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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH 22, 1996
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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UNION TANK CAR COMPANY
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 36-3104688
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
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225 WEST WASHINGTON STREET
CHICAGO, ILLINOIS 60606
(312) 372-9500
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
PROCOR LIMITED
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
CANADA NONE
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATE OR ORGANIZATION) IDENTIFICATION NO.)
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2001 SPEERS ROAD
OAKVILLE, ONTARIO, CANADA L6J 5E1
(905) 827-4111
(ADDRESS, INCLUDING ZIP CODE AND TELEPHONE NUMBER, INCLUDING
AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
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WILLIAM M. HOLZMAN, ESQ.
NEAL, GERBER & EISENBERG
TWO NORTH LASALLE STREET
CHICAGO, ILLINOIS 60602
(312) 269-8000
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
COPIES TO:
BARRY P. BIGGAR, ESQ.
MAYER, BROWN & PLATT
1675 BROADWAY
NEW YORK, NEW YORK 10019
(212) 506-2500
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable 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 / /.
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering / /.
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering / /.
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box / /.
CALCULATION OF REGISTRATION FEE
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PROPOSED PROPOSED
AMOUNT MAXIMUM MAXIMUM AMOUNT OF
TITLE OF EACH CLASS OF TO BE OFFERING PRICE AGGREGATE REGISTRATION
SECURITIES TO BE REGISTERED REGISTERED PER UNIT(1) OFFERING PRICE(1) FEE
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Pass Through Certificates, Series
1996-A............................... $122,000,000 100% $122,000,000 $42,069
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(1) Estimated in accordance with Rule 457 solely for the purpose of determining
the registration fee.
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THE REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANTS
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 THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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Information contained herein 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 the registration statement
becomes effective. This 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.
SUBJECT TO COMPLETION MARCH 22, 1996
PROSPECTUS
$122,000,000
UNION TANK CAR COMPANY
1996-A PASS THROUGH TRUSTS
PASS THROUGH CERTIFICATES, SERIES 1996-A
Each Pass Through Certificate offered hereby will represent a fractional
undivided interest in one of two separate Union Tank Car Company 1996-A Pass
Through Trusts (the "Pass Through Trusts") to be formed pursuant to two separate
pass through trust agreements. One pass through trust agreement is between Union
Tank Car Company (the "Company") and , as Pass Through Trustee (the
"Pass Through Trustee"), establishing Pass Through Trust 1996-A1, and the other
pass through trust agreement is among the Company, Procor Limited, an indirect
wholly-owned subsidiary of the Company ("Procor"), and the Pass Through Trustee
establishing Pass Through Trust 1996-A2. The property of Pass Through Trust
1996-A1 will consist of $ aggregate principal amount of equipment notes
(the "Equipment Notes") to be issued on a nonrecourse basis by the trustee of
separate owner trusts (each, an "Owner Trustee") in connection with
separate leveraged lease transactions to finance not more than 80% of the cost
of certain tank cars and covered hopper cars (each rail car a "Unit" and,
collectively, the "Equipment") that will be purchased by the Owner Trustees from
the Company and leased to the Company. The property of Pass Through Trust
1996-A2 will consist of (i) $ aggregate principal amount of Equipment
Notes to be issued in the same leveraged lease transactions as the Equipment
Notes to be held by Pass Through Trust 1996-A1, (ii) $ aggregate
principal amount of equipment trust certificates (the "Company ETCs") to be
issued pursuant to an equipment trust agreement between the Company and
, as trustee, and (iii) a $ principal amount equipment trust
certificate (the "Procor ETC") to be issued pursuant to an equipment trust
agreement between Procor and , as trustee. Amounts unconditionally
payable under the leases will be sufficient to pay in full when due all payments
of principal of, Make-Whole Amount (as hereinafter defined), if any, and
interest on the Equipment Notes held in each Pass Through Trust, except for the
prepayment of principal required to be made as part of a mandatory refinancing
of certain Equipment Notes on the final distribution date applicable to the Pass
Through Certificates issued by Pass Through Trust 1996-A2. Amounts payable
pursuant to the equipment trust agreements will be sufficient to pay in full
when due all payments of principal of and interest on the Company ETCs and the
Procor ETC. The Equipment Notes are not obligations of, or guaranteed by the
Company; however, the Company will fully and unconditionally guarantee (i) the
payment as and when due of the principal of and interest on the Company ETCs and
(ii) the due and punctual distribution to Certificateholders of principal and
interest payable in respect of the Procor ETC.
The Equipment Notes will be issued in two series under indentures and will
be secured by a security interest in the Equipment leased by the Company under
the lease relating to such indenture and by an assignment of certain of the
Owner Trustee's rights under such lease, including the right to receive rent
payable by the Company in respect of such Equipment pursuant to such lease.
Interest paid on the Equipment Notes, the Company ETCs and the Procor ETC held
in the Pass Through Trusts will be passed through to the Certificateholders on
and of each year, commencing on , 199[6], at the rate
per annum set forth below until the final distribution date as set forth below
for such Pass Through Trust. The principal of the Equipment Notes held in Pass
Through Trust 1996-A1 will be paid and passed through to the Certificateholders
in scheduled amounts on or , or both, of each year, commencing
on , 199 and continuing until the final distribution date set forth
below for such Pass Through Trust. The Equipment Notes held in Pass Through
Trust 1996-A2 will amortize as to principal commencing on 200 , with
the final payment of principal due on , 20 ; however, such Equipment
Notes are required to be prepaid pursuant to a mandatory refinancing on
, 20 . The Equipment Notes may be prepaid under certain circumstances.
The Company ETCs and the Procor ETC held in Pass Through Trust 1996-A2 will not
amortize as to principal, and the entire principal amount thereof will be paid
and passed through to Certificateholders on , 200 . Neither the
Company ETCs nor the Procor ETC are redeemable prior to maturity.
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.
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FINAL
PASS THROUGH PRINCIPAL INTEREST INITIAL PRINCIPAL FINAL PRICE TO
CERTIFICATES AMOUNT RATE DISTRIBUTION DATE DISTRIBUTION DATE PUBLIC(1)(2)
1996-A1....................... $ % 100%
1996-A2....................... $ % 100%
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(1) Plus accrued interest, if any, from May , 1996.
(2) The underwriting commission is $ , which constitutes . % of the
principal amount of the Pass Through Certificates. The underwriting
commission, and certain other expenses estimated at $ , will be
payable by the Owner Trustees in the leveraged lease transactions and by the
Company and Procor. All of the proceeds from the sale of the Pass Through
Certificates will be used to purchase the Equipment Notes, the Company ETCs
and the Procor ETC.
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 Mayer, Brown & Platt, counsel for the Underwriters. It
is expected that delivery of the Pass Through Certificates in book-entry form
will be made on or before May , 1996 through the facilities of The Depository
Trust Company, against payment therefor in immediately available funds.
SALOMON BROTHERS INC MORGAN STANLEY & CO.
INCORPORATED
The date of this Prospectus is May , 1996
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IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICES OF THE PASS THROUGH
CERTIFICATES 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.
AVAILABLE INFORMATION
The Company and Procor have filed with the Securities and Exchange
Commission (the "Commission") a Registration Statement on Form S-3 (the
"Registration Statement") under the Securities Act of 1933, as amended (the
"Securities Act"), with respect to the Pass Through Certificates. This
Prospectus, which forms a part of the Registration Statement, does not contain
all of the information set forth in the Registration Statement, certain parts of
which are omitted in accordance with the rules and regulations of the
Commission. For further information pertaining to the Pass Through Certificates,
the Company and Procor, reference is made to the Registration Statement. Any
statement contained herein concerning the provisions of any document is not
necessarily complete and, in each instance, reference is made to the copy of
such document filed as an exhibit to the Registration Statement or otherwise
filed with the Commission.
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 and other information with the Commission. Information
concerning the Company can be inspected and copied at the public reference
facilities maintained by the Commission at 450 Fifth Street, N.W., Washington,
D.C. 20549, and at the following Regional Offices of the Commission: Chicago
Regional Office, Citicorp Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661 and New York Regional Office, 7 World Trade Center, New York, New
York 10048. Copies of such material can be obtained from the Public Reference
Section of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549 at
prescribed rates.
REPORTS TO CERTIFICATEHOLDERS BY THE TRUSTEE
, as trustee under the Pass Through Trust
Agreements, will provide to Certificateholders certain periodic statements
concerning distributions made with respect to the Pass Through Trusts. See
"Description of the Pass Through Certificates--Reports to Certificateholders."
DOCUMENTS INCORPORATED BY REFERENCE
The Company's Annual Report on Form 10-K for the fiscal year ended December
31, 1995, as filed with the Commission pursuant to the Exchange Act, is
incorporated herein by reference.
All documents filed by the Company pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act after the date of this Prospectus and prior to the
termination of the offering of the Pass Through Certificates shall be deemed to
be incorporated by reference in this Prospectus and to be a part hereof from the
date of filing of such documents. Any statement contained 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 by
reference herein modifies or supersedes such statement. Any such statement so
modified or superseded shall not be deemed, except as so modified or superseded,
to constitute a part of this Prospectus.
The Company will provide without charge to each person to whom this
Prospectus is delivered, upon written request of such person, a copy (without
exhibits) of any or all documents incorporated by reference in this Prospectus.
Requests for such copies should be directed to the General Counsel and
Secretary, Union Tank Car Company, 225 West Washington Street, Chicago, Illinois
60606, telephone (312) 372-9500.
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SUMMARY
The following summary of provisions relating to the Pass Through
Certificates does not purport to be complete and is qualified in its entirety by
the detailed information appearing elsewhere or incorporated by reference in
this Prospectus.
GLOSSARY...................... Included at the end of this Prospectus as
Appendix I is a Glossary of certain of the
significant defined terms used herein.
PASS THROUGH TRUSTS........... Each of the Union Tank Car Company 1996-A Pass
Through Trusts (the "Pass Through Trusts") will
be formed pursuant to one of two separate Pass
Through Trust Agreements (collectively, the
"Agreements"), one between Union Tank Car
Company (the "Company") and
, as Pass Through Trustee (the
"Pass Through Trustee"), and the other among
the Company, Procor Limited, an indirect
wholly-owned subsidiary of the Company
("Procor"), and the Pass Through Trustee. Each
Pass Through Trust will be a separate entity.
PASS THROUGH TRUST PROPERTY... The property of Pass Through Trust 1996-A1 will
consist of $ aggregate principal
amount of equipment notes (the "Equipment
Notes") to be issued on a non-recourse basis by
, as owner trustee (each,
an "Owner Trustee") of separate owner
trusts, for the benefit of certain
institutional investors (each, an "Owner
Participant") in connection with separate
leveraged lease transactions to finance not
more than 80% of the cost to the Owner Trustees
of certain tank cars and covered hopper cars
(each rail car a "Unit" and, collectively, the
"Equipment") that will be purchased by the
Owner Trustees, on behalf of the Owner
Participants, from the Company and leased to
the Company. Until all of such Equipment Notes
are issued, the Pass Through Trustee will hold
in cash an amount equal to the aggregate
principal amount of unissued Equipment Notes.
Such cash shall be invested by the Pass Through
Trustee in Specified Investments. See
"Description of the Pass Through
Certificates--General". The Equipment Notes
will be issued in series in connection with
such leveraged lease transactions under
indentures (each, an "Indenture").
The property of Pass Through Trust 1996-A2 will
consist of:
(a) $ aggregate principal amount of
Equipment Notes to be issued in the same
leveraged lease transactions as the
Equipment Notes to be held by Pass Through
Trust 1996-A1.
(b) $ aggregate principal amount of
equipment trust certificates (the "Company
ETCs") to be issued pursuant to an
equipment trust agreement between the
Company and , as
trustee (the "Company Trust Agreement").
Until all the Company ETCs are issued, the
Pass Through Trustee will hold in
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cash an amount equal to the aggregate
principal amount of Company ETCs not yet
issued. Such cash will be invested by the
Pass Through Trustee in Specified
Investments. See "Description of the Pass
Through Certificates--General."
(c) a $ principal amount equipment
trust certificate (the "Procor ETC") to be
issued pursuant to an equipment trust
agreement between Procor and
, as trustee (the
"Procor Trust Agreement").
Pass Through Trust 1996-A1 will acquire
Equipment Notes having an interest rate equal
to the interest rate applicable to the Pass
Through Certificates, Series 1996-A1. Pass
Through Trust 1996-A2 will acquire Equipment
Notes, the Company ETCs and the Procor ETC
having an interest rate equal to the interest
rate applicable to the Pass Through
Certificates, Series 1996-A2 (together with
Pass Through Certificates, Series 1996-A1, the
"Pass Through Certificates"). The Equipment
Notes acquired by Pass Through Trust 1996-A1
will mature on the final distribution date
applicable to the Pass Through Certificates
issued by such Pass Through Trust. The
Equipment Notes acquired by Pass Through Trust
1996-A2 will mature after the final
distribution date applicable to such Pass
Through Trust; however, such Equipment Notes
are required to be prepaid on such final
distribution date pursuant to a mandatory
refinancing. The Company ETCs and the Procor
ETC acquired by Pass Through Trust 1996-A2 will
mature on the final distribution date
applicable to the Pass Through Certificates,
Series 1996-A2. The aggregate principal amount
of the Equipment Notes, the Company ETCs and
the Procor ETC to be held in the Pass Through
Trusts will be the same as the aggregate
principal amount of the Pass Through
Certificates issued by the Pass Through Trusts.
PASS THROUGH CERTIFICATES;
BOOK-ENTRY REGISTRATION....... Each Pass Through Certificate will represent a
fractional undivided interest in the related
Pass Through Trust. The Pass Through
Certificates will be issued in fully registered
form only. See "Description of the Pass Through
Certificates--General." The Pass Through
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 the Pass Through
Certificates will be entitled to receive a
definitive certificate (a "Registered
Certificate") representing such person's
interest in a Pass Through Trust, except in the
event that Registered Certificates are issued
under the limited circumstances described
herein. See "Description of the Pass Through
Certificates--Book-Entry Registration" and
"--Registered Certificates."
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DENOMINATIONS................. The Pass Through Certificates will be issued in
minimum
denominations of $1,000 and any integral
multiple of $1,000 in excess thereof. See
"Description of the Pass Through
Certificates--General."
REGULAR DISTRIBUTION DATES.... and .
SPECIAL DISTRIBUTION DATES.... Regular Distribution Dates or, in certain
cases, any Business Day.
RECORD DATES.................. The fifteenth day preceding a Regular
Distribution Date or a Special Distribution
Date.
INITIAL AVERAGE LIFE DATE..... The initial average life date of the Pass
Through Certificates issued by Pass Through
Trust 1996-A1 is . The
initial average life date of the Pass Through
Certificates issued by Pass Through Trust
1996-A2 is .
DISTRIBUTIONS................. Payments of interest on the Equipment Notes,
the Company ETCs and the Procor ETC held in the
Pass Through Trusts are scheduled to be
received in specified amounts by the Pass
Through Trustee of the applicable Pass Through
Trust on and of
each year, commencing ,
199[6], and are to be distributed to the
Certificateholders on the corresponding Regular
Distribution Dates. Payments of principal of
the Equipment Notes held in Pass Through Trust
1996-A1 are scheduled to be received in
specified amounts by the Pass Through Trustee
of the applicable Pass Through Trust on
or , or both, of
each year, commencing on ,
199 and are to be distributed to the
Certificateholders on the corresponding Regular
Distribution Dates. The payment of the
outstanding principal amount of the Equipment
Notes, the Company ETCs and the Procor ETC held
in Pass Through Trust 1996-A2 is scheduled to
be received by the Pass Through Trustee on
, 200 and is to be
distributed to the Certificateholders on such
date. Payments of principal of, Make-Whole
Amount, if any, and interest on the Equipment
Notes resulting from prepayments thereof, if
any, will be distributed on a Special
Distribution Date after not less than 15 days'
notice from the Pass Through Trustee to the
Certificateholders of such Pass Through Trust.
For a discussion of distributions upon an Event
of Default, see "Description of the Pass
Through Certificates--Events of Default and
Certain Rights Upon an Event of Default."
EXTRAORDINARY DISTRIBUTIONS... It is anticipated that (i) approximately
$ principal amount of Equipment Notes,
$ principal amount of Company ETCs and
a $ principal amount Procor ETC will
be acquired by the Pass Through Trusts
immediately after the issuance of the Pass
Through Certificates and (ii) approximately
$ principal amount of Equipment Notes
and $ principal amount of Company ETCs
will be acquired by the Pass Through Trusts on
or about June ,
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1996. All proceeds of the issuance of the Pass
Through Certificates not immediately used to
purchase Equipment Notes and Company ETCs will
be held by the Pass Through Trustee and
invested in Specified Investments at the
direction of and for the account of the
Company. To the extent that the return on the
Specified Investments is less than the return
that would have been received on the remaining
Equipment Notes and Company ETCs had they been
purchased immediately after the issuance of the
Pass Through Certificates, the Company will
make up any shortfall in an amount equal to the
amount that would have been distributable to
Certificateholders on the first Regular
Distribution Date had all of such proceeds been
used to purchase Equipment Notes and Company
ETCs on the date of issuance of the Pass
Through Certificates. To the extent that the
remaining Equipment Notes and Company ETCs are
not purchased by the Pass Through Trustee on or
prior to June , 1996, the unexpended
proceeds, together with interest thereon at the
rate applicable to the Pass Through
Certificates, will be distributed to
Certificateholders on July , 1996. See
"Description of the Pass Through
Certificates--Delayed Purchase; Extraordinary
Distribution."
METHOD OF DISTRIBUTIONS....... So long as the Pass Through Certificates are
registered in the name of Cede, as the nominee
of DTC, distributions by the Pass Through
Trustee will be made in same-day funds to DTC,
which in turn will make distributions to
participants in DTC ("DTC Participants") in
same-day funds. The final distribution of
principal with respect to the Pass Through
Certificates will be made by DTC to DTC
Participants in same-day funds. Responsibility
for distributions by DTC Participants to
beneficial owners of the Pass Through
Certificates will be the responsibility of such
DTC Participants and will be made in accordance
with customary industry practices. See
"Description of the Pass Through
Certificates--Payments and Distributions." At
such time, if any, as Registered Certificates
are issued representing the Pass Through
Certificates and are not registered in the name
of Cede, as the nominee of DTC, distributions
by the Pass Through Trustee to
Certificateholders, other than the final
distribution, will be made by check mailed to
each Certificateholder of record on the
applicable record date at its address appearing
on the register. The final distribution with
respect to the Pass Through Certificates will
be made only upon surrender and presentation
thereof at the office or agency of the Pass
Through Trustee. See "Description of the Pass
Through Certificates--Payments and
Distributions."
INTEREST...................... Interest on the Pass Through Certificates of
each Pass Through Trust will be passed through
to the Certificateholders at the rate per annum
indicated on the cover of this Prospectus for
such Pass Through Trust, which is the interest
rate borne by the Equipment Notes held in the
respective Pass Through Trust, and in the case
of Pass Through Trust
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1996-A2, the Company ETCs and the Procor ETC to
be held in such Pass Through Trust. Interest is
calculated on the basis of a 360-day year
consisting of twelve 30-day months. See
"Description of the Pass Through Certificates--
General."
PRINCIPAL..................... The principal of the Equipment Notes held in
Pass Through Trust 1996-A1 is payable in
scheduled amounts on or ,
or both, of each year, commencing on
, . The principal of the
Equipment Notes held in Pass Through Trust
1996-A2 is payable in scheduled amounts
commencing on , 200 ; however,
such Equipment Notes are required to be prepaid
pursuant to a mandatory refinancing on
, 200 , the final distribution
date for such Pass Through Trust. The Company
ETCs and the Procor ETC will not amortize as to
principal, and the entire principal amount
thereof is payable on , 20 . See
"Description of the Pass Through
Certificates--Payments and Distributions,"
"Description of the Equipment Notes--Principal
Payments" and "Description of the ETCs--Payment
of Principal and Interest."
EQUIPMENT NOTES: GENERAL...... Interest will be payable in arrears on the
Equipment Notes on the unpaid principal amount
thereof on and of each
year, commencing on , 199[6]. The
principal of each Equipment Note is payable in
accordance with the principal repayment
schedule set forth herein under "Description of
the Equipment Notes--Principal Payments."
EQUIPMENT NOTES: PREPAYMENT... One or more of the Equipment Notes may be
prepaid, in whole or in part, under the
following circumstances:
(a) If an Event of Loss to a Unit shall occur
and the Company does not substitute like
kind equipment of equal or greater value
for such Unit, it is obligated to pay the
Stipulated Loss Value of such Unit. Such
payment will be used to prepay a portion of
the Equipment Notes issued under the
Indenture relating to such Unit on (i) the
next Regular Distribution Date following
the election by the Company to make such
payment rather than substitute like kind
equipment or (ii) in the case of the
occurrence of an Event of Loss in respect
of more than ten Units since the end of the
last six month reporting period under a
Lease (a "Multiple Loss"), on the first
Business Day succeeding the 60th day
following the date on which the Company is
required to report such Multiple Loss. The
amount prepaid will be equal to the sum of
(i) as to principal, an amount equal to the
product obtained by multiplying the
aggregate unpaid principal amount of the
Equipment Notes issued under the Indenture
to which such Unit relates as of the
prepayment date (after deducting therefrom
the scheduled principal installment, if
any, due on the prepayment date) by a
fraction, the numerator of which shall be
the
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Equipment Cost of such Unit and the
denominator of which shall be the aggregate
Equipment Cost of all Equipment securing
such Indenture immediately prior to the
prepayment date, and (ii) as to interest,
the aggregate amount of interest accrued
and unpaid to but not including the
prepayment date in respect of the principal
amount to be prepaid pursuant to clause (i)
above on such prepayment date. No
Make-Whole Amount will be payable in the
event of a prepayment under such
circumstances.
(b) If (i) on or after March , 200 the
Company elects to exercise its right to
terminate a Lease pursuant to the terms
thereof with respect to some or all of the
Units leased thereunder as a result of such
Units becoming obsolete or surplus, or (ii)
on , 200 the Company exercises
its option to purchase some or all of the
Units in accordance with the terms of the
applicable Lease or (iii) the Company
elects to exercise its right under a
Participation Agreement to purchase
Equipment as a result of an Owner
Participant (or an affiliate thereof)
engaging in a business that is in
competition with the Company's full service
railcar leasing business, a portion of the
proceeds from the Company's payment of the
Termination Value of such Units or the
exercise price of such purchase option, as
the case may be, will be used to prepay
Equipment Notes relating to such Equipment,
unless the Company elects in connection
with the exercise of a purchase option to
assume on a full recourse basis all of the
Owner Trustee's obligations in respect of
the related Equipment Notes and acquires
such purchased Units subject to the lien of
the related Indenture. Any such prepayment
will be in an amount at least equal to the
principal and accrued interest thereon,
computed as provided in paragraph (a)
above, plus a Make-Whole Amount. See
"Description of the Equipment
Notes--Prepayment" for a description of the
manner of computing the Make-Whole Amount.
(c) Subject to certain restrictions, the
Company may require an Owner Trustee to
effect a prepayment of the Equipment Notes
issued under an Indenture at a price equal
to the aggregate unpaid principal amount
thereof, together with accrued interest
thereon, plus a Make-Whole Amount, as part
of a refunding or refinancing which will
result in the prepayment of the Pass
Through Certificates. The Equipment Notes
held in Pass Through Trust 1996-A2 are
required to be prepaid as part of a
mandatory refinancing on the final
distribution date applicable to the Pass
Through Certificates issued by such Pass
Through Trust.
(d) If under any Indenture an Indenture Default
shall have occurred and be continuing and
(i) the Indenture Trus-
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tee shall give notice of its intent to
accelerate the Equipment Notes thereunder
or to exercise other remedies available to
it or (ii) the Indenture Trustee shall not
have taken action with respect to such
Indenture Default for a period of not less
than 180 days, the applicable Owner Trustee
may elect to prepay or purchase all of the
then outstanding Equipment Notes issued
under such Indenture at a price equal to
the unpaid principal amount thereof,
together with accrued interest thereon to
the date of prepayment or purchase, but
without any Make-Whole Amount.
See "Description of the Equipment
Notes--Prepayment."
EQUIPMENT NOTES: SECURITY..... The Equipment Notes issued under each Indenture
will be secured by a security interest in the
Equipment leased by the Company under the Lease
relating to such Indenture and an assignment to
the Indenture Trustee of certain of the Owner
Trustee's rights under the Lease covering such
Equipment, including the right to receive rent
payable by the Company thereunder.
Equipment Notes issued under the Indentures are
not cross-collateralized and, consequently, the
Equipment Notes issued under one Indenture are
not secured by any of the Equipment securing
the other Indenture or by the Lease related
thereto. There are no cross-default provisions
in the Indentures and, consequently, if the
Equipment Notes issued under one Indenture are
in default, the Equipment Notes issued under
the other Indenture may not be in default and,
if not in default, no remedies will be
exercisable under such Indenture. See
"Description of the Equipment Notes--Security."
