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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JANUARY 15, 1997
REGISTRATION NO. 333-17121
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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AMENDMENT NO. 2
TO
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 incorporation (I.R.S. Employer Identification No.)
or organization)
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)
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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: From time
to time after the effective date of this Registration Statement.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]
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 MAXIMUM
TITLE OF EACH CLASS OF AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED OFFERING PRICE(1)(2) REGISTRATION FEE
- ---------------------------------------------------------------------------------------------------
Debt Securities and Pass Through
Certificates................................. $400,000,000 $121,213(3)
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(1) Estimated in accordance with Rule 457 solely for the purpose of determining
the registration fee.
(2) Any offering of Debt Securities denominated in any foreign currency will be
treated as the equivalent in U.S. dollars based on the exchange rate
applicable to the purchase of such Debt Securities from the registrant.
(3) Previously paid.
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THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL 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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EXPLANATORY NOTE
This Registration Statement contains a Prospectus (the "Pass Through
Certificate Prospectus") relating to up to $400,000,000 aggregate principal
amount of pass through certificates of Union Tank Car Company (the "Company")
and a Prospectus (the "Debt Security Prospectus") relating to up to $400,000,000
aggregate principal amount of debt securities of the Company. The aggregate
principal amount of pass through certificates to be offered and sold pursuant to
this Registration Statement is subject to reduction by the aggregate principal
amount of debt securities sold pursuant to this Registration Statement and vice
versa.
Upon the public offering or sale of the pass through certificates or debt
securities registered under this Registration Statement, a Prospectus Supplement
describing the particular terms of such offer or sale will be filed in
accordance with the rules of the Securities and Exchange Commission together
with either the Pass Through Certificate Prospectus or the Debt Security
Prospectus, as applicable.
No offers or sales of pass through certificates or debt securities may be
made unless accompanied by a Prospectus Supplement applicable to the securities
offered thereby.
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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
JANUARY 15, 1997
PROSPECTUS
$400,000,000
UNION TANK CAR COMPANY
PASS THROUGH CERTIFICATES
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Up to $400,000,000 aggregate principal amount of Pass Through Certificates
may be offered for sale from time to time pursuant to this Prospectus and
related Prospectus Supplements. Pass Through Certificates may be issued in one
or more series in amounts, at prices and on terms to be determined at the time
of the offering. In respect of each offering of Pass Through Certificates, a
separate Union Tank Car Company Pass Through Trust for each series of Pass
Through Certificates being offered (each, a "Trust") will be formed pursuant to
the Pass Through Trust Agreement (the "Basic Agreement") and a supplement
thereto (a "Trust Supplement") relating to such Trust between Union Tank Car
Company (the "Company") and, unless otherwise specified in the Prospectus
Supplement, Harris Trust and Savings Bank (the "Pass Through Trustee"), as pass
through trustee under each Trust. Each Pass Through Certificate in a series will
represent a fractional undivided interest in the related Trust and will have no
rights, benefits or interest in respect of any other Trust. The property of each
Trust will consist of (i) equipment notes (the "Equipment Notes") issued on a
nonrecourse basis by one or more owner trustees pursuant to one of more
leveraged lease transactions to finance or refinance a portion of the equipment
cost of certain railcars ("Equipment Units") which have been or will be leased
to the Company or (ii) equipment trust certificates (the "ETCs") issued pursuant
to one or more equipment trust agreements between the Company and Harris Trust
and Savings Bank, as trustee. Each such equipment trust agreement is hereinafter
referred to as an "Equipment Trust Agreement", and Harris Trust and Savings
Bank, as trustee under each Equipment Trust Agreement, is hereinafter referred
to as the "Equipment Trust Trustee". Amounts payable pursuant to the ETCs will
be fully and unconditionally guaranteed by the Company. The Prospectus
Supplement relating to each offering of Pass Through Certificates will describe
certain terms of the Pass Through Certificates being offered, the Trust or
Trusts relating thereto, the Equipment Notes or ETCs to be purchased by such
Trust or Trusts, the Equipment Units relating to such Equipment Notes and the
leveraged lease transactions, if any, relating thereto.
The Equipment Notes will not be direct obligations of, or guaranteed by, the
Company, but the amounts unconditionally payable by the Company for the lease of
the Equipment Units will be sufficient to pay in full when due all payments
required to be made on such Equipment Notes.
Equipment Notes may be issued in respect of Equipment Units in one or more
series, each series having a different interest rate and final maturity date. A
separate Trust may purchase one or more series of the Equipment Notes issued
with respect to each group of Equipment Units (an "Equipment Group"). All of the
Equipment Notes held in such Trust will have an interest rate equal to the
interest rate applicable to the Pass Through Certificates issued by such Trust
and maturity dates occurring on or before the final distribution date applicable
to such Pass Through Certificates. The Equipment Notes issued with respect to
each Equipment Group will be secured by a security interest in such Equipment
Group and by the lease relating thereto (each, a "Lease"), including the right
to receive rent payable by the Company in respect of such Equipment Group.
Interest paid on the Equipment Notes or ETCs held in each Trust will be
passed through to the holders of the Pass Through Certificates relating to such
Trust on the dates and at the rate per annum set forth in the Prospectus
Supplement relating to such Pass Through Certificates until the final
distribution date for such Trust. Principal paid on the Equipment Notes or ETCs
held in each Trust will be passed through to the holders of the Pass Through
Certificates relating to such Trust in scheduled amounts on the dates set forth
in the Prospectus Supplement relating to such Pass Through Certificates until
the final distribution date for such Trust.
The Pass Through Certificates may be offered through underwriters, dealers
or agents. See "Plan of Distribution." The Prospectus Supplement will set forth
the names of any underwriters, dealers or agents involved in the sale of the
Pass Through Certificates in respect of which this Prospectus is being delivered
and any applicable fee, commission or discount arrangements with them.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
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This Prospectus may not be used to consummate a sale of Pass Through
Certificates unless accompanied by a Prospectus Supplement.
The date of this Prospectus is January , 1997.
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AVAILABLE INFORMATION
The Company has 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 Debt Securities. 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 Debt Securities and the Company, 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, Suite 1300,
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. Such materials also may be accessed
electronically by means of the Commission's home page on the Internet at
http://www.sec.gov.
REPORTS TO CERTIFICATEHOLDERS BY THE TRUSTEE
Harris Trust and Savings Bank, as trustee under the Pass Through Trust
Agreement, 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."
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DOCUMENTS INCORPORATED BY REFERENCE
The Company's Annual Report on Form 10-K for the fiscal year ended December
31, 1995 filed on March 11, 1996, as amended by Form 10-K/A filed on May 3, 1996
and by Form 10-K/A filed on May 17, 1996, and its Quarterly Reports on Form 10-Q
for the quarters ended March 31, 1996, June 30, 1996 and September 30, 1996, as
filed with the Commission pursuant to the Exchange Act, are 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 Debt Securities 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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THE COMPANY
Union Tank Car Company (with its wholly-owned subsidiaries herein
collectively referred to, except as the context otherwise requires, as the
"Company") is 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, a 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.
The Company's principal executive offices are located at 225 West
Washington Street, Chicago, Illinois 60606, and its telephone number is (312)
372-9500.
FORMATION OF THE TRUSTS
In respect of each offering of Pass Through Certificates, one or more
Trusts will be formed, and the related Pass Through Certificates will be issued,
pursuant to separate Trust Supplements to be entered into between the Pass
Through Trustee and the Company in accordance with the terms of the Basic
Agreement. All Pass Through Certificates with respect to each Trust will
represent fractional undivided interests in such Trust and the property held in
such Trust and will have no rights, benefits or interest in respect of any other
Trust or the property held therein. Concurrently with the execution and delivery
of each Trust Supplement relating to one or more leveraged lease transactions,
the Pass Through Trustee, on behalf of the Trust formed thereby, will enter into
one or more financing, refinancing, purchase or participation agreements (each
such agreement being herein referred to as a "Participation Agreement") relating
to one or more Equipment Groups described in the applicable Prospectus
Supplement. Concurrently with the execution and delivery of each Trust
Supplement relating to ETCs, the Pass Through Trustee, on behalf of such Trust,
will purchase such ETCs from the Equipment Trust Trustee. Pursuant to the
applicable Participation Agreement or Equipment Trust Agreement, the Pass
Through Trustee, on behalf of the Trust formed in connection with the offering
of Pass Through Certificates, will purchase the Equipment Notes issued with
respect to each such Equipment Group or ETCs so that all of the Equipment Notes
or ETCs held in such Trust will have an interest rate equal to the interest rate
applicable to the Pass Through Certificates issued by such Trust. Unless
otherwise indicated in the Prospectus Supplement, the maturity dates of the
Equipment Notes or ETCs acquired by each Trust will occur on or before the final
distribution date applicable to the Pass Through Certificates issued with
respect to such Trust. The Pass Through Trustee will distribute the amount of
payments of principal, premium, if any, and interest received by it as holder of
the Equipment Notes or ETCs to the Certificateholders of the Pass Through
Certificates with respect to the Trust in which such Equipment Notes or ETCs are
held. See "Description of the Pass Through Certificates", "Description of the
Equipment Notes" and "Description of the ETCs."
USE OF PROCEEDS
The Pass Through Certificates offered pursuant to any Prospectus Supplement
will be issued (i) to facilitate the financing or refinancing of the debt
component of one or more separate leveraged lease transactions entered into by
the Company, as lessee, with respect to the Equipment Units described therein or
(ii) to purchase ETCs. The proceeds from the sale of Pass Through Certificates
relating to one or more leveraged lease transactions will be used by the Pass
Through Trustee on behalf of the applicable Trust or Trusts to purchase, at par,
the Equipment Notes to be issued by the respective Owner Trustee or Owner
Trustees to finance or refinance all or a portion of the equipment cost of such
Equipment Units.
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Simultaneously with the acquisition of such Equipment Units, the respective
Owner Trustee will lease such Equipment Units to the Company. In the case of
ETCs, the proceeds from the sale of Pass Through Certificates will be used by
the Pass Through Trustee on behalf of the applicable Trust or Trusts to
purchase, at par, ETCs. The Company will use the net proceeds from each separate
leveraged lease transaction and from the issuance of ETCs to finance the
addition of railcars to the Company's fleet, for general corporate purposes or
as otherwise specified in the applicable Prospectus Supplement.
The Equipment Notes with respect to each Equipment Group will be issued
under a separate Trust Indenture and Security Agreement (each, an "Indenture")
between a bank or trust company as trustee thereunder (each, an "Indenture
Trustee") and an owner trustee, not in its individual capacity (except as
expressly set forth therein) but solely as trustee (each, an "Owner Trustee"),
of a separate trust for the benefit of one or more institutional or corporate
investors (each, an "Owner Participant"). Each Owner Participant will provide,
from sources other than the Equipment Notes, the balance of the equipment cost
of the related Equipment Group. No Owner Participant, however, will be
personally liable for any amount payable under the related Indenture or the
Equipment Notes issued thereunder. Subject to certain restrictions, each Owner
Participant may transfer its interest in the related Equipment Group.
Because the Company's obligation to make payments (i) under the Leases
relating to the Equipment Notes and (ii) in respect of the ETCs will be
unconditional, and not affected by the financial performance of the railcars
within the related Equipment Groups or subject to the related Equipment Trust
Agreements, the Company believes that historical financial information with
respect to such railcars will not be relevant to purchasers of the Pass Through
Certificates.
DESCRIPTION OF THE PASS THROUGH CERTIFICATES
In connection with each offering of Pass Through Certificates, one or more
separate Trusts will be formed and one or more series of Pass Through
Certificates will be issued pursuant to the Basic Agreement and one or more
Trust Supplements to be entered into between the Company and the Pass Through
Trustee. The following summary relates to the Basic Agreement and each of the
Trust Supplements, the Trusts to be formed thereby and the Pass Through
Certificates to be issued by each Trust except to the extent, if any, described
in the applicable Prospectus Supplement. Citations to the relevant sections of
the Basic Agreement appear below in parentheses. The statements under this
caption are a summary and do not purport to be complete. This summary makes use
of terms defined in and is qualified in its entirety by reference to all of the
provisions of the Basic Agreement, the form of which has been filed as an
exhibit to the Registration Statement of which this Prospectus is a part. The
form of the Trust Supplement relating to each series of Pass Through
Certificates and the forms of the Leases, Participation Agreements, Indentures,
Equipment Notes and Equipment Trust Agreements, if any, relating thereto will be
filed as exhibits to a report by the Company on Form 8-K, 10-Q, or 10-K, as
applicable, to be filed with the Commission following the offering of such
series of Pass Through Certificates.
GENERAL
The Pass Through Certificates of each Trust will be issued in fully
registered form only. Each Pass Through Certificate will represent a fractional
undivided interest in the separate Trust created by the Trust Supplement
pursuant to which such Pass Through Certificate is issued. The property of each
Trust will include the Equipment Notes or ETCs held in such Trust, all monies at
any time paid thereon and all monies due and to become due thereunder and funds
from time to time deposited with the Pass Through Trustee in accounts relating
to such Trust. Each Pass Through Certificate will correspond to a pro rata share
of the outstanding principal amount of the Equipment Notes or ETCs and other
property held in the related Trust and will be issued in denominations of $1,000
or any integral multiple of $1,000. (Sections 2.1 and 3.1)
Except as otherwise provided in the applicable Trust Supplement, Pass
Through Certificates will be registered in the name of Cede & Co. ("Cede") as
the nominee of The Depository Trust Company ("DTC") and no person acquiring an
interest in Pass Through Certificates (a "Certificate Owner") will be entitled
to receive a certificate representing such person's interest in the related
Trust unless "Definitive Certificates" are
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issued as described below. Unless Definitive Certificates are issued, all
references to actions by Certificateholders shall refer to actions taken by DTC
upon instructions from DTC Participants (as defined below), and all references
herein to distributions, notices, reports and 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 Trust at the
rate per annum set forth on the cover page of the applicable Prospectus
Supplement and will be calculated on the basis of a 360-day year of twelve
30-day months.
