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                                                       Rule 424(b)(3) 
                                                       Registration No. 33-65053

PROSPECTUS
 
(LOGO)                            $300,000,000
 
                            GATX CAPITAL CORPORATION
                          MEDIUM-TERM NOTES, SERIES D
                            ------------------------
            Due from Nine Months to Fifteen Years from Date of Issue
                            ------------------------
    GATX Capital Corporation ("GATX Capital" or the "Company") may offer from
time to time up to $300,000,000 aggregate principal amount of its Medium-Term
Notes, Series D (the "Notes"), which will bear interest at fixed or variable
rates ("Fixed Rate Notes" and "Floating Rate Notes," respectively). The interest
rate on the Fixed Rate Notes, which may be zero in the case of certain Notes
issued at a price representing a substantial discount from the principal amount
payable on maturity ("Zero Coupon Notes"), and the methods of determining the
interest rate on the Floating Rate Notes will be established by the Company from
time to time and will be set forth in supplements hereto ("Pricing
Supplements"). Interest rates, the methods of determining interest rates and
issue prices are subject to change by the Company, but no such change will
affect any Note previously issued or as to which an offer to purchase has been
accepted by the Company. The Notes will have maturities ranging from nine months
to fifteen years from the date of issue. The Notes will be issued in
denominations of $100,000 or any amount in excess thereof which is an integral
multiple of $1,000, except as otherwise specified in the applicable Pricing
Supplement. Offers to purchase the Notes are being solicited from time to time
by Morgan Stanley & Co. Incorporated and Salomon Brothers Inc, as Agents, and
may be solicited from time to time by such other agents as may be identified in
the applicable Pricing Supplement (each, an "Agent" and collectively, the
"Agents") on behalf of the Company. Notes may also be sold to such firms acting
as principals for their own accounts. Unless otherwise specified in the
applicable Pricing Supplement, interest, if any, on Fixed Rate Notes will accrue
from their dates of original issue and will be payable semiannually on each
April 1 and October 1 and at maturity or, if applicable, upon redemption. The
interest rate on Floating Rate Notes will be determined by reference to the
"Commercial Paper Rate," LIBOR, the "Federal Funds Rate," the "Treasury Rate" or
other interest rate formula, and may be adjusted by a "Spread," all as defined
herein. Interest on Floating Rate Notes will accrue from their dates of original
issue and will be payable monthly, quarterly, semiannually or annually, as set
forth in the applicable Pricing Supplement, and at maturity or, if applicable,
upon redemption.
 
    The Notes may be issued in whole or in part in the form of a certificate
issued in definitive form (a "Certificated Note") or in the form of one or more
global notes to be deposited with or on behalf of Depository Trust Company (the
"Depositary") (or such other depositary as is identified in the applicable
Pricing Supplement) and registered in the name of the Depositary's nominee (a
"Book-Entry Note"). Interests in Book-Entry Notes will be shown on, and
transfers thereof will be effected only through, records maintained by the
Depositary and its participants. Book-Entry Notes will be issuable only in
global form, except under the circumstances described herein.
 
    On and after the Redemption Date, if any, fixed by the Company at the time
of sale and set forth in the applicable Pricing Supplement, a Note will be
subject to redemption by the Company, in whole or in part, at the price or
prices set forth in the applicable Pricing Supplement, together with interest to
the date of redemption. See "Description of Notes."
                            ------------------------
  THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
 EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
   AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
       ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
                        CONTRARY IS A CRIMINAL OFFENSE.
                            ------------------------
 


                                   PRICE TO               AGENTS'                        PROCEEDS TO
                                  PUBLIC(1)            COMMISSIONS(2)                   COMPANY(2)(3)
                               ----------------   ------------------------   -----------------------------------
                                                                    
Per Note....................         100%              .125% - .625%                  99.875% - 99.375%
Total.......................     $300,000,000      $375,000 - $1,875,000         $299,625,000 - $298,125,000

 
- ---------------
(1) Unless otherwise specified in the applicable Pricing Supplement, Notes will
    be sold at 100% of their principal amount. If the Company issues any Note at
    a discount from or at a premium over its principal amount, the Price to
    Public of any Note issued at a discount or a premium will be set forth in
    the applicable Pricing Supplement.
 
(2) The commission payable to an Agent for each Note sold through such Agent
    shall range from .125% to .625% of the principal amount of such Note. The
    Company may also sell Notes to any Agent, as principal, for its own account
    at negotiated discounts and for resale to investors and other purchasers.
 
(3) Before deducting expenses payable by the Company estimated at $238,448.
                            ------------------------
 
     Offers to purchase the Notes are being solicited from time to time by
Morgan Stanley & Co. Incorporated, and Salomon Brothers Inc, as Agents, on
behalf of the Company. The Agents have agreed to use best efforts to solicit
purchases of such Notes. The Company may also sell Notes to an Agent acting as
principal for its own account for resale to investors and other purchasers, to
be determined by such Agent. The Company may appoint additional agents for the
purpose of soliciting offers to purchase Notes. The Company reserves the right
to sell Notes directly to investors on its own behalf in those jurisdictions
where it is permitted to do so. No termination date for the offering of the
Notes has been established. The Company or an Agent may reject any order in
whole or in part. The Notes will not be listed on any securities exchange, and
there can be no assurance that the Notes offered hereby will be sold or that
there will be a secondary market for the Notes. See "Plan of Distribution."
                            ------------------------
 
                               
     MORGAN STANLEY & CO.               SALOMON BROTHERS INC
         Incorporated


 
January 17, 1996
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     NO DEALER, SALESPERSON OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS (INCLUDING THE ACCOMPANYING PRICING SUPPLEMENT) IN CONNECTION WITH
THE OFFER CONTAINED HEREIN AND, IF GIVEN OR MADE, SUCH OTHER INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY
OR BY ANY OF THE AGENTS. NEITHER THE DELIVERY OF THIS PROSPECTUS (INCLUDING THE
ACCOMPANYING PRICING SUPPLEMENT) NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY
CIRCUMSTANCE, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE
AFFAIRS OF THE COMPANY SINCE THE DATE AS OF WHICH INFORMATION IS GIVEN IN THIS
PROSPECTUS (INCLUDING THE ACCOMPANYING PRICING SUPPLEMENT). THE PROSPECTUS
(INCLUDING THE ACCOMPANYING PRICING SUPPLEMENT) DOES NOT CONSTITUTE AN OFFER OR
A SOLICITATION BY ANYONE IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION
IS NOT AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS
NOT QUALIFIED TO DO SO OR TO ANYONE TO WHOM IT IS UNLAWFUL TO MAKE SUCH AN OFFER
OR SOLICITATION.
 
     IN CONNECTION WITH THIS OFFERING, THE AGENTS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE NOTES AT A
LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH
STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
 
                             AVAILABLE INFORMATION
 
     The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "1934 Act"), and, in accordance therewith,
files reports and other information with the Securities and Exchange Commission
(the "Commission"). Such reports and other information can be inspected and
copied at the public reference facilities maintained by the Commission at Room
1024, 450 Fifth Street, N.W., Washington, D.C. 20549, and at the Commission's
New York Regional Office, Seven World Trade Center, Suite 1300, New York, New
York 10048 and its Chicago Regional Office, Northwestern Atrium Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60611. Copies of such material can
be obtained from the Public Reference Section of the Commission, 450 Fifth
Street, N.W., Washington, D.C. 20549, at prescribed rates.
 
                INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
 
     The following documents, which are on file with the Commission, are
incorporated herein by reference and made a part hereof:
 
          (a) The Company's most recently filed Annual Report on Form 10-K;
 
          (b) The Company's Quarterly Reports on Form 10-Q filed since the end
     of the Company's fiscal year covered by its most recent Annual Report on
     Form 10-K; and
 
          (c) The Company's Current Reports on Form 8-K filed since the end of
     the Company's fiscal year covered by its most recent Annual Report on Form
     10-K.
 
     All documents filed by the Company pursuant to Sections 13(a), 13(c), 14
and 15(d) of the 1934 Act subsequent to the date of this Prospectus and prior to
the termination of the offering covered by this Prospectus shall be deemed to be
incorporated herein by reference and shall be a part hereof from the respective
dates of filing of such documents. Any statement contained in a document
incorporated or deemed to be incorporated by reference herein shall be deemed to
be modified or superseded for purposes of this Prospectus to the extent that a
statement contained herein or in any other subsequently filed document which
also is or is deemed to be incorporated by reference herein modifies or
supersedes such statement. Any
 
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statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this Prospectus.
 
