<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 4, 1994
REGISTRATION NO. 33-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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SALOMON INC
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 22-1660266
(STATE OF INCORPORATION) (I.R.S. EMPLOYER IDENTIFICATION NO.)
SEVEN WORLD TRADE CENTER
NEW YORK, NEW YORK 10048
(212) 783-7000
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
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ARNOLD S. OLSHIN, ESQ., SECRETARY
SALOMON INC
SEVEN WORLD TRADE CENTER
NEW YORK, NEW YORK 10048
(212) 783-7000
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
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COPIES TO:
JOHN W. WHITE, ESQ. ALLAN G. SPERLING, ESQ.
CRAVATH, SWAINE & MOORE CLEARY, GOTTLIEB, STEEN & HAMILTON
825 EIGHTH AVENUE ONE LIBERTY PLAZA
NEW YORK, NEW YORK 10019 NEW YORK, NEW YORK 10006
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
From time to time after this Registration Statement becomes effective
as determined by market conditions.
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If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the
following box: [_]
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If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or
interest reinvestment plans, please check the following box: [X]^
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CALCULATION OF REGISTRATION FEE
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<TABLE>
<CAPTION>
PROPOSED
PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT MAXIMUM AGGREGATE AMOUNT OF
SECURITIES TO BE TO BE OFFERING PRICE OFFERING REGISTRATION
REGISTERED REGISTERED(1)(2) PER UNIT(3) PRICE(3) FEE
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<S> <C> <C> <C> <C>
Debt Securities and
Warrants to Purchase
Debt Securities...... $5,000,000,000 100% $5,000,000,000 $1,724,138
</TABLE>
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(1) In United States dollars or the equivalent thereof in one or more foreign
or composite currencies.
(2) Plus such additional principal amount as may be necessary such that, if
Debt Securities or Warrants are issued with original issue discount, the
aggregate initial offering price of all Debt Securities and Warrants will
equal $5,000,000,000.
(3) Estimated solely for the purpose of calculating the registration fee.
-------------------
Pursuant to Rule 429 under the Securities Act of 1933, as amended (the
"Securities Act"), the Prospectuses and Prospectus Supplements included in
this Registration Statement also relate to the Debt Securities and Warrants to
Purchase Debt Securities previously registered under the Registrant's
Registration Statements on Form S-3 (Nos. 33-41932, -49136 -57922 and -51269).
This Registration Statement constitutes Post-Effective Amendment No. 2 to
Registrant's Registration Statement on Form S-3 (No. 33-57922), Post-Effective
Amendment No. 2 to Registrant's Registration Statement on Form S-3 (No. 33-
49136), Post-Effective Amendment No. 1 to Registrant's Registration Statement
on Form S-3 (No. 33-51269) and Post-Effective Amendment No. 2 to Registrant's
Registration Statement on Form S-3 (No. 33-41932).
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(A) OF THE SECURITIES ACT, OR UNTIL THIS REGISTRATION STATEMENT SHALL
BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(A), MAY DETERMINE.
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<PAGE>
INTRODUCTORY NOTE
This Registration Statement contains (i) a form of Prospectus relating to
Debt Securities and Warrants to Purchase Debt Securities (the "Basic
Prospectus"), (ii) a form of Prospectus relating to the Notes, Series G (the
"Series G Prospectus"), (iii) a form of Prospectus Supplement to the Basic
Prospectus relating to the offering by Salomon Inc of its Medium-Term Notes,
Series D and E, in registered form (the "Registered Prospectus Supplement") and
(iv) a form of Prospectus Supplement to the Basic Prospectus relating to the
offering by Salomon Inc of its Medium-Term Notes, Series D and E, in bearer
form (the "Bearer Prospectus Supplement"). The Registered Prospectus Supplement
and the Bearer Prospectus Supplement are forms which may be used, among others,
by Salomon Inc to offer its Debt Securities and Warrants to Purchase Debt
Securities under the Registration Statement, and will not be used as a
supplement to the Series G Prospectus. Although the amount of securities shown
on the cover page of the Basic Prospectus, the Series G Prospectus, the
Registered Prospectus Supplement and the Bearer Prospectus Supplement exceeds
in the aggregate the amount of securities registered under this Registration
Statement, the aggregate amount offered and sold hereunder will not exceed the
aggregate amount registered under this Registration Statement and Registrant's
Registration Statement on Form S-3 (No. 33-51269).
<PAGE>
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS SHALL
NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR
SHALL THERE BE ANY SALE OF THESE SECURITIES IN ANY STATE IN WHICH SUCH OFFER,
SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION
UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
SUBJECT TO COMPLETION DATED AUGUST 4, 1994
PROSPECTUS SUPPLEMENT
(To Prospectus Dated August , 1994)
$5,478,000,000
SALOMON INC
MEDIUM-TERM NOTES, SERIES D AND SERIES E
DUE MORE THAN NINE MONTHS FROM DATE OF ISSUE
Salomon Inc (the "Company") may from time to time offer pursuant to this
Prospectus Supplement its Medium-Term Notes, Series D (the "Series D Notes"),
and its Medium-Term Notes, Series E (the "Series E Notes" and, together with
the Series D Notes, the "Notes"), with an aggregate initial public offering
price or purchase price of up to $5,478,000,000, or the equivalent thereof in
one or more foreign or composite currencies (including the European Currency
Unit ("ECU")), subject to reduction as a result of the sale of other securities
under the Registration Statement of which this Prospectus Supplement and the
accompanying Prospectus form a part or under a Registration Statement to which
this Prospectus Supplement and the accompanying Prospectus relate. The amount
of Notes sold of either series will reduce the amount of Notes of the other
series that may be sold. In addition to the Notes in registered form
("Registered Notes") being offered hereby in the United States, the Company may
offer Notes in bearer form ("Bearer Notes") in a concurrent offering outside
the United States. The amount of Bearer Notes sold will reduce the amount of
Registered Notes that may be sold hereunder. See "Description of Registered
Notes--General".
The Series D Notes will be issued as Senior Indebtedness, and the Series E
Notes will be issued as subordinated debt. Subordinated debt will be
subordinated to all Senior Indebtedness. See "Description of Debt Securities--
Subordinated Debt" in the Prospectus.
Unless otherwise specified in the applicable Pricing Supplement, each
Registered Note will mature on a Business Day more than nine months from its
date of issue (the "Stated Maturity"), which maturity date may be subject to
extension at the option of the Company. Each Registered Note may also be
subject to redemption at the option of the Company, or to repayment at the
option of the Holder, prior to maturity. Each Registered Note will be
denominated in the currency designated by the Company (the "Specified
Currency"). See "Important Currency Information" and "Currency Risks". A
Registered Note may bear interest at a fixed rate (a "Fixed Rate Note"), which
may be zero in the case of certain Discount Notes, or at a floating rate (a
"Floating Rate Note") determined by reference to LIBOR, the CD Rate, the
Commercial Paper Rate, the Federal Funds Rate, the Treasury Rate or any other
Base Rate, as selected by the purchaser and agreed to by the Company, adjusted
by the Spread or Spread Multiplier, if any, applicable to such Note. Such fixed
rate, Spread or Spread Multiplier may be subject to change as described in the
applicable Pricing Supplement. Unless otherwise indicated, interest on each
Fixed Rate Note will be payable semiannually in arrears on each March 15 and
September 15 (each an "Interest Payment Date") and at Stated Maturity. A
Registered Note may be issued as an amortizing note (an "Amortizing Note") on
which a portion or all the principal amount is payable prior to Stated Maturity
in accordance with a schedule, by application of a formula, or by reference to
an index. A Registered Note may be issued as an indexed note (an "Indexed
Note") on which the amount of any interest payment, in the case of an Indexed
Rate Note, and/or the principal amount payable at maturity, in the case of an
Indexed Principal Note, will be determined by reference to the level of prices,
or changes in prices, or differences between prices, of securities, currencies,
intangibles, goods, articles or commodities or by application of a formula. See
"Description of Registered Notes--Indexed Notes". The Specified Currency,
interest rate or interest rate formula, reset provisions, Issue Price, Stated
Maturity, Interest Payment Dates, redemption, repayment and extension
provisions and certain other terms with respect to each Registered Note will be
established at the time of issuance and set forth in a pricing supplement to
this Prospectus Supplement (a "Pricing Supplement").
Each Registered Note will be represented either by a Global Security registered
in the name of a nominee of The Depository Trust Company, as Depositary (a
"Book-Entry Note"), or, if specified in the applicable Pricing Supplement, by a
certificate issued in temporary or definitive form (a "Certificated Note").
Beneficial interests in Global Securities representing Book-Entry Notes will be
shown on, and transfers thereof will be effected only through, records
maintained by the Depositary and its participants. Book-Entry Notes will not be
issuable as Certificated Notes except under the circumstances described herein.
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, ANY PRICING SUPPLEMENT
HERETO OR THE ACCOMPANYING PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
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<TABLE>
<CAPTION>
PRICE TO AGENT'S
PUBLIC(1) COMMISSION(2) PROCEEDS TO THE COMPANY(2)(3)
<S> <C> <C> <C>
Per Registered Note..... 100.000% .125%-.750% 99.250%-99.875%
Total(4)................ $5,478,000,000 $6,847,500-$41,085,000 $5,436,915,000-$5,471,152,500
</TABLE>
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(1) Unless otherwise specified in the applicable Pricing Supplement, the price
to public will be 100% of the principal amount.
(2) The Company will pay to Salomon Brothers Inc (the "Agent") a commission of
from .125% to .750% of the principal amount of any Registered Note, depending
upon its Stated Maturity, sold through the Agent.
(3) Before deduction of expenses payable by the Company estimated at
$2,700,000, including reimbursement of certain expenses of the Agent.
(4) Or the equivalent thereof in foreign or composite currencies.
The Registered Notes are being offered on a continuous basis by the Company
through the Agent, which has agreed to use its reasonable efforts to solicit
orders to purchase Registered Notes. The Company may also sell Registered Notes
at a discount to the Agent for its own account or for resale to one or more
purchasers at varying prices related to prevailing market prices at the time of
resale or, if set forth in the applicable Pricing Supplement, at a fixed public
offering price, as determined by the Agent. In addition, the Agent may offer
Registered Notes purchased by it as principal to other dealers. Unless
otherwise specified in the applicable Pricing Supplement, any Registered Note
purchased by the Agent as principal will be purchased at 100% of the principal
amount thereof less a percentage equal to the commission applicable to an
agency sale of a Registered Note of identical maturity. The Registered Notes
will not be listed on any securities exchange, and there can be no assurance
that the maximum amount of Registered Notes offered by this Prospectus
Supplement will be sold or that there will be a secondary market for the
Registered Notes. The Company reserves the right to withdraw, cancel or modify
the offer made hereby without notice. The Company or the Agent may reject any
order to purchase Registered Notes, whether or not solicited, in whole or in
part. See "Plan of Distribution".
This Prospectus Supplement, the related Pricing Supplement and the accompanying
Prospectus may be used by the Company, the Agent, a wholly owned subsidiary of
the Company, or other affiliates of the Company in connection with offers and
sales related to secondary market transactions in the Registered Notes offered
hereby and approximately $6,582,707,000 of Registered Notes initially sold
pursuant to earlier prospectuses, as described herein. The Agent or other such
Company affiliates may act as principal or agent in such transactions. Such
sales will be made at varying prices related to prevailing market prices at the
time of sale.
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SALOMON BROTHERS INC
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The date of this Prospectus Supplement is August , 1994.
<PAGE>
Pursuant to a Prospectus and Prospectus Supplement each dated February 25,
1992 (and applicable Pricing Supplements), filed with the Commission under
Registration No. 33-41932, a Prospectus and Prospectus Supplement each dated
February 12, 1993 (and applicable Pricing Supplements), filed with the
Commission under Registration Statement No. 33-57922, and a Prospectus and
Prospectus Supplement each dated December 14, 1993 (and applicable Pricing
Supplements) filed with the Commission under Registration Statement 33-51269,
the Company had outstanding as of August 1, 1994 approximately $8,749,332,288
of its Medium-Term Notes, Series D and E, of which approximately $6,582,707,000
were Registered Notes and approximately $2,166,625,288 were Bearer Notes. The
Registered Notes offered by this Prospectus Supplement are part of the same
series of Notes as the Notes described in the preceding sentence.
SALOMON INC
Salomon Inc was incorporated in 1960 under the laws of the State of Delaware.
Its major operating units are engaged principally in securities, commodities
trading and oil refining activities. Securities and related activities are
conducted by Salomon Brothers Holding Company Inc and its subsidiaries and
commodities trading by the Phibro Division of the Company. Oil refining
activities are conducted by Philbro Energy USA, Inc., the owner of several oil
refineries and other asset-based businesses.
IMPORTANT CURRENCY INFORMATION
Purchasers are required to pay for each Registered Note in the Specified
Currency for such Note. If requested by a prospective purchaser of a Registered
Note having a Specified Currency other than U.S. dollars, the Agent may at its
discretion arrange for the exchange of U.S. dollars into such Specified
Currency to enable the purchaser to pay for such Note. Each such exchange will
be made by the Agent on such terms and subject to such conditions, limitations
and charges as the Agent may from time to time establish in accordance with its
regular foreign exchange practice. All costs of exchange will be borne by the
purchaser.
References herein to "U.S. dollars" or "$" are to the lawful currency of the
United States.
DESCRIPTION OF REGISTERED NOTES
The following description of the particular terms of the Registered Notes
supplements, and to the extent inconsistent therewith replaces, the description
of the general terms and provisions of the Debt Securities set forth in the
Prospectus, to which description reference is hereby made.
GENERAL
The Series D Notes are a series of Debt Securities issued under the Senior
Debt Indenture, and the Series E Notes are a series of Debt Securities issued
under the Subordinated Debt Indenture. At the date of this Prospectus
Supplement, the Notes offered pursuant to this Prospectus Supplement are
limited to an aggregate initial public offering price or purchase price of up
to $5,478,000,000 or the equivalent thereof in one or more foreign or composite
currencies, which amount is subject to reduction as a result of the sale of
other securities under the Registration Statement of which this Prospectus
Supplement and the accompanying Prospectus form a part or under a Registration
Statement to which this Prospectus Supplement and the accompanying Prospectus
relate. In addition, the Company had outstanding as of August 1, 1994
approximately $6,582,707,000 of Series D Registered Notes and approximately
$2,166,625,288 of Series D Bearer Notes sold pursuant to earlier prospectuses.
The aggregate amount of Notes may be increased from time to time to such larger
amount as may be authorized by the Company. The U.S. dollar equivalent of the
public offering price or purchase price of a Note having a Specified Currency
other than U.S. dollars will be determined on the basis of the noon buying rate
in New York City for cable transfers in foreign currencies as certified for
customs purposes by the Federal Reserve Bank of New York (the "Market Exchange
Rate") for such Specified Currency on the applicable issue date. Such
determination will be made by the Company or its agent, as exchange rate agent
for both series of Notes (the "Exchange Rate Agent").
S-2
<PAGE>
The Series D Notes will constitute part of the Senior Indebtedness of the
Company and will rank pari passu with all other unsecured debt of the Company
except subordinated debt. The Series E Notes will be subordinate and junior in
the right of payment, to the extent and in the manner set forth in the
Subordinated Debt Indenture, to all Senior Indebtedness of the Company. See
"Description of Debt Securities--Subordinated Debt" in the Prospectus. As of
March 31, 1994, the aggregate principal amount of Senior Indebtedness
outstanding was $100.5 billion, consisting of the following: $13.9 billion of
term debt, $1.0 billion in commercial paper and $85.6 billion in other short-
term borrowings.
The Notes will consist of Registered Notes and Bearer Notes, each of which
will be offered on a continuous basis. Registered Notes will be issued in fully
registered form only, without coupons. Registered Notes may not be exchanged
for Bearer Notes.
Each Registered Note will be issued initially as either a Book-Entry Note or,
if specified in the applicable Pricing Supplement, a Certificated Note. Except
as set forth in the Prospectus under "Description of Debt Securities--Global
Securities", Book-Entry Notes will not be issuable as Certificated Notes. See
"Book-Entry System" below.
Unless otherwise specified in the applicable Pricing Supplement, the
authorized denominations of Registered Notes denominated in U.S. dollars will
be $1,000 and any larger amount that is an integral multiple of $1,000, and the
authorized denominations of Registered Notes having a Specified Currency other
than U.S. dollars will be the approximate equivalents thereof in the Specified
Currency.
Unless otherwise specified in the applicable Pricing Supplement, each
Registered Note will mature on a Business Day more than nine months from its
date of issue, as selected by the purchaser and agreed to by the Company (the
"Stated Maturity"), which maturity date may be subject to extension at the
option of the Company. Each Registered Note may also be subject to redemption
at the option of the Company, or to repayment at the option of the Holder,
prior to its Stated Maturity. Notwithstanding the foregoing, each Registered
Note having a Specified Currency of Japanese yen will have a Stated Maturity of
not less than one year from its Original Issue Date (as defined below), and
will not be subject to optional redemption or repayment prior to such time.
Each Registered Note having a Specified Currency of Pounds Sterling will mature
in compliance with such regulations as the Bank of England may promulgate from
time to time. Each Floating Rate Note will mature on an Interest Payment Date
for such Note.
The Pricing Supplement relating to a Registered Note will describe the
following terms: (i) the Specified Currency for such Note; (ii) whether such
Note is a Fixed Rate Note, a Floating Rate Note, an Amortizing Note and/or an
Indexed Note; (iii) the price (expressed as a percentage of the aggregate
principal amount or face amount thereof) at which such Note will be issued (the
"Issue Price"); (iv) the date on which such Note will be issued (the "Original
Issue Date"); (v) the date of the Stated Maturity; (vi) if such Note is a Fixed
Rate Note, the rate per annum at which such Note will bear interest, if any,
and whether and the manner in which such rate may be changed prior to its
Stated Maturity; (vii) if such Note is a Floating Rate Note, the Base Rate, the
Initial Interest Rate, the Interest Reset Period or the Interest Reset Dates,
the Interest Payment Dates, and, if applicable, the Index Maturity, the Maximum
Interest Rate, the Minimum Interest Rate, the Spread or Spread Multiplier (all
as defined below), and any other terms relating to the particular method of
calculating the interest rate for such Note and whether and the manner in which
such Spread or Spread Multiplier may be changed prior to Stated Maturity;
(viii) whether such Note is an Original Issue Discount Note (as defined below);
(ix) if such Note is an Amortizing Note, the terms for repayment prior to
Stated Maturity; (x) if such Note is an Indexed Note, in the case of an Indexed
Rate Note, the manner in which the amount of any interest payment will be
determined or, in the case of an Indexed Principal Note, its Face Amount and
the manner in which the principal amount payable at Stated Maturity will be
determined; (xi) whether such Note may be redeemed at the option of the
Company, or repaid at the option of the Holder, prior to Stated Maturity as
described under "Optional Redemption, Repayment and Repurchase" below and, if
so, the provisions relating to such redemption or repayment, including, in the
case of an Original Issue Discount Note or Indexed Note, the information
necessary to determine the amount due upon
S-3
<PAGE>
redemption or repayment; (xii) whether such Note is subject to an optional
extension beyond its Stated Maturity as described under "Extension of Maturity"
below; and (xiii) any other terms of such Note not inconsistent with the
provisions of the Indenture under which such Note will be issued.
"Business Day" with respect to any Registered Note means any day, other than
a Saturday or Sunday, that is (i) not a day on which banking institutions are
authorized or required by law or regulation to be closed in (a) The City of New
York or (b) if the Specified Currency for such Note is other than U.S. dollars,
the financial center of the country issuing such Specified Currency (which, in
the case of ECU, shall be Brussels, Belgium) and (ii) if such Note is a LIBOR
Note (as defined below), a London Banking Day. "London Banking Day" with
respect to any Registered Note means any day on which dealings in deposits in
the Specified Currency of such Note are transacted in the London interbank
market.
"Original Issue Discount Note" means (i) a Registered Note, including any
such Note whose interest rate is zero, that has a stated redemption price at
Stated Maturity that exceeds its Issue Price by at least 0.25% of its stated
redemption price at Stated Maturity, multiplied by the number of full years
from the Original Issue Date to the Stated Maturity for such Note and (ii) any
other Registered Note designated by the Company as issued with original issue
discount for United States Federal income tax purposes.
A "basis point" or "bp" equals one one-hundredth of a percentage point.
PAYMENT OF PRINCIPAL AND INTEREST
The principal of and any premium and interest on each Registered Note are
payable by the Company in the Specified Currency for such Note. If the
Specified Currency for a Registered Note is other than U.S. dollars, the
Company will (unless otherwise specified in the applicable Pricing Supplement)
arrange to convert all payments in respect of such Note into U.S. dollars in
the manner described in the following paragraph. The Holder of a Registered
Note having a Specified Currency other than U.S. dollars may (if the applicable
Pricing Supplement and such Note so indicate) elect to receive all payments in
respect of such Note in the Specified Currency by delivery of a written notice
to the Trustee for such Note not later than fifteen calendar days prior to the
applicable payment date, except under the circumstances described under
"Currency Risks--Payment Currency" below. Such election will remain in effect
until revoked by written notice to such Trustee received not later than fifteen
calendar days prior to the applicable payment date.
In the case of a Registered Note having a Specified Currency other than U.S.
dollars, the amount of any U.S. dollar payment in respect of such Registered
Note will be determined by the Exchange Rate Agent based on the highest firm
bid quotation expressed in U.S. dollars received by the Exchange Rate Agent at
approximately 11:00 a.m., New York City time, on the second Business Day
preceding the applicable payment date (or, if no such rate is quoted on such
date, the last date on which such rate was quoted), from three (or, if three
are not available, then two) recognized foreign exchange dealers in The City of
New York (one of which may be the Agent and another of which may be the
Exchange Rate Agent) selected by the Exchange Rate Agent, for the purchase by
the quoting dealer, for settlement on such payment date, of the aggregate
amount of such Specified Currency payable on such payment date in respect of
all Registered Notes denominated in such Specified Currency. All currency
exchange costs will be borne by the Holders of such Notes by deductions from
such payments. If no such bid quotations are available, such payments will be
made in such Specified Currency, unless such Specified Currency is unavailable
due to the imposition of exchange controls or to other circumstances beyond the
Company's control, in which case such payments will be made as described under
"Currency Risks--Payment Currency" below.
Unless otherwise specified in the applicable Pricing Supplement, U.S. dollar
payments of interest on Registered Notes (other than interest payable at Stated
Maturity) will be made, except as provided below, by check mailed to the
Registered Holders of such Notes (which, in the case of Global Securities
representing Book-Entry Notes, will be a nominee of the Depositary); provided,
however, that, in the
S-4
<PAGE>
case of a Registered Note issued between a Regular Record Date and the related
Interest Payment Date, unless otherwise specified in the related Pricing
Supplement, interest for the period beginning on the Original Issue Date for
such Note and ending on such Interest Payment Date shall be paid on the next
succeeding Interest Payment Date to the Registered Holder of such Note on the
related Regular Record Date. A Holder of $10,000,000 (or the equivalent thereof
in a Specified Currency other than U.S. dollars) or more in aggregate principal
amount of Registered Notes of like tenor and term shall be entitled to receive
such U.S. dollar payments by wire transfer of immediately available funds, but
only if appropriate wire transfer instructions have been received in writing by
the Trustee for such Notes not later than fifteen calendar days prior to the
applicable Interest Payment Date. Simultaneously with the election by any
Holder to receive payments in a Specified Currency other than U.S. dollars (as
provided above), such Holder shall provide appropriate wire transfer
instructions to the Trustee for such Notes. Unless otherwise specified in the
applicable Pricing Supplement, principal and any premium and interest payable
at the Stated Maturity of a Registered Note will be paid in immediately
available funds upon surrender of such Note at the corporate trust office or
agency of the Trustee for such Note in The City of New York.
Any payment required to be made in respect of a Registered Note on a date
(including the day of Stated Maturity) that is not a Business Day for such Note
need not be made on such date, but may be made on the next succeeding Business
Day with the same force and effect as if made on such date, and no additional
interest shall accrue as a result of such delayed payment.
Unless otherwise specified in the applicable Pricing Supplement, if the
principal of any Discount Note is declared to be due and payable immediately as
described under "Description of Debt Securities--Events of Default" in the
Prospectus, the amount of principal due and payable with respect to such Note
shall be limited to the aggregate principal amount (or face amount, in the case
of an Indexed Principal Note) of such Note multiplied by the sum of its Issue
Price (expressed as a percentage of the aggregate principal amount) plus the
original issue discount amortized from the date of issue to the date of
declaration, which amortization shall be calculated using the "interest method"
(computed in accordance with generally accepted accounting principles in effect
on the date of declaration).
The Regular Record Date with respect to any Interest Payment Date for a
Floating Rate Note or for an Indexed Rate Note shall be the date (whether or
not a Business Day) fifteen calendar days immediately preceding such Interest
Payment Date, and for a Fixed Rate Note (unless otherwise specified in the
applicable Pricing Supplement) shall be the March 1 or September 1 (whether or
not a Business Day) immediately preceding such Interest Payment Date.
FIXED RATE NOTES
Each Fixed Rate Note will bear interest from its Original Issue Date, or from
the last Interest Payment Date to which interest has been paid or duly provided
for, at the rate per annum stated in the applicable Pricing Supplement until
the principal amount thereof is paid or made available for payment, except as
described below under "Subsequent Interest Periods" and "Extension of
Maturity", and except that if so specified in the applicable Pricing
Supplement, the rate of interest payable on certain Fixed Rate Notes may be
subject to adjustment from time to time as described in such Pricing
Supplement. Unless otherwise set forth in the applicable Pricing Supplement,
interest on each Fixed Rate Note will be payable semiannually in arrears on
each March 15 and September 15 (each such day being an "Interest Payment Date")
and at Stated Maturity. If an Interest Payment Date with respect to any Fixed
Rate Note would otherwise be a day that is not a Business Day, such Interest
Payment Date shall not be postponed; provided, however, that any payment
required to be made in respect of such Note on a date (including the day of
Stated Maturity) that is not a Business Day for such Note need not be made on
such date, but may be made on the next succeeding Business Day with the same
force and effect as if made on such date, and no additional interest shall
accrue as a result of such delayed payment. Each payment of interest in respect
of an Interest Payment Date shall include interest accrued through the day
before such Interest Payment Date. Interest on Fixed Rate Notes will be
computed on the basis of a 360-day year of twelve 30-day months.
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FLOATING RATE NOTES
Unless otherwise specified in the applicable Pricing Supplement, each
Floating Rate Note will bear interest from its Original Issue Date to the first
Interest Reset Date (such period, the "Initial Interest Period") for such Note
at the Initial Interest Rate set forth on the face thereof and in the
applicable Pricing Supplement. The interest rate on such Note for each Interest
Reset Period (as defined below) (and for the Initial Interest Period if so
specified in the applicable Pricing Supplement) will be determined by reference
to an interest rate basis (the "Base Rate"), plus or minus the Spread, if any,
or multiplied by the Spread Multiplier, if any. The "Spread" is the number of
basis points that may be specified in the applicable Pricing Supplement as
being applicable to such Note, and the "Spread Multiplier" is the percentage
that may be specified in the applicable Pricing Supplement as being applicable
to such Note, except in each case as described below under "Subsequent Interest
Periods" and "Extension of Maturity", and except that if so specified in the
applicable Pricing Supplement, the Spread or Spread Multiplier on certain
Floating Rate Notes may be subject to adjustment from time to time as described
in such Pricing Supplement. The applicable Pricing Supplement will designate
one of the following Base Rates as applicable to a Floating Rate Note: (i)
LIBOR (a "LIBOR Note"), (ii) the Commercial Paper Rate (a "Commercial Paper
Rate Note"), (iii) the Treasury Rate (a "Treasury Rate Note"), (iv) the Federal
Funds Rate (a "Federal Funds Rate Note"), (v) the CD Rate (a "CD Rate Note") or
(vi) such other Base Rate as is set forth in such Pricing Supplement and in
such Note. The "Index Maturity" for any Floating Rate Note is the period of
maturity of the instrument or obligation from which the Base Rate is
calculated. "H.15(519)" means the publication entitled "Statistical Release
H.15(519), "Selected Interest Rates' ", or any successor publication, published
by the Board of Governors of the Federal Reserve System. "Composite Quotations"
means the daily statistical release entitled "Composite 3:30 p.m. Quotations
for U.S. Government Securities" published by the Federal Reserve Bank of New
York.
As specified in the applicable Pricing Supplement, a Floating Rate Note may
also have either or both of the following (in each case expressed as a rate per
annum on a simple interest basis): (i) a maximum limitation, or ceiling, on the
rate at which interest may accrue during any interest period ("Maximum Interest
Rate") and (ii) a minimum limitation, or floor, on the rate at which interest
may accrue during any interest period ("Minimum Interest Rate"). In addition to
any Maximum Interest Rate that may be applicable to any Floating Rate Note, the
interest rate on a Floating Rate Note will in no event be higher than the
maximum rate permitted by applicable law, as the same may be modified by United
States law of general application. The Notes will be governed by the law of the
State of New York and, under such law as of the date of this Prospectus
Supplement, the maximum rate of interest under provisions of the penal law,
with certain exceptions, is 25% per annum on a simple interest basis. Such
maximum rate of interest only applies to obligations that are less than
$2,500,000.
The Company will appoint, and enter into agreements with, agents (each a
"Calculation Agent") to calculate interest rates on Floating Rate Notes. Unless
otherwise specified in a Pricing Supplement, Citibank, N.A. shall be the
Calculation Agent for each Series D Floating Rate Note and Bankers Trust
Company shall be the Calculation Agent for each Series E Floating Rate Note.
All determinations of interest by the Calculation Agent shall, in the absence
of manifest error, be conclusive for all purposes and binding on the holders of
the Floating Rate Notes.
The interest rate on each Floating Rate Note will be reset daily, weekly,
monthly, quarterly, semiannually or annually (such period being the "Interest
Reset Period" for such Note; the Initial Interest Period and each Interest
Reset Period, an "Interest Period"; and the first day of each Interest Reset
Period, an "Interest Reset Date"), as specified in the applicable Pricing
Supplement. Unless otherwise specified in the applicable Pricing Supplement,
the Interest Reset Dates will be, in the case of Floating Rate Notes that reset
daily, each Business Day; in the case of Floating Rate Notes (other than
Treasury Rate Notes) that reset weekly, Wednesday of each week; in the case of
Treasury Rate Notes that reset weekly, Tuesday of each week (except as provided
below under "Treasury Rate Notes"); in the case of Floating Rate Notes that
reset monthly, the third Wednesday of each month; in
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the case of Floating Rate Notes that reset quarterly, the third Wednesday of
March, June, September and December of each year; in the case of Floating Rate
Notes that reset semiannually, the third Wednesday of each of two months of
each year specified in the applicable Pricing Supplement; and, in the case of
Floating Rate Notes that reset annually, the third Wednesday of one month of
each year specified in the applicable Pricing Supplement; provided, however,
that in all instances the interest rate in effect for the ten days immediately
prior to Stated Maturity will be that in effect on the tenth day preceding
Stated Maturity. If an Interest Reset Date for any Floating Rate Note would
otherwise be a day that is not a Business Day, such Interest Reset Date shall
be postponed to the next succeeding Business Day, except that, in the case of a
LIBOR Note, if such Business Day is in the next succeeding calendar month, such
Interest Reset Date shall be the immediately preceding Business Day.
