of the Pass Through
Certificate. When the Pass Through Trust has acquired all the related Lessor
Notes, the purchase price paid for a Pass Through Certificate by an original
purchaser of such certificate should be allocated among the Lessor Notes in such
Pass Through Trust in proportion to their respective principal amounts.
If the Pass Through Trust were treated as an association taxable as a
corporation and if the income of the Pass Through Trust were not offset each
year by its deductions, then the Pass Through Trust would be required to pay
federal and state income taxes which would reduce amounts available to pay
amounts due to Certificate Owners. As noted above, White & Case, counsel to the
Company, is rendering its opinion that the Pass Through Trust should not be
classified as an association taxable as a corporation, but rather should be
classified as a grantor trust for federal income tax purposes. Therefore, the
following discussion of federal income tax consequences is based upon the
assumption that the Pass Through Trust is treated as a grantor trust, and not as
an association taxable as a corporation.
SALES OF PASS THROUGH CERTIFICATES
A Certificate Owner that sells or exchanges a Pass Through Certificate
should be considered as having sold its pro rata portion of the Lessor Notes
held by the Pass Through Trust and should recognize gain or loss (in the
aggregate) equal to the difference between its adjusted tax basis in its pro
rata portion of the Lessor Notes held by the Pass Through Trust and the amount
realized (except to the extent attributable to accrued interest, which should be
taxable as interest income to the extent not previously included in income).
Subject to the market discount provisions of the Code (described below), if the
Certificate Owner's pro rata portion of the Lessor Notes held by the Pass
Through Trust is considered to be a capital asset, any such gain or loss will be
capital gain or loss, which will be long-term capital gain or loss if the Pass
Through Certificate was held for more than one year (but only to the extent the
Pass Through Trust also held the underlying Lessor Notes for more than one
year). Any long-term capital gains will be taxable under current law at the
applicable marginal rate for capital gains. Any capital losses realized
generally 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.
PREPAYMENT OF LESSOR NOTES
If a Lessor Note held by the Pass Through Trust is prepaid, each
Certificate Owner will be considered to have sold its pro rata portion of that
Lessor Note, and will recognize gain or loss equal to the difference between its
aggregate adjusted basis in the Lessor Note and the amount realized on the sale
(except to the extent attributable to accrued interest, which would be taxable
as interest income to the extent not previously included in income).
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<PAGE> 49
MARKET DISCOUNT
Generally, the term "market discount" means the excess of the remaining
principal amount of a Certificate Owner's pro rata portion of a Lessor Note over
the Certificate Owner's tax basis allocable to such Lessor Note immediately
after its acquisition, subject to a de minimis exception.
A Certificate Owner who acquires its pro rata portion of a Lessor Note at a
market discount will be required to treat any gain realized on the disposition
of such Lessor Note, except in certain nonrecognition transactions, as ordinary
income to the extent of the market discount that accrued during the period that
such holder held its pro rata portion of such Lessor Note. Further, a
disposition of a Pass Through Certificate by gift (and in certain other
circumstances) could result in the recognition of market discount income,
computed as if the Certificate Owner's pro rata portion of the Lessor Note had
been sold for its fair market value.
In the case of a principal payment on indebtedness subject to the market
discount rules, Section 1276 of the Code requires that such payment be included
in gross income as ordinary income to the extent of 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.
The explanatory Conference Committee Report to the Tax Reform Act of 1986
(the "Conference Report") indicates that, until Treasury regulations are
promulgated requiring a different treatment, holders of installment obligations
(such as the Lessor Notes) with market 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 installment
obligation as of the beginning of such period.
Under Section 1277 of the Code, if in any taxable year interest paid or
accrued on indebtedness incurred or continued to purchase or carry indebtedness
subject to the market discount rules exceeds the interest currently includible
in income with respect to such indebtedness, deduction of the excess interest
must be deferred to the extent of the market discount allocable to the taxable
year. The deferred portion of any interest expense will generally be deductible
when such market discount is included in income upon the sale or other
disposition (including repayment) of the indebtedness.