The Pass Through Certificates of each series represent interests only in
the related Trust and all payments and distributions shall be made only from the
related Trust Property. (Section 3.8) The Pass Through Certificates do not
represent an interest in or obligation of the Company, the Pass Through Trustee,
the Owner Trustee, if any, in its individual capacity, the Owner Participant, if
any, or any affiliate of any thereof.
The Basic Agreement does not and, except as otherwise described in the
applicable Prospectus Supplement, the Indentures will not, include financial
covenants or "event risk" provisions specifically designed to afford
Certificateholders protection in the event of a highly leveraged transaction
affecting the Company. However, the Certificateholders of each series will have
the benefit of (i) a lien on the specific Equipment Group securing the related
Equipment Notes held in the related Trust or, (ii) in the case of the ETCs held
in the related Trust, the indirect benefit of the Equipment Trust Trustee under
the relevant Equipment Trust Agreement holding title to the equipment securing
the ETCs, as well as the Company's full and unconditional guarantee of the ETCs.
See "Description of the Equipment Notes -- Security" and "Description of the
ETCs -- Guarantee" and "-- Security."
BOOK-ENTRY REGISTRATION
Except as otherwise described in the applicable Prospectus Supplement, Pass
Through Certificates will be subject to the provisions described under this
caption for book-entry registration with DTC.
DTC. DTC has advised the Company that it 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, 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, premium, if any, 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, because 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
Basic Agreement, and Certificate Owners will be permitted to exercise the rights
of Certificateholders only indirectly through DTC and DTC Participants.
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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, premium, 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 entities that do not participate in the
MC 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.
The Company understands that DTC will take any action permitted to be taken
by Certificateholders only at the direction of one or more DTC Participants to
whose accounts with DTC the Pass Through Certificates are credited.
Additionally, the Company understands that DTC will take such actions with
respect to any specified percentage of the beneficial interest of
Certificateholders held in each Trust only at the direction of and on behalf of
DTC Participants whose holders include undivided interests that satisfy any such
percentage. DTC may take conflicting actions with respect to other undivided
interests to the extent that such actions are taken on behalf of DTC
Participants whose holders include such undivided interests.
Neither the Company nor the Pass Through Trustee will have any liability
for any aspect of the records relating to or payments made on account of
beneficial ownership interests 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.
The information contained in this section concerning DTC and DTC's
book-entry system has been obtained from sources that the Company believes to be
reliable, but the Company takes no responsibility for the accuracy thereof.
DEFINITIVE CERTIFICATES. With respect to each Trust, the related Pass
Through Certificates will be issued in fully registered, certificated form
("Definitive Certificates") to Certificate Owners or their nominees, rather than
to DTC or its nominee, only if (i) the Company advises the Pass Through Trustee
in writing that DTC is no longer willing or able to properly discharge its
responsibilities as depository with respect to such 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 (iii) after the occurrence of an Event of Default (as
defined below), Certificate Owners representing an aggregate percentage interest
in such 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 affected
Certificate Owners through DTC Participants of the availability of Definitive
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 Definitive
Certificates to Certificate Owners. (Section 3.9)
Distributions of principal of, premium, if any, and interest on the Pass
Through Certificates will thereafter be made by the Pass Through Trustee in
accordance with the procedures set forth in the Basic Agreement and the
applicable Trust Supplements, directly to holders of Definitive Certificates in
whose names such Definitive Certificates were registered at the close of
business on the applicable record date. Such distributions will be made by check
mailed to the address of each such holder as it appears on the register
maintained with respect to the applicable Trust. The final payment on any Pass
Through Certificate, however,
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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. (Section 4.2 and 11.1)
Definitive Certificates will be freely transferable and exchangeable at the
office of the Pass Through Trustee upon compliance with the requirements set
forth in the Basic Agreement and the applicable Trust Supplements. No service
charge will be imposed for any registration of transfer or exchange, but payment
of a sum sufficient to cover any tax or other governmental charge shall be
required. (Section 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. So long
as the Pass Through Certificates are registered in the name of Cede, all
payments made by the Company to the Indenture Trustees, as assignees of the
Owner Trustees' rights under the Leases, in the case of Equipment Notes, or by
the Company in respect of ETCs, will be in immediately available funds and will
be passed through by the Pass Through Trustee to DTC in immediately available
funds.
Secondary trading in long-term notes and debentures of corporate issuers is
generally settled in clearinghouse or next-day funds. In contrast, the Pass
Through Certificates will trade in DTC's Same Day Funds Settlement System until
maturity, and secondary market trading activity in the Pass Through Certificates
will therefore be required by DTC to settle in immediately available funds. No
assurance can be given as to the effect, if any, of settlement in immediately
available funds on trading activity in the Pass Through Certificates.
PAYMENTS AND DISTRIBUTIONS
Payments received by the Pass Through Trustee of principal of, premium, if
any, and interest on the Equipment Notes or ETCs held in each Trust will be
distributed by the Pass Through Trustee to the Certificateholders of such Trust
on the date such receipt is confirmed, except in certain cases when some or all
of such Equipment Notes or ETCs are in default. See "-- Events of Default and
Certain Rights Upon an Event of Default."
Payments of principal of, and interest on the unpaid principal amount of,
the Equipment Notes or ETCs held in each Trust will be scheduled to be received
by the Pass Through Trustee on the dates specified in the applicable Prospectus
Supplement (such scheduled payments of principal of, and interest on, the
Equipment Notes or ETCs are herein referred to as "Scheduled Payments," and the
dates specified therefor in the applicable Prospectus Supplement are herein
referred to as "Regular Distribution Dates"). The Pass Through Trustee of each
Trust will distribute on each Regular Distribution Date to the
Certificateholders of such Trust all Scheduled Payments, the receipt of which is
confirmed by the Pass Through Trustee on such Regular Distribution Date. Each
such distribution of Scheduled Payments will be made by the Pass Through Trustee
to the holders of record of the Pass Through Certificates of such Trust on the
fifteenth day immediately preceding such Regular Distribution Date, subject to
certain exceptions. (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.
Each Certificateholder of each Trust will be entitled to receive a pro rata
share of any distribution in respect of Scheduled Payments of principal and
interest made on the Equipment Notes or ETCs held in such Trust. Scheduled
Payments of principal on the Equipment Notes or ETCs held in each Trust will be
set forth in the applicable Prospectus Supplement. After a partial or full
prepayment or default in respect of some or all of such Equipment Notes or ETCs,
a Certificateholder should refer to the information with respect to the Pool
Balance and the Pool Factor for such Trust reported periodically by the Pass
Through Trustee. See "-- Pool Factors" and "-- Statements to
Certificateholders."
Payments of principal, premium, if any, and interest received by the Pass
Through Trustee on account of a partial or full prepayment, if any, of the
Equipment Notes or ETCs held in a Trust, and payments received by the Pass
Through Trustee following a default in respect of the Equipment Notes or ETCs
held in a Trust (including, in the case of Equipment Notes, payments received by
the Pass Through Trustee on account of their purchase by the related Owner
Trustee or payments received on account of the sale of Equipment Notes
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or ETCs by the Pass Through Trustee) ("Special Payments") will be distributed on
the dates specified therefor in the applicable Prospectus Supplement (a "Special
Distribution Date"). In general, the Pass Through Trustee will mail notice to
the Certificateholders of record of any Trust 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 for any Trust will be
made by the Pass Through Trustee to the holders of record of the Pass Through
Certificates of such Trust as of the Record Date preceding such Special
Distribution Date. See "-- Events of Default and Certain Rights Upon an Event of
Default" and "Description of the Equipment Notes -- Prepayments."
The Basic Agreement requires that the Pass Through Trustee establish and
maintain, for each Trust and for the benefit of the Certificateholders of such
Trust, one or more non-interest bearing accounts (the "Certificate Account") for
the deposit of payments representing Scheduled Payments on the Equipment Notes
or ETCs held in such Trust. (Section 4.1) The Basic Agreement also requires that
the Pass Through Trustee establish and maintain, for each Trust and for the
benefit of the Certificateholders of such Trust, one or more accounts (the
"Special Payments Account") for the deposit of payments representing Special
Payments.
Pursuant to the terms of the Basic Agreement, the Pass Through Trustee is
required to deposit any Scheduled Payments relating to the applicable Trust
received by it in the Certificate Account of such Trust and to deposit any
Special Payments so received by it in the Special Payments Account of such
Trust. (Section 4.1) 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 of any Trust are
issued in the form of Definitive Certificates and not to Cede, as nominee for
DTC, distributions by the Pass Through Trustee from the Certificate Account or
the Special Payments Account of such Trust on a Regular Distribution Date or a
Special Distribution Date, as appropriate, will be made by check mailed to each
Certificateholder of such Trust of record on the applicable record date at its
address appearing on the register maintained with respect to such Trust.
(Section 4.2) The final distribution for each Trust, however, will be made only
upon presentation and surrender of the Pass Through Certificates for such Trust
at the office or agency of the Pass Through Trustee specified in the notice
given by the Pass Through Trustee of such final distribution. The Pass Through
Trustee will mail such notice of the final distribution to the
Certificateholders of such Trust, specifying the date set for such final
distribution and the amount of such distribution. (Section 11.1) See "--
Termination of the 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 additional interest. (Section 13.11)
POOL FACTORS
Unless there has been a prepayment, or a default in respect of one or more
issues of the Equipment Notes or ETCs held in a Trust, as described in the
applicable Prospectus Supplement or below in "-- Events of Default and Certain
Rights Upon an Event of Default," the Pool Factor for such Trust will decline in
proportion to the scheduled repayments of principal on the Equipment Notes or
ETCs held in such Trust as described in the applicable Prospectus Supplement. In
the event of a partial or full prepayment or default, the Pool Factor and the
Pool Balance of each Trust so affected will be recomputed after giving effect
thereto and notice thereof will be mailed to Certificateholders of such Trust.
Each Trust will have a separate Pool Factor and Pool Balance.
Unless otherwise described in the applicable Prospectus Supplement, the
"Pool Balance" for each Trust indicates, as of any Regular Distribution Date or
Special Distribution Date, the aggregate unpaid principal amount of the
Equipment Notes or ETCs held in such Trust on such date plus any amounts in
respect of principal on such Equipment Notes or ETCs held by the Pass Through
Trustee and not yet distributed plus the amount of any moneys held in the
related escrow account (other than earnings thereon). The Pool
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Balance for each Trust as of any Regular Distribution Date or Special
Distribution Date shall be computed after giving effect to the payment of
principal, if any, on the Equipment Notes or ETCs held in such Trust and
distribution thereof to be made on that date.
Unless otherwise described in the applicable Prospectus Supplement, the
"Pool Factor" for each Trust, as of any Regular Distribution Date or Special
Distribution Date, is the quotient (rounded to the seventh decimal place)
computed by dividing (i) the Pool Balance of such Trust, by (ii) the aggregate
original principal amount of the Pass Through Certificates issued by such Trust.
The Pool Factor for each Trust as of any Regular Distribution Date or Special
Distribution Date shall be computed after giving effect to the payment of
principal, if any, on the Equipment Notes or ETCs held in such Trust and
distribution thereof to be made on that date. (Section 1.1) The Pool Factor for
each Trust will initially be 1.0000000; thereafter, the Pool Factor for each
Trust will decline as described above to reflect reductions in the Pool Balance
of such Trust. The amount of a Certificateholder's pro rata share of the Pool
Balance of a Trust can be determined by multiplying the original denomination of
the Certificateholder's Pass Through Certificate of such Trust by the Pool
Factor for such Trust as of the applicable Regular Distribution Date or Special
Distribution Date. The Pool Factor and the Pool Balance for each Trust will be
mailed to Certificateholders of record of such Trust on each Regular
Distribution Date and Special Distribution Date.
STATEMENTS TO CERTIFICATEHOLDERS
On each Regular Distribution Date and Special Distribution Date, if any,
the Pass Through Trustee will include with each distribution of a Scheduled
Payment or Special Payment to Certificateholders of record of the related Trust
a statement, giving effect to such distribution to be made on such Regular
Distribution Date or Special Distribution Date, if any, setting forth the
following information (per $1,000 in aggregate principal amount of Pass Through
Certificates for such Trust, as to (i) and (ii) below):
(i) the amount of such distribution allocable to principal and the
amount allocable to premium, if any;
(ii) the amount of such distribution allocable to interest; and
(iii) the Pool Balance and the Pool Factor for such Trust. (Section
4.3)
So long as the Pass Through Certificates of any Trust are registered in the
name of Cede, as nominee for DTC, on the applicable record date prior to each
Regular Distribution Date and Special Distribution Date, the Pass Through
Trustee will request from DTC a securities position listing setting forth the
names of all DTC Participants reflected on DTC's books as holding interests in
the Pass Through Certificates of such Trust 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 Trust at any time
during the preceding calendar year a report containing the sum of the amounts
determined pursuant to clauses (i) and (ii) above with respect to the Trust for
such calendar year or, in the event such person was a Certificateholder 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 Certificateholder's 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 in the manner described above.
At such time, if any, as the Pass Through Certificates of a Trust are
issued in the form of Definitive Certificates, the Pass Through Trustee will
prepare and deliver the information described above to each Certificateholder of
record of such Trust as the name and period of record ownership of such
Certificateholder appears on the records of the Registrar of the Pass Through
Certificates.
