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Pursuant to Rule 424(b)(2)
File No. 33-64697
PROSPECTUS SUPPLEMENT
(To Prospectus Dated December 7, 1995)
U.S. $650,000,000
GENERAL AMERICAN TRANSPORTATION CORPORATION
MEDIUM-TERM NOTES, SERIES F
[LOGO]
DUE NINE MONTHS OR MORE FROM DATE OF ISSUE
General American Transportation Corporation ("GATC" or the "Company") may offer
from time to time its Medium-Term Notes, Series F (the "Notes"). Each Note will
mature on any business day nine months or more from the date of issue as
selected by the purchaser and agreed to by the Company and may be subject to
redemption at the option of the Company or repayment at the option of the holder
prior to maturity. The aggregate principal amount of the Notes to be offered
will not exceed U.S. $650,000,000 or its equivalent in foreign currencies or
currency units. Principal of and interest on the Notes may be payable in U.S.
dollars or in such foreign currencies or currency units (the "Specified
Currency") as may be designated by the Company. See "Important Currency Exchange
Information." Each Note will bear interest at a fixed rate (a "Fixed Rate
Note"), which may be zero in the case of certain Notes issued at a price
representing a substantial discount from the principal amount payable upon
maturity, or at a floating rate (a "Floating Rate Note"). See "Description of
Notes -- Fixed Rate Notes" and "Description of Notes -- Floating Rate Notes."
The currencies or currency units and redemption and repayment provisions, if
any, will be set forth in a pricing supplement to this Prospectus Supplement
(the "Pricing Supplement"). Notes may pay a level amount in respect of both
principal and interest amortized over the life of the Note (an "Amortizing
Note"). Holders of Notes may be provided the option of extending the maturity of
such Notes to one or more dates (an "Extendible Maturity Note"). The Notes will
not be subject to redemption or repayment prior to their stated maturity unless
otherwise specified in the applicable Pricing Supplement. The Notes may be
issued as Indexed Notes the principal amount of which, payable at maturity, is
determined by the relationship between the denominated currency and another
currency. See "Description of Notes -- Indexed Notes."
Each Note will be issued in fully registered form and will be represented by
either a global certificate (a "Global Security") registered in the name of a
nominee of The Depository Trust Company ("DTC") or other depository (DTC or such
other depository as is specified in the applicable Pricing Supplement is herein
referred to as the "Depository", and each Note represented by a Global Security
is herein referred to as a "Book-Entry Note"), or a certificate issued in
definitive form (a "Certificated Note"), as set forth in the applicable Pricing
Supplement. Interests in Book-Entry Notes will be shown on, and transfers
thereof will be effected only through, records maintained by the Depository and
its participants. See "Description of Notes -- Book-Entry System."
Unless otherwise set forth in the applicable Pricing Supplement, the Interest
Payment Dates, if any, for each Fixed Rate Note will be April 1 and October 1 of
each year and at maturity. The Interest Payment Dates for each Floating Rate
Note will be established on the date of issue and will be set forth therein and
in the applicable Pricing Supplement. Interest rates and interest rate formulas
are subject to change by the Company, but no change will affect any Notes
already issued or as to which an offer to purchase has been accepted by the
Company.
Unless otherwise specified in the applicable Pricing Supplement, the Notes will
be issued in denominations of U.S. $1,000 or any amount in excess thereof which
is an integral multiple of U.S. $1,000. The authorized denominations of Notes
denominated in a Specified Currency other than U.S. dollars will be set forth in
the applicable Pricing Supplement. See "Description of Notes -- General."
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
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PRICE TO AGENTS' PROCEEDS TO
PUBLIC(1)(2) COMMISSIONS(3) COMPANY(2)(3)(4)
<S> <C> <C> <C>
Per Note..................... 100.000% .125%-.750% 99.875%-99.250%
Total........................ U.S. $650,000,000 U.S. $812,500-$4,875,000 U.S. $649,187,500-$645,125,000
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Unless otherwise specified in the Pricing Supplement, the Price to Public
will be 100% of the principal amount.
(2) Or the equivalent thereof in the Specified Currency.
(3) The Company will pay to Salomon Brothers Inc and to Morgan Stanley & Co.
Incorporated (each an "Agent") a commission depending upon the maturity of
the Notes of from .125% to .750% of the principal amount of each Note;
provided, that commissions with respect to Notes maturing 30 years or more
from the date of issue will be subject to negotiation.
(4) Before deducting expenses payable by the Company estimated at U.S. $250,000,
including reimbursement of the Agents' expenses. The Company has agreed to
indemnify each Agent against certain civil liabilities, including
liabilities under the Securities Act of 1933, as amended.
The Notes are being offered on a continuing basis by the Company through the
Agents, which have agreed to use their reasonable best efforts to solicit
purchases of the Notes. The Company may also sell the Notes at a discount to the
Agents for resale to one or more investors or other purchasers at varying prices
related to prevailing market prices at the time of resale, or, if set forth in
the applicable Pricing Supplement, at a fixed public offering price, as
determined by the Agents. In addition, each Agent may offer Notes purchased by
it as principal for its own account or at negotiated discounts for resale to
investors, other dealers or other purchasers. Unless otherwise specified in the
applicable Pricing Supplement, any Note purchased by an Agent as principal will
be purchased at 100% of the principal amount thereof less a percentage equal to
the commission applicable to an agency sale of a Note of identical maturity. The
Company reserves the right to sell the Notes directly on its own behalf. The
Company may also appoint additional agents for the purpose of soliciting offers
to purchase the Notes. The Notes will not be listed on any securities exchange,
and there can be no assurance that the maximum principal amount of Notes offered
by this Prospectus Supplement will be sold or that there will be a secondary
market for the Notes. The Company reserves the right to withdraw, cancel or
modify the offer made hereby without notice. The Company or the Agents may
reject any offer to purchase as a whole or in part. See "Plan of Distribution."
SALOMON BROTHERS INC MORGAN STANLEY & CO.
INCORPORATED
The date of this Prospectus Supplement is January 26, 1996.
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USE OF PROCEEDS
The net proceeds to be received by the Company from the sale of the Notes
will be added to the general funds of the Company and may be used to repay the
Company's outstanding short-term or long-term debt. In addition, the proceeds
may be used to finance capital expenditures, to finance acquisitions, to make
advances to GATX Corporation, or for other corporate purposes, as may be set
forth in one or more Pricing Supplements. 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.
IMPORTANT CURRENCY EXCHANGE INFORMATION
Purchasers are required to pay for Notes in the Specified Currency and
payment of principal of, premiums, if any, and interest on such Notes will be
made in the Specified Currency unless otherwise indicated in the applicable
Pricing Supplement. Currently, there are limited facilities in the United States
for conversion of U.S. dollars into foreign currencies and vice versa, and
generally banks do not offer non-U.S. dollar checking or savings account
facilities in the United States. However, if requested by a prospective
purchaser of Notes denominated in a Specified Currency other than U.S. dollars,
the Agent soliciting the offer to purchase will arrange for the conversion of
U.S. dollars into such Specified Currency to enable the purchaser to pay for
such Notes. Such requests must be made on or before the fifth Business Day (as
defined below) preceding the date of delivery of the Notes, or by such other
date as determined by such Agent. Each such conversion will be made by the
relevant Agent on such terms and subject to such conditions, limitations and
charges as such Agent may from time to time establish in accordance with its
regular foreign exchange practice. All costs of exchange will be borne by
purchasers of the Notes.
References herein to "U.S. dollars" or "U.S. $" or "$" are to the currency
of the United States of America.
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DESCRIPTION OF NOTES
The following description of the particular terms of the Notes offered
hereby supplements, and to the extent inconsistent therewith, replaces, the
description of the general terms and provisions of the Debt Securities set forth
in the accompanying Prospectus, to which description reference is hereby made.
The following description will apply to each Note unless otherwise specified in
the applicable Pricing Supplement.
GENERAL
The Notes are to be issued as a series of Debt Securities limited in
principal amount to $650,000,000, or its equivalent in foreign currencies or
currency units, in aggregate principal amount under an Indenture dated as of
October 1, 1987, as supplemented by supplemental indentures dated as of May 15,
1988, March 15, 1990, June 15, 1990 and January 15, 1996 (collectively, the
"Debt Indenture"), between the Company and The Chase Manhattan Bank (National
Association), as Trustee (the "Debt Trustee"), which is described more fully
under "Description of Debt Securities" in the accompanying Prospectus. The
aggregate principal amount of Notes that may be issued and sold may be reduced
as a result of the sale by the Company of other Debt Securities or pass through
certificates of the Company. The statements herein concerning the Notes and the
Debt Indenture do not purport to be complete. They are qualified in their
entirety by reference to the provisions of the Debt Indenture, including the
definitions of certain capitalized terms used herein without definition.
The Notes will be offered on a continuing basis and will mature on any
Business Day (as defined below) nine months or more from the date of issue, as
selected by the purchaser and agreed to by the Company, and may be subject to
redemption at the option of the Company or repayment at the option of the holder
prior to maturity, as set forth under "Redemption and Repayment" below. Floating
Rate Notes will mature on an Interest Payment Date (each as defined below). Each
Note will bear interest at either (a) a fixed rate, which may be zero in the
case of certain Notes issued at an Issue Price (as defined below) representing a
substantial discount from the principal amount payable upon maturity (a "Zero-
Coupon Note"), or (b) a floating rate, determined by reference to a Base Rate
which may be adjusted by a Spread or Spread Multiplier (each as defined below).
The Notes may be issued as Indexed Notes, the principal amount of which
payable at maturity will be determined by the difference between the currency in
which such Notes are denominated and another currency or composite currency set
forth in the applicable Pricing Supplement. See "Indexed Notes."
Each Note will be issued initially as either a Book-Entry Note or a
Certificated Note in fully registered form without coupons. Except as set forth
in the Prospectus under "Description of Debt Securities-Book-Entry
Registration," Book-Entry Notes will not be issuable in certificated form. See
"Book-Entry System."
Unless otherwise specified in the applicable Pricing Supplement, 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. The authorized
denominations of Notes denominated in a Specified Currency other than U.S.
dollars will be set forth in the applicable Pricing Supplement.
The Notes will constitute unsecured and unsubordinated indebtedness of the
Company and will rank on a parity with the Company's other unsecured and
unsubordinated indebtedness.
"Business Day" means any day, other than a Saturday or Sunday, that is
neither a legal holiday nor a day on which banking institutions are authorized
or required by law or regulation to close in The City of New York or the City of
Chicago, or (i) with respect to Notes the principal of or the interest on which
is payable in a Specified Currency other than U.S. dollars, the capital city of
the country of the Specified Currency, (ii) with respect to Notes denominated in
European Currency Units ("ECUs"), Brussels, Belgium and (iii) with respect to
LIBOR Notes (as defined below), the City of London. "London Banking Day" means
any day on which dealings in deposits in U.S. dollars are transacted in the
London interbank market.
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The Notes may be issued as Original Issue Discount Notes. An "Original
Issue Discount Note" is a Note, including any Zero-Coupon Note, which is issued
at a price lower than the amount payable at the Stated Maturity thereof and
which provides that upon redemption or acceleration of the Maturity thereof an
amount, less than the principal amount payable at the Stated Maturity thereof
and determined in accordance with the terms thereof, shall become due and
payable. Original Issue Discount Notes, as well as certain other Notes offered
hereunder, may be subject to special United States federal income tax rules
governing original issue discount. See "United States Federal Taxation --
Original Issue Discount" below. A "Zero Coupon Note" is a Note that does not
bear interest prior to Maturity.
The interest rate on a Note will in no event be higher than the maximum
rate permitted by New York State law, as the same may be modified by United
States law of general application. Under present New York State law, the maximum
rate of interest, with certain exceptions, is 25% per annum on a simple interest
basis. This limit may not apply to Notes in which $2,500,000 or more has been
invested.
All percentages resulting from any calculation of the rate of interest on a
Floating Rate Note will be rounded, if necessary, to the nearest 1/100,000 of 1%
(.0000001), with five one-millionths of a percentage point rounded upward, and
all currency or currency unit amounts used in or resulting from such calculation
on Floating Rate Notes will be rounded to the nearest 1/100 of a unit, with five
one-thousandths being rounded upward.