Unless otherwise specified in the applicable Pricing Supplement, interest
payable in respect of Floating Rate Notes shall be the accrued interest from
and including the Original Issue Date or the last date to which interest has
been paid, as the case may be, to but excluding the applicable Interest Payment
Date. In the case of a Floating Rate Note that resets daily or weekly, interest
payable shall be the accrued interest from and including the Original Issue
Date or the last date to which interest has been accrued and paid, as the case
may be, to but excluding the Record Date immediately preceding the applicable
Interest Payment Date, except that, at Stated Maturity, interest payable will
include interest accrued to but excluding the date of Stated Maturity.
With respect to a Floating Rate Note, accrued interest shall be calculated by
multiplying the principal amount of such Note (or, in the case of a Floating
Rate Note that is an Indexed Principal Note, its Face Amount) by an accrued
interest factor. Such accrued interest factor will be computed by adding the
interest factors calculated for each day in the period for which accrued
interest is being calculated. The interest factor (expressed as a decimal
calculated to seven decimal places without rounding) for each such day is
computed by dividing the interest rate in effect on such day by 360, in the
case of LIBOR Notes, Commercial Paper Rate Notes, Federal Funds Rate Notes and
CD Rate Notes or by the actual number of days in the year, in the case of
Treasury Rate Notes. For purposes of making the foregoing calculation, the
interest rate in effect on any Interest Reset Date will be the applicable rate
as reset on such date.
Unless otherwise specified in the applicable Pricing Supplement, all
percentages resulting from any calculation of the rate of interest on a
Floating Rate Note will be rounded, if necessary, to the nearest 1/100,000 of
1% (.0000001), with five one-millionths of a percentage point rounded upward,
and all currency amounts used in or resulting from such calculation on Floating
Rate Notes will be rounded to the nearest one-hundredth of a unit (with .005 of
a unit being rounded upward).
Unless otherwise indicated in the applicable Pricing Supplement and except as
provided below, interest will be payable, in the case of Floating Rate Notes
that reset daily, weekly or monthly, on the third Wednesday of each month or on
the third Wednesday of March, June, September and December of each year, as
specified in the applicable Pricing Supplement; in the case of Floating Rate
Notes that reset quarterly, on the third Wednesday of March, June, September,
and December of each year; in the case of Floating Rate Notes that reset
semiannually, on the third Wednesday of each of two months of each year
specified in the applicable Pricing Supplement; and, in the case of Floating
Rate Notes that reset annually, on the third Wednesday of one month of each
year specified in the applicable Pricing Supplement (each such day being an
"Interest Payment Date"). If an Interest Payment Date with respect to any
Floating Rate Note would otherwise be a day that is not a Business Day, such
Interest Payment Date shall be postponed to the next succeeding Business Day,
except that, in the case of a LIBOR Note, if such Business Day is in the next
succeeding calendar month, such Interest Payment Date shall be the immediately
preceding Business Day.
Upon the request of the Holder of any Floating Rate Note, the Calculation
Agent for such Note will provide the interest rate then in effect and, if
determined, the interest rate that will become effective on the next Interest
Reset Date with respect to such Floating Rate Note.
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CD Rate Notes
Each CD Rate Note will bear interest for each Interest Reset Period at the
interest rate calculated with reference to the CD Rate and the Spread or Spread
Multiplier, if any, specified in such Note and in the applicable Pricing
Supplement.
Unless otherwise specified in the applicable Pricing Supplement, the "CD
Rate" for each Interest Reset Period shall be the rate as of the second
Business Day prior to the Interest Reset Date for such Interest Reset Period (a
"CD Rate Determination Date") for negotiable certificates of deposit having the
Index Maturity designated in the applicable Pricing Supplement as published in
H.15(519) under the heading "CDs (Secondary Market)". In the event that such
rate is not published prior to 3:00 p.m., New York City time, on the
Calculation Date (as defined below) pertaining to such CD Rate Determination
Date, then the "CD Rate" for such Interest Reset Period will be the rate on
such CD Rate Determination Date for negotiable certificates of deposit of the
Index Maturity designated in the applicable Pricing Supplement as published in
Composite Quotations under the heading "Certificates of Deposit". If by 3:00
p.m., New York City time, on such Calculation Date such rate is not yet
published in either H.15(519) or Composite Quotations, then the "CD Rate" for
such Interest Reset Period will be calculated by the Calculation Agent for such
CD Rate Note and will be the arithmetic mean of the secondary market offered
rates as of 10:00 a.m., New York City time, on such CD Rate Determination Date
of three leading nonbank dealers in negotiable U.S. dollar certificates of
deposit in The City of New York selected by the Calculation Agent for such CD
Rate Note for negotiable certificates of deposit of major United States money
center banks of the highest credit standing (in the market for negotiable
certificates of deposit) with a remaining maturity closest to the Index
Maturity designated in the Pricing Supplement in a denomination of $5,000,000;
provided, however, that if the dealers selected as aforesaid by such
Calculation Agent are not quoting offered rates as mentioned in this sentence,
the "CD Rate" for such Interest Reset Period will be the same as the CD Rate
for the immediately preceding Interest Reset Period (or, if there was no such
Interest Reset Period, the Initial Interest Rate).
The "Calculation Date" pertaining to any CD Rate Determination Date shall be
the tenth calendar day after such CD Rate Determination Date or, if such day is
not a Business Day, the next succeeding Business Day.
Commercial Paper Rate Notes
Each Commercial Paper Rate Note will bear interest for each Interest Reset
Period at the interest rate calculated with reference to the Commercial Paper
Rate and the Spread or Spread Multiplier, if any, specified in such Note and in
the applicable Pricing Supplement.
Unless otherwise specified in the applicable Pricing Supplement, the
"Commercial Paper Rate" for each Interest Reset Period will be determined by
the Calculation Agent for such Commercial Paper Rate Note as of the second
Business Day prior to the Interest Reset Date for such Interest Reset Period (a
"Commercial Paper Rate Determination Date") and shall be the Money Market Yield
(as defined below) on such Commercial Paper Rate Determination Date of the rate
for commercial paper having the index Maturity specified in the applicable
Pricing Supplement, as such rate shall be published in H.15(519) under the
heading "Commercial Paper". In the event that such rate is not published prior
to 3:00 p.m., New York City time, on the Calculation Date (as defined below)
pertaining to such Commercial Paper Rate Determination Date, then the
"Commercial Paper Rate" for such Interest Reset Period shall be the Money
Market Yield on such Commercial Paper Rate Determination Date of the rate for
commercial paper of the specified Index Maturity as published in Composite
Quotations under the heading "Commercial Paper". If by 3:00 p.m., New York City
time, on such Calculation Date such rate is not yet published in either
H.15(519) or Composite Quotations, then the "Commercial Paper Rate" for such
Interest Reset Period shall be the Money Market Yield of the arithmetic mean of
the offered rates, as of 11:00 a.m., New York City time, on such Commercial
Paper Rate Determination Date of three leading dealers of commercial paper in
The City of New York selected by the Calculation Agent for such Commercial
Paper Rate Note for commercial paper of the specified Index Maturity placed for
an
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industrial issuer whose bonds are rated "AA" or the equivalent by a nationally
recognized rating agency; provided, however, that if the dealers selected as
aforesaid by such Calculation Agent are not quoting offered rates as mentioned
in this sentence, the "Commercial Paper Rate" for such Interest Reset Period
will be the same as the Commercial Paper Rate for the immediately preceding
Interest Reset Period (or, if there was no such Interest Reset Period, the
Initial Interest Rate).
"Money Market Yield" shall be a yield calculated in accordance with the
following formula:
D X 360
Money Market Yield = ---------------- X 100
360 - (D X M)
where "D" refers to the applicable per annum rate for commercial paper quoted
on a bank discount basis and expressed as a decimal, and "M" refers to the
actual number of days in the specified Index Maturity.
The "Calculation Date" pertaining to any Commercial Paper Rate Determination
Date shall be the tenth calendar day after such Commercial Paper Rate
Determination Date or, if such day is not a Business Day, the next succeeding
Business Day.
Federal Funds Rate Notes
Each Federal Funds Rate Note will bear interest for each Interest Reset
Period at the interest rate calculated with reference to the Federal Funds Rate
and the Spread or Spread Multiplier, if any, specified in such Note and in the
applicable Pricing Supplement.
Unless otherwise specified in the applicable Pricing Supplement, the "Federal
Funds Rate" for each Interest Reset Period shall be the effective rate on the
Interest Reset Date for such Interest Reset Period (a "Federal Funds Rate
Determination Date") for Federal Funds as published in H.15(519) under the
heading "Federal Funds (Effective)". In the event that such rate is not
published prior to 3:00 p.m., New York City time, on the Calculation Date (as
defined below) pertaining to such Federal Funds Rate Determination Date, the
"Federal Funds Rate" for such Interest Reset Period shall be the rate on such
Federal Funds Rate Determination Date as published in Composite Quotations
under the heading "Federal Funds/Effective Rate". If by 3:00 p.m., New York
City time, on such Calculation Date such rate is not yet published in either
H.15(519) or Composite Quotations, then the "Federal Funds Rate" for such
Interest Reset Period shall be the rate on such Federal Funds Rate
Determination Date made publicly available by the Federal Reserve Bank of New
York which is equivalent to the rate which appears in H.15(519) under the
heading "Federal Funds (Effective)"; provided, however, that if such rate is
not made publicly available by the Federal Reserve Bank of New York by 3:00
p.m., New York City time, on such Calculation Date, the "Federal Funds Rate"
for such Interest Reset Period will be the same as the Federal Funds Rate in
effect for the immediately preceding Interest Reset Period (or, if there was no
such Interest Reset Period, the Initial Interest Rate). In the case of a
Federal Funds Rate Note that resets daily, the interest rate on such Note for
the period from and including a Monday to but excluding the succeeding Monday
will be reset by the Calculation Agent for such Note on such second Monday (or,
if not a Business Day, on the next succeeding Business Day) to a rate equal to
the average of the Federal Funds Rates in effect with respect to each such day
in such week.
The "Calculation Date" pertaining to any Federal Funds Rate Determination
Date shall be the next succeeding Business Day.
LIBOR Notes
Each LIBOR Note will bear interest for each Interest Reset Period at the
interest rate calculated with reference to LIBOR and the Spread or Spread
Multiplier, if any, specified in such Note and in the applicable Pricing
Supplement.
"LIBOR" for each Interest Reset Period will be determined by the Calculation
Agent for such LIBOR Notes as follows:
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(i) On the second London Banking Day prior to the Interest Reset Date for
such Interest Reset Period (a "LIBOR Determination Date"), the Calculation
Agent for such LIBOR Note will determine the arithmetic mean of the offered
rates for deposits in the Specified Currency for the period of the Index
Maturity specified in the applicable Pricing Supplement, commencing on such
Interest Reset Date, which appear on the Designated LIBOR Page at
approximately 11:00 a.m., London time, on such LIBOR Determination Date.
"Designated LIBOR Page" means "LIBOR Telerate", which shall be the display
designated as page "3750" on the Dow Jones Telerate Service (or such other
page as may replace page "3750" on such service or such other service as
may be nominated by the British Bankers' Association for the purpose of
displaying the London interbank offered rates of major banks), unless
"LIBOR Reuters" is designated in the applicable Pricing Supplement, in
which case "Designated LIBOR Page" means the display designated as page
"LIBO" on the Reuters Monitor Money Rates Service (or such other page as
may replace the LIBO page on such service or such other service as may be
nominated by the British Bankers' Association for the purpose of displaying
London interbank offered rates of major banks). If at least two such
offered rates appear on the Designated LIBOR Page, "LIBOR" for such
Interest Reset Period will be the arithmetic mean of such offered rates as
determined by the Calculation Agent for such LIBOR Note.
(ii) If fewer than two offered rates appear on the Designated LIBOR Page
on such LIBOR Determination Date, the Calculation Agent for such LIBOR Note
will request the principal London offices of each of four major banks in
the London interbank market selected by such Calculation Agent to provide
such Calculation Agent with its offered quotations for deposits in the
Specified Currency for the period of the specified Index Maturity,
commencing on such Interest Reset Date, to prime banks in the London
interbank market at approximately 11:00 a.m., London time, on such LIBOR
Determination Date and in a principal amount equal to an amount of not less
than $1,000,000 or the approximate equivalent thereof in the Specified
Currency that is representative of a single transaction in such market at
such time. If at least two such quotations are provided, "LIBOR" for such
Interest Reset Period will be the arithmetic mean of such quotations. If
fewer than two such quotations are provided, "LIBOR" for such Interest
Reset Period will be the arithmetic mean of rates quoted by three major
banks in The City of New York selected by the Calculation Agent for such
LIBOR Note at approximately 11:00 a.m., New York City time, on such LIBOR
Determination Date for loans in the Specified Currency to leading European
banks, for the period of the specified Index Maturity, commencing on such
Interest Reset Date, and in a principal amount equal to an amount of not
less than $1,000,000 or the approximate equivalent thereof in the Specified
Currency that is representative of a single transaction in such market at
such time; provided, however, that if fewer than three banks selected as
aforesaid by such Calculation Agent are quoting rates as mentioned in this
sentence, "LIBOR" for such Interest Reset Period will be the same as LIBOR
for the immediately preceding Interest Reset Period (or, if there was no
such Interest Reset Period, the Initial Interest Rate).
Treasury Rate Notes
Each Treasury Rate Note will bear interest for each Interest Reset Period at
the interest rate calculated with reference to the Treasury Rate and the Spread
or Spread Multiplier, if any, specified in such Note and in the applicable
Pricing Supplement.
Unless "Constant Maturity" is specified or unless otherwise specified in the
applicable Pricing Supplement, the "Treasury Rate" for each Interest Reset
Period will be the rate for the auction held on the Treasury Rate Determination
Date (as defined below) for such Interest Reset Period of direct obligations of
the United States ("Treasury securities") having the Index Maturity specified
in the applicable Pricing Supplement, as such rate shall be published in
H.15(519) under the heading "U.S. Government Securities-Treasury bills-auction
average (investment)" or, in the event that such rate is not published prior to
3:00 p.m., New York City time, on the Calculation Date (as defined below)
pertaining to such Treasury Rate Determination Date, the auction average rate
(expressed as a bond equivalent on the basis of a year of 365 or 366 days, as
applicable, and applied on a daily basis) on
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such Treasury Rate Determination Date as otherwise announced by the United
States Department of the Treasury. In the event that the results of the auction
of Treasury securities having the specified Index Maturity are not published or
reported as provided above by 3:00 p.m., New York City time, on such
Calculation Date, or if no such auction is held on such Treasury Rate
Determination Date, then the "Treasury Rate" for such Interest Reset Period
shall be calculated by the Calculation Agent for such Treasury Rate Note and
shall be a yield to maturity (expressed as a bond equivalent on the basis of a
year of 365 or 366 days, as applicable, and applied on a daily basis) of the
arithmetic mean of the secondary market bid rates, as of approximately 3:30
p.m., New York City time, on such Treasury Rate Determination Date, of three
leading primary United States government securities dealers selected by such
Calculation Agent for the issue of Treasury securities with a remaining
maturity closest to the specified Index Maturity; provided, however, that if
the dealers selected as aforesaid by such Calculation Agent are not quoting bid
rates as mentioned in this sentence, then the "Treasury Rate" for such Interest
Reset Period will be the same as the Treasury Rate for the immediately
preceding Interest Reset Period (or, if there was no such Interest Reset
Period, the Initial Interest Rate).
The "Treasury Rate Determination Date" for each Interest Reset Period will be
the day of the week in which the Interest Reset Date for such Interest Reset
Period falls on which Treasury securities would normally be auctioned. Treasury
securities are normally sold at auction on Monday of each week, unless that day
is legal holiday, in which case the auction is normally held on the following
Tuesday, except that such auction may be held on the preceding Friday. If, as
the result of a legal holiday, an auction is so held on the preceding Friday,
such Friday will be the Treasury Rate Determination Date pertaining to the
Interest Reset Period commencing in the next succeeding week. If an auction
date shall fall on any day that would otherwise be an Interest Reset Date for a
Treasury Rate Note, then such Interest Reset Date shall instead be the Business
Day immediately following such auction date.
If "Constant Maturity" is specified in the applicable Pricing Supplement, the
"Treasury Rate" for each Interest Reset Period will be the rate that is set
forth in the Federal Reserve Board publication H.15(519) opposite the caption
"U.S. Government/Securities/Treasury Constant Maturities/" in the Index
Maturity with respect to the applicable Constant Maturity Treasury Rate
Determination Date (as defined below). If the H.15(519) is not published, the
"Constant Maturity--Treasury Rate" shall be the rate that was set forth on
Telerate Page 7055, or its successor page (as determined by the Calculation
Agent), on the applicable Constant Maturity Treasury Rate Determination Date
opposite the applicable Index Maturity. If no such rate is set forth, then the
Constant Maturity Treasury Rate for such Interest Reset Period shall be
established by the Calculation Agent as follows. The Calculation Agent will
contact the Federal Reserve Board and request the Constant Maturity Treasury
Rate, in the applicable Index Maturity, for the Constant Maturity Treasury Rate
Determination Date. If the Federal Reserve Board does not provide such
information, then the Constant Maturity Treasury Rate for such Interest Reset
Date will be the arithmetic mean of bid-side quotations, expressed in terms of
yield, reported by three leading U.S. government securities dealers (one of
which may be Salomon Brothers Inc), according to their written records, as of
3:00 p.m. (New York City time) on the Constant Maturity Treasury Rate
Determination Date, for the noncallable U.S. Treasury Note that is nearest in
maturity to the Index Maturity, but not less than exactly the Index Maturity
and for the noncallable U.S. Treasury Note that is nearest in maturity to the
Index Maturity, but not more than exactly the Index Maturity. The Calculation
Agent shall calculate the Constant Maturity Treasury Rate by interpolating to
the Index Maturity based on an actual/actual date count basis, the yield on the
two Treasury Notes selected. If the Calculation Agent cannot obtain three such
adjusted quotations, the Constant Maturity Treasury Rate for such Interest
Reset Date will be the arithmetic mean of all such quotations, or if only one
such quotation is obtained, such quotation, obtained by the Calculation Agent.
In all events, the Calculation Agent shall continue polling dealers until at
least one adjusted yield quotation can be determined.
"The Constant Maturity Treasury Rate Determination Date" shall be the tenth
Business Day prior to the Interest Reset Date for the applicable Interest Reset
Period.
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The Treasury constant maturity rate for a Treasury security maturity (the
"CMT Rate") as published in H.15(519) as of any Business Day is intended to be
indicative of the yield of a U.S. Treasury security having as of such Business
Day a remaining term to maturity equivalent to such maturity. The CMT Rate as
of any Business Day is based upon an interpolation by the U.S. Treasury of the
daily yield curve of outstanding Treasury securities. This yield curve, which
relates the yield on a security to its time to maturity, is based on the over-
the-counter market bid yields on actively traded Treasury securities. Such
yields are calculated from composites of quotations reported by leading U.S.
government securities dealers, which may include Salomon Brothers Inc. Certain
constant maturity yield values are read from the yield curve. Such
interpolation from the yield curve provides a theoretical yield for a Treasury
security having ten years to maturity, for example, even if no outstanding
Treasury security has as of such date exactly ten years remaining to maturity.
The "Calculation Date" pertaining to any Treasury Rate Determination Date or
Constant Maturity Rate Determination Date, as applicable, shall be the tenth
calendar day after such Treasury Rate Determination Date or Constant Maturity
Rate Determination Date, as applicable, or, if such a day is not a Business
Day, the next succeeding Business Day.
SUBSEQUENT INTEREST PERIODS
The Pricing Supplement relating to each Registered Note will indicate whether
the Company has the option to reset the interest rate (in the case of a Fixed
Rate Note) with respect to such Registered Note or the Spread or Spread
Multiplier (in the case of a Floating Rate Note) with respect to such
Registered Note and, if so, the date or dates on which such interest rate or
such Spread or Spread Multiplier, as the case may be, may be reset (each an
"Optional Reset Date").
The Company shall notify the Trustee for a Registered Note whether or not it
intends to exercise such option with respect to such Registered Note at least
45 but not more than 60 days prior to an Optional Reset Date for such
Registered Note. Not later than 40 days prior to such Optional Reset Date, the
Trustee for such Registered Note will mail to the Holder of such Registered
Note a notice (the "Reset Notice"), first class, postage prepaid, indicating
whether the Company has elected to reset the interest rate (in the case of a
Fixed Rate Note) or the Spread or Spread Multiplier (in the case of a Floating
Rate Note) and if so, (i) such new interest rate or such new Spread or Spread
Multiplier, as the case may be; and (ii) the provisions, if any, for redemption
during the period from such Optional Reset Date to the next Optional Reset Date
or, if there is no such next Optional Reset Date, to the Stated Maturity of
such Registered Note (each such period a "Subsequent Interest Period"),
including the date or dates on which or the period or periods during which and
the price or prices at which such redemption may occur during such Subsequent
Interest Period.
Notwithstanding the foregoing, not later than 20 days prior to an Optional
Reset Date for a Registered Note, the Company may, at its option, revoke the
interest rate (in the case of a Fixed Rate Note) or the Spread or Spread
Multiplier (in the case of a Floating Rate Note) provided for in the Reset
Notice with respect to such Optional Reset Date and establish a higher interest
rate (in the case of a Fixed Rate Note) or a higher Spread or Spread Multiplier
(in the case of a Floating Rate Note) for the Subsequent Interest Period
commencing on such Optional Reset Date by causing the Trustee for such
Registered Note to mail notice of such higher interest rate or higher Spread or
Spread Multiplier, as the case may be, first class, postage prepaid, to the
Holder of such Registered Note. Such notice shall be irrevocable. All
Registered Notes with respect to which the interest rate or Spread or Spread
Multiplier is reset on an Optional Reset Date will bear such higher interest
rate (in the case of Fixed Rate Notes) or higher Spread or Spread Multiplier
(in the case of Floating Rate Notes), whether or not tendered for repayment.
The Holder of a Registered Note will have the option to elect repayment of
such Note by the Company on each Optional Reset Date at a price equal to the
principal amount thereof, plus interest
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accrued to such Optional Reset Date. In order for a Registered Note to be
repaid on an Optional Reset Date, the Holder thereof must follow the procedures
set forth below under "Optional Redemption, Repayment and Repurchase" for
optional repayment, except that the period for delivery of such Registered Note
or notification to the Trustee for such Registered Note shall be at least 25
but not more than 35 days prior to such Optional Reset Date, and except that a
Holder who has tendered a Registered Note for repayment pursuant to a Reset
Notice may, by written notice to the Trustee for such Registered Note, revoke
any such tender for repayment until the close of business on the tenth day
prior to such Optional Reset Date.
AMORTIZING NOTES
The Company may from time to time offer Registered Notes ("Amortizing Notes")
on which a portion or all the principal amount is payable prior to Stated
Maturity in accordance with a schedule, by application of a formula, or by
reference to an Index (as defined below). Further information concerning
additional terms and conditions of any Amortizing Notes, including terms for
repayment thereof, will be set forth in the applicable Pricing Supplement.
INDEXED NOTES
The Company may from time to time offer Registered Notes ("Indexed Notes") on
which certain or all interest payments (in the case of an "Indexed Rate Note"),
and/or the principal amount payable at Stated Maturity or earlier redemption or
retirement (in the case of an "Indexed Principal Note"), is determined by
reference to the principal amount of such Notes (or, in the case of an Indexed
Principal Note, to the amount designated in the applicable Pricing Supplement
as the "Face Amount" of such Indexed Note) and by reference to prices, changes
in prices, or differences between prices, of securities, currencies,
intangibles, goods, articles or commodities or by such other objective price,
economic or other measures as are described in the applicable Pricing
Supplement (the "Index"). A description of the Index used in any determination
of an interest or principal payment, and the method or formula by which
interest or principal payments will be determined by reference to such Index,
will be set forth in the applicable Pricing Supplement.
In the case of a Fixed Rate Note, Floating Rate Note or Indexed Rate Note
that is also an Indexed Principal Note, the amount of any interest payment will
be determined by reference to the Face Amount of such Indexed Note unless
specified otherwise in the applicable Pricing Supplement. In the case of an
Indexed Principal Note, the principal amount payable at Stated Maturity or any
earlier redemption or repayment of the Indexed Note may be different from the
Face Amount.
If the determination of the Index on which any interest payment or the
principal amount of an Indexed Note is calculated or announced by a third
party, which may be Salomon Brothers Inc or another affiliate of the Company,
and such third party either suspends the calculation or announcement of such
Index or changes the basis upon which such Index is calculated (other than
changes consistent with policies in effect at the time such Indexed Note was
issued and permitted changes described in the applicable Pricing Supplement),
then such Index shall be calculated for purposes of such Indexed Note by
another third party selected by the Company, which may be Salomon Brothers Inc
or another affiliate of the Company, subject to the same conditions and
controls as applied to the original third party. If for any reason such Index
cannot be calculated on the same basis and subject to the same conditions and
controls as applied to the original third party, then the indexed interest
payments, if any, or any indexed principal amount of such Indexed Note shall be
calculated in the manner set forth in the applicable Pricing Supplement. Any
determination of such third party shall in the absence of manifest error be
binding on all parties.
BOOK-ENTRY SYSTEM
Upon issuance, and subject to the rules of the Depositary, all Fixed Rate
Book-Entry Notes having the same Original Issue Date and otherwise identical
terms will be represented by a single Global
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Security. Each Global Security representing Book-Entry Notes will be deposited
with, or on behalf of, The Depository Trust Company, New York, New York (the
"Depositary"), and registered in the name of a nominee of the Depositary. Book-
Entry Notes will not be exchangeable for Certificated Notes and, except under
the circumstances described in the Prospectus under "Description of Debt
Securities--Global Securities", will not otherwise be issuable as Certificated
Notes.
The Depositary has advised the Company and the Agent as follows: The
Depositary is a limited-purpose trust company organized under New York Banking
Law, a "banking organization" within the meaning of the New York Banking Law, a
member of the Federal Reserve System, a "clearing corporation" within the
meaning of the New York Uniform Commercial Code, and a "clearing agency"
registered pursuant to the provisions of Section 17A of the Securities Exchange
Act of 1934, as amended. The Depositary was created to hold securities of its
participants and to facilitate the clearance and settlement of securities
transactions among its participants in such securities through electronic book-
entry changes in accounts of the participants, thereby eliminating the need for
physical movement of securities certificates. The Depositary's participants
include securities brokers and dealers (including the Agent), banks, trust
companies, clearing corporations, and certain other organizations, some of whom
(and/or their representatives) own the Depositary. Access to the Depositary's
book-entry system is also available to others, such as banks, brokers, dealers
and trust companies that clear through or maintain a custodial relationship
with a participant, either directly or indirectly.
A further description of the Depositary's procedures with respect to Global
Securities representing Book-Entry Notes is set forth in the Prospectus under
"Description of Debt Securities--Global Securities". The Depositary has
confirmed to the Company, the Agent and the Trustees that it intends to follow
such procedures.
EXTENSION OF MATURITY
The Pricing Supplement relating to each Registered Note will indicate whether
the Company has the option to extend the Stated Maturity of such Note for one
or more periods of whole years from one to five (each an "Extension Period") up
to but not beyond the date (the "Final Maturity") set forth in such Pricing
Supplement.
The Company may exercise such option with respect to a Registered Note by
notifying the Trustee for such Registered Note at least 45 but not more than 60
days prior to the old Stated Maturity of such Registered Note. Not later than
40 days prior to the old Stated Maturity of such Registered Note, the Trustee
for such Registered Note will mail to the Holder of such Registered Note a
notice (the "Extension Notice"), first class, postage prepaid. The Extension
Notice will set forth (i) the election of the Company to extend the Stated
Maturity of such Registered Note; (ii) the new Stated Maturity; (iii) in the
case of a Fixed Rate Note, the interest rate applicable to the Extension Period
or, in the case of a Floating Rate Note, the Spread or Spread Multiplier
applicable to the Extension Period; and (iv) the provisions, if any, for
redemption during the Extension Period, including the date or dates on which or
the period or periods during which and the price or prices at which such
redemption may occur during the Extension Period. Upon the mailing by such
Trustee of an Extension Notice to the Holder of a Registered Note, the Stated
Maturity of such Registered Note shall be extended automatically, and, except
as modified by the Extension Notice and as described in the next paragraph,
such Registered Note will have the same terms as prior to the mailing of such
Extension Notice.
Notwithstanding the foregoing, not later than 20 days prior to the old Stated
Maturity of such Registered Note, the Company may, at its option, revoke the
interest rate (in the case of a Fixed Rate Note) or the Spread or Spread
Multiplier (in the case of a Floating Rate Note) provided for in the Extension
Notice for such Registered Note and establish a higher interest rate (in the
case of a Fixed Rate Note) or a higher Spread or Spread Multiplier (in the case
of a Floating Rate Note) for the Extension Period, by causing the Trustee for
such Registered Note to mail notice of such higher interest
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rate or higher Spread or Spread Multiplier, as the case may be, first class,
postage prepaid, to the Holder of such Registered Note. Such notice shall be
irrevocable. All Registered Notes with respect to which the Stated Maturity is
extended will bear such higher interest rate (in the case of Fixed Rate Notes)
or higher Spread or Spread Multiplier (in the case of Floating Rate Notes) for
the Extension Period, whether or not tendered for repayment.
If the Company extends the Stated Maturity of a Registered Note, the Holder
of such Registered Note will have the option to elect repayment of such
Registered Note by the Company on the old Stated Maturity at a price equal to
the principal amount thereof, plus interest accrued to such date. In order for
a Registered Note to be repaid on the old Stated Maturity once the Company has
extended the Stated Maturity thereof, the Holder thereof must follow the
procedures set forth below under "Optional Redemption, Repayment and
Repurchase" for optional repayment, except that the period for delivery of such
Registered Note or notification to the Trustee for such Registered Note shall
be at least 25 but not more than 35 days prior to the old Stated Maturity and
except that a Holder who has tendered a Registered Note for repayment pursuant
to an Extension Notice may, by written notice to the Trustee for such
Registered Note, revoke any such tender for repayment until the close of
business on the tenth day before the old Stated Maturity.
OPTIONAL REDEMPTION, REPAYMENT AND REPURCHASE
The Pricing Supplement relating to each Registered Note will indicate either
that such Note cannot be redeemed prior to its Stated Maturity or that such
Note will be redeemable at the option of the Company, in whole or in part, and
the date or dates (each an "Optional Redemption Date") on which such Note may
be redeemed and the price (the "Redemption Price") at which (together with
accrued interest to such Optional Redemption Date) such Note may be redeemed on
each such Optional Redemption Date. The Company may exercise such option with
respect to a Registered Note by notifying the Trustee for such Note at least 45
days prior to any Optional Redemption Date. Unless otherwise specified in the
applicable Pricing Supplement, at least 30 but not more than 60 days prior to
the date of redemption, such Trustee shall mail notice of such redemption,
first class, postage prepaid, to the Holder of such Registered Note. In the
event of redemption of a Registered Note in part only, a new Note or Notes for
the unredeemed portion thereof shall be issued to the Holder thereof upon the
cancellation thereof. The Registered Notes will not be subject to any sinking
fund.
The Pricing Supplement relating to each Registered Note will also indicate
whether the Holder of such Note will have the option to elect repayment of such
Note by the Company prior to its Stated Maturity, and, if so, such Pricing
Supplement will specify the date or dates on which such Note may be repaid
(each an "Optional Repayment Date") and the price (the "Optional Repayment
Price") at which, together with accrued interest to such Optional Repayment
Date, such Note may be repaid on each such Optional Repayment Date.
