<PAGE> 1
As filed with the Securities and Exchange Commission on February 2, 1994
Registration No. 33- 51097
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_____________
POST-EFFECTIVE
AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER THE
SECURITIES ACT OF 1933
______________
SMITH'S FOOD & DRUG CENTERS, INC.
(Exact Name of Registrant as Specified in Its Charter)
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<S> <C>
DELAWARE 87-0258768
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
</TABLE>
1550 SOUTH REDWOOD ROAD
SALT LAKE CITY, UTAH 84104
(801) 974-1400
(Address, Including Zip Code, and Telephone Number, Including Area Code, of
Registrant's Principal Executive Offices)
______________
MICHAEL C. FREI, ESQ.
1550 SOUTH REDWOOD ROAD
SALT LAKE CITY, UTAH 84104
(801) 974-1494
(Name, Address, Including Zip Code, and Telephone Number,
Including Area Code, of Agent For Service)
______________
with copies to:
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JOHN A. GARRATY, JR., ESQ. JOEL S. KLAPERMAN, ESQ.
Kelley Drye & Warren Shearman & Sterling
101 Park Avenue 599 Lexington Avenue
New York, New York 10178 New York, New York 10022
</TABLE>
______________
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE OF THE SECURITIES TO
THE PUBLIC: From time to time, as determined by market conditions, after the
effective date of this registration statement.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box: / /
If any of the securities being registered on this form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection with
dividend or interest reinvestment plans, check the following box: /x/
______________
The registrant hereby amends this registration statement on such date
or dates as may be necessary to delay its effective date until the registrant
shall file a further amendment which specifically states that this registration
statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until this registration statement shall become
effective on such date as the Commission, acting pursuant to Section 8(a), may
determine.
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<PAGE> 2
PROSPECTUS
SMITH'S FOOD & DRUG CENTERS, INC.
PASS THROUGH CERTIFICATES
------------------------
Up to $300,000,000 aggregate principal amount of Pass Through Certificates (the
"Certificates") (or such greater amount if Certificates are issued at an
original issue discount as shall result in aggregate proceeds of $300,000,000)
may be offered for sale from time to time pursuant to this Prospectus and
related Prospectus Supplements (as defined below). Certificates may be
issued in one or more series in amounts, at prices and on terms to be
determined at the time of the offering. In respect of each offering of
Certificates, a separate Smith's Food & Drug Centers Pass Through Trust
for each series of Certificates being offered (each, a "Trust") will be
formed pursuant to the Pass Through Trust Agreement (the "Basic
Agreement") and the supplement thereto (a "Trust Supplement") relating
to such Trust between Smith's Food & Drug Centers, Inc. (the
"Company") and Wilmington Trust Company (the "Pass Through
Trustee"), as trustee under each Trust. Each Certificate in a
series will represent a fractional undivided interest in the
related Trust and will have no rights, benefits or interest in
respect of any other Trust. The property of each Trust will
consist of notes issued (a) on a nonrecourse basis by the
trustees of an owner trust (each, an "Owner Trustee") pursuant to
separate leveraged lease transactions to finance or refinance a
portion of the cost to such Owner Trustee or Owner Trustees of
one or more real properties, including improvements thereon
(each, a "Leased Property" and collectively, the "Leased
Properties"), which have been or will be leased to the Company
(the "Leased Property Notes"), or (b) with recourse to the
Company to finance or refinance all or a portion of the
cost of one or more real properties, including
improvements thereon (each, an "Owned Property" and
collectively, the "Owned Properties" and, together with
the Leased Properties, each, a "Property" and
collectively, the "Properties"), which have
been or will be purchased and owned by the Company
(the "Owned Property Notes" and, together with the
Leased Property Notes, the "Notes").
Certain specific terms of the particular Certificates in respect of which this
Prospectus is being delivered are set forth in the accompanying Prospectus
Supplement (the "Prospectus Supplement") including, where applicable, the
specific designation, form, aggregate principal amount, initial public
offering price and distribution dates relating to such Certificates, the
Trust or Trusts relating to such Certificates, the Notes to be purchased
by such Trust or Trusts, the Properties relating to such Notes, the
leveraged lease transactions or financing arrangements, as the case
may be, relating to such Notes and other special terms relating to
such Certificates and the net proceeds from the offering of such
Certificates. If so specified in the applicable Prospectus
Supplement, the Certificates may be issued in accordance
with a book-entry system in registered form only.
Notes may be issued in respect of a Property in one or more series, each series
having its own interest rate and final maturity date. A Trust will purchase all
of each series of Notes relating to each Property and having an interest rate
equal to the interest rate applicable to the Certificates issued by such
Trust and maturity dates occurring on or before the final distribution
date applicable to such Certificates. Interest paid on the Notes held in
each Trust will be passed through to the holders of the Certificates
relating to such Trust on the dates and at the rate per annum set
forth in the Prospectus Supplement relating to such Certificates
until the final distribution date for such Trust. Principal paid on
the Notes held in each Trust will be passed through to the holders
of the Certificates relating to such Trust in scheduled amounts on
the dates set forth in the Prospectus Supplement relating to such
Certificates until the final distribution date for such Trust.
The Notes issued with respect to each Property will be secured by a mortgage on
such Property and, in the case of each Leased Property, by a security interest
in the lease relating to such Leased Property, including the right to receive
rentals payable in respect of such Leased Property by the Company. Although
neither the Certificates nor the Leased Property Notes will be direct
obligations of, or guaranteed by, the Company, the amounts unconditionally
payable by the Company pursuant to the lease related to each Leased
Property will be sufficient to pay in full when due all payments
required to be made on the related Leased Property Notes.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
------------------------
The Certificates may be sold to or through underwriters, through dealers or
agents or directly to purchasers. The accompanying Prospectus Supplement
sets forth the names of any underwriters, dealers or agents involved in
the sale of the Certificates in respect of which this Prospectus is
being delivered and any applicable fee, commission or discount
arrangements with them. See "Plan of Distribution."
This Prospectus may not be used to consummate sales of Certificates unless
accompanied by a Prospectus Supplement.
------------------------
MORGAN STANLEY & CO.
Incorporated
GOLDMAN, SACHS & CO.
SALOMON BROTHERS INC
January 26, 1994
<PAGE> 3
NO 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 CONTAINED IN 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. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO
SELL OR THE SOLICITATION OF AN OFFER TO BUY SECURITIES IN ANY JURISDICTION TO
ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. NEITHER
THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY
CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE
AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THAT THE INFORMATION CONTAINED
HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF.
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 filed by the Company can be inspected and
copied at prescribed rates at the public reference facilities maintained by the
Commission at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549,
Room 1024, as well as at the Commission's Regional Offices located at
Northwestern Atrium Center, 500 West Madison Street, Chicago, Illinois 60661,
Suite 1400, and Seven World Trade Center, New York, New York 10048, Suite 1300.
Copies of such material may be obtained by mail from the Public Reference Branch
of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, at
prescribed rates. The Company's Class B Common Stock is listed on the New York
Stock Exchange and reports, proxy statements and other information regarding the
Company can also be inspected at the offices of the New York Stock Exchange, 20
Broad Street, New York, New York 10005.
This Prospectus constitutes a part of a registration statement on Form S-3
(together with all amendments and exhibits, the "Registration Statement") filed
by the Company with the Commission under the Securities Act of 1933, as amended
(the "Securities Act"). This Prospectus does not contain all of the information
included in the Registration Statement, certain parts of which are omitted in
accordance with the rules and regulations of the Commission. Reference is made
to such Registration Statement and to the exhibits relating thereto for further
information with respect to the Company and the Certificates offered hereby.
REPORTS TO CERTIFICATEHOLDERS BY THE PASS THROUGH TRUSTEE
Wilmington Trust Company, as trustee for the holders of the Certificates
with respect to each Trust, pursuant to the Basic Agreement and the related
Trust Supplement, will provide such holders certain periodic statements
concerning distributions made with respect to such Trust. See "Description of
the Pass Through Certificates -- Reports to Certificateholders."
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents have been filed with the Commission pursuant to the
Exchange Act and are incorporated by reference in this Prospectus:
1. the Company's Annual Report on Form 10-K for the fiscal year ended
January 2, 1993 (which incorporated certain portions of the Company's 1992
Annual Report to Stockholders and Proxy Statement relating to the 1993 Annual
Meeting of Stockholders); and
2. the Company's Quarterly Reports on Form 10-Q for the quarters ended
April 3, 1993, July 3, 1993 and October 2, 1993.
2
<PAGE> 4
All documents filed by the Company pursuant to section 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date of this Prospectus and prior to
the termination of the offering of the Certificates offered hereby shall be
deemed to be incorporated by reference herein and to be a part hereof from the
date of filing of such documents. Any statement contained in a document
incorporated or deemed to be incorporated by reference herein, or contained in
this Prospectus, 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 herein
by reference 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 to whom this
Prospectus is delivered, upon the written or oral request of such person, a copy
of any or all documents incorporated herein by reference, other than exhibits to
such documents (unless such exhibits are specifically incorporated by reference
into such documents). Requests for such copies should be directed to Smith's
Food & Drug Centers, Inc., P.O. Box 30550, Salt Lake City, Utah 84130, telephone
(801) 974-1400, Attention: Investor Relations.
TABLE OF CONTENTS
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PAGE
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Available Information................................................................. 2
Reports to Certificateholders by the Pass Through Trustee............................. 2
Incorporation of Certain Documents By Reference....................................... 2
The Company........................................................................... 4
Formation of the Trusts............................................................... 4
Use of Proceeds and Structure of Transaction.......................................... 5
Ratio of Earnings to Fixed Charges.................................................... 5
Description of the Certificates....................................................... 6
Description of the Notes.............................................................. 16
Certain Federal Income Tax Consequences............................................... 19
Certain Delaware Taxes................................................................ 23
ERISA Considerations.................................................................. 23
Plan of Distribution.................................................................. 24
Legal Matters......................................................................... 25
Experts............................................................................... 25
</TABLE>
3
<PAGE> 5
THE COMPANY
The Company is a leading regional supermarket and drug store chain, which
operated 129 stores as of January 1, 1994 in Arizona, California, Idaho, Nevada,
New Mexico, Texas, Utah and Wyoming.
The Company develops, owns and operates combination food and drug centers
which offer a full selection of supermarket food items, a wide assortment of
nonfood and drug items and a number of specialty departments. Primary food
products sold in the stores include groceries, meat, poultry, produce, dairy
products, delicatessen items, prepared foods, bakery products, frozen foods and
take-out foods, as well as specialty fish, meat and cheese. Nonfood items
available in the stores include full-line pharmacy and related over-the-counter
drug items, health and beauty aids, video rentals, in-store banking services,
housewares, toys, camera/photo department items, one-hour photo processing,
cosmetics and other general merchandise. The Company's 129 stores at January 1,
1994 consisted of 115 large combination food and drug centers averaging 69,200
square feet, 12 superstores averaging 40,500 square feet and two conventional
stores averaging 26,000 square feet.
The combination stores range in size from 45,000 to 86,000 square feet and
offer a complete line of supermarket, nonfood and drug products. These stores
feature modern, attractive layouts with wide aisles and well-lighted spaces to
facilitate convenient shopping, a variety of specialty departments and
centralized, highly automated checkout facilities. The superstores range in size
from 30,000 to 45,000 square feet and have the appearance of a large supermarket
augmented with a significant amount of nonfood and drug merchandise. Generally
the superstores have fewer and more limited specialty departments than the
combination stores. The conventional stores have the appearance of traditional
supermarkets.
The Company offers customers a broad product selection at everyday low
prices combined with quality customer service in large, modern, attractive food
and drug centers with ample parking. Customers are able to fill a substantial
portion of their daily and weekly shopping needs at one convenient location. The
Company promotes its reputation as a low price competitor in its market areas
through a policy of everyday low pricing. Management attributes much of the
Company's success to combining broad product selection and everyday low prices
with quality customer service.
The Company's primary focus in existing markets has been on increasing
sales volume by opening stores in adjacent or ancillary markets. The Company
also has focused on new markets. During 1993, the Company opened 11 combination
stores in the following states: eight in California and one each in New Mexico,
Texas and Utah. The Company has selected Southern California as its primary area
of expansion. It has in progress an expansion program which calls for up to 60
stores in the Southern California markets prior to mid-1997, of which 26 were
open and operating on January 1, 1994. The Company plans to open an additional
10 to 12 stores at locations primarily in Southern California during 1994.
The Company was founded in 1948 and reincorporated under Delaware law in
1989. The principal executive offices are located at 1550 South Redwood Road,
Salt Lake City, Utah 84104, and its telephone number is (801) 974-1400. As used
herein, the "Company" refers to Smith's Food & Drug Centers, Inc. and its
subsidiaries and predecessors, unless the context otherwise requires. The
Company's Class B Common Stock is traded on the New York Stock Exchange under
the symbol "SFD."
