-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, jwna/pJ1QRvk4//EtZXL7FdE0WALS0WWD2BngIqoDoE/Qeud9YpeVda61o3KgGCk z/hJu5ktucAx2HpgjEMpIw== 0000950123-94-000202.txt : 19940126 0000950123-94-000202.hdr.sgml : 19940126 ACCESSION NUMBER: 0000950123-94-000202 CONFORMED SUBMISSION TYPE: S-3/A PUBLIC DOCUMENT COUNT: 7 FILED AS OF DATE: 19940125 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SMITHS FOOD & DRUG CENTERS INC CENTRAL INDEX KEY: 0000850309 STANDARD INDUSTRIAL CLASSIFICATION: 5411 IRS NUMBER: 870258768 STATE OF INCORPORATION: DE FISCAL YEAR END: 1229 FILING VALUES: FORM TYPE: S-3/A SEC ACT: 33 SEC FILE NUMBER: 033-51097 FILM NUMBER: 94502672 BUSINESS ADDRESS: STREET 1: 1550 S REDWOOD RD CITY: SALT LAKE CITY STATE: UT ZIP: 84104 BUSINESS PHONE: 8019741400 S-3/A 1 AMEND.1 TO FORM S-3 1 As filed with the Securities and Exchange Commission on January 25, 1994 Registration No. 33- 51097 ================================================================================ SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 _____________ AMENDMENT NO. 1 TO FORM S-3 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 ______________ SMITH'S FOOD & DRUG CENTERS, INC. (Exact Name of Registrant as Specified in Its Charter) DELAWARE 87-0258768 (State or Other Jurisdiction of (I.R.S. Employer Incorporation or Organization) Identification No.)
1550 SOUTH REDWOOD ROAD SALT LAKE CITY, UTAH 84104 (801) 974-1400 (Address, Including Zip Code, and Telephone Number, Including Area Code, of Registrant's Principal Executive Offices) ______________ MICHAEL C. FREI, ESQ. 1550 SOUTH REDWOOD ROAD SALT LAKE CITY, UTAH 84104 (801) 974-1494 (Name, Address, Including Zip Code, and Telephone Number, Including Area Code, of Agent For Service) ______________ with copies to: JOHN A. GARRATY, JR., ESQ. JOEL S. KLAPERMAN, ESQ. Kelley Drye & Warren Shearman & Sterling 101 Park Avenue 599 Lexington Avenue New York, New York 10178 New York, New York 10022
______________ APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE OF THE SECURITIES TO THE PUBLIC: From time to time, as determined by market conditions, after the effective date of this registration statement. If the only securities being registered on this form are being offered pursuant to dividend or interest reinvestment plans, please check the following box: / / If any of the securities being registered on this form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, other than securities offered only in connection with dividend or interest reinvestment plans, check the following box: /x/ ______________ The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until this registration statement shall become effective on such date as the Commission, acting pursuant to Section 8(a), may determine. ================================================================================ 2 PROSPECTUS (SUBJECT TO COMPLETION) ISSUED JANUARY 25, 1994 SMITH'S FOOD & DRUG CENTERS, INC. PASS THROUGH CERTIFICATES ___________________________________ Up to $300,000,000 aggregate principal amount of Pass Through Certificates (the "Certificates") (or such greater amount if Certificates are issued at an original issue discount as shall result in aggregate proceeds of $300,000,000) may be offered for sale from time to time pursuant to this Prospectus and related Prospectus Supplements (as defined below). Certificates may be issued in one or more series in amounts, at prices and on terms to be determined at the time of the offering. In respect of each offering of Certificates, a separate Smith's Food & Drug Centers Pass Through Trust for each series of Certificates being offered (each, a "Trust") will be formed pursuant to the Pass Through Trust Agreement (the "Basic Agreement") and the supplement thereto (a "Trust Supplement") relating to such Trust between Smith's Food & Drug Centers, Inc. (the "Company") and Wilmington Trust Company (the "Pass Through Trustee"), as trustee under each Trust. Each Certificate in a series will represent a fractional undivided interest in the related Trust and will have no rights, benefits or interest in respect of any other Trust. The property of each Trust will consist of notes issued (a) on a nonrecourse basis by the trustees of an owner trust (each, an "Owner Trustee") pursuant to separate leveraged lease transactions to finance or refinance a portion of the cost to such Owner Trustee or Owner Trustees of one or more real properties, including improvements thereon (each, a "Leased Property" and collectively, the "Leased Properties"), which have been or will be leased to the Company (the "Leased Property Notes"), or (b) with recourse to the Company to finance or refinance all or a portion of the cost of one or more real properties, including improvements thereon (each, an "Owned Property" and collectively, the "Owned Properties" and, together with the Leased Properties, each, a "Property" and collectively, the "Properties"), which have been or will be purchased and owned by the Company (the "Owned Property Notes" and, together with the Leased Property Notes, the "Notes"). Certain specific terms of the particular Certificates in respect of which this Prospectus is being delivered are set forth in the accompanying Prospectus Supplement (the "Prospectus Supplement") including, where applicable, the specific designation, form, aggregate principal amount, initial public offering price and distribution dates relating to such Certificates, the Trust or Trusts relating to such Certificates, the Notes to be purchased by such Trust or Trusts, the Properties relating to such Notes, the leveraged lease transactions or financing arrangements, as the case may be, relating to such Notes and other special terms relating to such Certificates and the net proceeds from the offering of such Certificates. If so specified in the applicable Prospectus Supplement, the Certificates may be issued in accordance with a book-entry system in registered form only. Notes may be issued in respect of a Property in one or more series, each series having its own interest rate and final maturity date. A Trust will purchase all of each series of Notes relating to each Property and having an interest rate equal to the interest rate applicable to the Certificates issued by such Trust and maturity dates occurring on or before the final distribution date applicable to such Certificates. Interest paid on the Notes held in each Trust will be passed through to the holders of the Certificates relating to such Trust on the dates and at the rate per annum set forth in the Prospectus Supplement relating to such Certificates until the final distribution date for such Trust. Principal paid on the Notes held in each Trust will be passed through to the holders of the Certificates relating to such Trust in scheduled amounts on the dates set forth in the Prospectus Supplement relating to such Certificates until the final distribution date for such Trust. The Notes issued with respect to each Property will be secured by a mortgage on such Property and, in the case of each Leased Property, by a security interest in the lease relating to such Leased Property, including the right to receive rentals payable in respect of such Leased Property by the Company. Although neither the Certificates nor the Leased Property Notes will be direct obligations of, or guaranteed by, the Company, the amounts unconditionally payable by the Company pursuant to the lease related to each Leased Property will be sufficient to pay in full when due all payments required to be made on the related Leased Property Notes. _______________________________ THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. _______________________________ The Certificates may be sold to or through underwriters, through dealers or agents or directly to purchasers. The accompanying Prospectus Supplement sets forth the names of any underwriters, dealers or agents involved in the sale of the Certificates in respect of which this Prospectus is being delivered and any applicable fee, commission or discount arrangements with them. See "Plan of Distribution." This Prospectus may not be used to consummate sales of Certificates unless accompanied by a Prospectus Supplement. _______________________________ MORGAN STANLEY & CO. Incorporated GOLDMAN, SACHS & CO. SALOMON BROTHERS INC January __, 1994. 3 {COVER PAGE CONTINUED} 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 SUCH AMENDMENT TO THE REGISTRATION STATEMENT BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT BE ACCEPTED PRIOR TO THE TIME SUCH AMENDMENT TO 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. 4 NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS IN CONNECTION WITH THE OFFER CONTAINED IN THIS PROSPECTUS, AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR THE UNDERWRITERS. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY SECURITIES IN ANY JURISDICTION TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF. AVAILABLE INFORMATION The Company is subject to the informational requirements of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance therewith files reports, proxy statements and other information with the Securities and Exchange Commission (the "Commission"). Such reports, proxy statements and other information filed by the Company can be inspected and copied at prescribed rates at the public reference facilities maintained by the Commission at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, Room 1024, as well as at the Commission's Regional Offices located at Northwestern Atrium Center, 500 West Madison Street, Chicago, Illinois 60661, Suite 1400, and Seven World Trade Center, New York, New York 10048, Suite 1300. Copies of such material may be obtained by mail from the Public Reference Branch of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates. The Company's Class B Common Stock is listed on the New York Stock Exchange and reports, proxy statements and other information regarding the Company can also be inspected at the offices of the New York Stock Exchange, 20 Broad Street, New York, New York 10005. This Prospectus constitutes a part of a registration statement on Form S-3 (together with all amendments and exhibits, the "Registration Statement") filed by the Company with the Commission under the Securities Act of 1933, as amended (the "Securities Act"). This Prospectus does not contain all of the information included in the Registration Statement, certain parts of which are omitted in accordance with the rules and regulations of the Commission. Reference is made to such Registration Statement and to the exhibits relating thereto for further information with respect to the Company and the Certificates offered hereby. REPORTS TO CERTIFICATEHOLDERS BY THE PASS THROUGH TRUSTEE Wilmington Trust Company, as trustee for the holders of the Certificates with respect to each Trust, pursuant to the Basic Agreement and the related Trust Supplement, will provide such holders certain periodic statements concerning distributions made with respect to such Trust. See "Description of the Pass Through Certificates - Reports to Certificateholders." INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE The following documents have been filed with the Commission pursuant to the Exchange Act and are incorporated by reference in this Prospectus: 1. the Company's Annual Report on Form 10-K for the fiscal year ended January 2, 1993 (which incorporated certain portions of the Company's 1992 Annual Report to Stockholders and Proxy Statement relating to the 1993 Annual Meeting of Stockholders); and 2. the Company's Quarterly Reports on Form 10-Q for the quarters ended April 3, 1993, July 3, 1993 and October 2, 1993. All documents filed by the Company pursuant to section 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date of this Prospectus and prior to the termination of the offering of the Certificates offered -2- 5 hereby shall be deemed to be incorporated by reference herein and to be a part hereof from the date of filing of such documents. Any statement contained in a document incorporated or deemed to be incorporated by reference herein, or contained in this Prospectus, shall be deemed to be modified or superseded for purposes of this Prospectus to the extent that a statement contained herein or in any other subsequently filed document which also is or is deemed to be incorporated herein by reference modifies or supersedes such statement. Any such statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this Prospectus. The Company will provide without charge to each person to whom this Prospectus is delivered, upon the written or oral request of such person, a copy of any or all documents incorporated herein by reference, other than exhibits to such documents (unless such exhibits are specifically incorporated by reference into such documents). Requests for such copies should be directed to Smith's Food & Drug Centers, Inc., P.O. Box 30550, Salt Lake City, Utah 84130, telephone (801) 974-1400, Attention: Investor Relations. TABLE OF CONTENTS
Page ---- Available Information . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . 2 Reports to Certificateholders by the Pass Through Trustee . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . 2 Incorporation of Certain Documents By Reference . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . 2 The Company . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . 4 Formation of the Trusts . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . 4 Use of Proceeds and Structure of Transaction . . . .. . . . . . . . . . . . . . . . 5 Ratio of Earnings to Fixed Charges . . . . . . . . .. . . . . . . . . . . . . . . . 6 Description of the Certificates . . . . . . . . . . .. . . . . . . . . . . . . . . . 6 Description of the Notes . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . 17 Certain Federal Income Tax Consequences . . . . . . .. . . . . . . . . . . . . . . . 20 Certain Delaware Taxes . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . 24 ERISA Considerations . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . 25 Plan of Distribution . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . 25 Legal Matters . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . 26 Experts . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . 26
-3- 6 THE COMPANY The Company is a leading regional supermarket and drug store chain, which operated 129 stores as of January 1, 1994 in Arizona, California, Idaho, Nevada, New Mexico, Texas, Utah and Wyoming. The Company develops, owns and operates combination food and drug centers which offer a full selection of supermarket food items, a wide assortment of nonfood and drug items and a number of specialty departments. Primary food products sold in the stores include groceries, meat, poultry, produce, dairy products, delicatessen items, prepared foods, bakery products, frozen foods and take-out foods, as well as specialty fish, meat and cheese. Nonfood items available in the stores include full-line pharmacy and related over-the-counter drug items, health and beauty aids, video rentals, in-store banking services, housewares, toys, camera/photo department items, one-hour photo processing, cosmetics and other general merchandise. The Company's 129 stores at January 1, 1994 consisted of 115 large combination food and drug centers averaging 69,200 square feet, 12 superstores averaging 40,500 square feet and two conventional stores averaging 26,000 square feet. The combination stores range in size from 45,000 to 86,000 square feet and offer a complete line of supermarket, nonfood and drug products. These stores feature modern, attractive layouts with wide aisles and well-lighted spaces to facilitate convenient shopping, a variety of specialty departments and centralized, highly automated checkout facilities. The superstores range in size from 30,000 to 45,000 square feet and have the appearance of a large supermarket augmented with a significant amount of nonfood and drug merchandise. Generally the superstores have fewer and more limited specialty departments than the combination stores. The conventional stores have the appearance of traditional supermarkets. The Company offers customers a broad product selection at everyday low prices combined with quality customer service in large, modern, attractive food and drug centers with ample parking. Customers are able to fill a substantial portion of their daily and weekly shopping needs at one convenient location. The Company promotes its reputation as a low price competitor in its market areas through a policy of everyday low pricing. Management attributes much of the Company's success to combining broad product selection and everyday low prices with quality customer service. The Company's primary focus in existing markets has been on increasing sales volume by opening stores in adjacent or ancillary markets. The Company also has focused on new markets. During 1993, the Company opened 11 combination stores in the following states: eight in California and one each in New Mexico, Texas and Utah. The Company has selected Southern and Central California as its primary area of expansion. It has in progress an expansion program which calls for up to 60 stores in the Southern and Central California markets prior to mid-1997, of which 26 were open and operating on January 1, 1994. The Company plans to open an additional 12 to 15 stores at locations primarily in Southern and Central California during 1994. The Company was founded in 1948 and reincorporated under Delaware law in 1989. The principal executive offices are located at 1550 South Redwood Road, Salt Lake City, Utah 84104, and its telephone number is (801) 974-1400. As used herein, the "Company" refers to Smith's Food & Drug Centers, Inc. and its subsidiaries and predecessors, unless the context otherwise requires. The Company's Class B Common Stock is traded on the New York Stock Exchange under the symbol "SFD." FORMATION OF THE TRUSTS In respect of each offering of Certificates, one or more Trusts will be formed, and the related Certificates issued, pursuant to separate Trust Supplements to be entered into between the Pass Through Trustee and the -4- 7 Company in accordance with the terms of the Basic Agreement. Concurrently with the execution and delivery of each Trust Supplement, the Pass Through Trustee, on behalf of the Trust formed thereby, will enter into a separate financing agreement (each such financing agreement being herein referred to as a "Participation Agreement") relating to one or more of the Properties described in the applicable Prospectus Supplement. Pursuant to the applicable Participation Agreement or Participation Agreements, the Pass Through Trustee, on behalf of each Trust, will purchase all of the series of Notes relating to the relevant Properties and having an interest rate equal to the interest rate payable by such Trust on the Certificates that will be issued by such Trust. The maturity dates of the Notes acquired by each Trust will occur on or before the final distribution date applicable to the Certificates that will be issued by such Trust. The Pass Through Trustee will distribute the amount of payments of principal, premium, if any, and interest received by it as holder of the Notes to the Certificateholders of the Trust in which such Notes are held. See "Description of the Certificates" and "Description of the Notes." USE OF PROCEEDS AND STRUCTURE OF TRANSACTION The Certificates offered pursuant to any Prospectus Supplement will be issued in order to facilitate (a) the financing or refinancing of the debt portion and, in certain cases, the refinancing of some of the equity portion of one or more separate leveraged lease transactions entered into by the Company, as lessee, with respect to one or more Leased Properties, as described in the applicable Prospectus Supplement, and (b) the financing or refinancing of the aggregate principal amount of debt to be issued by the Company in respect of one or more Owned Properties, as described in the applicable Prospectus Supplement. The proceeds from the sale of the Certificates offered pursuant to any Prospectus Supplement will be used by the Pass Through Trustee on behalf of the applicable Trust or Trusts to purchase (a) Leased Property Notes issued by the related Owner Trustee or Owner Trustees to finance or refinance a portion (as specified in the applicable Prospectus Supplement) of the cost of the related Leased Property or Leased Properties and/or (b) Owned Property Notes issued by the Company to finance or refinance all or a portion (as specified in the applicable Prospectus Supplement) of the cost of the related Owned Property or Owned Properties. Any portion of the proceeds from the sale of Certificates not used by the Pass Through Trustee to purchase Notes on or prior to the date specified therefor in the applicable Prospectus Supplement will be distributed on a Special Distribution Date (as hereinafter defined) to the applicable Certificateholders, together with interest, but without premium. See "Description of Certificates - Special Distribution Upon Unavailability of Property." The Leased Property Notes with respect to each Leased Property will be issued under separate Trust Indenture and Security Agreements (the "Leased Property Indentures") between Wilmington Trust Company, as trustee thereunder (in such capacity, herein referred to as the "Loan Trustee"), and an institution specified in the related Prospectus Supplement acting not in its individual capacity (except as expressly set forth therein) but solely as owner trustee (an "Owner Trustee") of a separate trust for the benefit of one or more institutional investors (each, an "Owner Participant"). With respect to each Leased Property, the related Owner Participant will have provided or will provide from sources other than the Leased Property Notes a portion (as specified in the applicable Prospectus Supplement) of the cost of such Leased Property. No Owner Participant, however, will be personally liable for any amount payable under the related Leased Property Indenture or the Leased Property Notes issued thereunder. Simultaneously with the acquisition of each Leased Property, the related Owner Trustee leased or will lease such Leased Property to the Company pursuant to a separate lease agreement (each, a "Lease"). The Owned Property Notes will be issued under separate Trust Indenture and Security Agreements (the "Owned Property Indentures" and together, with any Leased Property Indentures, the "Indentures") between the applicable Loan Trustee and the Company. -5- 8 RATIO OF EARNINGS TO FIXED CHARGES The following table sets forth the ratio of earnings to fixed charges for the Company for the periods indicated.
