<PAGE> 1
PROSPECTUS SUPPLEMENT
(To Prospectus Dated February 11, 1998)
$25,000,000
UNION TANK CAR COMPANY
MEDIUM-TERM NOTES, SERIES D
Union Tank Car Company may use this prospectus supplement to offer its
medium-term notes, Series D from time to time.
The following terms may apply to the notes. The Company will provide
the final terms for each note in a pricing supplement.
- They may have maturities of nine months or more.
- They may be subject to redemption or repayment at the option of the
Company or the holder.
- They will be denominated in U.S. dollars unless otherwise specified
by the Company and described in a pricing supplement.
- They may bear interest at a fixed or floating interest rate. Certain
notes issued at a discount may not bear interest. Floating interest
rates may be based on any of the following formulas or on other
interest rate formulas specified in a pricing supplement.
<TABLE>
<S> <C> <C> <C> <C>
____ CD Rate ____ Treasury Rate
____ Commercial Paper Rate ____ Prime Rate
____ Federal Funds Rate ____ CMT Rate
____ LIBOR ____ Another Base Rate specified in
the pricing supplement
</TABLE>
- They may be issued as indexed notes.
- They may be issued in certificated or book-entry form.
- Interest will be paid on fixed rate notes on February 15 and August
15 of each year.
- Interest will be paid on floating rate notes on dates determined at
the time of issuance.
- They will be issued in minimum denominations of $1,000 and increased
in multiples of $1,000.
The Company will receive between $24,812,500 and $24,968,750 of the
proceeds from the sale of the notes after paying the Agent's commissions of
between $31,250 and $187,500. The exact proceeds to the Company will be set at
the time of issuance. The Company does not expect that any of the notes will be
listed on an exchange, and a market may not develop for the notes.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved these securities or determined if this
prospectus supplement or the related prospectus is truthful or complete. Any
representation to the contrary is a criminal offense.
--------------------
SALOMON SMITH BARNEY
April 28, 1999
<PAGE> 2
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth the ratio of earnings to fixed charges
for the Company and its subsidiaries for the periods indicated. The ratio of
earnings to fixed charges represents the number of times that interest expense,
amortization of debt discount and the interest component of rent expense were
covered by income before income taxes and cumulative effect of a change in
accounting principle and such interest, amortization and the interest component
of rentals.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------
1998 1997 1996 1995 1994
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
3.23x 2.74x 2.84x 2.41x 2.05x
</TABLE>
DESCRIPTION OF THE NOTES
The following description of the particular terms of the notes
supplements, and to the extent inconsistent therewith replaces, the description
of the general terms and provisions of the Debt Securities set forth in the
accompanying Prospectus.
GENERAL
The Company will issue the notes under an Indenture dated as of
January 16, 1997, as supplemented (the "Debt Indenture"), between the Company
and Harris Trust and Savings Bank, as Trustee. At the date of this Prospectus
Supplement, the notes offered pursuant to this Prospectus Supplement are limited
to an aggregate initial public offering price or purchase price of up to
$25,000,000, which amount is subject to reduction as a result of the sale by the
Company of other securities under the Registration Statement of which this
Prospectus Supplement and the accompanying Prospectus form a part or under a
Registration Statement to which this Prospectus Supplement and the accompanying
Prospectus relate. The aggregate amount of notes may be increased from time to
time to such larger amount as may be authorized by the Company.
The notes will be unsecured and unsubordinated indebtedness of the
Company and will rank on a parity with all other unsecured and unsubordinated
indebtedness of the Company.
The notes will be offered on a continuous basis. Notes will be issued
in fully registered form only, without coupons. Each note will be issued
initially as either a Book-Entry Note or, if specified in the applicable Pricing
Supplement, a certificated note. Except as set forth in the Prospectus under
"Description of Debt Securities-Book Entry Registration", Book-Entry Notes will
not be issuable as certificated notes. See "Book-Entry System" below.
Unless the applicable Pricing Supplement states otherwise, the
authorized denominations of notes denominated in U.S. dollars will be $1,000 and
any larger amount that is an integral multiple of $1,000.
Unless the applicable Pricing Supplement states otherwise, each note
will mature on a Business Day nine months or more from its date of issue, as
selected by the purchaser and agreed to by the Company, which maturity date may
be subject to extension at the option of the Company. Each note may also be
subject to redemption at the option of the Company, or repayment at the option
of the Holder, prior to its Stated Maturity. Each Floating Rate Note will mature
on an Interest Payment Date for such note.
The Pricing Supplement relating to a note will describe the following
terms:
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- whether such note is a Fixed Rate Note, a Floating Rate Note, an
Amortizing Note and/or an Indexed Note;
- the price (expressed as a percentage of the aggregate principal
amount or face amount thereof) at which such note will be issued (the
"Issue Price");
- the date on which such note will be issued (the "Original Issue
Date");
- the date of the Stated Maturity;
- if such note is a Fixed Rate Note, the rate per annum at which such
note will bear interest, if any, and whether and the manner in which
such rate may be changed prior to its Stated Maturity;
- if such note is a Floating Rate Note, the Base Rate, the Initial
Interest Rate, the Interest Reset Period or the Interest Reset Dates,
the Interest Payment Dates, and, if applicable, the Index Maturity,
the Maximum Interest Rate, the Minimum Interest Rate, the Spread or
Spread Multiplier (all as defined below), and any other terms
relating to the particular method of calculating the interest rate
for such note and whether and the manner in which such Spread or
Spread Multiplier may be changed prior to Stated Maturity;
- whether such note is an Original Issue Discount Note (as defined
below);
- if such note is an Amortizing Note, the terms for repayment prior to
Stated Maturity;
- if such note is an Indexed Note, in the case of an Indexed Rate Note,
the manner in which the amount of any interest payment will be
determined or, in the case of an Indexed Principal Note, its Face
Amount and the manner in which the principal amount payable at Stated
Maturity will be determined;
- whether such note may be redeemed at the option of the Company, or
repaid at the option of the Holder, prior to Stated Maturity as
described under "Optional Redemption, Repayment and Repurchase" below
and, if so, the provisions relating to such redemption or repayment,
including, in the case of an Original Issue Discount Note or Indexed
Note, the information necessary to determine the amount due upon
redemption or repayment;
- whether such note is subject to an optional extension beyond its
Stated Maturity as described under "Extension of Maturity" below;
- any other terms of such note not inconsistent with the provisions of
the Debt Indenture.
"Business Day" with respect to any note means any day, other than a
Saturday or Sunday, that is (i) not a legal holiday or a day on which banking
institutions are authorized or required by law, regulation or executive order to
be closed in The City of New York or the City of Chicago and (ii) if such note
is a LIBOR Note (as defined below), a London Banking Day. "London Banking Day"
with respect to any note means any day on which dealings in deposits in U.S.
dollars are transacted in the London interbank market.
"Original Issue Discount Note" means (i) a note, including any such
note whose interest rate is zero, that has a stated redemption price at Stated
Maturity that exceeds its Issue Price by at least 0.25% of its stated redemption
price at Stated Maturity, multiplied by the number of full years from the
Original Issue Date to the
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Stated Maturity for such note and (ii) any other note designated by the Company
as issued with original issue discount for United States Federal income tax
purposes.
A "basis point" or "bp" equals one one-hundredth of a percentage point.
PAYMENT OF PRINCIPAL AND INTEREST
Unless the applicable Pricing Supplement states otherwise, payments of
interest on notes (other than interest payable at Stated Maturity) will be made,
except as provided below, by check mailed to the Registered Holders of such
notes (which, in the case of Global Securities representing Book-Entry Notes,
will be a nominee of the Depositary); provided, however, that, in the case of a
note issued between a Regular Record Date and the related Interest Payment Date,
unless the related Pricing Supplement states otherwise, interest for the period
beginning on the Original Issue Date for such note and ending on such Interest
Payment Date shall be paid on the next succeeding Interest Payment Date to the
Registered Holder of such note on the related Regular Record Date. A Holder of
$10,000,000 or more in aggregate principal amount of notes of like tenor and
term shall be entitled to receive such U.S. dollar payments by wire transfer of
immediately available funds, but only if appropriate wire transfer instructions
have been received in writing by the Trustee for such notes not later than
fifteen calendar days prior to the applicable Interest Payment Date. Unless the
applicable Pricing Supplement states otherwise, principal and any premium and
interest payable at the Stated Maturity of a note will be paid in immediately
available funds upon surrender of such note at the corporate trust office or
agency of the Trustee for such note in The City of New York.
Unless the applicable Pricing Supplement states otherwise, if the
principal of any Discount Note is declared to be due and payable immediately as
described under "Description of Debt Securities-Events of Default" in the
Prospectus, the amount of principal due and payable with respect to such note
shall be limited to the aggregate principal amount (or face amount, in the case
of an Indexed Principal Note) of such note multiplied by the sum of its Issue
Price (expressed as a percentage of the aggregate principal amount) plus the
original issue discount amortized from the date of issue to the date of
declaration, which amortization shall be calculated using the "interest method"
(computed in accordance with generally accepted accounting principles in effect
on the date of declaration).
The Regular Record Date with respect to any Interest Payment Date for a
Floating Rate Note or for an Indexed Rate Note shall be the date (whether or not
a Business Day) fifteen calendar days immediately preceding such Interest
Payment Date, and for a Fixed Rate Note will be the February 1 or August 1
(whether or not a Business Day) immediately preceding such Interest Payment
Date.
FIXED RATE NOTES
Each Fixed Rate Note will bear interest from its Original Issue Date,
or from the last Interest Payment Date to which interest has been paid or duly
provided for, at the rate per annum stated in the applicable Pricing Supplement
until the principal amount thereof is paid or made available for payment, except
as described below under "Subsequent Interest Periods" and "Extension of
Maturity", and except that if so specified in the applicable Pricing Supplement,
the rate of interest payable on certain Fixed Rate Notes may be subject to
adjustment from time to time as described in such Pricing Supplement. Interest
on each Fixed Rate Note will be payable semiannually in arrears on each
February 15 and August 15 (each such day being an "Interest Payment Date") and
at Stated Maturity. If an Interest Payment Date with respect to any Fixed Rate
Note would otherwise be a day that is not a Business Day, such Interest Payment
Date shall not be postponed; provided, however, that any payment required to be
made in respect of such note on a date (including the day of Stated Maturity)
that is not a Business Day for such note need not be made on such date, but may
be made on the next succeeding Business Day with the same force and effect as if
made on such date, and no additional interest shall accrue as a result of such
delayed payment. Each payment of interest in respect of an Interest Payment Date
shall include interest
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accrued through the day before such Interest Payment Date. Interest on Fixed
Rate Notes will be computed on the basis of a 360-day year of twelve 30-day
months.
FLOATING RATE NOTES
Unless the applicable Pricing Supplement states otherwise, each
Floating Rate Note will bear interest from its Original Issue Date to the first
Interest Reset Date (such period, the "Initial Interest Period") for such note
at the Initial Interest Rate (an "Initial Interest Rate") set forth on the face
thereof and in the applicable Pricing Supplement. The interest rate on such note
for each Interest Reset Period (as defined below) (and for the Initial Interest
Period if so specified in the applicable Pricing Supplement) will be determined
by reference to an interest rate basis (the "Base Rate"), plus or minus the
Spread, if any, or multiplied by the Spread Multiplier, if any. The "Spread" is
the number of basis points that may be specified in the applicable Pricing
Supplement as being applicable to such note, and the "Spread Multiplier" is the
percentage that may be specified in the applicable Pricing Supplement as being
applicable to such note, except in each case as described below under
"Subsequent Interest Periods" and "Extension of Maturity", and except that if so
specified in the applicable Pricing Supplement, the Spread or Spread Multiplier
on certain Floating Rate Notes may be subject to adjustment from time to time as
described in such Pricing Supplement. The applicable Pricing Supplement will
designate one of the following Base Rates as applicable to a Floating Rate Note:
- LIBOR (a "LIBOR Note"),
- the Commercial Paper Rate (a "Commercial Paper Rate Note"),
- the Treasury Rate (a "Treasury Rate Note"),
- the Prime Rate ("a Prime Rate Note"),
- CMT Rate (a "CMT Note"),
- the Federal Funds Rate (a "Federal Funds Rate Note"),
- the CD Rate (a "CD Rate Note"), or
- such other Base Rate as is set forth in such Pricing Supplement and
in such note.