     The Company will provide without charge to each person, including any
beneficial owner, to whom a Prospectus is delivered, upon written or oral
request of such person, a copy of any and all of the information that has been
incorporated by reference in this Prospectus, other than exhibits to such
information (unless such exhibits are specifically incorporated by reference
into such information). Any such requests should be directed to Thomas C. Nord,
Esq., Vice President and General Counsel, GATX Capital Corporation, Four
Embarcadero Center, San Francisco, California 94111 (415) 955-3200.
 
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                                  THE COMPANY
 
     GATX Capital, directly and through subsidiaries and partnerships, provides
asset-based financing of primarily transportation and industrial equipment
through long term, full payout financing leases, secured equipment loans and
operating leases. The Company also provides related financial services including
arranging lease transactions for investment by other lessors and management of
leased equipment portfolios for third parties.
 
     All common and preferred stock of the Company is owned by GATX Corporation
("GATX"). GATX founded the Company as GATX Leasing Corporation, a Delaware
corporation, in 1968 to own, sell and finance equipment independent of GATX's
own specialized equipment activities. During 1968 and 1969, the Company
emphasized the leasing of commercial jet aircraft. Since that time, it has
developed a portfolio of earning assets diversified across industries and
equipment classifications. At September 30, 1995, the Company had approximately
650 financing contracts with approximately 450 customers, aggregating $1.4
billion of investment before reserves. Of this amount, 47% represented
commercial jet aircraft, 15% railroad equipment, 11% warehouse and production
equipment, 8% marine equipment, 5% golf courses, and 14% other equipment. The
Company provides equipment financing, operating lease services and residual
guarantees and engages in lease and portfolio acquisitions and management of
leased equipment portfolios and lease underwriting activities that provide fee
income and residual value participation.
 
     Except as expressly indicated or unless the context otherwise requires, as
used herein the "Company" or "GATX Capital" means GATX Capital Corporation and
its subsidiaries. The Company's principal office is located at Four Embarcadero
Center, San Francisco, California 94111, telephone (415) 955-3200.
 
                              RECENT DEVELOPMENTS
 
     On November 16, 1995, the Company announced that, effective October 31,
1995, it had agreed to acquire over the next four years all of the outstanding
stock of Sun Financial Group, Inc., a technology-focused finance company based
in Tampa, Florida. Sun Financial Group has approximately $140 million in 
assets, most of which are deployed in client/server environments, providing a 
source of increased diversification for the Company's investment portfolio. Mr.
Clay M. Biddinger, Sun Financial Group's founder, will continue as its 
president and chief executive officer.
 
                                USE OF PROCEEDS
 
     Many of the Company's lease and loan financing investments provide for a
fixed rate of return. These transactions are financed initially with internally
generated funds and the proceeds of the sale of commercial paper. Consistent
with its policy of matching funding on a portfolio basis whereby the Company
matches fixed rate assets with fixed cost funds and floating rate assets with
floating cost funds, the Company intends to apply the net proceeds from the sale
of the Notes primarily to reduce outstanding commercial paper and for other
general corporate purposes.
 
                       RATIO OF EARNINGS TO FIXED CHARGES
 
     The following table sets forth the historical ratios of earnings to fixed
charges of the Company for the periods indicated:
 


 NINE MONTHS
    ENDED                 YEAR ENDED DECEMBER 31,
SEPTEMBER 30,     ----------------------------------------
    1995          1994     1993     1992     1991     1990
- -------------     ----     ----     ----     ----     ----
                                       
     1.98         1.85     1.86     1.17     1.74     1.71

 
     For the purpose of computing the ratio of earnings to fixed charges, (i)
earnings consist of net income plus fixed charges (other than interest
capitalized during the period) and estimated federal and other taxes on
 
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income and (ii) fixed charges consist of interest on indebtedness (including
capitalized interest), amortization of debt discount or premium and a portion of
rental expense representative of an interest factor.
 
                              DESCRIPTION OF NOTES
 
GENERAL
 
     The Notes constitute a single series of debt securities of the Company to
be issued under an Indenture dated as of July 31, 1989 as supplemented and
amended by Supplemental Indentures dated as of December 18, 1991 and January 2,
1996 (together, the "Indenture"), between the Company and The Chase Manhattan
Bank (National Association), as trustee (the "Trustee"), each of which is
included as an exhibit to the Registration Statement of which this Prospectus
forms a part (the "Registration Statement"). The following summaries of certain
provisions of the Indenture and the Notes do not purport to be complete and are
subject to, and are qualified in their entirety by reference to, all provisions
of the Indenture and the Notes, including the definitions therein of certain
terms. Certain capitalized terms are defined in the Indenture. Section
references in parentheses are to the Indenture.
 
     The particular terms of the Notes issued under the Indenture will be
described in the Pricing Supplement relating to such Notes.
 
     The Indenture does not limit the principal amount of debt securities which
may be issued thereunder and provides that debt securities may be issued
thereunder in one or more series up to the aggregate principal amount which may
be authorized from time to time by the Company, and the Company from time to
time, without the consent of the Holders of any debt securities, may provide for
the issuance of debt securities under the Indenture in addition to the Notes
authorized on the date of this Prospectus. Notes in an aggregate principal
amount of up to $300,000,000 may be offered pursuant to this Prospectus.
 
     The Notes will be offered on a continuing basis and will mature at par on
any Business Day (as hereinafter defined) from nine months to fifteen years from
the date of issue, as selected by the purchaser and agreed to by the Company,
and may be subject to redemption at the option of the Company or a Holder prior
to maturity at the price or prices and on or after the date or dates specified
in the applicable Pricing Supplement.
 
     Unless otherwise specified in the applicable Pricing Supplement, the Notes
will be issued in fully registered form without coupons, in denominations of
$100,000 or any amount in excess thereof which is an integral multiple of
$1,000. No service charge will be made for any registration of transfer or
exchange of such Notes, but the Company may require payment of a sum sufficient
to cover any tax or other governmental charges that may be imposed in connection
therewith.
 
     Each Note will be issued initially as either a Book-Entry Note or a
Certificated Note. Except as set forth herein, Book-Entry Notes will be issuable
only as Global Notes. See "Book-Entry System."
 
     The Notes will be unsecured and will rank pari passu with all other
unsecured and unsubordinated indebtedness of the Company. Unless otherwise
specified in the applicable Pricing Supplement, principal and interest, if any,
will be payable, the transfer of the Notes will be registerable, and Notes will
be exchangeable for Notes bearing identical terms and provisions, at the office
of the Trustee in The City of New York designated for such purpose. Payment of
interest, other than interest payable at Maturity (including on the date of
redemption (the "Redemption Date"), if a Note is redeemed at the option of the
Company or a Holder prior to Maturity), may be made by check mailed to the
address of the person entitled thereto as shown on the Security Register. Unless
otherwise specified in the applicable Pricing Supplement, the principal and
interest payable at Maturity on each Note will be paid upon Maturity in
immediately available funds against presentation of the Note at the office of
the Trustee maintained for such purpose. Any other terms with respect to a Note
not inconsistent with the provisions of the Indenture will be set forth in the
applicable Pricing Supplement and in such Note.
 
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INTEREST RATE
 
     Each Note will bear interest from its date of original issue at either the
rate per annum which may be zero (a "Fixed Rate Note") or pursuant to the
interest rate formula (a "Floating Rate Note") stated therein and in the
applicable Pricing Supplement until the principal thereof is paid or made
available for payment. Interest, if any, will be payable on each Interest
Payment Date (as defined below) and at maturity or, if applicable, upon
redemption. The "Record Date" with respect to any Interest Payment Date for a
Fixed Rate Note shall be the March 15 or September 15 preceding such Interest
Payment Date and, with respect to any Interest Payment Date for a Floating Rate
Note, shall be the date fifteen calendar days immediately preceding such
Interest Payment Date, in either case, whether or not such date is a Business
Day. Interest will be payable to the person in whose name a Note is registered
at the close of business on the Record Date next preceding each Interest Payment
Date; provided, however, that interest payable at maturity or, if applicable,
upon redemption will be payable to the person to whom principal shall be
payable. The first payment of interest on any Note issued between a Record Date
and an Interest Payment Date will be made on the Interest Payment Date following
the next succeeding Record Date to the registered owner on such next succeeding
Record Date.
 