A Certificate Owner who acquires its pro rata portion of a Lessor Note at a
market discount may elect under Section 1278 of the Code, in the manner provided
by Revenue Procedure 92-67, 1992-2 C.B. 429, to include such discount in income
as it accrues. The current inclusion election applies to all market discount
obligations acquired on or after the first day to which the election applies,
and may not be revoked without the consent of the Internal Revenue Service (the
"IRS"). If a Certificate Owner elects to include market discount in income as it
accrues, the rules of Sections 1276 and 1277 of the Code with respect to the
recognition of ordinary income on a sale or other disposition of such
Certificate and the deferral of interest deductions on indebtedness related to
such Lessor Note would not apply.
The IRS is authorized to issue regulations to implement the market discount
provisions of the Code. No such regulations have been issued or proposed. It is
impossible to anticipate what effect, if any, such regulations could have on the
Certificate Owner.
AMORTIZABLE BOND PREMIUM
A Certificate Owner should generally be considered to have acquired an
interest in Lessor Notes at a premium to the extent the purchaser's tax basis
allocable to such interest exceeds the remaining principal amount of the Lessor
Notes allocable to such interest. In that event, a Certificate
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<PAGE> 50
Owner who holds its pro rata portion of a Lessor Note as a capital asset may
elect to amortize that premium as an offset to interest income under Section 171
of the Code with corresponding reductions in the Certificate Owner's tax basis
in its pro rata portion of a Lessor Note. In the case of installment obligations
(such as the Lessor Notes), the Conference Report indicates a Congressional
intent that amortization will be in accordance with the same rules that will
apply to the accrual of market discount on installment obligations (see
discussion above).
Under certain circumstances, amortizable bond premium may be determined by
reference to an early call date. It is unclear how the amortizable bond premium
rules apply where, as in the case with the Lessor Notes, the amount of
redemption premium payable on an early call date is unknown. In addition, the
treatment of any unamortized bond premium remaining at the time of an early call
is unclear. The Certificate Owners are urged to consult their own tax advisors
as to the treatment of any amortizable bond premiums.
TREATMENT OF CERTAIN FOREIGN CERTIFICATE OWNERS
Interest paid or accrued with respect to a Pass Through Certificate held by
a Certificate Owner that is a nonresident alien individual, foreign corporation,
or other non-United States person (a "Foreign Person") will generally be treated
as "portfolio interest" and, therefore, will not be subject to any United States
income tax, provided that (i) such interest is not effectively connected with a
trade or business in the United States of the Certificate Owner, (ii) such
Foreign Person does not directly or indirectly own 10% or more of the total
combined voting power of all classes of stock of Newmont entitled to vote, (iii)
such Foreign Person is not a controlled foreign corporation that is related to
Newmont by stock ownership, (iv) such Foreign Person is not a bank which
acquired Pass Through Certificates in consideration of an extension of credit
made pursuant to a loan agreement entered into in the ordinary course of
business, and (v) the Pass Through Trustee (or other person that otherwise would
be required to withhold tax) is provided with appropriate certification that the
beneficial owner of the Certificate is a Foreign Person ("Foreign Person
Certification"). If Foreign Person Certification is not provided, interest paid
with respect to a certificate could be subject to a 30% withholding tax or 31
percent backup withholding (described below).
BACKUP WITHHOLDING
Payments made on the Pass Through Certificates and proceeds from the sale
of the Pass Through Certificates to or through certain brokers may be subject to
a "backup" withholding tax of 31% unless the Certificate Owner complies with
certain reporting procedures or is an exempt recipient under Section 6049(b)(4)
of the Code. Any such withheld amounts will be allowed as a credit against the
Certificate Owner's federal income tax.