The Pricing Supplement relating to each Note will describe the following
terms: (1) the currencies or currency units in which the principal of and
interest on such Note is payable; (2) whether such Note is a Fixed Rate Note or
a Floating Rate Note; (3) the price (expressed as a percentage of the aggregate
principal amount thereof) at which such Note will be issued (the "Issue Price");
(4) the date on which such Note will be issued (the "Issue Date"); (5) the date
on which such Note will mature (the "Maturity Date"); (6) if such Note is a
Fixed Rate Note, the rate per annum at which such Note will bear interest, if
any (the "Interest Rate"); (7) if such Note is a Floating Rate Note, the Base
Rate, the Initial Interest Rate, the Interest Reset Dates, the Interest Payment
Dates, the Index Maturity, the Maximum Interest Rate and the Minimum Interest
Rate, if any, and the Spread or Spread Multiplier, if any (all as defined
below), and any other terms relating to the particular method of calculating the
Interest Rate, for such Note; (8) whether such Note may be redeemed at the
option of the Company or repaid at the option of the holder or is otherwise
required to be redeemed prior to maturity, and if so, the provisions relating to
such redemption or repayment; (9) whether such Note is an Indexed Note; (10) if
such Note is an Indexed Note, the Denominated Currency, the Indexed Currency,
the Face Amount, the Base Exchange Rate, the Determination Agent and the
Reference Dealers (each as defined in the applicable Pricing Supplement)
relating to such Indexed Note and certain other information relating to Indexed
Notes; (11) whether such Note is an Amortizing Note, and if so, the provisions
relating to such amortization; (12) whether such Note is an Extendible Maturity
Note, and if so, the provisions relating to such Extendible Maturity Note; and
(13) any other terms of such Note not inconsistent with the provisions of the
Debt Indenture.
PAYMENT OF PRINCIPAL AND INTEREST
The principal of and interest on each Note are payable by the Company in
the Specified Currency for such Note. If the Specified Currency for a Note is
other than U.S. dollars, the Company will, unless otherwise specified in the
applicable Pricing Supplement, appoint an agent (initially The Chase Manhattan
Bank (National Association)) (the "Exchange Rate Agent") to determine the
exchange rate for converting all payments in respect of such Note into U.S.
dollars in the manner described in the following paragraph and to perform such
conversion on behalf of the Company. Notwithstanding the foregoing, the holder
of a Note denominated in a Specified Currency other than U.S. dollars may (if
such Note and the applicable Pricing Supplement so indicate) elect to receive
all such payments in the Specified Currency by delivery of a written request to
the Debt Trustee, Four Chase MetroTech Center, Brooklyn, New York 11245, which
must be received by the Debt Trustee on or prior to the applicable Record Date
or at least 15 calendar days prior to maturity, as the case may be. Such
election shall remain in effect unless and until changed by written notice to
the Debt Trustee, but the Debt Trustee must
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receive written notice of any such change on or prior to the applicable record
date or at least 15 calendar days prior to maturity, as the case may be. In the
absence of manifest error, all determinations by the Exchange Rate Agent shall
be final and binding on the Company and the holders of Notes. Until the Notes
are paid or payment thereof is duly provided for, the Company will, at all
times, maintain a paying agent (the "Paying Agent") in The City of New York
capable of performing the duties described herein to be performed by the Paying
Agent. The Company has initially appointed the Debt Trustee as the Paying Agent.
The Company will notify the holders of such Notes, in accordance with the Debt
Indenture, of any change in the Paying Agent or its address.
Unless otherwise specified, in the case of a Note denominated in a
Specified Currency other than U.S. dollars, unless the holder has elected
otherwise, payment in respect of such Note shall be made in U.S. dollars based
upon the exchange rate as determined by the Exchange Rate Agent based on the
highest firm bid quotation expressed in U.S. dollars received by such Exchange
Rate Agent at approximately 11:00 a.m., New York City time, on the second
Business Day preceding the applicable payment date, from three recognized
foreign exchange dealers in The City of New York selected by the Exchange Rate
Agent and approved by the Company (one of which may be the Exchange Rate Agent)
for the purchase by the quoting dealer, for settlement on such payment date, of
the aggregate amount of the Specified Currency payable on such payment date in
respect of all such Notes denominated in such Specified Currency electing to
receive payments in U.S. dollars. If no such bid quotations are available,
payments will be made in the Specified Currency, unless such Specified Currency
is unavailable due to the imposition of exchange controls or to other
circumstances beyond the Company's control, in which case payment will be made
as described below under "Currency Risks -- Payment Currency." All currency
exchange costs will be borne by the holders of such Notes by deductions from
such payments.
Unless otherwise specified in the applicable Pricing Supplement, payments
in U.S. dollars of interest on Certificated Notes (other than interest payable
at maturity or upon earlier redemption or repayment) will be made by mailing a
check to the holder at the address of such holder appearing on the security
register on the applicable Record Date (as defined below). Simultaneously with
the election by any holder to receive payments in a Specified Currency other
than U.S. dollars (by written request to the Debt Trustee, as provided above),
such holder shall provide appropriate payment instructions to the Paying Agent,
and all such payments will be made in immediately available funds to an account
maintained by the payee in the Specified Currency. Beneficial owners of
Book-Entry Notes will be paid in accordance with the Depository's and the
participant's procedures in effect from time to time as described under
"Book-Entry System" below. Unless otherwise specified in the applicable Pricing
Supplement, principal and interest payable at maturity or upon earlier
redemption or repayment in respect of a Note will be paid in immediately
available funds upon surrender of such Note accompanied by wire transfer
instructions at the office of the Paying Agent.
Unless otherwise specified in the applicable Pricing Supplement, if the
principal of any Original Issue Discount Note is declared to be due and payable
immediately as described in the Prospectus under "Description of Debt
Securities -- Events of Default," the amount of principal due and payable with
respect to such Note shall be the Amortized Face Amount of such Note as of the
date of such declaration. The "Amortized Face Amount" of an Original Issue
Discount Note for this purpose shall be the amount equal to (i) the Issue Price
set forth in the applicable Pricing Supplement plus (ii) the 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) to such date of declaration, but in no event shall the
Amortized Face Amount of an Original Issue Discount Note exceed its principal
amount.
The "Record Date" with respect to any Interest Payment Date shall be the
date 15 calendar days prior to such Interest Payment Date, whether or not such
date shall be a Business Day. Interest payable and punctually paid or duly
provided for on any Interest Payment Date will be paid to the person in whose
name a Note is registered at the close of business on the Record Date
immediately preceding such Interest Payment Date; provided, however, that the
first payment of interest on any Note with an Issue Date between a Record Date
and an Interest Payment Date or on an Interest Payment Date will be made on the
Interest Payment Date following the next succeeding Record Date to the
registered holder on such
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next succeeding Record Date; provided, further, that interest payable at
maturity or upon earlier redemption or repayment will be payable to the person
to whom principal shall be payable.
FIXED RATE NOTES
Each Fixed Rate Note will bear interest from its Issue Date at the rate per
annum stated on the face thereof and in the applicable Pricing Supplement until
the principal amount thereof is paid or made available for payment. Unless
otherwise specified in the applicable Pricing Supplement, interest on each Fixed
Rate Note will be payable semi-annually each April 1 and October 1 (each an
"Interest Payment Date") and at maturity or upon earlier redemption or
repayment. Each payment of interest shall include interest accrued to but
excluding the Interest Payment Date. Interest on the Fixed Rate Notes will be
computed on the basis of a 360-day year of twelve 30-day months.
If any Interest Payment Date for any Fixed Rate Note falls on a day that is
not a Business Day, the interest payment shall be made on the next day that is a
Business Day, and no interest on such payment shall accrue for the period from
and after the Interest Payment Date. If the maturity (or date of redemption or
repayment) of any Fixed Rate Note falls on a day that is not a Business Day, the
payment of interest and principal (and premium, if any) will be made on the next
succeeding Business Day, and no interest on such payment shall accrue for the
period from and after the maturity date (or date of redemption or repayment).
Interest payments for Fixed Rate Notes will include accrued interest from
and including the Issue Date or from and including the last date in respect of
which interest has been paid, as the case may be, to, but excluding, the
Interest Payment Date or the date of maturity or earlier redemption or
repayment, as the case may be.
FLOATING RATE NOTES
Each Floating Rate Note will bear interest from its Issue Date at rates
determined by reference to an interest rate basis (the "Base Rate"), which may
be adjusted by a Spread or Spread Multiplier (each as defined below), until the
principal amount thereof is paid or made available for payment. The applicable
Pricing Supplement will designate one of the following Base Rates as applicable
to each Floating Rate Note: (a) the Commercial Paper Rate (a "Commercial Paper
Rate Note"), (b) LIBOR (a "LIBOR Note"), (c) the Treasury Rate (a "Treasury Rate
Note"), (d) the Certificate of Deposit Rate (a "CD Rate Note"), (e) the Federal
Funds Rate (a "Federal Funds Rate Note"), (f) the Prime Rate (a "Prime Rate
Note"), (g) the CMT Rate (a "CMT Rate Note"), or (h) such other Base Rate as is
set forth in such Pricing Supplement and in such Floating Rate 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.
Unless otherwise specified in the applicable Pricing Supplement, the
interest rate on each Floating Rate Note will be calculated by reference to the
specified Base Rate (i) plus or minus the Spread, if any, or (ii) multiplied by
the Spread Multiplier, if any. The "Spread" is the number of basis points
(one-one-hundredth of a percentage point) specified in the applicable Pricing
Supplement as being applicable to the interest rate for such Floating Rate Note,
and the "Spread Multiplier" is the percentage specified in the applicable
Pricing Supplement as being applicable to the interest rate for such Floating
Rate Note.
As specified in the applicable Pricing Supplement, a Floating Rate Note may
also have either or both of the following: (i) a maximum numerical interest rate
limitation, or ceiling, on the rate of interest which may accrue during any
interest period ("Maximum Interest Rate"); and (ii) a minimum numerical interest
rate limitation, or floor, on the rate of interest which may accrue during any
interest period ("Minimum Interest Rate").
The rate of interest on each Floating Rate Note will be reset daily,
weekly, monthly, quarterly, semiannually or annually (an "Interest Reset Date"),
as specified in the applicable Pricing Supplement. Unless otherwise specified in
the applicable Pricing Supplement, the Interest Reset Date will be, in the case
of Floating Rate Notes that reset daily, each Business Day; in the case of
Floating Rate Notes (other
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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); 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; in the
case of Floating Rate Notes that reset semiannually, the third Wednesday of each
of two months specified in the applicable Pricing Supplement; and in the case of
Floating Rate Notes that reset annually, the third Wednesday of the month
specified in the applicable Pricing Supplement. If any Interest Reset Date for
any Floating Rate Note would otherwise be a day that is not a Business Day, 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 next preceding
Business Day. If an auction of Treasury bills (as defined below) falls on a day
that is an Interest Reset Date for Treasury Rate Notes, the Interest Reset Date
shall be the following day that is a Business Day.
Interest on each Floating Rate Note will be payable monthly, quarterly,
semiannually or annually (the "Interest Payment Period") as specified in the
applicable Pricing Supplement. Except as provided below or in the applicable
Pricing Supplement, the date or dates on which interest will be payable (each an
"Interest Payment Date") will be, in the case of Floating Rate Notes with a
monthly Interest Payment Period, the third Wednesday of each month; in the case
of Floating Rate Notes with a quarterly Interest Payment Period, the third
Wednesday of March, June, September and December; in the case of Floating Rate
Notes with a semiannual Interest Payment Period, the third Wednesday of each of
the two months specified in the applicable Pricing Supplement; and in the case
of Floating Rate Notes with an annual Interest Payment Period, the third
Wednesday of the month specified in the applicable Pricing Supplement. Unless
otherwise specified in the applicable Pricing Supplement, if any Interest
Payment Date for 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 day that
is a Business Day except, 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.
Interest payments on each Interest Payment Date for Floating Rate Notes
(except in the case of Floating Rate Notes that reset daily or weekly) will
include accrued interest from and including the Issue Date or from and including
the last date in respect of which interest has been paid, as the case may be,
to, but excluding, such Interest Payment Date. In the case of Floating Rate
Notes that reset daily or weekly, interest payments will include accrued
interest from and including the Issue Date or from and including the last date
in respect of which interest has been paid, as the case may be, to and including
the Record Date immediately preceding the applicable Interest Payment Date,
except that at maturity the interest payments will include accrued interest from
and including the Issue Date, or from and including the last date in respect of
which interest has been paid, as the case may be, to, but excluding the Maturity
Date.
