<PAGE>
RULE NO. 424(b)(2)
REGISTRATION NO. 33-51269
PROSPECTUS SUPPLEMENT
(To Prospectus Dated December 14, 1993)
1,000,000 ELKS SM (EQUITY-LINKED SECURITIES SM)
SALOMON INC
6.125% PRI COMMON EQUITY-LINKED SECURITIES DUE 1997
(ISSUE PRICE AND PRINCIPAL AMOUNT BASED ON THE PER SHARE PRICE OF THE PROMUS
COMPANIES INCORPORATED COMMON STOCK)
The issue price (the "Issue Price") of each of the 6.125% PRI Common Equity-
Linked Securities Due 1997 (an "ELK", and in the aggregate, the "ELKS") of
Salomon Inc ("Salomon" or the "Company") being offered hereby will be $49.25
(the closing price of the Common Stock (the "PRI Common Stock") of The Promus
Companies Incorporated ("PRI") on February 28, 1994, as quoted on the New York
Stock Exchange Composite Tape). The ELKS will mature on March 15, 1997,
subject to extension upon the occurrence of certain Non-Trading Days, but in
any event not later than March 22, 1997.
The principal amount of each ELK payable at maturity will equal the lesser of
(A) 150% of the Issue Price or (B) the average Closing Price of PRI Common
Stock, subject to adjustment as a result of certain dilution events (see
"Description of ELKS--Dilution Adjustments" herein), for the 10 Trading Days
immediately prior to maturity. Interest on each ELK is payable quarterly on
each March 15, June 15, September 15 and December 15, at the rate of 6.125% of
the Issue Price per annum (or $3.017 per annum), beginning June 15, 1994. The
ELKS are not subject to redemption by the Company prior to maturity.
PROSPECTIVE INVESTORS ARE ADVISED TO CONSIDER CAREFULLY THE INFORMATION
CONTAINED UNDER "SPECIAL CONSIDERATIONS" HEREIN.
For a discussion of certain United States federal income tax consequences for
holders of ELKS, see "Certain United States Federal Income Tax
Considerations."
"PRI" is a trade name used by PRI. PRI is neither affiliated with the Company
nor involved in this offering of ELKS. See "Special Considerations--Lack of
Affiliation Between the Company and PRI."
"ELKS" and "Equity-Linked Securities" are service marks of Salomon Brothers
Inc.
The ELKS have been approved for listing on the American Stock Exchange (the
"AMEX"), subject to official notice of issuance. The AMEX symbol for the ELKS
will be PLK.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRICE TO UNDERWRITING PROCEEDS TO
PUBLIC(1) DISCOUNT COMPANY(1)(2)
<S> <C> <C> <C>
Per ELK.................................. $49.25 $1.31 $47.94
Total(3)................................. $49,250,000 $1,310,000 $47,940,000
</TABLE>
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(1) Plus accrued interest, if any, from March 7, 1994.
(2) Before deducting expenses payable by the Company estimated to be $131,000.
(3) The Company has granted to the Underwriters an option, exercisable for 30
days from February 28, 1994, to purchase up to an additional 150,000 ELKS
to cover over-allotments, if any. If all such ELKS are purchased, the
total Price to Public, Underwriting Discount and Proceeds to Company will
be $56,637,500, $1,506,500 and $55,131,000, respectively.
The ELKS are offered subject to receipt and acceptance by the Underwriters, to
prior sale and to the Underwriters' right to reject any order in whole or in
part and to withdraw, cancel or modify the offer without notice. It is
expected that delivery of the ELKS will be made at the office of The First
National Bank of Chicago, One First National Plaza, Chicago, Illinois, on
behalf of Salomon Brothers Inc, Seven World Trade Center, New York, New York,
or through the facilities of the Depository Trust Company, on or about March
7, 1994.
The Company or one or more of its subsidiaries may from time to time purchase
or acquire a position in ELKS and may, at their option, hold or resell such
ELKS. Salomon Brothers Inc, an indirect wholly owned subsidiary of the
Company, expects to offer and sell previously issued ELKS in the course of its
business as a broker-dealer. Salomon Brothers Inc may act as principal or
agent in such transactions. The Prospectus and this Prospectus Supplement may
be used by the Company or any of its subsidiaries, including Salomon Brothers
Inc, in connection with such transactions. Such sales, if any, will be made at
varying prices related to prevailing market prices at the time of sale.
SALOMON BROTHERS INC PRUDENTIAL SECURITIES INCORPORATED
The date of this Prospectus Supplement is March 3, 1994.
<PAGE>
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE ELKS OFFERED
HEREBY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET.
SUCH TRANSACTIONS MAY BE EFFECTED ON THE AMERICAN STOCK EXCHANGE OR OTHERWISE.
SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents, filed by the Company with the Securities and
Exchange Commission (the "Commission") pursuant to Section 13 of the
Securities Exchange Act of 1934, as amended (the "Exchange Act") (File No. 1-
4346), are incorporated herein by reference: (i) the Company's Annual Report
on Form 10-K for the year ended December 31, 1992; (ii) the Quarterly Reports
on Form 10-Q for the quarters ended March 31, 1993, June 30, 1993 and
September 30, 1993; and (iii) the Current Reports on Form 8-K dated January
12, 1993, January 19, 1993, February 1, 1993, February 3, 1993, February 22,
1993, March 4, 1993, April 22, 1993, July 22, 1993, October 14, 1993, October
21, 1993, October 27, 1993, November 5, 1993, December 17, 1993, January 12,
1994, January 18, 1994 and January 27, 1994. See "Incorporation of Certain
Documents By Reference" in the Prospectus.
----------------
S-2
<PAGE>
SALOMON INC
Salomon Inc was incorporated in 1960 under the laws of the State of
Delaware. Its major operating units are engaged principally in securities,
commodities trading and oil refining activities. Securities and related
activities are conducted by Salomon Brothers Holding Company Inc and its
subsidiaries and commodities trading by the Phibro Division of the Company.
Oil refining activities are conducted by Phibro Energy USA, Inc., the owner of
three oil refineries and other asset-based businesses.
RATIO OF EARNINGS TO FIXED CHARGES
Salomon's ratio of earnings to fixed charges was 1.25, 1.16, 1.08, 1.12, and
1.21 for the years 1992, 1991, 1990, 1989, and 1988, and 1.19 for the nine
months ended September 30, 1993. Such ratios were calculated by dividing fixed
charges into the sum of earnings before taxes and fixed charges. Fixed charges
consist largely of interest expense, including capitalized interest, and a
portion of rental expense representative of the interest factor. See "Ratio of
Earnings to Fixed Charges" in the Prospectus.
USE OF PROCEEDS AND HEDGING
Before and/or after the initial offering of the ELKS, the Company or one or
more of its subsidiaries will acquire PRI Common Stock or listed or over-the-
counter options contracts in, or other derivative or synthetic instruments
related to PRI Common Stock in connection with hedging the Company's
obligations under the ELKS. The proceeds of the offering not used for such
hedging will be used for corporate purposes. See "Use of Proceeds" in the
Prospectus. From time to time after the initial offering and prior to the
maturity of the ELKS, depending on market conditions (including the market
price of PRI Common Stock), in connection with hedging with respect to the
ELKS, the Company expects that it or one or more of its subsidiaries will
increase or decrease their initial hedging positions using dynamic hedging
techniques and may take long or short positions in PRI Common Stock, in listed
or over-the-counter options contracts in, or other derivative or synthetic
instruments related to, PRI Common Stock. In addition, the Company or one or
more of its subsidiaries may purchase or otherwise acquire a long or short
position in ELKS from time to time and may, in their sole discretion, hold or
resell such ELKS. The Company or one or more of its subsidiaries may also take
positions in other types of appropriate financial instruments that may become
available in the future. To the extent that the Company or one or more of its
subsidiaries have a long hedge position in PRI Common Stock or options
contracts in, or other derivative or synthetic instruments related to, PRI
Common Stock, the Company or one or more of its subsidiaries may liquidate a
portion of their holdings at or about the time of the maturity of the ELKS.
Depending, among other things, on future market conditions, the aggregate
amount and the composition of such positions are likely to vary over time.
Profits or losses from any such position cannot be ascertained until such
position is closed out and any offsetting position or positions are taken into
account.
S-3
<PAGE>
THE PROMUS COMPANIES INCORPORATED
According to publicly available documents, PRI, a Delaware corporation, is a
hospitality company with two business segments: (a) casino entertainment under
the brand name Harrah's and (b) hotels under the brand names Embassy Suites,
Hampton Inn and Homewood Suites. PRI is subject to the informational
requirements of the Exchange Act. Accordingly, PRI files reports, proxy
statements and other information with the Commission. Copies of such reports,
proxy statements and other information may be inspected and copied at certain
offices of the Commission.
THIS PROSPECTUS SUPPLEMENT RELATES ONLY TO THE ELKS OFFERED HEREBY AND DOES
NOT RELATE TO THE PRI COMMON STOCK. ALL DISCLOSURES CONTAINED IN THIS
PROSPECTUS SUPPLEMENT REGARDING PRI ARE DERIVED FROM THE PUBLICLY AVAILABLE
DOCUMENTS DESCRIBED IN THE PRECEDING PARAGRAPH. NEITHER THE COMPANY NOR THE
UNDERWRITERS HAVE PARTICIPATED IN THE PREPARATION OF SUCH DOCUMENTS, OR MADE
ANY DUE DILIGENCE INQUIRY WITH RESPECT TO THE INFORMATION PROVIDED THEREIN.
THERE CAN BE NO ASSURANCE THAT ALL EVENTS OCCURRING PRIOR TO THE DATE HEREOF
(INCLUDING EVENTS THAT WOULD AFFECT THE ACCURACY OR COMPLETENESS OF THE
PUBLICLY AVAILABLE DOCUMENTS DESCRIBED IN THE PRECEDING PARAGRAPH) THAT WOULD
AFFECT THE TRADING PRICE OF PRI COMMON STOCK HAVE BEEN PUBLICLY DISCLOSED.
BECAUSE THE PRINCIPAL AMOUNT OF THE ELKS PAYABLE AT MATURITY IS RELATED TO THE
TRADING PRICE OF PRI COMMON STOCK, SUCH EVENTS, IF ANY, WOULD ALSO AFFECT THE
TRADING PRICE OF THE ELKS.
PRICE RANGE AND DIVIDEND HISTORY OF PRI COMMON STOCK
PRI Common Stock is listed and traded on the New York Stock Exchange (the
"NYSE") under the symbol PRI. The following table sets forth, for the periods
indicated, the high and low sales prices, adjusted for stock splits, on the
NYSE for PRI Common Stock as reported by Bloomberg Financial Markets.
<TABLE>
<CAPTION>
HIGH LOW
---- ---
<S> <C> <C>
1992
Fourth Quarter........................................... $18 35/64 $12 3/8
1993
First Quarter............................................ $ 25 $17 35/64
Second Quarter........................................... 32 23 11/64
Third Quarter............................................ 52 1/2 32 11/64
Fourth Quarter........................................... 54 43/64 39 11/64
1994
First Quarter, as of the date hereof..................... 54 1/4 46 1/8
</TABLE>
Historically, cash dividends have not been declared on PRI Common Stock. The
Company makes no representation as to the amount of dividends, if any, that
PRI will pay in the future. In any event, holders of ELKS will not be entitled
to receive any dividends that may be payable on PRI Common Stock.