The "Index Maturity" for any Floating Rate Note is the period of maturity of the
instrument or obligation from which the Base Rate is calculated. "H.15(519)"
means the publication entitled "Statistical Release H.15(519), 'Selected
Interest Rates' ", or any successor publication, published by the Board of
Governors of the Federal Reserve System. "Composite Quotations" means the daily
statistical release entitled "Composite 3:30 p.m. Quotations for U.S. Government
Securities" published by the Federal Reserve Bank of New York.
As specified in the applicable Pricing Supplement, a Floating Rate Note
may also have either or both of the following (in each case expressed as a rate
per annum on a simple interest basis):
- a maximum limitation, or ceiling, on the rate at which interest may
accrue during any interest period ("Maximum Interest Rate"), and
- a minimum limitation, or floor, on the rate at which interest may
accrue during any interest period ("Minimum Interest Rate").
Unless the Pricing Supplement states otherwise, the Trustee will be the
"Calculation Agent". Upon request of the holder of any Floating Rate Note, the
Calculation Agent will provide the interest rate then in effect
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and, if determined, the interest rate will become effective as a result of a
determination for the next Interest Reset Date with respect to such Floating
Rate Note. Unless the applicable Pricing Supplement states otherwise, the
"Calculation Date", if applicable, pertaining to any Interest Determination Date
will be the earlier of (i) the tenth calendar day after such Interest
Determination Date, or, if such day is not a Business Day, the next succeeding
Business Day or (ii) the Business Day immediately preceding the applicable
Interest Payment Date or Stated Maturity, as the case may be.
CHANGE OF INTEREST RATES
The interest rate on each Floating Rate Note will be reset daily,
weekly, monthly, quarterly, semiannually or annually (such period being the
"Interest Reset Period" for such note, and the first day of each Interest Reset
Period being an "Interest Reset Date"), as specified in the applicable Pricing
Supplement. Unless the applicable Pricing Supplement states otherwise, the
Interest Reset Dates will be:
- in the case of Floating Rate Notes that reset daily, each Business
Day;
- in the case of Floating Rate Notes (other than Treasury Rate Notes)
that reset weekly, Wednesday of each week;
- in the case of Treasury Rate Notes that reset weekly, Tuesday of each
week (except as provided below under "Treasury Rate Notes");
- in the case of Floating Rate Notes that reset monthly, the third
Wednesday of each month;
- in the case of Floating Rate Notes that reset quarterly, the third
Wednesday of March, June, September and December of each year;
- in the case of Floating Rate Notes that reset semiannually, the third
Wednesday of each of two months of each year specified in the
applicable Pricing Supplement; and
- in the case of Floating Rate Notes that reset annually, the third
Wednesday of one month of each year specified in the applicable
Pricing Supplement.
If an Interest Reset Date for any Floating Rate Note would otherwise be a day
that is not a Business Day, such Interest Reset Date shall be postponed to the
next succeeding Business Day, 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.
DATE INTEREST RATE DETERMINED
Unless the applicable Pricing Supplement states otherwise, the rate of
interest that goes into effect on any Interest Reset Date will be determined on
a date (the "Interest Determination Date") preceding such Interest Reset Date,
as further described below. Unless the applicable Pricing Supplement states
otherwise, the Interest Determination Date pertaining to an Interest Reset Date
for:
- a CD Rate Note or any Floating Rate Note for which the interest rate
is determined with reference to the CD Rate (the "CD Rate Interest
Determination Date"), a Commercial Paper Rate Note or any Floating
Rate Note for which the interest rate is determined with reference to
the Commercial Paper Rate (the "Commercial Paper Rate Interest
Determination Date"), a Federal Funds Rate Note or any Floating Rate
Note for which the interest rate is determined with reference to the
Federal Funds Rate (the "Federal Funds Rate Interest Determination
Date"), or for a Prime Rate Note or any Floating Rate Note for which
the interest rate is determined with
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reference to the Prime Rate (the "Prime Rate Interest Determination
Date"), or for a CMT Rate Note or any Floating Rate Note for which
the interest rate is determined with reference to the CMT Rate (the
"CMT Rate Interest Determination Date"), the second Business Day
preceding the Interest Reset Date;
- a LIBOR Note or any Floating Rate Note for which the interest rate is
determined with reference to LIBOR (the "LIBOR Rate Interest
Determination Date") the second London Business Day immediately
preceding the Interest Reset Date with respect to such note; and
- a Treasury Rate Note or any Floating Rate Note for which the interest
rate is determined with reference to the Treasury Rate (the "Treasury
Rate Interest Determination Date"), the day of the week on which
Treasury bills (as defined below) would normally be auctioned in the
week in which such Interest Reset Date falls.
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 an Interest Reset Date occurring in the next succeeding week.
If an auction date falls o a day which would otherwise be an 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. The Interest
Determination Date pertaining to a Floating Rate Note the interest rate of which
is determined by reference to two or more Interest Rate Bases will be the most
recent Business Day which is at least two Business Days prior to the applicable
Interest Reset Date for such Floating Rate Note on which each Interest Rate
Basis is determinable. Each Interest Rate Basis will be determined on such date,
and the applicable interest rate will take effect on the applicable Interest
Reset Date.
Unless the applicable Pricing Supplement states otherwise, interest
payable in respect of Floating Rate Notes will be the amount of interest accrued
from and including the Original Issue Date or the last date to which interest
has been paid, as the case may be, to but excluding the applicable Interest
Payment Date.
With respect to a Floating Rate Note, accrued interest will be
calculated by multiplying the principal amount of such note (or, in the case of
a Floating Rate Note that is an Indexed Principal Note, its Face Amount) by an
accrued interest factor. Such accrued interest factor will be computed by adding
the interest factors calculated for each day in the period for which accrued
interest is being calculated. Unless the applicable Pricing Supplement states
otherwise, the interest factor (expressed as a decimal calculated to seven
decimal places without rounding) for each such day is computed by dividing the
interest rate in effect on such day by 360, in the case of LIBOR Notes, Prime
Rate Notes, Commercial Paper Rate Notes, Federal Funds Rate Notes and CD Rate
Notes or by the actual number of days in the year, in the case of CMT Rate Notes
or Treasury Rate Notes. For purposes of making the foregoing calculation, the
interest rate in effect on any Interest Reset Date will be the applicable rate
as reset on such date.
Unless the applicable Pricing Supplement states otherwise, all
percentages resulting from any calculation of the rate of interest on a Floating
Rate Note will be rounded, if necessary, to the nearest one-hundred thousandth
of a percent, with five one-millionths of a percentage point rounded upward, and
all dollar amounts used in or resulting from such calculation on Floating Rate
Notes will be rounded to the nearest cent (with one-half cent being rounded
upward).
Unless the applicable Pricing Supplement states otherwise 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
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semiannually, on the third Wednesday of each of 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 one month of each year
specified in the applicable Pricing Supplement (each such day being an "Interest
Payment Date"). If an Interest Payment Date with respect to any Floating Rate
Note would otherwise be a day that is not a Business Day, such Interest Payment
Date shall be postponed to the next succeeding Business Day, except that, in the
case of a LIBOR Note, if such Business Day is in the next succeeding calendar
month, such Interest Payment Date shall be the immediately preceding Business
Day.
CD RATE NOTES
Each CD Rate Note will bear interest for each Interest Reset Period at
the interest rate calculated with reference to the CD Rate and the Spread or
Spread Multiplier, if any, specified in such note and in the applicable Pricing
Supplement.
Unless the applicable Pricing Supplement states otherwise, the "CD
Rate" for each Interest Reset Period means the rate on the CD Rate Interest
Determination Date for negotiable certificates of deposit having the Index
Maturity designated in the applicable Pricing Supplement as published in
H.15(519) under the heading "CDs (Secondary Market)".
The following procedures will be followed if the CD Rate cannot be
determined as described above:
- If the CD Rate is not published prior to 3:00 p.m., New York City
time, on the Calculation Date pertaining to such Interest
Determination Date, then the "CD Rate" for such Interest Reset Period
will be the rate on such Interest Rate Determination Date for
negotiable certificates of deposit of the Index Maturity designated
in the applicable Pricing Supplement as published in Composite
Quotations under the heading "Certificates of Deposit".
- If such rate is not yet published in either H.15(519) or Composite
Quotations by 3:00 p.m., New York City time, on such Calculation
Date, then the "CD Rate" for such Interest Reset Period will be
calculated by the Calculation Agent for such CD Rate Note and will be
the arithmetic mean of the secondary market offered rates as of 10:00
a.m., New York City time, on such Interest Determination Date of
three leading nonbank dealers in negotiable U.S. dollar certificates
of deposit in The City of New York selected by the Calculation Agent
for such CD Rate Note for negotiable certificates of deposit of major
United States money center banks of the highest credit standing (in
the market for negotiable certificates of deposit) with a remaining
maturity closest to the Index Maturity designated in the Pricing
Supplement in a denomination of $5,000,000.
- If the dealers selected by the Calculation Agent are not quoting
offered rates as mentioned in this sentence, the "CD Rate" for such
Interest Reset Period will be the same as the CD Rate for the
immediately preceding Interest Reset Period (or, if there was no such
Interest Reset Period, the Initial Interest Rate).
COMMERCIAL PAPER RATE NOTES
Each Commercial Paper Rate Note will bear interest for each Interest
Reset Period at the interest rate calculated with reference to the Commercial
Paper Rate and the Spread or Spread Multiplier, if any, specified in such Note
and in the applicable Pricing Supplement.
Unless the applicable Pricing Supplement states otherwise, the
"Commercial Paper Rate" for each Interest Reset Period will be determined by the
Calculation Agent for such Commercial Paper Rate Note as of the Commercial Paper
Rate Interest Determination Date and shall be the Money Market Yield (as defined
below) on
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such Interest Determination Date of the rate for commercial paper having the
Index Maturity specified in the applicable Pricing Supplement, as such rate
shall be published in H.15(519) under the heading "Commercial
Paper-Nonfinancial".
The following procedures will be followed if the Commercial Paper Rate
cannot be determined as described above:
- If the Commercial Paper Rate is not published prior to 3:00 p.m., New
York City time, on the Calculation Date (as defined below) pertaining
to such interest Determination Date, then the "Commercial Paper Rate"
for such Interest Reset Period shall be the Money Market Yield on
such Interest Determination Date of the rate for commercial paper of
the specified Index Maturity as published in Composite Quotations
under the heading "Commercial Paper".
- If such rate is not yet published in either H.15(519) or Composite
Quotations by 3:00 p.m., New York City time, on such Calculation
Date, then the "Commercial Paper Rate" for such Interest Reset Period
shall be the Money Market Yield of the arithmetic mean of the offered
rates, as of 11:00 a.m., New York City time, on such Interest
Determination Date of three leading dealers of commercial paper in
The City of New York selected by the Calculation Agent for such
Commercial Paper Rate Note for commercial paper of the specified
Index Maturity placed for an industrial issuer whose bonds are rated
"AA" or the equivalent by a nationally recognized rating agency.
- If the dealers selected as aforesaid by such Calculation Agent are
not quoting offered rates as mentioned in this sentence, the
"Commercial Paper Rate" for such Interest Reset Period will be the
same as the Commercial Paper Rate for the immediately preceding
Interest Reset Period (or, if there was no such Interest Reset
Period, the Initial Interest Rate).
"Money Market Yield" shall be a yield calculated in accordance with the
following formula:
Money Market Yield = D x 360 x 100
-------------
360 - (D x M)
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.
FEDERAL FUNDS RATE NOTES
Each Federal Funds Rate Note will bear interest for each Interest Reset
Period at the interest rate calculated with reference to the Federal Funds Rate
and the Spread or Spread Multiplier, if any, specified in such note and in the
applicable Pricing Supplement.
Unless the applicable Pricing Supplement states otherwise, the "Federal
Funds Rate" for each Interest Reset Period shall be the effective rate on the
Federal Funds Rate Interest Determination Date for Federal Funds as published in
H.15(519) under the heading "Federal Funds (Effective)".
The following procedures will be followed if the Federal Fund Rate
cannot be determined as described above:
- If such rate is not published prior to 3:00 p.m., New York City time,
on the Calculation Date pertaining to such Interest Determination
Date, the "Federal Funds Rate" for such Interest Reset
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Period shall be the rate on such Interest Determination Date as
published in Composite Quotations under the heading "Federal
Funds/Effective Rate".
- If such rate is not yet published in either H.15(519) or Composite
Quotations by 3:00 p.m., New York City time, on such Calculation
Date, then the "Federal Funds Rate" for such Interest Reset Period
shall be the rate on such Interest Determination Date made publicly
available by the Federal Reserve Bank of New York which is equivalent
to the rate which appears in H.15(519) under the heading "Federal
Funds (Effective)".