     The applicable Pricing Supplement relating to a Note will designate, in the
case of a Fixed Rate Note, a fixed rate of interest per annum payable on the
applicable Note which may be zero in the case of certain Notes issued at a price
representing a substantial discount from the principal amount payable on
maturity (a "Zero Coupon Note") and, in the case of a Floating Rate Note, one of
the following interest rate formulas as applicable to the relevant Note: (a) the
Commercial Paper Rate (as defined below), in which case such Note will be a
"Commercial Paper Rate Note;" (b) LIBOR, in which case such Note will be a
"LIBOR Note;" (c) the Federal Funds Rate (as defined below), in which case such
Note will be a "Federal Funds Rate Note;" (d) the Treasury Rate (as defined
below), in which case such Note will be a "Treasury Rate Note;" or (e) such
other interest rate formula as is set forth in such Pricing Supplement. The rate
of interest on each Floating Rate Note will be reset daily, weekly, monthly,
quarterly, semiannually or annually (each an "Interest Reset Period"), as
specified in the applicable Pricing Supplement and in the applicable Note.
 
     All percentages resulting from any calculations will be rounded, if
necessary, to the nearest one hundredth of a percent, with five one-thousandths
of a percent being rounded upwards.
 
     If an Interest Payment Date with respect to any Note would otherwise fall
on a day that is not a Business Day with respect to such Note, such Interest
Payment Date will be the following day that is a Business Day with respect to
such Note, except that in the case of a LIBOR Note, if such day falls in the
next calendar month, such Interest Payment Date will be the preceding day that
is a Business Day with respect to such LIBOR Note. "Business Day" means (i) with
respect to any Note, any day that is not a Saturday or Sunday, and that, in The
City of New York, is neither a legal holiday nor a day on which banking
institutions or trust companies are authorized or obligated by law to close and
(ii) with respect to LIBOR Notes only, a London Banking Day. A "London Banking
Day" means any day on which dealings in deposits in U.S. dollars are transacted
in the London interbank market.
 
FIXED RATE NOTES
 
     Each Fixed Rate Note will bear interest, if any, from its date of original
issue at the rate per annum stated on the face thereof, until the principal
thereof is paid or made available for payment. The Interest Payment Dates for
Fixed Rate Notes will be on April 1 and October 1 of each year (each an
"Interest Payment Date") and at maturity (or on the Redemption Date, if a Fixed
Rate Note is redeemed at the option of the Company or a Holder). Interest will
be computed on the basis of a 360-day year of twelve 30-day months. Interest
rates are subject to change by the Company from time to time, but no such change
will affect any Fixed Rate Note theretofore issued or as to which an offer to
purchase has been accepted by the Company.
 
FLOATING RATE NOTES
 
     The interest rate on each Floating Rate Note will be calculated by
reference to the specified interest rate formula, plus or minus a spread, if any
(the "Spread"). The Spread is the number of basis points specified in
 
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the applicable Pricing Supplement as being applicable to the interest rate for
such Floating Rate Note and may be a fixed amount or an amount that increases or
decreases over time. A Floating Rate Note may also have either or both of the
following: (i) a maximum limitation, or ceiling, on the rate of interest which
may accrue during any interest period; and (ii) a minimum limitation, or floor,
on the rate of interest which may accrue during any interest period. In addition
to any maximum interest rate which may be applicable to any Floating Rate Note
pursuant to the above provisions, the interest rate on the Floating Rate Notes
will in no event be higher than the maximum rate permitted by New York law, as
the same may be modified by United States law of general application. Under
present New York law the maximum rate of interest, subject to certain
exceptions, for any loan in an amount less than $250,000 is 16% and for any loan
in an amount of $250,000 or more and less than $2,500,000 is 25% per annum on a
simple interest basis. This limit may not apply to Floating Rate Notes issued in
an aggregate principal amount of $2,500,000 or more.
 
     The applicable Pricing Supplement will specify the interest rate formula,
the amount or amounts of the Spread, if any, and the maximum or minimum interest
rate limitation, if any, applicable to each Floating Rate Note. In addition,
such Pricing Supplement will define or particularize for each Floating Rate Note
the following terms, if applicable: Calculation Date, Initial Interest Rate,
Interest Payment Period, Interest Payment Dates, Record Date, Index Maturity,
Interest Determination Date, Interest Reset Period and Interest Reset Date.
"Index Maturity" means, with respect to a Floating Rate Note, the period to
maturity of the instrument or obligation on which the interest rate formula is
based, as specified in the applicable Pricing Supplement.
 
     Unless otherwise indicated in the applicable Pricing Supplement, the date
or dates on which interest will be reset (each an "Interest Reset Date") will
be, in the case of Floating Rate Notes which reset daily, each Business Day; in
the case of Floating Rate Notes which reset weekly, the Wednesday of each week
(with the exception of weekly reset Treasury Rate Notes which will reset the
Tuesday of each week, except as specified below); in the case of Floating Rate
Notes which reset monthly, the third Wednesday of each month; in the case of
Floating Rate Notes which reset quarterly, the third Wednesday of March, June,
September and December; in the case of Floating Rate Notes which reset
semiannually, the third Wednesday of the two months specified in such Floating
Rate Notes; and, in the case of Floating Rate Notes which reset annually, the
third Wednesday of the month as specified in such Floating Rate Note; provided,
however, that (a) the interest rate in effect from the date of original issue to
the first Interest Reset Date with respect to a Floating Rate Note (the "Initial
Interest Rate") will be as set forth in the applicable Pricing Supplement and
(b) the interest rate in effect for the ten days immediately prior to maturity
will be that in effect on the tenth calendar day preceding such maturity. If any
Interest Reset Date for a Floating Rate Note would otherwise be a day that is
not a Business Day, such Interest Reset Date shall be postponed to the next
succeeding day that is a Business Day, except that, in the case of a LIBOR Note,
if such Business Day is in the next succeeding calendar month, such Interest
Reset Date shall be the next preceding Business Day. In the case of weekly reset
Treasury Rate Notes, if an auction of Treasury bills (as hereinafter defined)
falls on a day that is an Interest Reset Date for Treasury Rate Notes, the
Interest Reset Date will be the following day that is a Business Day.
 
     The "Interest Determination Date" pertaining to an Interest Reset Date for
a Commercial Paper Rate Note (the "Commercial Paper Rate Interest Determination
Date") and for a Federal Funds Rate Note (the "Federal Funds Rate Interest
Determination Date") will be the second Business Day preceding the Interest
Reset Date with respect to such Note. The Interest Determination Date pertaining
to an Interest Reset Date for a LIBOR Note (the "LIBOR Interest Determination
Date") will be the second London Banking Day preceding such Interest Reset Date.
The Interest Determination Date pertaining to an Interest Reset Date for a
Treasury Rate Note (the "Treasury Interest Determination Date") will be the day
of the week in which such Interest Reset Date falls on which Treasury bills of
the Index Maturity specified in the applicable pricing supplement would normally
be auctioned. Treasury bills are usually sold at auction on Monday of each week,
unless the day is a legal holiday, in which case the auction is usually held on
the following Tuesday, except that such auction may be held on the preceding
Friday. If, as the result of a legal holiday, an auction is so held on the
preceding Friday, such Friday will be the Treasury Interest Determination Date
pertaining to the
 
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Interest Reset Date occurring in the next succeeding week. If an auction falls
on a day that is an Interest Reset Date, such Interest Reset Date will be the
next following business day.
 
     Interest on each Floating Rate Note will be payable monthly, quarterly,
semiannually or annually (the "Interest Payment Period"). Except as provided
below or in the applicable Pricing Supplement, the date or dates on which
interest will be payable (each an "Interest Payment Date") will be, in the case
of Floating Rate Notes which reset daily, weekly or monthly, on the third
Wednesday of each month or on the third Wednesday of March, June, September and
December of each year; in the case of Floating Rate Notes which reset quarterly,
on the third Wednesday of March, June, September and December of each year; in
the case of Floating Rate Notes which reset semiannually, on the third Wednesday
of the two months of each year specified in such Floating Rate Notes; and in the
case of Floating Rate Notes which reset annually, on the third Wednesday of the
month specified in such Floating Rate Notes and in each case, at maturity or, if
applicable, upon redemption.
 