In order for a Registered Note to be repaid, the Trustee for such Registered
Note must receive, at least 30 but not more than 45 days prior to an Optional
Repayment Date (i) such Registered Note with the form entitled "Option to Elect
Repayment" on the reverse thereof duly completed, or (ii) a telegram, telex,
facsimile transmission or letter from a member of a national securities
exchange or the National Association of Securities Dealers, Inc. or a
commercial bank or trust company in the United States setting forth the name of
the Holder of such Registered Note, the principal amount of such Registered
Note to be repaid, the certificate number or a description of the tenor and
terms of such Registered Note, a statement that the option to elect repayment
is being exercised thereby and a guarantee that the Registered Note to be
repaid with the form entitled "Option to Elect Repayment" on the reverse of the
Registered Note duly completed will be received by such Trustee not later than
five Business Days after the date of such telegram, telex, facsimile
transmission or letter. If the procedure described in clause (ii) of the
preceding sentence is followed, then such Registered Note and form duly
completed must be received by such Trustee by such fifth Business Day. Any
tender of a Registered Note by the
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Holder for repayment (except pursuant to a Reset Notice or an Extension Notice)
shall be irrevocable. The repayment option may be exercised by the Holder of a
Registered Note for less than the entire principal amount of such Note provided
that the principal amount of such Note remaining outstanding after repayment is
an authorized denomination. Upon such partial repayment, such Registered Note
shall be cancelled and a new Note or Notes for the remaining principal amount
thereof shall be issued in the name of the Holder of such repaid Note.
If a Registered Note is represented by a Global Security, the Depositary's
nominee will be the Holder of such Note and therefore will be the only entity
that can exercise a right to repayment. In order to ensure that the
Depositary's nominee will timely exercise a right to repayment with respect to
a particular Registered Note, the beneficial owner of such Note must instruct
the broker or other direct or indirect participant through which it holds an
interest in such Note to notify the Depositary of its desire to exercise a
right to repayment. Different firms have different cut-off times for accepting
instructions from their customers and, accordingly, each beneficial owner
should consult the broker or other direct or indirect participant through which
it holds an interest in a Registered Note in order to ascertain the cut-off
time by which such an instruction must be given in order for timely notice to
be delivered to the Depositary.
Notwithstanding anything in this Prospectus Supplement to the contrary, if a
Registered Note is an Original Issue Discount Note (other than an Indexed
Note), the amount payable on such Note in the event of redemption or repayment
prior to its Stated Maturity shall be the Amortized Face Amount of such Note as
of the date of redemption or the date of repayment, as the case may be. The
"Amortized Face Amount" of a Discount Note shall be the amount equal to (i) the
Issue Price set forth in the applicable Pricing Supplement plus (ii) that
portion of the difference between the Issue Price and the principal amount of
such Note that has accrued at the Yield to Maturity set forth in the Pricing
Supplement (computed in accordance with generally accepted United States bond
yield computation principles) by such date of redemption or repayment, but in
no event shall the Amortized Face Amount of a Discount Note exceed its
principal amount.
The Company may at any time purchase Registered Notes at any price in the
open market or otherwise. Registered Notes so purchased by the Company may, at
the discretion of the Company, be held or resold or surrendered to the Trustee
for such Notes for cancellation.
DEFEASANCE
The defeasance provisions described in the Prospectus will not be applicable
to the Registered Notes.
CURRENCY RISKS
EXCHANGE RATES AND EXCHANGE CONTROLS
An investment in a Registered Note having a Specified Currency other than
U.S. dollars entails significant risks that are not associated with a similar
investment in a security denominated in U.S. dollars. Such risks include,
without limitation, the possibility of significant changes in rates of exchange
between the U.S. dollar and such Specified Currency and the possibility of the
imposition or modification of foreign exchange controls with respect to such
Specified Currency. Such risks generally depend on factors over which the
Company has no control and which cannot be readily foreseen, such as economic
and political events and the supply of and demand for the relevant currencies.
In recent years, rates of exchange between the U.S. dollar and certain
currencies have been highly volatile, and such volatility may be expected in
the future. Fluctuations in any particular exchange rate that have occurred in
the past are not necessarily indicative, however, of fluctuations in the rate
that may occur during the term of any Registered Note. Depreciation of the
Specified Currency for a Registered Note
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against the U.S. dollar would result in a decrease in the effective yield of
such Note below its coupon rate and, in certain circumstances, could result in
a substantial loss to the investor on a U.S. dollar basis.
Governments have from time to time imposed, and may in the future impose,
exchange controls that could affect exchange rates as well as the availability
of a Specified Currency for making payments in respect of Registered Notes
denominated in such currency. At present, the Company has identified the
following currencies in which payments of principal, premium and interest on
Registered Notes may be made: Australian dollars, Canadian dollars, Danish
kroner, English pounds sterling, French francs, German deutsche marks, Hong
Kong dollars, Italian lire, Japanese yen, New Zealand dollars, U.S. dollars and
ECU. However, the Company may determine at any time to issue Registered Notes
with Specified Currencies other than those listed. There can be no assurances
that exchange controls will not restrict or prohibit payments of principal,
premium or interest in any Specified Currency. Even if there are no actual
exchange controls, it is possible that, on a payment date with respect to any
particular Registered Note, the currency in which amounts then due in respect
of such Note are payable would not be available to the Company. In that event,
the Company will make such payments in the manner set forth under "Description
of Registered Notes--Payment of Principal and Interest" above.
THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS DO NOT DESCRIBE
ALL THE RISKS OF AN INVESTMENT IN REGISTERED NOTES DENOMINATED IN A CURRENCY
OTHER THAN U.S. DOLLARS, AND THE COMPANY DISCLAIMS ANY RESPONSIBILITY TO ADVISE
PROSPECTIVE PURCHASERS OF SUCH RISKS AS THEY EXIST AT THE DATE OF THIS
PROSPECTUS SUPPLEMENT OR AS SUCH RISKS MAY CHANGE FROM TIME TO TIME.
PROSPECTIVE PURCHASERS SHOULD CONSULT THEIR OWN FINANCIAL AND LEGAL ADVISORS AS
TO THE RISKS ENTAILED BY AN INVESTMENT IN REGISTERED NOTES DENOMINATED IN A
CURRENCY OTHER THAN U.S. DOLLARS. SUCH NOTES ARE NOT AN APPROPRIATE INVESTMENT
FOR PERSONS WHO ARE UNSOPHISTICATED WITH RESPECT TO FOREIGN CURRENCY
TRANSACTIONS.
The information set forth in this Prospectus Supplement is directed to
prospective purchasers of Registered Notes who are United States residents, and
the Company disclaims any responsibility to advise prospective purchasers who
are residents of countries other than the United States with respect to any
matters that may affect the purchase or holding of, or receipt of payments of
principal, premium or interest in respect of, Registered Notes. Such persons
should consult their own advisors with regard to such matters.
Any Pricing Supplement relating to Registered Notes having a Specified
Currency other than U.S. dollars will contain a description of any material
exchange controls affecting such currency and any other required information
concerning such currency.
PAYMENT CURRENCY
Except as set forth below, if payment in respect of a Registered Note is
required to be made in a Specified Currency other than U.S. dollars and such
currency is unavailable due to the imposition of exchange controls or other
circumstances beyond the Company's control or is no longer used by the
government of the country issuing such currency or for the settlement of
transactions by public institutions of or within the international banking
community, then all payments in respect of such Note shall be made in U.S.
dollars until such currency is again available or so used. The amounts so
payable on any date in such currency shall be converted into U.S. dollars on
the basis of the most recently available Market Exchange Rate for such currency
or as otherwise indicated in the applicable Pricing Supplement. Any payment in
respect of such Note made under such circumstances in U.S. dollars will not
constitute an Event of Default under the Indenture under which such Note shall
have been issued.
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If payment in respect of a Registered Note is required to be made in ECU and
ECU are no longer used in the European Monetary System, then all payments in
respect of such Note shall be made in U.S. dollars until ECU are again so used.
The amount of each payment in U.S. dollars shall be computed on the basis of
the equivalent of ECU in U.S. dollars, determined as described below, as of the
second Business Day prior to the date on which such payment is due.
The equivalent of ECU in U.S. dollars as of any date (the "Day of Valuation")
shall be determined for Series D Notes by the Trustee for such Notes and for
Series E Notes by the Exchange Rate Agent, on the following basis. The
component currencies of ECU for this purpose (the "Components") shall be the
currency amounts that were components of ECU as of the last date on which ECU
were used in the European Monetary System. The equivalent of ECU in U.S.
dollars shall be calculated by aggregating the U.S. dollar equivalents of the
Components. The U.S. dollar equivalent of each of the Components shall be
determined by such Trustee or such Exchange Rate Agent, as the case may be, on
the basis of the most recently available Market Exchange Rates for such
Components or as otherwise indicated in the applicable Pricing Supplement.
If the official unit of any component currency is altered by way of
combination or subdivision, the number of units of that currency as a Component
shall be divided or multiplied in the same proportion. If two or more component
currencies are consolidated into a single currency, the amounts of those
currencies as Components shall be replaced by an amount in such single currency
equal to the sum of the amounts of the consolidated component currencies
expressed in such single currency. If any component currency is divided into
two or more currencies, the amount of that currency as a Component shall be
replaced by amounts of such two or more currencies, each of which shall be
equal to the amount of the former component currency divided by the number of
currencies into which that currency was divided.
All determinations referred to above made by the Trustee for the Series D
Notes or the Exchange Rate Agent, as the case may be, shall be at its sole
discretion and shall, in the absence of manifest error, be conclusive for all
purposes and binding on holders of Registered Notes.
FOREIGN CURRENCY JUDGMENTS
The Notes will be governed by and construed in accordance with the law of the
State of New York. Courts in the United States customarily have not rendered
judgments for money damages denominated in any currency other than the U.S.
dollar. A 1987 amendment to the Judiciary Law of the State of New York
provides, however, that an action based upon an obligation denominated in a
currency other than U.S. dollars will be rendered in the foreign currency of
the underlying obligation and converted into U.S. dollars at the rate of
exchange prevailing on the date of the entry of the judgment or decree.
RISKS OF INDEXED NOTES
An investment in Indexed Notes may entail significant risks that are not
associated with a similar investment in a debt instrument that has a fixed
principal amount, is denominated in U.S. dollars and bears interest at either a
fixed rate or a floating rate determined by reference to nationally published
interest rate references. The risks of a particular Indexed Note will depend on
the terms of such Indexed Note, but may include, without limitation, the
possibility of significant changes in the prices of securities, currencies,
intangibles, goods, articles or commodities or of other objective price,
economic or other measures making up the relevant Index (the "Underlying
Assets"). Such risks generally depend on factors over which the Company has no
control and which cannot readily be foreseen, such as economic and political
events and the supply of and demand for the Underlying Assets. In recent years,
currency exchange rates and prices for various Underlying Assets have been
highly volatile, and such volatility may be expected in the future.
Fluctuations in any such rates or prices that have occurred in the past are not
necessarily indicative, however, of fluctuations that may occur during the term
of any Indexed Note.
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In considering whether to purchase Indexed Notes, investors should be aware
that the calculation of amounts payable in respect of Indexed Notes may involve
reference to an Index determined by an affiliate of the Company or to prices
which are published solely by third parties or entities which are not subject
to regulation under the laws of the United States.
THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS DO NOT DESCRIBE
ALL THE RISKS ON AN INVESTMENT IN INDEXED NOTES, AND THE COMPANY DISCLAIMS ANY
RESPONSIBILITY TO ADVISE PROSPECTIVE PURCHASERS OF SUCH RISKS AS THEY EXIST AT
THE DATE OF THIS PROSPECTUS SUPPLEMENT OR AS SUCH RISKS MAY CHANGE FROM TIME TO
TIME. THE RISK OF LOSS AS A RESULT OF THE LINKAGE OF PRINCIPAL OR INTEREST
PAYMENTS ON INDEXED NOTES TO AN INDEX AND TO THE UNDERLYING ASSETS CAN BE
SUBSTANTIAL. PROSPECTIVE PURCHASERS SHOULD CONSULT THEIR OWN FINANCIAL AND
LEGAL ADVISORS AS TO THE RISKS ENTAILED BY AN INVESTMENT IN INDEXED NOTES. AN
INDEXED NOTE IS NOT AN APPROPRIATE INVESTMENT FOR PERSONS WHO ARE
UNSOPHISTICATED WITH RESPECT TO TRANSACTIONS IN THE UNDERLYING ASSETS OF ANY
INDEX RELEVANT TO THAT INDEXED NOTE.
UNITED STATES TAX CONSIDERATIONS
The following is a summary of the principal U.S. Federal income tax
consequences resulting from the beneficial ownership of Registered Notes by
certain persons. This summary does not purport to consider all the possible
U.S. Federal tax consequences of the purchase, ownership or disposition of the
Registered Notes and is not intended to reflect the individual tax position of
any beneficial owner. It deals only with Registered Notes held as capital
assets. Moreover, except as expressly indicated, it addresses initial
purchasers and does not address beneficial owners that may be subject to
special tax rules, such as banks, insurance companies, dealers in securities or
currencies, purchasers that hold Registered Notes (or currencies or composite
currencies other than U.S. dollars ("Foreign Currency")) as a hedge against
currency risks or as part of a straddle with other investments or as part of a
"synthetic security" or other integrated investment (including a "conversion
transaction") comprised of a Registered Note and one or more other investments,
or purchasers that have a "functional currency" other than the U.S. dollar.
Except to the extent discussed below under "Non-U.S. Holders", this summary
applies only to U.S. Persons (as defined in the Prospectus) or any purchaser
that is otherwise subject to U.S. Federal income tax on a net income basis in
respect of a Registered Note (a "U.S. Holder"). This summary is based upon the
U.S. Federal tax laws and regulations as now in effect and as currently
interpreted and does not take into account possible changes in such tax laws or
such interpretations, any of which may be applied retroactively. It does not
include any description of the tax laws of any state, local or foreign
governments that may be applicable to the Registered Notes or holders thereof
and it does not discuss the tax treatment of Registered Notes denominated in
certain hyperinflationary currencies or dual currency Registered Notes. Persons
considering the purchase of Registered Notes should consult their own tax
advisors concerning the application of the U.S. Federal tax laws to their
particular situations as well as any consequences to them under the laws of any
other taxing jurisdiction.
U.S. HOLDERS
PAYMENTS OF INTEREST
In general, interest on a Registered Note, whether payable in U.S. dollars or
a Foreign Currency (other than certain payments on a Discount Note, as defined
and described below under "Original Issue Discount"), will be taxable to a U.S.
Holder as ordinary income at the time it is received or accrued, depending on
the holder's method of accounting for tax purposes. If an interest payment is
denominated in or determined by reference to a Foreign Currency, then special
rules, described below under "Foreign Currency Notes", apply.
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ORIGINAL ISSUE DISCOUNT
The following discussion summarizes the United States Federal income tax
consequences to U.S. Holders of Registered Notes issued with original issue
discount ("OID"). U.S. Holders of Registered Notes issued with OID generally
will be subject to special tax accounting rules provided in the Internal
Revenue Code of 1986, as amended (the "Code"). On February 2, 1994, the
Treasury Department published final regulations (the "OID Regulations"), which
expand and illustrate the rules provided by the Code.
Special rules apply to OID on a Discount Note that is denominated in Foreign
Currency. See "Foreign Currency Notes--Foreign Currency Discount Notes".
General. A Registered Note will be treated as issued with OID (a "Discount
Note") if the excess of the Registered Note's "stated redemption price at
maturity" over its issue price is greater than a de minimis amount (set forth
in the Code and the OID Regulations). Generally, the issue price of a
Registered Note (or any Registered Note that is part of an issue of Registered
Notes) will be the first price at which a substantial amount of Registered
Notes that are part of such issue of Registered Notes are sold (other than to
underwriters, placement agents or wholesalers). Under the OID Regulations, the
"stated redemption price at maturity" of a Registered Note is the sum of all
payments provided by the Note that are not payments of "qualified stated
interest". A "qualified stated interest" payment includes any stated interest
payment on a Registered Note that is unconditionally payable at least annually
at a single fixed rate (or at certain floating rates) that appropriately takes
into account the length of the interval between stated interest payments.
In general, if the excess of a Registered Note's stated redemption price at
maturity over its issue price is less than 1/4 of one percent of the Note's
stated redemption price at maturity multiplied by the number of complete years
to maturity, then such excess constitutes "de minimis OID". Under the OID
Regulations, unless the election described below under "Election to Treat All
Interest as Original Issue Discount" is made, such a Note will not be treated
as issued with OID (in which case the following paragraphs under "Original
Issue Discount" will not apply) and a U.S. Holder of such a Note will recognize
capital gain with respect to such de minimis OID as stated principal payments
on the Note are made. The amount of such gain with respect to each such payment
will equal the product of the total amount of the Registered Note's de minimis
OID and a fraction, the numerator of which is the amount of the principal
payment made and the denominator of which is the stated principal amount of the
Registered Note.
In certain cases, Registered Notes that bear stated interest and are issued
at par may be deemed to bear OID for Federal income tax purposes, with the
result that the inclusion of interest in income for Federal income tax purposes
may vary from the actual cash payments of interest made on such Notes,
generally accelerating income for cash method taxpayers. Under the OID
Regulations, a Registered Note may be a Discount Note where, among other
things, (i) a Note bearing interest at a floating rate (a "Floating Rate Note")
provides for a maximum interest rate or a minimum interest rate that is
reasonably expected as of the issue date to cause the yield on the debt
instrument to be significantly less, in the case of a maximum rate, or more, in
the case of a minimum rate, than the expected yield determined without the
maximum or minimum rate, as the case may be; (ii) a Floating Rate Note provides
for significant front-loading or back-loading of interest; or (iii) certain
Registered Notes bear interest at a floating rate in combination with one or
more other floating or fixed rates. Notice will be given in the applicable
Pricing Supplement when the Company determines that a particular Registered
Note will be a Discount Note.
The Code and the OID Regulations provide rules that require a U.S. Holder of
a Discount Note having a maturity of more than one year from its date of issue
to include OID in gross income before
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the receipt of cash attributable to such income, without regard to the holder's
method of accounting for tax purposes. The amount of OID includible in gross
income by a U.S. Holder of a Discount Note is the sum of the "daily portions"
of OID with respect to the Discount Note for each day during the taxable year
or portion of the taxable year in which the U.S. Holder holds such Discount
Note ("accrued OID"). The daily portion is determined by allocating to each day
in any "accrual period" a pro rata portion of the OID allocable to that accrual
period. Under the OID Regulations, accrual periods with respect to a Note may
be any set of periods (which may be of varying lengths) selected by the U.S.
Holder as long as (i) no accrual period is longer than one year and (ii) each
scheduled payment of interest or principal on the Note occurs on the first day
or final day of an accrual period.
The amount of OID allocable to an accrual period equals the excess of (a) the
product of the DIscount Note's adjusted issue price at the beginning of the
accrual period and the Discount Note's yield to maturity (determined on the
basis of compounding at the close of each accrual period and properly adjusted
for the length of the accrual period) over (b) the sum of any payments of
qualified stated interest on the Discount Note allocable to the accrual period.
In the case of a Discount Note that is a Floating Rate Note, both the yield to
maturity and the qualified stated interest will be determined for these
purposes as though the Note will bear interest in all periods at a fixed rate
generally equal to the rate that would be applicable to interest payments on
the Note on its date of issue or, in the case of certain Floating Rate Notes,
the rate that reflects the yield that is reasonably expected for the Note.
(Additional rules may apply if interest on a Floating Rate Note is based on
more than one interest index). The "adjusted issue price" of a Discount Note at
the beginning of the first accrual period is the issue price and at the
beginning of any accrual period thereafter is (x) the sum of the issue price of
such Discount Note, the accrued OID for each prior accrual period (determined
without regard to the amortization of any acquisition premium or bond premium,
which are discussed below), and the amount of any qualified stated interest on
the Note that has accrued prior to the beginning of the accrual period but is
not payable until a later date, less (y) any prior payments on the Discount
Note that were not qualified stated interest payments. If a payment (other than
a payment of qualified stated interest) is made on the first day of an accrual
period, then the adjusted issue price at the beginning of such accrual period
is reduced by the amount of the payment. All payments on a Discount Note (other
than a payment of qualified stated interest) generally will be viewed first as
payments of previously accrued OID (to the extent thereof), with payments made
for the earliest accrual periods first, and then as a payment of principal. If
a portion of the initial purchase price of a Registered Note is attributable to
interest that accrued prior to the Note's issue date, the first stated interest
payment on the Note is to be made within one year of the Note's issue date and
such payment will equal or exceed the amount of pre-issuance accrued interest,
then the issue price will be decreased by the amount of pre-issuance accrued
interest, in which case a portion of the first stated interest payment will be
treated as a return of the excluded pre-issuance accrued interest and not as an
amount payable on the Registered Note.
The OID Regulations contain certain special rules that generally allow any
reasonable method to be used in determining the amount of OID allocable to a
short initial accrual period (if all other accrual periods are of equal length)
and require that the amount of OID allocable to the final accrual period equal
the excess of the amount payable at the maturity of the Discount Note (other
than any payment of qualified stated interest) over the Discount Note's
adjusted issue price as of the beginning of such final accrual period. In
addition, if an interval between payments of qualified stated interest on a
Discount Note contains more than one accrual period, then the amount of
qualified stated interest payable at the end of such interval is allocated pro
rata (on the basis of their relative lengths) between the accrual periods
contained in the interval.
U.S. Holders of Discount Notes generally will have to include in income
increasingly greater amounts of OID over the life of the Notes.
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Acquisition Premium. A U.S. Holder that purchases a Discount Note for an
amount in excess of its issue price but less than its stated redemption price
at maturity (any such excess being "acquisition premium"), and that does not
make the election described below under "Original Issue Discount--Election to
Treat All Interest as Original Issue Discount", is permitted to reduce the
daily portions of OID by a fraction, the numerator of which is the excess of
the U.S. Holder's purchase price for the Note over the issue price, and the
denominator of which is the excess of the sum of all amounts payable on the
Note after the purchase date, other than payments of qualified stated interest,
over the Note's issue price. Alternatively, a U.S. Holder may elect to compute
OID accruals as described under "Original Issue Discount--General" above,
treating the U.S. Holder's purchase price as the issue price.
Optional Redemption. If the Company has an option to redeem a Discount Note,
or the Holder has an option to cause a Note to be repurchased, prior to the
Discount Note's stated maturity, such option will be presumed to be exercised
if, by utilizing any date on which such Note may be redeemed or repurchased as
the maturity date and the amount payable on such date in accordance with the
terms of such Note (the "redemption price") as the stated redemption price at
maturity, the yield on the Discount Note would be (i) in the case of an option
of the Company, lower than its yield to stated maturity, or (ii) in the case of
an option of the Holder, higher than its yield to stated maturity. If such
option is not in fact exercised when presumed to be exercised, the Discount
Note would be treated solely for OID purposes as if it were redeemed or
repurchased, and a new Discount Note were issued, on the presumed exercise date
for an amount equal to the Discount Note's adjusted issue price on that date.
Short-Term Notes. Under the Code, special rules apply with respect to OID on
Registered Notes that mature one year or less from the date of issuance
("Short-Term Notes"). In general, a cash basis U.S. Holder of a Short-Term Note
is not required to include OID in income as it accrues for United States
Federal income tax purposes unless it elects to do so. Accrual basis U.S.
Holders and certain other U.S. Holders, including banks, regulated investment
companies, dealers in securities and cash basis U.S. Holders who so elect, are
required to include OID in income as it accrues on Short-Term Notes on a
straight-line basis or, at the election of the U.S. Holder, under the constant
yield method (based on daily compounding). In the case of U.S. Holders not
required and not electing to include OID in
income currently, any gain realized on the sale or retirement of Short-Term
Notes will be ordinary income to the extent of the OID accrued on a straight-
line basis (unless an election is made to accrue the original issue discount
under the constant yield method) through the date of sale or retirement. U.S.
Holders who are not required and do not elect to include OID on Short-Term
Notes in income as it accrues will be required to defer deductions for interest
on borrowings allocable to Short-Term Notes in an amount not exceeding the
deferred income until the deferred income is realized.
Any U.S. Holder of a Short-Term Note can elect to apply the rules in the
preceding paragraph taking into account the amount of "acquisition discount",
if any, with respect to the Note (rather than the OID with respect to such
Note). Acquisition discount is the excess of the stated redemption price at
maturity of the Short-Term Note over the U.S. Holder's purchase price therefor.
Acquisition discount will be treated as accruing on a ratable basis or, at the
election of the U.S. Holder, on a constant yield basis.
For purposes of determining the amount of OID subject to these rules, the OID
Regulations provide that no interest payments on a Short-Term Note are
qualified stated interest, but instead such interest payments are included in
the Short-Term Note's stated redemption price at maturity.
NOTES PURCHASED AT A PREMIUM
Under the Code, a U.S. Holder that purchases a Registered Note for an amount
in excess of its stated redemption price at maturity will not be subject to the
OID rules and may elect to treat such excess as "amortizable bond premium", in
which case the amount of qualified stated interest required to be included in
the U.S. Holder's income each year with respect to interest on the Registered
Note
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will be reduced by the amount of amortizable bond premium allocable (based on
the Note's yield to maturity) to such year. Any election to amortize bond
premium is applicable to all bonds (other than bonds the interest on which is
excludible from gross income) held by the U.S. Holder at the beginning of the
first taxable year to which the election applies or thereafter acquired by the
U.S. Holder, and may not be revoked without the consent of the Internal Revenue
Service ("IRS"). See also "Original Issue Discount--Election to Treat All
Interest as Original Issue Discount".
NOTES PURCHASED AT A MARKET DISCOUNT
A Registered Note, other than a Short-Term Note, will be treated as issued at
a market discount (a "Market Discount Note") if the amount for which a U.S.
Holder purchased the Registered Note is less than the Note's issue price,
subject to a de minimis rule similar to the rule relating to de minimis OID
described under "Original Issue Discount--General".
In general, any gain recognized on the maturity or disposition of a Market
Discount Note will be treated as ordinary income to the extent that such gain
does not exceed the accrued market discount on such Note. Alternatively, a U.S.
Holder of a Market Discount Note may elect to include market discount in income
currently over the life of the Market Discount Note. Such an election applies
to all debt instruments with market discount acquired by the electing U.S.
Holder on or after the first day of the first taxable year to which the
election applies and may not be revoked without the consent of the IRS.
Market discount accrues on a straight-line basis unless the U.S. Holder
elects to accrue such discount on a constant yield to maturity basis. Such an
election is applicable only to the Market Discount Note with respect to which
it is made and is irrevocable. A. U.S. Holder of a Market Discount Note that
does not elect to include market discount in income currently generally will be
required to defer deductions for interest on borrowings allocable to such Note
in an amount not exceeding the accrued market discount on such Note until the
maturity or disposition of such Note.
The market discount rules do not apply to a Short-Term Note.
ELECTION TO TREAT ALL INTEREST AS ORIGINAL ISSUE DISCOUNT
Any U.S. Holder may elect to include in gross income all interest that
accrues on a Registered Note using the constant yield method described above
under the heading "Original Issue Discount--General," with the modifications
described below. For purposes of this election, interest includes stated
interest, OID, de minimis OID, market discount, acquisition discount, de
minimis market discount and unstated interest, as adjusted by any amortizable
bond premium or acquisition premium.
In applying the constant yield method to a Registered Note with respect to
which this election has been made, the issue price of such Note will equal the
electing U.S. Holder's adjusted basis in the Note immediately after its
acquisition, the issue date of the Note will be the date of its acquisition by
the electing US. Holder, and no payments on the Note will be treated as
payments of qualified stated interest. This election is generally applicable
only to the Registered Note with respect to which it is made and may not be
revoked without the consent of the IRS. If this election is made with respect
to a Registered Note with amortizable bond premium, the electing U.S. Holder
will be deemed to have elected to apply amortizable bond premium against
interest with respect to all debt instruments with amortizable bond premium
(other than debt instruments the interest on which is excludible from gross
income) held by such electing U.S. Holder as of the beginning of the taxable
year in which the election is made or any debt instruments acquired thereafter.
The deemed election with respect to amortizable bond premium may not be revoked
without the consent of the IRS.
If the election described above to apply the constant yield method to all
interest on a Registered Note is made with respect to a Market Discount Note,
as defined above, then the electing U.S. Holder
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will be treated as having made the election discussed above under "Notes
Purchased at a Market Discount" to include market discount in income currently
over the life of all debt instruments held or thereafter acquired by such U.S.
Holder.
PURCHASE, SALE AND RETIREMENT OF THE NOTES
General. A U.S. Holder's tax basis in a Registered Note will generally equal
its U.S. dollar cost (which, in the case of a Note purchased with a Foreign
Currency, will be the U.S. dollar value of the purchase price on the date of
purchase), increased by the amount of any OID or market discount (or
acquisition discount, in the case of a Short-Term Note) included in the U.S.
Holder's income with respect to the Note and the amount, if any, of income
attributable to de minimis OID included in the U.S. Holder's income with
respect to the Note, and reduced by the sum of (i) the amount of any payments
that are not qualified stated interest payments, and (ii) the amount of any
amortizable bond premium applied to reduce interest on the Note. A U.S. Holder
generally will recognize gain or loss on the sale or retirement of a Registered
Note equal to the difference between the amount realized on the sale or
retirement and the U.S. Holder's tax basis in such Note. The amount realized on
a sale or retirement for an amount in Foreign Currency will be the U.S. dollar
value of such amount on the date of sale or retirement. Except to the extent
described above under "Original Issue Discount--Short Term Notes" or "Market
Discount" or below under "Foreign Currency Notes--Exchange Gain or Loss", and
except to the extent attributable to accrued but unpaid interest, gain or loss
recognized on the sale or retirement of a Registered Note will be capital gain
or loss and will be long-term capital gain or loss if the Note was held for
more than one year.
FOREIGN CURRENCY NOTES
Interest Payments. If an interest payment is denominated in or determined by
reference to a Foreign Currency, the amount of income recognized by a cash
basis U.S. Holder will be the U.S. dollar value of the interest payment, based
on the exchange rate in effect on the date of receipt, regardless of whether
the payment is in fact converted into U.S. dollars. Accrual basis U.S. Holders
may determine the amount of income recognized with respect to such interest
payments in accordance with either of two methods. Under the first method, the
amount of income recognized will be based on the average exchange rate in
effect during the interest accrual period (or, with respect to an accrual
period that spans two taxable years, the partial period within the taxable
year). Under the second method, an accrual basis U.S. Holder may elect to
translate interest income into U.S. dollars at the spot exchange rate in effect
on the last day of the accrual period or, in the case of an accrual period that
spans two taxable years, at the exchange rate in effect on the last day of the
partial period within the taxable year. Upon receipt of an interest payment
(including a payment attributable to accrued but unpaid interest upon the sale
or retirement of a Note) determined by reference to a Foreign Currency, an
accrual basis U.S. Holder will recognize ordinary income or loss measured by
the difference between the exchange rate used to accrue such income and the
exchange rate in effect on the date of receipt, regardless of whether the
payment is in fact converted into U.S. dollars. Additionally, under the second
method, if a payment of interest is actually received within 5 business days of
the last day of the accrual period or taxable year, an accrual basis U.S.
Holder applying the second method may instead translate such accrued interest
into U.S. dollars at the spot exchange rate in effect on the day of actual
receipt (in which case no exchange gain or loss will result). Any election to
apply the second method will apply to all debt instruments held by the U.S.
Holder at the beginning of the first taxable year to which the election applies
or thereafter acquired by the U.S. Holder and may not be revoked without the
consent of the IRS.
Exchange of Amounts in Other than U.S. Dollars. Foreign Currency received as
interest on a Note or on the sale or retirement of a Note will have a tax basis
equal to its U.S. dollar value at the time such interest is received or at the
time of such sale or retirement, as the case may be. Foreign Currency that
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is purchased will generally have a tax basis equal to the U.S. dollar value of
the Foreign Currency on the date of purchase. Any gain or loss recognized on a
sale or other disposition of a Foreign Currency (including its use to purchase
Notes or upon exchange for U.S. dollars) will be ordinary income or loss.