CERTAIN ILLINOIS TAXES
The Pass Through Trustee is a national banking association with its
corporate trust office in Chicago, Illinois. Winston & Strawn, special Illinois
tax counsel to the Trustee, is of the opinion, under existing law and assuming
that, for federal income tax purposes, the Pass Through Trusts will not be
classified as associations taxable as corporations or as partnerships for
federal income tax purposes but will instead be properly classified as grantor
trusts under Subpart E, Part I of Subchapter J of the Code (See "Certain Federal
Income Tax Considerations" above), that (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),
governmental fee or other governmental charge (assuming that any and all
expenses, including filing and other fees, in connection with the qualification
of the Pass Through Certificates for offer and sale under the securities or Blue
Sky laws of the State of Illinois will be the responsibility of and paid for by
the Company) under the laws of the State of Illinois, the County of Cook or the
City of
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<PAGE> 51
Chicago, and (ii) the Certificate Owners who are not residents of the State of
Illinois and who are not otherwise subject to tax in the State of Illinois will
not be subject to any tax (including, without limitation, net or gross income,
tangible or intangible property, net worth, capital, franchise or doing business
tax), governmental fees or other governmental charges under the laws of the
State of Illinois, the County of Cook or the city of Chicago as a result of
purchasing, holding (including receiving payments with respect to) or selling a
Pass Through 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 the Pass Through Trusts could result in a reduction in the
amounts available for distribution to the Certificate Owners. In general, should
a Certificate Owner or the Pass Through Trusts be subject to any state or local
tax which would not be imposed if the Pass Through Trustee were located in a
different jurisdiction in the United States, the Pass Through Trustee will
resign and a new Pass Through Trustee in such other jurisdiction will be
appointed.
CERTAIN ERISA CONSIDERATIONS
No "employee benefit plan" subject to Part 4 of Subtitle B of Title I of
the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), or
"plan," subject to Section 4975 of the Internal Revenue Code of 1986, as amended
(the "Code"), or any trust created under any such employee benefit plan or plan,
or any "governmental plan," as defined in Section 3(32) of ERISA or Section
414(d) of the Code, organized in a jurisdiction having prohibitions on
transactions with such governmental plan similar to those contained in Section
406 of ERISA or Section 4975 of the Code (hereinafter such employee benefit
plan, plan and governmental plan are collectively referred to as an "ERISA
Plan"), or a person treated as holding the assets of an ERISA Plan, may acquire
or hold any Pass Through Certificates. No part of the funds used by any Person
to acquire or hold any Pass Through Certificates may constitute assets (within
the meaning of ERISA and any applicable rules and regulations) of an ERISA Plan.
Furthermore, the acquisition or holding by any Person of any Pass Through
Certificates will be deemed to constitute a representation by such Person to the
Company, the Owner Participants, the Owner Trustee, the Indenture Trustee and
the Pass Through Trustee that such Person is not an ERISA Plan and that such
Person is not acquiring or holding, and has not acquired or held, such Pass
Through Certificates with the assets of an ERISA Plan.
UNDERWRITING
Under the terms of and subject to the conditions contained in an
Underwriting Agreement dated the date hereof (the "Underwriting Agreement")
among the Company, Salomon Brothers Inc, CS First Boston Corporation, Chemical
Securities Inc. and Lazard Freres & Co. (the "Underwriters"), the Company has
agreed to cause each Pass Through Trustee to sell to each of the Underwriters,
and each of such Underwriters has severally agreed to purchase the respective
aggregate amounts of Pass Through Certificates set forth after their names
below.
The Underwriting Agreement provides that the obligation of the Underwriters
to pay for and accept delivery of the Pass Through Certificates is subject to,
among other things, the approval of
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certain legal matters by its counsel and certain other conditions. The
Underwriters are obligated to take and pay for all of the Pass Through
Certificates to be purchased if any are taken.
<TABLE>
<CAPTION>
TOTAL AGGREGATE AMOUNT OF
UNDERWRITER PASS THROUGH CERTIFICATES
----------- -------------------------
<S> <C>
Salomon Brothers Inc.................................... $144,203,400
CS First Boston Corporation............................. 39,328,200
Chemical Securities Inc................................. 39,328,200
Lazard Freres & Co...................................... 39,328,200
------------
Total.............................................. $262,188,000
============
</TABLE>
In the event of a default by any Underwriter, the Underwriting Agreement
provides that, in certain circumstances, purchase commitments of non-defaulting
Underwriters may be increased or the Underwriting Agreement may be terminated.
The Underwriters propose to offer all or part of the Pass Through
Certificates directly to the public at the public offering prices per Pass
Through Certificate set forth on the cover page of this Prospectus and may offer
a portion of the Pass Through Certificates to dealers at a price which
represents a concession not in excess of the amounts set forth below. The
Underwriters may allow, and such dealers may reallow, concessions not in excess
of the amounts set forth below to certain other dealers. After the initial
public offering, the public offering prices and such concessions may be changed.