Accrued interest shall be calculated by multiplying the principal amount of
such Floating Rate Note 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. The interest
factor (rounded upward, if necessary, to the next higher one hundred-thousandth
of a percent) for each such day is computed by dividing the interest rate
applicable to such day by 360, in the case of Commercial Paper Rate Notes, LIBOR
Notes, CD Rate Notes, Federal Funds Rate Notes and Prime Rate Notes, or by the
actual number of days in the year, in the case of Treasury Rate Notes and CMT
Rate Notes. The interest rate applicable to any day that is an Interest Reset
Date is the interest rate for such Interest Reset Date. The interest rate
applicable to any other day is the interest rate for the immediately preceding
Interest Reset Date (or, if none, the Initial Interest Rate, as described
below).
Unless otherwise specified in the applicable Pricing Supplement, The Chase
Manhattan Bank (National Association) shall be the calculation agent (the
"Calculation Agent") with respect to the Floating Rate Notes. Upon the request
of the holder of any Floating Rate Note, the Calculation Agent will
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provide the interest rate then in effect and, if determined, the interest rate
which will become effective on the next Interest Reset Date with respect to such
Floating Rate Note.
The interest rate in effect with respect to a Floating Rate Note from the
Issue Date to the first Interest Reset Date (the "Initial Interest Rate") will
be specified in the applicable Pricing Supplement. The interest rate for each
subsequent Interest Reset Date will be determined by the Calculation Agent as
follows.
Commercial Paper Rate Notes
Commercial Paper Rate Notes will bear interest at the interest rates
(calculated with reference to the Commercial Paper Rate and the Spread or Spread
Multiplier, if any) specified in the Commercial Paper Rate Notes and in the
applicable Pricing Supplement.
Unless otherwise specified in the applicable Pricing Supplement, the
"Commercial Paper Rate" for each Interest Reset Date will be determined by the
Calculation Agent on the second Business Day prior to such Interest Reset Date
(a "Commercial Paper Rate Determination Date") and shall be the Money Market
Yield (as defined below) on such date of the rate for commercial paper having
the Index Maturity specified in the applicable Pricing Supplement, as such rate
shall be published by the Board of Governors of the Federal Reserve System in
"Statistical Release H.15(519), Selected Interest Rates" or any successor
publication ("H.15(519)"), under the heading "Commercial Paper." In the event
that such rate is not published prior to 9:00 A.M., New York City time, on the
Calculation Date (as defined below), then the Commercial Paper Rate shall be the
Money Market Yield on such Commercial Paper Rate Determination Date of the rate
for commercial paper of the specified Index Maturity as published by the Federal
Reserve Bank of New York in its daily statistical release "Composite 3:30 P.M.
Quotations for U.S. Government Securities" ("Composite Quotations") under the
heading "Commercial Paper." If by 3:00 P.M., New York City time, on such
Calculation Date such rate is not yet published in either H.15(519) or Composite
Quotations, then the Commercial Paper Rate 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 Commercial Paper Rate Determination Date of three leading dealers of
commercial paper in The City of New York selected by the Calculation Agent for
commercial paper of the specified Index Maturity, placed for an industrial
issuer whose bond rating is "AA," or the equivalent, from a nationally
recognized rating agency; provided, however, that if the dealers selected as
aforesaid by the Calculation Agent are not quoting offered rates as mentioned in
this sentence, the Commercial Paper Rate in effect for the applicable period
will be the Commercial Paper Rate in effect on such Commercial Paper Rate
Determination Date.
"Money Market Yield" shall be a yield calculated 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 Index Maturity.
The interest rate for each such Interest Reset Date shall be the Commercial
Paper Rate applicable to such Interest Reset Date plus or minus the Spread or
multiplied by the Spread Multiplier, as specified in the applicable Pricing
Supplement; however, the interest rate in effect for the period from the Issue
Date to the first Interest Reset Date will be the Initial Interest Rate and the
interest rate in effect for the 10 days immediately prior to maturity or earlier
redemption or repayment will be that in effect on the 10th day preceding such
maturity or earlier redemption or repayment. The "Calculation Date" pertaining
to a Commercial Paper Rate Determination Date will be the tenth Business Day
after such Commercial Paper Rate Determination Date.
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LIBOR Notes
LIBOR Notes will bear interest at the interest rates (calculated with
reference to LIBOR as described below, and then applying the Spread or Spread
Multiplier, if any) specified in the LIBOR Notes and the applicable Pricing
Supplement.
Unless otherwise indicated in the applicable Pricing Supplement, "LIBOR"
for each Interest Reset Date means the determination by the Calculation Agent in
accordance with the following provisions:
(i) On the second London Banking Day prior to the Interest Reset Date
(a "LIBOR Determination Date") relating to a LIBOR Note, either, as
specified in the applicable Pricing Supplement: (a) the arithmetic mean of
the offered rates for deposits in the Designated Deposit Currency (as
defined below) having the Index Maturity specified in the applicable
Pricing Supplement, commencing on the Interest Reset Date, that appear on
the Reuters Screen LIBO Page as of 11:00 A.M., London time, on the LIBOR
Determination Date, if at least two such offered rates appear on the
Reuters Screen LIBO Page ("LIBOR Reuters"), or (b) the rate for deposits in
the Designated Deposit Currency having the Index Maturity designated in the
applicable Pricing Supplement, commencing on the Interest Reset Date, that
appears on the Telerate Page 3750 as of 11:00 A.M., London time, on that
LIBOR Determination Date ("LIBOR Telerate"). Unless otherwise indicated in
the applicable Pricing Supplement, "Reuters Screen LIBO Page" means the
display designated as page "LIBO" on the Reuters Monitor Money Rate Service
(or such other page as may replace the LIBO page on that service for the
purpose of displaying London interbank offered rates of major banks).
"Telerate Page 3750" means the display designated as page "3750" on the
Telerate Service (or such other page as may replace the 3750 page on that
service or such other service or services as may be nominated by the
British Bankers' Association (the "Association") for the purpose of
displaying London interbank offered rates for the Designated Deposit
Currency). If neither LIBOR Reuters nor LIBOR Telerate is specified in the
applicable Pricing Supplement, LIBOR will be determined as if LIBOR
Telerate had been specified. In the case where (a) above applies, if fewer
than two offered rates appear on the Reuters Screen LIBO Page, or, in the
case where (b) above applies if no rate appears on the Telerate Page 3750,
as applicable, LIBOR in respect of that Interest Reset Date will be
determined as if the parties had specified the rate described in (ii)
below.
(ii) With respect to an Interest Reset Date as to which this provision
applies, LIBOR will be determined on the basis of the rates at which
deposits in the Designated Deposit Currency having the Index Maturity
designated in the applicable Pricing Supplement are offered at
approximately 11:00 A.M., London time, on such LIBOR Determination Date by
four major banks ("Reference Banks") in the London interbank market
selected by the Calculation Agent (after consultation with the Association)
to prime banks in the London interbank market commencing on the Interest
Reset Date and in a principal amount of not less than U.S. $1,000,000 that
is representative for a single transaction in such market at such time. The
Calculation Agent will request the principal London office of each of the
Reference Banks to provide a quotation of its rate. If at least two such
quotations are provided, LIBOR for such Interest Reset Date will be the
arithmetic mean of such quotations. If fewer than two quotations are
provided, LIBOR for such Interest Reset Date will be the arithmetic mean of
the rates quoted at approximately 11:00 A.M., New York City time, on such
LIBOR Determination Date by three major banks in The City of New York
selected by the Calculation Agent (after consultation with the Association)
for loans in the Designated Deposit Currency to leading European banks
having the specified Index Maturity designated in the applicable Pricing
Supplement commencing on the Interest Reset Date and in a principal amount
equal to an amount of not less than U.S. $1,000,000 that is representative
for a single transaction in such market at such time; provided, however,
that if the banks selected as aforesaid by the Calculation Agent are not
quoting as mentioned in this sentence, LIBOR will be LIBOR then in effect
on such Interest Reset Date. "Designated Deposit Currency" means, with
respect to any LIBOR Note, the currency (including a currency unit), if
any, designated in the applicable LIBOR Note as the Designated Deposit
Currency.
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If no such currency is designated in the applicable LIBOR Note, the
Designated Deposit Currency shall be U.S. dollars.
The interest rate for each such Interest Reset Date shall be LIBOR plus or
minus the Spread or multiplied by the Spread Multiplier as specified in the
applicable Pricing Supplement; provided, however, the interest rate in effect
for the period from the Issue Date to the first Interest Reset Date will be the
Initial Interest Rate and the interest rate in effect for the 10 days
immediately prior to the Maturity Date or earlier redemption or repayment will
be that in effect on the 10th day preceding such Maturity Date or earlier
redemption or repayment. The "Calculation Date" pertaining to a LIBOR
Determination Date shall be such LIBOR Determination Date.
Treasury Rate Notes
Treasury Rate Notes will bear interest at the interest rate (calculated
with reference to the Treasury Rate and the Spread or Spread Multiplier, if any)
specified in the Treasury Rate Notes and in the applicable Pricing Supplement.
Unless otherwise specified in the applicable Pricing Supplement, the
"Treasury Rate" means, with respect to any Treasury Rate Determination Date, the
rate for the auction held on such Treasury Rate Determination Date of direct
obligations of the United States ("Treasury bills") having the Index Maturity
designated in the applicable Pricing Supplement as published in H.15(519) under
the heading "Treasury bills -- auction average (investment)" or, if not so
published by 9:00 A.M., New York City time, on the Calculation Date pertaining
to such Treasury Rate Determination Date, the auction average rate (expressed as
a bond equivalent, rounded to the nearest one-hundredth of a percent, with five
one-thousandths of a percent rounded upwards, on the basis of a year of 365 or
366 days, as applicable, and applied on a daily basis) as otherwise announced by
the United States Department of the Treasury. In the event that the results of
the auction of Treasury bills having the Index Maturity designated in the
applicable Pricing Supplement are not published or reported as provided above by
3:00 P.M., New York City time, on such Calculation Date or if no such auction is
held on such Treasury Rate Determination Date, then the Treasury Rate shall be
calculated by the Calculation Agent and shall be a yield to maturity (expressed
as a bond equivalent, rounded to the nearest one-hundredth of a percent, with
five one-thousandths of a percent rounded upwards, 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 Treasury Rate Determination Date, of three leading primary United
States government securities dealers selected by the Calculation Agent for the
issue of Treasury bills with a remaining maturity closest to the Index Maturity
designated in the applicable Pricing Supplement; provided, however, that if the
dealers selected as aforesaid by the Calculation Agent are not quoting bid rates
as mentioned in this sentence, the Treasury Rate for such Interest Reset Date
will be the Treasury Rate in effect on such Interest Reset Date.
The "Treasury Rate Determination Date" will be the day of the week in which
the related Interest Reset Date falls on which Treasury bills would normally be
auctioned. Treasury bills are normally sold at auction on Monday of each week,
unless that day is a legal holiday, in which case the auction is normally 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 Determination Date
pertaining to the Interest Reset Date occurring in the next succeeding week.
The interest rate for each such Interest Reset Date shall be the Treasury
Rate applicable to such Interest Reset Date plus or minus the Spread or
multiplied by the Spread Multiplier, as specified in the applicable Pricing
Supplement; provided, however, the interest rate in effect for the period from
the Issue Date to the first Interest Reset Date will be the Initial Interest
Rate and the interest rate in effect for the 10 days immediately prior to
maturity or earlier redemption or repayment will be that in effect on the 10th
day preceding such maturity or earlier redemption or repayment. The "Calculation
Date" pertaining to a Treasury Rate Determination Date will be the tenth
Business Day after such Treasury Rate Determination Date.
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CD Rate Notes
CD Rate Notes will bear interest at the interest rate (calculated with
reference to the CD Rate and the Spread or Spread Multiplier, if any) specified
in the CD Rate Notes and in the applicable Pricing Supplement.