Foreign Currency Discount Notes. OID for any accrual period on a Discount
Note that is denominated in a Foreign Currency will be determined in the
Foreign Currency and then translated into U.S. dollars in the same manner as
stated interest accrued by an accrual basis U.S. Holder. Upon receipt of an
amount attributable to original issue discount (whether in connection with a
payment of interest or the sale or retirement of a Note), a U.S. Holder may
recognize ordinary income or loss.
Amortizable Bond Premium. In the case of a Registered Note that is
denominated in a Foreign Currency, bond premium will be computed in units of
Foreign Currency, and amortizable bond premium will reduce interest income in
units of the Foreign Currency. At the time amortized bond premium offsets
interest income, a U.S. Holder may realize ordinary income or loss, measured by
the difference between exchange rates at that time and at the time of the
acquisition of the Registered Notes.
Market Discount. Market discount is determined in units of the Foreign
Currency, accrued market discount that is required to be taken into account on
the maturity or earlier disposition of a Registered Note is translated into
U.S. dollars at the exchange rate on the maturity or the disposition date, as
the case may be (and no part is treated as exchange gain or loss), accrued
market discount currently
includible in income by an electing U.S. Holder is translated into U.S. dollars
at the average exchange rate for the accrual period (or the partial accrual
period during which the U.S. Holder held the Registered Note) and exchange gain
or loss is determined on maturity or disposition of the Registered Note (as the
case may be) in the manner described in "Foreign Currency Notes--Interest
Payments", above, with respect to the computation of exchange gain or loss on
the receipt of accrued interest by an accrual method holder.
Exchange Gain or Loss. Gain or loss recognized by a U.S. Holder on the sale
or retirement of a Registered Note that is attributable to changes in exchange
rates will be treated as ordinary income or loss. However, exchange gain or
loss is taken into account only to the extent of total gain or loss realized on
the transaction.
INDEXED NOTES
The tax treatment of a U.S. Holder of an Indexed Note will depend on factors
including the specific index or indices used to determine indexed payments on
the Note and the amount and timing of any noncontingent payments of principal
and interest. Tax considerations relevant to holders of Indexed Notes will be
discussed in the applicable Pricing Supplement.
NON-U.S. HOLDERS
Subject to the discussion of backup withholding below, payments of principal
(and premium, if any) and interest (including OID) by the Company or any agent
of the Company (acting in its capacity as such) to any holder of a Note that is
not a U.S. Holder (a "Non-U.S. Holder") will not be subject to U.S. Federal
withholding tax, provided, in the case of interest (including OID), that (i)
the Non-U.S. Holder does not actually or constructively own 10% or more of the
total combined voting power of all classes of stock of the Company entitled to
vote, (ii) the Non-U.S. Holder is not a controlled foreign corporation for U.S.
tax purposes that is related to the Company (directly or indirectly) through
stock ownership and (iii) either (A) the Non-U.S. Holder certifies to the
Company or its agent under penalties of perjury that it is not a United States
person and provides its name and address or (B) a securities clearing
organization, bank or other financial institution that holds customers'
securities in the ordinary course of its trade or business (a "financial
institution") and holds the Registered Note certifies to the Company or its
agent under penalties of perjury that such statement has been received from the
Non-U.S. Holder by it or by another financial institution and furnishes the
payor with a copy thereof.
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If a Non-U.S. Holder is engaged in a trade or business in the United States
and interest (including OID) on the Registered Note is effectively connected
with the conduct of such trade or business, the Non-U.S. Holder, although
exempt from the withholding tax discussed in the preceding paragraph (provided
that such holder furnishes a properly executed IRS Form 4224 on or before any
payment date to claim such exemption), may be subject to U.S. Federal income
tax on such interest (or OID) in the same manner as if it were a U.S. Holder.
In addition, if the Non-U.S. Holder is a foreign corporation, it may be subject
to a branch profits tax equal to 30% of its effectively connected earnings and
profits for the taxable year, subject to certain adjustments. For purposes of
the branch profits tax, interest (including OID) on a Note will be included in
the earnings and profits of such holder if such interest (or OID) is
effectively connected with the conduct by such holder of a trade or business in
the United States.
Any capital gain, market discount or exchange gain realized on the sale,
exchange, retirement or other disposition of the Registered Note by a Non-U.S.
Holder will not be subject to U.S. Federal income or withholding taxes if (i)
such gain is not effectively connected with a U.S. trade or business of the
Non-U.S. Holder and (ii) in the case of an individual, such Non-U.S. Holder (A)
is not present in the United States for 183 days or more in the taxable year of
the sale, exchange, retirement or other disposition or (B) does not have a tax
home (as defined in Section 911(d)(3) of the Code) in the United States in the
taxable year of the sale, exchange, retirement or other disposition and the
gain is not attributable to an office or other fixed place of business
maintained by such individual in the United States.
Registered Notes held by an individual who is neither a citizen nor a
resident of the United States for U.S. Federal tax purposes at the time of such
individual's death will not be subject to U.S. Federal estate tax, provided
that the income from such Notes was not or would not have been effectively
connected with a U.S. trade or business of such individual and that such
individual qualified for the exemption from U.S. Federal withholding tax
(without regard to the certification requirements) described above.
PURCHASERS OF REGISTERED NOTES WHO ARE NON-U.S. HOLDERS SHOULD CONSULT THEIR
OWN TAX ADVISORS WITH RESPECT TO THE POSSIBLE APPLICABILITY OF UNITED STATES
WITHHOLDING AND OTHER TAXES UPON INCOME REALIZED IN RESPECT OF THE NOTES.
BACKUP WITHHOLDING AND INFORMATION REPORTING
For each calendar year in which the Notes are outstanding, the Company is
required to provide the IRS with certain information, including the holder's
name, address and taxpayer identification number (either the holder's Social
Security number or its employer identification number, as the case may be), the
aggregate amount of principal and interest paid (including OID, if any) to that
holder during the calendar year and the amount of tax withheld, if any. This
obligation, however, does not apply with respect to certain U.S. holders,
including corporations, tax-exempt organizations, qualified pension and profit
sharing trusts and individual retirement accounts.
In the event that a U.S. holder subject to the reporting requirements
described above fails to supply its taxpayer identification number in the
manner required by applicable law, provides an incorrect taxpayer
identification number that is used by a payor on an information return or
underreports its tax liability, the Company, its agents or paying agents or a
broker may be required to "backup" withhold a tax equal to 31 percent of each
payment of interest (including OID) and principal (and premium, if any) on the
Notes. This backup withholding is 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.
Under current Treasury Regulations, backup withholding and information
reporting will not apply to payments made by the Company or any agent thereof
(in its capacity as such) to a holder of a Note
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that is not a U.S. person if such holder has provided the required
certification that it is not a U.S. person as set forth in clause (iii) in the
first paragraph under "Non-U.S. Holders" above, or has otherwise established an
exemption (provided that neither the Company nor its agent has actual knowledge
that the holder is a U.S. person or that the conditions of any exemption are
not in fact satisfied).
Payment of the proceeds from the sale of a Note to or through a foreign
office of a broker will not be subject to information reporting or backup
withholding, except that if the broker is a 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 a Note 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 taxpayer identification number
or otherwise establishes an exemption from information reporting and backup
withholding.
PLAN OF DISTRIBUTION
The Registered Notes are being offered on a continuous basis by the Company
through the Agent, which has agreed to use its reasonable efforts to solicit
orders to purchase Registered Notes. The Company will have the sole right to
accept orders to purchase Registered Notes and may reject proposed purchases in
whole or in part. The Agent shall have the right, in its discretion reasonably
exercised and without notice to the Company, to reject any proposed purchase of
Registered Notes in whole or in part. The Company will pay the Agent a
commission of from not more than .125% to not more than .750% of the principal
amount of Registered Notes sold through it, depending upon the Stated Maturity.
The Company may also sell Registered Notes at a discount to the Agent for its
own account or for resale to one or more purchasers at varying prices related
to prevailing market prices at the time of resale or, if set forth in the
applicable Pricing Supplement, at a fixed public offering price, as determined
by the Agent. After any initial public offering of Registered Notes to be
resold to purchasers at a fixed public offering price, the public offering
price and any concession or discount may be changed. In addition, the Agent may
offer Registered Notes purchased by it as principal to other dealers.
Registered Notes sold by the Agent to a dealer may be sold at a discount and,
unless otherwise specified in the applicable Pricing Supplement, such discount
allowed will not be in excess of the discount received by the Agent from the
Company. Unless otherwise specified in the applicable Pricing Supplement, any
Registered Note purchased by the Agent as principal will be purchased at 100%
of the principal amount or face amount thereof less a percentage equal to the
commission applicable to an agency sale of a Registered Note of identical
maturity.
No Registered Note will have an established trading market when issued. The
Registered Notes will not be listed on any securities exchange. The Agent may
make a market in the Registered Notes, but the Agent is not obligated to do so
and may discontinue any market-making at any time without notice. There can be
no assurance of a secondary market for any Registered Notes, or that the
Registered Notes will be sold.
The Agent, whether acting as agent or principal, may be deemed to be an
"underwriter" within the meaning of the Securities Act. The Company has agreed
to indemnify the Agent against certain liabilities, including liabilities under
the Securities Act, or to contribute to payments that the Agent may be required
to make in respect thereof.
The Registered Notes have not been and will not be registered under the
Securities and Exchange Law of Japan. The Company and the Agent will agree not
to offer or sell any Registered Note directly
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or indirectly in Japan or to residents of Japan or for the benefit of any
Japanese person (which term as used herein means any person resident in Japan,
including any corporation or other entity organized under the laws of Japan) or
to others for reoffering or resale directly or indirectly in Japan or to any
Japanese person during the period of 90 days from the Original Issue Date of
such Registered Note (which Registered Note is denominated in Japanese yen) or
180 days from the Original Issue Date of such Registered Note (which Registered
Note is a Dual Currency Note, Reverse Dual Currency Note or Optional Dual
Currency Note) and that thereafter it will not do so except in circumstances
that result in compliance with any applicable laws, regulations and ministerial
guidelines of Japan taken as a whole.
In addition to the Registered Notes being offered through the Agent as
described herein, Bearer Notes that may have terms identical or similar to the
terms of the Registered Notes may be concurrently offered by the Company on a
continuous basis outside the United States by Salomon Brothers International
Limited, Salomon Brothers AG or Salomon Brothers Hong Kong Limited pursuant to
the Global Selling Agency Agreement between the Company, the Agent, Salomon
Brothers International Limited, Salomon Brothers AG and Salomon Brothers Hong
Kong Limited (the "Selling Agency Agreement"). Pursuant to the Selling Agency
Agreement, Salomon Brothers International Limited, Salomon Brothers AG and
Salomon Brothers Hong Kong Limited may also purchase Bearer Notes as principal
for their own accounts or for resale. Any Bearer Notes so offered and sold will
reduce correspondingly the maximum aggregate principal amount of Registered
Notes that may be offered by this Prospectus Supplement and the Prospectus.
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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 THE PRO-
SPECTUS SUPPLEMENT (INCLUDING THE ACCOMPANYING PRICING SUPPLEMENT) AND THE PRO-
SPECTUS IN CONNECTION WITH THE OFFER CONTAINED HEREIN AND, IF GIVEN OR MADE,
SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AU-
THORIZED BY THE COMPANY OR THE AGENT. NEITHER THE DELIVERY OF THIS PROSPECTUS
SUPPLEMENT (INCLUDING THE ACCOMPANYING PRICING SUPPLEMENT AND THE PROSPECTUS)
NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANYCIRCUMSTANCES, CREATE AN IMPLICA-
TION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE
DATES AS OF WHICH INFORMATION IS GIVEN IN THIS PROSPECTUS SUPPLEMENT (INCLUDING
THE ACCOMPANYING PRICING SUPPLEMENT) AND THE PROSPECTUS. THIS PROSPECTUS SUP-
PLEMENT (INCLUDING THE ACCOMPANYING PRICING SUPPLEMENT) AND THE PROSPECTUS DO
NOT CONSTITUTE AN OFFER OR SOLICITATION BY ANYONE IN ANY JURISDICTION IN WHICH
SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH
OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO OR TO ANY PERSON TO WHOM IT IS
UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION.
----------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
PROSPECTUS SUPPLEMENT
<S> <C>
Salomon Inc................................................................ S-2
Important Currency Information............................................. S-2
Description of Registered Notes............................................ S-2
Currency Risks............................................................. S-16
Risks of Indexed Notes..................................................... S-18
United States Tax Considerations........................................... S-19
Plan of Distribution....................................................... S-27
PROSPECTUS
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>
$5,478,000,000
SALOMON INC
MEDIUM-TERM NOTES, SERIES D AND SERIES E
DUE MORE THAN NINE MONTHS FROM DATE OF ISSUE
- -------------------------------------
SALOMON BROTHERS INC
---------------------------------------------------------------------------
PROSPECTUS SUPPLEMENT
DATED AUGUST , 1994
<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE +
+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY +
+OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT +
+BECOMES EFFECTIVE. THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS +
+SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY +
+NOR SHALL THERE BE ANY SALE OF THESE SECURITIES IN ANY STATE IN WHICH SUCH +
+OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR +
+QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION DATED AUGUST 4, 1994
PROSPECTUS SUPPLEMENT
(To Prospectus Dated August , 1994)
U.S.$5,478,000,000
SALOMON INC
MEDIUM-TERM NOTES, SERIES D AND SERIES E
DUE MORE THAN NINE MONTHS FROM DATE OF ISSUE
Salomon Inc (the "Company") may from time to time offer pursuant to this
Prospectus Supplement its Medium-Term Notes, Series D (the "Series D Notes"),
and its Medium-Term Notes, Series E (the "Series E Notes" and, together with
the Series D Notes, the "Notes"), with an aggregate initial public offering
price or purchase price of up to U.S.$5,478,000,000, or the equivalent thereof
in one or more other currencies, including the European Currency Unit ("ECU"),
subject to reduction as a result of the sale of other securities under the
Registration Statement of which this Prospectus Supplement and the accompanying
Prospectus form a part or under a Registration Statement to which this
Prospectus Supplement and the accompanying Prospectus relate. The amount of
Notes sold of either series will reduce the amount of Notes of the other series
that may be sold. In addition to the Notes in bearer form ("Bearer Notes")
being offered hereby, the Company may offer Notes in registered form
("Registered Notes") in the United States. Any Registered Notes sold will
reduce the amount of Bearer Notes that may be sold hereunder. See "Description
of Bearer Notes--General".
The Series D Notes will be issued as Senior Indebtedness, and the Series E
Notes will be issued as subordinated debt. Subordinated debt will be
subordinated to all Senior Indebtedness. See "Description of Debt Securities--
Subordinated Debt" in the Prospectus.
Each Bearer Note will not, in connection with its original issuance, or during
the period of 40 days after its Original Issue Date, be offered, sold or
delivered, directly or indirectly, within the United States or to U.S. Persons,
except to the extent permitted under U.S. Treasury regulations. See "Plan of
Distribution". All Bearer Notes that have the same Original Issue Date and
otherwise identical terms will be represented initially by a Temporary Global
Note to be delivered to a common depositary outside the United States for
Euroclear and CEDEL. Beneficial interests in a Temporary Global Note will be
exchangeable for beneficial interests in a Permanent Global Note or for
individual Bearer Notes only in the manner and upon compliance with the
procedures described under "Description of Bearer Notes--Denomination, Form and
Transfer".
Payments in respect of Bearer Notes will be made without deduction for United
States withholding taxes to the extent described herein. Each Bearer Note may
be redeemed in whole, at the Redemption Price thereof, if certain events occur
involving United States withholding taxes or information reporting
requirements. See "Tax Redemption" and "Special Tax Redemption" under
"Description of Bearer Notes".
Unless otherwise specified in the applicable Pricing Supplement, each Bearer
Note will mature on a Business Day more than nine months from its date of issue
(the "Stated Maturity"), with the final maturity to be agreed upon by the
Company and the purchaser at the time of issuance. Each Bearer Note may be
subject to redemption at the option of the Company, or to repayment at the
option of the Holder, prior to maturity. Each Bearer Note will be denominated
in the currency, which may be U.S. dollars or other currencies (including ECU),
designated by the Company (the "Specified Currency"). See "Currency Risks". A
Bearer Note may bear interest at a fixed rate (a "Fixed Rate Note"), which may
be zero in the case of certain Discount Notes, or at a floating rate (a
"Floating Rate Note") determined by reference to LIBOR, the CD Rate, the
Commercial Paper Rate, the Federal Funds Rate, the Treasury Rate or any other
Base Rate, as selected by the purchaser and agreed to by the Company, adjusted
by the Spread or Spread Multiplier, if any, applicable to such Note. Such fixed
rate, Spread or Spread Multiplier may be subject to change as described in the
applicable Pricing Supplement. Unless otherwise indicated, interest on each
Fixed Rate Note will be payable annually in arrears on each September 15 (each
an "Interest Payment Date") and at Stated Maturity. A Bearer Note may be issued
as an amortizing note (an "Amortizing Note") on which a portion or all the
principal amount is payable prior to Stated Maturity in accordance with a
schedule, by application of a formula, or by reference to an index. A Bearer
Note may be issued as an indexed note (an "Indexed Note") on which the amount
of any interest payment, in the case of an Indexed Rate Note, and/or the
principal amount payable at maturity, in the case of an Indexed Principal Note,
will be determined by reference to the level of prices, or changes in prices,
or differences between prices, of securities, currencies, intangibles, goods,
articles or commodities or by application of a formula. See "Description of
Bearer Notes--Indexed Notes". The Specified Currency, interest rate or interest
rate formula, Issue Price, Stated Maturity, Interest Payment Dates, redemption
and repayment provisions and certain other terms with respect to each Bearer
Note will be established at the time of issuance and set forth in a pricing
supplement to this Prospectus Supplement (a "Pricing Supplement").
In accordance with guidelines set by the German central bank, Salomon Brothers
AG has agreed to act as the arranger of all Bearer Notes denominated or payable
in, or linked to, German deutsche marks and has confirmed that it is an
authorized credit institution in accordance with the current guidelines of the
German central bank. Application has been made to list the Bearer Notes on the
Luxembourg Stock Exchange. The amount of Bearer Notes that may be listed on the
Luxembourg Stock Exchange is limited to the U.S.$5,478,000,000 described in the
first paragraph above plus U.S.$2,166,625,288 of Bearer Notes sold pursuant to
earlier prospectuses.
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, ANY PRICING SUPPLEMENT
HERETO OR THE ACCOMPANYING PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRICE TO AGENT'S PROCEEDS TO THE
PUBLIC (1) COMMISSION (2) COMPANY (2) (3)
<S> <C> <C> <C>
Per Bearer Note......... 100.000% .125%-.750% 99.250%-99.875%
Total(4)................ U.S.$5,478,000,000 U.S.$6,847,500-U.S.$41,085,000 U.S.$5,436,915,000-U.S.$5,471,152,500
</TABLE>
- --------------------------------------------------------------------------------
(1) Unless otherwise specified in the applicable Pricing Supplement, the price
to public will be 100% of the principal amount.
(2) The Company will pay to Salomon Brothers International Limited, Salomon
Brothers AG and Salomon Brothers Hong Kong Limited (each an "Agent") a
commission of from .125% to .750% of the principal amount of any Bearer Note,
depending upon its Stated Maturity, sold through the Agent.
(3) Before deduction of expenses payable by the Company estimated at
U.S.$2,700,000, including reimbursement of certain expenses of the Agent.
(4) Or the equivalent thereof in other currencies (including ECU).
The Bearer Notes are being offered on a continuous basis by the Company through
the Agents, each of which has agreed to use its reasonable efforts to solicit
orders to purchase Bearer Notes. The Company may also sell Bearer Notes at a
discount to an Agent for its own account or for resale to one or more
purchasers at varying prices related to prevailing market prices at the time of
resale or, if set forth in the applicable Pricing Supplement, at a fixed public
offering price, as determined by the Agent. In addition, an Agent may offer
Bearer Notes purchased by it as principal to other dealers. Unless otherwise
specified in the applicable Pricing Supplement, any Bearer Note purchased by an
Agent as principal will be purchased at 100% of the principal amount thereof
less a percentage equal to the commission applicable to an agency sale of a
Bearer Note of identical maturity. There can be no assurance that the maximum
amount of Bearer Notes offered by this Prospectus Supplement will be sold or
that there will be a secondary market for the Bearer Notes. The Company
reserves the right to withdraw, cancel or modify the offer made hereby without
notice. The Company or an Agent may reject any order to purchase Bearer Notes,
whether or not solicited, in whole or in part. See "Plan of Distribution".
This Prospectus Supplement, the related Pricing Supplement and the accompanying
Prospectus may be used by the Company, the Agents, each of which is a wholly
owned subsidiary of the Company, or other affiliates of the Company in
connection with offers and sales related to secondary market transactions in
the Bearer Notes offered hereby and approximately U.S.$2,166,625,288 of Bearer
Notes sold pursuant to earlier prospectuses, as described herein. The Agent or
other such Company affiliates may act as principal or agent in such
transactions. Such sales will be made at varying prices related to prevailing
market prices at the time of sale.
SALOMON BROTHERS HONG KONG LIMITED
SALOMON BROTHERS INTERNATIONAL LIMITED
SALOMON BROTHERS AG
The date of this Prospectus Supplement is August , 1994.
<PAGE>
No dealer, salesperson or any other person has been authorized to give any
information or to make any representations other than those contained in this
Prospectus Supplement (including the accompanying Pricing Supplement) and the
accompanying Prospectus (the "Prospectus") in connection with the offer
contained herein and, if given or made, such information or representations
must not be relied upon as having been authorized by the Company or an Agent.
Neither the delivery of this Prospectus Supplement (including the accompanying
Pricing Supplement) and the Prospectus nor any sale made hereunder shall, under
any circumstances, create an implication that there has been no change in the
affairs of the Company since the dates as of which information is given in this
Prospectus Supplement (including the accompanying Pricing Supplement) and the
Prospectus. This Prospectus Supplement (including the accompanying Pricing
Supplement) and the Prospectus do not constitute an offer or solicitation by
anyone in any jurisdiction in which such offer or solicitation is not
authorized or in which the person making such offer or solicitation is not
qualified to do so or to any person to whom it is unlawful to make such offer
or solicitation.
References herein to "U.S. dollars" or "U.S.$" are to the lawful currency to
the United States.
Pursuant to a Prospectus and Prospectus Supplement each dated February 25,
1992 (and applicable Pricing Supplements), filed with the Commission under
Registration Statement No. 33-41932, and a Prospectus and Prospectus
Supplements each dated February 12, 1993 (and applicable Pricing Supplements),
filed with the Commission under Registration Statement No. 33-57922, and a
Prospectus and Prospectus Supplements each dated December 14, 1993 (and
applicable Pricing Supplements) filed with the Commission under Registration
Statement No. 33-51269, the Company had outstanding as of August 1, 1994
approximately U.S. $8,749,332,288 of its Medium-Term Notes, Series D and E, of
which approximately U.S. $2,166,625,288 were Bearer Notes and approximately
U.S. $6,582,707,000 were Registered Notes. The Bearer Notes offered by this
Prospectus Supplement are part of the same series of Notes as the Notes
described in the preceding sentence.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PROSPECTUS SUPPLEMENT PAGE
--------------------- ----
<S> <C>
Incorporation of Certain Documents
by Reference...................... S-2
Salomon Inc........................ S-3
Selected Financial Information..... S-5
Directors and Officers of the
Company........................... S-6
Capitalization..................... S-7
Description of Bearer Notes........ S-8
Currency Risks..................... S-24
Risks of Indexed Notes............. S-27
Taxation in the United States...... S-28
Plan of Distribution............... S-29
General Information................ S-30
</TABLE>
<TABLE>
<CAPTION>
PROSPECTUS PAGE
---------- ----
<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>
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents, filed by the Company with the Commission pursuant to
Section 13 of the Securities Exchange Act of 1934 (the "Exchange Act") (File
No. 1-4346), are incorporated herein by reference and shall be deemed to be
disclosed herein: (i) the Annual Report on Form 10-K for the year ended
December 31, 1993 (the "1993 10-K"); (ii) the Quarterly Report on Form 10-Q for
the quarters ended March 31, 1994, and June 30, 1994 and (iii) the Current
Reports on Form 8-K dated January 12, 1994, January 18, 1994, January 27, 1994,
March 7, 1994, April 25, 1994, July 6, 1994 and July 21, 1994. 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 the Prospectus and prior to the
termination of the offering of the Securities (including the Bearer Notes)
shall be deemed to be incorporated by reference herein.
S-2
<PAGE>
Any statement contained in the Prospectus or this Prospectus Supplement or in
a document incorporated or deemed to be incorporated by reference in the
Prospectus or this Prospectus Supplement shall be deemed to be modified or
superseded for purposes of the Prospectus and this Prospectus Supplement to the
extent that a statement contained in the Prospectus or this Prospectus
Supplement or in any subsequently filed document which also is or is deemed to
be incorporated by reference in the Prospectus or this Prospectus Supplement
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 the Prospectus and this Prospectus Supplement.
Copies of any documents incorporated herein by reference will be available at
the office of Kredietbank S.A. Luxembourgeoise (the "Listing Agent"), 43
Boulevard Royal, Luxembourg City 2955, Luxembourg. Any person receiving a copy
of this Prospectus Supplement may obtain, without charge, upon written or oral
request, a copy of any document incorporated by reference herein, except for
the exhibits to such documents (unless such exhibits are specifically
incorporated by reference). Written or oral requests should be addressed to
Salomon Brothers International Limited, 111 Buckingham Palace Road, London SW1W
0SB (telephone: 44-1-721-3665).
This Prospectus Supplement may be used for the offer, sale (including in
secondary market transactions) and listing of Bearer Notes with an aggregate
initial public offering price or purchase price of up to U.S.$5,478,000,000 or
the equivalent thereof in other currencies, subject to reduction as a result of
the sale of other securities under the Registration Statement of which this
Prospectus Supplement and the accompanying Prospectus form a part or under a
Registration Statement to which this Prospectus Supplement and the accompanying
Prospectus relate. Pursuant to the Global Selling Agency Agreement between the
Company, the Agent, Salomon Brothers AG and Salomon Brothers Inc (the "Selling
Agency Agreement"), the Company will represent to the Agent that as of the
Original Issue Date of any Bearer Note, neither the Prospectus nor any
amendment thereof or supplement thereto will contain an untrue statement of a
material fact or omit to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading (subject to certain exceptions contained in the Selling
Agency Agreement). The Company has given an undertaking in connection with the
listing of the Bearer Notes on the Luxembourg Stock Exchange to the effect
that, so long as any Bearer Notes are issued by the Company, in the event of
any material adverse change in the business or financial position of the
Company that is not reflected in the Prospectus as then amended or
supplemented, the Company will prepare an amendment or supplement to the
Prospectus or publish a new Prospectus for use in connection with any
subsequent offering and listing by the Company of Bearer Notes.
SALOMON INC
GROUP PROFILE
Salomon Inc was incorporated in 1960 under the laws of the State of Delaware.
Its major operating units are engaged principally in securities and commodities
trading and oil refining activities. Securities and related activities are
conducted by Salomon Brothers Holding Company Inc and its subsidiaries
("Salomon Brothers") and commodities trading by the Phibro 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.
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.
S-3
<PAGE>
SALOMON BROTHERS
Salomon Brothers is an international investment banking firm which provides a
broad range of services to its clients and engages in proprietary trading. Its
businesses are organized into two groups: Client-Driven Businesses and
Proprietary Trading Businesses. Services provided by Client-Driven Businesses
include: strategic advice and a broad range of capital-raising, market-making
and brokerage services for governments, financial institutions and
corporations; fixed income and equity sales and trading; foreign exchange
trading; emerging markets activities; fixed income and equity market research;
funds management; and financial services for high net-worth individuals.
Proprietary Trading Businesses execute trading and arbitrage strategies using
debt, equity and derivative instruments. Salomon Brothers and its affiliates
conduct business globally, with offices in Argentina, Australia, Brazil,
Canada, Chile, France, Germany, Hong Kong, Italy, Japan, Singapore, South
Korea, Spain, Switzerland, Taiwan, Thailand, the United Kingdom and the United
States. Principal operating subsidiaries of Salomon Brothers Holding Company
Inc are Salomon Brothers Inc in New York, Salomon Brothers Asia Limited in
Tokyo, Salomon Brothers International Limited in London, Salomon Brothers AG in
Frankfurt with a branch in Tokyo, Salomon (International) Finance AG in Zug,
Switzerland, and Salomon Swapco Inc in New York.
PHIBRO DIVISION
The Phibro Division trades commodities through its principal offices in
Westport, Connecticut, London and Singapore. The Division trades oil, natural
gas, metals, petrochemicals, plastics, coal, coke, fertilizer and soft
commodities, such as coffee, cocoa, grains and sugar. The Division is a major
participant in the energy derivatives market and actively trades in swaps,
options, caps, floors and collars covering various grades of crude oil, natural
gas and other petroleum and energy-related products.
PHIBRO ENERGY USA, INC.
Phibro Energy USA, Inc., with headquarters in Houston, Texas, owns and
operates three oil refineries in the U.S. Gulf Coast area, with a combined
design crude oil distillation capacity of approximately 261,000 barrels per day
and additional throughputs of purchased feedstock of approximately 39,000
barrels per day.
S-4
<PAGE>
SELECTED FINANCIAL INFORMATION
The following selected financial information of the Company and its
consolidated subsidiaries with respect to the years 1989 through 1993 has been
derived from audited financial statements contained in the Company's Annual
Reports on Form 10-K and with respect to the three months ended March 31, 1994
and the six months ended June 30, 1994, from unaudited financial statements
contained in the Company's Quarterly Report on Form 10-Q for the quarter ended
March 31, 1994 and the Company's Report on Form 8-K dated July 21, 1994. Such
information should be read in conjunction with the consolidated financial
statements and related notes contained in the Company's 1993 Annual Report on
Form 10-K and such Quarterly Report on Form 10-Q, which are incorporated
herein by reference. Certain prior period amounts have been reclassified to
conform with the current year presentation as presented in the Quarterly
Report on Form 10-Q for the quarter ended March 31, 1994.
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
--------------------------------------------------------- ------------------
1993 1992 1991 1990 1989 1994 1993
-------- -------- ------- -------- -------- -------- --------
(Millions of U.S. Dollars) (unaudited)
<S> <C> <C> <C> <C> <C> <C> <C>
Consolidated revenues,
net of
interest expense........ $ 4,199 $ 3,859 $ 3,527 $ 2,987 $ 2,906 $ 882 $ 1,928
Income (loss) before
taxes and cumulative
effect of changes in
accounting principles by
segment:
Salomon Brothers........ 1,575(1) 1,390(2) 1,036(3) 416 534 $ (371) $ 694
Phibro Division......... (15)(1) (194) 47 361 202 132 9
Phibro USA.............. (46)(1) (47) (80) 146 173 17 (15)
Philipp Brothers........ -- -- -- (323)(4) (116) -- --
Corporate and Other..... (49)(1) (93) (84) (94) (53) (12) (48)
-------- -------- ------- -------- -------- -------- --------
Consolidated income
(loss) before taxes and
cumulative effect of
changes in accounting
principles.............. $ 1,465(1) $ 1,056 $ 919 $ 506 $ 740 $ (234) $ 640
Consolidated net income
(loss).................. $ 827 $ 550 $ 507 $ 303 $ 470 $ (138) $ 331
<CAPTION>
AT DECEMBER 31, AT MARCH 31,
--------------------------------------------------------- ------------------
1993 1992 1991 1990 1989 1994 1993
-------- -------- ------- -------- -------- -------- --------
(Millions of U.S. Dollars) (unaudited)
<S> <C> <C> <C> <C> <C> <C> <C>
Total assets............. $184,835 $159,459 $97,402 $109,877 $118,250 $173,316 $176,617
Term debt................ 11,692 8,533 7,082 4,976 2,911 13,950 9,759
Redeemable preferred
stock................... 700 700 700 700 700 700 700
Stockholders' equity:
Preferred............... 312 112 112 -- -- 312 312
Common.................. 4,319 3,551 3,233 2,844 2,865 4,095 3,407
</TABLE>
- --------
(1) Does not include a $65 million charge that is the cumulative effect of a
change in accounting principles. The charge is allocated as follows:
Salomon Brothers $35 million; Phibro Division $1 million; Phibro USA $6
million and Corporate and Other $23 million.