SPECIAL CONSIDERATIONS
ELKS are novel and innovative securities. Accordingly, the AMEX requires its
members and member organizations to sell ELKS only to investors whose accounts
have been specifically approved for trading equity-linked securities.
As described in more detail below, the trading price of the ELKS may vary
considerably prior to maturity due, among other things, to fluctuations in the
price of PRI Common Stock and other events that are difficult to predict and
beyond the Company's control.
S-4
<PAGE>
COMPARISON TO OTHER DEBT SECURITIES
The terms of the ELKS differ from those of ordinary debt securities, in that
the principal amount received at maturity is not fixed, but is based on the
price of PRI Common Stock. There can be no assurance that the principal amount
payable at maturity will be greater than the Issue Price and, if the price of
PRI Common Stock at maturity is less than the Issue Price, such principal
amount will be less, in which case an investment in ELKS may result in a loss.
RELATIONSHIP OF ELKS AND PRI COMMON STOCK
The market price of ELKS at any time is expected to be affected primarily by
changes in the price of PRI Common Stock. As indicated in "Price Range of PRI
Common Stock" herein, the price of PRI Common Stock has during certain recent
periods been highly volatile.
It is impossible to predict whether the price of PRI Common Stock will rise
or fall. Trading prices of PRI Common Stock will be influenced by PRI's
operational results and by complex and interrelated political, economic,
financial and other factors that can affect the capital markets generally, the
stock exchanges on which PRI Common Stock is traded and the market segment of
which PRI is a part. See "The Promus Companies Incorporated" herein.
DILUTION OF PRI COMMON STOCK
The principal amount of the ELKS payable at maturity is subject to
adjustment for certain events arising from stock splits and combinations,
stock dividends, extraordinary cash dividends and certain other actions of PRI
that modify its capital structure. See "Description of ELKS--Dilution
Adjustments" herein. The principal amount of the ELKS is not adjusted for
other events, such as offerings of PRI Common Stock for cash, that may
adversely affect the price of PRI Common Stock and, because of the
relationship of such principal amount to the price of PRI Common Stock, may
adversely affect the price of ELKS. There can be no assurance that PRI will
not make offerings of PRI Common Stock in the future or as to the amount of
such offerings, if any.
LACK OF AFFILIATION BETWEEN THE COMPANY AND PRI
The Company is not affiliated with PRI and, although the Company has no
knowledge that any of the events described in the preceding subsection are
currently being contemplated by PRI or of any event that would have a material
adverse effect on PRI or on the price of PRI Common Stock, such events are
beyond the Company's ability to control and are difficult to predict.
PRI is not involved in the offering of ELKS and has no obligations with
respect to the ELKS, including any obligation to take the needs of the Company
or of Holders of ELKS into consideration for any reason. PRI will not receive
any of the proceeds of the offering of the ELKS made hereby and is not
responsible for, and has not participated in, the determination of the timing
of, prices for, or quantities of, the ELKS to be issued or in the
determination or calculation of the principal amount to be paid at maturity.
PRI is not involved with the administration, marketing or trading of the ELKS
and has no obligations with respect to the principal amount to be paid to
Holders of ELKS at maturity.
POSSIBLE ILLIQUIDITY OF THE SECONDARY MARKET
It is not possible to predict how the ELKS will trade in the secondary
market or whether such market will be liquid or illiquid.
At issuance, the ELKS will be listed on the AMEX. However, there can be no
assurance that the ELKS will not later be delisted or that trading in the ELKS
on the AMEX will not be suspended. In the event of a delisting or suspension
of trading on such exchange, the Company will use its best efforts to list the
ELKS on another national securities exchange. If the ELKS are not listed or
traded on any securities exchange, or if trading of the ELKS is suspended,
pricing information for the ELKS may be more difficult to obtain, and the
liquidity of the ELKS may be adversely affected.
S-5
<PAGE>
DESCRIPTION OF ELKS
The ELKS are a series of Debt Securities to be issued under the Senior Debt
Indenture described in the accompanying Prospectus. The ELKS will be issued
only in fully registered form. Reference should be made to the accompanying
Prospectus for a detailed summary of additional provisions of the ELKS and the
Senior Debt Indenture under which the ELKS will be issued and to the
Prospectus and the Senior Debt Indenture for the definitions of certain
capitalized terms used herein.
The Trustee for the ELKS will be The First National Bank of Chicago, under a
Senior Debt Indenture dated as of February 8, 1993, as amended from time to
time. A copy of such Senior Debt Indenture has been filed with the Commission.
The aggregate number of ELKS to be issued will be 1,000,000 subject to the
over-allotment option granted by the Company to the Underwriters (see
"Underwriting" herein). The ELKS will mature on March 15, 1997, subject to
extension in the case of certain Non-Trading Days, but in any event not later
than March 22, 1997. At maturity, the Holder of an ELK will be entitled to
receive the principal amount, which will equal the lesser of (A) 150% of the
Issue Price or (B) the average Closing Price per share of the PRI Common
Stock, subject to adjustment as a result of certain dilution events (see
"Dilution Adjustments" below), for the 10 Trading Days immediately prior to
maturity.
The "Closing Price" of any security on any date of determination means the
closing sale price or last reported sale price of such security on the NYSE on
such date or, if such security is not listed for trading on the NYSE on any
such date, on such other national securities exchange or association that is
the primary market for the trading of such security. A "Trading Day" is
defined as a Business Day on which the security the Closing Price of which is
being determined (A) is not suspended from trading on any national securities
exchange or association at the close of business and (B) has traded at least
once on the national securities exchange or association that is the primary
market for the trading of such security. "Business Day" with respect to the
ELKS means any day that is not a Saturday, a Sunday or a day on which the
NYSE, the AMEX or banking institutions or trust companies in The City of New
York are authorized or obligated by law or executive order to close.
The maximum aggregate principal amount payable at maturity of the ELKS is
therefore $73,875,000 ($84,956,250, if the Underwriters' over-allotment option
is exercised in full). The Company in the future may, however, "reopen" the
issue of ELKS and issue additional ELKS at a later time or issue additional
Debt Securities or other securities with terms similar to those of the ELKS,
and such issuances may affect the trading value of the ELKS.
NON-TRADING DAYS
In the event that any of the 10 Business Days immediately prior to March 15,
1997 is not a Trading Day (a "Non-Trading Day"), the ELKS will not mature on
March 15, 1997, but the maturity of the ELKS will be suspended one Trading Day
for each Non-Trading Day; provided, however, that the ELKS will mature in any
event not later than March 22, 1997. The ELKS will continue to accrue interest
until the principal amount of the ELKS is paid at maturity, which, in the
event that the maturity of the ELKS is suspended as a result of a Non-Trading
Day, will be payable to the Holders of ELKS on the date of such suspended
maturity.
INTEREST
Each ELK will bear interest from March 7, 1994 at the rate of 6.125% of the
Issue Price per annum (or $3.017 per annum) until the principal amount thereof
is paid or made available for payment. Interest on the ELKS will be payable
quarterly in arrears on each March 15, June 15, September 15 and
S-6
<PAGE>
December 15 (each an "Interest Payment Date"), beginning June 15, 1994, and at
maturity. Interest on the ELKS will be computed on the basis of a 360-day year
of twelve 30-day months. The interest to be paid June 15, 1994 will be $0.821
per ELK. Each payment of interest in respect of an Interest Payment Date will
include interest accrued through the day before such Interest Payment Date. If
an Interest Payment Date falls on a day that is not a Business Day, the
interest payment to be made on such Interest Payment Date will be made on the
next succeeding Business Day with the same force and effect as if made on such
Interest Payment Date, and no additional interest will accrue as a result of
such delayed payment. Interest payable on an ELK on any Interest Payment Date
will be paid to the person in whose name such ELK is registered at the close
of business on the last day of the calendar month immediately preceding such
Interest Payment Date, or at 5:00 P.M., New York City time, on such last day,
if such last day is not a Business Day.
DILUTION ADJUSTMENTS
The Closing Price of PRI Common Stock on any of the 10 Trading Days (the "10
Trading Days") used to calculate the principal amount of the ELKS payable at
maturity shall be subject to adjustment as described below to the extent that
any of the events requiring such adjustment occur during the period commencing
on February 28, 1994 and ending at the maturity of the ELKS:
(i) PRI COMMON STOCK DIVIDENDS, EXTRAORDINARY CASH DIVIDENDS AND OTHER
DISTRIBUTIONS. In the event that a dividend or other distribution is
declared (i) on any class of PRI's capital stock (or on the capital stock
of any PRI Survivor, as defined in (iv) below) payable in shares of PRI
Common Stock (or the common stock of any PRI Survivor) or (ii) on PRI
Common Stock payable in cash in an amount greater than 10% of the Closing
Price of PRI Common Stock on the date fixed for the determination of the
shareholders of PRI entitled to receive such cash dividend (an
"Extraordinary Cash Dividend"), any Closing Price of PRI Common Stock (or
the common stock of any PRI Survivor) used to calculate the principal
amount of the ELKS payable at maturity on any Trading Day that follows the
date (the "PRI Record Date") fixed for the determination of the
shareholders of PRI (or any PRI Survivor) entitled to receive such
distribution shall be increased by multiplying such Closing Price by a
fraction of which the numerator shall be the number of shares of PRI Common
Stock (or the common stock of any PRI Survivor) outstanding on the PRI
Record Date plus the number of shares constituting such distribution or, in
the case of an Extraordinary Cash Dividend, plus the number of shares of
PRI Common Stock that could be purchased with the amount of such
Extraordinary Cash Dividend at the Closing Price of PRI Common Stock on the
Trading Day immediately subsequent to such PRI Record Date, and the
denominator shall be the number of shares of PRI Common Stock (or the
common stock of any PRI Survivor) outstanding on the PRI Record Date.
(ii) SUBDIVISIONS AND COMBINATIONS OF PRI COMMON STOCK. In the event that
the outstanding shares of PRI Common Stock (or the common stock of any PRI
Survivor) are subdivided into a greater number of shares, the Closing Price
of PRI Common Stock (or the common stock of any PRI Survivor) used to
calculate the principal amount of the ELKS payable at maturity on any
Trading Day that follows the date on which such subdivision becomes
effective will be proportionately increased, and, conversely, in the event
that the outstanding shares of PRI Common Stock (or the common stock of any
PRI Survivor) are combined into a smaller number of shares, such Closing
Price will be proportionately reduced.
(iii) RECLASSIFICATIONS OF PRI COMMON STOCK. In the event that PRI Common
Stock (or the common stock of any PRI Survivor) is changed into the same or
a different number of shares of any class or classes of stock, whether by
capital reorganization, reclassification or otherwise (except to the extent
otherwise provided in (i) or (ii) above or pursuant to a consolidation,
merger, sale, transfer, lease or conveyance, liquidation, dissolution or
winding up, as described in (iv) below), the principal amount of the ELKS
payable at maturity shall be calculated by using the
S-7
<PAGE>
Closing Prices of the shares of stock into which a share of PRI Common
Stock (or the common stock of any PRI Survivor) was changed on any Trading
Day that follows the effectiveness of such change.