Unless otherwise specified in the applicable Pricing Supplement, "CD Rate"
means, with respect to any Interest Reset Date, the rate on such 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)," or, if not so published by 9:00 A.M., New York City time,
on the second Business Day prior to such Interest Reset Date (a "CD Rate
Determination Date") pertaining to such Interest Reset Date, the CD Rate will be
the rate on such Interest Reset Date for negotiable certificates of deposit of
the Index Maturity designated in the applicable Pricing Supplement as published
in the Composite Quotations under the heading "Certificates of Deposit." If such
rate is not yet published in either H.15(519) or the Composite Quotations by
3:00 P.M., New York City time, on the CD Rate Determination Date pertaining to
such Interest Reset Date, the CD Rate on such Interest Reset Date will be
calculated by the Calculation Agent and will be the arithmetic mean of the
secondary market offered rates as of 10:00 A.M., New York City time, on such
Interest Reset Date, for certificates of deposit in the denomination of
$5,000,000 with a remaining maturity closest to the Index Maturity designated in
the Pricing Supplement 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 negotiable certificates of deposit of major United States
money center banks in the market for negotiable certificates of deposit;
provided, however, that if the dealers selected as aforesaid by the Calculation
Agent are not quoting as set forth above, the CD Rate in effect for the
applicable period will be the same as the CD Rate for the immediately preceding
Interest Payment Period (or, if there was no such Interest Payment Period, the
rate of interest payable on the CD Rate Notes for which such CD Rate is being
determined shall be the Initial Interest Rate).
The interest rate for each such Interest Reset Date shall be the CD Rate
plus or minus the Spread or multiplied by the Spread Multiplier as specified in
the applicable Pricing Supplement; provided, however, the interest rate in
effect for the period from the Issue Date to the first Interest Reset Date will
be the Initial Interest Rate and the interest rate in effect for the 10 days
immediately prior to the Maturity Date or earlier redemption or repayment will
be that in effect on the 10th day preceding such Maturity Date or earlier
redemption or repayment. The "Calculation Date" pertaining to a CD Rate
Determination Date shall be such CD Rate Determination Date.
Federal Funds Rate Notes
Federal Funds Rate Notes will bear interest at the interest rate
(calculated with reference to the Federal Funds Rate and the Spread or Spread
Multiplier, if any) specified in the Federal Funds Rate Notes and in the
applicable Pricing Supplement.
Unless otherwise specified in the applicable Pricing Supplement, the
"Federal Funds Rate" means, with respect to any Interest Reset Date, the rate on
such date for Federal funds as published in H.15(519) under the heading "Federal
Funds (Effective)," or, if not so published by 9:00 A.M., New York City time, on
the second Business Day prior to such Interest Reset Date (a "Federal Funds
Determination Date") pertaining to such Interest Reset Date, the Federal Funds
Rate will be the rate on such Interest Reset Date as published in the Composite
Quotations under the heading "Federal Funds/Effective Rate." If such rate is not
yet published in either H.15(519) or the Composite Quotations by 3:00 P.M., New
York City time, on the Federal Funds Determination Date pertaining to such
Interest Reset Date, the Federal Funds Rate for such Interest Reset Date 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 Reset Date, arranged by three leading brokers of
Federal funds transactions in The City of New York selected by the Calculation
Agent; provided, however, that if the brokers selected as aforesaid 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
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immediately preceding Interest Payment Period (or, if there was no such Interest
Payment Period, the rate of interest payable on the Federal Funds Rate Notes for
which such Federal Funds Rate is being determined shall be the Initial Interest
Rate).
The interest rate for each such Interest Reset Date shall be the Federal
Funds Rate plus or minus the Spread or multiplied by the Spread Multiplier as
specified in the applicable Pricing Supplement; provided, however, the interest
rate in effect for the period from the Issue Date to the first Interest Reset
Date will be the Initial Interest Rate and the interest rate in effect for the
10 days immediately prior to the Maturity Date or earlier redemption or
repayment will be that in effect on the 10th day preceding such Maturity Date or
earlier redemption or repayment. The "Calculation Date" pertaining to a Federal
Funds Rate Determination Date shall be such Federal Funds Rate Determination
Date.
Prime Rate Notes
Prime Rate Notes will bear interest at the interest rate (calculated with
reference to the Prime Rate and the Spread or Spread Multiplier, if any)
specified in the Prime Rate Notes and in the applicable Pricing Supplement.
Unless otherwise specified in the applicable Pricing Supplement, "Prime
Rate" means, with respect to any Interest Reset Date, the rate set forth in
H.15(519) for such date opposite the caption "Bank Prime Loan." If such rate is
not yet published by 9:00 A.M., New York City time, on the second Business Day
prior to such Interest Reset Date (a "Prime Rate Determination Date") pertaining
to such Interest Reset Date, the Prime Rate for such Interest Reset Date will be
the arithmetic mean of the rates of interest publicly announced by each bank
named on the Reuters Screen USPRIME 1 (as defined below) as such bank's prime
rate or base lending rate as in effect for such Interest Reset Date as quoted on
the Reuters Screen USPRIME 1 on such Interest Reset Date, or, if fewer than four
such rates appear on the Reuters Screen USPRIME 1 for such Interest Reset Date,
the rate shall be the arithmetic mean of the prime rates quoted on the basis of
the actual number of days in the year divided by 360 as of the close of business
on such Interest Reset Date by at least two of the three major money center
banks in The City of New York selected by the Calculation Agent from which
quotations are requested. If fewer than two quotations are provided, the Prime
Rate shall be calculated by the Calculation Agent and shall be determined as the
arithmetic mean on the basis of the prime rates in The City of New York by the
appropriate number of 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 million and being subject to
supervision or examination by federal or state authority, selected by the
Calculation Agent to quote such rate or rates. "Reuters Screen USPRIME 1" means
the display designated as page "USPRIME 1" on the Reuters Monitor Money Rates
Service (or such other page as may replace the USPRIME 1 page on that service
for the purpose of displaying prime rates or base lending rates of major United
States banks).
If in any month or two consecutive months the Prime Rate is not published
in H.15(519) and the banks or trust companies selected as aforesaid are not
quoting as mentioned in the preceding paragraph, the "Prime Rate" for such
Interest Payment Period will be the same as the Prime Rate for the immediately
preceding Interest Payment Period (or, if there was no such Interest Payment
Period, the rate of interest payable on the Prime Rate Notes for which the Prime
Rate is being determined shall be the Initial Interest Rate). If this failure
continues over three or more consecutive months, the Prime Rate for each
succeeding Interest Reset Date until the maturity, redemption or repayment of
such Prime Rate Notes or, if earlier, until this failure ceases, shall be LIBOR
determined as if such Prime Rate Notes were LIBOR Notes, and the spread, if any,
shall be the number of basis points specified in the applicable Pricing
Supplement as the "Alternate Rate Event Spread."
The interest rate for each such Interest Reset Date shall be the Prime Rate
plus or minus the Spread or multiplied by the Spread Multiplier as specified in
the applicable Pricing Supplement; provided, however, the interest rate in
effect for the period from the Issue Date to the first Interest Reset Date will
be the Initial Interest Rate and the interest rate in effect for the 10 days
immediately prior to the Maturity
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Date or earlier redemption or repayment will be that in effect on the 10th day
preceding such Maturity Date or earlier redemption or repayment. The
"Calculation Date" pertaining to a Prime Rate Determination Date shall be such
Prime Rate Determination Date.
CMT Rate Notes
CMT Rate Notes will bear interest at the interest rate (calculated with
reference to the CMT Rate and the Spread or Spread Multiplier, if any) specified
in the CMT Rate Notes and in the applicable Pricing Supplement.
Unless otherwise specified in the applicable Pricing Supplement, "CMT Rate"
means, with respect to any Interest Reset Date, the rate displayed on the
Designated CMT Telerate Page (as defined below) 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 (i) if the Designated CMT Telerate Page is 7055, the rate
on the related CMT Rate Determination Date (as defined below) and (ii) if the
Designated CMT Telerate Page is 7052, the week or the month, as applicable,
ended immediately preceding the week in which the related CMT Rate Determination
Date occurs. If such rate is no longer displayed on the relevant page, or if not
displayed by 3:00 P.M., New York City time, on the second Business Day prior to
such Interest Reset Date (a "CMT Rate Determination Date"), then the CMT Rate
for such CMT Rate Determination Date will be such Treasury Constant Maturity
rate for the Designated CMT Maturity Index as published in the relevant
H.15(519). If such rate is no longer published, or if not published by 3:00
P.M., New York City time, on the CMT Rate Determination Date pertaining to such
Interest Reset Date, then the CMT Rate for such CMT Rate 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) as
may then be published by either the Federal Reserve Board 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 available by
3:00 P.M., New York City time, on the CMT Rate Determination Date pertaining to
such Interest Reset Date, then the CMT Rate for such CMT Rate 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 offer side prices
as of approximately 3:30 P.M. (New York City time) on the CMT Rate Determination
Date reported, according to their written records, by three leading primary
United States government securities dealers (each, a "Reference Dealer") in The
City of New York (which may include the Agents or their affiliates) 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") with any original
maturity of approximately the Designated CMT Maturity Index and a remaining term
to maturity of not less than such Designated CMT Maturity Index minus one year.
If the Calculation Agent cannot obtain three such Treasury Note quotations, the
CMT Rate for such CMT Rate 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 CMT Rate Determination Date of three Reference Dealers in
The City of New York (from five such Reference Dealers selected by the
Calculation Agent and eliminating the highest quotation (or, in the event of
equality, one of the highest) and the lowest quotation (or, in the event of
equality, one of the lowest)), for Treasury Notes with an original maturity of
the number of years that is the next highest to the Designated CMT Maturity
Index and a remaining term to maturity closest to the Designated CMT Maturity
Index and in an amount of at least $100 million. If three or four (and not five)
of such Reference Dealers are quoting as described above, then the CMT Rate will
be based on the arithmetic mean of all the offer prices so obtained and neither
the highest nor lowest of such quotes will be eliminated; provided, however,
that if fewer than three Reference Dealers selected by the Calculation Agent are
quoting as described herein, the CMT Rate for such CMT Rate Determination Date
will be the CMT Rate determined on the immediately preceding CMT Rate
Determination Date or, in the case of the first CMT Rate Determination Date, the
Initial Interest Rate
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specified in the applicable CMT Rate Note and Pricing Supplement. If two
Treasury Notes with an original maturity as described in the third preceding
sentence having remaining terms to maturity equally close to the Designated CMT
Maturity Index, the quotes for the Treasury Note with the shorter remaining term
to maturity will be used.
"Designated CMT Telerate Page" means the display on the Dow Jones Telerate
Service on the page designated in the applicable Pricing Supplement and in the
CMT Rate Notes (or any other page that may replace such page on that service for
the purpose of displaying Treasury Constant Maturities as reported in H.15(519),
for the purpose of displaying Treasury Constant Maturities as reported in
H.15(519)). If no such page is specified in the applicable Pricing Supplement
and in the CMT Rate Notes, 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 Treasury Notes (either 1, 2, 3, 5, 7, 10, 20 or 30 years) specified in the
applicable Pricing Supplement and in the CMT Rate Notes with respect to which
the CMT Rate will be calculated. If no such maturity is specified in the
applicable Pricing Supplement and in the CMT Rate Notes, the Designated CMT
Maturity Index shall be 2 years.
The interest rate for each such Interest Reset Date shall be the CMT Rate
plus or minus the Spread or multiplied by the Spread Multiplier as specified in
the applicable Pricing Supplement; provided, however, the interest rate in
effect for the period from the Issue Date to the first Interest Reset Date will
be the Initial Interest Rate and the interest rate in effect for the 10 days
immediately prior to the Maturity Date or earlier redemption or repayment will
be that in effect on the 10th day preceding such Maturity Date or earlier
redemption or repayment. The "Calculation Date" pertaining to a CMT Rate
Determination Date shall be such CMT Rate Determination Date.
INDEXED NOTES
The Notes may be issued, from time to time, as Notes of which the principal
amount payable on a date from 9 months or more from the Issue Date and/or on
which the amount of interest payable on an Interest Payment Date will be
determined by reference to currencies, currency units, commodity prices,
financial or non-financial indices or other factors (the "Indexed Notes"), as
indicated in the applicable Pricing Supplement. Holders of Indexed Notes may
receive a principal amount at maturity that is greater than or less than the
face amount of such Notes depending upon the fluctuation of the relative value,
rate or price of the specified index. Specific information pertaining to the
method for determining the principal amount payable at maturity, a historical
comparison of the relative value, rate or price of the specified index and the
face amount of the Indexed Note and certain additional United States federal
income tax considerations will be described in the applicable Pricing
Supplement. See "Currency Risks."
PAYMENTS ON AMORTIZING NOTES
Amortizing Notes are securities for which payments of principal and
interest are made in equal installments over the life of the security. Unless
otherwise provided in the applicable Pricing Supplement, interest on each
Amortizing Note will be computed on the basis of a 360-day year of twelve 30-day
months. Payments with respect to Amortizing Notes will be applied first to
interest due and payable thereon and then to the reduction of the unpaid
principal amount thereof. A table setting forth repayment information in respect
of each Amortizing Note will be provided to the original purchaser and will be
available, upon request, to subsequent holders.
