SMITHS FOOD & DRUG CENTERS INC, POS AM, 1994-02-01

SMITHS FOOD & DRUG CENTERS INC
POS AM, 1994-02-01
GROCERY STORES

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<PAGE> 1

As filed with the Securities and Exchange Commission on February 1, 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)
<TABLE>
<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:
<TABLE>
<S> <C>
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.
================================================================================
<PAGE> 2
INFORMATION CONTAINED IN THIS PROSPECTUS SUPPLEMENT IS SUBJECT TO COMPLETION OR
AMENDMENT. A REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED
WITH THE SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD
NOR MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THAT A FINAL PROSPECTUS
SUPPLEMENT IS DELIVERED. THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING
PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN
OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES IN ANY STATE IN
WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION
OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.

PROSPECTUS SUPPLEMENT (Subject to Completion)
(To Prospectus dated January 26, 1994)

Smith's Food & Drug Centers, Inc.
1994-A Pass Through Trusts
PASS THROUGH CERTIFICATES, SERIES 1994-A
------------------------
Each Pass Through Certificate offered hereby will represent a fractional
undivided interest in one of the three Smith's Food & Drug Centers 1994-A Pass
Through Trusts (the "Trusts") to be formed pursuant to a pass through trust
agreement and three separate trust supplements between Smith's Food &
Drug Centers, Inc. (the "Company") and Wilmington Trust Company (the
"Pass Through Trustee"), as trustee under each Trust. The property
of the Trusts will consist of notes (the "Notes") issued on a
nonrecourse basis by the trustee of an owner trust (the "Owner
Trustee") in connection with nine separate leveraged lease
transactions to finance or refinance not more than 88% of the
cost to the Owner Trustee of its interest in certain
properties described in this Prospectus Supplement (each, a
"Property" and collectively, the "Properties") which have
been or will be leased to the Company.

The Notes in respect of each Property will be issued in three series. Each Trust
will purchase one series of the Notes issued with respect to each Property such
that all of the Notes held in each Trust will have an interest rate
corresponding to the interest rate applicable to the Pass Through Certificates
issued by such Trust. The maturity dates of the Notes acquired by each Trust
will occur on or before the final distribution date applicable to the Pass
Through Certificates issued by such Trust. The Notes with respect to each
Property will be secured by a mortgage of such Property and by an
assignment of certain of the Owner Trustee's rights under the Lease (as
defined herein) related thereto, including the right to receive rent and
certain other amounts payable by the Company thereunder. Although
neither the Pass Through Certificates nor the Notes are direct
obligations of or guaranteed by the Company, the amounts
unconditionally payable by the Company under the Leases for lease of
the Properties will be sufficient to pay in full when due all payments
required to be made on the Notes held in the Trusts.

The Notes to be held in each Trust will be purchased by such Trust at varying
discounts from par, and during the period from the closing of the public
offering of the Pass Through Certificates to , will provide a return
consisting of accretion of discount, such that the yield to , 1994 of
each Note held by each Trust will equal the semi-annual bond equivalent
rate corresponding to the interest rate per annum applicable to the
related series of Pass Through Certificates. From and after , all
of the Notes held in the 1994-A2 Trust and 1994-A3 Trust will accrue
interest payable in cash at the applicable rate per annum for the Pass
Through Certificates issued by such Trust on January 2 and July 2 of
each year, which will be passed through to Certificateholders of such
Trust on each such date. Principal payments on the Notes held in the
1994-A2 Trust and 1994-A3 Trust, respectively, will be passed
through to Certificateholders of such Trust in scheduled amounts
on January 2 or July 2, or both, in certain years, commencing on
the initial scheduled principal distribution date for such Trust
set forth below, until the final distribution date for such
Trust. The principal payment, and all accrued interest, if any,
on the Notes held in the 1994-A1 Trust will be passed through to
the Certificateholders of such Trust in full on the maturity date
relating to such Trust, , . The Price to Public
of the Pass Through Certificates shown below equals the sum of
the prices at which the Notes will be sold to the Trusts
upon original issue, as described above.

------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT OR THE
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
------------------------

<TABLE>
<CAPTION>
Principal Initial Scheduled Final Price to Proceeds to
Pass Through Amount at Interest Principal Distribution Public Pass Through
Certificates Maturity Rate(1) Distribution Date Date (2)(3) Trustee
- ------------ ---------- ------- ----------------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
1994-A1 $ % % $
1994-A2
1994-A3
</TABLE>

- ---------------

(1) Payable from and after , as more particularly set forth
herein.
(2) Plus accretion of original issue discount at the applicable interest
rate from .
(3) The underwriting commission of $ , constitutes % of the
principal amount at maturity of the Pass Through Certificates. The
underwriting commissions and certain other expenses, estimated at
$ , will be payable by the Owner Trustee in the leveraged lease
transactions (other than certain expenses to be paid directly by the
Company). The proceeds from the sale of the Pass Through Certificates
will be used to purchase the Notes from the Owner Trustee.

------------------------
The Pass Through Certificates are offered by the Underwriters, subject to
prior sale, when, as and if accepted by the Underwriters, and subject to
approval of certain legal matters by Shearman & Sterling, counsel for the
Underwriters. It is expected that delivery of the Pass Through Certificates in
book-entry form will be made on or about , 1994 through the facilities
of The Depository Trust Company, against payment therefor in immediately
available funds.
------------------------

MORGAN STANLEY & CO.
Incorporated
GOLDMAN, SACHS & CO.
SALOMON BROTHERS INC

February , 1994
<PAGE> 3

NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS SUPPLEMENT AND THE
ACCOMPANYING PROSPECTUS IN CONNECTION WITH THE OFFER CONTAINED IN THIS
PROSPECTUS SUPPLEMENT, AND, IF OTHER INFORMATION OR REPRESENTATIONS ARE GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY OR BY THE UNDERWRITERS. THIS PROSPECTUS SUPPLEMENT AND
THE ACCOMPANYING PROSPECTUS DO NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY SECURITIES OTHER THAN THE SECURITIES TO WHICH
THEY RELATE OR 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 SUPPLEMENT AND
THE ACCOMPANYING 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 ITS DATE.

------------------------

TABLE OF CONTENTS

PROSPECTUS SUPPLEMENT

<TABLE>
<CAPTION>
PAGE
---------
<S> <C>
Prospectus Supplement Summary..................................................... S-3
The Company....................................................................... S-9
Capitalization.................................................................... S-11
Selected Financial and Operating Data............................................. S-12
Management's Discussion and Analysis of Financial Condition and Results of
Operations...................................................................... S-13
Description of the Properties..................................................... S-16
Use of Proceeds................................................................... S-17
Diagram of Payments............................................................... S-18
Description of the Certificates................................................... S-19
Description of the Notes.......................................................... S-23
Certain Additional Federal Income Tax Consequences................................ S-36
ERISA Considerations.............................................................. S-37
Underwriting...................................................................... S-38
Glossary of Certain Terms......................................................... Appendix
PROSPECTUS
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>

------------------------

IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE CERTIFICATES
OFFERED HEREBY AT LEVELS ABOVE THOSE WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH TRANSACTIONS MAY BE EFFECTED IN THE OVER-THE-COUNTER MARKET OR
OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.

S-2
<PAGE> 4

PROSPECTUS SUPPLEMENT SUMMARY

The following summary does not purport to be complete and is qualified in
its entirety by the detailed information appearing elsewhere in this Prospectus
Supplement and the Prospectus accompanying this Prospectus Supplement (the
"Prospectus").

THE COMPANY

Smith's Food & Drug Centers, Inc., headquartered in Salt Lake City, Utah,
is a leading regional supermarket chain operating 129 stores as of January 1,
1994 in Arizona, California, Idaho, Nevada, New Mexico, Texas, Utah and Wyoming
with an average store size of 66,000 square feet.

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 combination food and drug centers averaging 69,200 square
feet per store, 12 superstores averaging 40,500 square feet per store and two
conventional stores averaging 22,000 square feet per store.

THE OFFERING

Glossary................... Included at the end of this Prospectus Supplement
as an Appendix is a Glossary of certain of the
significant defined terms used herein.

Trusts..................... Each of the three Smith's Food & Drug Centers, Inc.
1994-A Pass Through Trusts (the "1994-A1 Trust,"
"1994-A2 Trust" and "1994-A3 Trust,"
respectively) is to be formed pursuant to a
separate trust supplement (a "Trust Supplement")
to the Pass Through Trust Agreement (the "Basic
Agreement") between the Pass Through Trustee and
the Company. Each Trust will be a separate
entity.

Trust Property............. The property of each of the Trusts will consist of
Notes issued on a non-recourse basis by the Owner
Trustee in nine separate leveraged lease
transactions to (a) finance not more than 88% of
the cost to the Owner Trustee of two Properties
to be acquired from the Company by the Owner
Trustee and leased to the Company concurrently
with the closing of the public offering of the
Certificates or (b) refinance not more than 88%
of the cost to the Owner Trustee of seven
Properties which were acquired from the Company
by the Owner Trustee and leased to the Company on
December 29, 1993. Each Property is located in
California, was built by the Company and was
first put into service after October 1992.

The Notes with respect to each of the nine
Properties will be issued in three series
pursuant to the Trust Indenture and Security
Agreement (the "Trust Indenture") between the
Owner Trustee and Wilmington Trust Company as
trustee thereunder (in such capacity, the "Loan
Trustee") as supplemented by, with respect to
each Property, an indenture supplement thereto
(each a "Supplemental Indenture," and together
with the Trust Indenture, with respect to each
Property, an "Indenture") among the Owner
Trustee, the Loan Trustee and

S-3
<PAGE> 5

Stewart Title of California, as trustee. Each
Trust will acquire all of one of the series of
Notes with respect to each Property, and the
maturity dates of the Notes acquired by each
Trust will occur on or before the final
distribution date applicable to the Pass Through
Certificates, Series 1994-A (the "Certificates")
issued by such Trust. The aggregate principal
amount of the Notes to be held in each Trust will
be the same as the aggregate principal amount of
the Certificates issued by that Trust.

Certificates Offered;
Book-Entry Registration.... Each Certificate will represent a fractional
undivided interest in the related Trust. The
Certificates of each Trust will be issued in
fully registered form only and will be registered
in the name of Cede & Co. ("Cede"), as the
nominee of The Depository Trust Company ("DTC").
No person acquiring an interest in the
Certificates will be entitled to receive a
definitive certificate representing such person's
interest in the Trust, unless definitive
certificates are issued, which will only occur
under limited circumstances. See "Description of
the Certificates -- General" in this Prospectus
Supplement and "Description of the
Certificates -- General" and "-- Book-Entry
Registration" in the Prospectus.

Denominations.............. The Certificate of each Trust will be issued only
in integral multiples of $1,000.

Regular Distribution
Dates...................... January 2 and July 2.

Special Distribution
Dates...................... Any Business Day (as defined in the Glossary) on
which a Special Payment is to be distributed.

Record Dates............... The fifteenth day preceding a Regular Distribution
Date or a Special Distribution Date.

Initial Average Life
Dates...................... The 1994-A1 Trust will hold Notes whose principal
is payable only on the final maturity date
relating to such Notes. The initial average life
dates for Certificates issued by the 1994-A2
Trust and 1994-A3 Trust are as follows:

<TABLE>
<CAPTION>
TRUST DATE
-------- -----------------
<S> <C>
1994-A2
1994-A3
</TABLE>

The average life dates for Certificates issued by
the 1994-A2 Trust and 1994-A3 Trust will change
after principal repayments of the related Notes
commence.

Distributions.............. The Notes held in the 1994-A1 Trust will mature on
, 199 , at which time, the payment of
principal and all accrued interest, if any, with
respect to such Notes is scheduled to be received
by the Pass Through Trustee and will be
distributed to the Certificateholders of such
Trust. Payments of interest on the Notes held in
the 1994-A2 Trust and 1994-A3 Trust,
respectively, are scheduled to be received by the
Pass Through Trustee on January 2 and July 2 of
each year, commencing , and will be
distributed by the Pass Through Trustee to the
Certificateholders of such Trust on the Regular
Distribution Dates referred to above except in
certain circumstances.

S-4
<PAGE> 6

Payments of principal on the Notes held in the
1994-A2 Trust and 1994-A3 Trust, respectively,
are scheduled to be received in specified amounts
by the Pass Through Trustee of such Trust on
January 2 or July 2, or both, in one or more
years, commencing ,
in the case of the 1994-A2 Trust, and
, in the case of the 1994-A3
Trust, and are to be distributed to the
Certificateholders of such Trust on the
corresponding Regular Distribution Date. Payments
of principal, premium, if any, and interest
resulting from the early redemption or purchase,
if any, of any of the Notes held in any Trust
will be distributed on a Special Distribution
Date after not less than 20 days' notice from the
Pass Through Trustee to the Certificateholders of
such Trust. For a discussion of distributions
upon an Event of Default, see "Description of the
Certificates -- Events of Default and Certain
Rights Upon an Event of Default" in the
Prospectus.

Special Distribution Upon
Unavailability of
Property................. To the extent that any proceeds from the sale of
Certificates have not been used by the Pass
Through Trustee by , 1994 to purchase
the Notes that are contemplated to be held in the
related Trust, such proceeds shall be distributed
on , 1994 or at an earlier Special
Distribution Date to the Certificateholders on a
pro rata basis, together with accrued interest
thereon, but without premium. See "Description of
the Certificates -- Payments and Distributions"
in this Prospectus Supplement.

Method of Distribution..... So long as the Certificates are registered in the
name of Cede, as nominee of DTC, distributions by
the Pass Through Trustee, including the final
distribution of principal with respect to the
Certificates of any Trust, will be made in
same-day funds to DTC. See "Description of
Certificates -- Book-Entry
Registration -- Same-Day Settlement and Payment"
in the Prospectus. DTC will in turn make
distributions in same-day funds to those
participants in DTC who are credited with
ownership of the Certificates ("DTC
Participants") in amounts proportionate to the
amount of each such DTC Participant's respective
holdings of beneficial interests in such
Certificates. Corresponding payments by the DTC
Participants to beneficial owners of the
Certificates will be the responsibility of such
DTC Participants and will be made in accordance
with customary industry practices. See
"Description of the Certificates -- Book-Entry
Registration" in the Prospectus.

Interest................... The Notes to be held in each Trust will be
purchased by such Trust at varying discounts from
par and, during the period commencing on the
closing of the public offering of the
Certificates to , will
provide a return consisting of accretion of
discount such that the yield to
, of each Note held by
each Trust will equal the semi-annual bond
equivalent yield corresponding to the interest
rate per annum applicable to the related
Certificates. As used in this Prospectus
Supplement, the principal amount of a Note refers
to the accreted value of such Note during the
period that such Note is accreting discount and
thereafter the face amount thereof. From and
after , all of the Notes held in the
1994-A2 Trust and 1994-A3 Trust, respectively,
will accrue interest payable in cash at the
applicable rate per annum for the Certificates
issued by such Trust on January 2 and July 2 of
each

S-5
<PAGE> 7

year, commencing , and will be
passed through to Certificateholders of such
Trust on each such date. The interest, if any,
that accrues on the Notes held in the 1994-A1
Trust from and after , 199 will be
payable at the maturity of such Notes on
, 199 .

Interest is calculated on the basis of a 360-day
year consisting of twelve 30-day months. See
"Description of the Certificates -- General" and
"-- Payments and Distributions" in this
Prospectus Supplement.

