<PAGE>
FILED PURSUANT TO RULE 424(b)(2)
REGISTRATION NO. 33-54861; 33-54861-01
33-38505; 33-38505-01
PROSPECTUS SUPPLEMENT TO PROSPECTUS DATED FEBRUARY 3, 1995
LOGO
OF UNOCAL CORPORATION
$1,188,800,000
Union Oil Company of California
Medium-Term Notes, Series C
Payment of Principal, Interest and Premium, if any, is Guaranteed by
Unocal Corporation
Due Nine Months or more from Date of Issue
--------------
Union Oil Company of California (the "Company") may offer from time to time
its Medium-Term Notes, Series C (the "Notes"), pursuant to this Prospectus
Supplement in an aggregate principal amount of up to $1,188,800,000 or the
equivalent thereof in other currencies, subject to possible reduction as a
result of the sale of other securities. The particular terms of each Note
will be set forth in the applicable Pricing Supplement to this Prospectus
Supplement (the "Pricing Supplement") and may vary from those set forth
herein. The Interest Payment Dates for Fixed Rate Notes will be January 31
and July 31 of each year and any Redemption Date, any Repayment Date and
the Stated Maturity. Interest Payment Dates for Floating Rate Notes will
be set forth in the applicable Pricing Supplement. Each Note will mature
on a business day nine months or more from the date of issue (the
"Stated Maturity"), as set forth on the face of such Note, and may be
subject to redemption prior to the Stated Maturity, or obligate the
Company to redeem or purchase the Note at the option of the holder
thereof, in each case as set forth in the applicable Pricing
Supplement. Unless otherwise specified, the Notes will be issued in
denominations of U.S. $1,000 and integral multiples of U.S. $1,000
in excess thereof. Notes may be issued as indexed Notes (an
"Indexed Note") the principal amount of which, payable at the
Stated Maturity, and/or the interest payable on each Interest
Payment Date and at the Stated Maturity, is determined by
reference to currencies, currency units, commodity prices,
financial or non-financial indices or other factors, as indicated
in the applicable Pricing Supplement. See "Description of the
Medium-Term Notes-Indexed Notes." A Note may pay amounts in
respect of interest and principal over the life of the Note,
according to an amortization schedule (an "Amortizing Note").
The authorized denominations of Notes denominated in a
Specified Currency other than U.S. dollars will be set forth
in the applicable Pricing Supplement. Unocal Corporation (the
"Guarantor"), the parent company of the Company, will
guarantee the payment of principal, interest and premium, if
any, on the Notes.
Each Note will be issued only in fully registered form and will be
represented by either a Global Security registered in the name of a nominee
of The Depository Trust Company, as Depositary (a "Book-Entry Note"), or a
certificate issued in definitive form (a "Certificated Note") as set forth
in this Prospectus Supplement. Beneficial interests in Book-Entry Notes
will be shown on, and transfers thereof will be effected only through,
the records maintained by the Depositary and its participants. Except
as described in "Description of the Medium-Term Notes-Book Entry
System," owners of beneficial interests in Global Securities will
not be entitled to receive Notes in definitive form and will not be
considered the holders thereof.
The interest rate, or any interest rate formula, issue price, any Earliest
Redemption Date, any Repayment Date, Stated Maturity and any additional
information for each Note will be established by the Company at the date
of issuance of such Note and will be indicated in the applicable Pricing
Supplement. Each Note, except Zero-Coupon Notes, will bear interest at
a fixed rate or at a rate or rates determined by reference to the
Commercial Paper Rate, the Prime Rate, LIBOR, the Treasury Rate,
the CD Rate, the CMT Rate, or the Federal Funds Effective Rate
(each as defined herein), as adjusted by any Spread and/or
Spread Multiplier (each as defined herein), applicable to
such Note or such other interest rate index as set forth in
the applicable Pricing Supplement. Zero Coupon Notes will
not bear interest prior to the Stated Maturity. Interest
rates are subject to change by the Company from time to
time, but no such change will affect the interest
rate on any Note already issued or as to which an
offer to purchase has been accepted by Company.
--------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT,
ANY PRICING SUPPLEMENT HERETO OR THE PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
Price to Public(1) Agents' Commissions or Discounts(2) Proceeds to Company(2)(3)
------------------ ----------------------------------- -----------------------------
<S> <C> <C> <C>
Per Note................ 100% .125%-.875% 99.125%-99.875%
Total(4) ............... $1,188,800,000 $1,486,000-$10,402,000 $1,178,398,000-$1,187,314,000
</TABLE>
(1) Unless otherwise specified in the applicable Pricing Supplement, Notes
will be issued at 100% of their principal amount.
(2) The Company and the Guarantor will pay CS First Boston Corporation,
Salomon Brothers Inc or UBS Securities Inc. (each, an "Agent" and
collectively, the "Agents") a commission ranging from .125% to .875% of
the principal amount of any Note (or, in the case of an Original Issue
Discount Note, the purchase price thereof), depending on the Stated
Maturity up to 40 years, sold through such Agent. The Commission with
respect to a Note with a Stated Maturity of 40 years or more, sold through
an Agent, will be negotiated at the time of the sale. The Company also may
sell Notes to any Agent as principal at a discount for resale to one or
more purchasers at varying prices related to prevailing market prices at
the time of resale, as determined by such Agent, or if so agreed, at a
fixed public offering price. The Company has reserved the right to sell
Notes to purchasers from time to time other than through the Agents. The
Company and the Guarantor have agreed to indemnify the Agents against
certain liabilities, including certain liabilities under the Securities
Act of 1933.
(3) Assuming the Notes are issued at 100% of principal amount and before
deducting expenses payable by the Company estimated at $457,000.
(4) In U.S. dollars, or the equivalent thereof in other currencies.
--------------
The Notes are being offered on a continuing basis by the Company through the
Agents, each of which has agreed to use reasonable efforts to solicit offers
to purchase the Notes. The Company also may sell Notes to any Agent acting as
principal for resale to one or more investors or other purchasers at varying
prices related to prevailing market prices at the time of resale, or, if set
forth in the applicable Pricing Supplement, at a fixed public offering price,
as determined by such Agent. In addition, each Agent may offer Notes purchased
by it as principal to investors, other dealers or other purchasers. Unless
otherwise specified in the applicable Pricing Supplement, any Note purchased
by an Agent as principal will be purchased at 100% of the principal amount
thereof less a percentage equal to the commission applicable to an agency sale
of a Note with an identical Stated Maturity. The Company has reserved the
right to sell Notes to purchasers from time to time other than through the
Agents. The Notes will not be listed on any securities exchange, and there can
be no assurance that the Notes offered by this Prospectus Supplement will be
sold or that there will be a secondary market for the Notes. The Company
reserves the right to withdraw, cancel or modify the offer or solicitations of
offers made hereby without notice. The Company or any Agent, if it solicits
such offer, may reject any offer to purchase Notes, in whole or in part. See
"Plan of Distribution of the Notes."
CS First Boston
Salomon Brothers Inc
UBS Securities Inc.
The date of this Prospectus Supplement is March 8, 1995.
<PAGE>
IN CONNECTION WITH THE DISTRIBUTION OF THE NOTES, CS FIRST BOSTON
CORPORATION, SALOMON BROTHERS INC OR UBS SECURITIES INC. MAY OVERALLOT OR
EFFECT TRANSACTIONS IN THE NOTES OR OTHER DEBT SECURITIES OF THE COMPANY WITH A
VIEW TO STABILIZING OR MAINTAINING THE MARKET PRICE OF THE NOTES OR OTHER DEBT
SECURITIES OF THE COMPANY AT LEVELS OTHER THAN THOSE WHICH MIGHT OTHERWISE
PREVAIL IN THE OPEN MARKET. SUCH TRANSACTIONS, IF COMMENCED, MAY BE
DISCONTINUED AT ANY TIME.
DESCRIPTION OF THE MEDIUM-TERM NOTES
GENERAL
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 Debt Securities set forth under the
heading "Description of the Debt Securities" in the accompanying Prospectus.
Capitalized terms not defined herein have the meanings assigned to such terms
in the Prospectus. Each Pricing Supplement to this Prospectus Supplement will
specify the terms and conditions of the Note(s) to which it pertains and may
vary the terms and conditions from those set forth herein.
The Notes constitute a single series for purposes of the Senior Indenture and
are limited to an aggregate public offering price of $1,188,800,000 or the
equivalent in other currencies, subject to reduction as a result of the sale of
other securities pursuant to the registration statement to which the Prospectus
relates and subject to increase upon registration of additional amounts of the
Notes by the Company in the future.
Each Note will mature on a business day nine months or more from its date of
issue, as selected by the initial purchaser and agreed to by the Company. The
Notes will be issuable only in fully registered form in denominations of $1,000
and integral multiples of $1,000 in excess thereof. The Notes constitute senior
debt securities of the Company and the Guarantor. The Guarantor will guarantee
the payment of principal, interest and premium, if any, on the Notes.
Each Note will be issued initially as either a Book-Entry Note or a
Certificated Note. See "Book-Entry System".
Payments of principal (and premium, if any) and interest payable at the
Stated Maturity and at any Redemption Date or Repayment Date on a Note will be
made in immediately available funds at the corporate trust office or agency of
Chemical Trust Company of California (the "Senior Trustee"), in the Borough of
Manhattan, The City of New York, provided that the Note is presented to the
Senior Trustee in time for the Senior Trustee to make such payments in such
funds in accordance with its normal procedures. For interest payments on Notes
of U.S.$10,000,000 or more in principal amount, the purchaser may elect to have
payment made in immediately available funds. Interest payments on Notes of less
than U.S.$10,000,000 in principal amount will be made in immediately available
funds only if agreed to on a case-by-case basis by the Company and otherwise
will be made by check mailed on the Interest Payment Date to the registered
holder thereof (which, in the case of Book-Entry Notes, will be a nominee of
the Depositary), except that interest payments made at the Stated Maturity and
at any Redemption Date or Repayment Date will be made as described above.
Interest payments will not be made in immediately available funds unless
written instructions have been presented to the Senior Trustee at least 15 days
prior to the Regular Record Date from and after which a holder has elected to
receive payments in immediately available funds. The Company or the Guarantor
will provide the Senior Trustee with funds available for immediate use for such
purpose. The Notes may be presented for registration of transfer or exchange at
the corporate trust office or agency of the Senior Trustee, in the Borough of
Manhattan, The City of New York.
S-2
<PAGE>
FOREIGN CURRENCIES
Unless otherwise indicated in the applicable Pricing Supplement, the Notes
will be denominated in U.S. dollars and payments of principal of (and premium,
if any) and interest on the Notes will be made in U.S. dollars. If any of the
Notes are to be denominated in a currency other than U.S. dollars, including a
composite currency, or if the principal of and premium, if any, and interest on
any of the Notes is to be payable at the option of the holder or the Company in
a currency, including a composite currency, other than that in which such Note
is denominated, the applicable Pricing Supplement will provide additional
disclosure pertaining to the terms of such Notes and other matters of interest
to the holders thereof.
INTEREST
General
Each Note, except a Zero-Coupon Note, will bear interest from the date of
issue or from the most recent Interest Payment Date to which interest on such
Note has been paid or duly provided for at the fixed rate per annum, or at the
rate per annum determined pursuant to the interest rate formula, set forth
therein and in the applicable Pricing Supplement, until the principal thereof
is paid or made available for payment. The Interest Payment Dates for the Fixed
Rate Notes (as defined below) will be January 31 and July 31. Interest will
also be paid on any Redemption Date or Repayment Date and the Stated Maturity.
The Interest Payment Dates for the Floating Rate Notes are set forth below.
Interest will be payable to the person in whose name a Note is registered at
the close of business on the Regular Record Date next preceding each Interest
Payment Date; provided, however, that interest payable at Stated Maturity or,
if applicable, upon redemption or repayment, will be payable to the person to
whom principal shall be payable. The first payment of interest on any Note
originally issued between a Regular Record Date and an Interest Payment Date
will be made on the Interest Payment Date following the next succeeding Regular
Record Date to the registered owner on such next succeeding Regular Record
Date. The "Regular Record Date" with respect to Floating Rate Notes shall be
the date 15 calendar days prior to each Interest Payment Date, whether or not
such date shall be a Business Day, and the Regular Record Dates with respect to
the Fixed Rate Notes shall be the January 15 and July 15 next preceding the
January 31 and July 31 Interest Payment Dates. Unless otherwise provided in the
applicable Pricing Supplement, the Senior Trustee will be the calculation agent
(the "Calculation Agent") with respect to the Floating Rate Notes.
Interest rates, or interest rate formulas, are subject to change by the
Company from time to time, but no such change will affect the interest rate or
interest rate formula on any Note already issued or as to which an offer to
purchase has been accepted by the Company and the Guarantor.
Each Note, except a Zero-Coupon Note, will bear interest at either (a) a
fixed rate or rates (a "Fixed Rate Note") or (b) a variable rate or rates
determined by reference to an interest rate formula (a "Floating Rate Note"),
which may be adjusted by adding or subtracting the Spread and/or multiplying by
the Spread Multiplier (each term as defined below), unless otherwise specified
therein. A "Zero Coupon Note" is a Note that provides for the periodic
accretion of principal instead of the payment of interest, and that is offered
at a discount from the principal amount thereof. A Floating Rate Note may also
have either or both of the following: (a) a maximum numerical interest rate
limitation, or ceiling, on the rate of interest that may accrue during any
interest period; and (b) a minimum numerical interest rate limitation, or
floor, on the rate of interest that may accrue during any interest period. The
"Spread" is the number of basis points specified in the applicable Pricing
Supplement as being applicable to the interest rate for such Note and the
"Spread Multiplier" is the percentage specified in the applicable Pricing
Supplement as applicable to the interest rate for such Note. The term "Business
Day" shall mean (a) with respect to any Note, any day which is not a Saturday
or Sunday and which, in The City of New York, is neither a legal holiday nor a
day on which banking institutions are authorized or obligated by law or
regulation to close, and (b) with respect to LIBOR Notes only, any such day on
which dealings in deposits in U.S. dollars are transacted in the London
interbank market (a "London Business Day"). "Index Maturity" means, with
respect to a Floating Rate Note, the period to maturity of the instrument or
obligation on which the interest rate formula is based, as specified in the
applicable Pricing Supplement.
S-3
<PAGE>
The applicable Pricing Supplement for a Fixed Rate Note will designate the
rate or rates of interest per annum payable on such Fixed Rate Note. The
applicable Pricing Supplement for a Floating Rate Note will designate an
interest rate basis for such Floating Rate Note. Such basis may be: (a) the
Commercial Paper Rate, in which case such Note will be a Commercial Paper Rate
Note, (b) the Prime Rate, in which case such Note will be a Prime Rate Note,
(c) LIBOR, in which case such Note will be a LIBOR Note, (d) the Treasury Rate,
in which case such Note will be a Treasury Rate Note, (e) the Certificate of
Deposit Rate ("CD Rate"), in which case such Note will be a CD Rate Note, (f)
the CMT Rate ("CMT Rate"), in which case such Note will be a CMT Rate Note, (g)
the Federal Funds Effective Rate, in which case such Note will be a Federal
Funds Rate Note, or (h) such other interest rate formula as is set forth in the
applicable Pricing Supplement. The applicable Pricing Supplement for a Floating
Rate Note also will specify, if applicable, the Interest Calculation Date, the
Initial Interest Rate, the Index Maturity, the Interest Determination Date, the
Interest Reset Date (all as defined below), and the maximum or minimum interest
rate limitation, applicable to each Floating Rate Note. In addition, the
applicable Pricing Supplement will set forth the following terms, if
applicable: Interest Payment Dates, Regular Record Dates, Earliest Redemption
Date, Repayment Date, the principal amount, the issue price, the Stated
Maturity, and any redemption premium.
The rate of interest on each Floating Rate Note will be reset daily, weekly,
monthly, quarterly, semi-annually or annually (each an "Interest Reset Date"),
as specified in the applicable Pricing Supplement. The Interest Reset Date will
be, for Floating Rate Notes that reset daily, each Business Day; for Floating
Rate Notes (other than Treasury Rate Notes) that reset weekly, the Wednesday of
each week; for Treasury Rate Notes that reset weekly, the Tuesday of each week
(except as set forth in the last sentence of the next succeeding paragraph
below); for Floating Rate Notes that reset monthly, the third Wednesday of each
month; for Floating Rate Notes that reset quarterly, the third Wednesday of
March, June, September and December; for Floating Rate Notes that reset semi-
annually, the third Wednesday of two months of each year, as specified in the
applicable Pricing Supplement; and for Floating Rate Notes that reset annually,
the third Wednesday of one month of each year, as specified in the applicable
Pricing Supplement; provided, however, that the interest rate in effect from
the date of issue to the first Interest Reset Date for a Floating Rate Note
will be the Initial Interest Rate (as set forth in the applicable Pricing
Supplement). If any Interest Reset Date for any Floating Rate Note would
otherwise be a day that is not a Business Day for such Floating Rate Note, the
Interest Reset Date for such Floating Rate Note shall be the next day that is a
Business Day for such Floating Rate Note, except that in the case of a LIBOR
Note, if such Business Day is in the next succeeding calendar month, such
Interest Reset Date shall be the immediately preceding Business Day. "Initial
Interest Rate" means the rate at which a Floating Rate Note will bear interest
from its Issue Date to the first Interest Reset Date, as indicated in the
applicable Pricing Supplement.
The Interest Determination Date pertaining to an Interest Reset Date for (a)
a Commercial Paper Rate Note (the "Commercial Paper Rate Interest Determination
Date"), (b) a Prime Rate Note (the "Prime Rate Interest Determination Date"),
(c) a CD Rate Note (the "CD Rate Interest Determination Date"), (d) a CMT Rate
Note (the "CMT Rate Interest Determination Date") and (e) a Federal Funds Rate
Note (the "Federal Funds Rate Interest Determination Date") will be the second
Business Day preceding the Interest Reset Date for such Note. The Interest
Determination Date pertaining to an Interest Reset Date for a LIBOR Note (the
"LIBOR Interest Determination Date") will be the second London Business Day
preceding such Interest Reset Date. The Interest Determination Date pertaining
to an Interest Reset Date for a Treasury Rate Note (the "Treasury Rate Interest
Determination Date") will be the day of the week in which such Interest Reset
Date falls on which Treasury Bills would normally be auctioned. Treasury Bills
are usually sold at auction on Monday of each week, unless that day is a legal
holiday, in which case the auction is usually held on the following Tuesday,
except that such auction may be held on the preceding Friday. If, as the result
of a legal holiday, an auction is so held on the preceding Friday, such Friday
will be the Treasury Rate Interest Determination Date pertaining to the
Interest Reset Date occurring in the next succeeding week. If an auction date
falls on any Interest Reset Date for a Treasury Rate Note, then such Interest
Reset Date shall instead be the first Business Day immediately following such
auction date.
S-4
<PAGE>
In addition to any maximum interest rate that may be applicable to any
Floating Rate Note pursuant to the above provisions, the interest rate on the
Floating Rate Notes will in no event be higher than the maximum rate permitted
by New York law, as the same may be modified by United States law of general
application. Under present New York law the maximum rate of interest is 25% per
annum on a simple interest basis. The limit may not apply to Floating Rate
Notes in which U.S. $2,500,000 or more has been invested.
Unless otherwise indicated in the applicable Pricing Supplement and except as
provided below, interest will be payable, in the case of Floating Rate Notes
that reset daily, weekly or monthly, on the third Wednesday of each month or on
the third Wednesday of March, June, September and December of each year, as
specified in the applicable Pricing Supplement; in the case of Floating Rate
Notes that reset quarterly, on the third Wednesday of March, June, September
and December of each year; in the case of Floating Rate Notes that reset semi-
annually, on the third Wednesday of the two months of each year specified in
the applicable Pricing Supplement; and, in the case of Floating Rate Notes that
reset annually, on the third Wednesday of the month specified in the applicable
Pricing Supplement (each an "Interest Payment Date"), and, in each case, at any
Redemption Date or Repayment Date and any Stated Maturity. If an Interest
Payment Date for any Floating Rate Note would otherwise fall on a day that is
not a Business Day with respect to such Note, such Interest Payment Date will
be the following day that is a Business Day with respect to such Note, except
that in the case of a LIBOR Note, if such day falls in the next calendar month,
such Interest Payment Date will be the preceding day that is a Business Day
with respect to such LIBOR Note.