NINE MONTHS ENDED YEAR ENDED ----------------------- ------------------------------------------------------------------ October 2, October 3, January 2, December 28, December 29, December 30, December 31, 1993 1992 1993 1991 1990 1989 1988 ---------- ---------- ---------- ------------ ------------ ------------ ------------ (unaudited) Ratio of earnings to fixed charges . . . . 2.06x 2.58x 2.51x 2.44x 2.36x 2.13x 1.82x
For purposes of computing the ratio of earnings to fixed charges, "earnings" consist of income before provision for income taxes and fixed charges (excluding interest capitalized). For purposes of computing the ratio of earnings to fixed charges, "fixed charges" consist of interest, amortized debt expense and the portion of operating lease rentals that are representative of the interest factor. DESCRIPTION OF THE CERTIFICATES In connection with each offering of Certificates, one or more separate Trusts will be formed and one or more series of Certificates will be issued pursuant to the Basic Agreement and one or more separate Trust Supplements to be entered into between the Company and the Pass Through Trustee. The statements made under this caption are summaries and reference is made to the detailed provisions of the Basic Agreement, which has been filed as an exhibit to the Registration Statement and which will be qualified under the Trust Indenture Act of 1939, as amended (the "Trust Indenture Act"). Such summaries relate to the Basic Agreement and each of the Trust Supplements, the Trusts to be formed thereby and the Certificates to be issued by each Trust except to the extent, if any, described in the applicable Prospectus Supplement. The Prospectus Supplement that accompanies this Prospectus contains a glossary of the terms used with respect to the specific series of Certificates being offered thereby. The Trust Supplement relating to each series of Certificates and the forms of the related Participation Agreement and Indenture and, if the Certificates relate to any Leased Property, the related Lease or Leases and trust agreement entered into by the Owner Participant and the Owner Trustee with respect to such related Leased Property (a "Trust Agreement") will be filed as exhibits to a Current Report on Form 8-K, Quarterly Report on Form 10-Q or Annual Report on Form 10-K to be filed by the Company with the Commission following the issuance of such series of Certificates. Citations to the relevant sections of the Basic Agreement appear below in parentheses unless otherwise indicated. The Certificates offered pursuant to this Prospectus will be limited to $300,000,000 aggregate principal amount (or such greater amount if Certificates are issued at an original issue discount as shall result in aggregate proceeds of $300,000,000). Certain provisions of the description of the Certificates in this Prospectus do not necessarily apply to one Certificate of each Trust which may be issued in a denomination of less than $1,000. -6- 9 GENERAL Each Certificate will represent a fractional undivided interest in the Trust created by the Trust Supplement pursuant to which such Certificate was issued and all payments and distributions with respect thereto shall be made only from the related Trust Property (as defined below). The property of each Trust (the "Trust Property") will include the Notes held in such Trust, all monies at any time paid thereon and all monies due and to become due thereon and funds from time to time deposited with the Pass Through Trustee in accounts relating to such Trust. Unless otherwise specified in the applicable Prospectus Supplement, Certificates will be issued in minimum denominations of $1,000 or any integral multiple thereof. (Sections 2.01 and 3.01) The Certificates do not represent an interest in or obligation of the Company, the Pass Through Trustee, any Owner Trustee in its individual capacity, any Owner Participant, or any affiliate of any thereof. Reference is made to the Prospectus Supplement that accompanies this Prospectus for a description of the specific series of Certificates being offered thereby, including: (1) the specific designation and title of such Certificates; (2) the Regular Distribution Dates (as hereinafter defined) and Special Distribution Dates (as hereinafter defined) applicable to such Certificates; (3) the specific form of such Certificates, including whether or not such Certificates are to be issued in accordance with a book-entry system, in registered form or in bearer form; (4) a description of the Notes to be purchased by the related Trust, including the period or periods within which, the price or prices at which and the terms and conditions upon which such Certificates may or must be redeemed, in whole or in part, by the Company or, with respect to Leased Property Notes, the related Owner Trustee; (5) a description of the related Property or Properties, including whether each such Property is a Leased Property or an Owned Property; (6) a description of the related Participation Agreement and Indenture, including a description of the events of default thereunder, the remedies exercisable upon the occurrence of such events of default and any limitations on the exercise of such remedies with respect to such Notes; (7) if such Certificates relate to a Leased Property or Leased Properties, a description of the related Lease or Leases and Trust Agreement, including (a) the names of the related Owner Trustee, (b) a description of the events of default under the related Lease or Leases, the remedies exercisable upon the occurrence of such events of default and any limitations on the exercise of such remedies with respect to such Leased Property Notes and (c) the rights of the related Owner Trustee, if any, and/or Owner Participant, if any, to cure failures of the Company to pay rent under the related Lease or Leases; (8) the extent, if any, to which the provisions of the operative documents applicable to such Notes may be amended by the parties thereto without the consent of the holders of, or only upon the consent of the holders of a specified percentage of aggregate principal amount of, such Notes; and (9) any other special terms pertaining to such Certificates. BOOK-ENTRY REGISTRATION General. If so specified in the applicable Prospectus Supplement, the Certificates of each Trust may be issued in fully registered form pursuant to a book-entry system. In the event that the Certificates of any series are issued pursuant to a book-entry system, such Certificates will be registered in the name of Cede & Co. ("Cede") as the nominee of The Depository Trust Company ("DTC"). No person acquiring an interest in such Certificates (a "Certificate Owner") will be entitled to receive a certificate representing such person's interest in such Certificates, except as set forth below under "Definitive Certificates." Unless and until Definitive Certificates are issued under the limited circumstances described herein, all references to actions by Certificateholders shall refer to actions taken by DTC upon instructions from DTC Participants (as defined below), and all references herein to distributions, notices, reports and statements to Certificateholders shall refer, as the case may be, to distributions, notices, reports and statements to DTC or Cede, as the registered holder of such Certificates, or to DTC Participants for distribution to Certificate Owners in accordance with DTC procedures. (Section 3.09) DTC is a limited purpose trust company organized under the laws of the State of New York, a member of the Federal Reserve System, a "clearing corporation" within the meaning of the New York Uniform Commercial Code and a "clearing agency" registered pursuant to section 17A of the Exchange Act. DTC was created to hold securities for its participants ("DTC Participants") and to facilitate the -7- 10 clearance and settlement of securities transactions between DTC Participants through electronic book-entries, thereby eliminating the need for physical transfer of certificates. DTC Participants include securities brokers and dealers, banks, trust companies and clearing corporations. Indirect access to the DTC system also is available to others such as banks, brokers, dealers and trust companies that clear through or maintain a custodial relationship with a DTC Participant either directly or indirectly ("Indirect Participants"). Persons that are not DTC Participants or Indirect Participants but desire to purchase, sell or otherwise transfer ownership of, or other interests in, the Certificates may do so only through DTC Participants and Indirect Participants. In addition, Certificate Owners will receive all distributions of principal and interest from the Pass Through Trustee through DTC Participants or Indirect Participants, as the case may be. Under a book-entry format, Certificate Owners may experience some delay in their receipt of payments, since such payments will be forwarded by the Pass Through Trustee to Cede, as nominee for DTC. DTC will forward such payments in same-day funds to DTC Participants who are credited with ownership of the Certificates in amounts proportionate to the principal amount of each such DTC Participant's respective holdings of beneficial interest in the Certificates. DTC Participants will thereafter forward payments to Indirect Participants or Certificate Owners, as the case may be, in accordance with customary industry practices. The forwarding of such distributions to the Certificate Owners will be the responsibility of DTC Participants. Unless and until the Definitive Certificates are issued under the limited circumstances described herein, the only "Certificateholder," as such term is used in the Basic Agreement, will be Cede, as nominee of DTC. Certificate Owners will not be recognized by the Pass Through Trustee as Certificateholders, and Certificate Owners will be permitted to exercise the rights of Certificateholders only indirectly through DTC and DTC Participants. Under the rules, regulations and procedures creating and affecting DTC and its operations (the "Rules"), DTC is required to make book- entry transfers of the Certificates among DTC Participants on whose behalf it acts with respect to the Certificates and to receive and transmit distributions of principal, premium, if any, and interest with respect to the Certificates. DTC Participants and Indirect Participants with which Certificate Owners have accounts with respect to the Certificates similarly are required to make book-entry transfers and receive and transmit such payments on behalf of their respective customers. Accordingly, although Certificate Owners will not possess the Certificates, the Rules provide a mechanism by which Certificate Owners will receive payments and will be able to transfer their interests. Because DTC can only act on behalf of DTC Participants, who in turn act on behalf of Indirect Participants, the ability of a Certificate Owner to pledge the Certificates to persons or entities that do not participate in the DTC system, or to otherwise act with respect to such Certificates, may be limited due to the lack of physical certificates for such Certificates. DTC will take any action permitted to be taken by a Certificateholder under the Basic Agreement only at the direction of one or more DTC Participants to whose accounts with DTC the Certificates are credited. Additionally, DTC has advised the Company that in the event any action requires approval by Certificateholders of a certain percentage of beneficial interest in each Trust, DTC will take such action only at the direction of and on behalf of DTC Participants whose holders include undivided interests that satisfy any such percentage. DTC may take conflicting actions with respect to other undivided interests to the extent that such actions are taken on behalf of DTC Participants whose holders include such undivided interests. Neither the Company nor the Pass Through Trustee will have any liability for any aspect of the records relating to or payments made on account of beneficial ownership interests in the Certificates held by Cede, as nominee for DTC, or for maintaining, supervising or reviewing any records relating to such beneficial ownership interests. The foregoing information concerning DTC and DTC's book-entry system has been obtained from sources the Company believes to be reliable. The Company, however, has not undertaken any independent verification thereof. -8- 11 Definitive Certificates. Certificates will be issued in certificated form ("Definitive Certificates") to Certificate Owners or their nominees, rather than to DTC or its nominee, only if (i) the Company advises the Pass Through Trustee in writing that DTC (or a successor thereto) is no longer willing or able to discharge properly its responsibilities as depository with respect to such Certificates and the Company is unable to locate a qualified successor, (ii) the Company, at its option, advises the Pass Through Trustee in writing of its election to terminate the book-entry system through DTC (or a successor thereto) or (iii) after the occurrence of an Event of Default (as hereinafter defined) Certificate Owners with fractional undivided interests aggregating not less than a majority in interest in such Trust advise the Pass Through Trustee, the Company and DTC through DTC Participants in writing that the continuation of a book-entry system through DTC (or a successor thereto) is no longer in the Certificate Owners' best interest. (Section 3.09) Upon the occurrence of any event described in the immediately preceding paragraph, the Pass Through Trustee will be required to notify all Certificate Owners through DTC Participants of the availability of Definitive Certificates. Upon surrender by DTC of the certificates representing the Certificates and receipt of instructions for re-registration, the Pass Through Trustee will reissue the Certificates as Definitive Certificates to Certificate Owners. (Section 3.09) Distributions of principal, premium, if any, and interest with respect to Certificates will thereafter be made by the Pass Through Trustee directly, in accordance with the procedures set forth in the Basic Agreement and the applicable Trust Supplements, to holders in whose names the Definitive Certificates were registered at the close of business on the applicable record date. Such distributions will be made by check mailed to the address of such holder as it appears on the register maintained by the Pass Through Trustee. The final payment on any Certificate, however, will be made only upon presentation and surrender of such Certificate at the office or agency specified in the notice of final distribution to Certificateholders. (Sections 4.02 and 11.01) Definitive Certificates will be freely transferable and exchangeable at the office of the Pass Through Trustee upon compliance with the requirements set forth in the Basic Agreement and the applicable Trust Supplements. No service charge will be imposed for any registration of transfer or exchange, but payment of a sum sufficient to cover any tax or other governmental charge will be required. (Section 3.04) Same-Day Settlement and Payment. So long as the Certificates are registered in the name of Cede, as nominee for DTC, all payments made by the Company to the Loan Trustee (as assignee of the Owner Trustee) under any Lease will be in immediately available funds. Such payments, including the final distribution of principal with respect to the Certificates of any Trust, will be passed through to DTC in immediately available funds. Secondary trading in long-term notes and debentures of corporate issuers is generally settled in clearing-house or next-day funds. In contrast, secondary trading in pass through certificates (such as the Certificates offered hereby) is generally settled in immediately available or same-day funds. Any Certificates registered in the name of Cede, as nominee for DTC, will trade in DTC's Same-Day Funds Settlement System until maturity, and secondary market trading activity in the Certificates will therefore be required by DTC to settle in immediately available funds. No assurance can be given as to the effect, if any, of settlement in same-day funds on trading activity in the Certificates. PAYMENTS AND DISTRIBUTIONS Payments of principal, premium, if any, and interest with respect to the Notes held in each Trust will be distributed by the Pass Through Trustee to the Certificateholders of such Trust on the dates specified in the applicable Prospectus Supplement, except in certain cases when some or all of such Notes are in default. See "Events of Default and Certain Rights Upon an Event of Default." Payments of principal of, and interest on, the unpaid principal amount of the Notes held in each Trust will be scheduled to be received by the Pass Through Trustee on the dates specified in the applicable -9- 12 Prospectus Supplement (such scheduled payments of interest and principal on the Notes are herein referred to as "Scheduled Payments," and the dates specified in the applicable Prospectus Supplement are herein referred to as "Regular Distribution Dates"). See "Description of the Notes - General." Each holder of Certificates of each Trust will be entitled to receive a pro rata share of any distribution in respect of Scheduled Payments of principal and interest made on the Notes held in such Trust. Payments of principal, premium, if any, and interest received by the Pass Through Trustee on account of the early redemption, if any, of Notes, and payments, other than Scheduled Payments received on a Regular Distribution Date, received by the Pass Through Trustee following a default in respect of Notes ("Special Payments") will be distributed to the Certificateholders of the related Trust on the date determined pursuant to the applicable Prospectus Supplement (a "Special Distribution Date"). The Pass Through Trustee will mail notice to the Certificateholders of record of the applicable Trust not less than 20 days prior to the Special Distribution Date on which any Special Payment is scheduled to be distributed by the Pass Through Trustee stating such anticipated Special Distribution Date. (Section 4.02) POOL FACTORS Unless there has been an early redemption, a purchase of Notes by the related Owner Trustee after an Indenture Default (as defined below) or a default in the payment of principal or interest in respect of one or more issues of Notes held in a Trust, as described in the applicable Prospectus Supplement or below in "Events of Default and Certain Rights Upon an Event of Default," the Pool Factor (as defined below) for each Trust will decline in proportion to the scheduled repayments of principal on the Notes held in such Trust, as described in the applicable Prospectus Supplement. In the event of such redemption, purchase or default, the Pool Factor and the Pool Balance (as defined below) of each Trust so affected will be recomputed after giving effect thereto and notice thereof will be mailed to the Certificateholders of such Trust. Each Trust will have a separate Pool Factor. The "Pool Balance" for each Trust indicates, as of any date, the aggregate unpaid principal amount of the Notes held in such Trust on such date plus any amounts in respect of principal on such Notes held by the Pass Through Trustee and not yet distributed. The Pool Balance for each Trust as of any Regular Distribution Date or Special Distribution Date shall be computed after giving effect to the payment of principal, if any, on the Notes held in such Trust and distribution thereof to be made on that date. The "Pool Factor" for each Trust as of any Regular Distribution Date or Special Distribution Date is the quotient (rounded to the seventh decimal place) computed by dividing (i) the Pool Balance by (ii) the aggregate original principal amount of the Notes held in such Trust. The Pool Factor for each Trust as of any Regular Distribution Date or Special Distribution Date shall be computed after giving effect to the payment of principal, if any, on the Notes held in such Trust and distribution thereof to be made on that date. The Pool Factor for each Trust will initially (or, if applicable, after the accretion of the original issue discount at which the Certificates of such Trust were issued) be 1.0000000; thereafter, the Pool Factor for each Trust will decline as described above to reflect reductions in the Pool Balance of such Trust. The amount of a Certificateholder's pro rata share of the Pool Balance of a Trust can be determined by multiplying the original denomination of the holders' Certificate of such Trust by the Pool Factor for such Trust as of the applicable Regular Distribution Date or Special Distribution Date. The Pool Factor and the Pool Balance for each Trust will be identified in a statement mailed to Certificateholders of such Trust on each Regular Distribution Date and Special Distribution Date. REPORTS TO CERTIFICATEHOLDERS On each Regular Distribution Date and Special Distribution Date, the Pass Through Trustee will include with each distribution of a Scheduled Payment or Special Payment to Certificateholders of the related Trust a statement, giving effect to such distribution to be made on such Regular Distribution Date or Special Distribution Date, setting forth the following information (per $1,000 aggregate principal amount of Certificates for such Trust, as to (i) and (ii) below): -10- 13 (i) the amount of such distribution allocable to principal and the amount allocable to premium, if any; (ii) the amount of such distribution allocable to interest; and (iii) the Pool Balance and the Pool Factor for such Trust. (Section 4.03(a)) So long as the Certificates are registered in the name of Cede, as nominee for DTC, on the record date prior to each Regular Distribution Date and Special Distribution Date the Pass Through Trustee will request from DTC a Securities Position Listing setting forth the names of all DTC Participants reflected on DTC's books as holding interests in the Certificates on such record date. On each Regular Distribution Date and Special Distribution Date, the Pass Through Trustee will mail to each such DTC Participant the statement described above and will make available additional copies as requested by such DTC Participant for forwarding to Certificate Owners. (Section 3.09) In addition, after the end of each calendar year the Pass Through Trustee will prepare for each Certificateholder of each Trust at any time during the preceding calendar year a report containing the sum of the amounts determined pursuant to clauses (i) and (ii) above with respect to the Trust for such calendar year or, in the event such person was a Certificateholder during only a portion of such calendar year, for the applicable portion of such calendar year, and such other items as are readily available to the Pass Through Trustee and which a Certificateholder shall reasonably request as necessary for the purpose of such Certificateholder's preparation of its federal income tax returns. (Section 4.03(b)) Such report and such other items shall be prepared on the basis of information supplied to the Pass Through Trustee by the DTC Participants and shall be delivered by the Pass Through Trustee to such DTC Participants to be available for forwarding by such DTC Participants to Certificate Owners in the manner described above. At such time, if any, as the Certificates are issued in the form of Definitive Certificates, the Pass Through Trustee will prepare and deliver the information described above to each Certificateholder of record of each Trust as the name and period of beneficial ownership of such Certificateholder appears on the records of the registrar of the Certificates. VOTING OF NOTES The Pass Through Trustee, as holder of the Notes held in each Trust, has the right to vote and give consents and waivers with respect to such Notes under the related Indenture. The Basic Agreement sets forth the circumstances in which the Pass Through Trustee shall direct any action or cast any vote as the holder of the Notes held in the applicable Trust at its own discretion and the circumstances in which the Pass Through Trustee shall seek instructions from the Certificateholders of such Trust. Prior to an Event of Default (as defined below) with respect to any Trust, the principal amount of the Notes held in such Trust directing any action or being voted for or against any proposal shall be in proportion to the principal amount of Certificates held by the Certificateholders of such Trust taking the corresponding positions. (Sections 6.01 and 11.01) EVENTS OF DEFAULT AND CERTAIN RIGHTS UPON AN EVENT OF DEFAULT An event of default under the Basic Agreement (an "Event of Default") is defined as the occurrence and continuance of an event of default under one or more of the Indentures (an "Indenture Default"). The Indenture Defaults under an Indenture will be described in the applicable