(2) Salomon Brothers' 1992 results include a $185 million pretax charge
related to the settlement with U.S. government authorities of
investigations into the U.S. Treasury auction matters.
(3) Salomon Brothers' 1991 results include a $200 million pretax charge
related to the establishment of a reserve associated with the U.S.
Treasury auction and related matters.
(4) Philipp Brothers' 1990 results include a special charge of $155 million
before taxes incurred in connection with the downsizing of the segment.
S-5
<PAGE>
DIRECTORS AND OFFICERS OF THE COMPANY
The directors of the Company, together with their principal occupations, are:
<TABLE>
<CAPTION>
NAME OCCUPATION
- ---- ----------
<S> <C>
Dwayne O. Andre- Chairman of the Board and Chief Executive of Archer Daniels
as............. Midland Company
Warren E. Chairman of the Board and Chief Executive Officer of
Buffett*....... Berkshire Hathaway Inc.
Robert E.
Denham*........ Chairman and Chief Executive Officer of the Company
Claire M. Fagin. Leadership Professor, School of Nursing, University of
Pennsylvania
Andrew J. Hall.. Executive Vice President of the Company and Chairman and
President of Phibro Division
Gedale B. Horo-
witz........... Executive Vice President of the Company
Deryck C. Executive Vice President of the Company and Chairman and
Maughan........ Chief Executive Officer of Salomon Brothers Inc
William F. May*. Chairman and Chief Executive Officer of the Statue of
Liberty-Ellis Island Foundation, Inc.
Charles T. Mun-
ger............ Vice Chairman of the Board of Berkshire Hathaway Inc.
Louis A. President and Chief Executive Officer, Capital Operations,
Simpson*....... of GEICO Corporation
Robert G.
Zeller*........ Retired investment banker
</TABLE>
- --------
* Executive committee member.
The officers of the Company, in addition to those directors who serve as
officers of the Company, are:
<TABLE>
<CAPTION>
NAME TITLE
- ---- -----
<S> <C>
Jerome H. Bai-
ley............ Chief Financial Officer
Walter E. Baker. Senior Vice President
David C. Fisher. Controller
Laura J.M.
Gould.......... Vice President -- Environmental Affairs
William J.
Jennings....... Senior Vice President
John G. Macfar-
lane........... Treasurer
Robert H. Mund-
heim........... Executive Vice President and General Counsel
Gerald P. Nagy.. Vice President -- Taxes
Arnold S.
Olshin......... Secretary
</TABLE>
S-6
<PAGE>
CAPITALIZATION
The following table sets forth the capitalization of the Company and its
consolidated subsidiaries as of March 31, 1994. The largest component of
short-term capitalization is securities sold under agreements to repurchase,
which are collateralized principally by U.S. government and agency securities.
There have been no material changes to the capitalization of the Company as a
result of the issuance of debt, including the Notes, since March 31, 1994,
other than the issuance of approximately $278 million of additional term debt
(net of term debt retired) as of June 30, 1994 and other than changes in the
level of the Company's short-term borrowings outstanding which in the normal
course of business may vary significantly at any particular point in time.
<TABLE>
<CAPTION>
(MILLIONS OF
U.S. DOLLARS)
<S> <C>
Short-term borrowings:
Securities sold under agreements to repurchase............. $74,167
Bank borrowings............................................ 4,141
Securities loaned.......................................... 2,445
Deposit liabilities........................................ 2,159
Commercial paper........................................... 962
Other...................................................... 2,680
-------
Total short-term borrowings.............................. $86,554
=======
Collateralized mortgage obligations.......................... $ 3,499
=======
Term debt.................................................... $13,950
=======
Redeemable preferred stock, without par value (700,000 Series
A cumulative convertible shares, redeemable at assigned val- $ 700
ue, issued and outstanding)(1).............................. =======
Stockholders' equity:
Preferred stock, without par value (consisting of (a)
225,000 Series C cumulative shares issued and outstanding,
represented by 4,500,000 Depositary Shares, each repre-
senting a one-twentieth interest in a share of such Pre-
ferred Stock, redeemable only at the Company's option at
any time on or after June 30, 1996, at a price of $500 per
share, and (b) 400,000 Series D cumulative shares issued
and outstanding, represented by 8,000,000 Depositary
Shares, each representing a one-twentieth interest in a
share of such Preferred Stock, redeemable only at the
Company's option at any time after March 31, 1998 at a
price of $500 per share)(1)............................... $ 312
Common stock, par value $1 per share (250,000,000 shares
authorized; 155,544,203 shares issued).................... 156
Additional paid-in capital................................. 297
Retained earnings.......................................... 5,242
Cumulative translation adjustments......................... (2)
Equity Partnership Plan, net............................... 45
Common stock held in treasury, at cost (49,619,086 shares). (1,643)
-------
Total stockholders' equity............................... $ 4,407
=======
</TABLE>
- --------
In addition to the items included in the table above, the Company's
liabilities at March 31, 1994 included financial and energy instruments sold,
not yet purchased, and other contractual commitments of $54.6 billion, and
payables and accrued liabilities of $9.6 billion. As of June 30, 1994, the
Company had repurchased approximately 5.2 million shares of its common stock
during the first half of 1994 at an aggregate cost of $252 million under a
share repurchase program authorized by the Company's Board of Directors. As of
June 30, 1994, the Company was authorized to repurchase an additional 9.8
million shares of common stock under such program. See Part I Item 2 of the
Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 1994
and incorporated herein by reference.
(1) The Company is authorized to issue an aggregate of 5,000,000 shares of
preferred stock.
See Note 8 to the Company's consolidated financial statements incorporated
herein by reference from the Company's 1993 Form 10-K for a description of the
preferred share purchase rights outstanding and the authorization of a series
of preferred stock purchasable upon exercise of such rights.
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DESCRIPTION OF BEARER NOTES
The following description of the particular terms of the Bearer Notes
supplements, and to the extent inconsistent therewith replaces, the description
of the general terms and provisions of the Debt Securities set forth in the
Prospectus, to which description reference is hereby made. Numerical references
in parentheses below are to sections in the Senior Debt Indenture and the
Subordinated Debt Indenture. Wherever particular sections or defined terms of
the Indentures 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.
GENERAL
The Series D Notes are a series of Debt Securities issued under the Senior
Debt Indenture, and the Series E Notes are a series of Debt Securities issued
under the Subordinated Debt Indenture. At the date of this Prospectus
Supplement, the Notes offered pursuant to this Prospectus Supplement are
limited to an aggregate initial public offering price or purchase price of up
to U.S.$5,478,000,000 or the equivalent thereof in one or more other currencies
(including ECU), which amount is subject to reduction as a result of the sale
of other securities under the Registration Statement of which this Prospectus
Supplement and the accompanying Prospectus form a part or under a Registration
Statement to which this Prospectus Supplement and the accompanying Prospectus
relate. In addition, the Company had outstanding as of August 1, 1994
approximately U.S. $2,166,625,288 of Series D Bearer Notes and approximately
U.S. $6,582,707,000 of Series D Registered Notes sold pursuant to earlier
prospectuses. The aggregate amount of Notes may be increased from time to time
to such larger amount as may be authorized by the Company. The U.S. dollar
equivalent of the public offering price or purchase price of a Note having a
Specified Currency other than U.S. dollars will be determined on the basis of
the noon buying rate in New York City for cable transfers in foreign currencies
as certified for customs purposes by the Federal Reserve Bank of New York (the
"Market Exchange Rate") for such Specified Currency on the applicable issue
date. Such determination will be made by the Company or its agent, as exchange
rate agent for both Series of Notes (the "Exchange Rate Agent").
The Notes will consist of Bearer Notes and Registered Notes, each of which
will be offered on a continuous basis. In connection with their original
issuance or during the period of 40 days after their Original Issue Dates,
Bearer Notes will not be offered, sold or delivered, 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, as more fully set forth under "Plan
of Distribution". 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.
Payments in respect of Bearer Notes will be made without deduction for United
States withholding taxes to the extent described under "Payment of Additional
Interest" below. Each Bearer Note may be redeemed at the Redemption Price
applicable thereto, if certain events occur involving United States withholding
taxes or information reporting requirements. See "Tax Redemption" and "Special
Tax Redemption" below. Other than in such event, Bearer Notes may not be
redeemed by the Company prior to Stated Maturity (as defined below) unless
otherwise specified in the applicable Pricing Supplement. See "Optional
Redemption, Repayment and Repurchase" below. The Bearer Notes will not be
subject to any sinking fund.
Unless otherwise specified in the applicable Pricing Supplement, each Bearer
Note will mature at par (unless otherwise specified in the applicable Pricing
Supplement) on a Business Day more than nine months from its Original Issue
Date (as defined below), as selected by the purchaser and agreed to by the
Company (the "Stated Maturity"). Notwithstanding the foregoing, each Bearer
Note having a Specified Currency of Japanese yen will have a Stated Maturity of
not less than one year from its Original Issue Date, and will not be subject to
optional redemption or repayment prior to such time. Each Bearer Note having a
Specified Currency of Pounds Sterling will mature in compliance with such
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regulations as the Bank of England may promulgate from time to time. Each
Bearer Note may also be subject to redemption at the option of the Company, or
to repayment at the option of the Holder, at a price specified in the
applicable Pricing Supplement prior to its Stated Maturity. Each Floating Rate
Note will mature on an Interest Payment Date for such Note. No Bearer Note will
be issued without a final maturity.
The Pricing Supplement relating to a Bearer Note will describe the following
terms: (i) the Specified Currency for such Note; (ii) whether such Note is a
Fixed Rate Note, a Floating Rate Note, an Amortizing Note and/or an Indexed
Note; (iii) the price (expressed as a percentage of the aggregate principal
amount or face amount thereof) at which such Note will be issued (the "Issue
Price"); (iv) the date on which such Note will be issued (the "Original Issue
Date"); (v) the date of the Stated Maturity; (vi) if such Note is a Fixed Rate
Note, the rate per annum at which such Note will bear interest, if any, and
whether and the manner in which such rate may be changed prior to its Stated
Maturity; (vii) if such Note is a Floating Rate Note, the Base Rate, the
Initial Interest Rate, the Interest Reset Period or the Interest Reset Dates,
the Interest Payment Dates, and, if applicable, the Index Maturity, the Maximum
Interest Rate, the Minimum Interest Rate, the Spread or Spread Multiplier (all
as defined below), and any other terms relating to the particular method of
calculating the interest rate for such Note and whether and the manner in which
such Spread or Spread Multiplier may be changed prior to Stated Maturity;
(viii) whether such Note is an Original Issue Discount Note (as defined below);
(ix) if such Note is an Amortizing Note, the terms for repayment prior to
Stated Maturity; (x) if such Note is an Indexed Note, in the case of an Indexed
Rate Note, the manner in which the amount of any interest payment will be
determined or, in the case of an Indexed Principal Note, its Face Amount and
the manner in which the principal amount payable at Stated Maturity will be
determined; (xi) whether such Note may be redeemed at the option of the
Company, or repaid at the option of the Holder, prior to Stated Maturity as
described under "Optional Redemption, Repayment and Repurchase" below and, if
so, the provisions relating to such redemption or repayment, including, in the
case of an Original Issue Discount Note or Indexed Note, the information
necessary to determine the amount due upon redemption or repayment; and (xii)
any other terms of such Note not inconsistent with the provisions of the
Indenture under which such Note will be issued.
"Business Day" with respect to any Bearer Note means any day, other than a
Saturday or Sunday, that is not a day on which banking institutions are
authorized or required by law or regulation to be closed in (a) The City of New
York, (b) London, England, (c) the place in which such Note or any Coupon
relating thereto is presented for payment or (d) if the Specified Currency for
such Note is other than U.S. dollars, the financial center of the country
issuing such Specified Currency (which, in the case of ECU, shall be Brussels,
Belgium).
"Original Issue Discount Note" means (i) a Bearer Note, including any such
Note whose interest rate is zero, that has a stated redemption price at Stated
Maturity that exceeds its Issue Price by at least 0.25% of its stated
redemption price at Stated Maturity, multiplied by the number of full years
from the Original Issue Date to the Stated Maturity for such Note and (ii) any
other Bearer Note designated by the Company as issued with original issue
discount for United States Federal income tax purposes.
A "basis point" or "bp" equals one one-hundredth of a percentage point.
STATUS
The Series D Notes will be issued under the Senior Debt Indenture, will
constitute part of the Senior Indebtedness of the Company and will rank pari
passu with all other unsecured debt of the Company except subordinated debt.
The Series E Notes will be issued under the Subordinated Debt Indenture and
will be subordinate and junior in the right of payment, to the extent and in
the manner set forth in the Subordinated Debt Indenture, to all Senior
Indebtedness of the Company. See "Description of Debt Securities--Subordinated
Debt" in the Prospectus. As of March 31, 1994, the aggregate principal
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amount of Senior Indebtedness outstanding was U.S. $100.4 billion, consisting
of the following: U.S. $13.9 billion of term debt, U.S. $1.0 billion in
commercial paper and U.S. $85.5 billion in other short-term borrowings.
DENOMINATION, FORM AND TRANSFER
Unless otherwise provided in the applicable Pricing Supplement, the minimum
aggregate principal amount of Bearer Notes that may be purchased is U.S.
$25,000 or the approximate equivalent thereof in other currencies. The
authorized denominations of Bearer Notes denominated in U.S. dollars will be
U.S. $25,000 and any larger amount that is an integral multiple of U.S. $5,000,
and the authorized denominations of Bearer Notes having a Specified Currency
other than U.S. dollars will be, unless otherwise specified in the applicable
Pricing Supplement, the approximate equivalents thereof in the Specified
Currency.
All Bearer Notes that have the same Original Issue Date and otherwise
identical terms will be represented initially by interests in a single
temporary Global Security in bearer form, without Coupons (a "Temporary Global
Note"), to be deposited with a common depositary in London (the "Depositary")
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. On or after the 40th day following the
issuance of a Temporary Global Note (the "Exchange Date"), and subject to the
receipt of a Certificate of Non-U.S. Beneficial Ownership, beneficial interests
in that Temporary Global Note will be exchangeable for interests in a
definitive Global Security in bearer form, without Coupons (a "Permanent Global
Note"), in a denomination equal to the aggregate principal amount of all
interests in the Temporary Global Note so exchanged. A "Certificate of Non-U.S.
Beneficial Ownership" is a certificate, to the effect that a beneficial
interest in a Temporary Global Note 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, that is delivered in respect of the
Exchange Date or in respect of any Interest Payment Date prior to the Exchange
Date. Each Permanent Global Note will be deposited with the Depositary for
credit to the account or accounts designated by or on behalf of the beneficial
owner or owners thereof. The beneficial owner of a Bearer Note represented by
an interest in a Permanent Global Note may, upon 30 days' notice to the Trustee
for such Note given through either Euroclear or CEDEL, exchange such interest
for one or more individual Bearer Notes, with appropriate Coupons attached, in
any authorized denomination or denominations. No Bearer Note will be delivered
in or to the United States and its possessions. References herein to "Bearer
Notes" shall, except where otherwise indicated, include interests in a
Temporary or Permanent Global Note as well as individual Bearer Notes and any
appurtenant Coupons.
Transfers of interests in a Temporary or Permanent Global Note will be made
by Euroclear or CEDEL in accordance with their customary operating procedures.
Title to individual Bearer Notes and Coupons will pass by physical delivery.
The bearer of each Coupon, whether or not the Coupon is attached to an
individual Bearer Note, shall be subject to and bound by all the provisions
contained in the individual Bearer Note to which such Coupon relates. The
bearer of any individual Bearer Note and any Coupon may, to the fullest extent
permitted by applicable law, be treated at all times by all persons and for all
purposes as the absolute owner of such Note or Coupon, as the case may be,
regardless of any notice of ownership, theft or loss or of any writing thereon.
The following legend will appear on each Global Note and on all individual
Bearer Notes and any Coupons: "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 an interest in a
Global Note or an individual Bearer Note or Coupon will not be permitted 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, an interest in
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such Global Note or such individual Bearer Note or Coupon. See "Limitations on
Issuance of Bearer Securities and Bearer Warrants" in the accompanying
Prospectus.
Bearer Notes may not be exchanged for Registered Notes.
PAYMENTS AND PAYING AGENTS
Unless otherwise specified in the applicable Pricing Supplement and except,
under certain circumstances, for Bearer Notes having Specified Currencies other
than U.S. dollars, payments of the principal of and any premium and interest on
a Bearer Note will be made only in the Specified Currency for such Note. See
"Currency Risks" below.
Interest on each Temporary Global Note will be paid to each of Euroclear and
CEDEL with respect to that portion of such Temporary Global Note held for its
account, but only upon receipt as of the relevant Interest Payment Date of a
Certificate of Non-U.S. Beneficial Ownership and upon notation thereon of such
payment. Each of Euroclear and CEDEL will undertake in such circumstances to
credit such interest received by it to the respective accounts having an
interest in such Temporary Global Note.
The principal of and any premium or interest on each Permanent Global Note
will be paid to each of Euroclear and CEDEL with respect to that portion of
such Permanent Global Note held for its account upon notation thereon of such
payment. Each of Euroclear and CEDEL will undertake in such circumstances to
credit such principal, premium and interest received by it to the respective
accounts having an interest in such Permanent Global Note. All such payments
will be made to Euroclear and CEDEL in immediately available funds.
A payment in respect of an individual Bearer Note or any Coupon will be made
only against surrender of such Note or Coupon at the offices of such Paying
Agents outside the United States and its possessions as the Company may from
time to time appoint. At the direction of the Holder of such a Note or Coupon,
and subject to applicable laws and regulations, such payments will be made by
check drawn on a bank in The City of New York (in the case of a U.S. dollar
payment) or outside the United States (in the case of a payment in a currency
other than U.S. dollars) mailed to an address outside the United States and its
possessions furnished by such Holder or, at the option of such Holder, by wire
transfer (pursuant to written instructions supplied by such Holder) to an
account maintained by the payee with a bank located outside the United States
and its possessions. No payment in respect of an individual Bearer Note or
Coupon will be made upon presentation of such Note or Coupon at any office or
agency of either Trustee or any other paying agency maintained by the Company
in the United States and its possessions, nor will any such payment be made by
transfer to an account, or by mail to an address, in the United States and its
possessions. Notwithstanding the foregoing, if U.S. dollar payments in respect
of Bearer Notes or any Coupons at the offices of all Paying Agents outside the
United States and its possessions become illegal or are effectively precluded
because of the imposition of exchange controls or similar restrictions on the
full payment or receipt of such amounts in U.S. dollars, the Company will
appoint an office or agency (which may be a Trustee) in the United States at
which such payments may be made.
Payments of principal and interest (if any) with respect to Notes denominated
and payable in ECU will be made at the specified office of a Paying Agent
outside the United States by credit or transfer to an ECU account located
outside the United States specified by the payee. Payments in a component
currency (if required, as set forth under "Currency Risks--Payment Currency"
below) will be made in the Payment Currency (as defined below) at the specified
office of a Paying Agent in the country of the Payment Currency or, if none or
at the option of the holder, at the specified office of any Paying Agent
outside the United States either by a check drawn on, or by transfer to an
account specified by the payee with, a bank in the financial center of the
country of the Payment Currency. Payments will be subject in all cases to any
fiscal or other laws and regulations applicable thereto, but without prejudice
to the provisions regarding taxation discussed below.
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The specified offices of the Trustees and the names and offices of the
initial Paying Agents are set forth at the end of this Prospectus Supplement.
The Company reserves the right at any time to vary or terminate the appointment
of any Paying Agent and to appoint additional or other Paying Agents and to
approve any change in the office through which any Paying Agent acts, provided
that there will at all times be a Paying Agent (which may be a Trustee) in at
least one city in Europe, which, so long as the Bearer Notes are listed on the
Luxembourg Stock Exchange and that exchange shall so require, shall include
Luxembourg. Notice of any such termination or appointment and of any changes in
the specified offices of a Trustee or any Paying Agent will be given to the
Holders of Bearer Notes in accordance with "Notices" below.
Any payment required to be made in respect of a Bearer Note on a date
(including the day of Stated Maturity) that is not a Business Day for such Note
need not be made on such date, but may be made on the next succeeding Business
Day with the same force and effect as if made on such date, and no additional
interest shall accrue as a result of such delayed payment.
Unless otherwise specified in the applicable Pricing Supplement, if the
principal of any Discount Note is declared to be due and payable immediately as
described under "Description of Debt Securities--Events of Default" in the
Prospectus, the amount of principal due and payable with respect to such Note
shall be limited to the aggregate principal amount (or face amount, in the case
of an Indexed Principal Note) of such Note multiplied by the sum of its Issue
Price (expressed as a percentage of the aggregate principal amount) plus the
original issue discount amortized from the date of issue to the date of
declaration, which amortization shall be calculated using the "interest method"
(computed in accordance with generally accepted accounting principles in effect
on the date of declaration).
FIXED RATE NOTES
Each Fixed Rate Note will bear interest from its Original Issue Date, or from
the last Interest Payment Date to which interest has been paid or duly provided
for, at the rate per annum stated in the applicable Pricing Supplement until
the principal amount thereof is paid or made available for payment, except
that, if so specified in the applicable Pricing Supplement, the rate of
interest payable on certain Fixed Rate Notes may be subject to adjustment from
time to time as described in such Pricing Supplement. Unless otherwise set
forth in the applicable Pricing Supplement, interest on each Fixed Rate Note
will be payable annually in arrears on each September 15 (each such day being
an "Interest Payment Date") and at Stated Maturity. If an Interest Payment Date
with respect to any Fixed Rate Note would otherwise be a day that is not a
Business Day, such Interest Payment Date shall not be postponed; provided,
however, that any payment required to be made in respect of such Note on a date
(including the day of Stated Maturity) that is not a Business Day for such Note
need not be made on such date, but may be made on the next succeeding Business
Day with the same force and effect as if made on such date, and no additional
interest shall accrue as a result of such delayed payment. Each payment of
interest in respect of an Interest Payment Date shall include interest accrued
through the day before such Interest Payment Date. Interest on Fixed Rate Notes
will be computed on the basis of a 360-day year of twelve 30-day months.
FLOATING RATE NOTES
Unless otherwise specified in the applicable Pricing Supplement, each
Floating Rate Note will bear interest from its Original Issue Date to the first
Interest Reset Date (such period, the "Initial Interest Period") for such Note
at the Initial Interest Rate set forth in the applicable Pricing Supplement.
The interest rate on such Note for each Interest Reset Period (as defined
below) (and for the Initial Interest Period if so specified in the applicable
Pricing Supplement) will be determined by reference to an interest rate basis
(the "Base Rate"), plus or minus the Spread, if any, or multiplied by the
Spread Multiplier, if any. The "Spread" is the number of basis points that may
be specified in the applicable Pricing Supplement as being applicable to such
Note, and the "Spread Multiplier" is the percentage
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that may be specified in the applicable Pricing Supplement as being applicable
to such Note, except that, if so specified in the applicable Pricing
Supplement, the Spread or Spread Multiplier on certain Floating Rate Notes may
be subject to adjustment from time to time as described in such Pricing
Supplement. The applicable Pricing Supplement will designate one of the
following Base Rates as applicable to a Floating Rate Note:(i) LIBOR (a "LIBOR
Note"), (ii) the Commercial Paper Rate (a "Commercial Paper Rate Note"),(iii)
the Treasury Rate (a "Treasury Rate Note"), (iv) the Federal Funds Rate (a
"Federal Funds Rate Note"), (v) the CD Rate (a "CD Rate Note") or (vi) such
other Base Rate as is set forth in such Pricing Supplement and in such Note.
The "Index Maturity" for any Floating Rate Note is the period of maturity of
the instrument or obligation from which the Base Rate is calculated.
"H.15(519)" means the publication entitled "Statistical Release H.15(519),
"Selected Interest Rates' ", or any successor publication, published by the
Board of Governors of the Federal Reserve System. "Composite Quotations" means
the daily statistical release entitled "Composite 3:30 p.m. Quotations for U.S.
Government Securities" published by the Federal Reserve Bank of New York.
As specified in the applicable Pricing Supplement, a Floating Rate Note may
also have either or both of the following (in each case expressed as a rate per
annum on a simple interest basis): (i) a maximum limitation, or ceiling, on the
rate at which interest may accrue during any interest period ("Maximum Interest
Rate") and (ii) a minimum limitation, or floor, on the rate at which interest
may accrue during any interest period ("Minimum Interest Rate"). In addition to
any Maximum Interest Rate that may be applicable to any Floating Rate Note, the
interest rate on a Floating Rate Note will in no event be higher than the
maximum rate permitted by applicable law, as the same may be modified by United
States law of general application. The Notes will be governed by the law of the
State of New York and, under such law as of the date of this Prospectus
Supplement, the maximum rate of interest under provisions of the penal law,
with certain exceptions, is 25% per annum on a simple interest basis. Such
maximum rate of interest only applies to obligations that are less than
$2,500,000.
The Company will appoint, and enter into agreements with, agents (each a
"Calculation Agent") to calculate interest rates on Floating Rate Notes. Unless
otherwise specified in a Pricing Supplement, Citibank, N.A. shall be the
Calculation Agent for each Series D Floating Rate Note and Bankers Trust
Company shall be the Calculation Agent for each Series E Floating Rate Note.
All determinations of interest by the Calculation Agents shall, in the absence
of manifest error, be conclusive for all purposes and binding on the holders of
the Floating Rate Notes.
The interest rate on each Floating Rate Note will be reset daily, weekly,
monthly, quarterly, semiannually or annually (such period being the "Interest
Reset Period" for such Note; the Initial Interest Period and each Interest
Reset Period, an "Interest Period"; and the first day of each Interest Reset
Period, an "Interest Reset Date"), as specified in the applicable Pricing
Supplement. Unless otherwise specified in the applicable Pricing Supplement,
the Interest Reset Date will be, in the case of Floating Rate Notes that reset
daily, each Business Day; in the case of Floating Rate Notes (other than
Treasury Rate Notes) that reset weekly, Wednesday of each week; in the case of
Treasury Rate Notes that reset weekly, Tuesday of each week (except as provided
below under "Treasury Rate Notes" below); in the case of Floating Rate Notes
that reset monthly, the third Wednesday of each month; in the case of Floating
Rate Notes that reset quarterly, the third Wednesday of March, June, September
and December of each year; in the case of Floating Rate Notes that reset
semiannually, the third Wednesday of each of two months of each year specified
in the applicable Pricing Supplement; and, in the case of Floating Rate Notes
that reset annually, the third Wednesday of one month of each year specified in
the applicable Pricing Supplement; provided, however, that in all instances the
interest rate for the ten days immediately prior to Stated Maturity will be
that in effect on the tenth day preceding Stated Maturity. If an Interest Reset
Date for any Floating Rate Note would otherwise be a day that is not a Business
Day, such Interest Reset Date shall be postponed to the next succeeding
Business Day, except that in the case of a LIBOR Note, if such Business Day is
in the next succeeding calendar month, such Interest Reset Date shall be the
immediately preceding Business Day.
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Unless otherwise specified in the applicable Pricing Supplement, interest
payable in respect of Floating Rate Notes shall be the accrued interest from
and including the Original Issue Date or the last date to which interest has
been paid, as the case may be, to but excluding the applicable Interest Payment
Date. In the case of a Floating Rate Note that resets daily or weekly, interest
payable shall be the accrued interest from and including the Original Issue
Date or the last date to which interest has been accrued and paid, as the case
may be, to but excluding the date 15 calendar days immediately preceding the
applicable Interest Payment Date, except that, at Stated Maturity, interest
payable will include interest accrued to but excluding the date of Stated
Maturity.
With respect to a Floating Rate Note, accrued interest shall be calculated by
multiplying the principal amount of such Note (or in the case of a Floating
Rate Note that is an Indexed Principal Note, its Face Amount) by an accrued
interest factor. Such accrued interest factor will be computed by adding the
interest factors calculated for each day in the period for which accrued
interest is being calculated. The interest factor (expressed as a decimal
calculated to seven decimal places without rounding) for each such day is
computed by dividing the interest rate in effect on such day by 360, in the
case of LIBOR Notes, Commercial Paper Rate Notes, Federal Funds Rate Notes and
CD Rate Notes or by the actual number of days in the year, in the case of
Treasury Rate Notes. For purposes of making the foregoing calculation, the
interest rate in effect on any Interest Reset Date will be the applicable rate
as reset on such date.
Unless otherwise specified in the applicable Pricing Supplement, all
percentages resulting from any calculation of the rate of interest on a
Floating Rate Note will be rounded, if necessary, to the nearest 1/100,000 of
1% (.0000001), with five one-millionths of a percentage point rounded upward,
and all currency amounts used in or resulting from such calculation on Floating
Rate Notes will be rounded to the nearest one-hundredth of a unit (with .005 of
a unit being rounded upward).
Unless otherwise indicated in the applicable Pricing Supplement and except as
provided below, interest will be payable, in the case of Floating Rate Notes
that reset daily, weekly or monthly, on the third Wednesday of each month or on
the third Wednesday of March, June, September and December of each year, as
specified in the applicable Pricing Supplement; in the case of Floating Rate
Notes that reset quarterly, on the third Wednesday of March, June, September
and December of each year; in the case of Floating Rate Notes that reset
semiannually, on the third Wednesday of each of two months of each year
specified in the applicable Pricing Supplement; and, in the case of Floating
Rate Notes that reset annually, on the third Wednesday of one month of each
year specified in the applicable Pricing Supplement (each such day being an
"Interest Payment Date"). If an Interest Payment Date with respect to any
Floating Rate Note would otherwise be a day that is not a Business Day, such
Interest Payment Date shall be postponed to the next succeeding Business Day,
except that, in the case of a LIBOR Note, if such Business Day is in the next
succeeding calendar month, such Interest Payment Date shall be the immediately
preceding Business Day.
Upon the request of the Holder of any Floating Rate Note, the Calculation
Agent for such Note will provide the interest rate then in effect and, if
determined, the interest rate that will become effective on the next Interest
Reset Date with respect to such Floating Rate Note. In addition, such
information will be communicated to the Luxembourg Stock Exchange and will be
made available at the offices of the Paying Agents in Luxembourg and at the
Luxembourg Stock Exchange.
CD Rate Notes
Each CD Rate Note will bear interest for each Interest Reset Period at the
interest rate calculated with reference to the CD Rate and the Spread or Spread
Multiplier, if any, specified in such Note and in the applicable Pricing
Supplement.