(iv) DISSOLUTION OF PRI; MERGERS, CONSOLIDATIONS OR SALES OF ASSETS IN
WHICH PRI IS NOT THE SURVIVING ENTITY; SPIN-OFFS. In the event of any (A)
consolidation or merger of PRI, or any surviving entity or subsequent
surviving entity of PRI (a "PRI Survivor") with or into another entity
(other than a consolidation or merger in which PRI is the surviving
entity), (B) sale, transfer, lease or conveyance of all or substantially
all of the assets of PRI or any PRI Survivor, (C) liquidation, dissolution
or winding up of PRI or any PRI Survivor or (D) any declaration of a
distribution on PRI Common Stock of the common stock of any subsidiary of
PRI (a "PRI Spin-Off") (any of the events described in (A), (B), (C) or
(D), a "Reorganization Event"), for purposes of determining the principal
amount of each ELK payable at maturity, the Closing Price of PRI Common
Stock on any Trading Day subsequent to the effective time of any
Reorganization Event will be deemed to be the value of the cash and other
property (including securities) received by a holder of a share of PRI
Common Stock in any such Reorganization Event plus, in the case of a PRI
Spin-Off, the value of a share of PRI Common Stock, or, to the extent that
such holder obtains securities in any Reorganization Event, the value of
the cash and other property received by the holder of such securities in
any subsequent Reorganization Event. For purposes of determining any such
Closing Prices, the value of (A) any cash and other property (other than
securities) received in any such Reorganization Event will be an amount
equal to the value of such cash and other property at the effective time of
such Reorganization Event and (B) any property consisting of securities
received in any such Reorganization Event will be an amount equal to the
Closing Prices of such securities.
NOTWITHSTANDING THE FOREGOING, THE PRINCIPAL AMOUNT OF EACH ELK PAYABLE AT
MATURITY WILL NOT, UNDER ANY CIRCUMSTANCES, EXCEED 150% OF THE ISSUE PRICE (OR
$73.875 PER ELK).
REDEMPTION
The ELKS are not subject to redemption prior to maturity.
DEFEASANCE
The defeasance provisions described in the accompanying Prospectus will not
be applicable to the ELKS.
CERTIFICATES
The ELKS will be evidenced by certificates in fully registered form (each, a
"Certificate"). The Trustee will from time to time register the transfer of
any outstanding Certificate upon surrender thereof at the Trustee's Office,
duly endorsed by, or accompanied by a written instrument or instruments of
transfer in a form satisfactory to the Trustee duly executed by, the Holder
thereof, a duly appointed legal representative or a duly authorized attorney.
Such signature must be guaranteed by a bank or trust company having a
correspondent office in New York City or by a broker or dealer that is a
member of the National Association of Securities Dealers, Inc. (the "NASD") or
a member of a national securities exchange. A new Certificate will be issued
to the transferee upon any such registration of transfer.
At the option of a Holder, Certificates may be exchanged for other
Certificates representing a like amount of ELKS, upon surrender to the Trustee
at the Trustee's Office of the Certificates to be exchanged. The Company will
thereupon execute, and the Trustee will countersign and deliver, one or more
new Certificates representing such like amount of ELKS.
S-8
<PAGE>
If any Certificate is mutilated, lost, stolen or destroyed, the Company
shall execute, and the Trustee shall countersign and deliver, in exchange and
substitution for such mutilated Certificate, or in replacement for such lost,
stolen or destroyed Certificate, a new Certificate representing the same
principal amount represented by such Certificate, but only upon receipt of
evidence satisfactory to the Company and to the Trustee of loss, theft or
destruction of such Certificate and security or indemnity, if requested,
satisfactory to them. Holders requesting replacement Certificates must also
comply with such other reasonable regulations as the Company or the Trustee
may prescribe.
No service charge will be made for any registration of transfer or exchange
of Certificates, but the Company may require the payment of a sum sufficient
to cover any tax or governmental charge that may be imposed in connection
therewith, other than exchanges not involving any transfer. In the case of the
replacement of mutilated, lost, stolen or destroyed Certificates, the Company
may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection therewith and any other
expenses (including the fees and expenses of the Trustee) connected therewith.
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
The following is a summary of the principal U.S. federal income tax
consequences that may be relevant to a holder of an ELK that is a citizen or
resident of the United States, a corporation, partnership or other entity
created or organized under the laws of the United States, an estate or trust
the income of which is subject to U.S. federal income taxation regardless of
its source (a "U.S. person") or a holder that is otherwise subject to U.S.
federal income taxation on a net income basis in respect of an ELK (such a
holder and any U.S. person, a "U.S. holder").
This summary is based on the U.S. federal income tax laws, regulations,
rulings and decisions now in effect (or, in the case of certain Treasury
regulations, now in proposed form), all of which are subject to change. Except
to the extent discussed below under "Non-United States Persons", this summary
deals only with U.S. holders that will hold ELKS as capital assets. Except as
specifically noted, this summary does not address tax considerations
applicable to investors that may be subject to special tax rules, such as
banks, insurance companies, dealers in securities, persons that will hold ELKS
as a position in a "straddle" for tax purposes or as part of a "synthetic
security" or a "conversion transaction" or other integrated investment
comprised of an ELK and one or more other investments, or persons that have a
functional currency other than the U.S. dollar. It does not include any
description of the tax laws of any state or local governments or of any
foreign government that may be applicable to the ELKS or to the holders
thereof. Investors (including tax-exempt investors) should consult their own
tax advisors in determining the tax consequences to them of holding ELKS,
including the application to their particular situation of the U.S. federal
income tax considerations discussed below, as well as the application of
state, local or other tax laws.
There are no regulations, published rulings or judicial decisions addressing
the characterization for federal income tax purposes of securities with terms
substantially the same as the ELKS. The Company intends to treat an ELK for
U.S. federal income tax purposes as a combination of a fixed loan in an amount
equal to the issue price of the ELK and the application of the principal
repayment of that loan at maturity to a capped cash-settled forward purchase
contract on PRI Common Stock. Accordingly, under this approach, upon the sale,
exchange, retirement or other disposition of an ELK, a U.S. holder generally
will recognize gain or loss equal to the difference between the amount
realized on the sale, exchange, retirement or other disposition and the U.S.
holder's tax basis in the ELK. Such gain or loss generally will be long-term
capital gain or loss if the U.S. holder has held the ELK for more than one
year at the time of disposition, except that in the event of a retirement of
the ELK, such gain or loss may be ordinary.
S-9
<PAGE>
Under the approach described above, the Company intends to treat each
payment of interest on an ELK as ordinary interest income to the holder of the
ELK. Any such interest income would be includable in income in accordance with
the holder's regular method of tax accounting.
The Internal Revenue Service may contend that an ELK should be characterized
for federal income tax purposes in a manner different from the approach
described above. For example, the Internal Revenue Service may contend that
the ELKS should be characterized as contingent payment debt instruments of the
Company. Under this analysis, the ELKS would be subject to certain proposed
Treasury regulations dealing with "contingent payment" debt instruments (the
"Proposed Regulations"). Under the Proposed Regulations, payment of interest
on an ELK would be treated as a non-taxable return of the holder's investment
in the ELK. The amount payable at maturity of the ELK would be treated first
as a non-taxable return of the holder's investment in the ELK until, after
taking into account the amount of any previous payments treated as a return of
the holder's investment, the holder has recovered the full amount of its
investment, and thereafter would be taxable as interest income to the holder.
If a holder receives total payments in respect of an ELK in an amount less
than the amount of its investment in the ELK, the holder generally would
recognize a capital loss, which would be a long-term capital loss if the
holder has held the ELK for more than one year. It is unclear, under the
Proposed Regulations, whether gain from the sale of the ELK would be ordinary
income or capital gain. Any loss recognized by the holder of the ELK, however,
would generally be a capital loss, which would be a long-term capital loss if
the holder has held the ELK for more than one year.
The Internal Revenue Service has indicated that it is considering
withdrawing the Proposed Regulations, and may replace them with a rule that
requires some minimum amount of interest income to be accrued on all
contingent payment debt instruments. It is impossible to predict whether, or
in what manner, the Proposed Regulations may be modified and whether any
modifications would apply to the ELKS.
The distinction between capital gain or loss and ordinary income or loss is
important for purposes of the limitations on a U.S. holder's ability to offset
capital losses against ordinary income. In addition, certain individuals are
subject to taxation at a reduced rate on long-term capital gains.
NON-UNITED STATES PERSONS
In the case of a holder of the ELKS that is not a U.S. person, the Company
believes that payments made with respect to the ELKS should not be subject to
U.S. withholding tax, provided that such holder complies with applicable
certification requirements. Any capital gain realized upon the sale or other
disposition of the ELKS by a holder that is not a U.S. person will generally
not be subject to U.S. federal income tax if (i) such gain is not effectively
connected with a U.S. trade or business of such holder and (ii) in the case of
an individual, such individual is not present in the United States for 183
days or more in the taxable year of the sale or other disposition or the gain
is not attributable to a fixed place of business maintained by such individual
in the United States.
S-10
<PAGE>
BACKUP WITHHOLDING AND INFORMATION REPORTING
A holder of an ELK may be subject to information reporting and to backup
withholding at a rate of 31 percent of certain amounts paid to the holder
unless such holder (a) is a corporation or comes within certain other exempt
categories and, when required, provides proof of such exemption or (b)
provides a correct taxpayer identification number, certifies as to no loss of
exemption from backup withholding and otherwise complies with applicable
requirements of the backup withholding rules. Information reporting and backup
withholding do not apply to payments made to a holder of an ELK that is not a
U.S. person if the beneficial owner of the ELK certifies as to its non-U.S.
status or otherwise establishes an exemption, provided that the Company or its
agent does not have actual knowledge that the holder is a U.S. person.
Payment of the proceeds from the sale of an ELK 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 U.S. person, a controlled foreign
corporation for U.S. tax purposes or a foreign person 50 percent or more of
whose gross income from all sources for the three-year period ending with the
close of its taxable year preceding the payment was effectively connected with
a U.S. trade or business, information reporting may apply to such payments.
Payment of the proceeds from a sale of an ELK to or through the U.S. office of
a broker is subject to information reporting and backup withholding unless the
holder or beneficial owner certifies as to its non-U.S. status or otherwise
establishes an exemption from information reporting and backup withholding.
Any amounts withheld under the backup withholding rules are not an
additional tax and may be credited against the U.S. holder's U.S. Federal
income tax liability, provided that the required information is furnished to
the IRS.
S-11
<PAGE>
UNDERWRITING
Subject to the terms and conditions set forth in an underwriting agreement
among the Company and the Underwriters (the "Underwriting Agreement"), the
Company has agreed to sell to each of Salomon Brothers Inc and Prudential
Securities Incorporated (the "Underwriters"), and each of the Underwriters has
severally agreed to purchase, the number of ELKS set forth opposite its name
below.
<TABLE>
<CAPTION>
NUMBER OF
NAME ELKS
---- ---------
<S> <C>
Salomon Brothers Inc ............................................ 500,000
Prudential Securities Incorporated............................... 500,000
---------
Total.......................................................... 1,000,000
=========
</TABLE>
The Company has been advised by the Underwriters that the Underwriters
propose initially to offer the ELKS to the public at the public offering price
set forth on the cover page of this Prospectus Supplement, and to certain
dealers at such price less a concession not in excess of $0.78. After the
initial public offering, the public offering price and such concession may be
changed from time to time.
The Company has granted the Underwriters an option, exercisable within
thirty days of February 28, 1994, to purchase up to 150,000 additional ELKS
from the Company at the same price per ELK as described above. This option may
be exercised only for the purpose of covering over-allotments, if any, made in
the sale of the ELKS offered hereby.