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VOTING OF EQUIPMENT NOTES AND ETCS
The Pass Through Trustee, as holder of the Equipment Notes and ETCs held in
each Trust, has the right to vote and give consents and waivers in respect of
such Equipment Notes and ETCs under the applicable Indenture or Equipment Trust
Agreement. The Basic Agreement sets forth the circumstances in which the Pass
Through Trustee shall direct any action or cast any vote as the holder of the
Equipment Notes and ETCs held in the applicable Trust at its own discretion and
the circumstances in which the Pass Through Trustee shall seek instructions from
the Certificateholders of such Trust. Prior to an Event of Default with respect
to any Trust, the principal amount of the Equipment Notes and ETCs held in such
Trust directing any action or being voted for or against any proposal shall be
in proportion to the principal amount of Pass Through Certificates held by the
Certificateholders of such Trust taking the corresponding position. (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.
EVENTS OF DEFAULT AND CERTAIN RIGHTS UPON AN EVENT OF DEFAULT
The Basic Agreement defines an event of default with respect to a Trust (an
"Event of Default") as the occurrence and continuance of an event of default
under one or more of (i) the related Indentures (an "Indenture Event of
Default") or (ii) the related Equipment Trust Agreements (an "Equipment Trust
Event of Default"). The Indenture Events of Default or Equipment Trust Event of
Defaults will be described in the applicable Prospectus Supplement and, in the
case of Equipment Notes, will include events of default under the related Lease.
Because the Equipment Notes issued under an Indenture may be held in more than
one Trust, a continuing Indenture Event of Default under such Indenture would
result in an Event of Default with respect to each such Trust. There will be,
however, no cross-default provisions in the Indentures and events resulting in
an Indenture Event of Default under any particular Indenture (or a default under
any other indebtedness of the Company) will not necessarily result in an
Indenture Event of Default occurring under any other Indenture. If an Indenture
Event of Default occurs in fewer than all of the Indentures related to a Trust,
the Equipment Notes issued pursuant to the related Indentures with respect to
which an Indenture Event of Default has not occurred will continue to be held in
such Trust and payments of principal and interest on such Equipment Notes will
continue to be distributed to the holders of the Pass Through Certificates of
such Trust as originally scheduled.
In the case of Equipment Notes, the Owner Trustee and the Owner Participant
under each Indenture will each have the right under certain circumstances to
cure an Indenture Event of Default that results from the occurrence of a Lease
Event of Default under the related Lease. If the Owner Trustee or the Owner
Participant chooses to exercise such cure right, the Indenture Event of Default
and consequently the Event of Default with respect to the related Trust or
Trusts will be deemed to be cured.
The ability of the holders of the Pass Through Certificates issued with
respect to any one Trust to cause the Indenture Trustee with respect to any
Equipment Notes or the Equipment Trust Trustee with respect to any ETCs held in
such Trust to accelerate the payment on such Equipment Notes under the related
Indenture or Equipment Trust Agreement or to direct the exercise of remedies by
such Indenture Trustee under the related Indenture or Equipment Trust Trustee
under the related Equipment Trust Agreement will depend, in part, upon the
percentage of the aggregate principal amount of all Equipment Notes outstanding
under such Indenture or ETCs outstanding under such Equipment Trust Agreement
that are represented by the Equipment Notes outstanding under such Indenture or
ETCs outstanding under such Equipment Trust Agreement and held in such Trust.
Each Trust will hold Equipment Notes with different terms from those of the
Equipment Notes held in the other Trusts and therefore the Certificateholders of
a Trust may have divergent or conflicting interests from those of the
Certificateholders of any other Trusts that hold Equipment Notes relating to the
same Equipment Group. In addition, so long as the same institution acts as Pass
Through Trustee of each Trust, in the absence of instructions from the
Certificateholders of any such Trust, the Pass Through Trustee for such Trust
could for the same reason be faced with a potential conflict of interest upon an
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Indenture Event of Default or Equipment Trust Event of Default. In such event,
the Pass Through Trustee has indicated that it would resign as trustee of one or
all such Trusts, and a successor trustee for one or all of such Trusts would be
appointed in accordance with the terms of the Basic Agreement.
The Basic Agreement provides that, as long as (i) an Indenture Event of
Default under any Indenture relating to Equipment Notes held in a Trust or (ii)
an Equipment Trust Event of Default under any Equipment Trust Agreement relating
to ETCs held in such Trust shall have occurred and be continuing, the Pass
Through Trustee of such Trust may vote all of the Equipment Notes issued under
such Indenture or all of the ETCs issued under such Equipment Trust Agreement
that are held in such Trust, 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 Trust, shall vote not less than a
corresponding majority of such Equipment Notes or ETCs in favor of directing the
related Indenture Trustee or Equipment Trust Trustee to declare the unpaid
principal amount of all Equipment Notes issued under such Indenture or ETCs
issued under such Equipment Trust Agreement and any accrued and unpaid interest
thereon to be due and payable. The Basic Agreement also provides that, if (i) an
Indenture Event of Default under any Indenture relating to Equipment Notes held
in a Trust or (ii) an Equipment Trust Event of Default under any Equipment Trust
Agreement relating to ETCs held in such Trust shall have occurred and be
continuing, the Pass Through Trustee of such Trust 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 Trust shall,
subject to certain conditions, vote all of the Equipment Notes issued under such
Indenture or all the ETCs issued under such Equipment Trust Agreement that are
held in such Trust in favor of directing the related Indenture Trustee or
Equipment Trust Trustee as to the time, method and place of conducting any
proceeding for any remedy available to such Indenture Trustee or of exercising
any trust or power conferred on such Indenture Trustee or Equipment Trust
Trustee under such Indenture or Equipment Trust Agreement. (Sections 6.1 and
6.4)
As an additional remedy, if an Indenture Event of Default or Equipment
Trust Event of Default shall have occurred and be continuing, the Basic
Agreement provides that the Pass Through Trustee of a Trust holding Equipment
Notes issued under such Indenture or ETCs issued under such Equipment Trust
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 Trust shall, sell all or part of such Equipment
Notes or ETCs for cash to any person. (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 Trust and shall be distributed to the
Certificateholders of such Trust on a Special Distribution Date. (Sections 4.1
and 4.2) The market for Equipment Notes or ETCs in default may be very limited
and there can be no assurance that they could be sold for a reasonable price.
Furthermore, so long as the same institution acts as Trustee of each Trust, it
may be faced with a conflict in deciding from which Trust to sell Equipment
Notes or ETCs to available buyers. If the Pass Through Trustee sells any such
Equipment Notes with respect to which an Indenture Event of Default exists or
ETCs with respect to which an Equipment Trust Event of Default exists for less
than their outstanding principal amount thereof, the Certificateholders of such
Trust will receive a smaller amount of principal distributions than anticipated
and will not have any claim for the shortfall against the Pass Through Trustee,
the related Owner Trustee, the related Owner Participant, or, except as provided
in the next sentence, the Company. Inasmuch as the Company will fully and
unconditionally guarantee the payment of the principal of and interest on the
ETCs, the Certificateholders will have a claim against the Company for any
shortfall arising from the sale by the Pass Through Trustee of an ETC in
default. (Sections 4.1 and 4.2) See "Description of the ETCs-Guarantee". Neither
the Pass Through Trustee nor the Certificateholders of such Trust could take any
action with respect to any remaining Equipment Notes or ETCs held in such Trust
so long as no Indenture Event of Default or Equipment Trust Event of Default
existed with respect thereto.
Any amount distributed to the Pass Through Trustee of any Trust by (i) the
Indenture Trustee under any Indenture on account of the Equipment Notes held in
such Trust following an Indenture Event of Default under such Indenture or (ii)
the Equipment Trust Trustee under any Equipment Trust Agreement on account of
the ETCs held in such Trust following an Equipment Trust Event of Default shall
be deposited in the Special Payments Account for such Trust and shall be
distributed to the Certificateholders of such Trust on a
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Special Distribution Date. In addition, if, following an Indenture Event of
Default under any Indenture, the related Owner Trustee exercises its option, if
any, to prepay or purchase the outstanding Equipment Notes issued under such
Indenture as described in the related Prospectus Supplement, the price paid by
such Owner Trustee to the Pass Through Trustee of any Trust for the Equipment
Notes issued under such Indenture and held in such Trust shall be deposited in
the Special Payments Account for such Trust and shall be distributed to the
Certificateholders of such Trust on a Special Distribution Date. (Sections 4.1
and 4.2)
Any funds held by the Pass Through Trustee in the Special Payments Account
for a Trust representing either payments received with respect to (i) any
Equipment Notes held in such Trust following an Indenture Event of Default or
(ii) any ETCs held in such Trust following an Equipment Trust Event of Default
or proceeds from the sale by the Pass Through Trustee of any such Equipment
Notes or ETCs, shall, to the extent practicable, be invested and reinvested by
the Pass Through Trustee in Permitted Government Investments pending the
distribution of such funds on a Special Distribution Date. (Sections 4.1 and
4.2)
The Basic Agreement provides that the Pass Through Trustee of each Trust
shall, within 30 days after the occurrence of a default (as defined below) in
respect of such Trust, give to the Certificate holders of such Trust notice,
transmitted by mail, of all uncured or unwaived defaults with respect to such
Trust known to it; provided that, except in the case of default in the payment
of principal of, premium, if any, or interest on any of the Equipment Notes or
ETCs held in such Trust, the Pass Through Trustee shall be protected in
withholding such notice if it in good faith determines that the withholding of
such notice is in the interest of such Certificateholders. The term "default,"
for the purpose of the provision described in this paragraph only, shall mean
the occurrence of any Event of Default with respect to a Trust as specified
above, 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)
The Basic Agreement contains a provision entitling the Pass Through Trustee
of each Trust, subject to the duty of the Pass Through Trustee during a default
to act with the required standard of care, to obtain security from or be
indemnified by the holders of the Pass Through Certificates of such Trust before
proceeding to exercise any right or power under the Basic Agreement at the
request of such Certificateholders. (Section 7.3)
In certain cases, the holders of Pass Through Certificates of a Trust
evidencing fractional undivided interests aggregating not less than a majority
in interest of such Trust may on behalf of the holders of all Pass Through
Certificates of such Trust waive any past default or Event of Default with
respect to such Trust and thereby annul any direction given by the Pass Through
Trustee on behalf of such holders to the related Indenture Trustee with respect
thereto, except (i) a default in payment of the principal of, premium, if any,
or interest on any of the Equipment Notes or ETCs held in such Trust, and (ii) a
default in respect of any covenant or provision of the Basic Agreement or the
related Trust Supplement that cannot be modified or amended without the consent
of each Certificateholder of such Trust affected thereby. (Section 6.5) Each
Indenture and Equipment Trust Agreement will provide that, with certain
exceptions, the holders of a majority in aggregate unpaid principal amount of
the Equipment Notes or ETCs issued thereunder may on behalf of all such holders
waive any past default or Indenture Event of Default or Equipment Trust Event of
Default under such Equipment Trust Agreement thereunder. In the event of a
waiver with respect to a Trust as described above, the principal amount of the
Equipment Notes issued under the related Indenture or ETCs issued under the
related Equipment Trust Agreement held in such Trust shall be counted as waived
in the determination of the majority in aggregate unpaid principal amount of
Equipment Notes or ETCs required to waive a default or an Indenture Event of
Default under such Indenture or Equipment Trust Event of Default under such
Equipment Trust Agreement. Therefore, if the Certificateholders of a Trust waive
a past default or Event of Default such that the principal amount of the
Equipment Notes or ETCs held in such Trust constitutes the required majority in
aggregate unpaid principal amount under the applicable Indenture or Equipment
Trust Agreement, such past default, Indenture Event of Default under such
Indenture or Equipment Trust Event of Default under such Equipment Trust
Agreement shall be waived. For a discussion of waivers of Indenture Events of
Default under the Indentures and Equipment Trust Events of Default under the
Equipment Trust Agreements, see "Description of the Equipment Notes -- Indenture
Events of Default and Remedies" and "Description of the ETCs -- Events of
Default and Provisions Relating Thereto".