Unless otherwise specified in the applicable Pricing Supplement, the "CD
Rate" for each Interest Reset Period shall be the rate as of the second
Business Day prior to the Interest Reset Date for such
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Interest Reset Period (a "CD Rate Determination Date") for negotiable
certificates of deposit having the Index Maturity designated in the applicable
Pricing Supplement as published in H.15(519) under the heading "CDs (Secondary
Market)". In the event that such rate is not published prior to 3:00 p.m., New
York City time, on the Calculation Date (as defined below) pertaining to such
CD Rate Determination Date, then the "CD Rate" for such Interest Reset Period
will be the rate on such CD Rate Determination Date for negotiable certificates
of deposit of the Index Maturity designated in the applicable Pricing
Supplement as published in Composite Quotations under the heading "Certificates
of Deposit". If by 3:00 p.m., New York City time, on such Calculation Date such
rate is not yet published in either H.15(519) or Composite Quotations, then the
"CD Rate" for such Interest Reset Period will be calculated by the Calculation
Agent for such CD Rate Note and will be the arithmetic mean of the secondary
market offered rates as of 10:00 a.m., New York City time, on such CD Rate
Determination Date of three leading nonbank dealers in negotiable U.S. dollar
certificates of deposit in The City of New York selected by the Calculation
Agent for such CD Rate Note for negotiable certificates of deposit of major
United States money center banks of the highest credit standing (in the market
for negotiable certificates of deposit) with a remaining maturity closest to
the Index Maturity designated in the Pricing Supplement in a denomination of
$5,000,000; provided, however, that if the dealers selected as aforesaid by
such Calculation Agent are not quoting offered rates as mentioned in this
sentence, the "CD Rate" for such Interest Reset Period will be the same as the
CD Rate for the immediately preceding Interest Reset Period (or, if there was
no such Interest Reset Period, the Initial Interest Rate).
The "Calculation Date" pertaining to any CD Rate Determination Date shall be
the tenth calendar day after such CD Rate Determination Date or, if such day is
not a Business Day, the next succeeding Business Day.
Commercial Paper Rate Notes
Each Commercial Paper Rate Note will bear interest for each Interest Reset
Period at the interest rate calculated with reference to the Commercial Paper
Rate and the Spread or Spread Multiplier, if any, specified in such Note and in
the applicable Pricing Supplement.
Unless otherwise specified in the applicable Pricing Supplement, the
"Commercial Paper Rate" for each Interest Reset Period will be determined by
the Calculation Agent for such Commercial Paper Rate Note as of the second
Business Day prior to the Interest Reset Date for such Interest Reset Period (a
"Commercial Paper Rate Determination Date") and shall be the Money Market Yield
(as defined below) on such Commercial Paper Rate Determination Date of the rate
for commercial paper having the Index Maturity specified in the applicable
Pricing Supplement, as such rate shall be published in H.15(519) under the
heading "Commercial Paper". In the event that such rate is not published prior
to 3:00 p.m., New York City time, on the Calculation Date (as defined below)
pertaining to such Commercial Paper Rate Determination Date, then the
"Commercial Paper Rate" for such Interest Reset Period shall be the Money
Market Yield on such Commercial Paper Rate Determination Date of the rate for
commercial paper of the specified Index Maturity as published in Composite
Quotations under the heading "Commercial Paper". If by 3:00 p.m., New York City
time, on such Calculation Date such rate is not yet published in either
H.15(519) or Composite Quotations, then the "Commercial Paper Rate" for such
Interest Reset Period shall be the Money Market Yield of the arithmetic mean of
the offered rates, as of 11:00 a.m., New York City time, on such Commercial
Paper Rate Determination Date of three leading dealers of commercial paper in
The City of New York selected by the Calculation Agent for such Commercial
Paper Rate Note for commercial paper of the specified Index Maturity placed for
an industrial issuer whose bonds are rated "AA" or the equivalent by a
nationally recognized rating agency; provided, however, that if the dealers
selected as aforesaid by such Calculation Agent are not quoting offered rates
as mentioned in this sentence, the "Commercial Paper Rate" for such Interest
Reset Period will be the same as the Commercial Paper Rate for the immediately
preceding Interest Reset Period (or, if there was no such Interest Reset
Period, the Initial Interest Rate).
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"Money Market Yield" shall be a yield calculated in accordance with the
following formula:
D X 360
Money Market Yield = ------------------- X 100
360 -- (D X M)
where "D" refers to the applicable per annum rate for commercial paper quoted
on a bank discount basis and expressed as a decimal, and "M" refers to the
actual number of days in the specified Index Maturity.
The "Calculation Date" pertaining to any Commercial Paper Rate Determination
Date shall be the tenth calendar day after such Commercial Paper Rate
Determination Date or, if such day is not a Business Day, the next succeeding
Business Day.
Federal Funds Rate Notes
Each Federal Funds Rate Note will bear interest for each Interest Reset
Period at the interest rate calculated with reference to the Federal Funds Rate
and the Spread or Spread Multiplier, if any, specified in such Note and in the
applicable Pricing Supplement.
Unless otherwise specified in the applicable Pricing Supplement, the "Federal
Funds Rate" for each Interest Reset Period shall be the effective rate on the
Interest Reset Date for such Interest Reset Period (a "Federal Funds Rate
Determination Date") for Federal Funds as published in H.15(519) under the
heading "Federal Funds (Effective)". In the event that such rate is not
published prior to 3:00 p.m., New York City time, on the Calculation Date (as
defined below) pertaining to such Federal Funds Rate Determination Date, the
"Federal Funds Rate" for such Interest Reset Period shall be the rate on such
Federal Funds Rate Determination Date as published in Composite Quotations
under the heading "Federal Funds/Effective Rate". If by 3:00 p.m., New York
City time, on such Calculation Date such rate is not yet published in either
H.15(519) or Composite Quotations, then the "Federal Funds Rate" for such
Interest Reset Period shall be the rate on such Federal Funds Rate
Determination Date made publicly available by the Federal Reserve Bank of New
York which is equivalent to the rate which appears in H.15(519) under the
heading "Federal Funds (Effective)"; provided, however, that if such rate is
not made publicly available by the Federal Reserve Bank of New York by 3:00
p.m., New York City time, on such Calculation Date, the "Federal Funds Rate"
for such Interest Reset Period will be the same as the Federal Funds Rate in
effect for the immediately preceding Interest Reset Period (or, if there was no
such Interest Reset Period, the Initial Interest Rate). In the case of a
Federal Funds Rate Note that resets daily, the interest rate on such Note for
the period from and including a Monday to but excluding the succeeding Monday
will be reset by the Calculation Agent for such Note on such second Monday (or,
if not a Business Day, on the next succeeding Business Day) to a rate equal to
the average of the Federal Funds Rates in effect with respect to each such day
in such week.
The "Calculation Date" pertaining to any Federal Funds Rate Determination
Date shall be the next succeeding Business Day.
LIBOR Notes
Each LIBOR Note will bear interest for each Interest Reset Period at the
interest rate calculated with reference to LIBOR and the Spread or Spread
Multiplier, if any, specified in such Note and in the applicable Pricing
Supplement.
"LIBOR" for each Interest Reset Period will be determined by the Calculation
Agent for such LIBOR Notes as follows:
(i) On the second Business Day prior to the Interest Reset Date for such
Interest Reset Period (a "LIBOR Determination Date"), the Calculation Agent
for such LIBOR Note will determine the arithmetic mean of the offered rates
for deposits in U.S. dollars for the period of the Index Maturity
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specified in the applicable Pricing Supplement, commencing on such Interest
Reset Date, which appear on the Designated LIBOR Page at approximately
11:00 a.m., London time, on such LIBOR Determination Date. "Designated
LIBOR Page" means "LIBOR Telerate", which shall be the display designated
as page "3750" on the Dow Jones Telerate Service (or such other page as may
replace page "3750" on such service or such other service as may be
nominated by the British Bankers' Association for the purpose of displaying
the London interbank offered rates of major banks), unless "LIBOR Reuters"
is designated in the applicable Pricing Supplement, in which case
"Designated LIBOR Page" means the display designated as page "LIBO" on the
Reuters Monitor Money Rates Service (or such other page as may replace the
LIBO page on such service or such other service as may be nominated by the
British Bankers' Association for the purpose of displaying London interbank
offered rates of major banks). If at least two such offered rates appear on
the Designated LIBOR Page, "LIBOR" for such Interest Reset Period will be
the arithmetic mean of such offered rates as determined by the Calculation
Agent for such LIBOR Note.
(ii) If fewer than two offered rates appear on the Designated LIBOR Page
on such LIBOR Determination Date, the Calculation Agent for such LIBOR Note
will request the principal London offices of each of four major banks in
the London interbank market selected by such Calculation Agent to provide
such Calculation Agent with its offered quotations for deposits in the
Specified Currency for the period of the specified Index Maturity,
commencing on such Interest Reset Date, to prime banks in the London
interbank market at approximately 11:00 a.m., London time, on such LIBOR
Determination Date and in a principal amount equal to an amount of not less
than U.S.$1,000,000 or the approximate equivalent thereof in the Specified
Currency that is representative of a single transaction in such market at
such time. If at least two such quotations are provided, "LIBOR" for such
Interest Reset Period will be the arithmetic mean of such quotations. If
fewer than two such quotations are provided, "LIBOR" for such Interest
Reset Period will be the arithmetic mean of rates quoted by three major
banks in The City of New York selected by the Calculation Agent for such
LIBOR Note at approximately 11:00 a.m., New York City time, on such LIBOR
Determination Date for loans in the Specified Currency to leading European
banks, for the period of the specified Index Maturity, commencing on such
Interest Reset Date, and in a principal amount equal to an amount of not
less than U.S.$1,000,000 or the approxiate equivalent thereof in the
Specified Currency that is representative of a single transaction in such
market at such time; provided, however, that if fewer than three banks
selected as aforesaid by such Calculation Agent are quoting rates as
mentioned in this sentence, "LIBOR" for such Interest Reset Period will be
the same as LIBOR for the immediately preceding Interest Reset Period (or,
if there was no such Interest Reset Period, the Initial Interest Rate).
If LIBOR with respect to any LIBOR Note is indexed to the offered rates for
deposits in a currency other than U.S. dollars, the applicable Pricing
Supplement will set forth the method for determining such rate.
Treasury Rate Notes
Each Treasury Rate Note will bear interest for each Interest Reset Period at
the interest rate calculated with reference to the Treasury Rate and the Spread
or Spread Multiplier, if any, specified in such Note and in the applicable
Pricing Supplement.
Unless "Constant Maturity" is specified or unless otherwise specified in the
applicable Pricing Supplement, the "Treasury Rate" for each Interest Reset
Period will be the rate for the auction held on the Treasury Rate Determination
Date (as defined below) for such Interest Reset Period of direct obligations of
the United States ("Treasury securities") having the Index Maturity specified
in the applicable Pricing Supplement as such rate shall be published in
H.15(519) under the heading "U.S. Government Securities--Treasury bills--
auction average (investment)" or, in the event that such rate is not published
prior to 3:00 p.m., New York City time, on the Calculation Date (as defined
below)
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pertaining to such Treasury Rate Determination Date, the auction average rate
(expressed as a bond equivalent on the basis of a year of 365 or 366 days, as
applicable, and applied on a daily basis) on such Treasury Rate Determination
Date as otherwise announced by the United States Department of the Treasury. In
the event that the results of the auction of Treasury securities having the
specified Index Maturity are not published or reported as provided above by
3:00 p.m., New York City time, on such Calculation Date, or if no such auction
is held on such Treasury Rate Determination Date, then the "Treasury Rate" for
such Interest Reset Period shall be calculated by the Calculation Agent for
such Treasury Rate Note and shall be a yield to maturity (expressed as a bond
equivalent on the basis of a year of 365 or 366 days, as applicable, and
applied on a daily basis) of the arithmetic mean of the secondary market bid
rates, as of approximately 3:30 p.m., New York City time, on such Treasury Rate
Determination Date, of three leading primary United States government
securities dealers selected by such Calculation Agent for the issue of Treasury
securities with a remaining maturity closest to the specified Index Maturity;
provided, however, that if the dealers selected as aforesaid by such
Calculation Agent are not quoting bid rates as mentioned in this sentence, then
the "Treasury Rate" for such Interest Reset Period will be the same as the
Treasury Rate for the immediately preceding Interest Reset Period (or, if there
was no such Interest Reset Period, the Initial Interest Rate).
The "Treasury Rate Determination Date" for each Interest Reset Period will be
the day of the week in which the Interest Reset Date for such Interest Reset
Period falls on which Treasury securities would normally be auctioned. Treasury
securities are normally sold at auction on Monday of each week, unless that day
is a legal holiday, in which case the auction is normally held on the following
Tuesday, except that such auction may be held on the preceding Friday. If, as
the result of a legal holiday, an auction is so held on the preceding Friday,
such Friday will be the Treasury Rate Determination Date pertaining to the
Interest Reset Period commencing in the next succeeding week. If an auction
date shall fall on any day that would otherwise be an Interest Reset Date for a
Treasury Rate Note, then such Interest Reset Date shall instead be the Business
Day immediately following such auction date.
If "Constant Maturity" is specified in the applicable Pricing Supplement, the
"Treasury Rate" for each Interest Reset Period will be the rate that is set
forth in the Federal Reserve Board publication H.15(519) opposite the caption
"U.S. Government/Securities/Treasury Constant Maturities/" in the Index
Maturity with respect to the applicable Constant Maturity Treasury Rate
Determination Date (as defined below). If the H.15(519) is not published, the
"Constant Maturity-Treasury Rate" shall be the rate that was set forth on
Telerate Page 7055, or its successor page (as determined by the Calculation
Agent), on the applicable Constant Maturity Treasury Rate Determination Date
opposite the applicable Index Maturity. If no such rate is set forth, then the
Constant Maturity Treasury Rate for such Interest Reset Period shall be
established by the Calculation Agent as follows. The Calculation Agent will
contact the Federal Reserve Board and request the Constant Maturity Treasury
Rate, in the applicable Index Maturity, for the Constant Maturity Treasury Rate
Determination Date. If the Federal Reserve Board does not provide such
information, then the Constant Maturity Treasury Rate for such Interest Reset
Date will be the arithmetic mean of bid-side quotations, expressed in terms of
yield, reported by three leading U.S. government securities dealers (one of
which may be Salomon Brothers Inc), according to their written records, as of
3:00 p.m. (New York City time) on the Constant Maturity Treasury Rate
Determination Date, for the noncallable U.S. Treasury Note that is nearest in
maturity to the Index Maturity, but not less than exactly the Index Maturity
and for the noncallable U.S. Treasury Note that is nearest in maturity to the
Index Maturity, but not more than exactly the Index Maturity. The Calculation
Agent shall calculate the Constant Maturity Treasury Rate by interpolating to
the Index Maturity based on an actual/actual date count basis, the yield on the
two Treasury Notes selected. If the Calculation Agent cannot obtain three such
adjusted quotations, the Constant Maturity Treasury Rate for such Interest
Reset Date will be the arithmetic mean of all such quotations, or if only one
such quotation is obtained, such quotation, obtained by the Calculation Agent.
In all events, the Calculation Agent shall continue polling dealers until at
least one adjusted yield quotation can be determined.
"The Constant Maturity Treasury Rate Determination Date" shall be the tenth
Business Day prior to the Interest Reset Date for the applicable Interest Reset
Period.
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<PAGE>
The Treasury constant maturity rate for a Treasury security maturity (the
"CMT Rate") as published in H.15(519) as of any Business Day is intended to be
indicative of the yield of a U.S. Treasury security having as of such Business
Day a remaining term to maturity equivalent to such maturity. The CMT Rate as
of any Business Day is based upon an interpolation by the U.S. Treasury of the
daily yield curve of outstanding Treasury securities. This yield curve, which
relates the yield on a security to its time to maturity, is based on the over-
the-counter market bid yields on actively traded Treasury securities. Such
yields are calculated from composites of quotations reported by leading U.S.
government securities dealers, which may include Salomon Brothers Inc. Certain
constant maturity yield values are read from the yield curve. Such
interpolation from the yield curve provides a theoretical yield for a Treasury
security having ten years to maturity, for example, even if no outstanding
Treasury security has as of such date exactly ten years remaining to maturity.
The "Calculation Date" pertaining to any Treasury Rate Determination Date or
Constant Maturity Rate Determination Date, as applicable, shall be the tenth
calendar day after such Treasury Rate Determination Date or Constant Maturity
Rate Determination Date, as applicable, or, if such a day is not a Business
Day, the next succeeding Business Day.
AMORTIZING NOTES
The Company may from time to time offer Bearer Notes ("Amortizing Notes") on
which a portion or all the principal amount is payable prior to Stated Maturity
in accordance with a schedule, by application of a formula, or by reference to
an Index (as defined below). Further information concerning additional terms
and conditions of any Amortizing Notes, including terms for repayment thereof
will be set forth in the applicable Pricing Supplement.
INDEXED NOTES
The Company may from time to time offer Bearer Notes ("Indexed Notes") on
which certain or all interest payments (in the case of an "Indexed Rate Note"),
and/or the principal amount payable at Stated Maturity or earlier redemption or
retirement (in the case of an "Indexed Principal Note"), is determined by
reference to the principal amount of such Notes (or, in the case of an Indexed
Principal Note, to the amount designated in the applicable Pricing Supplement
as the "Face Amount" of such Indexed Note) and by reference to prices, changes
in prices, or differences between prices, of securities, currencies,
intangibles, goods, articles or commodities or by such other objective price,
economic or other measures as are described in the applicable Pricing
Supplement (the "Index"). A description of the Index used in any determination
of an interest or principal payment, and the method or formula by which
interest or principal payments will be determined by reference to such Index,
will be set forth in the applicable Pricing Supplement.
In the case of a Fixed Rate Note, Floating Rate Note or Indexed Rate Note
that is also an Indexed Principal Note, the amount of any interest payment will
be determined by reference to the Face Amount of such Indexed Note unless
otherwise specified in the applicable Pricing Supplement. In the case of an
Indexed Principal Note, the principal amount payable at Stated Maturity or any
earlier redemption or repayment of the Indexed Note may be different from the
Face Amount.
If the determination of the Index on which any interest payment or the
principal amount of an Indexed Note is calculated or announced by a third
party, which may be Salomon Brothers Inc or another affiliate of the Company,
and such third party either suspends the calculation or announcement of such
Index or changes the basis upon which such Index is calculated (other than
changes consistent with policies in effect at the time such Indexed Note was
issued and permitted changes described in the applicable Pricing Supplement),
then such Index shall be calculated for purposes of such Indexed Note by
another third party selected by the Company, which may be Salomon Brothers Inc
or another affiliate of the Company, subject to the same conditions and
controls as applied to the original third
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party. If for any reason such Index cannot be calculated on the same basis and
subject to the same conditions and controls as applied to the original third
party, then the indexed interest payments, if any, or any indexed principal
amount of such Indexed Note shall be calculated in the manner set forth in the
applicable Pricing Supplement. Any determination of such third party shall in
the absence of manifest error be binding on all parties.
OPTIONAL REDEMPTION, REPAYMENT AND REPURCHASE
The Pricing Supplement relating to each Bearer Note will indicate either that
such Note cannot be redeemed (other than as provided under "Tax Redemption" and
"Special Tax Redemption" below) prior to its Stated Maturity or that such Note
will be redeemable at the option of the Company in whole or in part, and the
date or dates (each an "Optional Redemption Date") on which such Note may be
redeemed and the price (the "Redemption Price") at which (together with accrued
interest to such Optional Redemption Date) such Note may be redeemed on each
such Optional Redemption Date. The Company may exercise such option with
respect to a Bearer Note by notifying the Trustee for such Note at least 45
days prior to any Optional Redemption Date. At least 30 but not more than 60
days prior to the date of redemption, such Trustee shall provide notice of such
redemption to the Holder of such Bearer Note in accordance with "Notices"
below. In the event of redemption of a Bearer Note in part only, a new Note or
Notes for the unredeemed portion thereof shall be issued to the Holder thereof
upon the cancellation thereof. Bearer Notes redeemed prior to Stated Maturity
must be presented for payment together with all unmatured Coupons, if any,
appertaining thereto, failing which the amount of any missing unmatured Coupon
will be deducted from the sum due for payment. The Bearer Notes will not be
subject to any sinking fund.
The Pricing Supplement relating to each Bearer Note will also indicate
whether the Holder of such Note will have the option to elect repayment of such
Note by the Company prior to its Stated Maturity, and, if so, such Pricing
Supplement will specify the date or dates on which such Note may be repaid
(each an "Optional Repayment Date") and the price (the "Optional Repayment
Price") at which, together with accrued interest to such Optional Repayment
Date, such Note may be repaid on each such Optional Repayment Date. Bearer
Notes that are to be repaid prior to Stated Maturity must be presented for
payment together with all unmatured Coupons, if any, pertaining thereto,
failing which the amount of any missing unmatured Coupon will be deducted from
the sum due for payment.
In order for a Bearer Note to be repaid, the Principal Paying Agent must
receive the Bearer Note at least 30 but not more than 45 days prior to an
Optional Repayment Date. Any tender of a Bearer Note for repayment shall be
irrevocable. The repayment option may be exercised by the Holder of a Bearer
Note for less than the entire principal amount of such Note, provided that the
principal amount of such Note remaining outstanding after repayment is an
authorized denomination. Upon such partial repayment, such Bearer Note shall be
cancelled and a new Note or Notes for the remaining principal amount thereof
shall be issued to the Holder of such repaid Note.
If a Bearer Note is represented by a Global Security, the Depositary will be
the Holder of such Note and therefore will be the only entity that can exercise
a right to repayment. In order to ensure that the Depositary will timely
exercise a right to repayment with respect to a particular Bearer Note, the
beneficial owner of such Note must instruct the broker or other direct or
indirect participant through which it holds an interest in such Note to notify
the Depositary of its desire to exercise a right to repayment. Different firms
have different cut-off times for accepting instructions from their customers
and, accordingly, each beneficial owner should consult the broker or other
direct or indirect participant through which it holds an interest in a Bearer
Note in order to ascertain the cut-off time by which such an instruction must
be given in order for timely notice to be delivered to the Depositary.
Notwithstanding anything in this Prospectus Supplement to the contrary, if a
Bearer Note is an Original Issue Discount Note (other than an Indexed Note),
the amount payable on such Note in the
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event of redemption or repayment prior to its Stated Maturity shall be the
Amortized Face Amount of such Note as of the date of redemption or the date or
repayment, as the case may be. The "Amortized Face Amount" of a Discount Note
shall be the amount equal to (i) the Issue Price set forth in the applicable
Pricing Supplement plus (ii) that portion of the difference between the Issue
Price and the principal amount of such Note that has accrued at the Yield to
Maturity set forth in the Pricing Supplement (computed in accordance with
generally accepted United States bond yield computation principles) by such
date of redemption or repayment, but in no event shall the Amortized Face
Amount of a Discount Note exceed its principal amount.
The Company may at any time purchase Bearer Notes at any price in the open
market or otherwise. Bearer Notes so purchased by the Company may, at the
discretion of the Company, be held or resold (in which case the Company will
comply with applicable selling restrictions contained in the Treasury
Regulations as described herein) or surrendered to the Trustee for such Notes
for cancellation (together with any unmatured Coupons attached thereto or
purchased therewith).
TAX REDEMPTION
The Bearer Notes of a series may be redeemed at the option of the Company in
whole, but not in part, at any time on giving at least 30 but not more than 60
days' notice in accordance with "Notices" below (which notice shall be
irrevocable), at the respective Redemption Prices thereof, if the Company has
or will become obligated to pay additional interest on such Notes as described
under "Payment of Additional Interest" below as a result of any change in, or
amendment to, the laws (or any regulations or rulings promulgated thereunder)
of the United States or any political subdivision or taxing authority thereof
or therein, or any change in the application or official interpretation of such
laws, regulations or rulings, which change or amendment becomes effective on or
after their respective Original Issue Dates, and such obligation cannot be
avoided by the Company taking reasonable measures available to it; provided
that no such notice of redemption shall be given earlier than 90 days prior to
the earliest date on which the Company would be obligated to pay such
additional interest were a payment in respect of such Notes then due. Prior to
the publication of any notice of redemption pursuant to this paragraph, the
Company shall deliver to the Trustee for the Notes to be redeemed a certificate
stating that the Company is entitled to effect such redemption and setting
forth a statement of facts showing that the conditions precedent to the right
of the Company so to redeem have occurred, and an opinion of independent
counsel to the effect that the Company has or will become obligated to pay such
additional interest as a result of such change or amendment (Section 1302).
PAYMENT OF ADDITIONAL INTEREST
The Company will, subject to the exceptions and limitations set forth below,
pay as additional interest to the Holder of a Bearer Note or Coupon that is a
United States Alien (as defined below) such amounts as may be necessary so that
every net payment on such Note or Coupon, after deduction or withholding for or
on account of any present or future tax, assessment or other governmental
charge imposed upon or as a result of such payment by the United States (or any
political subdivision or taxing authority thereof or therein), will not be less
than the amount provided in such Note or Coupon to be then due and payable.
However, the Company will not be required to make any such payment of
additional interest to such Holder for or on account of:
(a) any tax, assessment or other governmental charge that would not have
been imposed but for (i) the existence of any present or former connection
between such Holder (or between a fiduciary, settlor or beneficiary of, or
a person holding a power over, such Holder, if such Holder is an estate or
a trust, or a member or shareholder of such Holder, if such Holder is a
partnership or a corporation) and the United States, including, without
limitation, such Holder (or such fiduciary, settlor, beneficiary, person
holding a power, member or shareholder) being or having been a citizen or
resident thereof or being or having been engaged in trade or business or
present therein or having or having had a permanent establishment therein
or (ii) such Holder's past or present status
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as a passive foreign investment company, a personal holding company, a
foreign personal holding company, a controlled foreign corporation for
United States tax purposes or a private foundation or other tax-exempt
organization with respect to the United States or as a corporation that
accumulates earnings to avoid United States federal income tax;
(b) any estate, inheritance, gift, sales, transfer or personal property
tax or any similar tax, assessment or other governmental charge;
(c) any tax, assessment or other governmental charge that would not have
been imposed but for the presentation by the Holder of a Bearer Note or
Coupon for payment more than 15 days after the date on which such payment
became due and payable or on which payment thereof was duly provided for,
whichever occurred later;
(d) any tax, assessment or other governmental charge that is payable
otherwise than by deduction or withholding from a payment on a Bearer Note
or Coupon;
(e) any tax, assessment or other governmental charge required to be
deducted or withheld by any Paying Agent from a payment on a Bearer Note or
Coupon, if such payment can be made without such deduction or withholding
by any other Paying Agent;
(f) any tax, assessment or other governmental charge that would not have
been imposed but for a failure to comply with any applicable certification,
documentation, information or other reporting requirement concerning the
nationality, residence, identity or connection with the United States of
the Holder or beneficial owner of a Bearer Note or Coupon if, without
regard to any tax treaty, such compliance is required by statute or
regulation of the United States as a pre-condition to relief or exemption
from such tax, assessment or other governmental charge; or
(g) any tax, assessment or other governmental charge imposed on a Holder
that actually or constructively owns ten percent or more of the combined
voting power of all classes of stock of the Company (taking into account
applicable attribution of ownership rules under Section 871(h)(3) of the
Internal Revenue Code of 1986, as amended (the "Code")) or is a controlled
foreign corporation related to the Company through stock ownership;
nor shall such additional interest be paid with respect to a payment on a
Bearer Note or Coupon to a Holder that is a fiduciary or partnership or other
than the sole beneficial owner of such payment to the extent a beneficiary or
settlor with respect to such fiduciary or a member of such partnership or a
beneficial owner would not have been entitled to the additional interest had
such beneficiary, settlor, member or beneficial owner been the Holder of such
Bearer Note or Coupon (Section 1202).
The term "United States Alien" means any person who, for United States
federal income tax purposes, is a foreign corporation, a nonresident alien
individual, a nonresident alien fiduciary of a foreign estate or trust, or a
foreign partnership one or more of the members of which is, for United States
federal income tax purposes, a foreign corporation, a nonresident alien
individual or a nonresident alien fiduciary of a foreign estate or trust
(Section 101).
SPECIAL TAX REDEMPTION
If the Company shall determine that any payment made outside the United
States by the Company or any of its Paying Agents in respect of any Bearer Note
of a series that is not a Floating Rate Note or Coupon appertaining thereto (an
"Affected Security") would, under any present or future laws or regulations of
the United States, be subject to any certification, documentation, information
or other reporting requirement of any kind, the effect of which requirement is
the disclosure to the Company, any Paying Agent or any governmental authority
of the nationality, residence or identity of a beneficial owner of such
Affected Security that is a United States Alien (other than such a requirement
(a) that would not be applicable to a payment made by the Company or any one of
its Paying Agents (i) directly to the beneficial owner or (ii) to a custodian,
nominee or other agent of the beneficial owner or (b) that can be satisfied by
such custodian, nominee or other agent certifying to the effect that the
beneficial
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<PAGE>
owner is a United States Alien; provided that, in any case referred to in
clause (a) (ii) or (b), payment by the custodian, nominee or agent to the
beneficial owner is not otherwise subject to any such requirement), then the
Company shall elect either (x) to redeem such Affected Securities in whole, but
not in part, at the Redemption Price thereof, or (y) if the conditions
described in the next succeeding paragraph are satisfied, to pay the additional
interest specified in such paragraph. The Company shall make such determination
as soon as practicable and publish prompt notice thereof (the "Determination
Notice") stating the effective date of such certification, documentation,
information or other reporting requirement, whether the Company elects to
redeem the Affected Securities or to pay the additional interest specified in
the next succeeding paragraph and (if applicable) the last date by which the
redemption of the Affected Securities must take place, as described in the next
succeeding sentence. If the Affected Securities are to be redeemed as described
in this paragraph, the redemption shall take place on such date, not later than
one year after the publication of the Determination Notice, as the Company
shall specify by notice given to the Trustee for the Notes to be redeemed at
least 60 days before the Redemption Date. Notice of such redemption shall be
given to the Holders of the Affected Securities at least 30 but not more than
60 days prior to the Redemption Date. Notwithstanding the foregoing, the
Company shall not so redeem the Affected Securities if the Company shall
subsequently determine, at least 30 days prior to the Redemption Date, that
subsequent payments on the Affected Securities would not be subject to any such
certification, documentation, information or other reporting requirement, in
which case the Company shall publish prompt notice of such subsequent
determination and any earlier redemption notice given as described in this
paragraph shall be revoked and of no further effect. Prior to the publication
of any Determination Notice as described in this paragraph, the Company shall
deliver to the Trustee for the Notes to be redeemed a certificate stating that
the Company is obligated to make such determination and setting forth a
statement of facts showing that the conditions precedent to the obligation of
the Company to redeem the Affected Securities or to pay the additional interest
specified in the next succeeding paragraph have occurred, and an opinion of
independent counsel to the effect that such conditions have occurred.
If and so long as the certification, documentation, information or other
reporting requirement referred to in the preceding paragraph would be fully
satisfied by payment of a backup withholding tax or similar charge, the Company
may elect to pay as additional interest such amounts as may be necessary so
that every net payment made outside the United States following the effective
date of such requirement by the Company or any of its Paying Agents in respect
of any Affected Security of which the beneficial owner is a United States Alien
(but without any requirement that the nationality, residence or identity of
such beneficial owner be disclosed to the Company, any Paying Agent or any
governmental authority), after deduction or withholding for or on account of
such backup withholding tax or similar charge (other than a backup withholding
tax or similar charge that (i) would not be applicable in the circumstances
referred to in the parenthetical clause of the first sentence of the preceding
paragraph or (ii) is imposed as a result of presentation of such Affected
Security for payment more than 15 days after the date on which such payment
became due and payable or on which payment thereof was duly provided for,
whichever occurred later), will not be less than the amount provided in such
Affected Security to be then due and payable. If the Company elects to pay
additional interest as described in this paragraph, then the Company shall have
the right thereafter to redeem the Affected Securities at any time in whole,
but not in part, at the Redemption Price thereof, subject to the provisions
described in the last three sentences of the immediately preceding paragraph.