Principal.................. The principal payment on the Notes held in the
1994-A1 Trust will be passed through to the
Certificateholders of such Trust only on the
final maturity date relating to such Notes, being
, 199 . Scheduled principal payments
on the Notes held in the 1994-A2 Trust and
1994-A3 Trust, respectively, will be passed
through to the Certificateholders of such Trust
on January 2 or July 2, or both, in certain
years, commencing on in the case of
the 1994-A2 Trust, and in the case of
the 1994-A3 Trust, in accordance with the
principal repayment schedule set forth below
under "Description of the Notes -- General." See
"Description of the Certificates -- Payments and
Distributions" in the Prospectus and this
Prospectus Supplement.

Notes: Redemption.......... (a) The Notes issued with respect to each Property
will be redeemed, in whole, upon the occurrence
of certain events of casualty or condemnation
with respect to such Property that prevent the
Company from using such Property in the conduct
of its business at a redemption price equal to
the unpaid principal amount of the Notes to be
redeemed plus accrued but unpaid interest
thereon (the "Redemption Price"), but without a
premium.

(b) The Notes, relating to each Property or being
held by each Trust, may under certain
circumstances be redeemed in whole at any time
on or after the Redemption
Price plus, if such redemption is made prior to
the respective dates set forth below, a
Make-Whole Premium, if any.

<TABLE>
<CAPTION>
TRUST DATE
------- ------------------
<S> <C>
1994-A2
1994-A3
</TABLE>

See "Description of the Notes -- Redemption" in
this Prospectus Supplement for a description of
the manner of computing the Make-Whole Premium.

(c) If a default under an Indenture (an "Indenture
Default") shall have occurred and be continuing
and the Loan Trustee has given notice of its
intent to accelerate the Notes issued under
such Indenture or to exercise other substantial
remedies, the Owner Trustee may elect to
purchase all of such Notes at the Redemption
Price plus any other amounts then due and
payable with respect to such Notes, but without
a premium. See "Description of the
Notes -- Redemption" in this Prospectus
Supplement.

S-6
<PAGE> 8

Notes: Security............ The Notes with respect to each Property will be
secured by a mortgage of such Property and an
assignment to the Loan Trustee of certain of the
Owner Trustee's rights under the Lease with
respect to such Property, including the right to
receive payments of rent and other amounts
payable thereunder, with certain exceptions.

The Notes are not cross-collateralized and,
consequently, the Notes issued in respect of any
one Property are not secured by any other
Property or the Leases related thereto. There
are, however, cross default provisions in the
Leases, and, consequently, events resulting in a
default under any particular Lease will
constitute a default under each other Lease, and
consequently, an Indenture Default under each
other Indenture.

Although the Notes are not obligations of, or
guaranteed by, the Company, the amounts
unconditionally payable by the Company under the
Lease related to each Property will be sufficient
to pay in full when due all payments required to
be made on the Notes related to such Property.
See "Description of the Notes -- Security" in the
Prospectus and "Description of the
Notes -- Indenture Defaults; Notice and Waiver"
in this Prospectus Supplement.

Additional Notes........... Under certain circumstances, additional notes
("Additional Notes") may be issued under one or
more supplemental Indentures to refinance all or
a portion of the outstanding Notes related to any
Property or to finance the cost of certain
modifications to such Property. Such Additional
Notes will be equally and ratably secured with
all outstanding Notes related to such Property.
No holder of a Certificate, as such, will have
any right to, or interest in, any Additional
Note. See "Description of the Notes -- Additional
Notes" and "Description of the Notes -- The
Leases -- Modifications" in this Prospectus
Supplement.

Use of Proceeds............ The proceeds from the sale of the Certificates will
be used to purchase the Notes issued by the Owner
Trustee in connection with the financing or
refinancing of not more than 88% of the cost to
the Owner Trustee of its interest in the
Properties. After the application of the proceeds
from this offering, the Notes will represent in
the aggregate the entire debt portion of the
leveraged lease transactions relating to the
Properties. The net proceeds to the Company from
the sale of the Properties will be used by the
Company to repay certain indebtedness incurred in
connection with the construction of the
Properties, to finance real estate and other
capital investments in the Company's continuing
expansion and for working capital needs. See "Use
of Proceeds" in this Prospectus Supplement.

Pass Through Trustee....... Wilmington Trust Company will act as Pass Through
Trustee and as paying agent and registrar for the
Certificates of each Trust. Wilmington Trust
Company will also act as Loan Trustee for each
series of Notes.

Federal Income Tax
Consequences............. Each Trust should be classified as a grantor trust
for federal income tax purposes and therefore
each owner of a beneficial interest in a
Certificate (a "Certificate Owner") should be
treated as the owner of a pro rata undivided
interest in each of the Notes and any other

S-7
<PAGE> 9

property held by such Trust and generally should
report on its federal income tax return its pro
rata share of income from such Notes and other
property held by such Trust in accordance with
such Certificate Owner's method of accounting.
The Notes will be issued with original issue
discount, which Certificate Owners may be
required to include in income in advance of the
cash attributable to such income. Any gain
realized upon the sale or disposition of the
Certificates may be treated as ordinary income.
See "Certain Federal Income Tax Consequences" in
the Prospectus and "Certain Additional Federal
Income Tax Consequences" in this Prospectus
Supplement.

ERISA Considerations....... The Certificates, with certain exceptions, are
eligible for purchase by employee benefit plans.
See "ERISA Considerations" in this Prospectus
Supplement.

S-8
<PAGE> 10

THE COMPANY

Smith's Food & Drug Centers, Inc. is a leading regional supermarket and
drug store chain operating 129 stores as of January 1, 1994 in Arizona,
California, Idaho, Nevada, New Mexico, Texas, Utah and Wyoming.

The Company offers customers a broad product selection 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. In addition, the Company
promotes its reputation as a low price competitor in its market areas through a
policy of everyday low pricing.

The Company strives to provide superior quality, selection and service at
competitive prices in attractive facilities. The Company refines its
merchandising strategy on an ongoing basis in response to changing demographics,
lifestyles and product preferences. For example, the Company recently introduced
"Big Deal" sections to supplement its everyday low price policy. A section of
each store is dedicated to carrying "warehouse pack" sized items which are
offered to shoppers at warehouse club prices.

The Company's stores offer a complete line of supermarket, nonfood and drug
products with an average store size of 66,000 square feet. The Company's food
and drug centers currently being opened range in size from approximately 55,000
to 75,000 square feet per store, and future stores are expected to range in size
from 45,000 to 66,000 square feet per store, depending on site constraints and
the number and size of competing stores in relation to the population of the
market area being served. In order to respond to changing consumer needs, the
Company continually refines its store configurations and lay-outs. These large
centers, featuring brightly lit and spacious aisles, offer a wide selection of
nationally advertised food and nonfood products as well as quality private label
items. In addition, the Company's combination stores have a variety of specialty
departments, including some or all of the following: a full-line pharmacy and
related over-the-counter drug items, delicatessens, hot prepared food sections,
in-store bakeries, video rentals, floral shops, one-hour photo processing,
full-service banking and frozen yogurt shops.

The Company's stores are located in eight western states: 24 in Arizona; 26
in California; 5 in Idaho; 16 in Nevada; 15 in New Mexico; 4 in Texas; 34 in
Utah; and 5 in Wyoming. The states are grouped into two regions, which are
further divided into 10 geographic districts. The regions and districts are
staffed with operational managers who are given as much autonomy as possible
while retaining the advantages of central control and economies of scale over
accounting, data processing, real estate and legal functions. This operational
autonomy enables operating management to react quickly to local market
circumstances and gain competitive advantages as local conditions change.

The Company's primary focus in existing markets has been on increasing
sales volume through offering customers low prices and quality customer service
combined with specifically designed marketing programs. The Company also has
focused on increasing sales volume by opening new stores in existing and
adjacent markets. During 1993, the Company opened eight new combination stores
in Southern California and one each in New Mexico, Texas and Utah. The Company
has in progress an expansion program which calls for a total of up to 60 stores
in Southern California (San Diego to Fresno) prior to mid-1997, which will be
supported by the Company's recently opened distribution center in Riverside,
California. As of January 1, 1994, 26 California stores were open and operating.
The Company plans to open 10 to 12 new stores at locations primarily in Southern
California during 1994, two of which have been opened during the month of
January.

The Company competes with other large regional and national food and drug
store chains, local food and drug stores, specialty food stores, warehouse/club
stores, convenience stores and, to a lesser extent, restaurants and fast food
chains. Principal competitive factors include store location, price, service,
convenience, cleanliness, product quality and variety. Because the food and drug
store business is characterized by narrow profit margins, the Company's earnings
depend primarily on high sales volume and operating efficiency.

The Company believes its stores are among the most modern in the
supermarket industry today. Approximately 70% of the Company's current square
footage has been newly constructed or remodelled in the last five years. By
continually evaluating each store's physical condition and appearance, the
Company ensures that its stores are modern, attractive and in good physical
condition.

S-9
<PAGE> 11

The Company is an industry leader in the use of information systems and
technology. Electronic scanning equipment in each of the Company's stores has
simplified the check-out process and decreased the amount of time spent by
customers at the check stand. Additionally, this equipment gathers useful
information about movement of merchandise and volume of each product sold. This
data is used to allocate product space, plan labor schedules, evaluate the
profitability of individual products and plan merchandising programs. As a
result, the Company is able to reduce labor costs, monitor the success of
promotional programs, and effectively manage the level of inventory in each
store. The Company's stores also have separate, in-store computer systems that
are linked to the scanning equipment in the check-out stands and are networked
into the mainframe computer system at the corporate office in Salt Lake City,
Utah.

The Company operates approximately 3.7 million square feet of distribution
and processing facilities. Distribution facilities in Salt Lake City and Layton,
Utah, Tolleson, Arizona and Riverside, California supply grocery, meat, dairy,
deli and frozen food items to the Company's stores. Each of these
fully-integrated distribution centers contains a dry grocery warehouse, a
perishable grocery warehouse and a dairy processing plant. The Company also
operates a produce warehouse in Ontario, California. The Company's warehouse
capabilities enable it to purchase large quantities of selected products,
typically fast moving inventory items, on a forward purchase basis in order to
secure lower prices or to take advantage of special buying opportunities.

The dairy plants located in Layton, Tolleson and Riverside process a
variety of milk, milk products and fruit punches. The processing facilities
located in Layton also include an automated frozen dough plant that provides
support to the Company's in-store bakeries, a cultured products facility that
produces sour cream, yogurt, cottage cheese and chip dip products and a
state-of-the-art ice cream processing plant that supplies all stores with the
Company's private label ice cream.

The Company transports food and merchandise from its distribution centers
through a Company-owned fleet of tractors and trailers which primarily serve
nearby stores and through common carriers for stores located at greater
distances. Approximately 80% of the merchandise sold in Company stores is
handled through its distribution centers, with the balance delivered directly to
the stores by outside vendors.

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. The
Company's Class B Common Stock is traded on the New York Stock Exchange under
the symbol "SFD." As used herein, the "Company" refers to Smith's Food & Drug
Centers, Inc. and its subsidiaries and predecessors, unless the context
otherwise requires.

S-10
<PAGE> 12

CAPITALIZATION

The following table summarizes the capitalization of the Company as of
January 1, 1994. The table does not reflect any adjustments to such
capitalization to give effect to the sale of the Certificates or the issuance of
the Notes and does not reflect the lease of the Properties because the
Certificates and the Notes are not direct obligations of the Company and the
Leases are expected to be classified as operating, rather than capital, leases:

<TABLE>
<CAPTION>
JANUARY 1, 1994
---------------
(IN THOUSANDS)
<S> <C>
Short-term debt (including current maturities of
Redeemable Preferred Stock)................................ $ 22,519
Long-term debt, less current maturities...................... 704,014
Total Debt................................................... 726,533
---------------
Deferred income taxes........................................ 82,700
Redeemable Preferred Stock, less current maturities.......... 5,423
Common Stockholders' equity:
Convertible Class A Common Stock, par value $.01 per share:
Authorized 20,000,000 shares; issued and outstanding
12,617,445 shares....................................... 126
Class B Common Stock, par value $.01 per share:
Authorized 100,000,000 shares; issued and outstanding
17,248,848 shares....................................... 173
Additional paid-in capital................................. 285,482
Retained earnings.......................................... 259,399
---------------
Less cost of Common Stock in Treasury (95,718 shares)...... (2,983)
---------------
Total stockholders' equity......................... 542,197
---------------
Total capitalization including short-term debt..... $ 1,356,853
---------------
---------------
</TABLE>

S-11
<PAGE> 13

SELECTED FINANCIAL AND OPERATING DATA

The following is a summary of certain selected consolidated financial
information of the Company. This summary should be read in conjunction with the
consolidated financial statements and related notes of the Company included in
its Annual Report on Form 10-K for the year ended January 2, 1993 incorporated
herein by reference. See "Incorporation of Certain Documents by Reference" in
the Prospectus. The information presented below for and as of the end of each of
the fiscal years in the four year period ended January 2, 1993 (except for the
ratio of the earnings to fixed charges and selected operating data) has been
derived from the Company's consolidated financial statements, which statements
have been audited by Ernst & Young, independent public accountants, as indicated
in their report incorporated by reference herein. The financial information for
the twelve months ended January 1, 1994 is unaudited but in the opinion of
management includes all adjustments (which include only normal recurring
adjustments) necessary for a fair presentation of the financial position and
results of operations for such period.

<TABLE>
<CAPTION>
YEAR ENDED(1)
------------------------------------------------------------------
DECEMBER DECEMBER DECEMBER
JANUARY 1, JANUARY 2, 28, 29, 30,
1994 1993 1991 1990 1989
---------- ---------- ---------- ---------- ----------
(UNAUDITED)
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Net sales........................ $2,807,165 $2,649,860 $2,217,437 $2,031,373 $1,731,559
Cost of goods sold............... 2,175,061 2,042,800 1,723,848 1,589,055 1,354,743
---------- ---------- ---------- ---------- ----------
Gross profit..................... 632,104 607,060 493,589 442,318 376,816
Expenses:
Operating, selling and
administrative.............. 430,258 419,664 344,363 323,792 277,986
Depreciation and
amortization................ 77,099 63,216 45,510 38,217 31,009
Interest....................... 44,627 36,130 30,319 25,595 26,290
---------- ---------- ---------- ---------- ----------
551,984 519,010 420,192 387,604 335,285
---------- ---------- ---------- ---------- ----------
Income before income taxes....... 80,120 88,050 73,397 54,714 41,531
Income taxes..................... 34,300 34,400 28,300 20,400 15,400
---------- ---------- ---------- ---------- ----------
Net income....................... $ 45,820 $ 53,650 $ 45,097 $ 34,314 $ 26,131
---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ----------
Ratio of earnings to
fixed charges(2)............... 1.99x 2.51x 2.44x 2.36x 2.13x
BALANCE SHEET DATA:
Property and equipment, net...... $1,158,629 $1,077,638 $ 861,350 $ 637,312 $ 511,345
Total assets..................... 1,654,308 1,479,485 1,196,689 891,716 728,482
Long-term debt, less current
maturities..................... 704,014 592,311 375,632 326,190 257,208
Redeemable preferred stock,
less current maturities........ 5,423 6,462 7,401 8,448 9,542
Common stockholders' equity...... 542,197 515,389 474,386 268,158 240,920
SELECT OPERATING DATA:
Number of stores................. 129 119 109 95 98
Total store square footage....... 8,501,000 7,668,000 6,773,000 5,580,000 5,235,000
Number of employees.............. 18,759 19,310 18,303 15,208 15,289
</TABLE>

- ---------------
(1) The Company's fiscal year ends on the Saturday nearest to December 31.
Fiscal year operating results include 52 weeks for each year except fiscal
year 1992, which includes 53 weeks.