Interest payments shall be for the amount of interest accrued to, but
excluding, the Interest Payment Date. With respect to a Floating Rate Note,
accrued interest from the date of issue or from the last date to which interest
has been paid is calculated by multiplying the face amount of such Floating
Rate Note by an accrued interest factor. Such accrued interest factor is
computed by adding the interest factor calculated for each day from the date of
issue, or from the last date to which interest has been paid, to the date for
which accrued interest is being calculated. The interest factor (expressed as a
decimal rounded upwards if five one hundred-thousandths or more of a percentage
point and rounded downwards if less than five one hundred-thousandths of a
percentage point, if necessary, to the next higher or lower, as the case may
be, one hundred-thousandth of a percentage point (e.g., 9.876546% or .09876546
being rounded to 9.87655% or .0987655, respectively)) for each such day is
computed by dividing the interest rate (expressed as a decimal rounded off in
the same manner as the interest factor) applicable to such date by 360, in the
case of Commercial Paper Rate Notes, Prime Rate Notes, LIBOR Notes, CD Rate
Notes and Federal Funds Rate Notes, or by the actual number of days in the
year, in the case of Treasury Rate Notes and CMT Rate Notes. All dollar amounts
used in or resulting from such calculations will be rounded to the nearest cent
(with one-half cent being rounded upwards).
Upon the request of the holder of any Floating Rate Note, the Calculation
Agent will provide the interest rate then in effect, and, if different, the
interest rate which will become effective as a result of a determination made
on the most recent Interest Determination Date with respect to such Floating
Rate Note.
Unless otherwise specified in the applicable Pricing Supplement, the
"Interest Calculation Date", where applicable, pertaining to any Interest
Determination Date will be the earlier of (a) the 10th calendar day after such
Interest Determination Date, or, if any such day is not a Business Day, the
next succeeding Business Day, or (b) the Business Day preceding the applicable
Interest Payment Date, Redemption Date, Repayment Date or Stated Maturity, as
the case may be.
Fixed Rate Notes
Each Fixed Rate Note will bear interest from the date of issue at the annual
rate or rates stated on the face thereof. The Interest Payment Dates for the
Fixed Rate Notes will be January 31 and July 31 of each
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<PAGE>
year and any Redemption Date and the Stated Maturity. The Regular Record Dates
will be on January 15 and July 15 next preceding the January 31 and July 31
Interest Payment Dates. Interest on Fixed Rate Notes will be computed on the
basis of a 360-day year of twelve 30-day months.
Commercial Paper Rate Notes
Commercial Paper Rate Notes will bear interest at the interest rates
(calculated with reference to the Commercial Paper Rate and the Spread or
Spread Multiplier, if any), and will be payable on the dates, specified on the
face of the Commercial Paper Rate Note and in the applicable Pricing
Supplement.
Unless otherwise indicated in the applicable Pricing Supplement, "Commercial
Paper Rate" means, with respect to any Commercial Paper Rate Interest
Determination Date, the Money Market Yield (calculated as described below) of
the rate on such date for commercial paper having the Index Maturity specified
in the applicable Pricing Supplement as published by the Board of Governors of
the Federal Reserve System in "Statistical Release H.15(519), Selected Interest
Rates" or any successor publication of the Board of Governors of the Federal
Reserve System ("H. 15(519)") under the heading "Commercial Paper". In the
event that such rate is not published prior to 3:00 P.M. New York City time on
the Interest Calculation Date pertaining to such Commercial Paper Rate Interest
Determination Date, then the Commercial Paper Rate shall be the Money Market
Yield of the rate on such Commercial Paper Rate Interest Determination Date for
commercial paper having the Index Maturity specified in the applicable Pricing
Supplement as published by the Federal Reserve Bank of New York in its daily
statistical release, "Composite 3:30 P.M. Quotations for U.S. Government
Securities" ("Composite Quotations") under the heading "Commercial Paper". If
by 3:00 P.M. New York City time on such Interest Calculation Date such rate is
not yet published in either H.15(519) or Composite Quotations, the rate for
that Commercial Paper Rate Interest Determination Date shall be calculated by
the Calculation Agent and shall be the Money Market Yield of the arithmetic
mean (rounded to the next higher one hundred-thousandth of a percentage point)
of the offered rates, as of 11:00 A.M. New York City time, on that Commercial
Paper Rate Interest Determination Date, of three leading dealers of commercial
paper (which may include one or more of the Agents) in The City of New York
selected by the Calculation Agent (after consultation with the Company) for
commercial paper of the Index Maturity specified in the applicable Pricing
Supplement placed for an industrial issuer whose bond rating is "AA", or the
equivalent, from a nationally recognized rating agency; provided, however, that
if the dealers selected by the Calculation Agent are not quoting as mentioned
in this sentence, the Commercial Paper Rate will remain the Commercial Paper
Rate in effect on such Commercial Paper Rate Interest Determination Date.
"Money Market Yield" shall be a yield (expressed as a percentage rounded to
the next higher one hundred-thousandth of a percentage point) calculated in
accordance with the following formula:
<TABLE>
<S> <C> <C>
D x 360
Money Market Yield = _____________ x 100
360 - (D x M)
</TABLE>
where "D" refers to the applicable per annum rate for commercial paper quoted
on a bank discount basis and expressed as a decimal; and "M" refers to the
actual number of days in the interest period for which interest is being
calculated.
Prime Rate Notes
Prime Rate Notes will bear interest at the interest rates (calculated with
reference to the Prime Rate and the Spread or Spread Multiplier, if any), and
will be payable on the dates, specified on the face of the Prime Rate Note and
in the applicable Pricing Supplement.
Unless otherwise indicated in the applicable Pricing Supplement, "Prime Rate"
means, with respect to any Prime Rate Interest Determination Date, the rate set
forth on such date in H.15(519) under the heading "Bank Prime Loan." In the
event that such rate is not published prior to 9:00 A.M., New York City time,
on the Interest Calculation Date pertaining to such Prime Rate Interest
Determination Date, then the Prime Rate will be determined by the Calculation
Agent and will be the arithmetic mean of the rates of interest
S-6
<PAGE>
publicly announced by each bank that appears on the Reuters Screen NYMF Page
(as defined below) as such bank's prime rate or base lending rate as in effect
for that Prime Rate Interest Determination Date. If fewer than four such rates
but more than one such rate appear on the Reuters Screen NYMF Page for the
Prime Rate Interest Determination Date, the Prime Rate will be determined by
the Calculation Agent and will be the arithmetic mean of the prime rates quoted
on the basis of the actual number of days in the year divided by a 360-day year
as of the close of business on such Prime Rate Interest Determination Date by
four major money center banks in The City of New York selected by the
Calculation Agent (after consultation with the Company). If fewer than two such
rates appear on the Reuters Screen NYMF Page, the Prime Rate will be determined
by the Calculation Agent on the basis of the rates furnished in The City of New
York by the appropriate number of substitute banks (which may include one or
more of the Agents) or trust companies organized and doing business under the
laws of the United States, or any State thereof, having total equity capital of
at least U.S. $500,000,000 and being subject to supervision or examination by
Federal or State authority, selected by the Calculation Agent (after
consultation with the Company) to provide such rate or rates; provided,
however, that if the banks selected as aforesaid are not quoting as mentioned
in this sentence, the Prime Rate will remain the Prime Rate in effect on such
Prime Rate Interest Determination Date. "Reuters Screen NYMF Page" means the
display designated as page "NYMF" on the Reuters Monitor Money Rates Service
(or such other page as may replace the NYMF page on that service for the
purpose of displaying prime rates or base lending rates of major United States
banks).
LIBOR Notes
"LIBOR" Notes will bear interest at the interest rates (calculated with
reference to LIBOR and the Spread or Spread Multiplier, if any), and will be
payable on the dates, specified on the face of the LIBOR Note and in the
applicable Pricing Supplement.
Unless otherwise indicated in the applicable Pricing Supplement, LIBOR will
be determined by the Calculation Agent in accordance with the following
provisions:
(a) With respect to any LIBOR Interest Determination Date, either, as
specified in the applicable Pricing Supplement: (i) the arithmetic mean of
the offered rates for deposits in U.S. dollars for the period of the Index
Maturity specified in the applicable Pricing Supplement, commencing on the
second London Business Day immediately following such LIBOR Interest
Determination Date, which appear on the Reuters Screen LIBO Page as of
11:00 A.M., London time, on the LIBOR Interest Determination Date, if at
least two such offered rates appear on the Reuters Screen LIBO Page ("LIBOR
Reuters"), or (ii) the rate for deposits in U.S. dollars having the Index
Maturity specified in the applicable Pricing Supplement, commencing on the
second London Business Day immediately following that LIBOR Interest
Determination Date, that appears on the Telerate Page 3750 as of 11:00
A.M., London time, on that LIBOR Interest Determination Date ("LIBOR
Telerate"). Unless otherwise indicated in the applicable Pricing
Supplement, "Reuters Screen LIBO Page" means the display designated as Page
"LIBO" on the Reuters Monitor Money Rate Service (or such other page as may
replace the LIBO page on that service for the purpose of displaying London
interbank offered rates of major banks). "Telerate Page 3750" means the
display designated as page "3750" on the Telerate Service (or such other
page as may replace the 3750 page on that service or such other service or
services as may be nominated by the British Bankers' Association for the
purpose of displaying London interbank offered rates for U.S. dollar
deposits). If neither LIBOR Reuters nor LIBOR Telerate is specified in the
applicable Pricing Supplement, LIBOR will be determined as if LIBOR
Telerate had been specified. If fewer than two offered rates appear on the
Reuters Screen LIBO Page, or if no rate appears on the Telerate Page 3750,
as applicable, LIBOR in respect of that LIBOR Interest Determination Date
will be determined as if the parties had specified the rate described in
(b) below.
(b) With respect to a LIBOR Interest Determination Date on which fewer
than two offered rates appear on the Reuters Screen LIBO Page, as described
in (a)(i) above, or on which no rate appears on the Telerate Page 3750, as
specified in (a)(ii) above, as applicable, LIBOR will be determined on the
basis of the rates at which deposits in U.S. dollars having the Index
Maturity specified in the applicable Pricing Supplement are offered at
approximately 11:00 A.M., London time, on such LIBOR Interest
S-7
<PAGE>
Determination Date by four major banks ("Reference Banks") in the London
interbank market selected by the Calculation Agent (after consultation with
the Company) to prime banks in the London interbank market commencing on
the second London Business Day immediately following such LIBOR Interest
Determination Date and in a principal amount of not less than U.S.
$1,000,000 that is representative for a single transaction in such market
at such time. The Calculation Agent will request the principal London
office of each of the Reference Banks to provide a quotation of its rate.
If at least two such quotations are provided, LIBOR for such LIBOR Interest
Determination Date will be the arithmetic mean (rounded to the nearest one
hundred-thousandth of a percentage point) of such quotations. If fewer than
two quotations are provided, LIBOR for such LIBOR Interest Determination
Date will be the arithmetic mean (rounded to the nearest one hundred-
thousandth of a percentage point) of the rates quoted at approximately
11:00 A.M., New York City time, on such LIBOR Interest Determination Date
by three major banks (which may include one or more of the Agents) in The
City of New York selected by the Calculation Agent (after consultation with
the Company) for loans in U.S. dollars to leading European banks having the
specified Index Maturity specified in the applicable Pricing Supplement
commencing on the second London Business Day immediately following such
LIBOR Interest Determination Date and in a principal amount equal to an
amount of not less than U.S. $1,000,000 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 will remain LIBOR in effect on such LIBOR
Interest Determination Date.
Treasury Rate Notes
Treasury Rate Notes will bear interest at the interest rates (calculated with
reference to the Treasury Rate and the Spread or Spread Multiplier, if any) and
will be payable on the dates specified on the face of the Treasury Rate Note
and in the applicable Pricing Supplement.
Unless otherwise indicated in the applicable Pricing Supplement, "Treasury
Rate" means, with respect to any Treasury Rate Interest Determination Date, the
applicable rate for the most recent auction of direct obligations of the United
States ("Treasury Bills") having the Index Maturity specified in the applicable
Pricing Supplement as published in H.15(519) under the heading "U.S. Government
Securities--Treasury Bills/Auction Average (Investment)" or, if not so
published by 3:00 P.M., New York City time, on the Interest Calculation Date
pertaining to such Treasury Rate Interest Determination Date, the auction
average rate, expressed as a Bond Equivalent Yield (calculated as described
below), for such auction as otherwise announced by the United States Department
of the Treasury. In the event that the results of the auction of Treasury Bills
having the Index Maturity specified in the applicable Pricing Supplement are
not published or reported as provided above by 3:00 P.M., New York City time,
on such Interest Calculation Date, or if no such auction is held in a
particular week, then the Treasury Rate shall be calculated by the Calculation
Agent and shall be a yield to maturity, expressed as a Bond Equivalent Yield,
of the arithmetic mean of the secondary market bid rates as of approximately
3:30 P.M., New York City time, on such Treasury Rate Interest Determination
Date, of three leading primary United States government securities dealers
(which may include one or more of the Agents) selected by the Calculation Agent
(after consultation with the Company), for the issue of Treasury Bills with a
remaining maturity closest to the specified Index Maturity; provided, however,
that if the dealers selected by the Calculation Agent are not quoting as
mentioned in this sentence, the Treasury Rate will remain the Treasury Rate in
effect on such Treasury Rate Interest Determination Date.
"Bond Equivalent Yield" means a yield (expressed as a percentage rounded to
the next higher one-hundred thousandth of a percentage point) calculated in
accordance with the following formula:
<TABLE>
<S> <C> <C>
D x N
Bond Equivalent Yield = _____________ x 100
360 - (D x M)
</TABLE>
where "D" refers to the applicable per annum rate for Treasury Bills, quoted on
a bank discount basis and expressed as a decimal; "N" refers to 365 or 366, as
the case may be; and "M" refers to the actual number of days in the interest
period for which interest is being calculated.
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<PAGE>
CD Rate Notes
CD Rate Notes will bear interest at the interest rate (calculated with
reference to the CD Rate and the Spread and/or Spread Multiplier, if any), and
will be payable on the dates, specified on the face of the CD Rate Note and in
the applicable Pricing Supplement.
Unless otherwise indicated in the applicable Pricing Supplement, "CD Rate"
means, with respect to any CD Rate Interest Determination Date, the rate on
such date for negotiable certificates of deposit having the Index Maturity
specified in the applicable Pricing Supplement as published in H.15(519) under
the heading "CDs (Secondary Market)." In the event that such rate is not so
published by 3:00 P.M., New York City time, on the Interest Calculation Date
pertaining to such CD Rate Interest Determination Date, the CD Rate will be
the rate on such CD Rate Interest Determination Date for negotiable
certificates of deposit having the Index Maturity specified in the applicable
Pricing Supplement as published in Composite Quotations under the heading
"Certificates of Deposit." If such rate is neither published in H.15(519) nor
in Composite Quotations by 3:00 P.M., New York City time, on such Interest
Calculation Date the CD Rate for such CD Rate Interest Determination Date will
be calculated by the Calculation Agent and will be the arithmetic mean of the
secondary market offered rates as of 10:00 A.M., New York City time, on such
CD Rate Interest Determination Date, of three leading nonbank dealers of
negotiable U.S. dollar certificates of deposit (which may include one or more
of the Agents) in The City of New York selected by the Calculation Agent
(after consultation with the Company) for negotiable certificates of deposit
of major United States money center banks (in the market for negotiable
certificates of deposit) with a remaining maturity closest to the Index
Maturity specified in the applicable Pricing Supplement in a denomination of
U.S.$5,000,000; provided, however, that if the dealers selected as aforesaid
by the Calculation Agent are not quoting as mentioned in this sentence, the CD
Rate will remain the CD Rate in effect on such CD Rate Interest Determination
Date.
CMT Rate Notes
CMT Rate Notes will bear interest at the interest rate (calculated with
reference to the CMT Rate and the Spread and/or Spread Multiplier, if any),
and will be payable on the dates, specified on the face of the CMT Rate Note
and in the applicable Pricing Supplement.
Unless otherwise indicated in the applicable Pricing Supplement, "CMT Rate"
means, with respect to any CMT Rate Interest Determination Date, the rate
displayed on the Designated CMT Telerate Page under the caption " . . .
Treasury Constant Maturities . . . Federal Reserve Board Release H.15 . . .
Mondays Approximately 3:45 P.M.," under the column for the Designated CMT
Maturity Index for (i) if the Designated CMT Telerate Page is 7055, the rate
on such CMT Rate Interest Determination Date and (ii) if the Designated CMT
Telerate Page is 7052, the rate for the week, or the month, as applicable,
ended immediately preceding the week in which the related CMT Rate Interest
Determination Date occurs. If such rate is no longer displayed on the relevant
page, or if not displayed by 3:00 P.M., New York City time, on the related
Interest Calculation Date, then the CMT Rate for such CMT Rate Interest
Determination Date will be such Treasury Constant Maturity rate for the
Designated CMT Maturity Index as published in the relevant H.15(519). If such
rate is no longer published, or if not published by 3:00 P.M., New York City
time, on the related Interest Calculation Date, then the CMT Rate for such CMT
Rate Interest Determination Date will be such Treasury Constant Maturity rate
for the Designated CMT Maturity Index (or other United States Treasury rate
for the Designated CMT Maturity Index) for the CMT Rate Interest Determination
Date with respect to such Interest Reset Date as may then be published by
either the Board of Governors of the Federal Reserve System or the United
States Department of the Treasury that the Calculation Agent determines to be
comparable to the rate formerly displayed on the Designated CMT Telerate Page
and published in the relevant H.15(519). If such information is not provided
by 3:00 P.M., New York City time, on the related Interest Calculation Date,
then the CMT Rate for the CMT Rate Interest Determination Date will be
calculated by the Calculation Agent and will be a yield to maturity, based on
the arithmetic mean (rounded to the nearest one hundred-thousandth of a
percentage point) of the secondary market closing offer side prices as of
approximately 3:30 P.M., New York City time, on the CMT Rate Interest
Determination Date reported, according to their written records,
S-9
<PAGE>
by three leading primary United States government securities dealers (which
may include one or more of the Agents) (each, a "Reference Dealer") in The
City of New York selected by the Calculation Agent (from five such Reference
Dealers selected by the Calculation Agent (after consultation with the
Company) and eliminating the highest quotation (or, in the event of equality,
one of the highest) and the lowest quotation (or, in the event of equality,
one of the lowest)), for the most recently issued direct noncallable fixed
rate obligations of the United States ("Treasury Note") with an original
maturity of approximately the Designated CMT Maturity Index and a remaining
term to maturity of not less than such Designated CMT Maturity Index minus one
year. If the Calculation Agent cannot obtain three such Treasury Note
quotations, the CMT Rate for such CMT Rate Interest Determination Date will be
calculated by the Calculation Agent and will be a yield to maturity based on
the arithmetic mean (rounded to the nearest one hundred-thousandth of a
percentage point) of the secondary market offer side prices as of
approximately 3:30 P.M., New York City time, on the CMT Rate Interest
Determination Date of three Reference Dealers in The City of New York (from
five such Reference Dealers selected by the Calculation Agent and eliminating
the highest quotation (or, in the event of equality, one of the highest) and
the lowest quotation (or, in the event of equality, one of the lowest)), for
Treasury Notes with an original maturity of the number of years that is the
next highest to the Designated CMT Maturity Index and a remaining term to
maturity closest to the Designated CMT Maturity Index and in an amount of at
least $100,000,000. If three or four (and not five) of such Reference Dealers
are quoting as described above, then the CMT Rate will be based on the
arithmetic mean (rounded to the nearest one hundred-thousandth of a percentage
point) of the offer prices obtained and neither the highest nor lowest of such
quotes will be eliminated; provided, however, that if fewer than three
Reference Dealers selected by the Calculation Agent are quoting as described
herein, the CMT Rate will remain the CMT Rate in effect on such CMT Rate
Interest Determination Date. If two Treasury Notes with an original maturity
as described in the third preceding sentence have remaining terms to maturity
equally close to the Designated CMT Maturity Index, the quotes for the CMT
Rate Note with the shorter remaining term to maturity will be used.