<TABLE>
<CAPTION>
PASS THROUGH CONCESSIONS REALLOWANCE
CERTIFICATE TO DEALERS CONCESSION
------------ ----------- -----------
<S> <C> <C>
1994-A1............................................... .400% .250%
1994-A2............................................... .450 .250
</TABLE>
The Company has agreed to indemnify the Underwriters and the Underwriters
have agreed to indemnify the Company against certain liabilities, including
liabilities under the Securities Act.
The Company does not intend to apply for listing of the Pass Through
Certificates on a national securities exchange, but has been advised by the
Underwriters that the Underwriters presently intend to make a market in the Pass
Through Certificates, as permitted by applicable laws and regulations. The
Underwriters are not obligated, however, to make a market in the Pass Through
Certificates and any such market making may be discontinued at any time at the
sole discretion of the Underwriters. Accordingly, no assurance can be given as
to the liquidity of, or trading markets for, the Pass Through Certificates.
Each of the Underwriters, or their respective affiliates, performs
investment banking and other financing services for the Company in the ordinary
course of business. Chemical Securities Inc. is an affiliate of Chemical Bank
which is a lender to the Company.
LEGAL OPINIONS
Certain legal matters in connection with the offering will be passed upon
for the Company by White & Case and by Winston & Strawn, special Illinois tax
counsel to the Pass Through Trustee, and for the Underwriters by Davis Polk &
Wardwell.
EXPERTS
The audited consolidated financial statements and schedules incorporated by
reference in this Prospectus have been audited by Arthur Andersen & Co.,
independent public accountants, as indicated in their reports with respect
thereto, and are incorporated by reference herein in reliance upon the authority
of said firm as experts in auditing and accounting in giving said reports.
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<PAGE> 53
APPENDIX I
GLOSSARY OF DEFINED TERMS
"1994-A1 Trust" shall mean the Newmont Gold Company 1994-A1 Pass Through
Trust to be formed pursuant to the Pass Through Agreement.
"1994-A2 Trust" shall mean the Newmont Gold Company 1994-A2 Pass Through
Trust to be formed pursuant to the Pass Through Agreement.
"Bankruptcy Default" shall mean the pendency of certain bankruptcy
proceedings with respect to the Company.
"Basic Documents" shall mean, with respect to any Indenture, the related
Participation Agreement, the related Lease, the Ground Lease and Easement, the
related Assignment of Contracts and all related documents of title or transfer
under which the related undivided ownership interest in the Facility was
transferred to an Owner Trustee.
"Basic Rent or Basic Rent Payment" shall mean, with respect to either
Lease, an amount equal to the periodic rent payments required on each Rent
Payment Date which must be not less than the Scheduled Payments then due on the
related Lessor Notes.
"Business Day" shall mean any day other than a Saturday or Sunday or other
day on which banks in New York, New York, Chicago, Illinois or Hartford,
Connecticut are authorized to remain closed.
"Carlin Complex" shall mean and include the Facility and any asset or
facility of the Company located in the immediate vicinity of Carlin, Nevada.
"Cede" shall mean Cede & Co., DTC's nominee for the permanent global
certificates.
"Certificate Account" shall mean any of the non-interest bearing accounts
for the deposit of Scheduled Payments on the Lessor Notes held in the Pass
Through Trust.
"Certificate Owner" shall mean a person having a beneficial interest in a
Pass Through Certificate.
"Certificateholder" shall mean the name in which a Pass Through Certificate
is registered.
"Code" shall mean the Internal Revenue Code of 1986, as amended, and any
regulations promulgated pursuant to the Code.
"Commission" shall mean the United States Securities and Exchange
Commission.
"Company" shall mean Newmont Gold Company, a Delaware corporation.
"Components" shall mean appliances, parts, instruments, appurtenances,
accessories, furnishings, equipment and other property of whatever nature that
may from time to time be incorporated in the Facility.
"DTC" shall mean the Depository Trust Company.
"Early Buy-Out Date" shall mean January 5, 2012.
"Early Buy-Out Price" shall mean an amount, payable under any Lease in
installments commencing on the Early Buy-Out Date, the payment to be made on the
Early Buy-Out Date being equal to a predetermined percentage of Facility Cost
but not less than redemption price of the related Lessor Notes on such date.
