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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 30, 1996
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------
UNOCAL CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 2911 95-3825062
(State or other (Primary Standard Industrial (I.R.S. Employer
jurisdiction of Classification Code Number) Identification Number)
incorporation or
organization) 2141 ROSECRANS AVENUE, SUITE 4000
EL SEGUNDO, CALIFORNIA 90245
(310) 726-7600
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
UNOCAL CAPITAL TRUST
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 6733 95-4589528
(State or other (Primary Standard Industrial (I.R.S. Employer
jurisdiction of Classification Code Number) Identification Number)
incorporation or
organization)
2141 ROSECRANS AVENUE, SUITE 4000
EL SEGUNDO, CALIFORNIA 90245
(310) 726-7600
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
---------------
DENNIS P.R. CODON
VICE PRESIDENT, CHIEF LEGAL OFFICER AND GENERAL COUNSEL
UNOCAL CORPORATION
2141 ROSECRANS AVENUE, SUITE 4000
EL SEGUNDO, CALIFORNIA 90245
(310) 726-7600
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
COPIES TO:
R. GREGORY MORGAN BRUCE K. DALLAS
MUNGER, TOLLES & OLSON DAVIS POLK & WARDWELL
355 SOUTH GRAND AVENUE 450 LEXINGTON AVENUE
LOS ANGELES, CALIFORNIA 90071 NEW YORK, NEW YORK 10017
(213) 683-9100 (212) 450-4000
---------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this Registration Statement becomes effective.
If the securities being registered on this Form are to be offered in
connection with the formation of a holding company and there is compliance
with General Instruction G, check the following box: [_]
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CALCULATION OF REGISTRATION FEE
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PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE AGGREGATE OFFERING REGISTRATION
SECURITIES TO BE REGISTERED REGISTERED (1) PER UNIT (1) PRICE FEE
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<S> <C> <C> <C> <C>
% Trust Convertible Preferred Securities of
Unocal Capital Trust representing indirectly
undivided beneficial interests in % Convertible
Junior Subordinated Debentures of Unocal Corporation
held by Unocal Capital Trust.................. -- -- $512,500,000(2) $176,725
Guarantee of % Trust Convertible Preferred
Securities of Unocal Capital Trust by Unocal
Corporation............ -- -- -- (3)
Common Stock, par value $1.00 per share, of
Unocal Corporation (together with Preferred
Stock Purchase Rights)................ (4) -- -- (5)
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(1) Consistent with Rule 475(o), this information is not included.
(2) Represents the book value of the outstanding shares of $3.50 Convertible
Preferred Stock of Unocal Corporation as of July 29, 1996, which was used
to calculate the registration fee pursuant to Rule 457(f)(2).
(3) No separate consideration will be received for the Guarantee. Pursuant to
Rule 457(n), no filing fee is required.
(4) Such presently indeterminable number of shares as may be issued upon
conversion of the % Trust Convertible Preferred Securities and/or the
% Convertible Junior Subordinated Debentures in accordance with the
respective terms thereof.
(5) Pursuant to Rule 457(i), no filing fee is required.
---------------
THE REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANTS
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION,
ACTING PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
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<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE +
+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY +
+OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT +
+BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR +
+THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE +
+SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE +
+UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF +
+ANY SUCH STATE. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
PROSPECTUS Subject to Completion,
Issued July 30, 1996
Unocal Corporation
Offer to Exchange
% Trust Convertible Preferred Securities
(liquidation amount $50 per security)
of
Unocal Capital Trust
Guaranteed by Unocal Corporation to the Extent Set Forth Herein
For $3.50 Convertible Preferred Stock of Unocal Corporation
----------
THE EXCHANGE OFFER WILL EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON , 1996, UNLESS EXTENDED.
----------
Unocal Corporation, a Delaware corporation (the "Company"), hereby offers,
upon the terms and subject to the conditions set forth in this Prospectus (the
"Prospectus") and the accompanying Letter of Transmittal (the "Letter of
Transmittal" which, together with the Prospectus, constitute the "Exchange
Offer"), to exchange % Trust Convertible Preferred Securities (the "Trust
Convertible Preferred Securities") of Unocal Capital Trust, a Delaware
statutory business trust (the "Trust"), for up to all of the 10,250,000
outstanding shares of $3.50 Convertible Preferred Stock (the "$3.50 Convertible
Preferred Stock") of the Company. The Company will directly or indirectly own
all of the common securities of the Trust (the "Trust Common Securities" and,
together with the Trust Convertible Preferred Securities, the "Trust
Securities"). The Trust Securities will represent undivided beneficial
interests in the assets of the Trust.
The Exchange Offer will be effected on the basis of (A) that amount of Trust
Convertible Preferred Securities having an aggregate liquidation amount equal
to the greater of (1) the redemption price for a share of the $3.50 Convertible
Preferred Stock as of the Exchange Amount Determination Date (as defined
herein), plus accumulated and unpaid dividends thereon to but excluding the
Expiration Date (as defined herein), or (2) the Market Value (as defined
herein) of the number of shares of the common stock, par value $1.00 per share
(the "Common Stock"), of the Company into which a share of the $3.50
Convertible Preferred Stock is convertible as of the Exchange Amount
Determination Date, for (B) each share of $3.50 Convertible Preferred Stock
validly tendered and accepted for exchange in the Exchange Offer. The Trust
Convertible Preferred Securities have a liquidation amount of $50 per security.
The current redemption price for a share of the $3.50 Convertible Preferred
Stock is $52.10. The current conversion ratio of the $3.50 Convertible
Preferred Stock is 1.626 shares of Common Stock for each share of $3.50
Convertible Preferred Stock. The Company will pay amounts of less than $50 due
to a Holder (as defined herein) of $3.50 Convertible Preferred Stock for such
exchange in cash in lieu of issuing a fractional Trust Convertible Preferred
Security. The "Exchange Amount Determination Date" will be the second business
day before the Expiration Date. "Market Value" means the average of the daily
closing prices for one share of the Common Stock as reported on the New York
Stock Exchange Composite Transactions listing (the "Closing Price") for the
five trading days immediately preceding the Exchange Amount Determination Date.
The Trust Convertible Preferred Securities will be convertible at any time
beginning 90 days following the first date of issuance of any Trust Convertible
Preferred Securities and prior to the close of business on September 1, 2026,
at the option of the holder thereof, into shares of Common Stock at an initial
conversion ratio equal to that number of shares of Common Stock determined by
dividing the liquidation amount of $50 per security by the product of times
the Market Value of a share of Common Stock.
On the Exchange Amount Determination Date, the Company will issue a press
release announcing the exchange ratio for the Exchange Offer and the initial
conversion ratio for the Trust Convertible Preferred Securities.
Immediately prior to the exchange of Trust Convertible Preferred Securities
for the shares of $3.50 Convertible Preferred Stock validly tendered and
accepted for exchange in the Exchange Offer, the Company will deposit in the
Trust as trust assets its % Convertible Junior Subordinated Debentures due
2026 (the "Convertible Debentures"), having an aggregate principal amount equal
to the aggregate liquidation amount of the Trust Securities to be issued by the
Trust.
Upon the terms and subject to the conditions of the Exchange Offer, the
Company will accept for exchange all shares of $3.50 Convertible Preferred
Stock validly tendered and not withdrawn prior to 12:00 midnight, New York City
time, on , 1996, or if extended by the Company, in its sole discretion, the
latest date and time to which extended (the "Expiration Date"). The Exchange
Offer will expire on the Expiration Date. Tenders of shares of $3.50
Convertible Preferred Stock may be withdrawn at any time prior to the
Expiration Date and, unless accepted for exchange by the Company, may be
withdrawn at any time after 40 business days after the date of this Prospectus.
The Company expressly reserves the right, in its sole discretion, to (i)
terminate the Exchange Offer and not accept for exchange any shares of $3.50
Convertible Preferred Stock, upon failure of certain conditions or for any
other reason, (ii) waive any condition to the Exchange Offer and accept all
shares of $3.50 Convertible Preferred Stock previously tendered pursuant to the
Exchange Offer, and (iii) extend, amend, or modify the terms of the Exchange
Offer in any manner. See "The Exchange Offer--Expiration Date; Extensions;
Amendments; Termination".
(continued on next page)
----------
SEE "RISK FACTORS" STARTING ON PAGE 11 FOR A DISCUSSION OF CERTAIN FACTORS
THAT SHOULD BE CONSIDERED IN CONNECTION WITH THE EXCHANGE OFFER.
----------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR BY 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.
----------
Morgan Stanley & Co. Incorporated and Goldman, Sachs & Co. have been retained
to act as Dealer Managers to solicit exchanges of shares of $3.50 Convertible
Preferred Stock for Trust Convertible Preferred Securities. See "The Exchange
Offer--Dealer Managers". The Bank of New York has been retained to act as
Exchange Agent in connection with the Exchange Offer. D.F. King & Co., Inc. has
been retained to act as Information Agent to assist in connection with the
Exchange Offer.
----------
THE DEALER MANAGERS FOR THE EXCHANGE OFFER:
MORGAN STANLEY & CO. GOLDMAN, SACHS & CO.
Incorporated
, 1996
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(continued from previous page)
NONE OF THE BOARD OF DIRECTORS OF THE COMPANY (THE "BOARD"), THE COMPANY,
THE TRUSTEES (AS DEFINED HEREIN), OR THE TRUST MAKES ANY RECOMMENDATION TO
HOLDERS OF $3.50 CONVERTIBLE PREFERRED STOCK AS TO WHETHER TO TENDER OR
REFRAIN FROM TENDERING IN THE EXCHANGE OFFER. HOLDERS OF $3.50 CONVERTIBLE
PREFERRED STOCK ARE URGED TO CONSULT THEIR FINANCIAL AND TAX ADVISORS IN
MAKING THEIR DECISIONS ON WHAT ACTION TO TAKE IN LIGHT OF THEIR OWN PARTICULAR
CIRCUMSTANCES.
IN ORDER TO PARTICIPATE IN THE EXCHANGE OFFER, HOLDERS OF $3.50 CONVERTIBLE
PREFERRED STOCK MUST SUBMIT A LETTER OF TRANSMITTAL AND COMPLY WITH THE OTHER
PROCEDURES FOR TENDERING IN ACCORDANCE WITH THE INSTRUCTIONS CONTAINED HEREIN
AND IN THE LETTER OF TRANSMITTAL PRIOR TO THE EXPIRATION DATE. SEE "THE
EXCHANGE OFFER--PROCEDURES FOR TENDERING" AND "--LETTER OF TRANSMITTAL".
For a description of the other terms of the Exchange Offer, see "The
Exchange Offer--Terms of the Exchange Offer," "--Expiration Date; Extensions;
Amendments; Termination," and "--Withdrawal of Tenders". Consummation of the
Exchange Offer is conditioned on, among other things, receipt of at least
4,000,000 validly tendered shares of $3.50 Convertible Preferred Stock (which
condition may be waived by the Company). See "The Exchange Offer--Expiration
Date; Extensions; Amendments; Termination".
The Company expressly reserves the right, in its sole discretion, subject to
applicable law, to (i) terminate the Exchange Offer, and not accept for
exchange any shares of $3.50 Convertible Preferred Stock and promptly return
all shares of $3.50 Convertible Preferred Stock at any time for any reason,
including (without limitation) if fewer than 4,000,000 of such shares are
tendered or upon the failure of any of the conditions specified in "The
Exchange Offer--Procedures for Tendering", (ii) waive any condition to the
Exchange Offer and accept all shares of $3.50 Convertible Preferred Stock
previously tendered pursuant to the Exchange Offer, (iii) extend the
Expiration Date and retain all shares of $3.50 Convertible Preferred Stock
tendered pursuant to such Exchange Offer until the Expiration Date, subject,
however, to all withdrawal rights of Holders (see "The Exchange Offer--
Withdrawal of Tenders") or (iv) amend or modify the terms of the Exchange
Offer in any manner, including (without limitation), the form of the
consideration or the formula for calculating the amount of the consideration
to be paid pursuant to the Exchange Offer. Any amendment applicable to the
Exchange Offer will apply to all shares of $3.50 Convertible Preferred Stock
tendered pursuant to the Exchange Offer. The minimum period during which the
Exchange Offer must remain open following a material change in the terms of
the Exchange Offer or a waiver by the Company of a material condition of the
Exchange Offer, other than a change in the percentage of the $3.50 Convertible
Preferred Stock being sought or in the consideration offered, will depend upon
the facts and circumstances, including the relative materiality of the change
or waiver. See "The Exchange Offer--Expiration Date; Extensions; Amendments;
Termination".
The Company will own directly or indirectly all of the Trust Common
Securities. The Trust exists for the sole purposes of (a) issuing its Trust
Securities in exchange for Convertible Debentures having an aggregate
principal amount equal to the aggregate liquidation amount of such Trust
Securities and (b) engaging in such other activities as are necessary or
incidental thereto. The Trust Convertible Preferred Securities and the Trust
Common Securities will rank pari passu with each other and payment thereon
shall be pro rata; provided that (i) if a Declaration Event of Default (as
defined herein) occurs and is continuing, the rights of holders of Trust
Common Securities to receive payment of periodic distributions and payments
upon liquidation, redemption, or otherwise will be subordinated to the rights
of holders of the Trust Convertible Preferred Securities and (ii) holders of
Trust Common Securities have the exclusive right (subject to the terms of the
Declaration (as defined herein)) to appoint, replace, or remove Trustees and
to increase or decrease the number of Trustees. See "Unocal Capital Trust,"
"Description of the Trust Convertible Preferred Securities," and "Description
of the Convertible Debentures".
Cash distributions on the Trust Convertible Preferred Securities will
accumulate from and including the Expiration Date at an annual rate of % of
the liquidation amount of $50 per security (the "distribution rate"), and will
be payable quarterly in arrears on March 1, June 1, September 1, and December
1 of each year, commencing on December 1, 1996 ("distributions"). Cash
distributions not paid on the regular scheduled distribution date therefor
will bear interest thereon at the distribution rate, compounded quarterly, to
the extent
ii
<PAGE>
permitted by applicable law. The term "distributions" as used herein includes
such cash distributions and any such interest payable unless otherwise stated.
The distribution rate and the distribution and other payment dates for the
Trust Convertible Preferred Securities will correspond to the interest rate
and the interest and other payment dates on the Convertible Debentures
deposited in the Trust as trust assets. As a result, if principal or interest
is not paid on the Convertible Debentures, including as a result of the
Company's election to extend the interest payment period on the Convertible
Debentures as described below, the Trust will not make payments on the Trust
Securities. The Convertible Debentures provide that, so long as the Company
shall not be in default in the payment of interest on the Convertible
Debentures, the Company shall have the right to defer payments of interest on
the Convertible Debentures by extending the interest payment period from time
to time. Such deferral right, if exercised, would result in a corresponding
deferral of quarterly distributions on the Trust Convertible Preferred
Securities (though such deferred distributions would bear interest thereon at
the distribution rate, compounded quarterly, since interest would continue to
accrue on the Convertible Debentures). Such deferral rights could result in
multiple extension periods of varying lengths but are limited to an aggregate
of 20 consecutive quarters (each, an "Extension Period"), and no such
Extension Period may extend beyond the maturity of the Convertible Debentures.
During any such Extension Period, the Company may not declare or pay dividends
on, or redeem, purchase, acquire, or make any distribution or liquidation
payment with respect to, any shares of its capital stock (with certain limited
exceptions); see "Risk Factors--Option to Extend Interest Payment Period," and
"Description of the Convertible Debentures--Interest," and "--Option to Extend
Interest Payment Period".
The obligations of the Company under the Convertible Debentures will be
unsecured obligations of the Company and will be subordinate and junior in
right of payment, to the extent set forth herein, to all Senior Indebtedness
(as defined herein) of the Company, which includes all obligations and
liabilities other than accounts payable or any other obligations of the
Company to trade creditors, obligations expressly made pari passu or
subordinate by their terms, and certain indebtedness between or among the
Company and its affiliates, but senior to all capital stock of the Company now
outstanding, including the $3.50 Convertible Preferred Stock, or hereafter
issued by the Company and to any guarantee now or hereafter entered into by
the Company in respect of capital stock of its affiliates, including the
Guarantee. As of June 30, 1996, the Company (on an unconsolidated basis) had
no Senior Indebtedness other than guarantees of debt and capital lease
obligations of the Company's subsidiaries. At the same date, the Company's
consolidated balance sheet reflected approximately $6.6 billion of total
liabilities of the subsidiaries of the Company, including $3.2 billion of
total debt and capital lease obligations of the Company's subsidiaries
guaranteed by the Company. The Trust's funds available for distribution to the
holders of the Trust Convertible Preferred Securities will be limited to
payments received from the Company on the Convertible Debentures. The
Convertible Debentures will be structurally subordinated to all obligations of
the Company's subsidiaries. See "Description of the Trust Convertible
Preferred Securities--Distributions".
The payment of distributions, payments on the liquidation of the Trust, and
payments on the redemption of the Trust Convertible Preferred Securities, out
of moneys held by the Trust as set forth below, will be guaranteed by the
Company on a subordinated basis as and to the extent described herein (the
"Guarantee"). The Guarantee will be a full and unconditional guarantee from
the time of exchange of the Trust Convertible Preferred Securities, but the
Guarantee will cover distributions and other payments on the Trust Convertible
Preferred Securities only if and to the extent that the Company has made a
payment of interest or principal on the Convertible Debentures deposited in
the Trust as trust assets. The Company's obligations under the Guarantee will
be unsecured and will rank (i) subordinate and junior in right of payment to
all Senior Indebtedness of the Company, (ii) pari passu with the most senior
preferred or preference stock now or hereafter issued by the Company
(including the $3.50 Convertible Preferred Stock) and with any guarantee now
or hereafter entered into by the Company in respect of any preferred or
preference stock of any affiliate of the Company, and (iii) senior to the
Common Stock. The Guarantee will be structurally subordinated to all
obligations of the Company's subsidiaries. See "Description of the Guarantee".
For a description of the redemption rights with respect to the Trust
Convertible Preferred Securities, the possible dissolution of the Trust, and
distribution of Convertible Debentures held by the Trust to holders of the
iii
<PAGE>
Trust Securities and the liquidation amount on the Trust Convertible Preferred
Securities, see "Risk Factors--Special Event Distribution or Redemption,"
"Description of the Trust Convertible Preferred Securities--Mandatory
Redemption," "--Special Event Distribution or Redemption," "--Redemption
Procedures for Redemption by the Trust," "--Liquidation Distribution Upon
Dissolution," and "Description of the Convertible Debentures".
There is no established public trading market for the $3.50 Convertible
Preferred Stock.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS IN CONNECTION WITH THE EXCHANGE OFFER OTHER THAN THOSE
CONTAINED IN THIS PROSPECTUS. IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS SHOULD NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE
TRUST, THE TRUSTEES, THE COMPANY, OR THE DEALER MANAGERS. NEITHER THE DELIVERY
OF THIS PROSPECTUS NOR ANY EXCHANGE CONTEMPLATED HEREBY SHALL, UNDER ANY
CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE
AFFAIRS OF THE TRUST OR THE COMPANY SINCE THE RESPECTIVE DATES AS OF WHICH
INFORMATION IS GIVEN HEREIN. THE EXCHANGE OFFER IS NOT BEING MADE TO (NOR WILL
TENDERS BE ACCEPTED FROM OR ON BEHALF OF) HOLDERS OF $3.50 CONVERTIBLE
PREFERRED STOCK IN ANY JURISDICTION IN WHICH THE MAKING OF THE EXCHANGE OFFER
OR THE ACCEPTANCE THEREOF WOULD NOT BE IN COMPLIANCE WITH THE LAWS OF SUCH
JURISDICTION. HOWEVER, THE TRUST AND THE COMPANY MAY, AT THEIR DISCRETION, TAKE
SUCH ACTION AS THEY MAY DEEM NECESSARY FOR THE COMPANY TO MAKE THE EXCHANGE
OFFER IN ANY SUCH JURISDICTION AND EXTEND THE EXCHANGE OFFER TO HOLDERS OF
$3.50 CONVERTIBLE PREFERRED STOCK IN SUCH JURISDICTION. IN ANY JURISDICTION THE
SECURITIES LAWS OR BLUE SKY LAWS OF WHICH REQUIRE THE EXCHANGE OFFER TO BE MADE
BY A LICENSED BROKER OR DEALER, THE EXCHANGE OFFER IS BEING MADE ON BEHALF OF
THE COMPANY BY THE DEALER MANAGERS OR ONE OR MORE REGISTERED BROKERS OR DEALERS
WHICH ARE LICENSED UNDER THE LAWS OF SUCH JURISDICTION.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
Certain matters discussed in this Prospectus and the documents incorporated
herein by reference may constitute forward-looking statements and as such may
involve known and unknown risks, uncertainties, and other factors which may
cause the actual results, performance, or achievements of the Company to be
materially different from any future results, performance, or achievements
expressed or implied by such forward-looking statements.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements, and other information concerning the Company can be inspected and
copied at the public reference facilities maintained by the Commission at
Judiciary Plaza, 450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549, 500
West Madison Street, Suite 1400, Chicago, Illinois 60661-2511; and 7 World
Trade Center, Suite 1300, New York, New York 10048. Copies of such material can
be obtained from the Public Reference Section of the Commission at 450 Fifth
Street, N.W., Washington, D.C. 20549, at prescribed rates. The Common Stock is
listed on the New York Stock Exchange, Inc. (the "NYSE"), the Chicago Stock
Exchange, and the Pacific Stock Exchange. Reports, proxy statements, and other
information concerning the Company can be inspected and copied at the offices
of the NYSE, 20 Broad Street, New York, New York 10005; the Chicago Stock
Exchange, 440 South LaSalle Street, Chicago, Illinois 60605; and the Pacific
Stock Exchange, 115 Sansome Street, 3rd Floor, San Francisco, California 94104.
iv
<PAGE>
The Commission maintains a Web site at http://www.sec.gov that contains
reports, proxy statements, and other information concerning the Company, which
files electronically with the Commission.
This Prospectus constitutes a part of a combined registration statement on
Form S-4 (together with all amendments and exhibits, the "Registration
Statement") filed by the Company and the Trust with the Commission under the
Securities Act of 1933, as amended (the "Securities Act"). This Prospectus
does not contain all of the information included in the Registration
Statement, certain parts of which are omitted in accordance with the rules and
regulations of the Commission. Statements contained herein concerning the
provisions of any document do not purport to be complete and, in each
instance, are qualified in all respects by reference to the copy of such
document filed as an exhibit to the Registration Statement or otherwise filed
with the Commission. Each such statement is subject to and qualified in its
entirety by such reference. Reference is made to such Registration Statement
and to the exhibits relating thereto for further information with respect to
the Company, the Trust, and the securities offered hereby.
No separate financial statements of the Trust have been included herein. The
Company does not consider that such financial statements would be material to
holders of the Trust Convertible Preferred Securities because (i) all of the
voting securities of the Trust will be owned, directly or indirectly, by the
Company, a reporting company under the Exchange Act, (ii) the Trust has no
independent operations but exists for the sole purpose of issuing securities
representing undivided beneficial interests in the assets of the Trust in
order to refinance outstanding shares of the $3.50 Convertible Preferred
Stock, and (iii) the Company's obligations described herein, the guarantee by
the Company of the Trust's obligations under the Trust Convertible Preferred
Securities, and the Convertible Debentures to be held by the Trust and the
related indenture, taken together, constitute a full and unconditional
guarantee of payments due on the Trust Convertible Preferred Securities. See
"Description of the Convertible Debentures" and "Description of the
Guarantee".
The Trust is not currently subject to the information reporting requirements
of the Exchange Act. The Trust will become subject to such requirements upon
the effectiveness of the Registration Statement, although it intends to seek
and expects to receive exemption therefrom.
v
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INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents have been filed by the Company with the Commission
and are incorporated herein by reference (Commission File No. 1-8483):
1. The Company's Annual Report on Form 10-K for the year ended December 31,
1995.
2. The Company's Quarterly Report on Form 10-Q for the quarter ended March
31, 1996.
3. The Company's Current Reports on Form 8-K dated January 25, 1996,
February 20, 1996, February 23, 1996, April 9, 1996, April 24, 1996,
June 3, 1996, and July 25, 1996.
All documents filed by the Company with the Commission 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 herein by reference 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.
THIS PROSPECTUS INCORPORATES DOCUMENTS BY REFERENCE WHICH ARE NOT PRESENTED
HEREIN OR DELIVERED HEREWITH. THE COMPANY WILL PROVIDE WITHOUT CHARGE TO EACH
PERSON, INCLUDING ANY BENEFICIAL OWNER OF SHARES OF $3.50 CONVERTIBLE
PREFERRED STOCK, 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 TO SUCH DOCUMENTS
(UNLESS SUCH EXHIBITS ARE SPECIFICALLY INCORPORATED BY REFERENCE INTO SUCH
DOCUMENTS). THESE DOCUMENTS ARE AVAILABLE UPON REQUEST FROM THE STOCKHOLDER
SERVICES DEPARTMENT, UNOCAL CORPORATION, 2929 E. IMPERIAL HIGHWAY, BREA,
CALIFORNIA 92621-2390, OR (800) 252-2233. IN ORDER TO ENSURE TIMELY DELIVERY
OF THE DOCUMENTS, ANY REQUEST SHOULD BE MADE NOT LATER THAN FIVE BUSINESS DAYS
PRIOR TO THE EXPIRATION DATE.
vi
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TABLE OF CONTENTS
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<S> <C>
Prospectus Summary................. 1
Risk Factors....................... 11
The Company........................ 16
Market Price of the Common Stock... 17
Dividends on the Common Stock...... 17
Capitalization..................... 18
Selected Consolidated Financial
Information....................... 20
The Exchange Offer................. 21
Unocal Capital Trust............... 28
Description of the Trust
Convertible Preferred Securities.. 30
Description of the Guarantee....... 48
</TABLE>
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Description of the Convertible
Debentures........................ 50
Effect of Obligations under the
Convertible Debentures and the
Guarantee......................... 59
Description of the Common Stock.... 60
Description of the $3.50
Convertible Preferred Stock....... 62
Book-Entry System--The Depository
Trust Company..................... 69
Certain Federal Income Tax
Considerations.................... 71
Legal Matters...................... 78
Experts............................ 78
</TABLE>
vii
<PAGE>
PROSPECTUS SUMMARY
The following summary does not purport to be complete and is qualified in its
entirety by the detailed information contained elsewhere in this Prospectus or
by documents incorporated by reference into this Prospectus.
THE COMPANY
The Company is a fully integrated energy resources company whose worldwide
operations comprise many aspects of energy production. The Company conducts
virtually all of its operations through its subsidiary, Union Oil Company of
California ("Union Oil"), and Union Oil's subsidiaries. As of June 30, 1996,
the Company had approximately $9.8 billion in assets.
During 1995, the Company reorganized its business into the following segments
in order to remain focused on its most critical business activities:
. EXPLORATION AND PRODUCTION: This segment engages in the exploration for,
and the production and marketing of, crude oil, condensate, natural gas,
and natural gas liquids. The Company's major production and development
operations are conducted in the United States (principally the
Louisiana/Gulf Coast region and Alaska), Thailand, Indonesia, and
Canada. The Company's worldwide 1995 oil and gas production averaged
approximately 500,000 barrel-of-oil equivalents ("BOE") per day,
excluding production from California properties which were sold in April
1996 but including approximately 35,000 BOE per day of host-country
share under the Company's Indonesian production sharing contract.
. REFINING, MARKETING AND TRANSPORTATION: The 76 Products Company, a
division of Union Oil, encompasses the Company's West Coast petroleum
refining operations, marketing, and transportation of refined petroleum
products and manufacturing and marketing of petroleum coke. This
business unit includes three refineries in California and more than
1,300 retail service stations in six Western states. The Company's 1995
refinery production was 234,000 barrels per day.
. GEOTHERMAL AND POWER OPERATIONS: This segment engages in the exploration
for, and the production and sale of, geothermal resources for the
generation of electricity. The Company is the world's largest supplier
of geothermal energy for power generation and is expanding to become a
provider of electrical power in Southeast Asia's markets with projects
in Indonesia and the Philippines. At year-end 1995, the Company had
worldwide net proved geothermal reserves of 216 million BOE.
. DIVERSIFIED BUSINESSES: The Company's diversified businesses include
agricultural products (nitrogen-based fertilizers), carbon and minerals
(lanthanides and molybdenum, petroleum coke, and specialty graphites),
pipelines, and real estate development and sales. Diversified businesses
also include a 50% interest in The UNO-VEN Company, a refining and
marketing partnership with the Venezuelan state oil company, operating
in the midwestern United States.
THE TRUST
The Trust is a statutory business trust that was formed under the Delaware
Business Trust Act (the "Delaware Trust Act") on July 17, 1996. The Trust
exists for the sole purpose of (a) issuing its Trust Securities in exchange for
Convertible Debentures having an aggregate principal amount equal to the
aggregate liquidation amount of such Trust Securities and (b) engaging in such
other activities as are necessary and incidental thereto.
<PAGE>
THE EXCHANGE OFFER
PURPOSE OF THE EXCHANGE OFFER
The purpose of the Exchange Offer is to refinance the $3.50 Convertible
Preferred Stock with the Trust Convertible Preferred Securities. This
refinancing will benefit the Company by (i) permitting the Company to deduct
interest payable on the Convertible Debentures for United States federal income
tax purposes, while dividends payable on the $3.50 Convertible Preferred Stock
are not deductible, (ii) potentially lowering the Company's quarterly cash
payment obligation, and (iii) reducing the number of shares of Common Stock
issuable upon conversion. See "The Exchange Offer--Purpose of the Exchange
Offer".
THE EXCHANGE OFFER; SECURITIES OFFERED
Upon the terms and subject to the conditions of the Exchange Offer, the
Company hereby offers to exchange Trust Convertible Preferred Securities
representing preferred undivided beneficial interests in the assets of the
Trust for up to all outstanding shares of $3.50 Convertible Preferred Stock of
the Company. The Convertible Debentures will be the sole assets of the Trust.
The Trust Convertible Preferred Securities will be guaranteed by the Company to
the extent set forth in the Guarantee and described herein.
The Exchange Offer will be effected on the basis of (A) that amount of Trust
Convertible Preferred Securities having an aggregate liquidation amount equal
to the greater of (1) the redemption price for a share of the $3.50 Convertible
Preferred Stock as of the Exchange Amount Determination Date, plus accumulated
and unpaid dividends thereon to but excluding the Expiration Date, or (2) the
Market Value of the number of shares of Common Stock into which a share of the
$3.50 Convertible Preferred Stock is convertible as of the Exchange Amount
Determination Date for (B) each share of $3.50 Convertible Preferred Stock
validly tendered and accepted for exchange in the Exchange Offer. The Trust
Convertible Preferred Securities have a liquidation amount of $50 per security.
The current redemption price for a share of the $3.50 Convertible Preferred
Stock is $52.10. The current conversion ratio of the $3.50 Convertible
Preferred Stock is 1.626 shares of Common Stock for each share of $3.50
Convertible Preferred Stock. The Company will pay amounts of less than $50 due
to a Holder of $3.50 Convertible Preferred Stock for such exchange in cash in
lieu of issuing a fractional Trust Convertible Preferred Security.
The Trust Convertible Preferred Securities will be convertible at any time
beginning 90 days following the first date of issuance of any Trust Convertible
Preferred Securities and prior to the close of business on September 1, 2026,
at the option of the holder thereof, into shares of Common Stock at an initial
conversion ratio equal to that number of shares of Common Stock determined by
dividing the liquidation amount of $50 per security by the product of times
the Market Value of a share of Common Stock.
On the Exchange Amount Determination Date, the Company will issue a press
release announcing the exchange ratio for the Exchange Offer and the initial
conversion ratio for the Trust Convertible Preferred Securities.
Immediately prior to the exchange of Trust Convertible Preferred Securities
for the shares of $3.50 Convertible Preferred Stock validly tendered in the
Exchange Offer, the Company will deposit in the Trust as trust assets its
Convertible Debentures having an aggregate principal amount equal to the
aggregate liquidation amount of the Trust Securities to be issued by the Trust.
EXPIRATION DATE; WITHDRAWALS
Upon the terms and subject to the conditions of the Exchange Offer, the
Company will accept for exchange all shares of $3.50 Convertible Preferred
Stock validly tendered and not withdrawn prior to the Expiration Date, or if
extended by the Company, in its sole discretion, the latest date and time to
which extended. The Exchange
2
<PAGE>
Offer will expire on the Expiration Date. Tenders of shares of $3.50
Convertible Preferred Stock pursuant to the Exchange Offer may be withdrawn at
any time prior to the Expiration Date and, unless accepted for exchange by the
Company, may be withdrawn at any time after 40 business days after the date of
this Prospectus. See "The Exchange Offer--Withdrawal of Tenders" and "--
Expiration Date; Extensions; Amendments; Termination".
EXTENSIONS, AMENDMENTS, AND TERMINATION
The Company expressly reserves the right to (i) extend, amend, or modify the
terms of the Exchange Offer in any manner and (ii) withdraw or terminate the
Exchange Offer and not accept for exchange any shares of $3.50 Convertible
Preferred Stock, at any time for any reason, including (without limitation) if
fewer than 4,000,000 shares of $3.50 Convertible Preferred Stock are tendered
(which condition may be waived by the Company). See "The Exchange Offer--
Expiration Date; Extensions; Amendments; Termination".
PROCEDURES FOR TENDERING
Each Holder of $3.50 Convertible Preferred Stock wishing to accept the
Exchange Offer must (i) properly complete and sign the Letter of Transmittal or
a facsimile thereof (all references in this Prospectus to the Letter of
Transmittal shall be deemed to include a facsimile thereof) in accordance with
the instructions contained herein and therein, together with any required
signature guarantees, and deliver the same to The Bank of New York, as Exchange
Agent, at either of its addresses set forth in "The Exchange Offer--Exchange
Agent and Information Agent" and either (a) certificates for the shares of
$3.50 Convertible Preferred Stock held by such Holder must be received by the
Exchange Agent at either such addresses or (b) such shares of $3.50 Convertible
Preferred Stock must be transferred pursuant to the procedures for book-entry
transfer described herein and a confirmation of such book-entry transfer must
be received by the Exchange Agent, in each case prior to the Expiration Date,
or (ii) comply with the guaranteed delivery procedures described herein. See
"The Exchange Offer--General" and "--Procedures for Tendering".
SPECIAL PROCEDURES FOR BENEFICIAL OWNERS
Any beneficial owner whose shares of $3.50 Convertible Preferred Stock are
registered in the name of a broker, dealer, commercial bank, trust company, or
other nominee and who wishes to tender should contact such registered Holder
promptly and instruct such registered Holder to tender on such beneficial
owner's behalf. If such beneficial owner wishes to tender on its own behalf,
such owner must, prior to completing and executing a Letter of Transmittal and
delivering its shares of $3.50 Convertible Preferred Stock, either make
appropriate arrangements to register the ownership of such shares in such
owner's name or obtain a properly completed stock power from the registered
Holder. The transfer of registered ownership may take considerable time and may
not be able to be completed prior to the Expiration Date. See "The Exchange
Offer--Procedures for Tendering--Signature Guarantees".
GUARANTEED DELIVERY PROCEDURES
If a Holder desires to accept the Exchange Offer and time will not permit a
Letter of Transmittal or shares of $3.50 Convertible Preferred Stock to reach
the Exchange Agent before the Expiration Date or the procedure for book-entry
transfer cannot be completed on a timely basis, a tender may be effected in
accordance with the guaranteed delivery procedures set forth in "The Exchange
Offer--Procedures for Tendering--Guaranteed Delivery".
ACCEPTANCE OF SHARES AND DELIVERY OF TRUST CONVERTIBLE PREFERRED SECURITIES
Upon the terms and subject to the conditions of the Exchange Offer, including
the reservation by the Company of the right to withdraw or terminate the
Exchange Offer and certain other rights, the Company will accept for exchange
all shares of $3.50 Convertible Preferred Stock validly tendered and not
withdrawn, and will deliver the Trust Convertible Preferred Securities to
exchanging Holders of $3.50 Convertible Preferred Stock as promptly as
practicable after the Expiration Date. See "The Exchange Offer--Terms of the
Exchange Offer" and "--Expiration Date; Extensions; Amendments; Termination".
3
<PAGE>
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
The exchange of shares of $3.50 Convertible Preferred Stock for Trust
Convertible Preferred Securities pursuant to the Exchange Offer will be a
taxable event. Depending on each exchanging Holder's particular facts and
circumstances, the exchange may be treated as (i) a transaction in which gain
or loss will be recognized in an amount equal to the difference between the
fair market value of the Trust Convertible Preferred Securities received in the
exchange and the exchanging Holder's tax basis in the shares of $3.50
Convertible Preferred Stock surrendered or (ii) a distribution taxable as a
dividend in an amount equal to the fair market value of the Trust Convertible
Preferred Securities received by such exchanging Holder. See "Certain Federal
Income Tax Considerations--Exchange of $3.50 Convertible Preferred Stock for
Trust Convertible Preferred Securities".
In the event an Extension Period deferring interest on the Convertible
Debentures occurs, all holders will be required to include accrued and unpaid
interest on the Convertible Debentures through the date of disposition in
income as ordinary income (i.e., original issue discount ("OID")), although the
holders did not receive a cash distribution from the Trust related to such
interest. The OID is then added to the holder's adjusted tax basis in his pro
rata share of the underlying Convertible Debentures. A holder who disposes of
his Trust Convertible Preferred Securities between record dates for payments of
distributions at a selling price that is less than the holder's adjusted tax
basis will recognize a capital loss. Subject to certain limited exceptions,
capital losses cannot be applied to offset ordinary income for United States
federal income tax purposes. The extent to which a holder would recognize a
gain or loss on the Trust Convertible Preferred Securities will depend on the
market for the Trust Convertible Preferred Securities at the time of
disposition. See "Certain Federal Income Tax Considerations--Interest Income
and Original Issue Discount".
UNTENDERED SHARES
Holders of $3.50 Convertible Preferred Stock who do not tender their shares
of $3.50 Convertible Preferred Stock in the Exchange Offer or whose shares of
$3.50 Convertible Preferred Stock are not accepted for exchange will continue
to hold such $3.50 Convertible Preferred Stock and will be entitled to all the
rights and preferences, and will be subject to all of the limitations,
applicable thereto. See "The Exchange Offer--Trading of Trust Convertible
Preferred Securities and $3.50 Convertible Preferred Stock". The Company may
exercise its optional redemption rights on any shares of $3.50 Convertible
Preferred Stock which are not tendered and exchanged in the Exchange Offer. The
current redemption price for a share of the $3.50 Convertible Preferred Stock
is $52.10, plus accumulated and unpaid dividends, if any, up to but excluding
the date fixed for redemption. To the extent that shares of $3.50 Convertible
Preferred Stock are tendered and exchanged in the Exchange Offer, a Holder's
ability to sell untendered shares of $3.50 Convertible Preferred Stock could be
adversely affected. See "Risk Factors--Reduced Trading Market for $3.50
Convertible Preferred Stock".
EXCHANGE AGENT AND INFORMATION AGENT
The Bank of New York has been appointed as Exchange Agent in connection with
the Exchange Offer. Questions and requests for assistance, requests for
additional copies of this Prospectus or of the Letter of Transmittal and
requests for Notices of Guaranteed Delivery should be directed to D.F. King &
Co., Inc., which has been retained by the Company to act as Information Agent
for the Exchange Offer. The addresses and telephone numbers of the Exchange
Agent and Information Agent are set forth in "The Exchange Offer--Exchange
Agent and Information Agent".
DEALER MANAGERS
Morgan Stanley & Co. Incorporated and Goldman, Sachs & Co. have been retained
to act as Dealer Managers to solicit exchanges of shares of $3.50 Convertible
Preferred Stock for Trust Convertible Preferred Securities. Questions with
respect to the Exchange Offer may be directed to Morgan Stanley & Co.
Incorporated at (800) 835-9668 (extension 2262) and to Goldman, Sachs & Co. at
(800) 323-5678.
4
<PAGE>
COMPARISON OF TRUST CONVERTIBLE PREFERRED SECURITIES AND $3.50 CONVERTIBLE
PREFERRED STOCK
The following is a brief summary of certain terms of the Trust Convertible
Preferred Securities and the $3.50 Convertible Preferred Stock. For a more
complete description of the Trust Convertible Preferred Securities, see
"Description of the Trust Convertible Preferred Securities". For a more
complete description of the Convertible Debentures which will be deposited in
the Trust as trust assets and will represent the sole source for the payment of
distributions and other payments on the Trust Convertible Preferred Securities,
see "Description of the Convertible Debentures". For a more complete
description of the $3.50 Convertible Preferred Stock, see "Description of the
$3.50 Convertible Preferred Stock".
<TABLE>
<CAPTION>
TRUST CONVERTIBLE $3.50 CONVERTIBLE
PREFERRED SECURITIES PREFERRED STOCK
--------------------------------- ---------------------------------
<S> <C> <C>
Issuer.................. The Trust. Payment of distribu- The Company.
tions and on liquidation or re-
demption is guaranteed by the
Company on a subordinated basis,
to the extent described herein.
Liquidation Amount...... $50.00 per Trust Convertible Pre- $50.00 per share, plus accumu-
ferred Security, plus accumulated lated and unpaid dividends.
and unpaid distributions.
Distribution/Dividend
Rate................... % per annum cash distribution $3.50 per share per annum (7% per
payable quarterly in arrears on annum) cash dividend payable
March 1, June 1, September 1, and quarterly in arrears on the 15th
December 1 of each year, commenc- day of January, April, July, and
ing December 1, 1996, but only October of each year, out of
if, and to the extent that, in- funds legally available therefor,
terest payments are made in re- when, as and if declared by the
spect of the Convertible Deben- Board. Dividends are cumulative.
tures held by the Trust. During Accumulated and unpaid dividends
any Extension Period on the Con- do not bear interest. To date,
vertible Debentures, distribution the Company has made each quar-
payments on the Trust Convertible terly dividend payment with re-
Preferred Securities will not be spect to the $3.50 Convertible
made but will continue to accumu- Preferred Stock on the scheduled
late, and will bear interest at dividend payment date. In the
the distribution rate, compounded event that the equivalent of six
quarterly, to the extent permit- quarterly dividends (whether con-
ted by applicable law. If a de- secutive or not) are accumulated
ferral of an interest payment oc- but not paid, the Holders of
curs, the holders of the Trust $3.50 Convertible Preferred Stock
Convertible Preferred Securities will have certain voting rights.
would accrue income for United See "Voting Rights/Enforcement"
States federal income tax purpos- below. If a deferral of a divi-
es. Distributions accumulate from dend payment occurs, the Holders
and including the Expiration of $3.50 Convertible Preferred
Date. Stock would not be required to
include such amount in income for
United States federal income tax
purposes until the dividend is
actually declared and paid.
</TABLE>
5
<PAGE>
<TABLE>
<CAPTION>
TRUST CONVERTIBLE $3.50 CONVERTIBLE
PREFERRED SECURITIES PREFERRED STOCK
--------------------------------- ---------------------------------
<S> <C> <C>
Conversion.............. Convertible at the option of the Convertible at the option of the
holder at any time beginning 90 Holder into such number of whole
days following the first date of shares of Common Stock as is
issuance of any Trust Convertible equal to the aggregate liquida-
Preferred Securities and prior to tion preference of shares of
the close of business on Septem- $3.50 Convertible Preferred Stock
ber 1, 2026 into such number of divided by the conversion price.
whole shares as is equal to the As of the date of the Prospectus,
liquidation amount of $50 per se- the conversion
curity divided by the initial ratio is 1.626 shares (equivalent
conversion price, which will be to a conversion price of $30.75).
the product of times the Mar- The conversion price is subject
ket Value of a share of Common to adjustments upon certain
Stock. The conversion price is events, including the event of a
subject to adjustments upon cer- Non-Stock Fundamental Change or a
tain events, including the event Common Stock Fundamental Change,
of a Non-Stock Fundamental each as defined herein with re-
Change, a Common Stock Fundamen- spect to $3.50 Convertible Pre-
tal Change, each as defined ferred Stock. See "Description of
herein with respect to the Trust the $3.50 Convertible Preferred
Convertible Preferred Securities, Stock--Conversion Rights".
or a Spinoff (as defined herein). In the event of a Spinoff, the
Although similar defined terms $3.50 Convertible Preferred Stock
are used, these adjustments dif- will be subject to certain con-
fer in many respects from the ad- version provision adjustments.
justments required for the $3.50
Convertible Preferred Stock. See
"Description of the Trust Con-
vertible Preferred Securities--
Conversion Rights".
In the event of a Spinoff (as de-
fined herein), the Trust Convert-
ible Preferred Securities may be,
at the Company's option with cer-
tain limitations, subject to cer-
tain conversion provision adjust-
ments or exchanged for one or
more new convertible preferred
securities which may be convert-
ible into Spinoff Common Stock
(as defined herein). See "De-
scription of the Trust Convert-
ible Preferred Securities--Cer-
tain Other Conversion Provision
Adjustments".
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
TRUST CONVERTIBLE $3.50 CONVERTIBLE
PREFERRED SECURITIES PREFERRED STOCK
--------------------------------- ---------------------------------
<S> <C> <C>
Maturity/Redemption..... Upon the repayment of the Con- The $3.50 Convertible Preferred
vertible Debentures, whether at Stock is not subject to mandatory
maturity, upon redemption, or redemption. The $3.50 Convertible
otherwise, the proceeds thereof Preferred Stock is redeemable at
must immediately be applied to the option of the Company on and
redeem the Trust Convertible Pre- after July 15, 1996, in whole or
ferred Securities through the in part, upon not less than 30
close of business on September 1, days notice nor more than 60 days
2026 and the Trust Common Securi- notice, during the twelve-month
ties having an aggregate liquida- periods commencing on July 15 of
tion amount equal to the aggre- the years indicated below at a
gate principal amount of the Con- redemption price per share (ex-
vertible Debentures so repaid. pressed as a percentage of the
The Convertible Debentures will $50 liquidation preference there-
be redeemable at the option of of), plus accumulated and unpaid
the Company, in whole or in part, dividends thereon, up to but ex-
upon not less than 30 days notice cluding the redemption date:
nor more than 60 days notice on 104.2% in 1996, 103.5% in 1997,
or after September 3, 2000 ini- 102.8% in 1998, 102.1% in 1999,
tially at a redemption price 101.4% in 2000, 100.7% in 2001
equivalent to % per Convertible and 100.0% in 2002 and thereaf-
Debenture to be redeemed and de- ter. Holders of $3.50 Convertible
clining to par on September 1, Preferred Stock have no right to
2006, plus accrued and unpaid in- require the Company to redeem the
terest thereon to the redemption $3.50 Convertible Preferred
date, including interest accumu- Stock. See "Description of the
lated as a result of the $3.50 Convertible Preferred
Company's election to defer pay- Stock--Optional Redemption".
ments of interest on the Convert-
ible Debentures. The Company may
not redeem any Convertible Deben-
tures unless all accumulated and
unpaid distributions have been
paid on all Convertible Deben-
tures for all quarterly interest
payment periods terminating on or
prior to the date of redemption.
See "Description of the Trust
Convertible Preferred Securi-
ties--Mandatory Redemption" and
"--Special Event Distribution or
Redemption". Holders of Trust
Convertible Preferred Securities
have no right to require the
Trust to redeem the Trust Con-
vertible Preferred Securities.
Subordination........... Subordinated to claims of credi- Subordinated to claims of credi-
tors of the Trust, if any. The tors, including holders of the
Trust is not permitted to incur Company's outstanding debt secu-
any indebtedness for borrowed rities and the Convertible Deben-
money. The Declaration provides tures, and structurally subordi-
that the Company shall pay for nated to all existing and future
all debts and obligations (other obligations of the Company's sub-
than with respect to the Trust sidiaries, but senior to the Com-
Securities) and all costs and ex- mon Stock.
penses of the Trust, including As of June 30, 1996, the Company
any income taxes, duties, and (on an unconsolidated basis) had
other governmental charges, and no Senior
all costs and expenses with re- Indebtedness other than guaran-
spect thereto, to which the Trust tees of debt and capital lease
may become subject, except for obligations of
United States withholding taxes. the Company's subsidiaries. At
the same
</TABLE>
7
<PAGE>
<TABLE>
<CAPTION>
TRUST CONVERTIBLE $3.50 CONVERTIBLE
PREFERRED SECURITIES PREFERRED STOCK
--------------------------------- ---------------------------------
<S> <C> <C>
The Convertible Debentures will date, the Company's consolidated
rank subordinate and junior to balance sheet reflected approxi-
all Senior Indebtedness of the mately $6.6 billion of total lia-
Company, which includes all obli- bilities of the subsidiaries of
gations and liabilities other the Company, including $3.2 bil-
than accounts payable or any lion of total debt and capital
other obligations of the Company lease obligations of the
to trade creditors, obligations Company's subsidiaries guaranteed
expressly made pari passu or sub- by the Company.
ordinate by their terms, and cer-
tain indebtedness between or
among the Company and its affili-
ates, but senior to all capital
stock, including the $3.50 Con-
vertible Preferred Stock, now or
hereafter issued by the Company,
and to any guarantee now or here-
after entered into by the Company
in respect of capital stock of
its affiliates, including the
Guarantee.
The Convertible Debentures (and
the Company's obligations under
the Guarantee) also will be
structurally subordinated to all
existing and future obligations
of the Company's subsidiaries,
except to the extent that the
Company is a creditor of the sub-
sidiaries and is recognized as
such. In addition, the Guarantee
will rank junior to the Convert-
ible Debentures.
As of June 30, 1996, the Company
(on an unconsolidated basis) had
no Senior Indebtedness other than
guarantees of debt and capital
lease obligations of the
Company's subsidiaries. At the
same date, the Company's consoli-
dated balance sheet reflected ap-
proximately $6.6 billion of total
liabilities of the subsidiaries
of the Company, including
$3.2 billion of total debt and
capital lease obligations of the
Company's subsidiaries guaranteed
by the Company.
</TABLE>
8
<PAGE>
<TABLE>
<CAPTION>
TRUST CONVERTIBLE $3.50 CONVERTIBLE
PREFERRED SECURITIES PREFERRED STOCK
--------------------------------- ---------------------------------
<S> <C> <C>
Guarantee............... The Company will fully and uncon- None.
ditionally guarantee, on a subor-
dinated basis and to the extent
set forth herein, the payment in
full of (i) distributions on the
Trust Convertible Preferred Secu-
rities to the extent the Trust
has funds available therefor,
(ii) the amount payable upon re-
demption of the Trust Convertible
Preferred Securities to the ex-
tent the Trust has funds avail-
able therefor, and (iii) general-
ly, the liquidation amount of the
Trust Convertible Preferred Secu-
rities to the extent the Trust
has assets available for distri-
bution to holders of Trust Con-
vertible Preferred Securities.
The Company's obligations under
the Guarantee will be unsecured
and will rank (i) subordinate and
junior in right of payment to all
other liabilities of the Company,
(ii) pari passu with the most se-
nior preferred or preference
stock now or hereafter issued by
the Company and with any guaran-
tee now or hereafter entered into
by the Company in respect of any
preferred or preference stock of
any affiliate of the Company, and
(iii) senior to the Common Stock.
Voting Rights/
Enforcement............ Generally, holders of the Trust The $3.50 Convertible Preferred
Convertible Preferred Securities Stock is non-voting except that
will not have any voting rights. (i) if the equivalent of six full
However, if an Indenture Event of quarterly dividends (whether con-
Default (as defined herein) oc- secutive or not) on the $3.50
curs and is continuing, the hold- Convertible Preferred Stock are
ers of 25% of the aggregate liq- accumulated and unpaid, the num-
uidation amount of the Trust Con- ber of directors of the Company
vertible Preferred Securities may will be increased by two and the
direct the Institutional Trustee Holders of $3.50 Convertible Pre-
to declare the principal of and ferred Stock will have the right,
interest on the Convertible De- voting as a class together with
bentures immediately due and pay- holders of shares of any other
able. If (i) the Institutional preferred stock having similar
Trustee fails to enforce its voting rights, to elect such ad-
rights under the Convertible De- ditional directors (such voting
bentures or (ii) the Company de- rights will continue until such
faults under the Guarantee, a time as the dividend arrearage on
record holder of the Trust Con- the $3.50 Convertible Preferred
vertible Preferred Securities may Stock and shares of stock ranking
institute a legal proceeding di- on a parity with it have been
rectly against the Company to en- paid in full), (ii) the affirma-
force the Institutional Trustee's tive consent of the Holders of at
rights without first instituting least 66 2/3% of the outstanding
any legal proceeding against the shares of $3.50 Convertible Pre-
Institutional Trustee. ferred Stock, voting as a class
together with any other preferred
stock ranking on a parity with
the $3.50 Convertible Preferred
Stock, will be required for the
issuance of any class or series
of preferred stock ranking senior
to the $3.50 Convertible Pre-
ferred Stock as to dividends or
liquidation rights, and (iii) the
affirmative consent of the Hold-
ers of at least 66 2/3% of the
outstanding shares of $3.50 Con-
vertible Preferred Stock will be
required for certain amendments
to the Company's Certificate of
Incorporation affecting adversely
the rights of Holders of the
$3.50 Convertible Preferred
Stock.
</TABLE>
9
<PAGE>
<TABLE>
<CAPTION>
TRUST CONVERTIBLE $3.50 CONVERTIBLE
PREFERRED SECURITIES PREFERRED STOCK
--------------------------------- ---------------------------------
<S> <C> <C>
Trading................. The Company has no current plans There is no established public
to list the Trust Convertible trading market for the $3.50 Con-
Preferred Securities on a securi- vertible Preferred Stock. The
ties exchange. Although the shares of $3.50 Convertible Pre-
Dealer Managers have indicated to ferred Stock, and the Common
the Company and the Trust that Stock issuable upon conversion
they intend to make a market in thereof, which are not (and have
the Trust Convertible Preferred not been) held by an affiliate of
Securities, they are not obli- the Company are no longer subject
gated to do so and may discon- to transfer restrictions.
tinue any such market making at
any time without notice. See "The
Exchange Offer--Trading of Trust
Convertible Preferred Securities
and $3.50 Convertible Preferred
Stock".
Dividends Received
Deduction.............. Distributions on the Trust Con- Dividends on the $3.50 Convert-
vertible Preferred Securities ible Preferred Stock are eligible
will not be eligible for the div- for the dividends received deduc-
idends received deduction for tion for corporate Holders.
corporate holders.
</TABLE>
ACCOUNTING TREATMENT
The financial statements of the Trust will be reflected in the Company's
consolidated financial statements with the Trust Convertible Preferred
Securities shown as Company-obligated mandatorily redeemable convertible
preferred securities of a subsidiary trust holding solely the Convertible
Debentures, and appropriate disclosure about the Trust Convertible Preferred
Securities, the Guarantee, and the Convertible Debentures will be included in
the notes to the Company's consolidated financial statements. For financial
reporting purposes, the Company will record distributions payable on the Trust
Convertible Preferred Securities as a reduction in earnings applicable to the
Common Stock in the Company's consolidated statement of earnings. See
"Capitalization".
10
<PAGE>
RISK FACTORS
Prospective exchanging Holders of $3.50 Convertible Preferred Stock should
carefully consider, in addition to the other information set forth elsewhere
in this Prospectus, the following:
EXCHANGE OFFER AS TAXABLE EVENT
The exchange of shares of $3.50 Convertible Preferred Stock for Trust
Convertible Preferred Securities pursuant to the Exchange Offer will be a
taxable event. Depending on each exchanging Holder's particular facts and
circumstances, the exchange may be treated as (i) a transaction in which gain
or loss will be recognized in an amount equal to the difference between the
fair market value of the Trust Convertible Preferred Securities received in
the exchange and the exchanging Holder's tax basis in the shares of $3.50
Convertible Preferred Stock surrendered or (ii) a distribution taxable as a
dividend in an amount equal to the fair market value of the Trust Convertible
Preferred Securities received by such exchanging Holder. See "Certain Federal
Income Tax Considerations". All Holders of $3.50 Convertible Preferred Stock
are advised to consult their own tax advisors regarding the federal, state,
local, and foreign tax consequences of an exchange of shares of $3.50
Convertible Preferred Stock.
CORPORATE HOLDERS OF TRUST CONVERTIBLE PREFERRED SECURITIES NOT ENTITLED TO
DIVIDENDS RECEIVED DEDUCTION
While dividends with respect to the $3.50 Convertible Preferred Stock are
eligible for the dividends received deduction for corporate Holders, each
corporate holder of the Trust Convertible Preferred Securities will be
considered the owner of an undivided interest in the Convertible Debentures
and will be required to include distributions on the Trust Convertible
Preferred Securities in gross income without a deduction for dividends
received.
RANKING OF SUBORDINATED OBLIGATIONS UNDER THE GUARANTEE AND CONVERTIBLE
DEBENTURES
The Company's obligations under the Guarantee will be unsecured and will
rank subordinate and junior in right of payment to all other liabilities of
the Company and pari passu with the most senior preferred or preference stock
now or hereafter issued by the Company and with any guarantee now or hereafter
entered into by the Company in respect of any preferred or preference stock of
any affiliate of the Company (including the $3.50 Convertible Preferred
Stock). The obligations of the Company under the Convertible Debentures will
be unsecured and will rank subordinate and junior in right of payment to all
present and future Senior Indebtedness of the Company, which includes all
obligations and liabilities other than accounts payable or any other
obligations of the Company to trade creditors, obligations expressly made pari
passu or subordinate by their terms, and certain indebtedness between or among
the Company and its affiliates. Both the Guarantee and the Convertible
Debentures will be structurally subordinated to all obligations of the
Company's subsidiaries, including Union Oil, through which the Company
conducts virtually all of its operations. No payment of principal of
(including redemption), premium, if any, or interest on the Convertible
Debentures may be made (i) if any Senior Indebtedness of the Company is not
paid when due and any applicable grace period with respect to such default has
ended and such default not having been cured or waived or ceasing to exist or
(ii) if the maturity of any Senior Indebtedness has been accelerated because
of a default. As of June 30, 1996, the Company (on an unconsolidated basis)
had no Senior Indebtedness other than guarantees of debt and capital lease
obligations of the Company's subsidiaries. At the same date, the Company's
consolidated balance sheet reflected approximately $6.6 billion of total
liabilities of the subsidiaries of the Company, including $3.2 billion of
total debt and capital lease obligations of the Company's subsidiaries
guaranteed by the Company. There are no terms in the Trust Convertible
Preferred Securities, the Convertible Debentures, or the Guarantee that limit
the Company's or its subsidiaries' ability to incur additional indebtedness,
including indebtedness that ranks senior to the Convertible Debentures and the
Guarantee. See "Description of the Guarantee--Status of the Guarantee" and
"Description of the Convertible Debentures--Subordination".
11
<PAGE>
RIGHTS UNDER THE GUARANTEE
The Guarantee will be qualified as an indenture under the Trust Indenture
Act. The Institutional Trustee will act as indenture trustee under the
Guarantee for the purposes of compliance with the provisions of the Trust
Indenture Act (the "Guarantee Trustee"). The Guarantee Trustee will hold the
Guarantee for the benefit of the holders of the Trust Convertible Preferred
Securities.
The Guarantee guarantees to the holders of the Trust Convertible Preferred
Securities the payment of (i) any accumulated and unpaid distributions
required to be paid on the Trust Convertible Preferred Securities, to the
extent the Trust has funds available therefor, (ii) the Redemption Price (as
defined herein), all accumulated and unpaid distributions with respect to
Trust Convertible Preferred Securities called for redemption by the Trust, to
the extent the Trust has funds available therefor and (iii) upon a voluntary
or involuntary dissolution, winding-up or termination of the Trust (other than
in connection with the distribution of Convertible Debentures to the holders
of Trust Convertible Preferred Securities or a redemption of all the Trust
Convertible Preferred Securities), the lesser of (a) the aggregate of the
liquidation amount and all accumulated and unpaid distributions on the Trust
Convertible Preferred Securities to the date of the payment to the extent the
Trust has funds available therefor or (b) the amount of assets of the Trust
remaining available for distribution to holders of the Trust Convertible
Preferred Securities in liquidation of the Trust. The holders of a majority in
liquidation amount of the Trust Convertible Preferred Securities will have the
right to direct the time, method and place of conducting any proceeding for
any remedy available to the Guarantee Trustee or to direct the exercise of any
trust or power conferred upon the Guarantee Trustee under the Guarantee.
Notwithstanding the foregoing, any holder of Trust Convertible Preferred
Securities may institute a legal proceeding directly against the Company to
enforce such holder's right to receive payment under the Guarantee without
first instituting a legal proceeding against the Trust, the Guarantee Trustee
or any other person or entity. If the Company were to default on its
obligation to pay amounts payable on the Convertible Debentures, the Trust
would lack available funds for the payment of distributions or amounts payable
on redemption of the Trust Convertible Preferred Securities or otherwise, and,
in such event, holders of the Trust Convertible Preferred Securities would not
be able to rely upon the Guarantee for payment of such amounts. See
"Description of the Guarantee". However, a holder of the Trust Convertible
Preferred Securities could instead rely on the enforcement (1) by the
Institutional Trustee of its rights as registered holder of the Convertible
Debentures against the Company pursuant to the terms of the Convertible
Debentures or (2) by such holder of its right of direct action against the
Company to enforce payments on Convertible Debentures. See "Description of the
Convertible Debentures--Indenture Events of Default". The Declaration provides
that each holder of Trust Convertible Preferred Securities, by acceptance
thereof, agrees to the provisions of the Guarantee, including the
subordination provisions thereof, and the Indenture.
ENFORCEMENT OF CERTAIN RIGHTS BY HOLDERS OF TRUST CONVERTIBLE PREFERRED
SECURITIES
If (i) the Trust fails to pay distributions in full on the Trust Convertible
Preferred Securities (other than pursuant to a deferral) or (ii) a Declaration
Event of Default occurs and is continuing, then the holders of Trust
Convertible Preferred Securities could rely upon, and under certain
circumstances, could cause, the enforcement by the Institutional Trustee of
its rights as a holder of the Convertible Debentures against the Company. In
addition, the holders of a majority in liquidation amount of the Trust
Convertible Preferred Securities will have the right to direct the time,
method, and place of conducting any proceeding for any remedy available to the
Institutional Trustee or to direct the exercise of any trust or power
conferred upon the Institutional Trustee under the Declaration, including the
right to direct the Institutional Trustee to exercise the remedies available
to it as a holder of the Convertible Debentures. If the Institutional Trustee
fails to enforce its rights under the Convertible Debentures, a holder of
Trust Convertible Preferred Securities may institute a legal proceeding
directly against the Company to enforce the Institutional Trustee's rights
under the Convertible Debentures without first instituting any legal
proceeding against the Institutional Trustee or any other person or entity.
Notwithstanding the foregoing, if a Declaration Event of Default has occurred
and is continuing and such event is attributable to the failure of the Company
to pay interest or principal on the Convertible Debentures on the date such
interest or principal is otherwise payable (or in the case of redemption, on
the redemption date), then the registered holder of Trust Convertible
Preferred Securities may directly institute a proceeding for enforcement of
payment to such
12
<PAGE>
holder of the principal of or interest on the Convertible Debentures having a
principal amount equal to the aggregate liquidation amount of the Trust
Convertible Preferred Securities of such holder (a "Direct Action") on or
after the respective due date specified in the Convertible Debentures. In
connection with such Direct Action, the Company will be subrogated to the
rights of such holder of Trust Convertible Preferred Securities under the
Declaration to the extent of any payment made by the Company to such holder of
Trust Convertible Preferred Securities in such Direct Action. The holders of
Trust Convertible Preferred Securities will not be able to exercise directly
any other remedy available to the holders of the Convertible Debentures. See
"Description of the Trust Convertible Preferred Securities--Declaration Events
of Default" and "Description of the Convertible Debentures--Indenture Events
of Default".
OPTION TO EXTEND INTEREST PAYMENT PERIOD
So long as the Company shall not be in default in the payment of interest on
the Convertible Debentures, the Company will have the right at any time, and
from time to time, under the Indenture (as such term is defined in
"Description of the Convertible Debentures" herein) to defer payments of
interest on the Convertible Debentures by extending the interest payment
period at any time, for a period not exceeding 20 consecutive quarters. As a
consequence of such an extension, quarterly distributions on the Trust
Convertible Preferred Securities would be deferred (but despite such deferral
would continue to accumulate with interest thereon at the rate specified by
the Convertible Debentures, compounded quarterly) by the Trust during any such
extended interest payment period. If the Company exercises this right to defer
interest payments, then (a) the Company shall not declare or pay any dividend
on, make any distributions with respect to, or redeem, purchase, acquire, or
make a liquidation payment with respect to, any of its capital stock (other
than (i) purchases or acquisitions of shares of capital stock in connection
with any employee benefit plan or program, director plan or program, dividend
reinvestment, stock repurchase, or other similar plans available to
stockholders of the Company, or any option, warrant, right, or exercisable,
exchangeable, or convertible security outstanding as of the Expiration Date,
(ii) as a result of a reclassification of the Company's capital stock pursuant
to the exchange or conversion provisions of the Company's capital stock or the
exchange or conversion of one class or series of the Company's capital stock
for another class or series of the Company's capital stock or the capital
securities of a subsidiary (including a trust such as the Trust), or (iii) the
purchase of fractional interests in shares of the Company's capital stock
pursuant to the conversion or exchange provisions of such capital stock or
security being converted or exchanged), and (b) the Company shall not make any
payment of interest, principal or premium, if any, on, or repay, repurchase,
or redeem or make any guarantee payment (other than pursuant to the Guarantee)
with respect to any debt securities issued by the Company that rank pari passu
with or junior to the Convertible Debentures. Prior to the termination of any
such Extension Period, the Company may further extend the interest payment
period; provided that such Extension Period, together with all such previous
and further extensions thereof, may not exceed 20 consecutive quarters or
extend beyond the maturity of the Convertible Debentures. Upon the termination
of any Extension Period and the payment of all amounts then due, the Company
may commence a new Extension Period, subject to the above requirements. See
"Description of the Trust Convertible Preferred Securities--Distributions" and
"Description of the Convertible Debentures--Option to Extend Interest Payment
Period".
Should the Company exercise its right to defer payments of interest by
extending the interest payment period, each holder of Trust Convertible
Preferred Securities will accrue income (OID) in respect of the deferred and
compounded interest allocable to its Trust Convertible Preferred Securities
for United States federal income tax purposes, which will be allocated but not
distributed, to holders of record of Trust Convertible Preferred Securities.
As a result, each such holder of Trust Convertible Preferred Securities will
recognize income for United States federal income tax purposes in advance of
the receipt of cash and will not receive the cash from the Trust related to
such income if such holder disposes of its Trust Convertible Preferred
Securities prior to the record date for the date on which distributions of
such amounts are made. The Company has no current intention of exercising its
right to defer payments of interest by extending the interest payment period
on the Convertible Debentures. However, should the Company determine to
exercise such right in the future, the market price of the Trust Convertible
Preferred Securities is likely to be affected. A holder that disposes of its
Trust Convertible
13
<PAGE>
Preferred Securities during an Extension Period, therefore, might not receive
the same return on its investment as a holder that continues to hold its Trust
Convertible Preferred Securities. In addition, as a result of the existence of
the Company's right to defer interest payments, the market price of the Trust
Convertible Preferred Securities (which represent an undivided beneficial
interest in the Convertible Debentures) may be more volatile than other
securities that do not grant the issuer such rights. See "Certain Federal
Income Tax Considerations--Interest Income and Original Issue Discount".
PROPOSED TAX LEGISLATION
On March 19, 1996, as a part of President Clinton's Fiscal 1997 Budget
Proposal, the Treasury Department proposed legislation (the "Proposed
Legislation") that, among other things, would (i) treat as equity for United
States federal income tax purposes certain debt instruments with a maximum
term of more than 20 years and (ii) disallow interest deductions on certain
convertible debt instruments or defer interest deductions on certain debt
instruments issued with OID. The Proposed Legislation is proposed to be
effective for debt instruments issued on or after December 7, 1995.
On March 29, 1996, Senate Finance Committee Chairman William V. Roth, Jr and
House Ways and Means Committee Chairman William Archer issued a joint
statement (the "Joint Statement") indicating their intent that the Proposed
Legislation, if adopted by either of the tax-writing committees of Congress,
would have an effective date that is no earlier than the date of "appropriate
Congressional action". Based upon the Joint Statement, it is expected that if
the Proposed Legislation were enacted, such legislation would not apply to the
Convertible Debentures since they would be issued prior to the date of any
"appropriate Congressional action" or otherwise qualify for transitional
relief. However, there can be no assurances that the effective date guidance
contained in the Joint Statement will be incorporated in the Proposed
Legislation, if enacted, or that other legislation enacted after the date
hereof will not otherwise adversely affect the tax treatment of the
Convertible Debentures.
If legislation were enacted that adversely affects the tax treatment of the
Convertible Debentures, there could be a distribution of the Convertible
Debentures to holders of the Trust Convertible Preferred Securities or, in
certain circumstances, the redemption of the Convertible Debentures by the
Company and the distribution by the Trust of the resulting cash in redemption
of the Trust Convertible Preferred Securities. See "Description of the Trust
Convertible Preferred Securities--Special Event Distribution or Redemption".
SPECIAL EVENT DISTRIBUTION OR REDEMPTION
Upon the occurrence of a Special Event (as defined herein), the Trust could
be dissolved (with the consent of the Company) except in the limited
circumstance described below, with the result that the Convertible Debentures
would be distributed to the holders of the Trust Securities in connection with
the liquidation of the Trust. In certain circumstances, the Company would have
the right to redeem the Convertible Debentures, in whole or in part, in lieu
of a distribution of the Convertible Debentures by the Trust; in which event
the Trust would redeem the Trust Securities on a pro rata basis to the same
extent as the Convertible Debentures are redeemed by the Company. See
"Description of the Trust Convertible Preferred Securities--Special Event
Distribution or Redemption" and "Certain Federal Income Tax Considerations--
Receipt of Convertible Debentures or Cash Upon Liquidation of the Trust".
There can be no assurance as to the market prices for the Trust Convertible
Preferred Securities or the Convertible Debentures that may be distributed in
exchange for Trust Convertible Preferred Securities if a dissolution or
liquidation of the Trust were to occur. Accordingly, the Trust Convertible
Preferred Securities that an investor may receive in the Exchange Offer or the
Convertible Debentures that a holder of Trust Convertible Preferred Securities
may receive on dissolution and liquidation of the Trust, may trade at a
discount to the value of the $3.50 Convertible Preferred Stock on the
Expiration Date of the Exchange Offer. Because holders of Trust Convertible
Preferred Securities may receive Convertible Debentures upon the occurrence of
a Special Event, prospective purchasers of Trust Convertible Preferred
Securities are also making an investment decision with regard to the
Convertible Debentures and should carefully review all the information
regarding the Convertible
14
<PAGE>
Debentures contained herein. See "Description of the Trust Convertible
Preferred Securities--Special Event Distribution or Redemption" and
"Description of the Convertible Debentures--General".
EXCHANGE OF SECURITIES AND OTHER ADJUSTMENTS UPON A SPINOFF
In the event of a Spinoff (as defined herein) of shares of capital stock of
a subsidiary or other corporation controlled by the Company, the Trust
Convertible Preferred Securities, at the Company's option with certain
limitations, (i) may be subject to certain conversion provision adjustments,
(ii) may be exchanged for a new trust convertible preferred security issued by
a new trust created by the Spinoff Company (as defined herein) which is
convertible into Spinoff Company Stock (as defined herein), (iii) may be
subject to certain adjustments and a new trust convertible preferred security
will be issued to holders of the Trust Convertible Preferred Securities or
(iv) may be exchanged for a combination of such a new security and a new trust
convertible preferred security issued by the Trust which is convertible into
Common Stock. See "Description of the Trust Convertible Preferred Securities--
Conversion Rights--Certain Other Conversion Provision Adjustments".
LIMITED VOTING RIGHTS
Holders of Trust Convertible Preferred Securities will have limited voting
rights and will not be entitled to vote to appoint, remove or replace, or to
increase or decrease the number of, the Trustees, which voting rights are
vested exclusively in the holder of the Trust Common Securities. See
"Description of the Trust Convertible Preferred Securities--Voting Rights".
TRADING PRICE
The Trust Convertible Preferred Securities may trade at a price that does
not fully reflect the value of accrued and unpaid interest with respect to the
underlying Convertible Debentures. Should the Company exercise its right to
defer payments of interest, a holder who disposes of his Trust Convertible
Preferred Securities between record dates for payments of distributions
thereon will be required to include accrued and unpaid interest on the
Convertible Debentures through the date of disposition in income as ordinary
income (i.e., OID), and to add such amount to his adjusted tax basis in his
pro rata share of the underlying Convertible Debentures deemed disposed of. To
the extent the selling price is less than the holder's adjusted tax basis, a
holder will recognize a capital loss. Subject to certain limited exceptions,
capital losses cannot be applied to offset ordinary income for United States
federal income tax purposes. See "Certain Federal Income Tax Considerations--
Interest Income and Original Issue Discount" and "--Sale or Redemptions of
Trust Convertible Preferred Securities".
LACK OF ESTABLISHED TRADING MARKET FOR TRUST CONVERTIBLE PREFERRED SECURITIES
There has not previously been any public market for the Trust Convertible
Preferred Securities, and the Company has no current plans to list the Trust
Convertible Preferred Securities on a securities exchange. There can be no
assurance that an active market for the Trust Convertible Preferred Securities
will develop or, if developed, will be sustained in the future. Although the
Dealer Managers have indicated to the Company and the Trust that they intend
to make a market in the Trust Convertible Preferred Securities, as permitted
by applicable laws and regulations, they are not obligated to do so and may
discontinue any such market-making at any time without notice. Accordingly, no
assurance can be given as to the liquidity of, or trading markets for, the
Trust Convertible Preferred Securities.
REDUCED TRADING MARKET FOR $3.50 CONVERTIBLE PREFERRED STOCK
There is no established public trading market for the $3.50 Convertible
Preferred Stock. To the extent shares of $3.50 Convertible Preferred Stock are
tendered and accepted in the Exchange Offer, the liquidity and trading market
for shares of $3.50 Convertible Preferred Stock outstanding following the
Exchange Offer, and the terms upon which such shares could be sold, could be
adversely affected. In addition, if the Exchange Offer is substantially
subscribed, there would be a significant risk that round lot holdings of
shares of $3.50 Convertible Preferred Stock outstanding following the Exchange
Offer would be limited. See "The Exchange Offer--Trading of Trust Convertible
Preferred Securities and $3.50 Convertible Preferred Stock".
15
<PAGE>
THE COMPANY
The Company is a fully integrated energy resources company whose worldwide
operations comprise many aspects of energy production. The Company conducts
virtually all of its operations through Union Oil and Union Oil's
subsidiaries. As of June 30, 1996, the Company had approximately $9.8 billion
in assets.
During 1995, the Company reorganized its business into the following
segments in order to remain focused on its most critical business activities:
. EXPLORATION AND PRODUCTION: This segment engages in the exploration for,
and the production and marketing of, crude oil, condensate, natural gas,
and natural gas liquids. The Company's major production and development
operations are conducted in the United States (principally the
Louisiana/Gulf Coast region and Alaska), Thailand, Indonesia, and
Canada. The Company's worldwide 1995 oil and gas production averaged
approximately 500,000 BOE per day, excluding production from California
properties which were sold in April 1996 but including approximately
35,000 BOE per day of host-country share under the Company's Indonesian
production sharing contract.
. REFINING, MARKETING AND TRANSPORTATION: The 76 Products Company, a
division of Union Oil, encompasses the Company's West Coast petroleum
refining operations, marketing, and transportation of refined petroleum
products and manufacturing and marketing of petroleum coke. This
business unit includes three refineries in California and more than
1,300 retail service stations in six Western states. The Company's 1995
refinery production was 234,000 barrels per day.
. GEOTHERMAL AND POWER OPERATIONS: This segment engages in the exploration
for, and the production and sale of, geothermal resources for the
generation of electricity. The Company is the world's largest supplier
of geothermal energy for power generation and is expanding to become a
provider of electrical power in Southeast Asia's markets with projects
in Indonesia and the Philippines. At year-end 1995, the Company had
worldwide net proved geothermal reserves of 216 million BOE.
. DIVERSIFIED BUSINESSES: The Company's diversified businesses include
agricultural products (nitrogen-based fertilizers), carbon and minerals
(lanthanides and molybdenum, petroleum coke, and specialty graphites),
pipelines, and real estate development and sales. Diversified businesses
also include a 50% interest in the UNO-VEN Company, a refining and
marketing partnership with the Venezuelan state oil company, operating
in the midwestern United States.
The Company was incorporated in Delaware on March 18, 1983, to operate as
the parent of Union Oil, which was incorporated in California on October 17,
1890. The principal offices of the Company are located at 2141 Rosecrans
Avenue, Suite 4000, El Segundo, California 90245, and its telephone number at
that address is (310) 726-7600.
16
<PAGE>
MARKET PRICE OF THE COMMON STOCK
The following table sets forth the high and low price of a share of the
Common Stock reported on the New York Stock Exchange Composite Transactions
listing during the indicated periods. The Common Stock is also listed on the
Pacific, Chicago, Swiss (Basel, Geneva, and Zurich), and Singapore stock
exchanges.
<TABLE>
<CAPTION>
HIGH LOW
------ -------
<S> <C> <C>
1994
First Quarter.................................................. $30 $24 7/8
Second Quarter................................................. 29 5/8 24 3/8
Third Quarter.................................................. 30 3/4 26 5/8
Fourth Quarter................................................. 29 7/8 25 5/8
1995
First Quarter.................................................. 29 1/8 25 1/4
Second Quarter................................................. 30 1/8 27 5/8
Third Quarter.................................................. 30 1/2 26 7/8
Fourth Quarter................................................. 29 7/8 24 3/4
1996
First Quarter.................................................. 34 27 3/4
Second Quarter................................................. 34 1/2 29 5/8
Third Quarter (through July 26, 1996).......................... 34 3/8 30 1/2
</TABLE>
DIVIDENDS ON THE COMMON STOCK
The following table sets forth the quarterly dividends declared on the
Common Stock since January 1, 1994. Quarterly dividends declared are generally
paid on or about the tenth day of February, May, August, and November. The
most recent quarterly dividend was declared on June 3, 1996 and will be paid
on August 9, 1996.
<TABLE>
<CAPTION>
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
First Quarter................................................. $.20 $.20 $.20
Second Quarter................................................ .20 .20 .20
Third Quarter................................................. .20 .20
Fourth Quarter................................................ .20 .20
</TABLE>
Declarations of cash dividends are at the discretion of the Board and
dependent on the Company's results of operations, financial conditions, legal
restrictions, and other factors deemed to be relevant by the Board.
17
<PAGE>
CAPITALIZATION
The following table sets forth the consolidated capitalization of the
Company (i) at June 30, 1996, and (ii) as adjusted to give effect to the
issuance of Trust Convertible Preferred Securities in the Exchange Offer on
the assumption that all of the outstanding shares of the $3.50 Convertible
Preferred Stock are validly tendered and accepted for exchange. To the extent
that shares of the $3.50 Convertible Preferred Stock are not validly tendered
or accepted in the Exchange Offer, the amount attributed to the Trust
Convertible Preferred Securities would decrease and the amounts under the "As
Adjusted" column attributed to the $3.50 Convertible Preferred Stock and to
retained earnings would increase.
<TABLE>
<CAPTION>
JUNE 30, 1996
-------------------------
ACTUAL AS ADJUSTED
---------- -------------
(DOLLARS IN MILLIONS)
<S> <C> <C>
Debt:
Current portion of long-term debt and capital
lease obligations............................... $ 124 $ 124
Long-term debt and capital lease obligations..... 3,117 3,117
---------- ----------
Total debt..................................... 3,241 3,241
Capitalization:
Company-obligated mandatorily redeemable
convertible preferred securities of a subsidiary
trust holding solely the Convertible
Debentures...................................... -- 540(1)
Stockholders' Equity:
Preferred stock, par value $.10 per share;
Authorized--100,000,000 shares; Outstanding--
10,250,000 shares of $3.50 Convertible
Preferred Stock, stated at liquidation
preference, under Actual; no shares
outstanding under As Adjusted(2).............. 513 --
Common stock, $1.00 par value; Authorized--
750,000,000 shares; Outstanding--248,309,196
shares(3)..................................... 248 248
Capital in excess of par value................. 344 344
Foreign currency translation adjustment........ (10) (10)
Unearned portion of restricted stock........... (16) (16)
Retained earnings.............................. 2,119 2,092(4)
---------- ----------
Total stockholders' equity................... 3,198 2,658
---------- ----------
Total capitalization....................... $ 6,439 $ 6,439
========== ==========
Debt to capitalization............................. 50.3% 50.3%
========== ==========
</TABLE>
- --------
(1) As described in this Prospectus, the sole assets of the Trust will be the
Convertible Debentures in an aggregate principal amount equal to the
aggregate liquidation amount of the Trust Convertible Preferred Securities
issued in the Exchange Offer and the Trust Common Securities. The amount
shown is attributable only to the Trust Convertible Preferred Securities
and assumes the issuance thereof in an amount having an aggregate
liquidation amount equal to the aggregate redemption price of all
10,250,000 outstanding shares of the $3.50 Convertible Preferred Stock
($534 million), plus the aggregate accumulated and unpaid dividends
thereon for the period after July 15, 1996 (the most recent dividend
payment date) to but excluding the Expiration Date stated on the cover of
this Prospectus (approximately $6 million). To the extent that the Market
Value for a share of the Common Stock exceeds $32.40 on the Exchange
Amount Determination Date, the carrying amount of the Trust Convertible
Preferred Securities will be greater.