FORMATION OF THE TRUSTS
In respect of each offering of Certificates, one or more Trusts will be
formed, and the related Certificates issued, pursuant to separate Trust
Supplements to be entered into between the Pass Through Trustee and the Company
in accordance with the terms of the Basic Agreement. Concurrently with the
execution and delivery of each Trust Supplement, the Pass Through Trustee, on
behalf of the Trust formed thereby, will enter into a separate financing
agreement (each such financing agreement being herein referred to as a
"Participation Agreement") relating to one or more of the Properties described
in the applicable Prospectus Supplement. Pursuant to the applicable
Participation Agreement or Participation Agreements, the Pass Through Trustee,
on behalf of each Trust, will purchase all of the series of Notes relating to
the relevant Properties and having an interest rate equal to the interest rate
payable by such Trust on the Certificates that will be issued by such
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Trust. The maturity dates of the Notes acquired by each Trust will occur on or
before the final distribution date applicable to the Certificates that will be
issued by such Trust. The Pass Through Trustee will distribute the amount of
payments of principal, premium, if any, and interest received by it as holder of
the Notes to the Certificateholders of the Trust in which such Notes are held.
See "Description of the Certificates" and "Description of the Notes."
USE OF PROCEEDS AND STRUCTURE OF TRANSACTION
The Certificates offered pursuant to any Prospectus Supplement will be
issued in order to facilitate (a) the financing or refinancing of the debt
portion and, in certain cases, the refinancing of some of the equity portion of
one or more separate leveraged lease transactions entered into by the Company,
as lessee, with respect to one or more Leased Properties, as described in the
applicable Prospectus Supplement, and (b) the financing or refinancing of the
aggregate principal amount of debt to be issued by the Company in respect of one
or more Owned Properties, as described in the applicable Prospectus Supplement.
The proceeds from the sale of the Certificates offered pursuant to any
Prospectus Supplement will be used by the Pass Through Trustee on behalf of the
applicable Trust or Trusts to purchase (a) Leased Property Notes issued by the
related Owner Trustee or Owner Trustees to finance or refinance a portion (as
specified in the applicable Prospectus Supplement) of the cost of the related
Leased Property or Leased Properties and/or (b) Owned Property Notes issued by
the Company to finance or refinance all or a portion (as specified in the
applicable Prospectus Supplement) of the cost of the related Owned Property or
Owned Properties. Any portion of the proceeds from the sale of Certificates not
used by the Pass Through Trustee to purchase Notes on or prior to the date
specified therefor in the applicable Prospectus Supplement will be distributed
on a Special Distribution Date (as hereinafter defined) to the applicable
Certificateholders, together with interest, but without premium. See
"Description of Certificates -- Special Distribution Upon Unavailability of
Property."
The Leased Property Notes with respect to each Leased Property will be
issued under separate Trust Indenture and Security Agreements (the "Leased
Property Indentures") between Wilmington Trust Company, as trustee thereunder
(in such capacity, herein referred to as the "Loan Trustee"), and an institution
specified in the related Prospectus Supplement acting not in its individual
capacity (except as expressly set forth therein) but solely as owner trustee (an
"Owner Trustee") of a separate trust for the benefit of one or more
institutional investors (each, an "Owner Participant"). With respect to each
Leased Property, the related Owner Participant will have provided or will
provide from sources other than the Leased Property Notes a portion (as
specified in the applicable Prospectus Supplement) of the cost of such Leased
Property. No Owner Participant, however, will be personally liable for any
amount payable under the related Leased Property Indenture or the Leased
Property Notes issued thereunder. Simultaneously with the acquisition of each
Leased Property, the related Owner Trustee leased or will lease such Leased
Property to the Company pursuant to a separate lease agreement (each, a
"Lease"). The Owned Property Notes will be issued under separate Trust Indenture
and Security Agreements (the "Owned Property Indentures" and together, with any
Leased Property Indentures, the "Indentures") between the applicable Loan
Trustee and the Company.
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth the ratio of earnings to fixed charges for
the Company for the periods indicated.
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NINE MONTHS ENDED YEAR ENDED
----------------------- ----------------------------------------------------------------------
OCTOBER 2, OCTOBER 3, JANUARY 2, DECEMBER 28, DECEMBER 29, DECEMBER 30, DECEMBER 31,
1993 1992 1993 1991 1990 1989 1988
---------- ---------- ---------- ------------ ------------ ------------ ------------
(UNAUDITED)
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Ratio of earnings to
fixed charges...... 2.06x 2.58x 2.51x 2.44x 2.36x 2.13x 1.82x
</TABLE>
For purposes of computing the ratio of earnings to fixed charges,
"earnings" consist of income before provision for income taxes and fixed charges
(excluding interest capitalized). For purposes of computing the
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<PAGE> 7
ratio of earnings to fixed charges, "fixed charges" consist of interest,
amortized debt expense and the portion of operating lease rentals that are
representative of the interest factor.
DESCRIPTION OF THE CERTIFICATES
In connection with each offering of Certificates, one or more separate
Trusts will be formed and one or more series of Certificates will be issued
pursuant to the Basic Agreement and one or more separate Trust Supplements to be
entered into between the Company and the Pass Through Trustee. The statements
made under this caption are summaries and reference is made to the detailed
provisions of the Basic Agreement, which has been filed as an exhibit to the
Registration Statement and which will be qualified under the Trust Indenture Act
of 1939, as amended (the "Trust Indenture Act"). Such summaries relate to the
Basic Agreement and each of the Trust Supplements, the Trusts to be formed
thereby and the Certificates to be issued by each Trust except to the extent, if
any, described in the applicable Prospectus Supplement. The Prospectus
Supplement that accompanies this Prospectus contains a glossary of the terms
used with respect to the specific series of Certificates being offered thereby.
The Trust Supplement relating to each series of Certificates and the forms of
the related Participation Agreement and Indenture and, if the Certificates
relate to any Leased Property, the related Lease or Leases and trust agreement
entered into by the Owner Participant and the Owner Trustee with respect to such
related Leased Property (a "Trust Agreement") will be filed as exhibits to a
Current Report on Form 8-K, Quarterly Report on Form 10-Q or Annual Report on
Form 10-K to be filed by the Company with the Commission following the issuance
of such series of Certificates. Citations to the relevant sections of the Basic
Agreement appear below in parentheses unless otherwise indicated.
The Certificates offered pursuant to this Prospectus will be limited to
$300,000,000 aggregate principal amount (or such greater amount if Certificates
are issued at an original issue discount as shall result in aggregate proceeds
of $300,000,000).
Certain provisions of the description of the Certificates in this
Prospectus do not necessarily apply to one Certificate of each Trust which may
be issued in a denomination of less than $1,000.
GENERAL
Each Certificate will represent a fractional undivided interest in the
Trust created by the Trust Supplement pursuant to which such Certificate was
issued and all payments and distributions with respect thereto shall be made
only from the related Trust Property (as defined below). The property of each
Trust (the "Trust Property") will include the Notes held in such Trust, all
monies at any time paid thereon and all monies due and to become due thereon and
funds from time to time deposited with the Pass Through Trustee in accounts
relating to such Trust. Unless otherwise specified in the applicable Prospectus
Supplement, Certificates will be issued in minimum denominations of $1,000 or
any integral multiple thereof. (Sections 2.01 and 3.01) The Certificates do not
represent an interest in or obligation of the Company, the Pass Through Trustee,
any Owner Trustee in its individual capacity, any Owner Participant, or any
affiliate of any thereof.
Reference is made to the Prospectus Supplement that accompanies this
Prospectus for a description of the specific series of Certificates being
offered thereby, including: (1) the specific designation and title of such
Certificates; (2) the Regular Distribution Dates (as hereinafter defined) and
Special Distribution Dates (as hereinafter defined) applicable to such
Certificates; (3) the specific form of such Certificates, including whether or
not such Certificates are to be issued in accordance with a book-entry system,
in registered form or in bearer form; (4) a description of the Notes to be
purchased by the related Trust, including the period or periods within which,
the price or prices at which and the terms and conditions upon which such
Certificates may or must be redeemed, in whole or in part, by the Company or,
with respect to Leased Property Notes, the related Owner Trustee; (5) a
description of the related Property or Properties, including whether each such
Property is a Leased Property or an Owned Property; (6) a description of the
related Participation Agreement and Indenture, including a description of the
events of default thereunder, the remedies exercisable upon the occurrence of
such events of default and any limitations on the exercise of such remedies with
respect to such
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Notes; (7) if such Certificates relate to a Leased Property or Leased
Properties, a description of the related Lease or Leases and Trust Agreement,
including (a) the names of the related Owner Trustee, (b) a description of the
events of default under the related Lease or Leases, the remedies exercisable
upon the occurrence of such events of default and any limitations on the
exercise of such remedies with respect to such Leased Property Notes and (c) the
rights of the related Owner Trustee, if any, and/or Owner Participant, if any,
to cure failures of the Company to pay rent under the related Lease or Leases;
(8) the extent, if any, to which the provisions of the operative documents
applicable to such Notes may be amended by the parties thereto without the
consent of the holders of, or only upon the consent of the holders of a
specified percentage of aggregate principal amount of, such Notes; and (9) any
other special terms pertaining to such Certificates.
BOOK-ENTRY REGISTRATION
General. If so specified in the applicable Prospectus Supplement, the
Certificates of each Trust may be issued in fully registered form pursuant to a
book-entry system. In the event that the Certificates of any series are issued
pursuant to a book-entry system, such Certificates will be registered in the
name of Cede & Co. ("Cede") as the nominee of The Depository Trust Company
("DTC"). No person acquiring an interest in such Certificates (a "Certificate
Owner") will be entitled to receive a certificate representing such person's
interest in such Certificates, except as set forth below under "Definitive
Certificates." Unless and until Definitive Certificates are issued under the
limited circumstances described herein, all references to actions by
Certificateholders shall refer to actions taken by DTC upon instructions from
DTC Participants (as defined below), and all references herein to distributions,
notices, reports and statements to Certificateholders shall refer, as the case
may be, to distributions, notices, reports and statements to DTC or Cede, as the
registered holder of such Certificates, or to DTC Participants for distribution
to Certificate Owners in accordance with DTC procedures. (Section 3.09)
DTC is a limited purpose trust company organized under the laws of the
State of New York, a member of the Federal Reserve System, a "clearing
corporation" within the meaning of the New York Uniform Commercial Code and a
"clearing agency" registered pursuant to section 17A of the Exchange Act. DTC
was created to hold securities for its participants ("DTC Participants") and to
facilitate the clearance and settlement of securities transactions between DTC
Participants through electronic book-entries, thereby eliminating the need for
physical transfer of certificates. DTC Participants include securities brokers
and dealers, banks, trust companies and clearing corporations. Indirect access
to the DTC system also is available to others such as banks, brokers, dealers
and trust companies that clear through or maintain a custodial relationship with
a DTC Participant either directly or indirectly ("Indirect Participants").
Persons that are not DTC Participants or Indirect Participants but desire
to purchase, sell or otherwise transfer ownership of, or other interests in, the
Certificates may do so only through DTC Participants and Indirect Participants.
In addition, Certificate Owners will receive all distributions of principal and
interest from the Pass Through Trustee through DTC Participants or Indirect
Participants, as the case may be. Under a book-entry format, Certificate Owners
may experience some delay in their receipt of payments, since such payments will
be forwarded by the Pass Through Trustee to Cede, as nominee for DTC. DTC will
forward such payments in same-day funds to DTC Participants who are credited
with ownership of the Certificates in amounts proportionate to the principal
amount of each such DTC Participant's respective holdings of beneficial interest
in the Certificates. DTC Participants will thereafter forward payments to
Indirect Participants or Certificate Owners, as the case may be, in accordance
with customary industry practices. The forwarding of such distributions to the
Certificate Owners will be the responsibility of DTC Participants. Unless and
until the Definitive Certificates are issued under the limited circumstances
described herein, the only "Certificateholder," as such term is used in the
Basic Agreement, will be Cede, as nominee of DTC. Certificate Owners will not be
recognized by the Pass Through Trustee as Certificateholders, and Certificate
Owners will be permitted to exercise the rights of Certificateholders only
indirectly through DTC and DTC Participants.
Under the rules, regulations and procedures creating and affecting DTC and
its operations (the "Rules"), DTC is required to make book-entry transfers of
the Certificates among DTC Participants on whose behalf it acts with respect to
the Certificates and to receive and transmit distributions of principal,
premium, if any, and
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interest with respect to the Certificates. DTC Participants and Indirect
Participants with which Certificate Owners have accounts with respect to the
Certificates similarly are required to make book-entry transfers and receive and
transmit such payments on behalf of their respective customers. Accordingly,
although Certificate Owners will not possess the Certificates, the Rules provide
a mechanism by which Certificate Owners will receive payments and will be able
to transfer their interests.