Although the Equipment Notes are not direct
obligations of, or guaranteed by, the Company,
the amounts unconditionally payable by the
Company under the Leases will be sufficient to
pay in full when due all payments of principal
of, Make-Whole Amount, if any, and interest on
the Equipment Notes, except for the prepayment
of principal required to be made as part of a
mandatory refinancing on the final distribution
date applicable to the Pass Through
Certificates issued by Pass Through Trust
1996-A2 of the Equipment Notes held by such
Pass Through Trust. See "Description of the
Equipment Notes--General."
COMPANY ETCS: GENERAL......... Interest will be payable in arrears on the
Company ETCs on the unpaid principal amount
thereof on and of each
year, commencing on , 199[6]. The
Company ETCs, which will not amortize as to
principal, mature on , 20 .
COMPANY ETCS: REDEMPTION...... The Company ETCs are not redeemable prior to
maturity.
COMPANY ETCS: SECURITY........ The Company Trust Agreement will provide for
(i) the sale by the Company to the trustee
thereunder of certain tank
9
11
cars and other rail cars having an estimated
cost of approximately 133 1/3% of the aggregate
principal amount of the Company ETCs and (ii)
the lease of such equipment by the trustee to
the Company. The rent and other amounts payable
by the Company will be sufficient to enable the
trustee to pay when due the principal of and
interest on the Company ETCs. At the
termination of the lease, such payments will be
treated as purchase money as the full purchase
price of the equipment, and title to all such
equipment will vest in the Company.
PROCOR ETC: GENERAL........... Interest will be payable in arrears on the
Procor ETC on the unpaid principal amount
thereof on and of each
year, commencing on , 199[6]. The
Procor ETC, which will not amortize as to
principal, matures on , 20 .
PROCOR ETC: REDEMPTION........ The Procor ETC is not redeemable prior to
maturity.
PROCOR ETC: SECURITY.......... The Procor Trust Agreement will provide for (i)
the sale by Procor to the trustee thereunder of
certain tank cars and other rail cars having an
estimated cost of approximately 133 1/3% of the
principal amount of the Procor ETC and (ii) the
conditional sale of such equipment by the
trustee to Procor. The payments in respect of
the purchase of such equipment and other
amounts payable by Procor will be sufficient to
enable the trustee to pay when due the
principal of and interest on the Procor ETC.
After all such payments have been made by
Procor, such payments will be deemed to
represent payment of the full purchase price of
the equipment, and title to all such equipment
will vest in Procor.
PROCOR ETC: GUARANTEE......... The Company will fully and unconditionally
guarantee the due and punctual distribution to
Certificateholders of principal and interest
payable in respect of the Procor ETC. In
addition, the Company will fully and
unconditionally guarantee the due and punctual
performance by Procor of its obligations under
the Procor Trust Agreement.
USE OF PROCEEDS............... The proceeds from the sale of the Pass Through
Certificates will be used by the Pass Through
Trustee for each Pass Through Trust to purchase
the Equipment Notes, and in the case of Pass
Through Trust 1996-A2, the Company ETCs and the
Procor ETC. The Owner Trustees will use the
proceeds from the sale of the Equipment Notes
to finance not more than 80% of the Equipment
Cost of the Equipment, representing in the
aggregate the entire debt portion of the
separate leveraged lease
transactions. The net proceeds to the Company
from the sale of the Equipment will be used by
the Company for general corporate purposes. The
net proceeds to the Company from the issuance
of the Company ETCs will be used to provide
long-term financing for the addition of rail
cars to the Company's fleet. The net proceeds
to Procor from the issuance of the Procor
10
12
ETC will be used for general corporate
purposes. See "Use of Proceeds."
PASS THROUGH TRUSTEE.......... will act as trustee under
each Pass Through Agreement and as paying agent
and registrar for the Pass Through
Certificates. also will act
as the Indenture Trustee under each Indenture
and as the trustee under the Company and Procor
equipment trust agreements.
FEDERAL INCOME TAX
CONSEQUENCES.................. Each Pass Through Trust [will] be classified as
a grantor trust for federal income tax
purposes, and each Certificate Owner of each
Pass Through Trust [will] be treated as the
owner of a pro rata undivided interest in each
of the Equipment Notes and, in the case of Pass
Through Trust 1996-A2, the Company ETCs and the
Procor ETC held by such Pass Through Trust and
any other property held in such Pass Through
Trust and should report on its federal income
tax return its pro rata share of income from
such Equipment Notes, Company ETCs and Procor
ETC and any other property held, as the case
may be, by such Pass Through Trust in
accordance with such Certificate Owner's method
of accounting. See "Certain Federal Income Tax
Consequences."
ERISA CONSIDERATIONS.......... The Pass Through Certificates, with certain
limited exceptions, are eligible for purchase
by employee benefit plans. See "ERISA
Considerations."
11
13
FORMATION OF THE PASS THROUGH TRUSTS
The Pass Through Trusts will be formed pursuant to two separate Pass
Through Trust Agreements (each, an "Agreement"), one Agreement between the
Company and the Pass Through Trustee and the other Agreement by and among the
Company, Procor and the Pass Through Trustee. Upon or prior to the execution and
delivery of the Agreements, the Pass Through Trustee, on behalf of each Pass
Through Trust, will enter into separate participation agreements with
the Company, the Indenture Trustee, the applicable Owner Trustee and the
applicable Owner Participant (in each case, a "Participation Agreement")
pursuant to which such Pass Through Trust will, among other things, purchase
certain Equipment Notes. Concurrently, Pass Through Trust 1996-A2 will purchase
a portion of the Company ETCs and the Procor ETC. Pass Through Trust 1996-A1
will acquire Equipment Notes and Pass Through Trust 1996-A2 will acquire
Equipment Notes, the Company ETCs and the Procor ETC, in each case having an
interest rate corresponding to the interest rate borne by the Pass Through
Certificates that will be issued by such Pass Through Trust. The Company ETCs
and the Procor ETC acquired by Pass Through Trust 1996-A2 will mature on the
final distribution date applicable to the Pass Through Certificates issued by
such Pass Through Trust. The Equipment Notes acquired by Pass Through Trust
1996-A1 will mature on the final distribution date applicable to the Pass
Through Certificates issued by such Pass Through Trust. The Equipment Notes
acquired by Pass Through Trust 1996-A2 will mature after the final distribution
date applicable to such Pass Through Trust; however, such Equipment Notes are
required to be prepaid pursuant to a mandatory refinancing on such final
distribution date. The two Pass Through Trusts, taken together, will hold all of
the Equipment Notes, representing in the aggregate the entire debt portion of
the separate leveraged lease transactions, as well as the Company ETCs
and the Procor ETC. The Pass Through Trustee will distribute to the
Certificateholders of the relevant Pass Through Trust the payments of principal,
Make-Whole Amount, if any, and interest received by it as the holder of the
Equipment Notes, the Company ETCs and the Procor ETC. See "Description of the
Pass Through Certificates--General", "Description of the Equipment
Notes--General" and "Description of the ETCs."
12
14
DESCRIPTION OF PAYMENT FLOWS
LEVERAGED LEASE TRANSACTIONS
The following diagram illustrates certain aspects of the payment flows in
each separate leveraged lease transaction among the Company, an Owner Trustee,
an Owner Participant, the Indenture Trustee, the Pass Through Trustee and the
Certificateholders.
In each of the separate leveraged lease transactions, the Company will
lease certain Equipment from an Owner Trustee, as lessor of such Equipment under
a Lease. Equipment Notes with respect to such Equipment will be issued under an
Indenture by the Owner Trustee and will be purchased by the Pass Through Trustee
for the benefit of the Certificateholders. Rent is payable under the Lease to
the Owner Trustee, as lessor. However, as a result of the assignment of the
Lease to the Indenture Trustee, the Company will make rental payments directly
to the Indenture Trustee. From these rental payments the Indenture Trustee will,
on behalf of the Owner Trustee, first make payments to the Pass Through Trustee
as required to meet the Owner Trustee's obligations under the Equipment Notes
relating to such Equipment and will pay the remaining balance to the Owner
Trustee, for the benefit of the Owner Participant. The Pass Through Trustee will
distribute payments received in respect of the Equipment Notes relating to such
Equipment (together with payments received in respect of the Equipment Notes
relating to the other Equipment which is the subject of the other lease
transactions) held in such Pass Through Trust to the Certificateholders as
required under the terms of the Pass Through Certificates.
will act initially both as Pass Through Trustee of
the two Pass Through Trusts and as Indenture Trustee under the Indentures.
________________________
| UNION TANK CAR COMPANY |
|________________________|
|
| Lease Rental Payments
| Assigned by Owner Trustee
| to Indenture Trustee
|
|
|
_________________
| INDENTURE |
| TRUSTEE |
|_________________|
| |
| |
| |
| |
Excess | | Equipment
Payments | | Note payments
___________________| |________________
| |
| |
| |
_____________ ______________________
| OWNER | | PASS THROUGH TRUSTEE |
| TRUSTEE | |______________________|
|_____________| |
| |
| |
| |
| Excess | Pass Through
| Payments | Certificate
| | Distributions
| |
_______________ _________________________
| OWNER | | HOLDERS OF PASS THROUGH |
| PARTICIPANT | | CERTIFICATES |
|_______________| |_________________________|
13
15
COMPANY ETCS AND PROCOR ETC
The following diagram illustrates certain aspects of the payment flows in
the other financing transactions to which this Prospectus relates.
The Company will lease and Procor will conditionally purchase the Trust
Equipment (as hereinafter defined) from , as
trustee (in such capacity, the "Equipment Trust Trustee"). The Equipment Trust
Trustee will issue under the Company Trust (as hereinafter defined) the Company
ETCs and under the Procor Trust (as hereinafter defined) the Procor ETC, which
will be purchased by the Pass Through Trustee of Pass Through Trust 1996-A2 for
the benefit of the Certificateholders of such Pass Through Trust. The Company
will make rental and Procor will make conditional sale payments to the Equipment
Trust Trustee. From these payments, the Equipment Trust Trustee will make
principal and interest payments to the Pass Through Trustee of Pass Through
Trust 1996-A2 as required to meet the obligations under the Company ETCs and the
Procor ETC. The Pass Through Trustee will distribute such payments to the
Certificateholders of such Pass Through Trust as required under the terms of the
Pass Through Certificates. The Company will fully and unconditionally guarantee
the due and punctual distribution to Certificateholders of principal and
interest payable in respect of the Procor ETC.
_______________________ _______________________
| UNION TANK CAR | | |
| COMPANY | | PROCOR LIMITED |
|_______________________| |_______________________|
| |
Lease Rental | Conditional Sale |
Payments | Payments |
| |
_______________________ _______________________
| EQUIPMENT TRUST | | EQUIPMENT TRUST |
| TRUSTEE | | TRUSTEE |
|_______________________| |_______________________|
| |
| |
Company ETC | | Procor ETC
Payments | _________________________________ | Payments
| | | |
| _______ | PASS THROUGH TRUSTEE | _______ |
|_________________________________|
| ____________________________
Certificate | Distributions | UNION TANK CAR |
| | COMPANY |
| |____________________________|
| Guarantee of the |
| Distribution of Principal |
| and Interest Payable in |
| Respect of the Procor ETC |
| |
_________________________________ |
| HOLDERS OF PASS | |
| THROUGH CERTIFICATES |_______________________________|
|_________________________________|
14
16
USE OF PROCEEDS
A portion of the proceeds from the sale of Pass Through Certificates will
be used by each Pass Through Trustee to purchase for the Pass Through Trusts
$ aggregate principal amount of Equipment Notes issued by the Owner
Trustees which, in turn, will use the proceeds, together with funds provided by
the Owner Participants, to purchase the Equipment from the Company, on behalf of
the Owner Participants.
The Equipment Notes will be issued under separate Trust Indenture and
Security Agreements (each an "Indenture"), each such Indenture being between
, as trustee thereunder (in such capacity, the "Indenture
Trustee"), and , not in its individual capacity (except as
expressly set forth therein) but solely as owner trustee (each, an "Owner
Trustee") of a separate trust for the benefit of an institutional investor (the
"Owner Participant"). Each Owner Participant will provide from sources other
than the Equipment Notes at least 20% of the cost of the related Equipment as an
equity investment. No Owner Participant, however, will be liable for any amount
payable under the related Indenture or any Equipment Notes issued thereunder.
The net proceeds to the Company from the sale of the Equipment will be used
by the Company for general corporate purposes.
The following table sets forth information with respect to the Equipment
(consisting of an aggregate of [2,146] rail cars, all of which were manufactured
in [1995 or 1996]) expected to be purchased by the Owner Trustees and leased to
the Company in the leveraged lease transactions:
TYPE OF CAR NO. OF CARS
--------------------------------------------------------- -----------
Covered Hopper........................................... [965]
Tank (general purpose)................................... [616]
Tank (pressure).......................................... [565]
-----
Total............................................... [2,146]
=====
The following table sets forth information with respect to each of the
Leases:
AGGREGATE COST
OF EQUIPMENT PRINCIPAL
TO OWNER AMOUNT OF
LEASE NO. TRUSTEES EQUIPMENT NOTES
------------------------------------- -------------- ---------------
1.................................. $ $
2..................................
------- -------
Total........................... $ $
======= =======
The remaining proceeds from the sale of the Pass Through Certificates,
Series 1996-A2 will be used by the Pass Through Trustee for Pass Through Trust
1996-A2 to purchase $ aggregate principal amount of equipment trust
certificates (the "Company ETCs") to be issued pursuant to an equipment trust
agreement (the "Company Trust Agreement") between the Company and
, as trustee, and a $ principal amount equipment trust
certificate (the "Procor ETC" and, together with the Company ETCs, the "ETCs")
to be issued pursuant to an equipment trust agreement (the "Procor Trust
Agreement" and, together with the Company Trust Agreement, the "Trust
Agreements") between Procor and , as trustee. The net proceeds to
the Company from the issuance of the Company ETCs will be used to provide
long-term financing for the addition of rail cars to the Company's fleet. These
rail cars were initially financed with cash provided by operating activities.
The net proceeds to Procor from the issuance of the Procor ETC will be used for
general corporate purposes.
Immediately following the issuance of the Pass Through Certificates, the
Pass Through Trusts will purchase an aggregate of approximately $
principal amount of Equipment Notes, and Pass Through Trust 1996-A2 will
purchase an aggregate of approximately $ principal
15
17
amount of ETCs. Pending the scheduled purchase on or about June , 1996 of the
remaining $ aggregate principal amount of Equipment Notes and
$ principal amount of Company ETCs, the unexpended proceeds from the
sale of Pass Through Certificates will be held by the Pass Through Trustee and
invested in Specified Investments. Any shortfall between the earnings on such
investments and the amount to be paid Certificateholders shall be paid by the
Company. See "Description of the Pass Through Certificates--Delayed Purchases;
Extraordinary Distribution."
16
18
THE COMPANY
Union Tank Car Company (with its wholly-owned subsidiaries herein
collectively referred to, except as the context otherwise requires, as the
"Company") and Procor are principally engaged in the leasing of railway tank
cars and other rail cars to United States, Canadian and Mexican manufacturers
and other shippers of chemical products, including liquid fertilizers, petroleum
products, including liquid petroleum gas, food products and bulk plastics. The
Company owns and operates one of the largest fleets of privately-owned railway
tank cars in the world.
The Company, which was incorporated in Delaware in 1980 and is the
successor to a business which was incorporated in New Jersey in 1891 and
reincorporated in Delaware in 1968, is a wholly-owned subsidiary of Marmon
Industrial Corporation, an indirect wholly-owned subsidiary of Marmon Holdings,
Inc. Substantially all the stock of Marmon Holdings, Inc. is owned, directly or
indirectly, by trusts for the benefit of certain members of the Pritzker family.
As used herein, "Pritzker family" refers to the lineal descendants of Nicholas
J. Pritzker, deceased. Procor, which was incorporated in Canada in 1952, is an
indirect wholly-owned subsidiary of the Company.
The Company's principal executive offices are located at 225 West
Washington Street, Chicago, Illinois 60606, and its telephone number is (312)
372-9500. Procor's principal executive offices are located at 2001 Speers Road,
Oakville, Ontario, Canada L6J 5E1, and its telephone number is (905) 827-4111.
17
19
CAPITALIZATION
The following table sets forth the consolidated capitalization of the
Company at December 31, 1995 and as adjusted to give effect to the issuance of
the Company ETCs and the Procor ETC. The table does not give effect to the sale
of the Pass Through Certificates because the Pass Through Certificates are not
direct obligations of the Company. In addition, because the Leases are expected
to be classified as operating, rather than capital, leases, there will be no
related obligation recorded on the Company's consolidated balance sheet.
DECEMBER 31, 1995
----------------------------
OUTSTANDING AS ADJUSTED
----------- -----------
(DOLLARS IN THOUSANDS)
Borrowed debt:
Equipment obligations, payable periodically through 2009 at
6.50%-15.55% (average rate 8.97% at December 31, 1995)....... $ 631,840 $
Senior notes, 9.75% due in 1997................................. 143,000 143,000
Other long-term borrowings, payable periodically through 2005
(average rate 12.2%)......................................... 26,745 26,745
---------- --------
Total borrowed debt..................................... 801,585
Stockholder's equity:
Common stock, no par value: 1,000 shares authorized and issued.. 106,689 106,689
Additional capital.............................................. 4,652 4,652
Retained earnings............................................... 419,132 419,132
---------- --------
Total stockholder's equity.............................. 530,473 530,473
---------- --------
Total capitalization............................... $ 1,332,058 $
========== ========
18
20
SELECTED FINANCIAL INFORMATION
The selected financial information set forth below as of December 31, 1991
through 1995 and for the years then ended, with the exception of the operating
fleet data, has been derived from the Company's audited financial statements
contained in the Company's Annual Reports on Form 10-K. The audited financial
statements contained in the Company's Annual Report on Form 10-K for the year
ended December 31, 1995, together with the report of the Company's independent
auditors, Ernst & Young LLP, are incorporated herein by reference. See
"Documents Incorporated by Reference." The selected financial information should
be read in conjunction with such financial statements and related notes and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" included in the Company's Annual Report on Form 10-K for the year
ended December 31, 1995.
YEAR ENDED DECEMBER 31,
-----------------------------------------------------------------
1995 1994 1993 1992 1991
--------- --------- --------- --------- ---------
(DOLLARS IN THOUSANDS)
Income Statement
Services and net sales(1)......................... $856,229 $720,864 $504,823 $618,007 $483,416
Other income...................................... 19,607 15,959 17,033 22,374 37,406
Total revenues.................................... 875,836 736,823 521,856 640,381 520,822
Cost of services and sales........................ 608,534 487,742 280,161 400,177 269,748
General and administrative........................ 55,630 54,120 54,629 53,609 52,560
Interest expense.................................. 81,179 91,442 96,584 105,417 117,263
Income before income taxes and cumulative effect
of change in accounting principle............... 130,493 103,519 90,482 81,178 81,251
Income before cumulative effect of a change in
accounting principle............................ 84,465 63,378 49,730 48,382 45,024
Cumulative effect of a change in accounting
principle(2).................................... -- -- 80,000 -- --
Net income........................................ 84,465 63,378 129,730 48,382 45,024
BALANCE SHEET(3)
Total assets...................................... 2,003,346 2,017,772 2,054,867 2,063,267 2,253,760
Borrowed debt..................................... 801,585 882,407 951,031 942,907 1,131,558
Stockholder's equity.............................. 530,473 505,008 485,630 445,900 430,518
OTHER
Ratio of earnings to fixed charges(4)............. 2.41x 2.05x 1.89x 1.76x 1.69x
OPERATING FLEET(3)
Tank cars......................................... 53,669 52,090 51,021 49,580 48,837
Other railway cars................................ 13,943 13,300 13,515 13,633 14,334
- ---------------
(1) In 1995, 1994 and 1992, the Company entered into sale-leaseback transactions
pursuant to which it sold and leased back an aggregate of $130.5 million,
$125.5 million and $124.9 million, respectively, of railcars. The unusually
high sales and cost of sales figures in 1995, 1994 and 1992 as compared to
other periods are primarily attributable to these transactions.
(2) The $80 million cumulative effect of a change in accounting principle for
the year ended December 31, 1993 resulted from the Company's adoption of
Statement of Financial Accounting Standards (SFAS) No. 109, "Accounting for
Income Taxes." As more fully discussed in the Company's Annual Report on
Form 10-K for the year ended December 31, 1993, effective January 1, 1993,
the Company prospectively adopted the provisions of this new accounting
standard and, accordingly, changed to the asset and liability approach of
accounting for income taxes. The cumulative effect of this change in
accounting principle was an $80 million non-cash credit to earnings, which
represents the new, lower net deferred income tax liability calculated under
the new accounting method as compared to the net liability recorded under
the former income tax accounting method. Adoption of the new accounting
method had no impact on pre-tax income and has not and will not impact cash
flows related to income taxes.
(3) As of the end of the period indicated.
(4) The ratio of earnings to fixed charges represents the number of times that
interest expense, amortization of debt discount and the interest component
of rent expense were covered by income before income taxes and such
interest, amortization and the interest component of rentals. In addition to
fluctuations in the ratio of earnings to fixed charges resulting from
changes in the Company's operations, the ratio of earnings to fixed charges
for the periods beginning in 1991 was reduced because of the incurrence of
additional interest expense relating to the Company's commercial paper
program, which program was suspended effective May 1994.
19
21
DESCRIPTION OF THE PASS THROUGH CERTIFICATES
The Pass Through Certificates offered hereby will be issued pursuant to two
separate Agreements, one between the Company and the Pass Through Trustee and
the other among the Company, Procor and the Pass Through Trustee. Each Agreement
will be qualified under the Trust Indenture Act of 1939, as amended (the "Trust
Indenture Act") and will contain substantially the same terms and conditions,
except that the interest rate, scheduled repayments of principal, and maturity
dates applicable to the Equipment Notes held in each Pass Through Trust, the
aggregate principal amount of Equipment Notes held in each Pass Through Trust,
and the final distribution date applicable to each Pass Through Trust will
differ. In addition, Pass Through Trust 1996-A1 will only hold certain Equipment
Notes, and Pass Through Trust 1996-A2 will hold certain Equipment Notes and the
ETCs. The statements under this caption are a summary only and do not purport to
be complete. The summary makes use of terms defined in the Agreements and is
qualified in its entirety by reference to all of the provisions of the
Agreements. Except as otherwise indicated, the following summary relates to the
Agreements, the Pass Through Trusts formed thereby and the Pass Through
Certificates issued by the Pass Through Trusts. Citations to the relevant
sections of the Agreements appear below in parentheses unless otherwise
indicated.
GENERAL
The Pass Through Certificates will be issued in fully registered form only.
Each Pass Though Certificate will represent a fractional, undivided interest in
the Pass Through Trust created by the Agreement pursuant to which such Pass
Through Certificate was issued. The property of each Pass Through Trust will
include (i) the Equipment Notes, and in the case of Pass Through Trust 1996-A2,
the Company ETCs and the Procor ETC, held in such Pass Through Trust, (ii) all
monies at any time paid with respect to such Equipment Notes, and in the case of
Pass Through Trust 1996-A2, the Company ETCs and the Procor ETC, (iii) all
monies due and to become due thereunder and (iv) funds from time to time
deposited with the Pass Through Trustee in accounts relating to such Pass
Through Trust. Each Pass Through Certificate will correspond to a pro rata share
of the outstanding principal amount of the Equipment Notes, and in the case of
Pass Through Trust 1996-A2, the Company ETCs and the Procor ETC, to be held in
the related Pass Through Trust and will be issued in minimum denominations of
$1,000 or any integral multiple of $1,000 in excess thereof. (Sections 2.1 and
3.1) The Pass Through 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 the Pass Through Certificates (a "Certificate Owner")
will be entitled to receive a certificate representing such persons interest in
the Pass Through Certificates, except as set forth below under "Registered
Certificates." Unless and until Registered 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 the Pass Through Certificates, or to DTC Participants for
distribution to Certificate Owners in accordance with DTC procedures. See
"Book-Entry Registration." (Section 3.9)
Interest will be passed through to Certificateholders of each Pass Through
Trust at the rate per annum set forth on the cover page of this Prospectus,
which is calculated on the basis of a 360-day year of twelve 30-day months.