(2) 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 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.

S-12
<PAGE> 14

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS

RESULTS OF OPERATIONS

Net sales increased 5.9% in 1993, 19.5% in 1992 and 9.2% in 1991 compared
with the respective prior years. Since 1992 included 53 weeks compared to 52
weeks in 1993 and 1991, the increase in net sales would have been 8% in 1993 and
18% in 1992 after adjusting for the extra week. New stores increased net sales
by 6.6% in 1993, 18.8% in 1992 and 8.1% in 1991. The fluctuation in sales
increases from new stores resulted primarily from the timing of store openings
within the respective years. Same store sales decreased 0.7% in 1993 and
increased 0.7% in 1992 and 1.1% in 1991 compared with the respective prior
years. The decrease in same store sales in 1993 was caused primarily by weakened
sales in Southern California due to the continuing intense recession in that
market, heavy price competition in Utah resulting from the Company's aggressive
pricing program, and new stores opened by competitors. To the extent these
conditions persist, the weakness in same store sales may continue. The increases
in same store sales in 1992 and 1991 were generated as new stores opened in
previous years continued to mature in their markets and as volume increased as a
result of the Company's everyday low price policy.

The Company opened 11 stores during 1993, 12 stores during 1992 and 17
stores during 1993. Retail square footage increased to 8,501,000 square feet at
the end of 1993 (129 stores) from 7,668,000 square feet at the end of 1992 (119
stores) and 6,773,000 square feet at the end of 1991 (109 stores). Due to market
conditions and current recessionary pressures in its expansion area, the Company
is moderating its expansion plans. In 1994 and 1995, the Company anticipates
opening 10 to 12 stores each year with continuing emphasis in Southern
California. New stores opened by the Company in recent years have averaged
approximately 75,000 square feet. Stores expected to be opened during 1994 range
from 43,000 to 82,000 square feet. Future stores primarily will range from
45,000 to 66,000 square feet to take advantage of market opportunities where
site constraints or the number and size of competing stores in relation to the
population of the market area being served would preclude stores of the size
opened by the Company in recent years, although a few larger stores will be
opened where appropriate.

Gross margins during 1993, 1992 and 1991 were 22.5%, 22.9% and 22.3%
respectively. The decrease in 1993 was caused primarily by the Company's
aggressive Utah pricing program, which commenced on July 21, 1993. To reinforce
the Company's Every Day Low Price program, prices in Utah stores were lowered on
more than 10,000 grocery, meat and produce items. Management anticipates that
this new pricing program will enhance long term earnings potential. However, in
the near term, both gross margins and net income are expected to under pressure
as the Company continues to build sales volume. The improvements in gross
margins in 1992 and 1991 were due to the further maturing of new and existing
store marketing areas, a shift in product mix to private label and other higher
margin products in the Company's larger combination stores in the specialty
departments and continuing improvements in backstage efficiencies.

Gross margins have been and are expected to be affected by the Company's
expansion program. The stores in Southern California tend to operate at higher
gross margins to offset higher real estate, operating and labor costs.
Additionally, the new 1,000,000 square foot distribution center, including a
dairy processing plant, in Riverside, California was completed and began
operations in late 1993. This new center is expected to increase gross margins
in the California region through backstage efficiencies and reduced shipping
expenses. However, the Company anticipates that new stores recently opened and
the planned new stores in California will apply pressure on the Company's gross
margins until the stores become established in their respective markets.

In 1992 the Company adopted the last-in, first-out (LIFO) cost method for
valuing inventories. The adoption of LIFO did not have a material effect on the
1992 financial statements. The pretax LIFO charge was $1.6 million in 1993.
There were no LIFO charges or credits in 1992.

Operating, selling and administrative expenses as a percent of net sales
were 15.3% in 1993, 15.8% in 1992 and 15.5% in 1991. The decrease in 1993,
resulting primarily from the Company's aggressive program to reduce operating
costs, was somewhat offset by the higher operating costs associated with
continued expansion

S-13
<PAGE> 15

into Southern California. The increase in 1992 was caused mainly by the higher
operating costs incurred by the stores in the Southern California market. The
Company anticipates that the new and planned stores in Southern California will
increase operating, selling and administrative expenses as a percent of net
sales until anticipated economies of scale are realized.

Depreciation and amortization expenses increased 22.0% in 1993, 38.9% in
1992 and 19.1% in 1991 over the respective prior years due to the addition of
new combination centers and distribution and processing facilities.

Interest expense increased 23.5% in 1993, 19.2% in 1992 and 18.5% in 1991
compared with the respective prior years as a result of net increases in the
average long-term debt for each period. However, the increase in 1991 was
partially offset by a reduction of debt from the proceeds of the Company's
public offering in July 1991.

Income taxes as a percent of income before income taxes were 42.8% in 1993,
39.1% in 1992 and 38.6% in 1991. The Omnibus Budget Reconciliation Act of 1993
increased the Company's Federal Tax rate from 34% to 35%. As a result of the
increased tax rate, net income was reduced by $2,750,000 or $.09 per common
share. This reduction consisted of $800,000 or $.03 per common share due to the
rate increase and $1,950,000 or $.06 per common share due to the increase in
recorded deferred taxes. The effective tax rate, including state income taxes,
for 1994 is expected to approximate 40.5%. The increase in 1992 was due
primarily to the Company's increasing presence in markets that have higher state
tax rates.

As the Company opens new stores and enters new markets, pressure on net
income is created by normal start-up costs associated with new store openings
and by the Company aggressively pursuing its everyday low price policy in order
to establish market share within each store's trading area and build sufficient
volume to effect anticipated economies of scale. Management believes that net
income in 1994 will come under pressure as the Company continues its expansion
in Southern California. The Company operated 26 combination stores in Southern
California at the end of 1993 and plans to continue to expand its market
presence there by opening additional stores. Net income may also be affected by
the relatively higher real estate costs, operating and selling expenses
(including pre-opening, start-up and advertising expenses) typically associated
with stores in the Southern California market. However these higher costs may be
offset to some degree, depending upon competitive conditions, by the generally
higher gross margins expected in that market. In addition, net income may
continue to be affected by price competition in its Utah market as a result of
the Company's aggressive pricing program.

LIQUIDITY AND CAPITAL RESOURCES

Cash and cash equivalents increased $46.4 million during 1993 and $1.1
million during 1992. The increase during 1993 primarily resulted from receipt at
the end of 1993 of $152.7 million from the sale/leaseback transactions with
respect to the seven Properties previously acquired from the Company by the
Owner Trustee, which proceeds have been and will be applied as described at "Use
of Proceeds" in this Prospectus Supplement. Working capital increased to $160.4
million at January 1, 1994 from $91.2 million at January 2, 1993, an increase of
$69.2 million. The Company's current ratio at the end of 1993 was 1.5:1 compared
to 1.3:1 in 1992 and 1.1:1 in 1991. The working capital is supplemented by
unused revolving credit lines aggregating $60 million at January 1, 1994.

Cash provided by operating activities amounted to $118.6 million and $84.6
million for 1993 and 1992, respectively. Cash normally provided by operating
activities in each of such years was partially offset by increases in inventory
balances. The Company maintains levels of inventory necessary to support its
high-volume, everyday low price merchandising strategy. Inventories increased
$36.5 million and $51.0 million to $377.9 million and $341.4 million at the end
of 1993 and 1992, respectively. These increases in inventories were caused
mainly by warehouse and store expansion and forward buying.

Cash used in investing activities totaled $164.4 million for 1993 and
$286.6 million for 1992. Additions to property and equipment totaled $322.3
million in 1993 and $288.0 million in 1992 reflecting the Company's ongoing
expansion program. In 1993 the Company completed the sale and leaseback of
certain recent

S-14
<PAGE> 16

additions to property and equipment totaling $152.7 million. There were no sale
and leaseback transactions in 1992. The Company anticipates investing
approximately $200 million during 1994 for the development and construction of
new food and drug centers, remodeling of existing stores and replacing
equipment. However, the actual timing and amount of capital expenditures will
depend upon a number of factors.

Cash provided by financing activities totalled $92.3 million for 1993 and
$203.1 million for 1992. The Company obtained $262.0 million during 1993 and
$252.7 million during 1992 in additional unsecured long-term borrowings to
finance additions to property and equipment. On November 18, 1993, the Company
filed a shelf registration statement with the Securities and Exchange Commission
(the "Commission") the relating to the public offering of up to $300 million
aggregate principal amount of Pass Through Certificates. The gross proceeds to
the Company from the sale/leaseback transactions with respect to the two
Properties occur upon the closing of the offering of Certificates contemplated
hereby are expected to be $16.6 million and, after payment of expenses, will be
applied as described at "Use of Proceeds" in this Prospectus Supplement.
Quarterly cash dividends have been paid on the Company's Class A and Class B
Common Stock since 1989.

At January 1, 1994 and January 2, 1993, the Company had outstanding $704.0
million and $592.3 million, respectively, of long-term debt, principally
borrowed from insurance companies and other institutional lenders. Of these
amounts, $289.1 million and $325.1 million were secured by real estate assets at
the end of each respective year. The Company has not experienced difficulty in
obtaining financing at satisfactory interest rates.

Management believes that the financial resources available to it, including
proceeds from sale/leaseback transactions, amounts available under existing and
future bank lines of credit, additional long-term financings and internally
generated funds, will be sufficient to meet planned capital expansion and
working capital requirements for the foreseeable future, including debt and
lease servicing requirements. The Company may, however, use additional sources
of funds for such purposes, including the issuance of debt or equity securities
and leasing rather than owning real estate and equipment.

INFLATION

In recent years, the impact of inflation on the Company's operating results
has been moderate, reflecting generally lower rates of inflation in the economy.
Management does not believe that the Company will be adversely affected by any
significant future inflation because there are a large number of Company-owned
stores, and because many of the leased stores do not have contingent or
volume-related rental obligations. While inflation has not had, and the Company
does not expect it to have, a material impact upon operating results, there is
no assurance that the Company's business will not be affected by inflation in
the future.

S-15
<PAGE> 17

DESCRIPTION OF THE PROPERTIES

The Properties consist of the Company's distribution center located in
Riverside, California and eight of the Company's combination stores located in
Southern California. The stores were newly constructed by the Company in
furtherance of its California expansion program, and placed into service during
the period from October, 1992 to January, 1994. The Riverside distribution
center, which was first placed into service in September, 1993 and completed in
December, 1993, will support the Company's California stores.

The Company has conveyed or will convey to the Owner Trustee fee simple
ownership of the improvements on the parcel of land included in each Property
(the "Improvements") and an estate for years in each such parcel of land, which
estate for years will expire concurrently with the initial expiration date of
the related Lease (the "Estate for Years"). The Company also has conveyed or
will convey fee simple ownership of the remainder interest in each such parcel
of land to an unaffiliated third party (the "Remainderman"). Concurrently with
the conveyance of each Property to the Owner Trustee, the Company leased or will
lease the Owner Trustee's interest in such Property pursuant to the related
Lease. The Remainderman has agreed that in the event the Company exercises its
right to extend any Lease beyond the initial term thereof, the Remainderman will
either sell its interest in the Property related to such Lease to the Owner
Trustee or lease the land related to such Lease to the Owner Trustee for a term
not less than the term of the Lease, as extended. In addition, the Remainderman
has agreed that in the event the Company purchases the Owner Trustee's interests
in any Property, the Remainderman will sell its interest in such Property to the
Company for the consideration stipulated in such Lease.

The following table sets forth certain information with respect to the
seven Properties purchased by the Owner Trustee and leased to the Company on
December 29, 1993 and the two Properties expected to be purchased by the Owner
Trustee and leased to the Company concurrently with the closing of the public
offering of the Certificates:

PROPERTIES TO BE REFINANCED

<TABLE>
<CAPTION>
PERCENTAGE OF
FAIR MARKET INITIAL COST
YEAR PLACED FACILITY VALUE OF TO OWNER
LOCATION USE INTO SERVICE SQUARE FEET PROPERTY TRUSTEE FINANCED
- --------------------------- --------------------------------- ------------ ----------- ----------- ----------------
<S> <C> <C> <C> <C> <C>
Riverside, CA.............. Riverside Distribution Center 1993 1,046,482 $94,190,523 %
Bakersfield, CA............ Retail -- Combination Store 1993 80,880 8,696,168
Bakersfield, CA............ Retail -- Combination Store 1993 80,880 7,239,644
La Habra, CA............... Retail -- Combination Store 1992 88,846 11,833,423
Ponoma, CA................. Retail -- Combination Store 1993 87,005 10,831,553
Glendora, CA............... Retail -- Combination Store 1992 85,615 11,436,375
Grover City, CA............ Retail -- Combination Store 1993 80,880 8,456,610
</TABLE>

PROPERTIES TO BE FINANCED

S-16
<PAGE> 18

USE OF PROCEEDS

The Certificates are being issued in connection with the financing or
refinancing, as the case may be, of the debt portion of nine separate leveraged
lease transactions entered into by the Company, as lessee, with respect to the
nine Properties. The proceeds from the sale of the Certificates will be used by
the Pass Through Trustee on behalf of the Trusts to purchase at varying
discounts from par $ aggregate principal amount of Notes issued by the
Owner Trustee as trustee of a separate trust (the "Owner Trust") for the benefit
of the Owner Participant. The Owner Trustee, in turn, will use the proceeds to
finance the cost to the Owner Trustee of two Properties to be acquired by it
concurrently with the closing of the public offering of the Certificates and to
repay $123,201,513 of debt, and interest thereon, incurred by it to purchase its
interest in the seven Properties acquired by it on December 29, 1993. Such debt
to be repaid is evidenced by seven promissory notes, matures July 2, 2018 and
bears interest during the period from December 29, 1993 through such closing
date at variable rates which, through January 27, 1993, averaged 3.89% per
annum.

The Notes will be issued under the nine separate Indentures between the
Loan Trustee and the Owner Trustee. The Owner Participant provided or will
provide from its own funds at least 20% of the initial acquisition cost of its
interest in each Property. The Owner Participant, however, will not be
personally liable for any amount payable under any Indenture or the Notes issued
thereunder. Simultaneously with the acquisition of its interest in each
Property, the Owner Trustee leased or will lease such Property to the Company
pursuant to a separate lease agreement (a "Lease").

The net proceeds to the Company from the sale of the Properties are
expected to be approximately $165.8 million after payment of transaction
expenses. Of such net proceeds, approximately $50 million has been used to
discharge the full amount of the Company's indebtedness under its revolving
lines of credit incurred in connection with the construction of the Properties,
which at December 29, 1993 bore interest at rates ranging from 3.19% to 3.50%
per annum. The remainder of such net proceeds will be used to finance real
estate and other capital investments in the Company's continuing expansion
program and for other working capital purposes. Pending such use, the Company
intends to invest the net proceeds in the interest-bearing bank accounts, United
States government securities, other investment grade debt securities and other
short-term investments.

S-17
<PAGE> 19

DIAGRAM OF PAYMENTS

The diagram below illustrates certain aspects of the payment flows among
the Company, the Owner Trustee, the Loan Trustee, the Pass Through Trustee, the
Owner Participant and the Certificateholders with respect to the three Trusts
and the nine related Properties.