Application has been made to list the ELKS on the AMEX. The Company will use
its best efforts to maintain the listing of the ELKS on the AMEX or another
national securities exchange. Nevertheless, no assurances can be given as to
the liquidity of the market for the ELKS. See "Special Considerations--
Possible Illiquidity of the Secondary Market" herein.
The Underwriting Agreement provides that the Company will indemnify the
Underwriters against certain liabilities, including liabilities under the
Securities Act of 1933, as amended, or contribute to payments the Underwriters
may be required to make in respect thereof.
The Underwriting Agreement provides that the obligations of the Underwriters
are subject to certain conditions precedent and that the Underwriters will
purchase all the ELKS if any are purchased.
Salomon Brothers Inc is an indirect wholly owned subsidiary of the Company.
The participation of Salomon Brothers Inc in the offer and sale of the ELKS
complies with the requirements of Schedule E of the By-Laws of the NASD
regarding underwriting securities of an affiliate.
S-12
<PAGE>
PROSPECTUS
SALOMON INC
DEBT SECURITIES AND
WARRANTS TO PURCHASE DEBT SECURITIES
Salomon Inc (the "Company") intends to issue from time to time in one or more
series its unsecured debt securities ("Debt Securities") and warrants
("Warrants") to purchase Debt Securities (the Debt Securities and the Warrants
being herein collectively called the "Securities") with an aggregate initial
public offering price or purchase price of up to $5,113,000,000, or the
equivalent thereof in one or more foreign or composite currencies, including
the European Currency Unit ("ECU"). The sale of other securities under the
Registration Statement of which this Prospectus forms a part or under a
Registration Statement to which this Prospectus relates will reduce the amount
of Securities which may be sold hereunder. Debt Securities and Warrants will be
offered on terms to be determined at the time of sale. Debt Securities and
Warrants may be sold for United States dollars or for one or more foreign or
composite currencies, and the principal of, premium, if any, and any interest
on Debt Securities may be payable in United States dollars or in one or more
foreign or composite currencies. Debt Securities of a series may be issuable as
individual securities in registered form without coupons ("Registered
Securities") or in bearer form with or without coupons attached ("Bearer
Securities") or as one or more global securities in registered or bearer form
(each a "Global Security"). Warrants of a series will be issuable in registered
form ("Registered Warrants") and may be issuable in bearer form ("Bearer
Warrants"). The classification as senior or subordinated Debt Securities,
specific designation, aggregate principal amount, the currency in which the
principal, premium, if any, and any interest are payable, the rate (or method
of calculation) and the time and place of payment of any interest, authorized
denominations, maturity, offering price, any redemption terms and any other
specific terms of the Debt Securities in respect of which this Prospectus is
being delivered will be set forth in an accompanying Prospectus Supplement (a
"Prospectus Supplement"). With regard to the Warrants, if any, in respect of
which this Prospectus is being delivered, the applicable Prospectus Supplement
will set forth a description of the Debt Securities for which the Warrants are
exercisable and the offering price, if any, exercise price, duration,
detachability and any other specific terms of the Warrants.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE COMMISSION
OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
Securities may be sold by the Company directly to purchasers, through agents
designated from time to time, through underwriting syndicates led by one or
more managing underwriters or through one or more underwriters. Any such
agents, managing underwriters or underwriters in the United States will include
Salomon Brothers Inc. If underwriters or agents are involved in any offering of
Securities, the names of the underwriters or agents will be set forth in the
applicable Prospectus Supplement. If an underwriter, agent or dealer is
involved in any offering of Securities, the underwriter's discount, agent's
commission or dealer's purchase price will be set forth in, or may be
calculated from the information set forth in, the applicable Prospectus
Supplement, and the net proceeds to the Company from such offering will be the
public offering price of such Securities less such discount in the case of an
offering through an underwriter, or the purchase price of such Securities less
such commission in the case of an offering through an agent, and less, in each
case, the other expenses of the Company associated with the issuance and
distribution of such Securities.
The Company or one or more of its subsidiaries may from time to time purchase
or acquire a position in the Securities and may at its option, hold, resell,
cancel or exercise, if applicable, such Securities. Salomon Brothers Inc
expects to offer and sell previously issued Securities in the course of its
business as a broker-dealer and may act as principal or agent in such
transactions. This Prospectus and the related Prospectus Supplements may be
used by the Company or any of its subsidiaries, including Salomon Brothers Inc,
in connection with such transactions.
- ----------------------------
SALOMON BROTHERS INC
--------------------------------------------------------------------------
The date of this Prospectus is December 14, 1993.
<PAGE>
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"). Reports, proxy
statements and other information concerning the Company 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
Regional Offices at Seven World Trade Center, 13th Floor, New York, New York
10048, and Northwestern Atrium Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661. Copies of such material can be obtained upon written
request addressed to the Commission, Public Reference Section, 450 Fifth
Street, N.W., Washington, D.C. 20549, at prescribed rates. In addition,
reports, proxy statements and other information concerning the Company may be
inspected at the offices of the New York Stock Exchange, Inc., 20 Broad Street,
New York, New York 10005 and at the offices of the American Stock Exchange, 86
Trinity Place, New York, New York 10006.
The Company has filed with the Commission a registration statement on Form S-
3 (herein, together with all amendments and exhibits, referred to as the
"Registration Statement") under the Securities Act of 1933, as amended (the
"Securities Act"), relating to the Securities. This Prospectus does not contain
all the information set forth in the Registration Statement, certain parts of
which are omitted in accordance with the rules and regulations of the
Commission. For further information, reference is hereby made to the
Registration Statement.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents, filed by the Company with the Commission pursuant to
Section 13 of the Exchange Act (File No. 1-4346), are incorporated herein by
reference: (i) the Annual Report on Form 10-K for the year ended December 31,
1992 (the "1992 10-K"); (ii) the Quarterly Reports on Form 10-Q for the
Quarters ended March 31, 1993, June 30, 1993 and September 30, 1993, and (iii)
the Current Reports on Form 8-K dated January 12, 1993, January 19, 1993,
February 1, 1993, February 3, 1993, February 22, 1993, March 4, 1993, April 22,
1993, July 22, 1993, October 14, 1993, October 21, 1993, October 27, 1993 and
November 5, 1993.
All documents filed by the Company pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date of this Prospectus and prior
to the termination of the offering of the Securities shall be deemed to be
incorporated by reference in this Prospectus.
Any statement contained herein or 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 subsequently filed document which also is or is deemed to be
incorporated by reference herein modifies or supersedes such statement. Any
such statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of this Prospectus.
THE COMPANY WILL PROVIDE WITHOUT CHARGE TO EACH PERSON, INCLUDING ANY
BENEFICIAL OWNER, TO WHOM A COPY OF THIS PROSPECTUS IS DELIVERED, ON THE
WRITTEN OR ORAL REQUEST OF ANY SUCH PERSON, A COPY OF ANY OR ALL OF THE
DOCUMENTS INCORPORATED HEREIN BY REFERENCE, EXCEPT THE EXHIBITS TO SUCH
DOCUMENTS (UNLESS SUCH EXHIBITS ARE SPECIFICALLY INCORPORATED BY REFERENCE IN
SUCH DOCUMENTS). WRITTEN REQUESTS FOR SUCH COPIES SHOULD BE DIRECTED TO THE
CORPORATE SECRETARY, SALOMON INC, SEVEN WORLD TRADE CENTER, NEW YORK, NEW YORK
10048. TELEPHONE REQUESTS FOR SUCH COPIES SHOULD BE DIRECTED TO THE CORPORATE
SECRETARY AT (212) 783-7000.
----------------
References herein to "U.S. dollars", "U.S.$", "dollar" or "$" are to the
lawful currency of the United States.
2
<PAGE>
SALOMON INC
Salomon Inc was incorporated in 1960 under the laws of the State of Delaware.
Its major operating units are engaged principally in securities, energy trading
and oil refining activities. Securities and related activities are conducted by
Salomon Brothers Holding Company Inc and its subsidiaries and energy trading by
the Phibro Energy Division of the Company. Oil refining activities are
conducted by Phibro Energy USA, Inc., the owner of several oil refineries and
other asset-based businesses. At December 31, 1992, the Company employed 8,698
people.
The Company's principal executive offices are located at Seven World Trade
Center, New York, New York 10048 (telephone (212) 783-7000). Its registered
office in Delaware is c/o Corporation Trust Center, 1209 Orange Street,
Wilmington, Delaware 19801.
USE OF PROCEEDS
The proceeds to be received by the Company from the sale of the Securities
will be used for general corporate purposes, principally to fund the business
of its operating units and to fund investments in, or extensions of credit to,
its subsidiaries and to lengthen the average maturity of liabilities, which may
include the reduction of short-term liabilities or the refunding of maturing
indebtedness.
RATIO OF EARNINGS TO FIXED CHARGES
The ratio of earnings to fixed charges was 1.19 for the nine months ended
September 30, 1993, and 1.25, 1.16, 1.08, 1.12, and 1.21 for the years 1992,
1991, 1990, 1989, and 1988, respectively. Such ratios were calculated by
dividing fixed charges into the sum of earnings before taxes and fixed charges.
Fixed charges consist largely of interest expense, including capitalized
interest, and a portion of rental expense representative of the interest
factor.
DESCRIPTION OF DEBT SECURITIES
The Debt Securities will constitute either senior or subordinated debt of the
Company and will be issued, in the case of Debt Securities that will be senior
debt, under a senior debt indenture (as amended from time to time, the "Senior
Debt Indenture") and, in the case of Debt Securities that will be subordinated
debt, under a subordinated debt indenture (as amended from time to time, the
"Subordinated Debt Indenture"). The Senior Debt Indenture and the Subordinated
Debt Indenture are sometimes hereinafter referred to individually as an
"Indenture" and collectively as the "Indentures." The institutions named as
trustees under the Indentures are hereinafter referred to individually as a
"Trustee" and collectively as the "Trustees." Forms of the Indentures have been
filed with the Commission and are incorporated by reference as part of the
Registration Statement. The following summaries of certain provisions of the
Indentures and the Debt Securities do not purport to be complete and such
summaries are subject to the detailed provisions of the applicable Indenture to
which reference is hereby made for a full description of such provisions,
including the definition of certain terms used, and for other information
regarding the Debt Securities. Numerical references in parentheses below are to
sections in the applicable Indenture or, if no Indenture is specified, to
sections in each of the Indentures. Wherever particular sections or defined
terms of the applicable Indenture are referred to, such sections or defined
terms are incorporated herein by reference as part of the statement made, and
the statement is qualified in its entirety by such reference.
Unless otherwise provided in the applicable Prospectus Supplement, the
Trustee under the Senior Debt Indenture will be Citibank, N.A., a national
banking association, under an indenture dated as of December 1, 1988, as
amended from time to time, and the Trustee under the Subordinated Debt
3
<PAGE>
Indenture will be Bankers Trust Company, a New York banking corporation, under
an indenture dated as of December 1, 1988, as amended from time to time. Copies
of the respective Indentures under which Citibank, N.A. and Bankers Trust
Company serve as Trustees have been filed with the Commission and are
incorporated by reference as part of the Registration Statement.
GENERAL
Neither of the Indentures limits the amount of Debt Securities that may be
issued thereunder and each Indenture provides that Debt Securities may be
issued from time to time in series (Section 301). The Debt Securities to be
issued under either of the Indentures will be unsecured senior or subordinated
obligations of the Company as set forth below.