"Early Purchase Option" shall mean the Company's right to purchase an Owner
Trustee's interest in the Facility under the Lease as described above under
"Description of the Leases -- Purchase Option."
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<PAGE> 54
"Easement" shall mean the easement relating to the adjacent Company
premises granted by the Company to the Owner Trustee under and pursuant to the
Ground Lease and Easement.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended, or any comparable successor law.
"ERISA Plan" shall mean any "employee benefit plan" subject to Part 4 of
Subtitle B of Title I of ERISA, or "plan" subject to Section 4975 of the Code,
any trust created under any such employee benefit plan or plan, or "governmental
plan" as defined in Section 3(32) of ERISA or Section 414(d) of the Code
organized in a jurisdiction having prohibitions on transactions with such
governmental plan similar to those contained in Section 406 of ERISA or Section
4975 of the Code.
"Event of Default" shall mean the occurrence and continuance of any Lease
Event of Default or Indenture Event of Default.
"Event of Loss" shall mean any of the events described above under
"Description of the Lease -- Events of Loss."
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended.
"Facility" shall mean the refractory gold ore treatment facility located
approximately six miles north of Carlin, Nevada.
"Facility Agreements" shall mean the Support Agreement, the Assignment of
Contracts, the Ground Lease and Easement and any other agreement, permit or
license or Governmental Action to which the Company is a party and which are
necessary for the operation of the Facility.
"Facility Cost" shall mean the Owner Trustee's share of the cost of the
Facility.
"Facility Site" shall mean the Site Interest and the adjacent premises.
"Financing Lease" shall mean any lease of equipment and/or real property
which has a cost to the lessor in excess of $80,000,000 under which the Company
is a lessee and which had a term of not less than 15 years from the inception
thereof.
"First Chicago" or "FNBC" shall mean The First National Bank of Chicago, a
national banking association, in its individual capacity unless the context
requires otherwise.
"Foreign Person" shall mean any Certificate Owner who is a nonresident
alien individual, foreign corporation, or other non-United States person.
"GAAP" shall mean generally accepted accounting principles in the United
States as in effect from time to time.
"Ground Lease and Easement" shall mean the Ground Lease and Easement,
pursuant to which the Owner Trustees will, subject to the conditions set forth
therein, lease from the Company the Site Interest and accept a grant by the
Company of the Easement.
"Holders" shall mean the holders of the Lessor Notes.
"Indenture" shall mean either of the Trust Indenture and Security Agreement
to be dated as of July 15, 1994, between an Owner Trustee and an Indenture
Trustee.
"Indenture Default" shall mean an event which, after giving of notice or
lapse of time, or both, would become an Indenture Event of Default.
"Indenture Event of Default" shall mean any of the events specified in the
Indenture and described above under "Description of the Indentures -- Indenture
Events of Default."
"Indenture Trustee" shall mean The First National Bank of Chicago, a
national banking association, not in its individual capacity, but solely as
Indenture Trustee under each Indenture, and each successor as Indenture Trustee
under each Indenture.
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<PAGE> 55
"Lease" shall mean either Lease, to be dated the Closing Date between the
Company and an Owner Trustee.
"Lease Default" shall mean an event which, after notice or lapse of time,
or both, would become a Lease Event of Default.
"Lease Event of Default" shall be any Event of Default in a Lease as
described above under "Description of the Leases -- Lease Events of Default."
"Lessee" shall mean the Company.
"Lessor" shall mean each Owner Trustee.
"Lessor Notes" shall mean the Notes issued or to be issued by the Owner
Trustees pursuant to the Indentures and authorized by the Indenture Trustees.
"Lien" shall mean any mortgage, pledge, security interest, encumbrance,
lien or charge of any kind, including, without limitation, any conditional sale
or other title retention agreement, any lease in the nature thereof or the
filing of, or agreement to give, any financing statement under the Uniform
Commercial Code of any jurisdiction.
"Majority in Interest of the Holders of Lessor Notes" shall mean a 66 2/3%
majority of the Holders.
"Make-Whole Premium" shall have the meaning as described above under
"Description of the Indentures -- Prepayment."
"NEL" shall mean Newmont Exploration Limited, the Company's subsidiary.
"NMC" shall mean Newmont Mining Corporation, a Delaware corporation, which
is the Company's parent.