     Unless otherwise indicated in the applicable Pricing Supplement, interest
payments shall be the amount of interest accrued from, and including, the next
preceding Interest Payment Date in respect of which interest has been paid (or
from, and including, the date of original issue if no interest has been paid
with respect to such Floating Rate Note) to, but excluding, the Interest Payment
Date.
 
     With respect to a Floating Rate Note, accrued interest from its date of
original issue or from the last date to which interest has been paid is
calculated by multiplying the face amount of such Floating Rate Note by an
accrued interest factor. Such accrued interest factor is computed by adding the
interest factors calculated for each day from the date of issue, or from the
last date to which interest has been paid, to the date for which accrued
interest is being calculated. The interest factor (expressed as a decimal
calculated to seven decimal places without rounding) for each such day is
computed by dividing the interest rate applicable to such day by 360, in the
case of Commercial Paper Rate Notes, Federal Funds Rate Notes and LIBOR Notes,
or by the actual number of days in the year, in the case of Treasury Rate Notes.
 
     The "Calculation Date," where applicable, pertaining to an Interest
Determination Date will be the tenth calendar day after such Interest
Determination Date or, if any such day is not a Business Day, the next
succeeding Business Day.
 
     Unless otherwise provided in the applicable Pricing Supplement, The Chase
Manhattan Bank (National Association) will be the calculation agent (the
"Calculation Agent") with respect to the Floating Rate Notes. Upon the request
of the Holder of any Floating Rate Note, the Calculation Agent will provide the
interest rate then in effect and, if determined, the interest rate which will
become effective as a result of a determination made on the most recent Interest
Reset Date with respect to such Floating Rate Note.
 
     Commercial Paper Rate Notes.  Commercial Paper Rate Notes will bear
interest at the interest rates (calculated with reference to the Commercial
Paper Rate and the Spread, if any) specified in the Commercial Paper Rate Notes
and in the applicable Pricing Supplement.
 
     Unless otherwise indicated in the applicable Pricing Supplement,
"Commercial Paper Rate" means, with respect to any Interest Determination Date,
the Money Market Yield (as defined below) on such date of the rate for
commercial paper having the Index Maturity specified in the applicable Pricing
Supplement as published by the Board of Governors of the Federal Reserve System
in "Statistical Release H.15(519), Selected Interest Rates" ("H.15(519)"), or
any successor publication, under the heading "Commercial Paper." In the event
that such rate is not published by the Calculation Date pertaining to such
Interest Determination Date, then the Commercial Paper Rate shall be the Money
Market Yield on such Interest Determination Date of the rate for commercial
paper of the specified Index Maturity as published by the Federal Reserve Bank
of New York in its daily statistical release, "Composite 3:30 P.M. Quotations
for U.S. Government Securities" ("Composite Quotations") under the heading
"Commercial Paper." If by 3:00 P.M., New York City time, on such Calculation
Date the rate for an Interest Determination Date is not yet published in either
H.15(519) or Composite Quotations, the rate for that Interest Determination Date
shall be calculated by the Calculation Agent and shall be the Money Market Yield
of the arithmetic mean of the offered rates, as of 11:00 A.M., New York City
time, of three leading dealers of commercial paper in The City
 
                                        8
   9
 
of New York selected by the Calculation Agent on that Interest Determination
Date, for commercial paper of the specified Index Maturity placed for an
industrial issuer whose bond rating is "AA," or the equivalent, from a
nationally recognized rating agency; provided, however, that if any of the
dealers selected as aforesaid by the Calculation Agent are not quoting as
mentioned in this sentence, the Commercial Paper Rate in effect for the
applicable period will be the same as the Commercial Paper Rate for the
immediately preceding Interest Reset Period (or, if there was no such Interest
Reset Period, the rate of interest payable on the Commercial Paper Rate Notes
for such period shall be the Initial Interest Rate).
 
     "Money Market Yield" shall be a yield calculated in accordance with the
following formula:
 
                                   
Money Market Yield =       D X 360       X 100
                      ------------------
                        360 - (D X M)


 
where "D" refers to the per annum rate for commercial paper quoted on a bank
discount basis and expressed as a decimal; and "M" refers to the actual number
of days in the interest period for which interest is being calculated.
 
     LIBOR Notes.  LIBOR Notes will bear interest at the interest rates
(calculated with reference to LIBOR and the Spread, if any) specified in the
LIBOR Notes and in the applicable Pricing Supplement.
 
     Unless otherwise indicated in the applicable Pricing Supplement, LIBOR will
be determined by the Calculation Agent in accordance with the following
provisions:
 
          (i) With respect to an Interest Determination Date, LIBOR will be
     determined on the basis of the offered rates for deposits in U.S. dollars
     having the Index Maturity specified in the applicable Pricing Supplement,
     commencing on the second London Banking Day immediately following such
     Interest Determination Date and may consist either of (a) the arithmetic
     mean (rounded upward, if necessary, to the nearest one-sixteenth of a
     percent), as determined by the Calculation Agent, of the offered rates for
     deposits in U.S. dollars for the period of such Index Maturity which appear
     on the Reuters Screen LIBO Page as of 11:00 A.M., London time, on such
     Interest Determination Date, if at least two such offered rates appear on
     the Reuters Screen LIBO Page ("LIBOR Reuters") or (b) the rate for deposits
     in U.S. dollars for the period of such Index Maturity which appears on the
     Telerate Page 3750 as of 11:00 A.M., London time, on such Interest
     Determination Date ("LIBOR Telerate"). "Reuters Screen LIBO Page" means the
     display designated as Page "LIBO" on the Reuters Monitor Money Rate Service
     (or such other page as may replace the LIBO page on the service for the
     purpose of displaying London Interbank offered rates of major banks).
     "Telerate Page 3750" means the display designated as page "3750" on the
     Telerate Service (or such other page as may replace the 3750 page in that
     service or such other service or services as may be nominated by the
     British Bankers' Association for the purpose of displaying London Interbank
     offered rates for U.S. dollar deposits). If neither LIBOR Reuters nor LIBOR
     Telerate is specified in the applicable Pricing Supplement, LIBOR will be
     determined as if LIBOR Telerate had been specified. If fewer than two
     offered rates appear on the Reuters Screen LIBO Page or if no rate appears
     on the Telerate Page 3750, as applicable, LIBOR for such Interest
     Determination Date will be determined as if the parties had specified the
     rate described in (ii) below.
 
          (ii) With respect to an Interest Determination Date on which fewer
     than two offered rates appear on the Reuters Screen LIBO Page or if no rate
     appears on the Telerate Page 3750, as applicable as described in (i) above,
     LIBOR will be determined, on the basis of the rates at approximately 11:00
     A.M. London time on such Interest Determination Date at which deposits in
     U.S. dollars having the Index Maturity specified in the applicable Pricing
     Supplement are offered to prime banks in the London interbank market by
     four major banks in the London interbank market selected by the Calculation
     Agent, commencing on the second London Banking Day immediately following
     such Interest Determination Date and in a principal amount equal to an
     amount of not less than U.S. $1,000,000 that is representative of a single
     transaction in such market at such time. The Calculation Agent will request
     the principal London office of each of such banks to provide a quotation of
     its rate. If at least two such quotations are provided, LIBOR for such
     Interest Determination Date will be the arithmetic mean (rounded upward, if
     necessary, to the nearest one-sixteenth of a percent) of such quotations,
     as determined by the Calculation
 
                                        9
   10
 
     Agent. If fewer than two quotations are provided, LIBOR for such Interest
     Determination Date will be the arithmetic mean of the rates quoted at
     approximately 11:00 A.M., New York City time, on such LIBOR Interest
     Determination Date by three major banks in The City of New York, selected
     by the Calculation Agent (after consultation with the Company) for loans in
     U.S. dollars to leading European banks, having the specified Index
     Maturity, commencing on the second London Banking Day immediately following
     such Interest Determination Date and in a principal amount equal to an
     amount of not less than $1,000,000 that is representative of a single
     transaction in such market at such time; provided, however, that if any of
     the banks selected as aforesaid by the Calculation Agent are not quoting as
     mentioned in this sentence, LIBOR in effect for the applicable period will
     be the same as LIBOR for the immediately preceding Interest Reset Period
     (or, if there was no such Interest Reset Period, the rate of interest
     payable on the LIBOR Notes for such period shall be the Initial Interest
     Rate).
 