If the Company elects to pay additional interest as described in this paragraph
and the condition specified in the first sentence of this paragraph should no
longer be satisfied, then the Company shall redeem the Affected Securities in
whole, but not in part, at the Redemption Price thereof, subject to the
provisions of the last three sentences of the immediately preceding paragraph.
Any redemption payments made by the Company as described in the two immediately
preceding sentences shall be subject to the continuing obligation of the
Company to pay additional interest as described in this paragraph (Section
1302).
DEFEASANCE
The defeasance provisions described in the Prospectus will not be applicable
to the Bearer Notes.
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<PAGE>
REPLACEMENT OF BEARER NOTES AND COUPONS
If an individual Bearer Note or Coupon is mutilated, destroyed, stolen or
lost it may be replaced at the specified office of the Principal Paying Agent
for such Note in London; or, so long as the Bearer Notes are listed on the
Luxembourg Stock Exchange, at the specified office of the Paying Agent in
Luxembourg, upon payment by the claimant of such expenses as may be incurred in
connection therewith and, in the case of destruction, theft or loss, on such
terms as to evidence and indemnity as the Company or the Trustee for such Note
may reasonably require. Mutilated or defaced Bearer Notes or Coupons must be
surrendered before replacements will be issued.
NOTICES
All notices to Holders of Bearer Notes will be deemed to have been duly given
if published on two separate Business Days in a leading London daily newspaper
(which is expected to be the Financial Times) and, so long as the Bearer Notes
are listed on the Luxembourg Stock Exchange and the rules of such exchange so
requires, in Luxembourg in a newspaper of general circulation in Luxembourg
(which is expected to be the Luxemburger Wort). Such notices shall be deemed to
have been given on the date of the first such publication.
UNCLAIMED MONIES
All monies paid by the Company to a Trustee or a Paying Agent for the payment
of principal of or any premium or interest on any Bearer Note or for the
payment of any Coupon which remain unclaimed at the end of two years after such
payments shall have become due and payable will be repaid to the Company, at
its written request, and the Holder of such Note or Coupon will thereafter look
only to the Company for payment, such payment to be made only outside the
United States.
GOVERNING LAW
The Indenture and the Notes will be governed by, and construed in accordance
with, the laws of the State of New York.
CURRENCY RISKS
EXCHANGE RATES AND EXCHANGE CONTROLS
An investment in a Bearer Note having a Specified Currency other than the
currency of the country in which a purchaser is resident or the currency
(including ECU and any other such composite currency) in which a purchaser
conducts its business or activities (the "home currency") entails significant
risks that are not associated with a similar investment in a security
denominated in the home currency. Such risks include, without limitation, the
possibility of significant changes in rates of exchange between the home
currency and such Specified Currency and the possibility of the imposition or
modification of foreign exchange controls with respect to such Specified
Currency. Such risks generally depend on factors over which the Company has no
control and which cannot be readily foreseen, such as economic and political
events and the supply of and demand for the relevant currencies. In recent
years, rates of exchange for certain currencies have been highly volatile, and
such volatility may be expected in the future. Fluctuations in any particular
exchange rate that have occurred in the past are not necessarily indicative,
however, of fluctuations in the rate that may occur during the term of any
Bearer Note. Depreciation of the Specified Currency for a Bearer Note against
the relevant home currency would result in a decrease in the effective yield of
such Note below its coupon rate and, in certain circumstances, could result in
a substantial loss to the investor on a home currency basis.
Governments have from time to time imposed, and may in the future impose,
exchange controls that could affect exchange rates as well as the availability
of a Specified Currency for making payments
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<PAGE>
in respect of Bearer Notes denominated in such currency. At present, the
Company has identified the following currencies in which payments of principal,
premium and interest on Bearer Notes may be made: Australian dollars, Canadian
dollars, Danish kroner, English pounds sterling, French francs, German deutsche
marks, Hong Kong dollars, Italian lire, Japanese yen, New Zealand dollars,
Pounds sterling, U.S. dollars and ECU. However, the Company may determine at
any time to issue Bearer Notes with Specified Currencies other than those
listed. There can be no assurances that exchange controls will not restrict or
prohibit payments of principal, premium or interest in any Specified Currency.
Even if there are no actual exchange controls, it is possible that, on a
payment date with respect to any particular Bearer Note, the currency in which
amounts then due in respect of such Note are payable would not be available to
the Company. In that event, the Company will make such payments in the manner
set forth under "Payment Currency" below.
THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS DO NOT DESCRIBE
ALL THE RISKS OF AN INVESTMENT IN BEARER NOTES DENOMINATED IN A CURRENCY OTHER
THAN A PROSPECTIVE PURCHASER'S HOME CURRENCY, AND THE COMPANY DISCLAIMS ANY
RESPONSIBILITY TO ADVISE PROSPECTIVE PURCHASERS OF SUCH RISKS AS THEY EXIST AT
THE DATE OF THIS PROSPECTUS SUPPLEMENT OR AS SUCH RISKS MAY CHANGE FROM TIME TO
TIME. PROSPECTIVE PURCHASERS SHOULD CONSULT THEIR OWN FINANCIAL AND LEGAL
ADVISORS AS TO THE RISKS ENTAILED BY AN INVESTMENT IN BEARER NOTES DENOMINATED
IN A CURRENCY OTHER THAN THE PURCHASER'S HOME CURRENCY. SUCH NOTES ARE NOT AN
APPROPRIATE INVESTMENT FOR PERSONS WHO ARE UNSOPHISTICATED WITH RESPECT TO
FOREIGN CURRENCY TRANSACTIONS.
Any Pricing Supplement relating to Bearer Notes having a Specified Currency
other than U.S. dollars will contain a description of any material exchange
controls affecting such currency and any other required information concerning
such currency.
VALUE OF ECU
Subject to the provisions set forth under "Payment Currency" below, the value
of the ECU is equal to the value of the European Currency Unit that is at
present used in the European Monetary System and which is at present valued on
the basis of specified amounts of the currencies of twelve member countries of
the European Communities (the "EC") as shown below.
Pursuant to Council Regulation (EEC) No. 1971/89 dated June 19, 1989, the ECU
is at present defined as the sum of the following components:
<TABLE>
<S> <C>
0.6242 German deutsche mark
0.08784 English pound sterling
1.332 French franc
151.8 Italian lire
0.2198 Dutch guilder
3.301 Belgian franc
</TABLE>
<TABLE>
<S> <C>
0.13 Luxembourg franc
0.1976 Danish krone
0.008552 Irish pound
1.44 Greek drachma
6.885 Spanish peseta
1.393 Portuguese escudo
</TABLE>
The EC may change this definition of the ECU, including by making changes in
the foregoing components, which will cause the basis for the valuation of a
Bearer Note denominated in ECU to change accordingly.
PAYMENT CURRENCY
Except as set forth below, if payment in respect of a Bearer Note is required
to be made in a Specified Currency other than U.S. dollars and such currency is
unavailable due to the imposition of exchange controls or other circumstances
beyond the Company's control or is no longer used by the
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<PAGE>
government of the country issuing such currency or for the settlement of
transactions by public institutions of or within the international banking
community, then all payments in respect of such Note shall be made in U.S.
dollars until such currency is again available or so used. The amounts so
payable on any date in such currency shall be converted into U.S. dollars on
the basis of the most recently available Market Exchange Rate for such currency
or as otherwise indicated in the applicable Pricing Supplement. Any payment in
respect of such Note made under such circumstances in U.S. dollars will not
constitute an Event of Default under the Indenture under which such Note shall
have been issued.
If payment in respect of a Bearer Note is required to be made in ECU and the
ECU is not then used in the European Monetary System, then the Trustee for such
Note shall, without liability on its part, choose a component currency (the
"Payment Currency") of the ECU in which all payments in respect of such Note
and any related Coupons shall be made until the ECU is again so used. Notice of
the Payment Currency selected by such Trustee shall be given in accordance with
"Description of Bearer Notes--Notices" above. The amount of each payment in
such Payment Currency shall be computed on the basis of the equivalent of the
ECU in that currency, determined as described below, as of the fourth
Luxembourg business day prior to the date on which such payment is due. Any
payment in respect of such Note made under such circumstances in the Payment
Currency will not constitute an Event of Default under the Indenture under
which such Note shall have been issued.
Notwithstanding the foregoing, on the first Luxembourg business day on which
the ECU is no longer used in the European Monetary System, each Trustee shall,
without liability on its part, choose a Payment Currency in which all payments
in respect of Bearer Notes and Coupons for which such Trustee serves as Trustee
denominated in ECU having a due date prior thereto but not yet presented for
payment are to be made. The amount of each payment in such Payment Currency
shall be computed on the basis of the equivalent of the ECU in that currency,
determined as described below, as of such first Luxembourg business day. Any
payment in respect of such Notes made under such circumstances in the Payment
Currency will not constitute an Event of Default under the Indenture under
which such Notes shall have been issued.
The equivalent of the ECU in the relevant Payment Currency as of any date
(the "Day of Valuation") shall be determined by the Luxembourg Stock Exchange
on the following basis. The component currencies of the ECU for this purpose
(the "Components") shall be the currency amounts that were components of the
ECU when the ECU was most recently used in the European Monetary System or for
the settlement of transactions by public institutions of or within the EC. The
equivalent of the ECU in the Payment Currency shall be calculated by, first,
aggregating the U.S. dollar equivalents of the Components, and then, using the
rate used for determining the U.S. dollar equivalent of the Components in the
Payment Currency as set forth below, calculating the equivalent in the Payment
Currency of such aggregate amount of U.S. dollars.
The U.S. dollar equivalent of each of the Components for each series of
Bearer Notes shall be determined by the Luxembourg Stock Exchange on the basis
of the middle spot delivery quotations prevailing at 2:30 p.m. Luxembourg time
on the Day of Valuation, as obtained by the Luxembourg Stock Exchange from one
or more major banks, selected by the Trustee for such Notes (with the approval
of the Company), in the country of issue of the Component in question.
If the official unit of any component currency of the ECU is altered by way
of combination or subdivision, the number of units of that currency as a
Component shall be divided or multiplied in the same proportion. If two or more
component currencies are consolidated into a single currency, the amounts of
those currencies as Components shall be replaced by an amount in such single
currency equal to the sum of the amounts of the consolidated component
currencies expressed in such single currency. If any component currency is
divided into two or more currencies, the amount of that currency as a Component
shall be replaced by amounts of such two or more currencies, each of which
shall be equal to the amount of the former component currency divided by the
number of currencies into which that currency was divided.
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<PAGE>
If no direct quotations are available for a Component on a Day of Valuation
from any of the banks selected by a Trustee (with the approval of the Company)
for this purpose, because foreign exchange markets are closed in the country of
issue of that Component, or for any other reason, in computing the U.S. dollar
equivalent of such Component the Luxembourg Stock Exchange shall (except as
provided below) use the most recent direct quotations for such Component
obtained by it; provided that such most recent quotations may be used only if
they were prevailing in the country of issue not more than two Luxembourg
business days before such Day of Valuation. Beyond such period of two
Luxembourg business days, the Luxembourg Stock Exchange shall determine the
U.S. dollar equivalent of such Component on the basis of cross rates derived
from the middle spot delivery quotations for such Component and for the U.S.
dollar prevailing at 2:30 p.m. Luxembourg time on such Day of Valuation, as
obtained by the Luxembourg Stock Exchange from one or more major banks,
selected by such Trustee (with the approval of the Company), in a country other
than the country of issue of such Component. Notwithstanding the foregoing,
within such period of two Luxembourg business days, the Luxembourg Stock
Exchange shall determine the U.S. dollar equivalent of such Component on the
basis of such cross rates if such Trustee and the Company judge that the
equivalent so calculated is more representative than the U.S. dollar equivalent
calculated on the basis of such most recent direct quotations. Unless otherwise
specified by such Trustee, if there is more than one market for dealing in any
component currency by reason of foreign exchange regulations or for any other
reason, the market to be referred to in respect of such currency shall be that
upon which a non-resident issuer of securities denominated in such currency
would purchase such currency in order to make payments in respect of such
securities.
All determinations referred to above made by a Trustee or the Luxembourg
Stock Exchange shall be at their respective sole discretion (except to the
extent expressly provided herein that any determination made by a Trustee is
subject to the approval of the Company) and shall, in the absence of manifest
error, be conclusive for all purposes and binding on holders of Bearer Notes,
and such Trustee shall have no liability therefor.
FOREIGN CURRENCY JUDGMENTS
The Notes will be governed by and construed in accordance with the law of the
State of New York. Courts in the United States customarily have not rendered
judgments for money damages denominated in any currency other than the U.S.
dollar. A 1987 amendment to the Judiciary Law of the State of New York
provides, however, that an action based upon an obligation denominated in a
currency other than U.S. dollars will be rendered in the foreign currency of
the underlying obligation and converted into U.S. dollars at the rate of
exchange prevailing on the date of the entry of the judgment or decree.
RISKS OF INDEXED NOTES
An investment in Indexed Notes may entail significant risks that are not
associated with a similar investment in a debt instrument that has a fixed
principal amount, is denominated in U.S. dollars and bears interest at either a
fixed rate or a floating rate determined by reference to nationally published
interest rate references. The risks of a particular Indexed Note will depend on
the terms of such Indexed Note, but may include, without limitation, the
possibility of significant changes in the prices of securities, currencies,
intangibles, goods, articles or commodities or of other objective price,
economic or other measures making up the relevant Index (the "Underlying
Assets"). Such risks generally depend on factors over which the Company has no
control and which cannot readily be foreseen, such as economic and political
events and the supply of and demand for the Underlying Assets. In recent years,
currency exchange rates and prices for various Underlying Assets have been
highly volatile, and such volatility may be expected in the future.
Fluctuations in any such rates or prices that have occurred in the past are not
necessarily indicative, however, of fluctuations that may occur during the term
of any Indexed Note.
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<PAGE>
In considering whether to purchase Indexed Notes, investors should be aware
that the calculation of amounts payable in respect of Indexed Notes may involve
reference to an Index determined by an affiliate of the Company or to prices
which are published solely by third parties or entities which are not subject
to regulation under the laws of the United States.
THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS DO NOT DESCRIBE
ALL THE RISKS ON AN INVESTMENT IN INDEXED NOTES, AND THE COMPANY DISCLAIMS ANY
RESPONSIBILITY TO ADVISE PROSPECTIVE PURCHASERS OF SUCH RISKS AS THEY EXIST AT
THE DATE OF THIS PROSPECTUS SUPPLEMENT OR AS SUCH RISKS MAY CHANGE FROM TIME TO
TIME. THE RISK OF LOSS AS A RESULT OF THE LINKAGE OF PRINCIPAL OR INTEREST
PAYMENTS ON INDEXED NOTES TO AN INDEX AND TO THE UNDERLYING ASSETS CAN BE
SUBSTANTIAL. PROSPECTIVE PURCHASERS SHOULD CONSULT THEIR OWN FINANCIAL AND
LEGAL ADVISORS AS TO THE RISKS ENTAILED BY AN INVESTMENT IN INDEXED NOTES. AN
INDEXED NOTE IS NOT AN APPROPRIATE INVESTMENT FOR PERSONS WHO ARE
UNSOPHISTICATED WITH RESPECT TO TRANSACTIONS IN THE UNDERLYING ASSETS OF ANY
INDEX RELEVANT TO THAT INDEXED NOTE.
TAXATION IN THE UNITED STATES
Under current United States Federal income and estate tax law, (a) payment on
a Bearer Note or Coupon by the Company or any paying agent to a holder that is
a United States Alien will not be subject to withholding of United States
Federal income tax provided that, with respect to payments of interest,
including original issue discount, the holder does not actually or
constructively own ten percent or more of the combined voting power of all
classes of stock of the Company (taking into account the applicable attribution
of ownership rules under Section 871(h)(3) of the Code) and is not a controlled
foreign corporation related to the Company through stock ownership; (b) a
holder of a Bearer Note or Coupon that is a United States Alien will not be
subject to United States Federal income tax on gain realized on the sale,
exchange or redemption of such Note or Coupon, provided that such holder does
not have a connection with or status with respect to the United States
described in clause (a) under "Payment of Additional Interest"; (c) a
beneficial owner of a Bearer Note or Coupon that is a United States Alien will
not be required to disclose its nationality, residence or identity to the
Company, a paying agent (acting in its capacity as such) or any United States
governmental authority in order to receive payment on such Note or Coupon from
the Company or a paying agent outside the United States (although the
beneficial owner of an interest in a Temporary Global Note will be required to
provide a Certificate of Non-U.S. Beneficial Ownership to Euroclear or Cedel in
order to exchange such interest or to receive interest payments with respect
thereto, as described in "Description of Bearer Notes--Payments and Paying
Agents" above); and (d) a Bearer Note or Coupon will not be subject to United
States Federal estate tax as a result of the death of a holder who is not a
citizen or resident of the United States at the time of death, provided that
such holder did not at the time of death actually or constructively own ten
percent or more of the combined voting power of all classes of stock of the
Company and, at the time of such holder's death, payments of interest on such
Note or Coupon would not have been effectively connected with the conduct by
such holder of a trade or business in the United States.
Special tax considerations may apply to certain Indexed Notes or any Notes
providing for contingent payments. Any such considerations will be described in
the applicable Pricing Supplement.
United States information reporting requirements and backup withholding tax
will not apply to payments on a Bearer Note or Coupon made outside the United
States by the Company or any paying agent (acting in its capacity as such) to a
holder that is a United States Alien. Information reporting requirements and
backup withholding tax also will not apply to any payment on a Bearer Note or
Coupon outside the United States by a foreign office of a custodian, nominee or
other agent of the beneficial owner of such Note or Coupon, provided that such
custodian, nominee or agent (i) is not a
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<PAGE>
U.S. Person, (ii) derives less than 50% of its gross income for certain periods
from the conduct of a trade or business in the United States and (iii) is not a
controlled foreign corporation as to the United States (a person described in
(i), (ii) and (iii) being hereinafter referred to as a "foreign controlled
person"). Payment in respect of a Bearer Note or Coupon outside the United
States to the beneficial owner thereof by a foreign office of any custodian,
nominee or agent that is not a foreign controlled person will not be subject to
backup withholding tax, but will be subject to information reporting
requirements unless such custodian, nominee or agent has documentary evidence
in its records that the beneficial owner is a United States Alien or the
beneficial owner otherwise establishes an exemption.
Information reporting requirements and backup withholding tax will not apply
to any payment of the proceeds of the sale of a Bearer Note or Coupon effected
outside the United States by a foreign office of a "broker" (as defined in
applicable Treasury regulations), provided that such broker is a foreign
controlled person. Payment of the proceeds of the sale of a Bearer Note or
Coupon effected outside the United States by a foreign office of any broker
that is not a foreign controlled person will not be subject to backup
withholding tax, but will be subject to information reporting requirements
unless such broker has documentary evidence in its records that the beneficial
owner is a United States Alien and certain other conditions are met, or the
beneficial owner otherwise establishes an exemption.
PLAN OF DISTRIBUTION
The Bearer Notes are being offered on a continuous basis by the Company
through the Agents, each of which has agreed to use its reasonable efforts to
solicit orders to purchase Bearer Notes. The Company will have the sole right
to accept orders to purchase Bearer Notes and may reject proposed purchases in
whole or in part. Each Agent shall have the right, in its discretion reasonably
exercised and without notice to the Company, to reject any proposed purchase of
Bearer Notes in whole or in part. The Company will pay each Agent a commission
of from not more than .125% to not more than .750% of the principal amount of
Bearer Notes sold through it, depending upon the Stated Maturity.
The Company may also sell Bearer Notes at a discount to an Agent for its own
account or for resale to one or more purchasers at varying prices related to
prevailing market prices at the time of resale or, if set forth in the
applicable Pricing Supplement, at a fixed public offering price, all as
determined by the Agent. After any initial public offering of Bearer Notes to
be resold to purchasers at a fixed public offering price, the public offering
price and any concession or discount may be changed. In addition, an Agent may
offer Bearer Notes purchased by it as principal to other dealers. Bearer Notes
sold by an Agent to a dealer may be sold at a discount and, unless otherwise
specified in the applicable Pricing Supplement, such discount allowed will not
be in excess of the discount received by the Agent from the Company. Unless
otherwise specified in the applicable Pricing Supplement, any Bearer Note
purchased by an Agent as principal will be purchased at 100% of the principal
amount or face amount thereof less a percentage equal to the commission
applicable to an agency sale of a Bearer Note of identical maturity.
In compliance with United States Federal income tax laws and regulations, the
Company and each Agent have agreed that in connection with the original
issuance of any Bearer Note and during the period ending 40 days after the
Original Issue Date of such Note they will not offer, sell or deliver such
Note, directly or indirectly, to a U.S. Person or to any person within the
United States and its possessions, except to the extent permitted under U.S.
Treasury regulations. Under those regulations, Bearer Notes may be offered and
sold during that period to international organizations, to foreign central
banks and to foreign branches of U.S. financial institutions that satisfy
requirements prescribed by the regulations. Confirmations sent by an Agent in
connection with sales of Bearer Notes need not contain certain purchaser
representations.
The Bearer Notes have not been and will not be registered under the
Securities and Exchange Law of Japan. The Company and the Agents will agree not
to offer or sell any Bearer Note directly or
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<PAGE>
indirectly in Japan or to residents of Japan or for the benefit of any Japanese
person (which term as used herein means any person resident in Japan, including
any corporation or other entity organized under the laws of Japan) or to others
for reoffering or resale directly or indirectly in Japan or to any Japanese
person during the period of 90 days from the Original Issue Date of such Bearer
Note (which Bearer Note is denominated in Japanese yen) or 180 days from the
Original Issue Date of such Bearer Note (which Bearer Note is a Dual Currency
Note, Reverse Dual Currency Note or Optional Dual Currency Note) and that
thereafter it will not do so except in circumstances that result in compliance
with any applicable laws, regulations and ministerial guidelines of Japan taken
as a whole.
Bearer Notes may not be offered or sold in Great Britain, by means of this
Prospectus Supplement, the accompanying Prospectus or any other document, other
than to persons whose ordinary business it is to buy or sell shares or
debentures, whether as principal or agent (except under circumstances that do
not constitute an offer to the public within the meaning of the Companies Act
1985), and all applicable provisions of The Financial Service Act 1986 must be
complied with in respect to anything done or to be done in relation to the
Bearer Notes in, from or otherwise involving the United Kingdom. Furthermore,
each underwriter, dealer, agent and remarketing firm participating in the
distribution of Bearer Notes will agree that it will only issue or pass on in
the United Kingdom any publication or document received by it in connection
with the issue of such Notes to persons who are persons falling within Article
9(3) of The Financial Services Act of 1986 (Investment Advertisements)
(Exemptions) Order 1988.
Bearer Notes that are denominated in German deutsche marks will be offered by
the Company through Salomon Brothers AG. Each issue of Bearer Notes denominated
or payable in, or linked to, German deutsche marks will take place only in
compliance with the guidelines of the German central bank regarding the issue
of debt securities denominated in German deutsche marks. In particular, only
credit institutions domiciled in Germany will act as dealers in relation to
such Notes except in the case of a syndicated issue of Bearer Notes denominated
in German deutsche marks (where only the lead manager specified in the Pricing
Supplement need be such a credit institution). Each issue of Indexed Notes
denominated in German deutsche marks will be made in compliance with the policy
of the German central bank regarding the indexation of debt obligations
denominated in German deutsche marks of non-German issuers.
There can be no assurance as to the existence of a secondary market for any
Bearer Notes, or that the Bearer Notes will be sold.
An Agent, whether acting as agent or principal, may be deemed to be an
"underwriter" within the meaning of the Securities Act. The Company has agreed
to indemnify the Agents against certain liabilities, including liabilities
under the Securities Act, or to contribute to payments that the Agent may be
required to make in respect thereof.
In addition to the Bearer Notes being offered through the Agents as described
herein, Registered Notes that may have terms identical or similar to the terms
of the Bearer Notes may be concurrently offered by the Company on a continuous
basis in the United States by Salomon Brothers Inc, as U.S. Agent pursuant to
the Global Selling Agency Agreement between the Company, Salomon Brothers
International Limited, Salomon Brothers AG, Salomon Brothers Hong Kong Limited
and Salomon Brothers Inc (the "Selling Agency Agreement"). Pursuant to the
Selling Agency Agreement, Salomon Brothers Inc may also purchase Registered
Notes as principal for its own account or for resale. Any Registered Notes so
offered and sold will reduce correspondingly the maximum aggregate principal
amount of Bearer Notes that may be offered by this Prospectus Supplement and
the Prospectus.
GENERAL INFORMATION
Application has been made to list the Bearer Notes on the Luxembourg Stock
Exchange. In connection with such listing, the Certificate of Incorporation and
By-Laws of the Company and a legal
S-30
<PAGE>
notice relating to the issuance of the Bearer Notes have been deposited with
the Chief Registrar of the District Court of Luxembourg, where copies may be
obtained upon request.
The issuance of the Notes was authorized by action of the Board of Directors
of the Company on September 7, 1988, March 7, 1990, May 2, 1990, June 5, 1991,
September 5, 1991, June 2, 1993, and December 1, 1993, and by action of the
executive committee of the Board of Directors on July 24, 1991 and by action of
an authorized officer of the Company on February 12, 1993, December 14, 1993
and August , 1994.
So long as the Bearer Notes of either series are listed on the Luxembourg
Stock Exchange, copies of the Pricing Supplements for such series of Notes, the
Registration Statement (and the documents incorporated by reference therein),
the annual and quarterly reports, Certificate of Incorporation and By-Laws of
the Company, the Indenture for such series of Notes and the Selling Agency
Agreement will be available for inspection at the office of the Listing Agent
or at the office of the Paying Agent for such series of Notes in Luxembourg
during the term of the Bearer Notes. In addition, copies of such annual and
quarterly reports and such Pricing Supplements may be obtained at such offices.
Except as otherwise disclosed or incorporated by reference herein, the
Company is not involved in any litigation or arbitration proceedings relating
to claims or amounts which it believes will be material in the context of the
issue of the Bearer Notes and is not aware that any such litigation or
arbitration proceedings are pending or threatened.
As of the date of this Prospectus Supplement, there has been no material
adverse change in the financial position of the Company since the date of the
latest audited financial statements contained or incorporated by reference in
the accompanying Prospectus.
The Bearer Notes have been accepted for clearance through Euroclear and
CEDEL.
S-31
<PAGE>
REGISTERED OFFICE OF SALOMON INC
Seven World Trade Center New York, New York 10048
TRUSTEE FOR SERIES D NOTES TRUSTEE FOR SERIES E NOTES
Citibank, N.A. Bankers Trust Company
120 Wall Street Four Albany Street
New York, New York 10043 New York, New York 10015
PRINCIPAL PAYING AGENT PRINCIPAL PAYING AGENT
FOR SERIES D NOTES FOR SERIES E NOTES
Citibank, N.A. Bankers Trust Company
Issuer Services 1 Appold Street, Broadgate
336 Strand London, EC2A 2HE
London, WC2R 0E
PAYING AGENT FOR SERIES D NOTES PAYING AGENT FOR SERIES E NOTES
Citibank (Luxembourg) S.A. Bankers Trust Luxembourg, S.A.
16, Avenue Marie Therese P. O. Box 807
Luxembourg 14 Boulevard F.D. Roosevelt
L-2450 Luxembourg
LEGAL ADVISOR TO SALOMON INC LEGAL ADVISOR TO THE AGENTS
Cravath, Swaine & Moore Cleary, Gottlieb, Steen & Hamilton
825 Eighth Avenue One Liberty Plaza
New York, N.Y. 10019 New York, N.Y. 10006
AUDITOR TO SALOMON INC
Arthur Andersen & Co.
1345 Avenue of the Americas
New York, N.Y. 10105
LISTING AGENT
Kredietbank S.A. Luxembourgeoise
43 Boulevard Royal
Luxembourg City 2955
Luxembourg
<PAGE>
SUBJECT TO COMPLETION DATED AUGUST 4, 1994
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 $5,478,000,000, 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 SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS, ANY PROSPECTUS SUPPLEMENT OR ANY
PRICING SUPPLEMENT THERETO. 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 and
Pricing Supplements may be used by the Company or any of its subsidiaries,
including Salomon Brothers Inc, in connection with such transactions.
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS AND ANY PROSPECTUS SUPPLEMENT SHALL NOT CONSTITUTE
AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY
SALE OF THESE SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR
SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE
SECURITIES LAWS OF ANY SUCH STATE.
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SALOMON BROTHERS INC
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The date of this Prospectus is August , 1994.
<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 Citicorp 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,
1993 (the "1993 10-K"); (ii) the Quarterly Reports on Form 10-Q for the
Quarters ended March 31, 1994 and June 30, 1994, and (iii) the Current Reports
on Form 8-K dated January 12, 1994, January 18, 1994, January 27, 1994, March
7, 1994, April 25, 1994, July 6, 1994 and July 21, 1994.
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, 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 several oil
refineries and other asset-based businesses. At December 31, 1993, the Company
employed 8,640 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 1.11 for the three months ended
March 31, 1994, and 1.32, 1.25, 1.16, 1.08, and 1.12 for the years 1993, 1992,
1991, 1990 and 1989, 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
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<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
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<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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<PAGE>
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.
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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 1993 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>
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS AND ANY PRICING SUPPLEMENT SHALL NOT CONSTITUTE AN
OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY
SALE OF THESE SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR
SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE
SECURITIES LAWS OF ANY SUCH STATE.
SUBJECT TO COMPLETION DATED AUGUST 4, 1994
PROSPECTUS
$1,000,000,000
SALOMON INC
NOTES, SERIES G
DUE MORE THAN NINE MONTHS FROM DATE OF ISSUE
Salomon Inc (the "Company") may from time to time offer its Notes, Series G
(the "Notes") with an aggregate initial public offering price or purchase price
of up to $1,000,000,000. The sale of other securities under the Registration
Statement of which this Prospectus forms a part or under a Registration to
which this Prospectus relates may reduce the amount of Notes that may be sold
hereunder. Each Note will mature more than nine months from its date of issue.
The interest rate or interest rate formula, reset provisions, Issue Price,
Stated Maturity, Interest Payment Dates, repayment provisions and certain other
terms (including a Survivor's Option, if applicable) with respect to each Note
will be established at the time of issuance and set forth in a pricing
supplement to this Prospectus (a "Pricing Supplement"). A Note may bear
interest at a fixed rate (a "Fixed Rate Note"), which may be zero in the case
of certain Discount Notes, or at a floating rate (a "Floating Rate Note")
determined by reference to LIBOR, the CD Rate, the Commercial Paper Rate, the
Federal Funds Rate or the Treasury Rate, as selected by the purchaser and
agreed to by the Company, adjusted by the Spread or Spread Multiplier, if any,
applicable to such Note. Such fixed rate, Spread or Spread Multiplier may be
subject to change as described in the applicable Pricing Supplement. A Note may
be issued as an amortizing note (an "Amortizing Note") on which a portion or
all the principal amount is payable prior to Stated Maturity in accordance with
a schedule or by application of a formula. The Pricing Supplement also will
state whether interest will be payable monthly, quarterly or semi-annually.