Prospectus Supplement and, with respect to each Leased Property, will include an event of default under the related Lease (a "Lease Event of Default"). Since the Notes issued under an Indenture may be held in more than one Trust, a continuing Indenture Default under such Indenture would result in an Event of Default under each such Trust. However, unless specified in the applicable Prospectus Supplement, there will be no cross-default provisions in the Indentures, and events resulting in an Indenture Default under any particular Indenture will not necessarily -11- 14 result in an Indenture Default occurring under any other Indenture. If an Indenture Default occurs in fewer than all of the Indentures, notwithstanding the treatment of Notes issued under any Indenture under which an Indenture Default has occurred, payments of principal and interest on the Notes issued pursuant to Indentures with respect to which an Indenture Default has not occurred will continue to be distributed to the Certificateholders as originally scheduled. With respect to each Leased Property, the applicable Owner Trustee and Owner Participant will, under the related Indenture, have the right under certain circumstances to cure Indenture Defaults that result from the occurrence of a Lease Event of Default under the related Lease. If the Owner Trustee or the Owner Participant exercises such cure right, the Indenture Default and, consequently, the Event of Default with respect to the related Trust will be deemed to have been cured. The Basic Agreement provides that as long as an Indenture Default under any Indenture relating to the Notes held in a Trust shall have occurred and be continuing the Pass Through Trustee of such Trust may, but shall be under no duty to, vote all of the Notes issued under such Indenture in such Trust and, upon the direction of the holders of Certificates evidencing fractional undivided interests aggregating not less than a majority in interest of such Trust, shall vote a corresponding majority of such Notes in favor of directing the Loan Trustee to declare the unpaid principal amount of all Notes issued under such Indenture and any accrued and unpaid interest thereon to be due and payable. The Basic Agreement also provides that if an Indenture Default under such Indenture relating to the Notes held in a Trust shall have occurred and be continuing the Pass Through Trustee of such Trust may, and upon the direction of the holders of Certificates evidencing fractional undivided interests aggregating not less than a majority in interest of such Trust shall, vote all of the Notes issued under such Indenture that are held in such Trust in favor of directing the Loan Trustee as to the time, method and place of conducting any proceeding for any remedy available to the Loan Trustee or of exercising any trust or power conferred on the Loan Trustee under such Indenture. (Sections 6.01 and 6.04) The ability of the Certificateholders of any Trust to cause the Loan Trustee with respect to any Notes held in such Trust to accelerate the Notes under the related Indenture or to direct the exercise of remedies by the Loan Trustee under the related Indenture will depend, in part, upon the proportion between the aggregate principal amount of the Notes outstanding under such Indenture and held in such Trust and the aggregate principal amount of all Notes outstanding under such Indenture. Each Trust will hold Notes with different terms from the Notes held in other Trusts and, therefore, the Certificateholders of one Trust may have divergent or conflicting interests from those of the Certificateholders of the other Trusts holding Notes outstanding under the same Indenture. In addition, so long as the same institution acts as Pass Through Trustee of each Trust, in the absence of instructions from the Certificateholders of any such Trust, the Pass Through Trustee for such Trust could for the same reason be faced with a potential conflict of interest upon an Indenture Default. In such event, the Pass Through Trustee has indicated that it would resign as trustee of one or all of such Trusts, and a successor trustee would be appointed in accordance with the terms of the Basic Agreement. As an additional remedy, if an Indenture Default shall have occurred and be continuing, the Basic Agreement provides that the Pass Through Trustee of any Trust holding Notes issued under such Indenture may, but shall be under no duty to, and upon the direction of the holders of Certificates evidencing fractional undivided interests aggregating not less than a majority in interest of such Trust shall, sell for cash to any person all or part of such Notes. (Sections 6.01 and 6.02) Any proceeds received by the Pass Through Trustee upon any such sale of Notes shall be deposited in an account established by the Pass Through Trustee for the benefit of the Certificateholders of such Trust for the deposit of such Special Payments (the "Special Payments Account") and shall be distributed to such Certificateholders on a Special Distribution Date. (Sections 4.01 and 4.02) The market for Notes in default may be very limited, and there can be no assurance that they could be sold for a reasonable price. Furthermore, so long as the same institution acts as Pass Through Trustee of multiple Trusts, it may be faced with a conflict in deciding from which Trust to sell Notes to available buyers. If the Pass Through Trustee sells any Notes with respect to which an Indenture Default exists for less than their outstanding principal amount, the Certificateholders of such Trust will receive a smaller amount of principal distributions than anticipated and will not have any claim for the shortfall against the Company, any Owner Trustee or Owner Participant or the Pass -12- 15 Through Trustee. Furthermore, neither the Pass Through Trustee nor the Certificateholders of such Trust could take any action with respect to any remaining Notes held in such Trust so long as no Indenture Defaults exist with respect thereto. Any amount, other than Scheduled Payments received on a Regular Distribution Date, distributed to the Pass Through Trustee of any Trust by the Loan Trustee under any Indenture on account of the Notes held in such Trust following an Indenture Default under such Indenture shall be deposited in the Special Payments Account for such Trust and shall be distributed to the Certificateholders of such Trust on a Special Distribution Date. In addition, if, following an Indenture Default, the applicable Owner Trustee exercises its option to redeem or purchase the outstanding Notes issued under such Indenture as described in the related Prospectus Supplement, the price paid by such Owner Trustee to the Pass Through Trustee of any Trust for the Notes issued under such Indenture and held in such Trust shall be deposited in the Special Payments Account for such Trust and shall be distributed to the Certificateholders of such Trust on a Special Distribution Date. (Sections 4.01, 4.02 and 6.02) Any funds representing payments received with respect to any Notes held in a Trust in default, or the proceeds from the sale by the Pass Through Trustee of any such Notes, held by the Pass Through Trustee in the Special Payments Account for such Trust shall, to the extent practicable, be invested and reinvested by the Pass Through Trustee in Permitted Investments (as defined herein) pending the distribution of such funds on a Special Distribution Date. Permitted Investments are defined as obligations of the United States or agencies or instrumentalities thereof the payment of which is backed by the full faith and credit of the United States and which mature in not more than 60 days or such lesser time as is required for the distribution of any such funds on a Special Distribution Date. (Sections 1.01 and 4.04) The Basic Agreement provides that the Pass Through Trustee of each Trust shall, as promptly as practicable and, in any event, within 90 days, after the occurrence of a default in respect of such Trust, if such default is actually known to a responsible officer of the Pass Through Trustee, give to the Certificateholders of such Trust notice, transmitted by mail, of all uncured or unwaived defaults with respect to such Trust known to it, provided that, except in the case of default in the payment of principal, premium, if any, or interest on any of the Notes held in such Trust, the Pass Through Trustee shall be protected in withholding such notice if it in good faith determines that the withholding of such notice is in the interests of such Certificateholders. (Section 7.01) The Basic Agreement contains a provision entitling the Pass Through Trustee of each Trust, subject to the duty of the Pass Through Trustee during a default to act with the required standard of care, to be offered reasonable security or indemnity by the Certificateholders of such Trust before proceeding to exercise any right or power under the Basic Agreement at the request of such Certificateholders. (Section 7.02) In certain cases, the holders of Certificates of a Trust evidencing fractional undivided interests aggregating not less than a majority in interest of such Trust may on behalf of all Certificateholders of such Trust waive, or instruct the Loan Trustee to waive, any past default or Event of Default with respect to such Trust and thereby annul any direction given by such Certificateholders to the applicable Loan Trustee with respect thereto, except (i) a default in the deposit of any Scheduled Payment or Special Payment or in the distribution thereof, (ii) a default in payment of the principal, premium, if any, or interest with respect to any of the Notes held in such Trust and (iii) a default in respect of any covenant or provision of the Basic Agreement or the related Trust Supplement that cannot be modified or amended without the consent of each Certificateholder of such Trust affected thereby. (Section 6.05) Each Indenture will provide that, with certain exceptions, the holders of a majority in aggregate unpaid principal amount of the Notes issued thereunder may on behalf of all such holders waive any past default or Indenture Default thereunder. In the event of a waiver with respect to a Trust as described above, the principal amount of the Notes issued under the related Indenture held in such Trust shall be counted as waived in the determination of the majority in aggregate unpaid principal amount of Notes required to waive a default or an Indenture Default. Therefore, if the Certificateholders of a Trust or Trusts waive a past default or Event of Default such that the principal amount of the Notes held either individually in such Trust or in the aggregate in such Trusts constitutes the required majority in aggregate unpaid principal amount under the applicable Indenture, such past default or Indenture Default shall be waived. -13- 16 MERGER, CONSOLIDATION AND TRANSFER OF ASSETS The Company will be prohibited from consolidating with or merging into any other corporation or transferring substantially all of its assets as an entirety to any other entity unless (i) the surviving successor or transferee entity shall expressly assume all of the obligations of the Company contained in the Basic Agreement and in all Trust Supplements, Indentures and Participation Agreements and, with respect to the Leased Property Notes, Leases and any other operative documents; (ii) immediately after giving effect to such transaction no Indenture Default (with respect to Owned Property Notes) or Lease Event of Default (with respect to Leased Property Notes) shall have occurred and be continuing; and (iii) the Company shall have delivered a certificate and an opinion of counsel indicating that such transaction, in effect, complies with such conditions. (Section 5.02(a)) The Basic Agreement does not and, except as otherwise described in the applicable Prospectus Supplement, the Indentures will not contain any covenants or provisions which may afford the Pass Through Trustee or Certificateholders protection in the event of a highly leveraged transaction, including transactions effected by management or affiliates, which may or may not result in a change of control of the Company. No other instrument or agreement currently evidencing other indebtedness of the Company contains covenants or provisions affording holders of such indebtedness protection in the event of a change in control of the Company. MODIFICATION OF THE BASIC AGREEMENT The Basic Agreement contains provisions permitting the Company and the Pass Through Trustee of each Trust to enter into a supplemental trust agreement, without the consent of any of the Certificateholders of such Trust, (i) to provide for the formation of such Trust and the issuance of a series of Certificates, (ii) to evidence the succession of another corporation to the Company and the assumption by such corporation of the Company's obligations under the Basic Agreement and the applicable Trust Supplement, (iii) to add to the covenants of the Company for the benefit of such Certificateholders or to surrender any right or power in the Basic Agreement or the applicable Trust Supplement conferred upon the Company, (iv) to correct or supplement any defective or inconsistent provision of the Basic Agreement or the applicable Trust Supplement or to make any other provisions with respect to matters or questions arising thereunder, provided such action shall not adversely affect the interests of such Certificateholders, or to cure any ambiguity or correct any mistake, (v) to modify, eliminate or add to the provisions of the Basic Agreement to the extent as shall be necessary to continue the qualification of the Basic Agreement (including any supplemental agreement) under the Trust Indenture Act and to add to the Basic Agreement such other provisions as may be expressly permitted by the Trust Indenture Act, (vi) to provide for a successor Pass Through Trustee or to add to or change any provision of the Basic Agreement or the applicable Trust Supplement as shall be necessary to facilitate the administration of the Trusts thereunder by more than one Trustee and (vii) to make any other amendments or modifications to the Basic Agreement, provided such amendments or modifications shall only apply to Certificates issued thereafter. (Section 9.01) The Basic Agreement also contains provisions permitting the Company and the Pass Through Trustee of each Trust, with the consent of the holders of Certificates of such Trust evidencing fractional undivided interests aggregating not less than a majority in interest of such Trust and, with respect to any Leased Property, the consent of the applicable Owner Trustee (such consent not to be reasonably withheld), to execute supplemental trust agreements adding any provisions to or changing or eliminating any of the provisions of the Basic Agreement, to the extent relating to such Trust, and the applicable Trust Supplement, or modifying the rights of the Certificateholders, except that no such supplemental trust agreement may, without the consent of the holder of each Certificate so affected thereby, (a) reduce in any manner the amount of, or delay the timing of, receipt by the Trustee of payments on the Notes held in such Trust or distributions in respect of any Certificate related to such Trust, or change the date or place of any payment in respect of any Certificate, or make distributions payable in coin or currency other than that provided for in such Certificates, or impair the right of any Certificateholder of such Trust to institute suit for the enforcement of any such payment when due, (b) permit the disposition of any Note held in such Trust, except as provided in the Basic Agreement or the applicable Trust Supplement, or -14- 17 otherwise deprive any Certificateholder of the benefit of the ownership of the applicable Notes, (c) reduce the percentage of the aggregate fractional undivided interests of the Trust provided for in the Basic Agreement or the applicable Trust Supplement, the consent of the holders of which is required for any such supplemental trust agreement or for any waiver provided for in the Basic Agreement or such Trust Supplement or (d) modify any of the provisions relating to the rights of the Certificateholders in respect of the waiver of events of default or receipt of payment. (Section 9.02) MODIFICATION OF INDENTURE AND RELATED AGREEMENTS In the event that the Pass Through Trustee, as the holder of any Notes held in a Trust, receives a request for its consent to any amendment, modification or waiver under the Indenture or other documents relating to such Notes (including any Lease), the Pass Through Trustee shall send a notice of such proposed amendment, modification or waiver to each Certificateholder of record of such Trust as of the date of such notice. The Pass Through Trustee shall request instructions from the Certificateholders of such Trust as to whether or not to consent to such amendment, modification or waiver. The Pass Through Trustee shall vote or consent with respect to such Notes in such Trust in the same proportions as the Certificates of such Trust were actually voted by the holders thereof by a certain date. Notwithstanding the foregoing, if an Event of Default in respect of such Trust shall have occurred and be continuing, the Pass Through Trustee may, in the absence of instructions from Certificateholders holding a majority in interest of such Trust, in its own discretion consent to such amendment, modification or waiver and may so notify the relevant Loan Trustee. (Section 10.01) TERMINATION OF THE TRUSTS Each Trust will terminate upon the distribution to Certificateholders of such Trust of all amounts required to be distributed to them pursuant to the Basic Agreement and the applicable Trust Supplement and the disposition of all property held in such Trust. The Pass Through Trustee will send to each Certificateholder of record of such Trust notice of the termination of such Trust, the amount of the proposed final payment and the proposed date for the distribution of such final payment for such Trust. The final distribution to any Certificateholder of such Trust will be made only upon surrender of such Certificateholder's Certificates at the office or agency of the Pass Through Trustee specified in such notice of termination. (Section 11.01) DELAYED PURCHASE In the event that, on the delivery date of any Certificates, all of the proceeds from the sale of such Certificates are not used to purchase the Notes contemplated to be held in the related Trust, such Notes may be purchased by the Pass Through Trustee at any time on or prior to the date specified in the applicable Prospectus Supplement. In such event, the Pass Through Trustee will hold the proceeds from the sale of such Certificates not used to purchase Notes in an escrow account pending the purchase of the Notes not so purchased. Such proceeds will be invested at the direction and risk of, and for the account of, the Company in certain specified investments, which may include: (i) obligations of, or guaranteed by, the United States Government or agencies thereof, (ii) open market commercial paper of any corporation incorporated under the laws of the United States of America or any State thereof rated at least P-2 or its equivalent by Moody's Investors Service, Inc. or at least A-2 or its equivalent by Standard & Poor's Corporation, (iii) certificates of deposit issued by commercial banks organized under the laws of the United States or of any political subdivision thereof having a combined capital and surplus in excess of $500,000,000 which banks or their holding companies have a rating of A or its equivalent by Moody's Investors Service, Inc. or Standard & Poor's Corporation; provided, however, that the aggregate amount at any one time so invested in certificates of deposit issued by any one bank shall not exceed 5% of such bank's capital and surplus, (iv) U.S. dollar denominated offshore certificates of deposit issued by, or offshore time deposits with, any commercial bank described in (iii) or any subsidiary thereof and (v) repurchase agreements with any financial institution having combined capital and surplus of at least $500,000,000 with any of the obligations described in (i) -15- 18 through (iv) as collateral; provided that if all of the above investments are unavailable, the entire amounts to be invested may be used to purchase federal funds from an entity described in clause (iii) above; and provided further that no investment shall be eligible as a "specified investment" unless the final maturity date or date of return of such investment is on or before (x) the scheduled date for the purchase of such Notes, or (y) if no date has been scheduled for the purchase of such Notes, the next business day, or (z) if the Company has given notice that such Notes will not be purchased, the next applicable Special Distribution Date. Earnings on such investments in the escrow account for each Trust will be paid to the Company periodically, and the Company will be responsible for any losses. (Section 2.02(b)) On the next Regular Distribution Date specified in the applicable Prospectus Supplement, the Company will pay to the Pass Through Trustee an amount equal to the interest that would have accrued on any Notes purchased after the date of the issuance of such Certificates from the date of the issuance of such Certificates to, but excluding, the date of the purchase of such Notes by the Pass Through Trustee. (Section 2.02(b)) SPECIAL DISTRIBUTION UPON UNAVAILABILITY OF PROPERTY To the extent, due to a casualty to, or other event causing the unavailability of, a Property, that the full amount of the proceeds from the sale of any Certificates held in the escrow account referred to above is not used to purchase Notes on or prior to the date specified in the applicable Prospectus Supplement, an amount equal to the unused proceeds will be distributed by the Pass Through Trustee of the related Trust to the Certificateholders of record of such Trust on a pro rata basis upon not less than 20 days' prior notice to them as a Special Distribution Date together with interest thereon at a rate equal to the rate applicable to such Certificates, but without premium, and the Company will pay to the Pass Through Trustee on such date an amount equal to such interest. (Section 2.02(b)) THE PASS THROUGH TRUSTEE Wilmington Trust Company will be the Pass Through Trustee for each series of Certificates and will be the Loan Trustee for each of the Indentures under which the Notes are issued. With certain exceptions, the Pass Through Trustee makes no representations as to the validity or sufficiency of the Basic Agreement, the Trust Supplements, the Certificates, the Notes, the Indentures, the Leases or other related documents. The Pass Through Trustee shall not be liable, with respect to any series of Certificates, for any action taken or omitted to be taken by it in good faith in accordance with the direction of the holders of a majority in interest of outstanding Certificates of such series issued under the Basic Agreement. Subject to such provisions, such Pass Through Trustee shall be under no obligation to exercise any of its rights or powers under the Basic Agreement at the request of any holders of Certificates issued thereunder unless they shall have offered to the Pass Through Trustee indemnity satisfactory to it. The Basic Agreement provides that the Pass Through Trustee in its individual or any other capacity may acquire and hold Certificates issued thereunder and, subject to certain conditions, may otherwise deal with the Company and any Owner Trustee with the same rights it would have if it were not the Pass Through Trustee. (Sections 7.02, 7.03 and 7.04) The Pass Through Trustee may resign with respect to any or all of the Trusts at any time, in which event the Company will be obligated to appoint a successor trustee for such Trust or Trusts. If the Pass Through Trustee ceases to be eligible to continue as Pass Through Trustee with respect to a Trust or becomes incapable of acting as Pass Through Trustee or becomes insolvent, the Company may remove such Pass Through Trustee, or any holder of the Certificates of such Trust for at least six months may, on behalf of himself and all others similarly situated, petition any court of competent jurisdiction for the removal of such Pass Through Trustee and the appointment of a successor trustee. Any resignation or removal of the Pass Through Trustee with respect to a Trust and appointment of a successor trustee for such Trust does not become effective until acceptance of the appointment by the successor trustee. (Section 7.08) Pursuant to such resignation and successor trustee provisions, it is possible -16- 19 that a different trustee could be appointed to act as the successor trustee with respect to each Trust. All references in this Prospectus to the Pass