     Federal Funds Rate Notes.  Federal Funds Rate Notes will bear interest at
the interest rates (calculated with reference to the Federal Funds Rate and the
Spread, if any) specified in the Federal Funds Rate Notes and in the applicable
Pricing Supplement.
 
     Unless otherwise indicated in the applicable Pricing Supplement, "Federal
Funds Rate" means, with respect to any Interest Determination Date, the rate on
that day for Federal Funds as published in H.15(519) under the heading "Federal
Funds (Effective)" or, if not so published by the Calculation Date pertaining to
such Interest Determination Date, the Federal Funds Rate will be the rate on
such Interest Determination Date as published in Composite Quotations under the
heading "Federal Funds/Effective Rate." If neither of such rates is published by
3:00 P.M., New York City time, on the Calculation Date pertaining to such
Interest Determination Date, the Federal Funds Rate for such Interest
Determination Date will be calculated by the Calculation Agent and will be the
arithmetic mean of the rates for the last transaction in overnight Federal Funds
arranged by three leading brokers of Federal Funds transactions in The City of
New York selected by the Calculation Agent as of 11:00 A.M., New York City time,
on such Interest Determination Date; provided, however, that if any of the
brokers selected as aforesaid by the Calculation Agent are not quoting as
mentioned in this sentence, the rate of interest in effect for the applicable
period will be the same as the Federal Funds Rate for the immediately preceding
Interest Reset Period (or, if there was no such Interest Reset Period, the rate
of interest payable on the Federal Funds Rate Notes for such period shall be the
Initial Interest Rate).
 
     Treasury Rate Notes.  Treasury Rate Notes will bear interest at the
interest rates (calculated with reference to the Treasury Rate and the Spread,
if any) specified in the Treasury Rate Notes and in the applicable Pricing
Supplement.
 
     Unless otherwise indicated in the applicable Pricing Supplement, "Treasury
Rate" means, with respect to any Interest Determination Date, the rate for the
most recent auction of direct obligations of the United States ("Treasury
bills") having the Index Maturity specified in the applicable Pricing Supplement
as published in H.15(519), or any successor publication, under the heading "U.S.
Government Securities -- Treasury bills -- auction average (Investment)" or, if
not so published by the Calculation Date pertaining to such Interest
Determination Date, the auction average rate (expressed as a bond equivalent, on
the basis of a year of 365 or 366 days, as applicable, and applied on a daily
basis) as otherwise announced by the United States Department of the Treasury.
Treasury bills are usually sold at auction on Monday of each week, unless that
day is a legal holiday, in which case the auction is usually held on the
following Tuesday, except that such auction may be held on the preceding Friday.
In the event that the results are not published or reported as provided above by
3:00 P.M., New York City time, on such Calculation Date, or if no such auction
is held in a particular week, then the Treasury Rate shall be calculated by the
Calculation Agent and shall be a yield to maturity (expressed as a bond
equivalent, on the basis of a year of 365 or 366 days, as applicable, and
applied on a daily basis) of the arithmetic mean of the secondary market bid
rates as of approximately 3:30 P.M., New York City time, on such Interest
Determination Date, of three leading primary United States government securities
dealers selected by the Calculation Agent (after consultation with the Company)
for the issue of Treasury bills with a remaining maturity closest to the
specified Index Maturity; provided, however, that if any of the dealers selected
as aforesaid by the Calculation Agent are not quoting as mentioned in this
sentence, the Treasury Rate in effect for the applicable period will be the same
as the Treasury Rate for the immediately
 
                                       10
   11
 
preceding Interest Reset Period (or, if there was no such Interest Reset Period,
the rate of interest payable on the Treasury Rate Notes for such period shall be
the Initial Interest Rate).
 
ZERO COUPON NOTES
 
     Zero Coupon Notes will be offered at a substantial discount from their
principal amount at maturity. There will be no periodic payments of interest.
The calculation of the accrual of original issue discount (as defined below), in
the period during which a Zero Coupon Note remains outstanding, will be on a
semiannual bond equivalent basis using a year composed of twelve 30-day months.
Upon maturity, original issue discount will cease to accrue on a Zero Coupon
Note. See "Certain United States Federal Income Tax Consequences."
 
     Limitation of Claims in Bankruptcy.  If a bankruptcy case is commenced in
respect of the Company, the claim of the Holder of a Zero Coupon Note with
respect to the principal amount thereof may, under Section 502(b)(2) of Title 11
of the United States Code, be limited to the issue price of the Zero Coupon Note
plus that portion of the original issue discount that is amortized from the date
of issue to the commencement of the proceeding.
 
REDEMPTION
 
     Unless otherwise specified in the applicable Pricing Supplement, the Notes
will not have a sinking fund. Redemption Dates, if any, and whether such
redemption is at the option of the Company or a Holder, will be fixed at the
time of sale and set forth in the applicable Pricing Supplement and on the
applicable Note. If no Redemption Date is indicated with respect to a Note, such
Note will not be redeemable prior to maturity. On and after the Redemption Date,
the related Fixed Rate Note or Floating Rate Note will be redeemable in whole,
or in part increments of $1,000 (provided that any remaining principal amount of
such Note shall be at least $1,000), at the option of the Company or the Holder,
as the case may be, at the redemption price or prices set forth in the
applicable Pricing Supplement, together with interest thereon payable to the
Redemption Date (the "Redemption Price"), on notice given (i) to the Trustee not
more than 60 nor less than 30 days prior to the Redemption Date with respect to
redemption at the option of the Company or (ii) to the Trustee and the Company
at least 60 days prior to the Redemption Date with respect to redemption at the
option of a Holder. (Sections 11.1 through 11.7)
 
REPURCHASE
 
     The Company may at any time purchase Notes at any price in the open market
or otherwise. Notes so purchased by the Company may be held or resold or, at the
discretion of the Company, may be surrendered to the Trustee for cancellation.
 
BOOK-ENTRY SYSTEM
 
     Book-Entry Notes may be issued in whole or in part in the form of one or
more fully-registered global notes which will be deposited with, or on behalf
of, the Depositary and registered in the name of its nominee. Except as set
forth below, a Global Note may not be transferred except as a whole by the
Depositary to its nominee or by its nominee to such Depositary or another
nominee of the Depositary or by the Depositary or its nominee to a successor of
the Depositary or a nominee of such successor. (Sections 2.3 and 3.5)
 
     The Depositary has advised the Company and the Agents as follows: the
Depositary is a limited-purpose trust company organized under the laws of the
State of New York, a member of the Federal Reserve System, a "clearing
corporation" within the meaning of the New York Uniform Commercial Code and a
"clearing agency" registered pursuant to the provisions of Section 17A of the
1934 Act. The Depositary was created to hold securities of its participating
organizations ("participants") and to facilitate the clearance and settlement of
securities transactions among its participants in such securities through
electronic book-entry changes in accounts of the participants, thereby
eliminating the need for physical movement of securities certificates. The
Depositary's participants include securities brokers and dealers (including the
Agents expressly identified by name herein), banks, trust companies, clearing
companies, clearing corporations and certain other organizations, some of whom
(and/or their representatives) own the Depositary. Access to the Depositary's
book-entry
 
                                       11
   12
 
system is also available to others, such as banks, brokers, dealers and trust
companies that clear through or maintain a custodial relationship with a
participant, either directly or indirectly. Persons who are not participants may
beneficially own securities held by the Depositary only through participants.
 
     Upon issuance of any Notes by the Company that will be represented by a
Global Note, the Depositary will credit on its book- entry system the respective
principal amounts of the Notes represented by such Global Note to the accounts
of participants. The accounts to be credited shall be designated by the Agents
or by the Company, if such Notes are offered and sold directly by the Company.
Ownership of beneficial interests in a Global Note will be limited to
participants or persons that may hold interests through participants. Ownership
of beneficial interests in a Global Note will be shown on, and the transfer of
that ownership will be effected only through, records maintained by the
Depositary's participants or persons that may hold interests through
participants. The laws of some states require that certain purchasers of
securities take physical delivery of such securities in definitive form. Such
limits and such laws may impair the ability to transfer beneficial interests in
a Global Note.
 