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MODIFICATIONS OF THE BASIC AGREEMENT
The Basic Agreement contains provisions permitting the Company and the Pass
Through Trustee of each Trust to enter into supplemental trust agreements,
without the consent of the holders of any of the Pass Through Certificates of
such Trust, (i) to evidence the succession of another corporation to the Company
and the assumption by such corporation of the Company's obligations under the
Basic Agreement and the applicable Trust Supplement, (ii) to add to the
covenants of the Company for the benefit of the holders of such Pass Through
Certificates, (iii) to cure any ambiguity, to correct any manifest error or to
correct or supplement any defective or inconsistent provision of such Basic
Agreement, the applicable Trust Supplement or any supplemental trust agreement,
or to make any other provisions with respect to matters or questions arising
thereunder, provided such action shall not adversely affect the interest of the
holders of such Pass Through Certificates, (iv) to evidence and provide for a
successor Trustee for some or all of the Trusts, or (v) to make any other
amendments or modifications which shall only apply to Pass Through Certificates
of one or more series to be issued thereafter. (Section 9.1)
The Basic Agreement also contains provisions permitting the Company and the
Pass Through Trustee of each Trust, with the consent of the Certificateholders
of such Trust evidencing fractional undivided interests aggregating not less
than a majority in interest of such Trust, to execute supplemental trust
agreements adding any provisions to or changing or eliminating any of the
provisions of the Basic Agreement, to the extent relating to such Trust, and the
applicable Trust Supplement, or modifying the rights of such Certificateholders,
except that no such supplemental trust agreement may, without the consent of the
holder of each such Pass Through Certificate so affected, (a) 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 held in such Trust, or
distributions in respect of any Pass Through Certificate of such Trust, or make
distributions payable in coin or currency other than that provided for in such
Pass Through Certificates, or impair the right of any Certificateholder of such
Trust to institute suit for the enforcement of any such payment when due, (b)
permit the disposition of any Equipment Note or ETC held in such Trust, except
as provided in the Basic Agreement or the applicable Trust Supplement, or (c)
reduce the percentage of the aggregate fractional undivided interests of the
Trust provided for in the Basic Agreement or the applicable Trust Supplement,
the consent of the holders of which is required for any such supplemental trust
agreement or for any waiver provided for in the Basic Agreement or such Trust
Supplement. (Section 9.2)
MODIFICATION AND CONSENTS AND WAIVERS UNDER THE INDENTURES, THE EQUIPMENT TRUST
AGREEMENTS AND RELATED AGREEMENTS
In the event that the Pass Through Trustee, as the holder of any Equipment
Notes or ETCs held in a Trust, receives a request for its consent to any
amendment, modification or waiver under the Indenture, Lease, if any, or other
document relating to such Equipment Notes, or Equipment Trust Agreement relating
to such ETCs, which requires the consent of the Certificateholders of such
Trust, the Pass Through Trustee shall mail a notice of such proposed amendment,
modification or waiver to each Certificateholder of such Trust as of the date of
such notice. The Pass Through Trustee shall request instructions from the
Certificateholders of such Trust as to whether or not to consent to such
amendment, modification or waiver. The Pass Through Trustee shall vote or
consent with respect to such Equipment Notes or ETCs in such Trust in the same
proportion as the Pass Through Certificates of such Trust were actually voted by
the holders thereof by a certain date. Notwithstanding the foregoing, if an
Event of Default in respect of such Trust shall have occurred and be continuing,
the Pass Through Trustee, subject to the voting instructions referred to under
"-- Events of Default and Certain Rights Upon an Event of Default," may in its
own discretion consent to such amendment, modification or waiver, and may so
notify the Indenture Trustee or equipment trust trustee to which such consent
relates. (Section 10.1)
TERMINATION OF THE TRUSTS
The obligations of the Company and the Pass Through Trustee with respect to
a Trust will terminate upon the distribution to Certificateholders of such Trust
of all amounts required to be distributed to them pursuant to the Basic
Agreement and the applicable Trust Supplement and the disposition of all
property held
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in such Trust. The Pass Through Trustee will mail to each Certificateholder of
record of such Trust notice of the termination of such Trust, the amount of the
proposed final payment and the proposed date for the distribution of such final
payment for such Trust. The final distribution to any Certificateholder of such
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
In the event that, on the date of issuance of any Pass Through
Certificates, all of the proceeds from the sale of such Pass Through
Certificates are not used to purchase the Equipment Notes or ETCs contemplated
to be held in the related Trust, such Equipment Notes or ETCs may be purchased
by the Pass Through Trustee at any time on or prior to the date specified in the
applicable Prospectus Supplement. In such event, the Pass Through Trustee will
hold the proceeds from the sale of such Pass Through Certificates not used to
purchase Equipment Notes or ETCs in an escrow account pending the purchase of
the Equipment Notes or ETCs not so purchased. Such proceeds will be invested in
Specified Investments at the direction and risk of, and for the account of, the
Company. Earnings on Specified Investments in the escrow account for each Trust
will be paid to the Company periodically, and the Company will be responsible
for any losses realized on such Specified Investments. (Section 2.2)
On the Regular Distribution Date occurring after the issuance of such Pass
Through Certificates, the Company will pay to the Pass Through Trustee an amount
equal to the interest that would have accrued on any Equipment Notes or ETCs
which are purchased after the date of the issuance of such Pass Through
Certificates from the date of the issuance of such Pass Through Certificates to,
but excluding, the date of the purchase of such Equipment Notes or ETCs by the
Pass Through Trustee. (Section 2.2)
To the extent that Equipment Notes or ETCs are not purchased by the Pass
Through Trustee on or prior to the date specified in the applicable Prospectus
Supplement, the unexpended proceeds from the sale of such Pass Through
Certificates, together with interest thereon at the rate applicable to such Pass
Through Certificates, will be distributed to the holders of such Pass Through
Certificates as a Special Payment.
THE PASS THROUGH TRUSTEE
Unless otherwise specified in the applicable Prospectus Supplement, Harris
Trust and Savings Bank ("Harris Bank") will be the Pass Through Trustee for each
of the 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 Basic Agreement, the Trust Supplements, the Pass Through
Certificates, the Equipment Notes, the Indentures, the Leases, the ETCs, the
Equipment Trust Agreements or other related documents. (Section 7.4) Unless
otherwise specified in a Prospectus Supplement, Harris Bank will also be the
Indenture Trustee under the Indentures pursuant to which the Equipment Notes are
issued and the equipment trust trustee under the Equipment Trust Agreements
pursuant to which the ETCs are issued.
Under certain circumstances, the Pass Through Trustee could be faced with a
potential conflict of interest as a result of its acting as trustee of one or
more Trusts, as Indenture Trustee with respect to the Equipment Notes and as
Equipment Trust Trustee with respect to the ETCs. In such event, the Pass
Through Trustee either would be required pursuant to the provisions of the Trust
Indenture Act of 1939 to resign as trustee of one or all of the Trusts or has
indicated that it would voluntarily so resign as trustee. See "-- Events of
Default and Certain Rights Upon an Event of Default."
Harris Bank serves as trustee under an Equipment Trust Agreement, dated as
of November 15, 1990, between the Company and Harris Bank and under an
Indenture, dated as of January 15, 1997, between the Company and Harris Bank. In
addition, Harris Bank provides customary banking services to the Company and
certain of its affiliates.
The Pass Through Trustee may resign with respect to any or all of the
Trusts at any time, in which event the Company will be obligated to appoint a
successor trustee. If the Pass Through Trustee ceases to be eligible
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to continue as Trustee with respect to a Trust or becomes incapable of acting as
Trustee or becomes insolvent, the Company may remove such Trustee. In addition,
any holder of Pass Through Certificates of such Trust for at least six months
may in such circumstances, on behalf of himself and all others similarly
situated, petition any court of competent jurisdiction for the removal of such
Trustee and the appointment of a successor trustee. Any resignation or removal
of the Pass Through Trustee with respect to a Trust and appointment of the
successor trustee for such 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 with respect to each
Trust. All references in this Prospectus to the Pass Through Trustee are to the
trustee acting in such capacity under each of the Trusts and should be read to
take into account the possibility that each of the Trusts could have a different
successor trustee in the event of such a resignation or removal.
The Basic Agreement provides that the Company will pay the Pass Through
Trustee's fees and expenses and will indemnify the Pass Through Trustee in
accordance with the Participation Agreement with respect to certain taxes. To
the extent not indemnified by the Company with respect to such taxes, the Pass
Through Trustee may be entitled to be reimbursed by the applicable Trust.
(Section 7.7)
DESCRIPTION OF THE EQUIPMENT NOTES
The statements under this caption are summaries and do not purport to be
complete. Except as otherwise indicated below or as described in the applicable
Prospectus Supplement, the following summaries will apply to the Equipment
Notes, the Indenture, the Lease and the Participation Agreement relating to each
Equipment Group. Additional provisions with respect to the Equipment Notes, the
Indentures, the Leases and the Participation Agreements relating to any
particular Equipment Group will be described in the applicable Prospectus
Supplement.
GENERAL
Each Equipment Note issued under the same Indenture will relate to a single
Equipment Group. The Equipment Notes with respect to each Equipment Group will
be issued under a separate Indenture between the related Indenture Trustee and
the Owner Trustee of a trust for the benefit of the Owner Participant which is
the beneficial owner of such Equipment Group.
The Equipment Notes will be nonrecourse obligations of the related Owner
Trustee. Except in certain circumstances involving the Company's purchase of
Equipment Units and the assumption of the Equipment Notes related thereto, the
Equipment Notes will not be direct obligations of, or guaranteed by, the
Company; however, the Company will be obligated to make or cause to be made
rental and other payments to the related Owner Trustee under the Lease of the
related Equipment Group in amounts that will be at least sufficient to pay when
due all payments required to be made on the Equipment Notes issued with respect
to such Equipment Group. The Company's rental obligations under each Lease will
be general obligations of the Company.
PRINCIPAL AND INTEREST PAYMENTS
Interest paid on the Equipment Notes held in each Trust will be passed
through to the Certificateholders of such Trust on the dates and at the rate per
annum set forth in the applicable Prospectus Supplement until the final
distribution date for such Trust. Principal paid on the Equipment Notes held in
each Trust will be passed through to the Certificateholders of such Trust in
scheduled amounts on the dates set forth in the applicable Prospectus Supplement
until the final distribution date for such Trust.
If any date scheduled for any payment of principal of, premium, if any, or
interest on the Equipment Notes is not a Business Day, such payment may be made
on the next succeeding Business Day without any additional interest.
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PREPAYMENTS
The applicable Prospectus Supplement will describe the circumstances,
whether voluntary or involuntary, under which the related Equipment Notes may be
prepaid or purchased, the premium, if any, related to certain prepayments or
purchases and other terms applying to prepayments or purchases of such Equipment
Notes.
SECURITY
The Equipment Notes issued with respect to an Equipment Group will be
secured by (i) an assignment by the related Owner Trustee to the related
indenture Trustee of such Owner Trustee's rights (except for certain limited
rights described in the Prospectus Supplement) under the Lease with respect to
such Equipment Group, including the right to receive payments of rent thereunder
and (ii) a perfected security interest to such Indenture Trustee in such
Equipment Group, subject to the rights of the Company under such Lease. Unless
and until an Indenture Event of Default with respect to an Equipment Group has
occurred and is continuing, the Indenture Trustee may not exercise the rights of
the Owner Trustee under the related Lease, except the right to receive payments
of rent due thereunder.
The Equipment Notes issued under different Indentures will not be
cross-collateralized and consequently the Equipment Notes issued in respect of
any one Equipment Group will not be secured by any other
Equipment Group or the Lease related to any other Equipment Group.
The Company will be required to file each Indenture, any indenture
supplement, each Lease and any lease supplement with respect to each Equipment
Group with the Surface Transportation Board and will be further required to
deposit such documents with the Registrar General of Canada under the Railway
Act of Canada and to publish notice of such deposit in accordance with such Act.
The filing with the Surface Transportation Board will give the Indenture Trustee
a perfected security interest in each Equipment Unit in such Equipment Group
whenever it is located in the United States and in the Lease. Such deposit and
publication in Canada will be done in order to protect the lien of the Indenture
Trustee in and to the Lease and the Equipment Units subject to the Indenture in
Canada or any province or territory thereof, to the extent provided for in the
Railway Act of Canada.
Each Equipment Unit may be operated by the Company or, subject to certain
limitations, under sublease or interchange arrangements in the United States,
Canada or Mexico. The extent to which the Indenture Trustee's security interest
would be recognized in an Equipment Unit located in countries other than the
United States is uncertain.
Funds, if any, held from time to time by the Indenture Trustee with respect
to any Equipment Units, including funds held as the result of the loss or
destruction of such Equipment Units or termination of the Lease, if any,
relating thereto, will be invested and reinvested by such Indenture Trustee, at
the direction of the Company (except in the case of a Lease Event of Default
under the applicable Lease, if any), in Specified Investments. The Company will
pay the amount of any loss resulting from any such investment directed by it.
The Company will be obligated, at its cost and expense, to maintain, repair
and keep each Equipment Unit in accordance with prudent industry maintenance
practices and in compliance in all material respects with all laws and
regulations.
LIMITATION OF LIABILITY
Except in certain circumstances involving the Company's purchase of
Equipment Units and the assumption of the Equipment Notes related thereto, the
Equipment Notes will not be direct obligations of, or guaranteed by, the Company
or the Owner Trustees. None of the Owner Trustees, the Owner Participants or the
Indenture Trustees, or any affiliates thereof, will be personally liable to any
holder of an Equipment Note or, in the case of the Owner Trustees and the Owner
Participants, to the Indenture Trustees for any amounts payable under the
Equipment Notes or, except as provided in each Indenture, for any liability
under such Indenture. Except in the circumstances described above, all payments
of principal of, premium, if any, and interest on Equipment Notes issued with
respect to any Equipment Group (other than payments made in
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connection with an optional prepayment or purchase by the related Owner Trustee)
will be made only from the assets subject to the lien of the Indenture with
respect to such Equipment Group or the income and proceeds received by the
related Indenture Trustee therefrom (including rent payable by the Company under
the Lease with respect to such Equipment Group).
Except as otherwise provided in the Indentures, each 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 Trustees or to any holder of any Equipment Note.
INDENTURE EVENTS OF DEFAULT AND REMEDIES
The applicable Prospectus Supplement will describe the Indenture Events of
Default under the related Indentures, the remedies that the Indenture Trustee
may exercise with respect to the related Equipment Group, either at its own
initiative or upon instruction from holders of the related Equipment Notes, and
other provisions relating to the occurrence of an indenture Event of Default and
the exercise of remedies. There will be no cross-default provisions in the
Indentures and events resulting in an indenture Event of Default under any
particular Indenture (or a default under any other indebtedness of the Company)
will not necessarily result in an Indenture Event of Default under any other
Indenture.
In the event of the bankruptcy of an Owner Participant, it is possible
that, notwithstanding that the related Equipment Group is owned by an Owner
Trustee in trust, such Equipment Group and its Lease and the Equipment Notes
related thereto might become part of the bankruptcy proceeding. In such event,
payments 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 such Lease and the related Equipment Group. In
addition, in the event of an Owner Participant bankruptcy, the estate might seek
court approval to reject the related Lease as an executory contract. Such a
Lease rejection, if successful, would leave the Indenture Trustee as a secured
creditor in respect of the related Equipment Group with a claim for damages
against the estate.
THE LEASES
The following provisions will be applicable unless otherwise disclosed in
the Prospectus Supplement.