The Company has sold or will sell the Improvements on and the Estate for
Years in each of the Properties to the Owner Trustee as trustee of the Owner
Trust. See "Description of the Properties" in this Prospectus Supplement.
Simultaneously with such sale, the Owner Trustee has leased or will lease its
interest in such Property to the Company under a separate Lease. Rent is payable
under each Lease by the Company to the Owner Trustee, as lessor. However, as a
result of the assignment of all of the Leases to the Loan Trustee, the Company
makes rental payments directly to the Loan Trustee. From these rental payments
such Loan Trustee will, on behalf of the Owner Trustee, first make payments to
the Pass Through Trustee for each of the Trusts on the Notes held in such Trust
and pay the balance to such Owner Trustee for the benefit of the Owner
Participant. The Pass Through Trustee for each of the Trusts will distribute
payments received in respect of the Notes held in such Trust to the related
Certificateholders.

{MORGAN STANLEY TO PROVIDE}

S-18
<PAGE> 20

DESCRIPTION OF THE CERTIFICATES

The Certificates offered hereby will be issued pursuant to three separate
Trust Supplements to the Basic Agreement. The Prospectus covers the issuance of
up to $300,000,000 aggregate principal amount of pass through certificates (or
such greater amount if issued at less than par as shall result in aggregate
proceeds of $300,000,000) pursuant to the Basic Agreement in accordance with a
Registration Statement that was declared effective by the Commission on January
26, 1994. To date, no pass through certificates have been issued pursuant to the
Basic Agreement. The following summary of the particular terms of the
Certificates offered hereby supplements, and to the extent inconsistent
therewith replaces, the description of the general terms and provision of the
Certificates set forth in the Prospectus under the heading "Description of the
Certificates." The statements under this caption are a summary and do not
purport to be complete. The summary is qualified in its entirety by reference to
all of the provisions of the Basic Agreement, a form of which has been filed as
an exhibit to the Registration Statement of which this Prospectus Supplement is
a part, and to all of the provisions of the Trust Supplements which, together
with the forms of the related Indentures, Leases, Trust Agreement relating to
the Owner Trust and the Participation Agreement among the Company, the Owner
Trustee, the Owner Participant, the Owner Participant Parent, the Remainderman,
the Pass Through Trustee, the Loan Trustee, the Remainderman Participant, the
Remainderman Trustee and the Initial Noteholder (the "Participation Agreement"),
will be filed as exhibits to a Current Report on Form 8-K filed by the Company
with the Commission. Except as otherwise indicated, the following summary
relates to each of the Trusts and the Certificates issued by each Trust. The
terms and conditions governing each of the Trusts will be substantially the
same, except that the principal amount, the interest rate, scheduled repayments
of principal and maturity date applicable to the Notes held by each Trust and
the final distribution date applicable to each Trust will differ. Citations to
the relevant sections of the Basic Agreement appear below in parentheses unless
otherwise indicated.

GENERAL

The Certificates of each Trust will be issued in fully registered form
only. Each Certificate will represent a fractional undivided interest in the
Trust created by the Trust Supplement pursuant to which such Certificate was
issued. 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 thereunder and funds from time to time deposited with the Pass
Through Trustee in accounts relating to such Trust. Each Certificate will
represent a pro rata share of the Notes held in the related Trust and will be
issued only in integral multiples of $1,000. (Sections 2.01 and 3.01) The
Certificates will be issued pursuant to a book-entry system and will be
registered in the name of Cede as the nominee of DTC. No Certificate Owner will
be entitled to receive a certificate representing such person's interest in any
of the Certificates (a "Definitive Certificate"), except as set forth in the
Prospectus under "Description of the Certificates -- Book Entry
Registration -- Definitive Certificates." Unless and until Definitive
Certificates are issued under the limited circumstances described in the
Prospectus, all references to actions by Certificateholders shall refer to
actions taken by DTC upon instructions from DTC Participants (as defined in the
Prospectus), and all references herein to distributions, notices, reports and
statements to Certificateholders shall refer, as the case may be, to
distributions, notices, reports and statements to DTC or Cede, as the registered
holder of the Certificates, or to DTC Participants for distribution to
Certificate Owners in accordance with DTC procedures. See "Description of the
Certificates -- Book-Entry Registration -- Definitive Certificates" and
"-- Same-Day Settlement and Payment" in the Prospectus.

Interest will be passed through to Certificateholders of each Trust at the
rate per annum set forth on the cover page of this Prospectus Supplement, which
is calculated on the basis of a 360-day year of twelve 30-day months.

S-19
<PAGE> 21

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
Certificateholders of such Trust on the date receipt of such payment is
confirmed, except in certain cases when some or all of such Notes are in
default. See "Description of Certificates -- Events of Default and Certain
Rights Upon an Event of Default" in the Prospectus. The Notes to be held in each
Trust will be purchased by such Trust at varying discounts from par, and during
the period commencing on the closing of the public offering of the Certificates
to , will provide a return consisting of accretion of discount, such that
the yield to of each Note held by each Trust will equal the semi-annual
bond equivalent rate corresponding to the interest rate per annum applicable to
the Certificates issued by such Trust. From and after , all of the Notes
held in each Trust will accrue interest payable in cash at the applicable rate
per annum for the Certificates issued by such Trust on January 2 and July 2 of
each year commencing , and will be passed through to Certificateholders
of such Trust on each such date. Payments of principal on the Notes held in the
1994-A2 Trust and 1994-A3 Trust are scheduled to be received by the Pass Through
Trustee on January 2 or July 2, or both, in certain years depending upon the
terms of the Notes held in such Trust commencing in the case of the
1994-A2 Trust and in the case of the 1994-A3 Trust (such scheduled
payments of interest and principal on the Notes are herein referred to as
"Scheduled Payments," and January 2 or July 2 of each year are herein referred
to as "Regular Distribution Dates"). The payment of principal and accrued
interest, if any, on the Notes held in the 1994-A1 Trust will be payable only on
the final maturity date relating to such Notes, being . See "Description
of the Notes -- General" in this Prospectus Supplement. The Pass Through Trustee
of each Trust will distribute on each Regular Distribution Date to the
Certificateholders of such Trust all Scheduled Payments, the receipt of which is
confirmed by the Pass Through Trustee on such Regular Distribution Date. Each
Certificateholder of each Trust will be entitled to receive a pro rata share of
any distribution in respect of Scheduled Payments of principal and interest made
on the Notes held in such Trust. Each such distribution of Scheduled Payments
will be made by the Pass Through Trustee to the Certificateholders of the
applicable Trust of record on the Record Date applicable to such Scheduled
Payment subject to certain exceptions. (Sections 4.01 and 4.02) If a Scheduled
Payment is not received by the Pass Through Trustee on a Regular Distribution
Date but is received within five days thereafter, it will be distributed to such
holders of record on the date received. If it is received after such five-day
period, it will be treated as a Special Payment (as defined below) and
distributed as described below.

Payments of principal, premium, if any, and interest received by the Pass
Through Trustee on account of the early redemption, if any, of the Notes
relating to one or more Properties held in a Trust, and payments received by the
Pass Through Trustee following a default in respect of Notes held in a Trust
relating to one or more Properties (including payments received by the Pass
Through Trustee on account of the purchase by the Owner Trustee of such Notes or
payments received on account of the sale of such Notes by the Pass Through
Trustee) ("Special Payments") will be distributed on, in the case of an early
redemption or a purchase, the date of such early redemption or purchase (which
shall be a Business Day), and otherwise, on the Business Day specified for
distribution of such Special Payment pursuant to a notice delivered by the Pass
Through Trustee as soon as practicable after the Pass Through Trustee has
received funds for such Special Payment (each, a "Special Distribution Date").
The Pass Through Trustee will mail notice to the Certificateholders 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) Each
distribution of a Special Payment, other than a final distribution, on a Special
Distribution Date for any Trust will be made by the Pass Through Trustee to the
Certificateholders of record of such Trust on the Record Date applicable to such
Special Payment. See "Description of the Notes -- Redemption" in this Prospectus
Supplement and "Description of the Certificates -- Events of Default and Certain
Rights Upon an Event of Default" in the Prospectus.

To the extent that all of the proceeds from the sale of any Certificates
are not used on the delivery date of such Certificates to purchase the Notes
contemplated to be held in the related Trust, the Pass Through Trustee may use
such funds for the purchase of such Notes at any time on or prior to
, and pending such purchase the Pass Through Trustee will hold the
proceeds from the sale of such Certificates in

S-20
<PAGE> 22

an escrow account. 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-1 or its equivalent by Moody's Investors Service, Inc. or at
least A-1 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 . 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. To the extent
that any amount of the proceeds held in the escrow account referred to above is
not used to purchase Notes on or prior to , an amount equal to the
unused proceeds will be distributed by the Pass Through Trustee to the holders
of record of the Certificates on a pro rata basis upon not less than 20 days'
prior notice to them as a Special Payment on a Special Distribution Date not
later than , 1994, 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 Basic Agreement requires that the Pass Through Trustee establish and
maintain, for each Trust and for the benefit of the Certificateholders of such
Trust, one or more accounts (the "Certificate Account") for the deposit of
payments representing Scheduled Payments on the Notes held in such Trust. The
Basic Agreement also requires that the Pass Through Trustee establish and
maintain, for each Trust and for the benefit of the Certificateholders of such
Trust, one or more accounts (the "Special Payments Account") for the deposit of
payments representing Special Payments, which account shall be non-interest
bearing except in certain circumstances where the Pass Through Trustee may
invest amounts in such account in certain permitted investments. Pursuant to the
terms of the Basic Agreement, the Pass Through Trustee is required to deposit
any Scheduled Payments relating to the applicable Trust received by it in the
Certificate Account of such Trust and to deposit any Special Payments so
received by it in the Special Payments Account of such Trust. (Section 4.01) All
amounts so deposited will be distributed by the Pass Through Trustee on a
Regular Distribution Date or a Special Distribution Date as appropriate.
(Section 4.02)

At such time, if any, as the Certificates are issued in the form of
Definitive Certificates and not to Cede, as nominee for DTC, distributions by
the Pass Through Trustee from the Certificate Account or the Special Payments
Account of each Trust on a Regular Distribution Date or a Special Distribution
Date will be made by check mailed to each Certificateholder of record of such
Trust on the applicable record date at its address appearing on the register
maintained with respect to such Trust. (Section 4.02) The final distribution for
each Trust, however, will be made only upon presentation and surrender of the
Certificates for such Trust at the office or agency of the Pass Through Trustee
specified in the notice given by the Pass Through Trustee of such final
distribution. The Pass Through Trustee will mail such notice of the final
distribution to the Certificateholders of such Trust, specifying the date set
for such final distribution and the amount of such distribution. (Section 11.01)
See "Description of the Certificates -- Termination of the Trusts" in the
Prospectus.

If any Regular Distribution Date or Special Distribution Date is not a
Business Day, distributions scheduled to be made on such Regular Distribution
Date or Special Distribution Date will be made on the next succeeding Business
Day without additional interest. (Section 12.10)

S-21
<PAGE> 23

POOL FACTORS

Unless there has been an early redemption, purchase or a default in the
payment of principal or interest in respect of Notes held in a Trust, as
described in "Description of the Notes -- Redemption" in this Prospectus
Supplement and "Description of Certificates -- Events of Default and Certain
Rights upon an Event of Default" in the Prospectus, the Pool Factor (as defined
below) (i) with respect to the 1994-A1 Trust, will not change prior to the
distribution date applicable to such Trust when the single payment of principal
on the Notes held in such Trust is distributed and (ii) with respect to each
other Trust, will decline in proportion to the scheduled repayments of on the
Notes held in such Trust as described below in "Description of the
Notes -- General." 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 (including any accretion of discount) 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 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. Assuming
that no early redemption, purchase or default in respect of any Notes shall have
occurred, the Pool Factor for the 1994-A1 Trust will be 1.0000000 on ,
199 and for each of the 1994-A2 Trust and 1994-A3 Trust will be 1.0000000 on
thereafter, the Pool Factor for each Trust will decline as described
above to reflect reductions in the Pool Balance of such. 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 Certificates
of such Trust by the Pool Factor for such as of the applicable Regular
Distribution Date or Special Distribution Date. The Pool Factor and the Pool
Balance for each Trust will be mailed to Certificateholders of such Trust on
each Regular Distribution Date and Special Distribution Date.

As of the date of sale by the Pass Through Trustee of the Certificates and
assuming that no early redemption or default in respect of any Notes shall
occur, the Scheduled Payments of principal on the Notes held in the 1994-A2
Trust and 1994-A3 Trust, and the resulting Pool Factors for such Trusts after
taking into account each Scheduled Payment, are set forth below:

<TABLE>
<CAPTION>
1994-A2 TRUST 1994-A3 TRUST
NOTES NOTES
SCHEDULED SCHEDULED
REGULAR PRINCIPAL 1994-A2 TRUST PRINCIPAL 1994-A3 TRUST
DISTRIBUTION DATE REPAYMENTS POOL FACTOR REPAYMENTS POOL FACTOR
- ----------------------------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
</TABLE>

S-22
<PAGE> 24

DESCRIPTION OF THE NOTES

The following summarizes the particular terms and provisions of the Notes
and supplements, and to the extent inconsistent therewith replaces, the
description of the general terms and provisions of the Notes set forth in the
Prospectus under the heading "Description of the Notes." The statements under
this caption are summaries and do not purport to be complete. The summary is
qualified in its entirety by reference to all of the provisions of the Notes,
the Trust Indenture, the Supplemental Indentures, the Leases and the
Participation Agreement, the forms of which will be filed as exhibits to a
Current Report on Form 8-K filed by the Company with the Commission.

GENERAL

The Notes with respect to each Property will be issued in up to three
series. The Notes are to be issued under a Trust Indenture and Security
Agreement between State Street Bank and Trust Company of California, National
Association, as Owner Trustee, and Wilmington Trust Company, as Loan Trustee, as
supplemented by, with respect to each Property, a separate indenture supplement
thereto (each, a "Supplemental Indenture," and together with the Trust
Indenture, with respect to each Property, an "Indenture") among the Owner
Trustee, the Loan Trustee and Stewart Title of California, as trustee.

The Owner Trustee has leased or will lease each Property to the Company
pursuant to a separate Lease between the Owner Trustee and the Company. As
security for the Notes related to each Property, the Owner Trustee has assigned
or will assign certain of its rights under the related Lease, including the
right to receive rent thereunder, to the Loan Trustee, and the Owner Trustee has
granted a mortgage encumbering its interests in such Property to the Loan
Trustee. The Notes are not cross collateralized and, consequently, the Notes
issued in respect of any one Property are not secured by any other Property or
the Leases related thereto. There are, however, cross default provisions in the
Leases and, consequently, a Lease Event of Default under any particular Lease
will constitute a Lease Event of Default under each other Lease and,
consequently, an Indenture Default under each other Indenture. Pursuant to each
Lease, the Company is obligated to make or cause to be made rental and other
payments to the Loan Trustee on behalf of the Owner Trustee in amounts that will
be at least sufficient to pay when due all payments required to be made on the
related Notes. The Notes are not, however, obligations of, or guaranteed by the
Company. The Company's rental obligations under each Lease are general
obligations of the Company.

The Notes to be held in each Trust will be purchased by such Trust at
varying discounts from par and, during the period commencing on the closing of
the public offering of the Certificates to , will provide a return
consisting of accretion of discount, such that the yield to of each Note
held by each Trust will equal the interest rate per annum applicable to the
related Certificates. From and after , all of the Notes held in each
Trust will accrue interest payable in cash at the applicable rate per annum for
the Certificates issued by such Trust on January 2 and July 2 of each year,
which interest will be passed through to Certificateholders of such Trust on
each such date. Such interest will be computed on the basis of a 360-day year of
twelve 30-day months.