The Pass Through Certificates represent interests in the respective Pass
Through Trusts and do not represent an interest in or obligation of the Company,
Procor, the Pass Through Trustee, any Owner Participant, any Owner Trustee in
its individual capacity, or any affiliate of any such person. (Section 3.8)
20
22
Neither the Agreements, the Indentures nor the Trust Agreements contain any
financial or operating covenants nor any "event risk" provisions specifically
designed to afford Certificate Owners protection in the event of a highly
leveraged transaction which may or may not result in a change of control of the
Company or Procor. However, the Certificate Owners have the indirect benefit of,
among other things, a lien on the Equipment and an assignment of rights to lease
payments securing the respective Equipment Notes, and in the case of Certificate
Owners of Pass Through Trust 1995-A2, title to the Trust Equipment securing the
Company ETCs and the Procor ETC as well as the Company's full and unconditional
guarantee of (i) the payment as and when due of the principal of and interest on
the Company ETCs and (ii) the due and punctual distribution to
Certificateholders of principal and interest payable in respect of the Procor
ETC. See "--Guarantee," "Description of the Equipment Notes--Security,"
"Description of the ETCs--Guarantees" and "--Security."
BOOK-ENTRY REGISTRATION
DTC has advised the Company that DTC is a limited purpose trust company
organized under the laws of the State of New York, a member of the Federal
Reserve System, a "clearing corporation" within the meaning of the New York
Uniform Commercial Code and a "clearing agency" registered pursuant to Section
17A of the Exchange Act. DTC was created to hold securities for its participants
("DTC Participants") and to facilitate the clearance and settlement of
securities transactions between DTC Participants through electronic
book-entries, thereby eliminating the need for physical movement of
certificates. DTC Participants include securities brokers and dealers (including
Salomon Brothers Inc), banks, trust companies and clearing corporations.
Indirect access to the DTC system also is available to others such as banks,
brokers, dealers and trust companies that clear through or maintain a custodial
relationship with a DTC Participant either directly or indirectly ("Indirect
Participants").
Certificate Owners that are not DTC Participants or Indirect Participants
but desire to purchase, sell or otherwise transfer ownership of, or other
interests in, Pass Through 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, as such payments will be forwarded by the Pass Through Trustee to
Cede, as nominee for DTC. DTC will forward such payments to DTC Participants,
which thereafter will forward them to Indirect Participants or Certificate
Owners, as the case may be, in accordance with customary industry practices. The
forwarding of such distributions to the Certificate Owners will be the
responsibility of such DTC Participants. The only "Certificateholder" will be
Cede, as nominee of DTC. Certificate Owners will not be recognized by the Pass
Through Trustee as Certificateholders, as such term is used in the Agreements,
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
Pass Through Certificates among DTC Participants on whose behalf it acts with
respect to the Pass Through Certificates and to receive and transmit
distributions of principal of, Make-Whole Amount, if any, and interest on, the
Pass Through Certificates. DTC Participants and Indirect Participants with which
Certificate Owners have accounts with respect to the Pass Through Certificates
similarly are required to make book-entry transfers and receive and transmit
such payments on behalf of their respective Certificate Owners. Accordingly,
although Certificate Owners will not possess Pass Through 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
Pass Through Certificates to persons or
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entities that do not participate in the DTC system, or to otherwise act with
respect to such Pass Through Certificates, may be limited due to the lack of a
physical certificate for such Pass Through Certificates.
DTC has advised the Company that it will take any action permitted to be
taken by a Certificateholder under the Agreements only at the direction of one
or more DTC Participants to whose accounts with DTC the Pass Through
Certificates are credited, which DTC Participants represent the percentage
interest of the Pass Through Trust necessary to provide such direction under the
Agreements. Additionally, DTC may take conflicting actions with respect to an
undivided interest held by a DTC Participant to the extent that it is directed
to do so by such DTC Participant as a result of instructions from various
Certificate Owners.
Neither the Company, Procor 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 of the Pass Through Certificates held by Cede,
as nominee for DTC, or for maintaining, supervising or reviewing any records
relating to such beneficial ownership interests.
REGISTERED CERTIFICATES
The Pass Through Certificates will be issued in fully registered,
certificated form ("Registered Certificates") to Certificate Owners or their
nominees, rather than to DTC or its nominee, only if (i) 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 the Pass Through Certificates and the Pass Through Trustee or the
Company is unable to locate a qualified successor, (ii) the Company, at its
option, elects to terminate the book-entry system through DTC (or a successor
thereto) or (iii) after the occurrence of an Event of Default, Certificate
Owners representing an aggregate percentage interest in the Pass Through Trust
of not less than a majority advise the Pass Through Trustee through DTC 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 3.9)
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 Registered Certificates.
Upon surrender by DTC of the certificates representing the Pass Through
Certificates and receipt of instructions for re-registration, the Pass Through
Trustee will reissue the Pass Through Certificates as Registered Certificates to
Certificate Owners or their nominees. (Section 3.9)
Distribution of principal of, Make-Whole Amount, if any, and interest on
the Pass Through Certificates will thereafter be made by the Pass Through
Trustee directly to holders of Registered Certificates in accordance with the
procedures set forth in the Agreement. 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 Pass Through Certificate,
however, will be made only upon presentation and surrender of such Pass Through
Certificate at the office or agency specified in the notice of final
distribution to Certificateholders. (Sections 4.2 and 11.1)
Registered Pass Through Certificates will be freely transferable and
exchangeable at the office of the Pass Through Trustee upon compliance with the
requirements set forth in the Agreement. No service charge will be imposed for
any registration of transfer or exchange, but payment of a sum sufficient to
cover any tax or other governmental charge will be required. (Sections 3.4 and
11.1)
SAME-DAY SETTLEMENT AND PAYMENT
Settlement for the Pass Through Certificates will be required to be made in
immediately available funds. All payments made by the Company to each Indenture
Trustee as assignee of an Owner Trustee's rights under the corresponding Lease,
as well as all payments made by the
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Company and Procor in respect of the Company ETCs and the Procor ETC, will be in
immediately available funds and will be passed through to DTC in immediately
available funds to the extent such payments are required to pay principal of,
Make-Whole Amount, if any, or interest on the Equipment Notes or to pay
principal or interest on the Company ETCs and the Procor ETC.
Secondary trading in long-term notes and debentures of corporate issuers is
generally settled in clearinghouse or next-day funds. Secondary trading in pass
through certificates such as the Pass Through Certificates is generally settled
in immediately available funds. The Pass Through Certificates will trade in DTCs
Same-Day Funds Settlement System until maturity, and secondary market trading
activity in the Pass Through Certificates will therefore be required by DTC to
settle in immediately available funds.
PAYMENTS AND DISTRIBUTIONS
Payments of principal of, Make-Whole Amount, if any, and interest on the
Equipment Notes, and in the case of Pass Through Trust 1995-A2, the Company ETCs
and the Procor ETC, held in each Pass Through Trust received by the Pass Through
Trustee will be distributed by the Pass Through Trustee to Certificateholders of
such Pass Through Trust on the date such receipt is confirmed, except in certain
cases when some or all of such Equipment Notes, Company ETCs or the Procor ETC,
as the case may be, are in default. See "Description of the Pass Through
Certificates--Events of Default and Certain Rights Upon an Event of Default."
Payments of interest on the unpaid principal amount of the Equipment Notes, and
in the case of Pass Through Trust 1996-A2, the Company ETCs and the Procor ETC,
held in such Pass Through Trust are scheduled to be received by the Pass Through
Trustee on and of each year, commencing ,
199[6], until the final distribution date for the Pass Through Trust. Payments
of principal of the Equipment Notes held in Pass Through Trust 1996-A1 are
scheduled to be received by the Pass Through Trustee on or
or both, of each year, commencing , 199[ ] (such scheduled payments
of interest and principal are herein referred to as "Scheduled Payments", and
and of each year, commencing , 199[6], are
herein referred to as "Regular Distribution Dates"). The payment of the
outstanding principal amount of the Equipment Notes (as a result of the
mandatory refinancing of such Equipment Notes), the Company ETCs and the Procor
ETC held in Pass Through Trust 1996-A2 is scheduled to be received by the Pass
Through Trustee on , 200 . The Pass Through Trustee will distribute
on each Regular Distribution Date to the Certificateholders all Scheduled
Payments the receipt of which is confirmed by the Pass Through Trustee on such
Regular Distribution Date. Each such distribution of Scheduled Payments will be
made by the Pass Through Trustee to the holders of record of the Pass Through
Certificates as of the Record Date preceding such Regular Distribution Date.
(Sections 4.1 and 4.2) If a Scheduled Payment is not received by the Pass
Through Trustee on a Regular Distribution Date, it will be distributed on the
date received to such holders of record. (Section 4.2)
Each Certificate Owner will be entitled to receive a pro rata share of any
distribution in respect of Scheduled Payments of principal and interest made on
the Equipment Notes, the Company ETCs and the Procor ETC held in the related
Pass Through Trust. Scheduled Payments of principal of the Equipment Notes held
in Pass Through Trust 1996-A1 are set forth below under "Description of the
Equipment Notes--Principal Payments." After a prepayment of some or all of the
Equipment Notes or a default in respect of some or all of such Equipment Notes,
Company ETCs or the Procor ETC, a Certificate Owner should refer to the
information with respect to the Pool Balance and the Pool Factor reported
periodically by the Pass Through Trustee of such Pass Through Trust. See
"Description of the Pass Through Certificates--Pool Factors" and "Description of
the Pass Through Certificates--Reports to Certificateholders."
Payments of principal, Make-Whole Amount, if any, and interest received by
the Pass Through Trustee on account of the prepayment, if any, of the Equipment
Notes relating to certain Equipment, and payments received by the Pass Through
Trustee following a default in respect of the Equipment
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Notes relating to certain Equipment, Company ETCs or the Procor ETC (including
payments received by the Pass Through Trustee on account of the purchase by the
Owner Trustee of such Equipment Notes or payments received on account of the
sale of such Equipment Notes, Company ETCs or the Procor ETC by the Pass Through
Trustee) ("Special Payments") will be distributed (i) in the case of prepayments
with respect to a voluntary termination of a Lease, the purchase of any Units by
the Company or an ordinary Event of Loss, on a Regular Distribution Date, (ii)
in the case of prepayments with respect to a Multiple Loss (as hereinafter
defined), a refunding or refinancing of the Equipment Notes or a purchase of the
Equipment by the Company from an Owner Trustee of a competitive Owner
Participant, on any Business Day following 15 days notice from the Pass Through
Trustee to DTC and (iii) in the case of payments received following a default in
respect of any Equipment Note, a Company ETC or the Procor ETC, on the [second
day of any month] (each, a "Special Distribution Date"). The Pass Through
Trustee will mail notice to the Certificateholders of record not less than 15
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 4.2) Each distribution of a Special Payment,
other than a final distribution, on a Special Distribution Date will be made by
the Pass Through Trustee to the holders of record of the Pass Through
Certificates as of the Record Date preceding such Special Distribution Date. See
"Description of the Pass Through Certificates--Events of Default and Certain
Rights Upon an Event of Default" and "Description of the Equipment
Notes--Prepayment."
Each Agreement requires that the Pass Through Trustee establish and
maintain, for the Pass Through Trust created by such Agreement and for the
benefit of the Certificateholders, one or more non-interest bearing accounts
(the "Certificate Account") for the deposit of payments representing Scheduled
Payments. Each Agreement also requires that the Pass Through Trustee establish
and maintain, for the Pass Through Trust created by such Agreement and for the
benefit of the Certificateholders of such Pass Through Trust, one or more
non-interest bearing accounts (the "Special Payments Account") for the deposit
of payments representing Special Payments. Pursuant to the terms of each
Agreement, the Pass Through Trustee is required to deposit any Scheduled
Payments received by it in the Certificate Account and to deposit any Special
Payments so received by it in the Special Payments Account. (Section 4.1) 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 4.2)
At such time, if any, as the Pass Through Certificates are issued in the
form of Registered Certificates and not to Cede, as nominee for DTC,
distributions by the Pass Through Trustee from the Certificate Account or the
Special Payments Account on a Regular Distribution Date or a Special
Distribution Date will be made by check mailed to each Certificateholder of
record of such Pass Through Trust on the applicable record date at its address
appearing on the register maintained with respect to such Pass Through Trust.
(Section 4.2) The final distribution for each Pass Through Trust, however, will
be made only upon presentation and surrender of the Pass Through Certificates
for such Pass Through Trust at the office or agency of the Pass Through Trustee
specified in the notice given by the Pass Through Trustee of such final
distribution. The Pass Through Trustee will mail such notice of the final
distribution to the Certificateholders, specifying the date set for such final
distribution and the amount of such distribution. (Section 11.1) See
"Description of the Pass Through Certificates--Termination of the Pass Through
Trusts."
If any Regular Distribution Date or Special Distribution Date is not a
Business Day, distributions scheduled to be made on such Regular Distribution
Date or Special Distribution Date may be made on the next succeeding Business
Day without any additional interest. (Section 12.11)
GUARANTEE
The Company will fully and unconditionally guarantee the due and punctual
distribution to Certificateholders of principal and interest payable in respect
of the Procor ETC. In addition, the
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Company will fully and unconditionally guarantee the due and punctual
performance by Procor of its obligations under the Procor Trust Agreement.
POOL FACTORS
Unless there has been a prepayment or purchase of any Equipment Notes or a
default in respect of any Equipment Notes, a Company ETC or the Procor ETC held
in a Pass Through Trust, as described below in "Events of Default--Events of
Default and Certain Rights Upon an Event of Default" and "Description of the
Equipment Notes--Prepayment", the Pool Factor for each Pass Through Trust will
decline in proportion to the scheduled repayments of principal of the Equipment
Notes, and in the case of Pass Through Trust 1996-A2, the Company ETCs and the
Procor ETC, held in such Pass Through Trust as described under "Description of
the Equipment Notes--Principal Payments" and "Description of the ETCs--Payment
of Principal and Interest." In the event of such a prepayment, purchase or
default, the Pool Factor and the Pool Balance of each Pass Through Trust so
affected will be recomputed after giving effect thereto and notice thereof will
be mailed to Certificateholders of such Pass Through Trust.
The "Pool Balance" for each Pass Through Trust indicates, as of any Regular
Distribution Date or Special Distribution Date, the aggregate unpaid principal
amount of the Equipment Notes, and in the case of Pass Through Trust 1996-A2,
the Company ETCs and the Procor ETC held in each Pass Through Trust on such date
plus any amounts in respect of principal of such Equipment Notes, and in the
case of Pass Through Trust 1996-A2, such Company ETCs and the Procor ETC held by
the Pass Through Trustee and not yet distributed. The Pool Balance as of any
Regular Distribution Date or Special Distribution Date, if any, shall be
computed after giving effect to the payment of principal, if any, of the
Equipment Notes, and in the case of Pass Through Trust 1996-A2, the Company ETCs
and the Procor ETC held in the Pass Through Trust and distribution thereof to be
made on that date. (Section 1.1)
The "Pool Factor" for each Pass Through Trust as of any Regular
Distribution Date or Special Distribution Date is the quotient (rounded to the
seventh decimal place) computed by dividing (i) the Pool Balance by (ii) the
aggregate original principal amount of the Pass Through Certificates issued by
such Pass Through Trust. The Pool Factor for each Pass Through Trust as of any
Regular Distribution Date or Special Distribution Date shall be computed after
giving effect to the payment of principal, if any, of the Equipment Notes, and
in the case of Pass Through Trust 1996-A2, the Company ETCs and the Procor ETC,
held in such Pass Through Trust and distribution thereof to be made on that
date. (Section 1.1) The Pool Factor for each Pass Through Trust will initially
be 1.0000000; thereafter, the Pool Factor will decline as described above to
reflect reductions in the Pool Balance of such Pass Through Trust. The amount of
a Certificateholder's pro rata share of the Pool Balance of a Pass Through Trust
can be determined by multiplying the original denomination of such holder's Pass
Through Certificate of such Pass Through Trust by the Pool Factor for such Pass
Through Trust as of the Regular Distribution Date or Special Distribution Date.
The Pool Factor and the Pool Balance for each Pass Through Trust will be mailed
to Certificateholders of record of such Pass Through Trust on each Regular
Distribution Date and Special Distribution Date.
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As of the date of issuance of the Pass Through Certificates and assuming
that all proceeds are used to purchase Equipment Notes, Company ETCs and the
Procor ETC on or before June , 1996, and that no prepayment or purchase in
respect of any Equipment Notes or default in respect of any Equipment Notes,
Company ETCs or the Procor ETC shall occur, the scheduled payment of principal
of the Equipment Notes, Company ETCs and the Procor ETC and the resulting Pool
Factors for the Pass Through Trusts after taking into account each such payment
are set forth below:
PASS THROUGH PASS THROUGH
TRUST 1996-A1 TRUST 1996-A2
SCHEDULED PASS THROUGH SCHEDULED PASS THROUGH
PRINCIPAL TRUST 1996-A1 PRINCIPAL TRUST 1996-A2
REGULAR DISTRIBUTION DATE PAYMENTS POOL FACTOR PAYMENTS POOL FACTOR
- ---------------------------------------- ------------- ------------- ------------- -------------
.........................
.........................
.........................
.........................
REPORTS TO CERTIFICATEHOLDERS
On each Regular Distribution Date or Special Distribution Date, the Pass
Through Trustee will include with each distribution of a Scheduled Payment or
Special Payment to Certificateholders of record of the related Pass Through
Trust a statement, giving effect to such distribution to be made on such Regular
Distribution Date or Special Distribution Date, setting forth the following
information (per a $1,000 principal amount Pass Through Certificate of such Pass
Through Trust, as to (i) and (ii) below):
(i) the amount of such distribution allocable to principal and the
amount allocable to Make-Whole Amount, if any;
(ii) the amount of such distribution allocable to interest; and
(iii) the Pool Balance and the Pool Factor for such Pass Through
Trust. (Section 4.3)
So long as any Pass Through 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 participants
reflected on DTC's books as holding interests in the Pass Through 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, to be available for forwarding to Certificate
Owners. (Section 3.9)
In addition, after the end of each calendar year, the Pass Through Trustee
will prepare for each Certificateholder of record of each Pass Through Trust at
any time during the preceding calendar year a report containing the sum of the
amounts determined pursuant to clauses (i) and (ii) above with respect to such
Pass Through Trust for such calendar year or, in the event such person was a
Certificateholder of record during a portion of such calendar year, for the
applicable portion of such calendar year, and such other items as are readily
available to the Pass Through Trustee and which a Certificateholder shall
reasonably request as necessary for the purpose of such Certificateholders'
preparation of its federal income tax returns. (Section 4.3) 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.
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At such time, if any, as the Pass Through Certificates are issued in the
form of Registered Certificates, the Pass Through Trustee will prepare and
deliver the information described above to each Certificateholder of record of
each Pass Through Trust as the name of such Certificateholder appears on the
records of the Registrar of the Pass Through Certificates.
VOTING OF THE EQUIPMENT NOTES AND THE ETCS
The Pass Through Trustee, as holder of the Equipment Notes, and in the case
of Pass Through Trust 1996-A2, the ETCs in the respective Pass Through Trust,
has the right to vote and give consents and waivers in respect of such Equipment
Notes and ETCs, as applicable. Each Agreement sets forth the circumstances in
which the Pass Through Trustee shall direct any action or cast any vote as the
holder of the Equipment Notes held in the applicable Pass Through Trust at its
own discretion and the circumstances in which the Pass Through Trustee shall
seek instructions from the Certificateholders of such Pass Through Trust. Prior
to an Event of Default (as defined below) with respect to either Pass Through
Trust, all Equipment Notes and in the case of Pass Through Trust 1996-A2, all
ETCs held in such Pass Through Trust shall be voted for or against any action in
the same proportion as the Pass Through Certificates held by the
Certificateholders of such Pass Through Trust were actually voted. (Sections 6.1
and 10.1) Whenever the Agreements require or permit actions to be taken based
upon instructions or directions of Certificateholders of such Pass Through Trust
holding a specified percentage interest of a Pass Through Trust, DTC shall be
deemed to represent such percentage interest only to the extent that it has
received instructions to such effect from Certificate Owners and/or DTC
Participants owning or representing, respectively, such required percentage
interest and has delivered such instructions to the Pass Through Trustee.
(Section 3.9)
EVENTS OF DEFAULT AND CERTAIN RIGHTS UPON AN EVENT OF DEFAULT
An event of default under an Agreement (an "Event of Default") is defined
as the occurrence and continuance of (i) an event of default under one or more
of the Indentures (an "Indenture Default") or (ii) an event of default under the
Company Trust Agreement or the Procor Trust Agreement (an "Equipment Trust
Default"). For a description of the Indenture Defaults under the Indentures, see
"Description of the Equipment Notes--Indenture Defaults, Notice and Waiver." For
a description of the Equipment Trust Defaults under the Trust Agreements, see
"Description of the ETCs--Equipment Trust Defaults and Provisions Relating
Thereto." Each Pass Through Trust will hold Equipment Notes issued pursuant to
each of the Indentures, which means a continuing Indenture Default under any one
Indenture will result in an Event of Default under each of the Agreements and
therefore will affect each of the Pass Through Trusts. There are, however, 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. See "Description of the
Equipment Notes--Indenture Defaults, Notice and Waiver." If an Indenture Default
occurs with respect to fewer than all of the Indentures, the Equipment Notes
issued pursuant to the Indentures with respect to which an Indenture Default has
not occurred will continue to be held in the Pass Through Trusts, and payments
of principal and interest on such Equipment Notes will continue to be
distributed to the holders of the Pass Through Certificates as originally
scheduled. Similarly, there are no cross-default provisions in the Trust
Agreements, and an Equipment Trust Default under the Company Trust Agreement
will not constitute an Equipment Trust Default under the Procor Equipment Trust
Agreement, nor will an Equipment Trust Default under the Procor Trust Agreement
(other than a Company bankruptcy related default) constitute an Equipment Trust
Default under the Company Trust Agreement. Accordingly, if an Equipment Trust
Default occurs with respect to one Trust Agreement, but no Equipment Trust
Default has occurred with respect to the other Trust Agreement, the ETCs under
the non-defaulted Trust Agreement will continue to be held in Pass Through Trust
1996-A2, and payments of principal and interest on such ETCs will continue to be
distributed to the holders of such Certificates as originally scheduled.
However, a failure by the Company to perform in respect of its guarantee of the
due and punctual
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distribution to Certificateholders of principal and interest payable in respect
of the Procor ETC and the due and punctual performance by Procor of its
obligations under the Procor Trust Agreement will constitute an Equipment Trust
Default under the Company Trust Agreement. (Section 6.1) In addition, an
Indenture Default will not necessarily result in an Equipment Trust Default nor
will an Equipment Trust Default necessarily result in an Indenture Default.
Under each Indenture, the Owner Trustee and the Owner Participant 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 chooses to exercise such cure right, the
Indenture Default and consequently the Event of Default under each Agreement
will be deemed to be cured. In addition, in circumstances where (i) the
Indenture Trustee has given notice of its intent to accelerate the Equipment
Notes issued under such Indenture or to exercise other remedies or (ii) the
Indenture Trustee shall not have taken action for a period of not less than 180
days with respect to such Indenture Default, the Owner Trustee has the option to
prepay or purchase such Equipment Notes at a price equal to the unpaid principal
amount thereof together with accrued interest thereon to the date of prepayment
or purchase, but without Make-Whole Amount. See "Description of the Equipment
Notes--Indenture Defaults, Notice and Waiver."
Each Indenture provides that, if an Indenture Default shall occur and be
continuing thereunder, the Indenture Trustee may, and upon the instructions of
the holders of a majority in aggregate principal amount of the Equipment Notes
outstanding under such Indenture shall, declare the unpaid principal amount of
the Equipment Notes issued under such Indenture to be immediately due and
payable, together with any accrued and unpaid interest thereon. Each Indenture
further provides that, if an Indenture Default shall occur and be continuing
thereunder, the holders of a majority in aggregate principal amount of the
Equipment Notes outstanding under such Indenture may direct the Indenture
Trustee with respect to the exercise of remedies thereunder. See "Description of
the Equipment Notes--Remedies." Accordingly, the ability of the holders of the
Pass Through Certificates issued with respect to either Pass Through Trust to
cause the Indenture Trustee to accelerate the Equipment Notes issued under an
Indenture or to direct the exercise of remedies by the Indenture Trustee under
an Indenture will depend, in part, upon the proportion between the aggregate
principal amount of the Equipment Notes issued under such Indenture and held in
such Pass Through Trust and the aggregate principal amount of all Equipment
Notes issued under such Indenture. If, for example, the Equipment Notes held in
a Pass Through Trust constitute only 45% in aggregate principal amount of the
Equipment Notes issued under an Indenture, even if all of the Certificateholders
of such Pass Through Trust were to instruct the Pass Through Trustee to direct
the Indenture Trustee to accelerate the Equipment Notes issued under such
Indenture, the Equipment Notes so voted by such Pass Through Trust in favor of
acceleration would not alone be sufficient under the terms of the Indenture to
compel the Indenture Trustee to act. Moreover, there can be no assurance that
the Certificateholders of the other Pass Through Trust would at such time vote
the Equipment Notes held in such Pass Through Trust in favor of acceleration.