EXTENSION OF MATURITY
The Pricing Supplement relating to each Note will indicate whether the
holder of such Note has the option to extend the maturity of such Note to one or
more dates (each an "Extended Maturity Date") indicated in the applicable
Pricing Supplement. If the holder has such option with respect to any such Note
(an "Extendible Maturity Note"), the following procedures will apply, unless
otherwise specified in the applicable Pricing Supplement.
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Each Note will mature on the Maturity Date as indicated in the applicable
Pricing Supplement; provided, that the Maturity Date may be extended, at the
option of the holder, to the Extended Maturity Date or Dates, if any, shown in
the applicable Pricing Supplement if the holder of such Note so elects, in the
manner specified below, prior to the applicable Notice of Extension Date shown
in the applicable Pricing Supplement. Such election will be irrevocable and will
be binding upon each subsequent holder of such Note. If no Extended Maturity
Date or Dates are indicated with respect to a Note, the Maturity Date of such
Note will not be extended.
Any such election to extend the Maturity Date of an Extendible Maturity
Note will be effective only if notice thereof is provided to the Debt Trustee in
the manner described below. The Maturity Date of such Note may be extended, at
the option of the holder thereof, to each successive Extended Maturity Date
indicated in the applicable Pricing Supplement if the holder of such Note
presents a duly completed extension notice, which may be obtained from the
Company or the Debt Trustee, to the Debt Trustee in New York, New York prior to
but not more than 10 Business Days prior to the applicable Notice of Extension
Date shown in the applicable Pricing Supplement; provided, however, that if a
holder of such Note does not make an election with respect to a specified
Extended Maturity Date, such Note may not be extended with respect to a
subsequent Extended Maturity Date. Any option by the holder to extend the
Maturity Date of an Extendible Maturity Note must be exercised with respect to
the entire principal amount thereof unless otherwise provided in the Pricing
Supplement. All questions as to the validity, eligibility (including time of
receipt) and acceptance of any option to extend the Maturity Date of such Note
will be determined by the Company, whose determination will be final and
binding.
REDEMPTION AND REPAYMENT
The Pricing Supplement relating to each Note will indicate if such Note can
be redeemed prior to maturity or if such Note will be redeemable at the option
of the Company on a date or dates specified prior to maturity at a price or
prices set forth in the applicable Pricing Supplement, together with accrued
interest to the date of redemption. Unless otherwise specified in the applicable
Pricing Supplement, the Notes will not be subject to redemption or repayment
prior to their stated maturity. Unless otherwise specified in the applicable
Pricing Supplement, the Notes will not be subject to any sinking fund or
amortization. The Company may redeem any of the Notes that are redeemable and
remain outstanding either in whole or from time to time in part, upon not less
than 30 nor more than 60 days' notice. If less than all of the Notes with like
tenor and terms are to be redeemed, the Notes to be redeemed shall be selected
by the Debt Trustee by such method as the Debt Trustee shall deem fair and
appropriate.
The Pricing Supplement relating to each Note will indicate either that such
Note is not repayable at the option of the holder prior to maturity or that such
Note will be repayable at the option of the holder on a date or dates specified
prior to maturity at a price or prices set forth in the applicable Pricing
Supplement, together with accrued interest to the date of repayment.
In order for a Note to be repaid, the Paying Agent must receive at least 30
days but not more than 45 days prior to the repayment date (i) the Note with the
form entitled "Option to Elect Repayment" on the reverse of the Note duly
completed or (ii) 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 the Note, the principal amount of
the Note, the principal amount of the Note to be repaid, the certificate number
or a description of the tenor and terms of the Note, 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 the Paying Agent not later than five
Business Days after the date of such telegram, telex, facsimile transmission or
letter and such Note and form duly completed are received by the Paying Agent by
such fifth Business Day. Exercise of the repayment option by the holder of a
Note shall be irrevocable. The repayment option may be exercised by the holder
of a Note for less than the entire principal amount of the Note provided that
the principal amount of the Note remaining outstanding after the repayment is an
authorized denomination of at least $1,000,000.
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If a Note is represented by a Global Security, the Depository'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 Depository'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 Depository 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 Depository.
Notwithstanding anything in this Prospectus Supplement to the contrary,
unless otherwise specified in the applicable Pricing Supplement, if a Note is an
Original Issue Discount Note, the amount payable on such Note in the event of
redemption or repayment prior to its Maturity Date 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
for this purpose shall be the amount equal to (i) the Issue Price set forth in
the applicable Pricing Supplement plus (ii) the 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) to 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.
REPURCHASE
The Company may at any time purchase Notes at any price or prices in the
open market or otherwise. Notes so purchased by the Company may be held or
resold or, at the discretion of the Company, may be surrendered to the Debt
Trustee for cancellation.
BOOK-ENTRY SYSTEM
Upon issuance, all Book-Entry Notes having the same Specified Currency,
Issue Date, Maturity Date, reset, extension, redemption and repayment
provisions, Issue Price (in the case of Original Issue Discount Notes), and
interest rate (in the case of Fixed Rate Notes), Base Rate, Initial Interest
Rate, Interest Reset Dates, Interest Payment Dates, Index Maturity, Minimum
Interest Rate, if any, Maximum Interest Rate, if any, and Spread or Spread
Multiplier, if any (in the case of Floating Rate Notes), and Denominated
Currency, Indexed Currency, Face Amount and Base Exchange Rate (in the case of
Indexed Notes, each as defined in the applicable Pricing Supplement), will be
represented by a single Global Security. Each Global Security representing
Book-Entry Notes will be deposited with, or on behalf of, DTC or such other
Depository as is specified in the Pricing Supplement, and registered in the name
of a nominee of DTC or such other Depository. The owner of a Book-Entry Note
may, on terms acceptable to the Company and DTC or such other Depository,
exchange such Book-Entry Note for a Certificated Note. DTC has advised the
Company that its procedures do not currently permit such exchanges. DTC
currently only accepts Notes which have a Specified Currency of U.S. dollars. A
further description of the Depository'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" and "-- Same-Day
Settlement".
The information in this section concerning the Depository and the
Depository'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.
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CURRENCY RISKS
EXCHANGE RATES AND EXCHANGE CONTROLS
An investment in a Note denominated in a Specified Currency other than the
currency of the country in which a purchaser is resident or the currency
(including any composite currency) in which a purchaser conducts its primary
business (the "home currency") entails significant risks that are not associated
with a similar investment in a security denominated in the home currency.
Similarly, an investment in an Indexed Note with respect to which payments of
principal or interest are determined with respect to an Indexed Currency (as
defined in the applicable Pricing Supplement) (each a "Currency Indexed Note")
entails significant risks that are not associated with a similar investment in
non-indexed Notes. Such risks include, without limitation, the possibility of
significant changes in rates of exchange between the home currency and the
Specified Currency (and, in the case of Currency Indexed Notes, the rate of
exchange between the Specified Currency and the Indexed Currency for such
Currency Indexed Notes) and the possibility of the imposition or modification of
foreign exchange controls with respect to the Specified Currency. Such risks
generally depend on factors over which the Company has no control, such as
economic and political events and the supply of and demand for the relevant
currencies. In recent years, rates of exchange for certain currencies have been
highly volatile, and such volatility may be expected in the future. Fluctuations
in any particular exchange rate that have occurred in the past are not
necessarily indicative, however, of fluctuations in the rate that may occur
during the term of any Note. Depreciation of the Specified Currency in which a
Note is denominated against the relevant home currency would result in a
decrease in the effective yield of such Note below its coupon rate and in
certain circumstances could result in a loss to the investor on a home currency
basis. Similarly, depreciation of the Denominated Currency (as defined in the
applicable Pricing Supplement) with respect to a Currency Indexed Note against
the applicable Indexed Currency would result in the principal amount payable
with respect to such Currency Indexed Note at the Maturity Date thereof being
less than the Face Amount of such Currency Indexed Note which, in turn, would
decrease the effective yield of such Currency Indexed Note below its stated
interest rate and could also result in a loss to the investor. See "Description
of Notes -- Indexed Notes."
Governments have from time to time imposed, and may in the future impose,
exchange controls that could affect exchange rates as well as the availability
of a Specified Currency for making payments with respect to a Note. At present,
the Company has identified the following currencies and composite currency in
which payments on Notes may be made: Australian dollars, Canadian dollars,
Danish kroner, English pounds sterling, French francs, Italian lire, New Zealand
dollars, Spanish peseta, United States dollars and ECUs. There can be no
assurances that exchange controls will not restrict or prohibit payments in any
such currency or currency unit. Even if there are no actual exchange controls,
it is possible that on a payment date with respect to any particular Note, the
Specified Currency for such Note would not be available to the Company to make
payments then due. In that event, the Company will make such payments in the
manner set forth under "Payment Currency" below.
The information set forth in this Prospectus Supplement is not directed to
prospective purchasers who are residents of countries other than the United
States with respect to any matters that may affect the purchase, holding or
receipt of payments of principal of, premium, if any, and interest on the Notes.
Such persons should consult their own counsel with regard to such matters.
THIS PROSPECTUS SUPPLEMENT, ANY PRICING SUPPLEMENT HERETO AND THE
PROSPECTUS DO NOT DESCRIBE ALL THE RISKS OF AN INVESTMENT IN NOTES DENOMINATED
IN A CURRENCY (INCLUDING ANY COMPOSITE CURRENCY) OTHER THAN A PROSPECTIVE
PURCHASER'S HOME CURRENCY OR OF AN INVESTMENT IN CURRENCY INDEXED NOTES, AND THE
COMPANY DISCLAIMS ANY RESPONSIBILITY TO ADVISE PROSPECTIVE PURCHASERS OF SUCH
RISKS AS THEY EXIST AT THE DATE OF THIS PROSPECTUS SUPPLEMENT OR AS SUCH RISKS
MAY CHANGE FROM TIME TO TIME. PROSPECTIVE PURCHASERS SHOULD CONSULT THEIR OWN
FINANCIAL AND LEGAL ADVISORS AS TO THE RISKS ENTAILED BY AN INVESTMENT IN NOTES
DENOMINATED IN A CURRENCY (INCLUDING ANY COMPOSITE CUR-
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<PAGE> 18
RENCY) OTHER THAN THE PARTICULAR HOME CURRENCY OR BY AN INVESTMENT IN
CURRENCY INDEXED NOTES. SUCH NOTES ARE NOT AN APPROPRIATE INVESTMENT FOR PERSONS
WHO ARE UNSOPHISTICATED WITH RESPECT TO FOREIGN CURRENCY TRANSACTIONS.
Unless otherwise provided, Notes denominated in foreign currencies other
than ECUs will not be sold in, or to residents of, the country of the Specified
Currency in which particular Notes are denominated.
The Pricing Supplement relating to each Note denominated in a Specified
Currency other than U.S. dollars or any Currency Indexed Note will contain
information concerning relevant historical exchange rates for the applicable
Specified Currency, Denominated Currency and/or Indexed Currency, as the case
may be, a description of such currency or currencies and any exchange controls
affecting such currency or currencies. The information contained therein is
furnished as a matter of information only and should not be regarded as
indicative of the range of or trends in fluctuations in currency exchange rates
that may occur in the future.
PAYMENT CURRENCY
Except as set forth below, if payment on a Note is required to be made in a
Specified Currency other than U.S. dollars and on a payment date with respect to
such Note such currency is unavailable due to the imposition of exchange
controls or other circumstances beyond the Company's control, or is no longer
used by the government of the country issuing such currency or for the
settlement of transactions by public institutions of or within the international
banking community, then all payments due on such payment date shall be made in
U.S. dollars. The amount so payable on any payment date in such foreign currency
shall be converted into U.S. dollars at a rate determined by the Exchange Rate
Agent on the basis of the most recently available noon buying rate for cable
transfers in The City of New York as determined by the Federal Reserve Bank of
New York (the "Market Exchange Rate") for such currency, or as otherwise
specified in the applicable Pricing Supplement. Any payment made under such
circumstances in U.S. dollars where the required payment is in a Specified
Currency other than U.S. dollars will not constitute an Event of Default under
the Debt Indenture.