     So long as the Depositary for a Global Note, or its nominee, is the
registered owner of a Global Note, such Depositary or nominee, as the case may
be, will be considered the sole owner or Holder of the Note represented by such
Global Note for all purposes under the Indenture. Except as provided below,
owners of beneficial interests in a Global Note will not be entitled to have
Notes represented by Global Notes registered in their names, will not receive or
be entitled to receive physical delivery of Notes in definitive form and will
not be considered the owners or Holders thereof under the Indenture.
 
     Principal and interest payments on the Notes registered in the name of the
Depositary or its nominee will be made by the Company to the Depositary or its
nominee, as the case may be, as the registered owner of a Global Note. Neither
the Company nor the Trustee will have any responsibility or liability for any
aspect of the records relating to or payments made on account of beneficial
ownership interests of a Global Note or for maintaining, supervising or
reviewing any records relating to such beneficial ownership interests and each
of them may act or refrain from acting without liability on any information
provided by the Depositary. The Company expects that the Depositary, upon
receipt of any payment of principal or interest in respect of a Global Note,
will credit immediately the accounts of the participants with payment in amounts
proportionate to their respective holdings in principal amount of beneficial
interest in a Global Note as shown on the records of the Depositary. The Company
also expects that payments by participants to owners of beneficial interests in
a Global Note will be governed by standing customer instructions and customary
practices, as is now the case with securities held for the accounts of customers
in bearer form or registered in "street name," and will be the responsibility of
such participants.
 
     The applicable Pricing Supplement will specify whether a Note will be
issued initially as a Book-Entry Note or a Certificated Note. Except as set
forth in this paragraph, Book-Entry Notes will only be issued as Global Notes.
If the Depositary is at any time unwilling or unable or ineligible to continue
as depositary and a successor depositary is not appointed by the Company within
90 calendar days, the Company will issue Notes in certificated form in exchange
for all outstanding Global Notes. In addition, the Company (but not a Holder)
may at any time determine not to have Notes represented by a Global Note and, in
such event, will issue Notes in certificated form in exchange for all such
Global Notes. In any such instance, an owner of a beneficial interest in the one
or more Global Notes to be exchanged will be entitled to physical delivery in
definitive certificated form of Notes equal in principal amount to such
beneficial interest and to have such Notes registered in its name. Notes so
issued in certificated form will be issued in denominations of $100,000 and
integral multiples of $1,000 in excess thereof, except as otherwise specified in
the applicable Pricing Supplement, and will be issued in registered form only,
without coupons. (Section 3.5)
 
CERTAIN COVENANTS OF COMPANY
 
     The debt securities are not secured by mortgage, pledge or other lien. The
Company covenants that neither it nor any Restricted Subsidiary (which the
Indenture defines as any subsidiary which is a consolidated subsidiary, in
accordance with generally accepted accounting principles, in the consolidated
financial statements of the Company) will subject any of its property, tangible
or intangible, real or personal to any lien
 
                                       12
   13
 
unless the debt securities are secured equally and ratably with other
indebtedness thereby secured. There are excepted from this covenant any liens
existing on the date of the Indenture, as well as certain other liens, and the
extension, renewal or replacement thereof, including without limitation, (i)
liens on any property provided that the creditor has no recourse against the
Company or any Restricted Subsidiary except recourse to such property or
proceeds of any sale or lease therefrom; (ii) liens on property existing at the
time of acquisition (including acquisition through merger or consolidation) or
given in connection with financing the purchase price or cost of construction or
improvement of property; (iii) other liens not permitted by clauses (i) and (ii)
on property then owned or thereafter acquired, provided no such lien shall be
incurred pursuant to clause (iii) if the aggregate amount of indebtedness
secured by liens incurred pursuant to clauses (ii) and (iii), including the lien
proposed to be incurred, shall exceed 30% of Net Tangible Assets; (iv) liens
securing certain intercompany indebtedness; (v) a banker's lien or right of
offset; (vi) liens arising under the Employee Retirement Income Security Act of
1974, as amended, to secure any contingent liability of the Company; (vii) liens
on sublease interests held by the Company which liens are in favor of the person
granting the lease to the Company; (viii) various specified governmental liens
and deposits; and (ix) various other liens not incurred in connection with the
borrowing of money (including purchase money indebtedness) or the obtaining of
advances or credit. (Section 10.6). Net Tangible Assets is defined for this
purpose as the total assets of the Company less (x) current liabilities and (y)
intangible assets.
 
     In addition, the Company covenants that neither it nor any Restricted
Subsidiary will pay any dividends upon any of its stock of any class or make any
distribution of cash or property among its stockholders by reduction of capital
or otherwise (other than in stock of the Company) or purchase or redeem any
stock of any class of the Company unless the aggregate amounts of all such
payments and distributions after December 31, 1988 will not exceed the sum of
(i) the total of the accumulated consolidated net income of the Company and its
Restricted Subsidiaries during the period after December 31, 1988, (ii) any net
consideration received from the sale of the stock of any class of the Company
after December 31, 1988, (iii) the aggregate principal amount of any
indebtedness of the Company which shall have been converted into the stock of
any class of the Company and (iv) $25,000,000. Such restriction shall not apply
to (i) the payment of dividends on preferred stock or any payment to purchase
shares of preferred stock subject to a mandatory sinking fund, provided that
such payments are included in the foregoing calculations, (ii) the redemption or
retirement of any shares of capital stock of the Company by exchange for, or out
of the proceeds of a substantially concurrent sale of, other shares of capital
stock, (iii) the purchase of any shares of capital stock of the Company pursuant
to or in connection with any retirement, bonus, profit sharing, thrift, savings,
stock option or compensation plan for officers or employees of the Company or
(iv) the conversion of shares of any stock of the Company into shares of any
other stock of the Company. (Section 10.8)
 
MERGER AND CONSOLIDATION
 
     The Indenture provides that the Company may consolidate or merge with or
into any other corporation and the Company may sell, lease or convey all or
substantially all of its assets to any corporation, organized and existing under
the laws of the United States of America or a State thereof, provided that the
corporation (if other than the Company) formed by or resulting from any such
consolidation or merger or which shall have received such assets shall assume
payment of the principal of (and premium, if any) and interest on the Notes and
the performance and observance of all of the covenants and conditions of the
Indenture to be performed or observed by the Company. (Sections 8.1 and 8.2)
 
MODIFICATION AND WAIVER
 
     Modification and amendment of the Indenture may be effected by the Company
and the Trustee with the consent of the Holders of 66-2/3% in principal amount
of the Outstanding debt securities of each series affected thereby, provided
that no such modification or amendment may, without the consent of the Holder of
each Outstanding debt security affected thereby, (a) change the Stated Maturity
of any installment of principal of, or interest on, any debt security or change
the Redemption Price; (b) reduce the principal amount of, or the interest on,
any debt security or reduce the amount of principal which could be declared due
and payable prior to the Stated Maturity; (c) change the place or currency of
any payment of principal or interest on any debt
 
                                       13
   14
 
security; (d) impair the right to institute suit for the enforcement of any
payment on or with respect to any debt security; (e) reduce the percentage in
principal amount of the Outstanding debt securities of any series, the consent
of whose Holders is required to modify or amend the Indenture; or (f) modify the
foregoing requirements or reduce the percentage of Outstanding debt securities
necessary to waive any past default to less than a majority. Except with respect
to certain fundamental provisions, the Holders of at least a majority in
principal amount of Outstanding debt securities of any series may, with respect
to such series, waive past defaults under the Indenture and waive compliance by
the Company with certain provisions of the Indenture. (Sections 9.2 and 10.7)
 
EVENTS OF DEFAULT, WAIVER AND NOTICE
 
     An Event of Default with respect to any debt security of any series is
defined in the Indenture as being: default for 30 days in payment of any
interest on or any Additional Amounts payable in respect of any debt security of
that series; default in payment of principal (and premium, if any) on the debt
securities of that series when due either at maturity, upon optional or
mandatory redemption, as a sinking fund installment, by declaration or
otherwise; default in the performance or breach of any other covenant or
warranty of the Company in respect of the debt securities of such series in the
Indenture which shall not have been remedied for a period of 90 days after
notice; certain events of bankruptcy, insolvency and reorganization of the
Company; and any other Event of Default established for the debt securities of
such series set forth in the Pricing Supplement. (Section 5.1) The Indenture
provides that the Trustee may withhold notice to the Holders of the debt
securities of any default with respect to any series thereof (except in payment
of principal of, or interest on, the debt securities) if the Trustee considers
it in the interest of the Holders of the debt securities of such series to do
so. (Section 6.2)
 