"Designated CMT Telerate Page" means the display on the Dow Jones Telerate
Service on the page specified in the applicable Pricing Supplement (or any
other page as may replace such page on that service for the purpose of
displaying Treasury Constant Maturities as reported in H.15(519)), for the
purpose of displaying Treasury Constant Maturities as reported in H.15(519).
If no such page is specified in the applicable Pricing Supplement, the
Designated CMT Telerate Page shall be 7052, for the most recent week.
"Designated CMT Maturity Index" means the original period to maturity of the
U.S. Treasury securities (either 1, 2, 3, 5, 7, 10, 20 or 30 years) specified
in the applicable Pricing Supplement with respect to which the CMT Rate will
be calculated. If no such maturity is specified in the applicable Pricing
Supplement, the Designated CMT Maturity Index shall be two years.
Federal Funds Rate Notes
Federal Funds Rate Notes will bear interest at the interest rate (calculated
with reference to the Federal Funds Effective Rate and the Spread and/or
Spread Multiplier, if any), and will be payable on the dates, specified on the
face of the Federal Funds Rate Note and in the applicable Pricing Supplement.
Unless otherwise indicated in the applicable Pricing Supplement, "Federal
Funds Effective Rate" means, with respect to any Federal Funds Rate Interest
Determination Date, the rate on that date for Federal Funds as published in
H.15(519) under the heading "Federal Funds (Effective)." In the event that
such rate is not so published by 3:00 P.M., New York City time, on the
Interest Calculation Date pertaining to such Federal Funds Rate Interest
Determination Date, the Federal Funds Effective Rate will be the rate on such
Federal Funds Rate Interest Determination Date as published in Composite
Quotations under the heading "Federal Funds/Effective Rate." If such rate is
neither published in H.15(519) nor in Composite Quotations by 3:00 P.M., New
York City time, on such Interest Calculation Date, the Federal Funds Effective
Rate for such Federal Funds Rate Interest Determination Date will be
calculated by the Calculation Agent and will be the arithmetic mean of the
rates as of 9:00 A.M., New York City time, on such Federal Funds Rate Interest
Determination Date for the last transaction in overnight Federal Funds
arranged by three leading brokers of
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<PAGE>
Federal Funds transactions (which may include one or more of the Agents) in The
City of New York selected by the Calculation Agent (after consultation with the
Company); provided, however, that if the brokers selected as aforesaid by the
Calculation Agent are not quoting as mentioned in this sentence, the Federal
Funds Effective Rate will remain the Federal Funds Effective Rate in effect on
such Federal Funds Rate Interest Determination Date.
Discount Notes
The Notes may be issued as Original Issue Discount Notes. An "Original Issue
Discount Note" is a Note, including any Zero-Coupon Note, which is issued at a
price lower than the amount payable at the Stated Maturity thereof and which
provides that upon redemption or acceleration of the Maturity thereof an amount
less than the principal amount payable at the Stated Maturity thereof and
determined in accordance with the terms thereof shall become due and payable.
Original Issue Discount Notes, as well as certain other Notes offered
hereunder, may, for United States Federal income tax purposes, be considered
"Discount Notes." The principal United States Federal income tax consequences
of the ownership of Discount Notes are described under "United States Tax
Considerations--Original Issue Discount" in this Prospectus Supplement. A "Zero
Coupon Note" is a Note that does not bear interest prior to the Stated
Maturity.
Indexed Notes
The Notes may be issued, from time to time, as Indexed Notes the principal
amount of which, payable at Maturity, and/or the interest on which, payable on
each Interest Payment Date and at the Stated Maturity, will be determined by
reference to currencies, currency units, commodity prices, financial or non-
financial indices or other factors, as specified in the applicable Pricing
Supplement. Holders of Indexed Notes may receive a principal amount at the
Stated Maturity that is greater than or less than the face amount of such Notes
depending upon the fluctuation of the relative value, rate or price of the
specified index. Specific information pertaining to the method for determining
the principal amount payable at the Stated Maturity, a historical comparison of
the relative value, rate price of the specified index and the face amount of
the Indexed Note and certain additional United States federal tax
considerations will be specified in the applicable Pricing Supplement.
Amortizing Notes
The Company may from time to time offer Amortizing Notes. Unless otherwise
specified in the applicable Pricing Supplement, interest on each Amortizing
Note will be computed on the basis of a 360-day year of twelve 30-day months.
Payments with respect to Amortizing Notes will be applied first to interest due
and payable thereon and then to the reduction of the unpaid principal amount
thereof. Further information concerning additional terms and conditions of any
issue of Amortizing Notes will be provided in the applicable Pricing
Supplement. A table setting forth repayment information in respect of each
Amortizing Note will be specified in the applicable Pricing Supplement and set
forth on such Notes.
OTHER PROVISIONS; ADDENDA
Any provision with respect to the determination or calculation of the
interest rate or interest rate formula applicable to any Floating Rate Note,
the Interest Payment Dates of any Note or any other variable term of a Note to
be issued by the Company may be modified by the terms as specified under "Other
Provisions" on the face thereof or in an Addendum relating thereto, if so
specified on the face thereof or in an Addendum thereto and in the applicable
Pricing Supplement.
BOOK-ENTRY SYSTEM
Upon issuance, all Book-Entry Notes having the same original issuance date,
Interest Payment Dates, Redemption Dates or Repayment Dates, if any, original
issue discount provisions, if any, Stated Maturity
S-11
<PAGE>
and, in the case of Fixed Rate Notes, interest rate, or, in the case of
Floating Rate Notes, initial interest rate, interest rate formula, Index
Maturity, Spread or Spread Multiplier (if any), minimum interest rate
limitation (if any), maximum interest rate limitation (if any) and Interest
Reset Dates, will be represented by a single Global Security. Each Global
Security representing Book-Entry Notes will be deposited with, or on behalf of,
The Depository Trust Company, as depositary (the "Depositary"), and registered
in the name of a nominee of the Depositary. Book-Entry Notes will not be
exchangeable for Certificated Notes, provided, however, that if the Depositary
is at any time unwilling or unable to continue as depositary and a successor
depositary is not appointed by the Company within 90 days, the Company will
issue Certificated Notes in exchange for the Global Security or Securities
representing Book-Entry Notes. In addition, the Company may at any time and in
its sole discretion determine not to have Book-Entry Notes represented by
Global Securities, and, in such event, will issue Certificated Notes in
exchange for all Global Securities representing such Book-Entry Notes.
The Depositary has advised the Company and the Agents that it is a limited-
purpose trust company organized under the laws of the State of New York, a
member of the Federal Reserve System, a "clearing corporation" within the
meaning of the Uniform Commercial Code and a "clearing agency" registered
pursuant to the provisions of Section 17A of the Securities Exchange Act of
1934, as amended. The Depositary was created to hold 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. The Depositary's participants
include securities brokers and dealers (including the Agents), banks, trust
companies, clearing corporations and certain other organizations (including the
Senior Trustee), some of whom (and/or their representatives) own the
Depositary. Access to the Depositary'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. Persons who are not participants may beneficially own securities
held by the Depositary only through participants.
A further description of the Depositary's procedures with respect to Global
Securities representing Book-Entry Notes is set forth in the attached
Prospectus under "Description of the Debt Securities--Global Securities." The
Depositary has confirmed to the Company, the Agents and the Senior Trustee that
it intends to follow such procedures.
REDEMPTION OR REPAYMENT
The Notes are not subject to redemption by the Company prior to the Earliest
Redemption Date, if any, fixed at the time of sale and set forth in the
applicable Pricing Supplement. If no Earliest Redemption Date is indicated with
respect to a Note, such Note is not redeemable prior to the Stated Maturity. On
and after the indicated Earliest Redemption Date, the related Note will be
redeemable in whole or in part in increments of $1,000 (provided that any
remaining principal amount of any Note shall be at least $1,000) at the option
of the Company at a redemption price set forth in the applicable Pricing
Supplement or, if no such redemption price is set forth, then at 100% of the
principal amount to be redeemed (unless otherwise provided in the applicable
Pricing Supplement), in each case, together with interest thereon payable to
the Redemption Date, on notice given not more than 60 nor less than 30 days
prior to the Redemption Date. The Company will redeem the specified portion of
the principal amount of a Note ("Sinking Fund Amount") on the sinking fund
redemption dates, if any, set forth in the applicable Pricing Supplement
("Sinking Fund Redemption Date"), together with accrued interest to the
applicable Sinking Fund Redemption Date. If no Sinking Fund Amount is set forth
in the applicable Pricing Supplement, the Company will not have any obligation
to redeem such Note before its Stated Maturity. The Company may reduce the
Sinking Fund Amount to be redeemed on any Sinking Fund Redemption Date by
subtracting 100% of the principal amount (excluding premium) of any Note
surrendered to the Senior Trustee for cancellation of which the Company becomes
the beneficial owner or that the Company has otherwise redeemed or repaid other
than pursuant to the second preceding sentence. The Company may so credit the
same principal amount of such Note only once. Notice of any such redemption
will be given not more than 60 nor less than 30 days prior to the Sinking Fund
Redemption Date.
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<PAGE>
In addition, the applicable Pricing Supplement will indicate either that the
Company will be obligated to repurchase a Note at the option of the holder
thereof or that the Company will not be so obligated. If the Company will be so
obligated, the applicable Pricing Supplement will set forth the date or dates
(each a "Repayment Date") and the price or prices at which the applicable Notes
will be repurchased, in whole or in part, pursuant to such obligation.
UNITED STATES TAX CONSIDERATIONS
The following is a summary of certain United States Federal income tax
considerations that may be relevant to a holder of a Note that is a United
States person (as defined under "Limitations on the Issuance of Bearer
Securities" in the Prospectus). This summary is based on laws, regulations,
rulings and decisions now in effect, all of which are subject to change
(including changes in effective dates) or possible differing interpretations.
It deals only with holders that will hold Notes as capital assets and does not
deal with persons in special tax situations, such as financial institutions,
insurance companies, regulated investment companies, dealers in securities or
currencies, persons that will hold Notes as a hedge against currency risks or
as a position in a "straddle" for tax purposes, or persons whose functional
currency is not the United States dollar. It also does not address tax
considerations applicable to holders who are not United States persons for
United States Federal income tax purposes, and such holders should consult
their tax advisors regarding an investment in the Notes. This summary does not
generally deal with tax consequences to holders other than original purchasers.
Persons considering the purchase of the Notes should consult their own tax
advisors concerning the application of United States Federal income tax laws to
their particular situations as well as any consequences of the purchase,
ownership and disposition of the Notes arising under the laws of any other
taxing jurisdiction.
PAYMENTS OF INTEREST
Payments of interest on a Note generally will be taxable to a holder as
ordinary interest income at the time such payments are accrued or are received
(in accordance with the holder's method of accounting for tax purposes).
ORIGINAL ISSUE DISCOUNT
The following summary is a general discussion of the United States Federal
income tax consequences to holders of the purchase, ownership and disposition
of Notes issued with original issue discount ("Discount Notes").
For United States Federal income tax purposes, "original issue discount" is
defined as the excess of the stated redemption price at maturity of a Note over
its issue price, if such excess equals or exceeds a de minimis amount
(generally 1/4 of 1% of the Note's stated redemption price at maturity
multiplied by the number of complete years to its maturity from its issue
date). The issue price of an issue of Notes will generally equal the first
price at which a substantial amount of such Notes are sold. The stated
redemption price at maturity of a Note is the sum of all payments provided by
the Note other than "qualified stated interest" payments. The term "qualified
stated interest" generally means stated interest that is unconditionally
payable in cash or property (other than debt instruments of the issuer) at
least annually at a single fixed rate or at current values of (i) one or more
qualified floating rates, (ii) a single fixed rate and one or more qualified
floating rates, (iii) a single objective rate, or (iv) a single fixed rate and
a single objective rate that is a qualified inverse floating rate. A "qualified
floating rate" is generally any floating rate where variations in such rate can
reasonably be expected to measure contemporaneous variations in the cost of
newly borrowed fluids in the currency in which the debt instrument is
denominated. An "objective rate" is a rate that is not itself a qualified
floating rate but which is determined using a single formula that is fixed
throughout the term of the Note and which is based upon (i) one or more
qualified floating rates (e.g., a multiple of a qualified floating rate), (ii)
the yield or changes in the price of one or more items of actively traded
personal property, (iii) one or more rates
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where each rate would be a qualified floating rate for a debt instrument
denominated in a currency other than the currency in which the Note is
denominated, or (iv) a combination of the rates described in items (i) through
(iii). An objective rate is a "qualified inverse floating rate" if (i) the rate
is equal to a fixed rate minus a qualified floating rate and (ii) the
variations in the rate can reasonably be expected to inversely reflect
contemporaneous variations in the cost of newly borrowed funds.
A holder of a Discount Note must include original issue discount in income
for United States Federal income tax purposes as it accrues under a constant
yield method in advance of receipt of the cash payments attributable to such
income, regardless of such holder's method of accounting for tax purposes. In
general, the amount of original issue discount included in income by the
initial holder of a Discount Note is the sum of the "daily portions" of
original issue discount with respect to such Note for each day during the
taxable year on which such holder held such Note. The daily portion of original
issue discount on any Discount Note is determined by allocating to each day in
any "accrual period" a ratable portion of the original issue discount allocable
to that accrual period. An accrual period may be of any length and the accrual
periods may vary in length over the term of the debt instrument, provided that
each accrual period is no longer than one year and each scheduled payment of
principal or interest occurs on the first day or the final day of an accrual
period. The amount of original issue discount allocable to each accrual period
is equal to the difference between (i) the product of the Discount Note's
adjusted issue price at the beginning of such accrual period and its yield to
maturity (determined on the basis of compounding at the close of each accrual
period and appropriately adjusted to take into account the length of the
particular accrual period) and (ii) the amount of any qualified stated interest
payments allocable to such accrual period. The "adjusted issue price" of a
Discount Note at the beginning of any accrual period is the sum of the issue
price of the Discount Note plus the amount of original issue discount allocable
to all prior accrual periods minus the amount of any prior payments on the
Discount Note that were not qualified stated interest payments. Under these
rules, holders will generally have to include in income increasingly greater
amounts of original issue discount in successive accrual periods.
A holder who purchases a Discount Note for an amount that is greater than its
adjusted issue price as of the purchase date will be considered to have
purchased the Discount Note at an "acquisition premium." Under the acquisition
premium rules, the amount of original issue discount which such holder must
include in its gross income with respect to such Discount Note for any taxable
year (or portion thereof in which the holder holds the Discount Note) will be
reduced (but not below zero) by the portion of the acquisition premium properly
allocable to the period.
Notes that have a fixed maturity of one year or less ("Short-Term Notes")
will be deemed to have been issued with original issue discount. In general, an
individual or other cash method holder is not required to accrue original issue
discount on Short-Term Notes as income unless the holder elects to do so. If
such an election is not made, any gain recognized by the holder on the sale,
exchange or maturity of the Short-Term Note will be ordinary income to the
extent of the original issue discount accrued on a straight-line basis (or,
upon election, a constant yield method based on daily compounding) through the
date of sale or maturity, and a portion of the deductions otherwise allowable
to the holder for interest on borrowings allocable to the Short-Term Note will
be deferred until a corresponding amount of income is realized. Holders who
report income for Federal income tax purposes under the accrual method and
certain other holders, including banks and dealers in securities, are required
to accrue original issue discount on a Short-Term Note on a straight-line basis
unless an election is made to accrue the original issue discount under a
constant yield method (based on daily compounding).
Holders may generally, upon election, include all interest (including stated
interest, original issue discount, de minimis original issue discount, market
discount, de minimis market discount, and unstated interest, as adjusted by any
amortizable bond premium or acquisition premium) on a debt instrument by using
the constant yield method applicable to original issue discount, subject to
certain limitations and exceptions.
S-14
<PAGE>
MARKET DISCOUNT
If a holder purchases a Note other than a Discount Note for an amount that is
less than its issue price (or, in the case of a subsequent purchaser, its
stated redemption price at maturity) or purchases a Discount Note for an amount
that is less than its adjusted issue price as of the purchase date, the amount
of the difference will be treated as "market discount," unless such difference
is less than a specified de minimis amount.
Under the market discount rules, a holder will be required to treat any
partial principal payment on a Note (or, in the case of a Discount Note, any
payment that does not constitute qualified stated interest on the Discount
Note) or any gain realized on the sale, exchange, retirement or other
disposition of a Note as ordinary income to the extent of the lesser of (i) the
amount of such payment or realized gain or (ii) the market discount which has
not previously been included in income and is treated as having accrued on such
Note at the time of such payment or disposition. Market discount will be
considered to accrue ratably during the period from the date of acquisition to
the maturity date of the Note, unless the holder elects to accrue market
discount on the basis of semiannual compounding.
A holder may be required to defer the deduction of all or a portion of the
interest paid or accrued on any indebtedness incurred or maintained to purchase
or carry a Note with market discount until the maturity of the Note or its
earlier disposition in a taxable transaction. A holder may elect to include
market discount in income currently as it accrues (on either a ratable or
semiannual compounding basis), in which case the rules described above
regarding the treatment as ordinary income of gain upon the disposition of the
Note and upon the receipt of certain cash payments and regarding the deferral
of interest deductions will not apply. Generally, such currently included
market discount is treated as interest for Federal income tax purposes.
PREMIUM
If a holder purchases a Note for an amount that is greater than its stated
redemption price at maturity, such holder will be considered to have purchased
the Note with "amortizable bond premium" equal in amount to such excess. A
holder may elect to amortize such premium using a constant yield method over
the remaining term of the Note and may offset interest otherwise required to be
included in respect of the Note during any taxable year by the amortized amount
for the taxable year. However, if the Note may be optionally redeemed after the
holder acquires it at a price in excess of its stated redemption price at
maturity, special rules would apply which could result in a deferral of the
amortization of some bond premium until later in the term of the Note.
DISPOSITION OF A NOTE
Upon the sale, exchange or retirement of a Note, a holder generally will
recognize taxable gain or loss equal to the difference between the amount
realized on the sale, exchange or retirement and such holder's adjusted tax
basis in the Note. A holder's adjusted tax basis in a Note generally will equal
such holder's initial investment of the Note increased by any original issue
discount included in income (and accrued market discount, if any, if the holder
has included such market discount in income) and decreased by the amount of any
payments, other than qualified stated interest payments, received and premium
amortization deductions taken with respect to such Note. Except as discussed
above under "Original Issue Discount" and "Market Discount," such gain or loss
generally will be long-term capital gain or loss if the Note has been held for
more than one year.
BACKUP WITHHOLDING
Backup withholding of Federal income tax at a rate of 31% may apply to
payments made in respect of the Notes to registered owners who are not "exempt
recipients" and who fail to provide certain identifying information (such as
the registered owner's taxpayer identification number) in the required manner.
S-15
<PAGE>
Generally, individuals are not exempt recipients, whereas corporations and
certain other entities generally are exempt recipients. Payments made in
respect of the Notes to a holder must be reported to the IRS unless the holder
is an exempt recipient or otherwise establishes an exemption.
In addition, upon the sale of a Note to (or through) a broker, the broker
must withhold 31% of the entire purchase price, unless either (i) the broker
determines that the seller is a corporation or other exempt recipient or (ii)
the seller provides, in the required manner, certain identifying information.
Such a sale must also be reported by the broker to the IRS unless the broker
determines that the seller is an exempt recipient. Any amounts withheld under
the backup withholding rules from a payment to a beneficial owner would be
allowed as a refund or a credit against such beneficial owner's United States
Federal income tax, provided certain required information is furnished to the
IRS.