If payment on a Note is required to be made in ECUs and on a payment date
with respect to such Note ECUs are unavailable due to the imposition of exchange
controls or other circumstances beyond the Company's control, or are no longer
used in the European Monetary System, then all payments due on such payment date
shall be made in U.S. dollars. The amount so payable on any payment date in ECUs
shall be converted into U.S. dollars at a rate determined by the Exchange Rate
Agent as of the second Business Day prior to the date on which such payment is
due on the following basis. The component currencies of the ECUs for this
purpose (the "Components") shall be the currency amounts that were components of
the ECUs as of the last date on which ECUs were used in the European Monetary
System. The equivalent of ECUs in U.S. dollars shall be calculated by
aggregating the U.S. dollar equivalents of the Components. The U.S. dollar
equivalent of each of the Components shall be determined by the Exchange Rate
Agent on the basis of the most recently available Market Exchange Rate for the
Components, or as otherwise indicated in the applicable Pricing Supplement.
If the official unit of any component currency is altered by way of
combination or subdivision, the number of units of that currency as a Component
shall be divided or multiplied in the same proportion. If two or more component
currencies are consolidated into a single currency, the amounts of those
currencies as Components shall be replaced by an amount in such single currency
equal to the sum of the amounts of the consolidated component currencies
expressed in such single currency. If any component currency is divided into two
or more currencies, the amount of that currency as a Component shall be replaced
by amounts of such two or more currencies, each of which shall have a value on
the date of division equal to the amount of the former component currency
divided by the number of currencies into which that currency was divided.
All determinations referred to above made by the Exchange Rate Agent shall
be at its sole discretion (except to the extent expressly provided herein or in
the applicable Pricing Supplement that any
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<PAGE> 19
determination is subject to approval by the Company) and, in the absence of
manifest error, shall be conclusive for all purposes and binding on holders of
the Notes and the Company, and the Exchange Rate Agent shall have no liability
therefor.
FOREIGN CURRENCY JUDGMENTS
The Notes will be governed by and construed in accordance with the laws of
the State of New York. A judgment for money damages by courts in the United
States, including a money judgment based on an obligation expressed in a foreign
currency, will ordinarily be rendered only in U.S. dollars. New York statutory
law provides that in an action based on an obligation expressed in a currency
other than U.S. dollars a court shall render a judgment or decree in the foreign
currency of the underlying obligation and that the judgment or decree shall be
converted into U.S. dollars at the exchange rate prevailing on the date of entry
of the judgment or decree.
UNITED STATES FEDERAL TAXATION
The following summary accurately describes certain United States federal
income tax consequences of the ownership and disposition of Notes as of the date
hereof, based on the opinion of Mayer, Brown & Platt, counsel to the Company.
Except where noted, it deals only with Notes held as capital assets and does not
deal with special situations, such as those of dealers in securities or foreign
currencies, financial institutions, life insurance companies, persons holding
Notes as a hedge against, or which are hedged against, currency risks or United
States Holders whose "functional currency" is not the U.S. dollar. In addition,
this summary does not address the federal income tax consequences of owning
Indexed Notes or any other Notes the payments of principal or interest on which
are contingent. Such consequences will be addressed in the relevant Pricing
Supplement. Furthermore, the discussion below is based upon the provisions of
the Internal Revenue Code of 1986 (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 an owner of a Note that is a
citizen or resident of the United States, a corporation, partnership or other
entity created or organized in or under the laws of the United States or any
political subdivision thereof, an estate or trust the income of which is subject
to United States federal income taxation regardless of its source or certain
former citizens of the United States whose income and gain on the Notes will be
taxable in the United States. A "Non-United States 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. Additional rules applicable to Discounted Notes which are
denominated in or determined by reference to a Specified Currency other than the
U.S. dollar are described under "Foreign Currency Notes" below. If the Company
issues Discounted Notes that qualify as "applicable high-yield obligations"
under the Code, the rules applicable to such Notes will be set forth in the
relevant Pricing Supplement.
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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, will be OID. (Notes issued with OID shall be
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.
"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. In the case of a
qualified 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) one or more qualified
floating rates, (ii) a single fixed rate and one or more qualified floating
rates, (iii) a single objective rate, or (iv) a single fixed rate and a single
objective rate that is a qualified inverse floating rate. Whether the rate of
interest with respect to a Fixed Rate Note or Floating Rate Note is qualified
stated interest will be described in the applicable Pricing Supplement.
Certain of the Notes may be redeemed prior to maturity, as indicated in the
applicable Pricing Supplement. The Treasury Regulations regarding OID (the "OID
Regulations") provide than 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 into 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 occurs at the end 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
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<PAGE> 21
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
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. 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 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"), 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.
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.
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<PAGE> 22
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
Internal Revenue Service (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 a
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 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 about
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 as described above
with respect to certain Short-Term Notes, market discount that has accrued but
has not been previously included in income and gain or loss attributable to
changes in foreign currency exchange
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rates as described below with respect to certain Foreign Currency Notes, such
gain or loss will be capital gain or loss and will be long-term capital gain or
loss if at the time of sale, exchange or retirement the Note has been held for
more than one year. Under current law, net capital gains of individuals are,
under certain circumstances, taxed at lower rates than items of ordinary income.
The deductibility of capital losses is subject to limitations.
FOREIGN CURRENCY NOTES
The following is a summary of the principal United States federal income
tax consequences to a United States Holder of the ownership of a Note (a
"Foreign Currency Note") denominated in a Specified Currency other than the U.S.
dollar (a "Foreign Currency"). Persons considering the purchase of Foreign
Currency Notes should consult their own tax advisors with regard to the
application of the United States federal income tax laws to their particular
situations, as well as any consequences arising under the laws of any other
taxing jurisdiction.
If interest payments are made in a Foreign Currency to a United States
Holder who is not required to accrue such interest prior to its receipt, i.e., a
United States Holder who uses the cash method of accounting, such United States
Holder will be required to include in income the U.S. dollar value of the amount
received (determined by translating the Foreign Currency received at the "spot
rate" for such Foreign Currency on the date such payment is received),
regardless of whether the payment is in fact converted into U.S. dollars. No
foreign currency gain or loss is recognized with respect to the receipt of such
payment.
A United States Holder who is required to accrue interest on a Foreign
Currency Note prior to receipt of such interest will be required to include in
income for each taxable year the U.S. dollar value of the interest that has
accrued during such year, determined by translating such interest at the average
rate of exchange for the period or periods during which such interest accrued.
The average rate of exchange for an interest accrual period is the simple
average of the exchange rates for each business day of such period (or such
other average that is reasonably derived and consistently applied by the
holder). An accrual basis United States Holder may elect to translate interest
income at the spot rate on the last day of the accrual period (or last day of
the taxable year in the case of an accrual period that straddles the holder's
taxable year) or on the date the interest payment is received if such date is
within five business days of the end of the accrual period. Upon receipt of an
interest payment on such Note, such United States Holder will recognize foreign
currency gain or loss in an amount equal to the difference between the U.S.
dollar value of such payment (determined by translating any Foreign Currency
received at the "spot rate" for such Foreign Currency on the date received) and
the U.S. dollar value of the interest income that such holder has previously
included in income with respect to such payment. Any such gain or loss generally
will not be treated as interest income or expense, except to the extent provided
in Treasury Regulations or administrative pronouncements of the IRS.
OID on a Note that is also a Foreign Currency Note will be determined for
any accrual period in the applicable Foreign Currency and then translated into
U.S. dollars in the same manner as interest income accrued by a United States
Holder on the accrual basis, as described above. Likewise, a United States
Holder will recognize foreign currency gain or loss when the OID is paid to the
extent of the difference between the U.S. dollar value of the accrued OID
(determined in the same manner as for accrued interest) and the U.S. dollar
value of such payment (determined by translating any Foreign Currency received
at the spot rate for such Foreign Currency on the date of payment). For this
purpose, all receipts on a Note will be viewed first as the receipt of any
stated interest payments called for under the terms of the Note, second as
receipts of previously accrued OID (to the extent thereof), with payments
considered made for the earliest accrual periods first, and thereafter as the
receipt of principal.
The amount of market discount on Foreign Currency Notes includible in
income will generally be determined by translating the market discount
determined in the Foreign Currency into U.S. dollars at the spot rate on the
date the Foreign Currency Note is retired or otherwise disposed of. If the
United States Holder has elected to accrue market discount currently, then the
amount which accrues is determined in
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<PAGE> 24
the Foreign Currency and then translated into U.S. dollars on the basis of the
average exchange rate in effect during such accrual period. A United States
Holder will recognize foreign currency gain or loss with respect to market
discount which is accrued currently using the approach applicable to the accrual
of interest income as described above.
Amortizable bond premium on a Foreign Currency Note will be computed in the
applicable Foreign Currency. With respect to a United States Holder that elects
to amortize the premium, the amortizable bond premium will reduce interest
income in the applicable Foreign Currency. At the time bond premium is
amortized, foreign currency gain or loss (which is generally ordinary income or
loss) will be realized based on the difference between spot rates at such time
and at the time of acquisition of the Foreign Currency Note. A United States
Holder that does not elect to amortize bond premium will translate the bond
premium, computed in the applicable Foreign Currency, into U.S. dollars at the
spot rate on the maturity date and such bond premium will constitute a capital
loss which may be offset or eliminated by exchange gain. The principles of this
paragraph also apply to acquisition premium.
A United States Holder's tax basis in a Foreign Currency Note will be the
U.S. dollar value of the Foreign Currency amount paid for such Foreign Currency
Note determined at the time of such purchase. A United States Holder who
purchases a Note with previously owned Foreign Currency will recognize exchange
gain or loss at the time of purchase attributable to the difference at the time
of purchase, if any, between his tax basis in such Foreign Currency and the fair
market value of the Note in U.S. dollars on the date of purchase. Such gain or
loss will be ordinary income or loss.
For purposes of determining the amount of any gain or loss recognized by a
United States Holder on the sale, exchange or retirement of a Foreign Currency
Note, the amount realized upon such sale, exchange or retirement will be the
U.S. dollar value of the amount realized in Foreign Currency (other than amounts
attributable to accrued but unpaid interest not previously included in the
holder's income), determined at the time of the sale, exchange or retirement.
A United States Holder will recognize foreign currency gain or loss
attributable to the movement in exchange rates between the time of purchase and
the time of disposition (including the sale, exchange or retirement) of a
Foreign Currency Note. Such gain or loss will be treated as ordinary income or
loss. The amount of such gain or loss will equal the difference between (i) the
U.S. dollar value of the foreign currency principal amount of such Note on the
date such Note is disposed of, and (ii) the U.S. dollar value of the foreign
currency principal amount of such Note on the date such United States Holder
acquired such Note. Any portion of the proceeds of such disposition attributable
to accrued interest may result in foreign currency gain or loss under the rules
set forth above. The realization of such gain or loss with respect to principal
and interest will be limited to the amount of overall gain or loss realized on
the disposition of a Foreign Currency Note. Under proposed Treasury regulations
issued on March 17, 1992, if a Foreign Currency Note is denominated in one of
certain hyperinflationary currencies, generally (i) foreign currency gain or
loss would be realized with respect to movements in the exchange rate between
the beginning and end of each taxable year (or such shorter period) that such
Note was held and (ii) such foreign currency gain or loss would be treated as an
addition or offset, respectively, to the accrued interest income on (and an
adjustment to the holder's tax basis in) the Foreign Currency Note.
A United States Holder's tax basis in Foreign Currency received as interest
on (or OID with respect to), or received on the sale or retirement of, a Foreign
Currency Note will be the U.S. dollar value thereof at the spot rate at the time
the holder received such Foreign Currency. Any gain or loss recognized by a
United States Holder on a sale, exchange or other disposition of Foreign
Currency will be ordinary income or loss and will not be treated as interest
income or expense, except to the extent provided in Treasury regulations or
administrative pronouncements of the IRS.
