<PAGE> 1
As Filed Pursuant to Rule 424(b)(2)
Registration No. 333-59635
PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED JULY 31, 1998)
$110,000,000
UNION CARBIDE CORPORATION
FLOATING RATE NOTES DUE APRIL 26, 2000
------------------------
The Notes will bear interest at a rate which will be reset quarterly at
the three-month London interbank offered rate ("LIBOR"), determined as described
in this Prospectus Supplement, plus 0.65%. Interest on the Notes will be paid
quarterly on January 26, April 26, July 26 and October 26 of each year,
beginning on January 26, 1999. The Notes will mature on April 26, 2000. The
Notes are not redeemable before maturity and do not have the benefit of any
sinking fund.
The Notes are unsecured and rank equally with all of Union Carbide
Corporation's other unsecured senior indebtedness. The Notes are represented by
a global security registered in the name of The Depository Trust Company or its
nominees. Purchasers of the Notes may hold and transfer interests in the Notes
only through the facilities of The Depository Trust Company and its
participants. Purchasers of the Notes will not have the right to receive
physical certificates evidencing their ownership of the Notes.
Union Carbide Corporation's principal executive offices are located at
39 Old Ridgebury Road, Danbury, Connecticut 06817-0001 and its telephone number
is (203) 794-2000.
------------------------
<TABLE>
<CAPTION>
PER NOTE TOTAL
-------- ------------
<S> <C> <C>
Public Offering Price(1)........................... 99.9276% $109,920,360
Underwriting Discount.............................. 0.2% $ 220,000
Proceeds, before expenses, to Union Carbide
Corporation...................................... 99.7276% $109,700,360
</TABLE>
(1) Purchasers will pay accrued interest, if any, from October 26, 1998.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
Union Carbide Corporation expects that the Notes will be ready for
delivery in book-entry form only through The Depository Trust Company, on or
about October 26, 1998.
------------------------
MERRILL LYNCH & CO.
CHASE SECURITIES INC.
DONALDSON, LUFKIN & JENRETTE
------------------------
The date of this Prospectus Supplement is October 21, 1998.
<PAGE> 2
TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT
<TABLE>
<CAPTION>
PAGE
<S> <C>
Forward Looking Statements.................................. S-2
Ratio of Earnings to Fixed Charges.......................... S-3
Use of Proceeds............................................. S-3
Description of the Notes.................................... S-3
Underwriting................................................ S-7
Legal Opinions.............................................. S-8
PROSPECTUS
Available Information....................................... 2
Incorporation of Certain Documents by Reference............. 2
The Company................................................. 2
Use of Proceeds............................................. 3
Ratio of Earnings to Fixed Charges.......................... 3
Description of the Securities............................... 4
Plan of Distribution........................................ 11
Legal Opinions.............................................. 12
Experts..................................................... 12
</TABLE>
----------------------------
FORWARD LOOKING STATEMENTS
All statements in or incorporated by reference into this Prospectus
Supplement and Prospectus that do not reflect historical information are forward
looking statements within the meaning of the Private Securities Litigation
Reform Act of 1995. Such forward looking statements are subject to risks and
uncertainties. Important factors that could cause actual results to differ
materially from those discussed in such forward looking statements include the
supply/demand balance for the Company's products, customer inventory levels,
competitive pricing pressures, feedstock costs, changes in industry production
capacities and operating rates, currency exchange rates, interest rates, global
economic conditions, particularly in Asia, disruption in railroad and other
transportation facilities, competitive technology positions, failure by the
Company to achieve technology objectives and failure by the Company to achieve
cost reduction targets or complete projects on schedule.
S-2
<PAGE> 3
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth the ratio of earnings to fixed charges of
the Company for the periods indicated.
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR ENDED DECEMBER 31,
JUNE 30, ------------------------------------
1998 1997 1996 1995 1994 1993
---------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Ratio of Earnings to Fixed Charges(a)......... 3.9 4.5 6.2 9.4 5.4 3.2
</TABLE>
For the purpose of calculating the ratio of earnings to fixed charges,
earnings consist of pre-tax income of consolidated companies from continuing
operations before adjustment for minority interests in consolidated subsidiaries
or income or loss from equity investees plus (a) fixed charges, (b) amortization
of capitalized interest, (c) distributed income of equity investees and (d) the
Company's share of pre-tax losses of equity investees for which charges arising
from guarantees are included in fixed charges less (a) interest capitalized, (b)
preference security dividend requirements of consolidated subsidiaries and (c)
the minority interest in pre-tax income of subsidiaries that have not incurred
fixed charges. Fixed charges means the sum of (a) interest expensed and
capitalized, (b) amortized premiums, discounts and capitalized expenses related
to indebtedness, (c) an estimate of the interest within rental expense and (d)
preference security dividend requirements of consolidated subsidiaries. The
Company has a 45 percent equity investment in Equate Petrochemical Company
("Equate"). During 1998, 1997, and the last quarter of 1996, the Company
severally guaranteed 45 percent of Equate's long-term debt and working capital
financing needs. During the first three quarters of 1996, the Company severally
guaranteed up to $225 million of Equate's interim debt. Interest charges
associated with guarantees of outstanding borrowings totaled $32 million, $58
million and $13 million for the six months ended June 30, 1998 and the years
ended December 31, 1997 and 1996, respectively, and have been included, along
with the Company's equity in Equate's pre-tax loss for the same periods, in the
calculation of the ratio of earnings to fixed charges.
USE OF PROCEEDS
The net proceeds received by the Company from the sale of the Notes will be
used for general corporate purposes and to repay short-term debt incurred for
working capital purposes. The expenses payable by the Company are estimated to
be $25,000. At August 31, 1998, the Company's short-term debt bore a weighted
average interest rate of approximately 5.98%.
DESCRIPTION OF THE NOTES
The following description of the particular terms of the Notes offered
hereby supplements and, to the extent inconsistent therewith, replaces the
description of the general terms and provisions of the Debt Securities set forth
in the accompanying Prospectus, to which reference is hereby made. Capitalized
terms used herein and not defined herein shall have the meanings given to them
in the accompanying Prospectus or in the indenture referred to herein.
GENERAL
The Floating Rate Notes due April 26, 2000 (the "Notes") offered hereby
will be issued under an Indenture, dated as of June 1, 1995, between the Company
and The Chase Manhattan Bank, as Trustee, as supplemented from time to time (the
"Indenture"). The Indenture is filed as an exhibit to the Registration Statement
of which the accompanying Prospectus is a part. The following summary of certain
provisions of the Indenture and of the Notes (referred to in the accompanying
Prospectus as the "Debt Securities" or "Securities") supplements, and to the
extent inconsistent therewith replaces, the description of the general terms and
provisions of the Debt Securities set forth in the accompanying Prospectus, to
which reference is hereby made. Such summary does not purport to be complete and
is subject to,
S-3
<PAGE> 4
and is qualified in its entirety by reference to, all provisions of the
Indenture, including the definitions therein of certain terms.