"NMC Preferred Stock" shall mean the convertible preferred stock issued by
NMC.
"Owner Participant" shall mean an institutional investor.
"Owner Trust" shall mean the trust to be formed pursuant to each Trust
Agreement.
"Owner Trustee" shall mean Shawmut Bank Connecticut, National Association,
a national banking association, not in its individual capacity, but solely as
Owner Trustee.
"Participation Agreement" shall mean each Participation Agreement among
Shawmut Bank Connecticut, National Association, in its individual capacity and
as Owner Trustee, the Indenture Trustee, one or more Owner Participants, The
First National Bank of Chicago, the Pass Through Trustee and the Company.
"Pass Through Agreement" shall mean each pass through trust agreement
between the Company and the Pass Through Trustee.
"Pass Through Certificates" shall mean each of the Certificates, Series
1994-A1 and Series 1994-A2 issued by First National Bank of Chicago pursuant to
the Pass Through Agreement.
"Pass Through Permitted Investments" shall mean non-callable direct
obligations of the United States of America maturing on or prior to the day
required for the distribution of any such funds on a Special Distribution Date.
"Pass Through Trust" shall mean each of the Newmont Gold Company Series
1994-A1 Pass Through Trust and the Newmont Gold Company 1994-A2 Pass Through
Trust to be formed pursuant to the Pass Through Agreement.
"Pass Through Trustee" shall mean The First National Bank of Chicago, a
national banking association, not in its individual capacity, but solely as Pass
Through Trustee under the Pass Through Agreements and each successor Pass
Through Trustee under such Pass Through Agreements.
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<PAGE> 56
"Payment Default" shall mean a failure by the Company to make Rent payments
under the Lease.
"Permitted Investments" shall mean (i) obligations of the United States of
America, or fully guaranteed as to interest and principal by the United States
of America, maturing in not more than one year, (ii) certificates of deposit
having a final maturity of not more than 30 days after the date of issuance
thereof of any commercial bank incorporated under the laws of the United States
of America or any state thereof or the District of Columbia which bank is a
member of the Federal Reserve System and has a combined capital and surplus of
not less than $300,000,000 and (iii) commercial paper, rated P-1 by Moody's
Investors Services, Inc., or A-1 by Standard and Poor's Corporation, having a
remaining term until maturity of not more than 90 days, other than any such
obligation, certificate of deposit or commercial paper issued by the Owner
Trustee, the Indenture Trustee or any institution which shall become a successor
Owner Trustee or Indenture Trustee; provided, however, that no such investment
made while there has occurred and is continuing an Indenture Default or an
Indenture Event of Default is a Permitted Investment if it has a maturity in
excess of 30 days.
"Pool Balance" shall mean, for each Pass through Trust, as of any date, the
aggregate unpaid principal amount of the Lessor Notes held in such Pass Through
Trust on such date plus any amounts in respect of principal on such Lessor Notes
held by the Pass Through Trustee and not yet distributed. The Pool Balance for
each Pass Through Trust as of any Regular Distribution Date or Special
Distribution Date shall be computed after giving effect to the payment of
principal, if any, on the Lessor Notes held in such Pass Through Trust and
distribution thereof to be made on that date.
"Pool Factor" shall mean for each Pass Through Trust, as of any date, the
quotient (rounded to the seventh decimal point) computed by dividing (i) the
Pool Balance by (ii) the aggregate amount of the Lessor Notes held in the 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 of, if any, on the Lessor Notes held in the
Pass Through Trust and distribution thereof to be made on that date.
"Purchase Documents" shall mean such documents as either Owner Trustee
shall deem desirable to convey to it good and marketable title of its undivided
ownership interest from the Company.
"Regular Distribution Date" shall mean January 5 and July 5, commencing on
July 5, 1995, until all of the Scheduled Payments to be made under the Lessor
Notes have been made.
"Regulations" shall mean the income tax regulations promulgated under the
Code.
"Rent" shall mean Basic Rent and Supplemental Rent, collectively.
"Rent Payment Dates" shall mean and include each January 5 and July 5 of
each year, commencing July 5, 1995.
"Scheduled Payment" shall mean each payment of interest, Make-Whole
Premium, if applicable, and principal on a Lessor Note to be received by the
Pass Through Trustee in accordance with the principal repayment schedule set
forth in "Description of the Indentures -- Scheduled Payments."