Through Trustee should be read to take into account the possibility that the Trusts could have different successor trustees in the event of such a resignation or removal. The Basic Agreement provides that the Company will pay the Pass Through Trustee's fees and expenses. (Section 7.06) DESCRIPTION OF THE NOTES The statements made under this caption are summaries and reference is made to the entire Prospectus and the detailed information appearing in the applicable Prospectus Supplement. Such summaries relate to the Notes and Indenture relating to each Property in respect of which such Notes are to be issued except to the extent, if any, described in the applicable Prospectus Supplement. Where no distinction is made under this caption between the Leased Property Notes and the Owned Property Notes or between their respective Indentures, such statements refer to any Notes and any Indenture. GENERAL All Notes issued under the same Indenture will relate to a single Property. The Notes with respect to each Property will be issued under a separate Indenture either (a) between the related Owner Trustee of a trust for the benefit of the Owner Participant who is the beneficial owner of such Property and the related Loan Trustee or (b) between the Company and the related Loan Trustee. With respect to each Leased Property, the related Owner Trustee has acquired or will acquire such Leased Property from the Company, has granted or will grant a mortgage in the properties comprising such Leased Property to the related Loan Trustee as security for the payments of the related Leased Property Notes, and has leased or will lease such Leased Property to the Company pursuant to the related Lease which has been or will be assigned to the related Loan Trustee. Pursuant to the Lease related to each Leased Property, the Company will be obligated to make or cause to be made rental and other payments to the related Loan Trustee on behalf of the related Owner Trustee in amounts that will be sufficient to make payments of the principal, interest and premium, if any, required to be made in respect of such Leased Property Notes when and as due and payable. The rental obligations of the Company under each Lease and the obligations of the Company under each Owned Property Indenture and under the Owned Property Notes will be the general obligations of the Company. Except in certain circumstances involving the Company's purchase of Leased Property and the assumption of the Leased Property Notes related thereto, the Leased Property Notes are not direct obligations of or guaranteed by the Company. PRINCIPAL AND INTEREST PAYMENTS Interest paid on the Notes held in each Trust will be passed through to the Certificateholders of such Trust on the dates and at the rate per annum set forth in the applicable Prospectus Supplement until the final distribution for such Trust. Principal paid on the Notes held in each Trust will be passed through to the Certificateholders of such Trust in scheduled amounts on the dates set forth in the applicable Prospectus Supplement until the final distribution date for such Trust. See "Description of the Certificates - General." If any date scheduled for any payment of principal, premium, if any, or interest with respect to the Notes is not a business day, such payment will be made on the next succeeding business day without any additional interest. -17- 20 SECURITY The Leased Property Notes will be secured by (i) an assignment by the related Owner Trustee to the related Loan Trustee of such Owner Trustee's rights (except for certain rights, including those described below) under the Lease with respect to each related Leased Property, including the right to receive payments of rent thereunder and (ii) a mortgage granted to such Loan Trustee of each such Leased Property, subject to the rights of the Company under each related Lease. Under the terms of each Lease, the Company's obligations in respect of the related Leased Property will be those of a lessee under a "net lease." Accordingly, the Company will be obligated, among other things and at its expense, to pay all costs and expenses of operating and maintaining the Leased Properties. The Owned Property Notes will be secured by a mortgage granted to the related Loan Trustee of certain of the Company's rights with respect to the related Owned Properties. Under the terms of each Owned Property Indenture, the Company will be obligated, among other things and at its expense, to pay all costs and expenses of operating and maintaining the related Owned Property. The Notes are not cross-collateralized and consequently the Notes issued in respect of any one Property will not be secured by any other Property or, in the case of Leased Property Notes, the Lease or Leases related thereto. Unless and until an Indenture Default with respect to a Leased Property has occurred and is continuing, the related Loan Trustee may not exercise any of the rights of the related Owner Trustee under the related Lease. With respect to each Leased Property, the assignment by the related Owner Trustee to the related Loan Trustee of its rights under the related Lease will exclude, among other things, rights of such Owner Trustee and the related Owner Participant relating to indemnification by the Company for certain matters, insurance proceeds payable to such Owner Trustee in its individual capacity and to such Owner Participant under liability insurance maintained by the Company pursuant to such Lease or by such Owner Trustee or such Owner Participant, insurance proceeds payable to such Owner Trustee in its individual capacity or to such Owner Participant under certain casualty insurance maintained by such Owner Trustee or such Owner Participant pursuant to such Lease and any rights of such Owner Participant or such Owner Trustee to enforce payment of the foregoing amounts and their respective rights to the proceeds of the foregoing. The Company will, at its expense, maintain or cause to be maintained insurance covering each Property with coverage limits and on terms and conditions as are specified in the applicable Prospectus Supplement. Funds, if any, held from time to time by the Loan Trustee with respect to any Property, including funds held as the result of an event of loss to such Property or, with respect to any Leased Property, termination of -18- 21 the Lease related thereto, will be invested and reinvested by such Loan Trustee. Such investment and reinvestment will be at the direction of the Company (except, with respect to a Leased Property, in the case of a Lease Event of Default under the related Lease or, with respect to an Owned Property, in the case of an Indenture Default under the related Indenture) in certain investments described in the related Indenture. The net amount of any loss resulting from any such investments will be paid by the Company. CONSEQUENCES OF THE COMPANY'S BANKRUPTCY If the Company were to become a debtor in a liquidation or reorganization case under Title 11 of the United States Code (the "Bankruptcy Code"), the Company or its bankruptcy trustee could seek to reject any or all outstanding Leases. Rejection of any Lease would constitute a breach of such Lease and, as provided in applicable non-bankruptcy law, deprive the Company of the use of the related Leased Property. If any Lease were rejected, rental payments thereunder would terminate, thereby leaving the related Owner Trustee or Loan Trustee without regular rent payments and with a claim for damages to pay amounts due under the Leased Property Notes issued in respect of the related Leased Property. There can be no assurance that any such claim for damages would, if the bankruptcy court treated such Lease as a true lease and authorized its rejection, be sufficient to provide for the repayment of the Leased Property Notes issued under the Indenture related to such Lease. Under section 502(b)(6) of the Bankruptcy Code, a claim by a lessor for damages resulting from the rejection by a debtor of a lease of real property is limited to an amount equal to the rent reserved under the lease, without acceleration, for the greater of one year or 15 percent (but not more than three years) of the remaining term of the lease, plus rent already due but unpaid. Regardless of any limitation of damages pursuant to section 506(b)(6) of the Bankruptcy Code, the related Loan Trustee could also realize upon its lien on and security interest in the related Leased Property, which would not be affected by such rejection, to recover any additional unpaid amounts on the Leased Property Notes. PAYMENTS AND LIMITATION OF LIABILITY Each Leased Property will be leased separately by the related Owner Trustee to the Company pursuant to the related Lease for a term commencing on the delivery date thereof to such Owner Trustee and expiring on a date not earlier than the latest maturity date of the related Leased Property Notes, unless previously terminated as permitted by the terms of the related Lease. The basic rent and other payments under each such Lease will be payable by the Company in accordance with the terms specified in the applicable Prospectus Supplement, and will be assigned by the related Owner Trustee under the related Indenture to provide the funds necessary to pay principal of, premium, if any, and interest due from such Owner Trustee on the Leased Property Notes issued under such Indenture. In certain cases, the basic rent payments under a Lease may be adjusted, but each Lease will provide that under no circumstances will rent payments by the Company with respect to any Leased Property be less than the scheduled payments on the related Leased Property Notes. The balance of any basic rent payment under any Lease, after payment of amounts due on the Leased Property Notes issued under the Indenture corresponding to such Lease, will be paid over to the applicable Owner Participant. The Company's obligation to pay rent and to cause other payments to be made under each Lease will be general obligations of the Company. With respect to the Leased Property Notes, except in certain circumstances involving the Company's purchase of a Leased Property and the assumption of the Leased Property Notes related thereto, the Leased Property Notes will not be obligations of, or guaranteed by, the Company. With respect to the Leased Property Notes, none of the Owner Trustees, the Owner Participants or the Loan Trustees shall be personally liable to any holder of such Leased Property Notes for amounts payable under such Leased Property Notes, or, except as provided in the Indentures relating thereto in the case of the Owner Trustees and the Loan Trustees, for any liability under such Indentures. Except in the circumstances referred to above, all amounts payable under any Leased Property Notes (other than payments made in connection with an optional redemption or purchase by the related Owner Trustee or the related Owner Participant) will be made only from the assets subject to the lien of the related Indenture with -19- 22 respect to such Leased Property or the income and proceeds received by the related Loan Trustee therefrom (including rent payable by the Company under the related Lease). With respect to the Leased Property Notes, except as otherwise provided in the related Indentures, no Owner Trustee shall be personally liable for any amount payable or for any statement, representation, warranty, agreement or obligation under such Indentures or under such Leased Property Notes except for its own willful misconduct or gross negligence. None of the Owner Participants shall have any duty or responsibility under the Leased Property Indentures or Leased Property Notes to the related Loan Trustee or to any holder of any such Leased Property Note. The Company's obligations under each Owned Property Indenture and under the Owned Property Notes will be general obligations of the Company. DEFEASANCE OF THE INDENTURES AND THE NOTES IN CERTAIN CIRCUMSTANCES Unless otherwise specified in the applicable Prospectus Supplement, the applicable Indenture provides that the obligations of the related Loan Trustee and, with respect to any Leased Property Notes, the related Owner Trustee or, with respect to any Owned Property Notes, the Company under the applicable Indenture shall be deemed to have been discharged and paid in full (except for certain obligations, including the obligations to register the transfer or exchange of Notes, to replace stolen, lost, destroyed or mutilated Notes and to maintain paying agencies and hold money for payment in trust) on the 91st day after the date of irrevocable deposit with the related Loan Trustee of money or certain obligations of the Unites States or any agency or instrumentality thereof the payment of which is backed by the full faith and credit of the United States which, through the payment of principal and interest in respect thereof in accordance with their terms, will provide money in an aggregate amount sufficient to pay when due (including as a consequence of redemption in respect of which notice is given on or prior to the date of such deposit) principal of, premium, if any, and interest on all Notes issued thereunder in accordance with the terms of such Indenture. Such discharge may occur only if, among other things, there has been published by the Internal Revenue Service a ruling to the effect that holders of such Notes will not recognize income, gain or loss for federal income tax purposes as a result of such deposit, defeasance and discharge and will be subject to federal income tax on the same amount and in the same manner and at the same time as would have been the case if such deposit, defeasance and discharge had not occurred. Upon such defeasance, or upon payment in full of the principal of, premium, if any, and interest on all Notes issued under any Indenture on the maturity date therefor or deposit with the applicable Loan Trustee of money sufficient therefor no earlier than one year prior to the date of such maturity, the holders of such Notes will have no beneficial interest in or other rights with respect to the related Property or other assets subject to the lien of such Indenture and such lien shall terminate. ASSUMPTION OF OBLIGATIONS BY THE COMPANY Unless otherwise specified in the applicable Prospectus Supplement with respect to any Leased Property, upon the exercise by the Company of any purchase options it may have under the related Lease prior to the end of the term of such Lease, the Company may assume on a full recourse basis all of the obligations of the Owner Trustee (other than its obligations in its individual capacity) under the Indenture with respect to such Leased Property, including the obligations to make payments in respect of the related Leased Property Notes. In such event, certain relevant provisions of the related Lease, including (among others) provisions relating to maintenance, possession and use of such Leased Property, liens, insurance and events of default will be incorporated into such Indenture, and the Leased Property Notes issued pursuant thereto will not be redeemed and will continue to be secured by such Leased Property. -20- 23 CERTAIN FEDERAL INCOME TAX CONSEQUENCES The following is a general discussion of the anticipated material United States federal income tax consequences of the purchase, ownership and disposition of the Certificates and should be read in conjunction with any additional discussion of federal income tax consequences included in the applicable Prospectus Supplement. The discussion is based on laws, regulations, rulings and decisions, all as in effect on the date of this Prospectus and all of which are subject to change or different interpretations, which may be retroactive. The discussion below does not purport to address all of the federal income tax consequences that may be applicable to all categories of investors, some of which (for example, banks, tax exempt organizations, insurance companies and foreign investors) may be subject to special rules. The statements of law and legal conclusions set forth herein have been confirmed by the opinion of Kelley Drye & Warren, special counsel to the Company, as qualified therein and herein. Certain of the anticipated federal income tax consequences discussed herein are based on proposed Treasury Regulations, which are subject to change and are not binding authority until adopted as final or temporary regulations. As a result, definitive guidance cannot be provided regarding all of the federal income tax consequences to Certificate Owners or to the Trusts. In addition, there can be no assurance that the Internal Revenue Service ("IRS") or the courts would not take positions different from those discussed herein which would be materially adverse to investors. Investors should consult their own tax advisors in determining the federal, state, local, foreign and any other tax consequences to them of the purchase, ownership and disposition of the Certificates, including the advisability of making any election discussed below. The Trusts are not indemnified for any federal income taxes that may be imposed upon them, and the imposition of any such taxes could result in a reduction in the amounts available for distribution to the Certificate Owners of the affected Trust. GENERAL Based upon an interpretation of analogous authorities under currently applicable law, the Trusts should not be classified as associations taxable as corporations, but, rather, should be classified as grantor trusts under Subpart E, Part I of Subchapter J of the Internal Revenue Code of 1986, as amended (the "Code"), and each Certificate Owner of each Trust should be treated as the owner of a pro rata undivided interest in each of the Notes or any other property held by such Trust. Section 7701(i) of the Code provides that "taxable mortgage pools" will be taxed as corporations notwithstanding other provisions of the Code. An entity will be treated as a taxable mortgage pool only if (i) substantially all of the entity's assets consist of debt obligations more than 50% of which consist of real estate mortgages; (ii) the entity is the obligor under debt obligations with two or more maturities; and (iii) under the terms of the debt obligations (or underlying arrangement) under which the entity is the obligor, payments on the debt obligations bear a relationship to payments on the debt obligations held by the entity. Proposed Treasury Regulations under Code section 7701(i) provide that for purposes of applying the taxable mortgage pool rules, ownership interests in entities that are classified as trusts under the "investment trust" rules of Treasury Regulation section 301.7701-4(c) will not be treated as debt obligations -21- 24 of such trusts. The Trusts herein are expected to qualify as such trusts, and the Proposed Regulations would confirm that the taxable mortgage pool rules do not apply to the Trusts. Each Certificate Owner should be required to report on its federal income tax return its pro rata share of the entire income from the Notes or any other property held by the related Trust, in accordance with such Certificate Owner's method of accounting. A Certificate Owner using the cash method of accounting must take into account its pro rata share of income as and when received (or deemed received) by the Pass Through Trustee. A Certificate Owner using an accrual method of accounting must take into account its pro rata share of income as it accrues or is received by the Pass Through Trustee, whichever is earlier. A purchaser of a Certificate should be treated as purchasing an interest in each Note and any other property in the related Trust at a price determined by allocating the purchase price paid for the Certificate among such Notes and other property in proportion to their fair market values at the time of purchase of the Certificate. Unless otherwise indicated in a Prospectus Supplement, it is believed that when all the Notes have been acquired by the related Trust the purchase price paid for a Certificate by an original purchaser of a Certificate should be allocated among the Notes in the related Trust in proportion to their respective principal amounts. ORIGINAL ISSUE DISCOUNT The Notes may be issued with original issue discount ("OID"), which may require Certificate Owners to include such OID in gross income in advance of the receipt of the cash attributable to such income. The Prospectus Supplement will state whether any Notes to be held by the related Trust will be issued with OID. In general, a Note will be considered to be issued with OID (subject to a de minimis exception) to the extent the "stated redemption price at maturity" of such Note is greater than its "issue price." The stated redemption price at maturity of a debt instrument generally will equal all payments due under the debt instrument at any time, other than payments of "qualified stated interest," which is defined as interest payments calculated on the basis of a single fixed rate of interest that is actually and unconditionally payable at fixed, periodic intervals of one year or less over the entire term of the debt instrument. The issue price of the Notes will equal the price paid therefor by the related Trusts, which will equal the offering price at which the Certificates are sold to the public. -22- 25 The amount of OID to be included in income in any tax period with respect to a Note will be determined using a constant yield to maturity method. Any amounts included in income as OID will increase a Certificate Owner's adjusted tax basis with regard to its interest in the Note. Some Notes may be issued with maturity dates of not more than one year from the date of issue. The OID provisions of the Code do not generally apply to such short-term obligations; however, the Code provisions applicable to such short-term obligations may require taxpayers to include amounts in income prior to the receipt of cash. In general, section 1281 of the Code requires an accrual method taxpayer to include OID in income on a straight-line basis over the term of the obligation (or, if the holder so elects, on a constant interest basis). A Certificate Owner may elect to include in income "acquisition discount" rather than OID with respect to its interest in a Note constituting a short-term obligation. The amount of a Note's acquisition discount will equal the excess of its stated redemption price at maturity over the holder's basis in the Note, and would be included in income pursuant to the accrual rules discussed above. Once made, an election to utilize acquisition discount rather than OID would apply to all non-governmental debt obligations with a term of one year or less acquired by such Certificate Owner on or after the first day of the first taxable year to which the election applies, unless the IRS consents to a revocation of the election. The above discussion regarding OID is based on proposed Treasury Regulations promulgated under the OID provisions of the Code (the "Proposed OID Regulations"), as revised. Certificate Owners should be aware, however, that the IRS may further revise the Proposed OID Regulations, and that any such further revision could prescribe different tax treatment from that described herein. Subsequent purchasers of Certificates will be required to include OID in income, but the amount to be reported will depend on the amount paid for each such Certificate by the subsequent purchaser, as allocated to the Notes held by the related Trust. Section 1272(a)(7) of the Code provides that the amount of OID required to be reported on an interest in a Note may be reduced if the subsequent purchaser pays an "acquisition premium" for such interest. SALES OF CERTIFICATES A Certificate Owner that sells a Certificate should thus recognize gain or loss equal to the difference between its adjusted tax basis in each asset held by the related Trust and the amount realized on the sale (except to the extent attributable to accrued interest, which should be taxable as ordinary income). The amount realized on the sale of a Certificate should be apportioned among the assets of the related Trust according to their relative fair market values. Subject to the market discount rules discussed below, any such gain or loss will be capital gain or loss if the asset was held as a capital asset and will be long-term capital gain or loss if the asset was held for more than one year. See "Certain Federal Income Tax Consequences - Market Discount." Net capital gain (the excess of net long-term capital gain over net short-term capital loss) of individuals is, under certain circumstances, taxed at lower rates than items of ordinary income. -23- 26 MARKET DISCOUNT Purchasers of Certificates should be aware that the resale of such Certificates may be affected by the market discount provisions of the Code. In general, if any Certificate Owner's interest in a Note held by the related Trust is