Because DTC can only act on behalf of DTC Participants, who in turn act on
behalf of Indirect Participants, the ability of a Certificate Owner to pledge
the Certificates to persons or entities that do not participate in the DTC
system, or to otherwise act with respect to such Certificates, may be limited
due to the lack of physical certificates for such Certificates.
DTC will take any action permitted to be taken by a Certificateholder under
the Basic Agreement only at the direction of one or more DTC Participants to
whose accounts with DTC the Certificates are credited. Additionally, DTC has
advised the Company that in the event any action requires approval by
Certificateholders of a certain percentage of beneficial interest in each Trust,
DTC will take such action only at the direction of and on behalf of DTC
Participants whose holders include undivided interests that satisfy any such
percentage. DTC may take conflicting actions with respect to other undivided
interests to the extent that such actions are taken on behalf of DTC
Participants whose holders include such undivided interests.
Neither the Company nor the Pass Through Trustee will have any liability
for any aspect of the records relating to or payments made on account of
beneficial ownership interests in the Certificates held by Cede, as nominee for
DTC, or for maintaining, supervising or reviewing any records relating to such
beneficial ownership interests.
The foregoing information concerning DTC and DTC's book-entry system has
been obtained from sources the Company believes to be reliable. The Company,
however, has not undertaken any independent verification thereof.
Definitive Certificates. Certificates will be issued in certificated form
("Definitive Certificates") to Certificate Owners or their nominees, rather than
to DTC or its nominee, only if (i) the Company advises the Pass Through Trustee
in writing that DTC (or a successor thereto) is no longer willing or able to
discharge properly its responsibilities as depository with respect to such
Certificates and the Company is unable to locate a qualified successor, (ii) the
Company, at its option, advises the Pass Through Trustee in writing of its
election to terminate the book-entry system through DTC (or a successor thereto)
or (iii) after the occurrence of an Event of Default (as hereinafter defined)
Certificate Owners with fractional undivided interests aggregating not less than
a majority in interest in such Trust advise the Pass Through Trustee, the
Company and DTC through DTC Participants in writing that the continuation of a
book-entry system through DTC (or a successor thereto) is no longer in the
Certificate Owners' best interest. (Section 3.09)
Upon the occurrence of any event described in the immediately preceding
paragraph, the Pass Through Trustee will be required to notify all Certificate
Owners through DTC Participants of the availability of Definitive Certificates.
Upon surrender by DTC of the certificates representing the Certificates and
receipt of instructions for re-registration, the Pass Through Trustee will
reissue the Certificates as Definitive Certificates to Certificate Owners.
(Section 3.09)
Distributions of principal, premium, if any, and interest with respect to
Certificates will thereafter be made by the Pass Through Trustee directly, in
accordance with the procedures set forth in the Basic Agreement and the
applicable Trust Supplements, to holders in whose names the Definitive
Certificates were registered at the close of business on the applicable record
date. Such distributions will be made by check mailed to the address of such
holder as it appears on the register maintained by the Pass Through Trustee. The
final payment on any Certificate, however, will be made only upon presentation
and surrender of such Certificate at the office or agency specified in the
notice of final distribution to Certificateholders. (Sections 4.02 and 11.01)
Definitive Certificates will be freely transferable and exchangeable at the
office of the Pass Through Trustee upon compliance with the requirements set
forth in the Basic Agreement and the applicable Trust
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Supplements. No service charge will be imposed for any registration of transfer
or exchange, but payment of a sum sufficient to cover any tax or other
governmental charge will be required. (Section 3.04)
Same-Day Settlement and Payment. So long as the Certificates are
registered in the name of Cede, as nominee for DTC, all payments made by the
Company to the Loan Trustee (as assignee of the Owner Trustee) under any Lease
will be in immediately available funds. Such payments, including the final
distribution of principal with respect to the Certificates of any Trust, 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 clearing-house or next-day funds. In contrast, secondary
trading in pass through certificates (such as the Certificates offered hereby)
is generally settled in immediately available or same-day funds. Any
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 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 Certificates.
PAYMENTS AND DISTRIBUTIONS
Payments of principal, premium, if any, and interest with respect to the
Notes held in each Trust will be distributed by the Pass Through Trustee to the
Certificateholders of such Trust on the dates specified in the applicable
Prospectus Supplement, except in certain cases when some or all of such Notes
are in default. See "Events of Default and Certain Rights Upon an Event of
Default." Payments of principal of, and interest on, the unpaid principal amount
of the Notes held in each Trust will be scheduled to be received by the Pass
Through Trustee on the dates specified in the applicable Prospectus Supplement
(such scheduled payments of interest and principal on the Notes are herein
referred to as "Scheduled Payments," and the dates specified in the applicable
Prospectus Supplement are herein referred to as "Regular Distribution Dates").
See "Description of the Notes -- General." Each holder of Certificates of each
Trust will be entitled to receive a pro rata share of any distribution in
respect of Scheduled Payments of principal and interest made on the Notes held
in such Trust.
Payments of principal, premium, if any, and interest received by the Pass
Through Trustee on account of the early redemption, if any, of Notes, and
payments, other than Scheduled Payments received on a Regular Distribution Date,
received by the Pass Through Trustee following a default in respect of Notes
("Special Payments") will be distributed to the Certificateholders of the
related Trust on the date determined pursuant to the applicable Prospectus
Supplement (a "Special Distribution Date"). The Pass Through Trustee will mail
notice to the Certificateholders of record of the applicable Trust not less than
20 days prior to the Special Distribution Date on which any Special Payment is
scheduled to be distributed by the Pass Through Trustee stating such anticipated
Special Distribution Date. (Section 4.02)
POOL FACTORS
Unless there has been an early redemption, a purchase of Notes by the
related Owner Trustee after an Indenture Default (as defined below) or a default
in the payment of principal or interest in respect of one or more issues of
Notes held in a Trust, as described in the applicable Prospectus Supplement or
below in "Events of Default and Certain Rights Upon an Event of Default," the
Pool Factor (as defined below) for each Trust will decline in proportion to the
scheduled repayments of principal on the Notes held in such Trust, as described
in the applicable Prospectus Supplement. In the event of such redemption,
purchase or default, the Pool Factor and the Pool Balance (as defined below) of
each Trust so affected will be recomputed after giving effect thereto and notice
thereof will be mailed to the Certificateholders of such Trust. Each Trust will
have a separate Pool Factor.
The "Pool Balance" for each Trust indicates, as of any date, the aggregate
unpaid principal amount of the Notes held in such Trust on such date plus any
amounts in respect of principal on such Notes held by the Pass Through Trustee
and not yet distributed. The Pool Balance for each Trust as of any Regular
Distribution Date
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or Special Distribution Date shall be computed after giving effect to the
payment of principal, if any, on the Notes held in such Trust and distribution
thereof to be made on that date.
The "Pool Factor" for each Trust as of any Regular Distribution Date or
Special Distribution Date is the quotient (rounded to the seventh decimal place)
computed by dividing (i) the Pool Balance by (ii) the aggregate original
principal amount of the Notes held in such Trust. The Pool Factor for each Trust
as of any Regular Distribution Date or Special Distribution Date shall be
computed after giving effect to the payment of principal, if any, on the Notes
held in such Trust and distribution thereof to be made on that date. The Pool
Factor for each Trust will initially (or, if applicable, after the accretion of
the original issue discount at which the Certificates of such Trust were issued)
be 1.0000000; thereafter, the Pool Factor for each Trust will decline as
described above to reflect reductions in the Pool Balance of such Trust. The
amount of a Certificateholder's pro rata share of the Pool Balance of a Trust
can be determined by multiplying the original denomination of the holders'
Certificate of such Trust by the Pool Factor for such Trust as of the applicable
Regular Distribution Date or Special Distribution Date. The Pool Factor and the
Pool Balance for each Trust will be identified in a statement mailed to
Certificateholders of such Trust on each Regular Distribution Date and Special
Distribution Date.
REPORTS TO CERTIFICATEHOLDERS
On each Regular Distribution Date and Special Distribution Date, the Pass
Through Trustee will include with each distribution of a Scheduled Payment or
Special Payment to Certificateholders of the related Trust a statement, giving
effect to such distribution to be made on such Regular Distribution Date or
Special Distribution Date, setting forth the following information (per $1,000
aggregate principal amount of Certificates for such Trust, as to (i) and (ii)
below):
(i) the amount of such distribution allocable to principal and the amount
allocable to premium, if any;
(ii) the amount of such distribution allocable to interest; and
(iii) the Pool Balance and the Pool Factor for such Trust. (Section
4.03(a))
So long as the Certificates are registered in the name of Cede, as nominee
for DTC, on the record date prior to each Regular Distribution Date and Special
Distribution Date the Pass Through Trustee will request from DTC a Securities
Position Listing setting forth the names of all DTC Participants reflected on
DTC's books as holding interests in the Certificates on such record date. On
each Regular Distribution Date and Special Distribution Date, the Pass Through
Trustee will mail to each such DTC Participant the statement described above and
will make available additional copies as requested by such DTC Participant for
forwarding to Certificate Owners. (Section 3.09)
In addition, after the end of each calendar year the Pass Through Trustee
will prepare for each Certificateholder of each Trust at any time during the
preceding calendar year a report containing the sum of the amounts determined
pursuant to clauses (i) and (ii) above with respect to the Trust for such
calendar year or, in the event such person was a Certificateholder during only a
portion of such calendar year, for the applicable portion of such calendar year,
and such other items as are readily available to the Pass Through Trustee and
which a Certificateholder shall reasonably request as necessary for the purpose
of such Certificateholder's preparation of its federal income tax returns.
(Section 4.03(b)) Such report and such other items shall be prepared on the
basis of information supplied to the Pass Through Trustee by the DTC
Participants and shall be delivered by the Pass Through Trustee to such DTC
Participants to be available for forwarding by such DTC Participants to
Certificate Owners in the manner described above.
At such time, if any, as the Certificates are issued in the form of
Definitive Certificates, the Pass Through Trustee will prepare and deliver the
information described above to each Certificateholder of record of each Trust as
the name and period of beneficial ownership of such Certificateholder appears on
the records of the registrar of the Certificates.
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VOTING OF NOTES
The Pass Through Trustee, as holder of the Notes held in each Trust, has
the right to vote and give consents and waivers with respect to such Notes under
the related Indenture. The Basic Agreement sets forth the circumstances in which
the Pass Through Trustee shall direct any action or cast any vote as the holder
of the Notes held in the applicable Trust at its own discretion and the
circumstances in which the Pass Through Trustee shall seek instructions from the
Certificateholders of such Trust. Prior to an Event of Default (as defined
below) with respect to any Trust, the principal amount of the Notes held in such
Trust directing any action or being voted for or against any proposal shall be
in proportion to the principal amount of Certificates held by the
Certificateholders of such Trust taking the corresponding positions. (Sections
6.01 and 11.01)
EVENTS OF DEFAULT AND CERTAIN RIGHTS UPON AN EVENT OF DEFAULT
An event of default under the Basic Agreement (an "Event of Default") is
defined as the occurrence and continuance of an event of default under one or
more of the Indentures (an "Indenture Default"). The Indenture Defaults under an
Indenture will be described in the applicable Prospectus Supplement and, with
respect to each Leased Property, will include an event of default under the
related Lease (a "Lease Event of Default"). Since the Notes issued under an
Indenture may be held in more than one Trust, a continuing Indenture Default
under such Indenture would result in an Event of Default under each such Trust.
However, unless specified in the applicable Prospectus Supplement, there will be
no cross-default provisions in the Indentures, and events resulting in an
Indenture Default under any particular Indenture will not necessarily result in
an Indenture Default occurring under any other Indenture. If an Indenture
Default occurs in fewer than all of the Indentures, notwithstanding the
treatment of Notes issued under any Indenture under which an Indenture Default
has occurred, payments of principal and interest on the Notes issued pursuant to
Indentures with respect to which an Indenture Default has not occurred will
continue to be distributed to the Certificateholders as originally scheduled.
With respect to each Leased Property, the applicable Owner Trustee and
Owner Participant will, under the related Indenture, have the right under
certain circumstances to cure Indenture Defaults that result from the occurrence
of a Lease Event of Default under the related Lease. If the Owner Trustee or the
Owner Participant exercises such cure right, the Indenture Default and,
consequently, the Event of Default with respect to the related Trust will be
deemed to have been cured.