THE FEDERAL INCOME TAX DISCUSSION SET FORTH ABOVE IS INCLUDED FOR GENERAL
INFORMATION ONLY AND MAY NOT BE APPLICABLE DEPENDING UPON A HOLDER'S PARTICULAR
SITUATION. HOLDERS SHOULD CONSULT THEIR TAX ADVISORS WITH RESPECT TO THE TAX
CONSEQUENCES TO THEM OF THE OWNERSHIP AND DISPOSITION OF THE NOTES, INCLUDING
THE TAX CONSEQUENCES UNDER STATE, LOCAL, FOREIGN AND OTHER TAX LAWS AND THE
POSSIBLE EFFECTS OF CHANGES IN FEDERAL OR OTHER TAX LAWS.
PLAN OF DISTRIBUTION OF THE NOTES
Under the terms of an Agency Agreement, dated March 8, 1995, the Notes are
offered on a continuing basis by the Company through the Agents, each of which
has agreed to use reasonable efforts to solicit offers to purchase the Notes.
The Company and the Guarantor have agreed to pay jointly each Agent a
commission of from .125% to .875% of the principal amount (or, in the case of
an Original Issue Discount Note, the purchase price) of each Note, depending on
its Stated Maturity, sold through such Agent. The commission with respect to
any Note with a Stated Maturity of 40 years or more, sold through an agent,
will be negotiated at the time of sale. The Company will have the sole right to
accept offers to purchase Notes and may reject any such offer, in whole or in
part. Each Agent shall have the right, in its discretion reasonably exercised,
without notice to the Company, to reject any offer to purchase Notes received
by it, in whole or in part. The Company also may sell Notes to any Agent,
acting as a principal, at a discount to be agreed upon at the time of sale, for
resale to one or more purchasers at varying prices related to prevailing market
prices at the time of such resale, as determined by such Agent or for resale to
certain securities dealers at the offering price set forth on the cover page of
the applicable Pricing Supplement, less the applicable concession, of the
principal amount of the Notes. After any initial public offering of Notes to be
resold to purchasers at a fixed public offering price, the public offering
price and any concession or discount may be changed. In addition, each Agent
may offer Notes purchased as principal to other dealers. Notes sold by an Agent
to a dealer may be sold at a discount and, unless otherwise specified in the
applicable Pricing Supplement, any Note sold to an Agent as principal will be
purchased by such Agent at a price equal to 100% of the principal amount
thereof less a percentage equal to the commission applicable to an agency sale
of a Note of identical maturity, and may be resold by such Agent. The Company
has reserved the right to sell Notes to purchasers from time to time other than
through the Agents.
Unless otherwise specified in the applicable Pricing Supplement, payment of
the purchase price of the Notes will be required to be made in funds
immediately available in The City of New York.
The Agents may be deemed to be "underwriters" within the meaning of the
Securities Act of 1933 (the "Act"). The Company and the Guarantor have agreed
to indemnify the Agents against and contribute toward certain liabilities,
including certain liabilities under the Act. The Company and the Guarantor have
agreed to reimburse the Agents for certain expenses.
S-16
<PAGE>
In addition to offering Notes through the Agents as described herein, Debt
Securities that have terms substantially similar to the terms of the Notes
offered hereby (but constituting one or more separate series of Securities for
purposes of the Indenture) may be offered, concurrently with the offering of
the Notes on a continuing basis outside the United States (as defined under
"Limitations on the Issuance of Bearer Securities" in the Prospectus) by the
Company pursuant to a Placement Agency Agreement. In addition, the Company may
offer other Debt Securities from time to time as described in the Prospectus.
The sale of any Debt Securities by the Company may reduce the principal amount
of the Notes which may be offered by this Prospectus Supplement and the
Prospectus.
The Notes will not be listed on any securities exchange. In addition, while
each of the Agents may from time to time purchase and sell Notes in the
secondary market, they are not obligated to do so, and there can be no
assurance that there will be a secondary market for the Notes or liquidity in
the secondary market if one develops. From time to time, each of the Agents may
make a market in the Notes. None of the Agents is obligated to do so, however,
and any Agent may discontinue making a market at any time without notice. No
assurance can be given as to the liquidity of any trading market for the Notes.
The Agents may engage in transactions with and perform services for the
Company and the Guarantor in the ordinary course of business.
S-17
<PAGE>
LOGO
OF UNOCAL CORPORATION
$1,188,800,000
--------------
Union Oil Company of California
Debt Securities and Warrants to Purchase Debt Securities
With Payment of Principal, Interest and Premium, if any, Guaranteed by Unocal
Corporation
--------------
Unocal Corporation
Common Stock, Preferred Stock and Warrants to Purchase
Common Stock and Preferred Stock
--------------
Union Oil Company of California (the "Company") intends to offer from time
to time in one or more series debt securities consisting of unsecured
debentures, notes or other evidences of indebtedness (the "Debt Securities").
At the option of the Company, the Debt Securities may be offered as Senior
Debt Securities ("Senior Debt Securities") and as Subordinated Debt Securities
("Subordinated Debt Securities"). Unocal Corporation ("Unocal"), the parent
company of the Company, will guarantee the payment of principal, interest and
premium, if any, on the Debt Securities. The Company and Unocal may also offer
from time to time warrants to purchase guaranteed Debt Securities ("Debt
Warrants"), which may be issued independently or together with guaranteed Debt
Securities. Unocal may offer from time to time Common Stock ("Unocal Common
Stock"), Preferred Stock ("Unocal Preferred Stock") and warrants to purchase
Unocal Common or Preferred Stock ("Equity Warrants"), which may be issued
independently or together with Unocal Common Stock or Unocal Preferred Stock.
Such Unocal Common Stock and Unocal Preferred Stock may also be issued upon
conversion or exchange of Debt Securities and such Unocal Common Stock may be
issued upon conversion of Unocal Preferred Stock. The Debt Securities, Debt
Warrants, Unocal Common Stock, Unocal Preferred Stock and Equity Warrants are
referred to collectively as the "Securities." No more than an aggregate of
$1,188,800,000 public offering price of Securities, including the exercise
price of Debt Warrants and Equity Warrants, may be sold pursuant to this
Prospectus. The Securities may be sold for United States dollars, foreign
currency or currency units.
Certain specific terms of the particular Securities in respect of which this
Prospectus is being delivered will be set forth in the accompanying Prospectus
Supplement, including, where applicable, (i) in the case of Debt Securities,
the title, aggregate principal amount, authorized denominations, maturity,
interest rate (which may be fixed or variable) and time of payment of
interest, terms for redemption, terms for sinking fund payments, terms for
conversion or exchange into other Securities, currency or currencies of
denomination and payment (if other than U.S. dollars), listing on a securities
exchange and any other terms in connection with the offering and sale of the
Debt Securities in respect of which this Prospectus is delivered, as well as
the initial public offering price; (ii) in the case of Unocal Preferred Stock,
the specific title, number of shares, dividend (including the method of
calculation), seniority, liquidation, redemption, voting and other rights,
terms for any conversion or exchange into other Securities, listing on a
securities exchange, initial public offering price and any other terms; (iii)
in the case of Unocal Common Stock, the number of shares and the terms of the
offering thereof; and (iv) in the case of Debt Warrants and Equity Warrants,
the designation and number, exercise price, any listing of the Debt Warrants,
Equity Warrants or the underlying Securities on a securities exchange and any
other terms in connection with the offering, sale and exercise of the Debt
Warrants and Equity Warrants.
Debt Securities of a series may be issued in registered form, in a form
registered as to principal only, or in bearer form (with or without coupons
attached), or any combination of such forms. In addition, all or a portion of
the Debt Securities may be issued in temporary or definitive global form. Debt
Securities in bearer form are offered only outside the United States to non-
United States persons and to offices located outside the United States of
certain United States financial institutions and other exempt persons. See
"Limitations on the Issuance of Bearer Securities."
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 Securities will be sold directly, through agents designated from time to
time or through underwriters or dealers, which may be a group of underwriters.
The Securities may also be exchanged for outstanding securities of the Company
or Unocal or both and resold by the holder pursuant to this Prospectus in the
over-the-counter market, on the New York Stock Exchange, through negotiated
transactions or otherwise, at market prices prevailing at the time of sale or
at prices otherwise negotiated. The terms of any such exchange and the method
of resale by the holder will be set forth in a Prospectus Supplement. If any
agents of the Company or Unocal or any dealers or underwriters are involved in
the sale of the Securities, the names of such agents, underwriters or dealers
and any applicable commissions or discounts will be set forth in a Prospectus
Supplement.
THIS PROSPECTUS MAY NOT BE USED TO CONSUMMATE SALES OF SECURITIES
UNLESS ACCOMPANIED BY A PROSPECTUS SUPPLEMENT.
THE DATE OF THIS PROSPECTUS IS FEBRUARY 3, 1995.
<PAGE>
AVAILABLE INFORMATION
Unocal is subject to the informational requirements of the Securities
Exchange Act of 1934 (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 Unocal 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 following Regional Offices of the
Commission: 7 World Trade Center, 13th Floor, New York, New York 10048; and 500
West Madison Street, Suite 1400, Chicago, Illinois 60661-2511. Copies of such
material may also 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. In addition, such reports, proxy statements and other information
concerning Unocal may be inspected at the offices of the New York Stock
Exchange, 20 Broad Street, 17th Floor, New York, New York 10005, the Chicago
Stock Exchange, 440 South LaSalle Street, Suite 518, Chicago, Illinois 60605-
1070 and the Pacific Stock Exchange, 115 Sansome Street, 3rd Floor, San
Francisco, California 94104.
Prior to the date of this Prospectus, the Company filed reports and other
information with the Commission in accordance with the reporting requirements
of the Exchange Act. Such reports and other information filed by the Company
may be inspected and copied at, and obtained by mail from, the offices of the
Commission listed above. The Company has received advice from the Division of
Corporation Finance of the Commission that it will not object if the Company
ceases to file such reports, since debt securities of the Company are fully and
unconditionally guaranteed as to payment by Unocal. Accordingly, the Company
has ceased to file such reports with the Commission. Notes to the consolidated
financial statements of Unocal included in Unocal reports filed hereafter will
contain summarized financial information regarding the Company.
Unocal and the Company have filed with the Commission registration statements
on Form S-3 (together with all amendments and exhibits thereto, the
"Registration Statements") under the Securities Act of 1933. This Prospectus
and the accompanying Prospectus Supplement do not contain all of the
information set forth in the Registration Statements, certain parts of which
are omitted in accordance with the rules and regulations of the Commission. For
further information, reference is made to the Registration Statements, which
may be examined without charge at the public reference facilities maintained by
the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549. Copies
thereof may be obtained from the Commission upon payment of the prescribed
fees.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed with the Commission are incorporated into this
Prospectus by reference: (i) the Annual Report on Form 10-K for the fiscal year
ended December 31, 1993 of Unocal, as amended by Amendments Nos. 1 and 2 on
Form 10-K/A; (ii) the Annual Report on Form 10-K for the fiscal year ended
December 31, 1993 of the Company, as amended by Amendment No. 1 on Form 10-K/A;
(iii) the Quarterly Reports on Form 10-Q for the quarterly periods ended March
31, 1994, June 30, 1994 and September 30, 1994, the last as amended by
Amendment No. 1 on Form 10-Q/A, of Unocal and the Company; (iv) the Current
Reports on Form 8-K dated January 12, 1994, January 31, 1994, March 2, 1994,
March 24, 1994, April 25, 1994, June 27, 1994, June 28, 1994, July 22, 1994,
July 25, 1994, August 25, 1994, September 9, 1994, September 30, 1994, October
31, 1994, November 2, 1994, December 5, 1994, January 30, 1995 and January 31,
1995 of Unocal; and (v) the Current Reports on Form 8-K dated March 2, 1994,
June 27, 1994, June 28, 1994, August 25, 1994, September 30, 1994 and December
5, 1994 of the Company. All documents filed by Unocal 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 shall
be deemed to be incorporated by reference in this Prospectus and to be a part
hereof from the date of filing of such documents. Any statement contained
herein or in a document all or a portion of which is 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.
Unocal and the Company will provide without charge to each person to whom a
copy of this Prospectus is delivered, upon the written or oral request of any
such person, a copy of any or all of the documents incorporated herein by
reference (not including the exhibits to such documents, unless such exhibits
are specifically incorporated by reference in such documents). Requests for
such copies should be directed to: Unocal Corporation, 1201 West Fifth Street,
Los Angeles, California 90017, Attention: Corporate Secretary, telephone (213)
977-7600.
2
<PAGE>
USE OF PROCEEDS
The proceeds received by the Company from the sale of the Debt Securities and
Debt Warrants offered hereby, will be used by the Company and its affiliates
for general corporate purposes. The proceeds received by Unocal from the sale
of the Unocal Preferred Stock, Unocal Common Stock and Equity Warrants offered
hereby will be used for general corporate purposes, which are expected to
include contributions or loans to the Company. The gross proceeds anticipated
to be received by the Company and/or Unocal are estimated to be $1,188,800,000.
THE COMPANY AND UNOCAL
The Company is principally engaged in the exploration for, and the
production, transportation and sale of, crude oil and natural gas in the United
States and foreign countries; and the manufacture, purchase, transportation and
marketing of petroleum and selected chemical products. The Company is also
engaged in the exploration for, and the production and sale of, geothermal
resources. Other operations include the production and marketing of specialty
minerals, and real estate development and sales.
The Company was incorporated in California in 1890 and in 1983 became a
wholly owned operating subsidiary of Unocal. As of December 31, 1994, the net
assets of the Company represented approximately 100% of the net assets of
Unocal, based on book value. The Company is a California corporation and Unocal
is a Delaware corporation, each with its principal executive office at 1201
West Fifth Street, Los Angeles, California 90017, telephone (213) 977-7600.
3
<PAGE>
HISTORICAL CONDENSED CONSOLIDATED
SELECTED FINANCIAL INFORMATION
The following historical condensed consolidated financial information of
Unocal and its subsidiaries, including the Company, for the five years ended
December 31, 1994, has been derived from and is qualified in its entirety by
the detailed financial statements and other financial information included in
the documents incorporated by reference herein. See "Incorporation of Certain
Documents by Reference."
SELECTED FINANCIAL INFORMATION OF UNOCAL
(MILLIONS OF DOLLARS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------------------
1994 1993 1992 1991 1990
----------- ------ ------- ------- -------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA
Revenues.......................... $7,965 $8,344 $10,061 $10,895 $11,808
Earnings before cumulative effect
of
accounting changes(1)............ 124 343 196 73 401
Per common share................ .36 1.27 .75 .31 1.71
Net earnings (loss)............... (153) 213 220 73 401
Per common share................ (.78) .73 .85 .31 1.71
<CAPTION>
AT DECEMBER 31,
------------------------------------------
1994 1993 1992 1991 1990
----------- ------ ------- ------- -------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA
Total assets(2)................. $9,337 $9,706 $ 9,892 $10,345 $10,157
Long-term debt.................. 3,452 3,455 3,530 4,543 4,025
Stockholders' equity............ 2,815 3,129 3,131 2,464 2,550
</TABLE>
- --------
(1) The cumulative effect of accounting changes, which have been excluded,
consisted of a charge of $277 million ($1.14 per common share) in 1994, a
charge of $130 million ($.54 per common share) in 1993 and a credit of $24
million ($.10 per common share) in 1992.
(2) Total assets prior to 1994 have been restated to reflect the
reclassification of the accumulated allowance for future abandonment and
restoration costs from the property account to a liability account.
RATIOS OF UNOCAL AND THE COMPANY
(UNAUDITED)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------
1994 1993 1992 1991 1990
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Ratio of Earnings to Fixed Charges(1)
Unocal....................................... 1.7 2.5 1.7 1.4 2.0
Company...................................... 1.7 2.5 1.7 1.4 2.2
Ratio of Earnings to Combined Fixed Charges and
Preferred Stock Dividends(1)(2)
Unocal....................................... 1.5 2.2 1.6 1.4 2.0
</TABLE>
- --------
(1) For purposes of this ratio, earnings consist of earnings before the
cumulative effect of accounting changes, before taxes on income and fixed
charges. Fixed charges consist of interest on indebtedness (including
capitalized interest) and capital lease obligations, amortization of debt
discount, debt premium and issuance expense and that portion of operating
lease rental expense which is representative of the interest factor
(assumed to be one-third).
(2) For purposes of this ratio, preferred stock dividends are adjusted to a
pre-tax basis.
4
<PAGE>
DESCRIPTION OF THE DEBT SECURITIES
Described below are certain general terms and provisions of the Debt
Securities to which a Prospectus Supplement may relate or for which Debt
Warrants may be exercisable. The particular terms of the Debt Securities and
the extent, if any, to which such general provisions may apply to a particular
series of Debt Securities ("Offered Debt Securities") will be described in the
Prospectus Supplement relating to such Offered Debt Securities.
The Senior Debt Securities will be issued under an Indenture dated as of
February 3, 1995 (the "Senior Indenture") among the Company, Unocal and
Chemical Trust Company of California, as trustee (the "Senior Trustee"). The
Subordinated Debt Securities will be issued under a proposed indenture (the
"Subordinated Indenture") among the Company, Unocal and a trustee to be named
in any Prospectus Supplement relating to Subordinated Debt Securities (the
"Subordinated Trustee"). The Senior Indenture and the Subordinated Indenture
are referred to collectively as the "Indentures" and individually as an
"Indenture." The Senior Indenture incorporates, and the Subordinated Indenture
will incorporate, the Standard Multiple-Series Indenture Provisions, January
1991, dated as of January 2, 1991 (the "Standard Provisions"), of the Company
and Unocal, which is filed as an exhibit to the Registration Statement. Neither
of the Indentures will limit the amount of Debt Securities which may be issued
thereunder (Section 2.01). Each of the Indentures will provide that Debt
Securities of any series may be issued thereunder up to the aggregate principal
amount which may be authorized from time to time by the Company.
The following summaries of certain provisions of the Debt Securities and the
Indentures do not purport to be complete and are subject to, and qualified in
their entirety by reference to, all provisions of the Indentures, including the
definitions of certain terms used therein. Wherever particular sections of the
Indentures or terms that are defined in the Indentures are referred to herein
or in an accompanying Prospectus Supplement, it is intended that such sections
or terms will be incorporated by reference as a part of the statements made
herein or therein, and the statements are qualified in their entirety by such
reference. Unless otherwise indicated, references in this Prospectus or in an
accompanying Prospectus Supplement to particular sections of the Indentures are
to the Standard Provisions. Unless otherwise indicated, when used in this
Prospectus the term "principal" will mean principal of, and any premium on, the
Debt Securities.
GENERAL
The Debt Securities will be direct, unsecured obligations of the Company and
will be fully and unconditionally guaranteed as to payment by Unocal. The
Senior Debt Securities and the related Guarantees will rank on a parity with
all other unsecured and unsubordinated indebtedness of the Company and Unocal,
respectively, and will have a right of payment prior to any Subordinated Debt
Securities, in the case of Senior Debt Securities, and prior to the Guarantees
of Subordinated Debt Securities, in the case of the Guarantees of the Senior
Debt Securities. The indebtedness represented by the Subordinated Debt
Securities and the Guarantees of the Subordinated Debt Securities will be
subordinated in right of payment to the prior payment in full of the Senior
Debt of the Company and Unocal, respectively, as described below under
"Subordination." The Debt Securities may be issued in one or more series with
the same or various maturities at or above par or with an original issue
discount. Offered Debt Securities bearing no interest or interest at a rate
which at the time of issuance is below market rates ("Original Issue Discount
Securities") will be sold at a discount (which may be substantial) below their
stated principal amount. In the event of redemption or acceleration of the
maturity of an Original Issue Discount Security, the amount payable to the
holder of such Security upon such redemption or acceleration will be determined
in accordance with the terms of the Security, but will be an amount less than
the amount payable at the Stated Maturity of such Security.