acquired at a "market discount" (i.e., subject to a de minimis exception, a price below the Note's stated redemption price at maturity or, in the case of an interest in a Note with OID, the issue price plus the original issue discount includible in the income of all prior holders of such Certificate with respect to that Note), the Certificate Owner should be subject to the market discount rules of sections 1276 to 1278 of the Code with regard to its interest in the Note. In the case of a sale or certain other dispositions of indebtedness subject to the market discount rules, section 1276 of the Code requires that gain, if any, from such sale or disposition be treated as ordinary income to the extent such gain represents market discount that has accrued during the period in which the indebtedness was held. In the case of a partial principal payment on indebtedness subject to the market discount rules, section 1276 of the Code requires that such payment be included in gross income as ordinary income to the extent such payment does not exceed the market discount that has accrued during the period such indebtedness was held. The amount of any accrued market discount later required to be included in income upon a disposition, or subsequent partial principal payment, will be reduced by the amount of accrued market discount previously included in income. Generally, market discount accrues under a straight line method, or, at the election of the taxpayer, a constant interest method. However, in the case of installment obligations the manner in which market discount is to be accrued has been left to Treasury Regulations not yet issued (unless a Prospectus Supplement indicates otherwise). Until such Treasury Regulations are issued, the explanatory Conference Committee Report to the Tax Reform Act of 1986 (the "Conference Report") indicates that holders of installment obligations with market discount may elect to accrue market discount either on the basis of a constant interest rate or as follows: the amount of market discount that is deemed to accrue is the amount of market discount that bears the same ratio to the total amount of remaining market discount that the amount of stated interest paid in the accrual period (or, if such obligation has OID, the OID for the period) bears to the total amount of stated interest remaining to be paid on the installment obligation as of the beginning of such period (or, if such obligation has OID, the total remaining OID at the beginning of the period). Under section 1277 of the Code, if in any taxable year interest paid or accrued on indebtedness incurred or continued to purchase or carry indebtedness subject to the market discount rules exceeds the interest currently includible in income with respect to such indebtedness, deduction of the excess interest must be deferred to the extent of the market discount allocable to the taxable year. The deferred portion of any interest expense will generally be deductible when such market discount is included in income upon the sale or other disposition (including repayment) of the indebtedness. Section 1278 of the Code allows a taxpayer to make an election to include market discount in gross income currently, through the use of either the straight-line inclusion method or the constant interest method. If such election is made, the rules of sections 1276 and 1277 (described above) will not apply to the taxpayer. Once made, such an election applies to all market discount debt instruments acquired by the taxpayer during or after the taxable year for which the election is made, and may not be revoked without the consent of the IRS. If an election is made to include market discount in income currently, the taxpayer's basis in such debt instrument is increased by the market discount thereon as it is includible in income. PREMIUM -24- 27 A Certificate Owner should generally be considered to have acquired an interest in a Note at a premium to the extent the purchaser's tax basis allocable to such interest exceeds the remaining principal amount of the Note allocable to such interest. In such event, a Certificate Owner that holds a Certificate as a capital asset may elect under section 171 of the Code to amortize that premium as an offset to interest income with corresponding reductions in the Certificate Owner's tax basis in that Note. Generally, such amortization is on a constant yield basis. However, in the case of installment obligations, the Conference Report indicates a Congressional intent that amortization will be in accordance with the same rules that will apply to the accrual of market discount on installment obligations. See "Certain Federal Income Tax Consequences - Market Discount." It is not clear under the Code how amortizable bond premium should be treated when there is the possibility of early redemption or when the amount of the redemption premium is unknown. In addition, it is not clear how any unamortized bond premium remaining at the time of an early call should be treated under the Code. Because of the lack of certainty in this area, Certificate Owners should consult their own tax advisors as to the amount and treatment of any amortizable bond premium. If a Certificate Owner acquired a Certificate at a premium and elects to amortize such premium, and the IRS successfully challenged the amount of amortization claimed for a particular period, then such Certificate Owner would not be able to offset interest income on the Certificate for such period with the amount of such disallowed amortization. INFORMATION REPORTING Information reports will be made by the Trustee to the IRS, and to Certificate Owners that are not exempt from the reporting requirements, annually or as otherwise required with respect to interest paid (or OID accrued, if any) on the Certificates. BACKUP WITHHOLDING Payments made on the Certificates, and proceeds from the sale of the Certificates to or through certain brokers, may be subject to a "backup" withholding tax of 31% unless the Certificate Owner complies with certain reporting procedures or is exempt from such requirements under section 3406 of the Code. Any such withheld amounts are allowed as a credit against the Certificate Owner's federal income tax. Furthermore, certain penalties may be imposed by the IRS on a Certificate Owner who is required to supply information but who does not do so in the proper manner. THE FOREGOING SUMMARY DOES NOT DISCUSS ALL ASPECTS OF FEDERAL INCOME TAXATION THAT MAY BE RELEVANT TO A PARTICULAR CERTIFICATE OWNER IN LIGHT OF ITS CIRCUMSTANCES AND INCOME TAX SITUATION. EACH CERTIFICATE OWNER SHOULD CONSULT ITS TAX ADVISOR AS TO THE SPECIFIC TAX CONSEQUENCES TO SUCH CERTIFICATE OWNER OF THE OWNERSHIP AND DISPOSITION OF THE CERTIFICATES, INCLUDING THE PROPRIETY OF MAKING ANY ELECTION DESCRIBED ABOVE AND THE APPLICATION AND EFFECT OF STATE, LOCAL, FOREIGN AND OTHER TAX LAWS. CERTAIN DELAWARE TAXES The Pass Through Trustee is a Delaware banking corporation with its principal trust office in Wilmington, Delaware. Richards Layton & Finger, counsel to the Pass Through Trustee, has advised the Company that, in its opinion, under currently applicable Delaware law, assuming that the Trusts will not be taxable as corporations, but, rather, will be classified as grantor trusts under subpart E, Part I of Subchapter J of the Code, (i) the Trusts will not be subject to any tax (including without limitation, net or gross income, tangible or intangible property, net worth, capital, franchise or doing business tax), fee or other -25- 28 governmental charge under the laws of the State of Delaware or any political subdivision thereof and (ii) Certificate Owners that are not residents of or otherwise subject to tax in the State of Delaware will not be subject to any tax (including, without limitation, net or gross income, tangible or intangible property, net worth, capital, franchise or doing business tax), fee or other governmental charge under the laws of the State of Delaware or any political subdivision thereof as a result of purchasing, holding (including receiving payments with respect to) or selling a Certificate. Neither the Trusts nor the Certificate Owners will be indemnified for any state or local taxes imposed on them, and the imposition of any such taxes on a Trust could result in a reduction in the amounts available for distribution to the Certificate Owners of such Trust. In general, should a Certificate Owner or a Trust be subject to any state or local tax which would not be imposed if the Pass Through Trustee were located in a different jurisdiction in the United States, the Pass Through Trustee will resign and a new Pass Through Trustee in such other jurisdiction will be appointed. ERISA CONSIDERATIONS Unless otherwise indicated in the applicable Prospectus Supplement, the Certificates may, subject to certain legal restrictions, be purchased and held by an employee benefit plan (a "Plan") subject to Title I of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), or an individual retirement account or an employee benefit plan subject to section 4975 of the Code. A fiduciary of a Plan must determine that the purchase and holding of a Certificate is consistent with its fiduciary duties under ERISA and does not result in a non- exempt prohibited transaction as defined in section 406 of ERISA or section 4975 of the Code. Employee benefit plans which are governmental plans (as defined in section 3(32) of ERISA) and certain church plans (as defined in section 3(33) of ERISA) are not subject to Title I of ERISA or section 4975 of the Code. The Certificates may, subject to certain legal restrictions, be purchased and held by such plans. PLAN OF DISTRIBUTION The Certificates being offered hereby may be sold in any one or more of the following ways from time to time by Morgan Stanley & Co. Incorporated, Goldman, Sachs & Co. and Salomon Brothers Inc (the "Distributors") acting as: (i) agent or (ii) underwriters. In addition, the Certificates may be sold directly to purchasers. The distribution of the Certificates may be effected from time to time in one or more transactions at a fixed price or prices, which may be changed, at market prices prevailing at the time of sale, at prices related to such prevailing market prices or at negotiated prices. In the event the Distributors act as agent, any commission payable by the Company to the Distributors will be set forth, in the applicable Prospectus Supplement. Unless otherwise indicated in such Prospectus Supplement, any such Distributor will be acting on a best efforts basis for the period of its appointment. Any such Distributor may be deemed to be an underwriter, as that term is defined in the Securities Act, of the Certificates so offered and sold. If the Certificates are sold by means of an underwritten offering, the Company will execute an underwriting agreement with the Distributors, and the terms of the transaction, including commissions, discounts and any other compensation of the Distributors and dealers, if any, will be set forth in the Prospectus Supplement which will be used by the Distributors to make offers and sales of the Certificates in respect of which this Prospectus is delivered to the public. If Distributors are utilized in the sale of the Certificates in respect of which this Prospectus is delivered, the Certificates will be acquired by the Distributors for their own account and may be resold from time to time in one or more transactions, including negotiated transactions, at fixed public offering prices or at varying prices determined by the Distributors at the time of sale. The Certificates may be offered to the public either through underwriting syndicates represented by the Distributors or directly by the Distributors. If the Distributors are utilized in the sale of the Certificates, unless otherwise indicated in the Prospectus Supplement, the underwriting -26- 29 agreement will provide that the obligations of the Distributors are subject to certain conditions precedent and that the Distributors with respect to a sale of the Certificates will be obligated to purchase all such Certificates if any are purchased. The Company does not intend to apply for listing of the Certificates on a national securities exchange. If the Certificates are sold by means of an underwritten offering, the Distributors may make a market in the Certificates as permitted by applicable laws and regulations. No Distributor would be obligated, however, to make a market in the Certificates and any such market making could be discontinued at any time at the sole discretion of such Distributor. Accordingly, no assurance can be given as to the liquidity of, or trading markets for, the Certificates. If a dealer is utilized in the sale of the Certificates in respect of which this Prospectus is delivered, such Certificates will be sold to the dealer as principal. The dealer may then resell such Certificates to the public at varying prices to be determined by such dealer at the time of resale. Any such dealer may be deemed to be an underwriter, as such term is defined in the Securities Act, of the Certificates so offered and sold. The name of the dealer and the terms of the transaction will be set forth in the Prospectus Supplement relating thereto. Offers to purchase the Certificates may be solicited directly and the sale thereof may be made directly to institutional investors or others, who may be deemed to be underwriters within the meaning of the Securities Act with respect to any resale thereof. The terms of any such sales will be described in the Prospectus Supplement relating thereto. The Distributors may be entitled under relevant agreements to indemnification or contribution by the Company against certain liabilities, including liabilities under the Securities Act and may engage in transactions with, or perform services for, the Company and the Company's subsidiaries in the ordinary course of business. LEGAL MATTERS The validity of the Certificates offered hereby will be passed upon for the Company by Kelley Drye & Warren, a New York partnership including professional corporations, 101 Park Avenue, New York, New York 10178, and for any agents or underwriters by Shearman & Sterling, 599 Lexington Avenue, New York, New York 10022. Unless otherwise indicated in the applicable Prospectus Supplement, both Kelley Drye & Warren and Shearman & Sterling will rely on the opinion of Richards Layton & Finger, counsel for Wilmington Trust Company, individually and as Pass Through Trustee for the Certificates of each Trust, as to certain matters relating to the authorization, execution and delivery of such Certificates by, and the valid and binding effect thereof on, such Pass Through Trustee. EXPERTS The consolidated financial statements of the Company incorporated by reference in this Prospectus and elsewhere in the Registration Statement have been audited by Ernst & Young, independent auditors, for the periods indicated in their reports with respect thereto and have been incorporated by reference herein in reliance upon such reports given upon the authority of said firm as experts in accounting and auditing. -27- 30 PART II INFORMATION NOT REQUIRED IN PROSPECTUS ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION. The following table sets forth the expenses in connection with the issuance and distribution of the securities being registered, other than underwriting discounts and commissions. All amounts are estimated except the Securities and Exchange Commission registration fee. SEC registration fee . . . . . . . . . . . . . . . . . . . . . . . . . $103,449 Accounting fees and expenses . . . . . . . . . . . . . . . . . . . . . 100,000 Blue Sky fees and expenses . . . . . . . . . . . . . . . . . . . . . . 20,000 Legal fees and expenses . . . . . . . . . . . . . . . . . . . . . . . . 200,000 Trustee's fees and expenses . . . . . . . . . . . . . . . . . . . . . . 20,000 Printing and engraving expenses . . . . . . . . . . . . . . . . . . . . 60,000 Rating agency fees . . . . . . . . . . . . . . . . . . . . . . . . . . 250,000 ---------- Total . . . . . . . . . . . $ 753,449 ==========
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS. Article VII of the Company's By-laws provides for indemnification of directors and officers to the full extent permissible under section 145 of the Delaware General Corporation Law (the "GCL"). Section 145 of the GCL generally grants corporations the power to indemnify their directors, officers, employees and agents of a corporation in accordance with the provisions thereof. The Company enters into indemnification agreements with each of its executive officers and directors. Each such Indemnification Agreement provides for indemnification of officers and directors of the Company to the greatest extent permitted by the GCL and additionally provides (i) that such persons shall be indemnified for amounts paid in settlement of derivative actions, (ii) for advances of investigation and litigation expenses subject to repayment if indemnification is disallowed, (iii) that indemnification is available unless the board of directors or independent legal counsel or the stockholders determine that the relevant standards of conduct were not satisfied, with the Company bearing the burden of providing same in any suit for indemnification, and (iv) for payment to such persons of expenses incurred in connection with the successful prosection of an action for indemnification, in whole or in part, of any amount not timely paid (generally within 30 days of demand) by the Company. The Company maintains a standard form of officers' and directors' liability insurance policy which provides coverage to the officers and directors of the Company for certain liabilities, including certain liabilities which may arise out of this Registration Statement. In accordance with section 102(a)(7) of the GCL, Article VII of the Company's Restated Certificate of Incorporation eliminates the personal liability of directors to the Company or its stockholders for monetary damages for breach of fiduciary duty as a director with certain limited exceptions set forth in section 102(a)(7) of the GCL. Reference is made to the form of Underwriting Agreement filed as Exhibit 1 to this Registration Statement, which provides for indemnification of directors and officers of the Company by the Underwriters against certain liabilities. II-1 31 ITEM 16. EXHIBITS.
EXHIBIT NUMBER DESCRIPTION -------- ----------- 1 - Form of Underwriting Agreement. 4.1* - Form of Pass Through Trust Agreement between the Company and the Pass Through Trustee. 4.2* - Form of Pass Through Certificate (included in Exhibit 4.1). 5.1 - Opinion of Kelley Drye & Warren, counsel for the Company. 5.2 - Opinion of Richards Layton & Finger, counsel for the Pass Through Trustee. 8 - Tax Opinion of Kelley Drye & Warren, counsel for the Company. 12* - Computation of Ratio of Earnings to Fixed Charges. 23.1 - Consent of Ernst & Young. 23.2 - Consent of Kelley Drye & Warren (included in Exhibits 5.1 and 8). 23.3 - Consent of Richards Layton & Finger (included in Exhibit 5.2). 24.1* - Power of Attorney. 25 - Statement of Eligibility of Trustee on Form T-1 (Exhibit D thereto filed pursuant to Rule 202 of Regulation S-T). - -------------------
* Previously filed. ITEM 17. UNDERTAKINGS. Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the registrant pursuant to the provisions described under Item 15 above, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission, such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification for such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue. The undersigned registrant hereby undertakes: (1) to file, during any period in which offers or sales are being made, a post-effective amendment to this Registration Statement: II-2 32 (a) to include any prospectus required by section 10(a)(3) of the Securities Act; (b) to reflect in the prospectus any facts or events arising after the effective date of this Registration Statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in this Registration Statement; and (c) to include any material information with respect to the plan of distribution not previously disclosed in this Registration Statement or any material change to such information in this Registration Statement; (2) that, for the purpose of determining any liability under the Securities Act, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof; and (3) to remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. The undersigned registrant hereby undertakes that, for purposes of determining any liability under the Securities Act, each filing of the registrant's annual report pursuant to section 13(a) or section 15(d) of the Securities Exchange Act of 1934 that is incorporated by reference in this Registration Statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. The undersigned registrant hereby undertakes that: (1) For purposes of determining any liability under the Securities Act of 1933, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this registration statement as of the time it was declared effective. (2) For the purpose of determining any liability under the Securities Act of 1933, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. The undersigned registrant hereby undertakes to file an application for the purpose of determining the eligibility of the Trustee to act under subsection (a) of section 310 of the Trust Indenture Act in accordance with the rules and regulations prescribed by the Commission under section 305(b)(2) of the Act. II-3 33 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, as amended, the Registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-3 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Salt Lake City, State of Utah on the 25th day of January, 1994. SMITH'S FOOD & DRUG CENTERS, INC. By: /s/Jeffrey P. Smith ---------------------------------- Jeffrey P. Smith Chairman of the Board of Directors and Chief Executive Officer PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, THIS REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE CAPACITIES AND ON THE DATES INDICATED.
Signatures Title Date ---------- ----- ---- /s/Jeffrey P. Smith* Chairman of the Board of Directors and January 25, 1994 --------------------------------------- Chief Executive Officer (Principal Jeffrey P. Smith Executive Officer) /s/Richard D. Smith* President and Chief Operating Officer; January 25, 1994 --------------------------------------- Director Richard D. Smith /s/Matthew G. Tezak* Senior Vice President and Chief January 25, 1994 --------------------------------------- Financial Officer (Principal Financial Matthew G. Tezak and Accounting Officer) /s/Robert D. Bolinder* Executive Vice President, Corporate January 25, 1994 --------------------------------------- Planning and Development; Director Robert D. Bolinder /s/Kenneth A. White* Senior Vice President, Regional Manager, January 25, 1994 --------------------------------------- California Region; Director Kenneth A. White
II-4 34 /s/Rodney H. Brady* Director January 25, 1994 --------------------------------------- Rodney H. Brady /s/Allen P. Martindale* Director January 25, 1994 --------------------------------------- Allen P. Martindale /s/DeLonne Anderson* Director January 25, 1994 --------------------------------------- DeLonne Anderson /s/Alan R. Hoefer* Director January 25, 1994 --------------------------------------- Alan R. Hoefer /s/Duane Peters* Director January 25, 1994 --------------------------------------- Duane Peters /s/Ray V. Rose* Director January 25, 1994 --------------------------------------- Ray V. Rose /s/Fred L. Smith* Director January 25, 1994 --------------------------------------- Fred L. Smith /s/Sean D. Smith* Director January 25, 1994 --------------------------------------- Sean D. Smith /s/Douglas John Tigert* Director January 25, 1994 --------------------------------------- Douglas John Tigert *By/s/Michael C. Frei January 25, 1994 ------------------------------------ Michael C. Frei, Attorney in Fact
II-5 35 EXHIBIT INDEX
Exhibit Number Description Page No. -------- ----------- -------- 1 - Form of Underwriting Agreement. 4.1* - Form of Pass Through Trust Agreement between the Company and the Pass Through Trustee. 4.2* - Form of Pass Through Certificate (included in Exhibit 4.1). 5.1 - Opinion of Kelley Drye & Warren, counsel for the Company. 5.2 - Opinion of Richards Layton & Finger, counsel for the Pass Through Trustee. 8 - Tax Opinion of Kelley Drye & Warren, counsel for the Company. 12* - Computation of Ratio of Earnings to Fixed Charges. 23.1 - Consent of Ernst & Young. 23.2 - Consent of Kelley Drye & Warren (included in Exhibits 5.1 and 8). 23.3 - Consent of Richards Layton & Finger (included in Exhibit 5.2). 24.1* - Power of Attorney. 25 - Statement of Eligibility of Trustee on Form T-1 (Exhibit D thereto filed pursuant to Rule 202 of Regulation S-T).