"SEC" shall mean the United States Securities and Exchange Commission.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Shawmut" shall mean Shawmut Bank Connecticut, National Association, a
national banking association, in its individual capacity.
"Site Interest" shall mean the land on which the Facility is located.
"Special Distribution Date" shall mean the Business Day on which a special
payment is due.
I-4
<PAGE> 57
"Special Payment" shall mean any payments received (i) for the prepayment
of Lessor Notes in connection with certain events specified in this Prospectus,
(ii) upon the prepayment by the related Owner Trustee of the Lessor Notes
following a default in respect of such Lessor Notes, and (iii) on account of the
sale of the Lessor Notes by the Pass Through Trustee.
"Special Payment Account" shall mean any of the accounts which will, except
on connection with Pass Through Permitted Investments, be non-interest bearing
accounts for the deposit of Special Payments on Lessor Notes held in the Pass
Through Trust.
"Supplemental Financing" is a financing by an Owner Trustee of the cost of
certain modifications to the Facility as described above under "Description of
the Indentures -- Supplemental Financing Notes."
"Supplemental Financing Notes" shall mean those Notes issued in conjunction
with a Supplemental Financing.
"Supplemental Rent" shall mean certain indemnity and other payment
obligations of the Company to the Owner Trustees, the Owner Participants, the
Indenture Trustees, the Pass Through Trustees, or any holders of the Pass
Through Certificates in addition to Basic Rent which may be required in
connection with the leveraged lease financing described in this Prospectus.
"Termination Value" shall mean that value set forth opposite the
Termination Date in Schedule 5 to the Lease.
"Treasury Rate" shall have the meaning as described under the caption
"Description of the Indentures -- Prepayment."
"Trust Agreement" shall mean each trust agreement between the Owner
Participants and the Owner Trustee.
"Underwriters" shall mean Salomon Brothers Inc, CS First Boston
Corporation, Chemical Securities Inc. and Lazard Freres & Co.
"Underwriting Agreement" shall mean the agreement between the Company and
the Underwriters relating to the offering and sale of the Pass Through
Certificates.
"Weighted Average Life to Maturity" shall have the meaning described under
the caption "Description of the Indentures -- Prepayment."
I-5
<PAGE> 58
NO DEALER, SALESMAN OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION
OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS IN
CONNECTION WITH THE OFFER MADE BY THIS PROSPECTUS, AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE COMPANY OR THE UNDERWRITERS. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR
ANY SALE MADE HEREUNDER SHALL UNDER ANY CIRCUMSTANCES CREATE AN IMPLICATION THAT
THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER OR SOLICITATION BY ANYONE IN ANY
JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED OR IN WHICH
THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO OR TO
ANYONE TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
Available Information................ 3
Incorporation of Certain Documents by
Reference.......................... 3
Reports to Certificateholders by the
Pass Through Trustee............... 4
Prospectus Summary................... 5
The Company.......................... 12
Recent Developments.................. 14
Capitalization....................... 14
Selected Consolidated Financial
Data............................... 15
Ratio of Earnings to Fixed Charges... 17
Description of the Facility.......... 17
Description of the Transaction....... 18
Use of Proceeds...................... 19
Diagram of Payments.................. 20
Description of the Pass Through
Certificates....................... 21
Description of the Indentures........ 32
Description of the Leases............ 41
Description of Other Facility
Documents.......................... 47
Certain Federal Income Tax
Considerations..................... 47
Certain Illinois Taxes............... 50
Certain ERISA Considerations......... 51
Underwriting......................... 51
Legal Opinions....................... 52
Experts.............................. 52
Appendix I, Glossary of Defined
Terms.............................. I-1
</TABLE>
$262,188,000
NEWMONT GOLD COMPANY
1994-A1 AND 1994-A2
PASS THROUGH TRUSTS
PASS THROUGH CERTIFICATES,
SERIES 1994-A1 AND 1994-A2
SALOMON BROTHERS INC
CS FIRST BOSTON
CHEMICAL SECURITIES INC.
LAZARD FRERES & CO.
PROSPECTUS
DATED SEPTEMBER 26, 1994