The Notes will mature on April 26, 2000. The Notes are not redeemable by
the Company prior to maturity. The Notes will be subject to defeasance and
covenant defeasance as provided in the accompanying Prospectus.
The Notes will be issued in book-entry form only.
The Notes will be issued in minimum denominations of $1,000 and integral
multiples.
The Company may from time to time, without notice to or the consent of
holders of the Notes, create and issue further notes identical to the Notes in
all respects and ranking pari passu with the Notes so that such further notes
will be consolidated and form a single series under the Indenture with the Notes
and have the same terms otherwise as the Notes.
INTEREST
Interest will be payable quarterly on January 26, April 26, July 26 and
October 26 of each year (each, an "Interest Payment Date"), commencing January
26, 1999 to the persons in whose names the Notes are registered at the close of
business on the date fifteen calendar days prior to such Interest Payment Date.
Principal and interest payable at maturity will be paid to the holder on the
maturity date. The "Interest Period" with respect to a Note is each successive
period from and including an Interest Payment Date with respect to such Note to
but excluding the next Interest Payment Date or the maturity date, as the case
may be; provided, however, if such Interest Payment Date would not be a Business
Day, then such Interest Payment Date and the first day of the next succeeding
Interest Period will be the next succeeding Business Day, except that if such
Business Day is in the next succeeding calendar month, such Interest Payment
Date and the first day of the next succeeding Interest Period will be the
immediately preceding Business Day. The "Interest Determination Date" for an
Interest Period is two London Banking Days (as defined below) preceding the
first day of such Interest Period.
The interest rate on the Notes for any Interest Period will be subject to
adjustment as of the first day of such Interest Period. The interest rate on the
Notes for each Interest Period will be determined on the Interest Determination
Date for such Interest Period and will be a per annum rate equal to LIBOR
(determined as set forth below) plus 0.65%, subject to the applicable maximum
lawful rate. Interest will be computed on the basis of a 360-day year and the
actual number of days in the applicable Interest Period. The interest rate for
the Interest Period commencing October 26, 1998 to but excluding January 26,
1999 has been set at 5.84%.
LIBOR will be determined on the basis of the offered rates for deposits in
U.S. dollars for a three-month period commencing on the second London Banking
Day immediately following that Interest Determination Date that appears on
Telerate Page 3750 (as defined below) as of approximately 11:00 a.m. (London
time) on that Interest Determination Date. If such rate does not appear on
Telerate Page 3750 on such Interest Determination Date, LIBOR will be determined
on the basis of the rates at which deposits in U.S. dollars for a three-month
period commencing on the second London Banking Day immediately following that
Interest Determination Date and in a principal amount equal to an amount not
less than U.S. $1 million that is representative for a single transaction in
such market at such time, are offered to prime banks in the London interbank
market by four major banks in the London interbank market (which may include the
Calculation Agent) selected by the Calculation Agent (as defined below), after
consultation with the Company, at approximately 11:00 a.m., London time, on that
Interest Determination Date.
The Calculation Agent will request the principal London office of each of
such banks to provide a quotation of its rate. If at least two such quotations
are provided, LIBOR in respect of that Interest Determination Date will be the
arithmetic mean of such quotations. If fewer than two quotations are provided,
LIBOR in respect of that Interest Determination Date will be the arithmetic mean
of the rates quoted by three major money center banks in The City of New York
(which may include the Calculation
S-4
<PAGE> 5
Agent) selected by the Calculation Agent, after consultation with the Company,
at approximately 11:00 a.m., New York City time, on that Interest Determination
Date for loans in U.S. dollars to leading European banks for a three-month
period commencing on the second London Banking Day immediately following that
Interest Determination Date and in a principal amount equal to an amount of not
less than U.S. $1 million that is representative for a single transaction in
such market at such time; provided, however, that if the banks selected as
aforesaid by the Calculation Agent are not quoting as mentioned in this
sentence, LIBOR for the applicable period will be the same as LIBOR for the
immediately preceding Interest Period on such Interest Determination Date.
As used herein:
"Business Day" means any day which is not a Saturday or Sunday and which is not
a legal holiday or a day on which banking institutions in The City of New York
are authorized or obligated by law or executive order to be closed that is also
a London Banking Day.
"Calculation Agent" means the Chase Manhattan Bank, the Trustee named in
the Indenture, or such other entity as may be selected from time to time by the
Company to perform the functions of the Calculation Agent described herein.
"London Banking Day" means a day on which dealings in deposits in U.S.
dollars are transacted in the London interbank market.
"Telerate Page 3750" means the display designated as "Page 3750" on the Dow
Jones Markets Limited (or such other page as may replace Page 3750 on that
service or such other service or services as may be nominated by the British
Bankers' Association as the information vendor for the purpose of displaying
London interbank offered rates for U.S. dollars deposits).
All percentages resulting from any calculations of any interest rate for
the Notes will be rounded, if necessary, to the nearest one hundred-thousandth
of a percentage point, with five one-millionths of a percentage point rounded
upward, and all dollar amounts used in or resulting from such calculation will
be rounded to the nearest cent (with one-half cent being rounded upward).
The Calculation Agent will, upon the request of the Holder of any Note,
provide the interest rate then in effect. All calculations made by the
Calculation Agent in the absence of manifest error shall be conclusive for all
purposes and binding on the Company and the Holders of the Notes.
BOOK-ENTRY SYSTEM
The Depository Trust Company, New York, New York, will act as depositary
(the "Depositary") for the Notes. The Notes will be represented by one or more
Global Securities registered in the name of Cede & Co., the nominee of the
Depositary. The provisions described under "Description of the Securities --
Global Securities" in the Prospectus will be applicable to the Notes.
Accordingly, beneficial interests in the Notes will be shown on, and transfers
thereof will be effected only through, records maintained by the Depositary and
its participants.
The Depositary has advised the Company and the Underwriters as follows: the
Depositary is a limited-purpose trust company organized under the New York
Banking Law, a "banking organization" within the meaning of the New York Banking
Law, a member of the United States Federal Reserve System, a "clearing
corporation" within the meaning of the New York Uniform Commercial Code and a
"clearing agency" registered pursuant to the provisions of Section 17A of the
United States Securities Exchange Act of 1934, as amended. The Depositary holds
securities that its participants ("Direct Participants") deposit with the
Depositary. The Depositary also facilitates the settlement among Direct
Participants of securities transactions, such as transfers and pledges, in
deposited securities through electronic computerized book-entry changes in such
Direct Participants' accounts, thereby eliminating the need for physical
movement of securities certificates. Direct Participants include securities
brokers and dealers (including the Underwriters), banks, trust companies,
clearing corporations and certain other organizations. The Depositary is owned
by a number of its Direct Participants and by the New York Stock
S-5
<PAGE> 6
Exchange, Inc., the American Stock Exchange, Inc. and the National Association
of Securities Dealers, Inc. Access to the Depositary's book-entry system is also
available to others such as securities brokers and dealers, banks and trust
companies that clear through or maintain a custodial relationship with a Direct
Participant, either directly or indirectly ("Indirect Participants"). The rules
applicable to the Depositary and its Direct and Indirect Participants are on
file with the Securities and Exchange Commission.