S-23
<PAGE> 25

The aggregate par value of the Notes to be issued with respect to each
Property, as such Notes are to be held in each of the Trusts, is as follows:

<TABLE>
<CAPTION>
1994-A1 TRUST 1994-A2 TRUST 1994-A3 TRUST
% % % NOTES
PROPERTY NOTES NOTES NOTES TOTAL
- -------------------------------------- ------------- ------------- ------------- --------
<S> <C> <C> <C> <C>
Riverside Distribution Center.........
Bakersfield Store.....................
Bakersfield Store.....................
La Habra Store........................
Ponoma Store..........................
Glendora Store........................
Grover City Store.....................
Hemet Store...........................
Palmdale Store........................
------------- ------------- ------------- --------
Total....................... $ $ $ $
------------- ------------- ------------- --------
------------- ------------- ------------- --------
</TABLE>

The principal of the A1 Notes will be paid in full at maturity on .
The Scheduled Payments of principal on the A2 Notes and A3 Notes are as follows:

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.

REDEMPTION

The Notes issued with respect to any Property are separately subject to
redemption prior to maturity at any time, without the consent of the Pass
Through Trustee, (i) in whole or by series, at the option of the Owner Trustee
in connection with a voluntary refunding, or (ii) in whole after July 2, 1996 in
connection with

S-24
<PAGE> 26

a voluntary termination by the Company of the related Lease if the Company
determines in good faith that such Property shall have become obsolete or
uneconomic for use or surplus to its needs (and, in the case of (ii) above, the
Company has not elected, or has not satisfied the conditions, to cause the
related Notes to be exchanged for its full recourse securities in accordance
with the terms of the Participation Agreement and has not elected to exercise
its Substitution Right with respect to such Property; see "Description of the
Notes -- Exchange of Notes Under Certain Circumstances" and " -- The
Leases -- Substitution Right" in this Prospectus Supplement). The price of each
Note to be redeemed in each such case shall be equal to the Redemption Price,
plus, if such redemption is made prior to in the case of the A2
Notes and in the case of the A3 Notes (each such date a "Premium
Termination Date"), a Make-Whole Premium (as defined herein), if any. Any such
redemption of the Notes will be conditional upon the deposit of funds sufficient
to pay the redemption price of such Notes prior to the date fixed for
redemption. If such condition is not met and no redemption is to occur, the Loan
Trustee shall, prior to the date fixed for redemption, give notice of such
revocation to the holders of the Notes. (Trust Indenture, Article 6 and Section
13.1; Supplemental Indentures, Section 1.7; Leases, Section 14(a); Participation
Agreement, Sections 2.5 and 9.1)

The "Make-Whole Premium," if any, with respect to any Note shall be
determined as of the third Business Day prior to the applicable redemption date
and shall equal the excess, if any, of (i) the sum of the present values of all
remaining scheduled payments of principal and interest from the redemption date
to maturity of such Note, discounted semiannually on each interest payment date
of such Note at a rate equal to the Treasury Rate (as defined below), based on a
360-day year of twelve 30-day months, over (ii) the aggregate unpaid principal
amount (including any accretion of discount) of such Note plus accrued but
unpaid interest thereon (but not any accrued interest in default) to the
redemption date. The Make-Whole Premium, if any, on the Notes will be determined
by an independent investment banking institution of national standing selected
by the Company.

The "Treasury Rate" means, with respect to each Note to be redeemed, a per
annum rate (expressed as a semiannual equivalent and as a decimal and, in the
case of United States Treasury bills, converted to a bond equivalent yield)
determined to be the per annum rate equal to the semiannual yield to maturity of
United States Treasury securities maturing on the Average Life Date (as defined
below) of such Note, as determined by interpolation between the most recent
weekly average yields to maturity for two series of United States Treasury
securities, (A) one maturing as close as possible to, but earlier than, the
Average Life Date of such Note and (B) the other maturing as close as possible
to, but later than, the Average Life Date of such Note, in each case as
published in the most recent H.15(519) or, if a weekly average yield to maturity
for United States Treasury securities maturing on the Average Life Date of such
Note is reported in the most recent H.15(519), as published in the most recent
H.15(519). "H.15(519)" means "Statistical Release H.15(519), Selected Interest
Rates," or any successor publication, published by the Board of Governors of the
Federal Reserve System. "The most recent H.15(519)" means the latest H.15(519)
that is published prior to noon, New York time, on the third Business Day prior
to the redemption date.

The "Average Life Date" for each Note to be redeemed shall be the date that
follows the redemption date by a period equal to the Remaining Weighted Average
Life at the redemption date of such Note. The "Remaining Weighted Average Life"
of such Note, at the redemption date of such Note, shall be the number of days
equal to the quotient obtained by dividing: (a) the sum of the products obtained
by multiplying (i) the amount of each then remaining scheduled payment of
principal, including the payment due on the maturity date of such Note, by (ii)
the number of days from and including the redemption date to but excluding the
scheduled payment date of each such scheduled payment of principal; by (b) the
then unpaid principal amount of such Note.

In addition, the Notes issued with respect to each Property are separately
subject to redemption or purchase prior to maturity, in whole, (i) at the option
of the Owner Trustee, if an Indenture Default shall have occurred and be
continuing and the Loan Trustee shall give notice of its intent to accelerate
the related Notes or to exercise other substantial remedies available to it or
(ii) upon the occurrence of a casualty loss of 40% or more of the fair market
sales value of the Improvements on such Property in any one occurrence that, in
the Company's reasonable discretion, renders such Property unsuitable for use in
the Company's business, a

S-25
<PAGE> 27

failure of title or partial condemnation of such Property that, in the Company's
reasonable opinion, would significantly interfere with the value, use or
remaining useful life of such Property, a condemnation either (x) for a period
of time extending beyond the term of the related Lease or (y) for a period of
time longer than 10 years that, in either such case in the Company's reasonable
opinion will interfere majorially with the use or operation of such property or
a total condemnation of such Property (an "Event of Loss") and, in the case of
an Event of Loss, the Company shall not have elected to exercise its
Substitution Right with respect to such Property. Any such redemption or
purchase by the Owner Trustee shall be on at least 25 days' prior written notice
to each Noteholder. Any such redemption or purchase shall be at the Redemption
Price. Any partial redemption shall be made on a pro rata basis in accordance
with the then outstanding principal amount of the related Notes. (Trust
Indenture, Sections 6.1, 6.4 and 8.10; Supplemental Indentures, Section 1.8;
Leases, Section 9)

ADDITIONAL NOTES

Additional Notes may be issued with respect to any Property under and
secured by the related Indenture, at any time but on no more than two occasions
(unless the Owner Participant shall have otherwise consented in writing), for
the purpose of refunding any previously issued series of Notes issued with
respect to such Property, provided that certain conditions are satisfied,
including, among other things, that (i) either all Notes outstanding with
respect to such Property are being refunded or all Notes held in a particular
Trust are being refunded, (ii) the aggregate weighted average life-to-maturity
of all Additional Notes being issued in such refunding does not vary from the
aggregate weighted average life-to-maturity reflected in the debt amortization
schedule for the Notes to be refunded by more than six months, (iii) the final
maturities of the Additional Notes being issued are not later than the original
final maturity of the Notes to be refunded, (iv) the Additional Notes issued are
in an aggregate principal amount equal to the principal amount of Notes to be
refunded as of the date of such refunding, (v) the payment dates and record
dates for all Additional Notes being issued in such refunding do not vary from
the payment dates and record dates for the Notes to be refunded and (vi) certain
Indenture Defaults or Lease Events of Default shall not have occurred and be
continuing. (Trust Indenture, Section 2.13; Supplemental Indentures, Section
1.13; Participation Agreement, Section 2.5)

Additional Notes may also be issued with respect to any Property under and
secured by the related Indenture, at any time and from time to time, for the
purpose of providing funds to finance the cost of certain modifications to such
Property, provided that certain conditions set forth in the related Lease and
the related Indenture are satisfied, including, among other things, that (i) the
aggregate weighted average life-to-maturity of all Additional Notes being issued
in such financing does not vary from the aggregate weighted average life-
to-maturity reflected in the debt amortization schedule for the Notes related to
such Property outstanding immediately prior to such issuance by more than six
months, (ii) the Additional Notes shall be investment grade and the issuance of
such Additional Notes shall not adversely affect the rating of the Notes related
to such Property outstanding immediately prior to such issuance, (iii) the
aggregate principal amount of such Additional Notes shall not exceed 100% of the
cost of such modification, (iv) the final maturities of the Additional Notes
being issued are not later than the original final maturity of the Notes related
to such Property outstanding immediately prior to such issuance, (v) the payment
dates and record dates for all Additional Notes being issued in such refunding
do not vary from the payment dates and record dates of the Notes outstanding
immediately prior to such issuance and (v) certain Indenture Defaults or Lease
Events of Default shall not have occurred and be continuing. (Trust Indenture,
Section 2.13; Supplemental Indentures, Section 1.13; Participation Agreement,
Section 9.2; Leases, Section 8(f))

The term, conditions and designations of such Additional Notes will be set
forth in a supplement to the related Indenture. (Trust Indenture, Section 2.13)
In addition, rent and other amounts payable by the Company under the related
Lease will be adjusted to the extent necessary to provide rent payments and
certain other payments sufficient to provide for the payment, when due, of the
scheduled payments of principal of, premium, if any, and interest on the related
Notes as well as any such Additional Notes. (Participation Agreement, Section
2.5(c); Leases, Section 3(e)) All Notes issued and outstanding under any
Indenture, including any Additional Notes, will be equally and ratably secured
thereunder, without preference, priority or

S-26
<PAGE> 28

distinction of any thereof, or of any series thereof, over any other by reason
of difference in time of issuance, maturity or otherwise. (Supplemental
Indentures, Section 1.14)

INDENTURE DEFAULTS; NOTICE AND WAIVER

Indenture Defaults include: (a) the failure to pay principal, premium, if
any, or interest on any of the Notes issued thereunder within 10 days after such
payment becomes due; (b) a Lease Event of Default (other than the failure to
make certain indemnity and other payments to the Owner Trustee or the Owner
Participant) under the applicable Lease, provided that the Loan Trustee or the
holders of at least a majority in aggregate principal amount of the Notes issued
thereunder notify the Owner Trustee of its or their intention to terminate such
Lease, commence an action to foreclose on the related Property or exercise any
other comparable remedies under such Lease; (c) commencement of voluntary
bankruptcy or insolvency proceedings by the Owner Trust; (d) a decree or order
for relief is entered against the Owner Trust in any involuntary bankruptcy or
insolvency proceeding and such decree or order shall not be dismissed or stayed
for a period of 60 consecutive days; (e) the failure by the Owner Trustee to
comply in any material respect with certain material covenants or obligations
and which failure shall continue for a period of 60 days after written notice
thereof to the Owner Trustee by the Loan Trustee or the holders of at least a
majority in aggregate principal amount of the outstanding Notes issued under
such Indenture; provided, however, that if such breach cannot be cured by
payment of money within such 60-day period or, with respect to other breaches,
cannot be cured by diligent efforts within such 60-day period but such efforts
shall have been properly commenced within such period, the cure period, as long
as the Owner Trustee or Owner Participant is diligently pursuing a cure, shall
be extended for an additional period of time as may be necessary to effect such
cure but not to exceed 360 days; and (f) certain material representations or
warranties of the Owner Trustee or the Owner Participant affecting the rights or
interests of the Loan Trustee or the holders of the Notes issued under such
Indenture prove to be inaccurate in any material respect when made, unless such
inaccuracy is no longer material or any material adverse impact thereof is cured
within 60 days after written notice to the Owner Trustee or the Owner
Participant by the Loan Trustee or the holders of at least a majority in
aggregate principal amount of the outstanding Notes issued under such Indenture.
Although the Notes are not cross collateralized, there are cross default
provisions in the Leases and, consequently, a Lease Event of Default under any
particular Lease will constitute not only an Indenture Default under the related
Indenture but also a Lease Event of Default under each other Lease and,
consequently, an Indenture Default under each other Indenture. See " -- The
Leases -- Lease Events of Default." (Trust Indenture, Section 8.1)

If the Company fails to make any basic rent payment under a Lease within 10
days after the same shall become due, the related Loan Trustee shall not
exercise remedies under such Lease or declare the related Notes to be due and
payable until 15 Business Days after the Owner Trustee and the Owner Participant
have been given notice of such default. If the Owner Trustee or the Owner
Participant furnishes to the Loan Trustee the amount of such rent payment,
together with any interest thereon on account of the delayed payment thereof,
within such 15 Business Day period, the Loan Trustee and the holders of such
outstanding related Notes may not exercise any remedies otherwise available
under the related Indenture or such Lease as the result of such failure to make
such rental payment. The Owner Trustee's or the Owner Participant's right to
cure an Indenture Default resulting from the failure by the Company to pay basic
rent under any Lease will be limited to the right to cure an aggregate of six
such defaults, or three consecutive such defaults. The Owner Trustee or the
Owner Participant may also cure any other default by the Company in the
performance of its obligations under any Lease. (Trust Indenture, Section
8.10(a))

During the occurrence and continuance of an Indenture Default, the Loan
Trustee may withhold any portion of the rent otherwise payable to the Owner
Trustee without exercise of remedies under the related Lease until the earliest
to occur of (i) the first Business Day following the date that is 180 days after
the failure by the Owner Trustee to make any payment on the related Notes when
due (including applicable grace periods); (ii) the first Business Day following
the date that is 180 days after the Loan Trustee shall have received notice of
any other Indenture Default (including applicable grace periods); (iii) the date
there shall no longer be continuing an Indenture Default (in each of which cases
(described in clauses (i), (ii) and (iii)) such rent shall be distributed to the
Owner Trustee and no further withholding of rent on account of such

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Indenture Default shall be effected); or (iv) the date of declaration of
acceleration of the related Notes (in which case such rent shall be applied as
provided in such Indenture). (Trust Indenture, Section 4.1(b))

The holders of a majority in aggregate principal amount of the outstanding
Notes issued under any Indenture, by written directive to the Loan Trustee, may
on behalf of all holders of Notes waive any past default under such Indenture,
except a default in the payment of the principal of, premium, if any, interest
on, or other amounts due under, any such Note or a default in respect of any
covenant or provision of such Indenture that cannot be modified or amended
without the consent of each holder of such Note. (Trust Indenture, Section 8.9)

REMEDIES

If an Indenture Default has occurred and is continuing, to the extent
permitted by law, the Loan Trustee in its discretion may, or the holders of not
less than a majority in aggregate principal amount of the outstanding Notes
issued under such Indenture may, or the Loan Trustee at the direction of the
holders of not less than a majority in aggregate principal amount of such Notes
shall, by written notice, declare the unpaid principal of all such Notes and the
interest accrued thereon to be immediately due and payable, without premium. To
the extent permitted by law, the Loan Trustee will be deemed to have declared
the principal of all such Notes to be due and payable upon the exercise by the
Owner Trustee of certain remedies available to it that result in a termination
of the related Lease, acceleration and receipt by such Loan Trustee of rent due
thereunder or a demand for and receipt by the Loan Trustee of liquidated damages
equal to the higher of (a) a percentage stipulated in such Lease of the purchase
price paid by the Owner Trustee for the Property or (b) the fair market sales
value of such Property. (Trust Indenture, Sections 8.2(a) and 8.10(c); Leases,
Section 16(a)(v))