Reference is made to the Prospectus Supplement for a description of the
following terms of the Debt Securities in respect of which this Prospectus is
being delivered: (i) the title and series of such Debt Securities, whether such
Debt Securities will be senior or subordinated debt of the Company and under
which indenture such Debt Securities are being issued; (ii) the limit, if any,
upon the aggregate principal amount of such Debt Securities; (iii) the dates on
which or periods during which such Debt Securities may be issued and the dates
on which, or the range of dates within which, the principal of (and premium, if
any, on) such Debt Securities will be payable; (iv) the rate or rates or the
method of determination thereof, at which such Debt Securities will bear
interest, if any; the date or dates from which such interest will accrue; the
dates on which such interest will be payable; and, in the case of Registered
Securities, the Regular Record Dates for the interest payable on such Interest
Payment Dates; (v) the obligation, if any, of the Company to redeem or purchase
such Debt Securities pursuant to any sinking fund or analogous provisions, or
at the option of a Holder, and the periods within which or the dates on which,
the prices at which and the terms and conditions upon which such Debt
Securities will be redeemed or repurchased, in whole or in part, pursuant to
such obligation; (vi) the periods within which or the dates on which, the
prices at which and the terms and conditions upon which such Debt Securities
may be redeemed, if any, in whole or in part, at the option of the Company;
(vii) if other than denominations of $1,000 and any integral multiple thereof,
the denominations in which such Debt Securities will be issuable; (viii)
whether such Debt Securities are to be issued as Discount Securities (as
defined below) and the amount of discount with which such Debt Securities will
be issued; (ix) provisions, if any, for the defeasance of such Debt Securities;
(x) whether such Debt Securities are to be issued as Registered Securities or
Bearer Securities or both and, if Bearer Securities are to be issued, whether
Coupons will be attached thereto, whether Bearer Securities of the series may
be exchanged for Registered Securities having the same terms and the
circumstances under which and the place or places at which any such exchanges,
if permitted, may be made; (xi) whether such Debt Securities are to be issued
in whole or in part in the form of one or more Global Securities and, if so,
the identity of the Depositary (as defined below) for such Global Security or
Securities; (xii) if a temporary Debt Security is to be issued with respect to
such Debt Securities, whether any interest thereon payable on an Interest
Payment Date prior to the issuance of a definitive Debt Security of the series
will be credited to the account of the Persons entitled thereto on such
Interest Payment Date; (xiii) if a temporary Global Security is to be issued
with respect to such Debt Securities, the terms upon which beneficial interests
in such temporary Global Security may be exchanged in whole or in part for
beneficial interests in a definitive Global Security or for individual Debt
Securities of the series and the terms upon which beneficial interests in a
definitive Global Security, if any, may be exchanged for individual Debt
Securities having the same terms; (xiv) if other than United States dollars,
the foreign or composite currency in which such Debt Securities are to be
denominated, or in which payment of the principal of (and premium, if any) and
any interest on such Debt Securities will be made and the circumstances, if
any, when such currency of payment may be changed; (xv) if the principal of
(and premium, if any) or any interest on such Debt Securities are to be
payable, at the election of the Company or a Holder, in a currency other than
that in which such Debt Securities are denominated or stated to be payable, the
periods within which, and the terms and conditions upon which, such election
4
<PAGE>
may be made and the time and the manner of determining the exchange rate
between the currency in which such Debt Securities are denominated or stated to
be payable and the currency in which such Debt Securities are to be paid
pursuant to such election; (xvi) if the amount of payments of principal of (and
premium, if any) or any interest on such Debt Securities may be determined with
reference to an index based on a currency or currencies other than that in
which such Debt Securities are stated to be payable, the manner in which such
amounts shall be determined; (xvii) if the amount of payments of principal of
(and premium, if any) or any interest on such Debt Securities may be determined
with reference to an index based on the prices, changes in prices, or
differences between prices, of securities, currencies, intangibles, goods,
articles or commodities, or otherwise by application of a formula, the manner
in which such amounts shall be determined; (xviii) any additional Events of
Default (as defined below) or restrictive covenants provided for with respect
to such Debt Securities; (xix) whether and under what circumstances the Company
will pay additional interest on such Debt Securities held by a Person who is
not a U.S. Person in respect of any tax, assessment or governmental charge
withheld or deducted and, if so, whether the Company will have the option to
redeem such Debt Securities under such circumstances; (xx) whether and under
what circumstances the Company will be obligated to redeem such Debt Securities
if certain events occur involving United States information reporting
requirements; and (xxi) any other terms of such Debt Securities not
inconsistent with the provisions of the Indenture under which they are issued
(Section 301).
Unless otherwise indicated in the applicable Prospectus Supplement, Debt
Securities will be issued only as Registered Securities in denominations of
$1,000 and any integral multiple thereof and will be payable only in United
States dollars (Section 302).
If Bearer Securities are issued, the Federal income tax consequences and
other special considerations applicable to such Bearer Securities will be
described in the Prospectus Supplement relating thereto.
If the amount of payments of principal of (and premium, if any) or any
interest on Debt Securities is determined with reference to any type of index
or formula or changes in prices of particular securities, currencies,
intangibles, goods, articles or commodities, the Federal income tax
consequences, specific terms and other information with respect to such Debt
Securities and such index or formula, securities, currencies, intangibles,
goods, articles or commodities will be described in the Prospectus Supplement
relating thereto.
If the principal of (and premium, if any) or any interest on Debt Securities
are payable in a foreign or composite currency, the restrictions, elections,
Federal income tax consequences, specific terms and other information with
respect to such Debt Securities and such currency will be described in the
Prospectus Supplement relating thereto.
Debt Securities may be sold at a substantial discount below their stated
principal amount, bearing no interest or interest at a rate that at the time of
issuance is below market rates ("Discount Securities"). Debt Securities may be
variable rate debt securities that may be exchangeable for fixed rate debt
securities. Federal income tax consequences and other special considerations
applicable to any such Debt Securities will be described in the Prospectus
Supplement relating thereto.
Unless otherwise provided in the applicable Prospectus Supplement, the
principal of (and premium, if any) and any interest on Debt Securities will be
payable (in the case of Registered Securities) at the corporate trust office or
agency of the applicable Trustee in the City and State of New York or (in the
case of Bearer Securities) at the principal London office of the applicable
Trustee; provided, however, that payment of interest on Registered Securities
may be made at the option of the Company by check mailed to the Registered
Holders thereof or, if so provided in the applicable Prospectus Supplement, at
5
<PAGE>
the option of a Holder by wire transfer to an account designated by such Holder
(Section 307). Except as otherwise provided in the applicable Prospectus
Supplement, no payment on a Bearer Security will be made by mail to an address
in the United States or by wire transfer to an account maintained by the Holder
thereof in the United States.
Unless otherwise provided in the applicable Prospectus Supplement, Registered
Securities may be transferred or exchanged at the corporate trust office or
agency of the applicable Trustee in the City and State of New York, subject to
the limitations provided in the applicable Indenture, without the payment of
any service charge, other than any tax or governmental charge payable in
connection therewith (Section 305). Bearer Securities will be transferable by
delivery. Provisions with respect to the exchange of Bearer Securities will be
described in the applicable Prospectus Supplement.
All moneys paid by the Company to a Paying Agent for the payment of principal
of (and premium, if any) or any interest on any Debt Security that remain
unclaimed at the end of two years after such principal, premium or interest
shall have become due and payable will be repaid to the Company, and the Holder
of such Debt Security or any Coupon appertaining thereto will thereafter look
only to the Company for payment thereof (Section 1204).
Unless otherwise indicated in the applicable Prospectus Supplement, the
covenants contained in the Indenture and the Debt Securities would not afford
Holders protection in the event of a highly leveraged or other similar
transaction that may adversely affect Holders.
GLOBAL SECURITIES
Debt Securities having the same issue date and the same terms may be issued
in whole or in part in the form of one or more Global Securities that will be
deposited with, or on behalf of, a depositary (the "Depositary") identified in
the Prospectus Supplement relating to such Debt Securities. Global Securities
may be issued in either registered or bearer form and in either temporary or
definitive form. Unless and until it is exchanged in whole or in part for the
individual Debt Securities represented thereby, a Global Security may not be
transferred except as a whole by the Depositary for such Global Security to a
nominee of such Depositary or by a nominee of such Depositary to such
Depositary or another nominee of such Depositary or by such Depositary or any
such nominee to a successor of such Depositary or a nominee of such successor
(Sections 303 and 305).
The specific terms of the depositary arrangement with respect to any Debt
Securities of a series will be described in the Prospectus Supplement relating
to such series. The Company anticipates that the following provisions will
apply to all depositary arrangements.
Upon the issuance of a Global Security, the Depositary for such Global
Security will credit, on its book-entry registration and transfer system, the
respective principal amounts of the individual Debt Securities represented by
such Global Security to the accounts of institutions that have accounts with
such Depositary ("participants"). The accounts to be credited shall be
designated by the underwriters of such Debt Securities or, if such Debt
Securities are offered and sold directly by the Company or through one or more
agents, by the Company or such agent or agents. Ownership of beneficial
interests in a Global Security will be limited to participants or Persons that
may hold beneficial interests through participants. Ownership of beneficial
interests in a Global Security will be shown on, and the transfer of that
ownership will be effected only through, records maintained by the Depositary
for such Global Security or by participants or Persons that hold through
participants. The laws of some states require that certain purchasers of
securities take physical delivery of such securities. Such limits and such laws
may limit the market for beneficial interests in a Global Security.
So long as the Depositary for a Global Security, or its nominee, is the owner
of such Global Security, such Depositary or such nominee, as the case may be,
will be considered the sole Holder of the individual Debt Securities
represented by such Global Security for all purposes under the Indenture
governing such Debt Securities. Except as set forth below, owners of beneficial
interests in a Global Security will not be entitled to have any of the
individual Debt Securities represented by such Global
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Security registered in their names, will not receive or be entitled to receive
physical delivery of any such Debt Securities and will not be considered the
Holders thereof under the Indenture governing such Debt Securities.
Subject to the restrictions discussed under "Limitations on Issuance of
Bearer Securities and Bearer Warrants" below, payments of principal of (and
premium, if any) and any interest on individual Debt Securities represented by
a Global Security will be made to the Depositary or its nominee, as the case
may be, as the Holder of such Global Security. None of the Company, the Trustee
for such Debt Securities, any Paying Agent or the Security Registrar for such
Debt Securities will have any responsibility or liability for any aspect of the
records relating to or payments made on account of beneficial interests in such
Global Security or for maintaining, supervising or reviewing any records
relating to such beneficial interests.
The Company expects that the Depositary for any Debt Securities, upon receipt
of any payment of principal, premium or interest in respect of a definitive
Global Security representing any of such Debt Securities, will credit
immediately participants' accounts with payments in amounts proportionate to
their respective beneficial interests in the principal amount of such Global
Security as shown on the records of such Depositary. The Company also expects
that payments by participants to owners of beneficial interests in such Global
Security held through such participants will be governed by standing
instructions and customary practices, as is now the case with securities held
for the accounts of customers in bearer form or registered in "street name",
and will be the responsibility of such participants. Receipt by owners of
beneficial interests in a temporary Global Security of payments of principal,
premium or interest in respect thereof will be subject to the restrictions
discussed under "Limitations on Issuance of Bearer Securities and Bearer
Warrants" below.