(2) Pursuant to its Rights Plan, the Company has designated 3,000,000 shares
of preferred stock as Series A Junior Participating Cumulative Preferred
Stock and reserved such shares for issuance upon the possible exercise,
under the circumstances described in the Rights Plan, of preferred stock
purchase rights associated with shares of Common Stock. See "Description
of the Common Stock--Rights to Purchase Series A Preferred Stock".
18
<PAGE>
(3) At June 30, 1996, there were reserved for issuance an aggregate of
37,121,298 shares of Common Stock (together with associated preferred
stock purchase rights), of which 16,666,667 were issuable upon the
conversion of shares of the $3.50 Convertible Preferred Stock, 5,184,058
were issuable pursuant to the Company's Dividend Reinvestment and the
Common Stock Purchase Plan and the balance were issuable pursuant to
various employee benefit plans of the Company and the Company's directors'
restricted stock plan. The Company will reserve, upon consummation of the
Exchange Offer, an additional number of shares of Common Stock initially
issuable upon conversion of the Trust Convertible Preferred Securities.
The shares of Common Stock reserved for issuance upon conversion of the
$3.50 Convertible Preferred Stock will be reduced in proportion to the
number of shares of $3.50 Convertible Preferred Stock accepted in the
Exchange Offer and retired.
(4) The excess of the carrying value of the Trust Convertible Preferred
Securities over the carrying value of the $3.50 Convertible Preferred
Stock will be charged to retained earnings. All or some portion of this
amount may be treated similar to preferred dividends on the consolidated
earnings statement. Such portion will be dependent on the extent that the
value of the Trust Convertible Preferred Securities issued exceeds the
greater of the carrying value of the shares of $3.50 Convertible Preferred
Stock exchanged or the market value, as of the Exchange Amount
Determination Date, of the shares of Common Stock into which the shares of
$3.50 Convertible Preferred Stock exchanged were convertible. The issuance
costs of the Trust Convertible Preferred Securities will be treated as
deferred financing costs and will be amortized over a 30-year period (the
term of the Convertible Debentures).
19
<PAGE>
SELECTED CONSOLIDATED FINANCIAL INFORMATION
The following selected consolidated financial information of the Company and
its subsidiaries at and for the years ended December 31, 1991 through 1995 is
extracted or derived from, and should be read in conjunction with, the audited
consolidated financial statements, and the notes thereto, of the Company,
which statements have been audited by Coopers & Lybrand L.L.P., independent
accountants. The selected consolidated financial information of the Company
and its subsidiaries for the six months ended June 30, 1995 and 1996 is
extracted or derived from, and should be read in conjunction with, the
unaudited condensed consolidated financial statements, and the notes thereto,
of the Company, which, in the opinion of management, include all adjustments
(consisting only of normal recurring accruals) necessary for the fair
presentation of the financial information for such periods. The results for
the interim periods are not necessarily indicative of the results to be
expected for the full fiscal year. The financial information reflects the
adoption by the Company of certain accounting changes which are described in
the notes to the aforementioned financial statements and the cumulative effect
of which is reflected in the table below.
<TABLE>
<CAPTION>
SIX MONTHS
ENDED JUNE 30, YEAR ENDED DECEMBER 31,
--------------- --------------------------------------
1996 1995 1995 1994 1993 1992 1991
------- ------- ------ ------ ------ ------- -------
(DOLLARS IN MILLIONS,
EXCEPT PER SHARE AMOUNTS AND RATIOS)
<S> <C> <C> <C> <C> <C> <C> <C>
REVENUES AND EARNINGS
DATA
Sales and operating
revenues(1)........... $ 4,741 $ 4,064 $8,133 $7,797 $8,077 $ 9,887 $10,735
Other revenues(2)...... 221 132 292 168 267 174 160
Total revenues......... 4,962 4,196 8,425 7,965 8,344 10,061 10,895
Earnings before income
taxes and cumulative
effect of accounting
changes............... 614 256 463 294 611 349 212
Income taxes........... 252 104 203 170 268 153 139
Earnings before
cumulative effect of
accounting changes.... 362 152 260 124 343 196 73
Cumulative effect of
accounting changes.... -- -- -- (277) (130) 24 --
Net earnings
(loss)(2)............. 362 152 260 (153) 213 220 73
Dividends on $3.50
Convertible Preferred
Stock................. 18 18 36 36 36 17 --
Net earnings (loss)
applicable to the
Common Stock.......... 344 134 224 (189) 177 203 73
Earnings (loss) per
share of the Common
Stock:
Before cumulative
effect of accounting
changes............... 1.39 .55 .91 .36 1.27 .75 .31
Cumulative effect of
accounting changes.... -- -- -- (1.14) (.54) .10 --
Net earnings (loss)
per share............ 1.39 .55 .91 (.78) .73 .85 .31
Depreciation,
depletion, and
amortization.......... 496 467 1,022 947 963 964 1,005
COMMON SHARE DATA
Dividends declared..... 99 99 197 194 181 167 164
Per share.............. .40 .40 .80 .80 .75 .70 .70
BALANCE SHEET DATA (AT
PERIOD END)
Current assets......... 1,637 1,475 1,576 1,528 1,578 1,660 1,978
Current liabilities.... 1,466 1,070 1,316 1,257 1,196 1,436 1,524
Working capital........ 171 405 260 271 382 224 454
Total assets........... 9,779 9,569 9,891 9,337 9,706 9,892 10,345
Long-term debt and
capital lease
obligations........... 3,117 3,771 3,698 3,461 3,468 3,546 4,563
Stockholders' equity... 3,198 2,906 2,930 2,815 3,129 3,131 2,464
RATIOS
Earnings to fixed
charges(3)............ 4.5 2.3 2.2 1.7 2.5 1.7 1.4
Earnings to combined
fixed charges and
preferred stock
dividends(3)(4)....... 3.8 2.0 1.9 1.5 2.2 1.6 1.4
Current assets to
current liabilities... 1.1 1.4 1.2 1.2 1.3 1.2 1.3
</TABLE>
- -------
(1) Includes consumer excise taxes of $486 million, $437 million, $898
million, $893 million, $816 million, $992 million and $1,050 million,
respectively.
(2) Special items are detailed and discussed in the "Management's Discussion
and Analysis of Financial Condition and Results of Operations" included in
the Company's unaudited quarterly reports on Form 10-Q and audited annual
reports on Form 10-K from which the selected consolidated financial
information of the Company was extracted or derived.
(3) For purposes of this ratio, earnings consist of earnings before the
cumulative effect of accounting changes, income taxes and fixed charges.
Fixed charges consist of interest on indebtedness and capital lease
obligations, amortization of debt discount, debt premium and issuance
expense and that portion of operating lease rental expense which is
representative of the interest factor (assumed to be one-third).
(4)For purposes of this ratio, preferred stock dividends are adjusted to a
pre-tax basis.
20
<PAGE>
THE EXCHANGE OFFER
GENERAL
Participation in the Exchange Offer is voluntary and Holders should
carefully consider whether to accept. None of the Board, the Company, the
Trustees, or the Trust make any recommendation to Holders as to whether to
tender or refrain from tendering in the Exchange Offer. Holders of $3.50
Convertible Preferred Stock are urged to consult their financial and tax
advisors in making their own decisions on what action to take in light of
their own particular circumstances.
Unless the context requires otherwise, the term "Holder" with respect to the
Exchange Offer means (i) any person in whose name any shares of $3.50
Convertible Preferred Stock are registered on the books of the Company, (ii)
any other person who has obtained a properly completed stock power from the
registered holder, or (iii) any person whose shares of $3.50 Convertible
Preferred Stock are held of record by The Depository Trust Company ("DTC") who
desires to deliver such shares by book-entry transfer at DTC.
PURPOSE OF THE EXCHANGE OFFER
The purpose of the Exchange Offer is to refinance the $3.50 Convertible
Preferred Stock with the Trust Convertible Preferred Securities. This
refinancing will benefit the Company by (i) permitting the Company to deduct
interest payable on the Convertible Debentures for United States federal
income tax purposes, while dividends payable on the $3.50 Convertible
Preferred Stock are not deductible, (ii) potentially lowering the Company's
quarterly cash payment obligation, and (iii) reducing the number of shares of
Common Stock issuable upon conversion. The extent of these benefits, however,
cannot be predicted because they depend upon the number of shares of $3.50
Convertible Preferred Stock exchanged pursuant to the Exchange Offer, upon the
Company's federal income tax position in any year, and the period of time the
Trust Convertible Preferred Securities remain outstanding. Neither the Trust's
ability to defer distribution payments on the Trust Convertible Preferred
Securities nor the more limited voting rights on the part of holders of the
Trust Convertible Preferred Securities is a purpose of the Company in making
the Exchange Offer.
If any shares of $3.50 Convertible Preferred Stock remain outstanding after
the consummation of the Exchange Offer, the Company may exercise its optional
redemption rights on any such shares. The current redemption price for a share
of the $3.50 Convertible Preferred Stock is $52.10, plus accumulated and
unpaid dividends, if any, up to but excluding the date fixed for redemption.
TERMS OF THE EXCHANGE OFFER
Upon the terms and subject to the conditions of the Exchange Offer, the
Company will exchange Trust Convertible Preferred Securities representing
preferred undivided beneficial interests in the assets of the Trust for up to
all of the outstanding shares of $3.50 Convertible Preferred Stock of the
Company. The Exchange Offer will be effected on the basis of (A) that amount
of Trust Convertible Preferred Securities having an aggregate liquidation
amount equal to the greater of (1) the redemption price for a share of the
$3.50 Convertible Preferred Stock as of the Exchange Amount Determination
Date, plus accumulated and unpaid dividends thereon to but excluding the
Expiration Date, or (2) the Market Value of the number of shares of Common
Stock into which a share of the $3.50 Convertible Preferred Stock is
convertible as of the Exchange Amount Determination Date, for (B) each share
of $3.50 Convertible Preferred Stock validly tendered and accepted for
exchange in the Exchange Offer. The Trust Convertible Preferred Securities
have a liquidation amount of $50 per security. The current redemption price
for a share of the $3.50 Convertible Preferred Stock is $52.10. The current
conversion ratio of the $3.50 Convertible Preferred Stock is 1.626 shares of
Common Stock for each share of $3.50 Convertible Preferred Stock. The Company
will pay amounts of less than $50 due to a Holder of $3.50 Convertible
Preferred Stock for such exchange in cash in lieu of issuing a fractional
Trust Convertible Preferred Security. On the Exchange Amount Determination
Date, the Company will issue a press release announcing the exchange ratio for
the Exchange Offer.
21
<PAGE>
Upon the terms and subject to the conditions of the Exchange Offer, the
Company will accept for exchange all shares of $3.50 Convertible Preferred
Stock validly tendered and not withdrawn as promptly as practicable after the
Expiration Date unless the Exchange Offer has been withdrawn or terminated.
The Company will not accept shares of $3.50 Convertible Preferred Stock for
exchange prior to the Expiration Date. The Company expressly reserves the
right, in its sole discretion, to delay acceptance for exchange of shares of
$3.50 Convertible Preferred Stock tendered under the Exchange Offer or the
exchange of Trust Convertible Preferred Securities for the shares of $3.50
Convertible Preferred Stock accepted for exchange (subject to Rules 13e-4 and
14e-1 under the Exchange Act, which require that the Company consummate the
Exchange Offer or return the shares of $3.50 Convertible Preferred Stock
deposited by or on behalf of the Holders thereof promptly after the
termination or withdrawal of the Exchange Offer), or to withdraw or terminate
the Exchange Offer and not accept any shares of $3.50 Convertible Preferred
Stock at any time for any reason. In all cases, except to the extent waived by
the Company, delivery of the Trust Convertible Preferred Securities in
exchange for the shares of $3.50 Convertible Preferred Stock accepted for
exchange pursuant to the Exchange Offer will be made only after timely receipt
by the Exchange Agent of such shares (or confirmation of book-entry transfer
thereof), a properly completed and duly executed Letter of Transmittal, and
any other documents required thereby.
As of July 26, 1996, there were 10,250,000 shares of $3.50 Convertible
Preferred Stock outstanding. This Prospectus, together with the Letter of
Transmittal, is being sent to all registered Holders as of , 1996.
The Company shall be deemed to have accepted validly tendered shares of
$3.50 Convertible Preferred Stock (or defectively tendered shares of $3.50
Convertible Preferred Stock with respect to which the Company has waived such
defect) when, as and if the Company has given oral or written notice thereof
to the Exchange Agent. The Exchange Agent will act as agent for the tendering
Holders for the purpose of receiving the Trust Convertible Preferred
Securities from the Company and remitting such Trust Convertible Preferred
Securities to tendering Holders. Upon the terms and subject to the conditions
of the Exchange Offer, delivery of Trust Convertible Preferred Securities in
exchange for shares of $3.50 Convertible Preferred Stock will be made as
promptly as practicable after the Expiration Date.
If any tendered shares of $3.50 Convertible Preferred Stock are not accepted
for exchange because of an invalid tender, the occurrence of certain other
events set forth herein, or otherwise, unless otherwise requested by the
Holder under "Special Delivery Instructions" in the Letter of Transmittal,
such shares will be returned, without expense, to the tendering Holder thereof
(or in the case of shares of $3.50 Convertible Preferred Stock tendered by
book-entry transfer into the Exchange Agent's account at DTC, such shares will
be credited to an account maintained at DTC designated by the participant
therein who so delivered such shares), as promptly as practicable after the
Expiration Date or the withdrawal or termination of the Exchange Offer.
Holders of $3.50 Convertible Preferred Stock will not have any appraisal or
dissenters' rights under the Delaware General Corporation Law in connection
with the Exchange Offer. The Company intends to conduct the Exchange Offer in
accordance with the applicable requirements of the Exchange Act and the rules
and regulations of the Commission thereunder.
Holders who tender shares of $3.50 Convertible Preferred Stock in the
Exchange Offer will not be required to pay brokerage commissions or fees or,
subject to the instructions in the Letter of Transmittal, transfer taxes with
respect to the exchange of shares of $3.50 Convertible Preferred Stock
pursuant to the Exchange Offer. See "--Fees and Expenses".
EXPIRATION DATE; EXTENSIONS; AMENDMENTS; TERMINATION
The Exchange Offer will expire on the Expiration Date. The Company reserves
the right to extend the Exchange Offer in its sole discretion at any time and
from time to time by giving oral or written notice to the Exchange Agent and
by timely public announcement communicated, unless otherwise required by
applicable law or regulation, by issuing a press release. During any extension
of the Exchange Offer, all shares of $3.50
22
<PAGE>
Convertible Preferred Stock previously tendered pursuant to the Exchange Offer
and not withdrawn will remain subject to the Exchange Offer.
The Company expressly reserves the right to (i) amend or modify the terms of
the Exchange Offer in any manner, including (without limitation) the form of
the consideration or the formula for calculating the amount of the
consideration to be paid pursuant to the Exchange Offer and (ii) withdraw or
terminate the Exchange Offer and not accept for exchange any shares of $3.50
Convertible Preferred Stock, at any time for any reason, including (without
limitation) if fewer than 4,000,000 shares of $3.50 Convertible Preferred
Stock are tendered (which condition may be waived by the Company). If the
Company makes a material change in the terms of the Exchange Offer or if it
waives a material condition of the Exchange Offer, the Company will extend the
Exchange Offer. The minimum period for which the Exchange Offer will be
extended following a material change or waiver, other than a change in the
percentage of the $3.50 Convertible Preferred Stock being sought for exchange
or in the consideration offered, will depend upon the facts and circumstances,
including the relative materiality of the change or waiver. With respect to a
change in the percentage of the $3.50 Convertible Preferred Stock being sought
or in the consideration offered, the Exchange Offer will be extended for a
minimum of ten business days following public announcement of such change. Any
withdrawal or termination of the Exchange Offer will be followed as promptly
as practicable by public announcement thereof. In the event the Trust
withdraws or terminates the Exchange Offer, it will give immediate notice to
the Exchange Agent, and all shares of $3.50 Convertible Preferred Stock
theretofore tendered pursuant to the Exchange Offer will be returned promptly
to the tendering Holders thereof. See "--Withdrawal of Tenders".
ACCUMULATED DISTRIBUTIONS ON TRUST CONVERTIBLE PREFERRED SECURITIES AND
DIVIDENDS ON $3.50 CONVERTIBLE PREFERRED STOCK
The Trust Convertible Preferred Securities will accumulate distributions at
an annual rate of % from and including the Expiration Date. Dividends
accumulated on the $3.50 Convertible Preferred Stock after July 15, 1996 will
not be paid in cash on shares of $3.50 Convertible Preferred Stock accepted
for exchange in the Exchange Offer, but such accumulated and unpaid dividends
will be accounted for in determining the number of shares of Trust Convertible
Preferred Securities exchanged for each share of $3.50 Convertible Preferred
Stock.
PROCEDURES FOR TENDERING
The tender of shares of $3.50 Convertible Preferred Stock by a Holder
thereof pursuant to one of the procedures set forth below will constitute an
agreement between such Holder and the Company in accordance with the terms and
subject to the conditions set forth herein and in the Letter of Transmittal.
Each Holder of $3.50 Convertible Preferred Stock wishing to accept the
Exchange Offer must (i) properly complete and sign the Letter of Transmittal
or a facsimile thereof (all references in this Prospectus to the Letter of
Transmittal shall be deemed to include a facsimile thereof) in accordance with
the instructions contained herein and therein, together with any required
signature guarantees, and deliver the same to the Exchange Agent, at either of
its addresses set forth in "--Exchange Agent and Information Agent" and either
(a) certificates for the shares of $3.50 Convertible Preferred Stock held by
such Holder must be received by the Exchange Agent at either of such addresses
or (b) such shares of $3.50 Convertible Preferred Stock must be transferred
pursuant to the procedures for book-entry transfer described below and a
confirmation of such book-entry transfer must be received by the Exchange
Agent, in each case prior to the Expiration Date, or (ii) comply with the
guaranteed delivery procedures described below.
LETTERS OF TRANSMITTAL, $3.50 CONVERTIBLE PREFERRED STOCK, AND ANY OTHER
REQUIRED DOCUMENTS SHOULD BE SENT ONLY TO THE EXCHANGE AGENT, NOT TO THE
COMPANY, THE TRUST, THE DEALER MANAGERS, OR THE INFORMATION AGENT.
Signature Guarantees. If tendered shares of $3.50 Convertible Preferred
Stock are registered in the name of the signer of the Letter of Transmittal
and the Trust Convertible Preferred Securities to be issued in exchange
23
<PAGE>
therefor are to be issued (and any untendered shares of $3.50 Convertible
Preferred Stock are to be reissued) in the name of the registered Holder
(which term, for the purposes described herein, shall include any participant
in DTC whose name appears on a security listing as the owner of the $3.50
Convertible Preferred Stock), the signature of such signer need not be
guaranteed. If the tendered shares of $3.50 Convertible Preferred Stock are
registered in the name of someone other than the signer of the Letter of
Transmittal, such tendered shares must be endorsed or accompanied by written
instruments of transfer in form satisfactory to the Company and duly executed
by the registered Holder, and the signature on the endorsement or instrument
of transfer must be guaranteed by a financial institution (including most
banks, savings and loan associations, and brokerage houses) that is a
participant in the Security Transfer Agents Medallion Program or The New York
Stock Exchange Medallion Signature Guarantee Program or the Stock Exchange
Medallion Program (any of the foregoing hereinafter referred to as an
"Eligible Institution"). If the Trust Convertible Preferred Securities and/or
$3.50 Convertible Preferred Stock not exchanged are to be delivered to an
address other than that of the registered Holder appearing on the register for
the $3.50 Convertible Preferred Stock, the signature in the Letter of
Transmittal must be guaranteed by an Eligible Institution. Any beneficial
owner whose shares of $3.50 Convertible Preferred Stock are registered in the
name of a broker, dealer, commercial bank, trust company, or other nominee and
who wishes to tender should contact such registered Holder promptly and
instruct such registered Holder to tender on such beneficial owner's behalf.
If such beneficial owner wishes to tender on its own behalf, such owner must,
prior to completing and executing a Letter of Transmittal and delivering its
shares of $3.50 Convertible Preferred Stock, either make appropriate
arrangements to register the ownership of such shares in such owner's name or
obtain a properly completed stock power from the registered Holder. The
transfer of registered ownership may take considerable time and may not be
able to be completed prior to the Expiration Date.
THE METHOD OF DELIVERY OF $3.50 CONVERTIBLE PREFERRED STOCK AND ALL OTHER
DOCUMENTS IS AT THE ELECTION AND RISK OF THE HOLDER. IF SENT BY MAIL, IT IS
RECOMMENDED THAT REGISTERED MAIL, RETURN RECEIPT REQUESTED, BE USED, PRIOR
INSURANCE OBTAINED, AND THE MAILING BE MADE SUFFICIENTLY IN ADVANCE OF THE
EXPIRATION DATE TO PERMIT DELIVERY TO THE EXCHANGE AGENT ON OR BEFORE THE
EXPIRATION DATE.
Book-Entry Transfer. The Company understands that the Exchange Agent will
make a request promptly after the date of this Prospectus to establish
accounts with respect to the $3.50 Convertible Preferred Stock at DTC for the
purpose of facilitating the Exchange Offer, and subject to the establishment
thereof, any financial institution that is a participant in DTC's system may
make book-entry delivery of $3.50 Convertible Preferred Stock by causing DTC
to transfer such $3.50 Convertible Preferred Stock into the Exchange Agent's
account with respect to the $3.50 Convertible Preferred Stock in accordance
with DTC's Automated Tender Offer Program ("ATOP") procedures for such book-
entry transfers. However, the exchange for shares of $3.50 Convertible
Preferred Stock so tendered will only be made after timely confirmation (a
"Book-Entry Confirmation") of such Book-Entry Transfer of shares of $3.50
Convertible Preferred Stock into the Exchange Agent's account, and timely
receipt by the Exchange Agent of an Agent's Message (as such term is defined
in the next sentence) and any other documents required by the Letter of
Transmittal. The term "Agent's Message" means a message, transmitted by DTC
and received by the Exchange Agent and forming a part of a Book-Entry
Confirmation, which states that DTC has received an express acknowledgement
from a participant tendering shares of $3.50 Convertible Preferred Stock that
is the subject of such Book-Entry Confirmation that such participant has
received and agrees to be bound by the terms of the Letter of Transmittal, and
that the Trust may enforce such agreement against such participant. See "Book-
Entry System--The Depository Trust Company".
Guaranteed Delivery. If a Holder desires to accept the Exchange Offer and
time will not permit a Letter of Transmittal or shares of $3.50 Convertible
Preferred Stock to reach the Exchange Agent before the Expiration Date or the
procedure for book- entry transfer cannot be completed on a timely basis, a
tender may be effected if the Exchange Agent has received at its office, prior
to the Expiration Date, a letter, a telegram, or facsimile transmission from
an Eligible Institution setting forth the name and address of the tendering
Holder, the name(s)
24
<PAGE>
in which the $3.50 Convertible Preferred Stock is registered and, if the $3.50
Convertible Preferred Stock is held in certificated form, the certificate
number of the $3.50 Convertible Preferred Stock to be tendered, and stating
that the tender is being made thereby and guaranteeing that within three
trading days after the date of execution of such letter, telegram, or
facsimile transmission by the Eligible Institution, the $3.50 Convertible
Preferred Stock, in proper form for transfer together with a properly
completed and duly executed Letter of Transmittal (and any other required
documents), or a confirmation of book-entry transfer of such $3.50 Convertible
Preferred Stock into the Exchange Agent's account at DTC, will be delivered by
such Eligible Institution. Unless the shares of $3.50 Convertible Preferred
Stock being tendered by the above-described method are deposited with the
Exchange Agent within the time period set forth above (accompanied or preceded
by a properly completed Letter of Transmittal and any other required
documents) or a confirmation of book-entry transfer of such $3.50 Convertible
Preferred Stock into the Exchange Agent's account at DTC in accordance with
DTC's ATOP procedures is received, the Company may, at its option, reject the
tender. Copies of a Notice of Guaranteed Delivery which may be used by
Eligible Institutions for the purposes described in this paragraph are
available from the Exchange Agent and the Information Agent.
Miscellaneous. All questions as to the validity, form, eligibility
(including time of receipt), and acceptance for exchange of any tender of
shares of $3.50 Convertible Preferred Stock will be determined by the Company,
whose determination will be final and binding. The Company reserves the
absolute right to reject any or all tenders not in proper form or the
acceptance for exchange of which may, in the opinion of the Company's counsel,
be unlawful. The Company also reserves the absolute right to waive any defect
or irregularity in the tender of any shares of $3.50 Convertible Preferred
Stock, and the Company's interpretation of the terms and conditions of the
Exchange Offer (including the instructions in the Letter of Transmittal) will
be final and binding. None of the Company, the Exchange Agent, the Dealer
Managers, the Information Agent, or any other person will be under any duty to
give notification of any defects or irregularities in tenders or incur any
liability for failure to give any such notification.
Tenders of shares of $3.50 Convertible Preferred Stock involving any
irregularities will not be deemed to have been made until such irregularities
have been cured or waived. Shares of $3.50 Convertible Preferred Stock
received by the Exchange Agent that are not validly tendered and as to which
the irregularities have not been cured or waived will be returned by the
Exchange Agent to the tendering Holder (or in the case of shares of $3.50
Convertible Preferred Stock tendered by book-entry transfer into the Exchange
Agent's account at DTC, such shares will be credited to an account maintained
at DTC designated by the participant therein who so delivered such shares),
unless otherwise requested by the Holder in the Letter of Transmittal, as
promptly as practicable after the Expiration Date or the withdrawal or
termination of the Exchange Offer.
LETTER OF TRANSMITTAL
The Letter of Transmittal contains, among other things, the following terms
and conditions, which are part of the Exchange Offer.
The party tendering shares of $3.50 Convertible Preferred Stock for exchange
(the "Transferor") exchanges, assigns, and transfers such shares to the
Company and irrevocably constitutes and appoints the Exchange Agent as the
Transferor's agent and attorney-in-fact to cause such shares to be assigned,
transferred, and exchanged. The Transferor represents and warrants that it has
full power and authority to tender, exchange, assign, and transfer the shares
of $3.50 Convertible Preferred Stock and to acquire Trust Convertible
Preferred Securities issuable upon the exchange of such tendered shares, and
that, when the same are accepted for exchange, the Company will acquire good
and unencumbered title to the tendered shares of $3.50 Convertible Preferred
Stock, free and clear of all liens, restrictions, charges, and encumbrances
and not subject to any adverse claim. The Transferor also warrants that it
will, upon request, execute, and deliver any additional documents deemed by
the Company to be necessary or desirable to complete the exchange, assignment,
and transfer of tendered shares of $3.50 Convertible Preferred Stock or
transfer ownership of such shares on the account books maintained by DTC. All
authority conferred by the Transferor will survive the death, bankruptcy, or
incapacity of the Transferor, and every obligation of the Transferor shall be
binding upon the heirs, legal representatives, successors, assigns, executors,
and administrators of such Transferor.
25
<PAGE>
WITHDRAWAL OF TENDERS
Tenders of shares of $3.50 Convertible Preferred Stock pursuant to the
Exchange Offer may be withdrawn at any time prior to the Expiration Date and,
unless accepted for exchange by the Company, may be withdrawn at any time
after 40 business days after the date of this Prospectus.
To be effective, a written notice of withdrawal delivered by mail, hand
delivery, or facsimile transmission must be timely received by the Exchange
Agent at the address set forth in the Letter of Transmittal. The method of
notification is at the risk and election of the Holder. Any such notice of
withdrawal must specify (i) the Holder named in the Letter of Transmittal as
having tendered shares of $3.50 Convertible Preferred Stock to be withdrawn,
(ii) if shares of $3.50 Convertible Preferred Stock are held in certificated
form, the certificate numbers of such shares to be withdrawn, (iii) that such
Holder is withdrawing his election to have such shares exchanged, and (iv) the
name of the registered Holder of such shares, and must be signed by the Holder
in the same manner as the original signature on the Letter of Transmittal
(including any required signature guarantees) or be accompanied by evidence
satisfactory to the Company that the person withdrawing the tender has
succeeded to the beneficial ownership of the shares of $3.50 Convertible
Preferred Stock being withdrawn. The Exchange Agent will return the properly
withdrawn shares of $3.50 Convertible Preferred Stock promptly following
receipt of notice of withdrawal. If shares of $3.50 Convertible Preferred
Stock have been tendered pursuant to the procedure for book-entry transfer,
any notice of withdrawal must specify the name and number of the account at
DTC to be credited with the withdrawn shares of $3.50 Convertible Preferred
Stock and otherwise comply with DTC's procedures. All questions as to the
validity of notice of withdrawal, including time of receipt, will be
determined by the Company, and such determination will be final and binding on
all parties. Withdrawals of tenders of shares of $3.50 Convertible Preferred
Stock may not be rescinded and any shares of $3.50 Convertible Preferred Stock
withdrawn will thereafter be deemed not validly tendered for purposes of the
Exchange Offer. Properly withdrawn shares of $3.50 Convertible Preferred
Stock, however, may be retendered by following the procedures therefor
described elsewhere herein at any time prior to the Expiration Date. See "--
Procedures for Tendering".
26
<PAGE>
EXCHANGE AGENT AND INFORMATION AGENT
The Bank of New York has been appointed as Exchange Agent for the Exchange
Offer. Deliveries to the Exchange Agent should be as follows:
THE EXCHANGE AGENT:
THE BANK OF NEW YORK
By Hand or Overnight Courier:
The Bank of New York
101 Barclay Street (7 East)
Reorganization Section
Corporate Trust Services Window
New York, New York 10286
Attention: George Johnson
By Mail:
The Bank of New York
101 Barclay Street (7 East)
Reorganization Section
New York, New York 10286
Attention: George Johnson
By Facsimile Transmission
(For Eligible Institutions Only):
(212) 571-3080
Confirm Receipt of Notice of Guaranteed Delivery
by Telephone:
(212) 815-4997
D.F. King & Co., Inc. has been retained to act as Information Agent.
Questions and requests for assistance regarding the Exchange Offer, requests
for additional copies of this Prospectus or of the Letter of Transmittal and
requests for Notice of Guaranteed Delivery may be directed to the Information
Agent at 77 Water Street, New York, New York 10005, telephone (800) 848-3051
or (212) 269-5550 (collect).
The Company will pay the Exchange Agent and Information Agent reasonable and
customary fees for their services and will reimburse them for all their
reasonable out-of-pocket expenses in connection therewith.
DEALER MANAGERS
Morgan Stanley & Co. Incorporated and Goldman, Sachs & Co., as Dealer
Managers, have agreed to solicit exchanges of shares of $3.50 Convertible
Preferred Stock. The Company will pay the Dealer Managers a fee of 5/8% of the
aggregate redemption price for the shares of $3.50 Convertible Preferred Stock
as of the Exchange Amount Determination Date, plus accumulated and unpaid
dividends thereon to but excluding the Expiration Date, validly tendered and
accepted for exchange pursuant to the Exchange Offer. Additional solicitation
may be made by telecopier, by telephone, or in person by officers and regular
employees of the Company and its affiliates. No additional compensation will
be paid to any such officers and employees who engage in soliciting tenders.
Each of the Dealer Managers engage in transactions with, and from time to
time have performed services for, the Company.
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TRADING OF TRUST CONVERTIBLE PREFERRED SECURITIES AND $3.50 CONVERTIBLE
PREFERRED STOCK
There has not been any public market for the Trust Convertible Preferred
Securities. There can be no assurance that an active market for the Trust
Convertible Preferred Securities will develop or, if developed, be sustained
in the future. Although the Dealer Managers have indicated to the Company and
the Trust that they intend to make a market in the Trust Convertible Preferred
Securities, they are not obligated to do so and may discontinue any such
market-making at any time without notice. Accordingly, no assurance can be
given as to the liquidity of, or trading markets for, the Trust Convertible
Preferred Securities.
There is no established public trading market for the $3.50 Convertible
Preferred Stock. The shares of $3.50 Convertible Preferred Stock, and the
underlying shares of Common Stock issuable upon conversion thereof, have not
been and will not be registered under the Securities Act. The shares of $3.50
Convertible Preferred Stock, and the underlying shares of Common Stock
issuable upon conversion thereof, are freely tradeable unless held by
affiliates of the Company. Holders of $3.50 Convertible Preferred Stock who do
not tender their shares $3.50 Convertible Preferred Stock in the Exchange
Offer or whose shares of $3.50 Convertible Preferred Stock are not accepted
for exchange will continue to hold such shares and will be entitled to all the
rights and preferences, and will be subject to all of the limitations
applicable thereto. To the extent that shares of $3.50 Convertible Preferred
Stock are tendered and accepted in the Exchange Offer, the liquidity and
trading market for the $3.50 Convertible Preferred Stock outstanding following
the Exchange Offer, and the terms upon which such $3.50 Convertible Preferred
Stock could be sold, could be adversely affected.
TRANSACTIONS AND ARRANGEMENTS CONCERNING THE $3.50 CONVERTIBLE PREFERRED STOCK
IN CONNECTION WITH THE EXCHANGE OFFER
Except as described herein, there are no contracts, arrangements,
understandings, or relationships in connection with the Exchange Offer between
the Company or any of its directors or executive officers, the Trust or any of
the Trustees, and any person with respect to any securities of the Company or
the Trust, including the Trust Convertible Preferred Securities, the
Convertible Debentures, the $3.50 Convertible Preferred Stock, and the Common
Stock issuable upon conversion thereof.
FEES AND EXPENSES; TRANSFER TAXES
The expenses of soliciting tenders of shares of $3.50 Convertible Preferred
Stock will be borne by the Company. For compensation to be paid to the Dealer
Managers, see "--Dealer Managers". The total cash expenditures to be incurred
by the Company in connection with the Exchange Offer, other than fees payable
to the Dealer Managers, but including the expenses of the Dealer Managers and
the Trust, printing, accounting, and legal fees, and the fees and expenses of
the Exchange Agent, the Information Agent, the trustees under the Indenture,
the Guarantee, and the Trust, are estimated to be approximately $1.1 million.
Holders of shares of $3.50 Convertible Preferred Stock accepted in the
Exchange Offer are responsible for paying any transfer taxes in connection
with such exchange. If satisfactory evidence of payment of such taxes or
exemption therefrom is not submitted with the Letter of Transmittal, the
amount of such transfer taxes will be billed directly to such tendering
Holder.
UNOCAL CAPITAL TRUST
The Trust is a statutory business trust formed under Delaware law pursuant
to (i) a declaration of trust, dated as of July 17, 1996, executed by the
Company, as sponsor, and the trustees of the Trust (the "Trustees") and (ii)
the filing of a certificate of trust with the Secretary of State of Delaware
on July 17, 1996. Such declaration will be amended and restated in its
entirety (as so amended and restated, the "Declaration") substantially in the
form filed as an exhibit to the Registration Statement of which this
Prospectus is a part. The Declaration will be qualified as an indenture under
the Trust Indenture Act of 1939, as amended (the "Trust Indenture Act"). The
Company will initially acquire all of the Trust Securities and will offer the
Trust Convertible Preferred Securities
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to the Holders of $3.50 Convertible Preferred Stock in the Exchange Offer.
Immediately after consummation of the Exchange Offer, former Holders of $3.50
Convertible Preferred Stock will own all of the issued and outstanding Trust
Convertible Preferred Securities and the Company will own all of the issued
and outstanding Trust Common Securities. The Trust Common Securities will have
an aggregate liquidation amount equal to no less than 1% of the total capital
of the Trust. The Trust exists for the sole purposes and functions of (a)
issuing its Trust Securities in exchange for Convertible Debentures having an
aggregate principal amount equal to the aggregate liquidation amount of the
Trust Securities and (b) engaging in only those other activities as are
necessary or incidental thereto. The Company will pay all fees and expenses
related to the Trust and the offering of the Trust Securities.
Pursuant to the Declaration, the number of Trustees will initially be five.
Three of the Trustees (the "Regular Trustees") must be persons who are
employees or officers of the Company. The fourth Trustee must be an entity
permitted by the Commission to act as an institutional trustee under the Trust
Indenture Act, unaffiliated with the Company and with a combined capital and
surplus of at least $50 million, which will serve as indenture trustee under
the Declaration for the purpose of compliance with the Trust Indenture Act
(the "Institutional Trustee"). Initially, The Bank of New York, a banking
corporation, will be the Institutional Trustee until it resigns or is removed
by the Company. The fifth Trustee must be a resident of Delaware or an entity
that maintains its principal place of business in the state of Delaware (the
"Delaware Trustee"). Initially, The Bank of New York (Delaware), an affiliate
of the Institutional Trustee, will be the Delaware Trustee until it resigns or
is removed by the Company. The Company, as the holder of the Trust Common
Securities, will have the right to appoint or remove any Trustee and to
increase or decrease the number of Trustees (but not below two Trustees).
The Institutional Trustee will hold title to the Convertible Debentures for
the benefit of the holders of the Trust Securities and will have the power to
exercise all rights, powers, and privileges as the holder of the Convertible
Debentures under the Indenture. In addition, the Institutional Trustee will
maintain exclusive control of a segregated non-interest bearing trust account
(the "Institutional Trustee Account") into which it will deposit all payments
of funds received in respect of the Convertible Debentures for the benefit of
the holders of the Trust Securities. The Institutional Trustee will make
payments of distributions and payments on liquidation, redemption, and
otherwise to the holders of the Trust Securities out of funds from the
Institutional Trustee Account. Trust and Trustee expenses are not paid from
funds in the Institutional Trustee Account, but are paid by the Company
pursuant to the Indenture. See "Description of the Convertible Debentures--
Miscellaneous".
For the purpose of compliance with the Trust Indenture Act, The Bank of New
York will also act as the Guarantee Trustee and as Debenture Trustee (as
defined herein) under the Indenture (as defined herein). The Bank of New York
is currently the trustee under two indentures under which debt securities in
an aggregate principal amount of approximately $1.8 billion, maturing from
August 1996 to March 2011, have been issued by Union Oil and guaranteed by the
Company. The Bank of New York is a participating lender under two of the
Company's bank credit agreements, pursuant to which it has committed to lend
to Union Oil and other subsidiaries of the Company, subject to guarantees by
the Company, an aggregate of approximately $80 million, none of which is
outstanding as of the date of this Prospectus. The guarantees by the Company
under the indentures and bank credit agreements described above are Senior
Indebtedness (as defined herein). The Company and its subsidiaries may in the
future enter into other relationships with The Bank of New York.
The foregoing summary of the material terms and provisions of the
Declaration is subject to, and qualified in its entirety by reference to, the
Declaration, a copy of which is filed as an exhibit to the Registation
Statement of which this Prospectus is a part, the Delaware Trust Act, and the
Trust Indenture Act.
The business address of the Trust is 2141 Rosecrans Avenue, Suite 4000, El
Segundo, California 90245, and its telephone number at that address is (310)
726-7600.
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DESCRIPTION OF THE TRUST CONVERTIBLE PREFERRED SECURITIES
The Trust Convertible Preferred Securities will be issued pursuant to the
terms of the Declaration. The Declaration will be qualified as an indenture
under the Trust Indenture Act. The Institutional Trustee, The Bank of New
York, will act as indenture trustee for the Trust Convertible Preferred
Securities under the Declaration for purposes of compliance with the Trust
Indenture Act. The terms of the Trust Convertible Preferred Securities and the
rights of the holders thereof, will include those stated in the Declaration,
those made part of the Declaration by the Trust Indenture Act, and those set
forth in the Delaware Trust Act. The following summary of the material terms
and provisions of the Trust Convertible Preferred Securities and the rights of
the holders thereof, is subject to, and qualified in its entirety by reference
to, the Declaration, a copy of which is filed as an exhibit to the
Registration Statement of which this Prospectus is a part, the Trust Indenture
Act, and the Delaware Trust Act.
GENERAL
The Declaration authorizes the Regular Trustees to issue on behalf of the
Trust the Trust Securities, which represent undivided beneficial interests in
the assets of the Trust. All of the Trust Common Securities will be owned,
directly or indirectly, by the Company. The Trust Common Securities will rank
pari passu, and payments will be made thereon on a pro rata basis, with the
Trust Convertible Preferred Securities, except that upon the occurrence and
during the continuance of a Declaration Event of Default (as defined herein),
the rights of the holders of the Trust Common Securities to receive payment of
periodic distributions and payments upon liquidation, redemption, and
otherwise will be subordinated to the rights of the holders of the Trust
Convertible Preferred Securities. The Declaration does not permit the issuance
by the Trust of any securities other than the Trust Securities or the
incurrence of any indebtedness by the Trust. Pursuant to the Declaration, the
Institutional Trustee will hold the Convertible Debentures for the benefit of
the holders of the Trust Securities. The payment of distributions out of money
held by the Trust, and payments upon redemption of the Trust Convertible
Preferred Securities or liquidation of the Trust, will be guaranteed by the
Company to the extent described under "Description of the Guarantee". The
Guarantee will be held by The Bank of New York, the Guarantee Trustee, for the
benefit of the holders of the Trust Convertible Preferred Securities. The
Guarantee will not cover payment of distributions when the Trust does not have
sufficient available funds to pay such distributions. In such event, the
remedy of a holder of Trust Convertible Preferred Securities would be to vote
to direct the Institutional Trustee to enforce the Institutional Trustee's
rights under the Convertible Debentures except in the limited circumstances in
which the holder may take Direct Action (as defined herein). See "--
Declaration Events of Default" and "--Voting Rights".
DISTRIBUTIONS
Distributions on the Trust Convertible Preferred Securities will be fixed at
a rate per annum of % of the liquidation amount of $50 per security.
Distributions not paid on the regularly scheduled payment date therefor will
bear interest thereon at the distribution rate, compounded quarterly, to
the extent permitted by law. The term "distribution" as used herein includes
any such interest payable unless otherwise stated. The amount of distributions
payable for any full quarterly distribution period will be computed on the
basis of a 360-day year of twelve 30-day months. The amount of distributions
payable for any period shorter than a full quarterly distribution period for
which distributions are computed, will be computed on the basis of a 30-day
month and, for periods of less than a month, the actual number of days elapsed
divided by 30.
Distributions on the Trust Convertible Preferred Securities will be
cumulative, will accumulate from and including the Expiration Date, and will
be payable quarterly in arrears on March 1, June 1, September 1, and December
1 of each year, commencing December 1, 1996, when, as and if funds are
available for payment. Distributions will be made by the Institutional
Trustee, except as otherwise described below.
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So long as the Company is not in default in the payment of interest on the
Convertible Debentures, the Company will have the right under the Indenture at
any time, and from time to time, to defer payments of interest by extending
the interest payment period on the Convertible Debentures, during which
Extension Period no interest will be due and payable on the Convertible
Debentures. As a consequence of such deferral, quarterly distributions on the
Trust Convertible Preferred Securities will also be deferred, although such
deferred distributions would accumulate with interest thereon, to the extent
permitted by law, at the distribution rate, compounded quarterly, during any
such Extension Period. Such right to extend the interest payment period for
the Convertible Debentures will be limited to a period not exceeding 20
consecutive quarters and such period may not extend beyond the maturity of the
Convertible Debentures. If the Company exercises this right, then (a) the
Company shall not declare or pay any dividend on, make any distributions with
respect to, or redeem, purchase, acquire, or make a liquidation payment with
respect to, any of its capital stock (other than (i) purchases or acquisitions
of shares of capital stock in connection with any employee benefit plan or
program, director plan or program, dividend reinvestment, stock repurchase, or
other similar plans available to stockholders of the Company, or any option,
warrant, right, or exercisable, exchangeable, or convertible security
outstanding as of the Expiration Date, (ii) as a result of a reclassification
of the Company's capital stock pursuant to the exchange or conversion
provisions of the Company's capital stock or the exchange or conversion of one
class or series of the Company's capital stock for another class or series of
the Company's capital stock or the capital securities of a subsidiary
(including a trust such as the Trust), or (iii) the purchase of fractional
interests in shares of the Company's capital stock pursuant to the conversion
or exchange provisions of such capital stock or security being converted or
exchanged), and (b) the Company shall not make any payment of interest,
principal or premium, if any, on, or repay, repurchase, or redeem or make any
guarantee payment (other than pursuant to the Guarantee) with respect to any
debt securities issued by the Company that rank pari passu with or junior to
the Convertible Debentures. Prior to the termination of any such Extension
Period, the Company may further extend the Extension Period; provided, that
such Extension Period, together with all such previous and further extensions,
may not exceed 20 consecutive quarters or extend beyond the maturity of the
Convertible Debentures. Upon the termination of any Extension Period and the
payment of all amounts then due, the Company may commence a new Extension
Period, subject to the above requirements. See "Description of the Convertible
Debentures--Interest" and "--Option to Extend Interest Payment Period". If
distributions are deferred, the accumulated distributions (including accrued
interest thereon) will be paid to holders of the Trust Convertible Preferred
Securities as they appear on the books and records of the Trust on the first
record date following the termination of the Extension Period.
Distributions on the Trust Convertible Preferred Securities must be paid on
the dates on which they are payable only to the extent that the Trust has
funds available for the payment of such distributions. The Trust's funds
available for distribution to the holders of the Trust Convertible Preferred
Securities will be limited to payments received from the Company on the
Convertible Debentures. See "Description of the Convertible Debentures". The
payment of distributions out of moneys held by the Trust will be guaranteed by
the Company to the extent set forth under "Description of the Guarantee".
Distributions on the Trust Convertible Preferred Securities will be payable
to the holders thereof as they appear on the books and records of the Trust on
the relevant record dates, which, as long as the Trust Convertible Preferred
Securities remain in book-entry only form, will be one Business Day (as
defined below) prior to the relevant payment dates. Such distributions will be
paid through the Institutional Trustee who will hold amounts received in
respect of the Convertible Debentures for the benefit of the holders of the
Trust Securities. Subject to any applicable laws and regulations and the
provisions of the Declaration and the Indenture, distributions may, at the
Company's option, be paid either (i) by check mailed to the address of the
person entitled thereto as it appears in the register or (ii) by transfer to
an account maintained by such person located in the United States; provided,
however, that payments to DTC will be made by wire transfer of immediately
available funds to the account of DTC or its nominee. See "Book-Entry System--
The Depository Trust Company". If the Trust Convertible Preferred Securities
do not continue to remain in book-entry only form, the Regular Trustees shall
have the right to select record dates, which shall conform to the rules of any
securities exchange or other organization on which the Trust Convertible
Preferred Securities are listed or quoted and shall be at least one
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Business Day prior to the relevant payment dates. If any date on which
distributions are payable on the Trust Convertible Preferred Securities is not
a Business Day, then payment of the distributions payable on such date will be
made on the next succeeding day that is a Business Day (and without any
interest or other payment in respect of any such delay), except that, if such
Business Day is in the next succeeding calendar year, such payment shall be
made on the immediately preceding Business Day, in each case with the same
force and effect as if made on such payment date. A "Business Day" means any
day other than a Saturday, Sunday, or any other day on which banking
institutions in New York City or Los Angeles, California are permitted or
required by any applicable law to close.
CONVERSION RIGHTS
General. The Trust Convertible Preferred Securities will be convertible at
any time beginning 90 days following the first date of issuance of any Trust
Convertible Preferred Securities and prior to the close of business on
September 1, 2026 (or, in the case of Trust Convertible Preferred Securities
called for redemption, prior to the close of business on the Business Day
prior to the date of redemption (the "Redemption Date")), at the option of the
holder thereof and in the manner described below, into shares of Common Stock
at an initial conversion ratio equal to that number of shares of Common Stock
determined by dividing the liquidation amount of $50 per security by the
conversion price. The initial conversion price will be equal to the product of
times the Market Value of a share of Common Stock and will be subject to
adjustment as described under "--Conversion Provision Adjustments-General,"
"--Conversion Provision Adjustments-Merger, Consolidation or Sale of Assets of
the Company," and "--Certain Other Conversion Provision Adjustments" below.
Prior to the earliest of the Distribution Date (as defined herein), the date
on which all Rights are redeemed, or January 29, 2000, whenever the Company
issues shares of the Common Stock upon conversion of the Trust Convertible
Preferred Securities, the Company will issue, together with each such share of
the Common Stock, one Right (as defined herein) entitling the holder thereof,
under certain circumstances, to purchase one one-hundredth of a share of the
Series A Preferred Stock (as defined herein) pursuant to, and upon the terms
of, the Rights Plan. See "Description of the Common Stock--Rights to Purchase
Series A Preferred Stock".
The terms of the Trust Convertible Preferred Securities provide that a
holder of Trust Convertible Preferred Securities wishing to exercise its
conversion right shall deliver an irrevocable conversion request (and, if such
Trust Convertible Preferred Securities are certificated, the Trust Convertible
Preferred Securities certificate(s), duly endorsed or assigned to the Trust in
blank) to the Institutional Trustee, as conversion agent (the "Conversion
Agent"), directing the Conversion Agent, on behalf of such holder, to exchange
such Trust Convertible Preferred Securities for a portion of the Convertible
Debentures and immediately convert such Convertible Debentures into Common
Stock. Holders may obtain copies of the required form of the conversion notice
from the Conversion Agent. So long as a book-entry system for the Trust
Convertible Preferred Securities is in effect, however, procedures for
converting the Trust Convertible Preferred Securities into shares of Common
Stock will differ, as described under "Book-Entry System--The Depository Trust
Company".
Accumulated distributions will not be paid in cash on the Trust Convertible
Preferred Securities that are converted nor will such accumulated
distributions be converted into additional shares of Common Stock, but such
accumulated distributions will be deemed to be paid in full and then returned
by the holder to the Company as partial consideration for the Common Stock
received on conversion. If any Trust Convertible Preferred Securities are
converted into shares of Common Stock during the period from (but excluding) a
record date to (and including) the next succeeding distribution payment date,
then either (i) if such Trust Convertible Preferred Securities have been
called for redemption on a redemption date which occurs during such period, or
are to be redeemed in connection with a Special Event which occurs during such
period, the Company shall not be required to pay a distribution on such
distribution payment date in respect of such Trust Convertible Preferred
Securities or (ii) if otherwise converted during such period, such Trust
Convertible Preferred Securities shall be accompanied by funds equal to the
distributions payable on such succeeding distribution payment date on the
liquidation amount so converted. The Company may not redeem any Trust
Convertible Preferred Securities unless all accumulated and unpaid
distributions have been paid on all outstanding Trust Convertible Preferred
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Securities for all quarterly distribution payment periods terminating on or
prior to the last distribution payment date before the date of redemption.
Since the Company is required to pay all accumulated and unpaid distributions,
other than for the current quarter, prior to redeeming the Trust Convertible
Preferred Securities, holders choosing to convert their Trust Convertible
Preferred Securities in order to avoid such redemption will, at most, forego
actual receipt of a cash distribution payment only for the current quarter.
The Company will make no payment or allowance for distributions on the shares
of Common Stock issued upon such conversion, except to the extent that such
shares of Common Stock are held of record on the record date for any such
distributions.
No fractional shares of Common Stock will be issued as a result of
conversion, but cash will be paid by the Company in lieu thereof based on the
market price of the Common Stock on the date such Trust Convertible Preferred
Securities are converted.
Conversion Provision Adjustments--General. The conversion price for the
Convertible Debentures (and thus the conversion price of the Trust Convertible
Preferred Securities) will be subject to adjustment in certain events,
including (a) the issuance of shares of Common Stock as a dividend or a
distribution with respect to the Common Stock, (b) subdivisions, combinations,
and reclassification of the Common Stock, (c) the issuance to all holders of
the Common Stock of certain rights or warrants entitling them to subscribe for
shares of Common Stock at less than the average of the closing prices of the
Common Stock during the ten trading days immediately prior to such issuance,
(d) the distribution to all holders of the Common Stock of capital stock
(other than the Common Stock), evidences of indebtedness of the Company,
assets or rights or warrants to subscribe for any of its securities (excluding
certain distributions described elsewhere in this paragraph), (e) the
distribution of cash to all holders of the Common Stock, excluding
distributions in connection with the liquidation, dissolution, or winding-up
of the Company, and excluding any quarterly cash dividend on the Common Stock
to the extent that the aggregate cash dividend per share of the Common Stock
in any quarter does not exceed the greater of (i) the amount per share of the
next preceding quarterly dividend on the Common Stock to the extent that such
preceding quarterly dividend did not require an adjustment of the conversion
price pursuant to this clause (e) (as adjusted to reflect subdivisions or
combinations of the Common Stock), and (ii) 3.75% of the average of the
closing prices of the Common Stock during the ten trading days immediately
prior to the declaration of such dividend, (f) payment in respect of a tender
or exchange offer by the Company or a subsidiary thereof for the Common Stock
(other than an odd-lot tender offer) at a price in excess of the closing price
of the Common Stock as of the trading day next succeeding the last date
tenders or exchanges thereunder may be made, and (g) payment in respect of a
tender or exchange offer by a person other than the Company or a subsidiary
thereof for the Common Stock at a price in excess of the closing price of the
Common Stock as of the trading day next succeeding the last date tenders or
exchanges thereunder may be made. The adjustment referred to in clause (g)
above will only be made if the Board is not recommending rejection of the
tender offer or exchange offer and if such offer is made for an amount that
increases the offeror's ownership of the Common Stock to more than 25% of the
total shares of Common Stock outstanding. The adjustment referred to in clause
(g) above will not be made, however, if as of the close of the offer, the
offering documents with respect to such offer disclose a plan or an intention
to cause the Company to engage in a consolidation or merger or a sale of all
or substantially all of the Company's assets.
In the event that the Rights are separated from the Common Stock in
accordance with the provisions of the Rights Plan such that the holders of
Trust Convertible Preferred Securities would thereafter not be entitled to
receive any such Rights in respect to the Common Stock issuable upon
conversion of such Trust Convertible Preferred Securities, the conversion
price of the Convertible Debentures (and thus the conversion price of the
Trust Convertible Preferred Securities) will be adjusted as provided in clause
(d) of the preceding paragraph (subject to readjustment in the event of the
expiration, termination, or redemption of the Rights). In lieu of any such
adjustment, the Company may amend the Rights Plan to provide that upon
conversion of the Trust Convertible Preferred Securities the holders thereof
will receive, in addition to the Common Stock issuable upon such conversion,
the Rights which would have attached to such shares of Common Stock if the
Rights had not become separated from the Common Stock pursuant to the
provisions of the Rights Plan. See "Description of the Common Stock--Rights to
Purchase Series A Preferred Stock".
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The Company from time to time may reduce the conversion price of the
Convertible Debentures (and thus the conversion price of the Trust Convertible
Preferred Securities) by any amount selected by the Company for any period of
at least 20 days, in which case the Company shall give at least 15 days'
notice of such reduction. The Company may make such reductions in the
conversion price, in addition to those set forth above, as the Board considers
advisable to avoid or diminish any income tax to holders of the Common Stock
resulting from any dividend or distribution of stock (or rights to acquire
stock) or from any event treated as such for income tax purposes. See "Certain
Federal Income Tax Considerations--Conversion Adjustment".
No adjustment of the conversion price will be made upon the issuance of any
shares of Common Stock pursuant to (a) any present or future plan providing
for the reinvestment of dividends or interest payable on securities of the
Company and the investment of optional amounts in shares of Common Stock under
any such plan, (b) the issuance of shares of Common Stock, or options or
rights to purchase such shares, pursuant to any present or future employee
benefit plan or program, or director plan or program, or (c) pursuant to any
option, warrant, right, or excercisable, exchangeable, or convertible security
outstanding as of the Expiration Date. No adjustment in the conversion price
will be required unless such adjustment would require a change of at least one
percent (1%) in the conversion price then in effect; provided, however, that
any adjustment that would not be required to be made shall be carried forward
and taken into account in determining whether any subsequent adjustment is
required. If any action would require adjustment of the conversion price
pursuant to more than one of the provisions described above, only one
adjustment shall be made and such adjustment shall be the amount of adjustment
that has the highest absolute value to the holder of the Convertible
Debentures (and therefore the Trust Convertible Preferred Securities).
In the event that the provisions described herein specifying the methods by
which the conversion price is adjusted, including those described in "--
Conversion Provision Adjustments--Merger, Consolidation or Sale of Assets of
the Company" and "--Certain Other Conversion Provision Adjustments," would
require a conversion price adjustment that is determined in good faith by the
Board to be inconsistent with the purposes of the provisions hereof providing
for conversion price adjustment (generally, to place the holders of the
Convertible Debentures and the Trust Convertible Preferred Securities in a
position equivalent to the position they were in prior to the event requiring
an adjustment to the conversion price), the Board may make an adjustment (in
lieu of that required pursuant to the above provisions) that it determines in
good faith to be consistent with such purposes, which determination shall be
described in a resolution of the Board, and that the Institutional Trustee
determines to be not adverse to the holders of the Convertible Debentures and
the Trust Convertible Preferred Securities.
Conversion Provision Adjustments--Merger, Consolidation or Sale of Assets of
the Company. If the Company is a party to (i) any recapitalization or
reclassification of shares of Common Stock (other than a change in par value
or a change resulting from a subdivision or combination), (ii) any
consolidation or merger of the Company (other than a merger that does not
result in a reclassification, conversion, exchange, or cancellation of the
Common Stock), (iii) any sale or transfer of all or substantially all of the
assets of the Company, (iv) any compulsory share exchange, or (v) any other
transaction, in any such case pursuant to which the Common Stock is converted
solely to the right to receive other securities, cash or other property, then
lawful provision shall be made so that the holder of each Convertible
Debenture (and thus, Trust Convertible Preferred Security) then outstanding
will have the right thereafter to convert such Convertible Debenture only
into:
(x) in the case of any such transaction that does not constitute a Common
Stock Fundamental Change (as defined below) and subject to funds being
legally available for such purpose under applicable law at the time of such
conversion, the kind and amount of the securities, cash and other property
that would have been receivable upon such recapitalization,
reclassification, consolidation, merger, sale, transfer, or share exchange
by a holder of the number of shares of Common Stock issuable upon
conversion of such Trust Convertible Preferred Security immediately prior
to such recapitalization, reclassification, consolidation, merger, sale,
transfer, or share exchange, after giving effect, in the case of any Non-
Stock Fundamental Change (as defined below), to any adjustment in the
conversion price in accordance with clause (i) of the following paragraph,
and
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<PAGE>
(y) in the case of any transaction that constitutes a Common Stock
Fundamental Change, common stock of the kind received by holders of the
Common Stock as a result of such Common Stock Fundamental Change in an
amount determined in accordance with clause (ii) of the following
paragraph.
The company formed by such consolidation, resulting from such merger or that
acquires such assets or the Company's shares, as the case may be, shall make
provisions in its certificate or articles of incorporation or other
constituent document to establish such right. Such certificate or articles of
incorporation or other constituent document shall provide for adjustments
that, for events subsequent to the effective date of such provision in such
certificate or articles of incorporation or other constituent documents, shall
be as nearly equivalent as may be practicable to the relevant adjustments
provided for in the preceding paragraphs and in this paragraph.
Notwithstanding any other provision in the preceding paragraphs to the
contrary, if any Fundamental Change (as defined below) occurs, then the
conversion price in effect will be adjusted immediately after such Fundamental
Change as follows:
(i) in the case of a Non-Stock Fundamental Change, the conversion price
of the Trust Convertible Preferred Securities immediately following such
Non-Stock Fundamental Change shall be the lower of (A) the conversion price
in effect immediately prior to such Non-Stock Fundamental Change (after
giving effect to any other prior adjustments effected pursuant to the
preceding paragraphs) and (B) the product of (1) the greater of the
Applicable Price (as defined below) and the then applicable Reference
Market Price (as defined below) and (2) a fraction, the numerator of which
is the liquidation amount of such Trust Convertible Preferred Security and
the denominator of which is (x) the amount of the redemption price for one
Trust Convertible Preferred Security if the redemption date were the date
of such Non-Stock Fundamental Change (or, for the period through September
1, 1997, the twelve-month periods commencing September 1, 1997 and
September 1, 1998 and the period from September 1, 1999 to September 3,
2000, the product of , , and , respectively, times $50) plus
(y) any then-accumulated and unpaid distributions on one Trust Convertible
Preferred Security; and
(ii) in the case of a Common Stock Fundamental Change, the conversion
price of the Trust Convertible Preferred Securities immediately following
such Common Stock Fundamental Change will be the conversion price in effect
immediately prior to such Common Stock Fundamental Change, but after giving
effect to any other prior adjustments effected pursuant to the preceding
paragraphs, multiplied by a fraction, the numerator of which is the
Purchaser Stock Price (as defined below) and the denominator of which is
the Applicable Price, provided, however, that in the event of a Common
Stock Fundamental Change in which (A) 100% of the value of the
consideration received by a holder of the Common Stock is common stock of
the successor, acquiror, or other third party (and cash, if any, paid with
respect to any fractional interests in such common stock resulting from
such Common Stock Fundamental Change) and (B) all of the Common Stock shall
have been exchanged for, converted into or acquired for, common stock of
the successor, acquiror, or other third party (and any cash with respect to
fractional interests), the conversion price of the Trust Convertible
Preferred Securities immediately following such Common Stock Fundamental
Change shall be the conversion price in effect immediately prior to such
Common Stock Fundamental Change divided by the number of shares of common
stock of the successor, acquiror, or other third party received by a holder
of one share of the Common Stock as a result of such Common Stock
Fundamental Change.
Depending upon whether a Fundamental Change is a Non-Stock Fundamental
Change or a Common Stock Fundamental Change, a holder may receive
significantly different consideration upon conversion. In the event of a Non-
Stock Fundamental Change, the holder will have the right to convert Trust
Convertible Preferred Securities into the kind and amount of the shares of
stock and other securities or property or assets (including cash), except as
otherwise provided above, as is determined by the number of shares of Common
Stock receivable upon conversion at the conversion price as adjusted in
accordance with clause (i) of the preceding paragraph. However, in the event
of a Common Stock Fundamental Change in which less than 100% of the value of
the consideration received by a holder of the Common Stock is common stock of
the successor, acquiror or other third party, a holder of a Trust Convertible
Preferred Security who converts such security following the Common Stock
Fundamental Change will receive consideration in the form of such common stock
only, whereas
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<PAGE>
a holder who converted such security prior to the Common Stock Fundamental
Change would have received consideration in the form of such common stock as
well as any other securities or assets (which may include cash) issuable upon
conversion of such Trust Convertible Preferred Security immediately prior to
such Common Stock Fundamental Change.
For purposes of the "Description of the Trust Convertible Preferred
Securities," the following terms shall have the designated meanings:
The term "Applicable Price" means (i) in the event of a Non-Stock
Fundamental Change in which the holders of the Common Stock receive only cash,
the amount of cash received by a holder of one share of the Common Stock and
(ii) in the event of any other Fundamental Change, the average of the daily
closing price for one share of the Common Stock during the 10 trading days
immediately prior to the record date for the determination of the holders of
the Common Stock entitled to receive cash, securities, property or other
assets in connection with such Fundamental Change or, if there is no such
record date, prior to the date upon which the holders of the Common Stock
shall have the right to receive such cash, securities, property or other
assets.
The term "Common Stock Fundamental Change" means any Fundamental Change in
which more than 50% of the value (as determined in good faith by the Board) of
the consideration received by holders of the Common Stock consists of common
stock that, for the 10 trading days immediately prior to such Fundamental
Change, has been admitted for listing or admitted for listing subject to
notice of issuance on a national securities exchange or quoted on The Nasdaq
National Market; provided, however, that a Fundamental Change shall not be a
Common Stock Fundamental Change unless either (i) the Company continues to
exist after the occurrence of such Fundamental Change and the outstanding
Trust Convertible Preferred Securities continue to exist as outstanding Trust
Convertible Preferred Securities, or (ii) not later than the occurrence of
such Fundamental Change, the outstanding Trust Convertible Preferred
Securities are converted into or exchanged for shares of convertible preferred
stock or debentures of a corporation succeeding to the business of the
Company, which convertible preferred stock has powers, preferences and
relative, participating, optional or other rights, and qualifications,
limitations, and restrictions substantially similar to those of the Trust
Convertible Preferred Securities and which debentures have terms substantially
similar to those of the Convertible Debentures.
The term "Fundamental Change" means the occurrence of any transaction or
event or series of transactions or events pursuant to which all or
substantially all of the Common Stock is exchanged for, converted into,
acquired for or constitutes solely the right to receive cash, securities,
property, or other assets (whether by means of an exchange offer, liquidation,
tender offer, consolidation, merger, combination, reclassification,
recapitalization, or otherwise); provided, however, in the case of any such
series of transactions or events, for purposes of adjustment of the conversion
price, a Fundamental Change shall be deemed to have occurred when
substantially all of the Common Stock shall have been exchanged for, converted
into or acquired for, or shall constitute solely the right to receive, such
cash, securities, property or other assets, but the adjustment shall be based
upon the consideration that the holders of the Common Stock received in the
transaction or event as a result of which more than 50% of the Common Stock
shall have been exchanged for, converted into or acquired for, or shall
constitute solely the right to receive, such cash, securities, property or
other assets.
The term "Non-Stock Fundamental Change" means any Fundamental Change other
than a Common Stock Fundamental Change.
The term "Purchaser Stock Price" means, with respect to any Common Stock
Fundamental Change, the average of the daily closing price for one share of
the common stock received by holders of the Common Stock in such Common Stock
Fundamental Change during the 10 trading days immediately prior to the date
fixed for the determination of the holders of the Common Stock entitled to
receive such common stock or, if there is no such date, prior to the date upon
which the holders of the Common Stock shall have the right to receive such
common stock.
The term "Reference Market Price" shall initially mean 66 2/3% of the Market
Value of the Common Stock and, in the event of any adjustment to the
conversion price other than as a result of a Fundamental Change, the Reference
Market Price shall also be adjusted so that the ratio of the Reference Market
Price to the conversion
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<PAGE>
price after giving effect to any such adjustment shall always be the same as
the ratio of the initial Reference Market Price to the initial conversion
price.
Certain Other Conversion Provision Adjustments. Notwithstanding any other
provision in the preceding paragraphs to the contrary, in the event that the
Company shall distribute, by dividend or otherwise (the date of which is
hereinafter referred to as the "Spinoff Distribution Date") to all holders of
the Common Stock shares of capital stock ("Spinoff Company Stock") of any
subsidiary of the Company or any other corporation controlled by the Company
and formed for the purpose of facilitating the transaction described in this
paragraph (the "Spinoff Company") (such transaction, a "Spinoff"), then at the
option of the Company (within the limits specified below), the Company will:
(1) exchange all, but not less than all, of the Trust Convertible Preferred
Securities for a new trust convertible preferred security ("Spinoff
Company Trust Convertible Preferred Security") of the Spinoff Company
Trust (as defined below) having the same liquidation amount,
distribution rate, redemption provisions, and conversion provisions of
the Trust Convertible Preferred Securities and other terms
substantially similar to those of the Trust Convertible Preferred
Securities except that (i) upon conversion the Spinoff Company Trust
Convertible Preferred Securities will convert into Spinoff Company
Stock, (ii) the conversion price immediately following such Spinoff
will equal the product of (A) the conversion price in effect
immediately prior to such Spinoff and (B) a fraction, the numerator of
which is the Spinoff Fair Value (as defined below) and the denominator
of which is the Average Stock Price (as defined below) (such fraction
referred to as the "Spinoff Ratio") and (iii) the Reference Market
Price with respect to the Spinoff Trust Convertible Preferred
Securities shall equal the Reference Market Price with respect to the
Trust Convertible Preferred Securities multiplied by the Spinoff Ratio;
or
(2) either (a) exchange all, but not less than all, of the Trust
Convertible Preferred Securities for
(i) a new trust convertible preferred security ("Spinoff Company Trust
Convertible Preferred Security") of the Spinoff Company Trust (as
defined below) having the same distribution rate, redemption
provisions, and conversion provisions of the Trust Convertible
Preferred Securities and other terms substantially similar to
those of the Trust Convertible Preferred Securities except that
(A) upon conversion the Spinoff Company Trust Convertible
Preferred Securities will convert into Spinoff Company Stock, (B)
the liquidation amount of each Spinoff Trust Convertible Preferred
Security shall be equal to the product of (x) the liquidation
amount of a Trust Convertible Preferred Security and (y) the
Spinoff Ratio, (C) the conversion price immediately following such
Spinoff will equal the product of (I) the conversion price in
effect immediately prior to such Spinoff and (II) the Spinoff
Ratio, and (D) the Reference Market Price with respect to the
Spinoff Trust Convertible Preferred Securities shall equal the
Reference Market Price with respect to the Trust Convertible
Preferred Securities multiplied by the Spinoff Ratio; and
(ii) a new trust convertible preferred security ("New Trust
Convertible Preferred Security") of the Company having the same
distribution rate, redemption provisions, and conversion
provisions of the Trust Convertible Preferred Securities and
other terms substantially similar to those of the Trust
Convertible Preferred Securities except that (A) the liquidation
amount of each New Trust Convertible Preferred Security shall be
equal to the product of (x) the liquidation amount of a Trust
Convertible Preferred Security and (y) one minus the Spinoff
Ratio, (B) the conversion price immediately following such
Spinoff will equal the product of (I) the conversion price in
effect immediately prior to such Spinoff and (II) one minus the
Spinoff Ratio, and (C) the Reference Market Price with respect to
the New Trust Convertible Preferred Security shall equal the
Reference Market Price with respect to the Trust Convertible
Preferred Securities multiplied by one minus the Spinoff Ratio;
or
(b) in lieu of the exchange contemplated in (a) above, distribute a
Spinoff Company Trust Convertible Preferred Security as provided
for in (a)(i) and adjust the terms of the existing Trust
Convertible Preferred Security as provided for in subsection (A),
(B) and (C) of Section (a)(ii); or
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<PAGE>
(3) adjust the conversion price by multiplying the conversion price of the
Trust Convertible Preferred Securities prior to the Spinoff by a
fraction, the numerator of which is the Average Stock Price less the
Spinoff Fair Value, and the denominator of which is such Average Stock
Price;
provided, that:
(x) the Company will have the option described in clause (1) only if the
Spinoff Company will own more than 40% of the consolidated net assets
of the Company as of the day immediately prior to the Spinoff
Distribution Date, as determined in good faith by the Board prior to
the Spinoff Distribution Date;
(y) the Company will have the options described in clauses (1) and (2) only
if the effective date of the Spinoff is before September 1, 2023 and
the Company and the Regular Trustees have received an opinion of an
independent tax counsel experienced in such matters to the effect that
the holders of the Trust Convertible Preferred Securities will not be
subject, at the time of such transaction or subsequently, to more than
a de minimus amount of taxes, duties or other governmental charges in
connection with the transaction described therein; and
(z) the Company will have the option described in clause (2) only if the
Spinoff Company will own more than 20% of the consolidated net assets
of the Company as of the day immediately prior to the Spinoff
Distribution Date, as determined in good faith by the Board prior to
the Spinoff Distribution Date.
In order to effect the exchange described in clauses (1) or (2) above:
(i)no less than 20 business days prior to the date on which an exchange
of the Trust Convertible Preferred Securities or a distribution and
adjustment as contemplated by 2(b) above has been completed (the
"Spinoff Exchange Date"), the Company must provide notice to the
registered holders of the Trust Convertible Preferred Securities of the
Spinoff Exchange Date and the kind and amount of the securities into
which such Trust Convertible Preferred Securities will be exchanged as a
result of the Spinoff;
(ii)the Company shall make provision, as part of the Spinoff, to
establish the right of the holders of the Trust Convertible Preferred
Securities to the securities to be issued in such exchange or a
distribution and adjustment as contemplated by 2(b) above, including,
but not limited to, causing the Spinoff Company to create a trust
similar to the Trust (the "Spinoff Company Trust") for the purpose of
issuing the Spinoff Company Trust Convertible Preferred Securities;
(iii)following the Spinoff Exchange Date, the holders shall have the
benefit of guarantees with terms substantially similar to that of the
Guarantee, (a) from Spinoff Company as guarantor, with respect to the
Spinoff Company Trust Convertible Preferred Securities, and (b) from the
Company as guarantor, with respect to New Trust Convertible Preferred
Securities;
(iv)following the Spinoff Exchange Date, except in the case of 2(b)
above, the rights of holders of Trust Convertible Preferred Securities
(including, but not limited to, the right to accrue or accumulate
dividends) shall cease, and the Trust Convertible Preferred Securities
will no longer be deemed to be outstanding and will only represent the
right to receive the securities to be issued to the holders of Trust
Convertible Preferred Securities in exchange therefor pursuant to the
Spinoff; and
(v)following the Spinoff Exchange Date, the holders of record of the
Trust Convertible Preferred Securities will be considered the holders of
record of any Spinoff Company Trust Convertible Preferred Securities and
New Trust Convertible Preferred Securities (or in the case of 2(b)
above, the Trust Convertible Preferred Securities) for the purposes of
the governing instruments with respect to such securities, including,
but not limited to, any indenture, declaration or certificate of
designations and the Declaration and the Indenture, including for the
purposes of giving of notice or voting thereunder.
Whether, after the Spinoff, the Spinoff Company Trust Convertible Preferred
Securities or the New Trust Convertible Preferred Securities have terms
substantially equivalent to the Trust Convertible Preferred Securities prior
to the Spinoff will be determined in good faith by the Board (or its
successor).
"Average Stock Price" shall mean the average of the closing prices of the
Common Stock during the 10 trading days immediately prior to the "ex" dividend
or distribution date of the Common Stock, or absent such a date, the 10
trading days immediately prior to the Spinoff Distribution Date; provided,
however, that if the Spinoff Fair Value is computed with respect to daily
closing prices of Spinoff Company Stock following the Spinoff, the Average
Stock Price for the Common Stock shall be calculated as the average of the
sums of the
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<PAGE>
daily closing prices of the Common Stock and the Spinoff Company Stock over
such same 10 day trading day period.
"Spinoff Fair Value" shall mean the product of (a) the average daily closing
price for one share of Spinoff Company Stock as reported on a "when issued"
basis for the ten trading days immediately prior to the Spinoff Distribution
Date or in the absence of "when issued" trading, for the ten trading days
immediately following the Spinoff Distribution Date, multiplied by (b) the
number of shares of Spinoff Company Stock distributed to a holder of one share
of Common Stock in the Spinoff; provided, however, in the absence of an active
trading market for the Spinoff Company Stock, the fair value of the shares of
Spinoff Company Stock distributed to a holder of one share of Common Stock in
the Spinoff shall be determined by the Board in good faith.
In the event of a Spinoff, the provisions set forth in this section under
"--Certain Other Conversion Provision Adjustments" above shall exclusively
govern such transaction, and no other adjustment or change shall be made with
respect to the conversion price or the securities to be received by a holder
of Trust Convertible Preferred Securities upon conversion due solely to such
Spinoff. The implementation of any of the provisions set forth above shall not
require the approval of holders of Trust Securities.
MANDATORY REDEMPTION
Upon the repayment of the Convertible Debentures, whether at maturity or
upon redemption, the proceeds from such repayment must immediately be applied
to redeem Trust Securities having an aggregate liquidation amount equal to the
aggregate principal amount of the Convertible Debentures so repaid. The
Convertible Debentures will mature on September 1, 2026, and may be redeemed,
in whole or in part, at the option of the Company, at any time on or after
September 3, 2000, or at any time in certain circumstances upon the occurrence
of a Special Event (as defined below). Holders of Trust Securities must be
given not less than 30 nor more than 60 days notice of any such redemption.
The Company will issue a press release announcing any such redemption. See "--
Special Event Distribution or Redemption" and "Description of the Convertible
Debentures--Redemption at the Option of the Company".
In the event the Company redeems less than all of the Convertible Debentures
and, therefore, less than all of the outstanding Trust Convertible Preferred
Securities are to be redeemed, the Trust Convertible Preferred Securities will
be redeemed pro rata, which means that so long as the Trust Convertible
Preferred Securities are in book-entry form the redemption proceeds will be
distributed in accordance with the procedures of the Depository (as defined
herein). See "Book-Entry System--The Depository Trust Company". The Company
may not redeem any Convertible Debentures (and therefore cause a mandatory
redemption of Trust Convertible Preferred Securities) unless all accumulated
and unpaid distributions have been paid on all outstanding Trust Convertible
Preferred Securities for all quarterly distribution payment periods
terminating on or prior to the last distribution payment date before the date
of redemption. Any redemption of Trust Convertible Preferred Securities, other
than upon the occurrence of a Special Event, will be made at the following
prices (expressed as percentages of the principal amount of the Convertible
Debentures) (each, a "Redemption Price") together with accrued and unpaid
interest to, but excluding the redemption date, if redeemed during the 12-
month period beginning September 1 (other than the first period, which will
begin on September 3, 2000):
<TABLE>
<CAPTION>
REDEMPTION
YEAR PRICE
---- ----------
<S> <C>
2000.............................................................. %
2001.............................................................. %
2002.............................................................. %
2003.............................................................. %
2004.............................................................. %
2005.............................................................. %
and 100% if redeemed on or after September 1, 2006.
</TABLE>
SPECIAL EVENT DISTRIBUTION OR REDEMPTION
"Tax Event" means that the Regular Trustees shall have received an opinion
of an independent tax counsel experienced in such matters (a "Dissolution Tax
Opinion") to the effect that on or after the date of the Prospectus, as a
result of (a) any amendment to, clarification of, or change (including any
announced prospective change) in the laws, or any regulations thereunder, of
the United States or any political subdivision or taxing
39
<PAGE>
authority thereof or therein, (b) any judicial decision, official
administrative pronouncement, ruling, regulatory procedure, notice, or
announcement, including any notice or announcement of intent to adopt such
procedures or regulations (an "Administrative Action"), or (c) any amendment
to, clarification of, or change in the official position or the interpretation
of such Administrative Action or judicial decision that differs from the
theretofore generally accepted position, in each case, by any legislative
body, court, governmental authority, or regulatory body, irrespective of the
manner in which such amendment, clarification or change is made known, which
amendment, clarification, or change is effective or such pronouncement or
decision is announced, in each case, on or after, the date of this Prospectus,
there is the creation by such change in tax law of more than an insubstantial
risk that (i) the Trust is or will be subject to United States federal income
tax with respect to income accrued or received on the Convertible Debentures,
(ii) the Trust is, or will be subject to more than a de minimis amount of
taxes, duties or other governmental charges, or (iii) interest paid in cash by
the Company to the Trust on the Convertible Debentures (other than interest
attributable to the Trust Common Securities) is not, or will not be,
deductible, in whole or in part, by the Company for United States federal
income tax purposes. Notwithstanding the foregoing, a Tax Event shall not
include any change in tax law that requires the Company for United States
federal income tax purposes to defer taking a deduction for any OID that
accrues with respect to the Convertible Debentures until the interest payment
related to such OID is paid by the Company in cash; provided that such change
in tax law does not create more than an insubstantial risk that the Company
will be prevented from taking a deduction for OID accruing with respect to the
Convertible Debentures at a date that is no later than the date the interest
payment related to such OID is actually paid by the Company in cash.
"Investment Company Event" means that the Regular Trustees shall have
received an opinion of an independent counsel experienced in such matters (a
"Change in 1940 Act Opinion") to the effect that, as a result of the
occurrence of a change in law or regulation or a written change in
interpretation or application of law or regulation by any legislative body,
court, governmental agency, or regulatory authority on or after the date of
this Prospectus, there is more than an insubstantial risk that the Trust is or
will be considered an "investment company" which is required to be registered
under the Investment Company Act of 1940, as amended (the "1940 Act").
If, at any time, a Tax Event or an Investment Company Event (each, a
"Special Event") shall occur and be continuing, the Trust may with the consent
of the Company, except in the limited circumstances described below, be
dissolved with the result that Convertible Debentures with an aggregate
principal amount equal to the aggregate liquidation amount of, with an
interest rate identical to the distribution rate of, and accrued and unpaid
interest equal to accumulated and unpaid distributions on, the Trust
Securities, would be distributed to the holders of the Trust Securities in
liquidation of such holders' interests in the Trust on a pro rata basis within
90 days following the occurrence of the Special Event; provided that such
dissolution and distribution shall be conditioned on (i) the Regular Trustees'
receipt of an opinion of an independent tax counsel experienced in such
matters (a "No Recognition Opinion"), which opinion may rely on published
revenue rulings of the Internal Revenue Service ("IRS"), to the effect that
the holders of the Trust Securities will not recognize any gain or loss for
United States federal income tax purposes as a result of such dissolution and
distribution of Convertible Debentures, (ii) the Company or the Trust being
unable to avoid such Tax Event within such 90-day period by taking some
ministerial action or pursuing some other reasonable measure that will have no
adverse effect on the Trust, the Company or the holders of the Trust
Securities and (iii) the Company's prior written consent to such dissolution
and distribution. If the Company declines to consent to the dissolution and
distribution, the Company may incur an obligation to pay Additional Interest.
See "Description of the Convertible Debentures--Additional Interest".
Furthermore, if (i) after receipt of a Dissolution Tax Opinion by the Regular
Trustees the Company has received an opinion (a "Redemption Tax Opinion") of
an independent tax counsel experienced in such matters that, as a result of a
Tax Event, there is more that an insubstantial risk that the Company would be
precluded from deducting the interest on the Convertible Debentures for United
States federal income tax purposes, even after the Convertible Debentures were
distributed to the holders of Trust Securities in liquidation of such holders'
interests in the Trust as described above, or (ii) after receipt of a
Dissolution Tax Opinion or a Change in 1940 Act Opinion by the Regular
Trustees, such Regular Trustees shall have been informed by independent tax
counsel experienced in such matters that it cannot deliver a No Recognition
Opinion to the Trust,
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<PAGE>
the Company shall have the right, upon not less than 30 nor more than 60 days
notice, to redeem the Convertible Debentures, in whole or in part, at 100% of
the principal amount thereof, plus accrued and unpaid interest thereon, for
cash within 90 days following the occurrence of such Special Event. Following
such redemption, Trust Securities with an aggregate liquidation amount equal
to the aggregate principal amount of the Convertible Debentures so redeemed
shall be redeemed by the Trust at the liquidation amount thereof plus accrued
and unpaid distributions thereon to, but excluding the redemption date on a
pro rata basis; provided, however, that if at the time there is available to
the Company or the Trust the opportunity to eliminate, within such 90-day
period, such Special Event if it is a Tax Event by taking some ministerial
action, such as filing a form or making an election or pursuing some other
similar reasonable measure that has no adverse effect on the Trust, the
Company or the holders of the Trust Securities, the Company or the Trust will
pursue such measure in lieu of redemption.