The holders of a majority in aggregate principal amount of the outstanding
Notes may rescind and annul any such acceleration before any sale of the Loan
Trustee's interest in the related Property (the "Indenture Estate"), or any part
thereof, if: (a) there has been paid to or deposited with the Loan Trustee an
amount sufficient to pay (i) all overdue installments of interest on all of such
Notes, (ii) the principal of and premium, if any, on any such Notes that have
become due otherwise than by such acceleration, and interest thereon as provided
therein, and (iii) to the extent permitted by law, interest on overdue
installments of interest; and (b) all Indenture Defaults with respect to the
related Indenture have been cured or waived except non-payment of principal of
such Notes which have become due solely by such acceleration. (Trust Indenture,
Section 8.2(b))

If an Indenture Default that is also a Lease Event of Default has occurred
and is continuing, the Loan Trustee may, and upon the written request of the
holders of not less than a majority in aggregate principal amount of the
outstanding Notes issued pursuant to the related Indenture shall, subject to the
condition described below and the Owner Trustee's rights to cure such Indenture
Default or to purchase such Notes, exercise certain rights and remedies
available to it under the related Lease, such Indenture and applicable law,
including the right to (a) take possession of the related Indenture Estate,
either directly or through an agent or court appointed receiver, and exclude the
Owner Trustee and the Company to the extent permitted by law, (b) foreclose
either judicially or non-judicially on the Indenture Estate and (c) enforce any
security interests in personal property in accordance with law; provided that
the Loan Trustee may not exercise any remedy against the Indenture Estate unless
a declaration of acceleration of such Notes has been delivered to the Company
and the Owner Trustee. (Trust Indenture, Section 8.3; Supplemental Indentures,
Section 1.17)

In connection with an Indenture Default that arises solely by reason of a
Lease Event of Default, the Loan Trustee may not exercise any of its rights and
remedies under the related Indenture that would foreclose the lien of such
Indenture or otherwise result in the exclusion of the Owner Trustee from the
Indenture Estate or any substantial part thereof demised under the related Lease
unless the Loan Trustee concurrently takes action under such Lease to dispossess
the Company, terminates such Lease or effects any comparable remedy under such
Lease. (Trust Indenture, Section 8.3) If the Company were a debtor in a
proceeding under Title 11, United States Code ("the Bankruptcy Code") during a
Lease Event of Default, the preceding condition could not be met by the Loan
Trustee during the period when certain actions against the Company,

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including action to dispossess the Company, would be barred by the automatic
stay provisions of the Bankruptcy Code.

So long as no Lease Event of Default shall have occurred and be continuing,
foreclosure under the related Indenture would not result in the termination of
the related Lease and the Loan Trustee would be prohibited from taking any
action that would disturb the possession of the Company under such Lease. (Trust
Indenture, Section 8.3)

The holders of a majority in aggregate principal amount of the outstanding
Notes issued pursuant to any Indenture shall have the right to direct the time,
method and place of conducting any proceeding for any remedy available to the
Loan Trustee or exercising any trust or power conferred on the Loan Trustee,
provided that such direction does not conflict with applicable law or with the
rights of the Owner Trustee under such Indenture, and provided further that the
Loan Trustee may take any other action it deems proper that is not inconsistent
with such direction. (Trust Indenture, Section 8.7)

If an Indenture Default occurs and is continuing, any sums held or received
by the Loan Trustee shall be applied to pay the Loan Trustee all amounts then
due to it under the related Indenture prior to any payments to holders of the
Notes issued under such Indentures. (Trust Indenture, Section 4.3)

In the event of a bankruptcy of the Owner Participant, it is possible that,
notwithstanding that the Owner Participant's interest in each Property is owned
by the Owner Trustee in trust, the Leases, the Owner Trustee and the Notes might
become affected by the bankruptcy proceedings. In such event, payments under the
Leases or on the Notes might be interrupted and the ability of the Loan Trustee
to exercise its remedies under the related Indenture might be restricted,
although the Loan Trustee would retain its status as a secured creditor in
respect of the related Lease and the related Property.

POSSIBLE RECHARACTERIZATION OF THE LEASES AS LOANS FOR CERTAIN CALIFORNIA STATE
CORPORATE LAW PURPOSES

For federal income tax and accounting purposes, it is the intention of the
Company and the Owner Participant that each leveraged lease transaction entered
into by the Company constitutes a "true Lease". It is also the intention and
belief of both the Company and the Owner Participant that each such transaction
constitute a "true Lease" for purposes of applicable California state law. In
this regard the Company has agreed with the Owner Participant not to take or
omit to take any action during the Lease Term inconsistent with "true Lease"
lease classification. Notwithstanding the foregoing, a court applying the
analysis used in certain California case law in an action involving the
enforcement of any Lease might determine that the related leveraged lease
transaction entered into by the Company was actually a loan and that the
conveyance by the Company to the Owner Trustee constitutes an equitable mortgage
of the related Property. In such event, the Owner Trustee would be considered a
secured lender to the Company for purposes of enforcing state landlord's
remedies and the Loan Trustee would be considered a lender to the Owner Trustee
holding an assignment of the security for such purposes. Therefore, in the event
of a Lease Event of Default and an election by either the Owner Trustee or the
Loan Trustee to demand payment of the amounts due under the terms of any Lease,
the Owner Trustee or the Loan Trustee would be required to comply with the
procedural requirements of, and would be subject to the legal limitations on
recovery under, California law applicable to a lender seeking to recover the
principal of a loan secured by real property. It is unclear whether the mortgage
interest deemed to be held by the Owner Trustee in a recharacterized transaction
would be deemed to be properly perfected and thus enforceable against other
third party creditors. If the mortgage interest was deemed perfected, the Owner
Trustee and, by assignment, the Loan Trustee would have a secured claim against
the Company, would be required by law to proceed first by foreclosing on the
related Property, and could subsequently seek a deficiency judgment against the
Company if the value of such Property, as determined by a subsequent judicial
hearing, were insufficient to redeem the related Notes. If such mortgage
interest were not deemed perfected, it could be defeated by other creditors or a
trustee in bankruptcy and the Owner Trustee and, by assignment, the Loan Trustee
would have an unsecured claim against the Company in an amount at least equal to
the principal of, and accrued interest on, the outstanding related Notes. Such
unsecured claim would not be subject to the limitations on lessor damages
imposed by section 502(b)(6) of

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the Bankruptcy Code. See "Description of the Notes -- Possible Rejection of the
Leases by a Trustee in Bankruptcy" in the Prospectus.

MODIFICATION OF INDENTURES, LEASES AND OTHER DOCUMENTS

The parties to the Indentures, Participation Agreement, Basic Agreement and
the other documents contemplated thereby (collectively, the "Transaction
Documents") may grant consents under, or modify, waive, amend or supplement
certain provisions of the Transaction Documents without the consent of any
holder of outstanding Notes, provided that, no such modification, amendment,
supplement, consent or waiver shall, without the consent of the holder of each
outstanding Note affected thereby, modify, amend or supplement, or give any
consent in respect of or waive any provision of any related Lease in any manner
(i) as to reduce the amounts payable by the Company under the Leases, or change
the time for the payment thereof, so that such payments are less than the
amounts necessary to pay the principal of, premium, if any, and interest on the
outstanding Notes when due (whether at maturity, upon acceleration or otherwise)
or (ii) as would release the Company from its obligation in respect of payment
of rent or any other amount payable under the Leases and intended to be used to
pay the principal of, premium, if any, or interest on the Notes, in any manner
inconsistent with clause (i) above. In addition, without the consent of the Loan
Trustee given at the direction of the holders of at least a majority of the
outstanding related Notes, the Owner Trustee may not (except as it relates to
certain indemnity or other payments to the Owner Trustee or the Owner
Participant) agree to any amendment to, waiver, discharge, supplement or
termination of, or grant any consent under, certain specified provisions of the
Transaction Documents, including provisions of the Leases relating to (i) the
requirement that rent thereunder be sufficient to pay principal of, premium, if
any, and interest on the Notes; (ii) the obligation of the Company to make all
payments thereunder; (iii) the permitted uses of the Properties; (iv) certain
conditions the Company must satisfy in order to construct improvements to any
Property; (v) the rights of the Company upon the occurrence of an Event of Loss
(if the result thereof would be to lower the threshold for a casualty to
constitute an Event of Loss or adversely affect or delay or decrease the amount
of any prepayment of the Notes); (vi) the events constituting Lease Events of
Default; or (vii) the remedies available to the Owner Trustee upon the
occurrence of a Lease Event of Default. (Trust Indenture, Granting Clause;
Supplemental Indentures, Granting Clause)

With the consent of the holders holding not less than a majority in
aggregate principal amount of the then outstanding Notes issued with respect to
any Property, by directive delivered to the Owner Trustee and the Loan Trustee,
the Owner Trustee may and the Loan Trustee, upon receipt of a satisfactory
opinion of counsel, shall amend the related Indenture; provided, however, that
no such amendment shall, without the consent of the holder of each outstanding
Note affected thereby: (i) change the stated maturity of the principal of, or
any installment of interest on, or the dates or circumstances of payment of
premium, if any, on, any Note, or reduce the principal amount thereof or the
interest thereon or any amount payable upon the redemption thereof, or change
the circumstances for redemption or change the place of payment where, or the
coin or currency in which, any Note or the premium, if any, or the interest
thereon is payable, or impair the right to institute suit for the enforcement of
any such payment of principal or interest on or after the stated maturity
thereof (or, in the case of redemption, on or after the redemption date) or such
payment of premium, if any, on or after the date such premium becomes due and
payable or change the dates or the amounts of payments to be made through
installment payments; (ii) permit the creation of any lien prior to or (except
in respect of any Additional Notes) pari passu with the lien of such Indenture
with respect to any of the related Indenture Estate, or terminate the lien of
such Indenture on any of such Indenture Estate or deprive the holder of any such
Note of the security afforded by the lien of such Indenture except as may be
required to release property from the lien of such Indenture as expressly
provided in such Indenture; (iii) terminate the Leases, reduce the amounts
payable under the Leases or change the time for the payment thereof so that such
payments are less than the amounts necessary to pay when due the principal of,
premium, if any, and interest on the outstanding Notes; (iv) reduce the
percentage in principal amount of the outstanding Notes, the consent of the
holders of which is required for any such amendment, or the consent of the
holders of which is required for any waiver provided for in such Indenture; or
(v) modify the provisions of such Indenture governing amendments or waivers
thereunder except to increase the percentage of holders of Notes necessary to
permit certain actions or

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to add provisions of such Indenture that cannot be modified or waived without
the consent of each holder of a Note affected thereby. (Trust Indenture, Section
11.2)

DISCHARGE AND DEFEASANCE OF THE INDENTURES AND NOTES IN CERTAIN CIRCUMSTANCES

The liens and security interests created by each Indenture shall cease to
secure any obligations with respect to the Notes issued thereunder and the terms
and conditions set forth in such Indenture shall no longer apply to such Notes
or the holders thereof (except that certain terms, including the rights of such
holders to receive payments of principal, premium, if any, and interest, shall
remain applicable in the case of (c) below), if at any time (a) the principal
of, premium, if any, and interest on such Notes have been paid, (b) all such
Notes theretofore authenticated have been delivered to the Loan Trustee for
cancellation or (c) there has been irrevocably deposited with the Loan Trustee,
in trust, cash in an amount that will be sufficient to pay, or direct
obligations of the United States of America maturing in such amounts and at such
times as will ensure the availability of cash sufficient to pay, when due, the
principal of, premium, if any, and interest on such Notes; provided that
concurrently with the deposit specified in (c) above, (i) there has been
delivered to the Loan Trustee an opinion of counsel to the effect that such
deposit and defeasance will not be deemed to be, or result in, a taxable event
with respect to the holders of such Notes (and, so long as any Certificates
remain outstanding, to the holders of such Certificates) for purposes of federal
income taxation and (ii) certain other conditions have been satisfied. (Trust
Indenture, Section 3.1)

EXCHANGE OF NOTES UNDER CERTAIN CIRCUMSTANCES

Upon the termination of any Lease because the related Property is deemed by
the Company to be obsolete, uneconomic for use or surplus to the Company's
needs, the Company may elect to satisfy all of the rights and obligations of the
Owner Trustee under the related Indenture in respect of the related Notes by
exchanging such Notes for (a) if such Property is sold to a party other than the
Company, unsecured, full recourse securities of the Company or (b) if such
Property is sold to the Company, secured, full recourse securities of the
Company, in either case to be issued pursuant to an indenture reasonably
satisfactory to the Loan Trustee. Such exchange may be made by the Company only
if certain conditions are satisfied, including (i) the Company shall have paid
all rent and other amounts due to the Owner Participant and the Owner Trustee
under the Transaction Documents through the date of such exchange; (ii) the
securities issued by the Company in exchange for such Notes shall be issued in
the same aggregate principal amount as the related Notes then outstanding (after
giving effect to all payments of rent being made in connection with such
exchange), bear the same interest rate, be payable in installments in the same
manner, have the same stated maturity and otherwise have substantially the same
terms as such Notes (except that, in the case of an exchange pursuant to (a)
above, the new securities shall not contain any provisions relating to security
interests in or mortgages of such Property); (iii) the Loan Trustee and the
Owner Trustee shall have received an opinion of counsel to the effect that,
among other things, the exchange shall not (A) cause any Trust holding Notes to
become an "investment company" as defined in the Investment Company Act of 1940,
as amended, (B) cause any holder of a Note to recognize income, gain or loss for
tax purposes in connection with such exchange or (C) cause any adverse tax
consequences to the Noteholders or to the Certificateholders; and (iv) in the
case of an exchange pursuant to (b) above, no lien (other than specified
permitted liens) shall exist upon such Property. If such Property is sold to a
party other than the Company, holders of the securities would be required to
rely solely on the general credit of the Company in connection with the
repayment of such securities and would no longer have the benefit of a lien on
the Properties. Upon any exchange contemplated by (a) or (b) above, the Owner
Trustee will be released from all obligations with respect to such Notes. (Trust
Indenture, Sections 13.1 and 13.2; Participation Agreement, Section 9.1(a))

THE LEASES

Term and Rent

Each Property has been or will be leased separately by the Owner Trustee to
the Company pursuant to the related Lease for a term (the "Interim Term") which,
with respect to the seven Properties previously acquired by the Owner Trustee,
commenced on December 29, 1993 and, with respect to the two Properties to

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be acquired by the Owner Trustee upon the closing of the offering of the
Certificates, will commence on the date of such acquisition, and expires on July
1, 1995. (Leases, Section 2(b)) The "Basic Term" of the Leases shall commence on
July 2, 1995 and expire on December 30, 2018, unless earlier terminated or
extended as described herein. (Leases, Section 2(b)) So long as no default
exists under a Lease (a "Lease Event of Default"), the Company is entitled to
undisturbed possession of the related Property, even if an Indenture Default
(other than a Lease Event of Default) has occurred and is continuing under the
related Indenture. (Leases, Section 6)