________________________________ *Previously filed. EX-1 2 FORM OF UNDERWRITING AGREEMENT 1 1/10/94 DRAFT $______________ SMITH'S FOOD & DRUG CENTERS, INC. PASS THROUGH CERTIFICATES, SERIES 199_-A UNDERWRITING AGREEMENT __________, 199_ 2 EXHIBIT 1 ___________, 199_ Morgan Stanley & Co. Incorporated Goldman, Sachs & Co. Salomon Brothers Inc c/o Morgan Stanley & Co. Incorporated 1251 Avenue of the Americas New York, New York 10020 Dear Sirs: Smith's Food & Drug Centers, Inc., a Delaware corporation (the "Company"), proposes that Wilmington Trust Company, a Delaware banking corporation, as trustee (the "Pass Through Trustee") under the 199_-[A] Pass Through Trust Agreement (the "Basic Agreement"), as it is to be supplemented by [___] Pass Through Trust Supplements (each, a "Trust Supplement"), each between the Company and the Pass Through Trustee (the Basic Agreement as it is to be supplemented by each such Trust Supplement being referred to herein as a "Designated Agreement"), issue and sell to the several Underwriters named in Schedule I hereto (the "Underwriters") its pass through certificates in the aggregate principal amounts and with the interest rates, initial distributions dates and final distribution dates set forth on Schedule A hereto (the "Certificates") on the terms and conditions stated herein and in Schedule II hereto. As used in this Agreement, capitalized terms not otherwise defined shall have the meanings specified in the Designated Agreements or, if not so defined therein, such capitalized terms not otherwise defined shall have the meanings specified in the Indenture referred to in the Designated Agreements, as amended and supplemented by [_____] Supplemental Indentures to such Indenture to be executed on the date of the issuance of the Notes. 3 2 I. The Company represents and warrants to each of the Underwriters that: (a) The Company meets the requirements for use of Form S-3 under the Securities Act of 1933, as amended (the "Securities Act"), and has prepared and filed on such Form with the Securities and Exchange Commission (the "Commission") a registration statement (File No. 33-51097 (as amended at the date hereof, including the exhibits thereto and the documents incorporated by reference therein, the "Registration Statement") relating to certain pass through certificates (including the Certificates) and the offering thereof from time to time in accordance with Rule 415 under the Securities Act. The Registration Statement includes a basic prospectus referred to below which, as supplemented from time to time, will be used in connection with all offerings of such pass through certificates. The Registration Statement has been declared effective by the Commission. As provided in Section 3(a), a prospectus supplement reflecting the terms of the Certificates, the terms of the offering thereof and the other matters set forth therein has been prepared and will be filed (or mailed for filing) together with the basic prospectus referred to below pursuant to Rule 424 under the Securities Act (such prospectus supplement, in the form first filed on or after the date hereof pursuant to Rule 424, is herein referred to as the "Prospectus Supplement"). The basic prospectus included in the Registration Statement and relating to all offerings of pass through certificates under the Registration Statement, as supplemented by the Prospectus Supplement, is herein called the "Prospectus", except that, if such basic prospectus is amended on or prior to the date on which the Prospectus Supplement is first filed (or mailed for filing) pursuant to Rule 424, the term "Prospectus" shall refer to such basic prospectus as so amended and as supplemented by the Prospectus Supplement, in either case including the documents filed by the Company with the Commission pursuant to the Securities Exchange Act of 1934, as amended (the "Exchange Act"), that are incorporated by reference therein. Any reference herein to the terms "amendment" or "supplement" with respect to the Registration Statement, to the Prospectus or to any preliminary prospectus shall be deemed to refer to and include any documents filed with the Commission under the Exchange Act after the date hereof, the date the Prospectus is filed (or mailed for filing) with the 4 3 Commission, or the date of such preliminary prospectus, as the case may be, and incorporated therein by reference pursuant to Item 12 of Form S-3 under the Securities Act. (b) On the original effective date of the Registration Statement, on the effective date of any post-effective amendment thereto, and on the date of the filing by the Company of any Annual Report on Form 10-K after the original filing of such Registration Statement, such Registration Statement complied in all material respects with the applicable requirements of the Securities Act and the rules and regulations of the Commission thereunder (the "Securities Act Regulations"), and the Trust Indenture Act of 1939, as amended (the "Trust Indenture Act"), and the applicable rules and regulations of the Commission thereunder (the "Trust Indenture Act Regulations") and did not include an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading; the Registration Statement and any amendments thereof, on the date hereof, and the Prospectus, and any amendments thereof and supplements thereto, as of their respective filing (or mailing for filing) or issue dates and at the Closing Date (as defined below), comply and will comply in all material respects with the requirements of the Securities Act, the Securities Act Regulations, the Trust Indenture Act and the Trust Indenture Act Regulations, and none of such documents, as of any such respective dates, includes or will include an untrue statement of a material fact or omits or will omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading; except that this representation and warranty does not apply to statements or omissions made in reliance upon and in conformity with information furnished in writing to the Company in connection with the Registration Statement or the Prospectus or any amendment or supplement thereto by or on behalf of you expressly for use in the Registration Statement or the Prospectus, or to statements or omissions in that part of the Registration Statement which constitutes the Statement of Eligibility under the Trust Indenture Act (Form T-1) of the Trustee. (c) The consolidated financial statements incorporated by reference in the Registration Statement and Prospectus present fairly the consolidated financial position of the Company and its subsidiaries as at the dates indicated and the consolidated results of their operations and cash flows for the periods specified and have been prepared in conformity with generally accepted 5 4 accounting principles applied on a consistent basis during the periods involved, except as indicated therein, and the supporting schedules incorporated by reference in the Registration Statement present fairly the information required to be stated therein. (d) The documents incorporated by reference in the Prospectus, at the time they were or hereafter are filed with the Commission, complied and will comply in all material respects with the requirements of the Exchange Act and the rules and regulations thereunder. (e) The Company is a corporation duly incorporated and validly existing in good standing under the laws of the State of Delaware, has the corporate power and authority under such laws to own its properties and conduct its business as described in the Prospectus and is duly qualified to do business as a foreign corporation in good standing in each jurisdiction in which the conduct of its business or its ownership or leasing of property requires such qualification. (f) Each subsidiary of the Company has been duly incorporated, is validly existing as a corporation in good standing under the laws of the jurisdiction of its incorporation, has the corporate power and authority to own its property and to conduct its business as described in the Prospectus and is duly qualified to transact business and is in good standing in each jurisdiction in which the conduct of its business or its ownership or leasing of property requires such qualification. (g) The execution and delivery by the Company of this Agreement, the Basic Agreement, the Trust Supplements, the Participation Agreement and the Leases and other Transaction Documents to which the Company is, or is to be, a party, the consummation by the Company of the transactions herein and therein contemplated, and the compliance by the Company with the terms hereof and thereof do not and will not conflict with, or result in a breach of, any of the terms or provisions of, or constitute a default under, the Certificate of Incorporation or By-Laws, as amended, of the Company or any of its subsidiaries or any material indenture, mortgage, or other agreement or instrument to which the Company or any of its subsidiaries is a party or by which any of their respective properties is bound, or any applicable law, rule, regulation, judgment, order or decree of any government, governmental instrumentality or court, domestic or foreign, having jurisdiction over the 6 5 Company or any of its subsidiaries or any of their respective properties; and no consent, approval, authorization, order or license of, or filing with or notice to, any government, governmental instrumentality, regulatory body or authority or court, domestic or foreign, is required for the valid authorization, issuance and delivery of the Certificates and the Notes, the valid authorization, execution, delivery and performance by the Company of this Agreement, the Designated Agreements and the Leases and other Transaction Documents to which the Company is, or is to be, a party, or the consummation by the Company of the transactions contemplated by this Agreement, the Designated Agreements and the Leases and other Transaction Documents to which the Company is, or is to be, a party, except such as are required under the Securities Act, the Trust Indenture Act and the securities or Blue Sky laws of the various states. (h) This Agreement, the Designated Agreements and the other Transaction Documents to which the Company is, or is to be, a party, have each been duly authorized by the Company and, when duly executed and delivered by the Company, will constitute valid and binding obligations of the Company. The Basic Agreement as executed is substantially in the form filed as an exhibit to the Registration Statement and has been duly qualified under the Trust Indenture Act. At the Closing Date, the related Leases and other Transaction Documents to which the Company is, or is to be, a party will constitute the valid and binding obligations of the Company. The Certificates, the Notes, the Indenture, the Related Supplemental Indentures, the Designated Agreements and the Leases and other Transaction Documents to which the Company is, or is to be, a party will conform in all material respects to the descriptions thereof in the Prospectus. (i) Ernst & Young, who reported on the annual consolidated financial statements of the Company incorporated by reference in the Registration Statement and the Prospectus, are independent auditors as required by the Securities Act and the Securities Act Regulations. (j) The Certificates, when duly executed, authenticated and delivered by the Pass Through Trustee in accordance with the terms of the respective Designated Agreement and this Agreement and any Delayed Delivery Contracts, will be duly issued under such Designated Agreement and, when delivered to and paid for by the 7 6 Underwriters in accordance with the terms of this Agreement, will constitute valid and binding obligations of the Pass Through Trustee; and the holders thereof will be entitled to the benefits of the related Designated Agreement. (k) The Notes to be issued under each Related Supplemental Indenture, when duly executed and delivered by the related Owner Trustee and duly authenticated by the Loan Trustee in accordance with the terms of such Supplemental Indenture, will be duly issued under such Supplemental Indenture and will constitute valid and binding obligations of such Owner Trustee; and the holders thereof will be entitled to the benefits of the Indenture and the Related Supplemental Indenture. (l) In the event that any of the Certificates are purchased pursuant to Delayed Delivery Contracts, each of such Delayed Delivery Contracts has been duly authorized by the Company and, when duly executed and delivered by the Company, will constitute a valid and binding obligation of the Company. (m) There has not occurred any material adverse change, or any development involving a prospective material adverse change, in the condition, financial or otherwise, or in the earnings, business or operations of the Company and its subsidiaries, taken as a whole, from that set forth in the Prospectus. (n) There are no legal or governmental proceedings pending or threatened to which the Company or any of its subsidiaries is a party or to which any of the properties of the Company or any of its subsidiaries is subject that are required to be described in the Registration Statement or the Prospectus and are not so described or any statutes, regulations, contracts or other documents that are required to be described in the Registration Statement or the Prospectus or to be filed as exhibits to the Registration Statement that are not described or filed as required. (o) Each preliminary prospectus filed as part of the registration statement as originally filed or as part of any amendment thereto, or filed pursuant to Rule 424 under the Securities Act, complied when so filed with the Securities Act and the Securities Act Regulations. (p) The Company is not an "investment company" or an entity "controlled" by an "investment company," as such terms are defined in the Investment Company Act of 1940, as amended. 8 7 (q) The Company and its subsidiaries are (i) in compliance with any and all applicable foreign, federal, state and local laws and regulations relating to the protection of human health and safety, the environment or hazardous or toxic substances or wastes, pollutants or contaminants ("Environmental Laws"), (ii) have received all permits, licenses or other approvals required of them under applicable Environmental Laws to conduct their respective businesses and (iii) are in compliance with all terms and conditions of any such permit, license or approval, except where such noncompliance with Environmental Laws, failure to receive required permits, licenses or other approvals or failure to comply with the terms and conditions of such permits, licenses or approvals would not, singly or in the aggregate, have a material adverse effect on the Company and its subsidiaries, taken as a whole. (r) In the ordinary course of its business, the Company conducts a periodic review of the effect of Environmental Laws on the business, operations and properties of the Company and its subsidiaries, in the course of which it identifies and evaluates associated costs and liabilities (including, without limitation, any capital or operating expenditures required for clean-up, closure of properties or compliance with Environmental Laws or any permit, license or approval, any related constraints on operating activities and any potential liabilities to third parties). On the basis of such review, the Company has reasonably concluded that such associated costs and liabilities would not, singly or in the aggregate, have a material adverse effect on the Company and its subsidiaries, taken as a whole. (s) The Company has complied with all provisions of Section 517.075, Florida Statutes (Chapter 92-198, Laws of Florida). II. The Company hereby agrees to cause the Pass Through Trustee to sell to the several Underwriters, and each Underwriter, upon the basis of the representations and warranties herein contained, but subject to the conditions hereinafter stated, agrees, severally and not jointly, to purchase from the Company the respective principal amounts of Certificates set forth in Schedule I hereto opposite their names at ____% with respect to the Series 199_-[A1] Certificates and at __% with respect to the Series 199_-[A2] 9 8 Certificates of their respective principal amounts -- the purchase price -- plus accrued interest, if any, from ___________, 19__ to the date of payment and delivery. III. The Company is advised by you that the Underwriters propose to make a public offering of their respective portions of the Certificates as soon after the Registration Statement and this Agreement have become effective as in your judgment is advisable. The Company is further advised by you that the Certificates are to be offered to the public initially at ____% with respect to the Series 199_-[A1] Certificates and at __% with respect to the Series 199_-[A2] Certificates of their principal amount -- the public offering price - -- plus accrued interest, if any, and to certain dealers selected by you at a price that represents a concession not in excess of ____% of their principal amount under the public offering price, and that any Underwriter may allow, and such dealers may reallow, a concession, not in excess of ____% of their principal amount, to any Underwriter or to certain other dealers. As compensation to you for your commitments and obligations hereunder in respect of the Certificates, including your undertaking to offer the Certificates for sale to the public, the Owner Trustee will pay, or, if the Owner Trustee does not pay when due, the Company will pay, to you an amount equal to $________, which constitutes the sum of the respective percentages of the Relevant Principal Amounts of the Certificates as set forth on Schedule A hereto. Such payment shall be made simultaneously with, and is conditioned upon, the payment by you to the Pass Through Trustee of the purchase price of the Certificates as specified in Article IV hereof. Payment of such compensation shall be made by Federal funds check or other immediately available funds to the order of Morgan Stanley & Co. Incorporated. IV. Payment for the Certificates shall be made by wire transfer payable to the order of the Pass Through Trustee in immediately available funds at the office of Wilmington Trust Company, Rodney Square North, Wilmington, Delaware 19890 on ___________, 199_ or at such other time on the same or such other date, not later than _________, 199_, as shall be designated in writing by you. The time and date of such payment are hereinafter referred to as the "Closing Date". 10 9 Payment for the Certificates shall be made against delivery to you for the respective accounts of the several Underwriters of the Certificates registered in such names and in such denominations as you shall request in writing not later than two full business days prior to the date of delivery, with any transfer taxes payable in connection with the transfer of the Certificates to the Underwriters duly paid. Each such Certificate shall be available for inspection by the Underwriters in New York, New York, not later than 1:00 p.m. on the Business Day two Business Days prior to the Closing Date. V. The several obligations of the Underwriters hereunder are subject to the following further conditions: (a) No stop order suspending the effectiveness of the Registration Statement shall have been issued under the Securities Act and no proceedings therefor shall have been instituted or threatened by the Commission. (b) Subsequent to the execution and delivery of this Agreement and prior to the Closing Date, (i) there shall not have occurred any downgrading, nor shall any notice have been given of any intended or potential downgrading or of any review for a possible change that does not indicate the direction of the possible change, in the rating accorded any of the Company's securities by any "nationally recognized statistical rating organization", as such term is defined for purposes of Rule 436(g)(2) under the Securities Act; and (ii) there shall not have occurred any change, or any development involving a prospective change, in the condition, financial or otherwise, or in the earnings, business or operations, of the Company and its subsidiaries, taken as a whole, from that set forth in the Registration Statement, that, in your judgment, is material and adverse and that makes it, in your judgment, impracticable to market the Certificates on the terms and in the manner contemplated in the Prospectus. (c) The Underwriters shall have received on the Closing Date a certificate, dated the Closing Date and 11 10 signed by an executive officer of the Company, to the effect set forth in clause (a)(i) above and to the effect that the representations and warranties of the Company contained in this Agreement are true and correct as of the Closing Date and that the Company has complied with all of the agreements and satisfied all of the conditions on its part to be performed or satisfied on or before the Closing Date. (d) You shall have received on the Closing Date an opinion of Kelley Drye & Warren, counsel for the Company, dated the Closing Date, to the effect that (i) the Company has been duly incorporated, is validly existing as a corporation in good standing under the laws of the jurisdiction of its incorporation, has the corporate power and authority to own its property and to conduct its business as described in the Prospectus and is duly qualified to transact business and is in good standing in each jurisdiction in which the conduct of its business or its ownership or leasing of property requires such qualification; (ii) each of the subsidiaries of the Company has been duly incorporated, is validly existing as a corporation in good standing under the laws of the jurisdiction of its incorporation, has the corporate power and authority to own its property and to conduct its business as described in the Prospectus and is duly qualified to transact business and is in good standing in each jurisdiction in which the conduct of its business or its ownership or leasing of property requires such qualification; (iii) this Agreement has been duly authorized, executed and delivered by the Company; (iv) the Certificates have been duly authorized and, when executed, authenticated and issued in accordance with the provisions of the respective Designated Agreements and delivered to and paid for by the Underwriters in accordance with the terms of this Agreement, and will be valid and binding obligations of the Pass Through Trustee, enforceable in accordance with their terms; and the holders of the Certificates will be entitled to the benefits of the respective Designated Agreements; 12 11 (v) the Pass Through Trust Agreement has been duly qualified under the Trust Indenture Act and has been duly authorized, executed and delivered by the Company and is a valid and binding agreement of the Company, enforceable in accordance with its terms except as the enforceability thereof may be limited by bankruptcy, insolvency or similar laws affecting creditors' rights generally; (vi) the execution and delivery by the Company of this Agreement, the Certificates, the Basic Agreement and the Trust Supplements, and the performance by the Company of its obligations under this Agreement, the Certificates and the Designated Agreements, will not contravene any provision of applicable law or the certificate of incorporation or by-laws of the Company or, to the best of such counsel's knowledge, any agreement or other instrument binding upon the Company or any of its subsidiaries that is material to the Company and its subsidiaries, taken as a whole, or, to the best of such counsel's knowledge, any judgment, order or decree of any governmental body, agency or court having jurisdiction over the Company or any subsidiary, and no consent, approval, authorization or order of or qualification with any governmental body or agency is required for the performance by the Company of its obligations under this Agreement, the Certificates and the Designated Agreements, except such as maybe required by the securities or Blue Sky laws of the various states in connection with the offer and sale of the Certificates; (vii) the statements (1) in the Prospectus under the captions "Description of the Notes", "Description of the Certificates" and "Underwriters" and (2) in the Registration Statement under Items 14 and 15, in each case insofar as such statements constitute summaries of the legal matters, documents and proceedings referred to therein, fairly present the information called for with respect to such legal matters, documents and proceedings and fairly summarize the matters referred to therein; (viii) such counsel has reviewed the statements set forth in the Prospectus under the caption "Certain Federal Income Tax Consequences" and is of the opinion that the federal income tax consequences to the Pass Through Trusts and the holders of the Certificates are as set forth therein; 13 12 (ix) after due inquiry, such counsel does not know of any legal or governmental proceedings pending or threatened to which the Company or any of its subsidiaries is a party or to which any of the properties of the Company or any of its subsidiaries is subject that are required to be described in the Registration Statement or the Prospectus and are not so described or of any statutes, regulations, contracts or other documents that are required to be described in the Registration Statement or the Prospectus or to be filed as exhibits to the Registration Statement that are not described or filed as required; (x) the Company is not an "investment company" or an entity "controlled" by an "investment company," as such terms are defined in the Investment Company Act of 1940, as amended; (xi) such counsel is of the opinion that the Company is (i) in compliance with any and all applicable Environmental Laws, (ii) has received all permits, licenses or other approvals required of it under applicable Environmental Laws to conduct its business and (iii) is in compliance with all terms and conditions of any such permit, license or approval, except where such noncompliance with Environmental Laws, failure to receive required permits, licenses or other