- If such rate is not made publicly available by the Federal Reserve
Bank of New York by 3:00 p.m., New York City time, on such
Calculation Date, the "Federal Funds Rate" for such Interest Reset
Period will be calculated by the Calculation Agent and will be the
arithmetic mean of the rates for the last transaction in overnight
Federal Funds, as of 9:00 A.M., New York City time, on such Interest
Determination Date, arranged by three leading brokers of Federal
Funds transactions in The City of New York selected by the
Calculation Agent.
- If the brokers selected by the Calculation Agent are not quoting as
set forth above, the Federal Funds Rate in effect for the applicable
period will be the same as the Federal Funds Rate for the immediately
preceding Interest Reset Period (or, if there was no Interest Reset
Period, the rate of interest payable on the Federal Funds Rate Notes
for which the Federal Funds Rate is being determined shall be the
Initial Interest Rate).
LIBOR NOTES
A LIBOR Note will bear interest at the interest rate (calculated with
reference to LIBOR (London interbank offered rate) and the Spread or Spread
Multiplier, if any) specified in such note and in the applicable Pricing
Supplement.
Unless the applicable Pricing Supplement states otherwise, LIBOR will
be determined by the Calculation Agent in accordance with the following
provisions:
- On each Interest Determination Date, LIBOR will be either,
- if "LIBOR Reuters" is specified in the related LIBOR Note and any
applicable Pricing Supplement, the arithmetic mean of the offered
rates (unless the specified Designated LIBOR Page (as defined
below) by its terms provides only for a single rate, in which case
such single rate shall be used) for deposits in the currency
designated in the related LIBOR Note having the maturity
designated in the related LIBOR Note and any applicable Pricing
Supplement commencing on the second London Banking Day immediately
following the applicable Interest Determination Date that appears
on the Designated LIBOR Page specified in the related LIBOR Note
and any applicable Pricing Supplement as of 11:00 A.M., London
time, on that Interest Determination Date, if at least two such
offered rates appear (unless, as aforesaid, only a single rate is
required) on such Designated LIBOR Page; or
- if "LIBOR Telerate" is specified in the related LIBOR Note and any
applicable Pricing Supplement, the rate for deposits in the
currency designated in the related LIBOR Note having the maturity
designated in the related LIBOR Note and any applicable Pricing
Supplement commencing on the second London Banking Day immediately
following the applicable Interest Determination Date that appears
on the Designated LIBOR Page specified in the related LIBOR Note
and any applicable Pricing Supplement as of 11:00 A.M., London
time, on that Interest Determination Date.
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If fewer than two offered rates appear (unless, as aforesaid, only
a single rate is required), or no rate appears, as applicable,
LIBOR in respect of the related Interest Determination Date will
be determined as described immediately below.
- With respect to any Interest Determination Date on which fewer
than two offered rates for the applicable maturity appear on the
applicable Designated LIBOR Page as specified immediately above
(unless the specified Designated LIBOR Page by its terms provides
only for a single rate), or no rate appears, as applicable, LIBOR
will be determined on the basis of the rates at which deposits in
the currency designated in the related LIBOR Note having the
maturity designated in the related LIBOR Note and any applicable
Pricing Supplement commencing on the second London Business Day
immediately following such Interest Determination Date and in a
principal amount that is representative for a single transaction
in such market at such time are offered by four major banks in the
London interbank market selected by the Calculation Agent at
approximately 11:00 A.M., London time, on such Interest
Determination Date to prime banks in the London interbank market.
The Calculation Agent will request the principal London office of
each of such banks to provide a quotation on its rate. If at least
two such quotations are provided, LIBOR in respect of such
Interest Determination Date will be the arithmetic mean of such
quotations.
- If fewer than two quotations are provided, LIBOR on such Interest
Determination Date will be the arithmetic mean of the rates quoted
by three major banks in New York City selected by the Calculation
Agent at approximately 11:00 A.M., New York City time, on such
Interest Determination Date for loans in the currency designated
in the related LIBOR Note (the "Index Currency") to leading
European banks having the maturity designated in the related LIBOR
Note and any applicable Pricing Supplement commencing on the
second London Banking Day immediately following such Interest
Determination Date and in a principal amount that is
representative for a single transaction in such market at such
time.
- If fewer than three banks selected by the Calculation Agent are
quoting as mentioned immediately above, LIBOR will not change and
will remain the LIBOR in effect on such Interest Determination
Date.
"Designated LIBOR Page" means:
- if "LIBOR Reuters" is designated in the applicable Pricing
Supplement, the display on the Reuters Monitor Money Rates Service
for the purpose of displaying the London interbank rates of major
banks for the applicable Index Currency; or
- if "LIBOR Telerate" is designated in the applicable Pricing
Supplement, the display on the Dow Jones Telerate Service for the
purpose of displaying the London interbank rates of major banks
for the applicable Index Currency.
If neither LIBOR Reuters nor LIBOR Telerate is specified in the applicable
Pricing Supplement, LIBOR for the applicable Index Currency will be determined
as if LIBOR Telerate (and, if the U.S. dollar is the Index Currency, Page 3750)
had been specified.
TREASURY RATE NOTES
Each Treasury Rate Note will bear interest for each Interest Reset
Period at the interest rate calculated with reference to the Treasury Rate and
the Spread or Spread Multiplier, if any, specified in such note and in the
applicable Pricing Supplement.
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Unless the applicable Pricing Supplement states otherwise, the
"Treasury Rate" for each Interest Reset Period will be the rate for the auction
held on the Treasury Rate Interest Determination Date for such Interest Reset
Period of direct obligations of the United States ("Treasury securities") having
the Index Maturity specified in the applicable Pricing Supplement, as such rate
shall be published in H.15(519) under the heading "U.S. Government
Securities-Treasury bills-auction average (investment)" or, in the event that
such rate is not published prior to 3:00 p.m., New York City time, on the
Calculation Date pertaining to such Interest Determination Date, the auction
average rate (expressed as a bond equivalent on the basis of a year of 365 or
366 days, as applicable, and applied on a daily basis) on such Interest
Determination Date as otherwise announced by the United States Department of the
Treasury.
The following procedures will be followed if the Treasury Rate cannot
be determined as described above:
- If the results of the auction of Treasury securities having the
specified Index Maturity are not published or reported as provided
above by 3:00 p.m., New York City time, on the Calculation Date, or
if no such auction is held on such Interest Determination Date, then
the "Treasury Rate" for such Interest Reset Period shall be
calculated by the Calculation Agent for such Treasury Rate Note and
shall be a yield to maturity (expressed as a bond equivalent on the
basis of a year of 365 or 366 days, as applicable, and applied on a
daily basis) of the arithmetic mean of the secondary market bid
rates, as of approximately 3:30 p.m., New York City time, on such
Interest Determination Date, of three leading primary United States
government securities dealers selected by such Calculation Agent for
the issue of Treasury securities with a remaining maturity closest to
the specified Index Maturity.
- If the dealers selected by the Calculation Agent are not quoting bid
rates as mentioned immediately above, then the "Treasury Rate" for
such Interest Reset Period will not change and will remain the
Treasury Rate in effect on such Interest Determination Date.
PRIME RATE NOTES
Each Prime Rate Note will bear interest at the interest rate calculated
with reference to the Prime Rate and the Spread or Spread multiplier, if any
specified in such note and in the applicable Pricing Supplement.
Unless the applicable Pricing Supplement states otherwise, the "Prime
Rate" means, with respect to any Prime Rate Interest Determination Date, the
rate on such date as published in H.15(519) under the heading "Bank Prime Loan."
The following procedures will be followed if the Prime Rate cannot be
determined as described above:
- If the rate is not published by 9:00 a.m., New York City time, on the
Calculation Date pertaining to such 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 publicly announced by
each bank that appears on the Reuters Screen USPRIME1 Page (as
defined below) as such bank's prime rate or base lending rate as in
effect for that Interest Determination Date. "Reuters Screen
USPRIME1" means the display designated as page "USPRIME1" on the
Reuters Monitor Money Rates Service (or such other page as may
replace the USPRIME1 page on that service for the purpose of
displaying prime rates or base lending rates of major United States
banks).
- If fewer than four rates but more than one such rate appear on the
Reuters Screen USPRIME1 Page for such 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
actual number of days in the year divided by 360 as of the close of
business on such Interest Determination
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Date by at least two major money center banks in New York City
selected by the Calculation Agent (after consulting with the
Company).
- If fewer than two such rates appear on the Reuters Screen USPRIME1
Page, the Prime Rate will be determined by the Calculation Agent and
will be the arithmetic mean of the prime rates furnished in New York
City by three substitute banks or trust companies organized and doing
business under the laws of the United States, or any State thereof,
in each case having total equity capital of at least U.S.
$500,000,000 and being subject to supervision or examination by
Federa or State authority, selected by the Calculation Agent (after
consulting with the Company) to provide such rate or rates.
- If the banks selected as aforesaid are not quoting as mentioned
immediately above, the Prime Rate will not change and will remain the
Prime Rate in effect on such Interest Determination Date.
CMT RATE NOTES
Each CMT Rate Note will bear interest at the rate (calculated with
reference to the CMT Rate and the Spread and/or Spread Multiplier, if any)
specified in such CMT Rate Note and in any applicable Pricing Supplement.
Unless the applicable Pricing Supplement states otherwise, "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
(as defined below) for:
- if the Designated Telerate Page is 7051, the rate on such Interest
Determination Date; and
- if the Designated CMT Telerate Page is 7052, the week, or the month,
as applicable, ended immediately preceding the week in which the
related Interest Determination Date occurs.
The following procedures will be followed if the CMT Rate cannot be
determined as described above:
- 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
Calculation Date, then the CMT Rate for such Interest Determination
Date will be such treasury constant maturity rate for the Designated
CMT Maturity Index as published in H15.(519).
- If such rate is no longer published, or if not published by 3:00
P.M., New York City time, on the related Calculation Date, then the
CMT Rate for such 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 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 Calculation Date, then the CMT Rate for such Interest
Determination Date will be calculated by the Calculation Agent and
will be a yield to maturity, based on the arithmetic mean of the
secondary market closing side offer prices as of approximately 3:30
P.M., New York City time, on the Interest Determination Date
reported, according to their written records, by three leading
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primary United States government securities dealers (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 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 Notes") wit 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 Interest Determination Date will be
calculated by the Calculation Agent and will be a yield to maturity
based on the arithmetic mean of the secondary market offer side
prices as of approximately 3:30 P.M., New York City time, on the
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 such 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 in an
amount of at least U.S. $100 million.
- If three or four (but not five) of such Reference Dealers are quoting
as described above, then the CMT Rate will be based on the arithmetic
mean of the offer prices obtained and neither the highest nor the
lowest of such quotes will be eliminated.
- If fewer than three Reference Dealers selected by the Calculation
Agent are quoting as described herein, the CMT Rate will be the CMT
Rate in effect on such 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 designated in the applicable Pricing Supplement for the purpose
of displaying Treasury Constant Maturities as reported in H15 (519) (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)). 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 2 years.
SUBSEQUENT INTEREST PERIODS
The Pricing Supplement relating to each note will indicate whether the
Company has the option to reset the interest rate (in the case of a Fixed Rate
Note) with respect to such note or the Spread or Spread Multiplier (in the case
of a Floating Rate Note) with respect to such note and, if so, the date or dates
on which such interest rate or such Spread or Spread Multiplier, as the case may
be, may be reset (each an "Optional Reset Date").
The Company will notify the Trustee for a note whether or not it
intends to exercise such option with respect to such note at least 45 but not
more than 60 calendar days prior to an Optional Reset Date for such note. Not
later than 40 calendar days prior to such Optional Reset Date, the Trustee for
such note will mail to the Holder of such note a notice (the "Reset Notice"),
first class, postage prepaid, indicating whether the Company has elected to
reset the interest rate (in the
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case of a Fixed Rate Note) or the Spread or Spread Multiplier (in the case of a
Floating Rate Note) and if so, (i) such new interest rate or such new Spread or
Spread Multiplier, as the case may be; and (ii) the provisions, if any, for
redemption during the period from such Optional Reset Date to the next Optional
Reset Date or, if there is no such next Optional Reset Date, to the Stated
Maturity of such note (each such period a "Subsequent Interest Period"),
including the date or dates on which or the period or periods during which and
the price or prices at which such redemption may occur during such Subsequent
Interest Period.