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<PAGE> 25
NON-UNITED STATES HOLDERS
Under present United States federal income and estate tax law, and subject
to the discussion below concerning backup withholding:
(a) no withholding of United States federal income tax will be
required with respect to the payment by the Company or any Paying Agent of
principal or interest (which for purposes of this discussion includes OID)
on a Note owned by a Non-United States Holder, provided, in the case of
interest, (i) that the beneficial owner does not actually or constructively
own 10% or more of the total combined voting power of all classes of stock
of the Company entitled to vote within the meaning of section 871(h)(3) of
the Code and the regulations thereunder, (ii) the beneficial owner is not a
controlled foreign corporation that is related to the Company through stock
ownership, (iii) the beneficial owner is not a bank whose receipt of
interest on a Note is described in section 881(c)(3)(A) of the Code, (iv)
in the case of a Note, the beneficial owner satisfies the statement
requirement (described generally below) set forth in section 871(h) and
section 881(c) of the Code and the regulations thereunder, or (v) such
interest is not interest described in section 871(h)(4) of the Code (which
generally is limited to certain types of contingent interest);
(b) no withholding of United States federal income tax generally will
be required with respect to any gain or income realized by a Non-United
States Holder upon the sale, exchange or retirement of a Note; and
(c) a Note beneficially owned by an individual who at the time of
death is a U.S. citizen or U.S. resident (as determined for U.S. estate tax
purposes) will not be subject to United States federal estate tax as a
result of such individual's death, provided that such individual does not
actually or constructively own 10% or more of the total combined voting
power of all classes of stock of the company entitled to vote within the
meaning of section 871(h)(3) of the Code and the regulations thereunder and
provided that the interest payments with respect to such Note would not
have been, if received at the time of such individual's death, effectively
connected with the conduct of a U.S. trade or business by such individual.
To qualify for the exemption from withholding tax referred to in (a)(iv)
above, the beneficial owner of such Note, or a financial institution holding the
Note on behalf of such owner, must provide, in accordance with specified
procedures, a paying agent of the Company with a statement to the effect that
the beneficial owner is not a U.S. person, citizen or resident. Pursuant to
current temporary Treasury regulations, these requirements will be met if (1)
the beneficial owner provides his name and address, and certifies, under
penalties of perjury, that he is not a U.S. person, citizen or resident (which
certification may be made on an IRS Form W-8 (or successor form)) or (2) a
financial institution holding the Note on behalf of the beneficial owner
certifies, under penalties of perjury, that such statement has been received by
it and furnishes a paying agent with a copy thereof. The Company does not intend
to issue any Notes described in (a)(v) above.
Payments to Non-United States Holders not meeting the requirements of
paragraph (a) above and thus subject to withholding of United States federal
income tax may nevertheless be exempt from such withholding if the beneficial
owner of the Note provides the Company with a properly executed and timely (1)
IRS Form 1001 (or successor form) claiming an exemption or partial exemption
from withholding under the benefit of a tax treaty or (2) IRS Form 4224 (or
successor form) stating that interest paid on the Note is not subject to
withholding tax because it is effectively connected with the owner's conduct of
a trade or business in the United States.
A Non-United States Holder who is engaged in a U.S. trade or business and
has interest or gain from a Note that is effectively connected with such U.S.
trade or business will generally be subject to regular United States income tax
on such interest in the same manner as if it were a United States Holder. In
addition, if such Non-United States Holder is a corporation, it may be subject
to a branch profits tax equal to 30% (or lower rate under an applicable tax
treaty) of its effectively connected earnings and profits for the taxable year,
subject to certain adjustments. For purposes of the branch profits tax, interest
S-25
<PAGE> 26
(including original issue discount) on and any gain recognized on the
disposition of a Note will be included in the earnings and profits of such
Non-United States Holder if such interest is effectively connected with the
conduct of a U.S. trade or business by the Non-United States Holder.
BACKUP WITHHOLDING AND INFORMATION REPORTING
In general, information reporting requirements will apply to certain
payments of principal, interest, OID and premium paid on Notes and to the
proceeds of sale of a Note made to United States Holders other than certain
exempt recipients (such as corporations). A 31 percent backup withholding tax
will apply to such payments if the United States Holder fails to provide a
taxpayer identification number or certification of foreign or other exempt
status or fails to report in full dividend and interest income. Such
certification may be made on an Internal Revenue Service Form W-9 or a
substantially similar form.
No information reporting or backup withholding will be required with
respect to payments made by the Company or any paying agent to Non-United States
Holders if a statement described in (a)(iv) under "Non-United States Holders"
has been received and the payor does not have actual knowledge that the
beneficial owner is a United States person.
In addition, backup withholding and information reporting will not apply if
payments of the principal, interest, OID or premium on a Note is paid or
collected by a foreign office of a custodian, nominee or other foreign agent on
behalf of the beneficial owner of such Note, or if a foreign office of a broker
(as defined in applicable Treasury regulations) pays the proceeds of the sale of
a Note to the owner thereof. If, however, such nominee, custodian, agent or
broker is, for United States federal income tax purposes, a U.S. person, a
controlled foreign corporation or a foreign person that derives 50% or more of
its gross income for certain periods from the conduct of a trade or business in
the United States, such payments will not be subject to backup withholding but
will be subject to information reporting, unless (1) such custodian, nominee,
agent or broker has documentary evidence in its records that the beneficial
owner is not a U.S. person and certain other conditions are met or (2) the
beneficial owner otherwise establishes an exemption. Temporary Treasury
regulations provide that the Treasury is considering whether backup withholding
will apply with respect to such payments of principal, interest or the proceeds
of a sale that are not subject to backup withholding under the current
regulations. Under proposed Treasury regulations not currently in effect backup
withholding will not apply to such payments absent actual knowledge that the
payee is a United States person.
Payments of principal, interest, OID and premium on a Note paid to the
beneficial owner of a Note by a United States office of a custodian, nominee or
agent, or the payment by the United States office of a broker of the proceeds of
sale of a Note, will be subject to both backup withholding and information
reporting unless the beneficial owner provides a statement described in (a)(iv)
above and the payor does not have actual knowledge that the beneficial owner is
a United States person or otherwise establishes an exemption.
Any amounts withheld under the backup withholding rules will be allowed as
a refund or a credit against such holder's United States federal income tax
liability provided the required information is furnished to the IRS.
PLAN OF DISTRIBUTION
The Notes are being offered on a continuing basis by the Company through
the Agents, each of which has agreed to use its reasonable best efforts to
solicit offers to purchase the Notes. The Company will pay each Agent a
commission, depending upon maturity, of from .125% to .750% of the principal
amount of the Notes sold through such Agent; provided, that commissions with
respect to Notes maturing 30 years or more from the date of issue will be
subject to negotiation. The Company has agreed to be responsible for the
reasonable fees and disbursements of counsel to the Agents and to reimburse the
Agents for their out-of-pocket expenses.
S-26
<PAGE> 27
The Company may sell Notes to any of the Agents, as principal for its own
account, at negotiated discounts for resale to investors or other purchasers at
varying prices related to prevailing market prices at the time of resale or, if
set forth in the applicable Pricing Supplement, at a fixed public offering
price, as determined by such Agent. After any initial public offering of Notes
to be resold to purchasers at a fixed public offering price, the public offering
price and any concession or discount may be changed. In addition, each Agent may
offer Notes purchased as principal to other dealers. Notes sold by an Agent to a
dealer may be sold at a discount and unless otherwise specified in the
applicable Pricing Supplement, such discount allowed will not be in excess of
the discount received by the Agent from the Company. Unless otherwise specified
in the applicable Pricing Supplement, any Note sold to an Agent as principal
will be purchased by such Agent at a price equal to 100% of the principal amount
thereof less a percentage equal to the commission applicable to an agency sale
of a Note of identical maturity and may be resold by such Agent.
The Company reserves the right to sell Notes directly to the public on its
own behalf in those jurisdictions where it is authorized to do so and through
other agents as may be named in the applicable Pricing Supplement on
substantially the same terms and conditions as sales through an Agent. No
commission will be payable on any sales made directly to the public by the
Company.
The Company will have the sole right to accept offers to purchase Notes and
may reject any proposed purchase of Notes in whole or in part. Each Agent will
have the right, in its discretion reasonably exercised, to reject any offer to
purchase Notes received by it, in whole or in part.
Each Agent may be deemed to be an "underwriter" within the meaning of the
Securities Act of 1933, as amended (the "Securities Act"). The Company has
agreed to indemnify each Agent against certain liabilities, including
liabilities under the Securities Act, or to contribute to payments each Agent
may be required to make in respect thereof.
Each of the Agents may from time to time purchase and sell Notes in the
secondary market or make a market in the Notes, but is not obligated to do so,
and may discontinue market-making at any time without notice. There can be no
assurance that there will be a secondary market for the Notes or liquidity in
the secondary market if one develops.
S-27
<PAGE> 28
PROSPECTUS
$650,000,000
[LOGO]
GENERAL AMERICAN TRANSPORTATION
CORPORATION
DEBT SECURITIES
General American Transportation Corporation, a New York corporation ("GATC" or
the "Company") may offer from time to time, in one or more series, up to
$650,000,000 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 for sale directly to purchasers and may also be
offered through underwriters, dealers or agents. The names of any underwriters
or agents and any compensation to such underwriters or agents will be set forth
in the Prospectus Supplement.
The terms of the Debt Securities, including, where applicable, the specific
designation, aggregate principal amount, authorized denominations, currencies in
which such Debt Securities are issued or payable, maturity, rate (or manner of
calculation thereof) and time of payment of interest, if any, whether the Debt
Securities are issuable in registered form or bearer form or both, whether any
series of the Debt Securities will be represented by a single global
certificate, any terms for redemption or for sinking fund payments, whether the
Debt Securities are convertible into Debt Securities of a different series, the
initial public offering price, the net proceeds to the Company from the sale of
the Debt Securities and any other specific terms in connection with the offering
and sale of the Debt Securities in respect of which this Prospectus is being
delivered will be set forth in a Prospectus Supplement.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The date of this Prospectus is December 7, 1995
<PAGE> 29
AVAILABLE INFORMATION
General American Transportation Corporation, a New York corporation ("GATC"
or 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 Securities and Exchange
Commission (the "Commission"). Such reports and other information filed by GATC
with the Commission can be inspected and copied at the Public Reference Section
of the Commission, Room 1024, Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549, and at the public reference facilities of the
Commission's Regional Offices at 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661, and Seven World Trade Center, 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. GATC has filed with the Commission a registration statement on Form S-3
(herein, together with all amendments and exhibits, referred to as the
"Registration Statement") under the Securities Act of 1933, as amended (the
"Securities Act"). This Prospectus 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, reference is hereby made to the Registration Statement.
DOCUMENTS INCORPORATED BY REFERENCE
GATC's Annual Report on Form 10-K for the year ended December 31, 1994, its
Quarterly Reports on Form 10-Q for the quarters ended March 31, 1995, June 30,
1995 and September 30, 1995, respectively, and its Current Report on Form 8-K
dated July 19, 1995 heretofore filed with the Commission pursuant to the
Exchange Act, are hereby incorporated by reference.
All documents filed by GATC pursuant to Section 13(a), 13(c), 14 or 15(d)
of the Exchange Act subsequent to the date of this Prospectus and prior to the
termination of the offering of the securities offered hereby 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 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 and superseded, to constitute a part of
this Prospectus.
GATC will provide without charge to each person, including any beneficial
owner, to whom this Prospectus is delivered, upon the written or oral request of
such person, a copy of any or all of the foregoing documents incorporated herein
by reference (other than exhibits unless specifically incorporated therein).
Requests for such documents should be directed to General American
Transportation Corporation, 500 West Monroe Street, Chicago, Illinois
60661-3676, Attention: Secretary (telephone 312-621-6200).
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
repay the Company's outstanding short-term borrowings and long-term debt. The
proceeds may also be used to finance capital expenditures, to finance
acquisitions, or to make advances to GATX Corporation ("GATX"), of which the
Company is a wholly owned subsidiary. In addition, the proceeds may be used for
other corporate purposes or as may be described in the Prospectus Supplement.
The Company has not allocated a specific portion of the proceeds for any
particular use at this time. Pending such use, the net proceeds may be
temporarily invested in short-term securities.
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<PAGE> 30
THE COMPANY
GATC is a wholly owned subsidiary of GATX Corporation and is principally
engaged in railcar leasing and management. GATX Terminals Corporation
("Terminals"), a wholly owned subsidiary of the Company, is engaged in the
operation of public bulk liquid terminals and domestic pipeline systems. The
Company is the largest lessor of railroad tank cars in the United States, and
Terminals is one of the largest independent operators of public bulk liquid
terminals in the world. The principal offices of the Company are located at 500
West Monroe Street, Chicago, Illinois 60661-3676 (telephone: (312) 621-6200).
The Company leases specialized railcars, primarily tank cars and to a
lesser extent Airslide(R) covered hoppers and plastic pellet cars, under full
service leases. The Company's railcars have a useful life of approximately 30 to
33 years. The average age of the railcars in the Company's fleet is
approximately 15 years. The Company's customers typically lease new equipment
for a term of five years or longer, whereas renewals or leases of used cars are
typically for periods ranging from less than a year to seven years with an
average lease term of about three years. Under its full service leases, the
Company maintains and services its railcars, pays ad valorem taxes and provides
many ancillary services.