After the date for any distribution of Convertible Debentures upon
dissolution of the Trust, (i) the Trust Convertible Preferred Securities will
no longer be deemed to be outstanding, (ii) the Depository (as defined herein)
or its nominee, as the record holder of the Trust Convertible Preferred
Securities, will receive a registered global certificate or certificates
representing the Convertible Debentures to be delivered upon such
distribution, and (iii) any certificate representing Trust Convertible
Preferred Securities not held by the Depository or its nominee will be deemed
to represent Convertible Debentures having an aggregate principal amount equal
to the aggregate liquidation amount of, with an interest rate identical to the
distribution rate of, and accrued and unpaid interest (including Compound
Interest) equal to accumulated and unpaid distributions on such Trust
Convertible Preferred Securities until such certificates are presented to the
Company or its agent for transfer or reissuance.
REDEMPTION PROCEDURES FOR REDEMPTION BY THE TRUST
The Trust may not redeem any of the outstanding Trust Convertible Preferred
Securities unless all accumulated and unpaid distributions have been paid on
all outstanding Trust Convertible Preferred Securities for all quarterly
distribution periods terminating on or prior to the last distribution payment
date before the date of redemption.
If the Trust gives a notice of redemption in respect of Trust Convertible
Preferred Securities, then, by 12:00 noon, New York City time, on the
redemption date, provided that the Company has paid to the Institutional
Trustee funds sufficient to pay the applicable Redemption Price, the
Institutional Trustee will irrevocably deposit with the Depositary funds
sufficient to pay the applicable Redemption Price, plus accumulated and unpaid
distributions thereon, and will give the Depository irrevocable instructions
and authority to pay the Redemption Price to the holders of the Trust
Convertible Preferred Securities. See "Book-Entry System--The Depository Trust
Company". If notice of redemption shall have been given and funds deposited as
required, then, immediately prior to the close of business on the date of such
deposit, distributions will cease to accrue and all rights of holders of such
Trust Convertible Preferred Securities so called for redemption will cease,
except the right of the holders of such Trust Convertible Preferred Securities
to receive the Redemption Price, plus accumulated and unpaid distributions
thereon, but without further accrued interest on such Redemption Price. The
distributions payable upon redemption (unless the date of redemption is a
distribution payment date) will be payable to the person to whom the
Redemption Price is payable. In the event that any date fixed for redemption
of Trust Convertible Preferred Securities is not a Business Day, then payment
of the Redemption Price payable on such date will be made on the next
succeeding day that is a Business Day (without any interest or other payments
in respect of any such delay) except that, if such Business Day falls in the
next calendar year, such payment will be made on the immediately preceding
Business Day. In the event that payment of the Redemption Price in respect of
Trust Convertible Preferred Securities is improperly withheld or refused and
not paid either by the Institutional Trustee, or, if paid to the Trust, by the
Company pursuant to the Guarantee, distributions on such Trust Convertible
Preferred Securities will continue to accumulate at the distribution rate from
the original redemption date to the actual date of payment, in which case the
actual payment date will be considered the date fixed for redemption for
purposes of calculating the Redemption Price.
In the event that fewer than all of the outstanding Trust Securities are to
be redeemed, the Trust Securities will be redeemed pro rata. So long as the
Trust Convertible Securities are in book-entry form, the distribution of
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<PAGE>
proceeds will be made in accordance with the procedures applied by the
Depository. See "Book-Entry System--The Depository Trust Company".
Subject to the foregoing and applicable law (including, without limitation,
United States federal securities laws), the Company or any of its subsidiaries
may at any time, and from time to time, purchase outstanding Trust Convertible
Preferred Securities by tender, in the open market or otherwise.
LIQUIDATION DISTRIBUTION UPON DISSOLUTION
In the event of any voluntary or involuntary, dissolution, winding-up or
termination of the Trust (each a "Liquidation"), the then holders of the Trust
Convertible Preferred Securities will be entitled to receive out of the assets
of the Trust, after satisfaction of liabilities to creditors, distributions in
an amount equal to the aggregate of the liquidation amount per Trust
Convertible Preferred Security, plus accumulated and unpaid distributions
thereon to the date of payment (the "Liquidation Distribution"), unless, in
connection with such Liquidation, Convertible Debentures in an aggregate
principal amount equal to the aggregate liquidation amount of, with an
interest rate identical to the distribution rate of, and accrued and unpaid
interest equal to accumulated and unpaid distributions on, the Trust
Convertible Preferred Securities have been distributed on a pro rata basis to
the holders of the Trust Securities.
If, upon any such Liquidation, the Liquidation Distribution can be paid only
in part because the Trust has insufficient assets available to pay in full the
aggregate Liquidation Distribution for all Trust Securities, then the amounts
payable directly by the Trust on the Trust Securities shall be paid on a pro
rata basis. The holders of the Trust Common Securities will be entitled to
receive distributions upon any such dissolution pro rata with the holders of
the Trust Convertible Preferred Securities, except that if a Declaration Event
of Default has occurred and is continuing, the Trust Convertible Preferred
Securities shall have a preference over the Trust Common Securities with
regard to such distributions.
Pursuant to the Declaration, the Trust shall terminate (i) on July 17, 2031,
the expiration of the term of the Trust, (ii) upon the bankruptcy of the
Company as the holder of the Trust Common Securities, (iii) upon the filing of
a certificate of dissolution or its equivalent with respect to the Company as
the holder of the Trust Common Securities, the filing of a certificate of
cancellation with respect to the Trust after obtaining the consent of the
holders of at least a majority in liquidation amount of the Trust Securities
voting together as a single class to file such certificate of cancellation, or
the revocation of the charter of the Company as the holder of the Trust Common
Securities and the expiration of 90 days after the date of revocation without
a reinstatement thereof, (iv) upon the distribution of Convertible Debentures
upon the occurrence of a Special Event, (v) upon the entry of a decree of a
judicial dissolution of the holder of the Trust Common Securities or the
Trust, (vi) upon the redemption of all the Trust Securities, or (vii) upon the
distribution of the Common Stock to all holders of Trust Convertible Preferred
Securities upon conversion of all outstanding Trust Convertible Preferred
Securities.
DECLARATION EVENTS OF DEFAULT
An event of default under the Indenture (an "Indenture Event of Default")
constitutes an event of default under the Declaration with respect to the
Trust Securities (a "Declaration Event of Default"). See "Description of
Convertible Debentures--Indenture Events of Default".
Upon the occurrence and continuance of a Declaration Event of Default, the
Institutional Trustee as the sole holder of the Convertible Debentures will
have the right under the Indenture to declare the principal amount of the
Convertible Debentures to be immediately due and payable. The Company and the
Trust are each required to file annually with the Institutional Trustee an
officer's certificate as to its compliance with all conditions and covenants
under the Declaration.
If the Institutional Trustee fails to enforce its rights under the
Convertible Debentures, any holder of Trust Convertible Preferred Securities
may institute a legal proceeding against the Company to enforce the
Institutional
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Trustee's rights under the Convertible Debentures. Notwithstanding the
foregoing, if a Declaration Event of Default has occurred and is continuing
and such event is attributable to the failure of the Company to pay interest
or principal on the Convertible Debentures on the date such interest or
principal is otherwise payable (or in the case of redemption, the redemption
date), then the registered holder of Trust Convertible Preferred Securities
may institute a Direct Action for payment on or after the respective due date
specified in the Convertible Debentures. In connection with such Direct
Action, the Company will be subrogated to the rights of such holder of Trust
Convertible Preferred Securities under the Declaration to the extent of any
payment made by the Company to such holder of Trust Convertible Preferred
Securities in such Direct Action. The holders of Trust Convertible Preferred
Securities will not be able to exercise directly any other remedy available to
the holders of the Convertible Debentures.
Pursuant to the Declaration, the holder of the Trust Common Securities will
be deemed to have waived any Declaration Event of Default with respect to the
Trust Common Securities until all Declaration Events of Default with respect
to the Trust Convertible Preferred Securities have been cured, waived or
otherwise eliminated. Until such Declaration Events of Default with respect to
the Trust Convertible Preferred Securities have been so cured, waived, or
otherwise eliminated, the Institutional Trustee will be deemed to acting
solely on behalf of the holders of the Trust Convertible Preferred Securities
and only the holders of the Trust Convertible Preferred Securities will have
the right to direct the Institutional Trustee with respect to certain matters
under the Declaration, and therefore the Indenture.
VOTING RIGHTS
Except as described herein, under the Delaware Trust Act, the Trust
Indenture Act and under "Description of the Guarantee--Modification of the
Guarantee; Assignment", and as otherwise required by law and the Declaration,
the holders of the Trust Convertible Preferred Securities will have no voting
rights.
Subject to the requirement of the Institutional Trustee obtaining a tax
opinion as set forth in the last sentence of the next paragraph, the holders
of a majority in aggregate liquidation amount of the Trust Convertible
Preferred Securities have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Institutional
Trustee, or direct the exercise of any trust or power conferred upon the
Institutional Trustee under the Declaration, including the right to direct the
Institutional Trustee, as holder of the Convertible Debentures, to (i)
exercise the remedies available under the Indenture with respect to the
Convertible Debentures, (ii) waive any past Indenture Event of Default that is
waivable under the Indenture, or (iii) exercise any right to rescind or annul
a declaration that the principal of all the Convertible Debentures shall be
due and payable; provided, however, that if an Indenture Event of Default has
occurred and is continuing then, the holders of 25% of the aggregate
liquidation amount of the Trust Convertible Preferred Securities may direct
the Institutional Trustee to declare the principal of and interest on the
Convertible Debentures immediately due and payable; provided, further, that,
where a consent or action under the Indenture would require the consent or act
of holders of more than a majority in principal amount of the Convertible
Debentures (a "Super Majority"), only the holders of at least such Super
Majority in aggregate liquidation amount of the Trust Convertible Preferred
Securities may direct the Institutional Trustee to give such consent or take
such action.
The Institutional Trustee shall notify all holders of the Trust Convertible
Preferred Securities of any notice of default received from the Debenture
Trustee with respect to the Convertible Debentures. Such notice shall state
that such Indenture Event of Default also constitutes a Declaration Event of
Default. Except with respect to the directing the time, method and place of
conducting a proceeding for a remedy, the Institutional Trustee shall not take
any of the actions described in clauses (i), (ii) or (iii) above unless the
Institutional Trustee has obtained an opinion of tax counsel to the effect
that, as a result of such action, the Trust will not be classified as other
than a grantor trust for United States federal income tax purposes.
In the event the consent of the Institutional Trustee, as the holder of the
Convertible Debentures, is required under the Indenture with respect to any
amendment, modification or termination of the Indenture or the
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Convertible Debentures, the Institutional Trustee shall request the direction
of the holders of the Trust Securities with respect to such amendment,
modification or termination and shall vote with respect to such amendment,
modification or termination as directed by a majority in liquidation amount of
the Trust Securities voting together as a single class; provided, however,
that where a consent under the Indenture would require the consent of a Super
Majority, the Institutional Trustee may only give such consent at the
direction of the holders of at least the same Super Majority percentage in
liquidation amount of the Trust Securities as is required under the Indenture
of aggregate principal amount of the Convertible Debentures outstanding. The
Institutional Trustee shall not take any such action in accordance with the
direction of the holders of the Trust Securities unless the Institutional
Trustee has obtained an opinion of tax counsel to the effect that for the
purposes of United States federal income take the Trust will not be classified
as other than a grantor trust on account of such action.
A waiver of an Indenture Event of Default will constitute a waiver of the
corresponding Declaration Event of Default.
Any approval or direction of holders of Trust Convertible Preferred
Securities may be given at a separate meeting of holders of Trust Convertible
Preferred Securities convened for such purpose, at a meeting of all of the
holders of Trust Securities or pursuant to written consent. The Regular
Trustees will cause a notice of any meeting at which holders of Trust
Convertible Preferred Securities are entitled to vote, or of any matter upon
which action by written consent of such holders is to be taken, to be mailed
to each holder of record of Trust Convertible Preferred Securities. Each such
notice will include a statement setting forth the following information: (i)
the date of such meeting or the date by which such action is to be taken; (ii)
a description of any resolution proposed for adoption at such meeting on which
such holders are entitled to vote or of such matter upon which written consent
is sought; and (iii) instructions for the delivery of proxies or consents. No
vote or consent of the holders of Trust Convertible Preferred Securities will
be required for the Trust to redeem and cancel Trust Convertible Preferred
Securities, distribute Convertible Debentures, or make adjustments to the
conversion price or to the kind and amount of the securities, cash and other
property into which the Convertible Debentures are convertible, each in
accordance with the Declaration.
Notwithstanding that holders of Trust Convertible Preferred Securities are
entitled to vote or consent under any of the circumstances described above,
any of the Trust Convertible Preferred Securities that are owned at such time
by the Company or any entity directly or indirectly controlling or controlled
by, or under direct or indirect common control with, the Company, shall not be
entitled to vote or consent and shall, for purposes of such vote or consent,
be treated as if such Trust Convertible Preferred Securities were not
outstanding.
The procedures by which holders of Trust Convertible Preferred Securities
may exercise their voting rights are described below. See "--Book-Entry Only
Issuances" and "Book-Entry System--The Depository Trust Company".
Holders of the Trust Convertible Preferred Securities will have no rights to
appoint or remove the Trustees, who may be appointed, removed or replaced
solely by the Company as the indirect or direct holder of all of the Trust
Common Securities.
MODIFICATION OF THE DECLARATION
The Declaration may be modified and amended if approved by the Regular
Trustees (and in certain circumstances the Institutional Trustee), provided
that, if any proposed amendment provides for, or the Regular Trustees
otherwise propose to effect, (i) any action that would adversely affect the
powers, preferences or special rights of the Trust Securities, whether by way
of amendment to the Declaration or otherwise or (ii) the dissolution, winding-
up or termination of the Trust, then the holders of the Trust Securities
voting together as a single class will be entitled to vote on such amendment
or proposal and such amendment or proposal shall not be effective except with
the approval of at least a majority in liquidation amount of the Trust
Securities affected thereby; provided that if any amendment or proposal
referred to in clause (i) above would adversely affect only the Trust
Convertible Preferred Securities or only the Trust Common Securities, then
only the affected class will
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be entitled to vote on such amendment or proposal and such amendment or
proposal shall not be effective except with the approval of a majority in
liquidation amount of such class of Trust Securities.
Notwithstanding the foregoing, no amendment or modification may be made to
the Declaration if such amendment or modification would (i) cause the Trust to
be classified for purposes of United States federal income taxation as other
than a grantor trust, (ii) reduce or otherwise adversely affect the powers of
the Institutional Trustee in contravention of the Trust Indenture Act or (iii)
cause the Trust to be deemed an "investment company" which is required to be
registered under the 1940 Act.
PROPOSED TAX LEGISLATION
On March 19, 1996, as a part of President Clinton's Fiscal 1997 Budget
Proposal, the Treasury Department proposed legislation (the "Proposed
Legislation") that, among other things, would (i) treat as equity for United
States federal income tax purposes certain debt instruments with a maximum
term of more than 20 years and (ii) disallow interest deductions on certain
convertible debt instruments or defer interest deductions on certain debt
instruments issued with OID. The Proposed Legislation is proposed to be
effective for debt instruments issued on or after December 7, 1995.
On March 29, 1996, Senate Finance Committee Chairman William V. Roth, Jr.
and House Ways and Means Committee Chairman William Archer issued a joint
statement (the "Joint Statement") indicating their intent that the Proposed
Legislation, if adopted by either of the tax-writing committees of Congress,
would have an effective date that is no earlier than the date of "appropriate
Congressional action". Based upon the Joint Statement, it is expected that if
the Proposed Legislation were enacted, such legislation would not apply to the
Convertible Debentures since they would be issued prior to the date of any
"appropriate Congressional action" or otherwise qualify for transitional
relief. However, there can be no assurance that the effective date guidance
contained in the Joint Statement will be incorporated in the Proposed
Legislation, if enacted, or that other legislation enacted after the date
hereof will not otherwise adversely affect the tax treatment of the
Convertible Debentures. If legislation were enacted that adversely affects the
tax treatment of the Convertible Debentures, there could be a distribution of
the Convertible Debentures to holders of the Trust Convertible Preferred
Securities or, in certain circumstances, the redemption of the Convertible
Debentures by the Company and the distribution by the Trust of the resulting
cash in redemption of the Trust Convertible Preferred Securities. See
"Description of the Trust Convertible Preferred Securities--Special Event
Distribution or Redemption".
If the Proposed Legislation or any similar legislation changed the tax
treatment of the Convertible Debentures and the Trust Convertible Preferred
Securities, the United States federal income tax consequences of the purchase,
ownership and disposition of the Trust Convertible Preferred Securities would
differ from those described herein. If legislation were enacted that would
constitute a Tax Event, there would be a distribution of the Convertible
Debentures to holders of the Trust Convertible Preferred Securities or, in
certain circumstances, at the Company's option, redemption of the Convertible
Debentures by the Company. There can be no assurances as to whether or in what
form the Proposed Legislation may be enacted into law or whether other
legislation will be enacted that otherwise adversely affects the tax treatment
of the Convertible Debentures and the Trust Convertible Preferred Securities.
MERGERS, CONSOLIDATIONS OR AMALGAMATIONS
The Trust may not consolidate, amalgamate, merge with or into, or be
replaced by, or convey, transfer or lease its properties and assets
substantially as an entirety to, any corporation or other body, except as
described below. The Trust may, with the consent of the Regular Trustees and
without the consent of the holders of the Trust Securities, the Delaware
Trustee or the Institutional Trustee, consolidate, amalgamate, merge with or
into, or be replaced by a trust organized as such under the laws of any state,
provided that (i) such successor entity either (x) expressly assumes all of
the obligations of the Trust under the Trust Securities or (y) substitutes for
the Trust Convertible Preferred Securities other securities having
substantially the same terms as the Trust Securities (the "Successor
Securities"), so long as the Successor Securities rank the same as the Trust
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Convertible Preferred Securities rank with respect to distributions and
payments upon liquidation, redemption, and otherwise, (ii) the Company
expressly acknowledges a trustee of such successor entity possessing the same
powers and duties as the Institutional Trustee as the holder of the
Convertible Debentures, (iii) such merger, consolidation, amalgamation or
replacement does not cause the Trust Convertible Preferred Securities
(including any Successor Securities) to be downgraded by any nationally
recognized statistical rating organization, (iv) such merger, consolidation,
amalgamation or replacement does not adversely affect the rights, preferences
and privileges of the holders of the Trust Securities (including any Successor
Securities) in any material respect (other than with respect to any dilution
of the holders' interest in the Trust Convertible Preferred Securities as a
result of such merger, consolidation, amalgamation or replacement), (v) such
successor entity has a purpose identical to that of the Trust, (vi) prior to
such merger, consolidation, amalgamation or replacement, the Company has
received an opinion of an independent counsel to the Trust experienced in such
matters to the effect that, (A) such merger, consolidation, amalgamation or
replacement does not adversely affect the rights, preferences and privileges
of the holders of the Trust Securities (including any Successor Securities) in
any material respect (other than with respect to any dilution of the holders'
interest in the new entity), and (B) following such merger, consolidation,
amalgamation or replacement, neither the Trust nor such successor entity will
be required to register as an investment company under the 1940 Act and (vii)
the Company guarantees the obligations of such successor entity under the
Successor Securities at least to the extent provided by the Guarantee and the
Trust Common Securities Guarantee (as defined below). Notwithstanding the
foregoing, the Trust shall not, except with the consent of holders of 100% in
liquidation amount of the Trust Securities, consolidate, amalgamate, merge
with or into, or be replaced by any other entity or permit any other entity to
consolidate, amalgamate, merge with or into, or replace it, if such
consolidation, amalgamation, merger or replacement would cause the Trust or
the successor entity to be classified as other than a grantor trust for United
States federal income tax purposes.
BOOK-ENTRY ONLY ISSUANCES
DTC will act as securities depositary for the Trust Convertible Preferred
Securities. The Trust Convertible Preferred Securities will be issued only as
fully registered securities registered in the name of Cede & Co., DTC's
nominee ("Cede"). One or more fully registered global Trust Convertible
Preferred Securities certificates, representing the total aggregate number of
Trust Convertible Preferred Securities, will be issued and will be deposited
with DTC. Although voting with respect to the Trust Convertible Preferred
Securities is limited, in those cases where a vote is required, neither DTC
nor Cede will itself consent or vote with respect to Trust Convertible
Preferred Securities. Under its usual procedures, DTC would solicit votes on
behalf of the Trust through an Omnibus Proxy. Except as provided herein, a
Beneficial Owner in a global Trust Convertible Preferred Security certificate
will not be entitled to receive physical delivery of Trust Convertible
Preferred Securities. Accordingly, each Beneficial Owner must rely on the
procedures of DTC to exercise any rights under the Trust Convertible Preferred
Securities. A more detailed description of the DTC book-entry system is set
forth in "Book-Entry System--The Depository Trust Company" below.
INFORMATION CONCERNING THE INSTITUTIONAL TRUSTEE
The Institutional Trustee, prior to the occurrence of a default with respect
to the Trust Securities and after the curing of any defaults that may have
occurred, undertakes to perform only such duties as are specifically set forth
in the Declaration and, after default, shall exercise the same degree of care
as a prudent individual would exercise in the conduct of his or her own
affairs. Subject to such provisions, the Institutional Trustee is under no
obligation to exercise any of the powers vested in it by the Declaration at
the request of any holder of Trust Convertible Preferred Securities, unless
offered reasonable indemnity by such holder against the costs, expenses and
liabilities which might be incurred hereby. The holders of Trust Convertible
Preferred Securities will not be required to offer such indemnity in the event
such holders, by exercising their voting rights, direct the Institutional
Trustee to take any action it is empowered to take under the Declaration
following a Declaration Event of Default. The Institutional Trustee also
serves as trustee under the Guarantee and the Indenture.
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See "Unocal Capital Trust" regarding the Bank of New York's service as the
trustee under two indentures under which debt securities have been issued by
Union Oil and guaranteed by the Company.
CONVERSION AGENT AND PAYING AGENT
The Institutional Trustee is appointed under the terms of the Trust
Securities to act as Conversion Agent. In addition, in the event that the
Trust Convertible Preferred Securities do not remain in book-entry only form,
the following provisions would apply:
The Institutional Trustee will act as paying agent and may designate an
additional or substitute paying agent at any time. Registration of transfers
of Trust Convertible Preferred Securities will be effected without charge by
or on behalf of the Trust, but upon payment (with the giving of such indemnity
as the Trust or the Company may require) in respect of any tax or other
government charges that may be imposed in relation to it. The Trust will not
be required to register or cause to be registered the transfer of Trust
Convertible Preferred Securities after such Trust Convertible Preferred
Securities have been called for redemption.
GOVERNING LAW
The Declaration and the Trust Convertible Preferred Securities will be
governed by, and construed in accordance with, the internal laws of the State
of Delaware.
MISCELLANEOUS
The Regular Trustees are authorized and directed to take any action so that
the Trust will not be required to register as an "investment company" under
the 1940 Act or characterized as other than a grantor trust for United States
federal income tax purposes, and to cooperate with the Company so that the
Convertible Debentures will be treated as indebtedness of the Company for
United States federal income tax purposes. In this connection, the Regular
Trustees are authorized to take any action, not inconsistent with the
Declaration and applicable law, that the Regular Trustees determine in their
discretion to be necessary or desirable to achieve such end, as long as such
action does not adversely affect the interests of the holders of the Trust
Convertible Preferred Securities.
Holders of the Trust Convertible Preferred Securities have no preemptive
rights.
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DESCRIPTION OF THE GUARANTEE
Set forth below is a summary of information concerning the Guarantee which
will be executed and delivered by the Company for the benefit of the holders
of Trust Convertible Preferred Securities. The Guarantee will be qualified as
an indenture under the Trust Indenture Act. The Bank of New York will act as
the independent trustee under the Guarantee (the "Guarantee Trustee") for
purposes of the Trust Indenture Act. The terms of the Guarantee will be those
set forth in such Guarantee and those made part of such Guarantee by the Trust
Indenture Act. The summary is subject in all respects to the provisions of,
and is qualified in its entirety by reference to, the form of Guarantee, which
is filed as an exhibit to the Registration Statement of which this Prospectus
forms a part, and the Trust Indenture Act. The Guarantee will be held by the
Guarantee Trustee for the benefit of the holders of the Trust Convertible
Preferred Securities.
GENERAL
Pursuant to the Guarantee, the Company will agree, to the extent set forth
therein, to pay in full to the holders of the Trust Convertible Preferred
Securities the Guarantee Payments (as defined herein) (except to the extent
paid by the Trust), as and when due, regardless of any defense, right of
setoff, or counterclaim which the Trust may have or assert. The following
payments with respect to Trust Convertible Preferred Securities issued by the
Trust to the extent not paid by the Trust (the "Guarantee Payments"), will be
subject to the Guarantee thereon (without duplication): (i) any accumulated
and unpaid distributions which are required to be paid on such Trust
Convertible Preferred Securities to the extent the Trust shall have funds
available therefor; (ii) the Redemption Price and all accumulated and unpaid
distributions to the date of redemption to the extent the Trust has funds
available therefor with respect to any Trust Convertible Preferred Securities
called for redemption by the Trust, and (iii) upon a voluntary or involuntary
dissolution, winding-up, or termination of the Trust (other than in connection
with the conversion of all of the Trust Securities into Common Stock or the
distribution of the Convertible Debentures to the holders of Trust Convertible
Preferred Securities as provided in the Declaration), the lesser of (a) the
aggregate of the liquidation amount and all accumulated and unpaid
distributions on such Trust Convertible Preferred Securities to the date of
payment, to the extent the Trust has funds available therefor and (b) the
amount of assets of the Trust remaining available for distribution to holders
of such Trust Convertible Preferred Securities in liquidation of the Trust.
The Company's obligation to make a Guarantee Payment may be satisfied by
direct payment of the required amounts by the Company to the holders of Trust
Convertible Preferred Securities or by causing the Trust to pay such amounts
to such holders.
The Guarantee will not apply to any payment of distributions on the Trust
Convertible Preferred Securities except to the extent the Trust shall have
funds available therefor. If the Company does not make interest payments on
the Convertible Debentures purchased by the Trust, the Trust will not pay
distributions on the Trust Convertible Preferred Securities issued by the
Trust and will not have funds available therefor. See "Description of the
Convertible Debentures--Certain Covenants of the Company". The Guarantee, when
taken together with the Company's obligations under the Convertible
Debentures, the Indenture, and the Declaration, including its obligations to
pay costs, expenses, debts, and liabilities of the Trust (other than with
respect to the Trust Securities), will provide a full and unconditional
guarantee on a subordinated basis by the Company of payments due on the Trust
Convertible Preferred Securities.
The Company has also agreed separately to fully and unconditionally
guarantee the obligations of the Trust with respect to the Trust Common
Securities (the "Trust Common Securities Guarantee") to the same extent as the
Guarantee, except that upon an Indenture Event of Default, rights of holders
of Trust Common Securities to receive payment of periodic distributions and
payments on liquidation, redemption, or otherwise will be subordinated to the
rights of the holders of Trust Convertible Preferred Securities.
CERTAIN COVENANTS OF THE COMPANY
In the Guarantee, the Company will covenant that, so long as any Trust
Convertible Preferred Securities remain outstanding, if there shall have
occurred any event that would constitute an event of default under the
Guarantee or the Declaration, then (a) the Company shall not declare or pay
any dividend on, make any
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distributions with respect to, or redeem, purchase, acquire, or make a
liquidation payment with respect to, any of its capital stock (other than (i)
purchases or acquisitions of shares of capital stock in connection with any
employee benefit plan or program, director plan or program, dividend
reinvestment, stock repurchase, or other similar plans available to
stockholders of the Company, or any option, warrant, right, or exercisable,
exchangeable, or convertible security outstanding as of the Expiration Date,
(ii) as a result of a reclassification of the Company's capital stock pursuant
to the exchange or conversion provisions of the Company's capital stock or the
exchange or conversion of one class or series of the Company's capital stock
for another class or series of the Company's capital stock or the capital
securities of a subsidiary (including a trust such as the Trust), or (iii) the
purchase of fractional interests in shares of the Company's capital stock
pursuant to the conversion or exchange provisions of such capital stock or
security being converted or exchanged), and (b) the Company shall not make any
payment of interest, principal or premium, if any, on, or repay, repurchase,
or redeem or make any guarantee payment (other than pursuant to the Guarantee)
with respect to any debt securities issued by the Company that rank pari passu
with or junior to the Convertible Debentures.
MODIFICATION OF THE GUARANTEE; ASSIGNMENT
Except with respect to any changes that do not adversely affect the rights
of holders of Trust Convertible Preferred Securities (in which case no consent
of holders of Trust Convertible Preferred Securities will be required), the
Guarantee may be amended only with the prior approval of the holders of at
least a majority in liquidation amount of the outstanding Trust Convertible
Preferred Securities. All guarantees and agreements contained in a Guarantee
shall bind the successors, assigns, receivers, trustees, and representatives
of the Company and shall inure to the benefit of the holders of the Trust
Convertible Preferred Securities then outstanding.
TERMINATION
The Guarantee will terminate upon (a) full payment of the Redemption Price
of all Trust Convertible Preferred Securities, (b) conversion of all the Trust
Convertible Preferred Securities to Common Stock or distribution of the
Convertible Debentures held by the Trust to the holders of the Trust
Convertible Preferred Securities or (c) full payment of the amounts payable in
accordance with the Declaration upon liquidation of the Trust. Notwithstanding
the foregoing, the Guarantee will continue to be effective or will be
reinstated, as the case may be, if at any time any holder of Trust Convertible
Preferred Securities must restore payment of any sums paid under Trust
Convertible Preferred Securities or the Guarantee. The subordination
provisions of the Convertible Debentures provide that in the event payment is
made on the Convertible Debentures or the Guarantee in contravention of such
provisions, such payments shall be paid over the holders of Senior
Indebtedness.
EVENTS OF DEFAULT
An event of default under the Guarantee will occur upon the failure of the
Company to perform any of its payment or other obligations thereunder. The
holders of a majority in liquidation amount of the Trust Convertible Preferred
Securities have the right to direct the time, method, and place of conducting
any proceeding for any remedy available to the Guarantee Trustee in respect of
the Guarantee or exercising any trust or power conferred upon the Guarantee
Trustee under the Guarantee. If the Guarantee Trustee fails to enforce such
Guarantee, any holder of Trust Convertible Preferred Securities may institute
a legal proceeding directly against the Company to enforce the Guarantee
Trustee's rights under the Guarantee, without first instituting a legal
proceeding against the Trust, the Guarantee Trustee, or any other person or
entity. Notwithstanding the foregoing, if the Company has failed to make a
payment required under the Guarantee, a holder of the Trust Convertible
Preferred Securities may directly institute a proceeding against the Company
for enforcement of the Guarantee for such payment. The Company waives any
right or remedy to require that any action be brought first against the Trust
or any other person or entity before proceeding directly against the Company.
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STATUS OF THE GUARANTEE
The Guarantee will constitute an unsecured obligation of the Company and
will rank (i) subordinate and junior in right of payment to all other
liabilities of the Company, (ii) pari passu with the most senior preferred or
preference stock now or hereafter issued by the Company and with any guarantee
now or hereafter entered into by the Company in respect of any preferred or
preference stock of any affiliate of the Company (including the $3.50
Convertible Preferred Stock); and (iii) senior to the Common Stock. The terms
of the Trust Convertible Preferred Securities provide that each holder of
Trust Convertible Preferred Securities by acceptance thereof agrees to the
subordination provisions and other terms of the Guarantee relating thereto.
The Guarantee creates a guarantee of payment and not of collection (that is,
the holder of Trust Convertible Preferred Securities may institute a legal
proceeding directly against the Company to enforce its rights under the
Guarantee without instituting a legal proceeding against the Trust, the
Guarantee Trustee, or any other person or entity).
INFORMATION CONCERNING THE GUARANTEE TRUSTEE
The Guarantee Trustee, before the occurrence of any event of default with
respect to the Guarantee and after curing all events of default with respect
to the Guarantee that may have occurred, shall undertake to perform only such
duties as are specifically set forth in the Guarantee. After an event of
default with respect to the Guarantee has occurred, the Guarantee Trustee
shall exercise the rights and powers vested in it by the Guarantee, and shall
use the same degree of care and skill in its exercise thereof as a prudent
individual would exercise or use under the circumstances in the conduct of his
or her own affairs. Subject to such provisions, the Guarantee Trustee is under
no obligation to exercise any of the powers vested in it by the Guarantee at
the request of any holder of Trust Convertible Preferred Securities, unless
such holder shall have provided to the Guarantee Trustee such security and
indemnity, reasonably satisfactory to the Guarantee, against the costs,
expenses, and liabilities that might be incurred thereby.
DESCRIPTION OF THE CONVERTIBLE DEBENTURES
Set forth below is a description of the specific terms of the Convertible
Debentures. The following description is subject to, and is qualified in its
entirety by reference to, the Supplemental Indenture, dated as of , 1996
(the "Supplemental Indenture") and the Indenture dated as of , 1996 (the
"Base Indenture" and, together with the Supplemental Indenture, the
"Indenture"), each between the Company and The Bank of New York, as Trustee
(the "Debenture Trustee"), a form of which is filed as an Exhibit to the
Registration Statement of which this Prospectus is a part. Certain capitalized
terms used herein are defined in the Indenture.
Under certain circumstances involving the dissolution of the Trust following
the occurrence of a Special Event, Convertible Debentures may be distributed
to the holders of the Trust Securities in liquidation of the Trust. See
"Description of the Trust Convertible Preferred Securities--Special Event
Distribution or Redemption".
If the Convertible Debentures are distributed to the holders of the Trust
Convertible Preferred Securities, the Company will use its reasonable efforts
to have the Convertible Debentures listed or quoted on such national
securities exchange or similar organization on which the Trust Convertible
Preferred Securities are then listed or quoted, if any.
GENERAL
The Convertible Debentures will be issued as unsecured debt under the
Indenture. The Convertible Debentures will be limited in aggregate principal
amount to approximately (i) the greater of (A) the aggregate
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redemption price as of the Exchange Amount Determination Date for all
outstanding shares of $3.50 Convertible Preferred Stock, plus aggregate
accumulated and unpaid dividends thereon to but excluding the Expiration Date,
or (B) the Market Value of shares of Common Stock of the Company as of the
Exchange Amount Determination Date into which all outstanding shares of the
$3.50 Convertible Preferred Stock are convertible, plus (ii) the capital
contributed by the Company in exchange for the Trust Common Securities.
The Convertible Debentures are not subject to a sinking fund provision. The
Convertible Debentures are convertible into the Common Stock at the option of
the holders of the Convertible Debentures at any time beginning 90 days
following the first date that any Trust Convertible Preferred Securities are
issued and prior to the close of business on September 1, 2026 (or, in the
case of Convertible Debentures called for redemption, the close of business on
the Business Day immediately preceding the Redemption Date) at the initial
conversion ratio equal to that number of shares of Common Stock determined by
dividing the principal amount of $50 by the product of times the Market
Value of a share of Common Stock, subject to the conversion price adjustments
described under "Description of the Trust Convertible Preferred Securities--
Conversion Rights". The entire principal amount of the Convertible Debentures
will mature and become due and payable, together with any accrued and unpaid
interest thereon including Compound Interest (as defined herein) and
Additional Interest (as defined herein), if any, on September 1, 2026.
If Convertible Debentures are distributed to holders of Trust Convertible
Preferred Securities in liquidation of such holders' interests in the Trust,
such Convertible Debentures will initially be issued as a Global Security (as
defined herein). As described herein, under certain limited circumstances,
Convertible Debentures may be issued in certificated form in exchange for a
Global Security. See "Book-Entry and Settlement" below. In the event that
Convertible Debentures are issued in certificated form, such Convertible
Debentures will be in denominations of $50 and integral multiples thereof and
may be transferred or exchanged at the offices described below. Payments on
Convertible Debentures issued as a Global Security will be made to DTC, a
successor depositary or, in the event that no depositary is used, to a Paying
Agent for the Convertible Debentures. In the event Convertible Debentures are
issued in certificated form, principal and interest will be payable, the
transfer of the Convertible Debentures will be registrable and Convertible
Debentures will be exchangeable for Convertible Debentures of other
denominations of a like aggregate principal amount at the corporate trust
office of the Institutional Trustee in New York, New York; provided that
payment of interest may be made at the option of the Company by check mailed
to the address of the holder entitled thereto or by wire transfer to an
account appropriately designated by the holder entitled thereto.
Notwithstanding the foregoing, so long as the holder of any Convertible
Debentures is the Institutional Trustee, the payment of principal and interest
on the Convertible Debentures held by the Institutional Trustee will be made
at such place and to such account as may be designated by the Institutional
Trustee.
SUBORDINATION
The Convertible Debentures are subordinated and junior in right of payment
to all Senior Indebtedness of the Company to the extent set forth in the
Indenture. No payment of principal (including redemption payments), premium,
if any, or interest on the Convertible Debentures may be made (i) if any
Senior Indebtedness of the Company is not paid when due and any applicable
grace period with respect to such default has ended and such default has not
been cured or waived or ceased to exist, or (ii) if the maturity of any Senior
Indebtedness of the Company has been accelerated because of a default and such
acceleration has not been rescinded. Upon any payment by the Company or
distribution of assets of the Company to creditors upon any dissolution,
winding-up, liquidation, or reorganization, whether voluntary or involuntary,
or in bankruptcy, insolvency, receivership or other proceedings, all
principal, premium, if any, and interest due or to become due on all Senior
Indebtedness of the Company must be paid in full before the holders of
Convertible Debentures are entitled to receive or retain any payment. Upon
satisfaction of all claims of all Senior Indebtedness then outstanding, the
rights of the holders of the Convertible Debentures will be subrogated to the
rights of the holders of Senior Indebtedness of the Company to receive
payments of distributions applicable to Senior Indebtedness until all amounts
owing on the
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Convertible Debentures are paid in full. For purposes of the subordination
provisions, the payment, issuance and delivery of cash, property or securities
(other than stock and certain subordinated securities of the Company) upon
conversion of a Convertible Debenture will be deemed to constitute payment on
account of the principal of such Convertible Debenture.
By reason of such subordination, in the event of liquidation or insolvency,
creditors of the Company may recover less, ratably, than holders of Senior
Indebtedness and may recover more, ratably, than the holders of the
Convertible Debentures.
In the event of the acceleration of the maturity of any Convertible
Debentures, the holders of Senior Indebtedness outstanding at the time of such
acceleration will first be entitled to receive payment in full of all amounts
due thereon before the holders of the Convertible Debentures will be entitled
to receive any payment upon the principal of (and premium, if any) or interest
on, the Convertible Debentures.
The term "Senior Indebtedness" means, with respect to the Company, all
current and future obligations and liabilities of the Company (whether
absolute, accrued, fixed, contingent, liquidated, unliquidated, or otherwise),
except for (1) accounts payable or any other obligations of the Company to
trade creditors created or assumed by the Company in the ordinary course of
business, (2) any obligation that is expressly by its terms subordinated to or
pari passu with the Convertible Debentures, and (3) any obligation or
liability of the Company to any person of which at least a majority of the
voting interest under ordinary circumstances is at such time, directly or
indirectly, owned by the Company. Such Senior Indebtedness shall continue to
be Senior Indebtedness and be entitled to the benefits of the subordination
provisions irrespective of any amendment, modification, or waiver of any term
of such Senior Indebtedness.
The Indenture does not limit the aggregate amount of Senior Indebtedness
that may be issued or incurred by the Company and does not limit obligations
at Union Oil or other subsidiaries which are structurally senior to the
Convertible Debentures.
CERTAIN COVENANTS OF THE COMPANY
If the Company shall have exercised its right to defer payment of interest
on the Convertible Debentures by extending the interest payment period as
provided in the Indenture and such period, or any extension thereof, shall be
continuing, then (a) the Company shall not declare or pay any dividend on,
make any distributions with respect to, or redeem, purchase, acquire, or make
a liquidation payment with respect to, any of its capital stock (other than
(i) purchases or acquisitions of shares of capital stock in connection with
any employee benefit plan or program, director plan or program, dividend
reinvestment, stock repurchase, or other similar plans available to
stockholders of the Company, or any option, warrant, right, or exercisable,
exchangeable, or convertible security outstanding as of the Expiration Date,
(ii) as a result of a reclassification of the Company's capital stock pursuant
to the exchange or conversion provisions of the Company's capital stock or the
exchange or conversion of one class or series of the Company's capital stock
for another class or series of the Company's capital stock or the capital
securities of a subsidiary (including a trust such as the Trust), or (iii) the
purchase of fractional interests in shares of the Company's capital stock
pursuant to the conversion or exchange provisions of such capital stock or
security being converted or exchanged), and (b) the Company shall not make any
payment of interest, principal or premium, if any, on, or repay, repurchase,
or redeem or make any guarantee payment (other than pursuant to the Guarantee)
with respect to any debt securities issued by the Company that rank pari passu
with or junior to the Convertible Debentures.
Except as otherwise provided in the Indenture, for so long as the
Convertible Debentures are issued to the Trust or the Institutional Trustee
and the Trust Securities remain outstanding, the Company will covenant (i) to
directly or indirectly maintain 100% ownership of the Trust Common Securities;
provided, however, that any
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permitted successor of the Company under the Indenture may succeed to the
Company's ownership of such Trust Common Securities, (ii) to use its
reasonable efforts to cause the Trust (a) to remain a statutory business
trust, except in connection with the distribution of the Convertible
Debentures, the redemption of all Trust Securities, or certain mergers,
consolidations, amalgamations, or other transactions each as permitted by the
Indenture or the Declaration, and (b) to continue to be classified as a
grantor trust for United States federal income tax purposes and (iii) to use
its reasonable efforts to cause each holder of Trust Securities to be treated
as owning an undivided beneficial interest in the Convertible Debentures.
REDEMPTION AT THE OPTION OF THE COMPANY
Except as described below with respect to accrued and unpaid interest, the
Company will have the right to redeem the Convertible Debentures, in whole or
in part, from time to time, on or after September 3, 2000, upon not less than
30 nor more than 60 days notice, at the following Redemption Prices (expressed
as percentages of the principal amount of the Convertible Debentures) together
with accrued and unpaid interest thereon, including Compound Interest
(as defined herein) to, but excluding, the redemption date, if redeemed during
the 12-month period beginning September 1 (other than the first period, which
will begin on September 3, 2000):
<TABLE>
<CAPTION>
REDEMPTION
YEAR PRICE
---- ----------
<S> <C>
2000.............................................................. %
2001.............................................................. %
2002.............................................................. %
2003.............................................................. %
2004.............................................................. %
2005.............................................................. %
and 100% if redeemed on or after September 1, 2006.
</TABLE>
Notwithstanding the foregoing, the Company may not redeem any Convertible
Debentures unless all accrued and unpaid interest has been paid on all
outstanding Convertible Debentures for all quarterly interest payment periods
terminating on or prior to the last interest payment date before the date of
redemption. If Convertible Debentures are redeemed on any March 1, June 1,
September 1, or December 1, accrued and unpaid interest shall be payable to
holders of record on the record date for such interest payment.
The Company shall also have the right to redeem the Convertible Debentures
at any time in certain circumstances upon the occurrence of a Special Event as
described under "Description of the Trust Convertible Preferred Securities--
Special Event Distribution or Redemption" at 100% of the principal amount
thereof, plus accrued and unpaid interest thereon (including Compound
Interest), to, but excluding, the redemption date.
So long as the Trust Convertible Preferred Securities are outstanding, the
Declaration requires that the proceeds from the redemption of any of the
Convertible Debentures will be used to redeem Trust Convertible Preferred
Securities.
INTEREST
Each Convertible Debenture shall bear interest at the rate of % per annum
from the date of original issuance or, for Convertible Debentures issued in
the Exchange Offer, from and including the Expiration Date. Interest is
payable quarterly in arrears on March 1, June 1, September 1 and December 1 of
each year (each an "Interest Payment Date"), commencing on December 1, 1996,
to the person in whose name such Convertible Debenture is registered, subject
to certain exceptions, at the close of business on the business day next
preceding such Interest Payment Date. In the event the Convertible Debentures
shall not continue to remain in book-entry only form, the Company shall have
the right to select record dates, which shall be more than one business day
prior to the Interest Payment Date.
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The amount of interest payable for any full quarterly interest period will
be computed on the basis of a 360-day year of twelve 30-day months. The amount
of interest payable for any period shorter than a full quarterly interest
period for which interest is computed, will be computed on the basis of 30-day
months and, for periods of less than a month, the actual number of days
elapsed divided by 30. In the event that any date on which interest is payable
on the Convertible Debentures is not a business day, then payment of the
interest payable on such date will be made on the next succeeding day that is
a business day (and without any interest or other payment in respect of any
such delay), except that, if such business day is in the next succeeding
calendar year, then such payment shall be made on the immediately preceding
business day, in each case with the same force and effect as if made on such
date.
OPTION TO EXTEND INTEREST PAYMENT PERIOD
So long as the Company is not in default in the payment of interest on the
Convertible Debentures, the Company will have the right, at any time, and from
time to time, during the term of the Convertible Debentures, to defer payments
of interest by extending the interest payment period for a period not
exceeding 20 consecutive quarters, during which Extension Period no interest
will be due and payable. At the end of the Extension Period, the Company shall
pay all interest then accrued and unpaid (including any Additional Interest,
as herein defined), together with interest thereon compounded quarterly at the
rate specified for the Convertible Debentures to the extent permitted by
applicable law ("Compound Interest"); provided that during any such Extension
Period, (a) the Company shall not declare or pay any dividend on, make any
distributions with respect to, or redeem, purchase, acquire, or make a
liquidation payment with respect to, any of its capital stock (other than (i)
purchases or acquisitions of shares of capital stock in connection with any
employee benefit plan or program, director plan or program, dividend
reinvestment, stock repurchase, or other similar plans available to
stockholders of the Company, or any option, warrant, right, or exercisable,
exchangeable, or convertible security outstanding as of the Expiration Date,
(ii) as a result of a reclassification of the Company's capital stock pursuant
to the exchange or conversion provisions of the Company's capital stock or the
exchange or conversion of one class or series of the Company's capital stock
for another class or series of the Company's capital stock or the capital
securities of a subsidiary (including a trust such as the Trust), or (iii) the
purchase of fractional interests in shares of the Company's capital stock
pursuant to the conversion or exchange provisions of such capital stock or
security being converted or exchanged), and (b) the Company shall not make any
payment of interest, principal or premium, if any, on, or repay, repurchase,
or redeem or make any guarantee payment (other than pursuant to the Guarantee)
with respect to any debt securities issued by the Company that rank pari passu
with or junior to the Convertible Debentures. Prior to the termination of any
such Extension Period, the Company may further extend the Extension Period;
provided, that, such Extension Period, together with all such previous and
further extensions, may not exceed 20 consecutive quarters or extend beyond
the maturity of the Convertible Debentures. Upon the termination of any
Extension Period and the payment of all amounts then due, the Company may
commence a new Extension Period, subject to the above requirements. No
interest during an Extension Period, except at the end thereof, shall be due
and payable. The Company has no present intention of exercising its right to
defer payments of interest by extending the interest payment period on the
Convertible Debentures. If the Institutional Trustee shall be the sole holder
of the Convertible Debentures, the Company shall give the Regular Trustees and
the Institutional Trustee notice of its selection of such Extension Period one
Business Day prior to the earlier of (i) the date distributions on the Trust
Convertible Preferred Securities are payable or (ii) the date the Regular
Trustees are required to give notice to any national stock exchange or other
organization on which the Trust Convertible Preferred Stock are listed or
quoted, if any, or to holders of the Trust Convertible Preferred Securities of
the record date or the date such distribution is payable. The Regular Trustees
shall give notice to the Company's selection of such Extension Period to the
holders of the Trust Convertible Preferred Securities. If the Institutional
Trustee shall not be the sole holder of the Convertible Debentures, the
Company shall give the holders of the Convertible Debentures notice of its
selection of such Extension Period ten Business Days prior to the earlier of
(i) the Interest Payment Date or (ii) the date upon which the Company is
required to give notice to any national stock exchange or other organization
on which the Trust Convertible Preferred Stock are listed or quoted, if any,
or to holders of the Convertible Debentures of the record or payment date of
such related interest payment.
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<PAGE>
PROPOSED TAX LEGISLATION
See the discussion above under the heading "Description of the Trust
Convertible Preferred Securities--Proposed Tax Legislation".
CONVERSION OF THE CONVERTIBLE DEBENTURES
The Convertible Debentures will be convertible into the Common Stock at the
option of the holders of the Convertible Debentures at any time beginning 90
days following the first date that any Trust Convertible Preferred Securities
are issued and prior to the close of business on September 1, 2026 (or, in the
case of Convertible Debentures called for redemption, the close of business on
the Business Day immediately preceding the Redemption Date) at the initial
conversion ratio equal to that number of shares of Common Stock determined by
dividing the stated principal amount of one Convertible Debenture by the
product of times the Market Value of a share of Common Stock, subject to
the conversion price adjustments described under "Description of the Trust
Convertible Preferred Securities--Conversion Rights". The Trust has agreed not
to convert Convertible Debentures held by it except pursuant to a notice of
conversion delivered to the Conversion Agent by a holder of Trust Convertible
Preferred Securities. Upon surrender of a Trust Convertible Preferred Security
to the Conversion Agent for conversion, the Trust will distribute Convertible
Debentures to the Conversion Agent on behalf of the holder of the Trust
Convertible Preferred Securities so converted, whereupon the Conversion Agent
will convert such Convertible Debentures to the Common Stock on behalf of such
holder. The Company's delivery to the holders of the Convertible Debentures
(through the Conversion Agent) of the fixed number of shares of Common Stock
into which the Convertible Debentures are convertible (together with the cash
payment, if any, in lieu of fractional shares) will be deemed to satisfy the
Company's obligation to pay the principal amount of the Convertible Debentures
so converted, and the accrued and unpaid interest thereon attributable to the
period from the last date to which interest has been paid or duly provided
for. If any Convertible Debentures are converted into Common Stock during the
period from (but excluding) a record date to the next succeeding interest
payment date, then either (i) if such Convertible Debentures have been called
for redemption on a redemption date which occurs during such period, or are to
be redeemed in connection with a Special Event which occurs during such
period, the Company shall not be required to pay accrued interest in cash on
such interest payment date in respect of such Convertible Debentures nor will
such accrued interest be converted into additional shares of Common Stock, but
such accrued interest will be deemed to be paid in full and then returned by
the holder to the Company as partial consideration for the Common Stock
received on conversion or (ii) if otherwise converted during such period, such
Convertible Debentures shall be accompanied by funds equal to the interest
payable on such succeeding interest payment date on the principal amount so
converted. The Company may not redeem any Convertible Debentures unless all
accrued and unpaid interest has been paid on all outstanding Convertible
Debentures for all quarterly interest payment periods terminating on or prior
to the last interest payment date before the date of redemption. Since the
Company is required to pay all accrued and unpaid interest, other than for the
current quarter (which interest is then paid to holders of Trust Convertible
Preferred Securities as accumulated and unpaid distributions), prior to
redeeming the Convertible Debentures (and thus, resulting in the redemption of
the Trust Convertible Preferred Securities), holders of Trust Convertible
Preferred Securities choosing to convert such Trust Convertible Preferred
Securities in order to avoid such redemption will, at most, forego actual
receipt of a cash distribution payment only for the current quarter. Interest
may, at the Company's option, be paid either (i) by check mailed to the
address of the person entitled thereto as it appears in the register or (ii)
by transfer to an account maintained by such person located in the United
States; provided, however, that payments to DTC will be made by wire transfer
of immediately available funds to the account of DTC or its nominee.
ADDITIONAL INTEREST
If at any time the Trust shall be required to pay any taxes, duties,
assessments or governmental charges of whatever nature (other than withholding
taxes) imposed by the United States, or any other taxing authority, then, in
any such case, the Company will pay as additional interest ("Additional
Interest") such additional amounts as shall be required so that the net
amounts received and retained by the Trust after paying any such taxes,
duties,
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<PAGE>
assessments or other governmental charges will be not less than the amounts
the Trust would have received had no such taxes, duties, assessments or other
governmental charges been imposed.
CONSOLIDATION, MERGER AND SALE OF ASSETS
Except as otherwise provided in the Indenture, the Company may not merge or
consolidate or sell or convey all or substantially all of its assets unless
the successor corporation (if other than the Company) is a domestic
corporation and assumes the Company's obligations on the Convertible
Debentures and under the Indenture. See "Description of the Trust Convertible
Preferred Securities--Conversion Rights".
The Indenture does not contain provisions that afford the Convertible
Debentures protection in the event of a highly leveraged transaction involving
the Company.
INDENTURE EVENTS OF DEFAULT
Any one of the following events will constitute an Indenture Event of
Default with respect to the Convertible Debentures: (a) default in the payment
of any interest on the Convertible Debentures when due and payable, if
continued for 30 days after written notice has been given as provided on the
Indenture, whether or not such payment is prohibited by the subordination
provisions of the Indenture and the Convertible Debentures, provided, however,
that a valid extension of the interest payment period does not constitute a
default in the payment of interest; (b) default in the payment of principal of
(or premium, if any, on) the Convertible Debentures when due and payable
whether or not such payment is prohibited by the subordination provisions of
the Indenture and the Convertible Debentures, provided, however, that a valid
extension of the maturity of such Convertible Debentures does not constitute a
default in the payment of principal or premium; (c) failure to perform any
other covenant of the Company in the Indenture or the Convertible Debentures
(other than a covenant included in the Indenture solely for the benefit of any
series of debt securities other than the Convertible Debentures), if continued
for 90 days after written notice has been given as provided in the Indenture;
(d) failure of the Company to deliver the Common Stock upon a valid conversion
election by the holder or holders of the Convertible Debentures to convert
such Convertible Debentures into shares of Common Stock; (e) certain events in
bankruptcy, insolvency or reorganization involving the Company; or (f) the
voluntary or involuntary dissolution, winding-up, or termination of the Trust,
except in connection with (i) the distribution of Convertible Debentures to
the holders of Trust Securities in liquidation of the Trust or in their
interest in the Trust, (ii) the redemption of the Trust Convertible Preferred
Securities, and (iii) certain mergers, consolidations or amalgamations, each
as permitted by the Declaration.
If any Indenture Event of Default shall occur and be continuing, the
Institutional Trustee, as the holder of the Convertible Debentures, will have
the right to declare the principal of the Convertible Debentures (including
any Compound Interest and Additional Interest, if any) and any other amounts
payable under the Indenture to be forthwith due and payable and to enforce its
other rights as a creditor with respect to the Convertible Debentures. See
"Description of the Convertible Debentures--Indenture Events of Default" for a
description of the Indenture Events of Default. An Indenture Event of Default
also constitutes a Declaration Event of Default. The holders of Trust
Convertible Preferred Securities in certain circumstances have the right to
direct the Institutional Trustee to exercise its rights as the holder of the
Convertible Debentures. See "Description of the Trust Convertible Preferred
Securities--Declaration Events of Default" and "--Voting Rights".
Notwithstanding the foregoing, if an Indenture Event of Default has occurred
and is continuing and such event is attributable to the failure of the Company
to pay interest or principal on the Convertible Debentures on the date such
interest or principal is otherwise payable (or in the case of redemption, the
redemption date), the Company acknowledges that then a holder of Trust
Convertible Preferred Securities may institute a Direct Action for payment on
or after the respective due date specified in the Convertible Debentures.
Notwithstanding any payments made to such holder of Trust Convertible
Preferred Securities by the Company in connection with a Direct Action, the
Company shall remain obligated to pay the principal of or interest on the
Convertible Debentures held by the Trust or the Institutional Trustee of the
Trust, and the Company shall be subrogated to the rights of the holder of such
Trust Convertible Preferred Securities with respect to payments on the Trust
Convertible Preferred
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Securities to the extent of any payments made by the Company to such holder in
any Direct Action. The holders of Trust Convertible Preferred Securities will
not be able to exercise directly any other remedy available to the holders of
the Convertible Debentures.
DEFEASANCE
The obligations of the Company with respect to the payment of the principal
of, and interest on, the Convertible Debentures will terminate if the Company
irrevocably deposits or causes to be deposited with the Debenture Trustee,
under the terms of an escrow trust agreement in form and substance
satisfactory to the Debenture Trustee, as a trust fund specifically pledged as
security for, and dedicated solely to, the benefit of the holders of the
Convertible Debentures, (i) money, (ii) U.S. government obligations, which
through the payment of interest and principal in respect thereof in accordance
with their terms will provide money at such time or times as payments are due
and payable on the Convertible Debentures, or (iii) a combination of (i) and
(ii), sufficient to pay and discharge the Convertible Debentures (and all
other sums payable with respect to the Convertible Debentures). The discharge
of the Convertible Debentures is subject to certain other conditions,
including (without limitation) (a) no Indenture Event of Default or event
(including such deposit) which with notice or lapse of time would become an
Indenture Event of Default shall have occurred and be continuing on the date
of such deposit, and (b) such deposit and the related intended consequence
will not result in any default or event of default under any material
indenture, agreement, or other instrument binding upon the Company or its
subsidiaries or any of their properties. The conversion rights under the
Indenture will survive until the Convertible Debentures are no longer
outstanding.
MODIFICATION, WAIVER, MEETINGS, AND VOTING
Modification of Indentures. The Indenture will provide that the Company and
the Debenture Trustee may, without the consent of any holders of Convertible
Debentures, enter into supplemental indentures for the purposes, among other
things, of adding to the Company's covenants, adding additional Indenture
Events of Default, establishing the form or terms of Convertible Debentures or
curing ambiguities or inconsistencies in such Indenture, or making other
changes to the Indenture or form or terms of the Convertible Debentures,
provided such action does not have a material adverse effect on the interests
of the holders of the Convertible Debentures. In addition, modifications and
amendments of the Indenture may be made by the Company and the Debenture
Trustee with the consent of the holders of not less than a majority in
aggregate principal amount of the Convertible Debentures then outstanding
affect by such modification or amendment; provided, however, that no such
modification or amendment may, without the consent of each holder of
Convertible Debentures outstanding that is affected thereby, (a) change the
stated maturity of the principal of, or any installment of principal of or
rate of interest on the Convertible Debentures, (b) reduce the principal
amount of or interest on any Convertible Debentures, (c) change any obligation
to pay additional amounts, (d) change the place of payment or the currency or
currency unit in which the Convertible Debentures or interest thereon is
payable, (e) impair the right to institute suit for the enforcement of any
payment on or with respect to the Convertible Debentures, (f) reduce the
percentage in principal amount of the Convertible Debentures then outstanding
required for modification or amendment of the Indenture or for any waiver of
compliance with certain provisions of the Indenture or for waiver of certain
defaults, (g) change any obligation of the Company to maintain an office or
agency in the places and for the purposes required by the Indenture, (h) make
any change that would materially adversely affect the right to convert the
Convertible Indentures, or (i) modify any of the above positions.
Waiver of Default. The holders of a majority in aggregate principal amount
of the Convertible Debentures then outstanding may, on behalf of the holders
of all Convertible Debentures, waive compliance by the Company with certain
restrictive provisions of the Indenture. The holders of a majority in
aggregate principal amount of the Convertible Debentures then outstanding may,
on behalf of the holders of all Convertible Debentures, waive any past default
under the Indenture with respect to the Convertible Debentures except a
default (a) in the payment of principal of or any interest on the Convertible
Debentures and (b) in respect of a covenant or provision of the Indenture
which cannot be modified or amended without the consent of each holder of the
Convertible Debentures then outstanding.
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Meetings and Voting. A meeting may be called at any time by the Debenture
Trustee, and upon request, by the Company (pursuant to a resolution of the
Board) or the holders of at least 25% in principal amount of the Convertible
Debentures then outstanding. Except as described above under "Modifications of
Indentures" and "Waiver of Default," a resolution presented at a meeting or
reconvened meeting at which a quorum of the holders of Convertible Debentures
then outstanding is present may be adopted by the affirmative vote of the
lesser of (i) the holders of a majority in principal amount of the Convertible
Debentures then outstanding, or (ii) the holders of 66 2/3% in principal
amount of the Convertible Debentures then outstanding represented and voting
at the meeting; provided, however, that if any consent, waiver, or other
action which the Indenture expressly provides may be made, given, or taken by
the holders of a specified percentage, which is less than a majority of the
principal amount of the Convertible Debentures then outstanding, such action
may be adopted at a meeting or reconvened meeting at which a quorum is present
by the affirmative vote of the lesser of (a) the holders of such specified
percentage in principal amount of the Convertible Debentures then outstanding
or (b) a majority in principal amount of Convertible Debentures then
outstanding of such series represented and voting at the meeting. Any
resolution passed or decision taken at any meeting of holders of Convertible
Debentures duly held in accordance with the Indenture will be binding on all
holders of Convertible Debentures whether or not present or represented at the
meeting.
Except with respect to certain reconvened meetings, the quorum at a meeting
of the holders of a Convertible Debenture will be persons holding or
representing a majority in principal amount of the Convertible Debentures then
outstanding.
BOOK-ENTRY AND SETTLEMENT
If distributed to holders of Trust Convertible Preferred Securities in
connection with the involuntary or voluntary dissolution, winding-up, or
liquidation of the Trust as a result of the occurrence of a Special Event, the
Convertible Debentures will be issued in the form of one or more global
certificates registered in the name of the depository or its nominee. For
further detail, see "Book-Entry System--The Depository Trust Company" below.
THE DEPOSITORY
If the Convertible Debentures are distributed to holders of Trust
Convertible Preferred Securities in liquidation of such holders' interests in
the Trust, DTC will act as securities depository for the Convertible
Debentures. For a description of DTC and the specific terms of the depository
arrangements, see "Description of the Trust Convertible Preferred Securities--
Book-Entry Only Issuances".
None of the Company, the Trust, the Institutional Trustee, any paying agent
and any other agent of the Company or the Debenture Trustee will have any
responsibility or liability for any aspect of the records relating to or
payments made on account of beneficial ownership interests in a Global
Security for such Convertible Debentures or for maintaining, supervising or
reviewing any records relating to such beneficial ownership interests.
DISCONTINUANCE OF THE DEPOSITORY'S SERVICES
A Global Security shall be exchangeable for Convertible Debentures
registered in the names of persons other than the Depository or its nominee
only if (i) the Depository notifies the Company that it is unwilling or unable
to continue as a depository for such Global Security and no successor
depository shall have been appointed, (ii) the Depository, at any time, ceases
to be a clearing agency registered under the Exchange Act at which time the
Depository is required to be so registered to act as such depository and no
successor depository shall have been appointed, (iii) the Company, in its sole
discretion, determines that such Global Security shall be so exchangeable or
(iv) there shall have occurred an Indenture Event of Default with respect to
such Convertible Debentures. Any Global Security that is exchangeable pursuant
to the preceding sentence shall be exchangeable for Convertible Debentures
registered in such names as the Depository shall direct. It is expected that
such instructions will be based upon directions received by the Depository
from its Participants with respect to ownership of beneficial interests in
such Global Security.
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GOVERNING LAW
The Indenture and the Convertible Debentures will be governed by, and
construed in accordance with, the internal laws of the State of New York.
MISCELLANEOUS
The Indenture will provide that the Company will pay all fees and expenses
related to (i) the offering of the Trust Securities and the Convertible
Debentures, (ii) the organization, maintenance and dissolution of the Trust,
(iii) the retention of the Trustees and (iv) the enforcement by the
Institutional Trustee of the rights of the holders of the Trust Convertible
Preferred Securities. The payment of such fees and expenses will be fully and
unconditionally guaranteed by the Company.
The Company will have the right at all times to assign any of its respective
rights or obligations under the Indenture to a direct or indirect wholly owned
subsidiary of the Company; provided that, in the event of any such assignment,
the Company will remain liable for all of their respective obligations.
Subject to the foregoing, the Indenture will be binding upon and inure to the
benefit of the parties thereto and their respective successors and assigns.
The Indenture provides that it may not otherwise be assigned by the parties
thereto.
EFFECT OF OBLIGATIONS UNDER THE
CONVERTIBLE DEBENTURES AND THE GUARANTEE
As set forth in the Declaration, the sole purposes of the Trust are (a)
issuing its Trust Securities in exchange for Convertible Debentures having an
aggregate principal amount equal to the aggregate liquidation amount of such
Trust Securities and (b) engaging in such other activities as are necessary or
incidental thereto.
As long as payments of interest and other payments are made when due on the
Convertible Debentures, such payments will be sufficient to cover
distributions and payments due on the Trust Securities because of the
following factors: (i) the aggregate principal amount of Convertible
Debentures will be equal to the sum of the aggregate liquidation amount of the
Trust Securities; (ii) the interest rate and the interest and other payment
dates on the Convertible Debentures will match the distribution rate and
distribution and other payment dates for the Trust Convertible Preferred
Securities; (iii) the Company shall pay all, and the Trust shall not be
obligated to pay, directly or indirectly, costs, expenses, debt, and
obligations of the Trust (other than with respect to the Trust Securities);
and (iv) the Declaration further provides that the Trustees shall not take or
cause or permit the Trust to, among other things, engage in any activity that
is not consistent with the purposes of the Trust.
Payments of distributions (to the extent funds therefor are available) and
other payments due on the Trust Convertible Preferred Securities (to the
extent funds therefor are available) are guaranteed by the Company as and to
the extent set forth under "Description of the Guarantee". If the Company does
not make interest payments on the Convertible Debentures held by the Trust,
the Trust will not have sufficient funds to pay distributions on the Trust
Convertible Preferred Securities. The Guarantee is a full guarantee on a
subordinated basis with respect to the Trust Convertible Preferred Securities
issued by the Trust from the time of its issuance but does not apply to any
payment of distributions unless and until the Trust has sufficient funds for
the payment of such distributions. The Guarantee covers the payment of
distributions and other payments on the Trust Convertible Preferred Securities
only if and to the extent that the Company has made a payment of interest or
principal on the Convertible Debentures held by the Trust as its sole asset.
The Guarantee, when taken together with the Company's obligations under the
Convertible Debentures, the Indenture and the Declaration, including its
obligations to pay costs, expenses, debts and liabilities of the Trust (other
than with respect to the Trust Securities), provides a full and unconditional
guarantee of amounts on the Trust Convertible Preferred Securities.
If the Company fails to make interest or other payments on the Convertible
Debentures when due (taking account of any Extension Period), the Declaration
provides a mechanism whereby a holder of the Trust
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Convertible Preferred Securities, using the procedures described in
"Description of the Trust Convertible Preferred Securities--Book-Entry Only
Issuances," and "--Voting Rights," and "Book Entry System--The Depository
Trust Company" may direct the Institutional Trustee to enforce its rights
under the Convertible Debentures. Notwithstanding the foregoing, in such
circumstances a holder of Trust Convertible Preferred Securities may institute
a Direct Action for payment on or after the respective due date specified in
the Convertible Debentures. In connection with such Direct Action, the Company
will be subrogated to the rights of such holder of Trust Convertible Preferred
Securities in such Direct Action. The Company, under the Guarantee,
acknowledges that the Guarantee Trustee shall enforce the Guarantee on behalf
of the holders of the Trust Convertible Preferred Securities. If the Company
fails to make payments under the Guarantee, the Guarantee provides a mechanism
whereby the holders of the Trust Convertible Preferred Securities may direct
the Guarantee Trustee to enforce its rights thereunder. Any holder of Trust
Convertible Preferred Securities may institute a legal proceeding directly
against the Company to enforce such holder's right to receive payment under
the Guarantee without first instituting a legal proceeding against the Trust,
the Guarantee Trustee, or any other person or entity.
DESCRIPTION OF THE COMMON STOCK
The Board is authorized to issue a maximum of 750,000,000 shares of Common
Stock under the Company's Certificate of Incorporation, as amended (the
"Certificate of Incorporation"). As of June 30, 1996, 248,309,196 shares of
Common Stock were outstanding, 16,666,667 million shares were reserved for
issuance upon the conversion of the $3.50 Convertible Preferred Stock and
20,454,631 million shares were reserved for issuance in connection with the
Company's employee benefit plans, its directors' restricted stock plan and its
dividend reinvestment and common stock purchase plan.
The following summary of the rights of holders of the Common Stock does not
purport to be complete and is subject in all respects to the applicable
provisions of the Delaware General Corporation Law, the Certificate of
Incorporation, and the Company's bylaws (the "Bylaws").
CERTAIN RIGHTS OF HOLDERS OF THE COMMON STOCK
Dividend Rights: Subject to the prior rights of the holders of any class of
the Company's preferred stock, if any, holders of the Common Stock are
entitled to receive such dividends as are declared by the Board out of funds
legally available therefor.
Voting Rights: Subject to the rights of the holders of any class of the
Company's preferred stock, if any, all voting rights are vested in the holders
of shares of Common Stock, each share being entitled to one vote on all
matters presented for a vote (except for those matters for which a separate
class vote is required under Delaware law). The holders of one-third of the
shares entitled to vote constitute a quorum at any meeting of stockholders.
Holders of shares of Common Stock do not have cumulative voting rights, which
means that holders of more than 50% of the shares voting for the election of
directors can elect 100% of the directors standing for election, if they
choose to do so, and the holders of the remaining shares voting for the
election of directors will not be able to elect any person or persons to the
Board. The Board is divided into three classes, and directors normally serve
three-year staggered terms. One of the classes is presented for election at
each annual meeting, so that the entire Board is never presented for election
in any one year.
Liquidation Rights: Subject to the rights of the holders of any class of the
Company's preferred stock, if any, in the event of liquidation of the Company,
holders of the Common Stock will share pro rata in all assets distributable to
stockholders in respect of shares held by them.
Preemptive Rights: Holders of the Common Stock are not entitled to any
preemptive rights to subscribe for any securities that may be issued by the
Company.
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ChaseMellon Shareholder Services, L.L.C. ("ChaseMellon"), Encino,
California, is the transfer agent and registrar for the Common Stock. The
Common Stock may also be presented for transfer at the office of ChaseMellon,
New York, New York.
RIGHTS TO PURCHASE SERIES A PREFERRED STOCK
In January 1990, the Board adopted a stockholder rights plan (the "Rights
Plan") and declared a dividend of one right (a "Right" and collectively, the
"Rights") for, and to be attached to, each outstanding share of the Common
Stock. The resolutions creating the Rights Plan provide that as long as the
Rights are attached to shares of Common Stock, as provided in the "Rights
Agreement" referred to below, one additional Right will be issued and
delivered with each share of the Common Stock that becomes outstanding after
February 12, 1990. Each Right entitles the holder thereof to purchase one one-
hundredth (1/100th) of a share of preferred stock designated as the Series A
Junior Participating Cumulative Preferred Stock ("Series A Preferred Stock").
The Rights will expire on January 29, 2000, unless redeemed earlier, and will
not be exercisable or transferable separately from the shares of Common Stock
until the close of business on the earlier of (i) the tenth day following a
public announcement that a person or group of affiliated or associated persons
(a "15% Stockholder") has acquired, or obtained the right to acquire,
beneficial ownership of 15% or more of the outstanding Common Stock or (ii)
the date of the commencement or the announcement of an intention to make a
tender or exchange offer that would cause any person or group to become a 15%
Stockholder (the "Distribution Date"). The Rights Plan is expected to have the
effect of rendering certain changes of control of the Company more difficult.
Pursuant to the Rights Plan, 3,000,000 shares of Series A Preferred Stock
have been designated and reserved for issuance upon exercise of the Rights. An
additional number of shares of Series A Preferred Stock equal to one one-
hundredth of the number of shares of Common Stock will be reserved for
issuance in connection with an issuance of preferred stock or the Common Stock
of the Company, whether issued directly, upon exercise of equity warrants, or
upon conversion of any convertible preferred stock or debt securities
(including the Convertible Debentures) of the Company.
A description of the Rights and the Series A Preferred Stock is set forth in
the Rights Agreement, dated January 29, 1990 and as amended, between the
Company and The Chase Manhattan Bank, as successor rights agent, which is
included as exhibit to the Registration Statement of which this Prospectus is
a part.
CERTAIN PROVISIONS OF THE CERTIFICATE OF INCORPORATION AND BYLAWS
The Certificate of Incorporation and Bylaws contain certain provisions that
may have the effect of rendering a change of control of the Company more
difficult. The Board is divided into three classes, and normally serve three-
year staggered terms. Special meetings of the Company's stockholders generally
may be called only by the Board, and any action required or permitted to be
taken by the stockholders must be taken at an annual or special meeting and
may not be effected by written consent. The vote of 75% of the outstanding
stock of the Company entitled to vote is required for the stockholders to
adopt, amend or repeal bylaws. Such a 75% vote is also required for approval
of a merger or consolidation of the Company, and certain other transactions,
with another corporation that owns beneficially, with its affiliates, more
than 10% of the total voting power of all outstanding shares of the Company's
voting stock (a "Related Corporation"), unless such a transaction was approved
by 75% of the directors of the Company prior to the Related Corporation
becoming such. The Certificate of Incorporation also requires such a 75% vote
to repeal or amend any of the foregoing provisions.
The Bylaws require 30 days' advance notice of, and specified information
with respect to, nominations by stockholders of persons for election as
directors and other business to be brought before an annual meeting by a
stockholder.
As set forth below under "Description of the $3.50 Convertible Preferred
Stock," the Board has the authority, without further stockholder action, to
provide for the issuance of preferred stock of the Company and to fix the
terms thereof. Provisions which could render a change of control of the
Company more difficult, such
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as extraordinary voting, dividend, redemption or conversion rights, could be
included in the terms of preferred stock. The Board has adopted a policy that
it will not authorize the issuance of voting preferred stock for the sole or
principal purpose of deterring an unsolicited takeover bid for the Company.
However, this policy does not prevent or restrain the Board from taking any
action necessary in the discharge of its fiduciary duties or from authorizing
preferred stock in connection with a transaction approved by stockholders,
employee or executive plans, a rights offering or the Rights Plan, or to
existing stockholders in connection with a recapitalization or
reclassification.
DESCRIPTION OF THE $3.50 CONVERTIBLE PREFERRED STOCK
GENERAL
Under the Certificate of Incorporation, the Board is authorized without
further stockholder action to provide for the issuance of up to 100,000,000
shares of preferred stock, $.10 par value, in one or more series, with such
voting powers or without voting powers, and with such designations,
preferences and relative, participating, optional or other special rights, and
qualifications, limitations or restrictions, as shall be set forth in
resolutions providing for the issue therefor adopted by the Board. As of the
date of this Prospectus, the Company has issued, pursuant to a certificate of
designations (the "Certificate of Designations"), 10,250,000 shares of
preferred stock, all of which are shares of $3.50 Convertible Preferred Stock.
The transfer agent, registrar, dividend disbursing agent, and redemption
agent for the $3.50 Convertible Preferred Stock is ChaseMellon. The registrar
for the $3.50 Convertible Preferred Stock will send notices to stockholders of
any special meetings at which Holders thereof will have the right to elect
directors of the Company. See "--Voting Rights".
DIVIDENDS
Holders of $3.50 Convertible Preferred Stock are entitled to receive, when,
as and if declared by the Board, out of funds legally available for payment,
cash dividends at an annual rate of $3.50 per share, payable in arrears on
January 15, April 15, July 15, and October 15 of each year. Each such dividend
is payable to Holders of record as they appear on the Company's stock register
on such record dates, not more than 60 days nor less than 10 days preceding
the payment dates thereof, as fixed by the Board. Dividends payable for each
full dividend period equal $0.875 per share of $3.50 Convertible Preferred
Stock. Dividends payable for any period less than a full dividend period are
computed on the basis of a 360-day year consisting of twelve 30-day months.
Dividends on each share of $3.50 Convertible Preferred Stock cumulate to (but
excluding) the earlier of the redemption date for such share or the date of
final distribution upon liquidation, dissolution, or winding up of the
Company. Holders of $3.50 Convertible Preferred Stock are not entitled to any
dividend, whether payable in cash, property or stock, in excess of full
cumulative dividends. No interest, or sum of money in lieu of interest, is
payable in respect of any dividend payment or payments which may be in
arrears.
If there are outstanding shares of any other class or series of preferred
stock of the Company ranking junior to (including the Series A Preferred Stock
described under "Description of the Common Stock--Rights to Purchase Series A
Preferred Stock") or on a parity with the $3.50 Convertible Preferred Stock as
to dividends, no full dividends may be declared or paid or set apart for
payment on any such other series for any period unless full cumulative
dividends have been or contemporaneously are declared and paid (or declared
and a sum sufficient for the payment thereof is set apart for such payment) on
the $3.50 Convertible Preferred Stock for all dividend payment periods
terminating on or prior to the date of the payment of such full cumulative
dividends. When dividends are not paid in full on the $3.50 Convertible
Preferred Stock and on any other series of preferred stock of the Company
ranking on a parity as to dividends with the $3.50 Convertible Preferred
Stock, all dividends declared upon all outstanding shares of $3.50 Convertible
Preferred Stock and shares of such other series of preferred stock will be
declared pro rata so that the amounts of dividends declared per share on the
$3.50 Convertible Preferred Stock and such other preferred stock will in all
cases bear to each other the same
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ratio that accumulated and unpaid dividends per share on the shares of $3.50
Convertible Preferred Stock and such other preferred stock bear to each other.
Unless full cumulative dividends on all outstanding shares of $3.50
Convertible Preferred Stock have been paid or declared and set apart for
payment for all past dividend payment periods, no dividend (other than a
dividend in the Common Stock or in any other stock of the Company ranking
junior to the $3.50 Convertible Preferred Stock as to dividends and upon
liquidation and other than as provided in the preceding paragraph) may be
declared or paid or set apart for payment or other distribution declared or
made upon the Common Stock or upon any other stock of the Company ranking
junior to or on a parity with the $3.50 Convertible Preferred Stock as to
dividends or upon liquidation, nor may any of the Common Stock or any other
stock of the Company ranking junior to or on a parity with the $3.50
Convertible Preferred Stock as to dividends or upon liquidation be redeemed,
purchased or otherwise acquired for any consideration (or any moneys be paid
to or made available for a sinking fund for the redemption of any shares of
any such stock) by the Company (except by conversion into or exchange for
stock of the Company ranking junior to the $3.50 Convertible Preferred Stock
as to dividends and upon liquidation). These restrictions do not prevent the
Company from making contributions to its employee benefit plans or from
redeeming Rights pursuant to its Rights Plan.
Holders of shares of $3.50 Convertible Preferred Stock called for redemption
on a redemption date between a dividend record date and the corresponding
dividend payment date are not entitled to receive the dividend payable on such
dividend payment date.
LIQUIDATION RIGHTS
In the event of any voluntary or involuntary dissolution, liquidation, or
winding up of the Company, the Holders of $3.50 Convertible Preferred Stock
will be entitled to receive and to be paid out of the Company's assets
available for distribution to its stockholders, before any payment or
distribution is made to holders of the Common Stock or any other class of
stock of the Company ranking junior to the $3.50 Convertible Preferred Stock
upon liquidation (including the Series A Preferred Stock), a liquidation
preference in the amount of $50 per share of the $3.50 Convertible Preferred
Stock plus accumulated and unpaid dividends. If, upon any voluntary or
involuntary dissolution, liquidation, or winding up of the Company, the
amounts payable with respect to the liquidation preference of the $3.50
Convertible Preferred Stock and any other shares of stock of the Company
ranking as to any such distribution on a parity with the $3.50 Convertible
Preferred Stock are not paid in full, the Holders of $3.50 Convertible
Preferred Stock and of such other shares will share ratably in any such
distribution of assets of the Company in proportion to the full distributable
amounts to which they are entitled as measured by liquidation preferences.
After payment of the full amount of the liquidating distribution to which they
are entitled, the Holders of $3.50 Convertible Preferred Stock will have no
right or claim to any of the remaining assets of the Company. Neither the sale
of all or substantially all of the property or business of the Company (other
than in connection with the winding up of its business), nor the merger or
consolidation of the Company into or with any other corporation will be
considered a dissolution, liquidation, or winding up of the Company.
The right of the Company, and hence the right of Holders of $3.50
Convertible Preferred Stock and other stockholders and creditors of the
Company, to participate in any distribution of assets of any subsidiary
(including Union Oil) upon its liquidation or reorganization or otherwise is
necessarily subject to the prior claims of creditors of the subsidiary, except
to the extent that claims of the Company itself as a creditor of the
subsidiary are recognized.
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OPTIONAL REDEMPTION
The $3.50 Convertible Preferred Stock is not subject to any mandatory
redemption, sinking fund, or other similar provisions. Since July 15, 1996,
the $3.50 Convertible Preferred Stock has been redeemable in whole or in part,
at the Company's option, upon not less than 30 days' notice nor more than 60
days' notice, during the twelve-month periods commencing on July 15 of the
years indicated below at the following redemption prices per share (expressed
as a percentage of the $50 liquidation preference thereof), plus accumulated
and unpaid dividends, if any, up to but excluding the date fixed for
redemption:
<TABLE>
<CAPTION>
REDEMPTION
YEAR PRICE
---- ----------
<S> <C>
1996.............................................................. 104.2%
1997.............................................................. 103.5%
1998.............................................................. 102.8%
1999.............................................................. 102.1%
2000.............................................................. 101.4%
2001.............................................................. 100.7%
2002 and thereafter............................................... 100.0%
</TABLE>
In the event that fewer than all the outstanding shares of $3.50 Convertible
Preferred Stock are to be redeemed, the shares to be redeemed will be
determined by lot or pro rata or by any other method as may be determined by
the Board to be equitable.