TERM AND RENTALS. Each Equipment Group will be leased separately by the
related Owner Trustee to the Company for a term commencing on the delivery date
thereof to such Owner Trustee and expiring on a date not earlier than the latest
maturity date of the Equipment Notes issued with respect to such Equipment Group
unless previously terminated as permitted by the related Lease. The basic rental
payments by the Company under each Lease will be payable on the dates specified
in the applicable Prospectus Supplement, and will be assigned by the Owner
Trustee under the related Indenture to provide the funds necessary to make
payments of principal and interest due from such Owner Trustee on the Equipment
Notes issued under such Indenture. Although in certain cases the basic rental
payments under the Leases may be adjusted, under no circumstances will rental
payments be less than the scheduled payments of principal and interest on the
Equipment Notes issued under the Indenture relating to such Lease. The balance
of any basic rental payments under each Lease, after payment of the scheduled
principal and interest on the Equipment Notes issued under the Indenture
relating to such Lease, will be paid over to the related Owner Trustee. The
Company's obligation to pay rent and to cause other payments to be made under
each Lease will be a general obligation of the Company.
NET LEASE. The Company's obligations in respect of each Equipment Group
leased to the Company by an Owner Trustee will be those of a lessee under a "net
lease." Accordingly, the Company will be obligated, at its cost and expense, to
maintain, repair and keep each Equipment Unit in any such Equipment Group in
accordance with prudent industry maintenance practices and in compliance in all
material respects with all laws and regulations and consistent with maintenance
practices used by the Company in respect of equipment owned or leased by the
Company similar in type to such Equipment Unit. Subject to certain exceptions,
the
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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. The Company reserves the right to contest the
validity or applicability of any required alterations, replacements or
modifications. The Company shall have the right to make alterations,
modifications and improvements with respect to each Equipment Unit in any such
Equipment Group, provided that no such alteration, modification or improvement
shall materially diminish the fair market value, utility or remaining economic
useful life of such Unit.
INSURANCE. Unless waived or otherwise excused by the terms of any Lease,
the Company will be required, at its own expense, to 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. The Company does not maintain
casualty insurance with respect to the Equipment.
LEASE EVENTS OF DEFAULT; REMEDIES. The applicable Prospectus Supplement
will describe the Lease Events of Default under the related Lease, the remedies
that the Owner Trustee, or Indenture Trustee as assignee of the Owner Trustee,
may exercise with respect to an Equipment Group, and other provisions relating
to the occurrence of a Lease Event of Default and the exercise of remedies.
Lease Events of Default under each Lease will include, among other things,
(a) failure by the Company to make rental payments under the Lease, (b) failure
to maintain insurance as required by the Lease, (c) use of the Equipment Group
in contravention of the Lease, (d) breach of any representation or warranty made
by the Company in the Lease or in the related Participation Agreement and (e)
the occurrence of certain events of bankruptcy, reorganization or insolvency of
the Company. Upon the occurrence of a Lease Event of Default under any Lease,
the related Indenture Trustee, as assignee of the related Owner Trustee's rights
under such Lease, will be entitled to repossess the Equipment Units and use or
sell such Equipment Units free and clear of the Company's rights therein.
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 related Equipment Notes. In any case, rejection
of a Lease by the Company or its bankruptcy trustee would not deprive the
related indenture Trustee of its security interest in the related Equipment
Group.
The Company is not a railroad, and the protections against the automatic
stay in bankruptcy under Section 1168 of the Bankruptcy Code which are granted
to lessors, conditional vendors and purchase money financiers of rolling stock
to a common carrier by railroad will not be available to an Indenture Trustee
upon the occurrence of a Lease Event of Default.
THE PARTICIPATION AGREEMENTS
The Company will be required to indemnify the Pass Through Trustee, each
Indenture Trustee, each Owner Participant and each Owner Trustee for certain
losses and claims and for certain other matters. Each Owner Participant will be
required to discharge certain liens or claims on or against the assets subject
to the lien of the related Indenture that arise out of any act of or failure to
act by or claim against such Owner Participant. Subject to certain restrictions,
each Owner Participant may transfer its interest in the related Equipment Group.
DESCRIPTION OF THE ETCS
The statements under this caption are summaries only of the ETCs and the
Equipment Trust Agreements under which they will be issued and do not purport to
be complete. This summary makes use of terms to be defined in the Equipment
Trust Agreements, the form of which has been filed as an exhibit to the
Registration
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Statement of which this Prospectus is a part. Additional provisions relating to
any particular ETCs will be described in the applicable Prospectus Supplement.
GENERAL
The ETCs will be limited to the aggregate principal amount set forth in the
applicable Equipment Trust Agreement. The ETCs will be issued against the
deposit with the Equipment Trust Trustee by the Pass Through Trustee of like
amounts of Deposited Cash. Each ETC will represent an interest equal to its
principal amount in the trust created under the applicable Equipment Trust
Agreement.
PRINCIPAL AND INTEREST PAYMENTS
Interest paid on the ETCs held in each Trust will be passed through to the
Certificateholders of such Trust on the dates and at the rate per annum set
forth in the applicable Prospectus Supplement until the final distribution date
for such Trust. Principal paid on the ETCs held in each Trust will be passed
through to the Certificateholders of such Trust in scheduled amounts on the
dates set forth in the applicable Prospectus Supplement until the final
distribution date for such Trust.
If any date scheduled for any payment of principal of, premium, if any, or
interest on the ETCs is not a Business Day, such payment may be made on the next
succeeding Business Day without any additional interest.
GUARANTEE
The Company will fully and unconditionally guarantee the payment as and
when due of the principal of and interest on each ETC.
PREPAYMENT
The applicable Prospectus Supplement will describe the circumstances,
whether voluntary or involuntary, under which the related ETCs may be prepaid or
purchased, the premium (if any) related to certain prepayments or purchases and
other terms applying to prepayments or purchases of such ETCs.
SECURITY
Except as otherwise set forth in the applicable Prospectus Supplement, the
applicable Equipment Trust Agreement will provide for the sale by the Company to
the Equipment Trust Trustee, as trustee for the holders of ETCs, of railway tank
cars and other rail cars (the "Trust Equipment") of the types used in the
Company's business having an estimated cost of not less than 125% of the
principal amount of the related ETC. For the purpose of determining the cost of
any unit of Equipment built by the Company, 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
will be used.
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, as the
purchase price for such Trust Equipment, out of Deposited Cash an amount which
will not exceed 80% of the aggregate cost (without deduction for depreciation)
of such Trust Equipment (or such other percentage as may be set forth in the
applicable Prospectus Supplement). The balance of the cost will be paid by the
Equipment Trust Trustee from advance rentals required by the applicable
Equipment Trust Agreement to be paid to the Equipment Trust Trustee by the
Company. The advance rental shall equal the amount by which the aggregate cost
of the Trust Equipment exceeds the net proceeds of the sale of the ETCs. 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 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.
Each Equipment Trust Agreement will contain provisions requiring the
Company to cause such agreements and each supplement thereto, promptly after the
execution and delivery thereof, to be recorded
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with the Surface Transportation Board and the Registrar General of Canada. In
addition, the Company 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 will not be required to so record
in any jurisdiction if (1) in the opinion of the Company such recording would be
unduly burdensome, and (2) after giving effect to such failure to record, the
Company has taken all action required by law to protect the title of the
Equipment Trust Trustee to Trust Equipment 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.
Each Equipment Trust Agreement will provide for the lease to the Company of
all the Trust Equipment subject to such agreement for a period specified in the
applicable Prospectus Supplement. 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 applicable ETC, as well as all the expenses
of the trust created under the Equipment Trust Agreement and certain other
charges. At the termination of the lease and after all payments due or to become
due from the Company under the Equipment 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 trust shall vest in the Company.
Each Equipment Trust Agreement will permit the possession and use of the
Trust Equipment in the Company's business, including the sublease thereof to
others subject to the terms and conditions of such Equipment Trust Agreement.
The Trust Equipment subject to any Equipment Trust Agreement will not
secure the payment of an ETC issued under any other Equipment Trust Agreement.
MAINTENANCE, RELEASE AND SUBSTITUTION OF TRUST EQUIPMENT
The Company 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"). Each Equipment
Trust Agreement will provide that, whenever Trust Equipment having a value
specified therein shall have suffered a Casualty Occurrence, the Company shall
either deposit with the Equipment Trust Trustee an amount in cash equal to the
value of such Trust Equipment or convey to the Equipment Trust Trustee
additional Equipment having a value not less than the value of the Trust
Equipment suffering the Casualty Occurrence.
Each Equipment Trust Agreement will provide that if the aggregate cost of
the Trust Equipment initially delivered to the Equipment Trust Trustee by the
Company shall exceed 125% of the aggregate principal amount of the ETC (or such
other percentage as may be specified in the applicable Prospectus Supplement),
the Equipment Trust Trustee, upon request of the Company shall release Trust
Equipment from the relevant trust having an aggregate cost of not more than the
amount of such excess.
Each Equipment Trust Agreement will provide for the release by the
Equipment Trust Trustee of any Trust Equipment upon request of the Company, and
(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 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.
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INFORMATION CONCERNING THE EQUIPMENT TRUST TRUSTEE
Harris Bank will be the Equipment Trust Trustee under each Equipment Trust
Agreement. Harris Bank 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 EVENTS OF DEFAULT AND PROVISIONS RELATING THERETO
Equipment Trust Events of Default will be defined in each Equipment Trust
Agreement as being: default for more than 10 Business Days in the payment of any
rental payable under an Equipment Trust Agreement; any unauthorized assignment
or transfer of the Company's rights under the Equipment Trust Agreement,
continuing as provided therein; any unauthorized transfer, sublease or parting
with the possession of any Trust Equipment, continuing as provided therein; any
failure or refusal to perform any other covenant in such Equipment 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 has
knowledge of any such failure; certain events of bankruptcy; or the termination
of the lease provided for in an Equipment 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 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 for its property will be deemed to be an unauthorized assignment if,
prior to the exercise of the remedies of the Equipment Trust Trustee under an
Equipment Trust Agreement, such receiver or trustee shall not be discharged or
duly assume the Company's obligations under such agreement. (Section 4.09) Each
Equipment Trust Agreement will provide that the Equipment Trust Trustee shall,
promptly after the occurrence of any Equipment Trust Event of Default thereunder
known to it, give to the holders of the related ETC 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 an Equipment 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.
Upon the happening of an Equipment Trust Event of Default, the Equipment
Trust Trustee or the holders of not less than a majority in aggregate principal
amount of the relevant ETC may declare the principal thereof and all accrued
interest thereon to be due and payable. (Section 5.04) Subject to certain
conditions, however, any such declaration may be rescinded by the holders of
66 2/3% in principal amount of such 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 ETC may waive any past Equipment
Trust Event of Default, except an Equipment Trust Event of Default in the
payment of rentals due in respect of the principal of or interest on such ETC.
(Section 5.04)
The right of any holder of an ETC to institute action for any remedy under
an Equipment Trust Agreement (except such holder's right to enforce payment of
the principal of and interest on an ETC when due if such enforcement will not
impair the Equipment Trust Trustee's title to the Trust Equipment) will be
subject to certain conditions precedent, including a written request by the
holders of not less than a majority in principal amount of such 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)
Each Equipment Trust Agreement will require the annual filing by the
Company 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)
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ERISA CONSIDERATIONS
Unless otherwise indicated in the applicable Prospectus Supplement, 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 (as hereinafter defined). Employee benefit
plans which are governmental plans (as defined in Section 3(32) of ERISA) and
certain church plans (as defined in Section 3(33) of ERISA) are not subject to
the fiduciary responsibility provisions of ERISA. Any Plan that purchases a Pass
Through Certificate must be an "accredited investor" as defined in Rule
501(a)(1) of Regulation D promulgated under the Securities Act.
MATERIAL FEDERAL INCOME TAX CONSEQUENCES
The statements of law and legal conclusions contained in the following
discussion set forth the opinion of Neal, Gerber & Eisenberg, counsel to the
Company, with respect to 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
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 "Material 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
In the opinion of Neal, Gerber & Eisenberg, based upon an interpretation of
analogous authorities under currently applicable law, the Trusts will not be
classified as associations taxable as a corporation, but rather each will be
classified as grantor trusts for purposes of Sections 671 through 679 of the
Internal Revenue Code of 1986, as amended (the "Code"), and each Certificate
Owner of a Trust will be treated as the owner of a pro rata undivided interest
in each of the Equipment Notes, ETCs, if any, or any other property held in such
Trust.
Each Certificate Owner of a Trust will be required to report on its federal
income tax return its pro rata share of the entire income from the Equipment
Notes, ETCs, if any, or any other property in such 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.
A purchaser of a Pass Through Certificate should be treated as purchasing
an interest in each Equipment Note, ETC, if any, and any other property in a
Trust at a price determined by allocating the purchase price paid for the Pass
Through Certificate among such Equipment Notes, ETCs and other property in
proportion to their fair market values at the time of purchase of the Pass
Through Certificate. When a Trust has acquired all the Equipment Notes, ETCs, if
any, and any other property to be held by such Trust, the purchase price paid
for a Pass Through Certificate by an original purchaser of such certificate will
be allocated among such Equipment Notes, ETCs and any other property in such
Trust in proportion to their respective purchase prices.
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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 Trust also held the
underlying Equipment Notes, ETCs, if any, or other property 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 nor the ETCs 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 or ETC, if any, held in a Trust
at a "market discount" to the extent the remaining aggregate principal amount of
such Equipment Note or ETC exceeds the Certificate Owner's tax basis allocable
to such Equipment Note or 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 or 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.
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 (which may include certain of the Equipment
Notes and ETCs), 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
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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 or ETC, if any, held in a 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 or 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 or
ETC. Generally, such amortization is on a constant yield basis. However, in the
case of installment obligations, the Conference Report indicates a Congressional
intent that amortization will be in accordance with the same rules that will
apply to the accrual of market discount on installment obligations (see the
discussion above).
In the case of obligations that may be called at a premium prior to
maturity, 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.