The rent payments under each Lease will be payable on January 2 and July 2
(or, if such day is not a Business Day, on the next succeeding Business Day)
commencing , 1995, and will be paid directly to the Loan Trustee as
assignee of the Owner Trustee. (Leases, Sections 3 and 11(c)) Such payments,
together with certain supplemental payments under the Leases, will be used to
make payments of principal (other than principal due by reason of prepayment or
acceleration) and accrued interest then due and unpaid on the Notes, which in
turn will furnish the funds to be distributed to the Pass Through Trustee and
thereafter to the Certificateholders. Amounts payable under the Leases will be
sufficient to pay in full all payments of principal of, premium, if any, and
interest on, the related Notes. In certain cases, the rent payments under the
Leases may be adjusted, but adjusted rent payments may never be less than the
scheduled payments of principal of and interest on the related Notes. (Leases,
Section 3(g)) The balance of any payments of rent under any Leases, after
payment of the payments of principal of, and interest on, the related Notes will
be paid by the Loan Trustee to the Owner Trustee or as the Owner Trustee may
direct. (Trust Indenture, Section 4.1) The Company's obligation to pay rent and
to cause other payments to be made under the Leases is the sole responsibility
and obligation of the Company, not subject to any set-off, abatement, defense or
counterclaim. (Leases, Section 4)

Net Lease; Use and Maintenance

The obligations of the Company under each Lease are those of a lessee under
a "net lease," and the Company will be obligated, at its expense, to pay all
costs and expenses of operating and maintaining the related Property. (Leases,
Section 4) The Company may use and occupy each Property for any use permitted by
applicable law. The Company has the right to discontinue operations at any
Property, but the Company may not leave a Property vacant for more than six
years if the Company has an investment grade credit rating or three years if it
does not have such a credit rating. The discontinuance of operations at any
Property will not relieve the Company of any of its obligations under the
related Lease. (Leases, Section 5(a)) Each Lease requires the Company to
maintain the related Property in good repair and condition consistent with the
standard of maintenance employed by the Company as of the commencement of such
Lease with respect to similar properties located in the general geographic area
where such Property is located, in material compliance with the conditions of
all insurance policies required by such Lease, in a manner at least equal to the
care and diligence used by the Company with respect to similar buildings
utilized in the Company's business in the general geographic area where such
Property is located and in compliance with all applicable laws. (Leases, Section
8(a))

Modifications

So long as no Lease Event of Default shall have occurred and be continuing,
the Company has the right under each Lease to make such alterations,
improvements and modifications, structural or otherwise, to the related
improvements and to construct new buildings or other structures on to the
related Property or the replacement of any such property with other property (a
"Modification") as it deems necessary or desirable so long as such
Modifications, upon completion, will not diminish the value, utility or
remaining useful life of such Property (except to an insignificant extent) or
cause such Property to become a "limited use" property. (Leases, Section 8(c))

Subject to certain conditions, the Owner Participant may, but is not
required to, finance the cost of any Modifications to a Property through an
equity investment in the Owner Trust and the issuance of one or more series of
Additional Notes. (Leases, Section 8(f)) See "Description of the
Notes -- Additional Notes." If the Owner Participant does not finance the cost
of any Modifications, the Company shall bear the full cost thereof.

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Title to all Modifications financed by the Owner Participant and all
Modifications that can not be removed from the Property without diminishing the
value, utility or remaining useful life of such Property as compared to
immediately prior to such Modification (a "Nonseverable Modification") will vest
in the Owner Trustee upon completion of construction. Any Modifications that are
financed by the Owner Participant will be leased to the Company by the Owner
Trustee under the related Lease and, upon request of the Company or the Owner
Trustee, the related Lease will be amended or supplemented to reflect the lease
of the Modifications by the Company. Title to any other Modifications will vest
in the Company. (Leases, Sections 8(e) and 8(f))

Sublease and Assignment

Upon the satisfaction of certain conditions, the Company has the right to
assign its right, title and interest to and under any Lease to any person. Such
assignment will not release the Company from its obligations under such Lease or
any Transaction Documents. (Leases, Section 11(a))

Upon the satisfaction of certain conditions, the Company has the right to
sublease all or any portion of any Property to any person, provided such
sublease shall be expressly subject to and subordinate to the related Lease. No
sublease may extend beyond the end of the Basic Term or any then exercised
renewal term, and no sublease will release the Company from its obligations
under such Lease or any Transaction Document. (Leases, Section 11(b))

Insurance

The Company will, at its expense, maintain special form property insurance
(all risk type) with respect to each Property, with coverage limits at least
equal to the full replacement cost of the Property (exclusive of certain items)
and upon such other terms as are comparable to such special form property
insurance (all risk type) maintained generally by entities engaged in the
Company's business with respect to buildings and property that they occupy in
the same geographic area that are similar in size and use to such Property. All
policies covering loss of or damage to a Property shall be made payable to the
Loan Trustee so long as the related Indenture is in effect; provided that, so
long as no Lease Event of Default has occurred and is continuing, insurance
proceeds not in excess of (i) $5 million in respect of the Lease covering the
Property including the distribution center and $2 million in respect of each
other Lease if the Company has an investment grade credit rating or (ii) $1
million in respect of the Lease covering the Property including the distribution
center and $500,000 in respect of each other Lease if it does not have such a
credit rating, shall be paid solely to the Company. The Company is also required
to maintain commercial general liability insurance covering claims arising out
of the ownership, operation, maintenance, condition or use of the Properties in
such amounts not less than $50 million combined single limit per occurrence and
with such other terms as are comparable to the commercial general liability
insurance that is maintained generally by entities engaged in the Company's
business with respect to buildings and property that they occupy in the same
geographic area that are similar in size and use to the Properties. The Company
may satisfy all or a portion of its insurance requirements through
self-insurance provided that the amount of such self-insurance with respect to
each Property per occurrence may not exceed the lesser of (a) one percent of the
Company's net worth or (b) $5 million. The Loan Trustee, among others, will be
named as additional insureds under all liability insurance policies required
with respect to the Properties. (Leases, Section 10)

Termination

At any time following the first anniversary of the commencement of the
Basic Term, the Company has the option, so long as a Lease Event of Default
shall not have occurred and be continuing, to terminate any of the Leases if the
Company determines in good faith that the related Property shall have become
obsolete or uneconomic for use or surplus to its needs. No later than 180 days
prior to the termination date for such Lease (the "Termination Date") specified
in the notice of such termination, the Owner Trustee shall elect (i) to retain
ownership of such Property, (ii) to effect a sale of such Property to the
Company or (iii) to have the Company (as its non-exclusive agent) assume
responsibility for the sale of such Property. If the Owner Trustee elects to
retain ownership of such Property, it shall deposit with the Loan Trustee cash
in an amount (or certain investments maturing prior to the Termination Date in a
principal amount) equal to the aggregate

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principal amount of the Notes related to such Property, together with accrued
and unpaid interest and prepayment premium, if any, and the Company shall pay to
such Owner Trustee on the Termination Date any rent due on or prior to such
Termination Date, an amount equal to any premium payable on such Notes, accrued
and unpaid interest on such Notes as of the Termination Date, and certain other
amounts then payable to such Owner Participant, the Owner Trustee, the Loan
Trustee, the Remainderman and the Pass Through Trustee. If the Owner Trustee
elects to sell such Property on the Termination Date to the Company, the Company
shall pay to the Owner Trustee and the Remainderman, an amount equal to the
termination value identified in the related Lease (the "Termination Value"),
plus any accrued but unpaid rent due on or prior to such Termination Date, an
amount equal to any premium payable on such Notes, accrued and unpaid interest
on such Notes as of the Termination Date and certain other amounts then payable
to the Owner Participant, the Lessor, the Loan Trustee, the Remainderman and the
Pass Through Trustee; provided, however, that if such Notes have been exchanged
for full recourse securities of the Company on the Termination Date, the Company
will only be obligated to pay the Owner Trustee the excess, if any, of the
Termination Value over the unpaid principal amount of such Allocable Portion of
the Notes. If the Property is sold on the Termination Date to a third party, the
Owner Trustee shall retain the net sales proceeds subject to certain provisions
of the Indenture and the Company will be obligated to pay the Owner Trustee the
excess of the Termination Value over such net sales proceeds, if any, together
with all amounts payable under the related Lease. If the Owner Trustee has not
elected to retain the related Property and the Company or the Owner Trustee have
failed to sell such Property on or prior to the Termination Date, then the
Company may under certain circumstances purchase such Property as described
above. (Leases, Section 14; Participation Agreement, Section 9.1)

Substitution Right

Under each Lease, so long as no Lease Event of Default shall have occurred
and be continuing, the Company may substitute another property for the related
Property (the "Substitution Right"), either following the occurrence of an Event
of Loss or in the event that the Company determines in good faith that such
Property shall have become obsolete or uneconomic for use or surplus to its
needs. The Company may not substitute another property for the related Property
unless it provides documentation that satisfies certain conditions with respect
to the substitute property, including but not limited to, (a) that the fair
market sales value, utility and remaining useful life of the land and
Improvements and the respective interests therein of the Owner Trustee and the
Remainderman of the substitute property are not less than the fair market sales
value, utility and remaining useful life of the land and Improvements and the
respective interests therein of the Owner Trustee and the Remainderman of the
substituted Property, (b) that demonstrates the conveyance (i) to the Owner
Trustee of good and marketable fee simple title to the Improvements located on
the substitute property and an Estate for Years for a term equal to the
then-remaining Estate for Years with respect to the substituted Property and
(ii) to the Remainderman of good and marketable fee simple title to the land
component of the substitute property (subject to the Owner Trustee's Estate for
Years), (c) that provides for the lease of the substitute property upon all the
terms and conditions of the initial Lease, (d) that certain title, title
insurance, appraisal and environmental conditions have been satisfied, (e) that
amends the related Supplemental Indenture to reflect the substitution and (f)
that delivery of appropriate opinions has been made. (Leases, Sections 9 and 14)

Certain Renewal and Purchase Options

At the end of the Term of a Lease, in the absence of a Lease Event of
Default under any Lease, the Company will have certain options to renew such
Lease for additional periods. (Leases, Section 12)

In the event the Owner Trustee or the Owner Participant elects to sell its
interest in any Property to a third party, under certain circumstances the
Company will have the right to purchase such Owner Trustee's or Owner
Participant's interest, as the case may be, in such Property on the same terms
as are being offered by such third party. The exercise of such right by the
Company will not have any effect on the related Lease, nor will it result in any
redemption of any of the Notes. (Participation Agreement, Section 8.2)

S-34
<PAGE> 36

Event of Loss

If an Event of Loss occurs with respect to any Property, the Company may
elect to terminate the related Lease, or if such Event of Loss is a casualty
event and repairs can be completed within two years and prior to the scheduled
expiration of such Lease, to repair such Property. If the Company does not elect
to repair the Property pursuant to the related Lease, the Company is required to
pay to the Owner Trustee and the Remainderman (to the extent not previously paid
to such Owner Trustee or the Loan Trustee as insurance proceeds or condemnation
awards or otherwise), a casualty value amount determined pursuant to the related
Lease (the "Casualty Value"), certain interest and all rent and other amounts
then due, whereupon the Lease term will end, the obligations of the Company
thereunder will cease, and such Owner Trustee and the Remainderman will transfer
such Property to the Company or as the Company otherwise directs. For a period
of five years after such transfer, the Company will not be permitted to use such
Property in the conduct of its business, nor will the Company be permitted to
rebuild the Improvements to the same configuration as, or to a size within five
percent of the size of, such Improvements prior to such Event of Loss. If an
Event of Loss occurs and the Company elects to repair the affected Property, the
related Lease will remain in effect and the Company must (i) commence
reconstruction of the subject Property within one year after such casualty and
(ii) complete reconstruction of such Property by the earlier of the second
anniversary of the Event of Loss or the scheduled expiration of the term of the
related Lease, such that the resulting Property shall have a value, utility and
remaining useful life at least equal to that which such Property had immediately
prior to such Event of Loss, and shall thereafter diligently pursue the
completion of such reconstruction. (Leases, Section 9)

Lease Events of Default

Lease Events of Default under each Lease include, among other things: (a) a
failure to make (i) any payment of basic rent, Casualty Value or Termination
Value within 10 days after the same becomes due or (ii) certain other payments
within 30 Business Days after the same becomes due and notice shall have been
given by the Owner Trustee or the Loan Trustee; (b) a failure by the Company to
carry or maintain any required insurance which failure continues until the fifth
day before the end of the period during which the lapse of the applicable policy
is not effective as to the additional insureds; (c) a failure by the Company to
perform or observe any material covenant or agreement (other than those referred
to in clauses (a) and (b) above) to be performed or observed by it under the
Lease or any other Transaction Document to which it is a party, which failure
continues unremedied after notice by the Owner Trustee or the Loan Trustee and
the lapse of specified cure periods; (d) one or more specified representations
or warranties made by the Company in certain Transaction Documents proves to
have been incorrect in any material respect when made and remains material and
materially incorrect at the time in question, unless the fact, circumstance or
condition that is the subject of such representation or warranty shall have been
made true within 60 days after notice to the Company; (e) the occurrence of
certain events of bankruptcy, reorganization or insolvency of the Company; (f) a
Lease Event of Default has occurred and is continuing under any other Lease; or
(g) the Company shall assign, sublease or otherwise transfer its right, title
and interest in and to such Lease in violation of the terms thereof. (Leases,
Section 15)

Upon the occurrence and continuance of any Lease Event of Default, the
Owner Trustee may declare the related Lease to be in default. Except as provided
below, and to the extent permitted by law, the Owner Trustee may at any time
thereafter exercise one or more of the remedies set forth in the such Lease,
including the right to terminate such Lease and repossess and use or relet the
related Property, to sell such Property or any part thereof, together with any
interest of the Owner Trustee in such Property free and clear of the Company's
rights and retain the proceeds, and, so long as such Property has not been sold,
to require the Company to pay as liquidated damages, certain unpaid rent plus
any one of the following: (a) an amount equal to the excess, if any, of the
Casualty Value over the fair market rental value of such Property for the
remainder of the term of such Lease (discounted to present value), (b) an amount
equal to the excess of the Casualty Value over the fair market sales value of
such Property, (c) an amount equal to the excess of the present value of all
installments of rent until the end of the term of such Lease over the present
value of the fair market rental value of such Property until the end of such
term or (d) an amount equal to the higher of the Casualty

S-35
<PAGE> 37

Value or the fair market sales value of such Property. Upon payment by the
Company of the amount set forth in clause (d) above, the Owner Trustee is
obligated to transfer such Property to the Company and the Lease term shall end
and all of the Company's obligations under such Lease shall cease. (Leases,
Section 16)

The Loan Trustee, as assignee of the Owner Trustee under the related
Indenture, may exercise the remedies of such Owner Trustee under the related
Lease subject to the fulfillment of the conditions precedent set forth in the
related Indenture. These conditions precedent include the acceleration of the
Notes and prior notice to such Owner Trustee and the Owner Participant of the
intent to exercise remedies. Prior to the fulfillment of these conditions
precedent, such Owner Trustee will be able to exercise remedies under the
related Lease; provided that such Owner Trustee may not terminate such Lease
except in connection with the payment of the amount referred to in clause (d) in
the preceding paragraph. The interest of such Owner Trustee and the Owner
Participant may be different from the interest of holders of the Notes, and,
accordingly, such Owner Trustee may choose to exercise different remedies than
would be in the best interest of the holders of the Notes. After the Loan
Trustee has fulfilled the conditions precedent set forth in such Indenture for
the exercise of remedies, the Owner Trustee shall retain the right to enforce
the terms and conditions of such Lease and to declare such Lease in default and
to make the demand for the payment of the amount described in clause (d) in the
preceding paragraph. This right of an Owner Trustee to demand payment of the
amount set forth in clause (d) in the preceding paragraph may, in practice,
preclude the Loan Trustee from electing other remedies under such Lease.
(Leases, Section 16; Trust Indenture, Granting Clause; Supplemental Indentures,
Granting Clause)

THE PARTICIPATION AGREEMENT

The Company is required to indemnify the Owner Participant, the Owner
Trustee, the Loan Trustee, the Remainderman and the Pass Through Trustee for
certain losses and claims and for certain other matters. (Participation
Agreement, Article VII) Subject to certain restrictions, the Owner Participant
may transfer its interest in the Properties. (Participation Agreement, Article
VIII; Trust Indenture, Section 8.3(c))

CERTAIN ADDITIONAL FEDERAL INCOME TAX CONSEQUENCES

The following federal income tax information supplements the more detailed
discussion in the Prospectus, and should be read in conjunction therewith. See
"Certain Federal Income Tax Consequences" in the Prospectus.