approvals or failure to comply with the terms and conditions of such permits, licenses or approvals would not, singly or in the aggregate, have a material adverse effect on the Company; (xii) the Registration Statement and Prospectus (except for financial statements and schedules includedtherein as to which such counsel need not express any opinion) comply as to form in all material respects with the Securities Act and the rules and regulations of the Commission thereunder, (2) believes that (except for financial statements and schedules as to which such counsel need not express any belief and except for that part of the Registration Statement that constitutes the Form T-1 heretofore referred to) the Registration Statement and the prospectus included therein at the time the Registration Statement became effective did not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading and (3) believes that (except for 14 13 financial statements and schedules as to which such counsel need not express any belief) the Prospectus as of its issue date and as of the Closing Date did not and does not contain any untrue statement of a material fact or did not and does not omit to state a material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading; (xiii) each of [the Leases and the Deeds] is a valid and binding obligation of the Company enforceable in accordance with its respective terms subject to applicable bankruptcy, insolvency, reorganization, fraudulent conveyance or transfer, moratorium and similar laws affecting creditors rights generally and, subject, as to enforceability, to general principles of equity (regardless of whether enforcement is sought in a proceeding in equity or at law); (xiv) each of [the Leases and the Deeds] is a valid and binding obligation of the Company enforceable in accordance with its respective terms subject to applicable bankruptcy, insolvency, reorganization, fraudulent conveyance or transfer, moratorium and similar laws affecting creditors rights generally and, subject, as to enforceability, to general principles of equity (regardless of whether enforcement is sought in a proceeding in equity or at law); and (xv) (A) no Pass Through Trust will be subject to taxation in or any governmental fee or similar charge imposed by the State of California or any political subdivision or taxing authority thereof as a result of the transactions contemplated by the Designated Agreements; and (B) a Certificateholder or Certificate Owner who is not a resident of, or otherwise subject to tax in, the will not be subject to taxation in or any governmental fee or similar charge imposed by the State of California or any political subdivision or taxing authority thereof as a result of purchasing, holding (including receiving payments with respect to) or selling a Certificate or an interest therein. (e) You shall have received on the Closing Date an opinion of Shearman & Sterling, special counsel for the Underwriters, dated the Closing Date, covering the matters referred to in subparagraphs (iii), (iv), (v), 15 14 (vii) (but only as to the statements in the Prospectus under "Description of the Notes", "Description of the Certificates" and "Underwriters"), and (xii) of paragraph (d) above. With respect to subparagraph (xii) of paragraph (d) above, Kelley Drye & Warren and Shearman & Sterling may state that their opinion and belief are based upon their participation in the preparation of the Registration Statement and Prospectus and any amendments or supplements thereto and review and discussion of the contents thereof, but are without independent check or verification except as specified. The opinion of Kelley Drye & Warren described in paragraph (d) above shall be rendered to you at the request of the Company and shall so state therein. (f) You shall have received on the Closing Date an opinion, in form and substance satisfactory to you and to your counsel, of Richards Layton & Finger, counsel for Wilmington Trust Company, dated the Closing Date, to the effect that: (i) the Pass Through Trustee is a Delaware banking corporation duly organized and validly existing in good standing under the laws of the State of Delaware, and has the full corporate power, authority and legal right under the laws of the State of Delaware pertaining to its banking, trust and fiduciary powers to execute and deliver the Basic Agreement, each Trust Supplement, the Certificates, the Participation Agreement, and the other Transaction Documents to which the Pass Through Trustee is a party, and to perform its obligations under the Designated Agreements, the Certificates, the Participation Agreement and to consummate the transactions contemplated by the Transaction Documents to which the Pass Through Trustee is a party; (ii) each of the Basic Agreement, each Trust Supplement, the Participation Agreement and each other Transaction Document to which the Pass Through Trustee is a party has been duly authorized, executed and delivered by the Pass Through Trustee; (iii) the execution and delivery by the Pass Through Trustee of the Basic Agreement, each Trust Supplement, the Certificates, the Participation 16 15 Agreement and the other Transaction Documents to which the Pass Through Trustee is a party, and the performance by the Pass Through Trustee of its obligations under the Designated Agreements, the Certificates, the Participation Agreement and the other Transaction Documents to which the Pass Through Trustee is a party, do not and will not contravene any provision of the Articles of Association or by-laws of the Pass Through Trustee and do not and will not contravene, result in a violation or breach of, or constitute a default under, any law, rule or regulation of the State of Delaware or any United States governmental authority or agency regulating the banking, trust or fiduciary powers of the Pass Through Trustee; and (iv) neither the consent, approval, authorization or order of, qualification or filing with, or notice to, nor the taking of any other action in respect of, any governmental body or agency of the State of Delaware regulating the banking, trust or fiduciary powers of the Pass Through Trustee is required for the execution and delivery by the Pass Through Trustee of the Basic Agreement, each Trust Supplement, the Certificates, the Participation Agreement and the other Transaction Documents to which the Pass Through Trustee is a party, or for the performance by the Pass Through Trustee of its obligations under the Designated Agreements, the Certificates, the Participation Agreement and other Transaction the Documents to which the Pass Through Trustee is a party. (g) You shall have received, on each of the date hereof and the Closing Date, a letter dated the date hereof or the Closing Date, as the case may be, in form and substance satisfactory to you, from Ernst & Young, independent public accountants for the Company, containing statements and information of the type ordinarily included in accountants' "comfort letters" to underwriters with respect to the financial statements and certain financial information contained in the Registration Statement and the Prospectus. (h) You shall have received each of the signed opinions addressed to you and dated as of the Closing Date, specified in Schedule 1 to the Participation Agreement. 17 16 (i) The Company shall have furnished to you and to your counsel, in form and substance satisfactory to such counsel, such other documents, certificates and opinions as such counsel may reasonably request in order to evidence the accuracy and completeness of any of the representations, warranties or statements, the performance of any covenant by the Company theretofore to be performed, or the compliance with any of the conditions herein contained. VI. In further consideration of the agreements of the Underwriters herein contained, the Company covenants as follows: (a) To furnish you, without charge, four signed copies of the Registration Statement (including exhibits thereto and documents incorporated by reference) and four conformed copies of the Registration Statement (without exhibits) and, during the period mentioned in paragraph (c) below, as many copies of the Prospectus, any documents incorporated by reference, and any supplements and amendments thereto or to the Registration Statement as you may reasonably request. The terms "supplement" and "amendment" or "amend" as used in this Agreement shall include all documents subsequently filed by the Company with the Commission pursuant to the Exchange Act that are deemed to be incorporated by reference in the Prospectus. (b) Before amending or supplementing the Registration Statement or the Prospectus, to furnish to you a copy of each such proposed amendment or supplement and not to file any such proposed amendment or supplement to which you or your counsel reasonably object. (c) If, during such period after the first date of the public offering of the Certificates as in the opinion of your counsel the Prospectus is required by law to be delivered in connection with sales by an Underwriter or dealer, any event shall occur or condition exist as a result of which it is necessary to amend or supplement the Prospectus in order to make the statements therein, in the light of the circumstances when the Prospectus is delivered to a purchaser, not misleading, or if, in the opinion of your counsel, it is necessary to amend or supplement the Prospectus to comply with law, forthwith 18 17 to prepare, file with the Commission and furnish, at its own expense, to the Underwriters and to the dealers (whose names and addresses you will furnish to the Company) to which Certificates may have been sold by you on behalf of the Underwriters and to any other dealers upon request, either amendments or supplements to the Prospectus so that the statements in the Prospectus as so amended or supplemented will not, in the light of the circumstances when the Prospectus is delivered to a purchaser, be misleading or so that the Prospectus, as amended or supplemented, will comply with law. (d) To endeavor to qualify the Certificates for offer and sale under the securities or Blue Sky laws of such jurisdictions as you shall reasonably request and to pay all expenses (including fees and disbursements of counsel) in connection with such qualification and in connection with (i) the determination of the eligibility of the Certificates for investment under the laws of such jurisdictions as you may designate and (ii) any review of the offering of the Certificates by the National Association of Securities Dealers, Inc. (e) To make generally available to the Company's security holders and to you as soon as practicable an earning statement covering the twelve-month period ending ____________, 19__ that satisfies the provisions of Section 11(a) of the Securities Act and the Securities Act Regulations. (f) During the period beginning on the date hereof and continuing to and including the Closing Date, not to offer, sell contract to sell or otherwise dispose of any debt securities of the Company or warrants to purchase debt securities of the Company (other than (i) the Certificates and (ii) commercial paper issued in the ordinary course of business) without your prior written consent. (g) Whether or not any sale of the Certificates is consummated, to pay, or cause the Owner Trustee to pay, the following expenses incident to this Agreement and the Designated Agreements: (i) the preparation, printing and distribution of this Agreement, the Registration Statement, each preliminary prospectus, the Prospectus and all amendments and supplements thereto, the Designated Agreements and each of the Transaction Documents, (ii) the preparation, issuance and delivery of the Certificates, (iii) the fees and disbursements of the Company's counsel and accountants, (iv) the reasonable fees and expenses of the Pass Through Trustee, the Owner 19 18 Trustee and the Loan Trustee and the reasonable fees and disbursements of counsel for the Pass Through Trustee, the Owner Trustee and the Loan Trustee, (v) certain fees and disbursements of your counsel as heretofore agreed and (vi) any fees charged by rating agencies for the rating of the Certificates. (h) The Company, during the period when a prospectus relating to the Certificates is required to be delivered under the Securities Act (in the opinion of your counsel), will file promptly all documents required to be filed with the Commission pursuant to Section 13 or 14 of the Exchange Act. VII. The Company agrees to indemnify and hold harmless each Underwriter and each person, if any, who controls such Underwriter within the meaning of either Section 15 of the Securities Act or Section 20 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), from and against any and all losses, claims, damages and liabilities (including, without limitation, any legal or other expenses reasonably incurred by any Underwriter or any such controlling person in connection with defending or investigating any such action or claim) caused by any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement or any amendment thereof, any preliminary prospectus or the Prospectus (as amended or supplemented if the Company shall have furnished any amendments or supplements thereto), or caused by any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, except insofar as such losses, claims, damages or liabilities are caused by any such untrue statement or omission or alleged untrue statement or omission based upon information relating to any Underwriter furnished to the Company in writing by such Underwriter through you expressly for use therein. Each Underwriter agrees, severally and not jointly, to indemnify and hold harmless the Company, its directors, its officers who sign the Registration Statement and each person, if any, who controls the Company within the meaning of either Section 15 of the Securities Act or Section 20 of the Exchange Act to the same extent as the foregoing indemnity from the Company to such Underwriter, but only with reference to information relating to such Underwriter furnished to the Company in writing by such Underwriter 20 19 through you expressly for use in the Registration Statement, any preliminary prospectus, the Prospectus or any amendments or supplements thereto. In case any proceeding (including any governmental investigation) shall be instituted involving any person in respect of which indemnity may be sought pursuant to either of the two preceding paragraphs, such person (the "indemnified party") shall promptly notify the person against whom such indemnity may be sought (the "indemnifying party") in writing and the indemnifying party, upon request of the indemnified party, shall retain counsel reasonably satisfactory to the indemnified party to represent the indemnified party and any others the indemnifying party may designate in such proceeding and shall pay the fees and disbursements of such counsel related to such proceeding. In any such proceeding, any indemnified party shall have the right to retain its own counsel, but the fees and expenses of such counsel shall be at the expense of such indemnified party unless (i) the indemnifying party and the indemnified party shall have mutually agreed to the retention of such counsel or (ii) the named parties to any such proceeding (including any impleaded parties) include both the indemnifying party and the indemnified party and representation of both parties by the same counsel would be inappropriate due to actual or potential differing interests between them. It is understood that the indemnifying party shall not, in respect of the legal expenses of any indemnified party in connection with any proceeding or related proceedings in the same jurisdiction, be liable for the fees and expenses of more than one separate firm (in addition to any local counsel) for all such indemnified parties and that all such fees and expenses shall be reimbursed as they are incurred. Such firm shall be designated in writing by Morgan Stanley & Co. Incorporated, in the case of parties indemnified pursuant to the second preceding paragraph, and by the Company, in the case of parties indemnified pursuant to the first preceding paragraph. The indemnifying party shall not be liable for any settlement of any proceeding effected without its written consent, but if settled with such consent or if there be a final judgment for the plaintiff, the indemnifying party agrees to indemnify the indemnified party from and against any loss or liability by reason of such settlement or judgment. Notwithstanding the foregoing sentence, if at any time an indemnified party shall have requested an indemnifying party to reimburse the indemnified party for fees and expenses of counsel as contemplated by the second and third sentences of this paragraph, the indemnifying party agrees that it shall be liable for any settlement of any proceeding effected without its written consent if (i) such 21 20 settlement is entered into more than 30 days after receipt by such indemnifying party of the aforesaid request and (ii) such indemnifying party shall not have reimbursed the indemnified party in accordance with such request prior to the date of such settlement. No indemnifying party shall, without the prior written consent of the indemnified party, effect any settlement of any pending or threatened proceeding in respect of which any indemnified party is or could have been a party and indemnity could have been sought hereunder by such indemnified party, unless such settlement includes an unconditional release of such indemnified party from all liability on claims that are the subject matter of such proceeding. If the indemnification provided for in the first or second paragraph of this Article VII is unavailable to an indemnified party or insufficient in respect of any losses, claims, damages or liabilities referred to therein, then each indemnifying party under such paragraph, in lieu of indemnifying such indemnified party thereunder, shall contribute to the amount paid or payable by such indemnified party as a result of such losses, claims, damages or liabilities (i) in such proportion as is appropriate to reflect the relative benefits received by the Company on the one hand and the Underwriters on the other hand from the offering of the Certificates or (ii) if the allocation provided by clause (i) above is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) above but also the relative fault of the Company on the one hand and of the Underwriters on the other hand in connection with the statements or omissions that resulted in such losses, claims, damages or liabilities, as well as any other relevant equitable considerations. The relative benefits received by the Company on the one hand and the Underwriters on the other hand in connection with the offering of the Certificates shall be deemed to be in the same respective proportions as the net proceeds from the offering of the Certificates (before deducting expenses) received by the Company and the total underwriting discounts and commissions received by the Underwriters, in each case as set forth in the table on the cover of the Prospectus, bear to the aggregate public offering price of the Certificates. The relative fault of the Company on the one hand and of the Underwriters on the other hand shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Company or by the Underwriters and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The Underwriters' 22 21 respective obligations to contribute pursuant to this Article VII are several in proportion to the respective principal amounts of Certificates they have purchased hereunder, and not joint. The Company and the Underwriters agree that it would not be just or equitable if contribution pursuant to this Article VII were determined by pro rata allocation (even if the Underwriters were treated as one entity for such purpose) or by any other method of allocation that does not take account of the equitable considerations referred to in the immediately preceding paragraph. The amount paid or payable by an indemnified party as a result of the losses, claims, damages and liabilities referred to in the immediately preceding paragraph shall be deemed to include, subject to the limitations set forth above, any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any such action or claim. Notwithstanding the provisions of this Article VII, no Underwriter shall be required to contribute any amount in excess of the amount by which the total price at which the Certificates underwritten by it and distributed to the public were offered to the public exceeds the amount of any damages that such Underwriter has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. The remedies provided for in this Article VII are not exclusive and shall not limit any rights or remedies which may otherwise be available to any indemnified party at law or in equity. The indemnity and contribution provisions contained in this Article VII and the representations and warranties of the Company contained in this Agreement shall remain operative and in full force and effect regardless of (i) any termination of this Agreement, (ii) any investigation made by or on behalf of any Underwriter or any person controlling any Underwriter or by or on behalf of the Company, its officers or directors or any person controlling the Company and (iii) acceptance of and payment for any of the Certificates. VIII. This Agreement shall be subject to termination by notice given by you to the Company, if (a) after the execution and delivery of this Agreement and prior to the 23 22 Closing Date (i) trading generally shall have been suspended or materially limited on or by, as the case may be, any of the New York Stock Exchange, the American Stock Exchange, the National Association of Securities Dealers, Inc., the Chicago Board of Options Exchange, the Chicago Mercantile Exchange or the Chicago Board of Trade, (ii) trading of any securities of the Company shall have been suspended on any exchange or in any over-the-counter market, (iii) a general moratorium on commercial banking activities in New York shall have been declared by either Federal or New York State authorities or (iv) there shall have occurred any outbreak or escalation of hostilities or any change in financial markets or any calamity or crisis that, in your judgment, is material and adverse and (b) in the case of any of the events specified in clauses (a)(i) through (iv), such event singly or together with any other such event makes it, in your judgment, impracticable to market the Certificates on the terms and in the manner contemplated in the Prospectus. IX. If, on the Closing Date, any one or more of the Underwriters shall fail or refuse to purchase Certificates that it or they have agreed to purchase hereunder on such date, and the aggregate principal amount of Certificates which such defaulting Underwriter or Underwriters agreed but failed or refused to purchase is not more than one-tenth of the aggregate principal amount of the Certificates to be purchased on such date, the other Underwriters shall be obligated severally in the proportions that the principal amount of Certificates set forth opposite their respective names in Schedule I bears to the principal amount of Certificates set forth opposite the names of all such non-defaulting Underwriters, or in such other proportions as you may specify, to purchase the Certificates which such defaulting Underwriter or Underwriters agreed but failed or refused to purchase on such date; provided that in no event shall the principal amount of Certificates that any Underwriter has agreed to purchase pursuant to Article II be increased pursuant to this Article IX by an amount in excess of one-ninth of such principal amount of Certificates without the written consent of such Underwriter. If, on the Closing Date, any Underwriter or Underwriters shall fail or refuse to purchase Certificates and the aggregate principal amount of Certificates with respect to which such default occurs is more than one-tenth of the aggregate principal amount of Securities to be purchased on such date, and arrangements satisfactory to you and the Company for the purchase of such Certificates are not made within 36 hours after such default, 24 23 this Agreement shall terminate without liability on the part of any non-defaulting Underwriter or the Company. In any such case either you or the Company shall have the right to postpone the Closing Date but in no event for longer than seven days, in order that the required changes, if any, in the Registration Statement and in the Prospectus or in any other documents or arrangements may be effected. Any action taken under this paragraph shall not relieve any defaulting Underwriter from liability in respect of any default of such Underwriter under this Agreement. If this Agreement shall be terminated by the Underwriters, or any of them, because of any failure or refusal on the part of the Company to comply with the terms or to fulfill any of the conditions of this Agreement, or if for any reason the Company shall be unable to perform its obligations under this Agreement, the Company will reimburse the Underwriters or such Underwriters as have so terminated this Agreement with respect to themselves, severally, for all out-of-pocket expenses (including the fees and disbursements of their counsel) reasonably incurred by such Underwriters in connection with this Agreement or the offering contemplated hereunder. This Agreement may be signed in two or more counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument. 25 24 This Agreement shall be governed by and construed in accordance with the internal laws of the State of New York. Very truly yours, SMITH'S FOOD & DRUG CENTERS, INC. By__________________________ Accepted, ____________, 19__ Morgan Stanley & Co. Incorporated Goldman, Sachs & Co. Salomon Brothers Inc By Morgan Stanley & Co. Incorporated By___________________________ 26 SCHEDULE A to Underwriting Agreement
Pass Through Aggregate Final Certificate Principal Distribution Designation Amounts Interest Rate Date - ------------ -------- ------------- -------------- Series 1994-A1 $ % Series 1994-A2 $ %