Principal and interest payments on the Notes registered in the name of the
Depositary's nominee will be made in immediately available funds to the
Depositary's nominee as the registered owner of the Global Securities. Under the
terms of the Notes, the Company and the Trustee will treat the persons in whose
names the Notes are registered as the owners of such Notes for the purpose of
receiving payment of principal and interest on such securities and for all other
purposes whatsoever. Therefore, none of the Company, the Trustee or any paying
agent has any direct responsibility or liability for the payment of principal or
interest on the Global Securities to owners of beneficial interests in the
Global Securities. The Depositary has advised the Company and the Trustee that
its current practice is, upon receipt of any payment of principal or interest,
to credit Direct Participants' accounts on the payment date in accordance with
their respective holdings of beneficial interests in the Global Securities as
shown on the Depositary's records, unless the Depositary has reason to believe
that it will not receive payment on the payment date. Payments by Direct and
Indirect Participants to owners of beneficial interests in the Global Securities
will be governed by standing instructions and customary practices, as is the
case with securities held for the accounts of customers in bearer form or
registered in "street name," and will be the responsibility of such Direct and
Indirect Participants and not of the Depositary, the Trustee, or the Company,
subject to any statutory requirements that may be in effect from time to time.
Payment of principal and interest to the Depositary is the responsibility of the
Company or the Trustee. Disbursement of such payments to the owners of
beneficial interests in the Global Securities shall be the responsibility of the
Depositary and Direct and Indirect Participants.
Notes represented by a Global Security will be exchangeable for Notes in
definitive form of like tenor as such Global Security in denominations of $1,000
and in any greater amount that is an integral multiple if the Depositary
notifies the Company that it is unwilling or unable to continue as Depositary
for such Global Security or if at any time the Depositary ceases to be a
clearing agency registered under applicable law and a successor depositary is
not appointed by the Company within 90 days or the Company in its discretion at
any time determines not to require all of the Notes of such series to be
represented by a Global Security and notifies the Trustee thereof. Any Notes
that are exchangeable pursuant to the preceding sentence are exchangeable for
Notes issuable in authorized denominations and registered in such names as the
Depositary shall direct. Subject to the foregoing, a Global Security is not
exchangeable, except for a Global Security or Global Securities of the same
aggregate denominations to be registered in the name of the Depositary or its
nominee.
SAME-DAY SETTLEMENT AND PAYMENT
Settlement for the Notes will be made by the Underwriters in immediately
available funds. So long as the Depositary continues to make its Same-Day Funds
Settlement System available to the Company, all payments of principal and
interest on the Notes will be made by the Company in immediately available
funds.
S-6
<PAGE> 7
UNDERWRITING
Subject to the terms and conditions set forth in the Underwriting Agreement
dated the date hereof between the Company and the Underwriters named below, the
Company has agreed to sell to each of the Underwriters named below, severally,
and each of the Underwriters has severally agreed to purchase the principal
amount of the Notes set forth opposite its name below.
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT OF
UNDERWRITERS NOTES
------------ ------------
<S> <C>
Merrill Lynch, Pierce, Fenner & Smith Incorporated.......... $ 55,000,000
Chase Securities Inc. ...................................... 27,500,000
Donaldson, Lufkin & Jenrette Securities Corporation......... 27,500,000
------------
Total.......................................... $110,000,000
============
</TABLE>
The Underwriting Agreement provides that the obligations of the several
Underwriters to pay for and accept delivery of the Notes is subject to the
approval of certain legal matters by their counsel and to certain other
conditions. The Underwriters are committed to take and pay for all of the Notes
if any are taken.
The Underwriters propose initially to offer the Notes to the public at the
public offering price set forth on the cover page of this Prospectus Supplement
and to certain dealers at such price less a concession not in excess of .125% of
the principal amount of the Notes. The Underwriters may allow, and such dealers
may reallow, a discount not in excess of .05% of the principal amount of the
Notes to certain other dealers. After the initial public offering, the public
offering price, concession and discount may be changed.
The Notes are a new issue of securities with no established trading market.
The Company does not intend to apply for listing of the Notes on any securities
exchange. The Company has been advised by the Underwriters that the Underwriters
intend to make a market in the Notes but are not obligated to do so and may
discontinue market making at any time without notice. No assurance can be given
as to the liquidity of the trading market for the Notes.
In connection with this offering, the Underwriters may purchase and sell
the Notes in the open market. These transactions may include over-allotment and
stabilizing transactions and purchases to cover short positions created by the
Underwriters in connection with the offering. Stabilizing transactions consist
of certain bids or purchases for the purpose of preventing or retarding a
decline in the market price of a series of securities, and short positions
created by the Underwriters involve the sale by the Underwriters of a greater
number of securities than they are required to purchase from the Company in this
offering. The Underwriters also may impose a penalty bid, whereby selling
concessions allowed to underwriters or broker-dealers in respect of the Notes
sold in this offering may be reclaimed by the Underwriters if such securities
are repurchased by the Underwriters in stabilizing or covering transactions.
These activities may stabilize, maintain or otherwise affect the market price of
a series of the Notes, which may be higher than the price that might otherwise
prevail in the open market, and these activities, if commenced, may be
discontinued at any time. These transactions may be effected in the
over-the-counter market or otherwise.
The Company has agreed to indemnify the several Underwriters against
certain liabilities, including liabilities under the Securities Act of 1933, as
amended.
From time to time certain of the Underwriters have provided, and may
continue to provide, commercial and/or investment banking services to the
Company. In addition, The Chase Manhattan Bank, an affiliate of Chase Securities
Inc., is Trustee under the Indenture and the Calculation Agent.
S-7
<PAGE> 8
LEGAL OPINIONS
Certain legal matters in connection with the Notes will be passed upon for
the Company by Joseph E. Geoghan, a director and Vice-President, General Counsel
and Secretary of the Company or by Phyllis Savage, Chief Finance and Securities
Counsel of the Company, or by other counsel selected by the Company, and for the
agents, underwriters and dealers by Davis Polk & Wardwell, New York, NY, or by
other counsel satisfactory to the relevant agents, underwriters or dealers. At
September 30, 1998, Mr. Geoghan owned 29,624 shares of the Company's common
stock including shares allocated pursuant to the Company's employee stock
ownership plan and Ms. Savage owned 4,255 shares of the Company's Common Stock
including shares allocated pursuant to the Company's employee stock ownership
plan. At September 30, 1998, Mr. Geoghan had options to purchase 213,000 shares
of the Company's common stock and Ms. Savage held options to purchase 29,900
shares of the Company's common stock.