Each Pass Through Trust will hold Equipment Notes with different terms than the
Equipment Notes held in the other Pass Through Trust and therefore the
Certificateholders of one Pass Through Trust may have divergent or conflicting
interests from those of the Certificateholders of the other Pass Through Trust.
In addition, so long as the same institution acts as Pass Through Trustee of
both Pass Through Trusts, in the absence of instructions from the
Certificateholders of any such Pass Through Trust, the Pass Through Trustee
could for the same reason be faced with a potential conflict of interest upon an
Indenture Default.
Each Agreement provides that, so long as an Indenture Default under any
Indenture shall have occurred and be continuing, the Pass Through Trustee of the
Pass Through Trust created by such Agreement may vote all of the Equipment Notes
issued under such Indenture, and upon the direction of the holders of Pass
Through Certificates evidencing fractional undivided interests aggregating not
less than a majority in interest of such Pass Through Trust, the Pass Through
Trustee shall vote a corresponding majority of such Equipment Notes in favor of
directing the
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Indenture Trustee to declare the unpaid principal amount of all Equipment Notes
issued under such Indenture and any accrued and unpaid interest thereon to be
due and payable. Each Agreement also provides that, if an Indenture Default
under any Indenture shall have occurred and be continuing, the Pass Through
Trustee of the Pass Through Trust created by such Agreement may, and upon the
direction of the holders of the Pass Through Certificates evidencing fractional
undivided interests aggregating not less than a majority in interest of such
Pass Through Trust shall, vote all of the Equipment Notes issued under such
Indenture in favor of directing the Indenture Trustee as to the time, method and
place of conducting any proceeding for any remedy available to the Indenture
Trustee or of exercising any trust or power conferred on the Indenture Trustee
under such Indenture. (Sections 6.1 and 6.4)
As an additional remedy, if an Indenture Default under an Indenture shall
have occurred and be continuing, each Agreement provides that the Pass Through
Trustee of the Pass Through Trust created by such Agreement may, and upon the
direction of the holders of Pass Through Certificates evidencing fractional
undivided interests aggregating not less than a majority in interest of such
Pass Through Trust shall, sell all or part of the Equipment Notes issued under
such Indenture that are held in such Pass Through Trust for cash to any person.
In addition, if an Owner Trustee elects to purchase all of the outstanding
Equipment Notes issued under such Indenture in lieu of prepayment, the Pass
Through Trustee shall sell such Equipment Notes to such Owner Trustee at a price
equal to the unpaid principal amount thereof together with accrued and unpaid
interest thereon. (Sections 6.1 and 6.2) Any proceeds received by the Pass
Through Trustee upon any such sale shall be deposited in the Special Payments
Account for such Pass Through Trust and shall be distributed to the
Certificateholders on a Special Distribution Date. (Sections 4.1 and 4.2) The
market for Equipment 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 both Pass Through
Trusts, it may be faced with a conflict in deciding from which Pass Through
Trust to sell Equipment Notes to available buyers. If the Pass Through Trustee
sells any Equipment Notes with respect to which an Indenture Default exists for
less than their outstanding principal amount, the Certificateholders of such
Pass Through Trust will receive a smaller amount of principal distributions than
anticipated and will not have any claim for the shortfall against the Company,
the applicable Owner Participant, the applicable Owner Trustee in its individual
capacity or any affiliate thereof, or the Pass Through Trustee. Furthermore,
neither the Pass Through Trustee nor the Certificateholders of such Pass Through
Trust could take any action with respect to any remaining Equipment Notes so
long as no Indenture Defaults existed with respect thereto. (Sections 4.1 and
4.2)
Each Trust Agreement provides that, if an Equipment Trust Default shall
occur and be continuing thereunder, the Equipment Trust Trustee may, and upon
the instructions of the holders of a majority in aggregate principal amount of
the ETCs issued thereunder shall, declare the unpaid principal amount of such
ETCs to be immediately due and payable, together with any accrued and unpaid
interest thereon. Each Trust Agreement further provides that, if an Equipment
Trust Default shall occur and be continuing thereunder, the holders of a
majority in aggregate principal amount of the ETCs issued thereunder may direct
the Equipment Trust Trustee with respect to the exercise of remedies thereunder.
See "Description of the ETCs--Equipment Trust Defaults and Provisions Relating
Thereto." Accordingly, since all of the ETCs will be held in Pass Through Trust
1996-A2, the holders of such Pass Through Certificates will have the ability to
cause the Equipment Trust Trustee to accelerate the ETCs issued under a Trust
Agreement and to direct the exercise of remedies by the Equipment Trust Trustee
under a Trust Agreement.
The Agreement creating Pass Through Trust 1996-A2 provides that, so long as
an Equipment Trust Default under either Trust Agreement shall have occurred and
be continuing, the Pass Through Trustee may vote the ETCs issued under the
defaulted agreement and, upon the direction of the holders of Pass Through
Certificates evidencing fractional undivided interests aggregating not less than
a majority in interest in such Pass Through Trust, the Pass Through Trustee
shall vote a
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corresponding majority of the principal amount of the ETCs under the defaulted
agreement in favor of directing the Equipment Trust Trustee to declare the
unpaid principal amount of such ETCs and any accrued and unpaid interest thereon
to be due and payable. Such Agreement also provides that, if an Equipment Trust
Default under either Trust Agreement shall have occurred and be continuing, the
Pass Through Trustee of the Pass Through Trust 1996-A2 may, and upon the
direction of the holders of the Pass Through Certificates, Series 1996-A2
evidencing fractional undivided interests aggregating not less than a majority
in interest in such Pass Through Trust shall, vote the ETCs issued thereunder in
favor of directing the Equipment Trust Trustee as to the time, method and place
of conducting any proceeding for any remedy available to such Equipment Trust
Trustee or of exercising any trust or power conferred on the Equipment Trust
Trustee. In addition, if an Equipment Trust Default has occurred and is
continuing under the Procor ETC, the Pass Through Trustee may, and upon
direction of the holders of Certificates evidencing fractional undivided
interests aggregating not less than a majority in interest of such Pass Through
Trust shall, commence the exercise of remedies against the Company under its
guarantee of the due and punctual distribution to Certificateholders of
principal and interest payable in respect of the Procor ETC. (Sections 6.1, 6.4)
As an additional remedy, if an Equipment Trust Default shall have occurred
and be continuing, the Agreement creating Pass Through Trust 1996-A2 provides
that the Pass Through Trustee of such Pass Through 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 Pass Through
Trust shall sell the ETCs in default or a portion thereof for cash to any
person. The Pass Through Trustee is required to give notice to Procor of its
proposed sale of the Procor ETC at least 20 days prior to such proposed sale.
Such notice shall constitute an offer to sell the Procor ETC to Procor for a
price equal to the outstanding principal amount thereof, plus all accrued and
unpaid interest thereon, and all other amounts due and owing with respect
thereto. If, prior to the expiration of such 20 day period, Procor pays such
purchase price to the Pass Through Trustee, the Procor ETC will be transferred
to Procor. If Procor does not pay such purchase price prior to the expiration of
such period, the Pass Through Trustee may sell the Procor ETC to any person.
(Section 6.1) Any proceeds received by the Pass Through Trustee upon any such
sale shall be deposited in the Special Payments Account and shall be distributed
to the Certificateholders on a Special Distribution Date. (Sections 4.1, 4.2,
6.2) The market for equipment trust certificates in default may be very limited
and there can be no assurance that an ETC in default could be sold for a
reasonable price. If the Pass Through Trustee sells a Company ETC for less than
its outstanding principal amount, the Certificateholders of Pass Through Trust
1995-A2 will receive a smaller amount of principal distributions than
anticipated and will not have any claim for the shortfall amount against the
Company or the Pass Through Trustee. If the Pass Through Trustee sells the
Procor ETC for less than its outstanding principal amount, plus all accrued and
unpaid interest thereon and all other amounts due and owing with respect
thereto, the Certificateholders will have a claim for the shortfall amount
against the Company pursuant to its guarantee. See "--Guarantee."
Any amount distributed to the Pass Through Trustee of either Pass Through
Trust following an Indenture Default under an Indenture and any amount
distributed to the Pass Through Trustee of Pass Through Trust 1996-A2 following
an Equipment Trust Default under either Trust Agreement shall be deposited in
the Special Payments Account for such Pass Through Trust and shall be
distributed to the Certificateholders of such Pass Through Trust on a Special
Distribution Date. In addition, if, following an Indenture Default under any
Indenture, the applicable Owner Trustee exercises its option to prepay or
purchase the outstanding Equipment Notes issued under such Indenture as
described below under "Description of the Equipment Notes--Prepayment," the
amount paid by such Owner Trustee to the Pass Through Trustee for the Equipment
Notes issued under such Indenture shall be deposited in the Special Payments
Account for such Pass Through Trust and shall be distributed to the
Certificateholders of such Pass Through Trust on a Special Distribution Date.
(Sections 4.1 and 4.2)
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Any funds representing payments received with respect to an Equipment Note
or ETC in default, or the proceeds from the sale by the Pass Through Trustee of
such Equipment Note or ETC, held by the Pass Through Trustee in the Special
Payments Account for such Pass Through Trust shall, to the extent practicable,
be invested and reinvested by the Pass Through Trustee in Permitted Investments
pending the distribution of such funds on a Special Distribution Date. (Sections
1.1 and 4.4)
Each Agreement provides that the Pass Through Trustee shall, within 30 days
after the occurrence of a default (as defined below) in respect of the Pass
Through Trust created by such Agreement, give to the Certificateholders of such
Pass Through Trust notice, transmitted by mail, of all uncured or unwaived
defaults under such Agreement known to it; provided that, except in the case of
default in the payment of principal of, Make-Whole Amount, if any, or interest
on an Equipment Note or an ETC, as applicable, 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 the Certificateholders. The
term "default," for the purpose of the provision described in this paragraph
only, shall mean the occurrence of any Event of Default under an Agreement,
except that in determining whether any such Event of Default has occurred any
grace period or notice in connection therewith shall be disregarded. (Section
7.2)
Each Agreement contains a provision entitling the Pass Through Trustee,
subject to the duty of the Pass Through Trustee during a default to act with the
required standard of care, to obtain security from or be indemnified by the
holders of the Pass Through Certificates of the Pass Through Trust relating to
such Agreement before proceeding to exercise any right or power under such
Agreement at the request of such Certificateholders. (Section 7.3)
The holders of Pass Through Certificates of a Pass Through Trust evidencing
fractional undivided interests aggregating not less than a majority in interest
of such Pass Through Trust may on behalf of the holders of all Pass Through
Certificates of such Pass Through Trust instruct the Pass Through Trustee to
waive any past default or Event of Default under the related Agreement and
thereby annul any direction given by the Pass Through Trustee to the Indenture
Trustee or the Equipment Trust Trustee with respect thereto, except (i) a
default in payment of principal of, Make-Whole Amount, if any, or interest on,
an Equipment Note or an ETC, as applicable, and (ii) a default in respect of any
covenant or provision of the related Agreement that cannot be modified or
amended without the consent of each Certificateholder of such Pass Through Trust
affected thereby. (Section 6.5) Each Indenture provides that, with certain
exceptions, the holders of a majority in aggregate unpaid principal amount of
the Equipment Notes thereunder may on behalf of all such holders waive any past
default or Indenture Default thereunder. (Indentures, Section 5.06) For a
discussion of waivers of Indenture Defaults under the Indentures, see
"Description of the Equipment Notes--Indenture Defaults, Notice and Waiver."
Each Trust Agreement provides that, with certain exceptions, the holders of a
majority in aggregate unpaid principal amount of the ETCs outstanding thereunder
may on behalf of all such holders waive any past default or Equipment Trust
Default thereunder. Therefore, if the Certificateholders of a Pass Through Trust
or Trusts waive a past default or Event of Default under the respective related
Agreements such that the principal amount of the Equipment Notes or ETCs, as
applicable, held either individually in such Pass Through Trust or in the
aggregate in such Pass Through Trusts constitutes the required majority in
aggregate unpaid principal amount under the applicable Indenture or Trust
Agreement, as applicable, such past default or Indenture Default under such
Indenture or Equipment Trust Default under such Equipment Trust Agreement, as
applicable, shall be waived. For a discussion of waivers of Equipment Trust
Defaults under the Trust Agreements, see "Description of the ETCs--Equipment
Trust Defaults and Provisions Relating Thereto."
MODIFICATION OF THE AGREEMENTS
Each Agreement contains provisions permitting the Company and Procor and
requiring the Pass Through Trustee to enter into supplements to such Agreements,
without the consent of the
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holders of any of the Pass Through Certificates of the Pass Through Trust
created by such Agreement, among other things (i) to evidence the succession of
another corporation to the Company or Procor and the assumption by such
corporation of the Company's or Procor's obligations under the Agreement, (ii)
to add to the covenants of the Company or Procor, as the case may be, for the
benefit of holders of the applicable Pass Through Certificates or to surrender
any of the Company's or Procor's, as the case may be, rights under such
Agreement and (iii) to cure any ambiguity, to correct any manifest error, to
correct or supplement any defective or inconsistent provision of such Agreement
or any supplement to such Agreement, or to make any other provisions with
respect to matters or questions arising under such Agreement, provided such
action shall not adversely affect the interests of the holders of such Pass
Through Certificates. (Section 9.1)
Each Agreement also contains provisions permitting the Company and the Pass
Through Trustee and, in the case of Pass Through Trust 1996-A2, Procor, with the
consent of the holders of Pass Through Certificates or the Pass Through Trust
created by such Agreement evidencing fractional undivided interests aggregating
not less than a majority in interest of such Pass Through Trust, to enter into
supplements to such Agreement adding any provisions to or changing or
eliminating any of the provisions of such Agreement or modifying the rights of
the Certificateholders, except that no such supplement to such Agreement may,
without the consent of each Certificateholder so affected (i) reduce in any
manner the amount of, or delay the timing of, any receipt by the Pass Through
Trustee of payments on the Equipment Notes or ETCs, as applicable, held in such
Pass Through Trust, or distributions in respect of any related Pass Through
Certificate, or change any date of payment on any such Pass Through Certificate,
or make distributions payable at a place, or in coin or currency, other than
that provided for in such Pass Through Certificates, or impair the right of any
Certificateholder of such Pass Through Trust to institute suit for the
enforcement of any such payment when due, (ii) permit the disposition of the
Equipment Notes or the ETCs, as applicable, held in such Pass Through Trust,
except as provided in such Agreement or (iii) reduce the percentage of the
aggregate fractional undivided interests of the Pass Through Trust provided for
in such Agreement, the consent of the holders of which is required for any such
supplement to such Agreement or for any waiver provided for in such Agreement.
(Section 9.2)
MODIFICATION OF LEVERAGED LEASE AND TRUST AGREEMENTS
In the event that the Pass Through Trustee, as the holder of any Equipment
Note or, in the case of Pass Through Trust 1996-A2 ETC held in a Pass Through
Trust, receives a request for its consent to any amendment, modification or
waiver under the Indenture, Lease or other document relating to such Equipment
Notes or under a Trust Agreement or other agreement relating to an ETC, the Pass
Through Trustee shall mail a notice of such proposed amendment, modification or
waiver to each Certificateholder of such Pass Through Trust as of the date of
such notice. The Pass Through Trustee shall request instructions from the
Certificateholders as to whether or not to consent to such amendment,
modification or waiver. The Pass Through Trustee shall vote or consent with
respect to all such Equipment Notes or, in the case of Pass Through Trust
1996-A2, ETCs in such Pass Through Trust in the same proportion as the Pass
Through Certificates of such Pass Through Trust were actually voted by the
holders thereof by a certain date. Notwithstanding the foregoing, if any Event
of Default under the related Agreement shall have occurred and be continuing,
the Pass Through Trustee may in its own discretion consent to such amendment,
modification or waiver, and may so notify the Indenture Trustee to which such
consent relates. (Section 10.1)
TERMINATION OF THE PASS THROUGH TRUSTS
Each Agreement will terminate upon the distribution to all
Certificateholders of the Pass Through Trust of all amounts required to be
distributed to them pursuant to such Agreement and the disposition of all
property held in such Pass Through Trust. The Pass Through Trustee will mail to
each Certificateholder of record of such Pass Through Trust notice of the
termination of such Pass
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Through Trust, the amount of the proposed final payment and the proposed date
for the distribution of such final payment. The final distribution to any
Certificateholder of such Pass Through Trust will be made only upon surrender of
such Certificateholder's Pass Through Certificates at the office or agency of
the Pass Through Trustee specified in such notice of termination. (Section 11.1)
DELAYED PURCHASE; EXTRAORDINARY DISTRIBUTION
Earnings on Specified Investments in the escrow account in excess of
amounts required to be paid to Certificateholders for each Pass Through Trust
will be paid to the Company periodically and the Company will be responsible for
any losses. To the extent that the full amount of the proceeds from the sale of
the Pass Through Certificates is not used to purchase Equipment Notes and ETCs
on or prior to June , 1996, whether due to the physical unavailability of
Units, the failure by an Owner Trustee to issue Equipment Notes on or prior to
such date, the failure of an Equipment Trust Trustee to issue ETCs on or prior
to such date or otherwise, an amount equal to the unexpended proceeds, together
with interest thereon, from the date of issuance of the Pass Through
Certificates to but not including July , 1996, at the rate appertaining to the
applicable Pass Through Certificates, but without premium, will be distributed
on July , 1996 to the Certificateholders of record as of June , 1996.
(Section 2.1 (b)).
The Company will pay to the Pass Through Trustee on July , 1996 an amount
equal to the amount, if any, distributable by the Pass Through Trustee on such
date and thereupon will be entitled to any balance in the escrow account. On the
Regular Distribution Date occurring on , 199[6], the Company will
also pay to the Pass Through Trustee an amount equal to the difference between
the interest accrued on any Equipment Notes or ETCs, as applicable, purchased
after the issuance of the Pass Through Certificates and the interest that would
have accrued on such Equipment Notes or ETCs if they had been purchased at the
time of issuance of the Pass Through Certificates.
THE PASS THROUGH TRUSTEE
will be the Pass Through Trustee for each of the
two Pass Through Trusts. The Pass Through Trustee and any of its affiliates may
hold Pass Through Certificates in their own names. (Section 7.5) With certain
exceptions, the Pass Through Trustee makes no representations as to the validity
or sufficiency of the Agreements, the Pass Through Certificates, the Equipment
Notes, the ETCs, the Indentures, the Leases, the Trust Agreements or other
related documents. (Section 7.4) also will initially be
the Indenture Trustee of each of the Indentures under which the Equipment Notes
are issued and the Equipment Trust Trustee under the Trust Agreements.
The Pass Through Trustee may resign with respect to either or both of the
Pass Through Trusts at any time, in which event the Company and Procor will be
obligated to appoint a successor trustee. If the Pass Through Trustee fails to
comply with certain provisions of the Trust Indenture Act; ceases to be eligible
to continue as Pass Through Trustee under the related Agreement; becomes
incapable of acting as Pass Through Trustee; or becomes adjudged a bankrupt or
insolvent, the Company or Procor may remove the Pass Through Trustee, or any
holder of Pass Through Certificates of such Pass Through Trust for at least six
months may, on behalf of himself and all others similarly situated, petition any
court of competent jurisdiction for the removal of the Pass Through Trustee and
the appointment of a successor trustee. Any resignation or removal of the Pass
Through Trustee with respect to a Pass Through Trust and appointment of a
successor trustee for such Pass Through Trust does not become effective until
acceptance of the appointment by the successor trustee. (Section 7.9) Pursuant
to such resignation and successor trustee provisions, it is possible that a
different trustee could be appointed to act as the successor trustee under each
Agreement with respect to the related Pass Through Trust. All references in this
Prospectus to the Pass Through Trustee are to the Pass Through Trustee acting in
such capacity under each of the Pass Through Trusts and should be read to take
into account the possibility that the two Pass
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Through Trusts could each have a different successor trustee in the event of
such a resignation or removal.
Each Agreement provides that the Company and, in the case of Pass Through
Trust 1996-A2, Procor, will pay the Pass Through Trustee's fees and expenses,
other than a portion of the initial fees and reasonable actual disbursements of
the Pass Through Trustee, which shall be paid by the Owner Trustees. Each
Agreement further provides that the Pass Through Trustee will be entitled to
indemnification by the Company and, in the case of Pass Through Trust 1996-A2,
Procor, for, and will be held harmless against, any loss, liability or expense
incurred by the Pass Through Trustee (other than through its own wilful
misconduct, bad faith or negligence or by reason of a breach of any of its
representations or warranties set forth in the related Agreement), except to the
extent that such loss, liability or expense is for or with respect to taxes, in
which case the Pass Through Trustee may be entitled to be reimbursed by the Pass
Through Trust. (Section 7.7)
[Describe prior relationships, if any, between the Company and/or Procor
and the Pass Through Trustee.]
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DESCRIPTION OF THE EQUIPMENT NOTES
The statements under this caption are a summary only and do not purport to
be complete. The summary makes use of terms defined in, and is qualified in its
entirety by reference to all of the provisions of, the Equipment Notes, the
Indentures, the Leases and the Participation Agreements, the forms of which are
available without charge to each person to whom this Prospectus is delivered,
upon request of such person to the General Counsel and Secretary, Union Tank Car
Company, 225 West Washington Street, Chicago, Illinois 60606 (telephone
312/372-9500). Except as otherwise indicated, the following summary relates to
the Equipment Notes, the Indentures, the Leases and the Participation
Agreements.
GENERAL
Each series of Equipment Notes will be issued under one of
Indentures between , as Owner Trustee of an
owner trust for the benefit of an Owner Participant, and
, as Indenture Trustee.
Each Owner Trustee will lease Equipment to the Company pursuant to a Lease
under which the Company is obligated to pay rent to such Owner Trustee in
respect of the Equipment covered thereby. The amounts unconditionally payable
under each Lease will be sufficient to pay when due all payments of principal
of, Make-Whole Amount, if any, and interest on the Equipment Notes issued in
respect of the Equipment subject to such Lease. The Equipment 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.
PAYMENTS OF PRINCIPAL AND INTEREST
The aggregate principal amounts of the Equipment Notes issued with respect
to the Equipment covered by each Lease are as follows:
LEASE
NO. SERIES A1 SERIES A2
------ --------- ---------
1........................................................... $ $
2...........................................................
-------- --------
Total.............................................. $
======== ========
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37
Interest will be payable on each Equipment Note at the rate applicable to
such Equipment Note on the unpaid principal amount thereof on and
of each year, commencing , 199[6]. Such interest will be
computed on the basis of a 360-day year of twelve 30-day months. The principal
of each % Equipment Note issued on the date hereof (Note A) and each
Equipment Note issuable on or about June , 1996 (Note B) held in Pass Through
Trust 1996-A1 will be payable as set forth below:
NOTE A NOTE B
PRINCIPAL PRINCIPAL PRINCIPAL
PAYMENT DATES PAYMENT PAYMENT PAYMENT
------------------------------------------------ --------- --------- ---------
......................................
......................................
......................................
......................................
......................................
......................................
......................................
......................................
......................................
......................................
......................................
......................................
......................................
......................................
-------- -------- --------
Total................................. $ $ $
======== ======== ========
The % Equipment Notes held in Pass Through Trust 1996-A2, in an aggregate
principal amount of $ , will amortize as to principal commencing on
, 200 , with the final payment of principal due on ,
20 ; however, such Equipment Notes are required to be prepaid on ,
pursuant to a mandatory refinancing. See "-- Prepayment."
If any date scheduled for any payment of principal of, Make-Whole Amount,
if any, or interest on the Equipment Notes is not a Business Day, such payment
may be made on the next Business Day without any additional interest.