The Basic Agreement provides that as long as an Indenture Default under any
Indenture relating to the Notes held in a Trust shall have occurred and be
continuing the Pass Through Trustee of such Trust may, but shall be under no
duty to, vote all of the Notes issued under such Indenture in such Trust and,
upon the direction of the holders of Certificates evidencing fractional
undivided interests aggregating not less than a majority in interest of such
Trust, shall vote a corresponding majority of such Notes in favor of directing
the Loan Trustee to declare the unpaid principal amount of all Notes issued
under such Indenture and any accrued and unpaid interest thereon to be due and
payable. The Basic Agreement also provides that if an Indenture Default under
such Indenture relating to the Notes held in a Trust shall have occurred and be
continuing the Pass Through Trustee of such Trust may, and upon the direction of
the holders of Certificates evidencing fractional undivided interests
aggregating not less than a majority in interest of such Trust shall, vote all
of the Notes issued under such Indenture that are held in such Trust in favor of
directing the Loan Trustee as to the time, method and place of conducting any
proceeding for any remedy available to the Loan Trustee or of exercising any
trust or power conferred on the Loan Trustee under such Indenture. (Sections
6.01 and 6.04)
The ability of the Certificateholders of any Trust to cause the Loan
Trustee with respect to any Notes held in such Trust to accelerate the Notes
under the related Indenture or to direct the exercise of remedies by the Loan
Trustee under the related Indenture will depend, in part, upon the proportion
between the aggregate principal amount of the Notes outstanding under such
Indenture and held in such Trust and the aggregate principal amount of all Notes
outstanding under such Indenture. Each Trust will hold Notes with different
terms from the Notes held in other Trusts and, therefore, the Certificateholders
of one Trust may have divergent or conflicting interests from those of the
Certificateholders of the other Trusts holding Notes
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outstanding under the same Indenture. In addition, so long as the same
institution acts as Pass Through Trustee of each Trust, in the absence of
instructions from the Certificateholders of any such Trust, the Pass Through
Trustee for such Trust could for the same reason be faced with a potential
conflict of interest upon an Indenture Default. In such event, the Pass Through
Trustee has indicated that it would resign as trustee of one or all of such
Trusts, and a successor trustee would be appointed in accordance with the terms
of the Basic Agreement.
As an additional remedy, if an Indenture Default shall have occurred and be
continuing, the Basic Agreement provides that the Pass Through Trustee of any
Trust holding Notes issued under such Indenture may, but shall be under no duty
to, and upon the direction of the holders of Certificates evidencing fractional
undivided interests aggregating not less than a majority in interest of such
Trust shall, sell for cash to any person all or part of such Notes. (Sections
6.01 and 6.02) Any proceeds received by the Pass Through Trustee upon any such
sale of Notes shall be deposited in an account established by the Pass Through
Trustee for the benefit of the Certificateholders of such Trust for the deposit
of such Special Payments (the "Special Payments Account") and shall be
distributed to such Certificateholders on a Special Distribution Date. (Sections
4.01 and 4.02) The market for Notes in default may be very limited, and there
can be no assurance that they could be sold for a reasonable price. Furthermore,
so long as the same institution acts as Pass Through Trustee of multiple Trusts,
it may be faced with a conflict in deciding from which Trust to sell Notes to
available buyers. If the Pass Through Trustee sells any Notes with respect to
which an Indenture Default exists for less than their outstanding principal
amount, the Certificateholders of such Trust will receive a smaller amount of
principal distributions than anticipated and will not have any claim for the
shortfall against the Company, any Owner Trustee or Owner Participant or the
Pass Through Trustee. Furthermore, neither the Pass Through Trustee nor the
Certificateholders of such Trust could take any action with respect to any
remaining Notes held in such Trust so long as no Indenture Defaults exist with
respect thereto.
Any amount, other than Scheduled Payments received on a Regular
Distribution Date, distributed to the Pass Through Trustee of any Trust by the
Loan Trustee under any Indenture on account of the Notes held in such Trust
following an Indenture Default under such Indenture shall be deposited in the
Special Payments Account for such Trust and shall be distributed to the
Certificateholders of such Trust on a Special Distribution Date. In addition,
if, following an Indenture Default, the applicable Owner Trustee exercises its
option to redeem or purchase the outstanding Notes issued under such Indenture
as described in the related Prospectus Supplement, the price paid by such Owner
Trustee to the Pass Through Trustee of any Trust for the Notes issued under such
Indenture and held in such Trust shall be deposited in the Special Payments
Account for such Trust and shall be distributed to the Certificateholders of
such Trust on a Special Distribution Date. (Sections 4.01, 4.02 and 6.02)
Any funds representing payments received with respect to any Notes held in
a Trust in default, or the proceeds from the sale by the Pass Through Trustee of
any such Notes, held by the Pass Through Trustee in the Special Payments Account
for such Trust shall, to the extent practicable, be invested and reinvested by
the Pass Through Trustee in Permitted Investments (as defined herein) pending
the distribution of such funds on a Special Distribution Date. Permitted
Investments are defined as obligations of the United States or agencies or
instrumentalities thereof the payment of which is backed by the full faith and
credit of the United States and which mature in not more than 60 days or such
lesser time as is required for the distribution of any such funds on a Special
Distribution Date. (Sections 1.01 and 4.04)
The Basic Agreement provides that the Pass Through Trustee of each Trust
shall, as promptly as practicable and, in any event, within 90 days, after the
occurrence of a default in respect of such Trust, if such default is actually
known to a responsible officer of the Pass Through Trustee, give to the
Certificateholders of such Trust notice, transmitted by mail, of all uncured or
unwaived defaults with respect to such Trust known to it, provided that, except
in the case of default in the payment of principal, premium, if any, or interest
on any of the Notes held in such Trust, the Pass Through Trustee shall be
protected in withholding such notice if it in good faith determines that the
withholding of such notice is in the interests of such Certificateholders.
(Section 7.01)
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The Basic Agreement contains a provision entitling the Pass Through Trustee
of each Trust, subject to the duty of the Pass Through Trustee during a default
to act with the required standard of care, to be offered reasonable security or
indemnity by the Certificateholders of such Trust before proceeding to exercise
any right or power under the Basic Agreement at the request of such
Certificateholders. (Section 7.02)
In certain cases, the holders of Certificates of a Trust evidencing
fractional undivided interests aggregating not less than a majority in interest
of such Trust may on behalf of all Certificateholders of such Trust waive, or
instruct the Loan Trustee to waive, any past default or Event of Default with
respect to such Trust and thereby annul any direction given by such
Certificateholders to the applicable Loan Trustee with respect thereto, except
(i) a default in the deposit of any Scheduled Payment or Special Payment or in
the distribution thereof, (ii) a default in payment of the principal, premium,
if any, or interest with respect to any of the Notes held in such Trust and
(iii) a default in respect of any covenant or provision of the Basic Agreement
or the related Trust Supplement that cannot be modified or amended without the
consent of each Certificateholder of such Trust affected thereby. (Section 6.05)
Each Indenture will provide that, with certain exceptions, the holders of a
majority in aggregate unpaid principal amount of the Notes issued thereunder may
on behalf of all such holders waive any past default or Indenture Default
thereunder. In the event of a waiver with respect to a Trust as described above,
the principal amount of the Notes issued under the related Indenture held in
such Trust shall be counted as waived in the determination of the majority in
aggregate unpaid principal amount of Notes required to waive a default or an
Indenture Default. Therefore, if the Certificateholders of a Trust or Trusts
waive a past default or Event of Default such that the principal amount of the
Notes held either individually in such Trust or in the aggregate in such Trusts
constitutes the required majority in aggregate unpaid principal amount under the
applicable Indenture, such past default or Indenture Default shall be waived.
MERGER, CONSOLIDATION AND TRANSFER OF ASSETS
The Company will be prohibited from consolidating with or merging into any
other corporation or transferring substantially all of its assets as an entirety
to any other entity unless (i) the surviving successor or transferee entity
shall expressly assume all of the obligations of the Company contained in the
Basic Agreement and in all Trust Supplements, Indentures and Participation
Agreements and, with respect to the Leased Property Notes, Leases and any other
operative documents; (ii) immediately after giving effect to such transaction no
Indenture Default (with respect to Owned Property Notes) or Lease Event of
Default (with respect to Leased Property Notes) shall have occurred and be
continuing; and (iii) the Company shall have delivered a certificate and an
opinion of counsel indicating that such transaction, in effect, complies with
such conditions. (Section 5.02(a))
The Basic Agreement does not and, except as otherwise described in the
applicable Prospectus Supplement, the Indentures will not contain any covenants
or provisions which may afford the Pass Through Trustee or Certificateholders
protection in the event of a highly leveraged transaction, including
transactions effected by management or affiliates, which may or may not result
in a change of control of the Company. No other instrument or agreement
currently evidencing other indebtedness of the Company contains covenants or
provisions affording holders of such indebtedness protection in the event of a
change in control of the Company.
MODIFICATION OF THE BASIC AGREEMENT
The Basic Agreement contains provisions permitting the Company and the Pass
Through Trustee of each Trust to enter into a supplemental trust agreement,
without the consent of any of the Certificateholders of such Trust, (i) to
provide for the formation of such Trust and the issuance of a series of
Certificates, (ii) to evidence the succession of another corporation to the
Company and the assumption by such corporation of the Company's obligations
under the Basic Agreement and the applicable Trust Supplement, (iii) to add to
the covenants of the Company for the benefit of such Certificateholders or to
surrender any right or power in the Basic Agreement or the applicable Trust
Supplement conferred upon the Company, (iv) to correct or supplement any
defective or inconsistent provision of the Basic Agreement or the applicable
Trust Supplement or to make any other provisions with respect to matters or
questions arising thereunder, provided such action
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shall not adversely affect the interests of such Certificateholders, or to cure
any ambiguity or correct any mistake, (v) to modify, eliminate or add to the
provisions of the Basic Agreement to the extent as shall be necessary to
continue the qualification of the Basic Agreement (including any supplemental
agreement) under the Trust Indenture Act and to add to the Basic Agreement such
other provisions as may be expressly permitted by the Trust Indenture Act, (vi)
to provide for a successor Pass Through Trustee or to add to or change any
provision of the Basic Agreement or the applicable Trust Supplement as shall be
necessary to facilitate the administration of the Trusts thereunder by more than
one Trustee and (vii) to make any other amendments or modifications to the Basic
Agreement, provided such amendments or modifications shall only apply to
Certificates issued thereafter. (Section 9.01)
The Basic Agreement also contains provisions permitting the Company and the
Pass Through Trustee of each Trust, with the consent of the holders of
Certificates of such Trust evidencing fractional undivided interests aggregating
not less than a majority in interest of such Trust and, with respect to any
Leased Property, the consent of the applicable Owner Trustee (such consent not
to be reasonably withheld), to execute supplemental trust agreements adding any
provisions to or changing or eliminating any of the provisions of the Basic
Agreement, to the extent relating to such Trust, and the applicable Trust
Supplement, or modifying the rights of the Certificateholders, except that no
such supplemental trust agreement may, without the consent of the holder of each
Certificate so affected thereby, (a) reduce in any manner the amount of, or
delay the timing of, receipt by the Trustee of payments on the Notes held in
such Trust or distributions in respect of any Certificate related to such Trust,
or change the date or place of any payment in respect of any Certificate, or
make distributions payable in coin or currency other than that provided for in
such Certificates, or impair the right of any Certificateholder of such Trust to
institute suit for the enforcement of any such payment when due, (b) permit the
disposition of any Note held in such Trust, except as provided in the Basic
Agreement or the applicable Trust Supplement, or otherwise deprive any
Certificateholder of the benefit of the ownership of the applicable Notes, (c)
reduce the percentage of the aggregate fractional undivided interests of the
Trust provided for in the Basic Agreement or the applicable Trust Supplement,
the consent of the holders of which is required for any such supplemental trust
agreement or for any waiver provided for in the Basic Agreement or such Trust
Supplement or (d) modify any of the provisions relating to the rights of the
Certificateholders in respect of the waiver of events of default or receipt of
payment. (Section 9.02)
MODIFICATION OF INDENTURE AND RELATED AGREEMENTS
In the event that the Pass Through Trustee, as the holder of any Notes held
in a Trust, receives a request for its consent to any amendment, modification or
waiver under the Indenture or other documents relating to such Notes (including
any Lease), the Pass Through Trustee shall send a notice of such proposed
amendment, modification or waiver to each Certificateholder of record of such
Trust as of the date of such notice. The Pass Through Trustee shall request
instructions from the Certificateholders of such Trust as to whether or not to
consent to such amendment, modification or waiver. The Pass Through Trustee
shall vote or consent with respect to such Notes in such Trust in the same
proportions as the Certificates of such Trust were actually voted by the holders
thereof by a certain date. Notwithstanding the foregoing, if an Event of Default
in respect of such Trust shall have occurred and be continuing, the Pass Through
Trustee may, in the absence of instructions from Certificateholders holding a
majority in interest of such Trust, in its own discretion consent to such
amendment, modification or waiver and may so notify the relevant Loan Trustee.