S-8
<PAGE> 9
PROSPECTUS
UNION CARBIDE CORPORATION
DEBT SECURITIES
-------------------------
Union Carbide Corporation ("Company") may offer from time to time up to a
total initial offering price not to exceed $500,000,000 (or the equivalent in
foreign denominated currency or units based on or relating to currencies) of its
senior unsecured debt securities ("Debt Securities" or "Securities"). The
Company may offer Securities in one or more series, in amounts, at prices and
upon terms to be determined in light of market conditions at the time of sale.
Furthermore, the Company may sell the Securities directly, through agents
designated from time to time, or to or through underwriters or dealers (see
"Plan of Distribution").
The Prospectus Supplement accompanying the Prospectus sets forth the
specific aggregate principal amount, maturity, rate and time of payment of
interest as well as any redemption provisions, initial public offering price and
proceeds to the Company. The Prospectus Supplement also sets forth any other
specific terms in connection with the offering and sale of a series of
Securities, including the names of the underwriters or agents, if any, and the
terms of such offering.
The Securities may be issued as Registered Securities, in certificated or
uncertificated form or in any combination thereof.
-------------------------
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 date of this Prospectus is July 31, 1998.
<PAGE> 10
NO DEALER, SALESMAN OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED OR INCORPORATED BY
REFERENCE IN THIS PROSPECTUS, INCLUDING ANY PROSPECTUS SUPPLEMENT IN CONNECTION
WITH THE OFFER CONTAINED IN THIS PROSPECTUS, AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE COMPANY OR ANY UNDERWRITER, DEALER OR AGENT. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY OF THE
SECURITIES OFFERED HEREBY IN ANY JURISDICTION TO ANY PERSON TO WHOM IT IS
UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION IN SUCH JURISDICTION. NEITHER THE
DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY
CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE INFORMATION 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 ("Exchange Act"), and, in accordance therewith, files
reports and other information with the Securities and Exchange Commission
("Commission"). Reports, proxy statements, and other information filed by the
Company may be inspected and copied at the public reference facilities
maintained by the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549,
and at the Commission's Regional Offices at 7 World Trade Center, 13th Floor,
New York, New York 10048 and at the Citicorp Center, 500 West Madison Street,
Suite 1400, Chicago, Illinois 60661. Copies of such information may be obtained
by mail from the Public Reference Section of the Commission at 450 Fifth Street,
N.W., Washington, D.C. 20549, at prescribed rates. Information regarding the
operation of the Public Reference Section may be obtained by calling
1-800-SEC-0330. The Commission also maintains a World Wide Web site
(http://www.sec.gov) that contains reports, proxy and information statements and
other information regarding registrants that file electronically with the
Commission. In addition, reports, proxy statements, and other information
concerning the Company may be inspected at the offices of the New York Stock
Exchange, 20 Broad Street, New York, New York 10005, the Chicago Stock Exchange,
440 South LaSalle Street, Chicago, Illinois 60605, and the Pacific Stock
Exchange, 301 Pine Street, San Francisco, California 94104 or at the Company's
home page on the World Wide Web (http:www.unioncarbide.com).
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed with the Commission by the Company (File No.
1-1463) are incorporated herein by reference: (1) Annual Report on Form 10-K for
the year ended December 31, 1997; (2) Quarterly Reports on Form 10-Q for the
quarter ended March 31, 1998; and (3) all other 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
Securities. Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained herein
or in any other subsequently filed document which also is or is deemed to be
incorporated by reference herein modifies or supersedes such statement. Any such
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this Prospectus.
The Company will provide without charge to each person to whom a copy of
this Prospectus is delivered, upon the request of such person, a copy of any or
all of the documents which are incorporated by reference herein, other than
exhibits to such documents (unless such exhibits are specifically incorporated
by reference into such documents). Written or telephone requests should be
directed to Union Carbide Corporation, Investor Relations Department, 39 Old
Ridgebury Road, Danbury, Connecticut 06817-0001, telephone (203) 794-6445.
THE COMPANY
Union Carbide Corporation is a worldwide chemicals and polymers company
with two business segments, Specialties & Intermediates and Basic Chemicals &
Polymers. Specialties & Intermediates converts basic and intermediate chemicals
into a diverse portfolio of chemicals and polymers serving
2
<PAGE> 11
industrial customers in many markets. This segment also provides technology
services, including licensing, to the oil and gas and petrochemicals industries.
The Basic Chemicals & Polymers segment converts hydrocarbon feedstocks,
principally liquefied petroleum gas and naphtha, into polyethylene,
polypropylene and ethylene oxide/glycol for sale to third-party customers, as
well as propylene, ethylene and ethylene oxide for consumption by the
Specialties & Intermediates segment.
The Company was incorporated in 1917 under the laws of the State of New
York. The principal executive offices of the Company are located at 39 Old
Ridgebury Road, Danbury, Connecticut 06817-0001, telephone (203) 794-2000.
USE OF PROCEEDS
Unless otherwise indicated in an accompanying Prospectus Supplement, the
Company intends to use the net proceeds from the sale of the Securities to
retire outstanding debt, to repurchase outstanding shares of the Company's
common stock, and otherwise for general corporate purposes. Information
concerning the interest rates and maturities of the Company's outstanding debt
is set forth in the notes to the financial statements of the Company
incorporated by reference herein.
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth the ratio of earnings to fixed charges of
the Company for the periods indicated:
<TABLE>
<CAPTION>
THREE MONTHS
ENDED YEAR ENDED DECEMBER 31,
MARCH 31, ------------------------------------
1998 1997 1996 1995 1994 1993
------------ ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Ratio of Earnings to Fixed Charges(a)....... 3.7 4.2 5.0 8.0 4.9 2.9
</TABLE>
- -------------------------
(a) For the purpose of calculating the ratio of earnings to fixed charges,
earnings consist of income of consolidated companies from continuing
operations before provision for income taxes, before fixed charges, plus
dividends from less than 50%-owned companies carried at equity and the
registrant's share of pre-tax income of 50%-owned companies carried at
equity, less net capitalized interest and preferred stock dividend
requirements of consolidated subsidiaries. Fixed charges comprise interest
on long-term and short-term debt, capitalized interest, the portion of
rentals representative of an interest factor, preferred stock dividend
requirements of consolidated subsidiaries and the registrant's share of
fixed charges of 50%-owned companies carried at equity. The Company has a 45
percent equity investment in Equate Petrochemical Company. During 1998, 1997
and the last quarter of 1996, the Company severally guaranteed 45 percent of
Equate's long-term debt and working capital financing needs. During the
first three quarters of 1996, the Company severally guaranteed up to $225
million of Equate's interim debt. Interest charges associated with
guarantees of outstanding borrowings totaled $17 million, $58 million and
$13 million for the three months ending March 31, 1998 and the years ended
December 31, 1997 and 1996, respectively, and have been included, along with
the Company's equity in Equate's pre-tax loss for the same periods, in the
calculation of the ratio of earnings to fixed charges.
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DESCRIPTION OF SECURITIES
The Securities will be issued in one or more series under an indenture or
indentures ("Indenture") between the Company and one or more trustees
("Trustee"). The following summaries of certain provisions of the Indenture are
qualified in their entirety by express reference to the Indenture which is
incorporated herein by reference.