27 SCHEDULE I to Underwriting Agreement Dated: ______, 199_ SMITH'S FOOD & DRUG CENTERS, INC.
Principal Amount Underwriters of Certificates - ------------ ---------------- Morgan Stanley & Co. Incorporated $ Goldman, Sachs & Co. $ Salomon Brothers Inc $
Address for Notices: Morgan Stanley & Co. Incorporated 1221 Avenue of the Americas New York, New York 10020 Attention: _______________ 28 SCHEDULE II to Underwriting Agreement Dated: ______, 199_ SMITH'S FOOD & DRUG CENTERS, INC. Underwriting fees, discounts, commissions or other compensation: $ Closing date, time and location: _______, 199_ at 10:00 a.m., New York City time at the offices of Shearman & Sterling, 599 Lexington Avenue, New York, New York 10022 Location for checking Certificates: Morgan Stanley & Co. Incorporated, 1221 Avenue of the Americas, New York, New York 10020 Delayed delivery contracts: Listing requirement: Other terms and conditions: EX-5.1 3 OPINION OF KELLEY DRYE & WARREN 1 Exhibit 5.1 KELLEY DRYE & WARREN Two Stamford Plaza 281 Tresser Boulevard Stamford, Connecticut 06901 (203) 324-1400 January 25, 1994 Smith's Food & Drug Centers, Inc. 1550 South Redwood Road Salt Lake City, Utah 84104 Re: Smith's Food & Drug Centers, Inc. - Shelf Registration of Pass Through Certificates Ladies and Gentlemen: We have acted as special counsel to Smith's Food & Drug Centers, Inc., a Delaware corporation (the "Company"), in connection with the preparation and filing with the Securities and Exchange Commission (the "Commission") under the Securities Act of 1933, as amended (the "Act"), of a shelf Registration Statement on Form S-3 (Registration No. 33-51097), as amended (the "Registration Statement"). The Registration Statement relates to up to $300 million aggregate principal amount of Pass Through Certificates (the "Pass Through Certificates") that may be issued in one or more series from time to time. Each series of Pass Through Certificates will be issued under a separate supplement to the Pass Through Trust Agreement to be entered into by and between the Company and Wilmington Trust Company, as Trustee (the "Trustee"), substantially in the form filed as Exhibit 4.1 to the Registration Statement (each as supplemented, an "Agreement"). All capitalized terms used herein and not otherwise defined have the meanings specified in such Exhibit 4.1. In so acting, we have examined the Company's certificate of incorporation and by-laws, as amended to date; minutes of the Company's corporate proceedings, as made available to us by officers of the Company; an executed copy of such Registration Statement and all exhibits thereto in the form filed with the Commission; originals, or copies certified or otherwise identified to our satisfaction, of such other records, documents, certificates and other instruments as in our judgment are necessary or appropriate to enable us to render the within opinion; and such matters of law deemed necessary by us in order to deliver the within opinion. In the course of our examination, we have assumed the genuineness of all signatures, the authority of all signatories to sign on behalf of their principals, if any; the authenticity of all documents submitted to us as original documents and the conformity to original documents of all documents submitted to us as certified or photostatic copies. As to certain factual matters, we have relied upon information furnished to us by officers of the 2 Smith's Food & Drug Centers, Inc. January 25, 1994 Page 2 Company. We have also assumed: (i) the Trustee is duly organized, validly existing and in good standing under the laws of the jurisdiction in which it was organized and in which such qualification is required in connection with performance of the Agreement and consummation of the transactions contemplated thereby and has and will have the requisite power (corporate, trust and other) to execute, deliver and perform its obligations under each Agreement; (ii) the execution, delivery and performance of each Agreement and the consummation of the transactions contemplated thereby by the Trustee will not violate or result in the breach of any term of the certificate of incorporation, by-laws or other governing document of the Trustee; (iii) the execution, delivery and performance of each Agreement and the consummation of the transactions contemplated thereby by the Trustee will not violate, result in a breach of or conflict with any law, rule, regulation, order, judgment or decree; (iv) the persons authorizing the execution, delivery and performance of each Agreement and consummation of the transactions contemplated thereby for the Trustee did not violate any fiduciary or other duty owed by them; (v) no event has taken place subsequent to the execution, delivery or performance of any Agreement or the consummation of the transactions contemplated thereby or will take place which would cause any such execution, delivery, performance or consummation not to comply with any such law, rule, regulation, order, judgment, decree or duty or which would permit the Trustee at any time thereafter to cancel, rescind or otherwise avoid any such execution, delivery, performance or consummation; (vi) there has been and there will be no misrepresentation, omission or deceit by the Trustee or any other person or entity in connection with the execution, delivery or performance of any Agreement or consummation of the transactions contemplated thereby; (vii) the execution, delivery and performance of each Agreement and consummation of the transactions contemplated thereby by the Trustee will not violate, result in a breach of, conflict with or (with or without the giving of notice or the passage of time or both) entitle any party to terminate or call a default under any term of any contract, agreement, instrument, lease, license, arrangement or understanding to which the Trustee is or becomes a party or to which it or any of its properties, assets or securityholders are or will be subject; (viii) the Trustee is not and will not become subject to any impediment to which contracting parties generally are not subject which would affect the opinion expressed herein; (ix) the Trustee and the Company have received or will receive all documents and instruments which they are required to receive under any Agreement on or before the execution thereof; and (x) the due authorization of each Agreement and of the execution, authentication, issuance and delivery of the Pass Through Certificates by the Trustee. Based upon the foregoing, we are of the following opinion with respect to Pass Through Certificates of each series: 1. The execution and delivery by the Company of each Agreement has been duly authorized by the Company. 3 Smith's Food & Drug Centers, Inc. January 25, 1994 Page 3 2. Assuming (a) the due execution and delivery by each of the Company and the Trustee of the related Agreement in accordance with the terms and conditions thereof and (b) such Pass Through Certificates shall have been duly executed, authenticated, issued and delivered by the Trustee and sold as contemplated by each of the Registration Statement, the prospectus which constitutes part of the Registration Statement, the prospectus supplement or supplements to such prospectus relating to such Pass Through Certificates and such Agreement, such Agreement will constitute a valid and binding obligation of the Trustee, enforceable against the Trustee in accordance with its terms, and such Pass Through Certificates will be validly issued and will be entitled to the benefits of such Agreement. 3. Assuming the due execution and delivery by each of the Company and the Trustee of the related Agreement in accordance with the terms and conditions thereof, such Agreement will constitute a legal, valid and binding obligation of the Company, enforceable against it in accordance with its terms. The foregoing opinion is subject to the following limitations and qualifications: A. We express no opinion as to the binding nature and enforceability of any provision of any Agreement to the extent such provision may be subject to or affected by (i) applicable bankruptcy, insolvency, moratorium, reorganization or similar state or federal laws affecting the rights and remedies of creditors generally (including, without limitation, fraudulent transfer laws), regardless of whether such enforceability is considered in a proceeding at law or in equity and (ii) general principles of equity and equitable defenses, which may be subject to the discretion of the court before which any proceeding in connection therewith may be brought, regardless of whether such proceeding is at law or in equity. B. We express no opinion with respect to the enforceability of any provision in any Agreement providing for specific performance, injunctive relief or other equitable remedies, regardless of whether such enforceability is considered in a proceeding in equity or at law, and we express no opinion as to the enforceability of any contractual choice of law provision or the application of conflicts of law rules or principles. 4 Smith's Food & Drug Centers, Inc. January 25, 1994 Page 4 C. We have assumed that all rights and remedies will be exercised in good faith prior to the expiration of any applicable limitations period and otherwise in accordance with duties and standards imposed on parties to contracts. D. We express no opinion as to the enforceability of certain rights and remedies set forth in any Agreement (i) to the extent such rights and remedies may be limited by public policy considerations or court decisions related thereto, to the extent that enforcement of any provision of any such Agreement is inconsistent therewith, (ii) which provide for a waiver of notices or hearings required by law (including due process requirements of law), (iii) which provide for a waiver of defenses, (iv) which purport to make available remedies for violations, breaches or defaults under such Agreement that are determined by a court of competent jurisdiction to be non-material or (v) which purport to bind or affect the right (now existing or hereafter acquired) of any individual or entity other than the Company; however, we believe the inclusion of the provisions described in the preceding sentence will not materially interfere with the practical realization of the benefits or security intended to be provided by the Agreement. E. In rendering the opinion set forth in paragraph number 2 above, we have relied on the opinion of Richards, Layton & Finger, special counsel to the Trustee, with respect to all matters opined to in paragraph number 3 thereof, and our opinion is subject to all the assumptions contained in such opinion related thereto. A copy of such opinion is set forth as Exhibit 5.2 to the Registration Statement. F. We express no opinion concerning any law other than the internal laws of the State of New York applicable to transactions performed wholly within the State of New York and the corporate law of the State of Delaware. This opinion is given solely for the benefit of the Company, and no other person is entitled to rely hereon. We hereby consent to the filing of this opinion as an exhibit to the Registration Statement and the use of our name under the caption "Legal Matters" in the Prospectus relating to the Pass Through Certificates that constitutes part of the Registration Statement. In giving such consent, we do not thereby concede that we are within the category of persons whose consent is required under Section 7 of the Act or the rules and regulations of the Commission thereunder. Very truly yours, /s/KELLEY DRYE & WARREN EX-5.2 4 OPINION OF RICHARDS, LAYTON & FINGER 1 Exhibit 5.2 January 24, 1994 Smith's Food & Drug Centers, Inc. 1550 South Redwood Road Salt Lake City, UT 84104 Re: Smith's Food & Drug Centers, Inc. -- Pass Through Certificates; Shelf Registration Ladies and Gentlemen: We have acted as counsel to Wilmington Trust Company, a Delaware banking corporation ("WTC"), in connection with the Pass Through Trust Agreement, dated as of December 21, 1993 (the "Agreement"), between WTC, as pass through trustee (the "Trustee") and Smith's Food & Drug Centers, Inc. (the "Lessee"). Pursuant to the Agreement, the Trustee will issue Pass Through Certificates in one or more series (the "Pass Through Certificates"), to be registered with the Securities and Exchange Commission under the Securities Act of 1933, as amended (the "Act"), by a Registration Statement on Form S-3, as amended (the "Registration Statement"). This opinion is furnished pursuant to your request. Capitalized terms used herein and not otherwise defined are used as defined in the Agreement, except that reference herein to any document shall mean such document as in effect on the date hereof. We have examined originals or copies of the Agreement, the Pass Through Certificates, the Registration Statement and originals or copies of such other documents and such corporate records, certificates and other statements of governmental officials and corporate officers and other representatives of the corporations or entities referred to herein as we have deemed necessary or appropriate for the purposes of this opinion. Moreover, as to certain facts material to the opinions expressed herein, we have relied upon representations and warranties contained in the documents referred to in this paragraph. Based upon the foregoing and upon an examination of such questions of law as we have considered necessary or appropriate, and subject to the assumptions, exceptions and qualifications set forth below, we advise you that, in our opinion: 1. The Agreement has been duly authorized, executed and delivered by the Trustee. 2 Smith's Food & Drug Centers, Inc. January 24, 1994 Page 2 2. The execution, issuance, delivery and authentication by the Trustee of the Pass Through Certificates have been duly authorized by the Trustee. 3. With respect to the Pass Through Certificates of each series, when (a) the Trust Supplement establishing the terms of the Pass Through Certificates of such series and forming the related Trust shall have been duly authorized, executed and delivered by Lessee and the Trustee in accordance with the terms and conditions of the Agreement and (b) the Pass Through Certificates of such series shall have been duly executed, authenticated, issued and delivered by the Trustee and sold as contemplated by each of the Registration Statement, the Prospectus contained in the Registration Statement (the "Prospectus"), the supplement or supplements to the Prospectus relating to the Pass Through Certificates of such series, the Agreement and the related Trust Supplement, (i) the Agreement, as supplemented by the related Trust Supplement, will constitute a valid and binding obligation of the Trustee, enforceable against the Trustee in accordance with its terms and (ii) the Pass Through Certificates of such series will be validly issued and will be entitled to the benefits of the Agreement and the related Trust Supplement. 4. Under currently applicable Delaware 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 Delaware or any political subdivision thereof and (ii) Certificate Owners that are not residents of or otherwise subject to tax in the State of Delaware will not be subject to any tax (including, without limitation, net or gross income, tangible or intangible property, net worth, capital, franchise or doing business tax), fee or other governmental charge under the laws of the State of Delaware or any political subdivision thereof as a result of purchasing, holding (including receiving payments with respect to) or selling a Pass Through Certificate. The foregoing opinions are subject to the following assumptions, exceptions and qualifications: A. We are admitted to practice law in the State of Delaware and we do not hold ourselves out as being experts on the law of any other jurisdiction. The foregoing opinions are limited to the laws of the State of Delaware and the federal laws of the United States of America governing the banking or trust powers of WTC, except that we express no opinion with respect to (i) federal securities laws, including the Securities Act of 1933, as amended, the Securities Exchange Act of 1934, as amended, the Investment Company Act of 1940, as amended, and the Trust Indenture Act of 1939, as amended, (ii) state securities or blue sky laws or (iii) laws, rules and regulations applicable to the particular nature of the property acquired by the Lessee. Insofar as the foregoing opinions relate to the validity and enforceability of the Agreement, each Trust Supplement and each series of Pass Through Certificates expressed to be governed by the laws of the State of New York, 3 Smith's Food & Drug Centers, Inc. January 24, 1994 Page 3 we have assumed that each such document is legal, valid, binding and enforceable in accordance with its terms under such laws (as to which we express no opinion). B. The foregoing opinions regarding enforceability are subject to (i) applicable bankruptcy, insolvency, moratorium, reorganization, receivership, fraudulent conveyance and similar laws relating to or affecting the enforcement of the rights and remedies of creditors generally, and (ii) principles of equity (regardless of whether considered and applied in a proceeding in equity or at law). C. We have assumed that all signatures (other than signatures of officers of WTC) on documents examined by us are genuine, that all documents submitted to us as originals are authentic and that all documents submitted to us as copies or specimens conform with the originals, which facts we have not independently verified. D. We have assumed that the Trusts referred to in paragraph 3 will not be taxable as corporations, but will be classified as grantor trusts under subpart E, part 1 of Subchapter J of the Code. E. We have assumed that Lessee has or will have full power, authority and legal right to execute, deliver and perform the Agreement and each Trust Supplement and that the Agreement and each Trust Supplement has been or will be duly authorized, executed and delivered by Lessee. We hereby consent to the use of this opinion as an exhibit to the Registration Statement and to the use of our name under the headings "Certain Delaware Taxes" and "Legal Matters" in the Prospectus filed as part of the Registration Statement. In giving the foregoing consent, we do not thereby admit that we come within the category of Persons whose consent is required under Section 7 of the Securities Act of 1933, as amended, or the rules and regulations of the Securities and Exchange Commission thereunder. Except as stated above, without our prior written consent, this opinion may not be furnished or quoted to, or relied upon by, any other Person or for any other purpose. Very truly yours, /s/ Richards, Layton & Finger EAM/PSK/djh EX-8 5 TAX OPINION OF KELLEY DRYE & WARREN 1 Exhibit 8 KELLEY DRYE & WARREN 101 Park Avenue New York, New York 10178 (212) 808-7800 January 25, 1994 Smith's Food & Drug Centers, Inc. 1550 South Redwood Road Salt Lake City, Utah 84104 Re: Smith's Food & Drug Centers, Inc. - Shelf Registration of Pass Through Certificates Ladies and Gentlemen: We have acted as special counsel to Smith's Food & Drug Centers, Inc., a Delaware corporation ("Smith's"), in connection with the preparation and filing with the Securities and Exchange Commission (the "Commission") under the Securities Act of 1933, as amended (the "Act"), of a shelf Registration Statement on Form S-3 (Registration No. 33-51097) as amended by Amendment No. 1 thereto (the "Registration Statement"). The Registration Statement relates to up to $300 million aggregate principal amount (or such greater amount to the extent issued at less than par) of Pass Through Certificates that may be issued in one or more series from time to time on a delayed basis (the "Pass Through Certificates"). Each series of Pass Through Certificates will be issued under a separate Pass Through Trust Agreement (the "Agreement") by and between Smith's and Wilmington Trust Company, as Trustee, substantially in the form filed as Exhibit 4.1 to the Registration Statement. You have requested our opinion concerning the section of the prospectus (the "Prospectus") forming part of the Registration Statement entitled "Certain Federal Income Tax Consequences." In connection with the opinion rendered herein, we have examined and relied on (i) the Registration Statement, including the Prospectus; (ii) the form of the Agreement and Pass Through Certificates; and (iii) the remaining exhibits to the Registration Statement. This opinion is made in reliance upon the representations made in the Registration Statement and upon our examination of the other documents listed above and such other documents as we have deemed necessary or appropriate as a basis for the opinion set forth herein. We have assumed for purposes of this opinion that the Pass Through Trusts will be formed and operated strictly in accordance with the Registration Statement and the form of Agreement appended thereto as an exhibit, and that the representations made in the above documents are accurate. We have not been requested, and we have not undertaken, to make any independent investigation to verify the accuracy of such representations. 2 In making our examination, we have assumed the genuineness of all signatures, the authenticity of all documents submitted to us as originals, the conformity to originals of all documents submitted to us as copies, the authenticity of the originals of such copies, the conformity of all final documents to documents submitted to us as drafts and the legal capacity of all natural persons. The following opinion is based upon the Internal Revenue Code of 1986, as amended to the date of this letter (the "Code"), the Treasury Regulations promulgated thereunder, current administrative positions of the Internal Revenue Service (the "Service") contained in published Revenue Rulings and Revenue Procedures, and existing judicial decisions. We have also considered proposed Treasury Regulations and private rulings issued by the Service in Private Letter Rulings and Technical Advice Memoranda, which, although they are not precedential authority that binds the Service, do provide some indication of how the Service may rule in a similar case. In rendering the opinion set forth below, we have further assumed that proposed Treasury Regulations under the taxable mortgage pool rules of Code section 7701(i) are declaratory of existing Federal tax law affecting entities that might be classified as taxable mortgage pools. However, these proposed Treasury Regulations do not constitute binding authority until adopted as final or temporary Treasury Regulations. In addition, we express no opinion as to the laws of any jurisdiction other than the Federal income tax laws of the United States, nor do we express any opinion, either implicitly or otherwise, on any legal issue not expressly addressed below, or as to any issue of fact. Based on the foregoing, we are of the opinion that the description of Federal income tax consequences appearing under the heading "Certain Federal Income Tax Consequences" in the Prospectus, while not purporting to discuss all possible Federal income tax consequences of an investment in the Certificates, is accurate in all material respects with respect to those Federal income tax consequences which are discussed under presently existing law, judicial decisions and administrative interpretations, subject to the conditions and qualifications set forth therein. The opinion expressed in this letter is limited to authorities existing as of the date hereof, and we assume no obligation or responsibility to update any of the material contained herein. No assurance can be given that forthcoming legislation, administrative changes or court decisions will not significantly alter the conclusions reached in this opinion. Any change in the tax laws may or may not be applied retroactively to transactions entered into or completed prior to the adoption of such change. In addition, we cannot provide assurance that the Service will agree with the conclusions reached in this opinion and that, if any issue were to be litigated, the Service would not be successful. This opinion is given solely for the benefit of Smith's, and no other person is entitled to rely hereon. This letter may not be quoted in whole or in part, or otherwise referred to in any document, without our prior consent. 3 Smith's Food & Drug Centers, Inc. -3- January 25, 1994 We hereby consent to the filing of this opinion as an exhibit to the Registration Statement and to the use of our name in the first paragraph under the caption "Certain Federal Income Tax Consequences" in the Prospectus relating to the Pass Through Certificates which constitutes part of the Registration Statement. In giving such consent, we do not thereby concede that we are within the category of persons whose consent is required under Section 7 of the Act or the rules and regulations of the Commission thereunder. Very truly yours, /s/KELLEY DRYE & WARREN EX-23.1 6 CONSENT OF ERNST & YOUNG 1 ERNST & YOUNG SUITE 1400 50 SOUTH MAIN SALT LAKE CITY, UTAH 84144 (801) 350-3300 FAX: (801) 355-5813 EXHIBIT (23.1) CONSENT OF INDEPENDENT AUDITORS We consent to the reference to our firm under the caption "Experts" in the Registration Statement (Form S-3 No. 33-51097) and Related Prospectus of Smith's Food and Drug Centers, Inc. for the registration of Pass Through Certificates and to the incorporation by reference therein of our reports dated January 25, 1993 and March 29, 1993, with respect to the consolidated financial statements and schedules of Smith's Food & Drug Centers, Inc. and subsidiaries incorporated by reference and included in its Annual Report (Form 10-K) for the year ended January 2, 1993, filed with the Securities and Exchange Commission. Salt Lake City, Utah /s/ Ernst & Young January 24, 1994 EX-25 7 FORM T-1 1 Registration No. SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM T-1 STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939 OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT TO SECTION 305(B)(2) X WILMINGTON TRUST COMPANY (Exact name of trustee as specified in its charter) Delaware 51-0055023 (State of incorporation) (I.R.S. employer identification no.) Rodney Square North 1100 North Market Street Wilmington, Delaware 19890 (Address of principal executive offices) Cynthia L. Corliss Vice President and Trust Counsel Wilmington Trust Company Rodney Square North 1100 North Market Street Wilmington, Delaware 19890 (302) 651-8516 (Name, address and telephone number of agent for service) SMITH'S FOOD & DRUG CENTERS, INC. (Exact name of obligor as specified in its charter) Delaware 87-0258 (State of incorporation) (I.R.S. employer identification no.) 1550 South Redwood Road Salt Lake City, Utah 84104 (Address of principal executive offices) (Zip Code) Pass Through Certificates (Title of the indenture securities) 2 ITEM 1. GENERAL INFORMATION. Furnish the following information as to the trustee: (a) Name and address of each examining or supervising authority to which it is subject. Federal Deposit Insurance Co. State Bank Commissioner Five Penn Center Dover, Delaware Suite #2901 Philadelphia, PA (b) Whether it is authorized to exercise corporate trust powers. The trustee is authorized to exercise corporate trust powers. ITEM 2. AFFILIATIONS WITH THE OBLIGOR. If the obligor is an affiliate of the trustee, describe each affiliation: Based upon an examination of the books and records of the trustee and upon information furnished by the obligor, the obligor is not an affiliate of the trustee. ITEM 3. LIST OF EXHIBITS. List below all exhibits filed as part of this Statement of Eligibility and Qualification. A. Charter of Wilmington Trust Company, which includes the certificate of authority of Wilmington Trust Company to commence business and the authorization of Wilmington Trust Company to exercise corporate trust powers. Said Charter is incorporated herein by reference to Registration No. 22- 21841/Pre-Effective Amendment No. 3 to Form T-1 filed by Wilmington Trust Company in May, 1992, with respect to Subordinated Notes due 2002 of Supermarkets General Holdings Corporation. B. By-Laws of Wilmington Trust Company. Said By-Laws are incorporated herein by reference to Registration No. 22-21841/Pre-Effective Amendment No. 3 to Form T-1 filed by Wilmington Trust Company in May, 1992, with respect to Subordinated Notes due 2002 of Supermarket Generals Holdings Corporation. C. Consent of Wilmington Trust Company required by Section 321(b) of Trust Indenture Act. D. Copy of most recent Report of Condition of Wilmington Trust Company. Pursuant to the requirements of the Trust Indenture Act of 1939, the trustee, Wilmington Trust Company, a corporation organized and existing under the laws of Delaware, has duly caused this Statement of Eligibility to be signed on its behalf by the undersigned, thereunto duly authorized, all in the City of Wilmington and State of Delaware on the 21st day of January, 1994. WILMINGTON TRUST COMPANY [SEAL] By: /s/ Norma P. Closs -------------------- Attest: /s/ Carolyn C. Daniels Name: Norma P. Closs ----------------------- Title: Vice President Assistant Secretary 3 EXHIBIT C SECTION 321(b) CONSENT Pursuant to Section 321(b) of the Trust Indenture Act of 1939, Wilmington Trust Company hereby consents that reports of examinations by Federal, State, Territorial or District authorities may be furnished by such authorities to the Securities Exchange Commission upon requests therefor. WILMINGTON TRUST COMPANY Dated: January 21, 1994 By: /s/Norma P. Closs --------------------- Name: Norma P. Closs Title: Vice President -----END PRIVACY-ENHANCED MESSAGE-----