(Section 10.01)
TERMINATION OF THE TRUSTS
Each Trust will terminate upon the distribution to Certificateholders of
such Trust of all amounts required to be distributed to them pursuant to the
Basic Agreement and the applicable Trust Supplement and the disposition of all
property held in such Trust. The Pass Through Trustee will send to each
Certificateholder of record of such Trust notice of the termination of such
Trust, the amount of the proposed final payment and the proposed date for the
distribution of such final payment for such Trust. The final distribution to any
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Certificateholder of such Trust will be made only upon surrender of such
Certificateholder's Certificates at the office or agency of the Pass Through
Trustee specified in such notice of termination. (Section 11.01)
DELAYED PURCHASE
In the event that, on the delivery date of any Certificates, all of the
proceeds from the sale of such Certificates are not used to purchase the Notes
contemplated to be held in the related Trust, such Notes may be purchased by the
Pass Through Trustee at any time on or prior to the date specified in the
applicable Prospectus Supplement. In such event, the Pass Through Trustee will
hold the proceeds from the sale of such Certificates not used to purchase Notes
in an escrow account pending the purchase of the Notes not so purchased. Such
proceeds will be invested at the direction and risk of, and for the account of,
the Company in certain specified investments, which may include: (i) obligations
of, or guaranteed by, the United States Government or agencies thereof, (ii)
open market commercial paper of any corporation incorporated under the laws of
the United States of America or any State thereof rated at least P-2 or its
equivalent by Moody's Investors Service, Inc. or at least A-2 or its equivalent
by Standard & Poor's Corporation, (iii) certificates of deposit issued by
commercial banks organized under the laws of the United States or of any
political subdivision thereof having a combined capital and surplus in excess of
$500,000,000 which banks or their holding companies have a rating of A or its
equivalent by Moody's Investors Service, Inc. or Standard & Poor's Corporation;
provided, however, that the aggregate amount at any one time so invested in
certificates of deposit issued by any one bank shall not exceed 5% of such
bank's capital and surplus, (iv) U.S. dollar denominated offshore certificates
of deposit issued by, or offshore time deposits with, any commercial bank
described in (iii) or any subsidiary thereof and (v) repurchase agreements with
any financial institution having combined capital and surplus of at least
$500,000,000 with any of the obligations described in (i) through (iv) as
collateral; provided that if all of the above investments are unavailable, the
entire amounts to be invested may be used to purchase federal funds from an
entity described in clause (iii) above; and provided further that no investment
shall be eligible as a "specified investment" unless the final maturity date or
date of return of such investment is on or before (x) the scheduled date for the
purchase of such Notes, or (y) if no date has been scheduled for the purchase of
such Notes, the next business day, or (z) if the Company has given notice that
such Notes will not be purchased, the next applicable Special Distribution Date.
Earnings on such investments in the escrow account for each Trust will be paid
to the Company periodically, and the Company will be responsible for any losses.
(Section 2.02(b))
On the next Regular Distribution Date specified in the applicable
Prospectus Supplement, the Company will pay to the Pass Through Trustee an
amount equal to the interest that would have accrued on any Notes purchased
after the date of the issuance of such Certificates from the date of the
issuance of such Certificates to, but excluding, the date of the purchase of
such Notes by the Pass Through Trustee. (Section 2.02(b))
SPECIAL DISTRIBUTION UPON UNAVAILABILITY OF PROPERTY
To the extent, due to a casualty to, or other event causing the
unavailability of, a Property, that the full amount of the proceeds from the
sale of any Certificates held in the escrow account referred to above is not
used to purchase Notes on or prior to the date specified in the applicable
Prospectus Supplement, an amount equal to the unused proceeds will be
distributed by the Pass Through Trustee of the related Trust to the
Certificateholders of record of such Trust on a pro rata basis upon not less
than 20 days' prior notice to them as a Special Distribution Date together with
interest thereon at a rate equal to the rate applicable to such Certificates,
but without premium, and the Company will pay to the Pass Through Trustee on
such date an amount equal to such interest. (Section 2.02(b))
THE PASS THROUGH TRUSTEE
Wilmington Trust Company will be the Pass Through Trustee for each series
of Certificates and will be the Loan Trustee for each of the Indentures under
which the Notes are issued.
With certain exceptions, the Pass Through Trustee makes no representations
as to the validity or sufficiency of the Basic Agreement, the Trust Supplements,
the Certificates, the Notes, the Indentures, the
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Leases or other related documents. The Pass Through Trustee shall not be liable,
with respect to any series of Certificates, for any action taken or omitted to
be taken by it in good faith in accordance with the direction of the holders of
a majority in interest of outstanding Certificates of such series issued under
the Basic Agreement. Subject to such provisions, such Pass Through Trustee shall
be under no obligation to exercise any of its rights or powers under the Basic
Agreement at the request of any holders of Certificates issued thereunder unless
they shall have offered to the Pass Through Trustee indemnity satisfactory to
it. The Basic Agreement provides that the Pass Through Trustee in its individual
or any other capacity may acquire and hold Certificates issued thereunder and,
subject to certain conditions, may otherwise deal with the Company and any Owner
Trustee with the same rights it would have if it were not the Pass Through
Trustee. (Sections 7.02, 7.03 and 7.04)
The Pass Through Trustee may resign with respect to any or all of the
Trusts at any time, in which event the Company will be obligated to appoint a
successor trustee for such Trust or Trusts. If the Pass Through Trustee ceases
to be eligible to continue as Pass Through Trustee with respect to a Trust or
becomes incapable of acting as Pass Through Trustee or becomes insolvent, the
Company may remove such Pass Through Trustee, or any holder of the Certificates
of such 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. Any
resignation or removal of the Pass Through Trustee with respect to a Trust and
appointment of a successor trustee for such Trust does not become effective
until acceptance of the appointment by the successor trustee. (Section 7.08)
Pursuant to such resignation and successor trustee provisions, it is possible
that a different trustee could be appointed to act as the successor trustee with
respect to each Trust. All references in this Prospectus to the Pass Through
Trustee should be read to take into account the possibility that the Trusts
could have different successor trustees in the event of such a resignation or
removal.
The Basic Agreement provides that the Company will pay the Pass Through
Trustee's fees and expenses. (Section 7.06)
DESCRIPTION OF THE NOTES
The statements made under this caption are summaries and reference is made
to the entire Prospectus and the detailed information appearing in the
applicable Prospectus Supplement. Such summaries relate to the Notes and
Indenture relating to each Property in respect of which such Notes are to be
issued except to the extent, if any, described in the applicable Prospectus
Supplement. Where no distinction is made under this caption between the Leased
Property Notes and the Owned Property Notes or between their respective
Indentures, such statements refer to any Notes and any Indenture.
GENERAL
All Notes issued under the same Indenture will relate to a single Property.
The Notes with respect to each Property will be issued under a separate
Indenture either (a) between the related Owner Trustee of a trust for the
benefit of the Owner Participant who is the beneficial owner of such Property
and the related Loan Trustee or (b) between the Company and the related Loan
Trustee.
With respect to each Leased Property, the related Owner Trustee has
acquired or will acquire such Leased Property from the Company, has granted or
will grant a mortgage in the properties comprising such Leased Property to the
related Loan Trustee as security for the payments of the related Leased Property
Notes, and has leased or will lease such Leased Property to the Company pursuant
to the related Lease which has been or will be assigned to the related Loan
Trustee. Pursuant to the Lease related to each Leased Property, the Company will
be obligated to make or cause to be made rental and other payments to the
related Loan Trustee on behalf of the related Owner Trustee in amounts that will
be sufficient to make payments of the principal, interest and premium, if any,
required to be made in respect of such Leased Property Notes when and as due and
payable.
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The rental obligations of the Company under each Lease and the obligations
of the Company under each Owned Property Indenture and under the Owned Property
Notes will be the general obligations of the Company. Except in certain
circumstances involving the Company's purchase of Leased Property and the
assumption of the Leased Property Notes related thereto, the Leased Property
Notes are not direct obligations of or guaranteed by the Company.
PRINCIPAL AND INTEREST PAYMENTS
Interest paid on the Notes held in each Trust will be passed through to the
Certificateholders of such Trust on the dates and at the rate per annum set
forth in the applicable Prospectus Supplement until the final distribution for
such Trust. Principal paid on the Notes held in each Trust will be passed
through to the Certificateholders of such Trust in scheduled amounts on the
dates set forth in the applicable Prospectus Supplement until the final
distribution date for such Trust. See "Description of the
Certificates -- General."
If any date scheduled for any payment of principal, premium, if any, or
interest with respect to the Notes is not a business day, such payment will be
made on the next succeeding business day without any additional interest.
SECURITY
The Leased Property Notes will be secured by (i) an assignment by the
related Owner Trustee to the related Loan Trustee of such Owner Trustee's rights
(except for certain rights, including those described below) under the Lease
with respect to each related Leased Property, including the right to receive
payments of rent thereunder and (ii) a mortgage granted to such Loan Trustee of
each such Leased Property, subject to the rights of the Company under each
related Lease. Under the terms of each Lease, the Company's obligations in
respect of the related Leased Property will be those of a lessee under a "net
lease." Accordingly, the Company will be obligated, among other things and at
its expense, to pay all costs and expenses of operating and maintaining the
Leased Properties.
The Owned Property Notes will be secured by a mortgage granted to the
related Loan Trustee of certain of the Company's rights with respect to the
related Owned Properties. Under the terms of each Owned Property Indenture, the
Company will be obligated, among other things and at its expense, to pay all
costs and expenses of operating and maintaining the related Owned Property.
The Notes are not cross-collateralized and consequently the Notes issued in
respect of any one Property will not be secured by any other Property or, in the
case of Leased Property Notes, the Lease or Leases related thereto. Unless and
until an Indenture Default with respect to a Leased Property has occurred and is
continuing, the related Loan Trustee may not exercise any of the rights of the
related Owner Trustee under the related Lease. With respect to each Leased
Property, the assignment by the related Owner Trustee to the related Loan
Trustee of its rights under the related Lease will exclude, among other things,
rights of such Owner Trustee and the related Owner Participant relating to
indemnification by the Company for certain matters, insurance proceeds payable
to such Owner Trustee in its individual capacity and to such Owner Participant
under liability insurance maintained by the Company pursuant to such Lease or by
such Owner Trustee or such Owner Participant, insurance proceeds payable to such
Owner Trustee in its individual capacity or to such Owner Participant under
certain casualty insurance maintained by such Owner Trustee or such Owner
Participant pursuant to such Lease and any rights of such Owner Participant or
such Owner Trustee to enforce payment of the foregoing amounts and their
respective rights to the proceeds of the foregoing.
The Company will, at its expense, maintain or cause to be maintained
insurance covering each Property with coverage limits and on terms and
conditions as are specified in the applicable Prospectus Supplement.
Funds, if any, held from time to time by the Loan Trustee with respect to
any Property, including funds held as the result of an event of loss to such
Property or, with respect to any Leased Property, termination of the Lease
related thereto, will be invested and reinvested by such Loan Trustee. Such
investment and reinvestment will be at the direction of the Company (except,
with respect to a Leased Property, in the case of
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a Lease Event of Default under the related Lease or, with respect to an Owned
Property, in the case of an Indenture Default under the related Indenture) in
certain investments described in the related Indenture. The net amount of any
loss resulting from any such investments will be paid by the Company.
CONSEQUENCES OF THE COMPANY'S BANKRUPTCY
If the Company were to become a debtor in a liquidation or reorganization
case under Title 11 of the United States Code (the "Bankruptcy Code"), the
Company or its bankruptcy trustee could seek to reject any or all outstanding
Leases. Rejection of any Lease would constitute a breach of such Lease and, as
provided in applicable non-bankruptcy law, deprive the Company of the use of the
related Leased Property. If any Lease were rejected, rental payments thereunder
would terminate, thereby leaving the related Owner Trustee or Loan Trustee
without regular rent payments and with a claim for damages to pay amounts due
under the Leased Property Notes issued in respect of the related Leased
Property. There can be no assurance that any such claim for damages would, if
the bankruptcy court treated such Lease as a true lease and authorized its
rejection, be sufficient to provide for the repayment of the Leased Property
Notes issued under the Indenture related to such Lease. Under section 502(b)(6)
of the Bankruptcy Code, a claim by a lessor for damages resulting from the
rejection by a debtor of a lease of real property is limited to an amount equal
to the rent reserved under the lease, without acceleration, for the greater of
one year or 15 percent (but not more than three years) of the remaining term of
the lease, plus rent already due but unpaid. Regardless of any limitation of
damages pursuant to section 506(b)(6) of the Bankruptcy Code, the related Loan
Trustee could also realize upon its lien on and security interest in the related
Leased Property, which would not be affected by such rejection, to recover any
additional unpaid amounts on the Leased Property Notes.