Notwithstanding the foregoing, not later than 20 calendar days prior to
an Optional Reset Date for a note, the Company may, at its option, revoke the
interest rate (in the case of a Fixed Rate Note) or the Spread or Spread
Multiplier (in the case of a Floating Rate Note) provided for in the Reset
Notice with respect to such Optional Reset Date and establish a higher interest
rate (in the case of a Fixed Rate Note) or a higher Spread or Spread Multiplier
(in the case of a Floating Rat Note) for the Subsequent Interest Period
commencing on such Optional Reset Date by causing the Trustee for such note to
mail notice of such higher interest rate or higher Spread or Spread Multiplier,
as the case may be, first class, postage prepaid, to the Holder of such note.
Such notice shall be irrevocable. All notes with respect to which the interest
rate or Spread or Spread Multiplier is reset on an Optional Reset Date will bear
such higher interest rate (in the case of Fixed Rate Notes) or higher Spread or
Spread Multiplier (in the case of Floating Rate Notes), whether or not tendered
for repayment.
The Holder of a note will have the option to elect repayment of such
note by the Company on each Optional Reset Date at a price equal to the
principal amount thereof, plus interest accrued to such Optional Reset Date. In
order for a note to be repaid on an Optional Reset Date, the Holder thereof must
follow the procedures set forth below under "Optional Redemption, Repayment and
Repurchase" for optional repayment, except that the period for delivery of such
note or notification to the Trustee for such note shall be at least 25 but not
more than 35 calendar days prior to such Optional Reset Date, and except that a
Holder who has tendered a note for repayment pursuant to a Reset Notice may, by
written notice to the Trustee for such note, revoke any such tender for
repayment until the close of business on the tenth day prior to such Optional
Reset Date.
AMORTIZING NOTES
The Company may from time to time offer notes ("Amortizing Notes") on
which a portion or all the principal amount is payable prior to Stated Maturity
in accordance with a schedule, by application of a formula, or by reference to
an Index (as defined below). Further information concerning additional terms and
conditions of any Amortizing Notes, including terms for repayment thereof, will
be set forth in the applicable Pricing Supplement.
INDEXED NOTES
The Company may from time to time offer notes ("Indexed Notes") on
which certain or all interest payments (in the case of an "Indexed Rate Note"),
and/or the principal amount payable at Stated Maturity or earlier redemption or
retirement (in the case of an "Indexed Principal Note"), is determined by
reference to the principal amount of such notes (or, in the case of an Indexed
Principal Note, to the amount designated in the applicable Pricing Supplement as
the "Face Amount" of such Indexed Note) and by reference to prices, changes in
prices, or differences between prices, of securities, currencies, intangibles,
goods, articles or commodities or by such other objective price, economic or
other measures as are described in the applicable Pricing Supplement (the
"Index"). A description of the Index used in any determination of an interest or
principal payment, and the method or formula by which interest or principal
payments will be determined by reference to such Index, will be set forth in the
applicable Pricing Supplement.
In the case of a Fixed Rate Note, Floating Rate Note or Indexed Rate
Note that is also an Indexed Principal Note, the amount of any interest payment
will be determined by reference to the Face Amount of such Indexed Note unless
specified otherwise in the applicable Pricing Supplement. In the case of an
Indexed Principal
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Note, the principal amount payable at Stated Maturity or any earlier redemption
or repayment of the Indexed Note may be different from the Face Amount.
If the determination of the Index on which any interest payment or the
principal amount of an Indexed Note is calculated or announced by a third party,
which may be Salomon Smith Barney Inc. and such third party either suspends the
calculation or announcement of such Index or changes the basis upon which such
Index is calculated (other than changes consistent with policies in effect at
the time such Indexed Note was issued and permitted changes described in the
applicable Pricing Supplement), then such Index shall be calculated for purposes
of such Indexed Note by another third party selected by the Company, which may
be Salomon Smith Barney Inc., subject to the same conditions and controls as
applied to the original third party. If for any reason such Index cannot be
calculated on the same basis and subject to the same conditions and controls as
applied to the original third party, then the indexed interest payments, if any,
or any indexed principal amount of such Indexed Note shall be calculated in the
manner set forth in the applicable Pricing Supplement. Any determination of such
third party shall in the absence of manifest error be binding on all parties.
EXTENSION OF MATURITY
The Pricing Supplement relating to each note will indicate whether the
Company has the option to extend the Stated Maturity of such note for one or
more periods of whole years from one to five (each an "Extension Period") up to
but not beyond the date (the "Final Maturity") set forth in such Pricing
Supplement.
The Company may exercise such option with respect to a note by
notifying the Trustee for such note at least 45 but not more than 60 calendar
days prior to the old Stated Maturity of such note. Not later than 40 calendar
days prior to the old Stated Maturity of such note, the Trustee for such note
will mail to the Holder of such note a notice (the "Extension Notice"), first
class, postage prepaid.
The Extension Notice will set forth:
- the election of the Company to extend the Stated Maturity of such
note;
- the new Stated Maturity;
- in the case of a Fixed Rate Note, the interest rate applicable to the
Extension Period or, in the case of a Floating Rate Note, the Spread
or Spread Multiplier applicable to the Extension Period; and
- the provisions, if any, for redemption during the Extension Period,
including the date or dates on which or the period or periods during
which and the price or prices at which such redemption may occur
during the Extension Period.
Upon the mailing by such Trustee of an Extension Notice to the Holder of a note,
the Stated Maturity of such note shall be extended automatically, and, except as
modified by the Extension Notice and as described in the next paragraph, such
note will have the same terms as prior to the mailing of such Extension Notice.
Notwithstanding the foregoing, not later than 20 calendar days prior to
the old Stated Maturity of such note, the Company may, at its option, revoke the
interest rate (in the case of a Fixed Rate Note) or the Spread or Spread
Multiplier (in the case of a Floating Rate Note) provided for in the Extension
Notice for such note and establish a higher interest rate (in the case of a
Fixed Rate Note) or a higher Spread or Spread Multiplier (in the case of a
Floating Rate Note) for the Extension Period, by causing the Trustee for such
note to mail notice of such higher interest rate or higher Spread or Spread
Multiplier, as the case may be, first class, postage prepaid, to the Holder of
such note. Such notice shall be irrevocable. All notes with respect to which the
Stated Maturity
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is extended will bear such higher interest rate (in the case of Fixed Rate
Notes) or higher Spread or Spread Multiplier (in the case of Floating Rate
Notes) for the Extension Period, whether or not tendered for repayment.
If the Company extends the Stated Maturity of a note, the Holder of
such note will have the option to elect repayment of such note by the Company on
the old Stated Maturity at a price equal to the principal amount thereof, plus
interest accrued to such date. In order for a note to be repaid on the old
Stated Maturity once the Company has extended the Stated Maturity thereof, the
Holder thereof must follow the procedures set forth below under "Optional
Redemption, Repayment and Repurchase" for optional repayment, except that the
period for delivery of such note or notification to the Trustee for such note
shall be at least 25 but not more than 35 days prior to the old Stated Maturity
and except that a Holder who has tendered a note for repayment pursuant to an
Extension Notice may, by written notice to the Trustee for such note, revoke any
such tender for repayment until the close of business on the tenth day before
the old Stated Maturity.
OPTIONAL REDEMPTION, REPAYMENT AND REPURCHASE
The Pricing Supplement relating to each note will indicate either that:
- such note cannot be redeemed prior to its Stated Maturity, or
- such note will be redeemable at the option of the Company, in whole
or in part, and the date or dates (each an "Optional Redemption
Date") on which such note may be redeemed and the price (the
"Redemption Price") at which (together with accrued interest to such
Optional Redemption Date) such note may be redeemed on each such
Optional Redemption Date.
The Company may exercise such option with respect to a note by notifying the
Trustee for such note at least 45 days prior to any Optional Redemption Date.
Unless the applicable Pricing Supplement states otherwise, at least 30 but not
more than 60 days prior to the date of redemption, the Trustee will mail notice
of redemption, first class, postage prepaid, to the Holder of such note. In the
event of redemption of a note in part only, a new note or notes for the
unredeemed portion thereof shall be issued to the Holder thereof upon the
cancellation thereof. The notes will not be subject to any sinking fund.
The Pricing Supplement relating to each note will also indicate whether
the Holder of a note will have the option to elect repayment of such note by the
Company prior to its Stated Maturity, and, if so, such Pricing Supplement will
specify the date or dates on which such note may be repaid (each an "Optional
Repayment Date") and the price (the "Optional Repayment Price") at which,
together with accrued interest to such Optional Repayment Date, such note may be
repaid on each such Optional Repayment Date.
In order for a note to be repaid, the Trustee for such note must
receive, at least 30 but not more than 45 days prior to an Optional Repayment
Date:
- the note with the form entitled "Option to Elect Repayment" on the
reverse thereof duly completed, or
- a telegram, telex, facsimile transmission or letter from a member of
a national securities exchange or the National Association of
Securities Dealers, Inc. or a commercial bank or trust company in the
United States setting forth:
- the name of the Holder of such note,
- the principal amount of such note to be repaid,
- the certificate number or a description of the tenor and terms of
such note,
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- a statement that the option to elect repayment is being exercised
thereby, and
- a guarantee that the note to be repaid with the form entitled
"Option to Elect Repayment" on the reverse of the note duly
completed will be received by such Trustee not later than five
Business Days after the date of such telegram, telex, facsimile
transmission or letter.
If the procedure described immediately above is followed, then such
note and form duly completed must be received by such Trustee by such
fifth Business Day. Any tender of a note by the Holder for repayment
(except pursuant to a Reset Notice or an Extension Notice) shall be
irrevocable. The repayment option may be exercised by the Holder of a
note for less than the entire principal amount of such note provided
that the principal amount of such note remaining outstanding after
repayment is an authorized denomination. Upon such partial repayment,
such note shall be cancelled and a new note or notes for the remaining
principal amount thereof shall be issued in the name of the Holder of
such repaid note.
If a note is represented by a Global Security, the Depositary's nominee
will be the Holder of such note and therefore will be the only entity that can
exercise a right to repayment. In order to ensure that the Depositary's nominee
will timely exercise a right to repayment with respect to a particular note, the
beneficial owner of such note must instruct the broker or other direct or
indirect participant through which it holds an interest in such note to notify
the Depositary of its desire to exercise a right to repayment. Different firms
have different cut-off times for accepting instructions from their customers
and, accordingly, each beneficial owner should consult the broker or other
direct or indirect participant through which it holds an interest in a note in
order to ascertain the cut-off time by which such an instruction must be given
in order for timely notice to be delivered to the Depositary.
Notwithstanding anything in this Prospectus Supplement to the contrary,
if a note is an Original Issue Discount Note (other than an Indexed Note), the
amount payable on such note in the event of redemption or repayment prior to its
Stated Maturity shall be the Amortized Face Amount of such note as of the date
of redemption or the date of repayment, as the case may be. The "Amortized Face
Amount" of an Original Issue Discount Note shall be the amount equal to (i) the
Issue Price set forth in the applicable Pricing Supplement plus (ii) that
portion of the difference between the Issue Price and the principal amount of
such note that has accrued at the Yield to Maturity set forth in the Pricing
Supplement (computed in accordance with generally accepted United States bond
yield computation principles) by such date of redemption or repayment, but in no
event shall the Amortized Face Amount of an Original Issue Discount Note exceed
its principal amount.
The Company may at any time purchase notes at any price in the open
market or otherwise. Notes so purchased by the Company may, at the discretion of
the Company, be held or resold or surrendered to the Trustee for cancellation.
BOOK-ENTRY SYSTEM
Upon issuance, and subject to the rules of DTC, all Fixed Rate
Book-Entry Notes having the same Original Issue Date and otherwise identical
terms will be represented by a single Global Security. Each Global Security
representing Book-Entry Notes will be deposited with, or on behalf of, DTC, and
registered in the name of a nominee of DTC. Book-Entry Notes will not be
exchangeable for certificated notes and, except under the circumstances
described in the Prospectus under "Description of Debt Securities-Book-Entry
Registration", will not otherwise be issuable as certificated notes.
A further description of DTC's procedures with respect to Global
Securities representing Book-Entry Notes is set forth in the Prospectus under
"Description of Debt Securities-Book-Entry Registration". DTC has confirmed to
the Company, the Agent and the Trustee that it intends to follow such
procedures.
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FEDERAL INCOME TAX CONSEQUENCES
The following summary discusses the principal United States federal
income tax consequences of the ownership and disposition of notes as of the date
hereof, based on the opinion of Neal, Gerber & Eisenberg, counsel to the
Company. Except where noted, this summary deals only with notes held as capital
assets and does not deal with special situations, such as those of dealers in
securities, financial institutions or life insurance companies. Furthermore, the
discussion below is based upon the provisions of the Internal Revenue Code of
1986, as amended (the "Code"), and regulations, rulings and judicial decisions
thereunder as of the date hereof, and such authorities may be repealed, revoked
or modified so as to result in federal income tax consequences different from
those discussed below. Persons considering the purchase, ownership or
disposition of notes should consult their own tax advisors concerning the
federal income tax consequences in light of their particular situations as well
as any consequences arising under the laws of any other taxing jurisdiction.