From and after the applicable redemption date (unless default shall be made
by the Company in providing money for the payment of the redemption price),
dividends on the shares of $3.50 Convertible Preferred Stock to be redeemed on
such redemption date shall cease to accrue, said shares shall no longer be
deemed to be outstanding, the Holders thereof shall cease to be stockholders
of the Company, and all rights with respect to said shares (except the right
to receive the redemption price without interest) will terminate. Holders of
shares of $3.50 Convertible Preferred Stock called for redemption on a
redemption date between a dividend record date and the corresponding dividend
payment date are not entitled to receive the dividend payable on such dividend
payment date.
If any dividends on the $3.50 Convertible Preferred Stock are in arrears, no
shares of the Preferred Stock will be redeemed unless all outstanding shares
of $3.50 Convertible Preferred Stock are simultaneously redeemed.
Holders of $3.50 Convertible Preferred Stock have no right to require
redemption of the $3.50 Convertible Preferred Stock.
VOTING RIGHTS
Holders of $3.50 Convertible Preferred Stock have no voting rights except as
set forth below or as otherwise from time to time required by law.
If the equivalent of six quarterly dividends payable on the $3.50
Convertible Preferred Stock or any other series of preferred stock of the
Company are in default, the number of directors of the Company will be
increased by two and the Holders of all outstanding shares of $3.50
Convertible Preferred Stock and all other outstanding shares of preferred
stock having similar voting rights, voting as a single class without regard to
series and with no cumulative voting, to the exclusion of the holders of the
Common Stock, will be entitled to elect those two additional directors, who
shall serve until all dividends in default have been paid or declared and set
apart for payment.
Unless the vote or consent of the Holders of a greater number of shares is
then required by law, the affirmative vote or consent of the Holders of at
least 66 2/3% of the outstanding shares of $3.50 Convertible
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Preferred Stock, voting as a class, will be required for any amendment,
alteration or repeal of the Certificate of Incorporation (including any
certificate amendatory thereof or supplemental thereto providing for the
capital stock of the Company, including any Certificate of Designation or
similar document relating to the $3.50 Convertible Preferred Stock) which
would adversely affect the preferences, rights, powers or privileges of the
$3.50 Convertible Preferred Stock. Unless the vote or consent of the Holders
of a greater number of shares is then required by law, the affirmative vote or
consent of the Holders of at least 66 2/3% of the outstanding shares of $3.50
Convertible Preferred Stock and any other series of preferred stock of the
Company ranking on a parity with the $3.50 Convertible Preferred Stock either
as to dividends or upon liquidation, voting as a single class without regard
to series, will be required to create, authorize or issue, or reclassify any
authorized stock of the Company into, or create, authorize, or issue any
obligation or security convertible into or evidencing a right to purchase, any
shares of any class of stock of the Company ranking prior to the $3.50
Convertible Preferred Stock as to dividends or upon liquidation.
The Certificate of Incorporation may be amended to increase the number of
authorized shares of preferred stock without the vote of the Holders of the
outstanding shares of $3.50 Convertible Preferred Stock.
CONVERSION RIGHTS
The $3.50 Convertible Preferred Stock is convertible at the option of the
holder thereof into such number of shares of Common Stock as is equal to the
aggregate liquidation preference amount of shares of $3.50 Convertible
Preferred Stock surrendered for conversion divided by the conversion price
(except that a share of $3.50 Convertible Preferred Stock called for
redemption will be convertible up to and including but not after the close of
business on the day fixed for redemption, unless the Company defaults in
making payment of the amount payable upon redemption). As of the date of this
Prospectus, the conversion price is $30.75.
No fractional shares of Common Stock or securities representing fractional
shares of Common Stock will be issued upon conversion. Any fractional interest
in a share of the Common Stock resulting from conversion will be paid in cash
based on the market price of the Common Stock (determined as set forth in the
Certificate of Designations).
The conversion price is subject to adjustment (under formulas set forth in
the Certificate of Designation) in certain events, including: the issuance of
the Common Stock as a dividend or distribution on its capital stock;
subdivisions and combinations of the shares of Common Stock; the issuance to
all holders of the Common Stock of certain rights or warrants entitling them
to subscribe for or purchase the Common Stock at less than the current market
price (as defined in the Certificate of Designation); and the distribution to
all holders of the Common Stock of evidences of indebtedness of the Company,
capital stock, or assets (excluding the Common Stock, cash dividends,
distributions in connection with liquidation, dissolution, or winding up of
the Company, and those rights or warrants referred to above), unless the
Company reserves such distribution for the Holders of $3.50 Convertible
Preferred Stock upon conversion.
If the Company shall be a party to a recapitalization, reclassification,
consolidation, merger, sale or transfer of all or substantially all of its
assets or share exchange (including any (i) recapitalization or
reclassification of shares of Common Stock (other than a change in par value
or as a result of a subdivision or combination of the Common Stock), (ii)
consolidation or merger of the Company with or into another person, other than
a merger that does not result in a reclassification, conversion, exchange or
cancellation of the Common Stock, (iii) any sale or transfer of all or
substantially all of the assets of the Company, or (iv) any compulsory share
exchange, pursuant to which the Common Stock is converted to the right to
receive other securities, cash or other property), then lawful provision shall
be made so that the holder of each share of $3.50 Convertible Preferred Stock
then outstanding shall have the right thereafter to convert such share only
into (x) in the case of a Non-Stock Fundamental Change (as defined below) and
subject to funds being legally available for such purpose under applicable law
at the time of such conversion, the kind and amount of the securities, cash
and other property receivable upon such transaction by a holder of the number
of shares of Common Stock issuable upon conversion of such share of $3.50
Convertible Preferred Stock immediately prior to such transaction after giving
effect to
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any adjustment in the conversion price in accordance with clause (i) of the
following paragraph, and (y) in the case of a Common Stock Fundamental Change
(as defined below), common stock of the kind received by holders of the Common
Stock as a result of such Common Stock Fundamental Change in an amount
determined in accordance with clause (ii) of the following paragraph. The
company formed by such consolidation, resulting from such merger, or acquiring
such assets or the Company's shares, as the case may be, shall make provisions
in its certificate or articles of incorporation or other constituent document
to establish such right. Such certificate or articles of incorporation or
other constituent document shall provide for adjustments which, for events
subsequent to the effective date of such certificate or articles of
incorporation or other constituent document, shall be as nearly equivalent as
practical to the relevant adjustments provided for in specified portions of
the Certificate of Designations.
Notwithstanding any other provision in the preceding paragraphs, if any
Fundamental Change (as defined below) occurs, the conversion price in effect
will be adjusted immediately after that Fundamental Change as follows:
(i) in the case of a Non-Stock Fundamental Change, the conversion price
of the shares of $3.50 Convertible Preferred Stock will be the lower of (A)
the conversion price in effect immediately prior to such Non-Stock
Fundamental Change and (B) the product of (1) the greater of the Applicable
Price (as defined below) and the Reference Market Price (as defined below)
and (2) a fraction, the numerator of which is $50 and the denominator of
which is the amount at which one share of $3.50 Convertible Preferred Stock
would be redeemed by the Company if the redemption date were the date of
the Non-Stock Fundamental Change (the denominator being the sum of (y) the
product of the percentage (expressed as a decimal) set forth in the table
under the caption "Optional Redemption" and $50, and (z) any accumulated
and unpaid dividends on the $3.50 Convertible Preferred Stock); and
(ii) in the case of a Common Stock Fundamental Change, the conversion
price of the shares of $3.50 Convertible Preferred Stock immediately
following the Common Stock Fundamental Change will be the conversion price
in effect immediately prior to the Common Stock Fundamental Change
multiplied by a fraction, the numerator of which is the Purchaser Stock
Price (as defined below) and the denominator of which is the Applicable
Price; provided, however, that in the event of a Common Stock Fundamental
Change in which (A) 100% of the value of the consideration received by a
holder of the Common Stock is common stock of the successor, acquiror, or
other third party (and cash, if any, paid with respect to any fractional
interests in that common stock resulting from the Common Stock Fundamental
Change) and (B) all of the Common Stock of the Company shall have been
exchanged for, converted into, or acquired for, common stock of the
successor, acquiror or other third party, the conversion price of the
shares of $3.50 Convertible Preferred Stock immediately following the
Common Stock Fundamental Change shall be the conversion price in effect
immediately prior to the Common Stock Fundamental Change multiplied by a
fraction, the numerator of which is one (1) and the denominator of which is
the number of shares of common stock of the successor, acquiror, or other
third party received by a holder of one share of the Common Stock as a
result of the Common Stock Fundamental Change.
Depending upon whether the Fundamental Change is a Non-Stock Fundamental
Change or Common Stock Fundamental Change, a holder may receive significantly
different consideration upon conversion. In the event of a Non-Stock
Fundamental Change, the holder has the right to convert shares of $3.50
Convertible Preferred Stock into the kind and amount of the shares of stock
and other securities or property or assets (including cash), except as
otherwise provided above, as is determined by the number of shares of Common
Stock receivable upon conversion at the conversion price as adjusted in
accordance with clause (i) of the preceding paragraph. However, in the event
of a Common Stock Fundamental Change in which less than 100% of the value of
the consideration received by a holder of the Common Stock is common stock of
the successor, acquiror or other third party, a holder of a share of $3.50
Convertible Preferred Stock who converts such share following the Common Stock
Fundamental Change will receive consideration in the form of such common stock
only, whereas a holder who converted such share prior to the Common Stock
Fundamental Change received consideration in the form of such common stock as
well as any other securities or assets (which may include cash) issuable upon
conversion of such share of $3.50 Convertible Preferred Stock immediately
prior to such Common Stock Fundamental Change.
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For purposes of the "Description of the $3.50 Convertible Preferred Stock",
the following terms shall have the designated meanings:
The term "Applicable Price" means (i) in the event of a Non-Stock
Fundamental Change in which the holders of the Common Stock receive only cash,
the amount of cash received by a holder of one share of the Common Stock and
(ii) in the event of any other Non-Stock Fundamental Change or any Common
Stock Fundamental Change, the average of the Closing Prices (determined as
provided in the Certificate of Designation) for one share of the Common Stock
during the ten trading days immediately prior to the record date for the
determination of the holders of the Common Stock entitled to receive cash,
securities, property or other assets in connection with such Non-Stock
Fundamental Change or Common Stock Fundamental Change or, if there is no such
record date, prior to the date on which the holders of the Common Stock will
have the right to receive such cash, securities, property or other assets.
The term "Common Stock Fundamental Change" means any Fundamental Change in
which more than 50% of the value (as determined in good faith by the Board) of
the consideration received by holders of the Common Stock consists of common
stock that, for the ten trading days immediately prior to such Fundamental
Change, has been admitted for listing on a national securities exchange or
quoted on the Nasdaq National Market System; provided, however, that a
Fundamental Change will not be a Common Stock Fundamental Change unless either
(i) the Company continues to exist after the occurrence of such Fundamental
Change and the outstanding shares of $3.50 Convertible Preferred Stock
continue to exist as outstanding shares of $3.50 Convertible Preferred Stock,
or (ii) not later than the occurrence of such Fundamental Change, the
outstanding shares of $3.50 Convertible Preferred Stock are converted into or
exchanged for shares of convertible preferred stock of a corporation
succeeding to the business of the Company, which convertible preferred stock
has powers, preferences and relative, participating, optional or other rights,
and qualifications, limitations and restrictions substantially similar to
those of the $3.50 Convertible Preferred Stock.
The term "Fundamental Change" means the occurrence of any transaction or
event in connection with a plan pursuant to which all or substantially all of
the Common Stock of the Company is exchanged for, converted into, acquired for
or constitutes solely the right to receive cash, securities, property or other
assets (whether by means of an exchange offer, liquidation, tender offer,
consolidation, merger, combination, reclassification, recapitalization or
otherwise); provided, however, in the case of a plan involving more than one
such transaction or event, for purposes of adjustment of the conversion price,
a Fundamental Change will be deemed to have occurred when substantially all of
the Common Stock has been exchanged for, converted into, or acquired for, or
constitutes solely the right to receive cash, securities, property or other
assets, but the adjustment shall be based upon the consideration that the
holders of the Common Stock received in the transaction or event as a result
of which more than 50% of the Common Stock is exchanged for, converted into,
or acquired for, or constitutes solely the right to receive cash, securities,
property or other assets; and provided, further, that the term does not
include (i) any transaction or event in which the Company and/or any of its
subsidiaries are the issuers of all the cash, securities, property or other
assets exchanged, acquired or otherwise issued in the transaction or event, or
(ii) any transaction or event in which the holders of the Common Stock receive
securities of an issuer other than the Company if, immediately following the
transaction or event, those holders hold a majority of the securities having
the power to vote normally in the election of directors of the other issuer
outstanding immediately following the transaction or other event.
The term "Non-Stock Fundamental Change" means any Fundamental Change other
than a Common Stock Fundamental Change.
The term "Purchaser Stock Price" means, with respect to any Common Stock
Fundamental Change, the average of the reported last sale prices for one share
of the common stock received by holders of the Common Stock in that Common
Stock Fundamental Change during the ten trading days immediately prior to the
record date for the determination of the holders of the Common Stock entitled
to receive that common stock or, if there is no such record date, prior to the
date upon which the holders of the Common Stock shall have the right to
receive the common stock.
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The term "Reference Market Price" means $17.00 as of the date of this
Prospectus and, in the event of any adjustment to the conversion price as
described in the third paragraph of this subsection, the Reference Market
Price will also be adjusted so that the ratio of the Reference Market Price to
the conversion price after giving effect to any adjustment will always be the
same as the ratio of $17.00 (the initial Reference Market Price) to $30.75
(the initial conversion price for the Preferred Stock); which is 1 to 1.8088.
No adjustment in the conversion price will be required unless the adjustment
would require a change of at least 1% in the conversion price then in effect;
provided, however, that any adjustment that would otherwise be required to be
made shall be carried forward and taken into account in any subsequent
adjustment. The Company reserves the right to make any reduction in the
conversion price in addition to those required in the foregoing provisions as
the Company considers to be advisable to avoid or diminish income taxes to the
Company's stockholders resulting from certain stock-related distributions.
Except as stated above, the conversion price will not be adjusted for the
issuance of the Common Stock or any securities convertible into or
exchangeable for the Common Stock or carrying the right to purchase any of the
foregoing.
The Holders of shares of $3.50 Convertible Preferred Stock at the close of
business on a dividend record date are entitled to receive the dividend
payable on those shares (except that Holders of shares called for redemption
on a redemption date between the record date and the dividend payment date
will not be entitled to receive such dividend) on the corresponding dividend
payment date notwithstanding the subsequent conversion thereof. However,
shares of $3.50 Convertible Preferred Stock surrendered for conversion during
the period between the close of business on any dividend record date and the
opening of business on the corresponding dividend payment date (except shares
called for redemption on a redemption date during that period) must be
accompanied by payment of an amount equal to the dividend payable on the
shares on that dividend payment date. A holder of shares of $3.50 Convertible
Preferred Stock on a dividend record date who (or whose transferee) tenders
any shares for conversion on or after a dividend payment date will receive the
dividend payable by the Company on $3.50 Convertible Preferred Stock on that
date, and the converting holder need not include payment in the amount of such
dividend upon surrender of shares of $3.50 Convertible Preferred Stock for
conversion. Except as provided above, the Company will not make any payment or
adjustment on conversion in respect of dividends, whether or not in arrears,
on shares surrendered for conversion or on account of dividends on the shares
of Common Stock issued upon conversion.
BOOK-ENTRY; DELIVERY AND FORM
Except as described in the next paragraph, the shares of $3.50 Convertible
Preferred Stock are on deposit with, or on behalf of, DTC and are registered
in the name of Cede in the form of a global $3.50 Convertible Preferred Stock
certificate, and investors hold their interests therein directly through DTC,
or indirectly through organizations which are participants in DTC. A more
detailed description of the DTC book-entry system is set forth in "Book-Entry
System--The Depository Trust Company" below.
Shares of $3.50 Convertible Preferred Stock (i) held by certain foreign
purchasers or accredited institutional investors who are not qualified
institutional buyers (the "Non-Global Purchasers") or (ii) if DTC is at any
time unwilling or unable to continue as depositary and a successor depositary
is not appointed by the Company within 90 days, issued by the Company in
definitive form in exchange for the global certificate are "Certificated $3.50
Convertible Preferred Shares". There are restrictions on the transfer of
Certificated $3.50 Convertible Preferred Shares.
The redemption price of Certificated $3.50 Convertible Preferred Shares will
be payable upon redemption by wire transfer of immediately available funds
upon presentation and surrender of such Certificated $3.50 Convertible
Preferred Shares at the Company's principal office or at the office or agency
of the Company maintained for such purpose in the Borough of Manhattan, the
City of New York. Dividends on the Certificated $3.50 Convertible Preferred
Shares will be payable on each dividend payment date by check mailed to the
persons in whose names such shares are registered on the record date preceding
such dividend payment date; provided that any such person will be entitled to
receive such dividend payment by wire transfer of immediately
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available funds if appropriate wire transfer instructions have been received
by ChaseMellon, the transfer agent, not later than the record date preceding
such dividend payment date and the amount of such payment is equal to or
greater than the minimum amount required for a wire transfer under
ChaseMellon's rules for operations at the time of payment.
BOOK-ENTRY SYSTEM--THE DEPOSITORY TRUST COMPANY
DTC acts as securities depositary (the "Depository") for the $3.50
Convertible Preferred Stock, will act as the Depository for the Trust
Convertible Preferred Securities and, if such are distributed to the holders
of Trust Convertible Preferred Securities as described herein, is expected to
act as the Depository for the Convertible Debentures. For purposes of the
description of the book-entry system below, the Trust Convertible Preferred
Securities, the $3.50 Convertible Preferred Stock and the Convertible
Debentures are referred to as the "Convertible Securities".
DTC is a limited-purpose trust company organized under the New York Banking
Law, a "banking organization" within the meaning of the New York Banking Law,
a member of the Federal Reserve System, a "clearing corporation" within the
meaning of the New York Uniform Commercial Code and a "clearing agency"
registered pursuant to the provisions of Section 17A of the Exchange Act. DTC
holds securities that its participants (the "Participants") deposit with DTC.
DTC also facilitates the settlement among Participants of securities
transactions, such as transfers and pledges, in deposited securities through
electronic computerized book-entry changes in Participants' accounts, thereby
eliminating the need for physical movement of securities certificates. Direct
Participants include securities brokers and dealers, banks, trust companies,
clearing corporations and certain other organizations (the "Direct
Participants"). DTC is owned by a number of its Direct Participants and by the
NYSE, the American Stock Exchange, Inc., and the National Association of
Securities Dealers, Inc. Access to the DTC system is also available to others,
such as securities brokers and dealers, banks, and trust companies that clear
transactions through or maintain a direct or indirect custodial relationship
with a Direct Participant either directly or indirectly ("Indirect
Participants"). The rules applicable to DTC and its Participants are on file
with the SEC.
The ownership interest of each actual owner of a Convertible Security
("Beneficial Owner") within the DTC system is recorded on the Direct and
Indirect Participants' records and is credited to the Direct Participant on
DTC's records. Beneficial Owners do not receive written confirmation from DTC
of their transactions, but Beneficial Owners are expected to receive written
confirmations providing details of the transactions, as well as periodic
statements of their holdings, from the Direct or Indirect Participants through
which the Beneficial Owners exchanged or hold Convertible Securities.
Transfers of ownership interests in the Convertible Securities are to be
accomplished by entries made on the books of Participants acting on behalf of
Beneficial Owners. Beneficial Owners will not receive certificates
representing their ownership interests in a Convertible Security, except in
the event that use of the book-entry system for such Convertible Security is
discontinued.
The laws of some jurisdictions require that certain purchasers of securities
take physical delivery of securities in definitive form. Such laws may impair
the ability to transfer beneficial interests in the Convertible Securities
represented by a global certificate.
To facilitate subsequent transfers, all the Convertible Securities deposited
by Participants with DTC are registered in the name of Cede. The deposit of
Convertible Securities with DTC and their registration in the name of Cede
effect no change in beneficial ownership. DTC has no knowledge of the identity
of the Beneficial Owners of the Convertible Securities, as its records reflect
only the identity of the Direct Participants to whose accounts such
Convertible Securities are credited, which may or may not be the Beneficial
Owners. The Participants will remain responsible for keeping account of their
holdings on behalf of their customers.
Conveyance of notices and other communications by DTC to Direct
Participants, by Direct Participants to Indirect Participants and by Direct
Participants and Indirect Participants to Beneficial Owners will be governed
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by arrangements among them, subject to any statutory or regulatory
requirements that may be in effect from time to time.
Redemptions are coordinated through DTC. Redemption notices shall be sent to
Cede. If less than all of the Convertible Securities held by DTC are being
redeemed, DTC will reduce the amount of the interest of each Direct
Participant in such Convertible Securities in accordance with its procedures.
Conversions are coordinated through DTC. Conversions notices shall be sent
to Cede by a Direct Participant for the benefit of Beneficial Owners. DTC will
reduce the amount of interest of a Direct Participant in the Convertible
Securities as result of any such conversion in accordance with its procedures.
Additionally, although voting with respect to the Convertible Securities is
limited, in those cases where a vote is required, neither DTC nor Cede will
itself consent or vote with respect to such securities. Under its usual
procedures, DTC would mail an Omnibus Proxy to the issuer of the Convertible
Security for which a vote is being solicited as soon as possible after the
record date. The Omnibus Proxy assigns Cede consenting or voting rights to
those Direct Participants to whose accounts the voting Convertible Securities
are credited on the record date (identified in a listing attached to the
Omnibus Proxy). The Company and the Trust believe that the arrangements among
DTC, Direct and Indirect Participants, and Beneficial Owners will enable the
Beneficial Owners to exercise rights equivalent in substance to the rights
that can be directly exercised by a holder of a Convertible Security.
Distribution payments on the Convertible Securities are made to DTC. DTC's
practice is to credit Direct Participants' accounts on the relevant payment
date in accordance with their respective holdings shown of DTC's record unless
DTC has reason to believe that it will not receive payments on such payment
date. Payments by Participants to Beneficial Owners will be governed by
standing instructions and customary practices, as is the case with securities
held for the account of customers in bearer form or registered in "street
name," and such payments will be the responsibility of such Participant and
not of DTC, the Trust, or the Company, subject to any statutory or regulatory
requirements to the contrary that may be in effect from time to time. Payment
of distributions to DTC is the responsibility of the issuer of the Convertible
Security, disbursement of such payments to the Beneficial Owners is the
responsibility of Direct and Indirect Participants.
DTC has advised the Company that it will take any action permitted to be
taken by a holder of the Convertible Securities (including, without
limitation, the presentation of a stock certificate for conversion) only at
the direction of one or more Participants to whose account with DTC interests
in shares presented by a global certificate are credited and only in respect
of such number of the shares of the Convertible Securities represented by a
global certificate as to which such Participants have given such direction.
Except as provided herein, a Beneficial Owner in a global Convertible
Security certificate will not be entitled to receive physical delivery of such
securities. Accordingly, each Beneficial Owner must rely on the procedures of
DTC to exercise any rights under such securities. Because DTC can only act on
behalf of Participants, who in turn act on behalf of Indirect Participants,
the ability of a person having a beneficial interest in shares represented by
a global certificate to pledge such interest to persons or entities that do
not participate in the DTC system, or otherwise take actions in respect of
such interest, may be affected by the lack of a physical certificate of such
interest.
DTC may discontinue providing its services as Depository with respect to the
Convertible Securities at any time by giving reasonable notice to the issuer.
Under such circumstances, in the event that a successor securities depositary
is not obtained, certificates for the Convertible Securities for which DTC has
discontinued its services are required to be printed and delivered.
Additionally, the issuer of the Convertible Security may decide to discontinue
use of the system of book-entry transfers through DTC (or any successor
depositary) with respect to its Convertible Securities. In that event,
certificates for such Convertible Securities will be printed and delivered.
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The information in this section concerning DTC and DTC's book-entry system
has been obtained from sources that the Company and the Trust believe to be
reliable, but neither the Company nor the Trust takes responsibility for the
accuracy thereof.
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
GENERAL
In the opinion of Miller & Chevalier, Chartered, special tax counsel to the
Company and the Trust, the following are the material United States federal
income tax consequences of the acquisition by exchange, ownership, and
disposition of the Trust Convertible Preferred Securities. Unless otherwise
stated, this summary deals only with Trust Convertible Preferred Securities
held as capital assets by Holders who exchange shares of $3.50 Convertible
Preferred Stock. It does not deal with special classes of holders such as
banks, thrifts, real estate investment trusts, regulated investment companies,
insurance companies, dealers in securities or currencies, tax-exempt
investors, foreign governments, or with persons that hold the Trust
Convertible Preferred Securities or the $3.50 Convertible Preferred Stock as a
position in a "straddle," as part of a "synthetic security" or "hedge," as
part of a "conversion transaction" or other integrated investment, or as other
than a capital asset. This summary also does not address the tax consequences
to persons that have a functional currency other than the U.S. Dollar or the
tax consequences to stockholders, partners, or beneficiaries of a holder of
Trust Convertible Preferred Securities. Further, it does not include any
description of any alternative minimum tax consequences or the tax laws of any
state or local government or any foreign government that may be applicable to
the Trust Convertible Preferred Securities or to a Holder's decision to
exchange shares of $3.50 Convertible Preferred Stock for Trust Convertible
Preferred Securities. This summary is based on the Internal Revenue Code of
1986, as amended (the "Code"), Treasury regulations thereunder, and
administrative and judicial interpretations thereof, as of the date hereof,
all of which are subject to change, possibly on a retroactive basis.
ALL HOLDERS OF $3.50 CONVERTIBLE PREFERRED STOCK ARE ADVISED TO CONSULT
THEIR OWN TAX ADVISORS REGARDING THE FEDERAL, STATE, LOCAL, AND FOREIGN TAX
CONSEQUENCES OF AN EXCHANGE OF SHARES OF $3.50 CONVERTIBLE PREFERRED STOCK FOR
TRUST CONVERTIBLE PREFERRED SECURITIES AND THE OWNERSHIP, CONVERSION AND
DISPOSITION OF TRUST CONVERTIBLE PREFERRED SECURITIES RECEIVED IN THE EXCHANGE
OFFER IN LIGHT OF THEIR OWN PARTICULAR CIRCUMSTANCES.
CLASSIFICATION OF THE CONVERTIBLE DEBENTURES
In connection with the issuance of the Convertible Debentures, Miller &
Chevalier, Chartered will render its opinion that, although the matter is not
free from doubt, the Convertible Debentures will be classified for United
States federal income tax purposes as indebtedness of the Company under
current law. By accepting a Trust Convertible Preferred Security, each holder
covenants to treat the Convertible Debentures as indebtedness and the Trust
Convertible Preferred Securities as evidence of an indirect beneficial
ownership in the Convertible Debentures. No assurance can be given, however,
that the classification of the Convertible Debentures as indebtedness will not
be challenged by the IRS. The remainder of this discussion assumes that the
Convertible Debentures will be classified for United States federal income tax
purposes as indebtedness of the Company.
CLASSIFICATION OF THE TRUST
In connection with the issuance of the Trust Convertible Preferred
Securities, Miller & Chevalier, Chartered will render its opinion that the
Trust will be classified for United States federal income tax purposes as a
grantor trust and not as an association taxable as a corporation. Accordingly,
for United States federal income tax purposes, each holder of Trust
Convertible Preferred Securities will be considered the owner of an undivided
interest in the Convertible Debentures, and pursuant to the agreement to treat
the Convertible Debentures as indebtedness, each holder will be required to
include in its gross income interest received or accrued with respect to its
allocable share of the Convertible Debentures.
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INTEREST INCOME AND ORIGINAL ISSUE DISCOUNT
Corporate holders of the Trust Convertible Preferred Securities will not be
entitled to a dividends-received deduction with respect to any income
recognized with respect to the Trust Convertible Preferred Securities.
Under current law, the Company's option to defer payments of interest by
extending interest payment periods for up to 20 quarters would cause the
Convertible Debentures to be issued with OID. OID must be included in income
by all holders as it accrues economically on a daily basis, without regard to
when it is paid in cash or whether a particular holder generally uses the cash
method of accounting. On June 14, 1996, however, the U.S. Treasury Department
issued new income tax regulations providing that "remote" contingencies are
ignored in determining whether a debt instrument is issued with OID. These new
regulations apply to all debt instruments that, like the Convertible
Debentures, are to be issued on or after August 13, 1996.
The Company believes that the likelihood of its exercising its option to
defer payments of interest is "remote" because exercising that option would
prevent the Company from declaring dividends on its Common Stock and the
Company has paid regular quarterly dividends on its Common Stock for more than
80 years. Thus, in the opinion of special tax counsel, the Convertible
Debentures that will be issued on or after August 13, 1996, will not include
OID under the new regulations, and holders of the Trust Convertible Preferred
Securities should accrue interest under their own methods of accounting (e.g.,
cash or accrual) instead of under the daily economic accrual rules for OID
instruments.
Under the new regulations, however, if the Company exercises its right to
defer payments of interest, the Convertible Debentures will become OID
instruments, and all holders of the Trust Convertible Preferred Securities
will be required to accrue interest on a daily basis during the extended
interest period even though the Company will not pay the interest in cash
until the end of the extended interest period, and even if some holders
generally use the cash method of accounting. A holder who disposes of the
Trust Convertible Preferred Securities during an extended interest period may
suffer a loss because the market value of the Trust Convertible Preferred
Securities will likely fall if the Company exercises its option to defer
payments of interest on the Convertible Debentures. Furthermore, the market
value of the Trust Convertible Preferred Securities may not reflect the
accumulated distributions that will be paid at the end of the extended
interest period, and a holder who sells the Trust Convertible Preferred
Securities during the extended interest period will not receive from the
Company any cash related to the interest income the holder accrued and
included in its taxable income under the OID rules (because that cash will be
paid to the holder of record at the end of the extended interest period).
If the Convertible Debentures become OID instruments (i.e., if the Company
ever exercises its right to defer payments of interest), the Convertible
Debentures will be taxed as OID instruments for as long as they remain
outstanding. Thus, even after the end of the extended interest period, all
holders will be required to continue accruing interest on the Convertible
Debentures on a daily basis, regardless of their method of accounting. Under
the OID rules, a holder would accrue an amount of interest income each year
that approximates the stated interest payments called for under the terms of
the Convertible Debentures, and actual cash payments of interest on the
Convertible Debentures would not be reported separately as taxable income.
The new regulations have not yet been addressed in any rulings or other
interpretations by the IRS, and it is possible that the IRS could take a
position contrary to special tax counsel's interpretation.
EXCHANGE OF $3.50 CONVERTIBLE PREFERRED STOCK FOR TRUST CONVERTIBLE PREFERRED
SECURITIES
The exchange of shares of $3.50 Convertible Preferred Stock for Trust
Convertible Preferred Securities will be a taxable event. If, with respect to
a particular holder, the exchange satisfies one of the tests of section 302 of
the Code described below, it will be treated as a transaction in which capital
gain or loss is recognized, rather than as a dividend. The tests under section
302 of the Code are applied on a stockholder-by-stockholder basis. Therefore,
whether an exchange will be treated as a transaction in which capital gain or
loss is recognized or as a dividend with respect to a particular Holder will
depend on that Holder's particular facts and circumstances. If the exchange of
shares of $3.50 Convertible Preferred Stock for Trust Convertible Preferred
Securities is
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treated as a transaction in which capital gain or loss is recognized with
respect to a particular holder, the capital gain or loss will be based on the
difference between the fair market value of the Trust Convertible Preferred
Securities received in the exchange and the Holder's adjusted tax basis in the
shares of $3.50 Convertible Preferred Stock surrendered therefor. Any capital
gain or loss will be long-term capital gain or loss if the shares of $3.50
Convertible Preferred Stock surrendered in the exchange was held by the holder
for more than one year. The exchanging Holder's tax basis in the Trust
Convertible Preferred Securities received in the exchange will equal the fair
market value of the Trust Convertible Preferred Securities at the time of the
exchange and the holding period for the Trust Convertible Preferred Securities
will begin on the day after the day on which the Trust Convertible Preferred
Securities are acquired by the holder.
Pursuant to section 302 of the Code, an exchange will be treated as a
transaction in which gain or loss is recognized if, after giving effect to the
constructive ownership rules of section 318 of the Code, the exchange
(i) represents a "complete termination" of the exchanging Holder's stock
interest in the Company, (ii) is "substantially disproportionate" with respect
to the exchanging Holder or (iii) is "not essentially equivalent to a
dividend" with respect to the exchanging Holder, all within the meaning of
section 302(b) of the Code. Under the constructive ownership rules of section
318 of the Code, a holder of Trust Convertible Preferred Securities will be
treated as owning the Common Stock into which such Trust Convertible Preferred
Securities are convertible. Accordingly, an exchange pursuant to the Exchange
Offer could not, standing alone, satisfy the "complete termination" or the
"substantially disproportionate" tests. An exchange will be "not essentially
equivalent to a dividend" as to a particular holder if it results in a
"meaningful reduction" in such holder's interest in the Company (after
application of the constructive ownership rules of section 318 of the Code).
In general, there are no fixed rules for determining whether a "meaningful
reduction" has occurred. However, based upon published rulings of the IRS, the
exchange will be treated as a transaction in which gain or loss is recognized
if the holder's stock ownership (treating the Trust Convertible Preferred
Securities as converted) is minimal, the holder exercises no control over the
affairs of the Company, and the holder's percentage equity interest in the
Company is reduced in the redemption to any extent. As of the date of this
Prospectus, the current market price of the Common Stock is $ . If the Market
Value of a share of Common Stock is at least $ , the conversion price of the
Trust Convertible Preferred Securities will be higher than that of the
equivalent amount of $3.50 Convertible Preferred Stock to be surrendered, and
an exchange of shares of $3.50 Convertible Preferred Stock for Trust
Convertible Preferred Securities would, standing alone, result in some
reduction in an exchanging Holder's constructive stock interest in the
Company. However, if the Market Value of a share of Common Stock is lower than
$ , such exchange would not, standing alone, result in any reduction in the
exchanging Holder's constructive stock interest in the Company. No assurance
can be given that these tests will be satisfied, and, if such tests are not
satisfied, the exchange will be treated as a dividend. EACH HOLDER SHOULD
CONSULT ITS OWN TAX ADVISOR AS TO ITS ABILITY IN LIGHT OF ITS OWN PARTICULAR
CIRCUMSTANCES TO SATISFY ANY OF THE FOREGOING TESTS, POSSIBLY BY DISPOSING OF
A PORTION OF ITS STOCK INTEREST IN THE COMPANY CONTEMPORANEOUSLY, AND AS PART
OF AN INTEGRATED PLAN, WITH THE EXCHANGE OF SHARES OF $3.50 CONVERTIBLE
PREFERRED STOCK FOR TRUST CONVERTIBLE PREFERRED SECURITIES.
If an exchange is treated as a dividend with respect to a particular
exchanging Holder under section 302 of the Code, such holder (i) will not
recognize any loss on the exchange, (ii) will recognize dividend income
(rather than capital gain) in an amount equal to the fair market value of the
Trust Convertible Preferred Securities (and any cash in lieu of fractional
Trust Convertible Preferred Securities) received without regard to the
holder's basis in the shares of $3.50 Convertible Preferred Stock surrendered
in the exchange, to the extent of its proportionate share of the Company's
current or accumulated earnings and profits. The holding period for the Trust
Convertible Preferred Securities will begin on the day after the day on which
the Trust Convertible Preferred Securities are acquired by the exchanging
Holder. CORPORATE HOLDERS SHOULD CONSULT WITH THEIR OWN TAX ADVISORS
CONCERNING THE AVAILABILITY OF THE CORPORATE DIVIDENDS-RECEIVED DEDUCTION AND
THE POSSIBLE APPLICATION OF THE EXTRAORDINARY DIVIDEND RULES OF CODE SECTION
1059 TO AN EXCHANGE BY A CORPORATE HOLDER FOR WHOM THE DISTRIBUTION IS TAXABLE
AS A DIVIDEND.
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RECEIPT OF CONVERTIBLE DEBENTURES OR CASH UPON LIQUIDATION OF THE TRUST
Under certain circumstances, as described under the caption "Description of
the Trust Convertible Preferred Securities--Special Event Distribution or
Redemption". The Convertible Debentures may be distributed to holders in
exchange for the Trust Convertible Preferred Securities and in liquidation of
the Trust. This distribution cannot occur without an opinion of an independent
tax counsel to the effect that the distribution will not result in recognition
of gain or loss to each holder. If the exchange is a non-taxable event, each
holder would receive an aggregate tax basis in the Convertible Debentures
equal to the holder's aggregate tax basis in the Trust Convertible Preferred
Securities. A holder's holding period in the Convertible Debentures received
in liquidation of the Trust would include the period during which the Trust
Convertible Preferred Securities were held by the holder. However, the tax-
free treatment of the distribution may be adversely affected as a result of a
change in law. For example, if a Tax Event results in the Trust being treated
as an association taxable as a corporation, then a holder would recognize gain
or loss upon receipt of the Convertible Debentures as if it had sold the
exchanged Trust Convertible Preferred Securities for cash. See "--Sale or
Redemption of Trust Convertible Preferred Securities".
Under certain circumstances described herein (see "Description of the Trust
Convertible Preferred Securities"), the Convertible Debentures may be redeemed
for cash and the proceeds of the redemption distributed to holders in
redemption of the Trust Convertible Preferred Securities. Under current law,
such a redemption would, for United States federal income tax purposes,
constitute a taxable disposition of the redeemed Trust Convertible Preferred
Securities and a holder would recognize gain or loss as if it sold the
redeemed Trust Convertible Preferred Securities for cash. See "--Sale or
Redemption of Trust Convertible Preferred Securities".
SALE OR REDEMPTION OF TRUST CONVERTIBLE PREFERRED SECURITIES
A holder that sells or redeems Trust Convertible Preferred Securities will
recognize gain or loss equal to the difference between its adjusted tax basis
in the Trust Convertible Preferred Securities and the amount realized on such
sale or redemption. Assuming that the Company does not defer payment of
interest on the Convertible Debentures, a holder's adjusted tax basis in the
Trust Convertible Preferred Securities will be the fair market value of those
securities on the date of the exchange of shares of $3.50 Convertible
Preferred Stock for Trust Convertible Preferred Securities. Subject to the
discussion below regarding accrued and unpaid interest, such gain or loss
generally will be a capital gain or loss and generally will be a long-term
capital gain or loss if the Trust Convertible Preferred Securities have been
held for more than one year.
The Trust Convertible Preferred Securities may trade at a price that does
not fully reflect the value of the accrued and unpaid interest with respect to
the underlying Convertible Debentures. Should the Company exercise its right
to defer payments on interest, a holder who disposes of its Trust Convertible
Preferred Securities between record dates for payments of distributions
thereon will be required to include accrued and unpaid interest on the
Convertible Debentures through the date of disposition in income as ordinary
income, and to add such amount to its adjusted tax basis in its allocable
share of the underlying Convertible Debentures deemed disposed. To the extent
the selling price is less than the holder's adjusted tax basis, a holder will
recognize a capital loss. Subject to certain limited exceptions, capital
losses cannot be applied to offset ordinary income for United States federal
income tax purposes.
CONVERSION OF TRUST CONVERTIBLE PREFERRED SECURITIES INTO THE COMMON STOCK
A holder of Trust Convertible Preferred Securities will not recognize
income, gain or loss upon the conversion, through the Conversion Agent, of
Convertible Debentures into the Common Stock except to the extent of ordinary
income recognized with respect to accrued and unpaid interest on the
Convertible Debentures at that time. A holder of Trust Convertible Preferred
Securities will also recognize gain upon the receipt of cash in lieu of a
fractional share of the Common Stock equal to the amount of the cash received
less such holder's tax basis in such fractional share. Such a holder's tax
basis in the Common Stock received upon conversion should generally be equal
to such holder's tax basis in the Trust Convertible Preferred Securities
delivered to the Conversion Agent for exchange, plus the amount of interest
income recognized on the exchange, minus the basis
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<PAGE>
allocated to any fractional share for which cash is received and such holder's
holding period in the Common Stock received upon conversion will begin on the
day after the day the holder acquired the Trust Convertible Preferred
Securities delivered to the Conversion Agent for exchange (except that the
holding period of the Common Stock deemed issued for accrued interest will
begin on the day following the date of conversion).
CONVERSION ADJUSTMENT
Treasury Regulations promulgated under section 305 of the Code would treat
holders of Trust Convertible Preferred Securities as having received a
constructive distribution from the Company in the event the conversion price
of the Convertible Debentures were adjusted if (i) as a result of such
adjustment, the proportionate interest of such holder in the assets or
earnings and profits of the Company were increased and (ii) the adjustment was
not made pursuant to a bona fide, reasonable anti-dilution formula. An
adjustment to the conversion price would not be considered made pursuant to
such formula if the adjustment was made to compensate for certain taxable
distributions with respect to the Common Stock. Thus, under certain
circumstances, a reduction in the conversion price for the holders may result
in deemed dividend income to holders to the extent of the current or
accumulated earnings and profits of the Company. Holders of the Convertible
Debentures would be required to include their allocable share of such deemed
dividend in gross income but will not receive any cash related thereto.
PROPOSED TAX LEGISLATION
See the discussion above under the heading "Risk Factors--Proposed Tax
Legislation".
INFORMATION REPORTING TO HOLDERS
Income on the Trust Convertible Preferred Securities will generally be
reported to holders on Forms 1099, which should be mailed to holders of the
Trust Convertible Preferred Securities by January 31 following each calendar
year.
The Trust will be obligated to report annually to Cede, as holder of record
of the Trust Convertible Preferred Securities, the interest received or
accrued related to the Convertible Debentures for the year. The Trust
currently intends to report such information on Form 1099 prior to January 31
following each calendar year even though the Trust is not legally required to
report to record holders until April 15 following each calendar year. Under
current law, holders of Trust Convertible Preferred Securities who hold as
nominees for beneficial holders will not have any obligation to report
information regarding the beneficial holders to the Trust. The Trust,
moreover, will not have any obligation to report to beneficial holders who are
not also record holders. Thus, beneficial holders of the Trust Convertible
Preferred Securities who hold their Trust Convertible Preferred Securities
through nominees will receive Forms 1099 reflecting the income on their Trust
Convertible Preferred Securities from such nominee holders rather than the
Trust.
BACKUP WITHHOLDING
Payments made on, and proceeds from the sale of the Trust Convertible
Preferred Securities or the Convertible Debentures distributed to holders of
the Trust Convertible Preferred Securities may be subject to a "backup"
withholding tax of 31% unless the holder complies with certain identification
requirements. Any withheld amounts will be allowed as a refund or credit
against the holder's United States federal income tax provided the required
information is provided to the Service.
NON-UNITED STATES PERSONS
For purposes of this discussion, "non-United States person" means any person
who, for United States federal income tax purposes, is neither (i) a citizen
or resident of the United States, (ii) a corporation, partnership or other
entity created or organized in or under the laws of the United States or of
any State or of any of its territories or possessions, or (iii) a domestic
trust or estate.
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On April 15, 1996, the U.S. Treasury Department issued proposed regulations
that could affect the procedures to be followed by a non-United States person
in establishing non-United States person status. These proposed regulations
would generally be effective for payments made after December 31, 1997. Non-
United States persons should consult their tax advisors regarding the effect,
if any, of the proposed regulations on their acquisition, ownership and
disposition of the Trust Convertible Preferred Securities.
ALL HOLDERS OF $3.50 CONVERTIBLE PREFERRED STOCK THAT ARE NON-UNITED STATES
PERSONS ARE ADVISED TO CONSULT THEIR OWN TAX ADVISORS REGARDING THE FEDERAL,
STATE, LOCAL, AND FOREIGN TAX CONSEQUENCES OF THEIR EXCHANGE OF SHARES OF
$3.50 CONVERTIBLE PREFERRED STOCK FOR TRUST CONVERTIBLE PREFERRED SECURITIES
AND THE OWNERSHIP, CONVERSION, AND DISPOSITION OF TRUST CONVERTIBLE PREFERRED
SECURITIES RECEIVED IN THE EXCHANGE OFFER IN LIGHT OF THEIR OWN PARTICULAR
CIRCUMSTANCES.
EXCHANGE OF $3.50 CONVERTIBLE PREFERRED STOCK FOR TRUST CONVERTIBLE PREFERRED
SECURITIES
Subject to the discussion of backup withholding below, if a holder that is a
non-United States person proves, in a manner and under arrangements
satisfactory to the Company or other withholding agent, that the exchange of
shares of $3.50 Convertible Preferred Stock for Trust Convertible Preferred
Securities qualifies as a transaction in which gain or loss is recognized
rather than as a dividend (see "Certain Federal Income Tax Considerations--
Exchange of $3.50 Convertible Preferred Stock for Trust Convertible Preferred
Securities," above), the Company or other withholding agent will not withhold
federal income tax on the issuance of the Trust Convertible Preferred
Securities to that holder and that holder generally will not be subject to
United States federal income tax in respect of gain recognized on the exchange
unless (i) the gain is effectively connected with a trade or business
conducted by the non-United States person within the United States (in which
case the branch profits tax may also apply if the holder is a foreign
corporation), (ii) in the case of a non-United States person that is an
individual, the holder is present in the United States for a period or periods
aggregating 183 days or more in the taxable year of the exchange and certain
other conditions are satisfied or (iii) the Company is or has been a "United
States real property holding corporation" within the meaning of section
897(c)(2) of the Code within the shorter of the holder's holding period or the
five-year period ending on the date of the exchange and certain other
conditions are satisfied, and no treaty exception is applicable.
The Company believes it is a "United States real property holding
corporation". Accordingly, gain realized on the disposition (or exchange) of
shares of $3.50 Convertible Preferred Stock by a non-United States person that
is deemed to own more than five percent of the $3.50 Convertible Preferred
Stock at any time during the shorter of the five-year period preceding such
disposition or such holder's holding period may be subject to United States
federal income tax. Where a non-United States person is deemed to own less
than five percent of the $3.50 Convertible Preferred Stock at all times during
the shorter of the five-year period preceding disposition or such holder's
holding period, the non-United States person will not be subject to United
States federal income taxation provided that the $3.50 Convertible Preferred
Stock continues, prior to the disposition of such stock, to be "regularly
traded on an established securities market" (within the meaning of section
897(c)(3) of the Code and the temporary regulations issued thereunder).
If a holder that is a non-United States person exchanges shares of $3.50
Convertible Preferred Stock for Trust Convertible Preferred Securities and
does not prove, in a manner satisfactory to the Company or other withholding
agent, that such exchange qualifies as a transaction in which gain or loss is
recognized, the Company will treat the issuance of Trust Convertible Preferred
Securities to the non-United States person as a dividend distribution. The
Company will withhold United States federal income tax from the gross proceeds
to that holder in an amount equal to 30% of the proceeds (including Trust
Convertible Preferred Securities that the holder would otherwise have
received) unless the holder is eligible for a reduced tax treaty rate with
respect to dividend income (in which case tax will be withheld at the reduced
rate) or unless the holder establishes that it is exempt from tax (such as by
providing the appropriate form certifying its status as a foreign government).
Except as may otherwise be provided in an applicable income tax treaty, a
holder that is a non-United States person will be taxed at ordinary federal
income tax rates on a net income basis if such dividend is effectively
connected with
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<PAGE>
the conduct of a trade or business of such holder within the United States (in
which case the branch profits tax may also apply if the holder is a foreign
corporation) and will not be subject to the withholding tax described in the
preceding sentence. A holder that is a non-United States person may be
eligible to obtain from the IRS a refund of tax withheld if such holder meets
one of three tests of section 302 described above under "--Exchange of $3.50
Convertible Preferred Stock for Trust Convertible Preferred Securities" or is
otherwise able to establish that no tax (or a reduced amount of tax) was due.
PAYMENTS ON TRUST CONVERTIBLE PREFERRED SECURITIES
Subject to a discussion of backup withholding below, payments of principal
and interest (including OID, if any) on a Trust Convertible Preferred Security
by the Company or its agent (in its capacity as such) to a beneficial owner
that is a non-United States person will not be subject to United States
federal withholding tax provided that (a) such person 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, (b) such person is not a
controlled foreign corporation that is related to the Company actually or
constructively through stock ownership, (c) such person is not a bank that
acquired its Trust Convertible Preferred Security in consideration of an
extension of credit made pursuant to a loan agreement entered into in the
ordinary course of business and (d) either (i) the beneficial owner certifies
under penalties of perjury on a Form W-8 delivered to the Company or its
agent, that it is not a United States person and provides its name and address
or (ii) a qualifying securities clearing organization, bank or other financial
institution that holds customers' securities in the ordinary course of its
trade or business and that holds the Trust Convertible Preferred Security
certifies to the Company or its agent under penalties of perjury that such
statement has been received from the beneficial owner in a suitable form by it
or by a qualifying intermediary and furnishes the payor with a copy thereof.
If the beneficial owner of a Trust Convertible Preferred Security who is a
non-United States person is engaged in a trade or business within the United
States and interest (including OID, if any) on the Trust Convertible Preferred
Security is effectively connected with the conduct of such trade or business,
such beneficial owner may be subject to United States federal income tax on
such interest (including OID, if any) at ordinary federal income tax rates on
a net basis (in which case the branch profits tax may also apply if the holder
is a foreign corporation).
If the Convertible Debentures are not classified for United States federal
income tax purposes as indebtedness of the Company, payments by the Trust or
any of its paying agents to any holder of a Trust Convertible Preferred
Security who is a non-United States person could be subject to United States
withholding tax at a 30% rate (or a lower rate prescribed by an applicable
treaty). Prospective investors that are non-United States persons should
consult their tax advisors concerning the possible application of these rules.
SALE, EXCHANGE OR CONVERSION OF TRUST CONVERTIBLE PREFERRED SECURITIES
Subject to the discussion of backup withholding below, any capital gain
realized upon the sale or exchange of a Trust Convertible Preferred Security
(including upon retirement of a Trust Convertible Preferred Security or to the
extent cash is received in lieu of a fractional share of Common Stock upon
conversion) by a beneficial owner who is a non-United States person ordinarily
will not be subject to United States federal income tax unless (i) such gain
is effectively connected with a trade or business conducted by such non-United
States person within the United States (in which case the branch profits tax
may also apply if the holder is a foreign corporation), (ii) in the case of a
non-United States person that is an individual, such holder is present in the
United States for a period or periods aggregating 183 days or more in the
taxable year of the exchange and certain other conditions are satisfied or
(iii) the Company is or has been a "United States real property holding
corporation" within the meaning of section 897(c)(2) of the Code within the
shorter of the holder's holding period or the five-year period ending on the
date of the exchange and certain other conditions are satisfied, and no treaty
exception is applicable.
If the Company is treated as a "United States real property holding
corporation," gain realized on the disposition (or exchange) of the Trust
Convertible Preferred Securities by a non-United States person that is
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<PAGE>
deemed to own more than five percent of the Trust Convertible Preferred
Security disposed at any time during the shorter of the five-year period
preceding such disposition or such holder's holding period may be subject to
United States federal income tax. Where a non-United States person is deemed
to own less than five percent of the Trust Convertible Preferred Securities at
all times during the shorter of the five-year period preceding disposition or
such holder's holding period, the non-United States person will not be subject
to United States federal income taxation provided that the Trust Convertible
Preferred Securities continue to be "regularly traded on an established
securities market" (within the meaning of section 897(c)(3) of the Code and
the temporary regulations issued thereunder).
The conversion of Trust Convertible Preferred Securities into Common Stock
will not result in a realization of gain or loss or be subject to United
States withholding tax.
BACKUP WITHHOLDING AND INFORMATION REPORTING
Information reporting on IRS Form 1099 and backup withholding at a rate of
31% will not apply to payments of principal and interest (including OID, if
any) or a paying agent to a non-United States holder on a Trust Convertible
Preferred Security if the certification described in clause (d) under "--
Payments on Trust Convertible Preferred Securities" above is received,
provided that the payor does not have actual knowledge that the holder is a
United States person. However, interest (including OID, if any) on a Trust
Convertible Preferred Security owned by a holder that is non-United States
person may be required to be reported annually on IRS Form 1042S.
Payments of the proceeds from the sale by a holder that is a non-United
States person of a Trust Convertible Preferred Security made to or through a
foreign office of a broker will not be subject to information reporting or
backup withholding, except that if the broker is a United States person, a
controlled foreign corporation for United States tax purposes or a foreign
person 50% or more of whose gross income is effectively connected with a
United States trade or business for a specified three-year period, information
reporting may apply to such payments. Payments of the proceeds from the sale
of a Trust Convertible Preferred Security to or through the United States
office of a broker is subject to information reporting and backup withholding
unless the holder certifies as to its non-United States person status or
otherwise establishes an exemption from information reporting and backup
withholding.
LEGAL MATTERS
Certain matters relating to the validity of the Trust Convertible Preferred
Securities offered hereby will be passed upon for the Company by Morris
Nichols Arhst & Tunnell, Wilmington, Delaware, and certain matters relating to
the validity of the Convertible Debentures, the Guarantee, and the Common
Stock will be passed upon for the Company by Munger, Tolles & Olson, Los
Angeles, California. Certain tax matters will be passed upon for the Company
by Miller & Chevalier, Chartered, Washington, D.C. Certain legal matters will
be passed upon for the Dealer Managers by Davis Polk & Wardwell, New York, New
York.
EXPERTS
The consolidated financial statements and financial statement schedule of
the Company and its subsidiaries as of December 31, 1995 and 1994, and for
each of the three years in the period ended December 31, 1995, included in the
Annual Report on Form 10-K for the year ended December 31, 1995 and
incorporated by reference in this Prospectus, have been incorporated herein in
reliance on the report of Coopers & Lybrand L.L.P., independent accountants,
which report is incorporated by reference herein, and on the authority of that
firm as experts in accounting and auditing. Such report includes an
explanatory paragraph with respect to changes in methods of accounting for the
impairment of long-lived assets and long-lived assets to be disposed of in
1995; for recognizing the reduction in value of producing oil and gas
properties in 1994; and for postretirement benefits other than pensions and
for postemployment benefits in 1993.
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The Exchange Agent:
THE BANK OF NEW YORK
By Hand or Overnight Courier: By Mail
(Registered or Certified Mail
Recommended)
The Bank of New York
101 Barclay Street (7 East)
Reorganization Section The Bank of New York
Corporate Trust Services Window 101 Barclay Street (7 East)
New York, New York 10286 Reorganization Section
Attention: George Johnson Attention: George Johnson
By Facsimile Transmission
(For Eligible Institutions Only):
(212) 571-3080
Confirm Receipt of Notice of Guaranteed Delivery
by Telephone:
(212) 815-4997
The Information Agent:
D.F. KING & CO., INC.
77 Water Street
New York, New York 10005
(800) 848-3051 (Toll-Free)
(212) 269-5550 (Call Collect)
Any questions or requests for assistance or additional copies of this
Prospectus and the Letter of Transmittal may be directed to the Information
Agent at its telephone number and location set forth above. You may also
contact your broker, dealer, commercial bank or trust company or other nominee
for assistance concerning the Exchange Offer.
The Dealer Managers for the Exchange Offer:
MORGAN STANLEY & CO. GOLDMAN, SACHS & CO.
Incorporated 85 Broad Street
1585 Broadway New York, New York 10004
New York, New York 10036 (800) 323-5678 (Toll-Free)
(800)835-9668 (extension
2262) (Toll-Free)
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PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the Delaware General Corporation Law ("DGCL") authorizes
Unocal Corporation, a Delaware corporation (the "Company") to indemnify
directors and officers in certain circumstances against liabilities, including
expenses, incurred while acting in such capacities; provided, generally, that
any such indemnified director or officer acted in good faith and in a manner
he or she reasonably believed to be in the best interests of the corporation
and, in the case of a criminal proceeding, had no reasonable cause to believe
his or her conduct was unlawful. The Bylaws of the Company provide for the
indemnification of directors and officers to the maximum extent permitted by
the DGCL.
In addition, the Company has provided in its Certificate of Incorporation
that it shall eliminate the personal liability of its directors to the fullest
extent permitted by the DGCL, and the Company has entered into indemnification
agreements with each director providing for additional indemnification. The
Company has policies of directors' and officers' liability insurance which
insure directors and officers against the cost of defense, settlement, or
payment of a judgment under certain circumstances.
The Declaration of Trust, as amended and restated (the "Declaration"), of
Unocal Capital Trust (the "Trust"), the Trust provides that the Company will
indemnify, to the full extent provided by law, (i) a trustee, (ii) any
affiliate of a trustee, (iii) any officers, directors, shareholders, members,
partners, employees, representatives, or agents of a trustee, and (iv) any
officer, employee, or agent of the Trust or its affiliates for losses,
liabilities, and expenses incurred in connection with his actions as trustee
of the Trust if he acted in good faith and in a manner he reasonably believed
to be in or not opposed to the best interest of the Trust (except that, with
respect to actions in the right of the Trust, no such indemnification shall be
made in respect of a matter as to which such person shall have been adjudged
to be liable to the Trust, unless the court in which such matter was brought
determines that such person is fairly and reasonably entitled to indemnity),
and with respect to any criminal action or proceeding, had no reasonable cause
to believe his conduct was unlawful. The Company also agreed to indemnify (a)
the institutional trustee, (b) Delaware trustee, (c) any affiliate of the
institutional trustee or the Delaware trustee, and (d) any officers,
directors, shareholders, members, partners, employees, representatives,
custodians, nominees, or agents of the institutional trustee or Delaware
trustee for any losses, liabilities, and expenses incurred without negligence
or bad faith on its part in connection with the exercise or performance of any
of its powers or duties under the Declaration.
Section 11 of the form of Dealer Manager Agreement filed as Exhibit 1.1 to
this registration statement provides for indemnification of each of the
Company and the Trust, their directors, trustees, and officers who sign this
registration statement, and each person, if any, who controls the Company or
the Trust within the meaning of either Section 15 of the Securities Act of
1933, as amended (the "Securities Act"), or Section 20 of the Securities
Exchange Act of 1934, as amended (the "Exchange Act")) by the dealer managers
with respect to information relating to the dealer managers furnished to the
Company or the Trust in writing by the dealer managers expressly for use in
this registration statement and certain other materials prepared in connection
with the exchange offer contemplated hereby.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) Exhibits
<TABLE>
<CAPTION>
NUMBER EXHIBIT
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<C> <S>
1.1 Form of Dealer Manager Agreement.
3.1 Certificate of Trust of the Trust.
4.1 Certificate of Incorporation of the Company, as amended through July
23, 1992 and currently in effect (incorporated by reference to Exhibit
3.1 to Amendment No. 2 on Form 10-K/A to the Company's Annual Report on
Form 10-K for the year ended December 31, 1993, File No. 1-8483).
</TABLE>
II-1
<PAGE>
<TABLE>
<CAPTION>
NUMBER EXHIBIT
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<C> <S>
4.2 Bylaws of the Company, as amended through June 3, 1996 and currently in
effect.
4.3 Form of Standard Multiple-Series Indenture Provisions ("Indenture") of
the Company.*
4.4 Form of First Supplemental Indenture, between the Company and The Bank
of New York, as trustee, including form of % Convertible Junior
Subordinated Debenture.*
4.5 Declaration of Trust of the Trust.
4.6 Form of Amended and Restated Declaration of Trust of the Trust,
including form of % Trust Convertible Preferred Security ("Trust
Convertible Preferred Security").*
4.7 Form of Preferred Securities Guarantee Agreement (the "Guarantee").
4.8 Form of Common Stock certificate of the Company.
4.9 Rights Agreement, dated as of January 29, 1990 (the "Rights
Agreement"), between the Company and The Chase Manhattan Bank, as
successor rights agent.
5.1 Opinion of Munger, Tolles & Olson.*
5.2 Opinion of Morris Nichols Arhst & Tunnell.*
8.1 Opinion of Miller & Chevalier, Chartered.*
12.1 Statement re computation of ratio of earnings to fixed charges for the
Company (incorporated by reference to Exhibit 12.1 to the Company's
Annual Report on Form 10-K for the year ended December 31, 1995, File
No. 1-8483, and Exhibit 12.1 to the Company's Quarterly Report on Form
10-Q for the quarterly period ended March 31, 1996, File No. 1-8483).
12.2 Statement re computation of ratio of earnings to combined fixed charges
and preferred stock dividends for the Company (incorporated by
reference to Exhibit 12.2 to the Company's Annual Report on Form 10-K
for the year ended December 31, 1995, File No. 1-8483, and Exhibit 12.2
to the Company's Quarterly Report on Form 10-Q for the quarterly period
ended March 31, 1996, File No. 1-8483).
23.1 Consent of Coopers & Lybrand L.L.P.
23.2 Consent of Munger, Tolles & Olson (contained in its opinion filed as
Exhibit 5.1 to this Registration Statement).*
23.3 Consent of Morris Nichols Arhst & Tunnell (contained in its opinion
filed as Exhibit 5.2 to this Registration Statement).*
23.4 Consent of Miller & Chevalier, Chartered (contained in its opinion
filed as Exhibit 8.1 to this Registration Statement).*
24.1 Power of Attorney (the Company) (included on the signature page to this
Registration Statement).
24.2 Power of Attorney (the Trust) (included on the signature page to this
Registration Statement).
25.1 Form T-1 Statement of Eligibility under the Trust Indenture Act of
1939, as amended, of The Bank of New York, as trustee under the
Indenture.
25.2 Form T-1 Statement of Eligibility under the Trust Indenture Act of
1939, as amended, of The Bank of New York, as trustee under the
Declaration of Trust of the Trust.
25.3 Form T-1 Statement of Eligibility under the Trust Indenture Act of
1939, as amended, of The Bank of New York, as trustee under the
Guarantee by the Company for the benefit of the holders of the Trust
Convertible Preferred Securities.
99.1 Form of Letter of Transmittal.
99.2 Form of Notice of Guaranteed Delivery.
99.3 Form of Letter to Registered Holders and Depository Trust Company
Participants.
99.4 Form of Letter to Clients.
99.5 Form of Newspaper Announcement.
</TABLE>
- --------
* To be filed by amendment.
II-2
<PAGE>
ITEM 22. UNDERTAKINGS.
(a) The Company hereby undertakes to respond to requests for information
that is incorporated by reference into the Prospectus pursuant to Item 4,
10(b), 11 or 13 of Form S-4, within one business day of receipt of such
request, and to send the incorporated documents by first-class mail or equally
prompt means. This includes information contained in documents filed
subsequent to the effective date of the registration statement throughout the
date responding to the request.
(b) The undersigned registrants each hereby undertake to supply by means of
a post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
(c) The Company hereby undertakes that, for purposes of determining any
liability under the Securities Act, each of the Company's annual reports
pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934
(and, where applicable, each filing of any employee benefit plan's annual
report pursuant to Section 15(d) of the Securities Exchange Act of 1934) that
is incorporated by reference in the registration statement shall be deemed to
be a new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(d) Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
registrants pursuant to the provisions described under Item 20 above, or
otherwise, the registrants have each been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Securities Act and is, therefore, unenforceable. In
the event that a claim for indemnification against such liabilities (other
than the payment by the registrants of expenses incurred or paid by a
director, officer or controlling person of the registrants in the successful
defense of any action, suit or proceeding) is asserted by such director,
officer or controlling person in connection with the securities being
registered, the registrants will, unless in the opinion of their counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by them is
against public policy as expressed in the Securities Act and will be governed
by the final adjudication of such issue.
(e) The undersigned registrants each hereby undertake to file, during any
period in which offers or sales are being made, a post-effective amendment to
this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act;
(ii) To reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent post-
effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
registration statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high and of the estimated maximum offering range
may be reflected in the form of prospectus filed with the Commission
pursuant to Rule 424(b) if, in the aggregate, the changes in volume and
price represent no more than a 20 percent change in the maximum aggregate
offering price set forth in the "Calculation of Registration Fee" table in
the effective registration statement.
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized in the City of El Segundo, State of
California on July 29, 1996.
Unocal Corporation
/s/ Neal E. Schmale
By: _________________________________
Neal E. Schmale
Chief Financial Officer
Each person whose signature appears below hereby constitutes and appoints
each of Neal E. Schmale, Charles S. McDowell, and Darrell D. Chessum his or
her true and lawful attorney-in-fact and agent with full powers of
substitution and resubstitution, for the undersigned and in the name of the
undersigned, in any and all capacities, to sign any or all amendments
(including post-effective amendments) to this registration statement on Form
S-4, and to file the same, with all exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange Commission, granting
unto said attorney-in-fact and agent full power and authority to do and
perform each and every act and thing requisite and necessary to be done in and
about the premises, as fully to all intents and purposes as he might or could
do in person, hereby ratifying and confirming all that said attorneys-in-fact
and agents or their substitute or substitutes, may lawfully do or cause to be
done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.
Signature Title Date
/s/ R. C. Beach Chairman of the Board July 29, 1996
- ------------------------------------- of Directors and
Roger C. Beach Chief Executive
Officer
/s/ Neal E. Schmale Chief Financial July 29, 1996
- ------------------------------------- Officer and Director
Neal E. Schmale
/s/ Charles S. McDowell Vice
President and Comptroller
(Principal Accounting Officer)
July 29, 1996
- -------------------------------------
Charles S. McDowell
Director July , 1996
- -------------------------------------
John W. Amerman
II-4
<PAGE>
Signature Title Date
/s/ MacDonald Becket Director July 29, 1996
- -------------------------------------
MacDonald G. Becket
/s/ John W. Creighton, Jr. Director July 29, 1996
- -------------------------------------
John W. Creighton, Jr.
/s/ Malcolm R. Currie Director July 29, 1996
- -------------------------------------
Malcolm R. Currie
/s/ Frank C. Herringer Director July 29, 1996
- -------------------------------------
Frank C. Herringer
/s/ John F. Imle, Jr. Director July 29, 1996
- -------------------------------------
John F. Imle, Jr.
/s/ Donald P. Jacobs Director July 29, 1996
- -------------------------------------
Donald P. Jacobs
/s/ Charles R. Weaver Director July 29, 1996
- -------------------------------------
Charles R. Weaver
/s/ J. Steven Whisler Director July 29, 1996
- -------------------------------------
J. Steven Whisler
/s/ Marina v.N. Whitman Director July 29, 1996
- -------------------------------------
Marina v.N. Whitman
II-5
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized in the City of El Segundo, State of
California on July 29, 1996.
Unocal Capital Trust
/s/ D. D. Chessum
By: _________________________________
Darrell D. Chessum
Trustee
Each person whose signature appears below hereby constitutes and appoints
each of Darrell D. Chessum, Daniel A. Franchi, and Richard L. Walton his true
and lawful attorney-in-fact and agent with full powers of substitution and
resubstitution, for the undersigned and in the name of the undersigned, in any
and all capacities, to sign any or all amendments (including post-effective
amendments) to this registration statement on Form S-4, and to file the same,
with all exhibits thereto, and other documents in connection therewith, with
the Securities and Exchange Commission, granting unto said attorney-in-fact
and agent full power and authority to do and perform each and every act and
thing requisite and necessary to be done in and about the premises, as fully
to all intents and purposes as he might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents or their
substitute or substitutes, may lawfully do or cause to be done by virtue
hereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.
Signature Title Date
/s/ D. D. Chessum Trustee July 29, 1996
- -------------------------------------
Darrell D. Chessum
/s/ Daniel A. Franchi Trustee July 29, 1996
- -------------------------------------
Daniel A. Franchi
/s/ R. L. Walton Trustee July 29, 1996
- -------------------------------------
Richard L. Walton
The Bank of New York Trustee July , 1996
By: _________________________________
Title: ______________________________
The Bank of New York (Delaware) Trustee July , 1996
By: _________________________________
Title: ______________________________
II-6
<PAGE>
EXHIBIT 1.1
FORM OF
DEALER MANAGER AGREEMENT
July ______, 1996
Morgan Stanley & Company Incorporated
1585 Broadway
New York, New York 10036
Goldman, Sachs & Co.
One New York Plaza
New York, New York 10004
Ladies and Gentlemen:
1. General Unocal Corporation, a Delaware corporation (the "Company")
-------
proposes to exchange _____% Trust Convertible Preferred Securities (the
"Trust Preferred Securities") of Unocal Capital Trust (the "Trust"), a
statutory business trust organized under the Business Trust Act (the
"Delaware Act") of the State of Delaware (Chapter 38, Title 12, of the
Delaware Code, 12 Del. C. Sec 3801 et seq.) for that number of shares of
$3.50 Convertible Preferred Stock (par value $.10 per share) (the
"Preferred Shares") of the Company determined as set forth in the
Prospectus (as hereinafter defined). The Trust Preferred Securities will
be guaranteed (the "Guarantee") by the Company to the extent described in
the Prospectus (as hereinafter defined). The exchange offer, as it may be
amended and supplemented, described above is herein referred to as the
"Exchange Offer." In connection with the Exchange Offer, the Company will
deposit in the Trust as trust assets its _____% Convertible Junior
Subordinated Debentures due 2026 (the "Debentures") and the Trust will
transfer to the Company the Trust Preferred Securities and its common
securities (the "Common Securities") as set forth in the Prospectus.
2. Engagement as Dealer Manager. By this Dealer Manager Agreement (the
----------------------------
"Agreement"), each of the Company and the Trust hereby engages and appoints
each of you as the exclusive Dealer Managers for the Exchange Offer and
authorizes each of you to act as such in connection with the Exchange
Offer.
<PAGE>
As Dealer Managers each of you agrees, in accordance with your customary
practice,to perform in connection with the Exchange Offer those services as
are customarily performed by investment banking concerns in connection with
similar offers, including, without limitation, soliciting from individuals
and institutions the tender of Preferred Shares pursuant to and in
accordance with the terms and conditions of the Exchange Offer. You shall
act as independent contractors in connection with the Exchange Offer with
duties solely to the Company and the Trust and nothing herein contained
shall constitute you as an agent of the Company or the Trust in connection
with the solicitation of such Preferred Shares pursuant to and in
accordance with the terms and conditions of the Exchange Offer; provided,
---------
however, that the Company hereby authorizes the Dealer Managers, and/or one
-------
or more registered brokers or dealers chosen by the Dealer Managers, to act
as the Company's agent in making the Exchange Offer to residents of any
jurisdiction in which such agent designation may be necessary to comply
with applicable law. Nothing in this Agreement shall constitute the Dealer
Managers, either individually or collectively, partners or joint venturers
with the Company, the Trust or any of their subsidiaries. On the basis of
the representations and warranties and agreements of the Company and the
Trust contained herein and subject to and in accordance with the terms and
conditions hereof and of the Exchange Offer, the Dealer Managers agree to
act in such capacity.
3. Registration Statement, Prospectus and Offering Materials. (a) The
---------------------------------------------------------
Company and the Trust have prepared and filed with the Securities and
Exchange Commission (the "Commission"), under the Securities Act of 1933,
as amended, and the rules and regulations of the Commission promulgated
thereunder (collectively, the "Securities Act"), a registration statement
on Form S-4 covering the registration of the Trust Preferred Securities,
the Guarantee, the Debentures, and shares of the Common Stock, $1.00 par
value per share, of the Company issuable upon conversion of the Trust
Preferred Securities and the Debentures. Such registration statement,
including the exhibits thereto and any documents incorporated by reference
therein, as amended at the time it becomes effective or as thereafter
amended or supplemented from time to time, is herein called the
"Registration Statement." The final prospectus included in the
Registration Statement (including any documents incorporated in the
prospectus by reference) is herein called the "Prospectus," except that if
the final prospectus furnished to the Dealer Managers for use in connection
with the Exchange Offer differs from the prospectus set forth in the
Registration Statement (whether or not such prospectus is required to be
filed pursuant to Rule 424(b)), the term "Prospectus" shall refer to the
final prospectus furnished to the Dealer Managers for such use. The terms
"supplement" and "amendment" or "supplemented" and "amend" as used herein
with respect to the Prospectus shall include all documents deemed to
2
<PAGE>
be incorporated by reference in the Prospectus that are filed subsequent to
the date of the Prospectus and prior to the termination of the Exchange
Offer by the Company with the Commission pursuant to the Securities
Exchange Act of 1934, as amended (the "Exchange Act").
(b) The Company and the Trust have prepared and filed, or agree that
prior to or on the date of commencement of the Exchange Offer (the
"Commencement Date") they will file, with the Commission under the Exchange
Act and the rules and regulations promulgated thereunder a Statement on
Schedule 13E-4 with respect to the Exchange Offer (including the exhibits
thereto and any documents incorporated by reference therein, the "Schedule
13E-4").
(c) The Registration Statement, Prospectus and the related letters
from the Dealer Managers to securities brokers, dealers, commercial banks,
trust companies and other nominees, letters to beneficial owners of
Preferred Shares, letters of transmittal (the "Letters of Transmittal"),
notice of guaranteed delivery (the "Notice of Guaranteed Delivery") and any
newspaper announcements, press releases and other offering materials and
information the Company may use or prepare, approve or authorize for use in
connection with the Exchange Offer, including the Schedule 13E-4 as amended
or supplemented from time to time, are herein collectively referred to as
the "Exchange Offer Materials."
4. Use of Exchange Offer Material. (a) The Exchange Offer Materials
------------------------------
have been or will be prepared and approved by, and are the sole
responsibility of, the Company and the Trust. The Company shall, to the
extent permitted by law, use its best efforts to disseminate the Exchange
Offer Materials to each registered holder of any Preferred Shares, as soon
as practicable after the Commencement Date, pursuant to Rule 13e-4 under
the Exchange Act and comply in all material respects with its obligations
thereunder. Thereafter, to the extent practicable until three days prior to
the Expiration Date of the Exchange Offer, the Company shall use its best
efforts to cause copies of such Exchange Offer Materials and a return
envelope to be mailed to each person who becomes a holder of record of any
Preferred Shares. The Company and the Trust acknowledge and agree that you
may use the Exchange Offer Materials as specified herein without assuming
any responsibility for independent verification on your part and the
Company and the Trust represent and warrant to you that you may rely on the
accuracy and completeness of any information delivered to you by or on
behalf of the Company or the Trust without assuming any responsibility for
independent verification of such information or without performing or
receiving any appraisal or evaluation of the assets or liabilities of the
Company or the Trust.
3
<PAGE>
(b) The Company and the Trust agree to provide you as many copies as
you may reasonably request of the Exchange Offer Materials. The Company and
the Trust agree that within a reasonable time prior to using or filing with
any federal, state or other governmental agency or instrumentality of the
United States of any Exchange Offer Materials, it will submit copies of
such materials to you and will give reasonable consideration to your and
your counsel's comments, if any, thereon. The Company and the Trust agree
prior to the termination of the Exchange Offer, before amending or
supplementing the Registration Statement or the Prospectus, to furnish
copies of drafts to, and consult with, the Dealer Managers and their
counsel within a reasonable time in advance of filing with the Commission
of any amendment or supplement to the Registration Statement, the
Prospectus or the other Exchange Offer Materials. Neither the Company nor
the Trust shall file any such amendment or supplement to which the Dealer
Managers shall reasonably object; provided, however that the foregoing
-----------------
requirement shall not apply to any of the Company's filings with the
Commission required to be filed pursuant to Section 13(a), 13(c), 14, or
15(d) of the Exchange Act, copies of which filings the Company will cause
to be delivered to each of the Dealer Managers promptly after being
transmitted for filing with the Commission.
(c) The Company has furnished or shall use its best efforts to furnish
to you, or cause the transfer agents or registrars for the Preferred Shares
to furnish to you, as soon as practicable after the date hereof (to the
extent not previously furnished), cards or lists in reasonable quantities
or copies thereof showing the names of persons who were the holders of
record or, to the extent available, the beneficial owners of the Preferred
Shares as of a recent date, together with their addresses and the number of
Preferred Shares held by them. Additionally, the Company and the Trust
shall update, or cause the transfer agents or registrars referred to above
to update, such information from time to time during the term of this
Agreement as may be reasonably requested by you. Except as otherwise
provided herein, you agree to use such information only in connection with
the Exchange Offer.
(d) The Company and the Trust authorize the Dealer Managers to use the
Exchange Offer Materials in connection with the Exchange Offer and for such
period of time as any such materials are required by law to be delivered in
connection therewith. The Dealer Managers shall not have any obligation to
cause any Exchange Offer Materials to be transmitted generally to the
holders of Preferred Shares.
(e) Each of the Company and the Trust authorizes the Dealer Managers
to communicate with any information agent (the "Information Agent") or
exchange agent (the "Exchange Agent") appointed by the Company or the Trust
to act in
4
<PAGE>
such capacity in connection with the Exchange Offer. The Company and the
Trust will arrange for the Exchange Agent to advise you daily, as
necessary, as to such matters relating to the Exchange Offer as you may
reasonably request.
(f) The Company and the Trust agree that any reference to the Dealer
Managers in any Exchange Offer Materials or in any newspaper announcement
or press release or other document or communication is subject to the
Dealer Managers' prior consent, which consent shall not be unreasonably
withheld.
5. Withdrawal. In the event that either the Company or the Trust (i)
----------
uses or permits the use of, or files with the Commission, any amendment or
supplement to the Registration Statement and any such document has not been
previously submitted to you for your comment if prior submission is
required in accordance with the provisions of Section 4(b) hereof; or (ii)
shall have breached, in any material respect, any of its representations,
warranties, agreements or covenants herein, then you shall be entitled upon
written notice to the Company and the Trust to withdraw as Dealer Managers
in connection with the Exchange Offer without any liability or penalty to
you or any other indemnified person (as defined in Section 11 below) and
without loss of any right to indemnification or contribution provided in
Section 11 or to the payment of (x) all fees payable pursuant to Section 6
with respect to the Preferred Shares tendered prior to the date of
withdrawal and (y) all reasonable expenses payable hereunder which have
accrued through the date of such withdrawal.
6. Fees. The Company and the Trust have agreed to pay certain fees
----
of the Dealer Managers in connection with the Exchange Offer as set forth
in a separate letter agreement dated [ ] among the Company, the Trust and
the Dealer Managers (the "Engagement Letter").
7. Expenses and Reimbursement of Expenses. The Company and the Trust,
--------------------------------------
jointly and severally, agree to pay the reasonable costs and expenses
incident to the performance of the obligations hereunder, including,
without limitation, all costs and expenses (i) incurred by dealers and
brokers (including yourself), commercial banks, trust companies and
nominees for their customary mailing and handling expenses incurred in
forwarding the Exchange Offer Materials to their customers, (ii) incident
to the preparation, issuance, execution and delivery of the Trust Preferred
Securities, (iii) incident to the preparation, printing and filing under
the Securities Act of the Registration Statement, the Prospectus
(including, without limitation, in each case all exhibits, amendments and
supplements thereto), (iv) incurred in connection with the registration or
qualification of the Trust Preferred Securities under the laws of such
jurisdictions as the Dealer Managers may designate (including, without
limitation, reasonable
5
<PAGE>
fees of counsel for the Dealer Managers and its reasonable disbursements),
(v) in connection with the printing (including word processing and
duplication costs) and delivery of all Exchange Offer Materials (including,
without limitation, any preliminary and supplemental blue sky memoranda)
including, without limitation, mailing and shipping; (vi) all advertising
expenses related to the Exchange Offer and the fees and expenses of the
Exchange Agent and the Information Agent; (vii) the fees and disbursements
of Munger, Tolles & Olson, counsel to the Company and Trust, Coopers &
Lybrand, L.L.P., auditors to the Company and (viii) the fees and expenses
of the trustee of the Trust (the "Trustee"). In addition, the Company and
the Trust, jointly and severally, agree to reimburse the reasonable out-of-
pocket expenses of the Dealer Managers in connection with the Exchange
Offer (including, without limitation, the reasonable legal fees and
expenses of counsel to the Dealer Managers in connection with the Exchange
Offer).