PAYMENTS AND LIMITATION OF LIABILITY
Each Leased Property will be leased separately by the related Owner Trustee
to the Company pursuant to the related Lease for a term commencing on the
delivery date thereof to such Owner Trustee and expiring on a date not earlier
than the latest maturity date of the related Leased Property Notes, unless
previously terminated as permitted by the terms of the related Lease. The basic
rent and other payments under each such Lease will be payable by the Company in
accordance with the terms specified in the applicable Prospectus Supplement, and
will be assigned by the related Owner Trustee under the related Indenture to
provide the funds necessary to pay principal of, premium, if any, and interest
due from such Owner Trustee on the Leased Property Notes issued under such
Indenture. In certain cases, the basic rent payments under a Lease may be
adjusted, but each Lease will provide that under no circumstances will rent
payments by the Company with respect to any Leased Property be less than the
scheduled payments on the related Leased Property Notes. The balance of any
basic rent payment under any Lease, after payment of amounts due on the Leased
Property Notes issued under the Indenture corresponding to such Lease, will be
paid over to the applicable Owner Participant. The Company's obligation to pay
rent and to cause other payments to be made under each Lease will be general
obligations of the Company.
With respect to the Leased Property Notes, except in certain circumstances
involving the Company's purchase of a Leased Property and the assumption of the
Leased Property Notes related thereto, the Leased Property Notes will not be
obligations of, or guaranteed by, the Company. With respect to the Leased
Property Notes, none of the Owner Trustees, the Owner Participants or the Loan
Trustees shall be personally liable to any holder of such Leased Property Notes
for amounts payable under such Leased Property Notes, or, except as provided in
the Indentures relating thereto in the case of the Owner Trustees and the Loan
Trustees, for any liability under such Indentures. Except in the circumstances
referred to above, all amounts payable under any Leased Property Notes (other
than payments made in connection with an optional redemption or purchase by the
related Owner Trustee or the related Owner Participant) will be made only from
the assets subject to the lien of the related Indenture with respect to such
Leased Property or the income and proceeds received by the related Loan Trustee
therefrom (including rent payable by the Company under the related Lease).
With respect to the Leased Property Notes, except as otherwise provided in
the related Indentures, no Owner Trustee shall be personally liable for any
amount payable or for any statement, representation,
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warranty, agreement or obligation under such Indentures or under such Leased
Property Notes except for its own willful misconduct or gross negligence. None
of the Owner Participants shall have any duty or responsibility under the Leased
Property Indentures or Leased Property Notes to the related Loan Trustee or to
any holder of any such Leased Property Note.
The Company's obligations under each Owned Property Indenture and under the
Owned Property Notes will be general obligations of the Company.
DEFEASANCE OF THE INDENTURES AND THE NOTES IN CERTAIN CIRCUMSTANCES
Unless otherwise specified in the applicable Prospectus Supplement, the
applicable Indenture provides that the obligations of the related Loan Trustee
and, with respect to any Leased Property Notes, the related Owner Trustee or,
with respect to any Owned Property Notes, the Company under the applicable
Indenture shall be deemed to have been discharged and paid in full (except for
certain obligations, including the obligations to register the transfer or
exchange of Notes, to replace stolen, lost, destroyed or mutilated Notes and to
maintain paying agencies and hold money for payment in trust) on the 91st day
after the date of irrevocable deposit with the related Loan Trustee of money or
certain obligations of the Unites States or any agency or instrumentality
thereof the payment of which is backed by the full faith and credit of the
United States which, through the payment of principal and interest in respect
thereof in accordance with their terms, will provide money in an aggregate
amount sufficient to pay when due (including as a consequence of redemption in
respect of which notice is given on or prior to the date of such deposit)
principal of, premium, if any, and interest on all Notes issued thereunder in
accordance with the terms of such Indenture. Such discharge may occur only if,
among other things, there has been published by the Internal Revenue Service a
ruling to the effect that holders of such Notes will not recognize income, gain
or loss for federal income tax purposes as a result of such deposit, defeasance
and discharge and will be subject to federal income tax on the same amount and
in the same manner and at the same time as would have been the case if such
deposit, defeasance and discharge had not occurred.
Upon such defeasance, or upon payment in full of the principal of, premium,
if any, and interest on all Notes issued under any Indenture on the maturity
date therefor or deposit with the applicable Loan Trustee of money sufficient
therefor no earlier than one year prior to the date of such maturity, the
holders of such Notes will have no beneficial interest in or other rights with
respect to the related Property or other assets subject to the lien of such
Indenture and such lien shall terminate.
ASSUMPTION OF OBLIGATIONS BY THE COMPANY
Unless otherwise specified in the applicable Prospectus Supplement with
respect to any Leased Property, upon the exercise by the Company of any purchase
options it may have under the related Lease prior to the end of the term of such
Lease, the Company may assume on a full recourse basis all of the obligations of
the Owner Trustee (other than its obligations in its individual capacity) under
the Indenture with respect to such Leased Property, including the obligations to
make payments in respect of the related Leased Property Notes. In such event,
certain relevant provisions of the related Lease, including (among others)
provisions relating to maintenance, possession and use of such Leased Property,
liens, insurance and events of default will be incorporated into such Indenture,
and the Leased Property Notes issued pursuant thereto will not be redeemed and
will continue to be secured by such Leased Property.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following is a general discussion of the anticipated material United
States federal income tax consequences of the purchase, ownership and
disposition of the Certificates and should be read in conjunction with any
additional discussion of federal income tax consequences included in the
applicable Prospectus Supplement. The discussion is based on laws, regulations,
rulings and decisions, all as in effect on the date of this Prospectus and all
of which are subject to change or different interpretations, which may be
retroactive. The discussion below does not purport to address all of the federal
income tax consequences that may be applicable to all categories of investors,
some of which (for example, banks, tax exempt organizations,
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insurance companies and foreign investors) may be subject to special rules. The
statements of law and legal conclusions set forth herein have been confirmed by
the opinion of Kelley Drye & Warren, special counsel to the Company, as
qualified therein and herein. Certain of the anticipated federal income tax
consequences discussed herein are based on proposed Treasury Regulations, which
are subject to change and are not binding authority until adopted as final or
temporary regulations. As a result, definitive guidance cannot be provided
regarding all of the federal income tax consequences to Certificate Owners or to
the Trusts. In addition, there can be no assurance that the Internal Revenue
Service ("IRS") or the courts would not take positions different from those
discussed herein which would be materially adverse to investors. Investors
should consult their own tax advisors in determining the federal, state, local,
foreign and any other tax consequences to them of the purchase, ownership and
disposition of the Certificates, including the advisability of making any
election discussed below. The Trusts are not indemnified for any federal income
taxes that may be imposed upon them, and the imposition of any such taxes could
result in a reduction in the amounts available for distribution to the
Certificate Owners of the affected Trust.
GENERAL
Based upon an interpretation of analogous authorities under currently
applicable law, the Trusts should not be classified as associations taxable as
corporations, but, rather, should be classified as grantor trusts under Subpart
E, Part I of Subchapter J of the Internal Revenue Code of 1986, as amended (the
"Code"), and each Certificate Owner of each Trust should be treated as the owner
of a pro rata undivided interest in each of the Notes or any other property held
by such Trust.
Section 7701(i) of the Code provides that "taxable mortgage pools" will be
taxed as corporations notwithstanding other provisions of the Code. An entity
will be treated as a taxable mortgage pool only if (i) substantially all of the
entity's assets consist of debt obligations more than 50% of which consist of
real estate mortgages; (ii) the entity is the obligor under debt obligations
with two or more maturities; and (iii) under the terms of the debt obligations
(or underlying arrangement) under which the entity is the obligor, payments on
the debt obligations bear a relationship to payments on the debt obligations
held by the entity. Proposed Treasury Regulations under Code section 7701(i)
provide that for purposes of applying the taxable mortgage pool rules, ownership
interests in entities that are classified as trusts under the "investment trust"
rules of Treasury Regulation section 301.7701-4(c) will not be treated as debt
obligations of such trusts. The Trusts herein are expected to qualify as such
trusts, and the Proposed Regulations would confirm that the taxable mortgage
pool rules do not apply to the Trusts.
Each Certificate Owner should be required to report on its federal income
tax return its pro rata share of the entire income from the Notes or any other
property held by the related Trust, in accordance with such Certificate Owner's
method of accounting. A Certificate Owner using the cash method of accounting
must take into account its pro rata share of income as and when received (or
deemed received) by the Pass Through Trustee. A Certificate Owner using an
accrual method of accounting must take into account its pro rata share of income
as it accrues or is received by the Pass Through Trustee, whichever is earlier.
A purchaser of a Certificate should be treated as purchasing an interest in
each Note and any other property in the related Trust at a price determined by
allocating the purchase price paid for the Certificate among such Notes and
other property in proportion to their fair market values at the time of purchase
of the Certificate. Unless otherwise indicated in a Prospectus Supplement, it is
believed that when all the Notes have been acquired by the related Trust the
purchase price paid for a Certificate by an original purchaser of a Certificate
should be allocated among the Notes in the related Trust in proportion to their
respective principal amounts.
ORIGINAL ISSUE DISCOUNT
The Notes may be issued with original issue discount ("OID"), which may
require Certificate Owners to include such OID in gross income in advance of the
receipt of the cash attributable to such income. The Prospectus Supplement will
state whether any Notes to be held by the related Trust will be issued with OID.
In general, a Note will be considered to be issued with OID (subject to a de
minimis exception) to the extent
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the "stated redemption price at maturity" of such Note is greater than its
"issue price." The stated redemption price at maturity of a debt instrument
generally will equal all payments due under the debt instrument at any time,
other than payments of "qualified stated interest," which is defined as interest
payments calculated on the basis of a single fixed rate of interest that is
actually and unconditionally payable at fixed, periodic intervals of one year or
less over the entire term of the debt instrument. The issue price of the Notes
will equal the price paid therefor by the related Trusts, which will equal the
offering price at which the Certificates are sold to the public.
The amount of OID to be included in income in any tax period with respect
to a Note will be determined using a constant yield to maturity method. Any
amounts included in income as OID will increase a Certificate Owner's adjusted
tax basis with regard to its interest in the Note.
Some Notes may be issued with maturity dates of not more than one year from
the date of issue. The OID provisions of the Code do not generally apply to such
short-term obligations; however, the Code provisions applicable to such
short-term obligations may require taxpayers to include amounts in income prior
to the receipt of cash. In general, section 1281 of the Code requires an accrual
method taxpayer to include OID in income on a straight-line basis over the term
of the obligation (or, if the holder so elects, on a constant interest basis). A
Certificate Owner may elect to include in income "acquisition discount" rather
than OID with respect to its interest in a Note constituting a short-term
obligation. The amount of a Note's acquisition discount will equal the excess of
its stated redemption price at maturity over the holder's basis in the Note, and
would be included in income pursuant to the accrual rules discussed above. Once
made, an election to utilize acquisition discount rather than OID would apply to
all non-governmental debt obligations with a term of one year or less acquired
by such Certificate Owner on or after the first day of the first taxable year to
which the election applies, unless the IRS consents to a revocation of the
election.
The above discussion regarding OID is based on proposed Treasury
Regulations promulgated under the OID provisions of the Code (the "Proposed OID
Regulations"), as revised. Certificate Owners should be aware, however, that the
IRS may further revise the Proposed OID Regulations, and that any such further
revision could prescribe different tax treatment from that described herein.
Subsequent purchasers of Certificates will be required to include OID in
income, but the amount to be reported will depend on the amount paid for each
such Certificate by the subsequent purchaser, as allocated to the Notes held by
the related Trust. Section 1272(a)(7) of the Code provides that the amount of
OID required to be reported on an interest in a Note may be reduced if the
subsequent purchaser pays an "acquisition premium" for such interest.
SALES OF CERTIFICATES
A Certificate Owner that sells a Certificate should thus recognize gain or
loss equal to the difference between its adjusted tax basis in each asset held
by the related Trust and the amount realized on the sale (except to the extent
attributable to accrued interest, which should be taxable as ordinary income).
The amount realized on the sale of a Certificate should be apportioned among the
assets of the related Trust according to their relative fair market values.
Subject to the market discount rules discussed below, any such gain or loss will
be capital gain or loss if the asset was held as a capital asset and will be
long-term capital gain or loss if the asset was held for more than one year. See
"Certain Federal Income Tax Consequences -- Market Discount." Net capital gain
(the excess of net long-term capital gain over net short-term capital loss) of
individuals is, under certain circumstances, taxed at lower rates than items of
ordinary income.