As used herein, "United States Holder" means a beneficial owner of a
note that is, for U.S. federal income tax purposes:
- 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;
- an estate whose income is subject to United States federal income
taxation regardless of its source;
- a trust if a court within the United States is able to exercise
primary supervision over its administration and if one or more U.S.
persons has the authority to control all substantial decisions; or
- certain former citizens of the United States whose income and gain on
the notes will be taxable in the United States.
A "United States Alien Holder" is a holder that is not a United States Holder.
PAYMENTS OF INTEREST
Except as set forth below, interest on a note will generally be taxable
to a United States Holder as ordinary income from domestic sources at the time
it is paid or accrued in accordance with the United States Holder's method of
accounting for tax purposes.
ORIGINAL ISSUE DISCOUNT
The following is a summary of the principal United States federal
income tax consequences of the ownership of Discounted Notes (as defined below)
by United States Holders. If the Company issues Discounted Notes that qualify as
"applicable high-yield discount obligations" under the Code, the rules
applicable to such notes will be set forth in the relevant Pricing Supplement.
This summary is based on final Treasury regulations (the "OID Regulations") that
were issued in 1994.
A note may be issued for an amount that is less than its "stated
redemption price at maturity" (the sum of all payments to be made on the note
other than "qualified stated interest"). The difference between the stated
redemption price at maturity of the note and its "issue price", if such
difference is at least 0.25 percent of the stated redemption price at maturity
multiplied by the number of complete years to maturity (or, in the case of an
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Amortizing Note, the weighted average maturity of the note as determined under
the OID Regulations), will be OID. (Notes issued with OID are referred to as
"Discounted Notes".) The "issue price" of each note will be the first price to
the public (not including bond houses, brokers or similar persons or
organizations acting in the capacity of underwriters or wholesalers) at which a
substantial amount of the particular offering is sold.
If the excess of a note's stated redemption price at maturity over its
issue price is less than .25 percent of the note's stated redemption price at
maturity multiplied by the number of complete years to its maturity (the "de
minimis amount"), then such excess, if any, constitutes "de minimis original
issue discount" and the note is not a Discounted Note. Unless the election
described below under "Election to Treat All Interest as OID" is made, a United
States Holder of a note with de minimis original issue discount must include
such de minimis original issue discount in income as stated principal payments
on the notes are made. The includible amount with respect to each such payment
will equal the product of the total amount of the note's de minimis original
issue discount and a fraction, the numerator of which is the amount of the
principal payment made and the denominator of which is the stated principal
amount of the note.
"Qualified stated interest" is stated interest that is unconditionally
payable in cash or in property (other than debt instruments of the issuer) at
least annually and with respect to a Fixed Rate Note, at a single fixed rate.
Interest is payable at a single fixed rate only if the rate appropriately takes
into account the length of the interval between payments. The OID Regulations
provide that, in the case of a variable rate debt instrument, qualified stated
interest also includes stated interest that is unconditionally payable in cash
or property (other than debt instruments of the issuer) at least annually at
(i)Eone or more "qualified floating rates", (ii)Ea single fixed rate and one or
more qualified floating rates, (iii)Ea single "objective rate", or (iv)Ea single
fixed rate and a single objective rate that is a "qualified inverse floating
rate". Unless the applicable Pricing Supplement so indicates, interest with
respect to a Fixed Rate Note or Floating Rate Not will constitute qualified
stated interest.
Certain of the notes may be redeemed prior to maturity, as indicated in
the applicable Pricing Supplement. The OID Regulations provide that any note
that may be redeemed prior to its Stated Maturity Date at the option of the
issuer shall be treated from the time of issuance as having a maturity date for
federal income tax purposes on such redemption date if such redemption would
result in a lower yield to maturity. Notice will be given in the applicable
Pricing Supplement when the Company determines that a particular note will be
deemed to have a maturity date for federal income tax purposes prior to its
Stated Maturity Date.
In certain cases, notes that bear stated interest and are issued at par
may be deemed to bear OID for federal income tax purposes, with the result that
the inclusion of interest in income for federal income tax purposes may vary
from the actual cash payments of interest made on such notes, generally
accelerating income for cash method taxpayers. Under the OID Regulations,
generally a note may be a Discounted Note where a Floating Rate Note provides
for a maximum interest rate or a minimum interest rate that is very likely to
cause the interest rate in one or more accrual periods, known as of the issue
date, to be significantly less, in the case of a maximum rate, or more, in the
case of a minimum rate, than the overall expected return on the note or if there
are restrictions on changes in interest rates that cause the yield on the note
to be significantly more or less than the yield without such restrictions.
Notice will be given in the applicable Pricing Supplement when the Company
determines that a particular note will be a Discounted Note. Unless an
applicable Pricing Supplement so indicates, Floating Rate Notes will not be
Discounted Notes.
United States Holders of Discounted Notes with a maturity upon issuance
of more than one year must, in general, include OID in income in advance of the
receipt of some or all of the related cash payments. The amount of OID
includible in income by the initial United States Holder of a Discounted Note is
the sum of the "daily portions" of OID with respect to the note for each day
during the taxable year or portion of the taxable year in which such United
States Holder held such note ("accrued OID"). The daily portion is determined by
allocating to each day in any "accrual period" a pro rata portion of the OID
allocable to that accrual period. The "accrual period" for a Discounted Note may
be of any length and may vary in length over the term of a note, provided that
each accrual period is no longer than one year and each scheduled payment of
principal or interest
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occurs on the first day or the last day of an accrual period. In general, the
computation of OID is simplest if accrual periods correspond to the intervals
between payment dates provided by the terms of a note. The Company will specify
the accrual period it intends to use in the applicable Pricing Supplement
although the Holder is not bound by the Company's choice of accrual period. The
amount of OID allocable to any accrual period is an amount equal to the excess,
if any, of (a) the product of the 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 properly adjusted for the
length of the accrual period) over (b) the sum of any qualified stated interest
allocable to the accrual period. In the case of a Discounted Note that is a
Floating Rate Note, both the yield to maturity and the qualified stated interest
will generally be determined for these purposes as though the note will bear
interest in all periods at a fixed rate generally equal to the rate that would
be applicable to interest payments on the note on its date of issue or, in the
case of certain Floating Rate Notes, the rate that reflects the yield that is
reasonably expected for the note. (Additional rules may apply if interest on a
Floating Rate Note is based on more than one interest index.) In determining OID
allocable to an accrual period, if an interval between payments of qualified
stated interest contains more than one accrual period the amount of qualified
stated interest payable at the end of the interval is allocated on a pro rata
basis to each accrual period in the interval and the adjusted issue price must
be increased by the amount of any qualified stated interest that has accrued
prior to the beginning of the accrual period but is not payable until a later
date. OID allocable to a final accrual period is the difference between the
amount payable at maturity (other than a payment of qualified stated interest)
and the adjusted issue price at the beginning of the final accrual period. If
all accrual periods are of equal length, except for an initial short accrual
period, the amount of OID allocable to the initial short accrual period may be
computed under any reasonable method. In general, the "adjusted issue price" of
a note at the beginning of any accrual period is equal to its issue price
increased by the accrued OID for each prior accrual period determined without
regard to the amortization of any acquisition premium or amortizable bond
premium (as described below) and reduced by any prior payments with respect to
such note that were not qualified stated interest. Under these rules, a United
States Holder will have to include in income increasingly greater amounts of OID
in successive accrual periods. The Company is required to report to the Internal
Revenue Service ("IRS") the amount of OID accrued on notes held of record by
persons other than corporations and other exempt holders.
SHORT-TERM NOTES
In the case of notes having a term of one year or less ("Short-Term
Notes"), under the OID Regulations, payments of stated interest are not treated
as qualified stated interest. Accordingly, all payments on Short-Term Notes
(including all stated interest) will be included in the stated redemption price
at maturity and, thus, United States Holders will generally be taxed on the
"discount" in lieu of stated interest. The discount will be equal to the excess
of the stated redemption price at maturity over the issue price of the
Short-Term Note, unless the United States Holder elects to compute this discount
using tax basis instead of issue price. In general, an individual and certain
other cash method United States Holders of Short-Term Notes are not required to
include accrued discount in their income currently unless they elect to do so.
United States Holders who report income for federal income tax purposes on the
accrual method and certain other United States Holders are required to accrue
discount on such Short-Term Notes (as ordinary income) on a straight-line basis,
unless an election is made to accrue the discount according to a constant yield
method based on daily compounding. In the case of a United States Holder who is
not required, and does not elect, to include discount in income currently, any
gain realized on the sale, exchange or retirement of the Short-Term Note will be
ordinary income to the extent of the discount accrued through the date of sale,
exchange or retirement. In addition, United States Holders who do not elect to
currently include accrued discount in income may be required to defer deductions
for a portion of the United States Holder's interest expense with respect to any
indebtedness incurred or continued to purchase or carry such notes.
Any United States Holder of a Short-Term Note (whether a cash or
accrual basis taxpayer) can elect to accrue the "acquisition discount", if any,
with respect to the note on a current basis. Acquisition discount is the excess
of the stated redemption price at maturity of the Short-Term Note over the
United States Holder's purchase price therefore. Acquisition discount will be
treated as accruing ratably or, at the election of the United States
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<PAGE> 22
Holder, under a constant yield method based on daily compounding. If the
election to accrue acquisition discount is made, the original issue discount
rules will not apply with respect to the Short-Term Note.
MARKET DISCOUNT
If a United States Holder purchases a note other than a Short-Term Note
for an amount that is less than its "revised issue price" (defined as the sum of
the issue price of the note and the aggregate amount of the OID includible, if
any, without regard to the rules for acquisition premium discussed below, in the
gross income of all previous holders of the note), the amount of the difference
will be treated as "market discount" for federal income tax purposes, unless
such difference is less than a specified de minimis amount. Under the market
discount rules, a United States Holder will be required to treat any principal
payment on, or any gain on the sale, exchange, retirement or other disposition
of, a note as ordinary income to the extent of 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. In addition, the United States
Holder may be required to defer, until the maturity of the note or its earlier
disposition in a taxable transaction, the deduction of all or a portion of the
interest expense on any indebtedness incurred or continued to purchase or carry
such note.
Any 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
United States Holder elects to accrue on a constant yield method. A United
States Holder of a note may elect to include market discount in income currently
as it accrues (on either a ratable or constant yield basis), in which case the
rule described above regarding deferral of interest deductions will not apply.
This election to include market discount in income currently, once made, applies
to all market discount obligations acquired on or after the first taxable year
to which the election applies, and may not be revoked without the consent of the
IRS.
ACQUISITION PREMIUM; AMORTIZABLE BOND PREMIUM
A United States Holder who purchases a note for an amount that is
greater than its adjusted issue price but equal to or less than the sum of all
amounts payable on the note after the purchase date other than payments of
qualified stated interest will be considered to have purchased such note at an
"acquisition premium." Under the acquisition premium rules the amount of OID
which such United States Holder must include in its gross income with respect to
such note for any taxable year will be reduced by the portion of such
acquisition premium properly allocable to such year.
A United States Holder who purchases a note for an amount in excess of
the sum of all amounts payable on the note after the purchase date other than
qualified stated interest will be considered to have purchased the note at a
"premium" and will not be required to include any OID in income. A United States
Holder generally may elect to amortize the premium over the remaining term of
the note on a constant yield method. The amount amortized in any year will be
treated as a reduction of the United States Holder's interest income for the
note. Bond premium on a note held by a United States Holder that does not make
such an election will decrease the gain or increase the loss otherwise
recognized on disposition of the note. The election to amortize premium on
constant yield method, once made, applies to all debt obligations held or
subsequently acquired by the electing United States Holder on or after the first
day of the first taxable year to which the election applies and may not be
revoked without the consent of the IRS.