CERTAIN ILLINOIS TAXES
The Pass Through Trustee is an Illinois banking corporation with its
principal corporate trust office in Chicago, Illinois. Neal, Gerber & Eisenberg,
counsel to the Company, has advised the Company that, in its opinion, under
currently applicable law, (i) the Trusts will not be subject to any tax
(including, without limitation, net or gross income, tangible or intangible
property, net worth, capital, franchise or doing business tax), fee or other
governmental charge under the laws of the State of Illinois or any political
subdivision thereof and (ii) Certificate Owners who are not residents of or
otherwise subject to tax in Illinois will not be subject to any tax (including,
without limitation, net or gross income, tangible or intangible property, net
worth, capital, franchise or doing business tax), fee or other governmental
charge under the laws of the State of Illinois 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 (a) the Indenture Trustee forecloses on the Equipment and any of the
Equipment is located in Illinois, (b) the Equipment Trust Trustee forecloses on
the Trust Equipment and any of the Trust Equipment is located in Illinois or (c)
the Indenture Trust, the trust created under an Equipment Trust Agreement, or
the Pass Through Trust, as applicable, engages in business in Illinois as a
result of such foreclosure. Neither the Trusts nor the Certificate Owners will
be indemnified for any state or local taxes imposed on them, the imposition of
which on a Trust could reduce the amounts available for distribution to the
Certificate Owners of such Trust. In general, should a Certificate Owner or a
Trust be subject to any state or local tax which would not be imposed if the
Pass Through Trustee were located in a different jurisdiction in the United
States, the Pass Through Trustee will resign and a new Pass Through Trustee in
such other jurisdiction will be appointed.
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PLAN OF DISTRIBUTION
The Company may sell the Pass Through Certificates being offered hereby:
(i) through agents, (ii) to or through underwriters, (iii) through dealers or
(iv) through a combination of any such methods of sale.
The distribution of the Pass Through Certificates may be effected from time
to time in one or more transactions either (i) at a fixed price or prices, which
may be changed, or (ii) at market prices prevailing at the time of sale, or
(iii) at prices related to such prevailing market prices, or (iv) at negotiated
prices.
Offers to purchase the Pass Through Certificates may be solicited by agents
designated by the Company from time to time. Any such agent, which may be deemed
to be an underwriter as that term is defined in the Securities Act, involved in
the offer or sale of the Pass Through Certificates in respect of which this
Prospectus is delivered will be named, and any commissions payable by the
Company to such agent will be set forth, in the applicable Prospectus
Supplement. Unless otherwise indicated in the Prospectus Supplement, any such
agent will be acting on a best efforts basis for the period of its appointment.
If an underwriter or underwriters are utilized in the sale, the Company
will execute an underwriting agreement with such underwriters at the time of
sale to them and the names of the underwriters and the terms of the transaction,
including commissions, discounts and other compensation of the underwriters and
dealers, if any, will be set forth in the Prospectus Supplement, which will be
used by the underwriters to make resales of the Pass Through Certificates in
respect of which this Prospectus is delivered to the public.
If a dealer is utilized in the sale of the Pass Through Certificates in
respect of which this Prospectus is delivered, the Company or the Pass Through
Trustee, as the case may be, will sell such Pass Through Certificates to the
dealer, as principal. The dealer may then resell such Pass Through Certificates
to the public at varying prices to be determined by such dealer at the time of
resale.
Underwriters, dealers, agents and other persons may be entitled, under
agreements which may be entered into with the Company, to indemnification
against certain civil liabilities, including liabilities under the Securities
Act.
Underwriters, dealers and agents may be customers of, engage in
transactions with or perform services for the Company in the ordinary course of
business.
LEGAL OPINIONS
Unless otherwise indicated in the Prospectus Supplement to this Prospectus,
the validity of the Pass Through Certificates will be passed upon for the
Company by Neal, Gerber & Eisenberg, Chicago, Illinois, and for any underwriters
or agents, by Mayer, Brown & Platt, New York, New York. Both Neal, Gerber &
Eisenberg and Mayer, Brown & Platt will rely on the opinion of the Law
Department of Harris Trust and Savings Bank as to matters relating to the
authorization, execution, authentication, issuance and delivery of the Pass
Through Certificates under the Basic Agreement.
EXPERTS
The consolidated financial statements and related schedules of Union Tank
Car Company appearing in Union Tank Car Company's Annual Report (Form 10-K/A)
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.
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APPENDIX I
GLOSSARY OF CERTAIN TERMS
The following is a glossary of certain terms used in this Prospectus
relating to the Pass Through Certificates. The definitions of terms used in this
glossary that are also used in the Basic Agreement, Trust Supplements,
Indentures, Leases or Participation Agreements are qualified in their entirety
by reference to the definitions of such terms contained therein. Additional
terms or changes in the terms defined below may appear in the applicable
Prospectus Supplement.
"Basic Agreement" means the Pass Through Trust Agreement, dated as of
January 15, 1997, between the Company and the Pass Through Trustee.
"Business Day," when used with respect to the Pass Through Certificates of
any series, means any day other than a Saturday, a Sunday, or a day on which
commercial banking institutions in New York, New York, Chicago, Illinois or a
city and state in which the Pass Through Trustee or any related Indenture
Trustee maintains its Corporate Trust Office are authorized or obligated by law,
regulation or executive order to be closed.
"Certificate Account" means the one or more non-interest-bearing accounts
established and maintained by the Pass Through Trustee pursuant to the Basic
Agreement on behalf of the Certificate holders of each Trust for the deposit of
payments representing Scheduled Payments on the Equipment Notes held in such
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 the Person in whose name a Pass Through
Certificate is registered.
"Code" means the United States Internal Revenue Code of 1986, as amended.
"Commission" means the Securities and Exchange Commission.
"Company" means Union Tank Car Company and its wholly-owned subsidiaries
(unless the context otherwise requires).
"ETC" means each of the equipment trust certificates to be issued pursuant
to an Equipment Trust Agreement between the Company and the Equipment Trust
Trustee.
"Equipment Group" means all the railcars (which may include various types
or categories of standard gauge rolling stock) in respect of which a particular
series of Equipment Notes is issued.
"Equipment Trust Agreement" means an equipment trust agreement between the
Company and the Equipment Trust Trustee.
"Equipment Trust Event of Default" means each of the events designated as
an Event of Default in an Equipment Trust Agreement, as described in the
applicable Prospectus Supplement.
"Equipment Trust Trustee" means, unless otherwise specified in a Prospectus
Supplement, Harris Trust and Savings Bank, in its capacity as trustee under an
Equipment Trust Agreement, and each other person which may from time to time act
as successor trustee under such agreement.
"Equipment Unit" or "Unit" means an individual railcar.
"Event of Default" means, (i) with respect to the Equipment Notes held in
any Trust, the occurrence and continuance of an Indenture Event of Default under
one or more of the related Indentures, and (ii) with respect to ETCs held in a
Trust, the occurrence and continuance of an Equipment Trust Event of Default
under the related Equipment Trust Agreement.
"Indenture" means each of the separate trust indenture and security
agreements entered into from time to time between an Owner Trustee and an
Indenture Trustee with respect to the issuance of Leased
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Equipment Notes, as each such agreement may be amended or supplemented in
accordance with its respective terms.
"Indenture Event of Default" means each of the events designated as an
event of default in an Indenture, as described in the applicable Prospectus
Supplement.
"Indenture Trustee," when used with respect to any Equipment Note or the
Indenture applicable thereto, means, unless otherwise specified in a Prospectus
Supplement, Harris Trust and Savings Bank, and any successor to such Indenture
Trustee as such trustee.
"Lease" means each of the lease agreements entered into with respect to
Equipment Units between an Owner Trustee and the Company, as each such lease
agreement may from time to time be amended or supplemented.
"Lease Event of Default" means each of the events designated as an event of
default in a Lease, as described in the applicable Prospectus Supplement.
"Leased Equipment" means each Equipment Group leased by an Owner Trustee to the
Company pursuant to a Lease.
"Owner Participant" means each of the owner participants for whose benefit
an Owner Trustee owns an Equipment Group leased to the Company pursuant to a
Lease and its permitted successors and assigns.
"Owner Trustee," when used with respect to any Equipment Note or the
Indenture applicable thereto or the Lease related thereto, means the "Owner
Trustee" referred to in the applicable Indenture, not in its individual capacity
but solely as trustee; and each other Person which may from time to time be
acting as Owner Trustee in accordance with the provisions of the applicable
Indenture, Lease or Participation Agreement.
"Participation Agreement" when used with respect to any Equipment Note,
means the note purchase, participation, refinancing or similar agreement or
agreements referred to in the related Indenture, providing for, among other
things, the purchase of Equipment Notes by the Pass Through Trustee.
"Pass Through Certificate" means each of the Pass Through Certificates to
be issued by each of the Trusts pursuant to the Basic Agreement and the related
Trust Supplement.
"Pass Through Trustee" means, unless otherwise specified in a Prospectus
Supplement, Harris Trust and Savings Bank, in its capacity as Pass Through
Trustee under each Trust, and each other person which may from time to time act
as successor Pass Through Trustee under such Trust.
"Pool Balance" means, for each Trust, as of any date, the aggregate unpaid
principal amount of the Equipment Notes and ETCs, if any, held in such Trust on
such date plus any amounts in respect of principal on such Equipment Notes and
ETCs held by the Pass Through Trustee and not yet distributed plus the amount of
any moneys held in the related escrow account (other than earnings thereon). The
Pool Balance for each Trust as of any Regular Distribution Date or Special
Distribution Date shall be computed after giving effect to the payment of
principal, if any, on the Equipment Notes and ETCs, if any, held in such Trust
and distribution thereof to be made on that date.
"Pool Factor" means, for each Trust, as of any date, the quotient (rounded
to the seventh decimal place) computed by dividing (i) the Pool Balance of such
Trust by (ii) the aggregate original principal amount of the Equipment Notes
held in such Trust. The Pool Factor for each Trust as of any Regular
Distribution Date or Special Distribution Date shall be computed after giving
effect to the payment of principal, if any, on the Equipment Notes and ETCs, if
any, held in such Trust and distribution thereof to be made on that date.
"Regular Distribution Date" means each date on which a Scheduled Payment
will be distributed, as specified in the applicable Prospectus Supplement.
"Scheduled Payment" means each payment of interest or principal on an
Equipment Note scheduled to be received by the Pass Through Trustee on the
Regular Distribution Dates specified in the applicable Prospectus Supplement.
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"Special Distribution Date" means each date on which a Special Payment will
be distributed, as specified in the applicable Prospectus Supplement.
"Special Payment" means (i) any payment of principal, premium, if any, and
interest resulting from the prepayment or purchase of an Equipment Note held in
a Trust, (ii) any payment of principal and interest (including any interest
accruing upon default) on or any other amount in respect of an Equipment Note
held in a Trust upon an Indenture Event of Default in respect of, or upon
acceleration relating to, such Equipment Note, (iii) any payment of principal,
premium, if any, and interest on an Equipment Note which is not in fact paid
within five days of a Regular Distribution Date, (iv) any proceeds from the sale
of any Equipment Note upon an Event of Default, or (v) the amounts available for
distribution from a Trust as a result of the failure to apply such amounts to
the purchase of Equipment Notes on or prior to the date specified in the
applicable Prospectus Supplement.
"Special Payments Account" means the one or more accounts established and
maintained by the Pass Through Trustee pursuant to the Basic Agreement on behalf
of the Certificateholders of each Trust for the deposit of payments representing
Special Payments on the Equipment Notes held in such Trust.
"Specified Investments" when used with respect to any Trust, means, unless
otherwise specified in the related Prospectus Supplement, (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 H such conditions are met) and (iv)
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 (iii) above; provided that if all of the
above investments are unavailable, the entire amounts to be invested may be used
to purchase Federal funds from an entity described in clause (iii) above; and
provided further that no investment shall be eligible as a "Specified
Investment" unless the final maturity or date of return of such investment is 91
days or less from the date of purchase thereof.
"Trust" means each of the Union Tank Car Company Pass Through Trusts to be
formed pursuant to the Basic Agreement and a Trust Supplement.
"Trust Property" means the Equipment Notes and ETCs, if any, held as the
property of a Trust and all funds from time to time deposited in the related
Certificate Account, the related Special Payments Account and any other account
maintained as a part of such Trust, including any proceeds from the sale by the
Pass Through Trustee of any such Equipment Note or ETC in connection with an
Event of Default.
"Trust Supplement" means each of the Pass Through Trust Supplements between
the Company and the Pass Through Trustee, pursuant to each of which a Trust is
formed and a series of Pass Through Certificates is issued to evidence
fractional undivided ownership interests in the Trust Property held in such
Trust.
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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
JANUARY 15, 1997
PROSPECTUS
$400,000,000
UNION TANK CAR COMPANY
DEBT SECURITIES
------------------------
Union Tank Car Company, a Delaware corporation (the "Company"), may offer
from time to time, in one or more series, up to $400,000,000 aggregate principal
amount (or the equivalent in foreign currencies or currency units) of its debt
securities ("Debt Securities"), on terms to be determined at the time the Debt
Securities are offered for sale. Unless otherwise provided in a Prospectus
Supplement, the Debt Securities of any series may be represented by a single
global certificate registered in the name of a depository's nominee and, if so
represented, beneficial interests in the global certificate will be shown on,
and transfers thereof will be effected only through, records maintained by the
depository and its participants. Debt Securities may be offered through
underwriters, dealers or agents. The names of any underwriters, dealers or
agents and any compensation to such underwriters, dealers or agents will be set
forth in the Prospectus Supplement.
The terms of the Debt Securities, including, where applicable, the specific
designation, aggregate principal amount, authorized denominations, currencies in
which such Debt Securities are issued or payable, maturity, rate (or manner of
calculation thereof) and time of payment of interest, if any, whether the Debt
Securities are issuable in registered form or bearer form or both, whether any
series of the Debt Securities will be represented by a single global
certificate, any terms for redemption or for sinking fund payments, whether the
Debt Securities are convertible into Debt Securities of a different series, the
initial public offering price, the net proceeds to the Company from the sale of
the Debt Securities and any other specific terms in connection with the offering
and sale of the Debt Securities in respect of which this Prospectus is being
delivered will be set forth in a Prospectus Supplement.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
------------------------
This Prospectus may not be used to consummate a sale of Debt Securities
unless accompanied by a Prospectus Supplement.