GENERAL
The Indenture does not limit the amount of Securities that can be issued
thereunder and provides that the Securities may be issued in series up to the
aggregate principal amount which may be authorized from time to time by the
Company. The Securities will be unsecured and will rank on a parity with all
other unsecured and unsubordinated debt of the Company.
Reference is made to the Prospectus Supplement for the following terms, if
applicable, of the Securities offered thereby: (1) the designation, aggregate
principal amount, currency or composite currency and denominations; (2) the
price at which such Securities will be issued and, if an index formula or other
method is used, the method for determining amounts of principal or interest; (3)
the maturity date and other dates, if any, on which principal will be payable;
(4) the interest rate (which may be fixed or variable), if any; (5) the date or
dates from which interest will accrue and on which interest will be payable, and
the record dates for the payment of interest; (6) the manner of paying principal
or interest; (7) the place or places where principal and interest will be
payable; (8) the terms of any mandatory or optional redemption by the Company;
(9) the terms of any redemption at the option of holders; (10) whether such
Securities are to be represented in whole or in part by a Security in global
form and, if so, the identity of the depositary ("Depositary") for any global
Security; (11) any tax indemnity provisions; (12) if the Securities provide that
payments of principal or interest may be made in a currency other than that in
which Securities are denominated, the manner for determining such payments; (13)
the portion of principal payable upon acceleration of a Discounted Security (as
defined below); (14) whether and upon what terms Securities may be defeased;
(15) any events of default or restrictive covenants in addition to or in lieu of
those set forth in the Indenture; (16) provisions for electronic issuance of
Securities or for Securities in uncertificated form; and (17) any additional
provisions or other terms not inconsistent with the provisions of the Indenture,
including any terms that may be required or advisable under United States or
other applicable laws or regulations, or advisable in connection with the
marketing of the Securities.
Securities of any series may be issued as registered Securities, in
certificated or uncertificated form or a combination thereof, as specified in
the terms of the series. Unless otherwise indicated in the Prospectus
Supplement, Securities will be issued in denominations of $1,000 and whole
multiples thereof. The Securities of a series may be issued in whole or in part
in the form of one or more global Securities that will be deposited with, or on
behalf of, a Depositary identified in the Prospectus Supplement relating to the
series. Unless otherwise indicated in the Prospectus Supplement relating to a
series, the terms of the depositary arrangement with respect to any Securities
of a series specified in the Prospectus Supplement as being represented by
global Securities will be as set forth below under "Global Securities."
Registration of transfer of registered Securities may be requested upon
surrender thereof at any agency of the Company maintained for that purpose and
upon fulfillment of all other requirements of the agent.
Securities may be issued under the Indenture as Discounted Securities to be
offered and sold at a substantial discount from the principal amount thereof.
Special United States federal income tax and other considerations applicable
thereto will be described in the Prospectus Supplement relating to such
Discounted Securities. "Discounted Security" means a Security where the amount
of principal due upon acceleration is less than the stated principal amount.
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CERTAIN COVENANTS
The Securities will not be secured by any properties or assets and will
represent unsecured debt of the Company. Since secured debt ranks ahead of
unsecured debt, the limitation on liens and the limitation on sale-leaseback
transactions place some restrictions on the Company's ability to incur
additional secured debt or its equivalent when the asset securing the debt is a
material manufacturing facility in the United States. The limitations are
subject to a number of qualifications and exceptions described below. There can
be no assurance that a facility subject to the limitations at any time will
continue to be subject to those limitations at a later time.
Unless otherwise indicated in a Prospectus Supplement, the covenants
contained in the Indenture and the Securities do not afford holders of the
Securities protection in the event of a highly leveraged or other transaction
involving the Company that may adversely affect holders of the Securities.
Definitions
"Attributable Debt" for a lease means, as of the date of determination, the
present value of net rent for the remaining term of the lease. Rent shall be
discounted to present value at a discount rate that is compounded semi-annually.
The discount rate shall be 10% per annum or, if the Company elects, the discount
rate shall be equal to the weighted average Yield to Maturity of the Securities
under the Indenture. Such average shall be weighted by the principal amount of
the Securities of each series or, in the case of Discounted Securities, the
amount of principal that would be due as of the date of determination if payment
of the Securities were accelerated on that date.
Rent is the lesser of (a) rent for the remaining term of the lease assuming
it is not terminated or (b) rent from the date of determination until the first
possible termination date plus the termination payment then due, if any. The
remaining term of a lease includes any period for which the lease has been
extended. Rent does not include (1) amounts due for maintenance, repairs,
utilities, insurance, taxes, assessments and similar charges or (2) contingent
rent, such as that based on sales. Rent may be reduced by the discounted present
value of the rent that any sublessee must pay from the date of determination for
all or part of the same property. If the net rent on a lease is not definitely
determinable, the Company may estimate it in any reasonable manner.
"Consolidated Net Tangible Assets" means total assets less (a) total
current liabilities (excluding Debt due within 12 months) and (b) goodwill, as
reflected in the Company's most recent consolidated balance sheet preceding the
date of a determination under clause (9) of the "Limitation on Liens" covenant.
"Debt" means any debt for borrowed money or any guarantee of such a debt.
"Lien" means any mortgage, pledge, security interest or lien.
"Long-Term Debt" means Debt that by its terms matures on a date more than
12 months after the date it was created or Debt that the obligor may extend or
renew without the obligee's consent to a date more than 12 months after the date
the Debt was created.
"Principal Property" means any manufacturing facility located in the United
States (excluding territories and possessions), except any such facility that in
the opinion of the board of directors of the Company or any authorized committee
of the board is not of material importance to the total business conducted by
the Company and its consolidated Subsidiaries.
"Restricted Property" means any Principal Property or any shares of stock
of a Restricted Subsidiary, in each case now owned or hereafter acquired by the
Company or a Restricted Subsidiary. At March 31, 1998, "Restricted Property"
includes manufacturing facilities of the Company at Norco, LA; Taft, LA;
Seadrift, TX; Texas City, TX; Institute, WV; and South Charleston, WV.
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"Restricted Subsidiary" means a Wholly-Owned Subsidiary that has
substantially all of its assets located in the United States (excluding
territories or possessions) or Puerto Rico and owns a Principal Property.
"Sale-Leaseback Transaction" means an arrangement pursuant to which the
Company or a Restricted Subsidiary now owns or hereafter acquires a Principal
Property, transfers it to a person, and leases it back from the person.
"Subsidiary" means a corporation a majority of whose Voting Stock is owned
by the Company or a Subsidiary.
"Voting Stock" means capital stock having voting power under ordinary
circumstances to elect directors.
"Wholly-Owned Subsidiary" means a corporation all of whose Voting Stock is
owned by the Company or a Wholly-Owned Subsidiary.
"Yield to Maturity" means the yield to maturity on a Security at the time
of its issuance or at the most recent determination of interest on the Security.