ELECTION TO TREAT ALL INTEREST AS OID
Under the OID Regulations, an accrual basis United States Holder may
elect to treat all interest on any note as OID and calculate the amount
includible in gross income under the constant yield method described above. For
the purposes of this election, interest includes stated interest, acquisition
discount, OID, de minimis OID, market discount, de minimis market discount and
unstated interest, as adjusted by any amortizable bond premium or acquisition
premium. If a United States Holder makes this election for a note with market
discount
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or amortizable bond premium, the election is treated as an election under the
market discount or amortizable bond premium provisions, described above, and the
electing United States Holder will be required to amortize bond premium or
include market discount in income currently for all of the United States
Holder's other debt instruments with market discount or amortizable bond
premium. The election is to be made for the taxable year in which the United
States Holder acquired the note, and may not be revoked without the consent of
the IRS. United States Holders should consult with their own tax advisors when
considering the advisability of making this election.
SALE, EXCHANGE AND RETIREMENT OF NOTES
A United States Holder's tax basis in a note will, in general, be the
United States Holder's cost therefor, increased by OID, market discount or any
discount with respect to a Short-Term Note previously included in income by the
United States Holder and reduced by any amortized premium and any cash payments
on the note other than qualified stated interest. Upon the sale, exchange or
retirement of a note, a United States Holder will recognize gain or loss equal
to the difference between the amount realized upon the sale, exchange or
retirement and the adjusted tax basis of the note. Except to the extent
attributable to accrued qualified stated interest and as described above under
"-Short-Term Notes" and "-Market Discount", gain or loss recognized on the sale,
exchange or retirement of a note will be capital gain or loss. Capital gain or
loss recognized on the sale, exchange or retirement of a note held for more than
one year will generally be subject to federal income tax at rates preferential
to those applicable to ordinary income. The rate applicable to net capital gains
realized in respect of a note will depend (among other factors) on the date on
which the United States Holder acquired the note and the length of the United
States Holder's holding period in the note.
INDEXED NOTES
The United States federal income tax treatment of an Indexed Note will
depend on numerous factors, including the specific index or indices used to
determine indexed payments on the note and the amount and timing of any
non-contingent payments of principal and interest. The applicable Pricing
Supplement will contain a discussion of the special United States federal income
tax rules applicable to Indexed Notes.
UNITED STATES ALIEN HOLDERS
Under present United States federal income tax law and subject to the
discussion of backup withholding below:
(i) payments of interest (including accruals of OID) by the
Company or any of its paying agents to any holder of a note who or
which is a United States Alien Holder will not be subject to United
States federal withholding tax if (a) the beneficial owner of the note
does not actually or constructively own 10% or more of the capital or
profit interests in the Company within the meaning of Code section
871(h)(3), (b) the beneficial owner of the note is not a controlled
foreign corporation related to the Company through stock ownership
within the meaning of Code section 871(c)(3)(C), (c) the interest does
not constitute contingent interest within the meaning of Code section
871(h)(4), and (d) either (A) the beneficial owner of the note
certifies to the Company or its agent (on a Form W-8, Certificate of
Foreign Status, or a substantially similar substitute form), under
penalties of perjury, that it is not a United States Holder and
provides its name and address or (B) a securities clearing
organization, bank or other financial institution that holds customers'
securities in the ordinary course of its trade or business (a
"financial institution") and holds the note provides to the Company or
its agent a statement, under penalties of perjury, that such
certification has been received by it or a financial institution
between it and the beneficial owner from the beneficial owner (and
furnishes the payor with a copy thereof); and
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<PAGE> 24
(ii) a United States Alien Holder of a note will not be subject to
United States federal withholding tax on any capital gain realized on
the sale, exchange, retirement, or other disposition of a note.
If a United States Alien Holder is engaged in a trade or business in
the United States and interest (including OID) on the note is effectively
connected with the conduct of such trade or business, the United States Alien
Holder, although exempt from the withholding tax discussed in the preceding
paragraphs, is subject to United States federal income tax on such interest
(including OID) in the same manner as if it were a United States Holder. In lieu
of the certificate described above, such Holder must provide a properly executed
Form 4224 in order to claim an exemption from withholding tax. In addition, if
such Holder is a foreign corporation, it may be subject to a branch profits tax
equal to 30% (or such lower rate as may be specified by an applicable treaty) or
its effectively connected earnings and profits for the taxable year, subject to
adjustments.
On October 14, 1997 the IRS issued final regulations (the
"Regulations") which provide alternative methods for satisfying the
certification requirement described in clause (i)(d) above. The Regulations
require, in the case of notes held by a foreign partnership, that (x) the
certification as described in clause (i)(d) above be provided by the partners
rather than by the foreign partnership and (y) the partnership provide certain
information, including a United States taxpayer identification number. A
look-through rule would apply in the case of tiered partnerships. The
Regulations are effective for payments made after December 31, 1998.
BACKUP WITHHOLDING AND INFORMATION REPORTING
Certain Holders may be subject to backup withholding at a rate of 31%
on interest on the notes if the Holder fails to supply the Company or its agent
with its taxpayer identification number (or the IRS notifies the Company or its
agent that the taxpayer identification number furnished by the Holder is
incorrect), fails to report interest, dividends or other "reportable payments"
(as defined in the Code) properly or, under certain circumstances, fails to
provide the Company or its agent with a certified statement, under penalties of
perjury, that it is not subject to backup withholding. Information returns will
be sent annually to the IRS and to Holders that are not exempt from applicable
information return requirements setting forth the amount of interest paid and
the amount of tax withheld therefrom. Foreign investors that are exempt from
withholding under the provisions described above generally will not be subject
to backup withholding on payments of interest on note if the applicable
certification requirements are satisfied.
Payment of the proceeds from the sale of a note to or through a foreign
office of a broker will not be subject to information reporting or backup
withholding, except that if the broker is a United States person, a controlled
foreign corporation for United States tax purposes or a foreign person 50% or
more of whose gross income is effectively connected with the conduct of a trade
or business within the United States for a specified three-year period,
information reporting will apply to such payments unless such custodian, nominee
or other agent has documentary evidence in its files of the owner's foreign
status and has no actual knowledge to the contrary, or the owner otherwise
establishes an exemption. Payment of the proceeds from the sale of a note to or
through the United States office of a broker is subject to information reporting
and backup withholding unless the Holder or beneficial owner certifies as to its
non-United States status or otherwise establishes an exemption from information
reporting or backup withholding.
PLAN OF DISTRIBUTION
The notes are being offered on a continuous basis by the Company
through SalomonSmithBarney (the "Agent"), which has agreed to use its reasonable
efforts to solicit offers to purchase notes. The Company will have the sole
right to accept offers to purchase notes and may reject proposed purchases in
whole or in part. The Agent shall have the right, in its discretion reasonably
exercised and without notice to the Company, to reject any proposed purchase of
notes in whole or in part. The Company will pay the Agent a commission of from
.125% to .750%, depending on the
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<PAGE> 25
Stated Maturity, of the principal amount of notes sold through the Agent.
Commissions on notes with a Stated Maturity of greater than 30 years will be
negotiated at the time of sale.
The Company may also sell notes at a discount to the Agent for its own
account or for resale to one or more 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 the Agent. 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, the Agent may offer notes
purchased by it as principal to other dealers. Notes sold by the Agent to a
dealer may be sold at a discount and, unless otherwise specified in the
applicable Pricing Supplement, such discount allowed will not be in excess of
the discount received by the Agent from the Company. Unless the applicable
Pricing Supplement states otherwise, any note purchased by the Agent as
principal will be purchased at 100% of the principal amount or face amount
thereof less a percentage equal to the commission applicable to an agency sale
of a note of identical maturity.
The Company reserves the right to sell notes directly to the public on
its own behalf in those jurisdictions where it is authorized to do so. No
commission will be payable on any sales made directly to the public by the
Company.
No note will have an established trading market when issued. The notes
will not be listed on any securities exchange. The Agent may make a market in
the notes, but it is not obligated to do so and may discontinue any
market-making at any time without notice. There can be no assurance of a
secondary market for any notes, or that any notes will be sold.
The Agent, whether acting as agent or principal, may be deemed to be an
"underwriter" within the meaning of the Securities Act of 1933 (the "Securities
Act"). The Company has agreed to indemnify the Agent against certain
liabilities, including liabilities under the Securities Act or to contribute to
payments that the Agent may be required to make in respect thereof. The Company
has agreed to reimburse the Agent for certain expenses.
In connection with the offering of notes made hereby, the Agent may
purchase and sell the notes in the open market. These transactions may include
over-allotment and stabilizing transactions and purchases to cover short
positions created by the Agent in connection with the offering. Stabilizing
transactions consist of certain bids or purchases for the purpose of preventing
or retarding a decline in the market price of the notes, and short positions
created by the Agent involve the sale by the Agent of a greater amount of notes
than it is required to purchase from the Company in the offering. The Agent also
may impose a penalty bid, whereby selling concessions allowed to dealers in
respect of the notes sold in the offering for their account may be reclaimed by
the Agent if such notes are repurchased by the Agent in stabilizing or covering
transactions. These activities may stabilize, maintain or otherwise affect the
market price of the notes, which may be higher than the price that might
otherwise prevail in the open market; and these activities, if commenced, may be
discounted at any time. These transactions may be effected in the
over-the-counter market or otherwise.
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PROSPECTUS
$300,000,000
UNION TANK CAR COMPANY
DEBT SECURITIES
------------------------
Union Tank Car Company, a Delaware corporation (the "Company"), may offer
from time to time, in one or more series, up to $300,000,000 aggregate principal
amount (or the equivalent in foreign currencies or currency units) of its debt
securities ("Debt Securities"), on terms to be determined at the time the Debt
Securities are offered for sale. Unless otherwise provided in a Prospectus
Supplement, the Debt Securities of any series may be represented by a single
global certificate registered in the name of a depository's nominee and, if so
represented, beneficial interests in the global certificate will be shown on,
and transfers thereof will be effected only through, records maintained by the
depository and its participants. Debt Securities may be offered through
underwriters, dealers or agents. The names of any underwriters, dealers or
agents and any compensation to such underwriters, dealers or agents will be set
forth in the Prospectus Supplement.
The terms of the Debt Securities, including, where applicable, the specific
designation, aggregate principal amount, authorized denominations, currencies in
which such Debt Securities are issued or payable, maturity, rate (or manner of
calculation thereof) and time of payment of interest, if any, whether the Debt
Securities are issuable in registered form or bearer form or both, whether any
series of the Debt Securities will be represented by a single global
certificate, any terms for redemption or for sinking fund payments, whether the
Debt Securities are convertible into Debt Securities of a different series, the
initial public offering price, the net proceeds to the Company from the sale of
the Debt Securities and any other specific terms in connection with the offering
and sale of the Debt Securities in respect of which this Prospectus is being
delivered will be set forth in a Prospectus Supplement.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
------------------------
This Prospectus may not be used to consummate a sale of Debt Securities
unless accompanied by a Prospectus Supplement.
------------------------
The date of this Prospectus is February 11, 1998.
<PAGE> 27
AVAILABLE INFORMATION
The Company has filed with the Securities and Exchange Commission (the
"Commission") a Registration Statement on Form S-3 (the "Registration
Statement") under the Securities Act of 1933, as amended (the "Securities Act"),
with respect to the Debt Securities. This Prospectus, which forms a part of the
Registration Statement, does not contain all of the information set forth in the
Registration Statement, certain parts of which are omitted in accordance with
the rules and regulations of the Commission. For further information pertaining
to the Debt Securities and the Company, reference is made to the Registration
Statement. Any statement contained herein concerning the provisions of any
document is not necessarily complete and, in each instance, reference is made to
the copy of such document filed as an exhibit to the Registration Statement or
otherwise filed with the Commission.
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports and other information with the Commission. Information
concerning the Company can be inspected and copied at the public reference
facilities maintained by the Commission at 450 Fifth Street, N.W., Washington,
D.C. 20549, and at the following Regional Offices of the Commission: Chicago
Regional Office, Citicorp Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661 and New York Regional Office, 7 World Trade Center, Suite 1300,
New York, New York 10048. Copies of such material can be obtained from the
Public Reference Section of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549 at prescribed rates. Such materials also may be accessed
electronically by means of the Commission's home page on the Internet at
http://www.sec.gov.
DOCUMENTS INCORPORATED BY REFERENCE
The Company's Annual Report on Form 10-K for the fiscal year ended December
31, 1996, its Quarterly Reports on Form 10-Q for the quarters ended March 31,
1997, June 30, 1997 and September 30, 1997, and its Current Reports on Form 8-K
dated January 30, 1997, June 3, 1997 and October 31, 1997, as filed with the
Commission pursuant to the Exchange Act, are incorporated herein by reference.