If the Depositary for any Debt Securities is at any time unwilling or unable
to continue as depositary and a successor depositary is not appointed by the
Company within ninety days, the Company will issue individual Debt Securities
in exchange for the Global Security or Securities representing such Debt
Securities. In addition, the Company may at any time and in its sole discretion
determine not to have certain Debt Securities represented by one or more Global
Securities and, in such event, will issue individual Debt Securities in
exchange for the Global Security or Securities representing such Debt
Securities. Further, if the Company so specifies with respect to any Debt
Securities, an owner of a beneficial interest in a Global Security representing
such Debt Securities may, on terms acceptable to the Company and the Depositary
for such Global Security, receive individual Debt Securities in exchange for
such beneficial interest. In any such instance, an owner of a beneficial
interest in a Global Security will be entitled to physical delivery of
individual Debt Securities represented by such Global Security equal in
principal amount to such beneficial interest and to have such Debt Securities
registered in its name (if the Debt Securities are issuable as Registered
Securities). Individual Debt Securities so issued will be issued (a) as
Registered Securities in denominations, unless otherwise specified by the
Company, of $1,000 and integral multiples thereof if the Debt Securities are
issuable as Registered Securities, (b) as Bearer Securities in the denomination
or denominations specified by the Company if the Debt Securities are issuable
as Bearer Securities or (c) as either Registered or Bearer Securities, if the
Debt Securities are issuable in either form (Section 305). See, however,
"Limitations on Issuance of Bearer Securities and Bearer Warrants" below for a
description of certain restrictions on the issuance of individual Bearer
Securities in exchange for beneficial interests in a Global Security.
SENIOR DEBT
The Debt Securities and Coupons that will constitute part of the senior debt
of the Company will be issued under the Senior Debt Indenture and will rank
pari passu with all other unsecured debt of the Company except subordinated
debt.
SUBORDINATED DEBT
The Debt Securities and Coupons that will constitute part of the subordinated
debt of the Company will be issued under the Subordinated Debt Indenture and
will be subordinate and junior in the right of
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payment, to the extent and in the manner set forth in the Subordinated Debt
Indenture, to all "Senior Indebtedness" of the Company. The Subordinated Debt
Indenture defines "Senior Indebtedness" as the following indebtedness or
obligations, whether outstanding at the date of such Indenture or thereafter
incurred, assumed, guaranteed or otherwise created, unless in the instrument
creating or evidencing any such indebtedness or obligation or pursuant to which
the same is outstanding it is provided that such indebtedness or obligation is
not superior in right of payment to the subordinated Debt Securities and any
appurtenant Coupons: (a) all indebtedness of the Company (including
indebtedness of others guaranteed by the Company), other than the subordinated
Debt Securities and any appurtenant Coupons and other than the debt securities
issuable under the indenture dated as of July 1, 1986 between the Company and
Bank of New York, as trustee, that (i) is for money borrowed, (ii) arises in
connection with the acquisition of any business, properties, securities or
assets of any kind, other than in the ordinary course of the Company's business
as heretofore conducted or (iii) is secured, in whole or in part, by real or
personal property, (b) obligations of the Company (including obligations of
others guaranteed by the Company) as lessee under leases required to be
capitalized on the balance sheet of the lessee under generally accepted
accounting principles and leases of property or assets made as part of any sale
and lease-back transaction and (c) amendments, renewals, extensions,
modifications and refundings of any such indebtedness or obligation
(Subordinated Debt Indenture, Section 101). The subordinated Debt Securities
and any appurtenant Coupons will not be superior in right of payment to the
debt securities issuable under the indenture dated as of July 1, 1986 between
the Company and Bank of New York, as trustee (Subordinated Debt Indenture,
Section 1601).
In the event (a) of any insolvency or bankruptcy proceedings, or any
receivership, liquidation, reorganization or other similar proceedings in
respect of the Company or a substantial part of its property, or (b) that (i) a
default shall have occurred with respect to the payment of principal of (and
premium, if any) or any interest on or other monetary amounts due and payable
on any Senior Indebtedness, or (ii) there shall have occurred an event of
default (other than a default in the payment of principal, premium, if any, or
interest, or other monetary amounts due and payable) with respect to any Senior
Indebtedness, as defined therein or in the instrument under which the same is
outstanding, permitting the holder or holders thereof to accelerate the
maturity thereof (with notice or lapse of time, or both), and such event of
default shall have continued beyond the period of grace, if any, in respect
thereof, and such default or event of default shall not have been cured or
waived or shall not have ceased to exist, or (c) that the principal of and
accrued interest on the subordinated Debt Securities issued under the
Subordinated Debt Indenture shall have been declared due and payable upon an
Event of Default pursuant to Section 502 thereof and such declaration shall not
have been rescinded and annulled as provided therein, then the holders of all
Senior Indebtedness shall first be entitled to receive payment of the full
amount due thereon, or provision shall be made for such payment in money or
money's worth, before the Holders of any of the subordinated Debt Securities or
Coupons issued under the Subordinated Debt Indenture are entitled to receive a
payment on account of the principal of (and premium, if any) or any interest on
the indebtedness evidenced by such Debt Securities or such Coupons
(Subordinated Debt Indenture, Section 1601). If this Prospectus is being
delivered in connection with a series of subordinated Debt Securities, the
related Prospectus Supplement will set forth the amount of Senior Indebtedness
outstanding as of the most recent practicable date.
LIMITATION ON LIENS
The Senior Debt Indenture provides that the Company will not, and will not
permit any Restricted Subsidiary to, incur, issue, assume, guarantee or suffer
to exist any indebtedness for borrowed money if the payment of such
indebtedness is secured by a pledge of, lien on or security interest in any
shares of stock of any Restricted Subsidiary without effectively providing for
the equal and ratable securing of the payment of the Debt Securities issued
thereunder (Senior Debt Indenture, Section 1205). The term "Restricted
Subsidiary" is defined in the Senior Debt Indenture to mean each of Salomon
Brothers Inc, Phibro Energy Inc. and, with respect to the Company's Medium-Term
Notes Series D and E, Philipp Brothers, Inc. and any Subsidiary of the Company
owning, directly or indirectly, any of the common stock of, or succeeding to
any substantial part of the business now conducted by, any of such
corporations. As of December 31, 1992, Phibro Energy Inc. was merged with and
into Salomon Inc.
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EVENTS OF DEFAULT
The following will constitute Events of Default under each Indenture with
respect to any series of Debt Securities issued thereunder: (i) default in the
payment of the principal of (and premium, if any, on) any Debt Security of such
series when due; (ii) default for 30 days in the payment of any interest on any
Debt Security of such series or of any related Coupon when due; (iii) default
in the deposit of any sinking fund payment, when and as due by the terms of any
Debt Security of such series; (iv) default in the performance of any other
covenant in such Indenture, continued for 60 days after written notice thereof
by the applicable Trustee or the Holders of at least 25% in principal amount of
the Debt Securities of such series then Outstanding; and (v) certain events of
bankruptcy, insolvency or reorganization (Section 501). Any additional Events
of Default provided with respect to a series of Debt Securities will be set
forth in the applicable Prospectus Supplement. No Event of Default with respect
to a particular series of Debt Securities issued under either Indenture
necessarily constitutes an Event of Default with respect to any other series of
Debt Securities.
Each Indenture provides that if an Event of Default specified therein shall
occur and be continuing with respect to a series of Debt Securities issued
thereunder, either the Trustee thereunder or the Holders of at least 25% in
principal amount of the Debt Securities of such series then Outstanding may
declare the principal of and all accrued interest on all Debt Securities of
such series (or, in the case of Discount Securities, an amount equal to such
portion of the principal amount thereof as will be specified in the related
Prospectus Supplement) to be due and payable. In certain cases, the Holders of
a majority in principal amount of the Debt Securities then Outstanding of a
series may, on behalf of the Holders of all such Debt Securities, rescind and
annul such declaration and its consequences (Section 502).
Each Indenture contains a provision entitling the Trustee thereunder, subject
to the duty of such Trustee during the continuance of a default to act with the
required standard of care, to be indemnified by the Holders of the Debt
Securities or any Coupons of any series thereunder before proceeding to
exercise any right or power under such Indenture with respect to such series at
the request of such Holders (Section 603). Each Indenture provides that no
Holder of a Debt Security or any Coupon of any series thereunder may institute
any proceeding, judicial or otherwise, to enforce such Indenture except in the
case of failure of the Trustee thereunder, for 60 days, to act after it
receives (i) written notice of such default, (ii) a written request to enforce
such Indenture by the Holders of at least 25% in aggregate principal amount of
the Debt Securities then Outstanding of such series (and the Trustee receives
no direction inconsistent with such written request from the Holders of a
majority in aggregate principal amount of the Debt Securities then outstanding
of such series) and (iii) an offer of reasonable indemnity (Section 507). This
provision will not prevent any Holder of any such Debt Security from enforcing
payment of the principal thereof (and premium, if any, thereon) and any
interest thereon or of any such Coupon from enforcing payment thereof at the
respective due dates thereof (Section 508). The Holders of a majority in
aggregate principal amount of the Debt Securities then Outstanding of any
series may direct the time, method and place of conducting any proceedings for
any remedy available to the applicable Trustee or of exercising any trust or
power conferred on it with respect to the Debt Securities of such series.
However, such Trustee may refuse to follow any direction that conflicts with
law or the applicable Indenture or that would be unjustly prejudicial to
Holders not joining therein (Section 512).
Each Indenture provides that the Trustee thereunder will, within 90 days
after the occurrence of a default with respect to any series of Debt Securities
thereunder known to it, give to the Holders of Debt Securities and Coupons of
such series notice of such default, unless such default shall have been cured
or waived; but, except in the case of a default in the payment of the principal
of (and premium, if any) or any interest on any Debt Security or of any Coupon
of such series or in the payment of any sinking fund installment with respect
to Debt Securities of such series, the Trustee shall be protected in
withholding such notice if it determines in good faith that the withholding of
such notice is in the interest of the Holders of such Debt Securities and
Coupons (Section 602).
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The Company will be required to file annually with each Trustee a certificate
of an appropriate officer of the Company as to the absence of certain defaults
under the terms of the appropriate Indenture (Senior Debt Indenture, Section
1206; Subordinated Debt Indenture, Section 1205).
MODIFICATION AND WAIVER
Each Indenture contains provisions for convening meetings of Holders to
consider matters affecting their interests (Article Nine).
Modifications of and amendments to each Indenture may be made by the Company
and the Trustee thereunder with the consent of the Holders of a majority in
principal amount of the Debt Securities then Outstanding of each series issued
thereunder that is affected by such modification or amendment, voting
separately; provided, however, that no such modification or amendment may,
without the consent of the Holder of each Outstanding Debt Security affected
thereby: (i) change the Stated Maturity of the principal of, or any installment
of interest or additional amounts payable on, any Debt Security or Coupon; (ii)
reduce the principal amount (including the amount payable on a Discount
Security upon the acceleration of the Maturity thereof) of, or any interest on
or any premium payable upon redemption of, or additional amounts payable on,
any Debt Security or Coupon; (iii) change the currency or composite currency of
denomination or payment of the principal of (and premium, if any, on) or any
interest or additional amounts payable on any Debt Security or Coupon; (iv)
impair the right to institute suit for the enforcement of any payment on or
with respect to any Debt Security or Coupon; (v) reduce the percentage of the
principal amount of the Outstanding Debt Securities of any series, the consent
of the Holders of which is required for modification or amendment of the
applicable Indenture with respect to waiver of compliance with certain
provisions of the applicable Indenture or waiver of certain defaults; (vi)
limit the Company's obligation to maintain a Paying Agent outside the
UnitedStates for Bearer Securities; or (vii) limit the obligation of the
Company to redeem certain Bearer Securities if certain events occur involving
United States information reporting requirements (Section 1102).