MARKET DISCOUNT
Purchasers of Certificates should be aware that the resale of such
Certificates may be affected by the market discount provisions of the Code. In
general, if any Certificate Owner's interest in a Note held by the related Trust
is acquired at a "market discount" (i.e., subject to a de minimis exception, a
price below the Note's stated redemption price at maturity or, in the case of an
interest in a Note with OID, the issue price plus the original issue discount
includible in the income of all prior holders of such Certificate with respect
to
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that Note), the Certificate Owner should be subject to the market discount rules
of sections 1276 to 1278 of the Code with regard to its interest in the Note.
In the case of a sale or certain other dispositions of indebtedness subject
to the market discount rules, section 1276 of the Code requires that gain, if
any, from such sale or disposition be treated as ordinary income to the extent
such gain represents market discount that has accrued during the period in which
the indebtedness was held.
In the case of a partial 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 such payment does not
exceed the market discount that has accrued during the period such indebtedness
was held. The amount of any accrued market discount later required to be
included in income upon a disposition, or subsequent partial principal payment,
will be reduced by the amount of accrued market discount previously included in
income.
Generally, market discount accrues under a straight line method, or, at the
election of the taxpayer, a constant interest method. However, in the case of
installment obligations the manner in which market discount is to be accrued has
been left to Treasury Regulations not yet issued (unless a Prospectus Supplement
indicates otherwise). Until such Treasury Regulations are issued, the
explanatory Conference Committee Report to the Tax Reform Act of 1986 (the
"Conference Report") indicates that holders of installment obligations 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 (or, if such obligation has OID, the OID for the
period) bears to the total amount of stated interest remaining to be paid on the
installment obligation as of the beginning of such period (or, if such
obligation has OID, the total remaining OID at the beginning of the 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.
Section 1278 of the Code allows a taxpayer to make an election to include
market discount in gross income currently, through the use of either the
straight-line inclusion method or the constant interest method. If such election
is made, the rules of sections 1276 and 1277 (described above) will not apply to
the taxpayer. Once made, such an election applies to all market discount debt
instruments acquired by the taxpayer during or after the taxable year for which
the election is made, and may not be revoked without the consent of the IRS. If
an election is made to include market discount in income currently, the
taxpayer's basis in such debt instrument is increased by the market discount
thereon as it is includible in income.
PREMIUM
A Certificate Owner should generally be considered to have acquired an
interest in a Note at a premium to the extent the purchaser's tax basis
allocable to such interest exceeds the remaining principal amount of the Note
allocable to such interest. In such event, a Certificate Owner that holds a
Certificate as a capital asset may elect under section 171 of the Code to
amortize that premium as an offset to interest income with corresponding
reductions in the Certificate Owner's tax basis in that Note. Generally, such
amortization is on a constant yield basis. However, in the case of installment
obligations, 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 "Certain Federal
Income Tax Consequences -- Market Discount."
It is not clear under the Code how amortizable bond premium should be
treated when there is the possibility of early redemption or when the amount of
the redemption premium is unknown. In addition, it is
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not clear how any unamortized bond premium remaining at the time of an early
call should be treated under the Code. Because of the lack of certainty in this
area, Certificate Owners should consult their own tax advisors as to the amount
and treatment of any amortizable bond premium. If a Certificate Owner acquired a
Certificate at a premium and elects to amortize such premium, and the IRS
successfully challenged the amount of amortization claimed for a particular
period, then such Certificate Owner would not be able to offset interest income
on the Certificate for such period with the amount of such disallowed
amortization.
INFORMATION REPORTING
Information reports will be made by the Trustee to the IRS, and to
Certificate Owners that are not exempt from the reporting requirements, annually
or as otherwise required with respect to interest paid (or OID accrued, if any)
on the Certificates.
BACKUP WITHHOLDING
Payments made on the Certificates, and proceeds from the sale of the
Certificates to or through certain brokers, may be subject to a "backup"
withholding tax of 31% unless the Certificate Owner complies with certain
reporting procedures or is exempt from such requirements under section 3406 of
the Code. Any such withheld amounts are allowed as a credit against the
Certificate Owner's federal income tax. Furthermore, certain penalties may be
imposed by the IRS on a Certificate Owner who is required to supply information
but who does not do so in the proper manner.
THE FOREGOING SUMMARY DOES NOT DISCUSS ALL ASPECTS OF FEDERAL INCOME
TAXATION THAT MAY BE RELEVANT TO A PARTICULAR CERTIFICATE OWNER IN LIGHT OF ITS
CIRCUMSTANCES AND INCOME TAX SITUATION. EACH CERTIFICATE OWNER SHOULD CONSULT
ITS TAX ADVISOR AS TO THE SPECIFIC TAX CONSEQUENCES TO SUCH CERTIFICATE OWNER OF
THE OWNERSHIP AND DISPOSITION OF THE CERTIFICATES, INCLUDING THE PROPRIETY OF
MAKING ANY ELECTION DESCRIBED ABOVE AND THE APPLICATION AND EFFECT OF STATE,
LOCAL, FOREIGN AND OTHER TAX LAWS.
CERTAIN DELAWARE TAXES
The Pass Through Trustee is a Delaware banking corporation with its
principal trust office in Wilmington, Delaware. Richards Layton & Finger,
counsel to the Pass Through Trustee, has advised the Company that, in its
opinion, under currently applicable Delaware law, assuming that the Trusts will
not be taxable as corporations, but, rather, will be classified as grantor
trusts under subpart E, Part I of Subchapter J of the Code, (i) the Trusts will
not be subject to any tax (including without limitation, net or gross income,
tangible or intangible property, net worth, capital, franchise or doing business
tax), fee or other governmental charge under the laws of the State of Delaware
or any political subdivision thereof and (ii) Certificate Owners that are not
residents of or otherwise subject to tax in the State of Delaware will not be
subject to any tax (including, without limitation, net or gross income, tangible
or intangible property, net worth, capital, franchise or doing business tax),
fee or other governmental charge under the laws of the State of Delaware or any
political subdivision thereof as a result of purchasing, holding (including
receiving payments with respect to) or selling a Certificate. Neither the 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 a Trust could result in
a reduction in the amounts available for distribution to the Certificate Owners
of such Trust. In general, should a Certificate Owner or a Trust be subject to
any state or local tax which would not be imposed if the Pass Through Trustee
were located in a different jurisdiction in the United States, the Pass Through
Trustee will resign and a new Pass Through Trustee in such other jurisdiction
will be appointed.
ERISA CONSIDERATIONS
Unless otherwise indicated in the applicable Prospectus Supplement, the
Certificates may, subject to certain legal restrictions, be purchased and held
by an employee benefit plan (a "Plan") subject to Title I of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), or an individual
retirement account or an employee benefit plan subject to section 4975 of the
Code. A fiduciary of a Plan must determine
23
<PAGE> 25
that the purchase and holding of a Certificate is consistent with its fiduciary
duties under ERISA and does not result in a non-exempt prohibited transaction as
defined in section 406 of ERISA or section 4975 of the Code. Employee benefit
plans which are governmental plans (as defined in section 3(32) of ERISA) and
certain church plans (as defined in section 3(33) of ERISA) are not subject to
Title I of ERISA or section 4975 of the Code. The Certificates may, subject to
certain legal restrictions, be purchased and held by such plans.
PLAN OF DISTRIBUTION
The Certificates being offered hereby may be sold in any one or more of the
following ways from time to time by Morgan Stanley & Co. Incorporated, Goldman,
Sachs & Co. and Salomon Brothers Inc (the "Distributors") acting as: (i) agent
or (ii) underwriters. In addition, the Certificates may be sold directly to
purchasers.
The distribution of the Certificates may be effected from time to time in
one or more transactions at a fixed price or prices, which may be changed, at
market prices prevailing at the time of sale, at prices related to such
prevailing market prices or at negotiated prices.
In the event the Distributors act as agent, any commission payable by the
Company to the Distributors will be set forth, in the applicable Prospectus
Supplement. Unless otherwise indicated in such Prospectus Supplement, any such
Distributor will be acting on a best efforts basis for the period of its
appointment. Any such Distributor may be deemed to be an underwriter, as that
term is defined in the Securities Act, of the Certificates so offered and sold.
If the Certificates are sold by means of an underwritten offering, the
Company will execute an underwriting agreement with the Distributors, and the
terms of the transaction, including commissions, discounts and any other
compensation of the Distributors and dealers, if any, will be set forth in the
Prospectus Supplement which will be used by the Distributors to make offers and
sales of the Certificates in respect of which this Prospectus is delivered to
the public. If Distributors are utilized in the sale of the Certificates in
respect of which this Prospectus is delivered, the Certificates will be acquired
by the Distributors for their own account and may be resold from time to time in
one or more transactions, including negotiated transactions, at fixed public
offering prices or at varying prices determined by the Distributors at the time
of sale. The Certificates may be offered to the public either through
underwriting syndicates represented by the Distributors or directly by the
Distributors. If the Distributors are utilized in the sale of the Certificates,
unless otherwise indicated in the Prospectus Supplement, the underwriting
agreement will provide that the obligations of the Distributors are subject to
certain conditions precedent and that the Distributors with respect to a sale of
the Certificates will be obligated to purchase all such Certificates if any are
purchased. The Company does not intend to apply for listing of the Certificates
on a national securities exchange. If the Certificates are sold by means of an
underwritten offering, the Distributors may make a market in the Certificates as
permitted by applicable laws and regulations. No Distributor would be obligated,
however, to make a market in the Certificates and any such market making could
be discontinued at any time at the sole discretion of such Distributor.
Accordingly, no assurance can be given as to the liquidity of, or trading
markets for, the Certificates.
If a dealer is utilized in the sale of the Certificates in respect of which
this Prospectus is delivered, such Certificates will be sold to the dealer as
principal. The dealer may then resell such Certificates to the public at varying
prices to be determined by such dealer at the time of resale. Any such dealer
may be deemed to be an underwriter, as such term is defined in the Securities
Act, of the Certificates so offered and sold. The name of the dealer and the
terms of the transaction will be set forth in the Prospectus Supplement relating
thereto.
Offers to purchase the Certificates may be solicited directly and the sale
thereof may be made directly to institutional investors or others, who may be
deemed to be underwriters within the meaning of the Securities Act with respect
to any resale thereof. The terms of any such sales will be described in the
Prospectus Supplement relating thereto.
The Distributors may be entitled under relevant agreements to
indemnification or contribution by the Company against certain liabilities,
including liabilities under the Securities Act and may engage in
24
<PAGE> 26
transactions with, or perform services for, the Company and the Company's
subsidiaries in the ordinary course of business.
LEGAL MATTERS
The validity of the Certificates offered hereby will be passed upon for the
Company by Kelley Drye & Warren, a New York partnership including professional
corporations, 101 Park Avenue, New York, New York 10178, and for any agents or
underwriters by Shearman & Sterling, 599 Lexington Avenue, New York, New York
10022. Unless otherwise indicated in the applicable Prospectus Supplement, both
Kelley Drye & Warren and Shearman & Sterling will rely on the opinion of
Richards Layton & Finger, counsel for Wilmington Trust Company, individually and
as Pass Through Trustee for the Certificates of each Trust, as to certain
matters relating to the authorization, execution and delivery of such
Certificates by, and the valid and binding effect thereof on, such Pass Through
Trustee.
EXPERTS
The consolidated financial statements of the Company incorporated by
reference in this Prospectus and elsewhere in the Registration Statement have
been audited by Ernst & Young, independent auditors, for the periods indicated
in their reports with respect thereto and have been incorporated by reference
herein in reliance upon such reports given upon the authority of said firm as
experts in accounting and auditing.
25
<PAGE> 27
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the expenses in connection with
the issuance and distribution of the securities being registered, other than
underwriting discounts and commissions. All amounts are estimated except the
Securities and Exchange Commission registration fee.
<TABLE>
<S> <C>
SEC registration fee . . . . . . . . . . . . . . . . . . . . . . . . . $103,449
Accounting fees and expenses . . . . . . . . . . . . . . . . . . . . . 100,000
Blue Sky fees and expenses . . . . . . . . . . . . . . . . . . . . . . 20,000
Legal fees and expenses . . . . . . . . . . . . . . . . . . . . . . . . 200,000
Trustee's fees and expenses . . . . . . . . . . . . . . . . . . . . . . 20,000
Printing and engraving expenses . . . . . . . . . . . . . . . . . . . . 60,000
Rating agency fees . . . . . . . . . . . . . . . . . . . . . . . . . . 250,000
----------
Total . . . . . . . . . . . $ 753,449
==========
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Article VII of the Company's By-laws provides for indemnification of
directors and officers to the full extent permissible under section 145 of the
Delaware General Corporation Law (the "GCL"). Section 145 of the GCL generally
grants corporations the power to indemnify their directors, officers, employees
and agents of a corporation in accordance with the provisions thereof.