PREPAYMENT
The Equipment Notes may be prepaid under the following circumstances:
Mandatory Prepayments. If an Event of Loss to a Unit shall occur and like
kind equipment of equal or greater fair market sales value, utility, remaining
useful life, residual value and condition (assuming such Unit was in the
condition required to be maintained) is not substituted for the affected Unit in
accordance with the terms of the applicable Lease, then the Company is obligated
to pay the Stipulated Loss Value of such Unit. Such payment will be used to
prepay a portion of the Equipment Notes issued with respect to the Equipment of
which such Unit is a part on (i) the next Regular Distribution Date following
the election by the Company to pay the Stipulated Loss Value of such Units
rather than substitute like kind equipment or (ii) in the case of the occurrence
of an Event of Loss in respect of more than ten Units since the end of the last
six month reporting period under a Lease (a "Multiple Loss"), on the first
Business Day succeeding the 60th day following the date on which the Company is
required to report such Multiple Loss. The amount prepaid will be equal to the
sum of (i) as to principal, an amount equal to the product obtained by
multiplying the aggregate unpaid principal amount of the Equipment Notes issued
under the Indenture to which such Equipment relates as of the prepayment date
(after deducting therefrom the scheduled principal installment, if any, due on
the prepayment date) by a fraction, the numerator of which shall
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38
be the Equipment Cost of such Unit and the denominator of which shall be the
aggregate Equipment Cost of all Equipment securing such Indenture immediately
prior to the prepayment date, and (ii) as to interest, the aggregate amount of
interest accrued and unpaid to but not including the prepayment date in respect
of the principal amount to be prepaid pursuant to clause (i) above on such
prepayment date. No Make-Whole Amount (as defined below) will be payable in the
event of a prepayment under such circumstances. See "Description of the
Equipment Notes--The Leases-- Events of Loss." (Leases, Section 11; Indentures,
Section 2.10)
In addition, under the Leases the Company may, so long as no Lease Event of
Default has occurred and is continuing, terminate a Lease at its option (i) at
any time after , 200 , with respect to any Unit, if the Company
determines in good faith that (A) such Unit has become obsolete or surplus to
its requirements, or (B) any modification to a Unit required by law would be
economically impractical, or (ii) on , 200 with respect to any or
all of the Units (the "Early Purchase Date") if the Company exercises its option
to purchase such Unit or (iii) if the Company elects to exercise its right to
purchase Equipment as a result of an Owner Participant (or an affiliate thereof)
engaging in a business that is in competition with the Company's full service
railcar leasing business. Unless the Company elects in connection with the
exercise of a purchase option to assume on a full recourse basis all of the
Owner Trustee's obligations in respect of the related Equipment Notes and
acquires the purchased Units subject to the lien of the related Indentures, the
amount of Equipment Notes to be prepaid in the event of any such Lease
termination will be equal to the sum of (i) as to principal, an amount equal to
the product obtained by multiplying the aggregate unpaid principal amount of the
Equipment Notes issued under the Indenture to which such Unit relates as of the
prepayment date (after deducting therefrom the scheduled principal installment,
if any, due on the prepayment date) by a fraction, the numerator of which shall
be the Equipment Cost of such Unit and the denominator of which shall be the
aggregate Equipment Cost of all Equipment securing such Indenture immediately
prior to the prepayment date, and (ii) as to interest the aggregate amount of
interest accrued and unpaid to but not including the prepayment date in respect
of the principal amount to be prepaid pursuant to clause (i) of this on such
prepayment date, plus a premium as set forth below (a "Make-Whole Amount"). Such
prepayment is to be made on the date which is the Lease termination date for
such Unit. See "Description of the Equipment Notes--The Leases--Termination."
(Leases, Section 10 and 22.1; Indentures, Section 2.10; Participation
Agreements, Section 6.9)
The Equipment Notes held in Pass Through Trust 1996-A2 are required to be
prepaid at a price equal to the unpaid principal amount thereof, together with
accrued but unpaid interest thereon to but not including the prepayment date, as
part of a mandatory refinancing, to be arranged by the Company, of the Equipment
Notes held by such Pass Through Trust on the final distribution date applicable
to the Pass Through Certificates, Series 1996-A2.
Voluntary Prepayments. Subject to certain restrictions, the Company may
require the relevant Owner Participant and Owner Trustee and the Pass Through
Trustee to effect an optional prepayment of the Equipment Notes at a price equal
to the unpaid principal amount thereof, together with accrued but unpaid
interest thereon to but not including the specified prepayment date (which shall
be a Special Distribution Date), plus a Make-Whole Amount, as part of a
refunding or refinancing which will result in the prepayment of the Pass Through
Certificates. (Participation Agreements, Section 10.2; Indentures, Section 2.10)
The Equipment Notes are also subject to purchase in whole by the Owner
Trustee upon at least 30 days' notice on a Special Distribution Date, in the
case of (i) any acceleration of such Equipment Notes, (ii) the Indenture
Trustee, as assignee of a Lease, having exercised (or given notice of its
intention to exercise) any remedy in respect of the Units under such Lease,
(iii) one or more Lease Events of Default having occurred under a Lease and
continuing for a period of 180 days or more during which period such Equipment
Notes could, but shall not, have been accelerated by the Indenture Trustee or
(iv) the Indenture Trustee having commenced foreclosure of the lien of the
Indenture or otherwise exercised remedies which would result in the exclusion of
the Owner Trustee
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from any property subject to the lien of the Indenture or any part thereof (or
given notice of its intention to foreclose or exercise remedies). Such purchase
would be at a price equal to the unpaid principal amount thereof and accrued
interest on such Equipment Notes to the date of payment, but without the payment
of any Make-Whole Amount except in the case of a purchase of the Equipment Notes
pursuant to clause (iv) above, if the right to exercise any remedies arises from
action attributable to the Owner Trustee or the Owner Participant. (Indentures,
Section 5.04(b))
The term "Make-Whole Amount" means, with respect to the principal amount of
any Equipment Note to be prepaid on any prepayment date, the amount to be
determined as of the third Business Day prior to the applicable prepayment date,
equal to the product obtained by multiplying (a) the excess, if any, of (i) the
sum of the present values of all the remaining scheduled payments of principal
and interest from the prepayment date to maturity of such Equipment Note,
discounted semi-annually on each and at a rate equal to the
Treasury Rate, based on a 360-day year of twelve 30-day months, over (ii) the
aggregate unpaid principal amount of such Equipment Note plus any accrued but
unpaid interest thereon by (b) a fraction the numerator of which shall be the
principal amount of such Equipment Note to be prepaid on such prepayment date
and the denominator of which shall be the aggregate unpaid principal amount of
such Equipment Note; provided that the aggregate unpaid principal amount of such
Equipment Note for the purpose of clause (a)(ii) and (b) of this definition
shall be determined after deducting the principal installment, if any, due on
such prepayment date. The Make-Whole Amount will be calculated by an independent
investment banking institution of national standing appointed by the Company or,
if the Indenture Trustee does not receive notice of such appointment at least
ten days prior to a scheduled prepayment date or if a Lease Event of Default
under the applicable Lease shall have occurred and be continuing, appointed by
the Indenture Trustee (an "Independent Investment Banker"). In calculating the
Make-Whole Amount, the Independent Investment Banker will first determine the
Treasury Rate applicable to the relevant Equipment Note.
For purposes of determining the Make-Whole Amount, "Treasury Rate" means,
with respect to prepayment of each Equipment Note, 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 for United States Treasury
securities maturing on the Average Life Date of such Equipment 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
Equipment Note and (B) the other maturing as close as possible to, but later
than, the Average Life Date of such Equipment 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 Equipment
Note is reported in the most recent H.15(519), as published in H.15(519)).
H.15(519) means "Statistical Release H.15(519), Selected Interest Rates," or any
successor publication, published by the Board of Governors of the Federal
Reserve System. The most recent H.15(519) means the latest H.15(519) which is
published prior to the close of business on the third Business Day preceding the
scheduled prepayment date. As used herein, "Remaining Weighted Average Life"
means, with respect to any date of prepayment or any date of determination of
any Equipment Note, 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 principal payment on such Equipment Note by (ii) the number
of days from and including the prepayment date or date of determination to but
excluding the scheduled payment date of such principal payment by (b) the unpaid
principal amount of such Equipment Note. As used herein, "Average Life Date"
means, with respect to an Equipment Note, the date which follows the prepayment
date or, in the case of an Equipment Note not being prepaid, the date of such
determination, by a period equal to the Remaining Weighted Average Life of such
Equipment Note.
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SECURITY
The Equipment Notes issued with respect to the Equipment purchased by each
Owner Trustee will be secured by (i) an assignment by such Owner Trustee to the
Indenture Trustee of such Owner Trustee's rights (other than certain excepted
rights reserved to the Owner Trustee) under the Lease relating to such Equipment
including the right to receive payments of rent thereunder and (ii) a security
interest held by the Indenture Trustee in all such Equipment, subject to the
rights of the Company under such Lease.
Unless and until an Indenture Default has occurred and is continuing, the
Indenture Trustee may not exercise certain rights of the Owner Trustee under the
related Lease; however, for so long as Equipment Notes under such Indenture are
outstanding, the Indenture Trustee shall retain the right to receive payments of
rent due under such Lease. The assignment by the Owner Trustee to the Indenture
Trustee of its rights under each Lease excludes certain rights of the Owner
Trustee and the applicable Owner Participant including rights relating to
indemnification by the Company for certain matters and to insurance proceeds
payable to such Owner Trustee in its individual capacity and as Owner Trustee
and to such Owner Participant under liability insurance maintained by the
Company under such Lease. (Indentures, Granting Clauses)
Funds, if any, held from time to time by the Indenture Trustee with respect
to any Equipment, including funds held as the result of an Event of Loss to such
Equipment or termination of the Lease relating thereto, will be invested and
reinvested by the Indenture Trustee, at the direction of the Company (except in
the case of a Lease Event of Default under the applicable Lease), in certain
investments described in such Lease. The Company will pay the amount of any loss
resulting from any such investment directed by it. (Indentures, Section 7.04)
LIMITATION OF LIABILITY
The Equipment Notes are nonrecourse notes. All payments of principal of,
Make-Whole Amount, if any, and interest on the Equipment Notes (other than
payments made in connection with an optional or mandatory prepayment or purchase
by the Owner Trustee) will be made only from the assets subject to the lien of
the Indenture with respect to such Equipment or the income and proceeds received
by the Indenture Trustee therefrom (including rent payable by the Company under
the Lease with respect to such Equipment). The Equipment Notes are not
obligations of, or guaranteed by, the Company. None of the Owner Participants or
the Indenture Trustee, or any affiliates thereof, shall be liable to any holder
of an Equipment Note or, in the case of the Owner Participants, to the Indenture
Trustee for any amounts payable under the Equipment Notes or, except as provided
in each Indenture, for any liability under such Indenture. (Indentures, Section
2.03)
Except as otherwise provided in the Indentures, the Owner Trustee in its
individual capacity shall not be answerable or accountable under the Indentures
or under the Equipment Notes under any circumstances except for its own wilful
misconduct or gross negligence. None of the Owner Participants will have any
duty or responsibility under any of the Indentures or the Equipment Notes to the
Indenture Trustee or to any holder of any Equipment Note. (Indentures, Section
2.03)
INDENTURE DEFAULTS, NOTICE AND WAIVER
Indenture Events of Default under each Indenture include: (a) a Lease Event
of Default, (b) default by the Owner Trustee in making payments when due of
principal of, premium, if any, or interest on any Equipment Note and continuance
of that default for 10 Business Days, (c) failure by the Owner Trustee to prepay
the Equipment Notes on the final distribution date for the Pass Through
Certificates, (d) failure by the Owner Trustee or the Owner Participant to
perform any covenant contained in the Indenture, the Equipment Notes or in the
Participation Agreement continuing for a period of 30 days after written notice
by the Indenture Trustee or any holder of an Equipment Note issued under such
Indenture, (e) any representation or warranty made by the
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Owner Trustee in such Indenture or made by the Owner Trustee (except to the
extent made with respect to in its individual capacity) or
the Owner Participant in the Participation Agreement or in any document or
certificate furnished to the Indenture Trustee being incorrect in any material
respect as of the date made and remaining material and continuing unremedied for
a period of 30 days after written notice to the Owner Trustee and Owner
Participant, and (f) the occurrence of certain events of bankruptcy,
reorganization or insolvency of the Owner Participant or the Owner Trustee.
(Indentures, Section 5.01)
In the event that (i) at any time one or more Lease Events of Default shall
occur and shall have continued for a period of 180 days or more during which
time the Equipment Notes could, but shall not, have been accelerated, (ii) the
Equipment Notes shall have been accelerated, (iii) the Indenture Trustee, as
assignee of such Lease, shall have exercised (or given notice of its intention
to exercise) any remedies in respect of the Units under such Lease or (iv) the
Indenture Trustee shall commence foreclosure of the lien of the Indenture or
otherwise exercise remedies which would result in the exclusion of the Owner
Trustee from any property subject to the lien of the Indenture or any part
thereof (or given notice of its intention to foreclose or exercise remedies),
upon 30 days' notice the Owner Trustee may elect to purchase all, but not less
than all, of the Equipment Notes then outstanding under such Indenture from the
holders thereof by paying to each such holder an amount equal to the aggregate
unpaid principal amount of all such Equipment Notes then held by such holder,
together with accrued and unpaid interest thereon to the date of payment, but
without the payment of any Make-Whole Amount except in the case of a purchase of
the Equipment Notes pursuant to clause (iv) above if the right to exercise any
remedies arises because of action attributable to the Owner Trustee or the Owner
Participant. (Indentures, Section 5.04(b))
In the event the Company fails to make any semiannual basic rental payment
within 10 Business Days after the date the same shall become due under a Lease,
then and as long as no other Indenture Event of Default under the Indenture
(which is not being concurrently cured) shall have occurred and be continuing
the Owner Participant or the Owner Trustee may, during the 10 Business Days
after receiving written notice of such failure from the Indenture Trustee, pay
to the Indenture Trustee the amount of such rental payment together with any
interest thereon on account of the delayed payment thereof, in which event such
payment by the Owner Participant or the Owner Trustee shall be deemed to cure
any Indenture Event of Default which arose from such failure of the Company (but
such cure shall not relieve the Company of any of its obligations); provided,
that the Owner Participant and the Owner Trustee, collectively, shall not be
entitled to cure more than three consecutive or six total failures to make
semiannual basic rental payments. In the event there shall occur a Lease Event
of Default under a Lease in respect of any other payment of rent, or which is
curable by the payment of money, then and as long as no other Indenture Event of
Default under the Indenture (which is not being concurrently cured) shall have
occurred and be continuing the Owner Participant or the Owner Trustee may,
during the 30 days after receiving written notice of such Lease Event of Default
from the Indenture Trustee, pay to the Indenture Trustee the amount of such
rental payment together with any interest thereon on account of the delayed
payment thereof, or otherwise make such payment as shall effect such cure, in
which event such payment by the Owner Participant or the Owner Trustee shall be
deemed to cure any Indenture Event of Default which arose as a result of such
Lease Event of Default (but such cure shall not relieve the Company of any of
its obligations); provided, that the Owner Participant and the Owner Trustee,
collectively, shall not be entitled to cure such other Lease Events of Default
if the unreimbursed amount of such payments shall exceed in the aggregate
$ , as adjusted annually for inflation. (Indentures, Section 5.04(a))
Each Indenture provides that the Indenture Trustee shall, upon the
occurrence of any event known to it that is an Indenture Default or Indenture
Event of Default thereunder, give notice thereof to the holders of the Equipment
Notes issued thereunder, the Company, the Owner Trustee and the Owner
Participant. (Indentures, Section 6.01)
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The holders of a majority in aggregate principal amount of the outstanding
Equipment Notes issued under an Indenture, by notice to the Indenture Trustee,
may on behalf of all holders waive any past default under the Indenture except a
default in the payment of the principal of, Make-Whole Amount, if any, or
interest on any such Equipment 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 an Equipment Note affected thereby. (Indentures,
Section 5.06)
REMEDIES
If an Indenture Default shall occur and be continuing under an Indenture,
the Indenture Trustee may, and when instructed by the holders of at least a
majority in aggregate principal amount of the Equipment Notes outstanding under
such Indenture shall, declare the unpaid principal of all such Equipment Notes
outstanding under such Indenture immediately due and payable, together with all
accrued but unpaid interest thereon. The holders of a majority in aggregate
principal amount of Equipment Notes outstanding under such Indenture may rescind
any such declaration by the Indenture Trustee or by the holders at any time
prior to the sale of the Equipment covered by such Indenture after such an
Indenture Default if (i) there has been paid to or deposited with the Indenture
Trustee an amount sufficient to pay all due or overdue installments of principal
of, premium, if any, and interest on any such Equipment Notes that have become
due otherwise than by such declaration of acceleration, (ii) the rescission
would not conflict with any judgment or decree and (iii) all other Indenture
Defaults under such Indenture have been cured or waived except nonpayment of
principal of, premium, if any, or interest on any such Equipment Notes that have
become due solely because of acceleration. (Indentures, Section 5.02)
Each Indenture provides that if any Indenture Default under such Indenture
has occurred and is continuing the Indenture Trustee may exercise certain rights
or remedies available to it under applicable law, including (if the
corresponding Lease has been declared in default) one or more of the remedies
under such Indenture or such Lease. The Indenture Trustee's right to exercise
remedies under an Indenture is subject in certain circumstances to its having
proceeded to exercise one or more remedies under the Lease with respect to the
Equipment, unless at the time, the Indenture Trustee is stayed or otherwise
prevented from doing so by operation of law, in which case the Indenture Trustee
has agreed to refrain from exercising remedies under such Indenture for a period
of 90 days. Further, the Indenture Trustee may not exercise remedies under an
Indenture in those circumstances in which the Company, as the debtor in a
bankruptcy proceeding, shall have affirmed the Lease and no Lease Event of
Default (other than a Lease Event of Default arising from the bankruptcy of the
Company) has occurred and is continuing. See "Description of the Equipment
Notes -- The Lease -- Lease Events of Default." Such remedies may be exercised
by the Indenture Trustee to the exclusion of the Owner Trustee and, subject to
the terms of the Lease, the Company. Any Equipment sold in the exercise of such
remedies will be free and clear of any rights of those parties including the
rights of the Company under the Lease with respect to such Equipment; provided
that no exercise of any remedies by the Indenture Trustee may affect the rights
of the Company under the Lease unless a Lease Event of Default under the Lease
has occurred and is continuing. (Indentures, Sections 5.03(a) and (c), 5.04(c)
and 5.05; Leases, Section 15)
The holders of a majority in aggregate principal amount of the Equipment
Notes outstanding under the Indenture may instruct the Indenture Trustee to give
such notice, direction or consent, or exercise such right, remedy or power under
the Indenture or the Lease or in respect of the property subject to the lien of
the Indenture or take such other action as shall be specified in such
instructions, but in such event the Indenture Trustee shall not be required to
take or refrain from taking any action in connection therewith if it shall have
reasonable grounds to believe that adequate indemnity against such risk is not
reasonably assured to it. (Indentures, Sections 6.02 and 6.03)
If an Indenture Event of Default occurs and is continuing under the
Indenture and the Indenture Trustee (as security assignee) has declared the
Lease to be in default or the Equipment Notes outstanding under the Indenture
have been accelerated or the Indenture Trustee has exercised any
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remedies under the Indenture, any sums held or received by the Indenture Trustee
may be applied to reimburse the Indenture Trustee for any tax, expense or other
loss incurred by it and to pay any other amounts then due the Indenture Trustee
prior to any payments to holders of the Equipment Notes. (Indentures, Section
3.03)
In the event of a bankruptcy or reorganization of the Company, the right of
the Indenture Trustee to repossess or dispose of the Equipment would be subject
to the provisions of the Bankruptcy Code applicable to industrial companies
generally, and not those provisions applicable to railroads, particularly
Section 1168 of the Bankruptcy Code.
In the event of the bankruptcy of an Owner Participant, it is possible
that, notwithstanding that the applicable Equipment is owned by the Owner
Trustee in trust for the benefit of such Owner Participant, such Equipment and
the related Lease and Equipment Notes might become part of the bankruptcy
proceeding. In such event, payments under such Lease or on such Equipment Notes
might be interrupted and the ability of the Indenture Trustee to exercise its
remedies under the applicable Indenture might be restricted, although the
Indenture Trustee would retain its status as a secured creditor in respect of
the Lease and the Equipment subject thereto.
If the Company were to become a debtor in a bankruptcy or reorganization
case under the Bankruptcy Code, the Company or its bankruptcy trustee could
reject any or all Leases to which it is a party. In such event, there could be
no assurance that the amount of any claim for damages under such Leases that
would be allowed in such bankruptcy case would be in an amount sufficient to
provide for the repayment of the applicable Equipment Notes. In any case,
rejection of a Lease by the Company or its bankruptcy trustee would not deprive
the Indenture Trustee of its security interest in the applicable Units.
MODIFICATION OF INDENTURES AND LEASES
Without the consent of holders of a majority in unpaid principal amount of
the Equipment Notes outstanding under any Indenture, the provisions of such
Indenture and the Lease and the Participation Agreement corresponding thereto
may not be amended or modified, except to the extent indicated below.
Certain provisions of each Lease and Participation Agreement may be amended
or modified by the parties thereto without the consent of any holders of the
Equipment Notes outstanding under the Indenture so long as no Indenture Event of
Default shall have occurred and be continuing. In the case of each Lease, such
provisions include, among others, provisions relating to (i) rental payments and
other payments, except to the extent indicated in clause (a) of the following
paragraph, (ii) the maintenance of the Equipment covered by such Lease,
modifications to the Units and the return to the Owner Trustee of the Equipment
at the end of the term of the Lease and (iii) the renewal of such Lease and the
option of the Company at the end of the term of the Lease to purchase any or all
of the Equipment subject to such Lease. (Indentures, Section 10.05)
Without the consent of the holder of each Equipment Note outstanding under
an Indenture, no amendment or modification of such Indenture may (a) change the
final maturity of, or reduce the principal amount of, or premium, if any, or
interest payable on any Equipment Notes issued under such Indenture or impair
the right to institute suit for the enforcement of any such payment or change
the date on which any principal or premium, if any, or interest is due and
payable, (b) create any lien with respect to the property subject to the Lien of
the Indenture ranking prior to or on a parity with the security interest created
by the Indenture, except as permitted in the Indenture, or deprive any holder of
any Equipment Note issued under such Indenture of the benefit of the Lien of the
Indenture or (c) reduce the percentage in principal amount of outstanding
Equipment Notes issued under such Indenture necessary to modify or amend any
provision of the Indenture or to waive compliance therewith. (Indentures,
Section 10.01)
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THE LEASES
Terms and Rentals. The Equipment subject to each Lease will be leased by
the Owner Trustee to the Company for a term commencing on the delivery date
thereof and expiring on , , unless previously terminated
as permitted by each Lease. The rent payments under each Lease will be payable
on and (or, if such day is not a Business Day, on
the next succeeding Business Day), commencing on , 199[6], and
will be used to make payments of principal of and interest due on the Equipment
Notes issued under the Indenture corresponding to such Lease, which will in turn
furnish the funds to be distributed by the Pass Through Trustee to the
Certificateholders on and of each year. (Leases,
Section 3.2; Indentures, Section 3.01) The Company has also agreed to pay under
each Lease on , 199[6] such amounts (to the extent not paid by the
Owner Participant) as necessary to enable the Indenture Trustee to receive the
scheduled payment of principal and interest on the Equipment Notes relating to
such Lease. (Leases, Section 3.5) Rental payments that the Company is obligated
to make or cause to be made under each Lease will not be less than the scheduled
payments of principal of and interest on the Equipment Notes under the
Indenture, except for the prepayment of principal required to be made as part of
a mandatory refinancing of the Equipment Notes held by Pass Through Trust
1996-A2 on the final distribution date for such Pass Through Trust. In certain
cases, the semiannual basic rent payments under a Lease may be adjusted, but,
except as described below, under no circumstances will such rent payments be
adjusted so as to be less than the corresponding scheduled payments of principal
of and interest on the Equipment Notes issued under the Indenture corresponding
to such Lease. (Participation Agreements, Section 2.6; Leases, Section 3) The
balance of any such semi-annual rent payment under a Lease, after payment of the
scheduled principal of, and interest on the Equipment Notes issued under the
Indenture corresponding to such Lease, will be paid over to or for the account
of the applicable Owner Participant as the beneficial owner of the Equipment
covered by the Lease. (Leases, Section 3)
Net Lease; Modifications. The Company's obligations in respect of the
Equipment are those of a lessee under a "net lease." Accordingly, the Company is
and will be obligated, at its expense, to pay all costs and expenses of
operating the Equipment and to maintain, service and repair the Equipment so as
to keep the Units included therein in good operating order, ordinary wear and
tear excepted. (Leases, Sections 8 and 19)
Subject to certain exceptions, the Company will, at its expense, make all
alterations, replacements or modifications required to be made by the
Association of American Railroads, the United States Department of
Transportation, or any other United States, state or local governmental agency
or other applicable law. The Company will have the right, at its expense, to
make other modifications, alterations and improvements, provided that such
modifications do not diminish the value, utility or remaining useful life of
such Unit or cause it to become "limited use" property. Severable modifications
that are not required by law will remain the property of the Company but may be
purchased by the Owner Trustee at fair market value upon termination of the
Lease. The Owner Trustee will acquire title to all nonseverable modifications
and severable modifications required by law. (Leases, Section 9)
Sublease; Possession and Use. The Company is in the business of leasing
railway tank cars and other railcars to third parties under full-service
operating leases. These leases vary in nature based on the needs of the
sublessee and the Company. The Company shall have the right to use the
Equipment, subject to the applicable Lease, and to sublease the Equipment to any
railroad company incorporated in the United States, Canada or Mexico or to any
other responsible company which is not a railroad company for use in its
business; provided that the Units are used primarily on domestic routes in the
United States and that at no time shall more than 20% of the Units be used (as
determined by mileage records) outside the continental United States (exclusive
of Alaska) during any taxable year in which certain specified events occur; and
further provided that if the Company subleases any Units to a sublessee which
operates primarily in Mexico, subject to the
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provisions of each Lease, the Company shall make all registration filings and
deposits necessary or advisable under then-current prudent industry practice
(including any actions reasonably requested by the Owner Trustee or the
Indenture Trustee) to protect the interest of the Owner Trustee under the Lease
and the Indenture Trustee under the Indenture corresponding to such Lease. The
Company may not sublease any Unit for a term that extends beyond the term of the
Lease nor may it sublease any Unit on terms and conditions that are not
consistent with the terms of the Lease unless the Company replaces such Unit on
or prior to the expiration of the Lease term in accordance with the provisions
of the Lease. No sublease will discharge the Company of its obligations under
the Lease. (Leases, Sections 8.2 and 8.3) If any Unit is leased or the
possession is otherwise transferred, such Unit will remain subject to the lien
of the related Indenture.