8. Representations, Warranties and Certain Agreements of the Company
-----------------------------------------------------------------
and the Trust. Each of the Company and the Trust jointly and severally
-------------
represents and warrants to you, and agrees with you, that as of the
Commencement Date and at all times on or prior to date when the Exchange
Offer is consummated (the "Closing Date"):
(a) the Registration Statement has become effective; no stop order
suspending the effectiveness of the Registration Statement is in effect,
and no proceedings for such purpose are pending before or threatened by the
Commission;
(b) (i) the Exchange Offer Materials, including the Registration
Statement and Prospectus, comply and, as amended or supplemented, if
applicable, will comply in all material respects with the Securities Act
and the Exchange Act and the applicable rules and regulations of the
Commission thereunder; (ii) the Registration Statement, when it became
effective, did not contain and as amended or supplemented, if applicable,
will not contain, any untrue statement of a material fact or omit to state
a material fact required to be stated therein or necessary to make the
statements therein not misleading; and (iii) none of the Prospectus or
other Exchange Offer Materials contains, and, as amended or supplemented,
if applicable, will contain any untrue statement of a material fact or omit
to state a material fact necessary to make the statements therein, in the
light of the circumstances under which they were made, not misleading;
except that the representations and warranties set forth in this paragraph
8(b) do not apply (A) to statements or omissions in the Exchange Offer
Materials, the Registration Statement or the Prospectus based upon
information relating to the Dealer Managers furnished to the Company in
writing by the Dealer Managers expressly for use therein or (B) to that
part of the Registration
6
<PAGE>
Statement that constitutes the Statements of Eligibility and Qualification
(Form T-1) under the Trust Indenture Act of 1939, as amended (the "Trust
Indenture Act"), of the Trustee under the Indenture (as defined below), as
institutional trustee under the Declaration (as defined below), and as
trustee under the Guarantee;
(c) the Company has the corporate power and authority to execute,
deliver and perform its obligations under this Agreement, the Declaration,
the Indenture and the Guarantee; and the Trust has the business trust power
and authority to execute, deliver and perform its obligations under this
Agreement;
(d) this Agreement has been duly and validly authorized, executed and
delivered by the Company and is a valid and binding obligation of the
Company;
(e) this Agreement has been duly and validly authorized, executed and
delivered by the Trust and is a valid and binding obligation of the Trust;
(f) the Exchange Offer does not conflict with any provision of
existing indebtedness of the Company;
(g) the Prospectus as amended or supplemented in relation to the
Exchange Offer shall have been filed with the Commission pursuant to Rule
424(b), if required, within the applicable time period prescribed for such
filing by the rules and regulations under the Act;
(h) on or prior to the Commencement Date, the Exchange Agent
Agreement shall be in full force and effect;
(i) The Trust Preferred Securities to be issued pursuant to the
Exchange Offer will be duly authorized by the Trust's Amended and Restated
Declaration of Trust (the "Declaration") upon execution and delivery of the
Declaration in the form filed with the Registration Statement, and, when
issued and delivered in accordance with the terms of this Agreement in
exchange for Preferred Shares pursuant to the Exchange Offer, will be
validly issued and (subject to the terms of the Declaration) fully paid and
nonassessable undivided beneficial interests in the assets of the Trust,
not subject to any preemptive or similar rights, and will conform in all
material respects to all statements relating thereto contained in the
Prospectus. Holders of Trust Preferred Securities will be entitled, subject
to the terms of the Declaration, to the same limitation of personal
liability extended to stockholders of private corporations for profit.
(j) The Declaration and the Guarantee have been duly authorized by
the Company and, as of the Closing Date, will have been duly executed and
delivered
7
<PAGE>
by the Company. Assuming due authorization, execution and delivery of the
Declaration by the Trustees, the Declaration will, as of the Closing Date,
be a valid and binding obligation of the Company, enforceable in accordance
with its terms, except as the enforcement thereof may be limited by (i)
bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer or
other similar laws relating to or affecting enforcement of creditors'
rights generally and (ii) general principles of equity (regardless of
whether enforceability is considered in a proceeding at law or in equity).
The Guarantee, as of the Closing Date, will be a valid and binding
obligation of the Company, enforceable in accordance with its terms, except
as the enforcement thereof may be limited by (i) bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer or other similar laws
affecting enforcement of creditors' rights generally and (ii) general
principles of equity (regardless of whether enforceability is considered in
a proceeding at law or in equity).
(k) The Indenture between the Company and the Indenture Trustee
(including the related supplemental indenture governing the Debentures to
be deposited in the Trust, the "Indenture"), has been duly qualified under
the Trust Indenture Act and by the Indenture Trustee and, assuming due
authorization, execution and delivery of the Indenture by the Indenture
Trustee, when executed and delivered by the Company, will constitute a
valid and binding agreement of the Company, enforceable in accordance with
its terms, except as the enforcement thereof may be limited by (i)
bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer or
other similar laws affecting enforcement of creditors' rights generally and
(ii) general principles of equity (regardless of whether enforceability is
considered in a proceeding at law or in equity).
(l) The Debentures to be deposited in the Trust as trust assets in
connection with the Exchange Offer have been duly authorized, and, assuming
due authorization, execution and delivery of the Indenture by the Indenture
Trustee, when executed and delivered by the Company to the Indenture
Trustee, and when executed and authenticated in accordance with the
provisions of the Indenture and delivered to the Trust pursuant to the
terms of the Exchange Offer, will be entitled to the benefits of the
Indenture and will be valid and binding obligations of the Company
enforceable in accordance with their terms, except as the enforcement
thereof may be limited by (i) bankruptcy, insolvency, reorganization,
moratorium, fraudulent transfer or other similar laws affecting enforcement
of creditors' rights generally and (ii) general principles of equity
(regardless of whether enforceability is considered in a proceeding at law
or in equity).
8
<PAGE>
(m) The Company has been duly incorporated, is validly existing as a
corporation in good standing under the laws of the State of Delaware, has
the corporate power and authority to own its property and to conduct its
business as described in the Prospectus and is duly qualified to transact
business and is in good standing in each jurisdiction in which the conduct
of its business or its ownership or leasing of property requires such
qualification, except to the extent that the failure to be so qualified or
to be in good standing would not have a material adverse effect on the
Company and its subsidiaries, taken as a whole.
(n) The Trust has been duly created and is validly existing in good
standing as a business trust under the Delaware Act, is and will be treated
as a "grantor trust" for Federal income tax purposes under existing law,
has the business trust power and authority to conduct its business as
presently conducted and as described in the Prospectus, and is not required
to be authorized to do business in any other jurisdiction.
(o) Union Oil Company of California has been duly incorporated, is
validly existing as a corporation in good standing under the laws of the
State of California, has the corporate power and authority to own its
property and to conduct its business as described in the Prospectus and is
duly qualified to transact business and is in good standing in each
jurisdiction in which the conduct of its business or its ownership or
leasing of property requires such qualification, except to the extent that
the failure to be so qualified or to be in good standing would not have a
material adverse effect on the Company and its subsidiaries, taken as a
whole.
(p) The authorized capital stock of the Company conforms as to legal
matters to the description thereof contained in the Prospectus;
(q) The execution and delivery by the Company and the Trust of, and
the performance by the Company and the Trust of their obligations under,
this Agreement, the execution and delivery by the Company of, and the
performance by the Company of its obligations under, the Declaration, the
Indenture and the Guarantee, the issuance and delivery by the Trust of the
Trust Preferred Securities and the consummation of the Exchange Offer and
the fulfillment of the terms herein contemplated will not contravene,
violate, conflict with, result in the breach of, or constitute a default
under (i) any provision of applicable law or regulation; (ii) the
certificate of incorporation or by-laws of the Company; (iii) the
Declaration or any agreement or other instrument binding upon the Trust or
the Company or any of its subsidiaries; or (iv) any judgment,
determination, order or decree of any governmental body, agency or court
having jurisdiction over the Trust or the Company or any of its
subsidiaries other than, in the case of clauses
9
<PAGE>
(i), (iii) and (iv), any such contravention, violation, conflict, breach,
or default that individually or in the aggregate would not have a material
adverse effect on the Company and its subsidiaries, taken as a whole, and
no consent, approval, authorization or order of, or the qualification with,
any governmental body or agency is required for the performance by the
Company and the Trust of their obligations under this Agreement, the
issuance and delivery of the Trust Preferred Securities and the
consummation of the Exchange Offer, except such as may be required by the
Securities Act, the Exchange Act or the Trust Indenture Act and as may be
required by the securities or Blue Sky laws of the various states or the
securities laws of non-U.S. jurisdictions in connection with the Exchange
Offer.
(r) There has not occurred any material adverse change or any
development involving a prospective material adverse change in the
condition, financial or otherwise, or in the earnings, business or
operations of the Company and its subsidiaries, taken as a whole, from that
set forth in the Prospectus (exclusive of any amendments or supplements
thereto subsequent to the date of this Agreement).
(s) There are no legal or governmental proceedings pending or
threatened to which the Trust or the Company or any of its subsidiaries is
a party or to which any of the properties of the Trust or the Company or
any of its subsidiaries is subject that are required to be described in the
Registration Statement or the Prospectus and are not so described, other
than such proceedings that individually or in the aggregate would not have
a material adverse effect on the Company and its subsidiaries taken as a
whole, or any statutes, regulations, contracts or other documents that are
required to be described in the Registration Statement or the Prospectus or
to be filed as an exhibit to the Registration Statement that are not
described or filed as required.
(t) The Company and the Trust are not, and after giving effect to the
consummation of the Exchange Offer, will not be an "investment company" or
an entity "controlled" by an "investment company" as such terms are defined
in the Investment Company Act of 1940, as amended.
(u) There are no contracts, agreements or understandings between the
Company and any person granting such person the right to require the
Company to file a registration statement under the Securities Act with
respect to any securities of the Company or to require the Company to
include such securities with the Trust Preferred Securities registered
pursuant to the Registration Statement.
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(v) Except as described in the Prospectus and except for (i) other
noncompliance with Environmental laws (as defined below), (ii) failure to
receive required permits, licenses or other approvals or (iii) failure to
comply with the terms and conditions of permits, licenses or approvals,
which, in the case of clauses (i) through (iii), are not likely, based on
management's evaluation of known and anticipated claims, singly or in the
aggregate, to have a material adverse effect on the Company and its
subsidiaries, taken as a whole, the Company and its subsidiaries are (x) in
compliance with any and all applicable foreign, federal, state and local
laws and regulations relating to the protection of human health and safety,
the environment or hazardous or toxic substances or wastes, pollutants or
contaminants ("Environmental Laws"), (y) have received all permits,
licenses or other approvals required of them under applicable Environmental
Laws to conduct their respective businesses and (z) are in compliance with
all terms and conditions of any such permit, license or approval.
(w) In the ordinary course of its business, the Company periodically
reviews the effect of Environmental Laws on the business, operations and
properties of the Company and its subsidiaries, in the course of which it
identifies and evaluates associated costs and liabilities (including,
without limitation, capital or operating expenditures required for clean-
up, costs of closure of properties or compliance with Environmental Laws or
permits, licenses or approvals, costs of related constraints on operating
activities). The Company also periodically reviews potential liabilities
under Environmental Laws to third parties. On the basis of such reviews,
the Company has reasonably concluded that such associated costs and
liabilities are disclosed, in accordance with the requirements of the
Exchange Act and the Securities Act, in all material respects.
(x) Each of the Company and the Trust has complied with all
provisions of Section 517.075 Florida Statutes (Chapter 92-198, Laws of
Florida) relating to doing business with the Government of Cuba or with any
person or affiliate located in Cuba.
9. Conditions to Dealer Manager's Obligations. The obligations of the
------------------------------------------
Dealer Managers hereunder are subject, as of the Commencement Date and at
all times on or prior to the Closing Date, to the accuracy of the
representations and warranties on the part of the Company and the Trust
herein, to the accuracy of the statements of officers of the Company and of
the Trust made pursuant to the provisions hereof, to the performance by the
Company and the Trust of their respective obligations hereunder and to the
following additional conditions:
(a) subsequent to the execution and delivery of this Agreement and
prior to the Closing Date,
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(i) there shall not have occurred any downgrading, nor shall any
notice have been given of any intended or potential downgrading or of
any review for a possible change that does not indicate the direction
of the possible change, in the rating or preliminary rating accorded
the Trust Preferred Securities or of any other securities of or
guaranteed by the Company or any of its subsidiaries by any
"nationally recognized statistical rating organization," as such term
is defined for purposes of Rule 436(g)(2) under the Securities Act;
and
(ii) there shall not have occurred any change, or any
development involving a prospective change, in the condition,
financial or otherwise, or in the earnings, business or operations, of
the Trust or the Company and its subsidiaries taken as a whole, from
that described in the Prospectus that, in the Dealer Managers'
judgement, is material and adverse and that makes it, in the Dealer
Managers' judgement, impracticable to market the Trust Preferred
Securities on the terms and in the manner contemplated in the
Registration Statement;
(b) on the Commencement Date and the Closing Date, you shall have
received a certificate, dated such date and signed by an authorized officer
of the Company and an authorized officer of the Trust acceptable to you, to
the effect set forth in clause (a) above, and to the effect that the
representations and warranties of the Company and the Trust, as the case
may be, contained in this Agreement shall be true and correct as of the
Closing Date and that the Company and the Trust, as the case may be, shall
have performed all of their respective obligations to be performed
hereunder on or prior to the Closing Date. The officers signing and
delivering such certificate on behalf of the Company and the Trust may rely
upon the best of their knowledge as to proceedings threatened;
(c) each of the Company and the Trust shall have furnished to you on
each of the Commencement Date and the Closing Date, such additional
certificates or other documents as are typically delivered in connection
with a transaction of this type and which you may reasonably request;
(d) on the Closing Date and, except as to clauses (iii), (iv) and (v),
on the Commencement Date, the Dealer Managers shall have received a signed
opinion of Munger, Tolles & Olson, counsel for the Company and the Trust,
dated as of such date, to the effect that:
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<PAGE>
(i) this Agreement has been duly authorized, executed and
delivered by the Company;
(ii) the Exchange Agent Agreement has been duly authorized,
executed and delivered by the Company;
(iii) the Indenture has been duly qualified under the Trust
Indenture Act, has been duly authorized, executed and delivered by the
Company and, assuming due authorization, execution and delivery of the
Indenture by the Indenture Trustee, constitutes a valid and binding
agreement of the Company enforceable in accordance with its terms
except as the enforcement thereof may be limited by (i) bankruptcy,
insolvency, reorganization, moratorium fraudulent transfer or other
similar laws relating to or affecting the enforcement of creditors'
rights generally and (ii) general principles of equity (regardless of
whether enforceability is considered in a proceeding at law or in
equity);
(iv) the Debentures when executed and authenticated in
accordance with the provisions of the Indenture, assuming due
authorization, execution and delivery of the Indenture by the
Indenture Trustee, and delivered pursuant to the terms of the Exchange
Offer will be entitled to the benefits of the Indenture and will be
valid and binding obligations of the Company enforceable in accordance
with their terms except as the enforcement thereof may be limited by
(i) bankruptcy, insolvency, reorganization, moratorium, fraudulent
transfer or other similar laws relating to or affecting the
enforcement of creditors' rights generally and (ii) general principles
of equity (regardless of whether enforceability is considered in a
proceeding at law or in equity);
(v) the Guarantee has been duly authorized, executed and
delivered and is a valid and binding agreement of the Company,
enforceable in accordance with its terms except as the enforcement
thereof may be limited by (i) bankruptcy, insolvency, reorganization,
moratorium, fraudulent transfer or other similar laws relating to or
affecting the enforcement of creditors' rights generally and
13
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(ii) general principles of equity (regardless of whether
enforceability is considered in a proceeding at law or in equity);
(vi) the statements made in the Prospectus under the captions,
"Description of the Trust Convertible Preferred Securities,"
"Description of the $3.50 Convertible Preferred Stock," "Description
of the Convertible Debentures," "Description of the Guarantee," and
"Description of the Common Stock" insofar as such statements
constitute a summary of the legal matters, documents or proceedings
referred to therein, fairly present the information called for with
respect to such legal matters, documents and proceedings and are
accurate in all material respects;
(vii) neither the Company nor the Trust is, or after giving
effect to the consummation the Exchange Offer, will be, and neither
the Company nor the Trust is directly or indirectly "controlled" by an
"investment company" as such terms are defined in the Investment
Company Act of 1940, as amended;
(viii) such counsel (1) is of the opinion that the Registration
Statement and Prospectus (except for financial statements and
schedules and other financial and statistical data included or
incorporated therein as to which such counsel need not express an
opinion and except for that part of the Registration Statement that
constitutes the Forms T-1) comply as to form in all material respects
with the Securities Act and the applicable rules and regulations of
the Commission thereunder, (2) has no reason to believe that (except
for financial statements and schedules and other financial and
statistical data as to which such counsel need not express any belief)
the Registration Statement and the Prospectus included therein at the
time the Registration Statement became effective contained any untrue
statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading and (3) has no reason to believe that (except
for financial statements and schedules, and other financial and
statistical data as to which such counsel need
14
<PAGE>
not express any belief) the Prospectus at the date of such opinion
contains any untrue statement of a material fact or omits to state a
material fact necessary in order to make the statements therein in the
light of the circumstances under which they were made, not misleading.
In rendering such opinion, such counsel may rely as to matters of fact
on certificates of officers of the Company and of public officials, may
rely upon the opinion delivered pursuant to paragraph (h) of this Section 9
as to the laws of the State of New York and may state that such counsel
expresses no opinion as to the laws of any jurisdiction other than the
State of California, the federal law of the United States and the Delaware
General Corporation Law.
With respect to paragraph (viii) above, such counsel may state that it
has not independently verified the accuracy, completeness or fairness of
the statements made or included or incorporated by reference therein and
takes no responsibility therefor and that such opinion is based upon such
counsel's examination of the Registration Statement, the Prospectus as
amended or supplemented and any documents incorporated by reference
thereto, its participation in the preparation of the Registration Statement
and Prospectus and its participation in conferences with certain officers
and employees of the Company and its subsidiaries and any others referred
to in such opinion.
(e) On the Commencement Date and the Closing Date (except with
respect to paragraph (iv) which will be given on the Closing Date), the
Dealer Managers shall have received a signed opinion of Morris, Nichols,
Arsht & Tunnell, Delaware counsel for the Company and the Trust, dated as
of such date, to the effect that:
(i) the Trust has been duly created and is validly existing in
good standing as a business trust under the Delaware Act, is and has
the business trust power and authority to conduct its business as
described in the Prospectus;
(ii) assuming due authorization, execution and delivery of the
Declaration by the Company and the Trustees, the Declaration is a
valid and binding agreement of the Company and the Trustees,
enforceable in accordance with its terms except as the enforcement
thereof may be limited by (i) bankruptcy, insolvency, reorganization,
moratorium, fraudulent transfer or other
15
<PAGE>
similar laws relating to or affecting the enforcement of creditors'
rights generally, (ii) general principles of equity (regardless of
whether enforceability is considered in a proceeding at law or in
equity) and (iii) considerations of public policy or the effect of
applicable law relating to fiduciary duties;
(iii) assuming due authorization, execution and delivery of the
Declaration by the Company and the Trustees, the execution and
delivery of this Agreement by the Trust, and the performance by the
Trust of its obligations hereunder, will have been duly authorized by
all requisite business trust action on the part of the Trust;
(iv) the Trust Preferred Securities and the Common Securities
have been duly authorized by the Declaration and are duly and validly
issued and, subject to the terms of the Declaration, fully paid and
nonassessable beneficial interests in the assets of the Trust. The
holders of Preferred Securities and the Common Securities will be,
subject to the terms of the Declaration, entitled to the same
limitation of personal liability extended to stockholders of private
corporations for profit organized under the General Corporation Law of
the State of Delaware; and
(v) under the Declaration and the Delaware Act, the issuance of
the Trust Preferred Securities and the Common Securities is not
subject to preemptive rights.
(f) On the Commencement Date and the Closing Date, the Dealer
Managers shall have received a signed opinion of the General Counsel of the
Company, dated as of such date, to the effect that:
(i) the Company has been duly incorporated, is validly existing
as a corporation in good standing under the laws of the State of
Delaware, has the corporate power and authority to own its property
and to conduct its business as described in the Prospectus and is duly
qualified to transact business and is in good standing in each
jurisdiction in which the conduct of its business or the ownership or
leasing of its property requires such qualification, except to the
extent that the failure to be so qualified or be in good
16
<PAGE>
standing would not have a material adverse effect on the Company and
its subsidiaries, taken as a whole;
(ii) Union Oil Company of California has been duly
incorporated, is validly existing as a corporation in good standing
under the laws of the State of California has the corporate power and
authority to own its property and to conduct its business as described
in the Prospectus and is duly qualified to transact business and is in
good standing in each jurisdiction in which the conduct of its
business or its ownership or leasing of property requires such
qualification, except to the extent that the failure to be so
qualified or be in good standing would not have a material adverse
effect on the Company and its subsidiaries, taken as a whole;
(iii) this Agreement has been duly authorized, executed and
delivered by the Company;
(iv) the authorized capital stock of the Company conforms as to
legal matters to the description thereof contained in the Prospectus;
(v) the execution and delivery by the Company of, and the
performance by the Company of its obligations under, this Agreement,
the Declaration, the Indenture, the Debentures and the Guarantee, and
the consummation of the Exchange Offer and the fulfillment of the
terms herein contemplated (including the issuance of the Trust
Preferred Securities and the Common Securities by the Trust) will not
contravene any provision of applicable law or the certificate of
incorporation or by-laws of the Company or any of its subsidiaries
(including the Trust) or any material agreement or other instrument
binding upon the Company or any of its subsidiaries (including the
Trust) or any judgment, order or decree of any governmental body,
agency or court having jurisdiction over the Company or any subsidiary
(including the Trust), and no consent, approval or authorization or
order of, or qualification with, any governmental body or agency is
required for the performance by either the Trust or the Company of its
obligations under this Agreement, the Declaration, the
17
<PAGE>
Indenture, the Debentures and the Guarantee, and the consummation of
the Exchange Offer, except such as may be required by the Securities
Act, the Exchange Act or the Trust Indenture Act or the securities or
Blue Sky laws of the various states or the securities laws of non-U.S.
jurisdictions in connection with the Exchange Offer;
(vi) after due inquiry, to the best of such counsel's
knowledge, such counsel does not know of any legal or governmental
proceeding pending or threatened to which the Company or any of its
subsidiaries (including the Trust) is a party or to which any of the
properties of the Company or any of its subsidiaries (including the
Trust) is subject that is required to be described in the Registration
Statement or the Prospectus and is not so described, other than such
proceedings that individually or in the aggregate would not have a
material adverse effect on the Company and its subsidiaries taken as a
whole, or of any statutes, regulations, contracts or other documents
that are required to be described in the Registration Statement or the
Prospectus or to be filed as exhibits to the Registration Statement
that are not described or filed as required;
(vii) such counsel is of the opinion that the Company is (i) in
compliance with any and all applicable Environmental Laws, (ii) has
received all permits, licenses or other approvals required of it under
applicable Environmental Laws to conduct its business and (iii) is in
compliance with all terms and conditions of any such permit, license
or approval, except as otherwise described in or contemplated in the
Prospectus and except for such noncompliance with Environmental Laws,
failure to receive required permits, licenses or other approvals or
failure to comply with the terms and conditions of such permits,
licenses or approvals which such counsel believes, based on his
evaluation of known and anticipated claims, are not likely, singly or
in the aggregate, to have a material adverse effect on the Company and
its subsidiaries taken as a whole; and
(viii) such counsel (1) is of the opinion that the Registration
Statement and Prospectus (except for financial
18
<PAGE>
statements and schedules and other financial and statistical data
included or incorporated therein as to which such counsel need not
express an opinion and except for that part of the Registration
Statement that constitutes the Forms T-1) comply as to form in all
material respects with the Securities Act and the applicable rules and
regulations of the Commission thereunder, (2) has no reason to believe
that (except for financial statements and schedules and other
financial and statistical data as to which such counsel need not
express any belief) the Registration Statement and the prospectus
included therein at the time the Registration Statement became
effective contained any untrue statement of a material fact or omitted
to state a material fact required to be stated therein or necessary to
make the statements therein not misleading and (3) has no reason to
believe that (except for financial statements and schedules, and other
financial and statistical data as to which such counsel need not
express any belief), the Prospectus at the date of such opinion
contains any untrue statement of a material fact or omits to state a
material fact necessary in order to make the statements therein in the
light of the circumstances under which they were made, not misleading;
(ix) the statements made in "Item 3-Legal Proceedings" of the
Company's most recent annual report on Form 10-K, in "Item 1-Legal
Proceedings" of any quarterly report on Form 10-Q and in "Item 5-Other
Events" of any current report on Form 8-K included or incorporated by
reference in the Prospectus, insofar as such statements constitute a
summary of legal matters, documents or proceedings referred to
therein, fairly present the information called for with respect to
such legal matters, documents and proceedings and are accurate in all
material respects.
In rendering such opinion, such counsel may rely as to certain matters of
fact on certificates of officers of the Company and of public officials, may
rely upon the opinion delivered pursuant to paragraph (h) of this Section 9 as
to the laws of the State of New York and may state that such counsel expresses
no opinion as to the laws of any jurisdiction other than the State of
California, the federal law of the United States and the Delaware General
Corporation Law.
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<PAGE>
With respect to paragraph (viii) above, counsel for the Company may
state that such counsel's opinion and belief are based upon the
participation of the office of such counsel in the preparation of the
Registration Statement and Prospectus and any amendments or supplements
thereto and documents incorporated therein by reference and review and
discussion of the contents thereof, but are without independent check or
verification, except as specified.
(g) The Dealer Managers shall have received the opinion of Miller &
Chevalier Chartered, tax counsel for the Company and the Trust, dated as of
the Commencement Date and the Closing Date to the effect that the Trust
will be treated as a "grantor trust" for Federal income tax purposes under
existing law and covering the Statements made in the Prospectus under
"Certain Federal Income Tax Considerations."
(h) The Dealer Managers shall have received the opinion of Davis Polk
& Wardwell, counsel for the Dealer Managers, dated as of the Commencement
Date and the Closing Date, covering the incorporation and legal existence
of the Company, the issuance and delivery of the Trust Preferred
Securities, this Agreement, the Registration Statement, the Prospectus and
such other related matters as the Dealer Managers may require. In giving
such opinion such counsel may rely, as to all matters governed by the laws
of jurisdictions other than the law of the State of New York, and the
Federal law of the United States and the corporate law of the State of
Delaware, upon the opinions of counsel satisfactory to the Dealer Managers.
Such counsel may also state that, insofar as such opinion involves factual
matters, they have relied, to the extent they deem proper, upon
certificates of officers of the Company and certificates of public
officials.
(i) The Company and the Trust will also furnish to you from time to
time (including on the Closing Date), up to the last acceptance of
Preferred Shares pursuant to the Exchange Offer, any further opinion of
counsel, satisfactory to your counsel, as you may reasonably request.
(j) You shall have received, on the Commencement Date and the Closing
Date, letters, dated the Commencement Date and the Closing Date, as the
case may be, reasonably satisfactory to you of Coopers & Lybrand, L.L.P.,
containing statements and information of the type ordinarily included in
accountants' "comfort letters" with respect to the consolidated financial
statements of the Company and Trust and certain financial information
contained in the Registration Statement and the Prospectus.
20
<PAGE>
The Company and the Trust will furnish you with such executed or
conformed copies of such opinions, certificates, letters and documents as
you may reasonably request.
10. Covenants of the Company and the Trust. Each of the Company and
--------------------------------------
the Trust covenants with the Dealer Managers: (a) To use its reasonable
efforts to cause the Registration Statement, including any post-effective
amendment thereto, to become effective promptly and will notify the Dealer
Managers immediately and, if requested by the Dealer Managers, will confirm
the notice in writing, (i) when any post-effective amendment to the
Registration Statement shall have become effective, or any supplement to
the Prospectus or any amended Prospectus or any amended or additional
Exchange Offer Materials shall have been filed, (ii) of the receipt of any
comments from the Commission relating to the Exchange Offer, (iii) of any
request by the Commission to amend the Registration Statement or amend or
supplement the Prospectus or the other Exchange Offer Materials or for
additional information relating to the Exchange Offer and (iv) of (A) the
issuance by the Commission of any stop order suspending the use of any
Exchange Offer Materials or any qualification of the Trust Preferred
Securities for offering or sale in connection with the Exchange Offer in
any jurisdiction, (B) the institution or threatening of any proceedings for
any of such purposes or (C) the occurrence of any event which could cause
the Company or the Trust to withdraw, rescind, terminate or modify the
Exchange Offer or would permit the Company or the Trust to exercise any
right not to accept Preferred Shares tendered pursuant to the Exchange
Offer. Each of the Company and the Trust will use its reasonable efforts to
prevent the issuance of any such stop order, the issuance of any order
preventing or suspending such use and the suspension of any such
qualification and, if any such order is issued or qualification suspended,
to obtain the lifting of such order or suspension at the earliest
practicable time;
(b) To comply in all material respects with the Securities Act, the
Exchange Act and the Trust Indenture Act in connection with the Exchange
Offer Materials, the Exchange Offer and the transactions contemplated
hereby and thereby, as applicable. If at any time when the Prospectus is
required by the Securities Act or Exchange Act to be delivered in
connection with the Exchange Offer, any event shall occur or condition
shall exist as a result of which it is necessary, in the opinion of counsel
for the Dealer Managers or counsel for the Company or the Trust, to amend
the Registration Statement or amend or supplement the Prospectus or any
other Exchange Offer Materials in order that the Prospectus or such other
Exchange Offer Materials will not include an untrue statement of a material
fact or omit to state a material fact necessary in order to make the
statements in the Prospectus or such other Exchange Offer Materials, in
21
<PAGE>
the light of the circumstances under which they were made, not misleading
or if, in the opinion of either such counsel, it shall be necessary to
amend the Registration Statement or amend or supplement the Prospectus or
any other Exchange Offer Materials to comply with the requirements of the
Securities Act or Exchange Act, the Company and the Trust will promptly
prepare, file with the Commission, subject to Section 4(b) hereof, and
furnish, at its own expense, to the Dealer Managers and to the dealers
(whose names and address will be furnished to the Company and the Trust by
the Dealer Managers) to which Preferred Shares may have been exchanged,
such amendment or supplement as may be necessary to correct such untrue
statement or omission or to make the Registration Statement or the
Prospectus or such other Exchange Offer Materials comply with such
requirements;
(c) To endeavor, in cooperation with the Dealer Managers, to qualify
the Trust Preferred Securities for offering and sale in connection with the
Exchange Offer under the applicable securities or Blue Sky laws of such
jurisdictions as the Dealer Mangers may reasonably request and to maintain
such qualifications in effect for such time as may be required for the
consummation of the Exchange Offer. In each jurisdiction in which the Trust
Preferred Securities have been so qualified, the Trust will file such
statements and reports as may be required by the laws of such jurisdiction
to continue such qualification in effect for a period of not less than one
year from the effective date of the Registration Statement;
(d) To make generally available to its security holders and to the
Dealer Managers as soon as practicable an earnings statement covering a
twelve-month period beginning not later than the first day of the Trust's
fiscal quarter next following the effective date of the Registration
Statement that satisfies the provisions of Section 11(a) of the Securities
Act and the rules and regulations of the Commission thereunder; and
(e) To use its best efforts to advise or cause the Exchange Agent to
advise the Dealer Managers at 5:00 P.M., New York City time, or promptly
thereafter, daily (or more frequently if requested), by telephone or
facsimile transmission, with respect to Preferred Shares tendered as
follows: (i) the aggregate number of Preferred Shares validly tendered and
represented by certificates physically held by the Exchange Agent or
confirmations of receipt of book-entry transfer of Preferred Shares
pursuant to the procedures set forth in the Exchange Offer on such day;
(ii) the aggregate number of Preferred Shares represented by Notices of
Guaranteed Delivery on such day; (iii) any Preferred Shares properly
withdrawn on such day; and (v) the cumulative totals of the number of
Preferred Shares in categories (i) through (iii), inclusive, above.
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11. Indemnification and Contribution; Settlement of Litigation;
-----------------------------------------------------------
Release. Each of the Company and the Trust jointly and severally agrees to:
-------
(a) Indemnify and hold harmless the Dealer Managers, the partners, the
directors and officers of the Dealer Managers and each person, if any, who
controls the Dealer Managers ("Indemnified Persons") within the meaning of
either Section 15 of the Securities Act or Section 20 of the Exchange Act
(i) from and against any and all losses, claims, damages and liabilities
(including, without limitation, any legal or other expenses reasonably
incurred by the Dealer Managers or any such controlling person in
connection with defending or investigating any such action or claim) (A)
caused by any untrue statement or alleged untrue statement of a material
fact contained in the Registration Statement or any amendment thereof, any
related preliminary prospectus, the Prospectus, the Schedule 13E-4 or any
Exchange Offer Materials (as amended or supplemented if the Company or the
Trust shall have furnished any amendments or supplements thereto), or
caused by any omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein
not misleading (except insofar as such losses, claims, damages or
liabilities are caused by any such untrue statement or omission or alleged
untrue statement or omission based upon and in conformity with information
relating to the Dealer Managers furnished to the Company and the Trust in
writing by the Dealer Managers expressly for use therein); or (B) which
arises out of or is based upon a withdrawal, rescission or modification of
or a failure to make or consummate the Exchange Offer; and (ii) against any
other loss, claim, damage or liability which is related to, otherwise
arises out of or is based upon or asserted against you in connection with
your acting as a Dealer Manager in connection with the Exchange Offer,
rendering financial advisory services to the Company or the Trust in
connection with the Exchange Offer or which arises in connection with any
other matter referred to in this Agreement, except to the extent any such
losses, damages, liabilities or claims referred to in this clause (ii)
result from the Dealer Managers' gross negligence or bad faith in
performing the services that are the subject of this Agreement. The Company
or the Trust also agree that neither you nor any of your affiliates, nor
any of your partners, officers, directors, agents, employees or controlling
persons (if any), as the case may be, of you or any such affiliates, shall
have any liability to the Company or the Trust or any person asserting
claims on behalf of or in right of the Company or the Trust for or in
connection with any matter referred to in this Agreement except to the
extent that any loss, damage, liability or claim incurred by the Company or
the Trust results from the Dealer Managers' gross negligence or bad faith
in performing the services that are the subject of this Agreement.
(b) Indemnify and hold harmless the Dealer Managers, the directors
and officers of the Dealer Managers and each person, if any, who controls
the Dealer
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Managers within the meaning of either Section 15 of the Securities Act or
Section 20 of the Exchange Act from and against any other losses, claims,
damages or liabilities (including, without limitation, any legal or other
expenses reasonably incurred by the Dealer Managers or any such controlling
person in connection with defending or investigating any such action or
claim) which otherwise arise in connection with the Exchange Offer, except
to the extent any such loss, damage, claim or liability referred to in this
Section 11(b) which is finally judicially determined to have resulted from
the bad faith, gross negligence or wilful misconduct of any Indemnified
Person. The Company and the Trust also agree that no person indemnified
under this Section 11(b) shall have any liability (whether direct or
indirect, in contract or tort or otherwise) to them for or in connection
with the Exchange Offer except for any such liability for losses, claims,
damages or liabilities incurred by the Company and the Trust that are
finally judicially determined to have resulted from the bad faith, gross
negligence or wilful misconduct of such indemnified person.
(c) The Dealer Managers agree, severally and not jointly, to
indemnify and hold harmless each of the Company and the Trust, their
directors, trustees and officers who sign the Registration Statement or the
Schedule 13E-4, and each person, if any, who controls the Company or the
Trust within the meaning of either Section 15 of the Securities Act or
Section 20 of the Exchange Act to the same extent as the foregoing
indemnity from the Trust and the Company to the Dealer Managers contained
in Section 11(a)(A) above, but only with reference to information relating
to the Dealer Managers furnished to the Company or the Trust in writing by
the Dealer Managers expressly for use in the Registration Statement, any
preliminary prospectus, the Prospectus, the Schedule 13E-4, any other
Exchange Offer Material or any amendment or supplement thereto.
(d) In case any proceeding (including any governmental investigation)
shall be instituted involving any person in respect of which indemnity may
be sought pursuant to paragraphs (a), (b) or (c) of this Section 11, such
person (the "indemnified party") shall promptly notify the person against
whom such indemnity may be sought (the "indemnifying party") in writing and
the indemnifying party, upon request of the indemnified party, shall retain
counsel reasonably satisfactory to the indemnified party to represent the
indemnified party and any others the indemnifying party may designate in
such proceeding and shall pay the fees and disbursements of such counsel
related to such proceeding. In any such proceeding, any indemnified party
shall have the right to retain its own counsel, but the fees and expenses
of such counsel shall be at the expense of such indemnified party unless
(A) the indemnifying party and the indemnified party shall have mutually
agreed to the retention of such counsel or (B) the named parties to any
such proceeding (including any impleaded parties) include both the
24
<PAGE>
indemnifying party and the indemnified party and representation of both
parties by the same counsel would be inappropriate due to actual or
potential differing interests between them. It is understood that the
indemnifying party shall not, in respect of the legal expenses of any
indemnified party in connection with any proceeding or related proceedings
in the same jurisdiction, be liable for the fees and expenses of more than
one separate firm (in addition to any local counsel) for all such
indemnified parties and that all such fees and expenses shall be reimbursed
as they are incurred. In the case of any such separate firm for the Dealer
Managers and such partners, directors, officers and control persons of the
Dealer Managers, such firm shall be designated in writing by Morgan Stanley
& Co. Incorporated. In the case of any such separate firm for the Company
or the Trust, and such directors, officers, trustees and control persons of
the Company or the Trust, such firm shall be designated in writing by the
Company. The indemnifying party shall not be liable for any settlement of
any proceeding effected without its written consent, but if settled with
such consent or if there be a final judgment for the plaintiff, the
indemnifying party agrees to indemnify the indemnified party from and
against any loss or liability by reason of such settlement or judgment. No
indemnifying party shall, without the prior written consent of the
indemnified party, effect any settlement of any pending or threatened
proceeding in respect of which any indemnified party is or could have been
a party and indemnity could have been sought hereunder by such indemnified
party, unless such settlement includes an unconditional release of such
indemnified party from all liability on claims that are the subject matter
of such proceeding.
(e) If the indemnification provided for above is unavailable to an
indemnified party or insufficient in respect of any losses, claims, damages
or liabilities referred to therein, then each indemnifying party under such
paragraph, in lieu of indemnifying such indemnified party thereunder, shall
contribute to the amount paid or payable by such indemnified party as a
result of such losses, claims, damages or liabilities (A) in such
proportion as is appropriate to reflect the relative benefits received by
the Company and the Trust, on one hand, and the Dealer Managers, on the
other hand, from the Exchange Offer or (B) if the allocation provided by
clause (A) above is not permitted by applicable law, in such proportion as
is appropriate to reflect not only the relative benefits referred to in
clause (A) above but also the relative fault of the Company and the Trust,
on the one hand, and of the Dealer Managers, on the other hand, in
connection with the statements or omissions or any other matter that
resulted in such losses, claims, damages or liabilities, as well as any
other relevant equitable considerations. The relative benefits received by
the Company and the Trust, on the one hand, and the Dealer Managers, on the
other hand, in connection with the Exchange Offer shall be deemed to be in
the same respective proportions as the
25
<PAGE>
maximum aggregate principal amount of the Trust Preferred Securities
issuable pursuant to the Exchange Offer bears to the total Dealer Managers'
fee under the Engagement Letter attributable to the Exchange Offer payable
to the Dealer Managers pursuant to the Engagement Letter. The relative
fault of the Company and the Trust, on the one hand, and the Dealer
Managers, on the other hand, (A) in the case of any untrue statement of a
material fact or omission or alleged omission to state a material fact,
shall be determined by reference to, among other things, whether the untrue
or alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by the
Company or the Trust, on the one hand, or by the Dealer Managers, on the
other hand, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or
omission and (B) in the case of any other action or omission, shall be
determined by reference to, among other things, whether such action or
omission was taken or omitted to be taken by the Company or the Trust or
their affiliates or by the Dealer Managers, and the parties' relative
intent, knowledge, access to information and opportunity to correct or
prevent such action or omission.
(f) The Company, the Trust and the Dealer Manager agree that it would
not be just and equitable if contribution pursuant to Section 11(e) above
were determined by pro rata allocation or by any other method of allocation
--- ----
that does not take account of the equitable considerations referred to in
Section 11(e) above. The amount paid or payable by an indemnified party as
a result of the losses, claims, damages and liabilities referred to in
Section 11(e) above shall be deemed to include, subject to the limitations
set forth above, any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating or defending any such
action or claim. Notwithstanding the provisions of this Agreement, the
Dealer Managers shall not be required to contribute any amount in excess of
the fee paid to the Dealer Managers in connection with the Exchange Offer
as provided in the Engagement Letter. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities
Act) shall be entitled to contribution from any person who was not guilty
of such fraudulent misrepresentation.
(g) The remedies provided for in this Agreement are not exclusive and
shall not limit any rights or remedies which may otherwise be available to
any indemnified party at law or in equity.
(h) The indemnity and contribution provisions contained in this
Agreement and the representations and warranties of the Company and the
Trust contained in this Agreement shall remain operative and in full force
and effect regardless of (A) any termination of this Agreement, (B) any
investigation made
26
<PAGE>
by or on behalf of the Dealer Managers or its officers, directors, partners
or any person controlling the Dealer Managers, or by or on behalf of the
Company or the Trust, any of their respective officers, directors, trustees
or any person controlling the Company or any Trust or (C) consummation of
the Exchange Offer.
(i) With respect to the Exchange Offer (and for no other purpose),
this Section 11 shall supersede the indemnity agreement attached to the
Engagement Letter and with respect to the Exchange Offer (and for no other
purpose) such indemnity agreement shall be of no further effect.
12. Termination. (a) This Agreement shall terminate upon the earliest
-----------
to occur of (i) thirty days after the Expiration Date, (ii) any of the
conditions specified in Section 9 has not been fulfilled as of any date
such condition is required to be fulfilled pursuant to Section 9 (and the
Dealer Managers shall have notified the Company and the Trust thereof) or
(iii) the date on which the Company and the Trust terminate or withdraw the
Exchange Offer for any reason (the earliest to occur of clauses (i), (ii)
and (iii) being referred to as the "Termination Date").
(b) Notwithstanding termination of this Agreement pursuant to
subsection (a) above, the obligations of the parties pursuant to Sections
6, 7 and 11 shall survive any termination of this Agreement.
13. Severability. If any term or other provision of this Agreement is
------------
invalid, illegal or incapable of being enforced by any rule of law, or
public policy, all other provisions of this Agreement shall nevertheless
remain in full force and effect so long as the economic and legal substance
of the agreements contained herein is not affected in any manner adverse to
any party.
14. Counterparts. This Agreement may be executed by the different
------------
parties hereto in one or more separate counterparts, each of which when
executed shall be deemed an original, but all of which together shall
constitute one and the same agreement.
15. Binding Effect. This Agreement shall be binding upon and inure
--------------
solely to the benefit of each party hereto and the Indemnified Persons, and
nothing in this Agreement, express or implied, is intended to or shall
confer upon any other person any right, benefit or remedy.
16. Governing Law. This Agreement shall be governed by and construed
-------------
in accordance with the laws of the State of New York.
27
<PAGE>
17. Consent to Jurisdiction. (a) Each of the Company and the Trust
-----------------------
(i) agrees that any legal suit, action or proceeding brought by the Dealer
Managers arising out of or relating to this Agreement, the Indenture, the
Trust Preferred Securities, the Exchange Offer Materials or the
transactions contemplated hereby or thereby may be instituted in any
federal or state court in New York City, (ii) irrevocably waives, to the
fullest extent it may effectively do so, any objection (x) which it may now
or hereafter have to the laying of the venue of any such suit, action or
proceeding in any federal or state court in New York City or (y) that any
such suit, action or proceeding has been brought in an inconvenient forum,
and (iii) irrevocably submits to the non-exclusive jurisdiction of any such
court in any such suit, action or proceeding.
(b) Each of the Company and the Trust irrevocably designates and
appoints [ ] as its authorized agent upon which process may be served in
any legal suit, action or proceeding arising out of or relating to this
Agreement or the transactions contemplated hereby which may be instituted
in any federal or state court in New York City, and agrees that service of
process upon such agent, and written notice of said service to the Company
or the Trust, as the case may be, by the person serving the same, shall be
deemed in every respect effective service of process upon the Company or
the Trust, as the case may be, in any such suit or proceeding. Each of the
Company and the Trust further agrees to take any and all actions as may be
necessary to maintain such designation and appointment of such agent in
full force and effect.
(c) Each of the Company and the Trust agree that a final judgment in
any such legal suit, action or proceeding arising out of or relating to
this Agreement or the transactions contemplated hereby shall be conclusive
and may be enforced in other jurisdictions by suit on the judgment or in
any other manner provided by law.
18. Entire Agreement. This Agreement, together with the Engagement
----------------
Letter (including all attachments) constitutes the entire agreement among
the parties hereto with respect to the subject matter hereof and supersedes
all prior agreements and undertakings, both written and oral, among the
parties, or any of them, with respect to the subject matter hereof.
19. Amendment. This Agreement may not be amended except in a writing
---------
signed by each party to be bound thereby.
20. Notices. All notices and other communications required or
-------
permitted to be given under this Agreement shall be in writing and shall be
deemed to have been duly given if delivered in person, by cable, fax,
telegram or telex or by
28
<PAGE>
registered or certified mail (postage prepaid, return receipt requested) to
the parties hereto as follows (or, as to each party, at such other address
as shall be designated by such party in a written notice complying as to
delivery with the terms of this paragraph):
(a) If to you:
Morgan Stanley & Co. Incorporated
1585 Broadway
New York, New York 10036
Fax No: (212) 761-0367
Attention: Equity Syndicate
With a copy to: Legal Department
Davis Polk & Wardwell
450 Lexington Avenue
New York, New York 10017
Fax No.: (212) 450-4800
Attention: Bruce Dallas, Esq.
and:
Goldman, Sachs & Co.
333 South Grand Avenue
Suite 1900
Los Angeles, California
Fax No.: (213) 617-5763
Attention: [ ]
29
<PAGE>
(b) If to the Company or the Trust,
Unocal Corporation
2141 Rosecrans Avenue
Suite 4000
El Segundo, California 90245
Fax No.: (310) 726-7875
Attention: General Counsel
With a copy to:
Munger, Tolles & Olson
355 South Grand Avenue
35th Floor
Los Angeles, California 90071-1560
Fax No.: (213) 687-3702
Attention: R. Gregory Morgan, Esq.
21. Subheadings. The descriptive headings contained in this
-----------
Agreement are included for convenience of reference only and shall not
affect in any way the meaning or interpretation of this Agreement.
30
<PAGE>
Please indicate your willingness to act as Dealer Managers on the
terms set forth herein and your acceptance of the foregoing provisions by
signing in the space provided below for that purpose and returning to us a
copy of this letter, whereupon this letter and your acceptance shall
constitute a binding agreement among us.
Very truly yours,
UNOCAL CORPORATION
By:________________________
Name:
Title:
UNOCAL CAPITAL TRUST
By:________________________
Name:
Title:
Accepted and agreed as of the date
first above written:
MORGAN STANLEY & CO. INCORPORATED
By: __________________________
Name:
Title:
GOLDMAN, SACHS & CO.
_______________________________
Goldman, Sachs & Co.
<PAGE>
EXHIBIT 3.1
CERTIFICATE OF TRUST
OF
UNOCAL CAPITAL TRUST
This Certificate of Trust of Unocal Capital Trust (the "Trust"), dated
July 17, 1996, is being duly executed and filed by the undersigned, as trustees,
to form a business trust under the Delaware Business Trust Act (12 Del. C. (S)
--- -
3801 et seq.).
-- ---
1. NAME. The name of the business trust being formed hereby is
----
Unocal Capital Trust.
2. DELAWARE TRUST. The name and business address of the trustee of
--------------
the Trust with a principal place of business in the State of Delaware is the
Bank of New York (Delaware), a Delaware banking corporation, White Clay Center,
Route 273, Newark, Delaware 19711.
3. EFFECTIVE DATE. This Certificate of Trust shall be effective as
--------------
of its filing.
<PAGE>
IN WITNESS WHEREOF, the undersigned, being all of the trustees of the
Trust, have executed this Certificate of Trust as of the date first above
written.
/s/ Darrell D. Chessum
---------------------------------------
Darrell D. Chessum, as Trustee
/s/ Daniel A. Franchi
---------------------------------------
Daniel A. Franchi, as Trustee
/s/ Richard L. Walton
---------------------------------------
Richard L. Walton, as Trustee
THE BANK OF NEW YORK, as Trustee
By: /s/ Helen M. Cotiaux
-----------------------------------
Name: Helen M. Cotiaux
--------------------------------
Title: Vice President
-------------------------------
THE BANK OF NEW YORK (DELAWARE)
as Trustee
By: /s/ Joseph G. Ernst
-----------------------------------
Name: Joseph G. Ernst
---------------------------------
Title: Assistant Vice President
-------------------------------
<PAGE>
EXHIBIT 4.2
BYLAWS
OF
UNOCAL CORPORATION
ARTICLE I
FISCAL YEAR
Section 1. The fiscal year of Unocal Corporation (hereinafter called the
"Corporation") shall end on the thirty-first day of December of each year.
ARTICLE II
OFFICES
Section 1. PRINCIPAL OFFICE. The principal office for the transaction of
business of the Corporation is hereby fixed and located at 2141 Rosecrans
Avenue, Suite 4000, in the City of El Segundo, County of Los Angeles, State of
California. The Board of Directors (hereinafter sometimes called the "Board")
is hereby granted full power and authority to change said principal office from
one location to another.
ARTICLE III
STOCKHOLDERS
Section 1. ANNUAL MEETINGS. The annual meetings of the stockholders shall
be held at 10:00 o'clock A.M. on the fourth Monday in May of each year if not a
legal holiday, for the purpose of electing directors, consideration of reports
of the affairs of the Corporation, and for the transaction of any other business
which is within the powers of the stockholders and properly brought before the
meeting. If the fourth Monday in May is a legal holiday, the annual meeting of
the stockholders shall be held at 10:00 o'clock A.M. on the preceding or
subsequent Monday as fixed by resolution of the Board.
Section 2. NOTICE OF MEETINGS. Written notice of each annual or special
meeting of stockholders shall be given to each stockholder entitled to vote
thereat not less than ten nor more than sixty days before the meeting.
Section 3. PLACE OF MEETINGS. All meetings of stockholders, whether
annual or special, shall be held at the principal office of the Corporation or
at such other place, within or without the State of Delaware, as the Board may
from time to time designate pursuant to authority hereinafter granted it. In
the absence of any such designation stockholders' meetings shall be held at the
principal office of the Corporation.
Section 4. VOTING RIGHTS. Stockholders entitled to vote at stockholder
meetings shall be entitled to one vote for each full share. A fraction of a
share or a fractional interest in a share shall not be entitled to any voting
rights whatsoever.
<PAGE>
Section 5. CONDUCT OF MEETINGS. The decisions of the Chairman of the
Board or officer presiding at all stockholders' meetings shall govern in all
matters relating to the conduct of the meeting.
Section 6. VOTING. Directors shall be divided into three classes with
each director serving a three-year term. At each annual meeting, all directors
of one class shall be elected in accordance with the provisions of ARTICLE
SEVENTH of the Corporation's Certificate of Incorporation by the holders of
shares entitled to vote in the election. A nomination shall be accepted, and
votes cast for a proposed nominee shall be counted by the inspectors of
election, only if the Secretary of the Corporation has received at least 30 days
prior to the meeting a statement over the signature of the proposed nominee that
such person consents to being a nominee and, if elected, intends to serve as a
director. Such statement shall also contain the Unocal stock ownership of the
proposed nominee, occupations and business history for the previous five years,
other directorships, names of business entities in which the proposed nominee
owns a 10 percent or more equity interest, listing of any criminal convictions,
including federal or state securities violations, and all other information
required by the federal proxy rules in effect at the time the proposed nominee
submits said statement.
Section 7. NOTICE OF STOCKHOLDER BUSINESS. At any meeting of the
stockholders, only such business shall be conducted as shall have been properly
brought before the meeting. To be properly brought before a meeting, business
must be (a) specified in the notice of meeting (or any supplement thereto) given
by or at the direction of the Board of Directors, (b) otherwise properly brought
before the meeting by or at the direction of the Board of Directors, or (c)
otherwise properly brought before the meeting by a stockholder. For business to
be properly brought before the meeting by a stockholder, the Secretary must have
received written notice at least thirty (30) days prior to the meeting. A
stockholder's notice to the Secretary shall set forth as to each matter the
stockholder proposes to bring before the meeting (a) a brief description of the
business desired to be brought before the meeting, (b) the name and address, as
they appear on the Corporation's books, of the stockholder proposing such
business, (c) the class and the number of shares of the Corporation which are
beneficially owned by the stockholder, and (d) any material interest of the
stockholder in such business. Notwithstanding anything in the Bylaws to the
contrary, no business shall be conducted at a meeting except in accordance with
the procedures set forth herein.
Section 8. QUORUM. The holders of one-third (1/3) of all of the
outstanding shares of the stock of the Corporation entitled to vote at a meeting
of stockholders, present in person or by proxy,
2
<PAGE>
shall constitute a quorum for the transaction of any business at such meeting.
ARTICLE IV
BOARD OF DIRECTORS
Section 1. POWERS. Subject to the limitations of the Certificate of
Incorporation of the Corporation and of the Delaware General Corporation Law as
to action which shall be authorized or approved by the stockholders, all
corporate powers shall be exercised by or under the authority of, and the
business and affairs of the Corporation shall be managed by, the Board of
Directors.
Section 2. NUMBER. The exact number of directors of the Corporation,
within the limits specified in ARTICLE SEVENTH of the Corporation's Certificate
of Incorporation, shall be twelve until changed in the manner provided by law.
Section 3. CHAIRMAN AND VICE CHAIRMAN OF THE BOARD. The Board shall
appoint a Chairman, who shall preside at all meetings of the Board of Directors
and shall have such other powers and duties as may from time to time be assigned
by the Board of Directors or prescribed by the Bylaws. The Board may also
appoint a Vice Chairman, who shall preside at all meetings of the Board of
Directors in the absence of the Chairman and shall have such other powers and
duties as may from time to time be assigned by the Board of Directors or
prescribed by the Bylaws.
Section 4. ANNUAL MEETINGS. Immediately following each annual meeting of
stockholders, the Board shall hold its annual meeting for the purpose of
organization, election of officers and the transaction of any other business.
Section 5. REGULAR MEETINGS. Regular meetings of the Board shall be held
at the times and on the dates fixed by resolution of the Board.
Section 6. SPECIAL MEETINGS. Special meetings of the Board for any
purpose or purposes whatsoever may be called by the Chairman of the Board or the
Chief Executive Officer or, in the absence or inability of either of them, by
the President, the Chief Financial Officer, or by at least two of the directors
at the time in office.
Section 7. NOTICE OF MEETINGS. Notice of annual meetings and of regular
meetings of the Board is hereby dispensed with. Notice of special meetings must
be given at least two days in advance if given by mail, or at least twenty-four
hours in advance if delivered personally or given by telephone or telegram.
3
<PAGE>
Section 8. PLACE OF MEETINGS. All meetings of the Board, whether annual,
regular or special meetings, shall be held at any place within or without the
State of Delaware which has been designated from time to time by resolution of
the Board or in the notice of the meeting. In the absence of such designation
all directors' meetings shall be held at the principal office of the
Corporation.
Section 9. QUORUM. A majority of the exact number of directors specified
in Section 2 of ARTICLE IV of the Bylaws shall constitute a quorum of the Board
of Directors for the transaction of business; provided, however, that vacancies
on the Board may be filled by a majority of the remaining directors, though less
than a quorum, or by a sole remaining director, each such director to hold
office until a successor is elected at an annual or special meeting of the
stockholders.
Section 10. COMPENSATION OF DIRECTORS. Directors and members of
committees appointed by the Board shall receive such compensation, if any, for
their services, and such reimbursement for their expenses, as may be fixed or
determined by resolution of the Board. The Board may, however, in any such
resolution provide that directors who are also employees of the Corporation or
any of its subsidiaries shall not receive additional compensation for services
as a director or member of a committee appointed by the Board.
Section 11. INDEMNIFICATION OF DIRECTORS, OFFICERS, EMPLOYEES AND OTHER
AGENTS.
(a) RIGHT TO INDEMNIFICATION. Each person who was or is made a party or is
threatened to be made a party to or is involved in any action, suit, or
proceeding, whether civil, criminal, administrative, or investigative
(hereinafter a "proceeding"), by reason of the fact that he or she, or a person
of whom he or she is the legal representative, is or was a director or officer,
of the Corporation or is or was serving at the request of the Corporation as a
director, officer, employee, or agent of another corporation or of a
partnership, joint venture, trust, or other enterprise, including service with
respect to employee benefit plans, whether the basis of such proceeding is
alleged action in an official capacity as a director, officer, employee, or
agent or in any other capacity while serving as a director, officer, employee,
or agent, shall be indemnified and held harmless by the Corporation to the
fullest extent authorized by the Delaware General Corporation Law, as the same
exists or may hereafter be amended (but, in the case of any such amendment, only
to the extent that such amendment permits the Corporation to provide broader
indemnification rights than said law permitted the Corporation to provide prior
to such amendment), against all expense, liability, and loss (including
attorneys' fees, judgments, fines, ERISA excise taxes or penalties, and amounts
paid or to be paid in settlement) reasonably incurred or
4
<PAGE>
suffered by such person in connection therewith; and, such indemnification shall
continue as to a person who has ceased to be a director, officer, employee, or
agent and shall inure to the benefit of his or her heirs, executors, and
administrators; provided, however, that, except as provided in paragraph (b)
hereof, with respect to proceedings seeking to enforce rights to
indemnification, the Corporation shall indemnify any such person seeking
indemnification in connection with a proceeding (or part thereof) initiated by
such person only if such proceeding (or part thereof) was authorized by the
board of directors of the Corporation. The right to indemnification conferred
in this Section shall be a contract right and shall include the right to be paid
by the Corporation the expenses incurred in defending any such proceeding in
advance of its final disposition; provided, however, that, if the Delaware
General Corporation Law requires, the payment of such expenses incurred by a
director or officer in his or her capacity as a director or officer (and not in
any other capacity in which service was or is rendered by such person while a
director or officer, including without limitation, service to an employee
benefit plan) in advance of the final disposition of a proceeding, shall be made
only upon delivery to the Corporation of an undertaking, by or on behalf of such
director or officer, to repay all amounts so advanced if it shall ultimately be
determined that such director or officer is not entitled to be indemnified under
this Section or otherwise. The Corporation may, to the extent authorized from
time to time by its board of directors, provide indemnification to employees and
agents of the Corporation with the same scope and effect as the foregoing
indemnification of directors and officers.
(b) RIGHT OF CLAIMANT TO BRING SUIT. If a claim under paragraph (a) of
this Section is not paid in full by the Corporation within sixty (60) days after
a written claim has been received by the Corporation, except in the case of a
claim for expenses incurred in a proceeding in advance of its final disposition
in which case the applicable period shall be twenty (20) days, the claimant may
at any time thereafter bring suit against the Corporation to recover the unpaid
amount of the claim and, if successful in whole or in part, the claimant shall
be entitled to be paid also the expense of prosecuting such claim. It shall be
a defense to any such action (other than an action brought to enforce a claim
for expenses incurred in defending any proceeding in advance of its final
disposition where the required undertaking, if any is required, has been
tendered to the Corporation) that the claimant has not met the standards of
conduct which make it permissible under the Delaware General Corporation Law for
the Corporation to indemnify the claimant for the amount claimed, but the burden
of providing such defense shall be on the Corporation. Neither the failure of
the Corporation (including its board of directors, its independent legal
counsel, or its stockholders) to have made a determination prior to the
commencement of such action that indemnification of the claimant is
5
<PAGE>
proper in the circumstances because he or she has met the applicable standard of
conduct set forth in the Delaware General Corporation Law, nor an actual
determination by the Corporation (including its board of directors, its
independent legal counsel, or its stockholders) that the claimant has not met
such applicable standard of conduct, shall be a defense to the action or create
a presumption that the claimant has not met the applicable standard of conduct.
(c) NON-EXCLUSIVITY OF RIGHTS. The right to indemnification and the
payment of expenses incurred in defending a proceeding in advance of its final
disposition conferred in this Section shall not be exclusive of any other right
which any person may have or hereafter acquire under any statute, provision of
the Certificate of Incorporation, Bylaw, agreement, vote of stockholders or
disinterested directors, or otherwise.
(d) INSURANCE. The Corporation may maintain insurance, at its expense, to
protect itself and any director, officer, employee, or agent of the Corporation
or another corporation, partnership, joint venture, trust, or other enterprise
against any such expense, liability, or loss, whether or not the Corporation
would have the power to indemnify such person against such expense, liability or
loss under the Delaware General Corporation Law.
Section 12. AUTHORITY TO DESIGNATE PLACE OF STOCKHOLDERS' MEETINGS. The
Board is hereby granted full power and authority to designate from time to time
any place within or without the State of Delaware for the holding of any
stockholders' meeting.
Section 13. COMMITTEES. The Board may, by resolution, appoint one or more
committees, in addition to an Executive Committee and a Management Committee, to
consist of two or more of the directors of the Corporation, and prescribe their
duties and powers. A majority of the members of any such committee may
determine its action and fix the time and place of its meetings unless the Board
shall otherwise provide. The Board shall have the power at any time to fill
vacancies in, to change the membership of, or to dissolve any such committee.
Section 14. ACTION BY WRITTEN CONSENT. Any action required or permitted
to be taken by the Board or any committee thereof may be taken without a
meeting, if all members of the Board or such committee, as the case may be,
shall individually or collectively consent in writing to such action. Such
written consent or consents shall be filed with the minutes of the proceedings
of the Board.
Section 15. CONFERENCE CALLS. Members of the Board or any committee
thereof may participate in a meeting through use of conference telephone or
similar communications equipment, so long as all members participating in such
meeting can hear one another.
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ARTICLE V
EXECUTIVE COMMITTEE
Section 1. NUMBER AND COMPOSITION. The Board of Directors shall appoint
from its membership, annually, an Executive Committee of three or more
directors. Included on the Executive Committee shall be the Chief Executive
Officer of the Corporation. Each member of the Executive Committee shall hold
membership at the pleasure of the Board, which shall have the exclusive power to
fill vacancies thereon as they may occur. The Chairman of the Executive
Committee shall be the Chief Executive Officer of the Corporation.
Section 2. POWERS. The Executive Committee, during the intervals between
meetings of the Board, shall have and there is hereby granted to it all the
powers and authority of the Board of Directors in the management of the business
and affairs of the Corporation, except that the Executive Committee shall not be
permitted to fill vacancies on the Board or on any committee, approve any action
for which stockholder approval is also required by the Delaware General
Corporation Law, amend or repeal any resolution of the Board which by its
express terms is not so amendable or repealable, or appoint other committees of
the Board or the members thereof and shall not have any powers restricted by
Section 141(c) of the Delaware General Corporation Law unless the Board shall
have specifically delegated authority to the Executive Committee to take action
with respect to a matter listed in such Section as permitted to be so delegated.
Section 3. PROCEDURE. Two members of the Executive Committee shall
constitute a quorum of the Executive Committee for the transaction of business.
The Executive Committee, by vote of a majority of its members, shall fix its own
times and places of meetings and shall prescribe its own rules of procedure; no
change in which shall be made save by a majority vote of its members.
Section 4. RECORDS AND REPORTS. The Executive Committee shall keep
regular minutes of all business transacted at its meetings, and all action of
the Executive Committee shall be reported to the Board at its next ensuing
meeting.
Section 5. COMPENSATION. Members of the Executive Committee may receive
such compensation, if any, for their services, and such reimbursement for their
expenses, as may be fixed or determined by the Board.
ARTICLE VI
MANAGEMENT COMMITTEE
Section 1. NUMBER AND COMPOSITION. The Board of Directors shall appoint
from its membership, annually, a Management Committee composed of the directors
who are salaried officers of the
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Corporation. The Chairman of the Management Committee shall be the Chief
Executive Officer of the Corporation.
Section 2. POWERS. The Management Committee, during the intervals between
meetings of the Board, shall have and there is hereby granted to it all the
powers and authority of the Board of Directors in the management of the business
and affairs of the Corporation, subject to approval limits established by
resolution of the Board of Directors as deemed appropriate from time to time,
but the Management Committee shall not be permitted to fill vacancies on the
Board or on any committee, appoint officers, approve any action for which
stockholder approval is also required by the Delaware General Corporation Law,
amend or repeal any resolution of the Board or of the Executive Committee, which
by its express terms is not so amendable or repealable, or appoint other
committees of the Board or the members thereof and shall not have any powers
restricted by Section 141(c) of the Delaware General Corporation Law unless the
Board shall have specifically delegated authority to the Management Committee to
take action with respect to a matter listed in such Section as permitted to be
so delegated.
Section 3. PROCEDURE. Two members of the Management Committee shall
constitute a quorum of the Management Committee for the transaction of business.
The Management Committee, by vote of a majority of its members, shall fix its
own times and places of meetings, and shall prescribe its own rules of
procedure; no change in which shall be made save by a majority vote of its
members.
Section 4. RECORDS. The Management Committee shall keep regular minutes
of all business transacted at its meetings.
ARTICLE VII
OFFICERS
Section 1. OFFICERS. The officers of the Corporation shall be a Chief
Executive Officer, a President, a Chief Financial Officer, a Vice President, a
Secretary, a Comptroller, a Treasurer, and a Chief Legal Officer. The
Corporation may also have, at the discretion of the Board, one or more
additional Vice Presidents, one or more Assistant Secretaries, one or more
Assistant Treasurers, and one or more Assistant Comptrollers, and the Board may
appoint such other officers as it may deem necessary or advisable, who shall
have such authority and perform such duties as from time to time may be
prescribed by the Board, the Chairman of the Board, or the Chief Executive
Officer. Any two or more offices may be held by the same person.
Section 2. ELECTION AND REMOVAL. The officers of the Corporation shall be
chosen annually by the Board at its annual meeting and each shall hold office
until the corresponding annual meeting of the Board in the next year and until a
successor shall be elected and qualified unless such officer shall theretofore
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resign or shall be removed or otherwise disqualified to serve. The Board may
remove any officer either with or without cause or under such other terms or
conditions as it may prescribe. Vacancies may be filled by the Board as they
may occur.
Section 3. POWERS AND DUTIES.
(a) CHIEF EXECUTIVE OFFICER. The Chief Executive Officer shall be the
officer, reporting directly to the Board, responsible for overall management of
the Corporation and shall have general supervision, direction and control over
the business and affairs of the Corporation and its officers. The Chief
Executive Officer shall be a member of the Executive Committee and of the
Management Committee and in general shall perform all duties incident to the
office of Chief Executive Officer and shall have such powers and duties as may
from time to time be assigned by the Board of Directors or prescribed by the
Bylaws.
(b) PRESIDENT. The President in general shall perform all duties incident
to the office of President, and shall have such powers and duties as may from
time to time be assigned by the Board of Directors, the Chief Executive Officer
or prescribed by the Bylaws.
(c) CHIEF FINANCIAL OFFICER AND VICE PRESIDENTS. The Chief Financial
Officer and each Vice President shall have such authority and shall perform such
duties as shall from time to time be assigned by the Board, the Chief Executive
Officer or prescribed by the Bylaws.
(d) SECRETARY. The Secretary shall keep, or cause to be kept, a book of
minutes, at the principal office and/or such other place or places as the Board
may order, of all meetings of directors and stockholders, with the time and
place of holding, whether regular or special, and if special how authorized, the
notice thereof given, the names of those present at directors' meetings, the
number of shares present or represented at stockholders' meetings, and the
proceedings thereof.
The Secretary shall keep or cause to be kept at the principal office, or at
the office of the Corporation's transfer agent, a stock register, which may be
an electronic database, showing the names of the stockholders of record and
their addresses, the number and classes of shares held by each, the numbers and
dates of the certificates issued for those shares, and the numbers and dates of
cancellation of every certificate surrendered for cancellation.
The Secretary shall give or cause to be given notice of all meetings of the
stockholders and the Board required to be given by the Bylaws or by law. The
Secretary shall have charge of and be custodian of the seal of the Corporation
and the minute books and
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documents relating to the existence and governance of the Corporation.
The Secretary shall have such other powers and perform such other duties as
may from time to time be prescribed by the Board, the Chairman of the Board, the
Chief Executive Officer or the Bylaws, and shall in general, subject to control
of the Board, the Chairman of the Board and the Chief Executive Officer, perform
all the duties usually incident to the office of secretary of a corporation.
(e) ASSISTANT SECRETARIES. Each Assistant Secretary shall assist the
Secretary and, in the absence or disability of the Secretary, may perform the
duties of the Secretary unless and until the contrary is expressed by the Board,
and may perform such other duties as may be prescribed by the Board or the
Secretary.
(f) TREASURER. The Treasurer shall have custody of and be responsible for
all the monies and funds of the Corporation. The Treasurer shall deposit or
cause to be deposited all Corporation monies, funds and other valuables in the
name and to the credit of the Corporation in such bank or banks as shall be
judged proper or as shall be directed by the Board, the Chief Executive Officer,
or the Chief Financial Officer, and shall disburse the funds of the Corporation
which have been duly approved for disbursement. The Treasurer shall enter or
cause to be entered regularly in the books of the Corporation full and accurate
accounts of all monies received and paid out on account of the Corporation.
The Treasurer shall have such other powers and perform such other duties as
may from time to time be prescribed by the Board, the Chief Executive Officer,
the Chief Financial Officer or the Bylaws, and shall in general, subject to
control of the Board, the Chief Executive Officer, and the Chief Financial
Officer, perform all the duties usually incident to the office of treasurer of a
corporation.
(g) ASSISTANT TREASURERS. Each Assistant Treasurer shall assist the
Treasurer and, in the absence or disability of the Treasurer, may perform the
duties of the Treasurer unless and until the contrary is expressed by the Board,
and shall perform such other duties as may be prescribed by the Board or the
Treasurer.
(h) COMPTROLLER. The Comptroller shall be the principal officer in charge
of the general accounting books, accounting records and forms of the Corporation
and shall see that all monies and obligations due the Corporation and all
properties and assets are properly accounted for. The Comptroller shall prepare
the Corporation's balance sheets, income accounts and other financial statements
and reports, and render to the Board, the Chief Executive Officer, and the Chief
Financial Officer, such periodic
10
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reports covering the results of operations of the Corporation as may be required
by them or any of them.
The Comptroller shall have such other powers and perform such other duties
as may from time to time be prescribed by the Board, the Chief Executive
Officer, the Chief Financial Officer or the Bylaws and shall in general, subject
to control of the Board, the Chief Executive Officer, and the Chief Financial
Officer, perform all the duties usually incident to the office of comptroller of
a corporation.
(i) ASSISTANT COMPTROLLERS. Each Assistant Comptroller shall assist the
Comptroller and, in the absence or disability of the Comptroller, may perform
the duties of the Comptroller unless and until the contrary is expressed by the
Board, and shall perform such other duties as may be prescribed by the Board or
the Comptroller.
(j) CHIEF LEGAL OFFICER. The Chief Legal Officer shall be in charge of the
Corporation's legal affairs. The Chief Legal Officer shall advise the Board,
the Chairman of the Board and/or the officers of the Corporation on such legal
matters and prepare such reports as may be required by them or any of them.
ARTICLE VIII
MISCELLANEOUS
Section 1. EXECUTION OF DOCUMENTS. Unless otherwise authorized or
prescribed by the Board of Directors, all contracts, leases, deeds, deeds of
trust, mortgages, bonds, indentures, endorsements, assignments, powers of
attorney, and other documents and instruments of whatsoever kind shall be
executed for and on behalf of the Corporation by the Chief Executive Officer,
the President, the Chief Financial Officer, a Vice President, the Treasurer, the
Comptroller, or by any such officer and shall be attested by the Secretary or an
Assistant Secretary, who shall have authority to affix the corporate seal to the
same.
The Board also may authorize, and delegate to any one or more of the Chief
Executive Officer, the President and the Chief Financial Officer the power to so
authorize, any other officer or officers, employee or employees, or agent or
agents, to execute any contract, document or instrument of whatever kind for and
on behalf of the Corporation and such authority may be general or be confined to
specific instances.
Section 2. UNDERTAKINGS AND COMMITMENTS. No undertaking, commitment,
contract, instrument or document shall be binding upon the Corporation unless
previously authorized or subsequently ratified by the Board or executed by an
officer or officers, an employee or employees or an agent or agents of the
Corporation acting under powers conferred by the Board or by these Bylaws.
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Section 3. CHECKS, DRAFTS, ETC. All checks, notes and other obligations
for collection, deposit or transfer, and all checks and drafts for disbursement
from Corporation funds, and all bills of exchange and promissory notes, and all
acceptances, obligations and other instruments for the payment of money, shall
be endorsed or signed by such officer or officers, employee or employees or
agent or agents as shall be thereunto authorized from time to time by the Board
of Directors, which may delegate the power to so authorize to any one or more of
the Chief Executive Officer, the President and the Chief Financial Officer.
Section 4. REPRESENTATION OF SHARES OF OTHER CORPORATIONS. Shares
standing in the name of the Corporation may be voted or represented and all
rights incident thereto may be exercised on behalf of the Corporation by the
Chief Executive Officer, the President, the Chief Financial Officer, a Vice
President, the Secretary, the Treasurer or the Comptroller, or by such other
officers upon whom the Board of Directors may from time to time confer like
powers.
ARTICLE IX
AMENDMENTS TO BYLAWS
Section 1. POWER OF STOCKHOLDERS. New Bylaws may be adopted or these
Bylaws may be amended or repealed by the vote of seventy-five percent of the
outstanding stock of the Corporation entitled to vote thereon.
Section 2. POWER OF DIRECTORS. Subject to the right of stockholders as
provided in Section 1 of this ARTICLE IX to adopt, amend or repeal Bylaws,
Bylaws may be adopted, amended or repealed by the Board of Directors as provided
or permitted by law; however, any Bylaw amendment adopted by the Board of
Directors increasing or reducing the authorized number of directors or amending
this section shall require a resolution adopted by the affirmative vote of not
less than seventy-five percent of the directors.
ARTICLE X
EMERGENCY
Section 1. "Emergency" as used in this Article means disorder, disturbance
or damage caused by war, enemy attack, other warlike acts or by catastrophe,
disaster or other similar emergency condition, which prevents the conduct and
management of the affairs and business of the Corporation by the Board of
Directors and officers in the manner provided for in other Articles of these
Bylaws. The powers and duties conferred and imposed by this Article, and any
resolutions adopted pursuant hereto, shall be effective only during an
emergency. This Article may be implemented from time to time by resolutions
adopted by the Board of Directors before or during an emergency, or during an
emergency by the emergency Board of Directors constituted and then acting
12
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pursuant hereto. An emergency, once commenced, shall be deemed to continue
until terminated by resolutions adopted for that purpose by the Board of
Directors.
Section 2. If, during an emergency, a majority of the Board of Directors
cannot be found or is unable to act, one-third of the exact number of the Board
of Directors shall constitute a quorum thereof.
Section 3. During any emergency, the officers and employees of the
Corporation shall continue, so far as possible, to conduct the Corporation's
affairs and business under the guidance of the Board of Directors acting
pursuant to this Article and in accordance with known orders of governmental
authorities.
Section 4. If, during any emergency, a quorum of the Board of Directors,
as provided in Section 3 of this Article, cannot be found or is unable to act,
any three available members of the Executive Committee, including the Chief
Executive Officer, shall be and constitute the Board of Directors, with two
thereof constituting a quorum, and as such shall have and exercise the fullest
power of the Board of Directors for the conduct and management of the affairs
and business of the Corporation, permitted by law, without the limitations set
forth in Section 2 of ARTICLE V of these Bylaws, provided that such emergency
Board of Directors as so constituted shall comply to the extent practicable
under the circumstances with the provisions of ARTICLE III of these Bylaws
relating to annual and special meetings of stockholders. If three members of
the Executive Committee, including the Chief Executive Officer, are not able to
serve, any three available directors shall be and constitute such emergency
Board of Directors, with two thereof constituting a quorum, for the exercise of
the powers conferred and performance of the duties imposed by this Section 4.
Section 5. If, during any emergency, neither a quorum of the Board of
Directors, as provided in Section 3 of this Article, nor a quorum of the
emergency Board of Directors, as provided for in Section 4 of this Article is
available to serve, then the powers conferred and duties imposed by Section 4
shall vest in and devolve upon any three of (in the following order of priority)
available directors, including any one or more of the Chief Executive Officer,
the President and the Chief Financial Officer, and as many Vice Presidents (or,
in case of their inability, any other officers), in order of seniority, as may
be necessary from time to time to constitute a total of three emergency
directors. The Chief Executive Officer and any other one emergency director
shall constitute a quorum of such emergency Board of Directors for exercise of
the powers conferred and performance of the duties imposed hereunder, but if the
Chief Executive Officer is not available, any two of such emergency directors
shall constitute a quorum.
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EXHIBIT 4.5
DECLARATION OF TRUST
DECLARATION OF TRUST, dated as of July 17, 1996, between Unocal
Corporation, a Delaware corporation, as Sponsor, The Bank of New York, a New
York banking corporation, The Bank of New York (Delaware), a Delaware banking
corporation, Darrell D. Chessum, Daniel A. Franchi, and Richard L. Walton as
Trustees. The Sponsor and the Trustees hereby agree as follows:
1. The trust created hereby (the "Trust") shall be known as "Unocal
Capital Trust", in which name the Trustees, or the Sponsor to the extent
provided herein, may conduct the business of the Trust, make and execute
contracts, and sue and be sued.
2. The Sponsor hereby assigns, transfers, conveys and sets over to
the Trustees the sum of $10. The Trustees hereby acknowledge receipt of such
amount in trust from the Sponsor, which amount shall constitute the initial
trust estate. The Trustees hereby declare that they will hold the trust estate
in trust for the Sponsor. It is the intention of the parties hereto that the
Trust created hereby constitute a business trust under Chapter 38 of Title 12 of
the Delaware Code, 12 Del. C. (S) 3801 et seq. (the "Business Trust Act"), and
---- -- -- ----
that this document constitute the governing instrument of the Trust. The
Trustees are hereby authorized and directed to execute and file a certificate of
trust with the Delaware Secretary of State in the form attached hereto.
3. The Sponsor and the Trustees will enter into an amended and
restated Declaration of Trust, satisfactory to each such party and substantially
in the form to be included as Exhibit 4.2 to the Registration Statement referred
to below, to provide for the contemplated operation of the Trust created hereby
and the issuance of the Trust Convertible Preferred Securities and Trust Common
Securities referred to therein. Prior to the execution and delivery of such
amended and restated Declaration of Trust, the Trustees shall not have any duty
or obligation hereunder or with respect to the trust estate, except as otherwise
required by applicable law or as may be necessary to obtain prior to such
execution and delivery any licenses, consents or approvals required by
applicable law or otherwise.
4. The Sponsor and the Trustees hereby authorize and direct the
Sponsor, in each case on behalf of the Trust as the sponsor of the Trust, (i) to
prepare for filing with the Securities and Exchange Commission (the
"Commission") (a) a Registration Statement on Form S-4 and any pre-effective or
post-effective amendments to such Registration Statement (the "Registration
Statement"), relating to the registration under the Securities Act of 1933, as
amended, of the Trust Convertible Preferred Securities of the Trust, and (b) a
Registration Statement on Form 8-A or other form issued or permitted by the
Commission, including all pre-effective and post-effective amendments thereto
(the "1934 Act Registration Statement"), relating to the registration of the
Trust Convertible Preferred Securities under the Securities Exchange Act of
1934, as amended; (ii) to execute and file with the New York Stock Exchange, the
American Stock Exchange or such other national securities exchange or the Nasdaq
National Market as the Sponsor shall determine, a listing or other similar
application and all other
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applications, statements, certificates, agreements and other instruments as
shall be necessary or desirable to cause the Trust Convertible Preferred
Securities to be listed or approved for quotation on the New York Stock
Exchange, the American Stock Exchange or such other national securities exchange
or the Nasdaq National Market; (iii) to execute and file such applications,
reports, surety bonds, irrevocable consents, appointments of attorneys for
service of process and other papers, documents and agreements as shall be
necessary or desirable to register the Trust Convertible Preferred Securities
under the securities or "Blue Sky" laws of such jurisdictions as the Sponsor, on
behalf of the Trust, may deem necessary or desirable and (iv) to negotiate and
execute a Dealer Manager Agreement among the Trust, the Sponsor, Morgan Stanley
& Co. Incorporated and Goldman, Sachs & Co., and the other parties thereto,
relating to the Exchange Offer (as defined in the Registration Statement),
substantially in the form to be included as Exhibit 1.1 to the Registration
Statement. It is hereby acknowledged and agreed that in connection with any
document referred to in clauses (i)-(iii) above, (A) any Regular Trustee (or his
attorneys-in-fact and agents or the Sponsor as permitted herein) is authorized
on behalf of the Trust to execute such document on behalf of the Trust, provided
that the Registration Statement shall be signed by all of the Regular Trustees,
and (B) The Bank of New York and The Bank of New York (Delaware), in their
capacities as Trustees of the Trust shall not be required to join in any such
filing or execute on behalf of the Trust any such document unless required by
the rules and regulations of the Commission, the New York Stock Exchange (or
other national securities exchange or the Nasdaq National Market) or state
securities or "Blue Sky" laws, and in such case only to the extent so required.
In connection with all of the foregoing, each Regular Trustee, solely in his
capacity as Trustee of the Trust, hereby constitutes and appoints Neal E.
Schmale, Charles S. McDowell, and Darrell E. Chessum, and each of them, as his
true and lawful attorneys-in-fact and agents, with full power of substitution
and resubstitution, for such Regular Trustee or in such Regular Trustee's name,
place and stead, in any and all capacities, to sign the Registration Statement
and any and all amendments (including post-effective amendments) thereto, and to
file the same, with all exhibits thereto, and other documents in connection
therewith, with the Commission, granting unto said attorneys-in-fact and agents,
or any of them, full power and authority to do and perform each and every act
and thing requisite and necessary to be done in connection therewith, as fully
to all intents and purposes as such Regular Trustee might or could do in person,
hereby ratifying and confirming all that said attorney-in-fact and agent, or his
substitute or substitutes, shall do or cause to be done by virtue hereof.
5. This Declaration of Trust may be executed in counterparts.
6. The number of Trustees initially shall be five (5) and thereafter
the number of Trustees shall be such number as shall be fixed from time to time
by a written instrument signed by the Sponsor which may increase or decrease the
number of Trustees; provided that to the extent required by the Business Trust
Act, one Trustee shall either be a natural person who is a resident of the State
of Delaware or, if not a natural person, an entity which has its principal place
of business in the State of Delaware. Subject to the foregoing, the Sponsor is
entitled to appoint or remove without cause any Trustee at any time. The
Trustees may resign upon thirty days prior notice to the Sponsor.
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IN WITNESS WHEREOF, the parties hereto have caused this Declaration of
Trust to be duly executed as of the day and year first above written.