Terminals is engaged in the storage, handling and intermodal transfer of
petroleum and chemical commodities at key points in the bulk liquid distribution
chain. Terminals owns and operates terminals in the United States and the United
Kingdom; Terminals also has joint venture interests in facilities in Europe and
the Pacific Rim. All of its terminals are located near major distribution and
transportation points and most are capable of receiving and shipping bulk
liquids by ship, rail, barge and truck. Many of the terminals are also linked
with major interstate pipelines. In addition to storing, handling and
transferring bulk liquids, Terminals also provides blending and testing services
at most of its facilities.
RELATIONSHIP WITH GATX
All of the Company's outstanding common stock is owned by GATX. GATX is
also the parent of American Steamship Company, a shipping company which operates
self-unloading vessels on the Great Lakes, GATX Logistics, Inc., which provides
distribution and logistics support services, warehousing facilities, and related
real estate services throughout North America, and GATX Financial Services,
which through its principal subsidiary, GATX Capital Corporation as well as its
subsidiaries and joint ventures, arranges and services the financing of
equipment and other capital assets on a worldwide basis.
GATX will not guarantee the Debt Securities and does not guarantee any
other indebtedness of the Company. The Company, in the normal course of
business, pays dividends to GATX to provide for GATX's normal operating
expenses. Additional amounts have been advanced to GATX from time to time for
general corporate purposes, the redemption of GATX preferred stock and the
retirement of debt. In addition, GATX may make advances to subsidiaries of the
Company in the normal course of business. These advances have no fixed maturity
date.
3
<PAGE> 31
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
October 1, 1987, as supplemented (the "Debt Indenture"), between the Company and
The Chase Manhattan Bank (National Association), as Trustee (the "Debt
Trustee"). The following summaries of certain provisions of the Debt Securities
and the Debt Indenture do not purport to be complete and are subject to, and are
qualified in their entirety by reference to, all provisions of the Debt
Securities and the Debt Indenture, including the definitions therein of certain
terms. Particular sections of the Debt Indenture which are relevant to the
discussion are cited parenthetically. Wherever particular sections or defined
terms of the Debt Indenture are referred to, it is intended that such sections
or defined terms shall be incorporated herein by reference. Capitalized terms
not otherwise defined herein shall have the meaning ascribed to such terms in
the Debt Indenture.
GENERAL
The Debt Indenture does not limit the amount of Debt Securities which can
be issued thereunder or the amount of debt which may otherwise be incurred by
the Company, and additional debt securities may be issued under the Debt
Indenture up to the aggregate principal amount which may be authorized from time
to time by, or pursuant to a resolution of, the Company's Board of Directors or
by a supplemental indenture. Reference is made to the Prospectus Supplement for
the following terms, if applicable, of the particular series of Debt Securities
being offered thereby: (i) the title of the Debt Securities of the series; (ii)
any limit upon the aggregate principal amount of the Debt Securities of the
series; (iii) the date or dates on which the principal of the Debt Securities of
the series will be payable; (iv) the rate or rates (or manner of calculation
thereof), if any, at which the Debt Securities of the series will bear interest,
the date or dates from which any such interest will accrue and on which such
interest will be payable, and, with respect to Debt Securities of the series in
registered form, the record date for the interest payable on any interest
payment date; (v) the place or places where the principal of and interest, if
any, on the Debt Securities of the series will be payable; (vi) any redemption
or sinking fund provisions; (vii) the denominations in which Debt Securities of
the series shall be issuable; (viii) if other than the principal amount thereof,
the portion of the principal amount of Debt Securities of the series which will
be payable upon declaration of acceleration of the maturity thereof; (ix)
whether the Debt Securities of the series will be issuable in registered or
bearer form or both, any 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 2.01 and 2.02) To
the extent not described herein, principal and interest, if any, will be
payable, and the Debt Securities of a particular
4
<PAGE> 32
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 2.05(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 2.04)
Bearer Debt Securities and the coupons related thereto will be transferable
by delivery. (Section 2.08(f))
If appropriate, United States federal income tax consequences applicable to
a series of Debt Securities will be described in the Prospectus Supplement
relating thereto.
BOOK-ENTRY REGISTRATION
If the Prospectus Supplement so indicates, the Debt Securities will be
represented by one or more certificates (the "Global Securities"). The Global
Securities representing Debt Securities will be deposited with, or on behalf of,
The Depository Trust Company ("DTC") or other successor depository appointed by
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
5
<PAGE> 33
New York Uniform Commercial Code and a "clearing agency" registered pursuant to
the provisions of Section 17A of the Securities Exchange Act of 1934. DTC was
created to hold securities of its participants and to facilitate the clearance
and settlement of securities transactions among its participants in such
securities through electronic book-entry changes in accounts of the
participants, thereby eliminating the need for physical movement of securities
certificates. DTC's participants include securities brokers and dealers, banks,
trust companies, clearing corporations and certain other organizations, some of
which (and/or their representatives) own DTC. Access to DTC's book-entry system
is also available to others, such as banks, brokers, dealers and trust
companies, that clear through or maintain a custodial relationship with a
participant, either directly or indirectly.
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 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 participants or
persons that hold interests through 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 participants in DTC), or by
participants in DTC or persons that may hold interests through such participants
(with respect to persons other than participants in DTC). 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 the related 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 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
participants.
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.
6
<PAGE> 34
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 2.08(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 2.08(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.
CERTAIN COVENANTS OF THE COMPANY
The Company may not declare or pay any dividend or make any distribution in
cash or property on its Capital Stock or to any stockholder (other than
dividends or distributions payable in Capital Stock of the Company), or
purchase, redeem or otherwise acquire or retire for value any Capital Stock or
warrants or rights to acquire Capital Stock of the Company or permit any
Subsidiary to purchase, redeem or otherwise acquire or retire for value any such
Capital Stock or warrants or rights to acquire Capital Stock, if, upon giving
effect to such dividend, distribution, purchase, redemption or other acquisition
or retirement, the aggregate amount expended for all such purposes subsequent to
December 31, 1989 shall exceed the sum of (a) the aggregate Consolidated Net
Income accrued during the period (taken as a cumulative whole) subsequent to
December 31, 1989, (b) the aggregate of the net proceeds received by the Company
from the issue or sale of, or conversion of indebtedness into, its Capital Stock
or warrants or rights to acquire Capital Stock subsequent to December 31, 1989,
other than to a Subsidiary, said net proceeds being deemed for this purpose to
equal the aggregate of (x) the cash, if any, received by the Company for such
issue or sale, plus (y) the fair value of consideration other than cash (as
determined by the Board of Directors, whose determination shall be conclusive
and evidenced by a Board Resolution filed with the Debt Trustee) received by the
Company from such issue, sale or conversion, and (c) $75 million. (Section 4.07)
The Company may not (or permit any Subsidiary to) make any loan or advance
to or any other investment in, extend any credit so as to result in any amount
being deemed receivable from, or make any payments with respect to any guaranty
of any indebtedness of, any Related Parties (including GATX and its other
Subsidiaries) if, after giving effect thereto, the sum of all such loans,
advances, investments, receivables and payments, less the sum of any loans and
advances from, and accounts
7
<PAGE> 35
payable to, any Related Parties, would exceed 75% of the Consolidated Tangible
Net Worth of the Company.
"Consolidated Net Income" means, for any period, the consolidated net
income of the Company and its subsidiaries for such period determined in
accordance with generally accepted accounting principles in the United States on
the date of such computation.
"Consolidated Tangible Net Worth" means the consolidated shareholder's
equity of the Company and its subsidiaries, as reflected on the consolidated
balance sheet of the Company prepared in accordance with generally accepted
accounting principles in the United States at the conclusion of the immediately
preceding fiscal quarter for which such determination is made, less the amount
of intangible assets (including, without limitation, franchises, patents and
patent applications, trademarks and brand names, goodwill, research and
development expenses, and all write-ups in the book value of any asset
(excluding write-ups of assets resulting from the application of principles of
purchase accounting with respect to acquisitions made by the Company)).
"Investment" means all loans, advances, purchases of Capital Stock, capital
contributions and transfers of assets, and all sales and other dispositions of
assets for consideration consisting of evidences of indebtedness, Capital Stock
or other securities of the purchaser.
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 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 9.01)
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 5.01 and
Section 5.02)
8
<PAGE> 36
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, including
certain of the restrictive covenants described herein under the caption
"Description of Debt Securities -- Certain Covenants of the Company" and the
Event of Default described in clause (iv) under the caption "Description of Debt
Securities -- Events of Default," and such other restrictive covenants or 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 8.02)
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 8.01)
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; (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 6.01) 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
6.02)
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<PAGE> 37
Securityholders may not enforce the Debt Indenture or the Debt Securities,
except as provided in the Debt Indenture. (Section 6.06) The Debt Trustee may
require indemnity satisfactory to it before it enforces the Debt Indenture or
the Debt Securities. (Section 7.01(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 6.05) 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 7.05) 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
The Company maintains banking relationships in the ordinary course of
business with the Debt Trustee.
PLAN OF DISTRIBUTION
The Company may sell the Debt Securities being offered hereby: (i) directly
to purchasers, (ii) through agents, (iii) to or through underwriters, (iv)
through dealers or (v) 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 the Company
or 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.
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.
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<PAGE> 38
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 Mayer, Brown & Platt, Chicago, Illinois, and
for any underwriters or agents, by Winston & Strawn, Chicago, Illinois. From
time to time, Winston & Strawn has acted as special counsel to GATX Capital
Corporation, a wholly owned subsidiary of GATX.
EXPERTS
The consolidated financial statements and related schedules of GATC
appearing in GATC's Annual Report (Form 10-K) for the year ended December 31,
1994, 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.
11
<PAGE> 39
NO DEALER, SALESPERSON OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS SUPPLEMENT (INCLUDING THE ACCOMPANYING PRICING SUPPLEMENT) AND THE
ACCOMPANYING PROSPECTUS IN CONNECTION WITH THE OFFER CONTAINED IN THIS
PROSPECTUS SUPPLEMENT (INCLUDING THE ACCOMPANYING PRICING SUPPLEMENT) AND THE
ACCOMPANYING PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY
OR THE AGENTS. NEITHER THE DELIVERY OF THIS PROSPECTUS SUPPLEMENT (INCLUDING THE
ACCOMPANYING PRICING SUPPLEMENT) AND THE ACCOMPANYING PROSPECTUS NOR ANY SALE
MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE AN IMPLICATION THAT THERE
HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATES AS OF WHICH
INFORMATION IS GIVEN IN THIS PROSPECTUS SUPPLEMENT (INCLUDING THE ACCOMPANYING
PRICING SUPPLEMENT) AND THE ACCOMPANYING PROSPECTUS. THIS PROSPECTUS SUPPLEMENT
(INCLUDING THE ACCOMPANYING PRICING SUPPLEMENT) AND THE ACCOMPANYING PROSPECTUS
DO NOT CONSTITUTE AN OFFER OR SOLICITATION BY ANYONE IN ANY STATES IN WHICH SUCH
OFFER OR SOLICITATION IS NOT AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH OFFER
OR SOLICITATION IS NOT QUALIFIED TO DO SO OR TO ANY PERSON TO WHOM IT IS
UNLAWFUL TO MAKE SUCH OFFER OF SOLICITATION.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
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<S> <C>
PROSPECTUS SUPPLEMENT
Use of Proceeds........................ S-2
Important Currency Exchange
Information.......................... S-2
Description of Notes................... S-3
Currency Risks......................... S-17
United States Federal Taxation......... S-19
Plan of Distribution................... S-26
PROSPECTUS
Available Information.................. 2
Documents Incorporated by Reference.... 2
Use of Proceeds........................ 2
The Company............................ 3
Description of Debt Securities......... 4
Plan of Distribution................... 10
Legal Opinions......................... 11
Experts................................ 11
</TABLE>
U.S. $650,000,000
(LOGO)
GENERAL AMERICAN
TRANSPORTATION
CORPORATION
MEDIUM-TERM NOTES,
SERIES F
DUE NINE MONTHS OR MORE FROM DATE OF ISSUE
SALOMON BROTHERS INC
MORGAN STANLEY & CO.
INCORPORATED
PROSPECTUS SUPPLEMENT
DATED JANUARY 26, 1996