Maintenance. The Company, at its own cost and expense, shall maintain,
repair and keep each Unit (i) according to prudent industry practice, in good
working order, and in good physical condition for railcars of a similar age and
usage, normal wear and tear excepted, (ii) in a manner consistent with
maintenance practices used by the Company in respect of equipment owned or
leased by the Company similar in type to such Unit, (iii) in accordance in all
material respects with all manufacturers' warranties and in accordance with all
applicable provisions, if any, of insurance policies required to be maintained
pursuant to the Lease and (iv) in compliance in all material respects with all
applicable laws and regulations other than those being contested in good faith
in any reasonable manner which does not create any risk or danger of (x)
material interference with the use, possession, operation or return of any Unit,
or materially adversely affecting the rights or interests of the Company and the
Indenture Trustee in the Equipment, (y) the imposition of any criminal sanctions
on the part of the Owner Trustee, the Indenture Trustee or the Owner
Participant, or (z) the release of the Company from the obligation to return the
Equipment in compliance with the Lease. (Leases, Section 8)
Liens. The Equipment will be maintained free of any liens, other than the
respective rights of the Owner Participants, the Owner Trustee, the Indenture
Trustee, the holders of the Equipment Notes, the Company and any permitted
sublessee arising under the Leases, the Indentures, the Participation Agreements
and the separate Trust Agreements between the Owner Trustee and the Owner
Participants pursuant to which the Owner Trustee acts as trustee for the benefit
of the Owner Participants, and other than, in the case of the Equipment, certain
limited liens permitted under the Leases and the Indentures, including liens for
taxes either not yet due and payable or being contested in good faith (so long
as there exists no material risk of sale, forfeiture, loss or loss of use of the
Equipment or any interest therein), materialmen's, mechanics' and other similar
liens arising in the ordinary course of business and either not yet due and
payable or being contested (so long as there exists no material risk of sale,
forfeiture, loss or loss of use of the Equipment or any interest therein),
judgment liens that are being appealed in good faith and whose enforcement has
been stayed pending such appeal, and salvage rights of insurers under insurance
policies maintained pursuant to the Lease. (Leases, Section 7)
Insurance. The Company will at all times prior to the return of the
Equipment to the Owner Trustee, at its own expense, cause to be carried and
maintained insurance in respect of the Equipment in amounts and against such
risks and with deductibles and terms and conditions not less than the insurance,
if any, maintained by the Company in respect of similar equipment owned or
leased by the Company, but in no event shall such coverage be for amounts or
against risks less than the prudent industry standard for companies engaged in
full service leasing of tank and hopper cars. (Leases, Section 12) The Company
does not maintain casualty insurance with respect to the Equipment.
Termination. So long as no Lease Event of Default or event which, with
notice or the lapse of time or both, would become a Lease Event of Default
thereunder shall have occurred and be continuing, the Company may, upon at least
120 days prior written notice, terminate each Lease with respect to specific
groups of Equipment subject to such Lease (provided that if such termination is
for less than all of the Units in any one specific group of Equipment (as set
forth in the Leases), the
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determination as to which Units are subject to termination shall be made by the
Company on a random or other reasonable basis without regard to maintenance
status or operating condition) (the "Terminated Units"), at its option any time
after , 200 , if the Company determines in good faith (as
evidenced by a certified copy of a resolution adopted by its Board of Directors
and a certificate executed by the Chief Financial Officer of the Company) that
such Terminated Units have become obsolete or surplus to its requirements for
any reason or that any modification required by law to such Terminated Units
would be economically impractical. The Company will act as agent for the Owner
Trustee in obtaining bids for the Terminated Units and, if the Company succeeds
in locating the eventual purchaser of the Terminated Units, the Owner Trustee
shall transfer all of its right, title and interest in and to the Terminated
Units to the bidder which has submitted the highest cash bid (who may not be the
Company or any affiliate of the Company but who may be the Owner Trustee or any
affiliate of the Owner Trustee) on the termination date. The net proceeds of
such sale shall be paid to the Owner Trustee. If the net proceeds received from
such sale are less than the Termination Value for the Terminated Units, the
Company shall pay to the Owner Trustee an amount equal to the difference between
such proceeds and such Termination Value, together with certain other amounts
including, the MakeWhole Amount, if any. All funds to be paid to or deposited
with the Owner Trustee as described in this paragraph shall, so long as the
Indenture shall not have been discharged, be deposited directly with the
Indenture Trustee. Amounts in excess of the outstanding principal amount of the
Equipment Notes issued in respect of such Terminated Units, the MakeWhole
Amount, if applicable, and the then accrued and unpaid interest thereon will be
distributed by the Indenture Trustee in accordance with the terms of the
Indenture. The lien of the Indenture shall terminate with respect to the
Terminated Units after the full Termination Value and any rent due has been
received by the Indenture Trustee and, if all amounts due such Owner Participant
have also been paid, the Lease with respect to such Terminated Units shall
terminate and the obligation of the Company thereafter to make rent payments
with respect thereto shall cease. (Leases, Sections 3.6, 10.1, 10.2 and 10.4,
Indentures, Section 3.02)
The Owner Trustee shall have the option to retain the Terminated Units, but
it may do so only if the Owner Trustee shall pay, or cause to be paid, to the
Indenture Trustee funds in an amount equal to the principal of and accrued
interest on the outstanding Equipment Notes with respect to such Terminated
Units and, if applicable, an amount equal to the Make-Whole Amount. (Leases,
Section 10.3)
Purchase Options. So long as no Lease Event of Default or event which, with
notice or the lapse of time or both, would become a Lease Event of Default
thereunder, shall have occurred and be continuing, the Company shall have the
right to purchase on , any or all of such Units subject to
each Lease at the option prices set forth in the Leases. The Company may
exercise its early purchase option in whole or in part by giving written notice
to the Owner Trustee at least 90 days prior to the Early Purchase Date. If the
Company exercises its early purchase option, a portion of the purchase price
shall be used to prepay the Equipment Notes relating to the purchased Units
unless the Company elects to assume on a full recourse basis all of the Owner
Trustee's obligations in respect of the related Equipment Notes and acquires the
purchased Units subject to the lien of the related Indenture. (Leases, Section
22.1) See "Description of the Equipment Notes -- Prepayment."
Events of Loss. If an Event of Loss occurs with respect to a Unit, the
Company shall give notice to the Owner Trustee in accordance with the terms of
the related Lease and, if the Indenture has not been discharged, to the
Indenture Trustee, and shall either (i) pay to the Owner Trustee the Stipulated
Loss Value of such Unit or (ii) substitute for such Unit like kind equipment, of
equal or greater fair market sales value, utility, remaining economic useful
life and residual value as the Unit being replaced (assuming such Unit was in
the condition required under the Lease). If the Company elects not to substitute
for the applicable Unit, Stipulated Loss Value will be paid on (i) the next
Regular Distribution Date following the election by the Company to pay the
Stipulated Loss Value of
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such Unit rather than substitute like kind Equipment or (ii) in the case of the
occurrence of a Multiple Loss, on the first Business Day succeeding the 60th day
following the date on which the Company is required to report such Multiple
Loss. If the Company elects to substitute for the applicable Unit, it shall so
substitute for such Unit on (i) the Rent Payment Date immediately following the
date the Company delivers notice of such election or (ii) in the case of the
occurrence of a Multiple Loss, on the first Business Day succeeding the 60th day
following the date on which the Company is required to report such Multiple
Loss. All funds to be paid or deposited with the Owner Trustee as described in
this paragraph shall, so long as the applicable Indenture shall not have been
discharged, be deposited directly with the Indenture Trustee and shall be
applied to prepay all or a portion of the Equipment Notes as provided in the
Indenture. See "Description of the Equipment Notes -- Prepayment." If the
Company pays the Stipulated Loss Value of a Unit subject to an Event of Loss and
any rent due, the lien of the Indenture and the Lease relating to such Unit
shall terminate with respect to such Unit, title thereto shall be transferred to
the Company and the obligation of the Company thereafter to make rent payments
with respect thereto shall cease, except for indemnification obligations which
otherwise may have accrued. (Leases, Section 11) Amounts in excess of the
amounts applied to prepay Equipment Notes in accordance with the Indenture will
be distributed by the Indenture Trustee in accordance with the terms of the
Indenture.
An Event of Loss with respect to any Unit shall mean any of the following
events: (i) damage or contamination of such Unit which, in the Company's
reasonable judgment (as evidenced by an Officers' Certificate to such effect),
makes repair uneconomic or renders such Unit unfit for commercial use, (ii)
destruction of such Unit or theft or disappearance thereof for a period
exceeding twelve months, (iii) the permanent return of such Unit to the
manufacturer pursuant to any patent indemnity provisions, (iv) the taking or
appropriating of title to such Unit by any governmental authority under the
power of eminent domain or otherwise, (v) the actual or constructive total loss
of the Unit, (vi) in the normal course of interstate rail transportation, the
Unit shall be prohibited from being used for a continuous period in excess of
six months as a result of any rule, regulation, order or other action by the
United States government or any agency or instrumentality thereof, (vii) the
Unit shall be subject to a sublease with any person which operates primarily
outside of the United States and shall not be returned to the Company within 60
days of a demand by the Company for return of such Unit following the
termination of such sublease or (viii) the taking or requisitioning of such Unit
for use by any governmental authority or any agency or instrumentality thereof
under the power of eminent domain or otherwise and such taking or requisition is
for a period that exceeds the remaining Basic Term or any Renewal Term then in
effect (unless such taking or requisition is by Mexico or any governmental
authority, agency or instrumentality thereof, in which case such period shall be
the lesser of the period described above or 365 days). (Leases, Section 11.1)
Lease Events of Default. Events of default (each, a "Lease Event of
Default") under the Lease include, among other things: (a) failure by the
Company to make any payment of Basic Rent, any purchase price to be paid by the
Company for any Units pursuant to the Lease or the Participation Agreement,
Stipulated Loss Value or Termination Value, within 10 Business Days after the
same shall have become due, (b) failure by the Company to make any payment of
Supplemental Rent, including indemnity or tax indemnity payments, but not
including any purchase price to be paid by the Company for any Units pursuant to
the Lease or the Participation Agreement, Stipulated Loss Value or Termination
Value, after the same shall become due and such failure shall continue
unremedied for 10 Business Days after receipt by the Company of written notice
of such failure from the Owner Trustee or Indenture Trustee, (c) failure to
maintain in effect insurance as required by the Lease, such failure not having
been waived, (d) the Company shall make or permit any possession of the
Equipment of any portion thereof not permitted by the Lease, provided that such
unauthorized possession shall not constitute a Lease Event of Default for a
period of 45 days after the occurrence thereof, or the Company shall make or
permit an unauthorized assignment or transfer of the Lease, (e) failure by the
Company to observe or perform any of the agreements or covenants relating to the
merger, consolidation or transfer of assets of the Company and such
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failure continues unremedied for 30 days, (f) failure by the Company to perform
or observe any other covenant or agreement to be performed or observed by it
under any Lessee Agreement (other than the Tax Indemnity Agreement) continuing
for a period of 30 days after notice of such failure from the Owner Trustee or
the Indenture Trustee, or, if such failure is capable of being remedied (and the
remedy requires an action other than, or in addition to, the payment of money),
for a period of 90 days after receipt of such notice so long as the Company is
diligently proceeding to remedy such failure, (g) any representation or warranty
made by the Company in any Lessee Agreement (other than the Tax Indemnity
Agreement) being untrue or incorrect in any material respect at the time made
and such untruth or incorrectness continues to be material and unremedied for a
period of 30 days after notice thereof or, if such untruth or incorrectness is
capable of being remedied, for a period of 60 days after receipt of such notice
so long as the Company is diligently proceeding to remedy such untruth or
incorrectness and any adverse effects thereof, (h) failure of the Owner Trustee
to effect a mandatory refinancing of the Equipment Notes held by Pass Through
Trust 1996-A2 and (i) the occurrence of certain events of bankruptcy,
reorganization or insolvency of the Company. (Leases, Section 14)
If a Lease Event of Default under a Lease has occurred and is continuing,
and such Lease has been declared to be in default, the Indenture Trustee, as
assignee of the Owner Trustee's rights under the Lease, may exercise one or more
of the remedies provided in the Lease with respect to the Equipment subject
thereto. These remedies include the right to repossess and use or operate the
Equipment to sell or release the Equipment free and clear of the Company's
rights and retain the proceeds and to require the Company to pay liquidated
damages specified therein. (Leases, Section 15)
THE PARTICIPATION AGREEMENTS
The Company is required to indemnify each Owner Participant, the Owner
Trustee, the Indenture Trustee and the Pass Through Trustee for certain losses
and claims and for certain other matters. In addition, the Company is required
under certain circumstances to indemnify each Owner Participant for the loss of
depreciation deductions and certain other benefits allowable for certain income
tax purposes with respect to the applicable Equipment. (Participation
Agreements, Section 7) Subject to certain restrictions, each Owner Participant
may transfer its beneficial interest in the related owner trust.
Each Participation Agreement provides that if the Owner Participant or any
affiliate thereof is or acquires, is acquired by, merges or otherwise
consolidates with any company or affiliate thereof engaged in full service
railcar leasing, whether or not a direct competitor of the Company or any
affiliate of the Company, or any person that has a material interest in an
enterprise that engages in a business that is in competition with the Company's
full service railcar operating leasing business, the Company may purchase the
applicable Equipment for a purchase price equal to the greater of the
Termination Value or the then appraised fair market value, each calculated as of
the designated Special Distribution Date, plus certain other amounts including,
if applicable, the Make-Whole Amount. If the Company elects to exercise its
right to purchase the applicable Equipment, unless the Company elects to assume
the related Equipment Notes on a full recourse basis, the purchase price shall
be used to prepay the related Equipment Notes and the applicable Make-Whole
Amount shall be paid. Each Participation Agreement requires the Owner Trustee to
effect a refinancing of the Equipment Notes held by Pass Through Trust 1996-A2
on or prior to the final distribution date for the Pass Through Certificates
issued thereunder. See "Description of the Equipment Notes -- Prepayment."
(Participation Agreements, Section 6.9)
Under each Participation Agreement, the Company will be prohibited from
consolidating or merging with or into any other corporation or transferring
substantially all of its assets to another corporation unless (a) the successor
corporation, if other than the Company, shall be a corporation organized and
existing under the laws of the United States or any state or the District of
Columbia and shall expressly assume the due and punctual performance and
observance of all the covenants
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and conditions of the operative agreements to be performed by the Company, (b)
immediately prior to and immediately after giving effect to such transaction, no
Lease Event of Default, or event which with notice or the passage of time or
both would become a Lease Event of Default, shall have occurred, whether as a
result of such transaction or otherwise, and (c) the Company shall have made all
filings necessary or appropriate in the reasonable opinion of the Owner Trustee
and the Indenture Trustee in order to preserve and protect the rights of the
Owner Trustee under the related Lease and of the Indenture Trustee under the
related Indenture. (Participation Agreements, Section 6.8)
DESCRIPTION OF THE ETCS
The Company ETCs are to be issued under and pursuant to the provisions of
the Company Trust Agreement between the Company and , as
trustee (the "Equipment Trust Trustee"), creating Union Tank Car Company
Equipment Trust (Series 26) (the "Company Trust"). The Procor ETC is to be
issued under and pursuant to the provisions of the Procor Trust Agreement
between Procor and the Equipment Trust Trustee, creating Procor Limited
Equipment Trust (Series 26-Can) (the "Procor Trust"). The statements under this
caption are a summary only and do not purport to be complete. The summary makes
use of terms defined in, and is qualified in its entirety by reference to all of
the provisions of, the ETCs and the Trust Agreements. Citations to the relevant
sections of the Trust Agreements appear below in parentheses.
ISSUANCE
The Company ETCs will be limited to $ aggregate principal amount,
and the Procor ETC will be limited to $ aggregate principal amount. The
Company ETCs and the Procor ETC will be issued against the deposit with the
Equipment Trust Trustee by the Pass Through Trustee of like amounts of Deposited
Cash. The Company ETCs will represent an interest equal to the aggregate
principal amount thereof in the Company Trust, and the Procor ETC will represent
an interest equal to the principal amount thereof in the Procor Trust.
PAYMENT OF PRINCIPAL AND INTEREST
The ETCs, which will not amortize as to principal, mature on ,
200 . Interest will be payable on the unpaid principal amount of the ETCs at
the rate of % per annum on and of each year,
commencing , 199[6]. (Section 2.02)
GUARANTIES
The Company will fully and unconditionally guarantee (i) the payment as and
when due of the principal of and interest on the Company ETCs and (ii) the due
and punctual distribution to Certificateholders of principal and interest
payable in respect of the Procor ETC and the due and punctual performance by
Procor of its obligations under the Procor Trust Agreement. For a description of
the Company's guarantee of Procor's obligations under the Procor Trust
Agreement, see "Description of the Pass Through Certificates--Guarantee." Procor
will fully and unconditionally guarantee the payment as and when due of the
principal of and interest on the Procor ETC.
REDEMPTION
The ETCs are not redeemable prior to maturity.
SECURITY
The Company Trust Agreement will provide for the sale by the Company to the
Equipment Trust Trustee of railway tank cars and other rail cars of the types
used in the Company's business having an estimated cost of approximately
$ (133 1/3% of the aggregate principal amount of the
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Company ETCs). (Section 3.01) The Procor Trust Agreement will provide for the
sale by Procor to the Equipment Trust Trustee of railway tank cars and other
rail cars of the types used in Procor's business having an estimated cost of
approximately $(133 1/3% of the aggregate principal amount of the Procor ETC).
(Section 3.01) None of the Equipment to be initially subject to the Company
Trust or the Procor Trust will have been in use prior to or
, respectively. For the purpose of determining the cost of any unit
of Equipment built by the Company or Procor, so-called "car builder's cost"
(which includes direct cost of labor, material and overhead, but excludes any
manufacturing profit) will be used; otherwise the actual cost to the Company or
Procor will be used. (Sections 1.01) Of the Equipment which the Company and
Procor initially propose to subject to the Company Trust and the Procor Trust,
all of the railway tank cars have been or will be built either by the Company or
Procor, and all of the other rail cars have been built by other manufacturers.
When and as any of the Trust Equipment shall be delivered to the Equipment
Trust Trustee, the Equipment Trust Trustee will pay to the Company or Procor, as
applicable, out of Deposited Cash an amount which will not exceed 75% of the
aggregate cost (without deduction for depreciation) of such Trust Equipment, and
the balance of the cost will be paid by the Equipment Trust Trustee from advance
rentals paid to the Equipment Trust Trustee by the Company or Procor, as
applicable. (Sections 3.01, 3.02, 3.03) Until so paid out, Deposited Cash and
other funds held by the Equipment Trust Trustee pending delivery to it of Trust
Equipment may be invested, at the risk of the Company or Procor, as applicable,
in direct obligations of the United States, in certain obligations guaranteed by
the United States, in certificates of deposit or time deposits or in prime
commercial paper. (Sections 1.01, 8.04)
The Trust Agreements will contain provisions requiring the Company and
Procor to cause such agreements and each supplement thereto, promptly after the
execution and delivery thereof, to be recorded with the Surface Transportation
Board of the Department of Transportation and the Registrar General of Canada.
In addition, the Company and Procor will be required to take similar actions in
all other jurisdictions required by law or reasonably requested by the Equipment
Trust Trustee for the purposes of proper protection of the Equipment Trust
Trustee's title to the Trust Equipment subject thereto and the rights of the
holders of the ETCs; provided, however, that the Company and Procor shall not be
required to so record in any jurisdiction if (1) in the opinion of the Company
or Procor, as applicable, such recording would be unduly burdensome, and (2)
after giving effect to such failure to record, the Company or Procor, as
applicable, has taken all action required by law to protect the title of the
Equipment Trust Trustee to Trust Equipment subject to the Company Trust or the
Procor Trust having a value (defined as the greater of (a) the actual value of
such Trust Equipment and (b) the cost thereof less 1/20th of such cost for each
year the Trust Equipment has been in use) of not less than 90% of the value of
all such Trust Equipment. (Section 6.04)
The Company Trust Agreement will provide for the lease to the Company of
all the Trust Equipment subject to such agreement for a period commencing on
, with respect to Trust Equipment sold to the Equipment Trust
Trustee on such date and on the date (which shall be not later than June ,
1996) on which the other Trust Equipment is sold to the Equipment Trust Trustee
and ending . The rent and other amounts payable by the Company will
be sufficient to enable the Equipment Trust Trustee to pay when due the
principal of and interest on the Company ETCs, as well as all the expenses of
the Company Trust and certain other charges. At the termination of the lease and
after all payments due or to become due from the Company under the Company Trust
Agreement shall have been fully made, such payments shall be applied and treated
as purchase money as the full purchase price of the Trust Equipment, and title
to all Trust Equipment held in the Company Trust shall vest in the Company.
(Sections 4.01, 4.04, 4.05)
The Procor Trust Agreement will provide for the conditional sale to Procor
of all the Trust Equipment subject to such agreement and will obligate Procor to
make payments to the Equipment Trust Trustee during the period commencing on
, and ending . The payments in respect of the
purchase of the Trust Equipment and other amounts payable will be
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sufficient to enable the Equipment Trust Trustee to pay when due the principal
of and interest on the Procor ETC, as well as all the expenses of the Procor
Trust and certain other charges. After all payments due or to become due from
Procor under the Procor Trust Agreement shall have been fully made, such
payments shall be deemed to represent payment of the full purchase price for
Procor's purchase of the Trust Equipment, and title to all Trust Equipment held
in the Procor Trust shall vest in Procor. (Sections 4.01, 4.04, 4.05)
Each Trust Agreement will permit the possession and use of the Trust
Equipment in the Company's or Procor's business, as applicable, including the
sublease thereof to others subject to the terms and conditions of such equipment
trust agreement. (Section 4.09)
The Trust Equipment subject to the Company Trust Agreement will not secure
the payment of the Procor ETC, and the Trust Equipment subject to the Procor
Trust Agreement will not secure the payment of the Company ETCs. The Trust
Equipment subject to the Company Trust Agreement will secure the Company ETC
issued on , as well as the Company ETC to be issued not later
than June , 1996, and a default under either Company ETC will constitute a
default under the other Company ETC.
MAINTENANCE, RELEASE AND SUBSTITUTION OF TRUST EQUIPMENT
The Company and Procor will be required to maintain and keep the relevant
Trust Equipment in good order and proper repair unless and until it becomes worn
out, unsuitable for use, lost or destroyed (a "Casualty Occurrence"). The Trust
Agreements will provide that, whenever Trust Equipment having a value of
$250,000 shall have suffered a Casualty Occurrence, the Company or Procor, as
applicable, shall either deposit with the Equipment Trust Trustee an amount in
cash equal to the value of such Trust Equipment as of the date of the Casualty
Occurrence or convey to the Equipment Trust Trustee units of Equipment with a
value at least equal to the value of such Trust Equipment as of the date of the
Casualty Occurrence. (Section 4.08)
Each Trust Agreement will provide that if the aggregate cost of the Trust
Equipment initially delivered to the Equipment Trust Trustee by the Company or
Procor, as applicable, shall exceed 133 1/3% of the aggregate principal amount
of the relevant Company ETC or the relevant Procor ETC, the Equipment Trust
Trustee, upon request of the Company or Procor, as applicable, shall release
Trust Equipment from the Company Trust or the Procor Trust, as applicable,
having an aggregate cost of not more than the amount of such excess. (Section
3.01)
Each Trust Agreement will provide for the release by the Equipment Trust
Trustee of any Trust Equipment upon request of the Company or Procor, as
applicable, and upon (a) the conveyance to the Equipment Trust Trustee of other
Equipment (irrespective of when first put into use) of value not less than the
value of the Trust Equipment to be released or (b) the payment to the Equipment
Trust Trustee of cash in an amount not less than the value of the Trust
Equipment to be released. Any cash so deposited (and any cash deposited as
provided in the second preceding paragraph) will be paid over by the Equipment
Trust Trustee to the Company or Procor, as applicable, against the conveyance to
the Equipment Trust Trustee of additional Equipment having a value not less than
the amount of cash to be paid over. (Sections 4.03, 4.07)
INFORMATION CONCERNING THE EQUIPMENT TRUST TRUSTEE
will be the Equipment Trust Trustee under each Trust
Agreement. will also be the Pass Through Trustee and the
Indenture Trustee. See "Description of the Pass Through
Certificates -- Information Concerning the Pass Through Trustee."