The Subordinated Debt Indenture may not be amended to alter or impair the
subordination of the subordinated Debt Securities issued thereunder without the
consent of each holder of Senior Indebtedness then outstanding (Subordinated
Debt Indenture, Section 1107).
The Holders of a majority in principal amount of the Outstanding Debt
Securities of each series may, on behalf of all Holders of Debt Securities of
that series, waive, insofar as that series is concerned, compliance by the
Company with certain restrictive provisions of the applicable Indenture before
the time for such compliance (Senior Debt Indenture, Section 1207; Subordinated
Debt Indenture, Section 1206). The Holders of a majority in principal amount of
the Outstanding Debt Securities of each series may, on behalf of all Holders of
Debt Securities of that series, waive any past default under the applicable
Indenture with respect to Debt Securities of that series, except a default in
the payment of the principal of (and premium, if any) or any interest on any
such Debt Security or in the payment of any Coupon of that series and except a
default in respect of a covenant or provision the modification or amendment of
which would require the consent of the Holder of each Outstanding Debt Security
affected thereby (Section 513).
CONSOLIDATION, MERGER AND TRANSFER OR LEASE OF ASSETS
Each Indenture provides that the Company may not consolidate with or merge
into any corporation, or transfer or lease its assets substantially as an
entirety to any Person, unless (i) the successor corporation or transferee or
lessee (the "Successor Corporation") is a corporation organized under the laws
of the United States or any political subdivision thereof; (ii) the Successor
Corporation assumes the Company's obligations under the applicable Indenture
and on the Debt Securities and any Coupons issued thereunder; (iii) after
giving effect to the transaction no Event of Default and no event that, after
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notice or lapse of time, or both, would become an Event of Default shall have
occurred and be continuing; (iv) the Successor Corporation waives any right to
redeem any Bearer Security under circumstances in which the Successor
Corporation would be entitled to redeem such Bearer Security but the Company
would not have been so entitled if such consolidation, merger, transfer or
lease had not occurred; and (v) certain other conditions are met (Section
1001).
DEFEASANCE
If so specified in the applicable Prospectus Supplement with respect to Debt
Securities of any series that are Registered Securities payable only in United
States dollars, the Company, at its option, (i) will be discharged from any and
all obligations in respect of the Debt Securities of such series (except for
certain obligations to register the transfer or exchange of Debt Securities of
such series, replace stolen, lost or mutilated Debt Securities of such series,
maintain paying agencies and hold moneys for payment in trust) or (ii) will not
be subject to provisions of the applicable Indenture described above under
"Limitation on Liens" and "Consolidation, Merger and Transfer or Lease of
Assets" with respect to the Debt Securities of such series, in each case if the
Company deposits with the applicable Trustee, in trust, money or U.S.
Government Obligations that through the payment of interest thereon and
principal thereof in accordance with their terms will provide money in an
amount sufficient to pay all the principal of (and premium, if any) and any
interest on the Debt Securities of such series on the dates such payments are
due in accordance with the terms of such Debt Securities. To exercise any such
option under either of the Indentures, the Company is required to deliver to
the applicable Trustee an opinion of counsel to the effect that (1) the deposit
and related defeasance would not cause the Holders of the Debt Securities of
such series to recognize income, gain or loss for Federal income tax purposes
and, in the case of a discharge pursuant to clause (i), a ruling to such effect
received from or published by the United States Internal Revenue Service, and
(2) if the Debt Securities of such series are then listed on the New York Stock
Exchange, such Debt Securities would not be delisted from the New York Stock
Exchange as a result of the exercise of such option (Sections 1501 and 1502).
Defeasance provisions, if any, with respect to any other Debt Securities of any
series will be described in the applicable Prospectus Supplement.
REPLACEMENT DEBT SECURITIES
Unless otherwise provided in the applicable Prospectus Supplement, if a Debt
Security of any series or any related Coupon is mutilated, destroyed, lost or
stolen, it may be replaced at the corporate trust office or agency of the
applicable Trustee in the City and State of New York (in the case of Registered
Securities) or at the principal London office of the applicable Trustee (in the
case of Bearer Securities and Coupons) upon payment by the Holder of such
expenses as may be incurred by the Company and the applicable Trustee in
connection therewith and the furnishing of such evidence and indemnity as the
Company and such Trustee may require. Mutilated Debt Securities and Coupons
must be surrendered before new Debt Securities (with or without Coupons) will
be issued (Section 306).
NOTICES
Unless otherwise provided in the applicable Prospectus Supplement, any notice
required to be given to a Holder of a Debt Security of any series that is a
Registered Security will be mailed to the last address of such Holder set forth
in the applicable Security Register. Any notice required to be given to a
Holder of a Debt Security that is a Bearer Security will be published in a
daily morning newspaper of general circulation in the city or cities specified
in the Prospectus Supplement relating to such Bearer Security (Section 105).
CONCERNING THE TRUSTEES
The Company and certain of its subsidiaries maintain lines of credit and have
other customary banking relationships with Citibank, N.A. and Bankers Trust
Company, and certain of their respective affiliates, and may have such
relationships with other Trustees and their affiliates.
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DESCRIPTION OF WARRANTS
The following description of the terms of the Warrants sets forth certain
general terms and provisions of the Warrants to which any Prospectus Supplement
may relate. The particular terms of the Warrants offered by any Prospectus
Supplement and the extent, if any, to which such general provisions may apply
to the Warrants so offered will be described in the Prospectus Supplement
relating to such Warrants.
Warrants may be offered independently of or together with any series of Debt
Securities offered by a Prospectus Supplement and may be attached to or
separate from such Debt Securities. Each series of Warrants will be issued
under a separate warrant agreement (a "Warrant Agreement") to be entered into
between the Company and a bank or trust company, as warrant agent (the "Warrant
Agent"), all as described in the Prospectus Supplement relating to such series
of Warrants. The Warrant Agent will act solely as the agent of the Company
under the applicable Warrant Agreement and in connection with the certificates
for the Warrants (the "Warrant Certificates"), if any, of such series, and will
not assume any obligation or relationship of agency or trust for or with any
holders of such Warrant Certificates or beneficial owners of Warrants. Copies
of the form of Warrant Agreement for Warrants sold together with Debt
Securities and the form of Warrant Agreement for Warrants sold separate from
Debt Securities, including the respective forms of Warrant Certificates, have
previously been filed with the Commission and are incorporated by reference as
part of the Registration Statement. The following summaries of certain
provisions of the forms of Warrant Agreements and Warrant Certificates do not
purport to be complete and are subject to, and are qualified in their entirety
by reference to, all the provisions of the Warrant Agreements and the Warrant
Certificates.
GENERAL
Reference is hereby made to the Prospectus Supplement relating to the
particular series of Warrants, if any, offered thereby for the terms of such
Warrants, including, where applicable: (i) the offering price; (ii) the
currency or currencies in which such Warrants are being offered; (iii) the
designation, aggregate principal amount, currency or currencies, denominations
and other terms of the series of Debt Securities purchasable upon exercise of
such Warrants; (iv) the designation and terms of the series of Debt Securities
with which such Warrants are being offered and the number of such Warrants
being offered with each such Debt Security; (v) the date on and after which
such Warrants and the related series of Debt Securities will be transferable
separately; (vi) the principal amount of the Debt Securities purchasable upon
exercise of each such Warrant and the price at which and currency or currencies
in which such principal amount of Debt Securities may be purchased upon such
exercise; (vii) the date on which the right to exercise such Warrants shall
commence and the date (the "Expiration Date") on which such right shall expire;
(viii) whether such Warrants are to be issuable as Registered Warrants or
Bearer Warrants; (ix) whether such Warrants are extendable and the period or
periods of such extendability; (x) the terms upon which any Bearer Warrants of
such series may be exchanged for Registered Warrants of such series; (xi)
whether such Warrants will be issued in certificated or uncertificated form;
(xii) United States Federal income tax consequences; and (xiii) any other terms
of such Warrants not inconsistent with the applicable Warrant Agreement.
Registered Warrants of any series will be exchangeable into Registered
Warrants of the same series representing in the aggregate the number of
Warrants surrendered for exchange. Warrant Certificates, to the extent
exchangeable, may be presented for exchange, and Registered Warrants may be
presented for transfer, at the corporate trust office of the Warrant Agent for
such series of Warrants (or any other office indicated in the Prospectus
Supplement relating to such series of Warrants). Prior to the exercise of their
Warrants, holders of Warrants will not have any of the rights of Holders of the
Debt Securities of the series purchasable upon such exercise, including the
right to receive payments of principal of, premium, if any, or interest, if
any, on, the Debt Securities purchasable upon such exercise, or to enforce any
of the covenants in the applicable Indenture. Bearer Warrants will be
transferable by delivery. The applicable Prospectus Supplement will describe
the terms of exchange applicable to any Bearer Warrants.
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EXERCISE OF WARRANTS
Each Warrant will entitle the holder thereof to purchase such principal
amount of the related series of Debt Securities at such exercise price as shall
in each case be set forth in, or calculable as set forth in, the Prospectus
Supplement relating to such Warrant. Registered Warrants of a series may be
exercised at the corporate trust office of the Warrant Agent for such series
(or any other office indicated in the Prospectus Supplement relating to such
series) at any time prior to 5:00 P.M., New York City time (unless otherwise
indicated in the related Prospectus Supplement), on the Expiration Date set
forth in the Prospectus Supplement relating to such series of Warrants. After
the close of business on the Expiration Date relating to such series of
Warrants (or such later date to which such Expiration Date may be extended by
the Company), unexercised Warrants of such series will become void.
Registered Warrants of a series may be exercised by delivery to the
appropriate Warrant Agent of payment, as provided in the Prospectus Supplement
relating to such series of Warrants, of the consideration required to purchase
the principal amount of the series of Debt Securities purchasable upon such
exercise, together with certain information as set forth on the reverse side of
the Warrant Certificate evidencing such Warrants. Such Warrants will be deemed
to have been exercised upon receipt of the exercise price, subject to the
receipt of the Warrant Certificate evidencing such Warrants within five
business days. Upon receipt of such payment and such Warrant Certificate,
properly completed and duly executed, at the corporate trust office of the
appropriate Warrant Agent (or any other office indicated in the Prospectus
Supplement relating to such series of Warrants), the Company will, as soon as
practicable, issue and deliver the principal amount of the series of Debt
Securities purchasable upon such exercise. Only Registered Securities will be
issued and delivered upon exercise of Registered Warrants. If fewer than all of
the Warrants represented by a Registered Warrant are exercised, a new
Registered Warrant will be issued and delivered for the remaining amount of
Warrants. Special provisions relating to the exercise of any Bearer Warrants
will be described in the related Prospectus Supplement.