ORIGINAL ISSUE DISCOUNT

Final Treasury Regulations have now been promulgated under the original
issue discount ("OID") provisions of the Code (the "Final OID Regulations").
Although the Final OID Regulations are not identical to the Proposed OID
Regulations discussed in the Prospectus, the discussion of OID therein, as
supplemented below, remains applicable under the Final OID Regulations, which
will apply to the Notes. Potential investors should consult their tax advisors
concerning the particular effects of the Final OID Regulations as to them.

In general, a Note will be considered to be issued with OID, subject to a
de minimis exception, to the extent 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 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.

Because the Notes do not provide for payments of interest until
, 199 , no payments of interest under the Notes will be qualified
stated interest. As a result, all interest that accrues and is payable with
respect to the Notes will be included in the stated redemption price at maturity
of such Notes, and will be included in OID. Certificate Owners will be required
to include OID in gross income for U.S. federal income tax purposes in advance
of the receipt of the cash to which such income is attributable. The amount of
OID to

S-36
<PAGE> 38

be included in income in any tax period with respect to a Note will be
determined using a constant yield to maturity method under the rules applicable
to installment obligations. Any amounts included in income as OID with respect
to a Note will increase a Certificate Owner's adjusted tax basis with regard to
its interest in the Note.

ERISA CONSIDERATIONS

Employee benefit plans subject to Title I of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), individual retirement accounts and
employee benefit plans subject to Section 4975 of the Internal Revenue Code of
1986, as amended (hereinafter referred to as "ERISA Plans" or "Plans"), may
purchase Certificates issued by the Trusts, subject to certain legal
restrictions. Under ERISA, any person who exercises any authority or control
relating to management or disposition of the assets of an ERISA Plan is
considered to be a fiduciary of such Plan. ERISA requires that fiduciaries of
Plans cause the assets of such Plans to be invested prudently and for the
exclusive benefit of participants. A fiduciary of a Plan contemplating the
purchase of a Certificate should carefully consider how the purchase of a
Certificate will relate to the Plan's investment portfolio.

S-37
<PAGE> 39

UNDERWRITING

Under the terms of and subject to the conditions contained in the
Underwriting Agreement, Morgan Stanley & Co. Incorporated, Goldman, Sachs & Co.
and Salomon Brothers Inc (the "Underwriters") have each agreed to purchase from
the Pass Through Trustee the percentage of the Certificates of each Trust and
the aggregate principal amount of the Certificates of each Trust, in each case
as set forth opposite its name below.

<TABLE>
<CAPTION>
PERCENTAGE OF AGGREGATE TOTAL AGGREGATE
PRINCIPAL AMOUNT PRINCIPAL AMOUNT
UNDERWRITER OF EACH SERIES OF CERTIFICATES
------------------------------------------------- ----------------------- ----------------
<S> <C> <C>
Morgan Stanley & Co. Incorporated................ % $
Goldman, Sachs & Co. ............................
Salomon Brothers Inc.............................
Total.................................. 100% $
--- ----------------
--- ----------------
</TABLE>

The Underwriting Agreement provides that the obligation of the Underwriters
to pay for and accept delivery of the Certificates is subject to, among other
things, the approval of certain legal matters by counsel and certain other
conditions. The Underwriters are obligated to take and pay for all of the
Certificates to be purchased by them if any are taken.

The Underwriters propose initially to offer all or part of the Certificates
directly to the public at the public offering price per Certificate designation
set forth on the cover page of this Prospectus Supplement and may offer a
portion of the Certificates to dealers at a price which represents a concession
not in excess of the amounts set forth below for the respective designations of
Certificates. The Underwriters may allow, and such dealers may reallow, a
concession not in excess of the amounts set forth below for the respective
designations of Certificates to certain other dealers. After the initial public
offering, the public offering price and such concessions may be changed.

<TABLE>
<CAPTION>
CERTIFICATE CONCESSION REALLOWANCE
DESIGNATION TO DEALERS CONCESSION
---------------------------------------------- ----------- -----------
<S> <C> <C>
1994-A1....................................... % %
1994-A2.......................................
1994-A3.......................................
</TABLE>

The Company has agreed to indemnify the Underwriters against certain civil
liabilities, including liabilities under the Securities Act of 1933, as amended.

The Company does not intend to apply for listing of the Certificates on a
national securities exchange, but has been advised by the Underwriters that they
presently intend to make a market in the Certificates, as permitted by
applicable laws and regulations. No Underwriter is obligated, however, to make a
market in the Certificates and any such market may be discontinued at any time
at the sole discretion of such Underwriter. Accordingly, no assurance can be
given as to the liquidity of, or trading markets for, the Certificates.

S-38
<PAGE> 40

APPENDIX

GLOSSARY OF CERTAIN TERMS

The following is a glossary of certain terms used in this Prospectus
Supplement.

"Additional Notes" means the Notes which may be issued by the Owner Trustee
under certain circumstances under one or more Supplemental Indentures with
respect to the Properties.

"Basic Agreement" means the Pass Through Trust Agreement dated as of
December 21, 1993 entered into between the Company and the Pass Through Trustee
pursuant to which Pass Through Trust Agreement, as supplemented by the Trust
Supplements, the Trusts will be formed.

"Business Day" means any day other than a Saturday or a Sunday or other day
on which banks in New York, New York or the city in which the Loan Trustee's
office is located are authorized or required to be closed or, if no Note is
outstanding, the city in which the principal corporate trust office of the Loan
Trustee is located.

"Cede" means Cede & Co.

"Certificate" means each of the Pass Through Certificates of the three
Trusts to be issued by the Pass Through Trustee pursuant to the Basic Agreement
and the applicable Trust Supplement.

"Certificate Account" means the one or more non-interest bearing accounts
established and maintained by the Pass Through Trustee pursuant to the Basic
Agreement on behalf of the Certificateholders of the Trust created by the
related Trust Supplement for the deposit of payments representing Scheduled
Payments on the Notes held in such Trust.

"Certificateholder" means the registered holder of any Certificate issued
by a Trust.

"Certificate Owner" means a person having a beneficial interest in a
Certificate.

"Company" means Smith's Food & Drug Centers, Inc.

"DTC" means The Depository Trust Company.

"DTC Participants" means those participants in DTC who are credited with
ownership of the Certificates.

"Definitive Certificate" means a certificate representing a Certificate
Owner's interest in the Certificates.

"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.

"Estate for Years" means the interest of the Owner Trustee in each parcel
of land included in the Properties granted by the Company to the Owner Trustee.

"Event of Loss" shall mean a condemnation if (i) an entire Property is
taken in a condemnation, (ii) a portion of a Property is taken in a condemnation
and, in the Company's reasonable opinion, such condemnation would significantly
interfere with the value, use or remaining useful life of such Property, (iii)
if there is a failure of title with respect to a Property and in the Company's
reasonable opinion such failure of title would significantly interfere with the
value, use or remaining useful life of such Property or (iv) a condemnation
either (x) for a period of time extending beyond the term of the related Lease
or (y) for a period of time longer than 10 years, in either such case so as to
interfere materially, in Company's reasonable opinion, with the use or operation
of the Property. "Event of Loss" shall also mean a casualty if, in any one
occurrence, the cost of repairs of such casualty would be 40% or more of the
fair market sales value of the Improvements thereon and the Company determines
in its reasonable discretion that such Property is no longer suitable for use in
its business.

"Improvements" means all buildings, facilities, all personal property,
fixtures, improvements or other structures located on or in or attached to,
whether currently or in the future, any of the Properties, and all substitutions
and replacements thereof.

A-1
<PAGE> 41

"Indenture" means the Trust Indenture, as supplemented by a Supplemental
Indenture, pursuant to which a series of Notes is issued.

"Indenture Default" means each of the events designated as an event of
default in an Indenture. For a description of certain events constituting
Indenture Defaults, see "Description of Notes -- Indenture Defaults; Notice and
Waiver" in this Prospectus Supplement.

"Indenture Estate" means with respect to any Property the entire interest
of the Loan Trustee in such Property and related Lease under the related
Indenture and such Lease.

"Lease" means the Lease Agreement entered into with respect to each
Property between the Owner Trustee and the Company, as such Lease Agreement may
from time to time be amended or supplemented.

"Lease Event of Default" means each of the events designated as an event of
default in a Lease. For a description of certain events constituting Lease
Events of Default, see "Description of the Notes -- The Leases -- Lease Events
of Default" in this Prospectus Supplement.

"Loan Trustee" means Wilmington Trust Company, a Delaware banking
corporation, in its capacity as indenture trustee under the Trust Indenture, and
any successor thereunder.

"Modification" means (a) any alteration, improvement or modification to any
Improvement, other than original, substitute or replacement parts incorporated
into such Improvement and (b) the addition, betterment, expansion or enlargement
of any Improvement or the construction of a new building or other structure on a
Property or the replacement of any such property with other property.

"Nonseverable Modification" means Modifications which cannot be removed
from the Property without diminishing the value, utility or remaining useful
life of such Property as compared to the value, utility and remaining useful
life immediately prior to such Modification.

"Notes" means the notes issued on a nonrecourse basis by the Owner Trustee
under the Indentures.

"Owner Participant" means the owner participant for whose benefit the Owner
Trustee owns the Properties leased to the Company pursuant to the Leases and its
permitted successors and assigns.

"Owner Participant Parent" means the parent corporation of the Owner
Participant and such parent corporation's successors and assigns.

"Owner Trust" means the trust established for the benefit of the Owner
Participant, its successors and assigns.

"Owner Trustee" means State Street Bank and Trust Company of California,
National Association, a national banking association, not in its individual
capacity but solely as trustee of the Owner Trust and any successor thereunder.

"Pass Through Trustee" means Wilmington Trust Company, a Delaware banking
corporation, in its capacity as Pass Through Trustee under the Basic Agreement,
and any successor thereunder.

"Pool Balance" means, for each Trust, as of any date, the aggregate unpaid
principal amount (including accretion of discount) 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 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.

"Pool Factor" means, for each Trust, as of any date, the quotient (rounded
to the seventh decimal place) computed by dividing (i) the Pool Balance 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.

"Property" means each of the nine properties subject to the leveraged lease
transactions described in this Prospectus Supplement, and any property that may
be substituted therefor in accordance with the Leases;

A-2
<PAGE> 42

provided, that in the context of the Owner Trustee's interest in the Property
(in particular, "Property" acquired or to be acquired by the Owner Trustee and
leased to the Company) such term means the Improvements and Estate for Years.

"Redemption Price" means, as to any Note or portion thereof, on the
applicable redemption or repurchase date therefor, the outstanding principal
amount thereof, together with accrued interest thereon to such redemption or
purchase date.

"Regular Distribution Date" means January 2 and July 2 of each year,
commencing on or after , until payment of all the Schedule Payments
to be made under the Notes has been made.

"Remainderman" means an unaffiliated trust to whom the Company has conveyed
or will convey its interest in the parcel of land (but not the Improvements
thereon) included in each Property, subject to an Estate for Years.

"Remainderman Participant" means the remainderman participant for whose
benefit the Remainderman Trustee owns the remainderman interest in the
Properties and its permitted successors and assigns.

"Remainderman Trustee" means Wilmington Trust Company, a Delaware banking
corporation, not in its individual capacity, but solely as the Remainderman
Trustee under the trust agreement governing the Remainderman.

"Scheduled Payment" means each payment of interest or principal on a Note
scheduled to be received by the Pass Through Trustee on January 2 or July 2 of
each year, commencing on or after , until the final distribution date for
the relevant Trust.

"Special Distribution Date" means any Business Day on which a Special
Payment will be distributed.

"Special Payment" means (i) any payment of principal, premium, if any, and
interest received by the Pass Through Trustee on account of the early redemption
of a Note held in a Trust, (ii) any payment of principal and interest (including
any interest accruing upon default) on or any other amount in respect of a Note
upon an Indenture Default in respect of, or upon acceleration relating to, a
Note held in a Trust or (iii) any payment of principal, premium, if any, and
interest on a Note which is not received by the Pass Through Trustee within five
days after a Regular Distribution Date.

"Special Payments Account" means the one or more accounts established and
maintained by the Pass Through Trustee pursuant to the Agreement on behalf of
the Certificateholders of the Trust created by the related Trust Supplement for
the deposit of payments representing Special Payments.

"Supplemental Indenture" means each of the nine separate Second
Supplemental Indentures to the Trust Indenture entered into between the Owner
Trustee, the Loan Trustee and Stewart Title of California, as trustee, pursuant
to which the Notes with respect to each Property will be issued.

"Transaction Documents" means each of the Leases, the Trust Agreement, the
Basic Agreement, each Supplemental Indenture when executed and delivered, each
of the Notes when executed, authenticated and delivered, each Trust Supplement
when executed and delivered, the Certificates when executed, authenticated and
delivered, the Participation Agreement and certain related instruments and
documents contemplated by the foregoing.

"Trust" means each of the three separate Smith's Food & Drug Centers, Inc.
1994-A Pass Through Trusts, to be formed pursuant to the Basic Agreement and a
related Trust Supplement.

"Trust Agreement" means the Trust Agreement dated as of December 21, 1993
entered into between the Owner Participant and the Owner Trustee, as such Trust
Agreement may from time to time be amended or supplemented.

"Trust Indenture" means the Trust Indenture and Security Agreement entered
into with respect to each Property between the Owner Trustee and the Loan
Trustee pursuant to which Trust Indenture and Security

A-3
<PAGE> 43

Agreement, as supplemented by the Supplemental Indenture, the Owner Trustee will
issue the Notes with respect to such Property.

"Trust Property" means the property held by each Trust which includes the
Notes, all monies at any time paid thereon and all monies due and to become due
thereunder and funds from time to time deposited with the Pass Through Trustee
in accounts relating to such Trust.

"Trust Supplement" means each of the three separate Trust Supplements to
the Basic Agreement entered into between the Company and the Pass Through
Trustee pursuant to which the three separate Trusts will be formed.

A-4
<PAGE> 44

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> 45

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> 46

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

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
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> 47

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

4
<PAGE> 48

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.

<TABLE>
<CAPTION>
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)
<S> <C> <C> <C> <C> <C> <C> <C>
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

5
<PAGE> 49

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

6
<PAGE> 50

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

7
<PAGE> 51

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

8
<PAGE> 52

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

9
<PAGE> 53

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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<PAGE> 62

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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<PAGE> 63

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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<PAGE> 64

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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<PAGE> 65

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

22
<PAGE> 66

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

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<PAGE> 67

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

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<PAGE> 68

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.

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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> 70
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> 71
(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> 72
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> 73

<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> 74
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