Reference is made to the Prospectus Supplement relating to the Offered Debt
Securities for the following terms thereof:
(1) the title of the Offered Debt Securities;
5
<PAGE>
(2) any limit upon the aggregate principal amount of the Offered Debt
Securities;
(3) the percentage of their principal amount for which the Offered Debt
Securities will be issued;
(4) the date or dates on which the principal of the Offered Debt
Securities will be payable;
(5) the rate or rates (which may be fixed or variable) at which the
Offered Debt Securities will bear interest, if any, or the method by which
such rate or rates will be determined;
(6) the date or dates from which any such interest will accrue or the
method by which such date or dates will be determined;
(7) the dates on which payment of any such interest will be payable and
the record dates for such interest payment dates;
(8) the place or places where the principal of and any interest on the
Offered Debt Securities (and Coupons, if any) will be payable and the
offices or agencies of the Company maintained for such purposes and each
office or agency where the Offered Debt Securities may be presented for
registration of transfer or exchange;
(9) the period or periods within which, the price or prices at which, and
the terms and conditions upon which, the Offered Debt Securities may be
redeemed in whole or in part, at the option of the Company;
(10) the obligation of the Company, if any, to redeem, repay or purchase,
the Offered Debt Securities pursuant to any sinking fund or analogous
provision or at the option of a holder of an Offered Debt Security and the
period or periods within which, the price or prices at which, and the terms
and conditions upon which, the Offered Debt Securities will be redeemed,
repaid or purchased, in whole or in part, pursuant to such obligation;
(11) any additional restrictive covenants included for the benefit of
holders of the Offered Debt Securities;
(12) any additional Events of Default with respect to the Offered Debt
Securities;
(13) the principal amount of the Offered Debt Securities that are
Original Issue Discount Securities payable upon declaration of acceleration
of the maturity of the Offered Debt Securities;
(14) the currency or currency unit for which the Offered Debt Securities
may be purchased, the currency or currency unit in which the payment of
principal and interest on such Offered Debt Securities will be payable, the
right of the Company or the holder to elect a currency different from that
in which the Offered Debt Securities are denominated for payments of
principal and interest, and the Exchange Rate Agent, if any;
(15) any index used to determine the amount of payments of principal of
and interest on the Offered Debt Securities;
(16) whether the Offered Debt Securities will be issued in registered
form, in a form registered only as to principal, or in bearer form, or any
combination thereof;
(17) whether and on what terms the Offered Debt Securities will be
convertible or exchangeable into shares of Unocal Preferred Stock or Unocal
Common Stock;
(18) whether any of the Offered Debt Securities will be issuable
initially as a temporary Global Security (as defined in "Form, Exchange,
Registration and Transfer") and whether any of the Offered Debt Securities
are to be issuable as a permanent Global Security, or any combination
thereof and, if so, the Depositary (as defined in "Global Securities") or
Depositaries therefor;
(19) if a temporary Global Security is to be issued with respect to such
series, the requirements for certification of ownership by non-United
States persons that will apply prior to (a) the issuance of a definitive
Bearer Security (as defined in "Form, Exchange, Registration and Transfer")
or (b) the payment of interest on an Interest Payment Date that occurs
before the issuance of a definitive Bearer Security;
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(20) the circumstances under which Offered Debt Securities may be
exchanged for Debt Securities issued in a different form;
(21) any paying agents, transfer agents, registrars or other agents with
respect to the Offered Debt Securities;
(22) whether and under what circumstances the Company will pay additional
amounts to any holder of Offered Debt Securities who is not a United States
person (as defined under "Limitations on the Issuance of Bearer
Securities") in respect of any tax, assessment or governmental charge
required to be withheld or deducted and, if so, whether the Company will
have the option to redeem rather than pay any additional amounts;
(23) whether any of the provisions described in "Certain Covenants of
Unocal," "Events of Default," "Subordination," "Conversion and Exchange,"
"Form, Exchange, Registration and Transfer," and "Defeasance" will not
apply to the Offered Debt Securities;
(24) any other terms of the Offered Debt Securities not inconsistent with
the applicable Indenture; and
(25) a discussion of certain Federal income tax considerations, if
required.
INTEREST AND FOREIGN CURRENCY
Principal and interest will be payable, and the Offered Debt Securities will
be transferable, in the manner described in the Prospectus Supplement relating
to such Offered Debt Securities.
If any of the Offered Debt Securities are sold for any foreign currency or
currency unit or if principal of or any interest on any of the Offered Debt
Securities is payable in any foreign currency or currency unit, the
restrictions, elections, tax consequences, specific terms and other information
with respect to such Offered Debt Securities and such foreign currency or
currency unit will be specified in a Prospectus Supplement.
GUARANTEES
Under the terms of the Indentures and subject to the provisions thereof,
Unocal will fully and unconditionally guarantee to the holders from time to
time of the Debt Securities: (i) the full and prompt payment of the principal
of any Debt Securities and Coupons, if any, when and as the same become
payable, whether at the Stated Maturity thereof, by acceleration, call for
redemption or otherwise, and (ii) the full and prompt payment of any interest
on any Debt Securities and Coupons, if any, when and as the same becomes
payable. The Guarantees will remain in effect until the entire principal of and
interest on the Debt Securities has been paid in full or otherwise discharged
in accordance with the provisions of the Indentures (Section 5.01). In the
event of a default in the payment of principal of any Debt Security when and as
the same becomes payable, whether at the Stated Maturity thereof, by
acceleration, call for redemption or otherwise, or in the event of a default in
any sinking fund payment, or in the event of a default in the payment of any
interest on any Debt Security when and as the same becomes payable, the Trustee
has the right to proceed directly against Unocal without first proceeding
against the Company or exhausting any other remedies which the Trustee may have
(Section 5.02). Any right of payment of the holders of Senior Debt Securities
under the related Guarantees will be prior to the right of payment of the
holders of Subordinated Debt Securities under the related Guarantees.
CERTAIN COVENANTS OF UNOCAL
Limitations on Liens. The Senior Indenture provides that neither Unocal nor
any Restricted Subsidiary will issue, assume or guarantee any indebtedness for
money borrowed ("Debt") that is secured by a Mortgage upon (i) any domestic oil
or gas property of Unocal or a Restricted Subsidiary, (ii) any principal
domestic refining or manufacturing plant of Unocal or a Restricted Subsidiary,
or (iii) shares of stock or indebtedness
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of any Restricted Subsidiary, unless the Senior Debt Securities will be secured
equally and ratably with or prior to such Debt. This covenant will not apply to
(a) Mortgages on property or securities of a corporation when it becomes a
Restricted Subsidiary, (b) purchase money Mortgages, (c) Mortgages existing at
the time of acquisition of property pursuant to a merger, consolidation or
purchase of substantially all the assets of the Seller, (d) any Mortgage
securing Debt owing by a Restricted Subsidiary to Unocal or to another
Restricted Subsidiary, (e) Mortgages on particular property incurred in
connection with the exploration, drilling, development, repair, alteration or
improvement of such property, (f) Mortgages on current assets or other personal
property to secure Debt maturing in not more than one year, or extensions,
renewals or replacements of Mortgages referred to in (a) through (e).
Notwithstanding the foregoing, Unocal or one or more Restricted Subsidiaries
may issue, assume or guarantee Debt secured by a Mortgage which would otherwise
be subject to the foregoing restrictions if the aggregate amount of such Debt,
together with the aggregate principal amount of all other such Debt of Unocal
and its Restricted Subsidiaries then outstanding, does not at such time exceed
20% of the Consolidated Net Assets of Unocal (Senior Indenture Section 5.04).
The following types of transactions, among others, will not be deemed to
create Debt secured by a Mortgage: (a) the sale or transfer of oil, oil shale,
gas or other minerals in place for a period of time until, or in an amount such
that, the transferee will realize therefrom a specified amount of money
(however determined) or a specified amount of such minerals or the sale or
transfer of any other interest in property of the character commonly referred
to as a "production payment" and (b) the placing of any Mortgage in favor of
domestic or foreign governmental bodies or agencies to secure payment, or the
performance of any other obligations, pursuant to any contract or statute or to
secure any indebtedness incurred for the purpose of financing or refinancing
all or a part of the purchase price or the cost of construction of the property
subject to such Mortgage (Senior Indenture Section 5.04).
The term "Mortgage" is defined as any mortgage, pledge, lien, security
interest, conditional sale or other title retention agreement or other similar
encumbrance (Senior Indenture Section 1.01).
The term "oil or gas property" is defined as any interest owned by Unocal or
a Restricted Subsidiary in land which in the opinion of Unocal's Board of
Directors is capable of producing crude oil, natural gas or other hydrocarbons
in paying quantities and any interest in such substances produced or to be
produced (or the proceeds thereof) from said lands, but not including
exploration or production facilities or other improvements on said lands
(Senior Indenture Section 5.04).
The term "Consolidated Net Assets" is defined as the total amount of assets
(less applicable reserves and other properly deductible items) of Unocal and
its consolidated Subsidiaries after deducting therefrom all liabilities and
liability items except Long-Term Debt, stockholders' equity and deferred income
taxes, which under generally accepted accounting principles would be included
on such consolidated balance sheet (Senior Indenture Section 1.01).
The term "Restricted Subsidiary" is defined as the Company and any other
"Subsidiary" (i) substantially all of the assets and operations of which are
located within any one or more of the States of the United States and (ii)
which has assets in excess of 2% of the total consolidated assets of Unocal and
its consolidated Subsidiaries. The term "Subsidiary" is defined as any
corporation, association, or other business entity of which Unocal, either
directly or indirectly, has either (i) the voting power to elect a majority of
the directors of such corporation or (ii) other ownership interest representing
more than 50% ownership of such entity (Senior Indenture Section 1.01).
Limitations on Sale and Leaseback. Unocal will not, nor will it permit any
Restricted Subsidiary to, enter into any sale and leaseback arrangement (where
the lease runs for a term of more than five years) involving any domestic real
property, unless (i) Unocal or such Restricted Subsidiary is not restricted by
the above provisions from incurring Debt secured by a Mortgage on such property
or (ii) Unocal will apply within 90 days an amount equal to the greater of (a)
the fair value (as determined by the Board of Directors of Unocal) of such
property or (b) the proceeds of the sale of such property, to the retirement
(other than any
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mandatory retirement) of Long-Term Debt of Unocal or a Restricted Subsidiary
(other than Debt owned by Unocal or a Restricted Subsidiary and Debt
subordinated to the Senior Debt Securities) (Senior Indenture Section 5.05).
The foregoing limitations will not apply to any sale and leaseback between
Unocal and any of its Restricted Subsidiaries or between any of its Restricted
Subsidiaries.
Restrictions on Merger and Sale of Assets. Neither the Company nor Unocal may
consolidate with or merge into any other corporation, or transfer its
properties as an entirety or substantially as an entirety to any person, unless
(i) the person (if other than the Company or Unocal) formed by or resulting
from any such consolidation or merger or which has received the transfer of
such property and assets will be a corporation organized under the laws of the
United States or any state or territory thereof or the District of Columbia and
will assume payment of the principal of, and interest on, the Debt Securities
and the performance and observance of the Indentures and (ii) immediately after
the consolidation, merger, sale or conveyance, the surviving corporation or the
corporation to which the sale or conveyance was made will not be in default
under either Indenture (Section 12.01).
EVENTS OF DEFAULT
The Senior Indenture defines, and the Subordinated Indenture will define, an
Event of Default with respect to any series of Debt Securities as being any one
of the following events: (i) default in the payment of any interest on any Debt
Security of that series when due, continued for 30 days after written notice
has been given by the Trustee to the Company or Unocal or by a holder to the
Company and the Trustee, (ii) default in the payment of the principal of a Debt
Security of that series when due, (iii) default in the deposit of any sinking
fund payment when and as due by the terms of a Debt Security of such series,
continued for 30 days after written notice has been given by the Trustee to the
Company or Unocal or by a holder to the Company and the Trustee, (iv) default
in any material respect in the performance in any other of the Company's or
Unocal's material covenants in the applicable Indenture (other than a covenant
included in such Indenture solely for the benefit of another series of Debt
Securities), continued for 90 days after written notice has been given by the
Trustee to the Company or Unocal or by holders of at least 25% in principal
amount of the Outstanding Debt Securities of such series to the Company and the
Trustee, (v) a default resulting in acceleration of any other indebtedness for
borrowed money, in an aggregate principal amount exceeding $50,000,000, of the
Company or Unocal under the terms of the instrument or instruments under which
such indebtedness is issued or secured, unless such acceleration is annulled,
or such indebtedness is discharged, or there is deposited in trust a sum of
money sufficient to discharge such indebtedness, within 20 days after written
notice has been given by the Trustee to the Company and Unocal or by holders of
at least 25% in principal amount of the Outstanding Debt Securities of such
series to the Company, Unocal and the Trustee, and (vi) certain events of
bankruptcy, insolvency or reorganization (Section 7.01).
No holder of any Debt Security of a series will have any right to institute
any proceeding with respect to the applicable Indenture or for any remedy
thereunder, unless such holder previously has given to the Trustee written
notice of an Event of Default with respect to such series and unless the
holders of at least 25% in aggregate principal amount of the Debt Securities of
that series at the time outstanding have made written request upon the Trustee,
and have offered reasonable security or indemnity, to institute such proceeding
as trustee under such Indenture, and the Trustee for 60 days shall have failed
to institute such proceeding. However, the right of any holder of any Debt
Security to institute suit for enforcement of any payment of principal of and
interest on such Debt Security on or after the due date expressed in such Debt
Security may not be impaired or affected without such holder's consent (Section
7.04).
The holders of a majority in principal amount of Debt Securities of any
series at the time outstanding may direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee or exercising
any trust or power conferred on the Trustee with respect to Debt Securities of
that series, provided that such holders have offered reasonable security or
indemnity against the costs, expenses and liabilities which might be incurred
by the Trustee in compliance with any such direction and subject to certain
other restrictions (Sections 7.06 and 8.02(d)).
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Unocal and the Company will be required to furnish to the Trustee within 120
days after the end of each fiscal year a statement as to their respective
compliance with all conditions and covenants under the Indentures (Sections
4.06 and 5.07).
MANDATORY PREPAYMENT
The provisions of each of (i) the $1,400,000,000 Credit and Guarantee
Agreement, dated as of December 12, 1991, as amended as of July 5, 1994, among
the Company and Unocal Canada Limited, as borrowers, Unocal, as guarantor, and
a syndicate of banks, (ii) the $45,000,000 Credit and Guarantee Agreement,
dated as of April 19, 1993, as amended as of September 14, 1994, among Unocal
Netherlands B.V., as borrower, the Company, Unocal, and others, as guarantors,
and The Bank of Nova Scotia, as agent, and (iii) the $250,000,000 Credit and
Guarantee Agreement, dated as of December 15, 1993, among Unocal Thailand,
Ltd.--Thailand Branch, as borrower, the Company and Unocal, as guarantors, and
a syndicate of banks, provide for the termination of the loan commitments
thereunder and require the prepayment of all outstanding loans and all other
amounts owing thereunder in the event (a) any person or group becomes the
beneficial owner of more than 30% of the then outstanding voting stock of
Unocal, otherwise than in a transaction having the approval of the Board of
Directors of Unocal, at least a majority of which are continuing directors, or
(b) continuing directors shall cease to constitute at least a majority of the
Board of Directors of Unocal. The Company or Unocal may include similar or
different mandatory prepayment provisions in other borrowing instruments
including, without limitation, Debt Securities issued in the future. There can
be no assurance that the Company will have the funds available to prepay such
amounts if required to do so under any of these mandatory prepayment
provisions.
SUBORDINATION
The indebtedness represented by the Subordinated Debt Securities and the
Guarantees of Subordinated Debt Securities will be subordinate and junior in
right of payment to the prior payment in full of all Senior Debt of the Company
or Unocal, as the case may be, whether outstanding on the date of the
Subordinated Indenture or thereafter incurred. "Senior Debt" is defined as (i)
all indebtedness of the Company or Unocal, as the case may be, for borrowed
money, (ii) all indebtedness for borrowed money of others guaranteed by the
Company or Unocal and (iii) any obligation of the Company or Unocal under any
interest rate or currency swap agreement, in each case whether outstanding on
the date of the Indenture or incurred thereafter that is not by its terms
subordinate and junior in right of payment to any other indebtedness of the
Company or Unocal, as the case may be, and, in the case of the Company,
includes all indebtedness at any time evidenced by Senior Debt Securities
(Subordinated Indenture Section 16.09).
In the event (i) of any liquidation, dissolution or other winding up of the
Company or Unocal, or of any receivership, insolvency, bankruptcy,
readjustment, reorganization or other similar proceedings relative to the
Company or Unocal or their respective property, all principal of and any
interest due on all Senior Debt will be paid in full, or provided for, before
any principal, sinking fund, if any, or interest payment is made on the
Subordinated Debt Securities, in the case of the Company, or the Guarantees of
Subordinated Debt Securities, in the case of Unocal, or (ii) that the
Subordinated Debt Securities are declared due and payable because of the
occurrence of an Event of Default (under circumstances such that the preceding
clause (i) will not be applicable), the holders of the Subordinated Debt
Securities will be entitled to payment only after all principal of and any
interest due on the Senior Debt has been paid or has been provided for
(Subordinated Indenture Section 16.01).
By reason of such subordination, creditors of the Company who are holders of
Senior Debt Securities may recover more, ratably, than holders of Subordinated
Debt Securities.
CONVERSION AND EXCHANGE
The terms, if any, on which Offered Debt Securities are convertible into or
exchangeable for Unocal Preferred Stock or Unocal Common Stock will be set
forth in the Prospectus Supplement relating thereto.
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Such terms may include provisions for conversion or exchange, either mandatory,
at the option of the holder or at the option of the Company.
FORM, EXCHANGE, REGISTRATION AND TRANSFER
The Debt Securities may be issued in fully registered form without coupons,
in a form registered as to principal only with or without bearer coupons
("Registered Securities") or in bearer form with or without coupons ("Bearer
Securities") or any combination thereof. Debt Securities may also be issued in
whole or in part, in the form of one or more temporary or permanent global
securities (each a "Global Security"). Unless otherwise specified in the
applicable Prospectus Supplement relating to the Offered Debt Securities, the
Debt Securities will be only Registered Securities. The Debt Securities
denominated in United States Dollars will be issued, unless otherwise set forth
in the applicable Prospectus Supplement relating to the Offered Debt
Securities, in denominations of $1,000 for Registered Securities and in
denominations of $5,000 for Bearer Securities, and in any integral multiple of
such denominations (Section 2.02). See, however, "Limitations on the Issuance
of Bearer Securities" below. One or more Global Securities will be issued in a
denomination or aggregate denominations equal to the aggregate principal amount
of Outstanding Debt Securities of the series to be represented by such Global
Security or Securities. The Prospectus Supplement relating to a series of Debt
Securities denominated in a foreign or composite currency will specify the
denomination thereof.
Registered Securities of any series (other than a Global Security, except as
set forth below) will be exchangeable for other Registered Securities of the
same series and of a like aggregate principal amount and tenor of different
authorized denominations. In addition, if Debt Securities of any series are
issuable as both Registered Securities and Bearer Securities, at the written
request of the holder, and subject to the terms of the applicable Indenture,
Bearer Securities (with all unmatured coupons, except as provided below, and
all mature coupons in default) of such series will be exchangeable into
Registered Securities of the same series of any authorized denominations and of
a like aggregate principal amount and tenor. No Bearer Securities will be
delivered in the United States. Bearer Securities with coupons appertaining
thereto surrendered in exchange for Registered Securities between a Regular
Record Date, or, in certain circumstances a Special Record Date, and the
relevant date for payment of interest must be surrendered without the coupon
relating to such date for payment of interest and such interest will not be
payable in respect of the Registered Security issued in exchange for such
Bearer Security, but will be payable only to the holder of such coupon when due
in accordance with the terms of the applicable Indenture. Unless otherwise
stated in a Prospectus Supplement, Registered Securities will not be
exchangeable into Bearer Securities. If a holder elects to receive a definitive
Bearer Security, rather than hold an interest in a permanent global Bearer
Security, then, at the option of the Company, such holder must pay to the
Company a service charge and a proportionate share of the cost of printing such
definitive Bearer Security (Section 2.05).