     The Indenture provides that (1) if an Event of Default due to the default
in payment of principal of, or interest on, any series of debt securities, or
due to the default in the performance or breach of any other covenant or
warranty of the Company applicable to the debt securities of such series but not
applicable to all outstanding debt securities, shall have occurred and be
continuing, either the Trustee or the Holders of 25% in principal amount of the
Outstanding debt securities of such series then may declare the principal of all
debt securities of such series, or such lesser amount as may be provided for in
the debt securities of that series, and interest accrued thereon to be due and
payable immediately and (2) if an Event of Default resulting from default in the
performance of any other of the covenants or agreements in the Indenture
applicable to all Outstanding debt securities and certain events of bankruptcy,
insolvency and reorganization of the Company shall have occurred and be
continuing, either the Trustee or the Holders of 25% in principal amount of all
Outstanding debt securities (treated as one class) may declare the principal of
all debt securities, or such lesser amount as may be provided for in such
securities, and interest accrued thereon to be due and payable immediately, but
upon certain conditions such declarations may be annulled and past defaults may
be waived (except a continuing default in payment of principal of, or premium or
interest on, the debt securities) by the Holders of a majority in principal
amount of the Outstanding debt securities of such series (or of all series, as
the case may be). (Sections 5.2 and 5.13)
 
     The Holders of a majority in principal amount of the Outstanding debt
securities of any series shall have the right to direct the time, method and
place of conducting any proceeding for any remedy available to the Trustee or
exercising any trust or power conferred on the Trustee with respect to debt
securities of such series provided that such direction shall not be in conflict
with any rule of law or the Indenture or shall not be unduly prejudicial to the
Holders not taking part in such direction. (Section 5.12) The Indenture requires
the annual filing by the Company with the Trustee of a certificate as to the
absence of certain defaults under the Indenture. (Section 10.5)
 
CONCERNING THE TRUSTEE
 
     The Chase Manhattan Bank (National Association) is the Trustee under the
Indenture. The Trustee has substantial banking relationships with the Company,
GATX and certain other affiliates of the Company and is the trustee under the
Indenture with respect to other series of debt securities, under another
indenture with the Company and under certain equipment trust agreements with an
affiliate.
 
                                       14
   15
 
             CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES
 
     The following general discussion summarizes certain United States Federal
income tax aspects of the ownership of the Notes. This discussion is a summary
for general information only and is not a complete analysis of the tax
considerations that may be applicable to a prospective investor. This discussion
also does not address the tax consequences of ownership of Notes not held as
capital assets nor those that may be relevant to particular categories of
investors subject to special treatment under certain United States Federal
income tax laws, such as dealers in securities, tax-exempt entities, banks,
insurance companies and foreign individuals and entities. In addition, it does
not describe any tax consequences arising out of the tax laws of any state,
locality or foreign jurisdiction.
 
     This discussion is based upon the Internal Revenue Code of 1986, as amended
(the "Code"), existing and proposed regulations thereunder and current
administrative rulings and court decisions. All of the foregoing are subject to
change, and any such change could affect the continuing validity of this
discussion. Persons considering the purchase of Notes should consult their own
tax advisors concerning the application of United States Federal income tax
laws, as well as the laws of any state, local or foreign taxing jurisdictions to
their particular situations. Additional United States Federal income tax
consequences applicable to particular Notes may be set forth in the applicable
Pricing Supplement.
 
INTEREST INCOME
 
     Except as set forth below, interest on a Note will be taxable to a holder
as ordinary interest income at the time it accrues or is received in accordance
with such holder's method of accounting for tax purposes.
 
ORIGINAL ISSUE DISCOUNT
 
     Final U.S. Treasury Department Regulations (the "Regulations") regarding
the original issue discount ("OID") provisions of the Code were adopted in
February 1994. However, the Regulations are ambiguous in many respects and their
application to the Notes may require further guidance. The amount of OID, if
any, on a debt instrument is the difference between its issue price (generally,
the initial offering price to the public at which a substantial amount of Notes
are sold) and its Stated Redemption Price at Maturity, subject to a statutory de
minimis exception. A Note's Stated Redemption Price at Maturity is equal to all
payments to be received on the Note less payments of interest ("qualified stated
interest") payable at fixed periodic intervals of one year or less at a fixed
rate or a variable rate meeting certain conditions. The portion of OID, if any,
accrued (and recognized as income) with respect to a debt instrument for each
Accrual Period (ordinarily the periods ending with each Interest Payment Date
provided such periods are no longer than one year) will be equal to the excess,
if any, of (i) the Adjusted Issue Price at the beginning of the accrual period
(i.e., the original Issue Price plus previously accrued OID) multiplied by the
"yield to maturity" of a debt instrument (determined on the basis of a constant
interest rate adjusted to reflect the length of each accrual period) over (ii)
the sum of the amount of stated interest, if any, payable during such Accrual
Period. The resulting amount is allocated ratably to each day in the Accrual
Period, and the amount includible in a Holder's income (whether on the cash or
accrual method of accounting) with respect to the debt instrument is the sum of
the resulting daily portions of OID for each day of the taxable year in which
the Holder held the debt instrument. Generally, the tax basis of a debt
instrument in the hands of the Holder will be increased by the amount of OID, if
any, on the debt instrument that is included in the Holder's income pursuant to
these rules and will be decreased by the amount of any payment received with
respect to OID previously included in income. Under the foregoing rules, Holders
of Zero Coupon Notes will be required to include in income increasingly greater
amounts of OID in successive accrual periods.
 
     Under the Regulations, it is possible that a Note providing for annual
interest rate adjustments and issued between a Record Date and an Interest
Payment Date, where the first interest payment will be made on the next
succeeding Interest Payment Date, will have been issued with OID, because the
initial interest period will be longer than one year. It is also possible that a
Note will have been issued with OID because the manner of determining the Note's
rate of interest depends on an increasing Spread which may cause interest on the
Note to be other than qualified stated interest.
 
                                       15
   16
 
     Because the Regulations do not provide clear guidance in these and other
circumstances involving Notes, and due to the complex nature of the OID rules,
Holders are urged to consult their tax advisors concerning application of those
rules to the Notes.
 
SHORT-TERM OBLIGATIONS
 
     In general, a cash method Holder of a Note that matures one year or less
from the date of issuance (a "Short-Term Note") is not required to accrue OID
unless such holder elects to do so. Holders who report income for United States
Federal income tax purposes on the accrual method and certain other Holders,
including banks and dealers in securities, are required to include OID on such
Short-Term Notes on a straight-line basis, unless an election is made (on an
obligation-by-obligation basis) to accrue the OID according to a constant
interest method based on daily compounding. In the case of a Holder who is not
required, and does not elect, to include OID in income currently, any gain
realized on the sale, exchange or retirement of the Short-Term Note will be
ordinary income to the extent of the OID accrued on a straight-line basis (or,
if elected, according to a constant interest method based on daily compounding)
through the date of sale, exchange or retirement. In addition, such non-electing
Holders which are not subject to the current inclusion requirement described
above may be required to defer deductions for any interest paid on indebtedness
incurred or continued to purchase or carry such Short-Term Notes in an amount
not exceeding the deferred interest income, until such deferred interest income
is realized. Any election by a Holder to include OID on a Short-Term Note in
income as it accrues, whether under the straight-line or constant interest
method, applies to all obligations maturing one year or less from the date of
issuance acquired by the Holder during the taxable year of the election and all
subsequent taxable years, unless the U.S. Internal Revenue Service (the
"Service") consents to a revocation of the election.
 
INFORMATION REPORTING
 
     The Company is required to furnish certain information to the Service and
will furnish annually to record Holders of the Notes information with respect to
OID, if any, accruing during the calendar year (as well as interest paid during
that year). Because this information will be based upon the adjusted issue price
of the Notes, subsequent Holders who purchase the Notes for an amount in excess
of the adjusted issue price will be required to determine for themselves the
amount of OID, if any, they are required to report.
 