The Company enters into indemnification agreements with each of its
executive officers and directors. Each such Indemnification Agreement provides
for indemnification of officers and directors of the Company to the greatest
extent permitted by the GCL and additionally provides (i) that such persons
shall be indemnified for amounts paid in settlement of derivative actions, (ii)
for advances of investigation and litigation expenses subject to repayment if
indemnification is disallowed, (iii) that indemnification is available unless
the board of directors or independent legal counsel or the stockholders
determine that the relevant standards of conduct were not satisfied, with the
Company bearing the burden of providing same in any suit for indemnification,
and (iv) for payment to such persons of expenses incurred in connection with
the successful prosection of an action for indemnification, in whole or in
part, of any amount not timely paid (generally within 30 days of demand) by the
Company.
The Company maintains a standard form of officers' and directors'
liability insurance policy which provides coverage to the officers and
directors of the Company for certain liabilities, including certain liabilities
which may arise out of this Registration Statement.
In accordance with section 102(a)(7) of the GCL, Article VII of the
Company's Restated Certificate of Incorporation eliminates the personal
liability of directors to the Company or its stockholders for monetary damages
for breach of fiduciary duty as a director with certain limited exceptions set
forth in section 102(a)(7) of the GCL.
Reference is made to the form of Underwriting Agreement filed as
Exhibit 1 to this Registration Statement, which provides for indemnification of
directors and officers of the Company by the Underwriters against certain
liabilities.
II-1
<PAGE> 28
ITEM 16. EXHIBITS.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
-------- -----------
<S> <C> <C>
1* - Form of Underwriting Agreement.
4.1* - Form of Pass Through Trust Agreement between the Company and the Pass Through Trustee.
4.2* - Form of Pass Through Certificate (included in Exhibit 4.1).
5.1* - Opinion of Kelley Drye & Warren, counsel for the Company.
5.2* - Opinion of Richards Layton & Finger, counsel for the Pass Through Trustee.
8* - Tax Opinion of Kelley Drye & Warren, counsel for the Company.
12* - Computation of Ratio of Earnings to Fixed Charges.
23.1 - Consent of Ernst & Young.
23.2* - Consent of Kelley Drye & Warren (included in Exhibits 5.1 and 8).
23.3* - Consent of Richards Layton & Finger (included in Exhibit 5.2).
24.1* - Power of Attorney.
25 - Statement of Eligibility of Trustee on Form T-1 (previously filed,
except Exhibit D thereto filed herewith).
- -------------------
</TABLE>
* Previously filed.
ITEM 17. UNDERTAKINGS.
Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the registrant pursuant to the provisions described under Item 15 above, or
otherwise, the registrant has been advised that in the opinion of the
Securities and Exchange Commission, such indemnification is against public
policy as expressed in the Securities Act and is, therefore, unenforceable. In
the event that a claim for indemnification for such liabilities (other than the
payment by the registrant of expenses incurred or paid by a director, officer
or controlling person of the registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as
expressed in the Securities Act and will be governed by the final adjudication
of such issue.
The undersigned registrant hereby undertakes:
(1) to file, during any period in which offers or
sales are being made, a post-effective amendment to this
Registration Statement:
II-2
<PAGE> 29
(a) to include any prospectus required by section
10(a)(3) of the Securities Act;
(b) to reflect in the prospectus any facts or
events arising after the effective date of this
Registration Statement (or the most recent
post-effective amendment thereof) which, individually
or in the aggregate, represent a fundamental change
in the information set forth in this Registration
Statement; and
(c) to include any material information with
respect to the plan of distribution not previously
disclosed in this Registration Statement or any
material change to such information in this
Registration Statement;
(2) that, for the purpose of determining any
liability under the Securities Act, each such post-effective
amendment shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering
of such securities at that time shall be deemed to be the
initial bona fide offering thereof; and
(3) to remove from registration by means of a
post-effective amendment any of the securities being
registered which remain unsold at the termination of the
offering.
The undersigned registrant hereby undertakes that, for
purposes of determining any liability under the Securities Act, each filing of
the registrant's annual report pursuant to section 13(a) or section 15(d) of
the Securities Exchange Act of 1934 that is incorporated by reference in this
Registration Statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under
the Securities Act of 1933, the information omitted from the
form of prospectus filed as part of this registration
statement in reliance upon Rule 430A and contained in a form
of prospectus filed by the registrant pursuant to Rule
424(b)(1) or (4) or 497(h) under the Securities Act shall be
deemed to be part of this registration statement as of the
time it was declared effective.
(2) For the purpose of determining any liability
under the Securities Act of 1933, each post-effective
amendment that contains a form of prospectus shall be deemed
to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering
thereof.
The undersigned registrant hereby undertakes to file an
application for the purpose of determining the eligibility of the Trustee to
act under subsection (a) of section 310 of the Trust Indenture Act in
accordance with the rules and regulations prescribed by the Commission under
section 305(b)(2) of the Act.
II-3
<PAGE> 30
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as
amended, the Registrant certifies that it has reasonable grounds to believe
that it meets all of the requirements for filing on Form S-3 and has duly
caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Salt Lake City, State of
Utah on the 1st day of February, 1994.
SMITH'S FOOD & DRUG CENTERS, INC.
By: /s/ Robert D. Bolinder
----------------------------------
Robert D. Bolinder
Excutive Vice President
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED,
THIS REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED.
<TABLE>
<CAPTION>
Signatures Title Date
---------- ----- ----
<S> <C> <C>
/s/Jeffrey P. Smith* Chairman of the Board of Directors and February 1, 1994
--------------------------------------- Chief Executive Officer (Principal
Jeffrey P. Smith Executive Officer)
/s/Richard D. Smith* President and Chief Operating Officer; February 1, 1994
--------------------------------------- Director
Richard D. Smith
/s/Matthew G. Tezak* Senior Vice President and Chief February 1, 1994
--------------------------------------- Financial Officer (Principal Financial
Matthew G. Tezak and Accounting Officer)
/s/Robert D. Bolinder* Executive Vice President, Corporate February 1, 1994
--------------------------------------- Planning and Development; Director
Robert D. Bolinder
/s/Kenneth A. White* Senior Vice President, Regional Manager, February 1, 1994
--------------------------------------- California Region; Director
Kenneth A. White
</TABLE>
II-4
<PAGE> 31
<TABLE>
<S> <C> <C>
/s/Rodney H. Brady* Director February 1, 1994
---------------------------------------
Rodney H. Brady
/s/Allen P. Martindale* Director February 1, 1994
---------------------------------------
Allen P. Martindale
/s/DeLonne Anderson* Director February 1, 1994
---------------------------------------
DeLonne Anderson
/s/Alan R. Hoefer* Director February 1, 1994
---------------------------------------
Alan R. Hoefer
/s/Duane Peters* Director February 1, 1994
---------------------------------------
Duane Peters
/s/Ray V. Rose* Director February 1, 1994
---------------------------------------
Ray V. Rose
/s/Fred L. Smith* Director February 1, 1994
---------------------------------------
Fred L. Smith
/s/Sean D. Smith* Director February 1, 1994
---------------------------------------
Sean D. Smith
/s/Douglas John Tigert* Director February 1, 1994
---------------------------------------
Douglas John Tigert
*By/s/Michael C. Frei February 1, 1994
------------------------------------
Michael C. Frei,
Attorney in Fact
</TABLE>
II-5
<PAGE> 32
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number Description Page No.
-------- ----------- --------
<S> <C> <C>
1* - Form of Underwriting Agreement.
4.1* - Form of Pass Through Trust Agreement between the Company and the Pass Through Trustee.
4.2* - Form of Pass Through Certificate (included in Exhibit 4.1).
5.1* - Opinion of Kelley Drye & Warren, counsel for the Company.
5.2* - Opinion of Richards Layton & Finger, counsel for the Pass Through Trustee.
8* - Tax Opinion of Kelley Drye & Warren, counsel for the Company.
12* - Computation of Ratio of Earnings to Fixed Charges.
23.1 - Consent of Ernst & Young.
23.2* - Consent of Kelley Drye & Warren (included in Exhibits 5.1 and 8).
23.3* - Consent of Richards Layton & Finger (included in Exhibit 5.2).
24.1* - Power of Attorney.
25 - Statement of Eligibility of Trustee on Form T-1 (previously filed,
except Exhibit D thereto filed herewith).
</TABLE>
________________________________
*Previously filed.
<PAGE> 1
ERNST & YOUNG
SUITE 1400
50 SOUTH MAIN
SALT LAKE CITY, UTAH 84144
(801) 350-3300
FAX: (801) 355-5813
EXHIBIT (23.1)
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" and to the
use of our reports dated January 25, 1993 and March 29, 1993, in Post-effective
Amendment No. 1 to the Registration Statement (Form S-3 No. 33-51097) and
related Prospectus of Smith's Food & Drug Centers, Inc. for the registration of
$300,000,000 aggregate principal amount of Pass Through Certificates.
Salt Lake City, Utah /s/ Ernst & Young
January 31, 1994
<PAGE> 1
EXHIBIT D
NOTICE
This form is intended to assist state nonmember banks and
savings banks with state publication requirements. It has not
been approved by any state banking authorities. Refer to your
appropriate state banking authorities for your state
publication requirements.
R E P O R T O F C O N D I T I O N
Consolidating domestic subsidiaries of the
WILMINGTON TRUST COMPANY of WILMINGTON
______________________________________________ __________________
Name of Bank City
in the State of DELAWARE , at the close of business on September 30, 1993.
___________
<TABLE>
<S> <C>
ASSETS Thousands of dollars
Cash and balances due from depository institutions:
Noninterest-bearing balances and currency and coins . . . . . . . . . . . 210,050
Interest-bearing balances . . . . . . . . . . . . . . . . . . . . . . . . 100
Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,044,037
Federal funds sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0
Securities purchased under agreements to resell . . . . . . . . . . . . . . . . . . 17,198
Loans and lease financing receivables:
Loans and leases, net of unearned income . . . . . . . . . . . . . . . . . 2,910,116
LESS: Allowance for loan and lease losses . . . . . . . . . . . . . . . . 47,870
LESS: Allocated transfer risk reserve . . . . . . . . . . . . . . . . . . 0
Loans and leases, net of unearned income, allowance, and reserve . . . . . 2,862,246
Assets held in trading accounts . . . . . . . . . . . . . . . . . . . . . . . . . . 0
Premises and fixed assets (including capitalized leases) . . . . . . . . . . . . . 61,900
Other real estate owned . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27,878
Investments in unconsolidated subsidiaries and associated companies . . . . . . . . 2,589
Customers' liability to this bank on acceptances outstanding . . . . . . . . . . . 0
Intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,643
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83,462
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,316,103
</TABLE>
CONTINUED ON NEXT PAGE
<PAGE> 2
<TABLE>
<S> <C>
LIABILITIES
Deposits:
In domestic offices . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,277,586
Noninterest-bearing. . . . . . . . . . . . . . . . . . . . . . . . 603,916
Interest-bearing . . . . . . . . . . . . . . . . . . . . . . . . . 2,673,670
Federal funds purchased . . . . . . . . . . . . . . . . . . . . . . . . . . 24,271
Securities sold under agreements to repurchase . . . . . . . . . . . . . . 156,334
Demand notes issued to the U.S. Treasury . . . . . . . . . . . . . . . . . 95,000
Other borrowed money . . . . . . . . . . . . . . . . . . . . . . . . . . . 305,000
Mortgage indebtedness and obligations under capitalized leases . . . . . . 2,293
Bank's liability on acceptances executed and outstanding . . . . . . . . . 0
Subordinated notes and debentures . . . . . . . . . . . . . . . . . . . . . 0
Other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75,621
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,936,105
Limited-life preferred stock and related surplus . . . . . . . . . . . . . 0
EQUITY CAPITAL
Perpetual preferred stock and related surplus . . . . . . . . . . . . . . . 0
Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 500
Surplus . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62,118
Undivided profits and capital reserves . . . . . . . . . . . . . . . . . . 317,380
LESS: Net unrealized loss on marketable equity securities . . . . . . . . 0
Total equity capital . . . . . . . . . . . . . . . . . . . . . . . . . . . 379,998
Total liabilities, limited-life preferred stock, and equity capital . . . . 4,316,103
</TABLE>
We, the undersigned directors, attest to I, David R. Gibson
the correctness of this statement of _________________________
resources and liabilities. We declare Name
that it has been examined by us, and
to the best of our knowledge and belief Senior Vice President
has been prepared in conformance with _________________________
the instructions and is true and correct. Title
/s/ LEONARD W. QUILL ) of the above-named bank
_______________________________ ) do hereby declare that
) this Report of Condition
/s/ GEORGE P. EDMONDS ) Directors is true and correct to
_______________________________ ) the best of my knowledge
) and belief.
/s/ HUGH E. MILLER )
_______________________________ )
/s/ DAVID R. GIBSON
___________________________
Signature
October 29, 1993
___________________________
Date