Debt Securities may be presented for exchange as provided above, and
Registered Securities (other than a Global Security) may be presented for
registration of transfer (with the form of transfer endorsed thereon duly
executed), at the office of the Security Registrar or at the office of any
transfer agent designated by the Company for such purpose with respect to any
series of Debt Securities and specified in the applicable Prospectus
Supplement, upon payment of any required service charges and taxes and other
governmental charges. The holders of the Debt Securities will be required to
pay all service charges for the exchange or transfer of any Debt Security,
except the Company shall pay for such service charges (i) for the transfer from
a temporary global Debt Security to any other form of Debt Security, (ii) if
the Debt Securities are listed on a stock exchange that requires the issuer to
pay such charges as a condition to listing or (iii) if the applicable
Prospectus Supplement otherwise specifies. Such transfer or exchange will be
effected once the Security Registrar or such transfer agent, as the case may
be, is satisfied with the document of title and identity of the person making
the request. Bearer Securities will be transferable by delivery.
The Company has appointed the Senior Trustee under the Senior Indenture, and
will appoint the Subordinated Trustee under the Subordinated Indenture, as
Security Registrar (Section 2.05). At the date of
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this Prospectus, the Corporate Trust Office of the Senior Trustee is located at
300 South Grand Avenue, 4th Floor, Los Angeles, California 90071. If the
identity or address of the Senior Trustee changes, the corrected information
will appear in the applicable Prospectus Supplement, as appropriate. The
identity and address of the Subordinated Trustee will appear in the applicable
Prospectus Supplement. If the applicable Prospectus Supplement specifies any
transfer agents in addition to the Security Registrar with respect to any
series of Debt Securities, the Company may at any time rescind the designation
of any such transfer agent or approve a change in the location through which
any such transfer agent acts, except that, if Debt Securities of a series are
issuable only as Registered Securities, the Company will be required to
maintain a transfer agent in each Place of Payment for such series and, if Debt
Securities of a series are issuable as Bearer Securities, the Company will be
required to maintain (in addition to the Security Registrar) a transfer agent
in a Place of Payment for such series located outside the United States. The
Company may at any time designate additional transfer agents with respect to
any series of Debt Securities (Section 4.02).
In the event of any redemption in part, the Company shall not be required to:
(i) issue, register the transfer or exchange of Debt Securities of any series
during a period beginning at the opening of 15 Business Days before any
selection of Debt Securities of that series to be redeemed and ending at the
close of business on (a) the day of mailing of the relevant notice of
redemption, if Debt Securities of the series are issuable only as Registered
Securities, (b) the day of the first publication of the relevant notice of
redemption, if Debt Securities of the series are issuable only as Bearer
Securities, or (c) the day of mailing of the relevant notice of redemption, if
Debt Securities of the series are issuable as Registered Securities and Bearer
Securities and there is no publication; (ii) register the transfer or exchange
of any Registered Security, or portion thereof, called for redemption, except
the unredeemed portion of any Registered Security being redeemed in part; or
(iii) exchange any Bearer Security called for redemption, except to exchange
such Bearer Security for a Registered Security of that series and like tenor
which is simultaneously surrendered for redemption (Section 2.05).
PAYMENT AND PAYING AGENTS
Payment of principal of, and any interest on, Registered Securities, unless
otherwise specified in the applicable Prospectus Supplement, will be made at
the office of the Paying Agent or Paying Agents as the Company may designate
from time to time, except that at the option of the Company payment of any
interest may be made by check mailed to the address of the person entitled
thereto as such address shall appear in the Security Register (Section 2.11).
Payment of any installment of interest on Registered Securities will be made to
the person in whose name such Registered Security is registered at the close of
business on the Regular Record Date for such interest (Section 2.09), except as
otherwise specified in the applicable Prospectus Supplement.
Payment of principal of, and any interest on, Bearer Securities will be
payable in United States dollars, unless a different currency is designated in
the applicable Prospectus Supplement, subject to any applicable laws and
regulations, at the offices of such Paying Agents outside the United States as
the Company may designate from time to time. Payment of interest on Bearer
Securities with coupons appertaining thereto on any Interest Payment Date will
be made only against surrender of the coupon relating to such Interest Payment
Date, unless otherwise indicated in the applicable Prospectus Supplement
(Sections 2.11 and 4.02). No payment with respect to any Bearer Security will
be made at the Corporate Trust Office of the Trustee or any office or agency of
the Company in the United States or by check mailed to any address in the
United States or by transfer to an account maintained in the United States.
Notwithstanding the foregoing, payments of principal of, and any interest on,
Bearer Securities denominated and payable in United States Dollars will be made
at the office of the Company's Paying Agent in New York City, if (but only if)
payment of the full amount thereof in United States Dollars at all offices or
agencies outside the United States is illegal or effectively precluded by
exchange controls or other similar restrictions (Section 4.02).
The Company has designated the New York City Corporate Trust Office of the
Senior Trustee, and will designate the New York City Corporate Trust Office of
the Subordinated Trustee, as the sole Paying Agent
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for payments with respect to Offered Debt Securities that are issuable as
Registered Securities, and as the Paying Agent in New York City for payments
with respect to Offered Debt Securities (subject to the limitations described
above in the case of Bearer Securities) that are issuable solely as Bearer
Securities or as both Registered Securities and Bearer Securities. Any Paying
Agents outside the United States and any other Paying Agents in the United
States initially designated by the Company for the Offered Debt Securities will
be named in the applicable Prospectus Supplement. The Company may at any time
designate additional Paying Agents or rescind the designation of any Paying
Agent or approve a change in the office through which any Paying Agent acts.
However, the Company will be required to maintain a Paying Agent in each Place
of Payment for Debt Securities of each series that is issuable solely as
Registered Securities, and the Company will be required to maintain for each
series of Bearer Securities a Paying Agent (i) in New York City for payments
with respect to any Registered Securities of the series (and for payments with
respect to Bearer Securities of the series in the circumstances described
above, but not otherwise), (ii) in a place of payment located outside the
United States where Debt Securities of such series and any coupons appertaining
thereto may be presented and surrendered for payment; and (iii) each place
outside the United States required by any stock exchange on which Debt
Securities of such series are listed (Section 4.02).
All monies paid by the Company to a Paying Agent for the payment of principal
of, and any interest on, any Debt Securities that remain unclaimed at the end
of two years after such principal or interest has become due and payable will
be repaid to the Company and the holder of such Debt Security or any coupon
appertaining thereto will thereafter look only to the Company or Unocal for
payment thereof (Section 13.05).
GLOBAL SECURITIES
The Offered Debt Securities 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 (the "Depositary") identified in the applicable Prospectus
Supplement. Global Securities may be issued in either registered or bearer form
and in either temporary or definitive form. Unless and until it is exchanged in
whole or in part for Debt Securities in definitive form, a Global Security may
not be transferred except as a whole by the Depositary for such Global Security
to a nominee of such Depositary or by a nominee of such Depositary to such
Depositary or another nominee of such Depositary or by such Depositary or any
such nominee to a successor of such Depositary or a nominee of such successor
(Sections 2.03 and 2.05).
The specific terms of the depositary arrangement with respect to any Offered
Debt Securities will be described in the applicable Prospectus Supplement. The
Company anticipates that the following provisions will apply to all depositary
arrangements.
Upon the issuance of a Global Security, the Depositary for such Global
Security will credit, on its book-entry registration and transfer system, the
respective principal amounts of the Debt Securities represented by such Global
Security to the accounts of institutions that have accounts with such
Depositary ("Participants"). The accounts to be credited shall be designated by
the underwriters of such Debt Securities, by certain agents of the Company or
by the Company, if such Debt Securities are offered and sold directly by the
Company. Ownership of beneficial interests in a Global Security will be limited
to Participants or persons that may hold interests through Participants.
Ownership of beneficial interests in such Global Security will be shown on, and
the transfer of that ownership will be effected only through, records
maintained by the Depositary for such Global Security or by Participants or by
persons that hold through Participants. The laws of some jurisdictions require
that certain purchasers of securities take physical delivery of such securities
in definitive form. Such ownership limits and such laws may impair the ability
to transfer beneficial interests in a Global Security.
So long as the Depositary for a Global Security, or its nominee, is the owner
of such Global Security, such Depositary or such nominee, as the case may be,
will be considered the sole owner or holder of the Debt Securities represented
by such Global Security for all purposes under the Indenture governing such
Debt Securities. Except as set forth below, owners of beneficial interests in a
Global Security will not be
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entitled to have Debt Securities of the series represented by such Global
Security registered in their names, will not receive or be entitled to receive
physical delivery of Debt Securities of such series in definitive form and will
not be considered the owners or holders thereof under the Indenture governing
such Debt Securities.
Subject to the restrictions discussed under "Limitations on the Issuance of
Bearer Securities" below, principal and interest payments on Debt Securities
registered in the name of or held by a Depositary or its nominee will be made
to the Depositary or its nominee, as the case may be, as the registered owner
or the holder of the Global Security representing such Debt Securities. None of
the Company, Unocal, the Trustee for such Debt Securities, any paying agent or
the Security Registrar for such Debt Securities will have any responsibility or
liability for any aspect of the records relating to or payments made on account
of beneficial ownership interests in a Global Security for such Debt Securities
or for maintaining, supervising or reviewing any records relating to such
beneficial ownership interests.
The Company expects that the Depositary for Debt Securities of a series, upon
receipt of any payment of principal or interest in respect of a definitive
Global Security, will immediately credit Participants' accounts with payments
in amounts proportionate to their respective beneficial interests in the
principal amount of such Global Security as shown on the records of such
Depositary. The Company also expects that payments by Participants to owners of
beneficial interests in such Global Security held through such Participants
will be governed by standing instructions and customary practices, as is now
the case with securities held for the accounts of customers in bearer form or
registered in "street name," and will be the responsibility of such
participants.
If a Depositary for Debt Securities of a series is at any time unwilling or
unable to continue as Depositary and a successor Depositary is not appointed by
the Company within 90 days, the Company and Unocal will issue Debt Securities
of such series in definitive form in exchange for the Global Security or
Securities representing the Debt Securities of such series. In addition, the
Company may at any time and in its sole discretion determine not to have any
Debt Securities of a series represented by one or more Global Securities and,
in such event, will issue Debt Securities of such series in definitive form in
exchange for the Global Security or Securities representing such Debt
Securities. Further, an owner of a beneficial interest in a Global Security
representing Debt Securities of such series may, under certain circumstances
and on terms acceptable to the Company and the Depositary for such Global
Security, receive Debt Securities of such series in definitive form. In any
such instance, an owner of a beneficial interest in a Global Security will be
entitled to physical delivery in definitive form of Debt Securities of the
series represented by such Global Security equal in principal amount to such
beneficial interest and to have such Debt Securities registered in its name (if
the Debt Securities of such series are issuable as Registered Securities).
Unless otherwise specified by the Company, Debt Securities of such series so
issued in definitive form will be issued (a) as Registered Securities in
denominations of $1,000 and integral multiples thereof, if the Debt Securities
of such series are issuable as Registered Securities; (b) as Bearer Securities
in the denominations of $5,000, if the Debt Securities of such series are
issuable as Bearer Securities or (c) as either Registered or Bearer Securities
in such denominations, if the Debt Securities of such series are issuable in
either form (Section 2.05). See, however, "Limitations on the Issuance of
Bearer Securities" below for a description of certain restrictions on the
issuance of a Bearer Security in definitive form in exchange for an interest in
a Global Security.
MEETINGS, MODIFICATION AND WAIVER
Modification of Indentures. The Senior Indenture provides, and the
Subordinated Indenture will provide, that the Company, Unocal and the Trustee
thereunder may, without the consent of any holders of Debt Securities, enter
into supplemental indentures for the purposes, among other things, of adding to
the Company's or Unocal's covenants, adding additional Events of Default,
establishing the form or terms of Debt Securities or curing ambiguities or
inconsistencies in such Indenture or making other provisions; provided such
action shall not adversely affect the interests of the holders of any series of
Debt Securities in any material respect (Section 11.01). In addition,
modifications and amendments of each Indenture may be made by the Company and
Unocal and the Trustee with the consent of the holders of not less than a
majority
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in aggregate principal amount of the Debt Securities then outstanding of each
series affected by such modification or amendment; provided, however, that no
such modification or amendment may, without the consent of the holder of each
Debt Security then outstanding that is affected thereby, (a) change the Stated
Maturity of the principal of, or any installment of principal of or interest on
any Debt Security, (b) reduce the principal amount of or interest on any Debt
Security, (c) change any obligation to pay additional amounts, (d) reduce the
amount of principal of an Original Issue Discount Security payable upon
acceleration of the Maturity thereof, (e) change the Place of Payment or the
currency or currency unit in which any Debt Security or interest thereon is
payable, (f) impair the right to institute suit for the enforcement of any
payment on or with respect to any Debt Security, (g) reduce the percentage in
principal amount of Debt Securities then outstanding of any series, the consent
of whose holders is required for modification or amendment of the applicable
Indenture or for any waiver of compliance with certain provisions of the
Indenture or for waiver of certain defaults, (h) change any obligation of the
Company to maintain an office or agency in the places and for the purposes
required by an Indenture, (i) if the Debt Securities are convertible into any
other security of the Company or Unocal, make any change that would materially
adversely affect the right to convert such Debt Securities, or (j) modify any
of the above provisions. If the Debt Securities of any series are issuable upon
the exercise of Debt Warrants, then each holder of a Debt Warrant with respect
to such series shall be treated as a holder of such Debt Securities in the
amount issuable upon exercise of such Debt Warrant for purposes of voting under
Section 11.02 of the Indenture (Sections 9.04 and 11.02).
Waiver of Default. The holders of a majority in aggregate principal amount of
the Debt Securities then outstanding of each series may, on behalf of the
holders of all the Debt Securities of that series, waive, insofar as that
series is concerned, compliance by Unocal with certain restrictive provisions
of the applicable Indenture (Section 5.11). The holders of a majority in
aggregate principal amount of the Debt Securities then outstanding of each
series may, on behalf of all holders of Debt Securities of that series and any
coupons appertaining thereto, waive any past default under the Indenture with
respect to Debt Securities of that series, except a default (a) in the payment
of principal of or any interest on any Debt Security of such series and (b) in
respect of a covenant or provision of the Indenture which cannot be modified or
amended without the consent of the holder of each Debt Security then
outstanding of such series affected (Section 7.06).
Calculating Outstanding Principal. The Senior Indenture provides, and the
Subordinated Indenture will provide, that in determining whether the holders of
the requisite principal amount of the Debt Securities that are outstanding have
given any request, demand, authorization, direction, notice, consent or waiver
thereunder or are present at a meeting of holders of Debt Securities for quorum
purposes, (i) the principal amount of an Original Issue Discount Security that
will be deemed to be outstanding will be the amount of the principal thereof
that would be due and payable as of the date of such determination upon
acceleration of the Maturity thereof, and (ii) the principal amount of a Debt
Security denominated in a foreign currency or currency unit will be deemed to
be that amount of United States dollars that could be obtained for such
principal amount on the basis of the spot rate of exchange for such foreign
currency or currency unit as determined by the Company or an Exchange Rate
Agent up to ten days before the date of the action by the holders (Section
9.04).
Meetings and Voting. The Senior Indenture contains, and the Subordinated
Indenture will contain, a provision for convening meetings of the holders of
Debt Securities of a series, including Debt Securities issuable as Bearer
Securities (Section 10.01). A meeting may be called at any time by the Trustee,
and upon request, by the Company, Unocal or the holders of at least 25% in
principal amount of the Debt Securities then outstanding of such series, in any
such case upon notice given in accordance with "Notices" below (Sections 10.02
and 10.03). Except as described above under "Modifications of Indentures" and
"Waiver of Default," a resolution presented at a meeting or reconvened meeting
at which a quorum of the holders of Debt Securities then outstanding of the
applicable series is present may be adopted by the affirmative vote of the
lesser of (i) the holders of a majority in principal amount of the Debt
Securities then outstanding of such series, or (ii) the holders of 66 2/3% in
principal amount of the Debt Securities then outstanding of such series
represented and voting at the meeting; provided, however, that if any consent,
waiver, or other action which the applicable Indenture expressly provides may
be made, given or taken by the holders of a specified
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percentage, which is less than a majority of the principal amount of the Debt
Securities then outstanding of a series, such action may be adopted at a
meeting or reconvened meeting at which a quorum is present by the affirmative
vote of the lesser of (a) the holders of such specified percentage in principal
amount of the Debt Securities then outstanding of that series or (b) a majority
in principal amount of Debt Securities then outstanding of such series
represented and voting at the meeting. Any resolution passed or decision taken
at any meeting of holders of Debt Securities of any series duly held in
accordance with the Indenture will be binding on all holders of Debt Securities
of that series and the related coupons whether or not present or represented at
the meeting.
The quorum at a meeting of the holders of a series of Debt Securities will be
persons holding or representing a majority in principal amount of the Debt
Securities then outstanding of a series, unless otherwise specified in a
Prospectus Supplement (Section 10.08).
The record date for purposes of determining the identity of holders entitled
to vote regarding, or consent to, actions by the Trustee and certain waivers
will be the later of (i) thirty (30) days prior to the first solicitation of
such consent or (ii) the date of the most recent list of holders of securities
furnished to the Trustee prior to such solicitation.
NOTICES
Except as otherwise provided in the applicable Indenture, notices to holders
of Bearer Securities will be given by publication at least once in a newspaper
published on a Business Day in New York City and London and in such other city
or cities as may be required with respect to such Bearer Securities and will be
mailed to such persons whose names and addresses were previously filed with the
Trustee under the applicable Indenture, within the time prescribed for the
giving of such notice. Notices to holders of Registered Securities will be
given by mail to the address of such holders as they appear in the Security
Register (Section 1.04).
TITLE
Title to any Bearer Securities (including Bearer Securities in permanent
global bearer form) and any coupons appertaining thereto will pass by delivery.
The Company, Unocal, the appropriate Trustee and any agent of the Company or
such Trustee may treat the bearer of any Bearer Securities, the bearer of any
coupon and the registered owner of any Registered Security as the absolute
owner thereof (whether or not such Debt Security or coupon is overdue and
notwithstanding any notice to the contrary) for the purpose of making payment
and for all the other purposes (Section 2.07).
DEFEASANCE
Unless otherwise indicated in the applicable Prospectus Supplement, the
obligations of the Company and Unocal with respect to the payment of the
principal of and interest on the Offered Debt Securities and their respective
obligations under Sections 5.01, 5.02, 5.03, 5.04, 5.05, 5.08, 5.09, 5.11,
12.01 and 12.02 of the Indenture will be terminated if: (i) the Company
irrevocably deposits or causes to be deposited with the appropriate Trustee,
under the terms of an escrow trust agreement in form and substance satisfactory
to the appropriate Trustee, as trust funds pledged as security for, and
dedicated solely to, the benefit of the holders of the Offered Debt Securities,
(a) money or (b) in the case of Offered Debt Securities and coupons denominated
in United States Dollars, U.S. Government Obligations (as defined in Section
13.04), and in the case of Debt Securities and coupons denominated in a foreign
currency, Foreign Government Securities (as defined in Section 13.04), which
through the payment of interest thereon and principal thereof in accordance
with their terms will provide money or (c) a combination of (a) and (b), in
each case in an amount sufficient to pay in the currency or currency unit in
which the Offered Debt Securities are payable all the principal of and interest
on the Offered Debt Securities on the dates such payments are due in accordance
with the terms of the Offered Debt Securities; and (ii) the Company furnishes
to the appropriate Trustee a ruling by the
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Internal Revenue Service, in form and substance satisfactory to such Trustee,
or an Opinion of Counsel, in form and substance satisfactory to the appropriate
Trustee, to the effect, in either case, that the holders of such Offered Debt
Securities (a) will not recognize income, gain or loss for Federal income tax
purposes as a result of the Company's exercise of the defeasance provisions of
the Indenture and (b) will be subject to Federal income tax in the same amount,
in the same manner and at the same time as would have been the case if the
Company had not exercised its defeasance rights under the Indenture (Section
13.03).