All documents filed by the Company pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act after the date of this Prospectus and prior to the
termination of the offering of the Debt Securities shall be deemed to be
incorporated by reference in this Prospectus and to be a part hereof from the
date of filing of such documents. Any statement contained in a document
incorporated or deemed to be incorporated by reference herein, or contained in
this Prospectus, shall be deemed to be modified or superseded for purposes of
this Prospectus to the extent that a statement contained herein or in any other
subsequently filed document which also is or is deemed to be incorporated by
reference herein modifies or supersedes such statement. Any such statement so
modified or superseded shall not be deemed, except as so modified or superseded,
to constitute a part of this Prospectus.
The Company will provide without charge to each person to whom this
Prospectus is delivered, upon written request of such person, a copy (without
exhibits) of any or all documents incorporated by reference in this Prospectus.
Requests for such copies should be directed to the General Counsel and
Secretary, Union Tank Car Company, 225 West Washington Street, Chicago, Illinois
60606, telephone (312) 372-9500.
THE COMPANY
Union Tank Car Company (with its wholly-owned subsidiaries herein
collectively referred to, except as the context otherwise requires, as the
"Company") is principally engaged in the leasing of railway tank cars and other
rail cars to United States, Canadian and Mexican manufacturers and other
shippers of chemical products, including liquid fertilizers, petroleum products,
including liquid petroleum gas, food products and bulk plastics. The Company
owns and operates one of the largest fleets of privately-owned railway tank cars
in the world.
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<PAGE> 28
The Company, which was incorporated in Delaware in 1980 and is the
successor to a business which was incorporated in New Jersey in 1891 and
reincorporated in Delaware in 1968, is a wholly-owned subsidiary of Marmon
Industrial Corporation, a wholly-owned subsidiary of Marmon Holdings, Inc.
Substantially all the stock of Marmon Holdings, Inc. is owned, directly or
indirectly, by trusts for the benefit of certain members of the Pritzker family.
As used herein, "Pritzker family" refers to the lineal descendants of Nicholas
J. Pritzker, deceased.
The Company's principal executive offices are located at 225 West
Washington Street, Chicago, Illinois 60606, and its telephone number is (312)
372-9500.
USE OF PROCEEDS
The net proceeds to be received by the Company from the sale of Debt
Securities will be added to the general funds of the Company and may be used to
finance the addition of railcars to the Company's fleet and other capital
expenditures, to finance acquisitions, to repay outstanding indebtedness, or for
other corporate purposes or as may be described in a Prospectus Supplement. The
Company has not allocated a specific portion of the proceeds for any particular
use at this time. Pending such use, the net proceeds may be temporarily invested
in short-term securities.
DESCRIPTION OF DEBT SECURITIES
The following description sets forth certain general terms and provisions
of the Debt Securities to which any Prospectus Supplement may relate. The
particular terms and provisions of the series of Debt Securities offered by a
Prospectus Supplement, including any additional covenants or changes to existing
covenants relating to such series, and the extent to which such general terms
and provisions described below may apply thereto, will be described in the
Prospectus Supplement relating to such series of Debt Securities.
The Debt Securities are to be issued under an Indenture, dated as of
January 16, 1997, as supplemented (the "Debt Indenture"), between the Company
and Harris Trust and Savings Bank, as Trustee (the "Debt Trustee"). The
following summaries of certain provisions of the Debt Securities and the Debt
Indenture do not purport to be complete and are subject to, and are qualified in
their entirety by reference to, all provisions of the Debt Securities and the
Debt Indenture, including the definitions therein of certain terms. Particular
sections of the Debt Indenture which are relevant to the discussion are cited
parenthetically. Wherever particular sections or defined terms of the Debt
Indenture are referred to, it is intended that such sections or defined terms
shall be incorporated herein by reference. Capitalized terms not otherwise
defined herein shall have the meaning ascribed to such terms in the Debt
Indenture.
GENERAL
The Debt Indenture does not limit the amount of Debt Securities which can
be issued thereunder or the amount of debt which may otherwise be incurred by
the Company, and additional debt securities may be issued under the Debt
Indenture up to the aggregate principal amount which may be authorized from time
to time by, or pursuant to a resolution of, the Company's Board of Directors or
by a supplemental indenture. Reference is made to the Prospectus Supplement for
the following terms, if applicable, of the particular series of Debt Securities
being offered thereby: (i) the title of the Debt Securities of the series; (ii)
any limit upon the aggregate principal amount of the Debt Securities of the
series; (iii) the date or dates on which the principal of the Debt Securities of
the series will be payable; (iv) the rate or rates (or manner of calculation
thereof), if any, at which the Debt Securities of the series will bear interest,
the date or dates from which any such interest will accrue and on which such
interest will be payable, and, with respect to Debt Securities of the series in
registered form, the record date for the interest payable on any interest
payment date; (v) the place or places where the principal of and interest, if
any, on the Debt Securities of the series will be payable; (vi) any redemption
or sinking fund provisions; (vii) the denominations in which Debt Securities of
the series shall be issuable; (viii) if other than the principal amount thereof,
the portion of the principal amount of Debt Securities of the series which will
be payable upon declaration of acceleration of the maturity thereof;
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(ix) whether the Debt Securities of the series will be issuable in registered or
bearer form or both, any restrictions applicable to the offer, sale or delivery
of Debt Securities in bearer form ("bearer Debt Securities") and whether and the
terms upon which bearer Debt Securities will be exchangeable for Debt Securities
in registered form ("registered Debt Securities") and vice versa; (x) any
provisions relating to the conversion of Debt Securities of the series into Debt
Securities of a different series; (xi) whether and under what circumstances the
Company will pay additional amounts on the Debt Securities of the series held by
a person who is not a U.S. person (as defined below) in respect of taxes or
similar charges withheld or deducted and, if so, whether the Company will have
the option to redeem such Debt Securities rather than pay such additional
amounts; (xii) the currencies in which payments of interest, premium or
principal are payable with respect to such Debt Securities; (xiii) whether the
Debt Securities of any series will be issued as one or more Global Securities;
(xiv) whether Debt Securities of the series will be issuable in Tranches; and
(xv) any additional provisions or other terms not inconsistent with the
provisions of the Debt Indenture, including any terms which may be required by
or advisable under United States laws or regulations or advisable in connection
with the marketing of Debt Securities of such series. (Section 2.1 and 2.2) To
the extent not described herein, principal and interest, if any, will be
payable, and the Debt Securities of a particular series will be transferable, in
the manner described in the Prospectus Supplement relating to such series.
"Principal" when used herein includes, when appropriate, the premium, if any, on
the Debt Securities.
Each series of Debt Securities will constitute unsecured and unsubordinated
indebtedness of the Company and will rank on a parity with the Company's other
unsecured and unsubordinated indebtedness. There are no covenants or "event
risk" provisions contained in the Debt Indenture that may afford holders of Debt
Securities protection in the event of a highly leveraged transaction involving
the Company.
Debt Securities of any series may be issued as registered Debt Securities
or bearer Debt Securities or both as specified in the terms of the series.
Additionally, Debt Securities of any series may be represented by a single
global note registered in the name of a depository's nominee and, if so
represented, beneficial interests in such global note will be shown on, and
transfers thereof will be effected only through, records maintained by a
designated depository and its participants. Unless otherwise indicated in the
Prospectus Supplement, Debt Securities will be issued in the denomination of
$1,000 and integral multiples thereof and bearer Debt Securities will not be
offered, sold, resold or delivered to U.S. persons in connection with their
original issuance. Debt Securities of any series may be denominated in and
payments of principal and interest may be made in United States dollars or any
other currency, including composite currencies such as the European Currency
Unit. For purposes of this Prospectus, "U.S. person" means a citizen or resident
of the United States, any corporation, partnership or other entity created or
organized in or under the laws of the United States or any political subdivision
thereof, or any estate or trust the income of which is subject to United States
federal income taxation regardless of its source.
To the extent set forth in the Prospectus Supplement, except in special
circumstances set forth in the Debt Indenture, interest on bearer Debt
Securities will be payable only against presentation and surrender of the
coupons for the interest installments evidenced thereby as they mature at a
paying agency of the Company located outside of the United States and its
possessions. (Section 2.5(c)) The Company will maintain such an agency for a
period of two years after the principal of such bearer Debt Securities has
become due and payable. During any period thereafter for which it is necessary
in order to conform to United States tax laws or regulations, the Company will
maintain a paying agent outside of the United States and its possessions to
which the bearer Debt Securities and coupons related thereto may be presented
for payment and will provide the necessary funds therefor to such paying agent
upon reasonable notice. (Section 2.4)
Bearer Debt Securities and the coupons related thereto will be transferable
by delivery. (Section 2.8(f))
If appropriate, United States federal income tax consequences applicable to
a series of Debt Securities will be described in the Prospectus Supplement
relating thereto.
BOOK-ENTRY REGISTRATION
If the Prospectus Supplement so indicates, the Debt Securities will be
represented by one or more certificates (the "Global Securities"). The Global
Securities representing Debt Securities will be deposited
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with, or on behalf of, The Depository Trust Company ("DTC") or other successor
depository appointed by the Company (DTC or such other depository is herein
referred to as the "Depository") and registered in the name of the Depository or
its nominee. Debt Securities represented by a Global Security will not be
issuable in definitive form.
DTC currently limits the maximum denomination of any single Global Security
to $200,000,000. Therefore, for purposes hereof, "Global Security" refers to the
Global Security or Global Securities representing the entire issue of Debt
Securities of a particular series.
DTC has advised the Company and any underwriters, dealers or agents named
in the Prospectus Supplement as follows: DTC is a limited-purpose trust company
organized under the laws of the State of New York, a member of the Federal
Reserve System, a "clearing corporation" within the meaning of the New York
Uniform Commercial Code and a "clearing agency" registered pursuant to the
provisions of Section 17A of the Exchange Act. DTC was created to hold
securities for its participants ("DTC Participants") and to facilitate the
clearance and settlement of securities transactions between DTC Participants
through electronic book-entry changes in accounts of DTC Participants, thereby
eliminating the need for physical movement of securities certificates. DTC
Participants include securities brokers and dealers, banks, trust companies and
clearing corporations. Indirect access to the DTC book-entry system is also
available to others, such as banks, brokers, dealers and trust companies, that
clear through or maintain a custodial relationship with a DTC Participant,
either directly or indirectly ("Indirect Participants").
Upon the issuance by the Company of Debt Securities represented by a Global
Security, DTC will credit, on its book-entry registration and transfer system,
the respective principal amounts of the Debt Securities represented by such
Global Security to the accounts of DTC Participants. The accounts to be credited
shall be designated by the underwriters, dealers or agents. Ownership of
beneficial interests in the Global Security will be limited to DTC Participants
and Indirect Participants. Ownership of beneficial interests in Debt Securities
represented by the Global Security will be shown on, and the transfer of that
ownership will be effected only through, records maintained by DTC (with respect
to interests of DTC Participants), or by DTC Participants or Indirect
Participants (with respect to persons other than DTC Participants). The laws of
some states require that certain purchasers of securities take physical delivery
of such securities in definitive form. Such limits and such laws may impair the
ability to transfer beneficial interests in the Global Security.
So long as the Depository for the Global Security, or its nominee, is the
registered owner of the Global Security, the Depository or its nominee, as the
case may be, will be considered the sole owner or holder of the Debt Securities
represented by such Global Security for all purposes under the Debt Indenture.
Except as provided below, owners of beneficial interests in Debt Securities
represented by the Global Security will not be entitled to have Debt Securities
represented by such Global Security registered in their names, will not receive
or be entitled to receive physical delivery of Debt Securities in definitive
form and will not be considered the owners or holders thereof under the Debt
Indenture.
Payments of principal of and interest, if any, on the Debt Securities
represented by the Global Security registered in the name of DTC or its nominee
will be made by the Company through the Debt Trustee under the Debt Indenture or
a paying agent (the "Paying Agent"), which may also be the Debt Trustee under
the Debt Indenture, to DTC or its nominee, as the case may be, as the registered
owner of the Global Security. Neither the Company, the Debt Trustee, nor the
Paying Agent will have any responsibility or liability for any aspect of the
records relating to or payments made on account of beneficial ownership
interests of the Global Security or for maintaining, supervising or reviewing
any records relating to such beneficial ownership interests.
The Company has been advised that DTC, upon receipt of any payment of
principal or interest in respect of a Global Security, will credit immediately
the accounts of DTC Participants with payment in amounts proportionate to their
respective holdings in principal amount of beneficial interest in such Global
Security as shown on the records of DTC. The Company expects that payments by
DTC Participants to owners of beneficial interests in a Global Security will be
governed by standing customer instructions and customary practices, as is now
the case with securities held for the accounts of customers in bearer form or
registered in "street name" and will be the responsibility of such DTC
Participants.