Limitation on Liens. The Company will not, and will not permit any
Restricted Subsidiary to, incur a Lien on Restricted Property to secure a Debt
unless:
(1) the Lien equally and ratably secures the Securities and the Debt. The
Lien may equally and ratably secure the Securities and any other
obligation of the Company or a Subsidiary. The Lien may not secure an
obligation of the Company that is subordinated to the Securities;
(2) the Lien secures Debt incurred to finance all or some of the purchase
price or the cost of construction or improvement of property of the
Company or a Restricted Subsidiary. The Lien may not extend to any
other Restricted Property owned by the Company or a Restricted
Subsidiary at the time the Lien is incurred. However, in the case of
any construction or improvement, the Lien may extend to unimproved real
property used for the construction or improvement. The Debt secured by
the Lien may not be incurred more than one year after the later of the
(a) acquisition, (b) completion of construction or improvement or (c)
commencement of full operation, of the property subject to the Lien;
(3) The Lien is on property of a corporation at the time the corporation
merges into or consolidates with the Company or a Restricted
Subsidiary;
(4) the Lien is on property at the time the Company or a Restricted
Subsidiary acquires the property;
(5) the Lien is on property of a corporation at the time the corporation
becomes a Restricted Subsidiary;
(6) the Lien secures Debt of a Restricted Subsidiary owing to the Company
or another Restricted Subsidiary;
(7) the Lien is in favor of a government or governmental entity and secures
(a) payments pursuant to a contract or statute or (b) Debt incurred to
finance all or some of the purchase price or cost of construction or
improvement of the property subject to the Lien;
(8) the Lien extends, renews or replaces in whole or in part a Lien
("existing Lien") permitted by any of clauses (1) through (7). The Lien
may not extend beyond (a) the property subject to the existing Lien and
(b) improvements and construction on such property. However, the Lien
may extend to property that at the time is not Restricted Property. The
Debt secured by the Lien may not exceed the Debt secured at the time by
the existing Lien unless the existing Lien or a predecessor Lien was
incurred under clause (1) or (6); or
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(9) the Debt plus all other Debt secured by Liens on Restricted Property at
the time does not exceed 10% of Consolidated Net Tangible Assets.
However, the following Debt shall be excluded from all other Debt in
the determination: (a) Debt secured by a Lien permitted by any of
clauses (1) through (8) and (b) Debt secured by a Lien incurred prior
to the date of the Indenture that would have been permitted by any of
those clauses if the Indenture had been in effect at the time the Lien
was incurred. Attributable Debt for any lease permitted by clause (4)
of the "Limitation on Sale and Leaseback" covenant must be included in
the determination and treated as Debt secured by a Lien on Restricted
Property not otherwise permitted by any of clauses (1) through (8).
In general, clause (9) above, sometimes called a "basket" clause, permits
Liens to be incurred that are not permitted by any of the exceptions enumerated
in clauses (1) through (8) above if the Debt secured by all such additional
Liens does not exceed 10% of Consolidated Net Tangible Assets at the time.
Limitation on Sale and Leaseback. The Company will not, and will not
permit any Restricted Subsidiary to, enter into a Sale-Leaseback Transaction
unless:
(1) the lease has a term of three years or less;
(2) the lease is between the Company and a Restricted Subsidiary or between
Restricted Subsidiaries;
(3) the Company or a Restricted Subsidiary under clauses (2) through (8) of
the "Limitation on Liens" covenant could create a Lien on the property
to secure Debt at least equal in amount to the Attributable Debt for
the lease;
(4) the Company or a Restricted Subsidiary under clause (9) of the
"Limitation on Liens" covenant could create a Lien on the property to
secure Debt at least equal in amount to the Attributable Debt for the
lease; or
(5) the Company or a Restricted Subsidiary within 180 days of the effective
date of the lease retires Long-Term Debt of the Company or a Restricted
Subsidiary at least equal in amount to the Attributable Debt for the
lease. A Debt is retired when it is paid, canceled or defeased.
However, the Company or a Restricted Subsidiary may not receive credit
for retirement of: Debt that is retired at maturity or through
mandatory redemption; Debt of the Company that is subordinated to the
Securities; or Debt, if paid in cash, that is owned by the Company or a
Restricted Subsidiary.
In clauses (3) and (4) above, Sale-Leaseback Transactions and Liens are
treated as equivalents. Thus, if the Company or a Restricted Subsidiary could
create a Lien on a property, it may enter into a Sale-Leaseback Transaction to
the same extent.
SUCCESSOR OBLIGOR
The Company will not consolidate with or merge into, or transfer all or
substantially all of its assets to, any person, unless (1) the person is
organized under the laws of the United States or a State thereof; (2) the person
assumes by supplemental indenture all the obligations of the Company under the
Indenture, the Securities and any coupons; (3) immediately after the transaction
no Default (as defined) exists; and (4) if, as a result of the transaction, a
Restricted Property would become subject to a Lien not permitted by the
"Limitation on Liens" covenant, the Company or such person secures the
Securities equally and ratably with or prior to all obligations secured by the
Lien.
The successor will be substituted for the Company, and thereafter all
obligations of the Company under the Indenture, the Securities and any coupons
shall terminate.
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EXCHANGE OF SECURITIES
Certificates for Securities may be exchanged for an equal aggregate
principal amount of certificates for Securities of the same series and date of
maturity in such authorized denominations as may be requested upon surrender of
the certificates at an agency of the Company maintained for such purpose and
upon fulfillment of all other requirements of the agent.
DEFAULTS AND REMEDIES
An "Event of Default" with respect to a series of Securities will occur if:
(1) the Company fails to make any payment of interest on any Securities of
the series when the payment becomes due and continues not to make such
payment for a period of 10 days;
(2) the Company fails to make a payment of the principal of any Securities
of the series when the payment becomes due at maturity or upon
redemption, acceleration or otherwise;
(3) the Company fails to perform any of its other agreements applicable to
the series and such failure continues for 90 days after the notice set
forth below;
(4) the Company pursuant to or within the meaning of any Bankruptcy Law:
(A) initiates a voluntary case,
(B) consents to the entry of an order for relief against it in an
involuntary case,
(C) consents to the appointment of a Custodian for it or for all or
substantially all of its property, or
(D) makes a general assignment for the benefit of its creditors;
(5) a court of competent jurisdiction enters an order or decree under any
Bankruptcy Law that:
(A) is for relief against the Company in an involuntary case,
(B) appoints a Custodian for the Company or for all or substantially all
of its property, or
(C) orders the liquidation of the Company; and the order or decree
remains unstayed and in effect for 60 days; or
(6) any other Event of Default provided for in the series occurs.
The term "Bankruptcy Law" means Title 11, U.S. Code or any similar Federal
or State law for the relief of debtors. The term "Custodian" means any receiver,
trustee, assignee, liquidator or a similar official under any Bankruptcy Law.