THE TRUSTEES
A Trustee may resign or be removed with respect to one or more series of Debt
Securities and a successor Trustee may be appointed by the Company to act with
respect to such series (Section 8.10). In the event that two or more Persons
are acting as Trustee with respect to different series of Debt Securities under
one of the Indentures, each such Trustee will be deemed to be a Trustee of a
trust under the applicable Indenture, separate and apart from the trust
administered by any other such Trustee, and any action described herein to be
taken by the "Trustee" may then be taken by each such Trustee with respect to,
and only with respect to, the one or more series of Debt Securities for which
it is Trustee (Section 8.11).
The initial Senior Trustee is Chemical Trust Company of California, Los
Angeles, California. The identity of the initial Subordinated Trustee has yet
to be determined. Chemical Bank, an affiliate of the Senior Trustee, is a
lending bank and one of the agents under the $1,400,000,000 Credit and
Guarantee Agreement, as amended, referred to above under "Mandatory Prepayment"
and the Company maintains various accounts and conducts other normal banking
transactions with Chemical Bank. The Senior Trustee is the transfer agent and
registrar for the Unocal Common Stock and $3.50 Convertible Preferred Stock and
is the Rights Agent under the Rights Agreement, dated as of January 29, 1990,
referred to below under "Description of the Common Stock--Rights to Purchase
Series A Preferred Stock." Chemical Bank is the administrator of the Unocal
Dividend Reinvestment and Common Stock Purchase Plan. Unocal and the Company
may in the future maintain other banking relationships with the Senior Trustee
and Chemical Bank in the ordinary course of business and may do the same with
the Subordinated Trustee.
GOVERNING LAW
The Indentures, the Debt Securities, the Guarantees, and the coupons will be
governed by, and construed in accordance with, the laws of the State of New
York (Section 15.05).
DESCRIPTION OF THE PREFERRED STOCK
The following description of Unocal Preferred Stock sets forth certain
general terms and provisions of the series of Unocal Preferred Stock to which
any Prospectus Supplement may relate. The specific terms of an offered series
of Unocal Preferred Stock will be described in the Prospectus Supplement
relating to such series. If so indicated in the Prospectus Supplement relating
thereto, the terms of any such series of Unocal Preferred Stock may differ from
the terms set forth below. The description of Unocal Preferred Stock set forth
below and the description of the terms of an offered series of Unocal Preferred
Stock set forth in the Prospectus Supplement relating thereto do not purport to
be complete and are qualified in their entirety by reference to Unocal's
Certificate of Incorporation, as amended (the "Certificate of Incorporation"),
and the Certificate of Designations relating to such offered series of Unocal
Preferred Stock, which will be filed with the Commission and incorporated by
reference as an exhibit to the Registration Statement of which this Prospectus
is a part at or prior to the time of the sale of such offered series.
Under Unocal's Certificate of Incorporation, Unocal's Board of Directors is
authorized, without further stockholder action, to provide for the issuance of
up to 100,000,000 shares of preferred stock, $0.10 par value per share, in one
or more series, with or without voting powers, and with such designations,
preferences and relative, participating, optional or other special rights, and
qualifications, limitations or restrictions, as the
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Board of Directors shall determine. As of the date of this Prospectus, Unocal
has outstanding 10,250,000 shares of $3.50 Convertible Preferred Stock ("$3.50
Preferred Stock"). So long as any shares of $3.50 Preferred Stock are
outstanding, the preferences, privileges and voting powers, if any, of the
shares of Unocal Preferred Stock of any series, and the restrictions or
qualifications thereof, shall be subject to the preferences, privileges and
voting powers, if any, of the shares of $3.50 Preferred Stock. See "Description
of Outstanding Preferred Stock." In addition, Unocal has reserved for issuance
and designated 3,000,000 shares of preferred stock as Series A Junior
Participating Cumulative Preferred Stock in connection with the Rights Plan
described below under "Description of the Common Stock--Rights to Purchase
Series A Preferred Stock."
GENERAL
The applicable Prospectus Supplement will set forth the following specific
terms regarding the series of Unocal Preferred Stock offered thereby: (i) the
designation, number of shares and liquidation preference per share; (ii) the
initial public offering price; (iii) the dividend rate or rates, if any, or the
method of determining the dividend rate or rates; (iv) the index, if any, upon
which the amount of dividends is to be determined; (v) the dates on which
dividends will accrue and be payable and the designated record dates for
determining the holders entitled to such dividends; (vi) any redemption or
sinking fund provisions; (vii) any conversion or exchange provisions; (viii)
any provisions for the issuance of global securities; (ix) the currency (which
may be composite currency) in which liquidation preferences, redemption prices
and dividends shall be payable, if other than United States dollars; (x) voting
rights, if different from those described under "--Voting Rights"; and (xi) any
additional terms, preferences or rights.
The shares of Unocal Preferred Stock will, when issued, be fully paid and
nonassessable and will have no preemptive rights.
The transfer agent, registrar, dividend disbursing agent, redemption agent
and, if applicable, conversion agent for the offered series of Unocal Preferred
Stock will be specified in the applicable Prospectus Supplement relating
thereto.
DIVIDENDS
The holders of the Unocal Preferred Stock of each series will be entitled to
receive, when, as and if declared by the Board of Directors of Unocal, out of
funds legally available therefor, cumulative or non-cumulative cash or other
dividends at such rate or rates and on such dates as will be set forth in the
applicable Prospectus Supplement. Such rates may be fixed or variable or both.
If variable, the formula used for determining the dividend rate for each
dividend period will be set forth in the Prospectus Supplement. Dividends will
be payable to the holders of record as they appear on the stock register of
Unocal on such record dates, not more than sixty (60) days nor less than ten
(10) days preceding the payment dates thereof, as will be fixed by the Board of
Directors of Unocal. If the Board of Directors of Unocal fails to declare a
dividend payable on a dividend payment date on any series of Unocal Preferred
Stock for which dividends are noncumulative ("Noncumulative Preferred Stock"),
then the holders of such series of Noncumulative Preferred Stock will have no
right to receive a dividend in respect of the dividend period ending on such
dividend payment date, and Unocal will have no obligation to pay a dividend for
such period, whether or not dividends on such series are declared payable on
any future dividend payment dates. Dividends payable on any series of Unocal
Preferred Stock for any period less than a full dividend period will be
computed on the basis of a 360-day year consisting of twelve 30-day months.
If the offered series of Unocal Preferred Stock ranks junior to or on a
parity with the $3.50 Preferred Stock as to dividends, no full dividends may be
declared or paid or set apart for payment on such offered series of Unocal
Preferred Stock for any period unless full cumulative dividends have been or
contemporaneously are declared and paid, or declared and a sum sufficient for
the payment thereof set apart for such payment, on the $3.50 Preferred Stock
for all dividend payment periods terminating on or prior to the date of the
payment of such full cumulative dividends. If the offered series of Unocal
Preferred Stock
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ranks on a parity with the $3.50 Preferred Stock and dividends are not paid in
full on the $3.50 Preferred Stock, then all dividends declared upon all
outstanding shares of $3.50 Preferred Stock and shares of such offered series
of Unocal Preferred Stock will be declared pro rata so that the amounts of
dividends declared per share on the $3.50 Preferred Stock and such offered
series of Unocal Preferred Stock will in all cases bear to each other the same
ratio that accrued and unpaid dividends per share on the shares of $3.50
Preferred Stock and such offered Unocal Preferred Stock bear to each other.
If the offered series of Unocal Preferred Stock ranks junior to or on a
parity with the $3.50 Preferred Stock, then unless full cumulative dividends on
all outstanding shares of $3.50 Preferred Stock have been paid or declared and
set aside for payment for all past dividend payment periods, no dividend or
distribution (other than a dividend or distribution in Unocal Common Stock or
in any other capital stock of Unocal ranking junior to the $3.50 Preferred
Stock as to dividends and upon liquidation and other than as provided in the
preceding paragraph) may be declared or paid or set apart for payment on the
offered series of Unocal Preferred Stock nor may the offered series of Unocal
Preferred Stock be redeemed, purchased or otherwise acquired for any
consideration (or any moneys be paid to or made available for a sinking fund
for the redemption of any shares of any such stock) by Unocal (except by
conversion into or exchange for capital stock of Unocal ranking junior to the
$3.50 Preferred Stock as to dividends and upon liquidation). These restrictions
will not prevent Unocal from making contributions to, or purchasing capital
stock in connection with, its employee benefit plans and dividend reinvestment
plan or from redeeming rights pursuant to its Rights Plan, described below
under "Description of the Common Stock--Rights to Purchase Series A Preferred
Stock."
REDEMPTION
The offered series of Unocal Preferred Stock may be redeemable at the option
of Unocal and may be subject to mandatory redemption pursuant to a sinking fund
or otherwise, in each case upon the terms, on the date or dates and at the
redemption price or prices set forth in the applicable Prospectus Supplement.
If fewer than all shares of the offered series of Unocal Preferred Stock are to
be redeemed, the shares to be redeemed will be selected by Unocal pro rata or
by lot, by any other method determined by the Board of Directors to be
equitable, or by any method set forth in the applicable Prospectus Supplement.
If any dividends on shares of the offered series of Unocal Preferred Stock
are in arrears, no shares of Unocal Common Stock or shares of capital stock
ranking junior to or on parity with the offered series of Unocal Preferred
Stock may be redeemed and no shares of such offered series of Unocal Preferred
Stock may be redeemed unless all outstanding shares of such series are
simultaneously redeemed, and Unocal may not purchase or otherwise acquire any
shares of such series; provided, however, that the foregoing shall not prevent
the purchase or acquisition of shares of such series pursuant to a purchase or
exchange offer made on the same terms to holders of all outstanding shares of
such series.
Notice of redemption will be given by mailing the same to each record holder
of the shares to be redeemed to the respective addresses of such holders as the
same shall appear on Unocal's stock register. Each such notice will state: (i)
the redemption date; (ii) the number of shares and series of Unocal Preferred
Stock to be redeemed; (iii) the redemption price and the manner in which such
redemption price is to be paid and delivered; (iv) the place or places where
certificates for such shares of Unocal Preferred Stock are to be surrendered
for payment of the redemption price; and (v) that dividends on the shares to be
redeemed will cease to accrue on such redemption date. If fewer than all shares
of any series of Unocal Preferred Stock held by any holder are to be redeemed,
the notice mailed to such holder will also specify the number of shares to be
redeemed from such holder.
If notice of redemption has been given, from and after the redemption date
for the shares of the series of Unocal Preferred Stock called for redemption
(unless default shall be made by Unocal in providing money for the payment of
the redemption price of the shares so called for redemption), dividends on the
shares of Unocal Preferred Stock so called for redemption will cease to accrue,
any right to convert the shares of
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Unocal Preferred Stock will terminate, such shares will no longer be deemed to
be outstanding, and all rights of the holders thereof as stockholders of Unocal
(except the right to receive the redemption price, without interest) will
cease. Upon surrender in accordance with such notice of the certificates
representing any shares so redeemed (properly endorsed or assigned for
transfer, if the notice shall so state), the redemption price set forth above
will be paid out of funds provided by Unocal. If fewer than all of the shares
represented by any such certificate are redeemed, a new certificate will be
issued representing the unredeemed shares without cost to the holder thereof.
LIQUIDATION PREFERENCE
The applicable Prospectus Supplement will set forth the specific liquidation
preference of the offered series of Unocal Preferred Stock.
If the offered series of Unocal Preferred Stock ranks on a parity with the
$3.50 Preferred Stock, then upon any voluntary or involuntary liquidation,
dissolution or winding up of Unocal, the holders of shares of such offered
series of Unocal Preferred Stock and of $3.50 Preferred Stock will be entitled
to receive out of the assets of Unocal available for distribution to
stockholders, before any distribution of assets is made to or set apart for the
holders of Unocal Common Stock or of any other shares of capital stock of
Unocal ranking as to such a distribution junior to the shares of such series,
with respect to the offered series of Unocal Preferred Stock, an amount
described in the Prospectus Supplement relating to such offered series of
Unocal Preferred Stock, and with respect to $3.50 Preferred Stock, an amount
equal to the liquidation value of such shares. See "--Description of
Outstanding Preferred Stock." If the offered series of Unocal Preferred Stock
ranks on a parity with the $3.50 Preferred Stock, and upon any voluntary or
involuntary dissolution, liquidation or winding up of Unocal, the amounts
payable with respect to the liquidation preference of the $3.50 Preferred Stock
and the offered series of Unocal Preferred Stock are not paid in full, then the
holders of $3.50 Preferred Stock and the offered series of Unocal Preferred
Stock will share ratably in any such distribution of assets of Unocal in
proportion to the full distributable amounts to which they are entitled. After
payment of the full amount of the liquidating distributions to which they are
entitled, the holders of $3.50 Preferred Stock and the offered series of Unocal
Preferred Stock will have no right or claim to any of the remaining assets of
Unocal. Neither the sale of all or substantially all of the property or
business of Unocal (other than in connection with the winding up of its
business), nor the merger or consolidation of Unocal into or with any other
corporation will be deemed to be a dissolution, liquidation or winding up,
voluntary or involuntary, of Unocal.
Unocal conducts substantially all of its operations through the Company. The
right of Unocal, and hence the right of creditors and stockholders of Unocal,
to participate in any distribution of assets of any subsidiary (including the
Company) upon its liquidation or reorganization or otherwise is necessarily
subject to the prior claims of creditors of the subsidiary, except to the
extent that claims of Unocal itself as a creditor of the subsidiary may be
recognized.
CONVERSION AND EXCHANGE
The terms, if any, on which shares of any offered series of Unocal Preferred
Stock are convertible into or exchangeable for Unocal Common Stock will be set
forth in the Prospectus Supplement relating thereto. Such terms may include
provisions for conversion or exchange, either mandatory, at the option of the
holder, or at the option of Unocal.
VOTING RIGHTS
Except as indicated below or in the Prospectus Supplement relating to a
particular offered series of Unocal Preferred Stock, or except as expressly
required by applicable law, the holders of Unocal Preferred Stock will not be
entitled to vote.
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On matters on which holders of such offered series and holders of any other
series of Unocal Preferred Stock are entitled to vote as a single class, each
full share of any series of Unocal Preferred Stock shall be entitled to one
vote. Therefore, the voting power of such series will depend on the number of
shares in such series, not the liquidation preference or initial offering price
of the shares of such series of the Unocal Preferred Stock.
If the equivalent of six quarterly dividends (whether or not consecutive)
payable on any offered series of Unocal Preferred Stock, $3.50 Preferred Stock
or any other series of Unocal Preferred Stock are in default, the number of
directors of Unocal will be increased by two and the holders of all outstanding
shares of Unocal Preferred Stock, $3.50 Preferred Stock, and all other
outstanding shares of preferred stock having similar voting rights, voting as a
single class without regard to series and with no cumulative voting, to the
exclusion of the holders of Unocal Common Stock, will be entitled to elect
those two additional directors, who shall serve until all dividends in default
have been paid or declared and set apart for payment.
So long as any shares of Unocal Preferred Stock and $3.50 Preferred Stock
remain outstanding, Unocal shall not, without the consent of the holders of at
least two-thirds of the shares of the affected series of Unocal Preferred Stock
and $3.50 Preferred Stock outstanding at the time (voting separately as a class
with all other affected series of preferred stock ranking on a parity with the
affected series of Unocal Preferred Stock and $3.50 Preferred Stock), (i)
authorize, create or issue, or increase the authorized amount of, any class or
series of capital stock ranking prior to the affected series of Unocal
Preferred Stock and $3.50 Preferred Stock as to dividends or upon liquidation;
or (ii) amend, alter or repeal the provisions of Unocal's Certificate of
Incorporation, whether by merger, consolidation or otherwise, so as to
materially and adversely affect any right, preference, privilege or voting
power of the affected series of Unocal Preferred Stock or $3.50 Preferred Stock
or the holders thereof; provided, however, that any increase in the amount of
the authorized Common Stock or authorized Preferred Stock or the creation and
issuance of other series of capital stock ranking on a parity with or junior to
the affected series of Unocal Preferred Stock or $3.50 Preferred Stock as to
dividends and upon liquidation shall not be deemed to materially and adversely
affect such rights, preferences, privileges or voting powers.
DESCRIPTION OF OUTSTANDING PREFERRED STOCK
As of the date of this Prospectus, Unocal has issued and outstanding
10,250,000 shares of the $3.50 Preferred Stock, which is senior to the Unocal
Common Stock as to payment of dividends and distribution of assets on
liquidation, dissolution or winding up of Unocal.
Holders of $3.50 Preferred Stock are entitled to receive, when and as
declared by Unocal's Board of Directors, out of Unocal's funds legally
available for payment, quarterly cash dividends at an annual rate of $3.50 per
share payable in arrears. Dividends are cumulative.
In the event of any voluntary or involuntary dissolution, liquidation or
winding up of Unocal, the holders of $3.50 Preferred Stock will be entitled to
receive and to be paid out of Unocal's assets available for distribution to its
stockholders, before any payment or distribution is made to holders of Unocal
Common Stock or any other class of capital stock of Unocal ranking junior to
the $3.50 Preferred Stock upon liquidation, a liquidation preference in the
amount of $50 per share of the Unocal Preferred Stock plus accrued and unpaid
dividends.
The $3.50 Preferred Stock is not subject to any mandatory redemption, sinking
fund or other similar provisions. At any time on or after July 15, 1996, the
$3.50 Preferred Stock is redeemable in whole or in part, at Unocal's option, at
redemption prices declining from 104.2% at July 15, 1996 to 100% at July 15,
2002.
The $3.50 Preferred Stock is convertible at the option of the holder at any
time, unless previously redeemed, into Unocal Common Stock at the rate of
1.6260 shares of Unocal Common Stock for each share
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<PAGE>
of $3.50 Preferred Stock (equivalent to a conversion price of $30.75 per share
of Unocal Common Stock). The conversion price is subject to adjustment in
certain events, including a Non-Stock Fundamental Change or a Common Stock
Fundamental Change (as such terms are defined in the Certificate of
Designations relating thereto).
Holders of $3.50 Preferred Stock have no right to require redemption of the
$3.50 Preferred Stock.
DESCRIPTION OF THE COMMON STOCK
Unocal's Board of Directors is authorized to issue a maximum of 750,000,000
shares of Unocal Common Stock, $1.00 par value per share, under Unocal's
Certificate of Incorporation. As of December 31, 1994, 244,198,701 shares of
Unocal Common Stock were outstanding and 32,925,005 shares were reserved for
issuance upon the conversion of the $3.50 Preferred Stock and in connection
with Unocal's employee benefit plans, its Directors' Restricted Stock Plan and
its Dividend Reinvestment and Common Stock Purchase Plan.
The following summary of the rights of the Unocal Common Stock does not
purport to be complete and is subject in all respects to the applicable
provisions of the Delaware General Corporation Law and the Certificate of
Incorporation.
Dividend Rights: Subject to the prior rights, if any, of the holders of $3.50
Preferred Stock and Unocal Preferred Stock, holders of Unocal Common Stock are
entitled to receive such dividends as are declared by Unocal's Board of
Directors out of funds legally available therefor.
Voting Rights: Subject to the rights, if any, of the holders of $3.50
Preferred Stock and Unocal Preferred Stock, all voting rights are vested in the
holders of shares of Unocal Common Stock, each share being entitled to one vote
on all matters presented for a vote (except for those matters for which a
separate class vote is required under Delaware law). The holders of one-third
of the shares entitled to vote constitute a quorum at any meeting of
stockholders.
Liquidation Rights: Subject to the rights, if any, of the holders of $3.50
Preferred Stock and Unocal Preferred Stock, in the event of liquidation of
Unocal, holders of Unocal Common Stock will share pro rata in all assets
distributable to stockholders in respect of shares held by them.
Preemptive Rights: Holders of Unocal Common Stock are not entitled to any
preemptive rights to subscribe for any additional securities that may be
issued.
Non-Cumulative Voting: Holders of shares of Unocal Common Stock have non-
cumulative voting rights, which means that holders of more than 50% of the
shares voting for the election of directors can elect 100% of the directors
standing for election if they choose to do so, and, in such event, the holders
of the remaining less than 50% of the shares voting for the election of
directors will not be able to elect any person or persons to the Board of
Directors of Unocal. Unocal's Board of Directors is divided into three classes,
and directors are normally elected for three-year terms. One of the classes is
presented for election at each annual meeting, so that the entire Board of
Directors is never presented for election in any one year.