UNOCAL CORPORATION, as Sponsor
By: /s/ Darrell D. Chessum
-----------------------------------
Name: Darrell D. Chessum
-------------------------------
Title: Treasurer
------------------------------
/s/ Darrell D. Chessum
---------------------------------------
Darrell D. Chessum, as Trustee
/s/ Daniel A. Franchi
---------------------------------------
Daniel A. Franchi, as Trustee
Richard L. Walton
---------------------------------------
Richard L. Walton, as Trustee
THE BANK OF NEW YORK, as Trustee
By: /s/ Helen M. Cotiaux
-----------------------------------
Name: Helen Cotiaux
-------------------------------
Title: Vice President
-------------------------------
THE BANK OF NEW YORK (DELAWARE)
as Trustee
By: /s/ Joseph G. Ernst
-----------------------------------
Name: Joseph G. Ernst
-------------------------------
Title: Assistant Vice President
-------------------------------
<PAGE>
EXHIBIT 4.7
FORM OF
PREFERRED SECURITIES GUARANTEE AGREEMENT
Unocal Capital Trust
Dated as of July [ ], 1996
<PAGE>
TABLE OF CONTENTS
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<TABLE>
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Page
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<S> <C>
ARTICLE I
DEFINITIONS AND INTERPRETATION
SECTION 1.1 Definitions and Interpretation..................................... 2
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1 Trust Indenture Act; Application................................... 4
SECTION 2.2 Lists of Holders................................................... 5
SECTION 2.3 Reports by the Preferred Guarantee Trustee......................... 5
SECTION 2.4 Periodic Reports to Preferred Guarantee Trustee.................... 5
SECTION 2.5 Evidence of Compliance with Conditions Precedent................... 6
SECTION 2.6 Events of Default; Waiver.......................................... 6
SECTION 2.7 Event of Default; Notice........................................... 6
SECTION 2.8 Conflicting Interests.............................................. 6
ARTICLE III
POWERS, DUTIES AND RIGHTS OF
PREFERRED GUARANTEE TRUSTEE
SECTION 3.1 Powers and Duties of the Preferred Guarantee Trustee............... 7
SECTION 3.2 Certain Rights of Preferred Guarantee Trustee...................... 9
SECTION 3.3 Not Responsible for Recitals or Issuance of Preferred
Securities Guarantee............................................... 11
ARTICLE IV
PREFERRED GUARANTEE TRUSTEE
SECTION 4.1 Preferred Guarantee Trustee: Eligibility........................... 11
SECTION 4.2 Appointment, Removal and Resignation of Preferred
Guarantee Trustee.................................................. 12
ARTICLE V
PREFERRED SECURITIES GUARANTEE
SECTION 5.1 Preferred Securities Guarantee..................................... 13
SECTION 5.2 Waiver of Notice and Demand........................................ 13
SECTION 5.3 Obligations Not Affected........................................... 13
SECTION 5.4 Rights of Holders.................................................. 14
</TABLE>
i
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<TABLE>
<CAPTION>
Page
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<S> <C>
SECTION 5.5 Guarantee of Payment............................................... 14
SECTION 5.6 Subrogation........................................................ 15
SECTION 5.7 Independent Obligations............................................ 15
ARTICLE VI
LIMITATION OF TRANSACTIONS; SUBORDINATION
SECTION 6.1 Limitation of Transactions......................................... 15
SECTION 6.2 Subordination...................................................... 16
ARTICLE VII
TERMINATION
SECTION 7.1 Termination........................................................ 16
ARTICLE VIII
INDEMNIFICATION
SECTION 8.1 Exculpation........................................................ 16
SECTION 8.2 Indemnification.................................................... 17
ARTICLE IX
MISCELLANEOUS
SECTION 9.1 Successors and Assigns............................................. 17
SECTION 9.2 Amendments......................................................... 17
SECTION 9.3 Notices............................................................ 18
SECTION 9.4 Benefit............................................................ 19
SECTION 9.5 Governing Law...................................................... 19
</TABLE>
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PREFERRED SECURITIES GUARANTEE AGREEMENT
This GUARANTEE AGREEMENT (the "Preferred Securities Guarantee") dated as
of July [ ], 1996, is executed and delivered by Unocal Corporation, a Delaware
corporation (the "Guarantor"), and The Bank of New York, as trustee (the
"Preferred Guarantee Trustee"), for the benefit of the Holders (as defined
herein) from time to time of the Preferred Securities (as defined herein) of
Unocal Capital Trust, a Delaware statutory business trust (the "Issuer").
WHEREAS, pursuant to an Amended and Restated Declaration of Trust (the
"Declaration") dated as of ________, 1996, among the trustees of the Issuer
named therein, the Guarantor, as sponsor, and the holders from time to time of
undivided beneficial interests in the assets of the Issuer, the Issuer is
issuing to the Guarantor on the date hereof up to [ ] preferred securities,
having an aggregate liquidation amount of up to $[ ] designated the [ ]%
Trust Convertible Preferred Securities (the "Preferred Securities").
WHEREAS, the Guarantor is offering, upon the terms and subject to the
conditions set forth in the Prospectus dated ______, 1996 (the "Prospectus"), of
the Guarantor and the Issuer, and the related Letter of Transmittal (which,
together with the Prospectus, constitute the "Exchange Offer"), to exchange the
Preferred Securities for up to all of the 10,250,000 outstanding shares of its
$3.50 Convertible Preferred Stock, par value $.10 per share (the "$3.50
Convertible Preferred Stock").
WHEREAS, as incentive for the Holders to exchange their shares of $3.50
Convertible Preferred Stock for the Preferred Securities in the Exchange Offer,
the Guarantor desires fully and unconditionally to agree, to the extent set
forth in this Preferred Securities Guarantee, to pay to the Holders of the
Preferred Securities the Guarantee Payments (as defined herein) and to make
certain other payments on the terms and conditions set forth herein.
WHEREAS, as of the date hereof, the Guarantor is also executing and
delivering a guarantee agreement (the "Common Securities Guarantee") with
substantially identical terms to this Preferred Securities Guarantee for the
benefit of the holders of the Common Securities, except that if an Event of
Default (as defined in the Indenture), has occurred and is continuing, the
rights of holders of the Common Securities to receive Guarantee Payments under
the Common Securities Guarantee are subordinated to the rights of Holders of
Preferred Securities to receive Guarantee Payments under this Preferred
Securities Guarantee.
NOW, THEREFORE, in consideration of the exchange by each holder of $3.50
Convertible Preferred Stock in the Exchange Offer, the Guarantor executes and
delivers this Preferred Securities Guarantee for the benefit of the Holders.
<PAGE>
ARTICLE I
DEFINITIONS AND INTERPRETATION
SECTION 1.1 Definitions and Interpretation
------------------------------
In this Preferred Securities Guarantee, unless the context
otherwise requires:
(a) Capitalized terms used in this Preferred Securities Guarantee
but not defined in the preamble above have the respective meanings
assigned to them in this Section 1.1;
(b) terms defined in the Declaration as of the date of execution
of this Preferred Securities Guarantee have the same meaning when
used in this Preferred Securities Guarantee unless otherwise
defined in this Preferred Securities Guarantee;
(c) a term defined anywhere in this Preferred Securities Guarantee
has the same meaning throughout;
(d) all references to "the Preferred Securities Guarantee" or
"this Preferred Securities Guarantee" are to this Preferred
Securities Guarantee as modified, supplemented or amended from
time to time;
(e) all references in this Preferred Securities Guarantee to
Articles and Sections are to Articles and Sections of this
Preferred Securities Guarantee, unless otherwise specified;
(f) a term defined in the Trust Indenture Act of 1939, as amended
(the "Trust Indenture Act") has the same meaning when used in this
Preferred Securities Guarantee, unless otherwise defined in this
Preferred Securities Guarantee or unless the context otherwise
requires; and
(g) a reference to the singular includes the plural and vice
versa.
"Authorized Officer" of a Person means any Person that is
------------------
authorized to bind such Person, provided, however, that the Authorized Officer
-------- -------
signing a certificate furnished pursuant to Section 314(a)(4) of
the Trust Indenture Act shall be the principal executive, financial or
accounting officer of such Person.
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"Corporate Trust Office" means the office of the Preferred
----------------------
Guarantee Trustee at which the corporate trust business of the Preferred
Guarantee Trustee shall, at any particular time, be principally administered,
which office at the date of execution of this Agreement is located at 101
Barclay Street (21 West), New York, New York 10286.
"Covered Person" means any Holder or beneficial owner of Preferred
--------------
Securities.
"Event of Default" means a default by the Guarantor on any of its
----------------
payment or other obligations under this Preferred Securities Guarantee.
"Guarantee Payments" means the following payments or
------------------
distributions, without duplication, with respect to the Preferred Securities, to
the extent not paid or made by the Issuer: (i) any accumulated and unpaid
Distributions that are required to be paid on such Preferred Securities to the
extent the Issuer shall have funds available therefor, (ii) the redemption price
(the "Redemption Price"), and all accumulated and unpaid Distributions to the
date of redemption, to the extent the Issuer has funds available therefor, with
respect to any Preferred Securities called for redemption by the Issuer, and
(iii) upon a voluntary or involuntary dissolution, winding-up or termination of
the Issuer (other than in connection with the conversion of all of the Trust
Securities into the Guarantor's common stock or the distribution of Debentures
to the Holders in exchange for Preferred Securities as provided in the
Declaration), the lesser of (a) the aggregate of the liquidation amount and all
accrued and unpaid Distributions on the Preferred Securities to the date of
payment, to the extent the Issuer shall have funds available therefor and (b)
the amount of assets of the Issuer remaining available for distribution to
Holders in liquidation of the Issuer (in either case, the "Liquidation
Distribution"). If an Event of Default (as defined in the Indenture) has
occurred and is continuing, the rights of holders of the Common Securities to
receive payments under the Common Securities Guarantee are subordinated to the
rights of Holders of Preferred Securities to receive Guarantee Payments.
"Holder" shall mean any holder, as registered on the books and
------
records of the Issuer, of any Preferred Securities; provided, however, that, in
-------- -------
determining whether the holders of the requisite percentage of Preferred
Securities have given any request, notice, consent or waiver hereunder, "Holder"
shall not include the Guarantor or any Affiliate of the Guarantor.
"Indemnified Person" means the Preferred Guarantee Trustee, any
------------------
Affiliate of the Preferred Guarantee Trustee, or any officers, directors,
shareholders, members, partners, employees, representatives, nominees,
custodians or agents of the Preferred Guarantee Trustee.
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"Indenture" means Standard Multiple-Series Indenture dated as of
---------
_________, 1996, of the Guarantor, as supplemented by the First Supplemental
Indenture dated as of ___________, 1996, between the Guarantor (the "Debenture
Issuer") and The Bank of New York, as trustee, relating to the Debentures.
"Majority in liquidation amount of the Preferred Securities"
----------------------------------------------------------
means, except as provided in the terms of the Preferred Securities, or except as
provided by the Trust Indenture Act, a vote by Holder(s), voting separately as a
class, of more than 50% of the liquidation amount (including the stated amount
that would be paid on redemption, liquidation or other wise, plus accumulated
and unpaid Distributions to the date upon which the voting percentages are
determined) of all outstanding Preferred Securities.
"Preferred Guarantee Trustee" means The Bank of New York, until a
---------------------------
Successor Preferred Guarantee Trustee has been appointed and has accepted such
appointment pursuant to the terms of this Preferred Securities Guarantee and
thereafter means each such Successor Preferred Guarantee Trustee.
"Responsible Officer" means, with respect to the Preferred
-------------------
Guarantee Trustee, any officer within the Corporate Trust Office of the
Preferred Guarantee Trustee, including any vice president, any assistant vice
president, any assistant secretary, the treasurer, any assistant treasurer or
other officer within the Corporate Trust Office of the Preferred Guarantee
Trustee customarily performing functions similar to those performed by any of
the above designated officers, and also means, with respect to a particular
corporate trust matter, any other officer to whom such matter is referred
because of that officer's knowledge of and familiarity with the particular
subject.
"Successor Preferred Guarantee Trustee" means a successor
-------------------------------------
Preferred Guarantee Trustee possessing the qualifications to act as Preferred
Guarantee Trustee under Section 4.1.
"Trust Securities" means, collectively, the Common Securities and
----------------
the Preferred Securities.
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1 Trust Indenture Act; Application
--------------------------------
(a) This Preferred Securities Guarantee is subject to the
provisions of the Trust Indenture Act that are required to be part of this
Preferred Securities Guarantee and shall, to the extent applicable, be governed
by such provisions; and
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(b) if and to the extent that any provision of this Preferred
Securities Guarantee limits, qualifies or conflicts with the duties imposed by
Section 310 to 317, inclusive, of the Trust Indenture Act, such imposed duties
shall control.
SECTION 2.2 Lists of Holders
----------------
(a) The Guarantor shall provide the Preferred Guarantee Trustee
with a list, in such form as the Preferred Guarantee Trustee may reasonably
require, of the names and addresses of the Holders ("List of Holders") (i)
within 1 Business Day after each record date for payment of Distributions as
long as the Preferred Securities remain in book-entry only form, otherwise
within 14 days after each record date for payment of Distributions, and (ii) at
any other time within 30 days of receipt by the Guarantor of a written request
for a List of Holders as of a date no more than 14 days before such List of
Holders is given to the Preferred Guarantee Trustee, provided, that the
--------
Guarantor shall not be obligated to provide such List of Holders at any
time the List of Holders does not differ from the most recent List of Holders
given to the Preferred Guarantee Trustee by the Guarantor. The Preferred
Guarantee Trustee may destroy any List of Holders previously given to it on
receipt of a new List of Holders.
(b) The Preferred Guarantee Trustee shall comply with its
obligations under Sections 311(a), 311(b) and Section 312(b) of the Trust
Indenture Act.
SECTION 2.3 Reports by the Preferred Guarantee Trustee
------------------------------------------
Within 60 days after May 15 of each year, the Preferred Guarantee
Trustee shall provide to the Holders such reports as are required by Section 313
of the Trust Indenture Act if any, in the form and in the manner provided by
Section 313 of the Trust Indenture Act. The Preferred Guarantee Trustee shall
also comply with the requirements of Section 313(d) of the Trust Indenture Act.
SECTION 2.4 Periodic Reports to Preferred Guarantee Trustee
-----------------------------------------------
The Guarantor shall provide to the Preferred Guarantee Trustee
such documents, reports and information as are required by Section 314 (if any)
and the compliance certificate required by Section 314 of the Trust Indenture
Act in the form, in the manner and at the times required by Section 314 of the
Trust Indenture Act.
Delivery of such reports, information and documents to the
Preferred Guarantee Trustee is for informational purposes only and the Preferred
Guarantee Trustee's receipt of such shall not constitute constructive notice of
any information contained therein, including the Guarantor's compliance with any
of its covenants hereunder (as to which the Preferred Guarantee Trustee is
entitled to rely exclusively on Officers' Certificates).
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SECTION 2.5 Evidence of Compliance with Conditions Precedent
------------------------------------------------
The Guarantor shall provide to the Preferred Guarantee Trustee
such evidence of compliance with any conditions precedent, if any, provided for
in this Preferred Securities Guarantee that relate to any of the matters set
forth in Section 314(c) of the Trust Indenture Act. Any certificate or opinion
required to be given by an officer pursuant to Section 314(c)(1) may be given in
the form of an Officers' Certificate.
SECTION 2.6 Events of Default; Waiver
-------------------------
The Holders of a Majority in liquidation amount of the Preferred
Securities may, by vote, on behalf of the Holders of all of the Preferred
Securities, waive any past Event of Default and its consequences. Upon such
waiver, any such Event of Default shall cease to exist, and any Event of Default
arising therefrom shall be deemed to have been cured, for every purpose of this
Preferred Securities Guarantee, but no such waiver shall extend to any
subsequent or other default or Event of Default or impair any right consequent
thereon.
SECTION 2.7 Event of Default; Notice
------------------------
(a) The Preferred Guarantee Trustee shall, within 90 days after
the occurrence of an Event of Default, transmit by mail, first class postage
prepaid, to the Holders, notices of all Events of Default actually known to a
Responsible Officer of the Preferred Guarantee Trustee, unless such defaults
have been cured before the giving of such notice, provided, that, the Preferred
--------
Guarantee Trustee shall be protected in withholding such notice if and so long
as a Responsible Officer of the Preferred Guarantee Trustee in good faith
determines that the withholding of such notice is in the interests of the
Holders.
(b) The Preferred Guarantee Trustee shall not be deemed to have
knowledge of any Event of Default unless the Preferred Guarantee Trustee shall
have received written notice thereof, or a Responsible Officer of the Preferred
Guarantee Trustee charged with the administration of the Declaration shall have
obtained actual knowledge thereof.
SECTION 2.8 Conflicting Interests
---------------------
The Declaration shall be deemed to be specifically described in
this Preferred Securities Guarantee for the purposes of clause (i) of the first
proviso contained in Section 310(b) of the Trust Indenture Act.
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ARTICLE III
POWERS, DUTIES AND RIGHTS OF
PREFERRED GUARANTEE TRUSTEE
SECTION 3.1 Powers and Duties of the Preferred Guarantee Trustee
----------------------------------------------------
(a) This Preferred Securities Guarantee shall be held by the
Preferred Guarantee Trustee for the benefit of the Holders, and the Preferred
Guarantee Trustee shall not transfer this Preferred Securities Guarantee to any
Person except a Holder exercising his or her rights pursuant to Section 5.4(b)
or to a Successor Preferred Guarantee Trustee upon acceptance by such Successor
Preferred Guarantee Trustee of its appointment to act as Successor Preferred
Guarantee Trustee. The right, title and interest of the Preferred Guarantee
Trustee shall automatically vest in any Successor Preferred Guarantee Trustee,
and such vesting and succession of title shall be effective whether or not
conveyance documents have been executed and delivered pursuant to the
appointment of such Successor Preferred Guarantee Trustee.
(b) If an Event of Default actually known to a Responsible Officer
of the Preferred Guarantee Trustee has occurred and is continuing, the Preferred
Guarantee Trustee shall enforce this Preferred Securities Guarantee for the
benefit of the Holders.
(c) The Preferred Guarantee Trustee, before the occurrence of any
Event of Default and after the curing of all Events of Default that may have
occurred, shall undertake to perform only such duties as are specifically set
forth in this Preferred Securities Guarantee, and no implied covenants shall be
read into this Preferred Securities Guarantee against the Preferred Guarantee
Trustee. In case an Event of Default has occurred (that has not been cured or
waived pursuant to Section 2.6) and is actually known to a Responsible Officer
of the Preferred Guarantee Trustee, the Preferred Guarantee Trustee shall
exercise such of the rights and powers vested in it by this Preferred Securities
Guarantee, and shall use the same degree of care and skill in its exercise
thereof as a prudent person would exercise or use under the circumstances in the
conduct of his or her own affairs.
(d) No provision of this Preferred Securities Guarantee shall be
construed to relieve the Preferred Guarantee Trustee from liability for its own
negligent action, its own negligent failure to act, or its own willful
misconduct, except that:
(i) prior to the occurrence of any Event of Default and after the
curing or waiving of all such Events of Default that may have occurred:
(A) the duties and obligations of the Preferred Guarantee
Trustee shall be determined solely by the express provisions of this
Preferred Securities
7
<PAGE>
Guarantee, and the Preferred Guarantee Trustee shall not be liable
except for the performance of such duties and obligations as are
specifically set forth in this Preferred Securities Guarantee, and no
implied covenants or obligations shall be read into this Preferred
Securities Guarantee against the Preferred Guarantee Trustee; and
(B) in the absence of bad faith on the part of the Preferred
Guarantee Trustee, the Preferred Guarantee Trustee may conclusively
rely, as to the truth of the statements and the correctness of the
opinions expressed therein, upon any certificates or opinions
furnished to the Preferred Guarantee Trustee and conforming to the
requirements of this Preferred Securities Guarantee; but in the case
of any such certificates or opinions that by any provision hereof are
specifically required to be furnished to the Preferred Guarantee
Trustee, the Preferred Guarantee Trustee shall be under a duty to
examine the same to determine whether or not they conform to the
requirements of this Preferred Securities Guarantee;
(ii) the Preferred Guarantee Trustee shall not be liable for any
error of judgment made in good faith by a Responsible Officer of the
Preferred Guarantee Trustee, unless it shall be proved that the Preferred
Guarantee Trustee was negligent in ascertaining the pertinent facts upon
which such judgment was made;
(iii) the Preferred Guarantee Trustee shall not be liable with
respect to any action taken or omitted to be taken by it in good faith in
accordance with the direction of the Holders of not less than a Majority in
liquidation amount of the Preferred Securities relating to the time, method
and place of conducting any proceeding for any remedy available to the
Preferred Guarantee Trustee, or exercising any trust or power conferred
upon the Preferred Guarantee Trustee under this Preferred Securities
Guarantee; and
(iv) no provision of this Preferred Securities Guarantee shall
require the Preferred Guarantee Trustee to expend or risk its own funds or
otherwise incur personal financial liability in the performance of any of
its duties or in the exercise of any of its rights or powers, if the
Preferred Guarantee Trustee shall have reasonable grounds for believing
that the repayment of such funds or liability is not reasonably assured to
it under the terms of this Preferred Securities Guarantee or indemnity,
reasonably satisfactory to the Preferred Guarantee Trustee, against such
risk or liability is not reasonably assured to it.
8
<PAGE>
SECTION 3.2 Certain Rights of Preferred Guarantee Trustee
---------------------------------------------
(a) Subject to the provisions of Section 3.1:
(i) The Preferred Guarantee Trustee may conclusively rely, and
shall be fully protected in acting or refraining from acting upon, any
resolution, certificate, statement, instrument, opinion, report, notice,
request, direction, consent, order, bond, debenture, note, other evidence
of indebtedness or other paper or document believed by it to be genuine and
to have been signed, sent or presented by the proper party or parties.
(ii) Any direction or act of the Guarantor contemplated by this
Preferred Securities Guarantee shall be sufficiently evidenced by an
Officers' Certificate.
(iii) Whenever, in the administration of this Preferred Securities
Guarantee, the Preferred Guarantee Trustee shall deem it desirable that a
matter be proved or established before taking, suffering or omitting any
action hereunder, the Preferred Guarantee Trustee (unless other evidence is
herein specifically prescribed) may, in the absence of bad faith on its
part, request and conclusively rely upon an Officers' Certificate which,
upon receipt of such request, shall be promptly delivered by the Guarantor.
(iv) The Preferred Guarantee Trustee shall have no duty to see to
any recording, filing or registration of any instrument (or any
rerecording, refiling or re-registration thereof).
(v) The Preferred Guarantee Trustee may consult with counsel of
its selection, and the advice or opinion of such counsel with respect to
legal matters shall be full and complete authorization and protection in
respect of any action taken, suffered or omitted by it hereunder in good
faith and in accordance with such advice or opinion. Such counsel may be
counsel to the Guarantor or any of its Affiliates and may include any of
its employees. The Preferred Guarantee Trustee shall have the right at any
time to seek instructions concerning the administration of this Preferred
Securities Guarantee from any court of competent jurisdiction.
(vi) The Preferred Guarantee Trustee shall be under no obligation
to exercise any of the rights or powers vested in it by this Preferred
Securities Guarantee at the request or direction of any Holder, unless such
Holder shall have provided to the Preferred Guarantee Trustee such security
and indemnity, reasonably satisfactory to the Preferred Guarantee Trustee,
against the costs, expenses (including attorneys' fees and expenses and the
expenses of the Preferred Guarantee Trustee's agents, nominees or
custodians) and liabilities that might be incurred by it in complying with
such
9
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request or direction, including such reasonable advances as may be
requested by the Preferred Guarantee Trustee; provided that, nothing
--------
contained in this Section 3.2(a)(vi) shall be taken to relieve the
Preferred Guarantee Trustee, upon the occurrence of an Event of Default, of
its obligation to exercise the rights and powers vested in it by this
Preferred Securities Guarantee.
(vii) The Preferred Guarantee Trustee shall not be bound to make
any investigation into the facts or matters stated in any resolution,
certificate, statement, instrument, opinion, report, notice, request,
direction, consent, order, bond, debenture, note, other evidence of
indebtedness or other paper or document, but the Preferred Guarantee
Trustee, in its discretion, may make such further inquiry or investigation
into such facts or matters as it may see fit.
(viii) The Preferred Guarantee Trustee may execute any of the
trusts or powers hereunder or perform any duties hereunder either directly
or by or through agents, nominees, custodians or attorneys, and the
Preferred Guarantee Trustee shall not be responsible for any misconduct or
negligence on the part of any agent or attorney appointed with due care by
it hereunder.
(ix) Any action taken by the Preferred Guarantee Trustee or its
agents hereunder shall bind the Holders and the signature of the Preferred
Guarantee Trustee or its agents alone shall be sufficient and effective to
perform any such action. No third party shall be required to inquire as to
the authority of the Preferred Guarantee Trustee to so act or as to its
compliance with any of the terms and provisions of this Preferred
Securities Guarantee, both of which shall be conclusively evidenced by the
Preferred Guarantee Trustee's or its agent's taking such action.
(x) Whenever in the administration of this Preferred Securities
Guarantee the Preferred Guarantee Trustee shall deem it desirable to
receive instructions with respect to enforcing any remedy or right or
taking any other action hereunder, the Preferred Guarantee Trustee (i) may
request instructions from the Holders of a Majority in liquidation amount
of the Preferred Securities, (ii) may refrain from enforcing such remedy or
right or taking such other action until such instructions are received, and
(iii) shall be protected in conclusively relying on or acting in accordance
with such instructions.
(xi) The Preferred Guarantee Trustee may execute any of the trusts
or powers hereunder or perform any duties hereunder either directly or by
or through agents or attorneys, and the Preferred Guarantee Trustee shall
not be responsible for any misconduct or negligence on the part of any
agent or attorney appointed with due care by it hereunder.
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(xii) The Preferred Guarantee Trustee shall not be liable for any
action taken, suffered, or omitted to be taken by it in good faith and
reasonably believed by it to be authorized or within the discretion or
rights or powers conferred upon it by this Preferred Securities Guarantee.
(b) No provision of this Preferred Securities Guarantee shall be
deemed to impose any duty or obligation on the Preferred Guarantee Trustee to
perform any act or acts or exercise any right, power, duty or obligation
conferred or imposed on it in any jurisdiction in which it shall be illegal, or
in which the Preferred Guarantee Trustee shall be unqualified or incompetent in
accordance with applicable law, to perform any such act or acts or to exercise
any such right, power, duty or obligation. No permissive power or authority
available to the Preferred Guarantee Trustee shall be construed to be a duty.
SECTION 3.3 Not Responsible for Recitals or Issuance of Preferred Securities
----------------------------------------------------------------
Guarantee
---------
The recitals contained in this Preferred Securities Guarantee
shall be taken as the statements of the Guarantor, and the Preferred Guarantee
Trustee does not assume any responsibility for their correctness. The Preferred
Guarantee Trustee makes no representation as to the validity or sufficiency of
this Preferred Securities Guarantee.
ARTICLE IV
PREFERRED GUARANTEE TRUSTEE
SECTION 4.1 Preferred Guarantee Trustee: Eligibility
----------------------------------------
(a) There shall at all times be a Preferred Guarantee Trustee
which shall:
(i) not be an Affiliate of the Guarantor; and
(ii) be a corporation organized and doing business under the
laws of the United States of America or any State or
Territory thereof or of the District of Columbia, or a
corporation or Person permitted by the Securities and
Exchange Commission to act as an institutional trustee
under the Trust Indenture Act, authorized under such
laws to exercise corporate trust powers, having a
combined capital and surplus of at least 50 million
U.S. dollars ($50,000,000), and subject to supervision
or examination by federal, state, territorial or
District of Columbia authority. If such corporation
publishes reports of condition at least annually,
pursuant to law or to the requirements of the
supervising or examining authority referred to above,
then, for
11
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the purposes of this Section 4.1(a)(ii), the combined
capital and surplus of such corporation shall be deemed
to be its combined capital and surplus as set forth in
its most recent report of condition so published.
(b) If at any time the Preferred Guarantee Trustee shall cease to
be eligible to so act under Section 4.1(a), the Preferred Guarantee Trustee
shall immediately resign in the manner and with the effect set out in Section
4.2(c).
(c) If the Preferred Guarantee Trustee has or shall acquire any
"conflicting interest" within the meaning of Section 310(b) of the Trust
Indenture Act, the Preferred Guarantee Trustee and Guarantor shall in all
respects comply with the provisions of Section 310(b) of the Trust Indenture
Act.
SECTION 4.2 Appointment, Removal and Resignation of Preferred Guarantee
-----------------------------------------------------------
Trustee
-------
(a) Subject to Section 4.2(b), the Preferred Guarantee Trustee may
be appointed or removed without cause at any time by the Guarantor.
(b) The Preferred Guarantee Trustee shall not be removed in
accordance with Section 4.2(a) until a Successor Preferred Guarantee Trustee has
been appointed and has accepted such appointment by written instrument executed
by such Successor Preferred Guarantee Trustee and delivered to the Guarantor.
(c) The Preferred Guarantee Trustee appointed to office shall hold
office until a Successor Preferred Guarantee Trustee shall have been appointed
or until its removal or resignation. The Preferred Guarantee Trustee may resign
from office (without need for prior or subsequent accounting) by an instrument
in writing executed by the Preferred Guarantee Trustee and delivered to the
Guarantor, which resignation shall not take effect until a Successor Preferred
Guarantee Trustee has been appointed and has accepted such appointment by
instrument in writing executed by such Successor Preferred Guarantee Trustee and
delivered to the Guarantor and the resigning Preferred Guarantee Trustee.
(d) If no Successor Preferred Guarantee Trustee shall have been
appointed and accepted appointment as provided in this Section 4.2 within 60
days after delivery of an instrument of resignation or removal, the Preferred
Guarantee Trustee resigning or being removed may petition any court of competent
jurisdiction for appointment of a Successor Preferred Guarantee Trustee. Such
court may thereupon, after prescribing such notice, if any, as it may deem
proper, appoint a Successor Preferred Guarantee Trustee.
(e) No Preferred Guarantee Trustee shall be liable for the acts or
omissions to act of any Successor Preferred Guarantee Trustee.
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(f) Upon termination of this Preferred Securities Guarantee or
removal or resignation of the Preferred Guarantee Trustee pursuant to this
Section 4.2, the Guarantor shall pay to the Preferred Guarantee Trustee all
amounts owed to the Preferred Guarantee Trustee by the Guarantor to the date of
such termination, removal or resignation.
ARTICLE V
PREFERRED SECURITIES GUARANTEE
SECTION 5.1 Preferred Securities Guarantee
------------------------------
The Guarantor fully and unconditionally agrees to pay in full to
the Holders the Guarantee Payments (without duplication of amounts theretofore
paid by the Issuer), as and when due, regardless of any defense, right of set-
off or counterclaim that the Issuer may have or assert. The Guarantor's
obligation to make a Guarantee Payment may be satisfied by direct payment of the
required amounts by the Guarantor to the Holders or by causing the Issuer to pay
such amounts to the Holders.
SECTION 5.2 Waiver of Notice and Demand
---------------------------
The Guarantor hereby waives notice of acceptance of this Preferred
Securities Guarantee and of any liability to which it applies or may apply,
presentment, demand for payment, any right to require a proceeding first against
the Issuer or any other Person before proceeding against the Guarantor, protest,
notice of nonpayment, notice of dishonor, notice of redemption and all other
notices and demands.
SECTION 5.3 Obligations Not Affected
------------------------
The obligations, covenants, agreements and duties of the Guarantor
under this Preferred Securities Guarantee shall in no way be affected or
impaired by reason of the happening from time to time of any of the following:
(a) the release or waiver, by operation of law or otherwise, of
the performance or observance by the Issuer of any express or implied agreement,
covenant, term or condition relating to the Preferred Securities to be performed
or observed by the Issuer;
(b) the extension of time for the payment by the Issuer of all or
any portion of the Distributions, Redemption Price, Liquidation Distribution or
any other sums payable under the terms of the Preferred Securities or the
extension of time for the performance of any other obligation under, arising out
of, or in connection with, the Preferred Securities (other than an extension of
time for payment of Distributions, Redemption Price, Liquidation
13
<PAGE>
Distribution or other sum payable that results from the extension of any
interest payment period on the Debentures);
(c) any failure, omission, delay or lack of diligence on the part
of the Holders to enforce, assert or exercise any right, privilege, power or
remedy conferred on the Holders pursuant to the terms of the Preferred
Securities, or any action on the part of the Issuer granting indulgence or
extension of any kind;
(d) the voluntary or involuntary liquidation, dissolution, sale of
any collateral, receivership, insolvency, bankruptcy, assignment for the benefit
of creditors, reorganization, arrangement, composition or readjustment of debt
of, or other similar proceedings affecting, the Issuer or any of the assets of
the Issuer;
(e) any invalidity of, or defect or deficiency in, the Preferred
Securities;
(f) the settlement or compromise of any obligation guaranteed
hereby or hereby incurred; or
(g) any other circumstance whatsoever that might otherwise
constitute a legal or equitable discharge or defense of a guarantor, it being
the intent of this Section 5.3 that the obligations of the Guarantor hereunder
shall be full and unconditional under any and all circumstances.
There shall be no obligation of the Holders to give notice to, or
obtain consent of, the Guarantor with respect to the happening of any of the
foregoing.
SECTION 5.4 Rights of Holders
-----------------
(a) The Holders of a Majority in liquidation amount of the
Preferred Securities have the right to direct the time, method and place of
conducting of any proceeding for any remedy available to the Preferred Guarantee
Trustee in respect of this Preferred Securities Guarantee or exercising any
trust or power conferred upon the Preferred Guarantee Trustee under this
Preferred Securities Guarantee.
(b) If the Preferred Guarantee Trustee fails to enforce such
Preferred Securities Guarantee, any Holder of Preferred Securities may institute
a legal proceeding directly against the Guarantor to enforce the Preferred
Guarantee Trustee's rights under this Preferred Securities Guarantee, without
first instituting a legal proceeding against the Issuer, the Preferred Guarantee
Trustee or any other person or entity. The Guarantor waives any right or remedy
to require that any action be brought first against the Issuer or any other
person or entity before proceeding directly against the Guarantor.
14
<PAGE>
SECTION 5.5 Guarantee of Payment
--------------------
This Preferred Securities Guarantee creates a guarantee of payment
and not of collection.
SECTION 5.6 Subrogation
-----------
The Guarantor shall be subrogated to all (if any) rights of the
Holders of Preferred Securities against the Issuer in respect of any amounts
paid to such Holders by the Guarantor under this Preferred Securities Guarantee;
provided, however, that the Guarantor shall not (except to the extent required
- -------- -------
by mandatory provisions of law) be entitled to enforce or exercise any right
that it may acquire by way of subrogation or any indemnity, reimbursement or
other agreement, in all cases as a result of payment under this Preferred
Securities Guarantee, if, at the time of any such payment, any amounts are due
and unpaid under this Preferred Securities Guarantee. If any amount shall be
paid to the Guarantor in violation of the preceding sentence, the Guarantor
agrees to hold such amount in trust for the Holders and to pay over such amount
to the Holders.
SECTION 5.7 Independent Obligations
-----------------------
The Guarantor acknowledges that its obligations hereunder are
independent of the obligations of the Issuer with respect to the Preferred
Securities, and that the Guarantor shall be liable as principal and as debtor
hereunder to make Guarantee Payments pursuant to the terms of this Preferred
Securities Guarantee notwithstanding the occurrence of any event referred to in
subsections (a) through (g), inclusive, of Section 5.3 hereof.
ARTICLE VI
LIMITATION OF TRANSACTIONS; SUBORDINATION
SECTION 6.1 Limitation of Transactions
--------------------------
So long as any Preferred Securities remain outstanding, if there
shall have occurred an Event of Default or an event of default under the
Declaration, then (a) the Guarantor shall not declare or pay any dividend on,
make any distributions with respect to, or redeem, purchase, acquire or make a
liquidation payment with respect to, any of its capital stock (other than (i)
purchases or acquisitions of shares of capital stock in connection with any
employee benefit plan or program, director benefit plan or program, dividend
reinvestment, stock repurchase, or other similar plans available to stockholders
of the Guarantor, or any option, warrant, right, or exercisable, exchangeable,
or convertible security outstanding as of the expiration date of the Exchange
Offier, (ii) as a result of a reclassification of the Guarantor's capital
15
<PAGE>
stock or the exchange or conversion of one class or series of the Guarantor's
capital stock for another class or series of the Guarantor's capital stock or
the capital securities of a subsidiary (including a trust such as the Issuer),
or (iii) the purchase of fractional interests in shares of the Guarantor's
capital stock pursuant to the conversion or exchange provisions of such capital
stock of the Guarantor or the security being converted or exchanged) or make any
guarantee payments with respect to the foregoing, (b) the Guarantor shall not
make any payment of interest, principal or premium, if any, on or repay,
repurchase or redeem any debt securities (including guarantees) issued by the
Guarantor which rank pari passu with or junior to the Debentures and (c) the
---- -----
Guarantor shall not make any guarantee payments with respect to the foregoing
(other than pursuant to this Preferred Securities Guarantee).
SECTION 6.2 Subordination
-------------
This Preferred Securities Guarantee will constitute an unsecured
obligation of the Guarantor and will rank (i) subordinate and junior in right of
payment to all other liabilities of the Guarantor, (ii) pari passu with the most
---- -----
senior preferred or preference stock now or hereafter issued by the Guarantor
and with any guarantee now or hereafter entered into by the Guarantor in respect
of any preferred or preference stock of any Affiliate of the Guarantor, and
(iii) senior to the Guarantor's common stock.
ARTICLE VII
TERMINATION
SECTION 7.1 Termination
-----------
This Preferred Securities Guarantee shall terminate upon (i) full
payment of the Redemption Price of all Preferred Securities, (ii) the
distribution of the Guarantor's common stock to all of the Holders in respect of
the conversion of all the Preferred Securities into the Guarantor's common stock
or upon the distribution of the Debentures held by the Issuer to the Holders of
all of the Preferred Securities or (iii) full payment of the amounts payable in
accordance with the Declaration upon liquidation of the Issuer. Notwithstanding
the foregoing, this Preferred Securities Guarantee will continue to be effective
or will be reinstated, as the case may be, if at any time any Holder must
restore payment of any sums paid under the Preferred Securities or under this
Preferred Securities Guarantee.
ARTICLE VIII
INDEMNIFICATION
SECTION 8.1 Exculpation
-----------
16
<PAGE>
(a) No Indemnified Person shall be liable, responsible or
accountable in damages or otherwise to the Guarantor or any Covered Person for
any loss, damage, liability, expense or claim incurred by reason of any act or
omission performed or omitted by such Indemnified Person in good faith in
accordance with this Preferred Securities Guarantee and in a manner that such
Indemnified Person reasonably believed to be within the scope of the authority
conferred on such Indemnified Person by this Preferred Securities Guarantee or
by law, except that an Indemnified Person shall be liable for any such loss,
damage or claim incurred by reason of such Indemnified Person's negligence or
willful misconduct with respect to such acts or omissions.
(b) An Indemnified Person shall be fully protected in relying in
good faith upon the records of the Guarantor and upon such information,
opinions, reports or statements presented to the Guarantor by any Person as to
matters the Indemnified Person reasonably believes are within such other
Person's professional or expert competence and who has been selected with
reasonable care by or on behalf of the Guarantor, including information,
opinions, reports or statements as to the value and amount of the assets,
liabilities, profits, losses, or any other facts pertinent to the existence and
amount of assets from which Distributions to Holders might properly be paid.
SECTION 8.2 Indemnification
---------------
The Guarantor agrees to indemnify each Indemnified Person for, and
to hold each Indemnified Person harmless against, any loss, liability or expense
incurred without negligence or bad faith on its part, arising out of or in
connection with the acceptance or administration of the trust or trusts
hereunder, including the costs and expenses (including reasonable legal fees and
expenses) of defending itself against, or investigating, any claim or liability
in connection with the exercise or performance of any of its powers or duties
hereunder. The obligation to indemnify as set forth in this Section 8.2 shall
survive the termination of this Preferred Securities Guarantee.
When the Preferred Guarantee Trustee incurs expenses or renders
services in connection with an Event of Default with respect to the Preferred
Securities specified in Section 6.01(e) or 6.01(f) of the Standard Multiple-
Series Indenture of the Guarantor, the expenses (including the reasonable
charges and expenses of its counsel) and the compensation for services are
intended to constitute expenses of administration under any applicable federal
or state bankruptcy. insolvency or other similar law.
ARTICLE IX
MISCELLANEOUS
SECTION 9.1 Successors and Assigns
----------------------
17
<PAGE>
All guarantees and agreements contained in this Preferred
Securities Guarantee shall bind the successors, assigns, receivers, trustees and
representatives of the Guarantor and shall inure to the benefit of the Holders
of the Preferred Securities then outstanding.
SECTION 9.2 Amendments
----------
Except with respect to any changes that do not adversely affect
the rights of Holders (in which case no consent of Holders will be required),
this Preferred Securities Guarantee may be amended only with the prior approval
of the Holders of at least a Majority in liquidation amount (including the
stated amount that would be paid on redemption, liquidation or otherwise, plus
accumulated and unpaid Distributions to the date upon which the voting
percentages are determined) of the Preferred Securities. The provisions of
Section 12.2 of the Declaration with respect to meetings of Holders apply to the
giving of such approval.
SECTION 9.3 Notices
-------
All notices provided for in this Preferred Securities Guarantee
shall be in writing, duly signed by the party giving such notice, and shall be
delivered by hand, telecopied or mailed by first class mail, as follows:
(a) If given to the Preferred Guarantee Trustee, at the Preferred
Guarantee Trustee's mailing address set forth below (or such other address as
the Preferred Guarantee Trustee may give notice of to the Holders of the
Preferred Securities):
The Bank of New York
101 Barclay Street (21 West)
New York, New York 10286
Attn: Corporate Trust Trustee Administration
(b) If given to the Guarantor, at the Guarantor's mailing address
set forth below (or such other address as the Guarantor may give notice of to
the Holders of the Preferred Securities):
Unocal Corporation
2141 Rosecrans Avenue
Suite 4000
El Segundo, California 90245
Attn: Corporate Secretary
18
<PAGE>
(c) If given to any Holder of Preferred Securities, at the address
set forth on the books and records of the Issuer.
All such notices shall be deemed to have been given when received
in person, telecopied with receipt confirmed, or mailed by first class mail,
postage prepaid, except that if a notice or other document is refused delivery
or cannot be delivered because of a changed address of which no notice was
given, such notice or other document shall be deemed to have been delivered on
the date of such refusal or inability to deliver.
19
<PAGE>
SECTION 9.4 Benefit
-------
This Preferred Securities Guarantee is solely for the benefit of
the Holders of the Preferred Securities and, subject to Section 3.1(a), is not
separately transferable from the Preferred Securities.
SECTION 9.5 Governing Law
-------------
THIS PREFERRED SECURITIES GUARANTEE SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK,
WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES THEREOF.
20
<PAGE>
THIS PREFERRED SECURITIES GUARANTEE is executed as of the day and
year first above written.
UNOCAL CORPORATION, as Guarantor
By:___________________________________
Name:
Title:
THE BANK OF NEW YORK, as Preferred Guarantee Trustee
By:___________________________________
Name:
Title:
21
<PAGE>
EXHIBIT 4.8
FORM OF COMMON STOCK CERTIFICATE
COMMON COMMON
PAR VALUE OF $1.00 PAR VALUE OF $1.00
[PICTURE APPEARS HERE]
INCORPORATED UNDER THIS CERTIFICATE IS TRANSFERABLE IN THE
THE LAWS OF THE STATE OF DELAWARE CITY OF NEW YORK OR IN LOS ANGELES
OR IN SAN FRANCISCO
SEE REVERSE FOR CUSIP 915289 10 2
CERTAIN DEFINITIONS
AND TERMS
UNOCAL CORPORATION
This Certifies that
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
is the record holder of
FULLY PAID AND NON-ASSESSABLE COMMON SHARES OF
Unocal Corporation transferable on the books of the Corporation in person
or by duly authorized attorney upon surrender of this Certificate properly
endorsed. This Certificate is not valid unless countersigned by a Transfer Agent
and registered by a Registrar.
Witness the seal of the Corporation and the signatures of its duly
authorized officers.
DATED
COUNTERSIGNED AND REGISTERED: /s/ Dennis Codon
CHEMICAL TRUST COMPANY OF CALIFORNIA Vice President
TRANSFER AGENT AND REGISTRAR
BY_____________________ /s/ B. Dewez
AUTHORIZED SIGNATURE ASSISTANT CORPORATE SECRETARY
<PAGE>
UNOCAL CORPORATION
A copy of the statement of rights, preferences, privileges and restrictions
granted to or imposed upon the respective classes of shares of the Corporation
and upon the holders thereof as established by its Articles of Incorporation
will be furnished to the stockholders of the Corporation upon request and
without charge at the principal office of the Corporation in Los Angeles,
California.
This certificate also represents Rights that entitle the holder hereof to
certain rights as set forth in a Rights Agreement dated as of January 29, 1990
by and between the Corporation and Chemical Trust Company of California, as
Rights Agent (the "Rights Agreement"), the terms and conditions of which are
hereby incorporated herein by reference and a copy of which is on file at the
principal offices of the Corporation. Under certain circumstances specified in
the Rights Agreement, such Rights will be represented by separate certificates
and will no longer be represented by this certificate. Under certain
circumstances specified in the Rights Agreement, Rights beneficially owned by
certain persons may become null and void. The Corporation will mail to the
record holder of this certificate a copy of the Rights Agreement without charge
promptly following receipt of a written request therefor.
The following abbreviations, when used in the inscription on the face of
this certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
<TABLE>
<S> <C>
TEN COM--as tenants in common UNIF GIFT MIN ACT-- Custodian
TEN ENT--as tenants by the entireties -------------------------------------
JT TEN --as joint tenants with right of (Cust) (Minor)
survivorship and not as tenants under Uniform Gifts to Minors
in common Act
----------------------------
(State)
UNIF TRF MIN ACT-- Custodian (until age )
-------------------------------------
(Cust)
under Uniform Transfers
---------------
(Minor)
to Minors Act
------------------------
(State)
</TABLE>
Additional abbreviations may also be used though not in the above list.
For Value Received, hereby sell, assign and transfer unto
----------
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
- --------------------------------------
+ +
+ +
- --------------------------------------
- --------------------------------------------------------------------------------
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS, INCLUDING ZIP CODE, OF ASSIGNEE)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
shares
- --------------------------------------------------------------------------
of the capital stock represented by the within Certificate, and do hereby
irrevocably constitute and appoint
Attorney
- ------------------------------------------------------------------------
to transfer the said stock on the books of the within named Corporation with
full power of substitution in the premises.
Dated
----------------------
X
-------------------------------------------------------
X
-------------------------------------------------------
NOTICE: THE SIGNATURE(S) TO THIS ASSIGNMENT MUST CORRESPOND
WITH THE NAMES(S) AS WRITTEN UPON THE FACE OF THE
CERTIFICATE IN EVERY PARTICULAR, WITHOUT ALTERATION
OR ENLARGEMENT OR ANY CHANGE WHATSOEVER.
Signature(s) Guaranteed:
- ---------------------------------------------------------------
THE SIGNATURE(S) SHOULD BE GUARANTEED BY AN ELIGIBLE GUARANTOR
INSTITUTION (BANKS, STOCKBROKERS, SAVINGS AND LOAN ASSOCIATIONS
AND CREDIT UNIONS WITH MEMBERSHIP IN AN APPROVED SIGNATURE
GUARANTEE MEDALLION PROGRAM), PURSUANT TO S.E.C. RULE 17Ad-15.
<PAGE>
EXHIBIT 4.9
RIGHTS AGREEMENT
dated as of January 29, 1990
by and between
UNOCAL CORPORATION
and
MANUFACTURERS HANOVER TRUST COMPANY OF CALIFORNIA
as Rights Agent
<PAGE>
TABLE OF CONTENTS
-----------------
Section Page
- ------- ----
1 Certain Definitions.................................... 1
2 Appointment of Rights Agent............................ 7
3 Issuance of Right Certificates......................... 7
4 Form of Right Certificates............................. 8
5 Countersignature and Registration...................... 9
6 Transfer, Split Up, Combination and Exchange of Right
Certificates; Mutilated, Destroyed, Lost or Stolen
Right Certificates..................................... 10
7 Exercise of Rights..................................... 10
8 Cancellation and Destruction of Right Certificates..... 13
9 Reservation and Availability of Capital Stock.......... 13
10 Securities Record Date................................. 14
11 Adjustment of Exercise Price, Number of Shares
Issuable Upon Exercise of Rights or Number of Rights... 14
12 Certificate of Adjusted Exercise Price or Number of
Shares Issuable Upon Exercise of Rights................ 22
13 Consolidation, Merger, or Sale or Transfer of Assets
or Earning Power....................................... 23
14 Fractional Rights and Fractional Shares................ 25
15 Rights of Action....................................... 26
16 Agreement of Right Holders............................. 26
17 Right Holder and Right Certificate Holder Not
Deemed a Stockholder................................... 27
18 Concerning the Rights Agent............................ 27
(i)
<PAGE>
TABLE OF CONTENTS
-----------------
(continued)
Section Page
- ------- ----
19 Merger of Consolidation or Change
of Name of Rights Agent...................... 28
20 Duties of Rights Agent....................... 29
21 Change of Rights Agent....................... 31
22 Issuance of New Right Certificates........... 32
23 Redemption of Rights......................... 32
24 Exchange..................................... 33
25 Notice of Certain Events..................... 34
26 Notices...................................... 35
27 Supplements and Amendments................... 36
28 Certain Covenants............................ 36
29 Successors................................... 37
30 Benefits of this Agreement................... 37
31 Severability................................. 37
32 Governing Law................................ 37
33 Determination and Actions Taken By
the Board of Directors....................... 37
34 Counterparts................................. 38
35 Descriptive Headings......................... 38
(ii)
<PAGE>
TABLE OF EXHIBITS
-----------------
Exhibit A -- Form of Certificate of Designations
Exhibit B -- Form of Right Certificate
Exhibit C -- Form of Summary of the Rights
(iii)
<PAGE>
TABLE OF DEFINED TERMS
----------------------
Term Defined Page Section
- ------------ ---- -------
Adjustment Shares 16 11(a)(ii)
Affiliate 1 1(a)
Agreement 1 Introduction
Associate 1 1(a)
Beneficially Own 1 1(b)
Beneficial Owner 1 1(b)
Business Day 3 1(c)
Close of Business 3 1(d)
Closing Price 3 1(e)
Common Share 4 1(f)
Common Share Equivalent 18 11(c)
Company (Unocal Corporation) 1 Introduction
Company (following a Section 13(a) Event) 23 13(a)(iii)
Current Market Price 4 1(g)
Distribution Date 7 3(a)
Exchange Act 4 1(i)
Exchange Ratio 33 24
Exercise Price 11 7(c)
Expiration Date 4 1(k)
NASDAQ 3 1(e)
Person 4 1(l)
Preferred Share 5 1(m)
(iv)
<PAGE>
TABLE OF DEFINED TERMS
----------------------
(continued)
Term Defined Page Section
- ------------ ---- -------
Preferred Share Equivalent 17 11(b)
Record Date 1 Recital
Redemption Date 5 1(o)
Redemption Price 32 23(a)
Right 1 Recital
Rights Agent 1 Introduction
Section 13(a) Event 23 13(a)
Securities Act 5 1(r)
Subsidiary 5 1(s)
Surviving Person 23 13(a)
Trading Day 5 1(t)
Triggering Event 5 1(u)
Unavailable Adjustment Shares 16 11(a)(iii)
Voting Share 5 1(v)
15% Ownership Date 6 1(w)
15% Stockholder 6 1(x)
(v)
<PAGE>
RIGHTS AGREEMENT
This Rights Agreement ("Agreement") is made and entered into as of the 29th
day of January, 1990 by and between Unocal Corporation, a Delaware corporation
(the "Company"), and Manufacturers Hanover Trust Company of California (the
"Rights Agent").
WHEREAS, the Board of Directors of the Company has authorized and declared
a dividend of one preferred stock purchase right (a "Right") for each Common
Share (as hereinafter defined) of the Company, which dividend is payable on
February 12, 1990 (the "Record Date") to the holders of record of Common Shares
as of the Close of Business (as hereinafter defined) on such date;
WHEREAS, the Board of Directors of the Company has further authorized and
directed the issuance of one Right for each Common Share that shall be issued by
the Company at any time after the Record Date and prior to the earliest of the
Distribution Date, the Redemption Date or the Expiration Date (as such terms are
hereinafter defined); and
WHEREAS, in connection with the matters referred to herein, the Company
desires to appoint the Rights Agent to act on behalf of the Company, and the
Rights Agent is willing so to act;
NOW, THEREFORE, in consideration of the foregoing recitals and the mutual
agreements set forth herein, and for the benefit of the holders of Rights, the
parties hereto hereby agree as follows:
Section 1. Certain Definitions. For purposes of this Agreement, the
-------------------
following terms have the meanings indicated:
(a) "Affiliate" and "Associate" shall have the respective meanings
ascribed to such terms in Rule 12b-2 promulgated under the Exchange Act, as in
effect on the date hereof.
(b) A Person shall be deemed the "Beneficial Owner" of and shall be deemed
to "Beneficially Own":
(i) any securities that such Person or any of such Person's
Affiliates or Associates beneficially owns, directly or indirectly, for purposes
of Section 13(d) of the Exchange Act and Rule 13d-3 promulgated under the
Exchange Act, in each case as in effect on the date hereof;
<PAGE>
(ii) any securities that such Person or any of such Person's
Affiliates or Associates has the right to acquire (whether such right is
exercisable immediately, or only after the passage of time, compliance with
regulatory requirements, the fulfillment of a condition, or otherwise) pursuant
to any agreement, arrangement or understanding, or upon the exercise of
conversion rights, exchange rights, rights (other than the Rights), warrants or
options, or otherwise, provided that a Person shall not be deemed the Beneficial
Owner of, or to Beneficially Own, securities tendered pursuant to a tender offer
or exchange offer made by or on behalf of such Person or any of such Person's
Affiliates or Associates until such tendered securities are accepted for
purchase or exchange;
(iii) any securities that such Person or any such Person's Affiliates
or Associates has the right to vote, alone or in concert with others, pursuant
to any agreement, arrangement or understanding, provided that a Person shall not
be deemed the Beneficial Owner of, or to Beneficially Own, any security if the
agreement, arrangement or understanding to vote such security (A) arises solely
from a revocable proxy given to such Person or any of such Person's Affiliates
or Associates in response to a public proxy solicitation made pursuant to and in
accordance with the applicable rules and regulations of the Exchange Act, and
(B) is not also then reportable on Schedule 13D under the Exchange Act (or any
comparable or successor report);
(iv) any securities that are Beneficially Owned, directly or
indirectly, by any other Person with which such Person or any of such Person's
Affiliates or Associates has any agreement, arrangement or understanding for the
purpose of acquiring, holding, voting (other than voting pursuant to a revocable
proxy as described in the proviso to Section 1(b)(iii) hereof) or disposing of
any securities of the Company; and
(v) on any day on or after the Distribution Date, all Rights that
prior to such date were represented by certificates for Common Shares that such
Person Beneficially Owns on such day.
Notwithstanding anything to the contrary in this Section 1(b): (i) a Person
engaged in business as an underwriter of securities shall not be deemed to be
the Beneficial Owner of, or to Beneficially Own, any securities acquired through
such Person's participation in good faith in a firm commitment underwriting
until the expiration of 40 days after the date of such acquisition; and (ii) no
Person shall be deemed to be the Beneficial Owner of, or to Beneficially Own,
any security
2
<PAGE>
Beneficially Owned by another Person solely by reason of any agreement,
arrangement or understanding with such other Person for: (A) soliciting the
Company's stockholders for the election of director nominees or any other
stockholder resolution, the formation of and membership on any committee for the
purpose of promoting or opposing any stockholder resolution or for electing a
slate of nominees to the Company's board of directors, service on such a slate
of nominees, or agreement to a slate of director nominees, provided that such
other Person retains the right at any time to withdraw as a nominee or member of
any such committee, and to withhold or revoke any vote or proxy for or against
any such stockholder resolution or for such slate of nominees; (B) entry into
revocable voting agreements or the granting or solicitation of revocable
proxies with respect to the foregoing; or (C) the sharing of expenses and the
indemnification against expenses and liabilities by any such other Person with
respect to expenses incurred or conduct occurring during the time such other
Person is a nominee or a member of any such committee.
(c) "Business Day" shall mean any day other than a Saturday, a Sunday
or a day on which banking institutions in the States of New York or California
are authorized or obligated by law or executive order to close.
(d) "Close of Business" on any given date shall mean 5:00 o'clock
p.m., Los Angeles time, on such date; provided, however, that if such date is
not a Business Day, it shall mean 5:00 o'clock p.m., Los Angeles time, on the
next succeeding Business Day.
(e) "Closing Price" of a stock or other security on any day shall be
the last sale price, regular way, per share of such stock or unit of such other
security on such day or, in case no such sale takes place on such day, the
average of the closing bid and asked prices, regular way, in either case as
reported in the principal consolidated transaction reporting system with respect
to securities listed or admitted to trading on the New York Stock Exchange or,
if such stock or other security is not listed or admitted to trading on the New
York Stock Exchange, as reported in the principal consolidated transaction
reporting system with respect to securities listed on the principal national
securities exchange on which such stock or other security is listed or admitted
to trading or, if such stock or other security is not listed or admitted to
trading on any national securities exchange, the last quoted price or, if not so
quoted, the average of the high bid and low asked prices in the over-the-counter
market, as reported by the National Association of Securities Dealers, Inc.
Automated Quotations System ("NASDAQ") or such other system then in use or, if
on any such date such stock or other security is not
3
<PAGE>
quoted by any such organization, the average of the closing bid and asked prices
as furnished by a professional market maker that makes a market in such stock or
other security and that is selected by the Board of Directors of the Company.
(f) "Common Share" shall mean one share of the Common Stock, par value
$1.00 per share, of the Company, unless used with reference to a Person other
than the Company, in which case it shall mean one share of the class of common
stock or such Person having the greatest voting power per share or, if such
Person is a Subsidiary of another Person, one Common Share of the Person that
ultimately controls such Person.
(g) "Current Market Price" per share of a stock or unit of any other
security on any date shall mean the average of the daily Closing Prices of such
stock or other security for the 30 consecutive Trading Days through and
including the Trading Day immediately preceding the date in question; provided,
however, that if any event shall have caused the Closing Price on any Trading
Day during such 30-day period not to be fully comparable with the Closing Price
on the date in question (or, if no Closing Price is available on the date in
question, on the Trading Day immediately preceding the date in question), then
each such noncomparable Closing Price so used shall be appropriately adjusted by
the Board of Directors in order to make the Closing Price on each Trading Day
during the period used for the determination of the Current Market Price fully
comparable with the Closing Price on such date in question (or, if applicable,
the immediately preceding Trading Day); and provided further, however, that if
such stock or other security is not publicly held or so listed or traded,
"Current Market Price" per share of such stock or unit of such other security
shall mean the fair value per share of such stock or unit of such other security
as determined in good faith by the Board of Directors of the Company based upon
such appraisals or valuation reports of such independent experts as the Board of
Directors shall in good faith determine appropriate, which determination shall
be described in a statement filed by the Company with the Rights Agent.
(h) "Distribution Date" shall have the meaning ascribed to it in
Section 3 hereof.
(i) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
(j) "Exercise Price" shall have the meaning ascribed to it in
Section 7(c) hereof.
(k) "Expiration Date" shall mean January 29, 2000.
4
<PAGE>
(l) "Person" shall mean any individual, firm, partnership, corporation,
association, group (as such term is used in Rule 13d-5 promulgated under the
Exchange Act as in effect or the date hereof) or other entity, any two or more
of the foregoing acting in concert or pursuant to an agreement, arrangement or
understanding for the purpose of acquiring, holding voting or disposing of
capital stock of the Company, and shall include any successor (by merger or
otherwise) of any such entity.
(m) "Preferred Share" shall mean one share of the Series A Junior
Participating Cumulative Preferred Stock, par value $0.10 per share, of the
Company, which shall have the rights and preferences set forth in the form of
Certificate of Designations attached hereto as Exhibit A.
(n) "Record Date" shall have the meaning ascribed to it in the recitals
hereto.
(o) "Redemption Date" shall mean the date of the action of a majority of
the Board of Directors directing the Company to redeem the Rights pursuant to
Section 23(a) hereof.
(p) "Redemption Price" shall have the meaning ascribed to it in Section
23(a) hereof.
(q) "Section 13(a) Event" shall have the meaning ascribed to it in
Section 13(a) hereof.
(r) "Securities Act" shall mean the Securities Act of 1933, as amended.
(s) "Subsidiary" of any Person shall mean any corporation or other Person
of which equity securities or equity interests representing a majority of the
voting power are owned, directly or indirectly, or which is effectively
controlled, by such Person.
(t) "Trading Day" shall mean, as to any stock or other security, a day on
which the principal national securities exchange on which such stock or other
security is listed or admitted to trading is open for the transaction of
business or, if such stock or other security is not listed or admitted to
trading on any national securities exchange, a Business Day.
(u) "Triggering Event" shall mean the first to occur of (i) midnight at
the end of the tenth Business Day following a 15% Ownership Date, or (ii) the
date of a Section 13(a) Event.
5
<PAGE>
(v) "Voting Share" shall mean (i) a common share of a Person and (ii) any
other share of capital stock of a Person entitled to vote generally in the
election of Directors or entitled to vote together with the common shares in
respect of any merger, consolidation, sale of all or substantially all of a
Person's assets, liquidation, dissolution or winding up. References in this
Agreement to a percentage or portion of the outstanding Voting Shares shall be
deemed a reference to the percentage or portion of the total votes entitled to
be cast by the holders of the outstanding Voting Shares.
(w) "15% Ownership Date" shall mean the first date of public announcement
(which, for purposes of this definition, shall include, without limitation, a
report filed pursuant to Section 13(d) of the Exchange Act) by the Company or a
15% Stockholder containing the facts by virture of which a Person has become a
15% Stockholder.
(x) "15% Stockholder" shall mean any Person that, together with all
Affiliates and Associates of such Person, hereafter acquires Beneficial
Ownership of Voting Shares of the Company and thereupon or thereafter
Beneficially Owns 15% or more of the Voting Shares of the Company then
outstanding; provided, however, that the term "15% Stockholder" shall not
include: (i) the Company, any wholly-owned Subsidiary of the Company, any
employee benefit plan of the Company or any Person holding Voting Shares for or
pursuant to the terms of any such employee benefit plan; or (ii) any Person if
such Person would not otherwise be a 15% Stockholder but for a reduction in the
number of outstanding Voting Shares resulting from a stock repurchase program or
other similar plan of the Company or from a self tender offer of the Company,
which plan or tender offer commenced on or after the date hereof, provided,
however, that the term "15% Stockholder" shall include such Person from and
after the first date upon which (A) such Person, since the date of the
commencement of such plan or tender offer, shall have acquired Beneficial
Ownership of, in the aggregate, a number of Voting Shares of the Company equal
to 1% or more of the Voting Shares of the Company then outstanding and (B)such
Person, together with all Affiliates and Associates of such Person, shall
Beneficially Own 15% or more of the Voting Shares of the Company then
outstanding. In calculating the percentage of the outstanding Voting Shares that
are Beneficially Owned by a Person for purposes of this subsection (y), Voting
Shares that are Beneficially Owned by such Person shall be deemed outstanding,
and Voting Shares that are not Beneficially Owned by such Person and that are
subject to issuance upon the exercise or conversion of outstanding conversion
rights, exchange rights, rights (other than Rights), warrants or options shall
not be deemed outstanding. Any determination
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made by the Directors as to whether any Person is or is not a 15% Stockholder
shall be conclusive and binding upon all holders of Rights.
Section 2. Appointment of Rights Agent. The Company hereby appoints the
---------------------------
Rights Agent to act as agent for the Company in accordance with the terms and
conditions hereof, and the Rights Agent hereby accepts such appointment. The
Company may from time to time appoint such co-Rights Agents as it may deem
necessary or desirable.
Section 3. Issuance of Right Certificates.
------------------------------
(a) "Distribution Date" shall mean the date, after the date hereof, that is
midnight at the end of the tenth Business Day following the first to occur of
(i) the date of the commencement of, or the first public announcement of the
intent of any Person (other than the Company, any wholly-owned Subsidiary of
the Company, any employee benefit plan of the Company or of any Subsidiary of
the Company, or any Person holding Common Shares for or pursuant to the terms of
any such employee benefit plan) to commence, a tender offer or exchange offer,
the consummation of which would cause any Person to become a 15% Stockholder, or
(ii) the first 15% Ownership Date.
(b) Until the Distribution Date (i) the Rights shall be represented by
certificates for Common Shares (all of which certificates for Common Shares
shall be deemed to be Right Certificates) and not by separate Right
Certificates, (ii) the record holder of the Common Shares represented by each of
such Certificates shall be the record holder of the Rights represented thereby
and (iii) the Rights shall be transferable only in connection with the transfer
of Common Shares. Until the earliest of the Distribution Date, the Redemption
Date or the Expiration Date, the surrender for transfer of such certificates
for Common Shares shall also constitute the surrender for transfer of the
Rights represented thereby.
(c) As soon as practicable after the Distribution Date, and after
notification by the Company, the Rights Agent shall send by first-class,
postage-prepaid mail to each record holder of Common Shares, as of the Close of
Business on the Distribution Date, at the address of such holder shown on the
records of the Company, a Right Certificate substantially in the form of Exhibit
B hereto representing one Right for each Common Share so held. Notwithstanding
the foregoing, the Rights Agent shall not send any Right Certificate to any
Person known to the Rights Agent or Company to be a 15% Stockholder or any of
its Affiliates or Associates or to any Person if the Rights held by such Person
are Beneficially Owned by a 15% Stockholder or any of its Affiliates or
Associates. From
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and after the Distribution Date, the Rights shall be represented solely by such
Right Certificates and may only be transferred by the transfer of such Right
Certificates, and the holders of such Right Certificates, as listed in the
records of the Company or any transfer agent or registrar for such Rights,
shall be the record holders of such Rights. Any determination made by a majority
of the Board of Directors as to whether any Common Shares are or were
Beneficially Owned at any time by a 15% Stockholder or an Affiliate or Associate
of a 15% Stockholder shall be conclusive and binding upon all holders of Rights.
(d) As soon as practicable after the Record Date, the Company shall
send a copy of a Summary of the Rights in substantially the form attached hereto
as Exhibit C by first-class, postage-prepaid mail to each record holder of
Common Shares as of the Close of Business on the Record Date at the address of
such holder shown on the records of the Company.
(e) Certificates for Common Shares issued at any time after the Record
Date and prior to the earliest of the Distribution Date, the Redemption Date or
the Expiration Date, shall have impressed on, printed on, written on or
otherwise affixed to them the following legend:
This certificate also represents Rights that entitle the holder
hereof to certain rights as set forth in a Rights Agreement dated as
of January 29, 1990 by and between the Corporation and Manufacturers
Hanover Trust Company of California, as Rights Agent (the "Rights
Agreement"), the terms and conditions of which are hereby incorporated
herein by reference and a copy of which is on file at the principal
executive offices of the Corporation. Under certain circumstances
specified in the Rights Agreement, such Rights will be represented by
separate certificates and will no longer be represented by this
Certificate. Under certain circumstances specified in the Rights
Agreement, Rights beneficially owned by certain persons may become
null and void. The Corporation will mail to the record holder of this
certificate a copy of the Rights Agreement without charge promptly
following receipt of a written request therefor.
Section 4. Form of Right Certificates. The Right Certificates and the
form of assignment, including certificate, and the form of election to purchase,
including certificate, printed on the reverse thereof, when, as and if issued,
shall be substantially the same as Exhibit B hereto, and may have
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<PAGE>
such marks of identification or designation and such legends, summaries or
endorsements printed thereon as the Company may deem appropriate and as are not
inconsistent with the provisions of this Agreement, or as may be required to
comply with any applicable law or with any rule or regulation made pursuant
thereto or with any rule or regulation of any stock exchange upon which the
Rights or the securities of the Company issuable upon exercise of the Rights may
from time to time be listed, or to conform to usage. Subject to Section 22
hereof, Right Certificates, whenever issued, that are issued in respect of
Common Shares that were issued and outstanding as of the Close of Business on
the Distribution Date, shall be dated as of the Distribution Date.
Section 5. Countersignature and Registration.
---------------------------------
(a) The Right Certificates shall be executed on behalf of the Company
by any one of its Chairman of the Board, its Vice Chairman of the Board, its
President, any Vice President, its Chief Operating Officer, or its Chief
Financial Officer either manually or by facsimile signature, and may have
affixed thereto the Company's seal or a facsimile thereof attested by its
Secretary or any Assistant Secretary, either manually or by facsimile signature.
The Right Certificates shall be manually countersigned by the Rights Agent and
shall not be valid for any purpose unless so countersigned. In case any officer
of the Company who shall have signed any of the Right Certificates shall cease
to be such officer of the Company before countersignature by the Rights Agent
and issuance and delivery by the Company, such Right Certificates may
nevertheless be countersigned by the Rights Agent and issued and delivered by
the Company with the same force and effect as though the person who signed such
Right Certificates had not ceased to be such officer of the Company. Any Right
Certificate may be signed on behalf of the Company by any person who at the
actual date of such execution shall be a proper officer of the Company to sign
such Right Certificate, even though such person was not such an officer at the
date of the execution of this Agreement.
(b) Following the Distribution Date, the Rights Agent shall keep or
cause to be kept at its principal offices books for registration and transfer of
the Right Certificates issued hereunder. Such books shall show the names and
addresses of the respective holders of Right Certificates, the number of Rights
represented on its face by each Right Certificate and the date of each Right
Certificate.
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Section 6. Transfer, Split Up, Combination and Exchange of Right
-----------------------------------------------------
Certificates; Mutilated, Destroyed, Lost or Stolen Right Certificates.
- ---------------------------------------------------------------------
(a) Subject to the provisions of Sections 6(c), 7(d) and 14 hereof, at
any time after the Close of Business on the Distribution Date, and so long as
the Rights represented thereby remain outstanding, any one or more Right
Certificates may be transferred, split up, combined or exchanged for one or more
Right Certificates representing the same aggregate number of Rights as the Right
Certificates surrendered. Any registered holder desiring to transfer, split up,
combine or exchange one or more Right Certificates shall make such request in
writing delivered to the Rights Agent, and shall surrender the Right
Certificates to be transferred, split up, combined or exchanged at the office of
the Rights Agent with the form of assignment, including certificate, on the
reverse side thereof completed and duly executed, with signature guaranteed.
Thereupon, the Rights Agent shall countersign and deliver to the person entitled
thereto one or more Right Certificates, as so requested. The Company may require
payment of a sum sufficient to cover any tax or governmental charge that may be
imposed in connection with any transfer, split up, combination or exchange of
Right Certificates.
(b) Upon receipt by the Company and the Rights Agent of evidence
reasonably satisfactory to them of the loss, theft, destruction or mutilation of
a Right Certificate, and, in case of loss, theft or destruction, of indemnity or
security reasonably satisfactory to them and, at the Company's request,
reimbursement to the Company and the Rights Agent of all reasonable expenses
incidental thereto, and upon surrender to the Rights Agent and cancellation of
such Right Certificate if mutilated, the Company shall issue and deliver to the
Rights Agent for delivery to the record holder of such Right Certificate a new
Right Certificate of like tenor in lieu of such lost, stolen, destroyed or
mutilated Right Certificate.
(c) Notwithstanding anything to the contrary in this Section 6, the
Rights Agent shall not countersign and deliver a Right Certificate to any Person
if such Right Certificate represents, or would represent when held by such
Person, Rights that had become or would become null and void pursuant to
Section 7(d) hereof.
Section 7. Exercise of Rights.
------------------
(a) Until the Distribution Date, no Right may be exercised.
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<PAGE>
(b) Subject to Section 7(d) and (g) hereof and the other provisions of
this Agreement, at any time after the Close of Business on the Distribution Date
and prior to the Close of Business on the earlier of the Redemption Date or the
Expiration Date, the registered holder of any Right Certificate may exercise the
Rights represented thereby in whole or in part upon surrender of such Right
Certificate, with the form of election to purchase, including certificate, on
the reverse side thereof completed and duly executed, with signature guaranteed,
to the Rights Agent at the office of the Rights Agent at 300 South Grand Avenue,
Los Angeles, CA 90071, together with payment of the Exercise Price for each
Right exercised. Upon the exercise of an exercisable Right prior to the first
Triggering Event and payment of the Exercise Price in accordance with the
provisions of this Agreement, the holder of such Right shall be entitled to
receive, subject to adjustment as provided herein, one one-hundredth of a
Preferred Share.
(c) The Exercise Price for the exercise of each Right shall initially be
seventy-five dollars ($75.00) and shall be payable in lawful money of the United
States of America in accordance with Section 7(f) hereof. The Exercise Price and
the number of Preferred Shares (or, following the occurrence of a Section 13(a)
Event, Voting Shares and/or other securities) to be acquired upon exercise of a
Right shall be subject to adjustment from time to time as provided in Sections
7(e), 11 and 13 hereof and the other provisions of this Agreement.
(d) Notwithstanding anything in this Agreement to the contrary, from and
after the 15% Ownership Date, any Rights that are or were Beneficially Owned by
a 15% Stockholder or any Affiliate or Associate of a 15% Stockholder at any time
on or after the Distribution Date shall be null and void, and any holder of such
Rights (whether or not such holder is a 15% Stockholder or an Affiliate or
Associate of a 15% Stockholder) shall thereafter have no right to exercise such
Rights.
(e) Prior to the Distribution Date, if a majority of the Board of
Directors shall have determined that such action adequately protects the
interests of the holders of Rights, the Company may, in its discretion,
substitute for all or any portion of the Preferred Shares that are otherwise
issuable (after the Close of Business on the Distribution Date) upon the
exercise of each Right and payment of the Exercise Price, (i) cash, (ii) other
equity securities of the Company (iii) debt securities of the Company, (iv)
other assets or (v) any combination of the foregoing, in each case having an
aggregate value equal to the aggregate value of the Preferred Shares for which
substitution is made. Subject to Section 7(d) hereof, in the event that the
Company takes any action pursuant
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<PAGE>
to this Section 7(e), such action shall apply uniformly to all outstanding
Rights.
(f) Upon receipt of a Right Certificate representing exercisable
Rights, with the form of election to purchase, including certificate, completed
and duly executed, with signature guaranteed, accompanied by payment of the
Exercise Price for each Right to be exercised and an amount equal to any
applicable transfer tax required to be paid by the holder of such Right
Certificate in accordance with Section 9 hereof by certified check or cashier's
check payable to the order of the Company, the Rights Agent shall thereupon
promptly (i) requisition from the transfer agent of the Preferred Shares,
certificates for the number of Preferred Shares to be purchased, and the Company
hereby irrevocably authorizes such transfer agent to comply with all such
requests, and/or, as provided in Section 14 hereof, requisition from the
depositary agent described therein depositary receipts representing such number
of one-hundredths of a Preferred Share as are to be purchased (in which case
certificates for the Preferred Shares represented by such receipts shall be
deposited by the transfer agent with such depositary agent) and the Company
hereby directs such depositary agent to comply with such request, (ii) when
appropriate, requisition from the Company the amount of cash to be paid in lieu
of issuance of fractional Preferred Shares in accordance with Section 14 hereof,
(iii) after receipt of such certificates, depositary receipts or cash, cause the
same to be delivered to or upon the order of the registered holder of such Right
Certificate, registered in such name or names as may be designated by such
holder and (iv) when appropriate, after receipt thereof, deliver such cash to or
upon the order of the registered holder of such Right Certificate.
(g) Notwithstanding the foregoing provisions of this Section 7, the
exercisability of the Rights shall be suspended for such period as shall
reasonably be necessary for the Company to register under the Securities Act and
any applicable securities law of any jurisdiction the Preferred Shares to be
issued pursuant to the exercise of the Rights; provided, however, that nothing
contained in this Section 7 shall relieve the Company of its obligations under
Section 9(c) hereof.
(h) In case the registered holder of any Right Certificate shall
exercise less than all of the Rights represented thereby, a new Right
Certificate representing Rights equivalent to the Rights remaining unexercised
shall be issued by the Rights Agent to the registered holder of such Right
Certificate or to such holder's duly authorized assigns, subject to the
provisions of Section 14 hereof.
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<PAGE>
Section 8. Cancellation and Destruction of Right Certificates. All
--------------------------------------------------
Right Certificates surrendered for the purpose of exercise, transfer, split up,
combination or exchange shall, if surrendered to the Company or to any of its
agents, be delivered to the Rights Agent for cancellation or in canceled form,
or, if surrendered to the Rights Agent, shall be canceled by it, and no Right
Certificates shall be issued in lieu thereof except as expressly permitted by
this Agreement. The Company shall deliver to the Rights Agent for cancellation
and retirement, and the Rights Agent shall so cancel and retire, any other Right
Certificate purchased or acquired by the Company otherwise than upon the
exercise thereof. The Rights Agent shall deliver all canceled Right Certificates
to the Company or shall, at the written request of the Company, destroy such
canceled Right Certificates, and in such case shall deliver a certificate of
destruction thereof to the Company.
Section 9. Reservation and Availability of Capital Stock.
---------------------------------------------
(a) Subject to Section 7(e) hereof, the Company shall cause to be
reserved and kept available out of its authorized and unissued equity securities
(or out of its authorized and issued equity securities held in its treasury),
the number of such equity securities that will from time to time be sufficient
to permit the exercise in full of all outstanding Rights.
(b) In the event that any securities issuable upon exercise of the
Rights are listed on any national securities exchange, the Company shall use its
best efforts, from and after such time as the Rights become exercisable, to
cause all such securities issued or reserved for such issuance to be listed on
such exchange upon official notice of issuance upon such exercise.
(c) If necessary to permit the issuance of securities upon exercise of
the Rights, the Company shall use its best efforts, from and after the
Distribution Date, to register such securities under the Securities Act and any
applicable securities laws and to keep such registration effective until the
earlier of the Redemption Date or the Expiration Date.
(d) The Company shall take all such action as may be necessary to
ensure that all securities delivered upon exercise of the Rights shall, at the
time of delivery of the certificates for such securities (subject to payment of
the Exercise Price), be duly and validly authorized and issued and be fully paid
and nonassessable securities.
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<PAGE>
(e) The Company shall pay when due and payable any and all federal and
state transfer taxes and charges that may be payable in respect of the issuance
or delivery of the Right Certificates or of any securities upon the exercise of
Rights. The Company shall not, however, be required to pay any transfer tax that
may be payable in respect of any transfer or delivery of a Right Certificate to
a Person other than, or the issuance or delivery of a certificate for securities
in respect of a name other than that of, the registered holder of the Right
Certificate representing Rights surrendered for exercise, or to issue or deliver
any certificate for securities upon the exercise of any Right until any such tax
shall have been paid (any such tax being payable by the holder of such Right
Certificate at the time of surrender) or until it has been established to the
Company's satisfaction that no such tax is due.
(f) With respect to securities other than the Preferred Shares issuable
pursuant to Section 11(a)(iii) hereof, the foregoing covenants shall be
applicable only upon and following the occurrence of substitution pursuant to
Section 11(a)(iii).
Section 10. Securities Record Date. Each person in whose name any
----------------------
certificate for securities of the Company is issued upon the exercise of Rights
shall for all purposes be deemed to have become the holder of record of the
securities represented thereby on, and such certificate shall be dated, the date
upon which the Right Certificate representing such Rights was duly surrendered
and payment of the Exercise Price (and any applicable transfer taxes) was made;
provided, however, that if the date of such surrender and payment is a date upon
which the securities transfer books of the Company are closed, such person shall
be deemed to have become the record holder of such securities on, and such
certificate shall be dated, the next succeeding Business Day on which the
securities transfer books of the Company are open.
Section 11. Adjustment of Exercise Price, Number of Shares Issuable Upon
------------------------------------------------------------
Exercise of Rights or Number of Rights. The Exercise Price, the number and kind
- --------------------------------------
of securities that may be purchased upon exercise of a Right and the number of
Rights outstanding are subject to adjustment from time to time as provided in
this Section 11.
(a)(i) (A) In the event that the Company shall at any time after the Close
of Business on the Record Date and prior to the Close of Business on the earlier
of the Redemption Date or the Expiration Date (1) declare or pay any dividend on
the Common Shares payable in Common Shares, Preferred Shares or other Voting
Shares, (2) subdivide the
14
<PAGE>
outstanding Common Shares, (3) combine the outstanding Common Shares into a
smaller number of Common Shares, or (4) issue Common Shares, Preferred
Shares or other Voting Shares in a reclassification of the Common Shares
(including any such reclassification in connection with a consolidation or
merger in which the Company is the continuing or surviving corporation),
then and in each such event, the number and kind of Preferred Shares or
other securities issuable upon the exercise of a Right on such date shall
be appropriately and proportionately adjusted, to the extent practicable,
so that the value of the Preferred Shares or other such securities
purchasable upon exercise of a Right is not diminished or increased. (B) In
the event that the Company shall at any time after the Close of Business on
the Record Date and prior to the Close of Business on the earlier of the
Redemption Date or the Expiration Date (1) declare or pay any dividend on
the Preferred Shares payable in Common Shares, Preferred Shares or other
Voting Shares, (2) subdivide the outstanding Preferred Shares, (3) combine
the outstanding Preferred Shares into a smaller number of Preferred Shares,
or (4) issue Preferred Shares or other Voting Shares in a reclassification
of the Preferred Shares (including any such reclassification in connection
with a consolidation or merger in which the Company is the continuing or
surviving corporation), then and in each such event, the number and kind of
Preferred Shares or other securities issuable upon the exercise of a Right
on such date shall be proportionately adjusted so that the holder of any
Right exercised on or after such date shall be entitled to receive, upon
the exercise thereof and payment of the Exercise Price, the aggregate
number and kind of Preferred Shares or other securities or other property,
as the case may be, that, if such Right had been exercised immediately
prior to such date and at a time when such right was exercisable and the
transfer books of the Company were open, such holder would have owned upon
such exercise and would have been entitled to receive by virtue of such
dividend, subdivision, combination or reclassification. If an event occurs
that would require an adjustment under both this Section 11(a)(i) and
Section 11(a)(ii) hereof, the adjustment provided for in this Section
11(a)(i) shall be in addition to, and shall be made prior to, any
adjustment required pursuant to Section 11(a)(ii) hereof.