Failure to perform under clause (3) above is not an Event of Default until
the Trustee or the holders of at least 25% of the principal amount of the series
notify the Company of the failure and the Company does not cure the default
within the time specified after receipt of the notice.
Subject to certain limitations, holders of a majority in principal amount
of the Securities of the series may direct the Trustee in its exercise of any
trust or power. The Trustee may withhold from Securityholders of the series
notice of any continuing default (except a default in payment of principal or
interest) if it determines that withholding notice is in their interest.
The Indenture does not have a cross-default provision. Thus, a default by
the Company or a Subsidiary on any other debt would not constitute an Event of
Default.
If an Event of Default occurs and continues on a series, the Trustee or the
holders of at least 25% of the principal amount of the series may declare the
principal and interest on all Securities of the series due and payable
immediately upon notice to the Company. If an Event of Default occurs and
continues on a series, the Trustee or, upon satisfaction of certain conditions,
a holder may pursue any available remedy to collect the principal and interest
due on the series, enforce the performance of any provisions regarding the
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series or protect the rights of the Trustee and holders of the series. The
Trustee may require indemnity satisfactory to it before it enforces the
Indenture or the Securities of the series.
AMENDMENTS AND WAIVERS
Unless the bond resolution establishing the terms of a series otherwise
provides, the Indenture and the Securities or any coupons of the series may be
amended, and any default may be waived as follows: The Securities and the
Indenture may be amended with the consent of the holders of a majority in
principal amount of the Securities of all series affected voting as one class.
As discussed above under "General," the Company has the right to issue an
unlimited amount of Securities under the Indenture. A default on a series may be
waived with the consent of the holders of a majority in principal amount of the
Securities of the series. However, without the consent of each Securityholder
affected, no amendment or waiver may (1) reduce the amount of Securities whose
holders must consent to an amendment or waiver, (2) reduce the interest on or
change the time for payment of interest on any Security, (3) change the fixed
maturity of any Security, (4) reduce the principal of any non-Discounted
Security or reduce the amount of principal of any Discounted Security that would
be due on acceleration thereof, (5) change the currency in which principal or
interest on a Security is payable or (6) waive any default in payment of
interest on or principal of a Security. Without the consent of any
Securityholder, the Indenture, the Securities or any coupons may be amended to
cure any ambiguity, omission, defect or inconsistency; to provide for assumption
of Company obligations to Securityholders in the event of a merger or
consolidation requiring such assumption; to provide that specific provisions of
the Indenture not apply to a series of Securities not previously issued; to
create a series and establish its terms; to provide for a separate Trustee for
one or more series; or to make any change that does not materially adversely
affect the rights of any Securityholder.
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
Securities of a series may be defeased in accordance with their terms and,
unless the bond resolution establishing the terms of the series otherwise
provides, as set forth below. The Company at any time may terminate as to a
series all of its obligations (except for certain obligations with respect to
the defeasance trust and obligations to register the transfer or exchange of a
Security, to replace destroyed, lost or stolen Securities and coupons and to
maintain agencies in respect of the Securities) with respect to the Securities
of the series and any related coupons and the Indenture ("legal defeasance").
The Company at any time may terminate as to a series its obligations with
respect to the Securities and coupons of the series under the covenants
described under "Certain Covenants" ("covenant defeasance").
The Company may exercise its legal defeasance option notwithstanding its
prior exercise of its covenant defeasance option. If the Company exercises its
legal defeasance option, a series may not be accelerated because of an Event of
Default. If the Company exercises its covenant defeasance option, a series may
not be accelerated by reference to the covenants described under "Certain
Covenants."
To exercise either option as to a series, the Company must deposit in trust
(the "defeasance trust") with the Trustee money or U.S. Government Obligations
for the payment of principal, premium, if any, and interest on the Securities of
the series to redemption or maturity and must comply with certain other
conditions. In particular, the Company must obtain an opinion of tax counsel
that the defeasance will not result in recognition of any gain or loss to
holders for Federal income tax purposes. "U.S. Government Obligations" are
direct obligations of the United States of America which have the full faith and
credit of the United States of America pledged for payment and which are not
callable at the issuer's option, or certificates representing an ownership
interest in such obligations.
GLOBAL SECURITIES
Global Securities may be issued in certificated or uncertificated form and
in either temporary or permanent form. If Securities of a series are to be
issued as global Securities, one or more global
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Securities will be issued in a denomination or aggregate denominations equal to
the aggregate principal amount of outstanding Securities of the series to be
represented by such global Security or Securities.
Ownership of beneficial interests in global Securities will be limited to
persons that have accounts with the Depositary ("participants") or persons that
may hold interests through participants. Ownership interests in global
Securities will be shown on, and the transfer of that ownership interest will be
effected only through, records maintained by the Depositary or its nominee for
such global Securities (with respect to a participant's interest) and records
maintained by participants (with respect to interests of persons other than
participants).
Unless otherwise indicated in a Prospectus Supplement, payment of principal
of and any premium and interest on the book-entry Securities represented by a
global Security will be made to the Depositary or its nominee, as the case may
be, as the sole registered owner and the sole holder of the book-entry
Securities represented thereby for all purposes under the Indenture. Neither the
Company or the Trustee, nor any agent of the Company or the Trustee, will have
any responsibility or liability for any acts or omissions of the Depositary, for
any records of the Depositary relating to beneficial ownership interests in any
global Security or for any transactions between the Depositary and beneficial
owners.
Upon receipt of any payment of principal of or any premium or interest on a
global Security, the Depositary will immediately credit, on its book-entry
registration and transfer system, the accounts of participants with payments in
amounts proportionate to their respective beneficial interests in the principal
amount of such global Security as shown on the records of the Depositary.
Payments by participants to owners of beneficial interests in global Securities
held through such participants will be governed by standing instructions and
customary practices, as is now the case with securities held for customer
accounts registered in "street name," and will be the sole responsibility of
such participants.
Unless otherwise stated in a Prospectus Supplement, global Securities will
not be transferred except as a whole by the Depositary to a nominee of the
Depositary. Global Securities will be exchangeable only if (i) the Depositary
notifies the Company that it is unwilling or unable to continue as Depositary
for such global Securities or if at any time the Depositary ceases to be a
clearing agency registered under the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), (ii) the Company in its sole discretion determines that
such global Securities shall be exchangeable for definitive Securities in
registered form, or (iii) an Event of Default with respect to the series of
Securities represented by such global Securities has occurred and is continuing.
Any global Security that is exchangeable pursuant to the preceding sentence
shall be exchangeable for Registered Securities issuable in denominations of
$1,000 and integral multiples thereof and registered in such names as the
Depositary holding such global Security shall direct. Subject to the foregoing,
the global Security is not exchangeable, except for a global Security of like
denomination to be registered in the name of the Depositary or its nominee.