EQUIPMENT TRUST DEFAULTS AND PROVISIONS RELATING THERETO
Equipment Trust Defaults will be defined in each Trust Agreement as being:
default for more than 10 Business Days in the payment of any rental payable
under the Company Trust Agreement or
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any amount payable under the Procor Trust Agreement; any unauthorized assignment
or transfer of the Company's or Procor's rights under such Trust Agreement,
continuing as provided therein; any unauthorized transfer, sublease or parting
with the possession of any of the Trust Equipment, continuing as provided
therein; any failure or refusal to perform any other covenant in such Trust
Agreement for the shorter of (i) 60 days after the Equipment Trust Trustee shall
have demanded in writing such performance and (ii) 30 days after the Company or
Procor has knowledge of any such failure; certain events of bankruptcy; or the
termination of the lease provided for in the Company Trust Agreement or the
security interest provided for in the Procor Trust Agreement by operation of law
or by the Equipment Trust Trustee in the event of any unauthorized assignment or
transfer of the Company's or Procor's rights under such equipment trust
agreement or any unauthorized transfer or sublease of any of the Trust
Equipment. (Section 5.01) The appointment of a receiver or trustee in bankruptcy
or reorganization for the Company or Procor or for their respective property
will be deemed to be an unauthorized assignment if, prior to the exercise of the
remedies of the Equipment Trust Trustee under such Trust Agreement, such
receiver or trustee shall not be discharged or duly assume the Company's or
Procor's obligations under such Trust Agreement. (Section 4.09) In addition, (i)
the Company Trust Agreement provides that a failure by the Company to perform in
respect of its guarantee of the due and punctual distribution to
Certificateholders of principal and interest payable in respect of the Procor
ETC and the due and punctual performance by Procor of its obligations under the
Procor Trust Agreement will constitute an Equipment Trust Default under the
Company Trust Agreement, and (ii) the Procor Trust Agreement provides that
certain events of bankruptcy of the Company will constitute an Equipment Trust
Default under the Procor Trust Agreement. Each Trust Agreement will provide that
the Equipment Trust Trustee shall promptly after the occurrence of any Equipment
Trust Default thereunder known to it, give to the holders of the Company ETCs or
the Procor ETC, as applicable, notice of the occurrence thereof. However, unless
such default is the failure to make payments in respect of the principal of or
interest on an ETC, the Equipment Trust Trustee shall be protected in
withholding such notice if and so long as it in good faith determines that the
withholding of such notice is in the interest of the holders of the defaulted
ETC. (Section 5.07)
In the event of the bankruptcy or reorganization of the Company, the right
of the Equipment Trust Trustee to repossess or dispose of Trust Equipment
subject to the Company Trust Agreement would be subject to the provisions of the
Bankruptcy Code of 1978, as amended, applicable to industrial companies
generally, and not those provisions applicable to railroads, particularly
Section 1168 thereof. In the event of the bankruptcy or reorganization of
Procor, the right of the Equipment Trust Trustee to repossess or dispose of
Trust Equipment subject to the Procor Trust Agreement would be subject to the
provisions of the Canadian federal Bankruptcy and Insolvency Act and the
Companies' Creditors Arrangement Act and applicable provincial legislation which
governs the manner in which creditors can enforce interests in the assets of a
debtor.
Upon the happening of an Equipment Trust Default, the Equipment Trust
Trustee or the holders of not less than a majority in aggregate principal amount
of the outstanding Company ETCs or Procor ETC, as applicable, may declare the
principal thereof and all accrued interest thereon to be due and payable.
(Section 5.01) Subject to certain conditions, however, any such declaration may
be rescinded by the holders of a majority in principal amount of the outstanding
Company ETCs or the Procor ETC upon payment of all sums then due otherwise than
by acceleration. Prior to such declaration, the holders of a majority in
principal amount of the outstanding Company ETCs or the Procor ETC may waive any
past Equipment Trust Default, except an Equipment Trust Default in the payment
of rentals or conditional sale payments due in respect of the principal of or
interest on the Company ETCs or the Procor ETC. (Section 5.04)
The right of any holder of the Company ETCs or the Procor ETC to institute
action for any remedy under the Company Trust Agreement or the Procor Trust
Agreement (except his right to enforce payment of the principal of and interest
on the Company ETCs or the Procor ETC when due if such enforcement will not
impair the Equipment Trust Trustee's title to the Trust Equipment) will
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be subject to certain conditions precedent, including a written request by the
holders of not less than a majority in principal amount of the outstanding
Company ETCs or the Procor ETC to the Equipment Trust Trustee to take action,
and an offer to the Equipment Trust Trustee of reasonable indemnification
against liabilities incurred by it in so doing. (Section 5.09)
The Company Trust Agreement and the Procor Trust Agreement will require the
annual filing by the Company and Procor, respectively, with the Equipment Trust
Trustee of a certificate as to the absence of default and as to compliance with
the terms of the relevant equipment trust agreement. (Section 4.08)
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following is a general discussion by the Company of the anticipated
material federal income tax consequences of the purchase, ownership and
disposition of Pass Through Certificates. This summary is based on laws,
regulations, rulings and court decisions now in effect, all of which are subject
to change by legislative, administrative or judicial action, which change may be
retroactive. The statements of law and legal conclusions contained herein are
based on the opinion of Neal, Gerber & Eisenberg, counsel to the Company. The
discussion below does not purport to address federal income tax consequences
applicable to particular categories of investors, some of which (for example,
banks, tax exempt organizations, insurance companies or foreign investors) may
be subject to special rules. Investors should consult their own tax advisors in
determining the federal, state, local and foreign tax consequences to them of
the purchase, ownership and disposition of Pass Through Certificates, including
the advisability of making any election discussed below. Prospective investors
should note that no rulings have been or will be sought from the Internal
Revenue Service (the "IRS") with respect to any of the federal income tax
consequences discussed below and no assurance can be given that the IRS will not
take contrary positions. The Pass Through Trusts are not indemnified for any
federal income taxes that may be imposed upon them, the imposition of which
could significantly reduce the amounts available for distribution to the
Certificate Owners. For purposes of this "Certain Federal Income Tax
Consequences" section, the terms "Pass Through Certificate" and "Certificate"
also refer to an indirect interest in a Pass Through Certificate held by a
Certificate Owner.
GENERAL
Based upon an interpretation of analogous authorities under currently
applicable law, neither Pass Through Trust [will] be classified as an
association taxable as a corporation, but rather each [will] be classified as a
grantor trust for purposes of Sections 671 through 679 of the Internal Revenue
Code of 1986, as amended (the "Code"), and each Certificate Owner of each Pass
Through Trust [will] be treated as owning a pro rata undivided interest in each
of the Equipment Notes and, in the case of Pass Through Trust 1996-A2, the ETCs
and the Procor ETC, and any other property held in such Pass Through Trust.
The Company believes that each Certificate Owner of a Pass Through Trust
will be required to report on its federal income tax return its pro rata share
of the entire income from the Equipment Notes and, in the case of Pass Through
Trust 1996-A2, the Company ETCs and the Procor ETC, and any other property in
such Pass Through Trust, in accordance with such Certificate Owner's method of
accounting. A Certificate Owner using the cash method of accounting should take
into account its pro rata share of income as and when received by the Pass
Through Trustee. A Certificate Owner using the accrual method of accounting
should take into account its pro rata share of income as it accrues or is
received by the Pass Through Trustee, whichever is earlier. The Company believes
that the Make-Whole Amount described under "Description of the Equipment
Notes--Prepayment" should be taxed as contingent interest when it becomes fixed
and unconditionally payable.
A purchaser of a Pass Through Certificate should be treated as purchasing
an interest in each Equipment Note and, in the case of Pass Through Trust
1996-A2, the Company ETCs and the
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Procor ETC, and any other property in the Pass Through Trust at a price
determined by allocating the purchase price paid for the Pass Through
Certificate among the related Equipment Notes, ETCs and other property in
proportion to their fair market values at the time of purchase of the Pass
Through Certificate. The Company believes that when each Pass Through Trust has
acquired all the Equipment Notes and, in the case of Pass Through Trust 1996-A2,
the Company ETCs and the Procor ETC, the purchase price paid for a Pass Through
Certificate by an original purchaser of such certificate will be allocated among
the Equipment Notes and, in the case of Pass Through Trust 1996-A2, the Company
ETCs and the Procor ETC in such Pass Through Trust in proportion to their
respective purchase prices.
SALES OF PASS THROUGH CERTIFICATES
A Certificate Owner that sells or exchanges a Pass Through Certificate will
recognize gain or loss (in the aggregate) equal to the difference between its
adjusted tax basis in the Pass Through Certificate and the amount realized
(except to the extent attributable to accrued interest, which would be taxable
as interest income). Subject to the market discount provisions of the Code
(described below), if the Certificate Owner held such Pass Through Certificate
as a capital asset, any such gain or loss should be capital gain or loss, which
will be long-term capital gain or loss if the Pass Through Certificate was held
for more than one year (but only to the extent the Pass Through Trust also held
the underlying Equipment Notes and in the case of Pass Through Trust 1996-A2,
the Company ETCs and the Procor ETC for more than one year). Any long term
capital gains realized on a sale or exchange of Pass Through Certificates will
be taxable under current law to corporate taxpayers at the rates applicable to
ordinary income, and to individual taxpayers at their applicable marginal rate
for capital gains. Any capital losses realized generally will be deductible by a
corporate taxpayer only to the extent of capital gains and by an individual
taxpayer only to the extent of capital gains plus $3,000 of other income.
ORIGINAL ISSUE DISCOUNT
It is anticipated that neither the Equipment Notes, the Company ETCs nor
the Procor ETC will be issued with original issue discount.
MARKET DISCOUNT
A subsequent purchaser of a Pass Through Certificate will be considered to
have acquired an interest in an Equipment Note, Company ETC or Procor ETC held,
as the case may be, in a Pass Through Trust at a "market discount" to the extent
the remaining aggregate principal amount of such Equipment Note, Company ETC or
Procor ETC exceeds the Certificate Owner's tax basis allocable to such Equipment
Note, Company ETC or Procor ETC, provided such excess exceeds a prescribed de
minimis amount. If such excess exceeds the de minimis amount, the Certificate
Owner will be subject to the market discount rules of Section 1276 of the Code
with regard to its interest in such Equipment Note, Company ETC or Procor ETC.
In the case of a sale or other disposition of indebtedness subject to the
market discount rules, Section 1276 of the Code requires that gain, if any, from
such sale or other 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.
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Market discount generally accrues under either a straight line method or,
at the election of the taxpayer, a constant interest rate method. However, in
the case of installment obligations (such as certain of the Equipment Notes),
determination of the manner in which market discount is to be accrued has been
left to Treasury regulations not yet issued. Until such Treasury regulations are
issued, the 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 (i) on the basis of a
constant interest rate or (ii) by treating as accrued market discount an amount
equal to total remaining market discount times a fraction, the numerator of
which is the amount of stated interest paid in the accrual period and the
denominator of which is the total amount of stated interest remaining to be paid
on the installment obligation as of the beginning of such period.
Under Section 1277 of the Code, if in any taxable year interest paid or
accrued on indebtedness incurred or continued to purchase or carry indebtedness
subject to the market discount rules exceeds the interest currently includible
in income with respect to such indebtedness, deduction of the excess interest
must be deferred to the extent of the market discount allocable to the taxable
year. The deferred portion of any interest expense will generally be deductible
when such market discount is included in income upon the sale or other
disposition (including repayment) of the indebtedness.
A taxpayer may elect to include market discount in gross income currently.
If such election is made, the rules of Sections 1276 and 1277 (described above)
will not apply to the taxpayer.
PREMIUM
A Certificate Owner will generally be considered to have acquired an
interest in an Equipment Note, Company ETC or Procor ETC held, as the case may
be, in a Pass Through Trust at a premium to the extent the purchaser's tax basis
allocable to such interest exceeds the remaining aggregate principal amount of
the Equipment Note, Company ETC or Procor ETC allocable to such interest. In
that event, a Certificate Owner who holds a Pass Through Certificate as a
capital asset may elect to amortize that premium as an offset to interest income
under Section 171 of the Code, with corresponding reductions in the Certificate
Owner's tax basis in its interest in the Equipment Note, Company ETC or Procor
ETC. Generally, such amortization is on a constant yield basis. However, in the
case of installment obligations (such as certain of the Equipment Notes), the
Conference Report indicates a Congressional intent that amortization will be in
accordance with the same rules that will apply to the accrual of market discount
on installment obligations (see the discussion above).
In the case of obligations that may be called at a premium prior to
maturity (such as the Equipment Notes), amortizable bond premium may be
determined by reference to an early call date. Due to the complexities of the
amortizable premium rules, particularly where there is more than one possible
call date and the amount of any premium is uncertain, Certificate Owners are
urged to consult their own tax advisors as to the amount of any amortizable
premium.
BACKUP WITHHOLDING
Payments made on the Pass Through Certificates and proceeds from the sale
of the Pass Through Certificates to or through certain brokers may be subject to
a "backup" withholding tax of 31% unless the Certificate Owner complies with
certain reponing procedures or is an exempt recipient under Section 6049(b) (4)
of the Code. Any such withheld amounts will be allowed as a credit against the
Certificate Owner's federal income tax.
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CERTAIN CANADIAN TAX CONSEQUENCES
In the opinion of Osler, Hoskin & Harcourt, Canadian counsel for the
Company and Procor, the following is, as of the date hereof, a fair and accurate
summary of the principal Canadian federal income tax consequences to a
Certificate Owner who is a non-resident of Canada and who purchased Pass Through
Certificates issued by Pass Through Trust 1996-A2 in connection with this
offering. This summary is based on the current provisions of the Income Tax Act
(Canada) (the "Tax Act") and the regulations thereunder, counsel's understanding
of the current administrative practices published by Revenue Canada and all
specific proposals to amend the Tax Act and the regulations announced by the
Minister of Finance prior to the date hereof. This summary does not otherwise
take into account or anticipate changes in the law, whether by judicial,
governmental or legislative decision or action, nor does it take into account
tax legislation or considerations of any province or territory of Canada or any
jurisdiction other than Canada.
This summary is of a general nature only and is not intended to be, and
should not be construed as, legal or tax advice to any particular Certificate
Owner. Purchasers of Pass Through Certificates, Series 1996-A2 should consult
their own tax advisors with respect to their particular circumstances.
The payment by Procor of interest and principal on the Procor ETC to the
Pass Through Trustee of Pass Through Trust 1996-A2 will be exempt from Canadian
withholding tax. Also, the payment by such Pass Through Trustee of interest and
principal on the Pass Through Certificates, Series 1996-A2 to a Certificate
Owner will be exempt from Canadian withholding tax for a Certificate Owner who
is, or is deemed to be, a non-resident of Canada and with whom the Company and
Procor deal at arm's length, within the meaning of the Tax Act, at the time of
making the payment. For the purposes of the Tax Act, related persons (as therein
defined) are deemed not to deal at arm's length, and it is a question of fact
whether persons not related to each other deal at arm's length.
No other taxes on income (including taxable capital gains) will be payable
under the Tax Act in respect of the holding or disposition of the Procor ETC, or
the receipt of interest thereon, by the Pass Through Trustee of Pass Through
Trust 1996-A2. No other taxes on income (including taxable capital gains) will
be payable under the Tax Act in respect of the acquisition, holding or
disposition of the Pass Through Certificates, Series 1996-A2 or the receipt of
interest thereon by Certificate Owners who are, or are deemed to be,
non-residents of Canada for purposes of the Tax Act at any time during which
they hold Pass Through Certificates and who do not use or hold and are not
deemed by such laws to use or hold the Pass Through Certificates in carrying on
business in Canada for the purposes of the Tax Act, and, in the case of a
Certificate Owner who carries on an insurance business in Canada and elsewhere,
whose Pass Through Certificates are not effectively connected with its Canadian
insurance business.
CERTAIN TAXES
The Pass Through Trustee is a with its principal corporate
trust office in . , counsel to ,
has advised the Company that, in its opinion, under currently applicable law,
[assuming that neither Pass Through Trust is taxable as a corporation, but,
rather, each is classified as a grantor trust under subpart E, Part I of
Subchapter J of the Code,] (i) neither Pass Through Trust will 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 or any political
subdivision thereof, (ii) Certificate Owners who are not residents of or
otherwise subject to tax in 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 or any political subdivision
thereof solely as a result of purchasing, holding (including receiving payments
with respect to) or disposing of a Pass Through Certificate, except to the
extent the Indenture Trustee forecloses on the Equipment and any of the
Equipment is located in or (iii) the Equipment Trust Trustee
forecloses on the Trust
55
57
Equipment and any of the Trust Equipment is located in or to the
extent the Indenture Trust, the Company Trust, the Procor Trust or the Pass
Through Trust, as applicable, engages in business in as a result of
such foreclosure. Neither of the Pass Through Trusts nor the Certificate Owners
will be indemnified for any state or local taxes imposed on them, the imposition
of which on a Pass Through Trust could reduce the amounts available for
distribution to the Certificate Owners of such Pass Through Trust. In general,
should a Certificate Owner or a Pass Through Trust be subject to any state or
local tax which would not be imposed if the 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
Pass Through Certificates may be purchased by an employee benefit plan (a
"Plan") subject to the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"). A fiduciary of a Plan must determine that the purchase of a
Pass Through Certificate is consistent with its fiduciary duties under ERISA and
does not result in a non-exempt prohibited transaction as defined in Section 406
of ERISA or Section 4975 of the Code. Employee benefit plans which are
governmental plans (as defined in Section 3(33) of ERISA) and certain church
plans (as defined in Section 3(33) of ERISA) are not subject to the fiduciary
responsibility provisions of ERISA. Any Plan that purchases a Pass Through
Certificate must be an "accredited investor" as defined in Rule 501(a)(1) of
Regulation D promulgated under the Securities Act.
The United States Department of Labor has granted to each of Salomon
Brothers Inc and Morgan Stanley & Co. Incorporated an administrative exemption
(Prohibited Transaction Exemption 89-89, Exemption Application No. D-6446, et
al. 54 Fed. Reg. 42,589 (1989) as amended, 55 Fed. Reg. 48,939 (1990)) and
Prohibited Transaction Exemption 90-24 et al., Exemption Application No. D-8019
et al., 55 Fed. Reg. 20, 548 (1990) (collectively, the "Exemptions") from
certain of the prohibited transaction rules of ERISA and the Code with respect
to the initial purchase, the holding and the subsequent resale by a Plan of
certificates in certain pass through trusts, the assets of which consist of
secured credit instruments that bear interest, including qualified equipment
notes secured by leases. A number of conditions must be satisfied in order for
the Exemptions to apply, including the requirement that at the time of their
purchase by a Plan the Pass Through Certificates have a specified credit rating.
Under the Exemptions an equipment note secured by a lease will be considered
qualified only if it is a note (a) which is secured by equipment which is
leased, (b) which is secured by the obligation of the lessee to pay rent under
the equipment lease and (c) with respect to which the trust's security interest
is at least as protective of the rights of the trust as the trust would have if
the equipment note were secured only by the equipment and not by the lease.
It is not clear whether the Exemptions apply to participant directed plans
described in Section 404(c) of ERISA or plans that are subject to Section 4975
of the Code but not Title I of ERISA, such as individual retirement plans and
certain plans for self-employed individuals. In addition, there are various
other terms and conditions to the applicability of the Exemptions. Accordingly,
each fiduciary of a Plan should independently determine if its purchase of a
Pass Through Certificate will require an exemption, and if so, whether the
Exemptions apply to the purchase, or whether any other prohibited transaction
exemption is available.
56
58
UNDERWRITING
Under the terms of and subject to the conditions contained in an
Underwriting Agreement dated the date hereof, Salomon Brothers Inc and Morgan
Stanley & Co. Incorporated (the "Underwriters") have agreed to purchase from the
Pass Through Trustee the principal amount of Pass Through Certificates set forth
opposite its name below.
PRINCIPAL AMOUNT OF
UNDERWRITER PASS THROUGH CERTIFICATES
- ---------------------------------------------------------------------- -------------------------
Salomon Brothers Inc.................................................. $
Morgan Stanley & Co. Incorporated.....................................
--------
Total....................................................... $
========
The Underwriting Agreement provides that the obligation of the Underwriters
to pay for and accept delivery of the Pass Through Certificates is subject to,
among other things, the approval of certain legal matters by their counsel and
certain other conditions. The Underwriters are obligated to take and pay for all
of the Pass Through Certificates to be purchased by them if any are taken.
The Underwriters propose to offer all or part of the Pass Through
Certificates directly to the public at the public offering prices per Pass
Through Certificate set forth on the cover page of this Prospectus and may offer
a portion of the Pass Through Certificates to dealers at a price which
represents a concession not in excess of the amounts set forth below. The
Underwriters may allow, and such dealers may reallow, concessions not in excess
of the amounts set forth below to certain other dealers. After the initial
public offering, the public offering price and such concessions may be changed.
PASS THROUGH CERTIFICATE CONCESSIONS TO DEALERS REALLOWANCE CONCESSIONS
- ----------------------------------------------- ---------------------- -----------------------
1996-A1........................................ % %
1996-A2........................................ % %
The Company and Procor have agreed to indemnify the Underwriters and the
Underwriters have agreed to indemnify the Company and Procor against certain
liabilities, including liabilities under the Securities Act.
The Company and Procor do not intend to apply for listing of the Pass
Through Certificates on a national securities exchange, but has been advised by
the Underwriters that the Underwriters presently intend to make a market in the
Pass Through Certificates, as permitted by applicable laws and regulations. The
Underwriters are not obligated, however, to make a market in the Pass Through
Certificates and any such market making may be discontinued at any time at the
sole discretion of either Underwriter. Accordingly, no assurance can be given as
to the liquidity of, or trading markets for, the Pass Through Certificates.
LEGAL OPINIONS
The validity of the Pass Through Certificates is being passed upon for the
Company by Neal, Gerber & Eisenberg, Chicago, Illinois, and for the Underwriters
by Mayer, Brown & Platt, New York, New York. Both Neal, Gerber & Eisenberg and
Mayer, Brown & Platt will rely on the opinion of as to
matters relating to the authorization, execution, authentication, issuance and
delivery of the Pass Through Certificates under the Agreements.
57
59
EXPERTS
The consolidated financial statements of Union Tank Car Company appearing
in Union Tank Car Company's Annual Report (Form 10-K) for the year ended
December 31, 1995 have been audited by Ernst & Young LLP, independent auditors,
as set forth in their report thereon included therein and incorporated herein by
reference. Such consolidated financial statements are incorporated herein by
reference in reliance upon such report given upon the authority of such firm as
experts in accounting and auditing.
58
60
APPENDIX I
GLOSSARY OF CERTAIN TERMS
The following is a glossary of certain terms used in this Prospectus. The
definitions of terms used in this glossary that are also used in the Agreements,
Indentures, Leases or Participation Agreements are qualified in their entirety
by reference to the definitions of such terms contained therein.
"Agreement" means each of the two separate Pass Through Trust Agreements by
and among as Pass Through Trustee, the Company and Procor,
pursuant to which the two separate Union Tank Car Company 1996-A Pass Through
Trusts will be formed.
"Basic Rent" means, with respect to any Unit, all scheduled rent payable by
the Company pursuant to each Lease.
"Business Day" means any day other than a Saturday, Sunday or a day on
which commercial banking institutions are authorized or required by law,
regulation or executive order to be closed in New York, New York, Chicago,
Illinois, the city and state (if different from the foregoing) in which the
principal corporate trust office of the Owner Trustee is located, or, until the
lien of the Indenture has been discharged, the city and state (if different from
the foregoing) in which the principal corporate trust office of the Indenture
Trustee is located.
"Certificate Account" means the one or more accounts established and
maintained pursuant to an Agreement for the benefit of the Certificateholders of
such Pass Through Trust, for the deposit of payments representing Scheduled
Payments on the Equipment Notes, Company ETCs and the Procor ETC held in such
Pass Through Trust.
"Certificate Owner" means a person acquiring an interest in a Pass Through
Certificate registered in the name of Cede & Co. as the nominee of The
Depository Trust Company.
"Certificateholder" means any holder of a Pass Through Certificate.
"Code" means the United States Internal Revenue Code of 1986, as amended.