(ii) In the event neither the Redemption Date nor the Expiration Date
shall have occurred, after the tenth Business Day following each and
every 15% Ownership
15
<PAGE>
Date, proper provision shall be made so that except as provided in Section
7(d) hereof, each holder of a Right shall thereafter have the right to
receive, upon the exercise thereof in accordance with the terms of this
Agreement and payment of the then current Exercise Price, such number of
one-hundredths of a Preferred Share of the Company as shall equal the
result obtained by multiplying the then current Exercise Price by the then
number of one one-hundredths of a Preferred Share for which a Right was
exercisable or would have been exercisable if the distribution Date had
occurred on the Business Day immediately preceding the date of such tenth
Business Day following the 15% Ownership Date, and dividing that product by
50% of the Current Market Price (determined pursuant to Section 11(e)
hereof) of one one-hundredth of a Preferred Share on the date of occurrence
of the relevant event (such number of shares being hereinafter referred to
as the "Adjustment Shares"). Successive adjustments shall be made pursuant
to this paragraph each time such an event occurs.
(iii) In the event that the aggregate number of Preferred Shares that
are authorized by the Company's Certificate of Incorporation but not
outstanding or reserved for issuance for purposes other than upon exercise
of the Rights shall at any time be less than the aggregate number of
Adjustment Shares issuable upon the exercise in full of the Rights in
accordance with Section 11(a)(ii) hereof (the excess of such number of
Adjustment Shares over and above such number of Preferred Shares being
hereinafter referred to as the "Unavailable Adjustment Shares"), the
Company shall substitute for the pro rata portion of the Unavailable
Adjustment Shares that would otherwise be issuable thereafter upon the
exercise of each Right and payment of the Exercise Price, (A) cash,
(B) other equity securities of the Company, (C) debt securities of the
Company, (D) other assets or (E) any combination of the foregoing, in
each case having an aggregate value equal to the aggregate value of the
Unavailable Adjustment Shares for which substitution is made. Subject to
Section 7(d) hereof, in the event that the Company takes any action
pursuant to this Section 11(a)(iii), such action shall apply uniformly to
all outstanding Rights.
(b) In the event that the Company shall, at any time after the Close of
Business on the Record Date and prior to the Close of Business on the earlier of
the Redemption Date or the Expiration Date, fix a record date prior to the
earlier of the Redemption Date or the Expiration Date for the issuance of
rights, options or warrants to all holders of Preferred Shares
16
<PAGE>
or Common Shares entitling them initially to subscribe for or purchase Preferred
Shares (or shares other than Common Shares having the same rights, privileges
and preferences as the Preferred Shares ("Preferred Share Equivalents")) or
securities convertible into Preferred Shares or Preferred Share Equivalents, at
a price per Preferred Share or Preferred Share Equivalent (or having a
conversion price per share, if a security convertible into Preferred Shares or
Preferred Share Equivalents) less than the Current Market Price per Preferred
Share on such record date, then the Exercise Price to be in effect after such
record date shall be determined by multiplying the Exercise Price in effect
immediately prior to such record date by a fraction, the numerator of which
shall be equal to the sum of the aggregate number of Common Shares and
one-hundredths of Preferred Shares outstanding on such record date plus the
number of one-hundredths of Preferred Shares that the aggregate offering price
of the total number of Preferred Shares and/or Preferred Share Equivalents to
be so offered (and/or the aggregate initial conversion price of the convertible
securities to be so offered) would purchase at such Current Market Price, and
the denominator of which shall be equal to the aggregate number of Common Shares
and one-hundredths of Preferred Shares outstanding on such record date plus the
number of additional one-hundredths of Preferred Shares and/or Preferred Share
Equivalents to be offered for subscription or purchase (or into which the
convertible securities to be so offered are initially convertible); provided,
however, that if such rights, options or warrants are not exercisable
immediately upon issuance but become exercisable only upon the occurrence of a
specified event or the passage of a specified period of time, then the
adjustment to the Exercise Price shall be made and become effective only upon
the occurrence of such event or such passage of time, and such adjustment shall
be made as if the record date for the issuance of such rights, options or
warrants had been the Business Day immediately preceding the date upon which
such rights, options or warrants became exercisable. Preferred Shares owned by
or held for the account of the Company shall not be deemed outstanding for the
purpose of any such computation. Such adjustment to the Exercise Price shall be
made successively whenever such a record date is fixed, and in the event that
such rights or warrants are not so issued, the Exercise Price shall be adjusted
to be the Exercise Price that would then be in effect if such record date had
not been fixed.
(c) In the event that the Company shall, at any time after the Close of
Business on the Record Date and prior to the Close of Business on the earlier of
the Redemption Date or the Expiration Date, fix a record date prior to the
earlier of the Redemption Date or the Expiration Date for the issuance of
rights, options or warrants to all holders of Common Shares or Preferred Shares
entitling them initially to subscribe for or
17
<PAGE>
purchase Common Shares (or shares other than Preferred Shares having the same
rights, privileges and preferences as the Common Shares ("Common Share
Equivalents")) or securities convertible into Common Shares or Common Share
Equivalents, at a price per Common Share or Common Share Equivalent (or having a
conversion price per share, if a security convertible into Common Shares or
Common Share Equivalents) less than the Current Market Price per Common Share on
such record date, then the Exercise Price to be in effect after such record date
shall be determined by multiplying the Exercise Price in effect immediately
prior to such record date by a fraction, the numerator of which shall be equal
to the sum of the aggregate number of Common Shares and one-hundredths of
Preferred Shares outstanding on such record date plus the number of Common
Shares that the aggregate offering price of the total number of Common Shares
and/or Common Share Equivalents to be so offered (and/or the aggregate initial
conversion price of the convertible securities to be so offered) would purchase
at such Current Market Price, and the denominator of which shall be equal to the
aggregate number of Common Shares and one-hundredths of Preferred Shares
outstanding on such record date plus the number of additional Common Shares
and/or Common Share Equivalents to be offered for subscription or purchase (or
into which the convertible securities to be so offered are initially
convertible); provided, however, that if such rights, options or warrants are
not exercisable immediately upon issuance but become exercisable only upon the
occurrence of a specified event or the passage of a specified period of time,
then the adjustment to the Exercise Price shall be made and become effective
only upon the occurrence of such event or such passage of time, and such
adjustment shall be made as if the record date for the issuance of such rights,
options or warrants had been the Business Day immediately preceding the date
upon which such rights, options or warrants became exercisable. Common Shares
owned by or held for the account of the Company shall not be deemed outstanding
for the purpose of any such computation. Such adjustment to the Exercise Price
shall be made successively whenever such a record date is fixed, and in the
event that such rights or warrants are not so issued, the Exercise Price shall
be adjusted to be the Exercise Price that would then be in effect if such record
date had not been fixed.
(d) In the event that the Company shall, at any time after the Close of
Business on the Record Date and prior to the Close of Business on the earlier of
the Redemption Date or the Expiration Date, fix a record date for the making of
a distribution to all holders of Common Shares or Preferred Shares (including
any such distribution made in connection with a consolidation or merger in which
the Company is the surviving corporation) of securities or assets (other than a
distribution of securities for which an adjustment is required under Section
11(a)(i) or (b) hereof or a regular quarterly cash
18
<PAGE>
dividend), the Exercise Price to be in effect after such record date shall be
determined by multiplying the Exercise Price in effect immediately prior to such
record date by (i) in the case of a distribution only to holders of Common
Shares, a fraction, the numerator of which shall be equal to the excess of the
Current Market Price per Common Share on such record date over and above the
fair market value of the portion of the securities or assets to be so
distributed with respect to one Common Share, and the denominator of which shall
be equal to such Current Market Price per Common Share; (ii) in the case of an
equal distribution per share to holders of each Common Share and each one
one-hundredth of a Preferred Share, a fraction, the numerator of which shall be
equal to the excess of the Current Market Price per Preferred Share on such
record date over and above the fair market value of the portion of the
securities or assets to be so distributed with respect to one Preferred Share,
and the denominator of which shall be equal to such Current Market Price per
Preferred Share; or (iii) in the case of a distribution only to holders of
Preferred Shares, or in the case of a distribution to holders of Preferred
Shares and Common Shares in which holders of Preferred Shares receive a greater
distribution per one one-hundredth of a Preferred Share than holders of Common
Shares receive per Common Share, a fraction, the numerator of which shall be the
excess of the Current Market Price per Common Share on such record date over
quotient obtained by dividing the fair market value of the total distribution by
the aggregate number of Common Shares and one-hundredths of Preferred Shares
outstanding on such record date, and the denominator of which shall be equal to
such Current Market Price per Common Share. Such adjustments shall be made
successively whenever such a record date is fixed, and in the event that such a
distribution is not so made, the Exercise Price shall be adjusted to be the
Exercise Price that would then be in effect if such record date had not been
fixed.
(e) For the purpose of any computation under this Section 11, if the
Preferred Shares are not publicly held or so listed and traded, the "Current
Market Price" per Preferred Share shall be conclusively deemed to be the Current
Market Price per Common Share multiplied by 100.
(f) No adjustment in the Exercise Price shall be required unless such
adjustment would require an increase or decrease of at least 1% in the Exercise
Price; provided, however, that any adjustments that by reason of this Section
11(f) are not required to be made shall be cumulated and taken into account in
any subsequent adjustment. All calculations under this Section 11 shall be made
to the nearest cent or to the nearest ten-thousandth of a Common Share or other
share or ten-millionth of a Preferred Share, as the case may be.
19
<PAGE>
(g) If, as a result of an adjustment made pursuant to Section 11(a) hereof,
the holder of any Right thereafter exercised shall become entitled to receive
any securities of the Company other than Preferred Shares, the number of such
other securities so receivable upon exercise of any Right shall be subject to
adjustment from time to time in a manner and on terms as nearly equivalent as
practicable to the provisions with respect to Preferred Shares contained in this
Section 11, and the other provisions of this Agreement with respect to Preferred
Shares shall apply on like terms to any such other securities.
(h) All Rights originally issued by the Company subsequent to any
adjustment made to the Exercise Price hereunder shall represent the right to
purchase, at the adjusted Exercise Price, the number of one-hundredths of a
Preferred Share purchasable from time to time hereunder upon exercise of the
Rights, all subject to further adjustment as provided herein.
(i) Unless the Company shall have exercised its election as provided in
Section 11(j) below, upon each adjustment of the Exercise Price as a result of
the calculations made in Sections 11(b), (c) and (d) hereof, each Right
outstanding immediately prior to the making of such adjustment shall thereafter
represent the right to purchase, at the adjusted Exercise Price, that number of
one-hundredths of a Preferred Share (calculated to the nearest one
hundred-thousandth of a Preferred Share) obtained by multiplying (i) the number
of one-hundredths of a Preferred Share purchasable upon the exercise of one
Right immediately prior to such adjustment of the Exercise Price by (ii) the
Exercise Price in effect immediately prior to such adjustment, and dividing
the product so obtained by the Exercise Price in effect immediately after such
adjustment.
(j) The Company may elect, on or after the date of any adjustment of the
Exercise Price, to adjust the number of Rights instead of making any adjustment
in the number of Preferred Shares purchasable upon the exercise of a Right. Each
of the Rights outstanding after such adjustment of the number of Rights shall
be exercisable for the number of one-hundredths of a Preferred Share for which a
Right was exercisable immediately prior to such adjustment. Each Right held of
record prior to such adjustment of the number of Rights shall become that number
of Rights (calculated to the nearest one ten-thousandth) obtained by dividing
the Exercise Price in effect immediately prior to the adjustment of the Exercise
Price by the Exercise Price in effect immediately after such adjustment of the
Exercise Price. The Company shall make a
20
<PAGE>
public announcement of its election to adjust the number of Rights pursuant to
this Section 11(j), indicating the record date for the adjustment and, if known
at the time, the amount of the adjustment to be made. This record date may be
the date on which the Exercise Price is adjusted or any day thereafter, but, if
separate Right Certificates have been issued, it shall be at least 10 days after
the date of such public announcement. If separate Right Certificates have been
issued, upon each adjustment of the number of Rights pursuant to this Section
11(j), the Company shall, as promptly as practicable, cause to be distributed to
holders of record of Right Certificates on such record date Right Certificates
representing, subject to Section 14 hereof, the additional Rights to which such
holders shall be entitled as a result of such adjustment or, at the option of
the Company, cause to be distributed to such holders of record in substitution
and replacement for the Right Certificates held by such holders prior to the
date of such adjustment, and upon surrender thereof if required by the Company,
new Right Certificates representing all the Rights to which such holders shall
be entitled after such adjustment. Right Certificates to be so distributed shall
be issued, executed and countersigned in the manner provided for herein (and may
bear, at the option of the Company, the adjusted Exercise Price) and shall be
registered in the names of the holders of record of Right Certificates on the
record date specified in the public announcement.
(k) Irrespective of any adjustment or change in the Exercise Price or
the number of one-hundredths of a Preferred Share issuable upon the exercise of
one Right, the Right Certificates theretofore and thereafter issued may continue
to express the Exercise Price per one one-hundredth of a Preferred Share and the
number of Preferred Shares issuable upon the exercise of one Right that were
expressed in the initial Right Certificates issued hereunder.
(l) Before taking any action that would cause an adjustment reducing
the Exercise Price below one one-hundredth of the then par value, if any, of the
Preferred Shares issuable upon exercise of the Rights, the Company shall take
any corporate action that may, in the advice or opinion of its counsel, be
necessary in order that the Company may validly and legally issue fully paid and
nonassessable one one-hundredths of a Preferred Share at such adjusted Exercise
Price.
(m) In any case in which this Section 11 shall require that an
adjustment in the Exercise Price be made effective as of a record date for a
specified event, the Company may elect to defer, until the occurrence of such
event, the issuance to the holder of any Right exercised after such
21
<PAGE>
record date of the number of one-hundredths of a Preferred Share and other
capital stock or securities of the Company, if any, issuable upon such exercise
over and above the number of one-hundredths of a Preferred Share and other
capital stock or securities of the Company, if any, issuable upon such exercise
on the basis of the Exercise Price in effect prior to such adjustment; provided,
however, that the Company shall deliver to such holder a due bill or other
appropriate instrument representing such holder's right to receive such
additional shares upon the occurrence of the event requiring such adjustment.
(n) Anything in this Section 11 to the contrary notwithstanding, the
Company shall be entitled (but shall not be obligated) to make such further
adjustments in the number of one-hundredths of a Preferred Share that may be
purchased upon exercise of one Right, and such further adjustments in the
Exercise Price, in addition to those adjustments expressly required by this
Section 11, as and to the extent that it in its sole discretion shall determine
to be advisable in order that any (i) consolidation or subdivision of the Common
Shares or Preferred Shares, (ii) issuance wholly for cash of any Common Shares
or Preferred Shares at less than the Current Market Price thereof, (iii)
issuance wholly for cash of Common Shares or Preferred Shares or securities that
by their terms are convertible into or exchangeable for Common Shares or
Preferred Shares, (iv) dividends on Preferred Shares or Common Shares payable in
Preferred Shares or Common Shares or (v) issuance of rights, options or warrants
referred to Section 11(b) and (c) hereof, hereafter made by the Company to
holders of its Common Shares or Preferred Shares shall not be taxable to such
stockholders.
Section 12. Certificate of Adjusted Exercise Price or Number of Shares
----------------------------------------------------------
Issuable Upon Exercise of Rights. Whenever an adjustment is made as provided in
- --------------------------------
Section 11 hereof, the Company shall promptly (a) prepare a certificate setting
forth such adjustment and a brief statement of the facts giving rise to such
adjustment, (b) file with the Rights Agent and with each transfer agent for the
securities issuable upon exercise of the Rights a copy of such certificate and
(c) mail a brief summary thereof to each holder of Rights in accordance with
Section 26 hereof. Notwithstanding the foregoing sentence, the failure of the
Company to make such certification or to give such notice shall not affect the
validity or the force and effect of such adjustment. Any adjustment to be made
pursuant to Sections 11 or 13 hereof shall be effective as of the date of the
event giving rise to such adjustment.
22
<PAGE>
Section 13. Consolidation, Merger, or Sale or Transfer of Assets or
-------------------------------------------------------
Earning Power.
- -------------
(a) In the event (a "Section 13(a) Event") that, at any time on or after
the 15% Ownership Date and prior to the earlier of the Redemption Date or the
Expiration Date, (x) the Company shall, directly or indirectly, consolidate with
or merge with and into any other Person and the Company shall not be the
continuing or surviving corporation in such consolidation or merger, (y) any
Person shall, directly or indirectly, consolidate with or merge with and into
the Company and the Company shall be the continuing or surviving corporation in
such merger and, in connection with such merger, all or part of the Common
Shares shall be changed into or exchanged for stock or other securities of any
Person or cash or any other property, or (z) the Company and/or any one or more
of its Subsidiaries shall, directly or indirectly, sell or otherwise transfer,
in one or more transactions (other than transactions in the ordinary course of
business), assets or earning power aggregating more than 50% of the assets or
earning power of the Company and its Subsidiaries (taken as a whole) to any
Person or Persons other than the Company or one or more of its wholly-owned
Subsidiaries (such Persons, together with the Persons described in clauses (x)
and (y) above shall be collectively referred to in this Section 13 as the
"Surviving Person"), then, and in each such case, proper provision shall be made
so that:
(i) except as provided in Section 7(d) hereof, each holder of a
Right shall thereafter have the right to receive, upon the exercise thereof
in accordance with the terms of this Agreement and payment of the then
current Exercise Price, that number of validly authorized and issued, fully
paid and nonassessable Voting Shares of the Surviving Person as shall be
determined by multiplying the then current Exercise Price by the number of
one-hundredths of a Preferred Share for which one Right was or would have
been exercisable if the Distribution Date had occurred on the Business Day
immediately preceding the date of such Section 13(a) Event, and the
denominator of which is 50% of the Current Market Price per Share of the
Voting Shares of the Surviving Person on the date of consummation of such
Section 13(a) Event;
(ii) the Surviving Person shall thereafter be liable for and shall
assume, by virtue of such consolidation, merger, sale or transfer, all the
obligations and duties of the Company pursuant to this Agreement;
(iii) the term, "Company," shall thereafter be deemed to refer to the
Surviving Person; and
23
<PAGE>
(iv) the Surviving Person shall take such steps (including, but not
limited to, the reservation of a sufficient number of shares of its Voting
Shares in accordance with Section 9 hereof) in connection with such
consummation as may be necessary to ensure that the provisions hereof shall
thereafter be applicable to its Voting Shares thereafter deliverable upon
the exercise of Rights.
(b) Notwithstanding the foregoing, if the Section 13(a) Event is the sale
or transfer in one or more transactions of assets or earning power aggregating
more than 50% of the assets or earning power of the Company and its Subsidiaries
(taken as a whole), but less than 100% thereof, then each Person acquiring all
or a portion thereof shall assume the obligations of the Company as to a
fraction of each of the Rights equal to the fraction of the assets of the
Company and its Subsidiaries (taken as a whole) acquired by such Person, and the
obligations of the Company as to the remaining fraction of each of the Rights
shall continue to be the obligations of the Company.
(c) The Company shall not consummate a Section 13(a) Event unless prior
thereto the Company and the Surviving Person shall have executed and delivered
to the Rights Agent a supplemental agreement confirming that such Surviving
Person shall, upon consummation of such Section 13(a) Event, assume this
Agreement in accordance with Section 13 hereof, that all rights of first refusal
or preemptive rights in respect of the issuance of shares of the Voting Shares
of such Surviving Person upon exercise of outstanding Rights have been waived
and that such Section 13(a) Event shall not result in a default by such
Surviving Person under this Agreement, and further providing that, as soon as
practicable after the date of consummation of such Section 13(a) Event, such
Surviving Person shall:
(i) prepare and file a registration statement under the Securities
Act with respect to the Rights and the securities purchasable upon exercise
of the Rights on an appropriate form, use its best efforts to cause such
registration statement to become effective as soon as practicable after such
filing, use its best efforts to cause such registration statement to remain
effective (with a prospectus at all times meeting the requirements of the
Securities Act) until the Expiration Date, and similarly comply with all
applicable state securities laws;
(ii) use its best efforts to list (or continue the listing of) the
Rights and the Voting Shares of the Surviving Person purchasable upon
exercise of the Rights on a national securities exchange, or use its best
efforts to
24
<PAGE>
cause the Rights and such Voting Shares to meet the eligibility requirements
for quotation on NASDAQ; and
(iii) deliver to holders of the Rights historical financial
statements for such Surviving Person that comply in all respects with the
requirements for registration on Form 10 (or any successor form) under the
Exchange Act.
(d) In the event that at any time after the occurrence of the tenth
Business Day following a 15% Ownership Date some or all of the Rights shall
not have been exercised pursuant to Section 11 hereof prior to the date of a
Section 13(a) Event, such Rights shall thereafter be exercisable only in the
manner described in Section 13(a) hereof (without taking into account any prior
adjustment required by Section 11(a)). In the event that a 15% Ownership Date
occurs on or after the date of a Section 13(a) Event, Rights shall not be
exercisable pursuant to Section 11 hereof but shall instead be exercisable
pursuant to, and only pursuant to, this Section 13.
(e) The provisions of this Section 13 shall apply to each successive
merger, consolidation, sale or other transfer constituting a Section 13(a)
Event.
Section 14. Fractional Rights and Fractional Shares.
---------------------------------------
(a) The Company shall not be required to issue fractions of Rights or to
distribute Right Certificates that represent fractional Rights. If the Company
shall determine not to issue such fractional Rights, the Company shall pay to
the registered holders of the Right Certificates with respect to which such
fractional Rights would otherwise be issuable, at the time such Rights are
exercised as provided herein, an amount in cash equal to the same fraction of
the Current Market Value of a whole Right. For the purposes of this Section
14(a), the Current Market Value of a whole Right shall be the Closing Price per
Right for the Trading Day immediately prior to the date on which such fractional
Rights would have been otherwise issuable.
(b) The Company shall not be required to issue fractions of Preferred
Shares (other than fractions that are integral multiples of one one-hundredth of
a Preferred Share) upon exercise of Rights, or to distribute certificates that
represent fractional Preferred Shares (other than fractions that are integral
multiples of one one-hundredth of a Preferred Share). Fractions of Preferred
Shares in integral multiples of one one-hundredth of a Preferred Share may, at
the election of the Company, be represented by depositary receipts, pursuant to
an appropriate agreement between the Company and a depositary selected by it,
provided that such agreement shall provide that
25
<PAGE>
the holders of such depositary receipts shall have all the rights, privileges
and preferences to which they are entitled as beneficial owners of Preferred
Shares. If the Company shall determine not to issue fractional Preferred Shares
(or depositary receipts in lieu of Preferred Shares), the Company shall pay to
the registered holders of Right Certificates with respect to which such
fractional Preferred Shares would otherwise be issuable, at the time such Rights
are exercised as provided herein, an amount in cash equal to the same fraction
of the Current Market Value of a whole Preferred Share, as the case may be, or
purposes of this Section 14(b), the Current Market Value of a whole Preferred
Share shall be the Closing Price per share for the Trading Day immediately prior
to the date of such exercise.
(c) The holder of a Right, by the acceptance of such Right, expressly
waives such holder's right to receive any fractional Rights or any fractional
Preferred Shares upon exercise of such Right, except as permitted by this
Section 14.
Section 15. Rights of Action. All rights of action in respect of this
----------------
Agreement, except the rights of action given to the Rights Agent under Section
18 hereof, are vested in the respective registered holders of the Right
Certificates and certificates for Common Shares representing Rights, and any
registered holder of any Right Certificate and of such certificate for Common
Shares, without the consent of the Rights Agent or of the holder of any other
Right Certificate or any other certificate for Common Shares may, in such
holder's own behalf and for such holder's own benefit, enforce, and may
institute and maintain any suit, action or proceeding against the Company to
enforce, or otherwise act in respect of, such holder's right to exercise the
Rights represented by such Right Certificate or by such certificate for Common
Shares in the manner provided in such Certificate and in this Agreement.
Without limiting the foregoing or any remedies available to the holders of
Rights, it is specifically acknowledged that the holders of Rights would not
have an adequate remedy at law for any breach of this Agreement and shall be
entitled to specific performance, and injunctive relief against actual or
threatened violations, of the obligations of any Person under this Agreement.
Section 16. Agreement of Right Holders. Every holder of a Right, by
--------------------------
accepting the same, consents and agrees with the Company and the Rights Agent
and every other holder of a Right that:
(a) prior to the Distribution Date, the Rights shall be represented by
certificates for Common Shares registered in the name of the holders of such
Common Shares (which certificates for Common Shares shall also constitute Right
26
<PAGE>
Certificates), and each such Right shall be transferable only in connection with
the transfer of such Common Shares;
(b) after the Distribution Date, the Right Certificates shall only be
transferable on the registry books of the Rights Agent if surrendered at the
principal office of the Rights Agent, duly endorsed or accompanied by a proper
instrument of transfer; and
(c) the Company and the Rights Agent may deem and treat the person in whose
name the Right Certificate is registered as the absolute owner thereof and of
the Rights represented thereby (notwithstanding any notations of ownership or
writing on the Right Certificate by anyone other than the Company or the Rights
Agent) for all purposes whatsoever, and neither the Company nor the Rights Agent
shall be affected by any notice to the contrary.
Section 17. Right Holder and Right Certificate Holder Not Deemed a
------------------------------------------------------
Stockholder. No holder, as such, of any Right or Right Certificate shall
- -----------
be entitled to vote, receive dividends or be deemed for any purpose the holder
of the securities of the Company that may at any time be issuable upon the
exercise of the Rights represented thereby, nor shall anything contained herein
or in any Right Certificate be construed to confer upon the holder of any Right
or Right Certificate, as such, any of the rights of a stockholder of the Company
or any right to vote for the election of directors or upon any matter submitted
to stockholders at any meeting thereof, to give or withhold consent to any
corporate action, to receive notice of meetings or other actions affecting
stockholders (except as provided in Section 25 hereof), or to receive dividends
or subscription rights, or otherwise, in each case until such Right or the
Rights represented by such Right Certificate shall have been exercised in
accordance with the provisions hereof.
Section 18. Concerning the Rights Agent.
---------------------------
(a) The Company agrees to pay to the Rights Agent as compensation for all
services rendered by it hereunder reasonable and customary fees and expenses.
The Company also agrees to indemnify the Rights Agent for, and to hold it
harmless against, any loss, liability, or expense, incurred without negligence,
bad faith or willful misconduct on the part of the Rights Agent, for anything
done or omitted by the Rights Agent in connection with the acceptance and
administration of this Agreement, including the costs and expenses of defending
against any claim of liability.
(b) The Rights Agent shall be protected and shall incur no liability for or
in respect of any action taken, suffered or omitted by it in connection with its
administration
27
<PAGE>
of this Agreement in reliance upon any Right Certificate or certificate for the
Preferred Shares or Common Shares or for other securities of the Company,
instrument of assignment or transfer, power of attorney, endorsement,
affidavit, letter, notice, direction, consent, certificate, statement, or other
paper or document believed by it to be genuine and to be signed, executed and,
where necessary, verified or acknowledged, by the proper person or persons, or
otherwise upon the advice of its counsel as set forth in Section 20 hereof.
Section 19. Merger or Consolidation or Change of Name of Rights Agent.
---------------------------------------------------------
(a) Any corporation into which the Rights Agent or any successor
Rights Agent may be merged or with which it may be consolidated, or any
corporation resulting from any merger or consolidation to which the Rights Agent
or any successor Rights Agent shall be a party, or any corporation succeeding to
the corporate trust or stock transfer business of the Rights Agent or any
successor Rights Agent, shall be the successor to the Rights Agent under this
Agreement without the execution or filing of any paper or any further act on the
part of any of the parties hereto, provided that such corporation would be
eligible for appointment as a successor Rights Agent under the provisions of
Section 21 hereof. If, at the time such successor Rights Agent shall succeed to
the agency created by this Agreement, any of the Right Certificates shall have
been countersigned but not delivered, any such successor Rights Agent may adopt
the countersignature of the predecessor Rights Agent and deliver such Right
Certificates so countersigned; and if at that time any of the Right Certificates
shall not have been countersigned, any successor Rights Agent may countersign
such Right Certificates either in the name of the predecessor Rights Agent or in
the name of the successor Rights Agent; and in all such cases such Right
Certificates shall have the full force provided in such Right Certificates, and
in this Agreement.
(b) If at any time the name of the Rights Agent shall be changed, and
at such time any of the Right Certificates shall have been countersigned but not
delivered, the Rights Agent may adopt the countersignature under its prior name
and deliver Right Certificates so countersigned; and if at that time any of the
Right Certificates shall not have been countersigned, the Rights Agent may
countersign such Right Certificates either in its prior name or in its changed
name; and in all such cases such Right Certificates shall have the full force
provided in such Right Certificates and in this Agreement.
28
<PAGE>
Section 20. Duties of Rights Agent. The Rights Agent undertakes the duties
----------------------
and obligations imposed by this Agreement upon the following terms and
conditions, by all of which the Company and the holders of Right Certificates,
by their acceptance of the Rights, shall be bound:
(a) The Rights Agent may consult with legal counsel (who may be legal
counsel for the Company), and the advice or opinion of such counsel shall be
full and complete authorization and protection to the Rights Agent as to any
action taken or omitted by it in good faith and in accordance with such advice
or opinion.
(b) Whenever in the performance of its duties under this Agreement the
Rights Agent shall deem it necessary or desirable that any fact or matter be
proved or established by the Company prior to taking or suffering any action
hereunder, such fact or matter (unless other evidence in respect thereof be
herein specifically prescribed) may be deemed to be conclusively proved and
established by a certificate signed by any one of the Chairman of the Board, the
Vice Chairman of the Board, the President, any Vice President, the Chief
Operating Officer, the Chief Financial Officer, the Treasurer or the Secretary
of the Company and delivered to the Rights Agent; and such certificate shall be
full authorization to the Rights Agent for any action taken or suffered in good
faith by it under the provisions of this Agreement in reliance upon such
certificate.
(c) The Rights Agent shall be liable hereunder to the Company and any other
Person only for its own negligence, bad faith or willful misconduct.
(d) The Rights Agent shall not be liable for or by reason of any of the
statements of fact or recitals contained in this Agreement, or in the Right
Certificates (except its countersignature thereof), or be required to verify the
same, but all such statements and recitals are and shall be deemed to have been
made by the Company only.
(e) The Rights Agent shall not be under any responsibility in respect of
the validity of this Agreement or the execution and delivery hereof (except the
due authorization, execution and delivery hereof by the Rights Agent) or in
respect of the validity or execution of any Right Certificate (except its
countersignature thereof); nor shall it be responsible for any breach by the
Company of any covenant or condition contained in this Agreement or in any Right
Certificate; nor shall it be responsible for any change in the exercisability of
the Rights (including the Rights becoming null and void pursuant to Section
7(d) or any adjustment in the terms of the Rights (including the manner, method
or amount
29
<PAGE>
thereof) provided for in Sections 7, 11, 13 and 23 hereof, or the ascertaining
of the existence of facts that would require any such change or adjustment
(except with respect to the exercise of Rights represented by Right Certificates
after actual notice that such change or adjustment is required); nor shall it by
any act hereunder be deemed to make any representation or warranty as to the
authorization or reservation of any Preferred Shares or Common Shares or other
securities to be issued pursuant to this Agreement or any Right Certificate, or
as to whether any Preferred Shares or Common Shares or other securities will,
when issued, be validly authorized and issued, fully paid and nonassessable.
(f) The Company agrees that it will perform, execute, acknowledge and
deliver or cause to be performed, executed, acknowledged and delivered all such
further and other acts, instruments and assurances as may reasonably be required
by the Rights Agent for the carrying out or performing by the Rights Agent of
the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from any
one of the Chairman of the Board, the Vice Chairman, the President, any Vice
President, the Chief Operating Officer, the Chief Financial Officer, the
Secretary, any Assistant Secretary or the Treasurer of the Company, and to apply
to such officers for advice or instructions in connection with its duties, and
it shall not be liable for any action taken or suffered to be taken by it in
good faith in accordance with instructions of any such officer.
(h) The Rights Agent and any stockholder, director, officer or employee of
the Rights Agent may buy, sell or deal in any of the Rights or other securities
of the Company or become pecuniarily interested in any transaction in which the
Company may be interested, or contract with or lend money to the Company or
otherwise act as fully and freely as though it were not the Rights Agent under
this Agreement. Nothing herein shall preclude the Rights Agent from acting in
any other capacity for the Company or for any other legal entity.
(i) The Rights Agent may execute and exercise any of the rights or powers
hereby vested in it or perform any duty hereunder either itself or by or through
its attorneys or agents, and the Rights Agent shall not be answerable or
accountable for any act, default, neglect or misconduct of any such attorneys or
agents or for any loss to the Company resulting from any such act, default,
neglect or misconduct, provided that reasonable care was exercised in the
selection and continued employment thereof.
30
<PAGE>
Section 21. Change of Rights Agent. The Rights Agent or any successor
----------------------
Rights Agent may resign and be discharged from its duties under this Agreement
upon 30 days' notice in writing mailed to the Company and to each transfer agent
of the Common Shares and Preferred Shares by registered or certified mail, and
to the holders of the Right Certificates by first-class mail. The Company may
remove the Rights Agent or any successor Rights Agent upon 30 days' notice in
writing, mailed to the Rights Agent or successor Rights Agent, as the case may
be, and to each transfer agent of the Common Shares and Preferred Shares by
registered or certified mail, and to the holders of the Right Certificates by
first-class mail. If the Rights Agent shall resign or be removed or shall
otherwise become incapable of acting as such, the Company shall appoint a
successor to the Rights Agent. If the Company shall fail to make such
appointment within a period of 30 days after giving notice of such removal or
after it has been notified in writing of such resignation or incapacity by the
resigning or incapacitated Rights Agent or by the holder of a Right Certificate
(who shall, with such notice, submit such holder's Right Certificate for
inspection by the Company), then the Company shall become the Rights Agent and
the registered holder of any Right Certificate may apply to any court of
competent jurisdiction for the appointment of a new Rights Agent. Any successor
Rights Agent, whether appointed by the Company or by such a court, shall be a
corporation organized and doing business under the laws of the United States or
of the States of New York or California (or of any other state of the United
States so long as such corporation is authorized to do business as a banking
institution in the States of New York or California), in good standing, having a
principal office in New York or California, that is authorized under such laws
to exercise corporate trust or stock transfer powers and is subject to
supervision or examination by federal or state authority and that has at the
time of its appointment as Rights Agent a combined capital and surplus of at
least $50,000,000. After appointment, the successor Rights Agent shall be vested
with the same powers, rights, duties and responsibilities as if it had been
originally named as Rights Agent without further act or deed; but the
predecessor Rights Agent shall deliver and transfer to the successor Rights
Agent any property at the time held by it hereunder, and execute and deliver
any further assurance, conveyance, act or deed necessary for the purpose of this
Agreement and so that the successor Rights Agent may appropriately act as Rights
Agent hereunder. Not later than the effective date of any such appointment, the
Company shall file notice thereof in writing with the predecessor Rights Agent
and each transfer agent of the Common Shares and Preferred Shares, and mail a
notice thereof in writing to the registered holders of the Right Certificates.
Failure to give any notice provided for in this Section 21, however, or any
defect therein, shall not affect the legality or validity of
31
<PAGE>
the resignation or removal of the Rights Agent or the appointment of the
successor Rights Agent, as the case may be.
Section 22. Issuance of New Right Certificates. Notwithstanding any of
----------------------------------
the provisions of this Agreement or of the Right Certificates to the contrary,
the Company may, at its option, issue new Right Certificates in such form as may
be approved by the Board of Directors in order to reflect any adjustment or
change in the Exercise Price and the number or kind or class of shares or other
securities or property purchasable upon exercise of the Rights in accordance
with the provisions of this Agreement.
Section 23. Redemption of Rights.
--------------------
(a) Until the earliest of the first Triggering Event or the Expiration
Date, a majority of the Board of Directors may, at their option, direct the
Company to redeem all, but not less than all, of the then outstanding Rights at
a redemption price of $.01 per Right, as such redemption price shall be
appropriately adjusted to reflect any stock split, stock dividend or similar
transaction occurring after the date hereof (the "Redemption Price"), and the
Company shall so redeem the Rights.
(b) Immediately upon the action of a majority of the Board of Directors
directing the Company to redeem the Rights pursuant to subsection (a) of this
Section 23, or at such time and date thereafter as they may specify, and without
any further action and without any notice, the right to exercise Rights shall
terminate and the only right thereafter of the holders of Rights shall be to
receive the Redemption Price. Within 10 Business Days after the action of a
majority of the Board of Directors directing the Company to redeem the Rights
pursuant to subsection (a) of this Section 23, the Company shall give notice of
such redemption to the holders of Rights by mailing such notice to all holders
of Rights at their last addresses as they appear upon the registry books of the
Rights Agent or, if prior to the Distribution Date, on the registry books of the
transfer agent for the Common Shares. Any notice that is mailed in the manner
herein provided shall be deemed given, whether or not the holder receives such
notice, but neither the failure to give any such notice nor any defect therein
shall affect the legality or validity of such redemption. Each such notice of
redemption shall state the method by which the payment of the Redemption Price
will be made. Neither the Company nor any of its Affiliates or Associates may,
directly or indirectly, redeem, acquire or purchase for value any Rights in any
manner other than that specifically set forth in this Section 23, and other than
in connection with the purchase of Common Shares prior to the Distribution Date.
32
<PAGE>
Section 24. Exchange.
--------
(a) The Board of Directors of the Company may, at its option, at any time
after the first 15% Ownership Date, exchange all or part of the then outstanding
and exercisable Rights (which shall not include Rights that have become void
pursuant to the provisions of Section 7(d) hereof) for Preferred Shares at
an exchange ratio of one-half the number of Preferred Shares (calculated in one
one-hundredths of a Preferred Share) which each holder of a Right would have a
right to receive upon exercise of a Right after the tenth Business Day following
such 15% Ownership Date, per Right (such exchange ratio being hereinafter
referred to as the "Exchange Ratio"). Notwithstanding the foregoing, the Board
of Directors shall not be empowered to effect such exchange at any time after
any Person (other than the Company, any Subsidiary of the Company, any employee
benefit plan of the Company or any such Subsidiary, or any entity holding Common
Shares for or pursuant to the terms of any such plan), together with all
Affiliates and Associates of such Person, becomes the Beneficial Owner of a
majority of the Common Shares then outstanding.
(b) Immediately upon the action of the Board of Directors of the Company
ordering the exchange of any Rights pursuant to subsection (a) of this Section
24 and without any further action and without any notice, the right to exercise
such Rights shall terminate and the only right thereafter of a holder of such
Rights shall be to receive that number of Preferred Shares equal to the number
of such Rights held by such holder multiplied by the Exchange Ratio and divided
by 100. The Company shall promptly give notice of any such exchange; provided,
however, that the failure to give, or any defect in, such notice shall not
affect the validity of such exchange. The Company promptly shall mail a notice
of any such exchange to all of the holders of such Rights at their last
addresses as they appear upon the registry books of the Rights Agent. Any notice
which is mailed in the manner herein provided shall be deemed given, whether or
not the holder receives the notice. Each such notice of exchange will state
the method by which the exchange of the Common Shares for Rights will be
effected and, in the event of any partial exchange, the number of Rights which
will be exchanged. Any partial exchange shall be effected pro rata based on the
--------
number of Rights (other than Rights which have become void pursuant to the
provisions of Section 7(d) hereof) held by each holder of Rights.
(c) In any exchange pursuant to this Section 24, the Company, at its
option, may substitute other equity securities of the Company or Preferred Share
Equivalents for the one-hundredth of a Preferred Share units exchangeable for
Rights, as appropriately adjusted.
33
<PAGE>
(d) In the event that there shall not be sufficient Preferred Shares or
Preferred Share Equivalents authorized by the Company's certificate of
incorporation and not outstanding or subscribed for, or reserved or otherwise
committed for issuance for purposes other than upon exercise of Rights, to
permit any exchange of Rights as contemplated in accordance with this Section
24, the Company shall take all such action as may be necessary to authorize
additional Preferred Shares or Preferred Share Equivalents for issuance upon
exchange of the Rights.
(e) The Company shall not be required to issue fractions of Preferred
Shares or to distribute certificates which evidence fractional Preferred Shares
(other than integral multiples of one one-hundredth of a Preferred Share). In
lieu of such fractional Preferred Shares, the Company shall pay to the
registered holders of the Right Certificates with regard to which such frational
Preferred Shares would otherwise be issuable an amount in cash equal to the same
fraction of the current per share market value of a whole Preferred Share. For
the purposes of this paragraph (e), the current per share market value of a
whole Preferred Share shall be the Closing Price of a Preferred Share for the
Trading Day immediately prior to the date of the exchange pursuant to this
Section 24.
Section 25. Notice of Certain Events.
------------------------
(a) In the event that the Company shall propose (i) to declare or pay any
dividend payable on or make any distribution with respect to its Common Shares
or Preferred Shares (other than a regular quarterly cash dividend), (ii) to
offer to the holders of its Common Shares or Preferred Shares options, rights or
warrants to subscribe for or to purchase any additional shares thereof or shares
of stock of any class or any other securities, rights or options, (iii) to
effect any reclassification of its Common Shares or Preferred Shares (other than
a reclassification involving only the subdivision of outstanding shares), (iv)
to effect any consolidation or merger with or into, or to effect any sale or
other transfer (or to permit one or more of its Subsidiaries to effect any sale
or other transfer), in one or more transactions, of more than 50% of the assets
or earning power of the Company and its Subsidiaries (taken as a whole) to, any
other Person or Persons, or (v) to effect the liquidation, dissolution or
winding up of the Company, then and in each such case, the Company shall give to
each holder of a Right Certificate, in accordance with Section 26 hereof, a
notice of such proposed action, that shall specify the record date for the
purpose of such dividend or distribution, or the date upon which such
reclassification, consolidation, merger, sale, transfer, liquidation,
dissolution or winding up is to take place and the date of participation therein
by the holders of record of the
34
<PAGE>
Common Shares or Preferred Shares, if any such date is to be fixed, and such
notice shall be so given in the case of any action covered by clause (i) or (ii)
above at least 20 days prior to the record date for determining holders of the
Common Shares or Preferred Shares for purposes of such action, and in the case
of any such other action, at least 20 days prior to the date of the taking of
such proposed action or the date of participation therein by the holders of the
Common Shares or Preferred Shares, whichever date shall be the earlier. The
failure to give the notice required by this Section 25 or any defect therein
shall not affect the legality or validity of the action taken by the Company or
the vote upon any such action.
(b) Upon the occurrence of each Triggering Event, the Company shall as soon
as practicable thereafter give to each holder of a Right Certificate, in
accordance with Section 26 hereof, a notice of the occurrence of such event,
specifying the event and the consequences of the event to holders of Rights
under Sections 11 and 13 hereof.
Section 26. Notices. Notices or demands authorized by this Agreement to be
-------
given or made by the Rights Agent or by the holder of any Right Certificate to
or on the Company shall be sufficiently given or made if sent by first-class
mail, postage prepaid, addressed (until another address is filed in writing with
the Rights Agent) as follows:
Unocal Corporation
1201 West 5th Street
Los Angeles, CA 90071
Attention: Robert O. Hedley, Secretary
Subject to the provisions of Section 21 hereof, any notice or demand authorized
by this Agreement to be given or made by the Company or by the holder of any
Right Certificate to or on the Rights Agent shall be sufficiently given or made
if sent by first-class mail, postage prepaid, addressed (until another address
is filed in writing with the Company) to the principal office of the Rights
Agent as follows:
Manufacturers Hanover Trust Company of California
50 California Street
San Francisco, CA 94111
Attention: Sara Battin, Vice-President
Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Right Certificate shall be
sufficiently given or made if sent by first-class mail, postage prepaid,
addressed to such holder at the address of such holder as shown on the registry
books of the Company.
35
<PAGE>
Section 27. Supplements and Amendments.
--------------------------
(a) Until the earliest of (i) a Triggering Event, or (ii) the Redemption
Date, a majority of the Board of Directors may, without the approval of any
holders of Rights, direct the Company and the Rights Agent to supplement or
amend any provision of this Agreement in any manner, including, but not limited
to, postponing the Distribution Date, whether or not such supplement or
amendment is adverse to any holders of Rights, and the Company and the Rights
Agent shall so supplement or amend such provision. After the first Triggering
Event, a majority of the Board of Directors may, without the approval of any
holders of Rights, direct the Company and the Rights Agent to supplement or
amend any provision of this Agreement in any manner so long as the interests of
the holders of Rights (other than a 15% Stockholder, its Affiliates or
Associates) shall not be materially and adversely affected thereby, and the
Company and the Rights Agent shall so supplement or amend such provision.
(b) After the first Triggering Event and prior to the earlier of the
Redemption Date or the Expiration Date, the Company shall not effect any
amendment to the Certificate of Designations for the Preferred Shares that would
materially and adversely affect the rights, privileges or preferences of the
Preferred Shares without the prior approval of the holders of two-thirds or more
of the then outstanding Rights.
Section 28. Certain Covenants.
-----------------
Subject to Section 27 and the other provisions of this Agreement:
(a) no adjustment to the Exercise Price, the number of Preferred Shares or
other securities (or fractions of a share of any of them), as the case may be,
for which a Right is exercisable or the number of Rights outstanding shall be
made or be effective if such adjustment would have the effect of reducing or
limiting the benefits that the holders of Rights would have had absent such
adjustment, including, without limitation, the benefits under Sections 7, 11 and
13 hereof, unless the terms of this Agreement are amended so as to preserve such
benefits; and
(b) from and after the first Triggering Event and prior to the earlier of
the Redemption Date or the Expiration Date, the Company shall not (i) issue or
sell, or permit any Subsidiary to issue or sell, to a 15% Stockholder or a
Surviving Person, or any Affiliate or Associate of a 15% Stockholder or a
Surviving Person, or any Person holding Voting Shares of the Company that are
Beneficially Owned by a
36
<PAGE>
15% Stockholder or a Surviving Person, (A) any rights, options, warrants or
convertible securities on terms similar to, or that materially adversely affect
the value of, the Rights or (B) Preferred Shares, Common Shares or shares of any
other class of capital stock, if such sale is intended to or would materially
adversely affect the value of the Rights, or (ii) take any action that is
intended to or would materially adversely affect the value of the Rights.
Section 29. Successors. All the covenants and provisions of this Agreement
----------
by or for the benefit of the Company or the Rights Agent shall bind and inure to
the benefit of their respective successors and assigns hereunder.
Section 30. Benefits of this Agreement. Nothing in this Agreement shall be
--------------------------
construed to give to any Person other than the Company, the Rights Agent, the
registered holders of the Right Certificates (other than those representing
Rights that have become null and void) and the certificates for Common Shares
representing Rights (other than those Rights that have become null and void) any
legal or equitable right, remedy or claim under this Agreement, and this
Agreement shall be for the sole and exclusive benefit of the Company, the
Rights Agent, such registered holders of Right Certificates and such
certificates for Common Shares representing Rights.
Section 31. Severability. If any term, provision, covenant or restriction
------------
of this Agreement is held by a court of competent jurisdiction or other
authority to be invalid, void or unenforceable, the remainder of the terms,
provisions, covenants and restrictions of this Agreement shall remain in full
force and effect and shall in no way be affected, impaired or invalidated.
Section 32. Governing Law. This Agreement and each Right Certificate
-------------
issued hereunder shall be deemed to be a contract made under the laws of the
State of Delaware and for all purposes shall be governed by and construed in
accordance with the laws of such state applicable to contracts made and
performed entirely within such state.
Section 33. Determination and Actions Taken by the Board of Directors. The
---------------------------------------------------------
Board of Directors of the Company shall have the exclusive power and authority
to administer this Agreement and to exercise all rights and powers specifically
granted to such Board or to the Company, or as may be necessary or advisable in
the administration of this Agreement, including without limitation the right and
power to (i) interpret the provisions of this Agreement, and (ii) make all
determinations deemed necessary or advisable for the administration of this
Agreement (including a determination to redeem or not redeem
37
<PAGE>
the Rights or to amend the Agreement). All such actions, calculations,
interpretations and determinations (including, for purposes of clause (B) below,
all omissions with respect the foregoing) which are done or made by the Board in
good faith, shall (A) be final, conclusive and binding on the Company, the
Rights Agent, the holders of the Rights and all other parties, and (B) not
subject the Board to any liability to the holders of the Rights.
Section 34. Counterparts. This Agreement may be executed in any number of
------------
counterparts and each such counterpart shall for all purposes be deemed to be an
original and all such counterparts shall together constitute but one and the
same instrument.
Section 35. Descriptive Headings. Descriptive headings of the several
--------------------
sections of this Agreement are inserted for convenience only and shall not
control or affect the meaning or construction of any of the provisions hereof.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
Attest: UNOCAL CORPORATION
By /s/ R.E. Jenkins By /s/ Gary W. Sproule
--------------------------- -------------------------
R.E. Jenkins Gary W. Sproule, Vice President
Its: Assistant Secretary
-----------------------
Attest: MANUFACTURERS HANOVER TRUST
COMPANY OF CALIFORNIA
By /s/ C.L. Lyons By /s/ Sara Battin
--------------------------- -------------------------
Sara Battin, Vice President
Its: Assistant Secretary and General Manager
-----------------------
38
<PAGE>
Exhibit A
---------
FORM OF
CERTIFICATE OF DESIGNATIONS
OF
SERIES A JUNIOR PARTICIPATING CUMULATIVE PREFERRED STOCK
$.10 Par Value
of
UNOCAL CORPORATION
Pursuant to Section 151 of the General Corporation
Law of the State of Delaware
We, [Name], [Title], and [Name], [Title], of Unocal Corporation, a
corporation organized and existing under the General Corporation Law of the
State of Delaware, in accordance with the provisions of Section 103 thereof,
DO HEREBY CERTIFY:
That pursuant to the authority conferred upon the Board of Directors by the
Certificate of Incorporation of the Corporation, the Board of Directors on
January 29, 1990 adopted the following resolution creating a series of two
million five hundred thousand (2,500,000) shares of Preferred Stock, par value
$.10 per share, designated as Series A Junior Participating Cumulative Preferred
Stock:
RESOLVED, that pursuant to the authority vested in the Board of Directors
of this Corporation in accordance with the provisions of its Certificate of
Incorporation, a series of Preferred Stock of the Corporation be, and it hereby
is, created, and that the designation and amount thereof and the voting powers,
preferences and relative, participating, optional and other special rights of
the shares of such series, and the qualifications, limitations or restrictions
thereof, are as follows:
Section 1. Designation and Amount. The shares of such series shall be
----------------------
designated as Series A Junior Participating Cumulative Preferred Stock, par
value $.10 per share (the "Series A Preferred Stock"), and the number of shares
constituting such series shall be two million five hundred thousand (2,500,000).
Section 2. Dividends and Distributions.
---------------------------
(a) The holders of shares of Series A Preferred Stock, in preference to the
holders of shares of Common Stock,
<PAGE>
$1.00 per share, of the Corporation (the "Common Stock") and of any other junior
stock of the Corporation that may be outstanding, shall be entitled to receive,
when, as and if declared by the Board of Directors out of funds legally
available for the purpose, quarterly dividends payable in cash on the tenth day
of January, April, July and October in each year (each such date being referred
to herein as a "Quarterly Dividend Payment Date"), commencing on the first
Quarterly Dividend Payment Date after the first issuance of a share or fraction
of a share of Series A Preferred Stock, in an amount per share (rounded to the
nearest cent) equal to the greater of (i) $0.25 per share ($1.00 per annum), or
(ii) subject to the provision for adjustment hereinafter set forth, 100 times
the aggregate per share amount of all cash dividends, and 100 times the
aggregate per share amount (payable in kind) of all non-cash dividends or other
distributions, other than a dividend payable in shares of Common Stock, or a
subdivision of the outstanding shares of Common Stock (by reclassification or
otherwise), declared on the Common Stock since the immediately preceding
Quarterly Dividend Payment Date or, with respect to the first Quarterly Dividend
Payment Date, since the first issuance of any share or fraction of a share of
Series A Preferred Stock. In the event that the Corporation shall at any time
declare or pay any dividend on Common Stock payable in shares of Common Stock,
or effect a subdivision or combination or consolidation of the outstanding
shares of Common Stock (by reclassification or otherwise) into a greater or
lesser number of shares of Common Stock, then and in each such event, the amount
to which holders of shares of Series A Preferred Stock were entitled immediately
prior to such event under clause (ii) of the preceding sentence shall be
adjusted by multiplying such amount by a fraction, the numerator of which is the
number of shares of Common Stock outstanding immediately after such event, and
the denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
(b) The Corporation shall declare a dividend or distribution on the
Series A Preferred Stock as provided in paragraph (a) of this Section 2
immediately after it declares a dividend or distribution on the Common Stock
(other than a dividend payable in shares of Common Stock); provided, however,
that in the event no dividend or distribution shall have been declared on the
Common Stock during the period between any Quarterly Dividend Payment Date and
the next subsequent Quarterly Dividend Payment Date, a dividend of $0.25 per
share ($1.00 per annum) on the Series A Preferred Stock shall nevertheless be
payable on such subsequent Quarterly Dividend Payment Date.
2
<PAGE>
(c) Dividends shall begin to accrue and be cumulative on outstanding shares
of Series A Preferred Stock from the Quarterly Dividend Payment Date next
preceding the date of issue of such shares of Series A Preferred Stock, unless
the date of issue of such shares is prior to the record date for the first
Quarterly Dividend Payment Date, in which case dividends on such shares shall
begin to accrue from the date of issue of such shares, or unless the date of
issue is a Quarterly Dividend Payment Date or is a date after the record date
for the determination of holders of shares of Series A Preferred Stock entitled
to receive a quarterly dividend and before such Quarterly Dividend Payment Date,
in either of which cases such dividends shall begin to accrue and be cumulative
from such Quarterly Dividend Payment Date. Accrued but unpaid dividends shall
cumulate but shall not bear interest. Dividends paid on the shares of Series A
Preferred Stock in an amount less than the total amount of such dividends at the
time accrued and payable on such shares shall be allocated pro rata on a
share-by-share basis among all such shares at the time outstanding. The Board
of Directors may fix a record date for the determination of holders of shares of
Series A Preferred Stock entitled to receive payment of a dividend or
distribution declared thereon, which record date shall be not more than 60 days
prior to the date fixed for the payment thereof.
Section 3. Voting Rights. The holders of shares of Series A Preferred
-------------
Stock shall have the following voting rights:
(a) Each share of Series A Preferred Stock shall entitle the holder thereof
to 100 votes (and each one one-hundredth of a share of Series A Preferred Stock
shall entitle the holder thereof to one vote) on all matters submitted to a vote
of the stockholders of the Corporation. In the event that the Corporation shall
at any time declare or pay any dividend on Common Stock payable in shares of
Common Stock or effect a subdivision or combination or consolidation of the
outstanding shares of Common Stock (by reclassification or otherwise than by
payment of a dividend in shares of Common Stock) into a greater or lesser number
of shares of Common Stock, then and in each such event, the number of votes per
share to which holders of shares of Series A Preferred Stock were entitled
immediately prior to such event shall be adjusted by multiplying such number by
a fraction, the numerator of which is the number of shares of Common Stock
outstanding immediately after such event, and the denominator of which is the
number of shares of Common Stock that were outstanding immediately prior to such
event.
(b) Except as otherwise provided in the Certificate of Incorporation of the
Corporation or herein or by law, the holders of shares of Series A Preferred
Stock and the holders
3
<PAGE>
of shares of Common Stock shall vote together as one class on all matters
submitted to a vote of stockholders of the Corporation.
(c) In addition, the holders of shares of Series A Preferred Stock
shall have the following special voting rights:
In the event that at any time dividends on Series A Preferred Stock,
whenever accrued and whether or not consecutive, shall not have been paid or
declared and a sum sufficient for the payment thereof set aside, in an amount
equivalent to six quarterly dividends on all shares of Series A Preferred Stock
at the time outstanding, then and in each such event, the holders of shares of
Series A Preferred Stock and each other series of preferred stock now or
hereafter issued that shall be accorded such class voting right by the Board of
Directors and that shall have the right to elect three directors as the result
of a prior or subsequent default in payment of dividends on such series (each
such other series being hereinafter called "Other Series of Preferred Stock"),
voting separately as a class without regard to series, shall be entitled to
elect three directors at the next annual meeting of stockholders of the
Corporation, in addition to the directors to be elected by the holders of all
shares of the Corporation entitled to vote for the election of directors, and
the holders of all shares (including the Series A Preferred Stock) otherwise
entitled to vote for directors, voting separately as a class, shall be entitled
to elect the remaining members of the Board of Directors, provided that the
Series A Preferred Stock and each Other Series of Preferred Stock, voting as a
class, shall not have the right to elect more than three directors. Such special
voting right of the holders of shares of Series A Preferred Stock may be
exercised until all dividends in default on the Series A Preferred Stock shall
have been paid in full or declared and funds sufficient therefor set aside, and
when so paid or provided for, such special voting right of the holders of shares
of Series A Preferred Stock shall cease, but subject always to the same
provisions for the vesting of such special voting rights in the event of any
such future dividend default or defaults. At any time after such special voting
rights shall have so vested in the holders of shares of Series A Preferred
Stock, the Secretary of the Corporation may, and upon the written request of the
holders of record of 10% or more in number of the shares of Series A Preferred
Stock and each Other Series of Preferred Stock then outstanding addressed to the
Secretary at the principal executive office of the Corporation shall, call a
special meeting of the holders of shares of Preferred Stock so entitled to vote,
for the
4
<PAGE>
election of the directors to be elected by them as herein provided, to be held
within 60 days after such call and at the place and upon the notice provided by
law and in the Bylaws for the holding of meetings of stockholders; provided,
however, that the Secretary shall not be required to call such special meeting
in the case of any such request received less than 90 days before the date fixed
for any annual meeting of stockholders, and if in such case such special meeting
is not called or held, the holders of shares of Preferred Stock so entitled to
vote shall be entitled to exercise the special voting rights provided in this
paragraph at such annual meeting. If any such special meeting required to be
called as above provided shall not be called by the Secretary within 30 days
after receipt of any such request, then the holders of record of 10% or more in
number of the shares of Series A Preferred Stock and each Other Series of
Preferred Stock then outstanding may designate in writing one of their number to
call such meeting, and the person so designated may, at the expense of the
Corporation, call such meeting to be held at the place and upon the notice
given by such person, and for that purpose shall have access to the stock books
of the Corporation. No such special meeting and no adjournment thereof shall be
held on a date later than 60 days before the annual meeting of stockholders. If,
at any meeting so called or at any annual meeting held while the holders of
shares of Series A Preferred Stock have the special voting rights provided for
in this paragraph, the holders of not less than 40% of the shares of Series A
Preferred Stock and each Other Series of Preferred Stock then outstanding are
present in person or by proxy, which percentage shall be sufficient to
constitute a quorum for the election of additional directors as herein provided,
the then authorized number of directors of the Corporation shall be increased by
three, as of the time of such special meeting or the time of the first such
annual meeting held while such holders have special voting rights and such
quorum is present, and the holders of shares of Series A Preferred Stock and
each Other Series of Preferred Stock, voting as a class, shall be entitled to
elect the additional directors so provided for. If the directors of the
Corporation are then divided into classes under provisions of the Certificate of
Incorporation of the Corporation or the Bylaws, the three additional directors
shall be members of those respective classes of directors in which a vacancy is
created as a result of such increase in the authorized number of directors. If
the foregoing expansion of the size of the Board of Directors shall not be valid
under applicable law, then the holders of shares of Series A Preferred Stock and
of each Other Series of Preferred Stock, voting as a class, shall be entitled,
at the meeting
5
<PAGE>
of stockholders at which they would otherwise have voted, to elect directors to
fill any then existing vacancies on the Board of Directors, and shall
additionally be entitled, at such meeting and each subsequent meeting of
stockholders at which directors are elected, to elect all of the directors then
being elected until by such class vote three members of the Board of Directors
have been so elected. Upon the election at such meeting by the holders of
shares of Series A Preferred Stock and each Other Series of Preferred Stock,
voting as a class, of the directors they are entitled so to elect, the persons
so elected, together with such persons as may be directors or as may have been
elected as directors by the holders of all shares (including Series A Preferred
Stock) otherwise entitled to vote for directors, shall constitute the duly
elected directors of the Corporation. The additional directors so elected by
holders of shares of Series A Preferred Stock and each Other Series of Preferred
Stock, voting as a class, shall serve until the next annual meeting or until
their respective successors shall be elected and qualified, or if any such
director is a member of a class of directors under provisions dividing the
directors into classes, each such director shall serve until the annual meeting
at which the term of office of such director's class shall expire or until such
director's successor shall be elected and shall qualify, and at each subsequent
meeting of stockholders at which the directorship of any director elected by the
vote of holders of shares of Series A Preferred Stock and each Other Series of
Preferred Stock under the special voting rights set forth in this paragraph is
up for election, said special class voting rights shall apply in the
reelection of such director or in the election of such director's successor;
provided, however, that whenever the holders of shares of Series A Preferred
Stock and each Other Series of Preferred Stock shall be divested of the special
rights to elect three directors as above provided, the terms of office of all
persons elected as directors by the holders of shares of Series A Preferred
Stock and each Other Series of Preferred Stock, voting as a class, or elected to
fill any vacancies resulting from the death, resignation, or removal of
directors so elected by the holders of shares of Series A Preferred Stock and
each Other Series of Preferred Stock, shall forthwith terminate (and, if
applicable, the number of directors shall be reduced accordingly). If, at any
time after a special meeting of stockholders or an annual meeting of
stockholders at which the holders of shares of Series A Preferred Stock and each
Other Series of Preferred Stock, voting as a class, have elected directors as
provided above, and while the holders of shares of Series A Preferred Stock and
each Other Series of Preferred Stock shall be entitled so to elect three
directors, the
6
<PAGE>
number of directors who have been elected by the holders of shares of Series
A Preferred Stock and each Other Series of Preferred Stock (or who by reason
of one or more resignations, deaths or removals have succeeded any directors
so elected) shall by reason of resignation, death or removal be less than
three but at least one, the vacancy in the directors so elected by the
holders of shares of the Series A Preferred Stock and each Other Series of
Preferred Stock may be filled by the remaining director elected by such
holders, and in the event that such election shall not occur within 30 days
after such vacancy arises, or in the event that there shall not be incumbent
at least one director so elected by such holders, the Secretary of the
Corporation may, and upon the written request of the holders of record of 10%
or more in number of the shares of Series A Preferred Stock and each Other
Series of Preferred Stock then outstanding addressed to the Secretary at the
principal office of the Corporation shall, call a special meeting of the
holders of shares of Series A Preferred Stock and each Other Series of
Preferred Stock so entitled to vote, for an election to fill such vacancy or
vacancies, to be held within 60 days after such call and at the place and
upon the notice provided by law and in the Bylaws for the holding of meetings
of stockholders; provided, however, that the Secretary shall not be required
to call such special meeting in the case of any such request received less
than 90 days before the date fixed for any annual meeting of stockholders,
and if in such case such special meeting is not called, the holders of shares
of Preferred Stock so entitled to vote shall be entitled to fill such vacancy
or vacancies at such annual meeting. If any such special meeting required to
be called as above provided shall not be called by the Secretary within 30
days after receipt of any such request, than the holders of record of 10% or
more in number of the shares of Series A Preferred Stock and each Other
Series of Preferred Stock then outstanding may designate in writing one of
their number to call such meeting, and the person so designated may, at the
expense of the Corporation, call such meeting to be held at the place and
upon the notice above provided, and for that purpose shall have access to the
stock books of the Corporation; no such special meeting and no adjournment
thereof shall be held on a date later than 60 days before the annual meeting
of stockholders.
(d) Nothing herein shall prevent the directors or stockholders from taking
any action to increase the number of authorized shares of Series A Preferred
Stock, or increasing the number of authorized shares of Preferred Stock of the
same class as the Series A Preferred Stock or the number of authorized shares of
Common Stock, or changing the par value of the Common Stock or Preferred Stock,
or issuing options,
7
<PAGE>
warrants or rights to any class of stock of the Corporation as authorized by the
Certificate of Incorporation of the Corporation, as it may hereafter be amended.
(e) Except as set forth herein, holders of shares of Series A Preferred
Stock shall have no special voting rights and their consent shall not be
required (except to the extent they are entitled to vote as set forth in the
Certificate of Incorporation of the Corporation or herein or by law) for taking
any corporate action.
Section 4. Certain Restrictions.
--------------------
(a) Whenever any dividends or other distributions payable on the Series A
Preferred Stock as provided in Section 2 hereof are in arrears, thereafter and
until all accrued and unpaid dividends and distributions, whether or not
declared, on shares of Series A Preferred Stock outstanding shall have been paid
in full, the Corporation shall not and shall cause its subsidiaries not to,
directly or indirectly:
(i) declare or pay dividends on, or make any other distributions with
respect to, any shares of stock ranking junior (either as to dividends or
upon liquidation, dissolution or winding up) to the Series A Preferred Stock;
(ii) declare or pay dividends on, or make any other distributions with
respect to, any shares of stock ranking on a parity (either as to dividends
or upon liquidation, dissolution or winding up) with the Series A Preferred
Stock, except dividends paid ratably on shares of the Series A Preferred
Stock and all such parity stock on which dividends are payable or in arrears
in proportion to the total amounts to which the holders of all such shares
are then entitled;
(iii) redeem or purchase or otherwise acquire for consideration shares
of any stock ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) with the Series A Preferred Stock, provided that
the Corporation may at any time redeem, purchase or otherwise acquire shares
of any such junior stock in exchange for shares of any stock of the
Corporation ranking junior (either as to dividends or upon dissolution,
liquidation or winding up) to the Series A Preferred Stock; or
(iv) purchase or otherwise acquire for consideration any shares of
Series A Preferred Stock, or any shares of stock ranking on a parity with
the Series A Preferred Stock, except in accordance with a purchase offer made
in writing or by publication (as determined by the
8
<PAGE>
Board of Directors) to all holders of such shares upon such terms as the
Board of Directors, after consideration of the respective annual dividend
rates and other relative rights and preferences of the respective series and
classes, shall determine in good faith will result in fair and equitable
treatment among the respective series or classes.
(b) The Corporation shall not permit any subsidiary of the Corporation to
purchase or otherwise acquire for consideration any shares of stock of the
Corporation unless the Corporation could, under paragraph (a) of this Section 4,
purchase or otherwise acquire such shares at such time and in such manner.
Section 5. Reacquired Shares. Any shares of Series A Preferred Stock
-----------------
purchased or otherwise acquired by the Corporation in any manner whatsoever
shall be retired and cancelled promptly after the acquisition thereof. All such
shares shall upon their cancellation become authorized but unissued shares of
preferred stock, without designation as to series, and may be reissued as part
of any series of preferred stock created by resolution or resolutions of the
Board of Directors (including Series A Preferred Stock), subject to the
conditions and restrictions on issuance set forth herein.
Section 6. Liquidation, Dissolution or Winding Up. Upon any liquidation,
--------------------------------------
dissolution or winding up of the Corporation, no distribution shall be made to:
(a) the holders of shares of stock ranking junior (either as to dividends
or upon liquidation, dissolution or winding up) to the Series A Preferred
Stock unless, prior thereto, the holders of shares of Series A Preferred
Stock shall have received the greater of (i) $1.00 per share ($.01 per one
one-hundredth of a share), plus an amount equal to accrued and unpaid
dividends and distributions thereon, whether or not declared, to the date of
such payment, or (ii) an aggregate amount per share, subject to the provision
for adjustment hereinafter set forth, equal to 100 times the aggregate amount
to be distributed per share to holders of shares of Common Stock; or
(b) the holders of shares of stock ranking on a parity (either as to
dividends or upon liquidation, dissolution or winding up) with the Series A
Preferred Stock, except distributions made ratably on the Series A Preferred
Stock and all other such parity stock in proportion to the total amounts to
which the holders of all such shares are entitled upon such liquidation,
dissolution or winding up.
9
<PAGE>
In the event that the Corporation shall at any time declare or pay any dividend
on Common Stock payable in shares of Common Stock, or effect a subdivision or
combination or consolidation of the outstanding shares of Common Stock (by
reclassification or otherwise) into a greater or lesser number of shares of
Common Stock, then and in each such event, the aggregate amount to which holders
of shares of Series A Preferred Stock were entitled immediately prior to such
event under the proviso in clause (a) of the preceding sentence shall be
adjusted by multiplying such amount by a fraction, the numerator of which is the
number of shares of Common Stock outstanding immediately after such event, and
the denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
Section 7. Consolidation, Merger, etc. In the event that the Corporation
---------------------------
shall enter into any consolidation, merger, combination or other transaction in
which the shares of Common Stock are exchanged for or changed into other stock
or securities, cash and/or any other property, or otherwise changed, then and in
each such event, the shares of Series A Preferred Stock shall at the same time
be similarly exchanged or changed in an amount per share (subject to the
provision for adjustment hereinafter set forth) equal to 100 times the aggregate
amount of stock, securities, cash and/or any other property (payable in kind),
as the case may be, into which or for which each share of Common Stock is
changed or exchanged. In the event that the Corporation shall at any time
declare or pay any dividend on Common Stock payable in shares of Common Stock,
or effect a subdivision or combination or consolidation of the outstanding
shares of Common Stock (by reclassification or otherwise) into a greater or
lesser number of shares of Common Stock, then and in each such event, the amount
set forth in the preceding sentence with respect to the exchange or change of
shares of Series A Preferred Stock shall be adjusted by multiplying such amount
by a fraction, the numerator of which is the number of shares of Common Stock
outstanding immediately after such event, and the denominator of which is the
number of shares of Common Stock that were outstanding immediately prior to such
event.
Section 8. No Redemption. The shares of Series A Preferred Stock shall not
-------------
be redeemable. Notwithstanding the foregoing, the Corporation may acquire
shares of Series A Preferred Stock in any other manner permitted by law, the
Certificate of Incorporation of the Corporation or herein.
Section 9. Rank. Unless otherwise provided in the Certificate of
----
Incorporation of the Corporation or a Certificate of Designations relating to a
subsequent series of preferred stock of the Corporation, the Series A Preferred
10
<PAGE>
Stock shall rank junior to all other series of the Corporation's preferred stock
as to the payment of dividends and the distribution of assets on liquidation,
dissolution or winding up, and senior to the Common Stock of the Corporation.
Section 10. Amendment. The Certificate of Incorporation of the Corporation
---------
shall not be amended in any manner that would materially and adversely alter or
change the powers, preferences or special rights of the Series A Preferred Stock
without the affirmative vote of the holders of at least two-thirds of the
outstanding shares of Series A Preferred Stock, voting together as a single
series.
Section 11. Fractional Shares. Series A Preferred Stock may be issued in
-----------------
fractions of a share (in one one-hundredths (1/100) of a share and integral
multiples thereof) that shall entitle the holder thereof, in proportion to such
holder's fractional shares, to exercise voting rights, receive dividends,
participate in distributions and have the benefit of all other rights of holders
of shares of Series A Preferred Stock.
IN WITNESS WHEREOF, we have executed and subscribed this Certificate and do
affirm the foregoing as true under the penalties of perjury this ______ day of
February, 1990.
----------------------------
[Name]
[Title]
Attest:
- -------------------------
[Name]
[Title]
11
<PAGE>
Exhibit B
---------
FORM OF
RIGHT CERTIFICATE
Certificate No. R-____ ____ Rights
NOT EXERCISABLE AFTER JANUARY 29, 2000 OR EARLIER IF REDEEMED.
THE RIGHTS ARE SUBJECT TO REDEMPTION AT $.01 PER RIGHT ON THE
TERMS SET FORTH IN THE RIGHTS AGREEMENT. UNDER CERTAIN
CIRCUMSTANCES SPECIFIED IN THE RIGHTS AGREEMENT, RIGHTS
BENEFICIALLY OWNED BY CERTAIN PERSONS OR ANY SUBSEQUENT HOLDER OF
SUCH RIGHTS MAY BECOME NULL AND VOID.
Right Certificate
UNOCAL CORPORATION
This certifies that ___________________________, or registered assigns, is
the registered owner of the number of Rights set forth above, each of which
entitles the owner thereof, subject to the terms and conditions of a Rights
Agreement (the "Rights Agreement") dated as of January 29, 1990 by and between
Unocal Corporation, a Delaware corporation (the "Company"), and Manufacturers
Hanover Trust Company of California (the "Rights Agent"), to purchase from the
Company at any time prior to 5:00 o'clock p.m., Los Angeles time, on the earlier
of the Redemption Date (as such term is defined in the Rights Agreement) or
January 29, 2000, at the office or agency of the Rights Agent at 300 South Grand
Avenue, Los Angeles, California 90071, or at the office of its successor as
Rights Agent, one one-hundredth of a fully paid and nonassessable share of
Series A Junior Participating Cumulative Preferred Stock, par value $.10 per
share, of the Company (a "Preferred Share") or, in certain circumstances, other
securities or other property, at a purchase price of seventy-five dollars
($75.00) per one-hundredth of a Preferred Share (the "Exercise Price"), upon
presentation and surrender of this Right Certificate with the Form of Election
to Purchase, including Certificate, on the reverse side hereof completed and
duly executed, with signature guaranteed.
The number of Rights represented by this Right Certificate and the Exercise
Price set forth above are the number of Rights and the Exercise Price as of
January [29], 1990, based upon the Preferred Shares as constituted on such date.
As provided in the Rights Agreement, the Exercise Price and the number of
Preferred Shares or other securities or other property that may be purchased
upon the exercise of the Rights.
<PAGE>
represented by this Right Certificate are subject to modification and adjustment
upon the occurrence of certain events.
The Rights Agreement contains a full description of the rights, limitations
of rights, obligations, duties and immunities of the Rights Agent, the Company
and the holders of Right Certificates. This Right Certificate is subject to all
the terms and conditions of the Rights Agreement, which terms and conditions are
hereby incorporated herein by reference and made a part hereof. Copies of the
Rights Agreement are on file at the principal executive offices of the Company
and the above-mentioned offices of the Rights Agent.
This Right Certificate, with or without other Right Certificates, upon
presentation and surrender at the above-mentioned offices of the Rights Agent,
with the Form of Assignment, including Certificate, on the reverse side hereof
completed and duly executed, with signature guaranteed, may be exchanged for
another Right Certificate or Right Certificates of like tenor and date
representing Rights entitling the holder thereof to purchase a like aggregate
number of Preferred Shares or, in certain circumstances, other securities or
other property, as the Rights represented by the Right Certificate or Right
Certificates surrendered shall have entitled such holder to purchase. If this
Right Certificate shall be exercised in part, the holder shall be entitled to
receive, upon the surrender hereof with the Form of Election to Purchase,
including Certificate, on the reverse side hereof completed and duly executed,
with signature guaranteed, another Right Certificate or Right Certificates for
the number of whole Rights not exercised. Subject to the provisions of the
Rights Agreement, the Rights represented by this Right Certificate may be
redeemed by the Company, at its option, at a redemption price of $.01 per Right.
No fractional securities shall be issued upon the exercise of any Right or
Rights represented hereby (other than fractions of Preferred Shares that are
integral multiples of one one-hundredth of a Preferred Share, that may, at the
option of the Company, be represented by depositary receipts), but in lieu
thereof, a cash payment shall be made, as provided in the Rights Agreement.
No holder of this Right Certificate, as such, shall be entitled to vote or
receive dividends or be deemed for any purpose the holder of the Preferred
Shares or other securities of the Company that may at any time be issuable on
the exercise hereof, nor shall anything contained herein be construed to confer
upon the holder hereof, as such, any of the rights of a stockholder of the
Company or any right to vote for the
2
<PAGE>
election of directors or upon any matter submitted to stockholders at any
meeting thereof, or to give or withhold consent to any corporate action, or to
receive notice of meetings or other actions affecting stockholders (except as
provided in the Rights Agreement), or to receive dividends or subscription
rights, until the Right or Rights represented by this Right Certificate shall
have been exercised as provided in the Rights Agreement.
This Right Certificate shall not be valid or obligatory for any purpose
until it shall have been countersigned by the Rights Agent.
WITNESS the facsimile signature of the proper officers of the Company and
its corporate seal. Dated as of ___________.
Attest: UNOCAL CORPORATION
By By
--------------------------- ------------------------------
Name: Name:
Title: Title:
Countersigned:
MANUFACTURERS HANOVER TRUST COMPANY OF CALIFORNIA
By
---------------------------
Name:
Title:
3
<PAGE>
Form of Reverse Side of Right Certificate
FORM OF ASSIGNMENT
------------------
(To be executed by the registered holder if such holder
desires to transfer any or all of the Rights
represented by this Right Certificate)
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Name, address and social security or other
identifying number of transferee)
_________________________________ (____________)of the Rights represented by
this Right Certificate, together with all right, title and interest in and to
said Rights, and hereby irrevocably constitutes and appoints ________________
attorney to transfer said Rights on the books of Unocal Corporation with full
power of substitution.
Dated: ___________________, 19__ ____________________________
(Signature)
Signature Guaranteed:
Certificate
-----------
(to be completed, if true)
The undersigned hereby certifies that the Rights represented by this Right
Certificate are not Beneficially Owned by a 15% Stockholder or an Affiliate or
Associate of a 15% Stockholder (as such capitalized terms are defined in the
Rights Agreement).
Dated: ___________________, 19__ ____________________________
(Signature)
Signature Guaranteed:
4
<PAGE>
Form of Reverse Side of Right Certificate
(continued)
NOTICE
The signatures to the foregoing Assignment and the foregoing Certificate,
if applicable, must correspond to the name as written upon the face of this
Right Certificate in every particular, without alteration or enlargement or any
change whatsoever, and must be guaranteed by a member firm of a registered
national securities exchange, a member of the National Association of Securities
Dealers, Inc., or a commercial bank or trust company having an office or
correspondent in the United States.
In the event that the foregoing Certificate is not duly executed, with
signature guaranteed, the Company may deem the Rights represented by this Right
Certificate to be Beneficially Owned by a 15% Stockholder or an Affiliate or
Associate of a 15% Stockholder (as such capitalized terms are defined in the
Rights Agreement), and not issue any Right Certificate or Right Certificates in
exchange for this Right Certificate.
5
<PAGE>
Form of Reverse Side of Right Certificate
(continued)
FORM OF ELECTION TO PURCHASE
(To be executed by the registered holder if such holder
desires to exercise any or all of the Rights
represented by this Right Certificate)
To Unocal Corporation:
The undersigned hereby irrevocably elects to exercise
______________________________ (__________) of the Rights represented by this
Right Certificate to purchase the following:
(Check one of the following boxes)
__
/ / the Preferred Shares or other securities or property issuable upon the
__ exercise of said number of Rights pursuant to Section 7(c) of the Rights
Agreement.
__
/ / the shares of the Preferred Stock, par value $.10 per share of the Company,
__ or other securities or property issuable upon the exercise of said number
of Rights pursuant to Section 11(a)(ii) of the Rights Agreement.
__
/ / the securities issuable upon the exercise of said number of Rights pursuant
__ to Section 13(a) of the Rights Agreement.
The undersigned hereby requests that any such property and a
certificate for any such securities be issued in the name of and delivered to:
________________________________________________________________________________
________________________________________________________________________________
(Name, address and social security or other
identifying number of issuee)
The undersigned hereby further requests that if said number of Rights
shall not be all the Rights represented by his Right Certificate, a new Right
Certificate for the remaining balance of such Rights be issued in the name of
and delivered to:
________________________________________________________________________________
________________________________________________________________________________
(Name, address and social security or other
identifying number of issuee)
Dated: ___________, 19___ __________________________________
(Signature)
Signature Guaranteed:
6
<PAGE>
Form of Reverse Side of Right Certificate
(continued)
Certificate
-----------
(to be completed, if true)
The undersigned hereby certifies that the Rights represented by this
Right Certificate are not Beneficially Owned by a 15% Stockholder or an
Affiliate or Associate of a 15% Stockholder (as such capitalized terms are
defined in the Rights Agreement).
Dated: ____________________, 19__ ________________________________
(Signature)
Signature Guaranteed:
NOTICE
The signatures to the foregoing Assignment and the foregoing
Certificate, if applicable, must correspond to the name as written upon the face
of this Right Certificate in every particular, without alteration or enlargement
or any change whatsoever, and must be guaranteed by a member firm of a
registered national securities exchange, a member of the National Association of
Securities Dealers, Inc., or a commercial bank or trust company having an office
or correspondent in the United States.
In the event that the foregoing Certificate is not duly executed, with
signature guaranteed, the Company may deem the Rights represented by this Right
Certificate to be Beneficially Owned by a 15% Stockholder or an Affiliate or
Associate of a 15% Stockholder (as such capitalized terms are defined in the
Rights Agreement), and not issue any property or certificate for securities upon
the exercise of this Right Certificate or issue any new Right Certificate for
any remaining balance of unexercised Rights represented by this Right
Certificate.