So long as the Depositary for global Securities of a series, or its
nominee, is the registered owner of such global Securities, such Depositary or
such nominee, as the case may be, will be considered the sole holder of
Securities represented by such global Securities for the purposes of receiving
payment on such global Securities, receiving notices and for all other purposes
under the Indenture and such global Securities. Except as provided above, owners
of beneficial interests in global Securities of a series will not be entitled to
receive physical delivery of Securities of such series in definitive form and
will not be considered the holders thereof for any purpose under the Indenture.
Accordingly, each person owning a beneficial interest in a global Security must
rely on the procedures of the Depositary and, if such person is not a
participant, on the procedures of the participant through which such person owns
its interest, to exercise any rights of a holder under the Indenture. The
Depositary may grant proxies and otherwise authorize participants to give or
take any request, demand, authorization, direction, notice, consent, waiver or
other action which a holder is entitled to give or take under the Indenture. The
Company understands that under existing industry practices, in the event that
the Company requests any action of holders or that an owner of a beneficial
interest in such a global Security desires to give or take any action which a
holder is entitled to give or take under the Indenture, the Depositary would
authorize the participants holding the relevant beneficial interests to give or
take such action, and such participants would authorize beneficial
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owners owning through such participants to give or take such action or would
otherwise act upon the instructions of beneficial owners owning through them.
Unless otherwise specified in a Prospectus Supplement relating to
Securities of a series to be issued as global Securities, the Depositary will be
The Depository Trust Company ("DTC"). DTC has advised the Company that it is a
limited-purpose trust company organized under the law 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 under the Exchange Act. DTC was created to hold the securities of its
participants and to facilitate the clearance and settlement of securities
transactions among its participants in such securities through electronic
book-entry changes in accounts of the participants, thereby eliminating the need
for physical movement of securities certificates. DTC's participants include
securities brokers and dealers (which may include the underwriters, dealers or
agents with respect to the Securities), banks, trust companies, clearing
corporations, and certain other organizations, some of whom (and/or their
representatives) own DTC. Access to DTC's book-entry system is also available to
others, such as banks, brokers, dealers and trust companies that clear through
or maintain a custodial relationship with a participant either directly or
indirectly.
TRUSTEE
The Trustee for a series of Securities will be named in the Prospectus
Supplement for the series.
The Company may remove the Trustee if certain events occur. The Company
also may remove the Trustee with or without cause if the Company so notifies the
Trustee six months in advance and if no Default occurs during the six-month
period.
PLAN OF DISTRIBUTION
The Company may sell Securities in any of the following ways: (1) through
underwriters or dealers; (2) directly to one or more purchasers; or (3) through
agents. The Prospectus Supplement with respect to the Securities being offered
thereby will set forth the terms of the offering of such Securities, including
the name or names of any underwriters or agents, the purchase price of such
Securities and the proceeds to the Company from such sale, any underwriting
discounts, commissions and other items constituting underwriters' compensation,
any initial public offering price and any discounts or concessions allowed or
reallowed or paid to dealers and any securities exchanges on which such
Securities may be listed. Any underwriter or agent may be deemed to be an
underwriter as that term is defined in the Securities Act of 1933 (the "Act").
If underwriters are used in the sale of Securities, such Securities will be
acquired by the underwriters for their own account and may be resold from time
to time in one or more transactions, including negotiated transactions, at a
fixed public offering price or at varying prices determined at the time of sale.
The Securities may be offered to the public either through underwriting
syndicates (which may be represented by managing underwriters designated by the
Company), or directly by one or more underwriters acting alone. Unless otherwise
set forth in the Prospectus Supplement, the obligations of the underwriters to
purchase the Securities offered thereby will be subject to certain conditions
precedent, and the underwriters will be obligated to purchase all such
Securities if any are purchased. Any initial public offering price and any
discounts or concessions allowed or reallowed or paid to dealers may be changed
from time to time.
The Securities may be sold directly by the Company or through agents
designated by the Company from time to time. The Prospectus Supplement with
respect to any Securities sold in this manner will set forth the name of any
agent involved in the offer or sale of the Securities as well as any commissions
payable by the Company to such agent. Unless otherwise indicated in the
Prospectus Supplement, any such agent is acting on a best efforts basis for the
period of its appointment.
If dealers are utilized in the sale of any Securities, the Company will
sell the Securities to the dealers, as principal. Any dealer may then resell the
Securities to the public at varying prices to be determined by
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the dealer at the time of resale. The name of any dealer and the terms of the
transaction will be set forth in the Prospectus Supplement with respect to the
Securities being offered thereby.
If so indicated in the Prospectus Supplement, the Company will authorize
agents, underwriters or dealers to solicit offers by certain specified
institutions to purchase Securities from the Company at the public offering
price set forth in the Prospectus Supplement pursuant to delayed delivery
contracts providing for payment and delivery on a specified date in the future.
Such contracts will be subject only to those conditions set forth in the
Prospectus Supplement and the Prospectus Supplement will set forth the
commission payable for the solicitation of such contracts.
It has not been determined whether any Securities will be listed on a
securities exchange. Underwriters will not be obligated to make a market in any
Securities. The Company cannot predict the activity of trading in, or liquidity
of, any Securities.
Agents, underwriters and dealers may be entitled, under agreements entered
into with the Company, to indemnification by the Company against certain civil
liabilities, including liabilities under the Act or to contribution with respect
to payments which the agents, underwriters or dealers may be required to make in
respect thereof. Agents, underwriters and dealers may be customers of, engage in
transactions with, or perform services for the Company in the ordinary course of
business.
LEGAL OPINIONS
Certain legal matters in connection with the Securities will be passed upon
for the Company by Joseph E. Geoghan, a director and Vice-President, General
Counsel and Secretary of the Company or by Phyllis Savage, Chief Finance and
Securities Counsel of the Company, or by other counsel selected by the Company,
and for the agents, underwriters and dealers by Davis Polk & Wardwell, New York,
NY, or by other counsel satisfactory to the relevant agents, underwriters or
dealers. At June 30, 1998, Mr. Geoghan owned 29,572 shares of the Company's
common stock including shares allocated pursuant to the Company's employee stock
ownership plan and Ms. Savage owned 4,184 shares of the Company's common stock
including shares allocated pursuant to the Company's employee stock ownership
plan. At June 30, 1998, Mr. Geoghan held options to purchase 213,000 shares of
the Company's common stock and Ms. Savage held options to purchase 29,900 shares
of the Company's common stock.
EXPERTS
The Company's consolidated financial statements and schedules as of
December 31, 1997 and 1996 and for each of the years in the three-year period
ended December 31, 1997 incorporated by reference herein have been incorporated
herein in reliance upon the reports of KPMG Peat Marwick LLP, independent
auditors, incorporated by reference herein, and upon the authority of said firm
as experts in accounting and auditing.
12
<PAGE> 21
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$110,000,000
UNION CARBIDE CORPORATION
FLOATING RATE NOTES DUE APRIL 26, 2000
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PROSPECTUS SUPPLEMENT
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MERRILL LYNCH & CO.
CHASE SECURITIES INC.
DONALDSON, LUFKIN & JENRETTE
OCTOBER 21, 1998
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