MARKET DISCOUNT AND PREMIUM
 
     If the Notes are acquired at a Market Discount, some or all of any gain
realized upon a sale or other disposition, partial principal payment or payment
at Maturity, of such Notes may be treated as ordinary income, as described
below. For this purpose, Market Discount is generally the excess of (i) the
Stated Redemption Price at Maturity of the Note (or, in the case of a Note
issued with OID, its issue price plus previously accrued OID) over (ii) such
Holder's tax basis in such Note, subject to a statutory de minimis exception.
Any gain realized in any subsequent disposition of such Note (other than in
connection with certain nonrecognition transactions) or any partial principal
payment or payment at maturity with respect to such Note will be treated as
ordinary income to the extent of the Market Discount that is treated as having
accrued during the period such Note was held. In addition, if such Note is
disposed of by gift ordinary income will be recognized as if such Note had been
sold at its then fair market value.
 
     The amount of Market Discount treated as having accrued will be determined
either (i) on a ratable basis by multiplying the Market Discount times a
fraction, the numerator of which is the number of days the Note was held by the
Holder and the denominator of which is the total number of days after the date
such Holder acquired the Note up to and including the date of its Maturity, or
(ii) if the Holder so elects, on a constant interest method. A Holder may make
that election with respect to any Note and such election is irrevocable. In lieu
of including accrued market discount income at the time of disposition, a Holder
of such Note acquired at a Market Discount may elect to include Market Discount
in income currently, through the use of either the ratable inclusion method or
the elective constant interest method. Once made, such an election applies to
all Notes and other obligations of the Holder that are purchased at a Market
Discount during the taxable year for which the election is made and all
subsequent taxable years of the Holder, unless
 
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the Service consents to a revocation of the election. If an election is made to
include Market Discount in income currently, the basis of the Note in the hands
of the Holder will be increased by the Market Discount thereon as it is
includible in income.
 
     Unless a Holder who acquires a debt instrument at a Market Discount elects
to include market discount in income currently, such Holder may be required to
defer a portion of any interest expense that may otherwise be deductible on any
indebtedness incurred or maintained to purchase or carry such debt instrument
until the Holder disposed of the debt instrument in a taxable transaction.
 
     If a Holder purchases a Note issued with OID at a "premium" (i.e., for an
amount in excess of all remaining payments on the Note other than qualified
stated interest), then the Holder does not include any OID in income. Further,
if a Holder purchases a Note issued with OID for an amount in excess of the
Note's Adjusted Issue Price but not at a "premium," then the OID which such
Holder must include in income will be reduced under the "acquisition premium"
rules of the Code. Under those rules, such excess is allocated to each day
beginning on the date of purchase and ending on the day before the stated
Maturity date of the Note so as to equal a constant percentage of the OID
allocated to each such day, and the excess so allocated to the days of the
taxable year on which the Note is held reduces the amount of OID included in
such Holder's income for that year.
 
SALE, EXCHANGE, REDEMPTION OR REPAYMENT OF THE NOTES
 
     Upon the disposition of a Note by sale, exchange or redemption, the Holder
will have gain or loss equal to the difference between (i) the amount received
on the disposition and (ii) the Holder's adjusted tax basis in the Note. A
Holder's adjusted tax basis in a Note will equal the cost of the Note to such
Holder, increased by the amounts of any Market Discount and OID previously
included in income by the Holder with respect to such Note and reduced by any
amortized acquisition premium and any principal payments received by the Holder
and, in the case of a Zero Coupon Note, by the amounts of any other payments
that do not constitute qualified stated interest (as discussed above). Assuming
that the Note is held as a capital asset, such gain or loss will generally
(except to the extent that the short-term obligation or market discount rules
otherwise provide) constitute capital gain or loss and will be long-term capital
gain or loss if the Holder has held such Note for longer than one year.
 
BACKUP WITHHOLDING
 
     Holders of the Notes may be subject to backup withholding at the rate of
31% with respect to interest paid on the Notes, unless such Holder (i) is a
corporation or comes within certain other exempt categories and, when required,
demonstrates this fact or (ii) provides a correct taxpayer identification
number, certifies as to no loss of exemption from backup withholding and
otherwise complies with the applicable requirements of the backup withholding
rules. A Holder of the Notes who does not provide the Company with his correct
taxpayer identification number may be subject to penalties imposed by the
Service. Any amount paid as backup withholding will be creditable against the
Holder's United States Federal income tax liability and may entitle such Holder
to a refund.
 
                              PLAN OF DISTRIBUTION
 
     The Notes are being offered on a continuing basis by the Company through
the Agents expressly identified by name herein, each of which has agreed to use
its best efforts to solicit purchases of the Notes. The Company also may sell
Notes to any Agent, at a discount to be agreed upon at the time of sale, for
resale to one or more Dealers, Agents or investors at varying prices related to
prevailing market prices at the time of such resale, to be determined by such
Agent. The Company reserves the right to sell Notes directly on its own behalf
and through other agents as may be identified by name in the applicable Pricing
Supplement. The Company will have the sole right to accept offers to purchase
Notes and may reject any proposed purchase of Notes in whole or in part. Each
Agent will have the right, in its discretion reasonably exercised, to reject any
offer to purchase Notes received by it in whole or in part. The Company will pay
an Agent, in connection with
 
                                       17
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sales of Notes resulting from a solicitation made or an offer to purchase
received by such Agent, a commission ranging from .125% to .625% of the
principal amount of each Note depending upon the stated maturity.
 
     The Company may also sell Notes to an Agent as principal for its own
account at discounts to be agreed upon at the time of sale. Such Notes may be
resold to investors and other purchasers at prevailing market prices, or prices
related thereto at the time of such resale, as determined by such Agent or, if
so agreed, at a fixed public offering price. In addition, an Agent may offer any
Notes that it has purchased as principal to other dealers. An Agent may sell
Notes to any dealer at a discount and, unless otherwise specified in the
applicable Pricing Supplement, such discount allowed to any dealer will not be
in excess of the discount to be received by such Agent from the Company. After
the initial public offering of Notes to be resold to investors and other
purchasers, the public offering price (in the case of Notes to be resold at a
fixed public offering price), concession and discount may be changed.
 
     The Company has reserved the right to sell the Notes directly to investors
on its own behalf, and may solicit and accept offers to purchase Notes directly
from investors from time to time on its own behalf. No commission will be
payable by the Company on Notes sold directly by the Company. The Company may
accept offers to purchase Notes through additional agents and may appoint
additional agents for the purpose of soliciting offers to purchase Notes, in
either case on terms substantially identical to the terms contained in the
Distribution Agreement. Such other agents, if any, will be named in the
applicable Pricing Supplement.
 
     Unless otherwise indicated in the applicable Pricing Supplement, payment of
the purchase price of Notes will be required to be made in funds immediately
available in The City of New York.
 
     The Agents may be deemed to be "underwriters" within the meaning of the
Securities Act of 1933, as amended (the "Securities Act"). The Company has
agreed to indemnify the Agents against or to make contributions relating to
certain civil liabilities, including liabilities under the Securities Act. The
Company has agreed to reimburse the Agents for certain expenses.
 
     The Company does not intend to apply for listing of the Notes on a national
securities exchange, but has been advised by the Agents expressly identified by
name herein that they currently intend to make a market in the Notes, as
permitted by applicable laws and regulations. Neither Agent expressly identified
by name herein is obligated, however, to make a market in the Notes and any such
market-making may be discontinued at any time at the sole discretion of such
Agent. Accordingly, no assurance can be given as to the liquidity of, or trading
markets for, the Notes.
 
     Each Agent expressly identified by name herein in the ordinary course of
its business engages from time to time in securities transactions with and
performs investment banking services for the Company, GATX and certain other of
their affiliates.
 
                                 LEGAL OPINIONS
 
     The validity of the Notes will be passed upon for the Company by Thomas C.
Nord, Esq., Vice President and General Counsel, GATX Capital Corporation.
Certain legal matters relating to the Notes will be passed upon for the Agents
by Pillsbury Madison & Sutro LLP, 235 Montgomery Street, San Francisco,
California 94104. Pillsbury Madison & Sutro LLP has acted and continues to act
as counsel in certain matters for the Company and certain of its affiliates.
 
                                    EXPERTS
 
     The consolidated financial statements of the Company incorporated by
reference in the Company's Annual Report on Form 10-K for the year ended
December 31, 1994, have been audited by Ernst & Young LLP, independent auditors,
as set forth in their report thereon included therein and incorporated herein by
reference. Such consolidated financial statements are incorporated herein by
reference in reliance upon such report given upon the authority of such firm as
experts in accounting and auditing.
 
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