------------------------
The date of this Prospectus is January , 1997.
33
AVAILABLE INFORMATION
The Company has 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 Debt Securities. 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 Debt Securities and the Company, 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, Suite 1300,
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. Such materials also may be accessed
electronically by means of the Commission's home page on the Internet at
http://www.sec.gov.
DOCUMENTS INCORPORATED BY REFERENCE
The Company's Annual Report on Form 10-K for the fiscal year ended December
31, 1995 filed on March 11, 1996, as amended by Form 10-K/A filed on May 3, 1996
and by Form 10-K/A filed on May 17, 1996, and its Quarterly Reports on Form 10-Q
for the quarters ended March 31, 1996, June 30, 1996 and September 30, 1996, as
filed with the Commission pursuant to the Exchange Act, are 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 Debt Securities 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.
USE OF PROCEEDS
The net proceeds to be received by the Company from the sale of Debt
Securities will be added to the general funds of the Company and may be used to
finance the addition of railcars to the Company's fleet and other capital
expenditures, to finance acquisitions, to repay outstanding indebtedness, or for
other corporate purposes or as may be described in a Prospectus Supplement. The
Company has not allocated a specific portion of the proceeds for any particular
use at this time. Pending such use, the net proceeds may be temporarily invested
in short-term securities.
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THE COMPANY
Union Tank Car Company (with its wholly-owned subsidiaries herein
collectively referred to, except as the context otherwise requires, as the
"Company") is 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, a 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.
The Company's principal executive offices are located at 225 West
Washington Street, Chicago, Illinois 60606, and its telephone number is (312)
372-9500.
DESCRIPTION OF DEBT SECURITIES
The following description sets forth certain general terms and provisions
of the Debt Securities to which any Prospectus Supplement may relate. The
particular terms and provisions of the series of Debt Securities offered by a
Prospectus Supplement, including any additional covenants or changes to existing
covenants relating to such series, and the extent to which such general terms
and provisions described below may apply thereto, will be described in the
Prospectus Supplement relating to such series of Debt Securities.
The Debt Securities are to be issued under an Indenture, dated as of
January 15, 1997, as supplemented (the "Debt Indenture"), between the Company
and Harris Trust and Savings Bank, as Trustee (the "Debt Trustee"). The
following summaries of certain provisions of the Debt Securities and the Debt
Indenture do not purport to be complete and are subject to, and are qualified in
their entirety by reference to, all provisions of the Debt Securities and the
Debt Indenture, including the definitions therein of certain terms. Particular
sections of the Debt Indenture which are relevant to the discussion are cited
parenthetically. Wherever particular sections or defined terms of the Debt
Indenture are referred to, it is intended that such sections or defined terms
shall be incorporated herein by reference. Capitalized terms not otherwise
defined herein shall have the meaning ascribed to such terms in the Debt
Indenture.
GENERAL
The Debt Indenture does not limit the amount of Debt Securities which can
be issued thereunder or the amount of debt which may otherwise be incurred by
the Company, and additional debt securities may be issued under the Debt
Indenture up to the aggregate principal amount which may be authorized from time
to time by, or pursuant to a resolution of, the Company's Board of Directors or
by a supplemental indenture. Reference is made to the Prospectus Supplement for
the following terms, if applicable, of the particular series of Debt Securities
being offered thereby: (i) the title of the Debt Securities of the series; (ii)
any limit upon the aggregate principal amount of the Debt Securities of the
series; (iii) the date or dates on which the principal of the Debt Securities of
the series will be payable; (iv) the rate or rates (or manner of calculation
thereof), if any, at which the Debt Securities of the series will bear interest,
the date or dates from which any such interest will accrue and on which such
interest will be payable, and, with respect to Debt Securities of the series in
registered form, the record date for the interest payable on any interest
payment date; (v) the place or places where the principal of and interest, if
any, on the Debt Securities of the series will be payable; (vi) any redemption
or sinking fund provisions; (vii) the denominations in which Debt Securities of
the series shall be issuable; (viii) if other than the principal amount thereof,
the portion of the principal amount of Debt Securities of the series which will
be payable upon declaration of acceleration of the maturity thereof; (ix)
whether the Debt Securities of the series will be issuable in registered or
bearer form or both, any
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restrictions applicable to the offer, sale or delivery of Debt Securities in
bearer form ("bearer Debt Securities") and whether and the terms upon which
bearer Debt Securities will be exchangeable for Debt Securities in registered
form ("registered Debt Securities") and vice versa; (x) any provisions relating
to the conversion of Debt Securities of the series into Debt Securities of a
different series; (xi) whether and under what circumstances the Company will pay
additional amounts on the Debt Securities of the series held by a person who is
not a U.S. person (as defined below) in respect of taxes or similar charges
withheld or deducted and, if so, whether the Company will have the option to
redeem such Debt Securities rather than pay such additional amounts; (xii) the
currencies in which payments of interest, premium or principal are payable with
respect to such Debt Securities; (xiii) whether the Debt Securities of any
series will be issued as one or more Global Securities; (xiv) whether Debt
Securities of the series will be issuable in Tranches; and (xv) any additional
provisions or other terms not inconsistent with the provisions of the Debt
Indenture, including any terms which may be required by or advisable under
United States laws or regulations or advisable in connection with the marketing
of Debt Securities of such series. (Section 2.1 and 2.2) To the extent not
described herein, principal and interest, if any, will be payable, and the Debt
Securities of a particular series will be transferable, in the manner described
in the Prospectus Supplement relating to such series. "Principal" when used
herein includes, when appropriate, the premium, if any, on the Debt Securities.
Each series of Debt Securities will constitute unsecured and unsubordinated
indebtedness of the Company and will rank on a parity with the Company's other
unsecured and unsubordinated indebtedness. There are no covenants or "event
risk" provisions contained in the Debt Indenture that may afford holders of Debt
Securities protection in the event of a highly leveraged transaction involving
the Company.
Debt Securities of any series may be issued as registered Debt Securities
or bearer Debt Securities or both as specified in the terms of the series.
Additionally, Debt Securities of any series may be represented by a single
global note registered in the name of a depository's nominee and, if so
represented, beneficial interests in such global note will be shown on, and
transfers thereof will be effected only through, records maintained by a
designated depository and its participants. Unless otherwise indicated in the
Prospectus Supplement, Debt Securities will be issued in the denomination of
$1,000 and integral multiples thereof and bearer Debt Securities will not be
offered, sold, resold or delivered to U.S. persons in connection with their
original issuance. Debt Securities of any series may be denominated in and
payments of principal and interest may be made in United States dollars or any
other currency, including composite currencies such as the European Currency
Unit. For purposes of this Prospectus, "U.S. person" means a citizen or resident
of the United States, any corporation, partnership or other entity created or
organized in or under the laws of the United States or any political subdivision
thereof, or any estate or trust the income of which is subject to United States
federal income taxation regardless of its source.
To the extent set forth in the Prospectus Supplement, except in special
circumstances set forth in the Debt Indenture, interest on bearer Debt
Securities will be payable only against presentation and surrender of the
coupons for the interest installments evidenced thereby as they mature at a
paying agency of the Company located outside of the United States and its
possessions. (Section 2.5(c)) The Company will maintain such an agency for a
period of two years after the principal of such bearer Debt Securities has
become due and payable. During any period thereafter for which it is necessary
in order to conform to United States tax laws or regulations, the Company will
maintain a paying agent outside of the United States and its possessions to
which the bearer Debt Securities and coupons related thereto may be presented
for payment and will provide the necessary funds therefor to such paying agent
upon reasonable notice. (Section 2.4)
Bearer Debt Securities and the coupons related thereto will be transferable
by delivery. (Section 2.8(f))
If appropriate, United States federal income tax consequences applicable to
a series of Debt Securities will be described in the Prospectus Supplement
relating thereto.
BOOK-ENTRY REGISTRATION
If the Prospectus Supplement so indicates, the Debt Securities will be
represented by one or more certificates (the "Global Securities"). The Global
Securities representing Debt Securities will be deposited with, or on behalf of,
The Depository Trust Company ("DTC") or other successor depository appointed by
4
36
the Company (DTC or such other depository is herein referred to as the
"Depository") and registered in the name of the Depository or its nominee. Debt
Securities represented by a Global Security will not be issuable in definitive
form.
DTC currently limits the maximum denomination of any single Global Security
to $200,000,000. Therefore, for purposes hereof, "Global Security" refers to the
Global Security or Global Securities representing the entire issue of Debt
Securities of a particular series.
DTC has advised the Company and any underwriters, dealers or agents named
in the Prospectus Supplement as follows: 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 the
provisions of 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-entry changes in accounts of DTC Participants, thereby
eliminating the need for physical movement of securities certificates. DTC
Participants include securities brokers and dealers, banks, trust companies and
clearing corporations. Indirect access to the DTC book-entry system is also
available to others, such as banks, brokers, dealers and trust companies, that
clear through or maintain a custodial relationship with a DTC Participant,
either directly or indirectly ("Indirect Participants").
Upon the issuance by the Company of Debt Securities represented by a Global
Security, DTC will credit, on its book-entry registration and transfer system,
the respective principal amounts of the Debt Securities represented by such
Global Security to the accounts of DTC Participants. The accounts to be credited
shall be designated by the underwriters, dealers or agents. Ownership of
beneficial interests in the Global Security will be limited to DTC Participants
and Indirect Participants. Ownership of beneficial interests in Debt Securities
represented by the Global Security will be shown on, and the transfer of that
ownership will be effected only through, records maintained by DTC (with respect
to interests of DTC Participants), or by DTC Participants or Indirect
Participants (with respect to persons other than DTC Participants). The laws of
some states require that certain purchasers of securities take physical delivery
of such securities in definitive form. Such limits and such laws may impair the
ability to transfer beneficial interests in the Global Security.
So long as the Depository for the Global Security, or its nominee, is the
registered owner of the Global Security, the Depository or its nominee, as the
case may be, will be considered the sole owner or holder of the Debt Securities
represented by such Global Security for all purposes under the Debt Indenture.
Except as provided below, owners of beneficial interests in Debt Securities
represented by the Global Security will not be entitled to have Debt Securities
represented by such Global Security registered in their names, will not receive
or be entitled to receive physical delivery of Debt Securities in definitive
form and will not be considered the owners or holders thereof under the Debt
Indenture.
Payments of principal of and interest, if any, on the Debt Securities
represented by the Global Security registered in the name of DTC or its nominee
will be made by the Company through the Debt Trustee under the Debt Indenture or
a paying agent (the "Paying Agent"), which may also be the Debt Trustee under
the Debt Indenture, to DTC or its nominee, as the case may be, as the registered
owner of the Global Security. Neither the Company, the Debt Trustee, nor the
Paying Agent will have any responsibility or liability for any aspect of the
records relating to or payments made on account of beneficial ownership
interests of the Global Security or for maintaining, supervising or reviewing
any records relating to such beneficial ownership interests.
The Company has been advised that DTC, upon receipt of any payment of
principal or interest in respect of a Global Security, will credit immediately
the accounts of DTC Participants with payment in amounts proportionate to their
respective holdings in principal amount of beneficial interest in such Global
Security as shown on the records of DTC. The Company expects that payments by
DTC Participants to owners of beneficial interests in a Global Security will be
governed by standing customer instructions and customary practices, as is now
the case with securities held for the accounts of customers in bearer form or
registered in "street name" and will be the responsibility of such DTC
Participants.
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37
If the Depository with respect to a Global Security is at any time
unwilling or unable to continue as Depository and a successor Depository is not
appointed by the Company within 90 days, the Company will issue certificated
notes in exchange for the Debt Securities represented by such Global Security.
The information contained in this section concerning DTC and DTC's
book-entry system has been obtained from sources that the Company believes to be
reliable but the Company takes no responsibility for the accuracy thereof.
SAME-DAY SETTLEMENT
If the Prospectus Supplement so indicates, settlement for the Debt
Securities will be made by the underwriters, dealers or agents in immediately
available funds and all payments of principal and interest on the Debt
Securities will be made by the Company in immediately available funds. Secondary
trading in long-term notes and debentures of corporate issuers is generally
settled in clearinghouse or next-day funds. In contrast, the Debt Securities
subject to settlement in immediately available funds will trade in the
Depository's Same-Day Funds Settlement System until maturity, and secondary
market trading activity in such Debt Securities will therefore be required by
the Depository to settle in immediately available funds. No assurance can be
given as to the effect, if any, of settlement in immediately available funds on
trading activity in the Debt Securities.
EXCHANGE OF DEBT SECURITIES
Registered Debt Securities may be exchanged, subject to certain specified
restrictions, for an equal aggregate principal amount of registered Debt
Securities of the same series and date of maturity in such authorized
denominations as may be requested upon surrender of the registered Debt
Securities at an agency of the Company maintained for such purpose and upon
fulfillment of all other requirements of such agent. (Section 2.8(a))
To the extent permitted by the terms of a series of Debt Securities
authorized to be issued in registered form and bearer form, bearer Debt
Securities may be exchanged for an equal aggregate principal amount of
registered or bearer Debt Securities of the same series and date of maturity in
such authorized denominations as may be requested upon surrender of the bearer
Debt Securities with all unpaid coupons relating thereto at an agency of the
Company maintained for such purpose and upon fulfillment of all other
requirements of such agent. (Section 2.8(b)) As of the date of this prospectus,
temporary United States Treasury regulations essentially prohibit exchanges of
registered debt securities for bearer debt securities and, unless such
regulations are modified, the terms of a series of debt securities will not
permit registered debt securities to be exchanged for bearer debt securities.