"Company ETCs" means the equipment trust certificates issued pursuant to
the Company Trust Agreement.
"Company Trust Agreement" means the equipment trust agreement between the
Company and , as trustee.
"ETCs" means the Company ETCs and the Procor ETC.
"Equipment Cost" means the cost to an Owner Trust of Equipment purchased by
it from the Company.
"Equipment Notes" means the equipment notes issued on a nonrecourse basis
by the Owner Trustees pursuant to the Indentures and Indenture Supplements.
"Equipment Trust Default" means each of the events designated as an "Event
of Default" in the Company Trust Agreement or the Procor Trust Agreement.
"Equipment Trust Trustee" means in its capacity as trustee
under each Trust Agreement, and its successors and assigns thereunder.
"Event of Default" means, with respect to an Agreement, the occurrence and
continuance of an Indenture Default under one or more of the Indentures.
"Event of Loss" means each of the events designated as such in a Lease.
61
"Indenture" means each of the separate Trust Indenture and Security
Agreements to be entered into with respect to certain designated groups of
Equipment between an Owner Trustee and the Indenture Trustee and pursuant to
which such Owner Trustee will issue the Equipment Notes with respect to such
groups of Equipment, as such Trust Indenture and Security Agreements may from
time to time be amended or supplemented.
"Indenture Default" means each of the events designated as an "Indenture
Event of Default" in an Indenture. For a description of certain events
constituting Indenture Defaults, see "Description of the Equipment
Notes -- Indenture Defaults, Notice and Waiver."
"Indenture Trustee" means , in its capacity as indenture
trustee under each Indenture, and its successors and assigns thereunder.
"Lease" means each of the separate Lease Agreements to be entered into
with respect to the Equipment subject thereto between an Owner Trustee and the
Company, as such Lease Agreements may from time to time be amended or
supplemented.
"Lease Default" means any event which, with notice or the passage of time
or both, would become a Lease Event of Default.
"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 Equipment Notes -- The
Leases -- Lease Events of Default."
"Owner Participant" means the owner participant for whose benefit an Owner
Trustee owns Equipment leased to the Company pursuant to a Lease and its
permitted successors and assigns.
"Owner Trustee" means , not in its individual capacity but
solely as trustee of
separate owner trusts, each for the benefit of an Owner Participant, its
successors and assigns.
"Participation Agreement" means each of the separate Participation
Agreements to be entered into in connection with the leveraged lease financing
of the Equipment, as such Participation Agreements may from time to time be
amended or supplemented.
"Pass Through Certificate" means each of the Pass Through Certificates,
Series 1996-A to be issued by the Pass Through Trustee pursuant to the
Agreements.
"Pass Through Trust" means each of two separate Union Tank Car Company
1996-A Pass Through Trusts to be formed pursuant to the Agreements.
"Pass Through Trustee" means , in its capacity as Pass Through
Trustee under each Agreement, and each other person which may from time to time
act as successor Pass Through Trustee under such Agreement.
"Permitted Investment" means each of (i) direct obligations of the United
States of America and agencies thereof, (ii) obligations fully guaranteed by the
United States of America, (iii) certificates of deposit issued by, or bankers'
acceptances of, or time deposits with, any bank, trust company or national
banking association incorporated or doing business under the laws of the United
States of America or one of the States thereof having combined capital and
surplus and retained earnings of at least $100,000,000, having general
obligations rated at least A1 by Moody's Investors Service, Inc. or A+ by
Standard & Poor's Corporation (but excluding any new investment as to which
there is a public announcement by the rating agency providing a rating thereon
that such rating is under consideration for a possible downgrade below A1 or A+,
as the case may be), including the Owner Trustee in its individual capacity or
the Indenture Trustee in its individual capacity if such conditions are met,
(iv) commercial paper of any holding company of a bank, trust company or
national banking association described in clause (iii), (v) bearer note deposits
with, or certificates of deposit issued by, or promissory notes of, any
subsidiary incorporated under the laws of Canada (or any province thereof) of
any bank, trust company or national banking association described in clause
(iii), (vi) commercial paper of companies having a rating of A-1/P-1 or better
assigned to
I-2
62
such commercial paper by Standard & Poor's Corporation or Moody's Investors
Service, Inc. (or, if neither such organization shall rate such commercial paper
at any time, by any nationally recognized rating organization in the United
States of America), (vii) U.S. dollar-denominated certificates of deposit issued
by, or time deposits with, the European subsidiaries of any bank, trust company
or national banking association described in clause (iii), (viii) Canadian
Treasury Bills fully hedged to U.S. dollars, (ix) bonds, notes or other
obligations of any state of the United States of America, or any political
subdivision of any such state, or any agencies or other instrumentalities of any
such state, including, but not limited to, industrial development bonds,
pollution control revenue bonds, public power bonds, housing bonds, other
revenue bonds or any general obligation bonds; provided that, at the time of
their purchase, such obligations are rated in the highest rating category by
Standard & Poor's Corporation or Moody's Investors Service, Inc. (or, if neither
such organization shall rate such obligations at such time, by any nationally
recognized rating organization in the United States of America), and (x) bonds
or other debt instruments of any company, if such bonds or other debt
instruments, at the time of their purchase, are rated in the highest rating
category by Standard & Poor's Corporation or Moody's Investors Service, Inc.
(or, if neither such organization shall rate such obligations at such time, by
any nationally recognized rating organization in the United States of America);
provided that no investment shall be eligible as and included within the
definition of the term "Permitted Investment" unless either (x) the final
maturity or date of return of such investment is equal to one year or less from
the date of purchase thereof or (y) in the case of any investment referred to in
the foregoing clause (i) or (ii) only, such investment has a final maturity or
date of return greater than one year from the date of purchase thereof and
closing prices on a national securities exchange or bid and asked prices,
closing prices or yields to maturity for such investment are reported in The
Wall Street Journal (or if The Wall Street Journal is not at the time published
or ceases to report such prices, such prices are reported by any other
publication of nationally recognized standing of general circulation in New York
City).
"Pool Balance" means, for each Pass Through Trust, as of any Regular
Distribution Date or Special Distribution Date, the aggregate unpaid principal
amount of the Equipment Notes, and in the case of Pass Through Trust 1996-A2,
the Company ETCs and the Procor ETC, held in such Pass Through Trust plus any
amounts in respect of principal on such Equipment Notes, Company ETCs and the
Procor ETC held, as the case may be, by the Pass Through Trustee and not yet
distributed plus any proceeds of the sale of the Pass Through Certificates held
in the Pass Through Trust and not yet used to purchase Equipment Notes, or in
the case of Pass Through Trust 1996-A2 Company ETCs. The Pool Balance as of any
Regular Distribution Date or Special Distribution Date shall be computed after
giving effect to the payment of principal, if any, of the Equipment Notes,
Company ETCs and the Procor ETC, as the case may be, and distribution thereof to
be made on that date.
"Pool Factor" means, for each Pass Through Trust, as of any Regular
Distribution Date or Special Distribution Date, if any, the quotient (rounded to
the seventh decimal place) computed by dividing (i) the Pool Balance by (ii) the
aggregate original principal amount of Pass Through Certificates issued by such
Pass Through Trust. The Pool Factor for each Pass Through Trust as of any
Regular Distribution Date or Special Distribution Date shall be computed after
giving effect to the payment of principal, if any, on the Equipment Notes, and
in the case of Pass Through Trust 1996-A2, the Company ETCs and the Procor ETC,
held in such Pass Through Trust and distribution thereof to be made on that
date.
"Procor ETC" means the equipment trust certificate issued pursuant to the
Procor Trust Agreement.
"Procor Trust Agreement" means the equipment trust agreement between Procor
and , as trustee.
"Record Date" means the fifteenth day preceding a Regular Distribution Date
or Special Distribution Date.
"Registrar" shall have the meaning specified in Section 2.3 of the
Indenture.
I-3
63
"Regular Distribution Date" means and of each year,
commencing , 199[6]
"Scheduled Payment" means each payment of principal of or interest on an
Equipment Note, and in the case of Pass Through Trust 1996-A2, a Company ETC or
the Procor ETC, scheduled to be received by the Pass Through Trustee on
or of each year, commencing , 199[6] until
the final distribution date for the relevant Pass Through Trust, which payment
represents the payment of principal at stated maturity of, or the scheduled
payment or prepayment of principal of, such Equipment Note, Company ETC or
Procor ETC, or the regularly scheduled payment of interest accrued on such
Equipment Note, Company ETC or Procor ETC.
"Special Distribution Date" means each day on which a Special Payment will
be distributed as specified in the Prospectus.
"Special Payment" means any payment of principal, Make-Whole Amount, if
any, and interest received by the Pass Through Trustee on account of the
prepayment, if any, of the Equipment Notes (or portion thereof) held in a Pass
Through Trust; any payment received by the Pass Through Trustee following an
Indenture Default in respect of the Equipment Notes, Company ETCs or the Procor
ETC held in a Pass Through Trust, including payments received by the Pass
Through Trustee on account of the purchase by the applicable Owner Trustee of
such Equipment Notes; payments received by the Pass Through Trustee on account
of the sale by it of such Equipment Notes, Company ETCs or the Procor ETC; and
any return of escrowed funds which have not been used to purchase Equipment
Notes, Company ETCs or the Procor ETC plus any payment of amounts received by
the Pass Through Trustee representing interest that would have been paid on such
escrowed funds had Equipment Notes, Company ETCs or the Procor ETC been
purchased with such escrowed funds.
"Special Payment Account" means the one or more accounts established and
maintained pursuant to the Agreement and for the benefit of the
Certificateholders of such Pass Through Trust, for the deposit of payments
representing Special Payments.
"Specified Investments" means (i) direct obligations of the United States
of America and agencies thereof for which the full faith and credit of the
United States of America is pledged, (ii) obligations fully guaranteed by the
United States of America, (iii) certificates of deposit issued by, or bankers'
acceptances of, or time deposits with, any bank, trust company or national
banking association incorporated or doing business under the laws of the United
States of America or one of the States thereof having combined capital and
surplus and retained earnings of at least $500,000,000 (including any Indenture
Trustee or Owner Trustee, in their respective individual capacities if such
conditions are met), (iv) commercial paper of companies, banks, trust companies
or national banking associations incorporated or doing business under the laws
of the United States of America or one of the States thereof and in each case
having a rating of A-1/P-1 or better assigned to such commercial paper by
Standard & Poor's Corporation or Moody's Investors Service, Inc. (or, if neither
such organization shall rate such commercial paper at any time, by any
nationally recognized rating organization in the United States of America) and
(v) repurchase agreements with any financial institution having a combined
capital and surplus of at least $750,000,000 fully collateralized by obligations
of the type described in clauses (i) through (iv) above; provided, however, that
if all of the above investments are unavailable, the entire amount to be
invested may be used to purchase Federal Funds from an entity described in (iii)
above; and provided, further, that no investment shall be eligible as a
"Specified Investment" unless the final maturity or date of return of such
investment occurs no later than June , 1996.
"Stipulated Loss Value" means, as to a Unit, the amount payable under a
Lease upon the occurrence of an Event of Loss with respect to such Unit subject
to such Lease.
"Termination Value" means, as to a Unit, the amount required to be received
by an Owner Trustee under a Lease following certain early terminations of such
Lease with respect to such Unit.
"Trust Agreements" means the Company Trust Agreement and the Procor Trust
Agreement.
I-4
64
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS IN CONNECTION WITH THE OFFER MADE BY THIS PROSPECTUS AND, IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY OR BY THE UNDERWRITERS. NEITHER THE DELIVERY OF THIS
PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL UNDER ANY CIRCUMSTANCES CREATE AN
IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE
THE DATE HEREOF. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER OR SOLICITATION BY
ANYONE IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED
OR IN WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO
SO OR TO ANYONE TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION.
------------------------
TABLE OF CONTENTS
PAGE
----
Available Information..................... 2
Reports to Certificateholders by the
Trustee................................. 2
Documents Incorporated by Reference....... 2
Summary................................... 3
Formation of the Pass Through Trusts...... 12
Description of Payment Flows.............. 13
Use of Proceeds........................... 15
The Company............................... 17
Capitalization............................ 18
Selected Financial Information............ 19
Description of the Pass Through
Certificates............................ 20
Description of the Equipment Notes........ 35
Description of the ETCs................... 48
Certain Federal Income Tax Consequences... 52
Certain Canadian Tax Consequences......... 55
Certain Taxes.............. 55
ERISA Considerations...................... 56
Underwriting.............................. 57
Legal Opinions............................ 57
Experts................................... 58
Glossary of Certain Terms...........Appendix I
UNTIL , 1996 (90 DAYS AFTER THE COMMENCEMENT OF THE OFFERING), ALL
DEALERS EFFECTING TRANSACTIONS IN THE PASS THROUGH CERTIFICATES, WHETHER OR NOT
PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS.
THIS IS IN ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS WHEN
ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR
SUBSCRIPTIONS.
$122,000,000
UNION TANK CAR
COMPANY
1996-A
PASS THROUGH
TRUSTS
PASS THROUGH CERTIFICATES,
SERIES 1996-A
SALOMON BROTHERS INC
MORGAN STANLEY & CO.
INCORPORATED
PROSPECTUS
DATED MAY , 1995
65
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the estimated expenses (other than
underwriting discounts and commissions) to be incurred by the registrant in
connection with the offering described in this Registration Statement:
Securities and Exchange Commission registration fee............... $42,069
Blue Sky filing and counsel fees.................................. *
Trustees' fees and expenses....................................... *
Printing expenses................................................. *
Auditors' fees and expenses....................................... *
Attorneys' fees and expenses...................................... *
Rating agency fees................................................ *
Miscellaneous..................................................... *
-------
Total................................................... $ *
=======
- ---------------
* To be provided by amendment
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the Delaware General Corporation Law, Article Sixth of the
Company's Restated Certificate of Incorporation and Article VIII of the
Company's By-Laws authorize and empower the Company to indemnify its directors,
officers, employees and agents against liabilities incurred in connection with,
and related expenses resulting from, any claim, action or suit brought against
any such person as a result of such person's relationship with the Company,
provided that such persons acted in accordance with a stated standard of conduct
in connection with the acts or events on which such claim, action or suit is
based. The finding of either civil or criminal liability on the pan of such
persons in connection with such acts or events is not necessarily determinative
of the question of whether such persons have met the required standard of
conduct and are, accordingly, entitled to be indemnified.
Section 124 of the Canada Business Corporations Act and Section 33 of
By-law 15 of Procor authorize and empower Procor to indemnify its directors and
officers against all costs, charges and expenses including an amount paid to
settle an action or satisfy a judgment, reasonably incurred by him in respect of
any civil, criminal or administrative action or proceeding to which he is made a
party by reason of being or having been a director or officer of Procor, if he
acted honestly and in good faith with a view to the best interests of Procor
and, in the case of a criminal or administrative action or proceeding that is
enforced by a monetary penalty, if he had reasonable grounds for believing that
his conduct was lawful.
Reference is made to Section 8 of the form of Underwriting Agreement filed
as Exhibit I hereto for provisions regarding indemnification of the Company and
Procor and their respective officers, directors and controlling persons against
certain liabilities.
II-1
66
ITEM 16. EXHIBITS
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENTS
-------- ----------------------------------------------------------------------
1 Form of Underwriting Agreement.
4(a)(1) Form of Pass Through Trust Agreement 1996 A-1 between the Pass Through
Trustee and the Company relating to the Pass Through Certificates.**
4(a)(2) Form of Pass Through Trust Agreement 1996 A-2 among the Pass Through
Trustee, the Company and Procor relating to the Pass Through
Certificates.
4(a)(3) Form of Pass Through Certificate, Series 1996-A1 (included in Exhibit
4(a)(1)).**
4(a)(4) Form of Pass Through Certificate, Series 1996-A2 (included in Exhibit
4(a)(2)).
4(b)(1) Form of Participation Agreement among the Company, the Owner
Participant, the Indenture Trustee, the Owner Trustee and the Pass
Through Trustee relating to each separate leveraged lease
transaction.*
4(b)(2) Form of Lease Agreement between the Company and the Owner Trustee.*
4(b)(3) Form of Trust Indenture and Security Agreement between the Indenture
Trustee and the Owner Trustee.*
4(b)(4) Form of Equipment Note (included in Exhibit 4(b)(3)).
4(b)(5) Form of Trust Agreement between the Owner Participant and the Owner
Trustee.**
4(c)(1) Form of Equipment Trust Agreement (Series 26) between the Company and
the Equipment Trust Trustee relating to the Company ETCs.
4(c)(2) Form of the Company ETC (included in Exhibit 4(c)(1)).
4(c)(3) Form of Equipment Trust Agreement (Series 26-Can) between Procor and
the Equipment Trust Trustee relating to the Procor ETC.
4(c)(4) Form of the Procor ETC (included in Exhibit 4(c)(3)).
5(a) Opinion of Neal, Gerber & Eisenberg, counsel for the Company.**
5(b) Opinion of , counsel for the Pass Through
Trustee.**
8(a) Tax Opinion of Neal, Gerber & Eisenberg, counsel for the Company.**
8(b) Tax Opinion of Osler, Hoskin & Harcourt, counsel for Procor.**
8(c) Tax Opinion of , counsel for the Pass Through
Trustee.**
12 Computation of Ratios of Earnings to Fixed Charges.***
23(a) Consent of Ernst & Young LLP, Independent Auditors.
23(b) Consent of Neal, Gerber & Eisenberg (included in Exhibits 5(a) and
8(a)).**
23(c) Consent of (included in Exhibit 5(b) and
8(c)).**
23(d) Consent of Osler, Hoskin & Harcourt (included in Exhibit 8(b)).**
24 Powers of Attorney.
26 Statement of Eligibility of Pass Through Trustee on Form T-1.**
- ---------------
* separate Participation Agreements, Trust Indentures and Security
Agreements, Trust Agreements and Lease Agreements will be entered into with
respect to separate leveraged lease transactions. Except for differences in
parties, dollar amounts, interest rates, percentages and the like, there are
no material details in which the indicated agreements relating to such
equipment not filed herewith differ from the corresponding exhibit for the
form of such document.
II-2
67
** To be filed by amendment.
*** The computation for each of the five fiscal years ended December 31, 1995,
1994, 1993, 1992 and 1991 is incorporated herein by reference to Exhibit 12
to the Company's Annual Report on Form 10-K for the year ended December 31,
1995.
ITEM 17. UNDERTAKINGS
A. Undertaking Regarding Documents Subsequently Filed Under the Exchange
Act.
The Company and Procor hereby undertake that, for purposes of determining
any liability under the Securities Act of 1933, each filing of the Company's
annual report pursuant to Section 13(a)or Section 15(d) of the Exchange Act that
is incorporated by reference in this Registration Statement shall be deemed to
be a new Registration Statement relating to the securities offered herein, and
the offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
B. Undertaking in Respect of Indemnification.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Company and Procor pursuant to the provisions described under Item 15 above, or
other vise, the Company and Procor have been advised that in the opinion of the
Commission such indemnification is against public policy as expressed in the
Securities Act of 1933 and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the Company or Procor of expenses incurred or paid by a director, officer or
controlling person of the Company or Procor 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 Company or Procor
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 of 1933 and will be governed by the final
adjudication of such issue.
C. Undertakings Pursuant to Rule 430A
(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 Company or Procor pursuant to Rule 424(b)(1) or (4) or
497(h) under the Securities Act of 1933 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.
II-3
68
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Union Tank Car
Company 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 Chicago, State of Illinois on the 21st day of March,
1996.
UNION TANK CAR COMPANY
/s/ R.C. GLUTH
--------------------------------------
Robert C. Gluth,
Executive Vice President,
Treasurer and Director
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities indicated on the 21st day of March, 1996.
SIGNATURE TITLE
- ----------------------------------------------- ------------------------------------------
* /s/ JAY A. PRITZKER Chairman of the Board and Director
- -----------------------------------------------
Jay A. Pritzker
* /s/ ROBERT A. PRITZKER President and Director
- ----------------------------------------------- (principal executive officer)
Robert A. Pritzker
/s/ R.C. GLUTH Executive Vice President,
- ----------------------------------------------- Treasurer and Director
Robert C. Gluth (principal financial and accounting
officer)
* /s/ K.P. FISCHL Director
- -----------------------------------------------
K.P. Fischl
*By: /s/ R.C. GLUTH
- -----------------------------------------------
Robert C. Gluth
Attorney-in-Fact
II-4
69
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Procor Limited
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 Chicago, State of Illinois on the 21st day of March,
1996.
PROCOR LIMITED
/s/ R.C. GLUTH
--------------------------------------
Robert C. Gluth,
Vice President,
Treasurer and Director
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities indicated on the 21st day of March, 1996.
SIGNATURE TITLE
- ----------------------------------------------- ------------------------------------------
* /s/ FRANK D. LESTER President
- ----------------------------------------------- (principal executive officer)
Frank D. Lester
/s/ R.C. GLUTH Vice President,
- ----------------------------------------------- Treasurer and Director
Robert C. Gluth (principal financial and accounting
officer)
* /s/ DAVID H. PATTERSON Director
- -----------------------------------------------
David H. Patterson
* /s/ K.P. FISCHL Director
- -----------------------------------------------
K.P. Fischl
* /s/ PETER E. LAWFORD Director
- -----------------------------------------------
Peter E. Lawford
* /s/ S. DONALD HAMILTON Director
- -----------------------------------------------
S. Donald Hamilton
*By: /s/ R.C. GLUTH
- -----------------------------------------------
Robert C. Gluth
Attorney-in-Fact
II-5
70
EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENTS PAGE NO.
- -------- --------------------------------------------------------------------- --------
1 Form of Underwriting Agreement.......................................
4(a)(1) Form of Pass Through Trust Agreement 1996 A-1 between the Pass
Through Trustee and the Company relating to the Pass Through
Certificates**.......................................................
4(a)(2) Form of Pass Through Trust Agreement 1996 A-2 among the Pass Through
Trustee, the Company and Procor relating to the Pass Through
Certificates.........................................................
4(a)(3) Form of Pass Through Certificate, Series 1996-A1 (included in Exhibit
4(a)(1))**...........................................................
4(a)(4) Form of Pass Through Certificate, Series 1996-A2 (included in Exhibit
4(a)(2)).............................................................
4(b)(1) Form of Participation Agreement among the Company, the Owner
Participant, the Indenture Trustee, the Owner Trustee and the Pass
Through Trustee relating to each separate leveraged lease
transaction*.........................................................
4(b)(2) Form of Lease Agreement between the Company and the Owner Trustee*...
4(b)(3) Form of Trust Indenture and Security Agreement between the Indenture
Trustee and the Owner Trustee*.......................................
4(b)(4) Form of Equipment Note (included in Exhibit 4(b)(3)).................
4(b)(5) Form of Trust Agreement between the Owner Participant and the Owner
Trustee**............................................................
4(c)(1) Form of Equipment Trust Agreement (Series 26) between the Company and
the Equipment Trust Trustee relating to the Company ETCs.............
4(c)(2) Form of the Company ETC (included in Exhibit 4(c)(1))................
4(c)(3) Form of Equipment Trust Agreement (Series 26-Can) between Procor and
the Equipment Trust Trustee relating to the Procor ETC...............
4(c)(4) Form of the Procor ETC (included in Exhibit 4(c)(3)).................
5(a) Opinion of Neal, Gerber & Eisenberg, counsel for the Company**.......
5(b) Opinion of , counsel for the Pass Through Trustee**...
8(a) Tax Opinion of Neal, Gerber & Eisenberg, counsel for the Company**...
8(b) Tax Opinion of Osler, Hoskin & Harcourt, counsel for Procor**........
8(c) Tax Opinion of , counsel for the Pass Through
Trustee**............................................................
12 Computation of Ratios of Earnings to Fixed Charges**.................
23(a) Consent of Ernst & Young LLP, Independent Auditors...................
23(b) Consent of Neal, Gerber & Eisenberg (included in Exhibits 5(a) and
8(a))**..............................................................
23(c) Consent of (included in Exhibit 5(b) and 8(c))**......
23(d) Consent of Osler, Hoskin & Harcourt (included in Exhibit 8(b))**.....
24 Powers of Attorney...................................................
26 Statement of Eligibility of Pass Through Trustee on Form T-1**.......
- ---------------
* separate Participation Agreements, Trust Indentures and Security
Agreements, Trust Agreements and Lease Agreements will be entered into with
respect to separate leveraged lease transactions. Except for
differences in parties, dollar amounts, interest rates, percentages and the
like, there are no material details in which the indicated agreements
relating to such equipment not filed herewith differ from the corresponding
exhibit for the form of such document.
** To be filed by amendment.
*** The computation for each of the five fiscal years ended December 31, 1995,
1994, 1993, 1992 and 1991 is incorporated herein by reference to Exhibit 12
to the Company's Annual Report on Form 10-K for the year ended December 31,
1995.