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If the Depository with respect to a Global Security is at any time
unwilling or unable to continue as Depository and a successor Depository is not
appointed by the Company within 90 days, the Company will issue certificated
notes in exchange for the Debt Securities represented by such Global Security.
The information contained in this section concerning DTC and DTC's
book-entry system has been obtained from sources that the Company believes to be
reliable but the Company takes no responsibility for the accuracy thereof.
SAME-DAY SETTLEMENT
If the Prospectus Supplement so indicates, settlement for the Debt
Securities will be made by the underwriters, dealers or agents in immediately
available funds and all payments of principal and interest on the Debt
Securities will be made by the Company in immediately available funds. Secondary
trading in long-term notes and debentures of corporate issuers is generally
settled in clearinghouse or next-day funds. In contrast, the Debt Securities
subject to settlement in immediately available funds will trade in the
Depository's Same-Day Funds Settlement System until maturity, and secondary
market trading activity in such Debt Securities will therefore be required by
the Depository to settle in immediately available funds. No assurance can be
given as to the effect, if any, of settlement in immediately available funds on
trading activity in the Debt Securities.
EXCHANGE OF DEBT SECURITIES
Registered Debt Securities may be exchanged, subject to certain specified
restrictions, for an equal aggregate principal amount of registered Debt
Securities of the same series and date of maturity in such authorized
denominations as may be requested upon surrender of the registered Debt
Securities at an agency of the Company maintained for such purpose and upon
fulfillment of all other requirements of such agent. (Section 2.8(a))
To the extent permitted by the terms of a series of Debt Securities
authorized to be issued in registered form and bearer form, bearer Debt
Securities may be exchanged for an equal aggregate principal amount of
registered or bearer Debt Securities of the same series and date of maturity in
such authorized denominations as may be requested upon surrender of the bearer
Debt Securities with all unpaid coupons relating thereto at an agency of the
Company maintained for such purpose and upon fulfillment of all other
requirements of such agent. (Section 2.8(b)) As of the date of this prospectus,
temporary United States Treasury regulations essentially prohibit exchanges of
registered debt securities for bearer debt securities and, unless such
regulations are modified, the terms of a series of debt securities will not
permit registered debt securities to be exchanged for bearer debt securities.
AMENDMENT AND WAIVER
Subject to certain exceptions, the Debt Indenture and the Debt Securities
may be amended or supplemented by the Company and the Debt Trustee with the
written consent of the holders of a majority in principal amount of the
outstanding Debt Securities of each series affected by the amendment or
supplement (with each series voting as a class), or compliance with any
provision may be waived with the consent of the holders of a majority in
principal amount of the outstanding Debt Securities of each series affected by
such waiver (with each series voting as a class). However, without the consent
of each Securityholder affected, an amendment or waiver may not (i) reduce the
amount of Debt Securities whose holders must consent to an amendment or waiver,
(ii) change the rate of or change the time for payment of interest on any Debt
Security; (iii) change the principal of or change the Stated Maturity of any
Debt Security; (iv) reduce any premium payable upon redemption of any Debt
Security; (v) waive a default in the payment of the principal of or interest on
any Debt Security; (vi) make any Debt Security payable in money other than that
stated in the Debt Security; or (vii) impair the right to institute suit for the
enforcement of any payment on or with respect to any Debt Security. (Section
9.02) The Debt Indenture may be amended or supplemented without the consent of
any Securityholder (i) to cure any ambiguity, defect or inconsistency in the
Debt Indenture or in the Debt Securities of any series; (ii) to provide for the
assumption of all the obligations of the Company
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under the Debt Securities and any coupons appertaining thereto and under the
Debt Indenture by any corporation in connection with a merger, consolidation, or
transfer or lease of the Company's property and assets substantially as an
entirety, as provided for in the Debt Indenture; (iii) to secure the Debt
Securities; (iv) to provide for uncertificated Debt Securities in addition to or
in place of certificated Debt Securities; (v) to make any change that does not
adversely affect the rights of any Securityholder; (vi) to provide for the
issuance of and establish the form and terms and conditions of a series of Debt
Securities or to establish the form of any certifications required to be
furnished pursuant to the terms of the Debt Indenture or any series of Debt
Securities; or (vii) to add to rights of Securityholders. (Section 9.1)
SUCCESSOR ENTITY
The Company may consolidate with, or merge into, or be merged into, or
transfer or lease its property and assets substantially as an entirety to,
another U.S. corporation which assumes all the obligations of the Company under
the Debt Securities and any coupons appertaining thereto and under the Debt
Indenture if, after giving effect thereto, no default under the Debt Indenture
shall have occurred and be continuing. Thereafter, except in the case of a
lease, all such obligations of the Company shall terminate. (Section 5.1 and
Section 5.2)
DEFEASANCE, SATISFACTION AND DISCHARGE OF THE DEBT SECURITIES PRIOR TO MATURITY
Defeasance. Unless provided for otherwise in the Prospectus Supplement, if
the Company shall deposit with the Debt Trustee, in trust, at or before
maturity, lawful money or direct obligations of the United States of America or
obligations the principal of and interest on which are guaranteed by the United
States of America in such amounts and maturing at such times that the proceeds
of such obligations to be received upon the respective maturities and interest
payment dates of such obligations will provide funds sufficient, in the opinion
of a nationally recognized firm of independent public accountants chosen by the
Company, to pay when due the principal of and interest on the Debt Securities to
maturity (such money or direct obligations of, or obligations guaranteed by, the
United States of America, initially deposited or equivalent cash or securities
subsequently exchanged therefor, to be held as security for the payment of such
principal and interest), then the Company may omit to comply with certain of the
terms of the Debt Indenture as they relate to the Debt Securities, and the Event
of Default described in clause (iv) under the caption "Description of Debt
Securities -- Events of Default," and such other Events of Default as may be set
forth in the Prospectus Supplement. Defeasance of the Debt Securities would be
subject to the satisfaction of certain conditions, including, among others, (i)
the absence of an Event of Default at the date of the deposit, (ii) the
perfection of the holders' interest in such deposit and (iii) that such deposit
would not result in a breach of a material instrument by which the Company is
bound. (Section 8.2)
Satisfaction and Discharge. Upon the deposit of money or securities
contemplated above and the satisfaction of certain conditions, the Company may
omit to comply with its obligations duly and punctually to pay the principal of
and interest on the Debt Securities, or with any Events of Default with respect
thereto, and thereafter the holders of Debt Securities shall be entitled only to
payment out of the money or securities deposited with the Debt Trustee. Such
conditions may include, among others, (i) except in certain limited
circumstances involving a deposit made within one year of maturity, (A) the
absence of an Event of Default at the date of deposit or on the 91st day
thereafter, and (B) the delivery to the Debt Trustee by the Company of an
opinion of nationally recognized tax counsel to the effect that holders of Debt
Securities will not recognize income, gain or loss for Federal income tax
purposes as a result of such deposit and discharge and will be subject to
Federal income tax on the same amounts and in the same manner and at the same
times as would have been the case if such deposit and discharge had not
occurred, and (ii) the receipt by the Company of an opinion of counsel to the
effect that such satisfaction and discharge will not result in a violation of
the rules of any nationally recognized exchange on which the Debt Securities are
listed. (Section 8.1)
EVENTS OF DEFAULT
The following events are defined in the Debt Indenture as "Events of
Default" with respect to a series of Debt Securities: (i) default in the payment
of interest on any Debt Security of such series for 30 days;
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(ii) default in the payment of the principal of any Debt Security of such
series; (iii) default in the payment of any sinking fund installment required to
be made by the Company with respect to any series of Debt Securities; (iv)
failure by the Company for 90 days after notice to it to comply with any of its
other agreements in the Debt Securities of such series, in the Debt Indenture or
in any supplemental indenture under which the Debt Securities of that series may
have been issued; and (v) certain events of bankruptcy or insolvency. (Section
6.1) If an Event of Default occurs with respect to the Debt Securities of any
series and is continuing, the Debt Trustee or the holders of at least 25% in
principal amount of all of the outstanding Debt Securities of that series may
declare the principal (or, if the Debt Securities of that series are original
issue discount Debt Securities, such portion of the principal amount as may be
specified in the terms of that series) of, and any accrued interest on, all the
Debt Securities of that series to be due and payable. Upon such declaration,
such principal (or, in the case of original issue discount Debt Securities, such
specified amount) and all accrued interest thereon shall be due and payable
immediately. (Section 6.2)
Securityholders may not enforce the Debt Indenture or the Debt Securities,
except as provided in the Debt Indenture. (Section 6.6) The Debt Trustee may
require indemnity satisfactory to it before it enforces the Debt Indenture or
the Debt Securities. (Section 7.1(f)) Subject to certain limitations, holders of
a majority in principal amount of the Debt Securities of each series affected
(with each series voting as a class) may direct the Debt Trustee in its exercise
of any trust power. (Section 6.5) The Debt Trustee may withhold from
Securityholders notice of any continuing default (except a default in payment of
principal or interest) if it determines in good faith that withholding notice is
in their interests. (Section 7.5) The Company is not required under the Debt
Indenture to furnish any periodic evidence as to the absence of default or as to
compliance with the terms of the Debt Indenture.
CONCERNING THE DEBT TRUSTEE
Harris Trust and Savings Bank ("Harris Bank") serves as trustee under an
Equipment Trust Agreement, dated as of November 15, 1990, between the Company
and Harris Bank and is expected to serve as trustee under a Pass Through Trust
Agreement to be entered into between the Company and Harris Bank. In addition,
Harris Bank provides customary banking services to the Company and certain of
its affiliates.
PLAN OF DISTRIBUTION
The Company may sell the Debt Securities being offered hereby: (i) through
agents, (ii) to or through underwriters, (iii) through dealers or (iv) through a
combination of any such methods of sale.
The distribution of the Debt Securities may be effected from time to time
in one or more transactions either (i) at a fixed price or prices, which may be
changed, or (ii) at market prices prevailing at the time of sale, or (iii) at
prices related to such prevailing market prices, or (iv) at negotiated prices.
Offers to purchase Debt Securities may be solicited directly by agents
designated by the Company from time to time. Any such agent, which may be deemed
to be an underwriter as that term is defined in the Securities Act, involved in
the offer or sale of the Debt Securities in respect of which this Prospectus is
delivered will be named, and any commissions payable by the Company to such
agent will be set forth, in the Prospectus Supplement. Unless otherwise
indicated in the Prospectus Supplement, any such agent will be acting on a best
efforts basis for the period of its appointment.
If an underwriter or underwriters are utilized in the sale, the Company
will execute an underwriting agreement with such underwriters at the time of
sale to them and the names of the underwriters and the terms of the transaction,
including commissions, discounts and other compensation of the underwriters and
dealers, if any, will be set forth in the Prospectus Supplement, which will be
used by the underwriters to make resales of the Debt Securities in respect of
which this Prospectus is delivered to the public.
If a dealer is utilized in the sale of the Debt Securities in respect of
which this Prospectus is delivered, the Company will sell such Debt Securities
to the dealer, as principal. The dealer may then resell such Debt Securities to
the public at varying prices to be determined by such dealer at the time of
resale.
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If so indicated in the Prospectus Supplement, the Company will authorize
agents, underwriters or dealers to solicit offers by certain specified
institutions to purchase Debt Securities from the Company at the public offering
price set forth in the Prospectus Supplement pursuant to contracts providing for
payment and delivery on a specified date in the future. Such contracts will be
subject only to those conditions set forth in the Prospectus Supplement, and the
Prospectus Supplement will set forth the commission payable for solicitation of
such contracts.
Underwriters, dealers, agents and other persons may be entitled, under
agreements which may be entered into with the Company, to indemnification
against certain civil liabilities, including liabilities under the Securities
Act.
Underwriters, dealers and agents may be customers of, engage in
transactions with or perform services for the Company in the ordinary course of
business.
LEGAL OPINIONS
Unless otherwise indicated in the Prospectus Supplement to this Prospectus,
certain legal matters in connection with the Debt Securities offered hereby will
be passed upon for the Company by Neal, Gerber & Eisenberg, Chicago, Illinois,
and for any underwriters or agents, by Mayer, Brown & Platt, New York, New York.
EXPERTS
The consolidated financial statements of Union Tank Car Company appearing
in Union Tank Car Company's Annual Report (Form 10-K) for the year ended
December 31, 1996, have been audited by Ernst & Young LLP, independent auditors,
as set forth in their report thereon included therein and incorporated herein by
reference. Such consolidated financial statements are incorporated herein by
reference in reliance upon such report given upon the authority of such firm as
experts in accounting and auditing.
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