LIMITATIONS ON ISSUANCE OF BEARER SECURITIES AND BEARER WARRANTS
In compliance with United States Federal income tax laws and regulations the
Company and any underwriter, agent or dealer participating in the offering of
any Bearer Security will agree that, in connection with the original issuance
of such Bearer Security and during the period ending 40 days after the issue
date of such Bearer Security, they will not offer, sell or deliver such Bearer
Security, directly or indirectly, to a U.S. Person or to any person within the
United States, except to the extent permitted under U.S. Treasury regulations.
Bearer Securities will bear a legend to the following effect: "Any United
States Person who holds this obligation will be subject to limitations under
the United States income tax laws, including the limitations provided in
Sections 165(j) and 1287(a) of the Internal Revenue Code." The sections
referred to in the legend provide that, with certain exceptions, a United
States taxpayer who holds Bearer Securities will not be allowed to deduct any
loss with respect to, and will not be eligible for capital gain treatment with
respect to any gain realized on a sale, exchange, redemption or other
disposition of, such Bearer Securities.
As used herein, "United States" means the United States of America and its
possessions, and "U.S. Person" means a citizen or resident of the United
States, a corporation, partnership or other entity created or organized in or
under the laws of the United States, or an estate or trust the income of which
is subject to United States Federal income taxation regardless of its source.
Pending the availability of a definitive Global Security or individual Bearer
Securities, as the case may be, Debt Securities that are issuable as Bearer
Securities may initially be represented by a single temporary Global Security,
without interest coupons, to be deposited with a common depositary in
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London for Morgan Guaranty Trust Company of New York, Brussels Office, as
operator of the Euroclear System ("Euroclear"), and Centrale de Livraison de
Valeurs Mobilieres S.A. ("Cedel") for credit to the accounts designated by or
on behalf of the purchasers thereof. Following the availability of a definitive
Global Security in bearer form, without coupons attached, or individual Bearer
Securities and subject to any further limitations described in the applicable
Prospectus Supplement, the temporary Global Security will be exchangeable for
interests in such definitive Global Security or for such individual Bearer
Securities, respectively, only upon receipt of a "Certificate of Non-U.S.
Beneficial Ownership". A "Certificate of Non-U.S. Beneficial Ownership" is a
certificate to the effect that a beneficial interest in a temporary Global
Security or Bearer Warrant is owned by a person that is not a U.S. Person or is
owned by or through a financial institution in compliance with applicable U.S.
Treasury regulations. In no event will a definitive Bearer Security be
delivered to a purchaser without the receipt of a Certificate of Non-U.S.
Beneficial Ownership. No Bearer Security will be delivered in or to the United
States. If so specified in the applicable Prospectus Supplement, interest on a
temporary Global Security will be paid to each of Euroclear and Cedel with
respect to that portion of such temporary Global Security held for its account,
but only upon receipt as of the relevant Interest Payment Date of a Certificate
of Non-U.S. Beneficial Ownership.
Limitations on the offer, sale, delivery and exercise of Bearer Warrants
(including a requirement that a Certificate of Non-U.S. Beneficial Ownership be
delivered upon exercise of a Bearer Warrant) will be described in the
Prospectus Supplement relating to such Bearer Warrants.
PLAN OF DISTRIBUTION
The Company may sell Securities in any of three ways: (i) through
underwriters or dealers; (ii) directly to one or more purchasers; or (iii)
through agents. The applicable Prospectus Supplement will set forth the terms
of the offering of any Securities, including the names of any underwriters, the
purchase price of such Securities and the proceeds to the Company from such
sale, any underwriting discounts and other items constituting underwriters'
compensation, any initial public offering price, any discounts or concessions
allowed or reallowed or paid to dealers, any securities exchanges on which such
Securities may be listed and any restrictions on the sale and delivery of
Securities in bearer form.
If underwriters are used in the sale, Securities will be acquired by the
underwriters for their own account and may be resold from time to time in one
or more transactions, including negotiated transactions, at a fixed public
offering price or at varying prices determined at the time of sale. Such
Securities may be offered to the public either through underwriting syndicates
represented by managing underwriters or by underwriters without a syndicate.
The Company expects that such managing underwriters or underwriters in the
United States will include Salomon Brothers Inc. Unless otherwise set forth in
the applicable Prospectus Supplement, the obligations of the underwriters to
purchase such Securities will be subject to certain conditions precedent, and
the underwriters will be obligated to purchase all of such Securities if any of
such Securities are purchased. Any initial public offering price and any
discounts or concessions allowed or reallowed or paid to dealers may be changed
from time to time.
Securities may also be offered and sold, if so indicated in the Prospectus
Supplement, in connection with a remarketing upon their purchase, in accordance
with a redemption or repayment pursuant to their terms, by one or more firms
("remarketing firms") acting as principals for their own accounts or as agents
for the Company. Any remarketing firm will be identified and the terms of its
agreement, if any, with the Company and its compensation will be described in
the Prospectus Supplement. Remarketing firms may be deemed to be underwriters
in connection with the Securities remarketed thereby.
Securities may also be sold directly by the Company or through agents
designated by the Company from time to time. Any agent involved in the offer or
sale of Securities will be named, and any commissions payable by the Company to
such agent will be set forth, in the applicable Prospectus Supplement. Unless
otherwise indicated in the applicable Prospectus Supplement, any such agent
will act on a best efforts basis for the period of its appointment.
14
<PAGE>
If so indicated in the applicable Prospectus Supplement, the Company will
authorize agents, underwriters or dealers to solicit offers by certain
specified institutions to purchase Securities at the public offering price set
forth in such Prospectus Supplement pursuant to delayed delivery contracts
providing for payment and delivery on a future date specified in such
Prospectus Supplement. Such contracts will be subject only to those conditions
set forth in the applicable Prospectus Supplement and such Prospectus
Supplement will set forth the commissions payable for solicitation of such
contracts.
Any underwriters, dealers or agents participating in the distribution of
Securities may be deemed to be underwriters and any discounts or commissions
received by them on the sale or resale of Securities may be deemed to be
underwriting discounts and commissions under the Securities Act. Agents and
underwriters may be entitled under agreements entered into with the Company to
indemnification by the Company against certain civil liabilities, including
liabilities under the Securities Act, or to contribution with respect to
payments that the agents or underwriters may be required to make in respect
thereof. Agents and underwriters may be customers of, engage in transactions
with, or perform services for, the Company or its affiliates in the ordinary
course of business.
Salomon Brothers Inc is an indirect wholly owned subsidiary of the Company.
Salomon Brothers Inc's participation in the offer and sale of Securities
complies with the requirements of Schedule E of the By-Laws of the National
Association of Securities Dealers, Inc. regarding underwriting securities of an
affiliate.
ERISA MATTERS
The Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
imposes certain restrictions on employee benefit plans ("Plans") that are
subject to ERISA and on persons who are fiduciaries with respect to such Plans.
In accordance with ERISA's general fiduciary requirements, a fiduciary with
respect to any such Plan who is considering the purchase of Securities on
behalf of such Plan should determine whether such purchase is permitted under
the governing Plan documents and is prudent and appropriate for the Plan in
view of its overall investment policy and the composition and diversification
of its portfolio. Other provisions of ERISA and Section 4975 of the Internal
Revenue Code of 1986, as amended (the "Code"), prohibit certain transactions
involving the assets of a Plan and persons who have certain specified
relationships to the Plan ("parties in interest" within the meaning of ERISA or
"disqualified persons" within the meaning of Section 4975 of the Code). Thus, a
Plan fiduciary considering the purchase of Securities should consider whether
such a purchase might constitute or result in a prohibited transaction under
ERISA or Section 4975 of the Code.
The Company, directly or through its affiliates, may be considered a "party
in interest" or a "disqualified person" with respect to many Plans that are
subject to ERISA. The purchase of Securities by a Plan that is subject to the
fiduciary responsibility provisions of ERISA or the prohibited transaction
provisions of Section 4975 of the Code (including individual retirement
accounts and other plans described in Section 4975(e)(1) of the Code) and with
respect to which the Company is a party in interest or a disqualified person
may constitute or result in a prohibited transaction under ERISA or Section
4975 of the Code, unless such Securities are acquired pursuant to and in
accordance with an applicable exemption, such as Prohibited Transaction Class
Exemption ("PTCE") 84-14 (an exemption for certain transactions determined by
an independent qualified professional asset manager), PTCE 91-38 (an exemption
for certain transactions involving bank collective investment funds) or PTCE
90-1 (an exemption for certain transactions involving insurance company pooled
separate accounts). ANY PENSION OR OTHER EMPLOYEE BENEFIT PLAN PROPOSING TO
ACQUIRE ANY SECURITIES SHOULD CONSULT WITH ITS COUNSEL.
15
<PAGE>
EXPERTS
The financial statements and related schedules included in the 1992 10-K have
been audited by Arthur Andersen & Co., independent public accountants, as
indicated in their reports with respect thereto, and are incorporated by
reference in this Prospectus in reliance upon the authority of said firm as
experts in accounting and auditing in giving said reports.
LEGAL OPINIONS
Certain legal matters relating to the Securities will be passed upon for the
Company by Cravath, Swaine & Moore, New York, New York, and for any agents or
underwriters by Cleary, Gottlieb, Steen & Hamilton, New York, New York.
16
<PAGE>
NO DEALER, SALESPERSON OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY IN-
FORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS SUPPLEMENT AND THE PROSPECTUS IN CONNECTION WITH THE OFFER CON-
TAINED HEREIN AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST
NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR THE UNDERWRIT-
ERS. NEITHER THE DELIVERY OF THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS NOR
ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION
THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATES AS
OF WHICH INFORMATION IS GIVEN IN THIS PROSPECTUS SUPPLEMENT AND THE PROSPEC-
TUS. THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS DO NOT CONSTITUTE AN OFFER
OR SOLICITATION BY ANYONE IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITA-
TION IS NOT AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH OFFER OR SOLICITA-
TION IS NOT QUALIFIED TO DO SO OR TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE
SUCH OFFER OR SOLICITATION.
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TABLE OF CONTENTS
PAGE
----
PROSPECTUS SUPPLEMENT
<TABLE>
<S> <C>
Incorporation of Certain Documents by Reference............................ S-2
Salomon Inc ............................................................... S-3
Ratio of Earnings to Fixed Charges......................................... S-3
Use of Proceeds and Hedging ............................................... S-3
The Promus Companies Incorporated.......................................... S-4
Price Range and Dividend History of PRI Common Stock....................... S-4
Special Considerations..................................................... S-4
Description of ELKS........................................................ S-6
Certain Federal Income Tax Considerations.................................. S-9
Underwriting............................................................... S-12
</TABLE>
PROSPECTUS
<TABLE>
<S> <C>
Available Information....................................................... 2
Incorporation of Certain Documents by Reference............................. 2
Salomon Inc ................................................................ 3
Use of Proceeds............................................................. 3
Ratio of Earnings to Fixed Charges.......................................... 3
Description of Debt Securities.............................................. 3
Description of Warrants..................................................... 12
Limitations on Issuance of Bearer Securities and Bearer Warrants............ 13
Plan of Distribution........................................................ 14
ERISA Matters............................................................... 15
Experts..................................................................... 16
Legal Opinions.............................................................. 16
</TABLE>
1,000,000 ELKS
SALOMON INC
6.125% PRI COMMON EQUITY-LINKED SECURITIES DUE 1997
SALOMON BROTHERS INC
PRUDENTIAL SECURITIES INCORPORATED
PROSPECTUS SUPPLEMENT
DATED MARCH 3, 1994