Chemical Trust Company of California, Los Angeles, California, is the
transfer agent and registrar for the Unocal Common Stock. The Unocal Common
Stock may also be presented for transfer at the office of Chemical Bank, New
York, New York.
RIGHTS TO PURCHASE SERIES A PREFERRED STOCK
In January 1990, the Board of Directors of Unocal adopted a stockholder
rights plan (the "Rights Plan") and declared a dividend of one right (a
"Right"; collectively, the "Rights") for, and to be attached to, each
outstanding share of Common Stock. The resolutions creating the Rights Plan
provide that as long as the
22
<PAGE>
Rights are attached to shares of Common Stock, as provided in the "Rights
Agreement" referred to below, one additional Right will be issued and delivered
with each share of Common Stock that becomes outstanding after February 12,
1990. Each Right entitles the holder thereof to purchase one one-hundredth of a
share of preferred stock designated as the Series A Junior Participating
Cumulative Preferred Stock ("Series A Preferred Stock"). The Rights will expire
on January 29, 2000, unless redeemed earlier, and will not be exercisable or
transferable separately from the shares of Common Stock until the close of
business on the Distribution Date, which will occur on the earlier of (i) the
tenth day following a public announcement that a person or group of affiliated
or associated persons (a "15% Stockholder") has acquired, or obtained the right
to acquire, beneficial ownership of 15% or more of the outstanding Common Stock
or (ii) the date of the commencement or the announcement of an intention to
make a tender or exchange offer that would cause any person or group to become
a 15% Stockholder.
Pursuant to the Rights Plan, 3,000,000 shares of Series A Preferred Stock
have been designated and reserved for issuance upon exercise of the Rights. An
additional number of shares of Series A Preferred Stock equal to one one-
hundredth of the number of shares of Unocal Common Stock will be reserved for
issuance in connection with an issuance of Preferred Stock or Unocal Common
Stock, whether issued directly, upon exercise of Equity Warrants or upon
conversion of Preferred Stock or Debt Securities.
A description of the Rights and the Series A Preferred Stock is set forth in
the Rights Agreement, dated January 29, 1990, between Unocal and Chemical Trust
Company of California, as Rights Agent, which is included as exhibit to the
Registration Statement of which this Prospectus is a part.
CERTAIN PROVISIONS OF THE CERTIFICATE OF INCORPORATION AND BYLAWS OF UNOCAL
The Certificate of Incorporation and Bylaws of Unocal contain certain
provisions which may have the effect of rendering a change of control of Unocal
more difficult. The Certificate of Incorporation provides that the Board of
Directors is divided into three classes, with the directors serving three-year
staggered terms. Special meetings of Unocal's stockholders generally may be
called only by the Board of Directors, and any action required or permitted to
be taken by the stockholders must be taken at an annual or special meeting and
may not be effected by written consent. The vote of 75% of the outstanding
stock of Unocal entitled to vote is required for the stockholders to adopt,
amend or repeal bylaws. Such a 75% vote is also required for approval of a
merger or consolidation of Unocal with, and certain other transactions with,
another corporation which, with its affiliates, owns beneficially more than 10%
of the total voting power of all outstanding shares of Unocal voting stock (a
"Related Corporation"), unless such a transaction was approved by 75% of the
directors of Unocal prior to the Related Corporation becoming such. The
Certificate of Incorporation also require such a 75% vote to repeal or amend
any of the foregoing provisions.
The Bylaws of Unocal require 30 days' advance notice of, and specified
information with respect to, nominations by stockholders of persons for
election as directors and other business to be brought before an annual meeting
by a stockholder.
As set forth above under "Description of the Preferred Stock," the Board of
Directors has the authority, without further stockholder action, to provide for
the issuance of Unocal Preferred Stock and to fix the terms thereof. Provisions
which could render a change of control of Unocal more difficult, such as
extraordinary voting, dividend, redemption or conversion rights, could be
included in such Unocal Preferred Stock.
23
<PAGE>
DESCRIPTION OF THE WARRANTS
The following description sets forth certain general terms and provisions of
the Debt Warrants and Equity Warrants to which a Prospectus Supplement may
relate. The particular terms of any Debt Warrants and Equity Warrants offered
will be described in the Prospectus Supplement relating to such Debt Warrants
or Equity Warrants.
The following summaries of certain provisions of the Debt Warrants and Equity
Warrants and of one or more separate Warrant Agreements (each a "Warrant
Agreement") between the Company and Unocal and one or more banking institutions
or trust companies, as Warrant Agent (each a "Warrant Agent"), do not purport
to be complete and are subject to and qualified in their entirety by reference
to all provisions of the applicable Warrant Agreement. Forms of Warrant
Agreements are filed as exhibits to the Registration Statement. Each Warrant
Agreement will be governed by, and construed in accordance with, the laws of
the State of New York.
GENERAL
Debt Warrants and Equity Warrants, evidenced by Warrant Certificates (the
"Warrant Certificates"), may be issued under a Warrant Agreement independently
or together with any Debt Securities, Unocal Preferred Stock or Unocal Common
Stock and may be transferable with or separate from such Securities. If Debt
Warrants to purchase Debt Securities are offered, the applicable Prospectus
Supplement will describe the terms of the Debt Warrants, including the
following: (i) the offering price, if any, including the currency, or currency
unit in which such price will be payable; (ii) the designation, aggregate
principal amount and terms of the Offered Debt Securities with which the Debt
Warrants are issued and the number of Debt Warrants issued with each such
Offered Debt Security; (iii) if applicable, the date on or after which the Debt
Warrants and the related Offered Debt Securities will be separately
transferable; (iv) the designation, aggregate principal amount and terms of
Debt Securities purchasable upon exercise of one Debt Warrant and the price or
prices at which, and the currency, or currency unit in which such principal
amount of Debt Securities may be purchased upon exercise; (v) the date on which
the right to exercise the Debt Warrants commences and the date on which such
right expires; (vi) any United States Federal income tax consequences; (vii)
whether the Debt Warrants represented by the Warrant Certificates will be
issued in registered or bearer form or both; and (viii) any other material
terms of the Debt Warrants. If Equity Warrants are offered, the applicable
Prospectus Supplement will describe the terms of the Equity Warrants, including
the following: (i) the offering price, if any, including the currency or
currency unit in which such price will be payable; (ii) the designation of any
series of Unocal Preferred Stock purchasable upon exercise of the Equity
Warrants; (iii) the number of shares of Unocal Preferred Stock or Unocal Common
Stock purchasable upon exercise of one Equity Warrant, and the price or prices
at which, and the currency, or currency unit in which such shares may be
purchased upon exercise; (iv) the date on which the right to exercise the
Equity Warrants commences and the date on which such right expires; (v) any
United States Federal income tax consequences; (vi) whether the Equity Warrants
represented by the Warrant Certificate will be issued in registered or bearer
form or both; (vii) whether the Equity Warrants or the underlying Unocal
Preferred Stock or Unocal Common Stock will be listed on any national
securities exchange; and (viii) any other material terms of the Equity
Warrants. In addition, if any Debt Warrants or Equity Warrants are sold for any
foreign currency or currency units, the restrictions, elections, tax
consequences, specific terms and other information with respect to such issue
will be specified in the applicable Prospectus Supplement.
Warrant Certificates, if any, may be exchanged for new Warrant Certificates
of different denominations and may (if in registered form) be presented for
registration of transfer at the corporate trust office of the Warrant Agent,
which will be listed in the applicable Prospectus Supplement, or at such other
office as may be set forth therein. Warrantholders do not have any of the
rights of holders of Debt Securities (except to the extent that the consent of
Warrantholders may be required for certain modifications of the terms of the
Indenture under which the series of Offered Debt Securities issuable upon
exercise of the Warrants are to be
24
<PAGE>
issued) or Unocal Preferred or Common stockholders and are not entitled to
payments of principal and interest, if any, on Debt Securities or to dividends
or other distributions made with respect to Unocal Preferred Stock or Unocal
Common Stock.
EXERCISE OF WARRANTS
Warrants may be exercised by surrendering the Warrant Certificate, if any, at
the corporate trust office or other designated office of the Warrant Agent,
with (i) the form of election to purchase on the reverse side of the Warrant
Certificate, if any, properly completed and executed, and (ii) payment in full
of the exercise price, as set forth in the applicable Prospectus Supplement.
Upon exercise of Warrants, the Warrant Agent will, as soon as practicable,
deliver the Debt Securities, Unocal Preferred Stock or Unocal Common Stock
issuable upon the exercise of the Warrants in authorized denominations in
accordance with the instructions of the exercising Warrantholder and at the
sole cost and risk of such holder. If less than all of the Warrants evidenced
by the Warrant Certificate are exercised, a new Warrant Certificate will be
issued for the remaining amount of unexercised Warrants, if sufficient time
exists prior to the expiration date.
LIMITATIONS ON THE ISSUANCE OF BEARER SECURITIES
In compliance with United States Federal tax laws and regulations, Bearer
Securities may not, in general, be offered or sold during the Restricted Period
(as defined below) to a person within the United States or to, or for the
account or benefit of, a United States person. However, offers or sales can be
made to (i) the United States office of international organizations (as defined
in Section 7701(a)(18) of the Internal Revenue Code of 1986, as amended (the
"Code") and the regulations thereunder), (ii) the United States office of
foreign central banks (as defined in Section 895 of the Code and the
regulations thereunder) and (iii) foreign branches of United States financial
institutions which are purchasing for their own account or for resale, and
which have agreed to comply with the reporting requirements of Section
165(j)(3)(A), (B) or (C) of the Code and the regulations thereunder. In
addition, sales can be made to a United States person acquiring a Bearer
Security through a financial institution described in clause (iii) of the
preceding sentence if certain certification requirements and other conditions
are satisfied. Definitive Bearer Securities will not be delivered within the
United States, or in any event unless the beneficial owner of the Securities
has complied with the certification requirements to be described in the
relevant Prospectus Supplement.
Each underwriter, dealer and agent (or other "distributor" within the meaning
of the regulations under Section 163 of the Code) participating in the
distribution of any Bearer Securities will agree that (i) it will not offer,
sell or deliver Bearer Debt Securities within the United States or to, or for
the account or benefit of, United States persons (other than qualifying
financial institutions) (a) until 40 days after the closing date or (b) at any
time if the obligation is held as part of an unsold allotment or subscription
(the "Restricted Period"), and (ii) it has in effect procedures reasonably
designed to ensure that its employees and agents who are directly engaged in
selling the Bearer Securities are aware of the restrictions described in clause
(i) of this sentence. Bearer Securities will bear a legend on their face and on
any interest coupons that may be detached therefrom or, if the obligation is
evidenced by a book entry, a legend will appear in the book of record in which
the book entry is made substantially to the following effect: "Any United
States person who holds this obligation will be subject to limitations under
the United States income tax laws, including the limitations provided in
Section 165(j) and 1287(a) of the Internal Revenue Code." The Code Sections
referred to in such legend provide that a United States person who holds a
Bearer Security will not be allowed to deduct any loss realized on the sale,
exchange or redemption of such Bearer Security and any gain (which might
otherwise be characterized as capital gain) recognized on such sale, exchange
or redemption will be treated as ordinary income. If the Company or Unocal
issue Warrants in bearer form, they will specify in the applicable Prospectus
Supplement what, if any, restrictions or certification requirements will be
applicable to the issuance and delivery of such bearer Warrants.
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As used herein, "United States person" means an individual who is a citizen
or resident of the United States, a corporation, partnership or other entity
created or organized in or under the laws of the United States or any political
subdivision thereof, or an estate or trust the income of which is subject to
United States Federal income taxation regardless of its source; and "United
States" means the United States of America (including the States and the
District of Columbia) and its possessions, which include, as of the date
hereof, Puerto Rico, the U.S. Virgin Islands, Guam, American Samoa, Wake
Island, and Northern Mariana Islands.
PLAN OF DISTRIBUTION
The Company and Unocal may offer and sell the Securities in any of three
ways: (i) directly to investors; (ii) to investors through agents; or (iii)
through underwriters or dealers. The Securities may also be exchanged for
outstanding securities of the Company or Unocal or both and resold by the
holder pursuant to this Prospectus in the over-the-counter market, on the New
York Stock Exchange, through negotiated transactions or otherwise, at market
prices prevailing at the time of sale or at prices otherwise negotiated. The
terms of any such exchange and the method of resale by the holder will be set
forth in a Prospectus Supplement. The applicable Prospectus Supplement with
respect to the Securities will set forth the terms of the offering of the
Securities, including the name or names of any underwriters, the purchase price
of the Securities and the proceeds to the Company or Unocal, as the case may
be, from such sale, any underwriting discounts 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.
If underwriters are used in the sale, the 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 either offered to the public through underwriting syndicates
represented by managing underwriters, or directly by one or more underwriters.
Unless otherwise set forth in the applicable Prospectus Supplement, the
obligations of the underwriters to purchase the Securities will be subject to
certain conditions precedent and the underwriters will be obligated to purchase
all the 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.
Except for Unocal Common Stock, each issue of Securities sold will be a new
issue of securities with no established trading market. Any underwriters or
agents with respect to an issue of Securities may make a market in such
Securities, but such underwriters or agents will not be obligated to do so and
may discontinue any market making at any time without notice. No assurance can
be given as to the liquidity of any Securities in the secondary market.
If the Securities are issued in exchange for outstanding securities of the
Company or Unocal, the applicable Prospectus Supplement will set forth the
terms of the exchange, the identity of and the terms of sale of the Securities
by the selling security holders.
Securities may be sold directly by the Company or Unocal or through agents
designated by the Company or Unocal from time to time. Any agent involved in
the offer or sale of the Securities in respect of which this Prospectus is
delivered will be named, and any commissions payable by the Company or Unocal
to such agent will be set forth, in the applicable Prospectus Supplement.
Unless otherwise indicated in the applicable Prospectus Supplement, any such
agent will be acting on a best efforts basis for the period of its appointment.
If so indicated in the applicable Prospectus Supplement, the Company or
Unocal will authorize agents, underwriters or dealers to solicit offers by
certain specified institutions to purchase the Securities from the Company at
the public offering price set forth in the applicable 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 applicable Prospectus Supplement and the applicable
Prospectus Supplement will set forth the commission payable for solicitation of
such contracts.
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<PAGE>
Agents, selling security holders and underwriters may be entitled under
agreements entered into with the Company and Unocal to indemnification by the
Company and Unocal against certain civil liabilities, including certain
liabilities under the Securities Act of 1933, or to contribution with respect
to payments which the agents, selling security holders or underwriters may be
required to make in respect thereof. Agents, selling security holders and
underwriters may be customers of, engage in transactions with, or perform
services for the Company or Unocal in the ordinary course of business.
EXPERTS
The consolidated financial statements and financial statement schedules of
the Company and Unocal as of December 31, 1993 and 1992, and for each of the
three years in the period ended December 31, 1993, included in the 1993 Annual
Reports on Form 10-K of the Company and of Unocal incorporated by reference in
this Prospectus, have been incorporated herein in reliance on the reports of
Coopers & Lybrand, independent accountants, which reports are incorporated by
reference herein, and on the authority of that firm as experts in accounting
and auditing. Each of such reports includes an explanatory paragraph with
respect to the changes in methods of accounting for income taxes in 1992 and
for postretirement benefits other than pensions and for postemployment benefits
in 1993.
The information concerning estimates of proved oil and gas and geothermal
reserves attributable to the Company and Unocal, included in the 1993 Annual
Reports on Form 10-K of the Company and Unocal incorporated by reference in
this Prospectus, has been prepared by the Company's petroleum engineering staff
and certified by John F. Imle, Jr., a director and President of Unocal and the
Company and formerly President of the Energy Resources Division of Unocal and
the Company, and has been incorporated by reference herein in reliance upon the
authority of Mr. Imle as an expert in the field of petroleum engineering. As of
December 31, 1994, Mr. Imle owned 60,296 shares of Unocal Common Stock, which
included 7,149 restricted shares that vest in 1997 and 1998. Mr. Imle also held
options to purchase 150,162 shares of Unocal Common Stock at prices ranging
from $11.1563 to $30.0625, with expiration dates ranging from 1996 to 2004. In
addition, he held 27,157 performance share units initially awarded to him in
1992 through 1994, payable four years after the award dates. Each unit is the
equivalent of one share of Unocal Common Stock. The number of units actually
paid out at the end of each four-year term could be between 0% and 200% of the
units initially awarded, depending upon Unocal's total return to stockholders
compared to that of a peer group of companies. However, the value of the units
paid out may not exceed 400% of the value of the units initially awarded. The
units are paid out in a combination of cash and shares of Unocal Common Stock,
as determined by the Compensation Committee of the Board of Directors.
LEGAL MATTERS
Legal matters in connection with the issuance and sale of the Securities
offered hereby will be passed upon for the Company and Unocal by Dennis P. R.
Codon, Esq., Vice President and General Counsel of the Company and Unocal, and
for any underwriters, selling security holders or agents by Brobeck, Phleger &
Harrison, Los Angeles, California. As of December 31, 1994, Mr. Codon owned
11,212 shares of Unocal Common Stock, which included 7,002 restricted shares
that vest in 1995 through 1999. He also held options to purchase 30,267 shares
of Unocal Common Stock at prices ranging from $20.5313 to $30.0625, with
expiration dates ranging from 2000 to 2004. In addition, Mr. Codon held 10,679
performance share units awarded to him in 1992 through 1994, payable as
explained in the preceding paragraph. Brobeck, Phleger & Harrison also
represents the Company and Unocal in certain legal matters.
27
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NO DEALER, AGENT, SALESMAN OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE
ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN AS CONTAINED IN THIS
PROSPECTUS, PROSPECTUS SUPPLEMENT AND ANY PRICING SUPPLEMENT IN CONNECTION
WITH THE OFFER CONTAINED HEREIN AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE
COMPANY, THE GUARANTOR OR BY ANY AGENT. THIS PROSPECTUS, PROSPECTUS SUPPLEMENT
AND ANY PRICING SUPPLEMENT SHALL NOT CONSTITUTE AN OFFER TO SELL OR A
SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OTHER THAN THE SECURITIES
OFFERED BY THIS PROSPECTUS, PROSPECTUS SUPPLEMENT AND SUCH PRICING SUPPLEMENT
OR AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY SECURITIES
OFFERED HEREBY IN ANY JURISDICTION TO ANY PERSON TO WHOM IT IS UNLAWFUL TO
MAKE SUCH OFFER OR SOLICITATION IN SUCH JURISDICTION. THE DELIVERY OF THIS
PROSPECTUS, PROSPECTUS SUPPLEMENT AND ANY PRICING SUPPLEMENT AT ANY TIME DOES
NOT IMPLY THAT THE INFORMATION HEREIN OR THEREIN IS CORRECT AS OF ANY TIME
SUBSEQUENT TO THEIR RESPECTIVE DATES.
-----------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
PROSPECTUS SUPPLEMENT
<S> <C>
Description of the Medium-Term Notes....................................... S-2
United States Tax Considerations........................................... S-13
Plan of Distribution of the Notes.......................................... S-16
PROSPECTUS
Available Information...................................................... 2
Incorporation of Certain Documents by Reference............................ 2
Use of Proceeds............................................................ 3
The Company and Unocal..................................................... 3
Historical Condensed Consolidated Selected Financial Information........... 4
Description of the Debt Securities......................................... 5
Description of the Preferred Stock......................................... 17
Description of the Common Stock............................................ 22
Description of the Warrants................................................ 24
Limitations on the Issuance of Bearer Securities........................... 25
Plan of Distribution....................................................... 26
Experts.................................................................... 27
Legal Matters.............................................................. 27
</TABLE>
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LOGO
OF UNOCAL CORPORATION
$1,188,800,000
Union Oil Company
of California
Medium-Term Notes, Series C
Payment of Principal,
Interest and Premium,
if any, Guaranteed by
Unocal Corporation
PROSPECTUS SUPPLEMENT
CS First Boston
Salomon Brothers Inc
UBS Securities Inc.
- -------------------------------------------------------------------------------