AMENDMENT AND WAIVER
Subject to certain exceptions, the Debt Indenture and the Debt Securities
may be amended or supplemented by the Company and the Debt Trustee with the
written consent of the holders of a majority in principal amount of the
outstanding Debt Securities of each series affected by the amendment or
supplement (with each series voting as a class), or compliance with any
provision may be waived with the consent of the holders of a majority in
principal amount of the outstanding Debt Securities of each series affected by
such waiver (with each series voting as a class). However, without the consent
of each Securityholder affected, an amendment or waiver may not (i) reduce the
amount of Debt Securities whose holders must consent to an amendment or waiver,
(ii) change the rate of or change the time for payment of interest on any Debt
Security; (iii) change the principal of or change the Stated Maturity of any
Debt Security; (iv) reduce any premium payable upon redemption of any Debt
Security; (v) waive a default in the payment of the principal of or interest on
any Debt Security; (vi) make any Debt Security payable in money other than that
stated in the Debt Security; or (vii) impair the right to institute suit for the
enforcement of any payment on or with respect to any Debt Security. (Section
9.02) The Debt Indenture may be amended or supplemented without the consent of
any Securityholder (i) to cure any ambiguity, defect or inconsistency in the
Debt Indenture or in the Debt Securities of any series; (ii) to provide for the
assumption of all the obligations of the Company
6
38
under the Debt Securities and any coupons appertaining thereto and under the
Debt Indenture by any corporation in connection with a merger, consolidation, or
transfer or lease of the Company's property and assets substantially as an
entirety, as provided for in the Debt Indenture; (iii) to secure the Debt
Securities; (iv) to provide for uncertificated Debt Securities in addition to or
in place of certificated Debt Securities; (v) to make any change that does not
adversely affect the rights of any Securityholder; (vi) to provide for the
issuance of and establish the form and terms and conditions of a series of Debt
Securities or to establish the form of any certifications required to be
furnished pursuant to the terms of the Debt Indenture or any series of Debt
Securities; or (vii) to add to rights of Securityholders. (Section 9.1)
SUCCESSOR ENTITY
The Company may consolidate with, or merge into, or be merged into, or
transfer or lease its property and assets substantially as an entirety to,
another U.S. corporation which assumes all the obligations of the Company under
the Debt Securities and any coupons appertaining thereto and under the Debt
Indenture if, after giving effect thereto, no default under the Debt Indenture
shall have occurred and be continuing. Thereafter, except in the case of a
lease, all such obligations of the Company shall terminate. (Section 5.1 and
Section 5.2)
DEFEASANCE, SATISFACTION AND DISCHARGE OF THE DEBT SECURITIES PRIOR TO MATURITY
Defeasance. Unless provided for otherwise in the Prospectus Supplement, if
the Company shall deposit with the Debt Trustee, in trust, at or before
maturity, lawful money or direct obligations of the United States of America or
obligations the principal of and interest on which are guaranteed by the United
States of America in such amounts and maturing at such times that the proceeds
of such obligations to be received upon the respective maturities and interest
payment dates of such obligations will provide funds sufficient, in the opinion
of a nationally recognized firm of independent public accountants chosen by the
Company, to pay when due the principal of and interest on the Debt Securities to
maturity (such money or direct obligations of, or obligations guaranteed by, the
United States of America, initially deposited or equivalent cash or securities
subsequently exchanged therefor, to be held as security for the payment of such
principal and interest), then the Company may omit to comply with certain of the
terms of the Debt Indenture as they relate to the Debt Securities, and the Event
of Default described in clause (iv) under the caption "Description of Debt
Securities -- Events of Default," and such other Events of Default as may be set
forth in the Prospectus Supplement. Defeasance of the Debt Securities would be
subject to the satisfaction of certain conditions, including, among others, (i)
the absence of an Event of Default at the date of the deposit, (ii) the
perfection of the holders' interest in such deposit and (iii) that such deposit
would not result in a breach of a material instrument by which the Company is
bound. (Section 8.2)
Satisfaction and Discharge. Upon the deposit of money or securities
contemplated above and the satisfaction of certain conditions, the Company may
omit to comply with its obligations duly and punctually to pay the principal of
and interest on the Debt Securities, or with any Events of Default with respect
thereto, and thereafter the holders of Debt Securities shall be entitled only to
payment out of the money or securities deposited with the Debt Trustee. Such
conditions may include, among others, (i) except in certain limited
circumstances involving a deposit made within one year of maturity, (A) the
absence of an Event of Default at the date of deposit or on the 91st day
thereafter, and (B) the delivery to the Debt Trustee by the Company of an
opinion of nationally recognized tax counsel to the effect that holders of Debt
Securities will not recognize income, gain or loss for Federal income tax
purposes as a result of such deposit and discharge and will be subject to
Federal income tax on the same amounts and in the same manner and at the same
times as would have been the case if such deposit and discharge had not
occurred, and (ii) the receipt by the Company of an opinion of counsel to the
effect that such satisfaction and discharge will not result in a violation of
the rules of any nationally recognized exchange on which the Debt Securities are
listed. (Section 8.1)
EVENTS OF DEFAULT
The following events are defined in the Debt Indenture as "Events of
Default" with respect to a series of Debt Securities: (i) default in the payment
of interest on any Debt Security of such series for 30 days;
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39
(ii) default in the payment of the principal of any Debt Security of such
series; (iii) default in the payment of any sinking fund installment required to
be made by the Company with respect to any series of Debt Securities; (iv)
failure by the Company for 90 days after notice to it to comply with any of its
other agreements in the Debt Securities of such series, in the Debt Indenture or
in any supplemental indenture under which the Debt Securities of that series may
have been issued; and (v) certain events of bankruptcy or insolvency. (Section
6.1) If an Event of Default occurs with respect to the Debt Securities of any
series and is continuing, the Debt Trustee or the holders of at least 25% in
principal amount of all of the outstanding Debt Securities of that series may
declare the principal (or, if the Debt Securities of that series are original
issue discount Debt Securities, such portion of the principal amount as may be
specified in the terms of that series) of, and any accrued interest on, all the
Debt Securities of that series to be due and payable. Upon such declaration,
such principal (or, in the case of original issue discount Debt Securities, such
specified amount) and all accrued interest thereon shall be due and payable
immediately. (Section 6.2)
Securityholders may not enforce the Debt Indenture or the Debt Securities,
except as provided in the Debt Indenture. (Section 6.6) The Debt Trustee may
require indemnity satisfactory to it before it enforces the Debt Indenture or
the Debt Securities. (Section 7.1(f)) Subject to certain limitations, holders of
a majority in principal amount of the Debt Securities of each series affected
(with each series voting as a class) may direct the Debt Trustee in its exercise
of any trust power. (Section 6.5) The Debt Trustee may withhold from
Securityholders notice of any continuing default (except a default in payment of
principal or interest) if it determines in good faith that withholding notice is
in their interests. (Section 7.5) The Company is not required under the Debt
Indenture to furnish any periodic evidence as to the absence of default or as to
compliance with the terms of the Debt Indenture.
CONCERNING THE DEBT TRUSTEE
Harris Trust and Savings Bank ("Harris Bank") serves as trustee under an
Equipment Trust Agreement, dated as of November 15, 1990, between the Company
and Harris Bank and under a Pass Through Trust Agreement, dated as of January
15, 1997, between the Company and Harris Bank. In addition, Harris Bank provides
customary banking services to the Company and certain of its affiliates.
PLAN OF DISTRIBUTION
The Company may sell the Debt Securities being offered hereby: (i) through
agents, (ii) to or through underwriters, (iii) through dealers or (iv) through a
combination of any such methods of sale.
The distribution of the Debt Securities may be effected from time to time
in one or more transactions either (i) at a fixed price or prices, which may be
changed, or (ii) at market prices prevailing at the time of sale, or (iii) at
prices related to such prevailing market prices, or (iv) at negotiated prices.
Offers to purchase Debt Securities may be solicited directly by agents
designated by the Company from time to time. Any such agent, which may be deemed
to be an underwriter as that term is defined in the Securities Act, involved in
the offer or sale of the Debt Securities in respect of which this Prospectus is
delivered will be named, and any commissions payable by the Company to such
agent will be set forth, in the Prospectus Supplement. Unless otherwise
indicated in the Prospectus Supplement, any such agent will be acting on a best
efforts basis for the period of its appointment.
If an underwriter or underwriters are utilized in the sale, the Company
will execute an underwriting agreement with such underwriters at the time of
sale to them and the names of the underwriters and the terms of the transaction,
including commissions, discounts and other compensation of the underwriters and
dealers, if any, will be set forth in the Prospectus Supplement, which will be
used by the underwriters to make resales of the Debt Securities in respect of
which this Prospectus is delivered to the public.
If a dealer is utilized in the sale of the Debt Securities in respect of
which this Prospectus is delivered, the Company will sell such Debt Securities
to the dealer, as principal. The dealer may then resell such Debt Securities to
the public at varying prices to be determined by such dealer at the time of
resale.
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40
If so indicated in the Prospectus Supplement, the Company will authorize
agents, underwriters or dealers to solicit offers by certain specified
institutions to purchase Debt Securities from the Company at the public offering
price set forth in the Prospectus Supplement pursuant to contracts providing for
payment and delivery on a specified date in the future. Such contracts will be
subject only to those conditions set forth in the Prospectus Supplement, and the
Prospectus Supplement will set forth the commission payable for solicitation of
such contracts.
Underwriters, dealers, agents and other persons may be entitled, under
agreements which may be entered into with the Company, to indemnification
against certain civil liabilities, including liabilities under the Securities
Act.
Underwriters, dealers and agents may be customers of, engage in
transactions with or perform services for the Company in the ordinary course of
business.
LEGAL OPINIONS
Unless otherwise indicated in the Prospectus Supplement to this Prospectus,
certain legal matters in connection with the Debt Securities offered hereby will
be passed upon for the Company by Neal, Gerber & Eisenberg, Chicago, Illinois,
and for any underwriters or agents, by Mayer, Brown & Platt, New York, New York.
EXPERTS
The consolidated financial statements of Union Tank Car Company appearing
in Union Tank Car Company's Annual Report (Form 10-K/A) 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.
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PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the 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................ $121,213*
Blue Sky filing and counsel fees................................... 8,000
Trustees' fees and expenses........................................ 8,000
Printing expenses.................................................. 65,000
Auditors' fees and expenses........................................ 15,000
Attorneys' fees and expenses....................................... 125,000
Rating agency fees................................................. 200,000
Miscellaneous...................................................... 7,787
--------
Total......................................................... $550,000
========
- -------------------------
* Actual. All other amounts are estimated.
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 part 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.
Reference is made to Section 8 of the form of Underwriting Agreement filed
as Exhibits 1(a) and 1(b) hereto for provisions regarding indemnification of the
Company and its officers, directors and controlling persons against certain
liabilities.
ITEM 16. EXHIBITS
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENTS
- -------- -----------------------------------------------------------------------------
1(a) -- Form of Underwriting Agreement (Pass Through Certificates).
1(b) -- Form of Underwriting Agreement (Debt Securities).+
4(a)(1) -- Form of Pass Through Trust Agreement between the Company and the Pass Through
Trustee.
4(a)(2) -- Form of Pass Through Certificate (included in Exhibit 4(a)(1)).
4(b) -- Form of Indenture between the Company and the Debt Trustee.+
4(c)(1) -- Form of Equipment Trust Agreement between the Company and the Equipment Trust
Trustee relating to the ETCs.+
4(c)(2) -- Form of ETC (included in Exhibit 4(c)(1)).+
5(a) -- Opinion of Neal, Gerber & Eisenberg, counsel for the Company.+
5(b) -- Opinion of The Law Department of Harris Trust and Savings Bank, counsel for
the Pass Through Trustee.+
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EXHIBIT
NUMBER DESCRIPTION OF DOCUMENTS
- -------- -----------------------------------------------------------------------------
8(a) -- Tax Opinion of Neal, Gerber & Eisenberg, counsel for the Company.+
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 The Law Department of Harris Trust and Savings Bank (included in
Exhibit 5(b)).+
24 -- Powers of Attorney (included on the signature pages to the Registration
Statement).+
25(a) -- Statement of Eligibility of Pass Through Trustee on Form T-1.+
25(b) -- Statement of Eligibility of Indenture Trustee on Form T-1.+
- -------------------------
* 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/A for the year ended December 31,
1995.
+ Previously filed.
ITEM 17. UNDERTAKINGS
A. Undertakings Regarding Rule 415 Offering.
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the Registration Statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high and of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than 20 percent change in
the maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement;
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the Registration Statement
or any material change to such information in the Registration
Statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a
new Registration Statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
B. Undertaking Regarding Documents Subsequently Filed Under the Exchange
Act.
The Company hereby undertakes 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
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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.
C. 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 pursuant to the provisions described under Item 15 above, or otherwise,
the Company has 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
of expenses incurred or paid by a director, officer or controlling person of the
Company 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 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.
D. 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 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.
E. Undertakings Under the Trust Indenture Act of 1939.
The Company hereby undertakes to file an application for the purpose of
determining the eligibility of the trustee to act under subsection (a) of
Section 310 of the Trust Indenture Act in accordance with the rules and
regulations prescribed by the Commission under Section 305(b)(2) of the
Securities Act of 1933.
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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 Amendment No. 2
to Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Chicago, State of Illinois on the 14th
day of January, 1997.
UNION TANK CAR COMPANY
/s/ K.P. FISCHL
--------------------------------------
K.P. Fischl,
Vice President
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 2 to Registration Statement has been signed by the following persons in the
capacities indicated on the 14th day of January, 1997.
SIGNATURE TITLE
- --------------------------------------------- ---------------------------------------------
*JAY A. PRITZKER Chairman of the Board and Director
- ---------------------------------------------
Jay A. Pritzker
*ROBERT A. PRITZKER President and Director
- --------------------------------------------- (principal executive officer)
Robert A. Pritzker
*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/ K.P. FISCHL
---------------------------------
K.P. Fischl
Attorney-in-Fact
II-4