7
<PAGE>
Exhibit C
---------
SUMMARY OF THE RIGHTS
The following is a brief description of the preferred stock purchase
rights (the "Rights") issuable upon the adoption of the proposed rights plan by
Unocal Corporation (the "Company"). It is intended to provide a general
description only and is subject to the detailed terms and conditions of a Rights
Agreement (the "Rights Agreement") dated as of January 29, 1990 by and between
the Company and Manufacturers Hanover Trust Company of California, as Rights
Agent (the "Rights Agent").
1. Common Share Certificates Representing Rights
---------------------------------------------
Until the Distribution Date (as defined in Section 2 below), (a) the
Rights are not exercisable, (b) they remain attached to and traded only together
with the Common Shares and (c) Common Share certificates will represent the
Rights related thereto. Common Share certificates issued after the Record Date
and prior to the Distribution Date shall contain a notation incorporating the
Rights Agreement by reference.
2. Distribution Date
-----------------
The "Distribution Date" is the earliest of the tenth business day
following (a) the date of the first public announcement that any person (other
than the Company or certain related entities) has become the beneficial owner of
15% or more of the outstanding Common Shares (such person is a "15% Stockholder"
and the date of such public announcement is the "15% Ownership Date") or (b) the
date of the commencement of, or the announcement of an intention to make, a
tender offer or exchange offer, the consummation of which would cause any person
to become a 15% Stockholder.
In calculating the percentage of outstanding Common Shares that are
beneficially owned by any person, that person is deemed to own any Common Shares
issuable upon the exercise, exchange or conversion of any options, warrants or
other securities beneficially owned by such person; provided, however, that such
Common Shares are not deemed outstanding for the purpose of calculating the
percentage of Common Shares that are beneficially owned by any other person.
Upon the close of business on the Distribution Date, the Rights
separate from the Common Shares, Right certificates
<PAGE>
are issued and the Rights become exercisable to purchase Preferred Shares as
described in Section 5 below.
3. Issuance of Right Certificates
------------------------------
As soon as practicable following the Distribution Date, separate
certificates representing only Rights will be mailed to the holders of record of
Common Shares as of the close of business on the Distribution Date, and the
separate Right certificates alone will represent the Rights from and after the
Distribution Date.
4. Expiration of Rights
--------------------
The Rights will expire on January 29, 2000, unless earlier redeemed.
5. Exercise of Rights
------------------
Rights may be exercised, at the option of the holders, pursuant to
paragraphs (a), (b) or (c) below. No Right may be exercised more than once or
pursuant to more than one of such paragraphs. From and after the first event of
the type described in paragraphs (b) or (c) below, each Right that is
beneficially owned by a 15% Stockholder is void.
(a) Unless the Rights have previously expired or been redeemed, from
and after the close of business on the Distribution Date, each Right (other than
a Right that has become void) will be exercisable to purchase one one-hundredth
of a share of Series A Junior Participating Cumulative Preferred Stock, par
value $.10 per share, of the Company (the "Preferred Shares"), at an exercise
price of $75.00 (the "Exercise Price"). The Preferred Shares are nonredeemable
and, unless otherwise provided in connection with the creation of a subsequent
series of preferred stock, are subordinate to any other series of the Company's
preferred stock, whether issued before or after the issuance of the Preferred
Shares. The Preferred Shares may not be issued except upon exercise of Rights.
The holder of a Preferred Share is entitled to receive when, as and if declared,
the greater of (a) cash and non-cash dividends in an amount equal to 100 times
the dividends declared on each Common Share or (b) a preferential annual
dividend of $1.00 per Preferred Share ($.01 per one one-hundredth of a Preferred
Share). In the event of liquidation, the holders of Preferred Shares are
entitled to receive a liquidation payment in an amount equal to the greater of
(x) $100 per Preferred Share ($1.00 per one one-hundredth of a Preferred Share),
plus all accrued and unpaid dividends and distributions on the Preferred Shares,
or (y) an amount equal to 100 times the aggregate amount to be distributed per
Common
2
<PAGE>
Share. Each Preferred Share has 100 votes, voting together with the Common
Shares. In the event of any merger, consolidation or other transaction in which
Common Shares are exchanged, the holder of a Preferred Share will be entitled to
receive 100 times the amount received per Common Share. The rights of the
Preferred Shares as to dividends, voting and liquidation preferences are
protected by anti-dilution provisions. It is anticipated that the value of one
one-hundredth of a Preferred Share should approximate the value of one Common
Share.
(b) Unless the Rights have previously expired or been redeemed, from
and after the close of business on the tenth business day following the 15%
Ownership Date, each Right (other than a Right that has become void) will be
exercisable to purchase, at the Exercise Price (initially $75.00), Preferred
Shares with a market value equal to two times the Exercise Price. If the Board
of Directors so elects, the Company will substitute for all or any portion of
the Preferred Shares that would otherwise be issuable upon the exercise of the
Rights, cash, assets or other securities having the same aggregate value as such
Preferred Shares.
(c) Unless the Rights have previously expired or been redeemed, if, on
or after the 15% Ownership Date, (a) the Company is acquired in a merger or
other business combination in which the Company is not the surviving corporation
or in which the outstanding Common Shares are changed into or exchanged for
stock or assets of another person or (b) 50% or more of the Company's
consolidated assets or earning power are sold (other than in transactions in the
ordinary course of business), then each Right (other than a Right that has
become void) will thereafter be exercisable to purchase, at the Exercise Price
(initially $75.00), shares of stock of the surviving corporation or purchaser,
respectively, with an aggregate market value equal to two times the Exercise
Price.
6. Adjustments to Prevent Dilution
-------------------------------
The Exercise Price, the number of outstanding Rights and the number of
Preferred Shares issuable upon exercise of the Rights are subject to adjustment
from time to time as set forth in the Rights Agreement in order to prevent
dilution.
7. Exchange Provision
------------------
Unless the Rights have previously expired or been redeemed, at any time
after the 15% Ownership Date, the Board of Directors may elect to exchange the
Rights (other than a Right owned by the 15% Stockholder which has become void),
in whole or in part, for shares of Preferred Stock at an exchange
3
<PAGE>
ratio of one-half of the number of shares of Preferred Stock which a holder of a
Right would then be entitled to receive upon exercise of a Right, per Right.
8. Cash Paid Instead of Issuing Fractional Securities
--------------------------------------------------
With certain exceptions, no adjustment in the Exercise Price will be
required until cumulative adjustments require an adjustment of at least 1%. No
fractional securities will be issued upon exercise of a Right (other than
fractions of Preferred Shares that are integral multiples of one one-hundredth
of a Preferred Share and that may, at the election of the Company, be evidenced
by depositary receipts) and in lieu thereof, an adjustment in cash shall be made
based on the market price of such securities on the last trading date prior to
the date of exercise.
9. Redemption
----------
At any time prior to the first event of the type described in Section
5(b) or (c) above, a majority of the Board of Directors may, at their option,
direct the Company to redeem the Rights in whole, but not in part, at a price of
$.01 per Right (the "Redemption Price"). Immediately upon the action of a
majority of the Board of Directors directing the Company to redeem the Rights
(the date of such action is the "Redemption Date"), the right to exercise Rights
shall terminate and the only right of the holders of Rights thereafter shall be
to receive the Redemption Price.
10. No Stockholder Rights Prior to Exercise
---------------------------------------
Until a Right is exercised, the holder thereof, as such, has no rights
as a stockholder of the Company (other than rights resulting from the holder's
ownership of Common Shares), including, without limitation, the right to vote or
to receive dividends.
11. Amendment of Rights Agreement
-----------------------------
At any time prior to the earlier of (a) the first event of the type
described in Section 5(b) or (c) above, or (b) the Redemption Date, a majority
of the Board of Directors may, without the approval of any holders of Rights,
direct the Company and the Rights Agent to amend the Rights Agreement in any
manner, whether or not such amendment is adverse to the holders of Rights. At
any time after the earlier of the first event of the type described in Section
5(b) or (c) above and prior to the Redemption Date, a majority of the Board of
Directors may, without the approval of any holders of Rights, direct the Company
and the Rights Agent to amend the Rights
4
<PAGE>
Agreement in any manner so long as such amendment does not materially and
adversely affect the interests of the holders of Rights.
5
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in this Registration Statement
on Form S-4 of Unocal Corporation and Unocal Capital Trust of our report dated
February 14, 1996, except for Note 25, as to which the date is February 16,
1996, on our audits of the consolidated financial statements and financial
statement schedule of Unocal Corporation and its subsidiaries as of December
31, 1995 and 1994 and for each of the three years in the period ended December
31, 1995, which report is included in Unocal Corporation's Annual Report on
Form 10-K for the year ended December 31, 1995. Our report includes an
explanatory paragraph with respect to the changes in methods of accounting for
the impairment of long-lived assets and long-lived assets to be disposed of in
1995; for recognizing the reduction in value of producing oil and gas
properties in 1994; and for postretirement benefits other than pensions and
for postemployment benefits in 1993. We also consent to the reference to our
firm under the caption "Experts".
Coopers & Lybrand L.L.P.
Los Angeles, California
July 26, 1996
<PAGE>
EXHIBIT 25.1
================================================================================
FORM T-1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2) [__]
THE BANK OF NEW YORK
(Exact name of trustee as specified in its charter)
New York 13-5160382
(State of incorporation (I.R.S. employer
if not a U.S. national bank) identification no.)
48 Wall Street, New York, N.Y. 10286
(Address of principal executive offices) (Zip code)
UNOCAL CORPORATION
(Exact name of obligor as specified in its charter)
Delaware 95-3825062
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
2141 Rosecrans Avenue, Suite 4000
El Segundo, California 90245
(Address of principal executive offices) (Zip code)
______________________
__% Convertible Junior Subordinated Debentures
(Title of the indenture securities)
================================================================================
<PAGE>
1. General information. Furnish the following information as to the Trustee:
(a) Name and address of each examining or supervising authority to which
it is subject.
- --------------------------------------------------------------------------------
Name Address
- --------------------------------------------------------------------------------
Superintendent of Banks of the State of 2 Rector Street, New York,
New York N.Y. 10006, and Albany, N.Y.
12203
Federal Reserve Bank of New York 33 Liberty Plaza, New York,
N.Y. 10045
Federal Deposit Insurance Corporation Washington, D.C. 20429
New York Clearing House Association New York, New York
(b) Whether it is authorized to exercise corporate trust powers.
Yes.
2. Affiliations with Obligor.
If the obligor is an affiliate of the trustee, describe each such affilia-
tion.
None. (See Note on page 3.)
16. List of Exhibits.
Exhibits identified in parentheses below, on file with the Commission, are
incorporated herein by reference as an exhibit hereto, pursuant to Rule
7a-29 under the Trust Indenture Act of 1939 (the "Act") and Rule 24 of the
Commission's Rules of Practice.
1. A copy of the Organization Certificate of The Bank of New York
(formerly Irving Trust Company) as now in effect, which contains the
authority to commence business and a grant of powers to exercise
corporate trust powers. (Exhibit 1 to Amendment No. 1 to Form T-1
filed with Registration Statement No. 33-6215, Exhibits 1a and 1b to
Form T-1 filed with Registration Statement No. 33-21672 and Exhibit 1
to Form T-1 filed with Registration Statement No. 33-29637.)
4. A copy of the existing By-laws of the Trustee. (Exhibit 4 to Form T-1
filed with Registration Statement No. 33-31019.)
-2-
<PAGE>
6. The consent of the Trustee required by Section 321(b) of the Act.
(Exhibit 6 to Form T-1 filed with Registration Statement No. 33-
44051.)
7. A copy of the latest report of condition of the Trustee published
pursuant to law or to the requirements of its supervising or examining
authority.
NOTE
Inasmuch as this Form T-1 is filed prior to the ascertainment by the
Trustee of all facts on which to base a responsive answer to Item 2, the answer
to said Item is based on incomplete information.
Item 2 may, however, be considered as correct unless amended by an
amendment to this Form T-1.
-3-
<PAGE>
SIGNATURE
Pursuant to the requirements of the Act, the Trustee, The Bank of New York,
a corporation organized and existing under the laws of the State of New York,
has duly caused this statement of eligibility to be signed on its behalf by the
undersigned, thereunto duly authorized, all in The City of New York, and State
of New York, on the 24th day of July, 1996.
THE BANK OF NEW YORK
By: /s/ PAUL J. SCHMALZEL
Name: Paul J. Schmalzel
Title: Assistant Treasurer
-4-
<PAGE>
EXHIBIT 7
Consolidated Report of Condition of
THE BANK OF NEW YORK
of 48 Wall Street, New York, N.Y. 10286
And Foreign and Domestic Subsidiaries,
a member of the Federal Reserve System, at the close of business
March 31, 1996, published in accordance with a call made by the
Federal Reserve Bank of this District pursuant to the provisions
of the Federal Reserve Act.
Dollar Amounts
ASSETS in Thousands
Cash and balances due from
depository institutions:
Noninterest-bearing balances and
currency and coin ................. $ 2,461,550
Interest-bearing balances .......... 835,563
Securities:
Held-to-maturity securities ........ 802,064
Available-for-sale securities ...... 2,051,263
Federal funds sold in domestic
offices of the bank:
Federal funds sold ................... 3,885,475
Loans and lease financing
receivables:
Loans and leases, net of unearned
income .........................27,820,159
LESS: Allowance for loan and
lease losses ................... 509,817
LESS: Allocated transfer risk
reserve......................... 1,000
Loans and leases, net of unearned
income, allowance, and reserve... 27,309,342
Assets held in trading accounts ...... 837,118
Premises and fixed assets (including
capitalized leases) ................. 614,567
Other real estate owned .............. 51,631
Investments in unconsolidated
subsidiaries and associated
companies ........................... 225,158
Customers' liability to this bank on
acceptances outstanding ............. 800,375
Intangible assets .................... 436,668
Other assets ......................... 1,247,908
-----------
Total assets ......................... $41,558,682
===========
LIABILITIES
Deposits:
<PAGE>
In domestic offices ................ $18,851,327
Noninterest-bearing ............. 7,102,645
Interest-bearing ................11,748,682
In foreign offices, Edge and
Agreement subsidiaries, and IBFs .. 10,965,604
Noninterest-bearing .............. 37,855
<PAGE>
Interest-bearing .................. 10,927,749
Federal funds purchased and securities
sold under agreements to repurchase
in domestic offices of the bank and
of its Edge and Agreement
subsidiaries, and in IBFs:
Federal funds purchased ............. 1,224,886
Securities sold under agreements
to repurchase ...................... 29,728
Demand notes issued to the U.S.
Treasury ............................. 118,870
Trading liabilities ................... 673,944
Other borrowed money:
With original maturity of one year
or less ............................. 2,713,248
With original maturity of more than
one year ............................ 20,780
Bank's liability on acceptances
executed and outstanding ............. 803,292
Subordinated notes and debentures ..... 1,022,860
Other liabilities ..................... 1,590,564
----------
Total liabilities ..................... 38,015,103
==========
EQUITY CAPITAL
Common stock ......................... 942,284
Surplus .............................. 525,666
Undivided profits and capital
reserves ............................ 2,078,197
Net unrealized holding gains
(losses) on available-for-sale
securities .......................... 3,197
Cumulative foreign currency
translation adjustments ............. (5,765)
Total equity capital ................. 3,543,579
-----------
Total liabilities and equity
capital ............................. $41,558,682
============
I, Robert E. Keilman, Senior Vice President and Comptroller of the
above-named bank do hereby declare that this Report of Condition has
been prepared in conformance with the instructions issued by the Board
of Governors of the Federal Reserve System and is true to the best of
my knowledge and belief.
Robert E. Keilman
We, the undersigned directors, attest to the correctness of this
Report of Condition and declare that it has been examined by us and to
the best of our knowledge and belief has been prepared in conformance
with the instructions issued by the Board of Governors
<PAGE>
of the Federal Reserve System and is true and correct.
J. Carter Bacot
Thomas A. Renyi Directors
Alan R. Griffith
<PAGE>
EXHIBIT 25.2
================================================================================
FORM T-1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2) [__]
THE BANK OF NEW YORK
(Exact name of trustee as specified in its charter)
New York 13-5160382
(State of incorporation (I.R.S. employer
if not a U.S. national bank) identification no.)
48 Wall Street, New York, N.Y. 10286
(Address of principal executive offices) (Zip code)
UNOCAL CAPITAL TRUST
(Exact name of obligor as specified in its charter)
Delaware 95-4589528
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
2141 Rosecrans Avenue, Suite 4000
El Segundo, California 90245
(Address of principal executive offices) (Zip code)
______________________
__% Trust Convertible Preferred Securities
(Title of the indenture securities)
===============================================================================
<PAGE>
1. General information. Furnish the following information as to the Trustee:
(a) Name and address of each examining or supervising authority to which
it is subject.
- --------------------------------------------------------------------------------
Name Address
- --------------------------------------------------------------------------------
Superintendent of Banks of the State of 2 Rector Street, New York,
New York N.Y. 10006, and Albany, N.Y.
12203
Federal Reserve Bank of New York 33 Liberty Plaza, New York,
N.Y. 10045
Federal Deposit Insurance Corporation Washington, D.C. 20429
New York Clearing House Association New York, New York
(b) Whether it is authorized to exercise corporate trust powers.
Yes.
2. Affiliations with Obligor.
If the obligor is an affiliate of the trustee, describe each such affilia-
tion.
None. (See Note on page 3.)
16. List of Exhibits.
Exhibits identified in parentheses below, on file with the Commission, are
incorporated herein by reference as an exhibit hereto, pursuant to Rule
7a-29 under the Trust Indenture Act of 1939 (the "Act") and Rule 24 of the
Commission's Rules of Practice.
1. A copy of the Organization Certificate of The Bank of New York
(formerly Irving Trust Company) as now in effect, which contains the
authority to commence business and a grant of powers to exercise
corporate trust powers. (Exhibit 1 to Amendment No. 1 to Form T-1
filed with Registration Statement No. 33-6215, Exhibits 1a and 1b to
Form T-1 filed with Registration Statement No. 33-21672 and Exhibit 1
to Form T-1 filed with Registration Statement No. 33-29637.)
4. A copy of the existing By-laws of the Trustee. (Exhibit 4 to Form T-1
filed with Registration Statement No. 33-31019.)
-2-
<PAGE>
6. The consent of the Trustee required by Section 321(b) of the Act.
(Exhibit 6 to Form T-1 filed with Registration Statement No. 33-
44051.)
7. A copy of the latest report of condition of the Trustee published
pursuant to law or to the requirements of its supervising or examining
authority.
NOTE
Inasmuch as this Form T-1 is filed prior to the ascertainment by the
Trustee of all facts on which to base a responsive answer to Item 2, the answer
to said Item is based on incomplete information.
Item 2 may, however, be considered as correct unless amended by an
amendment to this Form T-1.
-3-
<PAGE>
SIGNATURE
Pursuant to the requirements of the Act, the Trustee, The Bank of New York,
a corporation organized and existing under the laws of the State of New York,
has duly caused this statement of eligibility to be signed on its behalf by the
undersigned, thereunto duly authorized, all in The City of New York, and State
of New York, on the 24th day of July, 1996.
THE BANK OF NEW YORK
By: /s/ PAUL J. SCHMALZEL
Name: Paul J. Schmalzel
Title: Assistant Treasurer
-4-
<PAGE>
EXHIBIT 7
Consolidated Report of Condition of
THE BANK OF NEW YORK
of 48 Wall Street, New York, N.Y. 10286
And Foreign and Domestic Subsidiaries,
a member of the Federal Reserve System, at the close of business
March 31, 1996, published in accordance with a call made by the
Federal Reserve Bank of this District pursuant to the provisions
of the Federal Reserve Act.
Dollar Amounts
ASSETS in Thousands
Cash and balances due from
depository institutions:
Noninterest-bearing balances and
currency and coin ................. $ 2,461,550
Interest-bearing balances .......... 835,563
Securities:
Held-to-maturity securities ........ 802,064
Available-for-sale securities ...... 2,051,263
Federal funds sold in domestic
offices of the bank:
Federal funds sold ................... 3,885,475
Loans and lease financing
receivables:
Loans and leases, net of unearned
income .........................27,820,159
LESS: Allowance for loan and
lease losses ................... 509,817
LESS: Allocated transfer risk
reserve......................... 1,000
Loans and leases, net of unearned
income, allowance, and reserve... 27,309,342
Assets held in trading accounts ...... 837,118
Premises and fixed assets (including
capitalized leases) ................. 614,567
Other real estate owned .............. 51,631
Investments in unconsolidated
subsidiaries and associated
companies ........................... 225,158
Customers' liability to this bank on
acceptances outstanding ............. 800,375
Intangible assets .................... 436,668
Other assets ......................... 1,247,908
-----------
Total assets ......................... $41,558,682
===========
LIABILITIES
Deposits:
<PAGE>
In domestic offices ................ $18,851,327
Noninterest-bearing ............. 7,102,645
Interest-bearing ................11,748,682
In foreign offices, Edge and
Agreement subsidiaries, and IBFs .. 10,965,604
Noninterest-bearing .............. 37,855
<PAGE>
Interest-bearing ................. 10,927,749
Federal funds purchased and securities
sold under agreements to repurchase
in domestic offices of the bank and
of its Edge and Agreement
subsidiaries, and in IBFs:
Federal funds purchased ............. 1,224,886
Securities sold under agreements
to repurchase ...................... 29,728
Demand notes issued to the U.S.
Treasury ............................. 118,870
Trading liabilities ................... 673,944
Other borrowed money:
With original maturity of one year
or less ............................. 2,713,248
With original maturity of more than
one year ............................ 20,780
Bank's liability on acceptances
executed and outstanding ............. 803,292
Subordinated notes and debentures ..... 1,022,860
Other liabilities ..................... 1,590,564
-----------
Total liabilities ..................... 38,015,103
===========
EQUITY CAPITAL
Common stock ......................... 942,284
Surplus .............................. 525,666
Undivided profits and capital
reserves ............................ 2,078,197
Net unrealized holding gains
(losses) on available-for-sale
securities .......................... 3,197
Cumulative foreign currency
translation adjustments ............. (5,765)
Total equity capital ................. 3,543,579
-----------
Total liabilities and equity
capital ............................. $41,558,682
===========
I, Robert E. Keilman, Senior Vice President and Comptroller of the
above-named bank do hereby declare that this Report of Condition has
been prepared in conformance with the instructions issued by the Board
of Governors of the Federal Reserve System and is true to the best of
my knowledge and belief.
Robert E. Keilman
We, the undersigned directors, attest to the correctness of this
Report of Condition and declare that it has been examined by us and to
the best of our knowledge and belief has been prepared in conformance
with the instructions issued by the Board of Governors
<PAGE>
of the Federal Reserve System and is true and correct.
J. Carter Bacot
Thomas A. Renyi Directors
Alan R. Griffith
<PAGE>
EXHIBIT 25.3
================================================================================
FORM T-1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2) [__]
THE BANK OF NEW YORK
(Exact name of trustee as specified in its charter)
New York 13-5160382
(State of incorporation (I.R.S. employer
if not a U.S. national bank) identification no.)
48 Wall Street, New York, N.Y. 10286
(Address of principal executive offices) (Zip code)
UNOCAL CORPORATION
(Exact name of obligor as specified in its charter)
Delaware 95-3825062
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
2141 Rosecrans Avenue, Suite 4000
El Segundo, California 90245
(Address of principal executive offices) (Zip code)
______________________
Guarantee of __% Trust Convertible
Preferred Securities of Unocal Capital Trust
(Title of the indenture securities)
===============================================================================
<PAGE>
1. General information. Furnish the following information as to the Trustee:
(a) Name and address of each examining or supervising authority to which
it is subject.
- --------------------------------------------------------------------------------
Name Address
- --------------------------------------------------------------------------------
Superintendent of Banks of the State of 2 Rector Street, New York,
New York N.Y. 10006, and Albany, N.Y.
12203
Federal Reserve Bank of New York 33 Liberty Plaza, New York,
N.Y. 10045
Federal Deposit Insurance Corporation Washington, D.C. 20429
New York Clearing House Association New York, New York
(b) Whether it is authorized to exercise corporate trust powers.
Yes.
2. Affiliations with Obligor.
If the obligor is an affiliate of the trustee, describe each such affilia-
tion.
None. (See Note on page 3.)
16. List of Exhibits.
Exhibits identified in parentheses below, on file with the Commission, are
incorporated herein by reference as an exhibit hereto, pursuant to Rule
7a-29 under the Trust Indenture Act of 1939 (the "Act") and Rule 24 of the
Commission's Rules of Practice.
1. A copy of the Organization Certificate of The Bank of New York
(formerly Irving Trust Company) as now in effect, which contains the
authority to commence business and a grant of powers to exercise
corporate trust powers. (Exhibit 1 to Amendment No. 1 to Form T-1
filed with Registration Statement No. 33-6215, Exhibits 1a and 1b to
Form T-1 filed with Registration Statement No. 33-21672 and Exhibit 1
to Form T-1 filed with Registration Statement No. 33-29637.)
4. A copy of the existing By-laws of the Trustee. (Exhibit 4 to Form T-1
filed with Registration Statement No. 33-31019.)
-2-
<PAGE>
6. The consent of the Trustee required by Section 321(b) of the Act.
(Exhibit 6 to Form T-1 filed with Registration Statement No. 33-
44051.)
7. A copy of the latest report of condition of the Trustee published
pursuant to law or to the requirements of its supervising or examining
authority.
NOTE
Inasmuch as this Form T-1 is filed prior to the ascertainment by the
Trustee of all facts on which to base a responsive answer to Item 2, the answer
to said Item is based on incomplete information.
Item 2 may, however, be considered as correct unless amended by an
amendment to this Form T-1.
-3-
<PAGE>
SIGNATURE
Pursuant to the requirements of the Act, the Trustee, The Bank of New York,
a corporation organized and existing under the laws of the State of New York,
has duly caused this statement of eligibility to be signed on its behalf by the
undersigned, thereunto duly authorized, all in The City of New York, and State
of New York, on the 24 day of July, 1996.
THE BANK OF NEW YORK
By: /s/ PAUL J. SCHMALZEL
Name: Paul J. Schmalzel
Title: Assistant Trassurer
-4-
<PAGE>
EXHIBIT 7
Consolidated Report of Condition of
THE BANK OF NEW YORK
of 48 Wall Street, New York, N.Y. 10286
And Foreign and Domestic Subsidiaries,
a member of the Federal Reserve System, at the close of business
March 31, 1996, published in accordance with a call made by the
Federal Reserve Bank of this District pursuant to the provisions
of the Federal Reserve Act.
Dollar Amounts
ASSETS in Thousands
Cash and balances due from
depository institutions:
Noninterest-bearing balances and
currency and coin ................. $ 2,461,550
Interest-bearing balances .......... 835,563
Securities:
Held-to-maturity securities ........ 802,064
Available-for-sale securities ...... 2,051,263
Federal funds sold in domestic
offices of the bank:
Federal funds sold ................... 3,885,475
Loans and lease financing
receivables:
Loans and leases, net of unearned
income ......................... 27,820,159
LESS: Allowance for loan and
lease losses ................... 509,817
LESS: Allocated transfer risk
reserve......................... 1,000
Loans and leases, net of unearned
income, allowance, and reserve... 27,309,342
Assets held in trading accounts ...... 837,118
Premises and fixed assets (including
capitalized leases) ................. 614,567
Other real estate owned .............. 51,631
Investments in unconsolidated
subsidiaries and associated
companies ........................... 225,158
Customers' liability to this bank on
acceptances outstanding ............. 800,375
Intangible assets .................... 436,668
Other assets ......................... 1,247,908
-----------
Total assets ......................... $41,558,682
===========
LIABILITIES
Deposits:
<PAGE>
In domestic offices ................ $18,851,327
Noninterest-bearing ............. 7,102,645
Interest-bearing ................11,748,682
In foreign offices, Edge and
Agreement subsidiaries, and IBFs .. 10,965,604
Noninterest-bearing .............. 37,855
<PAGE>
Interest-bearing ....................10,927,749
Federal funds purchased and securities
sold under agreements to repurchase
in domestic offices of the bank and
of its Edge and Agreement
subsidiaries, and in IBFs:
Federal funds purchased ............. 1,224,886
Securities sold under agreements
to repurchase ...................... 29,728
Demand notes issued to the U.S.
Treasury ............................. 118,870
Trading liabilities ................... 673,944
Other borrowed money:
With original maturity of one year
or less ............................. 2,713,248
With original maturity of more than
one year ............................ 20,780
Bank's liability on acceptances
executed and outstanding ............. 803,292
Subordinated notes and debentures ..... 1,022,860
Other liabilities ..................... 1,590,564
-----------
Total liabilities ..................... 38,015,103
===========
EQUITY CAPITAL
Common stock ......................... 942,284
Surplus .............................. 525,666
Undivided profits and capital
reserves ............................ 2,078,197
Net unrealized holding gains
(losses) on available-for-sale
securities .......................... 3,197
Cumulative foreign currency
translation adjustments ............. (5,765)
Total equity capital ................. 3,543,579
Total liabilities and equity
-----------
capital ............................. $41,558,682
===========
I, Robert E. Keilman, Senior Vice President and Comptroller of the
above-named bank do hereby declare that this Report of Condition has
been prepared in conformance with the instructions issued by the Board
of Governors of the Federal Reserve System and is true to the best of
my knowledge and belief.
Robert E. Keilman
We, the undersigned directors, attest to the correctness of this
Report of Condition and declare that it has been examined by us and to
the best of our knowledge and belief has been prepared in conformance
with the instructions issued by the Board of Governors
<PAGE>
of the Federal Reserve System and is true and correct.
J. Carter Bacot
Thomas A. Renyi Directors
Alan R. Griffith
<PAGE>
EXHIBIT 99.1
LETTER OF TRANSMITTAL
TO TENDER
$3.50 CONVERTIBLE PREFERRED STOCK
OF
UNOCAL CORPORATION
IN EXCHANGE FOR
% TRUST CONVERTIBLE PREFERRED SECURITIES
OF
UNOCAL CAPITAL TRUST
THE EXCHANGE OFFER WILL EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON , 1996 (THE "EXPIRATION DATE")
UNLESS EXTENDED
BY UNOCAL CORPORATION
EXCHANGE AGENT:
THE BANK OF NEW YORK
Facsimile Number:
(For Eligible Institutions Only)
(212) 571-3080
By Hand or Overnight Courier: By Mail:
(Registered or Certified Mail
The Bank of New York Recommended)
101 Barclay Street (7 East)
Reorganization Section The Bank of New York
Corporate Trust Services Window 101 Barclay Street (7 East)
New York, New York 10286 Reorganization Section
Attention: George Johnson New York, New York 10286
Attention: George Johnson
Confirm Receipt of Notice
of Guaranteed Delivery by Telephone
(212) 815-4997
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH
ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA A FACSIMILE TRANSMISSION TO A NUMBER
OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.
The undersigned acknowledges receipt of the Prospectus, dated , 1996 (the
"Prospectus"), of Unocal Corporation, a Delaware corporation ("Unocal"), and
Unocal Capital Trust, a Delaware statutory business trust (the "Trust") which,
together with this Letter of Transmittal (the "Letter of Transmittal"),
describes Unocal's offer (the "Exchange Offer") to exchange % Trust
Convertible Preferred Securities of the Trust, representing preferred
undivided beneficial interests in the assets of the Trust (the "Trust
Convertible Preferred Securities"), for up to all of the 10,250,000
outstanding shares of its $3.50 Convertible Preferred Stock (the "$3.50
Convertible Preferred Stock").
<PAGE>
The Exchange Offer will be effected on the basis of (A) that amount of Trust
Convertible Preferred Securities having an aggregate liquidation amount equal
to the greater of (1) the redemption price for a share of the $3.50
Convertible Preferred Stock as of the Exchange Amount Determination Date (as
defined herein), plus accumulated and unpaid dividends thereon to but
excluding the Expiration Date, or (2) the Market Value (as defined herein) of
the number of shares of the common stock, par value $1.00 per share (the
"Common Stock"), of Unocal into which a share of the $3.50 Convertible
Preferred Stock is convertible as of the Exchange Amount Determination Date,
for (B) each share of $3.50 Convertible Preferred Stock validly tendered and
accepted for exchange in the Exchange Offer. The Trust Convertible Preferred
Securities have a liquidation amount of $50 per security. The current
redemption price for a share of the $3.50 Convertible Preferred Stock is
$52.10. The current conversion ratio on the $3.50 Convertible Preferred Stock
is 1.626 shares of Common Stock for each share of $3.50 Convertible Preferred
Stock. Unocal will pay amounts of less than $50 due to a holder of $3.50
Convertible Preferred Stock for such exchange in cash in lieu of issuing a
fractional Trust Convertible Preferred Security. The "Exchange Amount
Determination Date" will be the second business day before the Expiration
Date. "Market Value" means the average of the daily closing price for one
share of the Common Stock as reported on the New York Stock Exchange Composite
Transaction listing for the five trading days immediately preceding the
Exchange Amount Determination Date.
The undersigned has checked the appropriate boxes below and signed this
Letter of Transmittal to indicate the action the undersigned desires to take
with respect to the Exchange Offer.
PLEASE READ THE ENTIRE LETTER OF TRANSMITTAL AND
THE PROSPECTUS CAREFULLY BEFORE CHECKING ANY BOX BELOW
THE INSTRUCTIONS INCLUDED WITH THIS LETTER OF TRANSMITTAL MUST BE FOLLOWED.
QUESTIONS AND REQUESTS FOR ASSISTANCE OR FOR ANY ADDITIONAL COPIES OF THE
PROSPECTUS AND THIS LETTER OF TRANSMITTAL MAY BE DIRECTED TO THE EXCHANGE
AGENT.
List below the shares of $3.50 Convertible Preferred Stock to which this
Letter of Transmittal relates. If the space provided below is inadequate, the
Certificate Numbers and Numbers of Shares should be listed on a separate
signed schedule affixed hereto.
DESCRIPTION OF SHARES OF $3.50 CONVERTIBLE PREFERRED STOCK TENDERED HEREWITH
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C> <C> <C>
NAME(S) AND ADDRESS(ES) OF REGISTERED HOLDER(S) NUMBER OF SHARES
(PLEASE CERTIFICATE REPRESENTED NUMBER OF SHARES
FILL IN) NUMBER(S)* BY CERTIFICATE(S) TENDERED**
- ----------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
TOTAL
</TABLE>
- -------------------------------------------------------------------------------
* Need not be completed by book-entry holders.
** Unless otherwise indicated, the holder will be deemed to have tendered
the full number of shares of $3.50 Convertible Preferred Stock
represented by the tendered certificates. See instruction 2.
<PAGE>
This Letter of Transmittal is to be used if certificates for shares of $3.50
Convertible Preferred Stock are to be forwarded herewith. If delivery of
shares of $3.50 Convertible Preferred Stock is to be made through book-entry
transfer into the Exchange Agent's account at the Depository Trust Company
("DTC"), this Letter of Transmittal need not be delivered; provided, however,
that tenders of shares of $3.50 Convertible Preferred Stock must be effected
in accordance with DTC's Automated Tender Offer Program ("ATOP") procedures and
the procedures set forth in the Prospectus under the caption "The Exchange
Offer--Procedures for Tendering--Book-Entry Transfer".
Unless the context requires otherwise, the term "Holder" for purposes of
this Letter of Transmittal means any person in whose name shares of $3.50
Convertible Preferred Stock are registered or any other person who has
obtained a properly completed stock power from the registered holder or any
person whose shares of $3.50 Convertible Preferred Stock are held of record by
DTC who desires to deliver such shares by book-entry transfer at DTC.
Holders whose shares of $3.50 Convertible Preferred Stock are not
immediately available or who cannot deliver their shares of $3.50 Convertible
Preferred Stock and all other documents required hereby to the Exchange Agent
prior to the Expiration Date may tender their shares of $3.50 Convertible
Preferred Stock according to the guaranteed delivery procedure set forth in
the Prospectus under the caption "The Exchange Offer--Procedures for
Tendering--Guaranteed Delivery".
[_] CHECK HERE IF TENDERED SHARES OF $3.50 CONVERTIBLE PREFERRED STOCK ARE
BEING DELIVERED BY BOOK-ENTRY TRANSFER MADE TO AN ACCOUNT MAINTAINED BY
THE EXCHANGE AGENT WITH DTC AND COMPLETE THE FOLLOWING:
Name of Tendering Institution
----------------------------------------------
The Depository Trust Company:
----------------------------------------------
Account Number Transaction Code Number
--------------- ---------------------
[_] CHECK HERE IF TENDERED SHARES OF $3.50 CONVERTIBLE PREFERRED STOCK ARE
BEING DELIVERED PURSUANT TO A NOTICE OF GUARANTEED DELIVERY AND COMPLETE
THE FOLLOWING:
Name(s) of Registered Holder(s)
--------------------------------------------
Name of Eligible Institution that Guaranteed Delivery
----------------------
If delivery is by Book-Entry Transfer:
Account Number
-----------------------------------------------------------
<PAGE>
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
Ladies and Gentlemen:
Upon the terms and subject to the conditions of the Exchange Offer, the
undersigned hereby tenders to Unocal the above-described shares of $3.50
Convertible Preferred Stock. Subject to, and effective upon, the acceptance
for exchange of the shares of $3.50 Convertible Preferred Stock tendered
herewith, the undersigned hereby exchanges, assigns, and transfers to, or upon
the order of, Unocal, all right, title, and interest in and to such shares.
The undersigned hereby irrevocably constitutes and appoints the Exchange Agent
as the true and lawful agent and attorney-in-fact of the undersigned (with
full knowledge that said Exchange Agent acts as the agent of the undersigned
in connection with the Exchange Offer) to cause the shares of $3.50
Convertible Preferred Stock to be assigned, transferred, and exchanged. The
undersigned represents and warrants that it has full power and authority to
tender, exchange, assign, and transfer the shares of $3.50 Convertible
Preferred Stock and to acquire the Trust Convertible Preferred Securities
issuable upon the exchange of such tendered shares, and that, when the same
are accepted for exchange, Unocal will acquire good and unencumbered title to
the tendered shares of $3.50 Convertible Preferred Stock, free and clear of
all liens, restrictions, charges, and encumbrances and not subject to any
adverse claim. The undersigned also warrants that it will, upon request,
execute, and deliver any additional documents deemed by the Exchange Agent or
Unocal to be necessary or desirable to complete the exchange, assignment, and
transfer of tendered shares of $3.50 Convertible Preferred Stock or transfer
ownership of such shares on the account books maintained by DTC. All authority
herein conferred or agreed to be conferred shall survive the death,
bankruptcy, or incapacity of the undersigned and every obligation of the
undersigned hereunder shall be binding upon the heirs, personal
representatives, successors, and assigns of the undersigned.
The Exchange Offer is conditioned on the receipt for exchange of at least
4,000,000 shares of $3.50 Convertible Preferred Securities and certain other
conditions described in the Prospectus, which conditions may be waived by
Unocal. In addition, Unocal expressly reserves the right, in its sole
discretion, to extend, amend, or modify the terms and conditions of the
Exchange Offer in any manner, or to withdraw or terminate the Exchange Offer
at any time for any reason. The undersigned recognizes that as a result of the
foregoing, Unocal may not be required to exchange any of the shares of $3.50
Convertible Preferred Stock tendered hereby and, in such event, the shares of
$3.50 Convertible Preferred Stock not exchanged will be returned to the
undersigned at the address shown below the signature of the undersigned.
Tendered shares of $3.50 Convertible Preferred Stock may be withdrawn at any
time prior to the Expiration Date and, unless accepted for exchange by Unocal,
may be withdrawn at any time after 40 business days after the date of the
Prospectus.
Certificates for all Trust Convertible Preferred Securities delivered in
exchange for tendered shares of $3.50 Convertible Preferred Stock delivered
herewith but not exchanged, registered in the name of the undersigned, shall
be delivered to the undersigned at the address shown below the signature of
the undersigned.
<PAGE>
TENDERED HOLDER(S) SIGN HERE
(Complete accompanying substitute Form W-9)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
(Signature(s) of Holder(s))
Dated:
---------------- , 1996
(Must be signed by registered Holder(s) exactly as name(s) appear(s) on
certificate(s) for shares of $3.50 Convertible Preferred Stock or by any
person(s) authorized to become registered Holder(s) by endorsements and
documents transmitted herewith or, if the shares of $3.50 Convertible
Preferred Stock are held of record by DTC, the person in whose name such
shares are registered on the books of DTC. If signature is by a trustee,
executor, administrator, guardian, attorney-in-fact, officer of a
corporation, or other person acting in a fiduciary or representative
capacity, please set forth the full title of such person.) See instruction 3.
Name(s):
---------------------------------------------------------------------
-----------------------------------------------------------------------------
(Please Print)
Capacity (full title):
-------------------------------------------------------
Address:
---------------------------------------------------------------------
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
(Including Zip Code)
Area Code and Telephone No.
--------------------------------------------------
Taxpayer Identification No.
--------------------------------------------------
GUARANTEE OF SIGNATURE(S)
(If Required--See Instruction 3)
Authorized Signature:
--------------------------------------------------------
Name:
------------------------------------------------------------------------
Title:
-----------------------------------------------------------------------
Address:
---------------------------------------------------------------------
Name of Firm:
----------------------------------------------------------------
Area Code and Telephone Number:
----------------------------------------------
Dated:
---------------- , 1996
<PAGE>
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE EXCHANGE OFFER
1. Delivery of this Letter of Transmittal and Certificates. Certificates for
all physically delivered shares of $3.50 Convertible Preferred Stock as well
as a properly completed and duly executed copy of this Letter of Transmittal
or facsimile thereof, and any other documents required by this Letter of
Transmittal, or confirmation of any book-entry transfer to the Exchange
Agent's account at DTC of shares of $3.50 Convertible Preferred Stock tendered
by book-entry transfer, must be received by the Exchange Agent at either of
its addresses set forth herein prior to the Expiration Date.
THE METHOD OF DELIVERY OF THIS LETTER OF TRANSMITTAL, THE SHARES OF $3.50
CONVERTIBLE PREFERRED STOCK, AND ANY OTHER REQUIRED DOCUMENTS IS AT THE
ELECTION AND RISK OF THE HOLDER AND, EXCEPT AS OTHERWISE PROVIDED BELOW, THE
DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE EXCHANGE
AGENT. IF SUCH DELIVERY IS BY MAIL, IT IS SUGGESTED THAT REGISTERED MAIL WITH
RETURN RECEIPT REQUESTED, PROPERLY INSURED, BE USED.
Holders whose shares of $3.50 Convertible Preferred Stock are not
immediately available or who cannot deliver their shares of $3.50 Convertible
Preferred Stock and all other required documents to the Exchange Agent prior
to the Expiration Date or comply with book-entry transfer procedures on a
timely basis may tender their shares of $3.50 Convertible Preferred Stock
pursuant to the guaranteed delivery procedure set forth in the Prospectus
under "The Exchange Offer--Procedures for Tendering--Guaranteed Delivery".
Pursuant to such procedure: (i) such tender must be made by or through an
Eligible Institution (as defined in the Prospectus); (ii) on or prior to the
Expiration Date, the Exchange Agent must have received from such Eligible
Institution a letter, telex, telegram, or facsimile transmission setting forth
the name and address of the tendering Holder, the names in which such shares
are registered, and, if possible, the certificate numbers of the shares of
$3.50 Convertible Preferred Stock to be tendered; and (iii) all tendered
shares of $3.50 Convertible Preferred Stock as well as this Letter of
Transmittal and all other documents required by this Letter of Transmittal, or
a confirmation of any book-entry transfer of such shares into the Exchange
Agent's account at DTC, must be received by the Exchange Agent within three
New York Stock Exchange, Inc. trading days after the date of execution of such
letter, telex, telegram, or facsimile transmission, all as provided in the
Prospectus under the caption "The Exchange Offer--Procedures for Tendering--
Guaranteed Delivery".
No alternative, conditional, irregular, or contingent tenders will be
accepted. All tendering Holders, by execution of this Letter of Transmittal
(or facsimile thereof), shall waive any right to receive notice of the
acceptance of the shares of $3.50 Convertible Preferred Stock for exchange.
2. Partial Tenders; Withdrawals. If less than the entire number of shares of
$3.50 Convertible Preferred Stock evidenced by a submitted certificate is
tendered, the tendering Holder must fill in the number of shares tendered in
the box entitled "Number of Shares Tendered". A newly issued certificate for
shares of $3.50 Convertible Preferred Stock submitted but not tendered will be
sent to such Holder as soon as practicable after the Expiration Date. All
shares of $3.50 Convertible Preferred Stock evidenced by certificates
delivered to the Exchange Agent will be deemed to have been tendered unless
otherwise indicated.
<PAGE>
Tenders of shares of $3.50 Convertible Preferred Stock pursuant to the
Exchange Offer may be withdrawn at any time prior to the Expiration Date and,
unless accepted for exchange by Unocal, may be withdrawn at any time after 40
business days after the date of the Prospectus. To be effective, a written,
telegraphic, telex, or facsimile transmission notice of withdrawal must be
timely received by the Exchange Agent. Any such notice of withdrawal must
specify the person named in the Letter of Transmittal as having tendered
shares of $3.50 Convertible Preferred Stock to be withdrawn, the certificate
numbers of the shares of $3.50 Convertible Preferred Stock to be withdrawn,
the number of shares of $3.50 Convertible Preferred Stock delivered for
exchange, a statement that such a Holder is withdrawing its election to have
such shares exchanged, and the name of the registered Holder of such shares
and must be signed by the Holder in the same manner as the original signature
on the Letter of Transmittal (including any required signature guarantees) or
be accompanied by evidence satisfactory to Unocal that the person withdrawing
the tender has succeeded to the beneficial ownership of the shares of $3.50
Convertible Preferred Stock being withdrawn. The Exchange Agent will return
properly withdrawn shares of $3.50 Convertible Preferred Stock promptly
following receipt of notice of withdrawal. If shares of $3.50 Convertible
Preferred Stock have been tendered pursuant to the procedure for book-entry
transfer, any notice of withdrawal must specify the name and number of the
account at DTC to be credited with the withdrawn shares of $3.50 Convertible
Preferred Stock or otherwise comply with DTC's procedures. All questions as to
the validity of notice of withdrawal, including time of receipt, will be
determined by Unocal, and such determination will be final and binding on all
parties. Withdrawals of tenders of shares of $3.50 Convertible Preferred Stock
may not be rescinded and any shares of $3.50 Convertible Preferred Stock
withdrawn will thereafter be deemed not validly tendered for purposes of the
Exchange Offer. Properly withdrawn shares of $3.50 Convertible Preferred
Stock, however, may be retendered by following the procedures therefor at any
time prior to the Expiration Date.
3. Signature on this Letter of Transmittal; Written Instruments and
Endorsements; Guarantee of Signatures. If this Letter of Transmittal is signed
by the registered Holder(s) of the shares of $3.50 Convertible Preferred Stock
tendered hereby, the signature must correspond with the name(s) as written on
the face of the certificates without alteration, enlargement, or any change
whatsoever.
If any of the shares of $3.50 Convertible Preferred Stock tendered hereby
are owned of record by two or more joint owners, all such owners must sign
this Letter of Transmittal.
If any of the shares of $3.50 Convertible Preferred Stock tendered hereby
are registered in different names on different certificates, it will be
necessary to complete, sign, and submit as many separate copies of this Letter
of Transmittal as there are different registrations of shares of $3.50
Convertible Preferred Stock.
When this Letter of Transmittal is signed by the registered Holder(s) of
shares of $3.50 Convertible Preferred Stock listed and tendered hereby, no
endorsements of certificates or separate written instruments of transfer or
exchange are required.
If this Letter of Transmittal is signed by a person other than the
registered Holder(s) of the shares of $3.50 Convertible Preferred Stock
listed, such shares must be endorsed or accompanied by separate written
instruments of transfer or exchange in form satisfactory to Unocal and duly
executed by the registered Holder(s), in either case signed exactly as the
name or names of the registered Holder(s) appear(s) on the shares of $3.50
Convertible Preferred Stock.
If this Letter of Transmittal, any certificates or separate written
instruments of transfer or exchange are signed by trustees, executors,
administrators, guardians, attorneys-in-fact, officers of corporations, or
others acting in a fiduciary or representative capacity, such person should so
indicate when signing, and, unless waived by Unocal, proper evidence
satisfactory to Unocal of their authority so to act must be submitted.
Endorsements on certificates or signatures on separate written instruments
of transfer or exchange required by this Instruction 3 must be guaranteed by
an Eligible Institution.
<PAGE>
Signatures on this Letter of Transmittal need not be guaranteed by an
Eligible Institution, provided the shares of $3.50 Convertible Preferred Stock
are tendered (i) by a registered Holder of such shares, or (ii) for the
account of an Eligible Institution.
4. Transfer Taxes. Unocal shall pay all transfer taxes, if any, applicable
to the transfer and exchange of shares of $3.50 Convertible Preferred Stock to
it or its order pursuant to the Exchange Offer. If, however, certificates
representing Trust Convertible Preferred Securities or shares of $3.50
Convertible Preferred Stock not tendered or accepted for exchange, are to be
delivered to, or are to be registered or issued in the name of, any person
other than the registered Holder of such shares tendered hereby, or if a
transfer tax is imposed for any reason other than the exchange of shares of
$3.50 Convertible Preferred Stock to Unocal or its order pursuant to the
Exchange Offer, the amount of any such transfer taxes (whether imposed on the
registered Holder or any other person) will be payable by the tendering
Holder. If satisfactory evidence of payment of such taxes or exception
therefrom is not submitted herewith, the amount of such transfer taxes will be
billed directly to such tendering Holder.
Except as provided in this Instruction 4, it will not be necessary for
transfer tax stamps to be affixed to the shares of $3.50 Convertible Preferred
Stock listed in this Letter of Transmittal.
5. Extensions, Amendments and Termination. Unocal expressly reserves the
right to extend, waive, amend, or modify the terms or conditions of the
Exchange Offer or withdraw or terminate the Exchange Offer at any time and for
any reason.
6. Mutilated, Lost, Stolen, or Destroyed Certificates. Any Holder whose
certificates for shares of $3.50 Convertible Preferred Stock have been
mutilated, lost, stolen, or destroyed should contact the Exchange Agent at the
address indicated below for further instructions.
7. Requests for Assistance or Additional Copies. Questions relating to the
procedure for tendering, as well as requests for additional copies of the
Prospectus and this Letter of Transmittal, may be directed to the Exchange
Agent at the addresses and telephone number set forth above. In addition, all
questions relating to the Exchange Offer as well as requests for assistance or
additional copies of the Prospectus and this Letter of Transmittal, may be
directed to D.F. King & Co., Inc., telephone (800) 848-3051.
8. Irregularities. All questions as to the validity, form, eligibility
(including time of receipt), and acceptance of Letters of Transmittal or
shares of $3.50 Convertible Preferred Stock will be resolved by Unocal, whose
determination will be final and binding. Unocal reserves the absolute right to
reject any or all Letters of Transmittal or tenders that are not in proper
form or the acceptance of which would, in the opinion of Unocal's counsel, be
unlawful. Unocal also reserves the right to waive any irregularities or
conditions of tender as to the particular shares of $3.50 Convertible
Preferred Stock covered by any Letter of Transmittal or tendered pursuant to
such letter. None of Unocal, the Exchange Agent, or any other person will be
under any duty to give notification of any defects or irregularities in
tenders or incur any liability for failure to give any such notification.
Unocal's interpretation of the terms and conditions of the Exchange Offer
shall be final and binding.
9. Substitute Form W-9. Except as described below under "Important Tax
Information," federal income tax laws require each tendering holder to provide
Unocal with a correct taxpayer identification number ("TIN") on the Substitute
Form W-9 which is provided below, and to indicate whether or not the holder is
not subject to backup withholding by crossing out Part 2 of the Substitute
Form W-9 if the holder is currently subject to backup withholding. Failure to
provide the information on such form or to cross out Part 2 of such form if
applicable may subject the tendering holder to 31% federal income tax
withholding on payments made to the holder. The box in Part 3 of such form may
be checked if the tendering holder has not been issued a TIN and has applied
for a TIN or intends to apply for a TIN in the near future. If the box in Part
3 is checked and the holder is not provided with a TIN within sixty (60) days,
Unocal will withhold 31% on all such payments thereafter until a TIN is
provided to it.
10. Definitions. Capitalized terms used in this Letter of Transmittal and
not otherwise defined have the meanings given in the Prospectus.
<PAGE>
IMPORTANT: THIS LETTER OF TRANSMITTAL OR A FACSIMILE THEREOF (TOGETHER WITH
CERTIFICATES FOR SHARES OF $3.50 CONVERTIBLE PREFERRED STOCK AND ALL OTHER
REQUIRED DOCUMENTS) OR CONFIRMATION OF BOOK-ENTRY TRANSFER OR A NOTICE OF
GUARANTEED DELIVERY MUST BE RECEIVED BY THE EXCHANGE AGENT PRIOR TO THE
EXPIRATION DATE.
IMPORTANT TAX INFORMATION
Under federal income tax law, a holder whose tendered shares of $3.50
Convertible Preferred Stock are accepted for exchange is required to provide
Unocal with such holder's correct taxpayer identification number ("TIN") on a
Substitute Form W-9. If a holder is an individual, the TIN is the holder's
social security number. If Unocal is not provided with the correct TIN, the
holder may be subject to a penalty imposed by the Internal Revenue Service
("IRS"). In addition, payments that are made to such holder with respect to
Trust Convertible Preferred Securities acquired pursuant to the Exchange Offer
may be subject to backup withholding.
If backup withholding applies, Unocal is required to withhold 31% of all
payments with respect to the Trust Convertible Preferred Securities made to a
holder. Backup withholding is not an additional tax. Rather, the tax liability
of persons subject to backup withholding will be reduced by the amount of tax
withheld. If withholding results in an overpayment of taxes, a refund may be
obtained.
To prevent backup withholding on payments that are made to a holder with
respect to Trust Convertible Preferred Securities, the holder is required to
notify Unocal of his or its correct TIN by completing the Substitute Form W-9
below, certifying that the TIN provided on such form is correct (or that such
holder is awaiting a TIN) and whether or not (i) the holder has not been
notified by the IRS that the holder is subject to backup withholding as a
result of a failure to report all interest or dividends or (ii) the IRS has
notified the holder that the holder is no longer subject to backup
withholding.
Certain holders (including, among others, all corporations and certain
foreign individuals) are not subject to these backup withholding requirements.
A corporation must, however, complete the Substitute Form W-9, including
providing its TIN (unless it is a foreign corporation that does not have a
TIN) and indicating that it is exempt from backup withholding, in order to
establish its exemption from backup withholding. A foreign corporation or
individual, or other foreign person, must submit a statement, signed under
penalties of perjury, attesting to such person's status as a non-United States
person. Such statements can be obtained from the Exchange Agent.
See the enclosed Guidelines for Certification of Taxpayer Identification
Number on Substitute Form W-9 for additional instructions.
<PAGE>
- -------------------------------------------------------------------------------
PAYER'S NAME: UNOCAL CORPORATION
-------------------------------------------------------------------------------
Part I--PLEASE PROVIDE YOUR
SUBSTITUTE TIN IN THE BOX AT RIGHT AND --------------------
Form W-9 CERTIFY BY SIGNING AND Social security
DATING BELOW number
OR
---------------------
Employer
identification number
- -------------------------------------------------------------------------------
Department of Part II--I am not subject to backup withholding
the Treasury because (i) I am exempt from backup withholding,
Internal Revenue (ii) I have not been notified by the Internal
Service Revenue Service ("IRS") that I am subject to backup
withholding as a result of a failure to report all
interest or dividends, or (iii) the IRS has
notified me that I am no longer subject to backup
withholding. (You must cross out this Part 2 if you
are currently subject to backup withholding because
of underreporting of interest or dividends on your
tax return.)
- -------------------------------------------------------------------------------
Payer's Request for CERTIFICATION--UNDER PENALTIES OF PERJURY, I
Taxpayer CERTIFY THAT THE INFORMATION PROVIDED ON THIS FORM
Identification Number IS TRUE, CORRECT, AND COMPLETE.
(TIN) -----------------------------------------------------
Part III
Signature: ______________ Date: ______ Awaiting
Name (Please Print): TIN [_]
---------------------------
- ------------------------------------------------------------------------------
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP
WITHHOLDING OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE EXCHANGE OFFER.
PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER
IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
- -------------------------------------------------------------------------------
CERTIFICATE OF TAXPAYER AWAITING TIN
I certify under penalties of perjury that a taxpayer identification num-
ber has not been issued to me, and either (a) I have mailed or delivered an
application to receive a taxpayer identification number to an appropriate
Internal Revenue Service Center or Social Security Administration Office or
(b) I intend to mail or deliver an application in the near future. I under-
stand that if I do not provide a taxpayer identification number within 60
days, 31% of all reportable payments made to me thereafter will be withheld
until I provide a number.
_______________________________________ __________________________
Signature Date
---------------------------------------
Name (Please Print)
------------------------------------------------------------------------------
<PAGE>
EXHIBIT 99.2
NOTICE OF GUARANTEED DELIVERY
FOR
TENDER OF $3.50 CONVERTIBLE PREFERRED STOCK
OF
UNOCAL CORPORATION
IN EXCHANGE FOR
% TRUST CONVERTIBLE PREFERRED SECURITIES
OF
UNOCAL CAPITAL TRUST
Registered holders of shares of $3.50 Convertible Preferred Stock (the
"$3.50 Convertible Preferred Stock") of Unocal Corporation, a Delaware
corporation ("Unocal"), who wish to tender any such shares in exchange for %
Trust Convertible Preferred Securities (the "Trust Convertible Preferred
Securities") of Unocal Capital Trust, a Delaware statutory business trust (the
"Trust"), representing preferred undivided beneficial interests in the assets
of the Trust, on the terms and subject to the conditions set forth in the
Prospectus of Unocal and the Trust, dated , 1996 (the "Prospectus"), and
the related Letter of Transmittal, and whose shares of $3.50 Convertible
Preferred Stock are not immediately available or who cannot deliver their
shares of $3.50 Convertible Preferred Stock and Letter of Transmittal (and any
other documents required by the Letter of Transmittal) to The Bank of New York
(the "Exchange Agent") prior to the Expiration Date (as defined in the
Prospectus), may use this Notice of Guaranteed Delivery or one substantially
equivalent hereto. This Notice of Guaranteed Delivery may be delivered by hand
or sent by facsimile transmission (receipt confirmed by telephone and an
original delivered by guaranteed overnight delivery) or mailed to the Exchange
Agent. See "The Exchange Offer--Procedures for Tendering" in the Prospectus.
The Exchange Agent for the Exchange Offer:
THE BANK OF NEW YORK
Facsimile Number:
(For Eligible Institutions Only)
(212) 571-3080
By Hand or Overnight Courier: By Mail:
(Registered or Certified Mail Recommended)
The Bank of New York The Bank of New York
101 Barclay Street (7 East) 101 Barclay Street (7 East)
Reorganization Section Reorganization Section
Corporate Trust Services Window New York, New York 10286
New York, New York 10286 Attention: George Johnson
Attention: George Johnson
Confirm Receipt of Notice
of Guaranteed Delivery by Telephone
(212) 815-4997
Delivery of this Notice of Guaranteed Delivery to an address other than as
set forth above or transmission of instructions via a facsimile transmission
to a number other than as set forth above will not constitute a valid
delivery.
<PAGE>
This Notice of Guaranteed Delivery is not to be used to guarantee
signatures. If a signature on a Letter of Transmittal is required to be
guaranteed by an Eligible Institution, such signature guarantee must appear in
the applicable space provided in the Letter of Transmittal for the guarantee
of signatures.
Ladies and Gentlemen:
The undersigned hereby tenders the number of shares of $3.50 Convertible
Preferred Stock indicated below, upon the terms and subject to the conditions
contained in the Prospectus, dated , 1996, of Unocal and the Trust,
receipt of which is hereby acknowledged.
DESCRIPTION OF SECURITIES TENDERED
Name and address of Certificate Number(s) Number of Shares of
registered holder as of $3.50 Convertible $3.50 Convertible
it appears on the Preferred Stock Preferred Stock
Certificate(s) of Tendered Tendered
$3.50 Convertible
Preferred Stock
(Please Print)
- ----------------------- ----------------------- -----------------------
- ----------------------- ----------------------- -----------------------
- ----------------------- ----------------------- -----------------------
- ----------------------- ----------------------- -----------------------
<PAGE>
THE FOLLOWING GUARANTEE MUST BE COMPLETED
GUARANTEE OF DELIVERY
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a firm that is a member of a registered national securities
exchange or a member of the National Association of Securities Dealers, Inc.
or a commercial bank or trust company having an office, branch, agency, or
correspondent in the United States, hereby guarantees to deliver to the
Exchange Agent at one of its addresses set forth above, the certificates
representing the shares of the $3.50 Convertible Preferred Stock, together
with a properly completed and duly executed Letter of Transmittal (or
facsimile thereof), with any required signature guarantees, and any other
documents required by the Letter of Transmittal within three New York Stock
Exchange, Inc. trading days after the date of execution of this Notice of
Guaranteed Delivery.
Name of Firm:
----------------------- -----------------------------------------
(Authorized Signature)
Address: Title:
---------------------------- -----------------------------------
Name:
- ------------------------------------ ------------------------------------
(Zip Code) (Please type or print)
Area Code and
Telephone Number: Date:
------------------- ------------------------------------
NOTE: DO NOT SEND CERTIFICATES OF $3.50 CONVERTIBLE PREFERRED STOCK WITH THIS
NOTICE OF GUARANTEED DELIVERY. CERTIFICATES OF $3.50 CONVERTIBLE
PREFERRED STOCK SHOULD BE SENT WITH YOUR LETTER OF TRANSMITTAL.
<PAGE>
EXHIBIT 99.3
TENDER FOR
$3.50 CONVERTIBLE PREFERRED STOCK
OF
UNOCAL CORPORATION
IN EXCHANGE FOR
% TRUST CONVERTIBLE PREFERRED SECURITIES
OF
UNOCAL CAPITAL TRUST
To Registered Holders and Depository Trust Company Participants:
We are enclosing herewith the material listed below relating to the Exchange
Offer (as defined herein) by Unocal Corporation, a Delaware corporation
("Unocal"), to exchange % Trust Convertible Preferred Securities of Unocal
Capital Trust, a Delaware statutory business trust (the "Trust"), representing
preferred undivided beneficial interests in the assets of the Trust (the
"Trust Convertible Preferred Securities"), for up to all of the 10,250,000
shares of its outstanding $3.50 Convertible Preferred Stock (the "$3.50
Convertible Preferred Stock").
The Exchange Offer will be effected on the basis of (A) that amount of Trust
Convertible Preferred Securities having an aggregate liquidation amount equal
to the greater of (1) the redemption price for a share of the $3.50
Convertible Preferred Stock as of the Exchange Amount Determination Date (as
defined herein), plus accumulated and unpaid dividends thereon to but
excluding the Expiration Date (as defined herein), or (2) the Market Value (as
defined herein) of the number of shares of the common stock, par value $1.00
per share (the "Common Stock"), of Unocal into which a share of the $3.50
Convertible Preferred Stock is convertible as of the Exchange Amount
Determination Date, for (B) each share of $3.50 Convertible Preferred Stock
validly tendered and accepted for exchange in the Exchange Offer, and upon the
terms and subject to the conditions set forth in the Prospectus, dated ,
1996 (the "Prospectus"), of Unocal and the Trust, and the related Letter of
Transmittal (which, together with the Prospectus, constitutes the "Exchange
Offer").
The Trust Convertible Preferred Securities have a liquidation amount of $50
per security. The current redemption price for a share of the $3.50
Convertible Preferred Stock is $52.10. The current conversion ratio on the
$3.50 Convertible Preferred Stock is 1.626 shares of Common Stock for each
share of $3.50 Convertible Preferred Stock. Unocal will pay amounts of less
than $50 due to a holder of $3.50 Convertible Preferred Stock for such
exchange in cash in lieu of issuing a fractional Trust Convertible Preferred
Security. The "Exchange Amount Determination Date" will be the second business
day before the Expiration Date. "Market Value" means the average of the daily
closing price for one share of the Common Stock as reported on the New York
Stock Exchange Composite Transaction listing for the five trading days
immediately preceding the Exchange Amount Determination Date.
Enclosed herewith are copies of the following documents:
1.Prospectus, dated , 1996;
2.Letter of Transmittal (together with accompanying Substitute Form W-9
Guidelines);
3.Notice of Guaranteed Delivery; and
4. Letter which may be sent to your clients for whose account you hold
shares of the $3.50 Convertible Preferred Stock in your name or in the
name of your nominee, with space provided for obtaining such client's
instruction with regard to the Exchange Offer.
We urge you to contact your clients promptly. Please note that the Exchange
Offer will expire at 12:00 midnight, New York City time, on , 1996,
unless extended (the "Expiration Date").
<PAGE>
The Exchange Offer is conditioned on the receipt for exchange of at least
4,000,000 shares of the $3.50 Convertible Preferred Stock and certain other
conditions described in the Prospectus, which conditions may be waived by
Unocal.
D. F. King & Co., Inc. has been appointed Information Agent for the Exchange
Offer. All questions relating to the Exchange Offer, as well as requests for
assistance or additional copies of the Prospectus or the Letter of
Transmittal, may be directed to D. F. King & Co., Inc., New York, New York,
telephone (800) 669-5550.
Unocal will not pay any fee or commission to any broker or dealer or to any
other persons (other than the Dealer Managers and the Exchange Agent) in
connection with the solicitation of tenders of shares of $3.50 Convertible
Preferred Stock pursuant to the Exchange Offer. Unocal will pay or cause to be
paid any transfer taxes payable on the transfer of shares of $3.50 Convertible
Preferred Stock to it, except as otherwise provided in Instruction 4 of the
enclosed Letter of Transmittal.
Very truly yours,
UNOCAL CORPORATION
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU AS
THE AGENT OF UNOCAL CORPORATION OR THE BANK OF NEW YORK OR AUTHORIZE YOU TO
USE ANY DOCUMENT OR MAKE ANY STATEMENT ON THEIR BEHALF IN CONNECTION WITH THE
EXCHANGE OFFER OTHER THAN THE DOCUMENTS ENCLOSED HEREWITH AND THE STATEMENTS
CONTAINED THEREIN.
<PAGE>
EXHIBIT 99.4
TENDER FOR
$3.50 CONVERTIBLE PREFERRED STOCK
OF
UNOCAL CORPORATION
IN EXCHANGE FOR
% TRUST CONVERTIBLE PREFERRED SECURITIES
OF
UNOCAL CAPITAL STOCK
To Our Clients:
We are enclosing herewith a Prospectus, dated , 1996 (the
"Prospectus"), of Unocal Corporation, a Delaware corporation ("Unocal"), and
Unocal Capital Trust, a Delaware statutory business trust (the "Trust"), and a
related Letter of Transmittal (which, together with the Prospectus,
constitutes the "Exchange Offer") relating to the offer by Unocal to exchange
% Trust Convertible Preferred Securities of the Trust, representing preferred
undivided beneficial interests in the assets of the Trust (the "Trust
Convertible Preferred Securities"), for up to all of the 10,250,000
outstanding shares of its $3.50 Convertible Preferred Stock (the "$3.50
Convertible Preferred Stock").
The Exchange Offer will be effected on the basis of (A) that amount of Trust
Convertible Preferred Securities having an aggregate liquidation amount equal
to the greater of (1) the redemption price for a share of the $3.50
Convertible Preferred Stock as of the Exchange Amount Determination Date (as
defined herein), plus accumulated and unpaid dividends thereon to but
excluding the Expiration Date (as defined herein), or (2) the Market Value (as
defined herein) of the number of shares of the common stock, par value $1.00
per share (the "Common Stock"), of Unocal into which a share of the $3.50
Convertible Preferred Stock is convertible as of the Exchange Amount
Determination Date, for (B) each share of $3.50 Convertible Preferred Stock
validly tendered and accepted for exchange in the Exchange Offer.
The Trust Convertible Preferred Securities have a liquidation amount of $50
per security. The current redemption price for a share of the $3.50
Convertible Preferred Stock is $52.10. The current conversion ratio on the
$3.50 Convertible Preferred Stock is 1.626 shares of Common Stock for each
share of $3.50 Convertible Preferred Stock. Unocal will pay amounts of less
than $50 due to a holder of $3.50 Convertible Preferred Stock for such
exchange in cash in lieu of issuing a fractional Trust Convertible Preferred
Security. The "Exchange Amount Determination Date" will be the second business
day before the Expiration Date. "Market Value" means the average of the daily
closing price for one share of the Common Stock as reported on the New York
Stock Exchange Composite Transaction listing for the five trading days
immediately preceding the Exchange Amount Determination Date.
Please note that the Exchange Offer will expire at 12:00 midnight, New York
City time, on , 1996, unless extended (the "Expiration Date").
The Exchange Offer is conditioned on the receipt for exchange of at least
4,000,000 shares of the $3.50 Convertible Preferred Stock and certain other
conditions described in the Prospectus, which conditions may be waived by
Unocal.
We are the holder of record of shares of $3.50 Convertible Preferred Stock
held by us for your account. A tender of such shares can be made only by us as
the record holder and pursuant to your instructions. THE LETTER OF TRANSMITTAL
IS FURNISHED TO YOU FOR YOUR INFORMATION ONLY AND CANNOT BE USED BY YOU TO
TENDER THE SHARES OF $3.50 CONVERTIBLE PREFERRED STOCK HELD BY US FOR YOUR
ACCOUNT.
<PAGE>
We request instructions as to whether you wish to tender any or all of the
shares $3.50 Convertible Preferred Stock held by us for your account pursuant
to the terms and conditions of the Exchange Offer. Please so instruct us by
completing, executing, detaching, and returning to us the instruction form on
the detachable part hereof. An envelope to return your instructions to us is
enclosed. If you authorize tender of your shares of $3.50 Convertible
Preferred Stock, please forward to us your instructions in ample time to
permit us to submit a tender on your behalf prior to the Expiration Date.
Unless otherwise indicated on the instruction form, you will be deemed to have
tendered the full number of shares of $3.50 Convertible Preferred Stock held
by us for your account.
Very truly yours,
<PAGE>
INSTRUCTIONS WITH RESPECT TO THE
TENDER FOR
$3.50 CONVERTIBLE PREFERRED STOCK
OF
UNOCAL CORPORATION
IN EXCHANGE FOR
% TRUST CONVERTIBLE PREFERRED SECURITIES
OF
UNOCAL CAPITAL TRUST
The undersigned acknowledges receipt of your letter enclosing the
Prospectus, dated , 1996, of Unocal and the Trust and a related Letter of
Transmittal relating to the Exchange Offer. This will instruct you to tender
the number of shares of $3.50 Convertible Preferred Stock indicated below held
by you for the account of the undersigned, pursuant to the terms and subject
to the conditions of the Exchange Offer, and confirm that you may make the
representations contained in the Letter of Transmittal on behalf of the
undersigned.
<PAGE>
DESCRIPTION OF SECURITIES TO BE TENDERED
AGGREGATE
NUMBER OF SHARES
OF $3.50 CONVERTIBLE
PREFERRED STOCK HELD BY NUMBER OF SHARES
YOU FOR THE ACCOUNT OF $3.50 CONVERTIBLE
OF THE UNDERSIGNED PREFERRED STOCK TENDERED
-------------------- ------------------------
-------------------------------------
Signature(s)
-------------------------------------
Please print name
-------------------------------------
Date
- --------
* Unless otherwise indicated, the undersigned will be deemed to have tendered
the full number of shares of $3.50 Convertible Preferred Stock held for the
account of the undersigned.
<PAGE>
EXHIBIT 99.5
This is neither an offer to exchange or to sell nor a solicitation of an offer
to exchange or buy any of the $3.50 Convertible Preferred Stock (the "$3.50
Convertible Preferred Stock") of Unocal Corporation. The Exchange Offer (as
defined herein) is made only by the Prospectus (as defined herein) and the
related Letter of Transmittal, and the Exchange Offer is not being made to, nor
will tenders be accepted from or on behalf of, holders of $3.50 Convertible
Preferred Stock in any jurisdiction in which the making or acceptance thereof
would not be in compliance with the securities or blue sky laws of such
jurisdiction. In any jurisdiction where the securities or blue sky laws require
the Exchange Offer to be made by a licensed broker or dealer, the Exchange Offer
is being made on behalf of Unocal Corporation by Morgan Stanley & Co.
Incorporated and Goldman, Sachs & Co. or one or more other brokers or dealers
which are licensed under the laws of such jurisdiction.
NOTICE OF EXCHANGE OFFER TO HOLDERS OF
UNOCAL CORPORATION
$3.50 CONVERTIBLE PREFERRED STOCK
Unocal Corporation, a Delaware corporation ("Unocal"), is offering, upon
the terms and subject to the conditions set forth in the Prospectus, dated
___________, 1996 (the "Prospectus"), of Unocal and Unocal Capital Trust, a
Delaware statutory business trust (the "Trust"), and the related Letter of
Transmittal (the "Letter of Transmittal" which, together with the Prospectus,
constitute the "Exchange Offer"), to exchange __% Trust Convertible Preferred
Securities of the Trust, representing preferred undivided beneficial interests
in the assets of the Trust (the "Trust Convertible Preferred Securities"), for
up to all of the 10,250,000 outstanding shares of its $3.50 Convertible
Preferred Stock. Unocal will directly or indirectly own all of the common
securities of the Trust (together with the Trust Convertible Preferred
Securities, the "Trust Securities").
THE EXCHANGE OFFER WILL EXPIRE
AT 12:00 MIDNIGHT, NEW YORK CITY TIME ON ______ __, 1996,
UNLESS EXTENDED.
NONE OF THE BOARD OF DIRECTORS OF UNOCAL, UNOCAL, THE TRUSTEES, OR THE
TRUST MAKES ANY RECOMMENDATION TO HOLDERS OF $3.50 CONVERTIBLE PREFERRED STOCK
AS TO WHETHER TO TENDER OR REFRAIN FROM TENDERING IN THE EXCHANGE OFFER.
HOLDERS OF $3.50 CONVERTIBLE PREFERRED STOCK ARE URGED TO CONSULT THEIR
FINANCIAL AND TAX ADVISORS IN MAKING THEIR DECISIONS ON WHAT ACTION TO TAKE IN
LIGHT OF THEIR OWN PARTICULAR CIRCUMSTANCES.
The Exchange Offer will be effected on the basis of (A) that amount of
Trust Convertible Preferred Securities having an aggregate liquidation amount
equal to the greater of (1) the redemption price of the $3.50 Convertible
Preferred Stock as of the Exchange Amount Determination Date (as defined
herein), plus accumulated and unpaid dividends on the $3.50 Convertible
Preferred Stock to but excluding the Expiration Date, or (2) the Market Value
(as defined herein) of the number of shares of the common stock, par value $1.00
per share (the "Common Stock"), of Unocal into which a share of the $3.50
Convertible Preferred Stock is convertible as of the Exchange Amount
Determination Date, for (B) each share of $3.50 Convertible Preferred Stock
validly tendered and accepted for exchange in the Exchange Offer. The Trust
Convertible Preferred Securities have a liquidation amount of $50 per security.
The current redemption price for a share of the $3.50 Convertible Preferred
Stock is $52.10. The current conversion ratio on the $3.50 Convertible Preferred
Stock is 1.626 shares of Common Stock
<PAGE>
for each share of $3.50 Convertible Preferred Stock. Unocal will pay amounts of
less than $50 due to a holder of $3.50 Convertible Preferred Stock for such
exchange in cash in lieu of issuing a fractional Trust Convertible Preferred
Security. The "Exchange Amount Determination Date" will be the second business
day before the Expiration Date. "Market Value" means the average of the daily
closing price for one share of the Common Stock as reported on the New York
Stock Exchange Composite Transaction listing for the five trading days
immediately preceding the Exchange Amount Determination Date.
The Trust Convertible Preferred Securities will be convertible at any time
beginning 90 days following the first date of issuance of any Trust Convertible
Preferred Securities through the close of business on ___________, 2026, at the
option of the holder thereof, into shares of Common Stock at an initial
conversion rate equal to that number of shares of Common Stock determined by
dividing the liquidation amount of $50 per security by the product of _____
times the Market Value.
On the Exchange Amount Determination Date, the Company will issue a press
release announcing the exchange ratio for the Exchange Offer and the initial
conversion ratio for the Trust Convertible Preferred Securities.
Immediately prior to the consummation of the Exchange Offer, Unocal will
deposit in the Trust as trust assets its __% Convertible Junior Subordinated
Debentures due 2026 (the "Convertible Debentures"), having an aggregate
principal amount equal to the aggregate stated liquidation amount of the Trust
Securities to be issued by the Trust. The Convertible Debentures will be the
sole assets of the Trust.
Upon the terms and subject to the conditions of the Exchange Offer, Unocal
will accept for exchange shares of $3.50 Convertible Preferred Stock validly
tendered and not withdrawn prior to 12:00 midnight, New York City time, on
_________ __, 1996, or if extended by Unocal, in its sole discretion, the latest
date and time to which extended (the "Expiration Date"). The Exchange Offer
will expire on the Expiration Date. Tenders of $3.50 Convertible Preferred
Stock may be withdrawn at any time prior to the Expiration Date and, unless
accepted for exchange by Unocal, may be withdrawn at any time after 40 business
days after the date of this Prospectus.
Consummation of the Exchange Offer is conditioned on, among other things,
receipt of at least 4,000,000 validly tendered shares of $3.50 Convertible
Preferred Stock (which condition may be waived by Unocal).
Unocal expressly reserves the right, in its sole discretion, subject to
applicable law, to (i) terminate the Exchange Offer, and not accept for exchange
any shares of $3.50 Convertible Preferred Stock and promptly return all $3.50
Convertible Preferred Stock at any time for any reason, including (without
limitation) if fewer than 4,000,000 of such shares are tendered or upon the
failure of any of the conditions specified in "The Exchange Offer--Procedures
for Tendering" in the Prospectus, (ii) waive any condition to the Exchange Offer
and accept all $3.50 Convertible Preferred Stock previously tendered pursuant to
the Exchange Offer, (iii) extend the Expiration Date and retain all $3.50
Convertible Preferred Stock tendered pursuant to such Exchange Offer until the
Expiration Date, subject, however, to all withdrawal rights of Holders (see "The
Exchange Offer--Withdrawal of Tenders" in the Prospectus), or (iv) amend or
modify the terms of the Exchange Offer in any manner, including (without
limitation), the form or the formula for calculating the amount of the
consideration to be paid pursuant to the Exchange Offer. Any amendment
applicable to the Exchange Offer will apply to all shares of $3.50 Convertible
Preferred Stock tendered pursuant to the Exchange Offer. The minimum period
during which the Exchange Offer must remain open following a material change in
the terms of the Exchange Offer or a waiver by the Company of a material
condition of the Exchange Offer, other than a change in the percentage of the
$3.50 Convertible Preferred Stock being sought or in the consideration offered,
will
<PAGE>
depend upon the facts and circumstances, including the relative materiality of
the change or waiver. See "The Exchange Offer--Expiration Date; Extensions;
Amendments; Termination" in the Prospectus.
The purpose of the Exchange Offer is to refinance the $3.50 Convertible
Preferred Stock with the Trust Convertible Preferred Securities.
The Prospectus and Letter of Transmittal contain important information
which should be read before any action is taken by holders of $3.50 Convertible
Preferred Stock. Tenders may be made only by a properly completed and executed
Letter of Transmittal and in conformance with the terms thereof and of the
Prospectus.
Unocal will pay to Morgan Stanley & Co. Incorporated and Goldman, Sachs &
Co., as dealer managers, a fee of 5/8% of the aggregate redemption price for the
shares of $3.50 Convertible Preferred Stock as of the Exchange Amount
Determination Date, plus accumulated and unpaid dividends thereon to but
excluding the Expiration Date, validly tendered and accepted for exchange
pursuant to the Exchange Offer.
The information required to be disclosed by paragraph (d)(1) of Rule 13e-4
of the General Rules and Regulations under the Securities Exchange Act of 1934,
as amended, is contained in the Prospectus and is incorporated herein by
reference.
The Prospectus and the related Letter of Transmittal are being sent to all
registered holders of the $3.50 Convertible Preferred Stock as of ____________,
1996.
Any questions or requests for assistance or copies of the Prospectus and
the Letter of Transmittal may be directed to the Information Agent at its
telephone number and location set forth below. Any copies requested will be
forwarded promptly at Unocal's expense. You may also contact your broker,
dealer, commercial bank, or trust company or other nominee for assistance
concerning the Exchange Offer.
THE INFORMATION AGENT:
D.F. KING & CO., INC.
77 Water Street
New York, New York 10005
(800) 848-3051 (Toll-Free)
(212) 269-5550 (Call Collect)
<PAGE>
THE EXCHANGE AGENT:
THE BANK OF NEW YORK
By Hand or Overnight Courier: By Mail
(Registered or Certified Mail Recommended)
The Bank of New York The Bank of New York
101 Barclay Street (7 East) 101 Barclay Street (7 East)
Reorganization Section Reorganization Section
Corporate Trust Services Window New York, New York 10286
New York, New York 10286 Attention: George Johnson
Attention: George Johnson
By Facsimile Transmission
(For Eligible Institutions Only):
(212) 571-3080
Confirm Receipt of Notice of Guaranteed Delivery
by Telephone:
(212) 815-4997
THE DEALER MANAGERS FOR THE EXCHANGE OFFER:
MORGAN STANLEY & CO. INCORPORATED GOLDMAN, SACHS & CO.
1585 Broadway 85 Broad Street
New York, New York 10036 New York, New York 10004
(800) ___-____ (Toll-Free) (800) 323-5678 (Toll-Free)
______________, 1996