Unless otherwise specified in the applicable Pricing Supplement, in the case of
a Note that provides for monthly interest payments, interest will be payable,
in arrears, on the fifteenth day of each calendar month; provided, however,
that in the case of such Note issued between the first and fifteenth day of a
calendar month, interest otherwise payable on the fifteenth day of such
calendar month will be payable on the fifteenth day of the next succeeding
calendar month. Unless otherwise specified in the applicable Pricing
Supplement, in the case of a Note that provides quarterly interest payments,
interest will be payable, in arrears, commencing on the day that is three
months from (i) the day on which such Note is issued, if such Note is issued on
the fifteenth day of a calendar month, or (ii) the preceding fifteenth day of a
calendar month prior to the issuance of such Note. Unless otherwise specified
in the applicable Pricing Supplement, in the case of a Note that provides for
semi-annual interest payments, interest will be payable, in arrears, commencing
on the day that is six months from (i) the day on which such Note is issued, if
such Note is issued on the fifteenth day of a calendar month, or (ii) the
preceding fifteenth day of a calendar month prior to the issuance of such Note.
Each Note will be issued in book-entry form and will be represented only by a
global certificate (a "Global Certificate") registered in the name of a nominee
of The Depository Trust Company, as depositary (the "Depositary"), and
certificates representing Notes will not be issued to the beneficial owners
thereof except as otherwise set forth herein. See "Book-Entry Procedures and
Settlement" and "Certificated Notes" under "Description of the Notes" herein.
Beneficial ownership of a Note will be recorded on or through the records of
the brokerage firm or other entity that maintains the beneficial owner's
account. Transfer of ownership of any Note may be effected only through the
selling owner's brokerage firm or such other entity.
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 OR ANY PRICING SUPPLEMENT HERETO. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRICE TO UNDERWRITER'S DISCOUNT PROCEEDS TO THE
PUBLIC(1) OR COMMISSION(2) COMPANY(3)
<S> <C> <C> <C>
Per Note...... 100.000% .500%-2.750% 97.250%-99.500%
Total......... $1,000,000,000 $5,000,000-$27,500,000 $972,500,000-$995,000,000
</TABLE>
- --------------------------------------------------------------------------------
(1) Unless otherwise specified in the applicable Pricing Supplement, the price
to public will be 100% of the principal amount.
(2) The underwriter's discount, which will be a percentage of the principal
amount of each Note, will vary depending on the Stated Maturity of such Note.
(3) Before deduction of expenses payable by the Company estimated at
$2,700,000, including reimbursement of certain expenses of Salomon Brothers
Inc (the "Underwriter").
The Notes will be sold through the Underwriter acting as principal, unless
otherwise specified in the applicable Pricing Supplement. The Pricing
Supplement with respect to each offering of Notes will set forth, among other
things, the price to public of such Notes, the proceeds to the Company from
such sale, the underwriter's discount and any dealer's selling concession and
the name of the underwriter, if other than Salomon Brothers Inc. The Notes will
not be listed on any securities exchange, and there can be no assurance that
the maximum amount of Notes offered by this Prospectus will be sold or that
there will be a secondary market for the Notes. The Company reserves the right
to withdraw, cancel or modify the offer made hereby without notice. Any Notes
offered through the Underwriter (or any other underwriter named in the
applicable Pricing Supplement) acting as principal are offered subject to
receipt and acceptance by the Underwriter, to prior sale and to the
Underwriter's right to reject any order in whole or in part and to withdraw,
cancel or modify the offer made hereby without notice. See "Plan of
Distribution".
The Prospectus and the accompanying Pricing Supplement may be used by the
Company, Salomon Brothers Inc, a wholly owned subsidiary of the Company, or
other affiliates of the Company in connection with offers and sales related to
secondary market transactions in the Notes offered hereby and approximately
$170,462,000 of Notes initially sold pursuant to an earlier prospectus, as
described herein. Salomon Brothers Inc or other such Company affiliates may act
as principal or agent in such transactions. Such sales will be made at varying
prices related to prevailing market prices at the time of sale.
- --------------------------
SALOMON BROTHERS INC
- -------------------------------------------------------------------------------
The date of this Prospectus is August , 1994
<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 Citicorp 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 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 Notes. 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,
1993 (the "1993 10-K"); (ii) the Quarterly Reports on Form 10-Q for the
quarters ended March 31, 1994, and June 30, 1994, and (iii) the Current Reports
on Form 8-K dated January 12, 1994, January 18, 1994, January 27, 1994, March
7, 1994, April 25, 1994, July 6, 1994 and July 21, 1994.
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 Notes 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.
----------------
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITER MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE DEBT
SECURITIES AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
2
<PAGE>
Pursuant to a Prospectus dated December 14, 1993 (and applicable Pricing
Supplements) filed with the Commission under Registration Statement No. 33-
51269, the Company had outstanding as of August 1, 1994 approximately
$170,462,000 of its Notes, Series G. The Notes offered by this Prospectus are
part of the same series of Notes as the Notes described in the preceding
sentence.
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 Philbro Division of the Company. Oil refining
activities are conducted by Philbro Energy USA, Inc., the owner of several oil
refineries and other asset-based businesses. At December 31, 1993, the Company
employed 8,640 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 Notes 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 1.11 for the three months ended
March 31, 1994, and 1.32, 1.25, 1.16, 1.08, and 1.12 for the years 1993, 1992,
1991, 1990, and 1989, 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 THE NOTES
The Notes will be issued as a series under an indenture, dated as of December
1, 1988 (as amended or supplemented from time to time, the "Indenture"),
between the Company and Citibank, N. A., a national banking association (the
"Trustee"). The Notes will rank pari passu with all other unsecured debt of the
Company except subordinated debt. A copy of the Indenture has previously been
filed with the Commission and is incorporated by reference as part of the
Registration Statement. The following summary of certain provisions of the
Indenture and the Notes does not purport to be complete and such summary is
subject to the detailed provisions of the Indenture, to which reference is
hereby made for a full description of such provisions, including the definition
of certain capitalized terms used herein, and for other information regarding
the Notes. Numerical references in parentheses below are to sections in the
Indenture. Wherever particular sections or defined terms of the 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.
The Indenture does not limit the aggregate principal amount of Debt
Securities, which term includes the Notes offered hereby, that may be issued
thereunder and provides that Debt Securities may be issued from time to time in
series (Section 301).
3
<PAGE>
GENERAL
At the date of this Prospectus, the Notes offered pursuant to this Prospectus
are limited to an aggregate initial public offering price or purchase price of
up to $1,000,000,000, which amount may be reduced as a result of 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. In addition, the Company had outstanding as of August 1, 1994
approximately $170,462,000 of Series G Notes sold pursuant to an earlier
prospectus. The aggregate amount of Notes may be increased from time to time to
such larger amount as may be authorized by the Company. The Notes will be
represented only by Global Certificates registered in the name of a nominee of
the Depositary, except as described below under "Certificated Notes". The
nominal authorized denominations of the Notes will be $1,000 and any larger
amount that is an integral multiple of $1,000. Each Note will mature more than
nine months from its date of issue on the day that is the final Interest
Payment Date for such Note.
Each Note will bear interest from its Original Issue Date (as defined below)
at the rate per annum stated on the face thereof until the principal amount
thereof is paid or made available for payment. Interest on each Note will be
payable, in arrears, either monthly, quarterly or semi-annually. Unless
otherwise specified in the applicable Pricing Supplement, in the case of a Note
that provides for monthly interest payments, interest will be payable on the
fifteenth day of each calendar month; provided, however, that in the case of
such Note issued between a Regular Record Date (as defined below) and an
Interest Payment Date, interest will be payable on the next succeeding Interest
Payment Date. Unless otherwise specified in the applicable Pricing Supplement,
in the case of a Note that provides for quarterly interest payments, interest
will be payable commencing on the day that is three months from (i) the
Original Issue Date, if such Note is issued on the fifteenth day of a calendar
month, or (ii) the preceding fifteenth day of a calendar month prior to the
Original Issue Date. Unless otherwise specified in the applicable Pricing
Supplement, in the case of a Note that provides for semi-annual interest
payments, interest will be payable commencing on the day that is six months
from (i) the Original Issue Date, if such Note is issued on the fifteenth day
of a calendar month, or (ii) the preceding fifteenth day of a calendar month
prior to the Original Issue Date. Unless otherwise specified in the applicable
Pricing Supplement, the Regular Record Date with respect to any Interest
Payment Date for a Note will be the first day of the calendar month in which
such Interest Payment Date occurs, except that the Regular Record Date with
respect to the final Interest Payment Date will be the final Interest Payment
Date. Each payment of interest in respect of an Interest Payment Date will
include interest accrued to such Interest Payment Date.
The Pricing Supplement relating to a Note will set forth, among other things,
the following terms: (i) whether such Note is a Fixed Rate Note, a Floating
Rate Note and/or an Amortizing Note, (ii) the price at which such Note will be
issued (the "Issue Price"); (iii) the date on which such Note will be issued
(the "Original Issue Date"); (iv) the date on which such Note will mature (the
"Stated Maturity"); (v) if such Note is a Fixed Rate Note, the rate per annum
at which such Note will bear interest, if any, and whether and the manner in
which such rate may be changed prior to its Stated Maturity; (vi) if such Note
is a Floating Rate Note, the Base Rate, the Initial Interest Rate, the Interest
Period or the Interest Reset Dates, the Interest Payment Dates, and, if
applicable, the Index Maturity, the Maximum Interest Rate, the Minimum Interest
Rate, the Spread or Spread Multiplier (all as defined below), and any other
terms relating to the particular method of calculating the interest rate for
such Note and whether and the manner in which such Spread or Spread Multiplier
may be changed prior to Stated Maturity; (vii) whether such Note is an Original
Issue Discount Note (as defined below); (viii) if such Note is an Amortizing
Note, the terms for repayment prior to Stated Maturity; (ix) whether the Holder
of such Note has a Survivor's Option, as described below under "Repayment Upon
Death"; and (x) any other terms not inconsistent with the provisions of the
Indenture.
"Original Issue Discount Note" means (i) a Note, including any Note whose
interest rate is zero, that has a stated redemption price at Stated Maturity
that exceeds its Issue Price by at least 0.25% of its stated redemption price
at Stated Maturity, multiplied by the number of full years from the Original
4
<PAGE>
Issue Date to the Stated Maturity for such Note and (ii) any other Note
designated by the Company as issued with original issue discount for United
States Federal income tax purposes.
A "basis point" or "bp" equals one one-hundredth of a percentage point.
REPAYMENT UPON DEATH
The Pricing Supplement relating to any Note will indicate whether the Holder
of such Note will have the option (the "Survivor's Option") to elect repayment
of such Note prior to its Stated Maturity in the event of the death of the
beneficial owner of such Note. SEE THE PRICING SUPPLEMENT TO DETERMINE WHETHER
THE SURVIVOR'S OPTION APPLIES TO ANY PARTICULAR NOTE.
Pursuant to exercise of the Survivor's Option, if applicable, the Company
will repay any Note properly tendered for repayment by or on behalf of the
person (the "Representative") that has authority to act on behalf of the
deceased beneficial owner of such Note under the laws of the appropriate
jurisdiction (including, without limitation, the personal representative,
executor, surviving joint tenant or surviving tenant by the entirety of such
deceased beneficial owner) at a price equal to 100% of the principal amount
thereof plus accrued interest to the date of such repayment, subject to the
following limitations. The Company may, in its sole discretion, limit to
$2,500,000 the aggregate principal amount of Notes as to which exercises of the
Survivor's Option will be accepted in any calendar year (the "Annual Put
Limitation") and, in the event that the Annual Put Limitation is applied, limit
to $250,000 the aggregate principal amount of Notes (or portions thereof) as to
which exercise of the Survivor's Option will be accepted in such calendar year
with respect to any individual deceased beneficial owner of Notes. Moreover,
the Company will not make principal repayments pursuant to exercise of the
Survivor's Option in amounts that are less than $5,000, and, in the event that
the limitations described in the preceding sentence would result in the partial
repayment of any Note, the principal amount of such Note remaining outstanding
after repayment must be at least $5,000 (the minimum authorized denomination of
the Notes). Any Note tendered pursuant to exercise of the Survivor's Option may
be withdrawn by a written request of its Holder received by the Trustee prior
to its repayment.
Each Note that is tendered pursuant to valid exercise of the Survivor's
Option will be accepted promptly in the order all such Notes are tendered,
except for any Note (or portion thereof) the acceptance of which would (i)
contravene the Annual Put Limitation or (ii) result in the acceptance during
the then current calendar year of an aggregate principal amount of Notes (or
portions thereof) exceeding $250,000 with respect to the relevant individual
deceased beneficial owner. If as of the end of any calendar year the Company
has not imposed the Annual Put Limitation or the aggregate principal amount of
Notes that have been accepted pursuant to exercise of the Survivor's Option
during such year has not exceeded the Annual Put Limitation for such year, any
exercise(s) of the Survivor's Option with respect to Notes (or portions
thereof) not accepted during such calendar year because more than $250,000
aggregate principal amount of Notes was tendered with respect to an individual
deceased beneficial owner will be accepted in the order all such Notes were
tendered, to the extent that any such exercise would not trigger the Annual Put
Limitation, if any, for such calendar year. Any Note (or portion thereof)
accepted for repayment pursuant to exercise of the Survivor's Option will be
repaid on the first Interest Payment Date that occurs 20 or more calendar days
after the date of such acceptance. Each Note (or any portion thereof) tendered
for repayment that is not accepted in any calendar year due to the application
of the Annual Put Limitation will be deemed to be tendered in the following
calendar year in the order in which all such Notes were originally tendered,
unless any such Note is withdrawn by its Holder. In the event that a Note (or
any portion thereof) tendered for repayment pursuant to valid exercise of the
Survivor's Option is not accepted, the Trustee will deliver a notice to any
affected Representative by first-class mail to the broker or other entity that
represents the deceased beneficial owner of the Note or, in the case of a
certificated Note, to the registered Holder thereof at its last known address
as indicated on the records of the Security Registrar that states the reasons
such Note (or portion thereof) has not been accepted for repayment.
5
<PAGE>
Subject to the foregoing, in order for a Survivor's Option to be validly
exercised, the Trustee must receive (i) a written request for repayment signed
by the Representative, and such signature must be guaranteed by a member firm
of a registered national securities exchange or of the National Association of
Securities Dealers, Inc. or a commercial bank or trust company having an office
or correspondent in the United States, (ii) tender of the Note to be repaid,
(iii) appropriate evidence satisfactory to the Company and the Trustee that (A)
the Representative has authority to act on behalf of the deceased beneficial
owner, (B) the death of such beneficial owner has occurred and (C) the deceased
was the beneficial owner of such Note at the time of death, (iv) if applicable,
a properly executed assignment or endorsement, and (v) if the Note is held by a
nominee of the deceased beneficial owner, a certificate satisfactory to the
Trustee from such nominee attesting to the beneficial ownership of such Note.
All questions as to the eligibility or validity of any exercise of the
Survivor's Option will be determined by the Company, in its sole discretion,
which determinations will be final and binding on all parties.
If a Note is represented by a Global Certificate, the Depositary's nominee
will be the Holder of such Note and therefore will be the only entity that can
exercise the Survivor's Option for such Note. To obtain repayment pursuant to
exercise of the Survivor's Option with respect to such Note, the Representative
must provide to the broker or other entity through which the deceased
beneficial owner holds an interest in such Note (i) the documents described in
clauses (i) and (iii) of the preceding paragraph and (ii) instructions to such
broker or other entity to notify the Depositary of such Representative's desire
to obtain repayment pursuant to exercise of the Survivor's Option. Such broker
or other entity will provide to the Trustee (i) the documents received from the
Representative referred to in clause (i) of the preceding sentence, (ii) its
tender of such Note pursuant to exercise of the Survivor's Option and (iii) a
certificate satisfactory to the Trustee from such broker or other entity
stating that it represents the deceased beneficial owner. Such broker or other
entity will be responsible for disbursing any payments it receives pursuant to
exercise of the Survivor's Option to the appropriate Representative.
A REPRESENTATIVE MAY OBTAIN THE FORMS USED TO EXERCISE THE SURVIVOR'S OPTION
FROM CITIBANK, N. A., THE TRUSTEE, AT 111 WALL STREET, 5TH FLOOR, NEW YORK, NEW
YORK 10043 (TELEPHONE (212) 412-6206), DURING NORMAL BUSINESS HOURS.
PURCHASE BY THE COMPANY
The Company may at any time purchase Notes at any price in the open market or
otherwise. Notes so purchased by the Company, may, at the discretion of the
Company, be held or resold or surrendered to the Trustee for cancellation. The
Notes will not be subject to a sinking fund.
BOOK-ENTRY PROCEDURES AND SETTLEMENT
The Notes offered hereby will be issued only in book-entry form from the
perspective of beneficial owners of Notes ("Noteholders"), except as described
below under "Certificated Notes". Notes having the same Original Issue Date,
interest rate and Stated Maturity will typically be issued in the form of a
single Global Certificate registered in the name of a nominee of the Depositary
(Section 303).
The Depositary's nominee will be considered the sole Holder of the Notes
represented by a Global Certificate for all purposes of the Indenture. Owners
of beneficial interests in a Global Certificate will not be entitled to have
Notes registered in their names, will not receive or be entitled to receive
physical delivery of Notes in definitive form and will not be considered the
Holders of Notes under the Indenture (except as described below under
"Certificated Notes").
A Noteholder's beneficial ownership of a Note will be recorded on or through
the records of the brokerage firm or other entity that maintains such
Noteholder's account. In turn, the total number of Notes held by an individual
brokerage firm or other entity for its clients will be maintained on the
records of the Depositary in the name of such brokerage firm or other entity
(or in the name of a Participant (as
6
<PAGE>
defined below) that acts as the agent for the Noteholder's brokerage firm or
other entity if it is not a Participant). Therefore, a Noteholder must rely
upon the records of such brokerage firm or other entity to evidence such
Noteholder's beneficial ownership of a Note. Transfer of ownership of any Note
may be effected only through the selling Noteholder's brokerage firm or such
other entity.
The Depositary has advised the Company as follows: The Depositary is a
limited-purpose trust company organized under New York Banking Law, a "banking
organization" within the meaning of the New York Banking Law, a member of the
Federal Reserve System, a "clearing corporation" within the meaning of the New
York Uniform Commercial Code, and a "clearing agency" registered pursuant to
the provisions of Section 17A of the Exchange Act. The Depositary was created
to hold securities of its Participants and to facilitate the clearance and
settlement of transactions among its Participants in such securities through
electronic book-entry changes in accounts of the Participants, thereby
eliminating the need for physical movement of securities certificates.
Participants include securities brokers and dealers (including the
Underwriter), banks, trust companies, clearing corporations and certain other
organizations, some of whom (and/or their representatives) own the Depositary.
Access to the Depositary's book-entry system is also available to others, such
as banks, brokers, dealers and trust companies that clear through or maintain a
custodial relationship with a Participant, either directly or indirectly.
PAYMENTS OF INTEREST AND PRINCIPAL
Payments of interest and principal on a Note payable on any Interest Payment
Date and at Stated Maturity will be made by the Company to the Trustee in
immediately available funds, unless such Note is represented by an individual
certificate. See "Certificated Notes" below. Thereafter on such Interest
Payment Date or at Stated Maturity, the Trustee will pay to the Depositary, in
funds immediately available to the Depositary, the amount of interest and
principal (if any) due on such date. Any payment required to be made in respect
of a Note on a day (including the day of Stated Maturity) that is not a
Business Day need not be made on such day, but may be made on the next
succeeding Business Day with the same force and effect as if made on such day,
and no additional interest shall accrue as a result of such delayed payment.
"Business Day" with respect to any Note means any day, other than a Saturday or
Sunday, that is (i) not a day on which banking institutions are authorized or
required by law or regulation to be closed in the City of New York and (ii) if
such Note is a LIBOR Note (as defined below), a London Banking Day. "London
Banking Day" with respect to any Note means any day on which dealings in
deposits in U.S. dollars are transacted in the London interbank market.
Unless otherwise specified in the applicable Pricing Supplement, if the
principal of any Discount Note is declared to be due and payable immediately as
described under "Description of the Notes-- Events of Default", the amount of
principal due and payable with respect to such Note shall be limited to the
aggregate principal amount of such Note multiplied by the sum of the Issue
Price (expressed as a percentage of the aggregate principal amount) plus the
original issue discount amortized from the date of issue to the date of
declaration, which amortization shall be calculated using the "interest method"
(computed in accordance with generally accepted accounting principles in effect
on the date of declaration).
The Depositary will be responsible for crediting the payments on the Notes
that it receives from the Trustee to the accounts of Participants in accordance
with procedures that provide for payment in same-day funds. Each Participant
will be responsible for disbursing such payments to the Noteholders that it
represents and to each brokerage firm or other entity for which it acts as
agent. Each such brokerage firm or other entity will be responsible for
disbursing funds to the Noteholders that it represents.
All moneys paid by the Company to the Trustee or any other Paying Agent for
the payment of principal of or interest on any Note that remain unclaimed at
the end of two years after such principal or interest shall have become due and
payable will be repaid to the Company, and the Holder of such Note will
thereafter look only to the Company for payment thereof (Section 1204).
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None of the Company, the Trustee or any other Paying Agent or Security
Registrar will have any responsibility or liability for any aspect of the
records relating to, or payments made on account of, beneficial ownership
interests in the Notes, or for maintaining, supervising or reviewing any
records relating to such beneficial ownership interests.
FIXED RATE NOTES
Each Fixed Rate Note will bear interest from its Original Issue Date, or from
the last Interest Payment Date to which interest has been paid or duly provided
for, at the rate per annum stated in the applicable Pricing Supplement until
the principal amount thereof is paid or made available for payment, except that
if so specified in the applicable Pricing Supplement, the rate of interest
payable on certain Fixed Rate Notes may be subject to adjustment from time to
time as described in such Pricing Supplement. If an Interest Payment Date with
respect to any Fixed Rate Note would otherwise be a day that is not a Business
Day, such Interest Payment Date shall not be postponed; provided, however, that
any payment required to be made in respect of such Note on a date (including
the day of Stated Maturity) that is not a Business Day for such Note need not
be made on such date, but may be made on the next succeeding Business Day with
the same force and effect as if made on such date, and no additional interest
shall accrue as a result of such delayed payment. Each payment of interest in
respect of an Interest Payment Date shall include interest accrued through the
day before such Interest Payment Date. Interest on Fixed Rate Notes will be
computed on the basis of a 360-day year of twelve 30-day months.
FLOATING RATE NOTES
Unless otherwise specified in the applicable Pricing Supplement, each
Floating Rate Note will bear interest from its Original Issue Date to the first
Interest Reset Date (such period, the "Initial Interest Period") for such Note
at the Initial Interest Rate set forth in the applicable Pricing Supplement.
The interest rate on such Note for each Interest Reset Period (as defined
below) (and for the Initial Interest Period if so specified in the applicable
Pricing Supplement) will be determined by reference to an interest rate basis
(the "Base Rate"), plus or minus the Spread, if any, or multiplied by the
Spread Multiplier, if any. The "Spread" is the number of basis points that may
be specified in the applicable Pricing Supplement as being applicable to such
Note, and the "Spread Multiplier" is the percentage that may be specified in
the applicable Pricing Supplement as being applicable to such Note, except that
if so specified in the applicable Pricing Supplement, the Spread or Spread
Multiplier on certain Floating Rate Notes may be subject to adjustment from
time to time as described in such Pricing Supplement. The applicable Pricing
Supplement will designate one of the following Base Rates as applicable to a
Floating Rate Note: (i) LIBOR (a "LIBOR Note"), (ii) the Commercial Paper Rate
(a "Commercial Paper Rate Note"), (iii) the Treasury Rate (a "Treasury Rate
Note"), (iv) the Federal Funds Rate (a "Federal Funds Rate Note") or (v) the CD
Rate (a "CD Rate Note"). The "Index Maturity" for any Floating Rate Note is the
period of maturity of the instrument or obligation from which the Base Rate is
calculated. "H.15(519)" means the publication entitled "Statistical Release
H.15(519), "Selected Interest Rates' ", or any successor publication, published
by the Board of Governors of the Federal Reserve System. "Composite Quotations"
means the daily statistical release entitled "Composite 3:30 p.m. Quotations
for U.S. Government Securities" published by the Federal Reserve Bank of New
York.
As specified in the applicable Pricing Supplement, a Floating Rate Note may
also have either or both of the following (in each case expressed as a rate per
annum on a simple interest basis): (i) a maximum limitation, or ceiling, on the
rate at which interest may accrue during any interest period ("Maximum Interest
Rate") and (ii) a minimum limitation, or floor, on the rate at which interest
may accrue during any interest period ("Minimum Interest Rate"). In addition to
any Maximum Interest Rate that may be applicable to any Floating Rate Note, the
interest rate on a Floating Rate Note will in no event be higher than the
maximum rate permitted by applicable law, as the same may be modified by
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United States law of general application. The Notes will be governed by the law
of the State of New York and, under such law as of the date of this Prospectus
Supplement, the maximum rate of interest under provisions of the penal law,
with certain exceptions, is 25% per annum on a simple interest basis. Such
maximum rate of interest only applies to obligations that are less than
$2,500,000.
The Company will appoint, and enter into agreements with, agents (each a
"Calculation Agent") to calculate interest rates on Floating Rate Notes. Unless
otherwise specified in a Pricing Supplement, Citibank, N.A. shall be the
Calculation Agent for each Note. All determinations of interest by the
Calculation Agent shall, in the absence of manifest error, be conclusive for
all purposes and binding on the holders of the Floating Rate Notes.
The interest rate on each Floating Rate Note will be reset daily, weekly,
monthly, quarterly, semiannually or annually (such period being the "Interest
Reset Period" for such Note; the Initial Interest Period and each Interest
Reset Period, an "Interest Period"; and the first day of each Interest Reset
Period, an "Interest Reset Date"), as specified in the applicable Pricing
Supplement. Unless otherwise specified in the applicable Pricing Supplement,
the Interest Reset Period will be monthly for Floating Rate Notes on which
interest is payable monthly, quarterly for Floating Rate Notes on which
interest is payable quarterly, and semiannually for Floating Rate Notes on
which interest is payable semiannually. Unless otherwise specified in the
applicable Pricing Supplement, the Interest Reset Dates will be, in the case of
Floating Rate Notes that reset daily, each Business Day; in the case of
Floating Rate Notes (other than Treasury Rate Notes) that reset weekly,
Wednesday of each week; in the case of Treasury Rate Notes that reset weekly,
Tuesday of each week (except as provided below under "Treasury Rate Notes"); in
the case of Floating Rate Notes that reset monthly, quarterly or semiannually,
each Interest Payment Date other than the Final Interest Payment Date;
provided, however, that in all instances the interest rate in effect for the
ten days immediately prior to Stated Maturity will be that in effect on the
tenth day preceding Stated Maturity. If an Interest Reset Date for any Floating
Rate Note would otherwise be a day that is not a Business Day, such Interest
Reset Date shall be postponed to the next succeeding Business Day, except that,
in the case of a LIBOR Note, if such Business Day is in the next succeeding
calendar month, such Interest Reset Date shall be the immediately preceding
Business Day.
Unless otherwise specified in the applicable Pricing Supplement, interest
payable in respect of Floating Rate Notes shall be the accrued interest from
and including the Original Issue Date or the last date to which interest has
been paid, as the case may be, to but excluding the applicable Interest Payment
Date. In the case of a Floating Rate Note that resets daily or weekly, interest
payable shall be the accrued interest from and including the Original Issue
Date or the last date to which interest has been accrued and paid, as the case
may be, to but excluding the Record Date immediately preceding the applicable
Interest Payment Date, except that, at Stated Maturity, interest payable will
include interest accrued to but excluding the date of Stated Maturity.
With respect to a Floating Rate Note, accrued interest shall be calculated by
multiplying the principal amount of such Note by an accrued interest factor.
Such accrued interest factor will be computed by adding the interest factors
calculated for each day in the period for which accrued interest is being
calculated. The interest factor (expressed as a decimal calculated to seven
decimal places without rounding) for each such day is computed by dividing the
interest rate in effect on such day by 360, in the case of LIBOR Notes,
Commercial Paper Rate Notes, Federal Funds Rate Notes and CD Rate Notes or by
the actual number of days in the year, in the case of Treasury Rate Notes. For
purposes of making the foregoing calculation, the interest rate in effect on
any Interest Reset Date will be the applicable rate as reset on such date.
Unless otherwise specified in the applicable Pricing Supplement, all
percentages resulting from any calculation of the rate of interest on a
Floating Rate Note will be rounded, if necessary, to the nearest
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1/100,000 of 1% (.0000001), with five one-millionths of a percentage point
rounded upward, and all currency amounts used in or resulting from such
calculation on Floating Rate Notes will be rounded to the nearest one-hundredth
of a unit (with .005 of a unit being rounded upward).
If an Interest Payment Date with respect to any Floating Rate Note would
otherwise be a day that is not a Business Day, such Interest Payment Date shall
be postponed to the next succeeding Business Day, except that, in the case of a
LIBOR Note, if such Business Day is in the next succeeding calendar month, such
Interest Payment Date shall be the immediately preceding Business Day.
Upon the request of the Holder of any Floating Rate Note, the Calculation
Agent for such Note will provide the interest rate then in effect and, if
determined, the interest rate that will become effective on the next Interest
Reset Date with respect to such Floating Rate Note.
CD Rate Notes
Each CD Rate Note will bear interest for each Interest Reset Period at the
interest rate calculated with reference to the CD Rate and the Spread or Spread
Multiplier, if any, specified in such Note and in the applicable Pricing
Supplement.
Unless otherwise specified in the applicable Pricing Supplement, the "CD
Rate" for each Interest Reset Period shall be the rate as of the second
Business Day prior to the Interest Reset Date for such Interest Reset Period (a
"CD Rate Determination Date") for negotiable certificates of deposit having the
Index Maturity designated in the applicable Pricing Supplement as published in
H.15(519) under the heading "CDs (Secondary Market)". In the event that such
rate is not published prior to 3:00 p.m., New York City time, on the
Calculation Date (as defined below) pertaining to such CD Rate Determination
Date, then the "CD Rate" for such Interest Reset Period will be the rate on
such CD Rate Determination Date for negotiable certificates of deposit of the
Index Maturity designated in the applicable Pricing Supplement as published in
Composite Quotations under the heading "Certificates of Deposit". If by 3:00
p.m., New York City time, on such Calculation Date such rate is not yet
published in either H.15(519) or Composite Quotations, then the "CD Rate" for
such Interest Reset Period will be calculated by the Calculation Agent for such
CD Rate Note and will be the arithmetic mean of the secondary market offered
rates as of 10:00 a.m., New York City time, on such CD Rate Determination Date
of three leading nonbank dealers in negotiable U.S. dollar certificates of
deposit in The City of New York selected by the Calculation Agent for such CD
Rate Note for negotiable certificates of deposit of major United States money
center banks of the highest credit standing (in the market for negotiable
certificates of deposit) with a remaining maturity closest to the Index
Maturity designated in the Pricing Supplement in a denomination of $5,000,000;
provided, however, that if the dealers selected as aforesaid by such
Calculation Agent are not quoting offered rates as mentioned in this sentence,
the "CD Rate" for such Interest Reset Period will be the same as the CD Rate
for the immediately preceding Interest Reset Period (or, if there was no such
Interest Reset Period, the Initial Interest Rate).
The "Calculation Date" pertaining to any CD Rate Determination Date shall be
the tenth calendar day after such CD Rate Determination Date or, if such day is
not a Business Day, the next succeeding Business Day.
Commercial Paper Rate Notes
Each Commercial Paper Rate Note will bear interest for each Interest Reset
Period at the interest rate calculated with reference to the Commercial Paper
Rate and the Spread or Spread Multiplier, if any, specified in such Note and in
the applicable Pricing Supplement.
Unless otherwise specified in the applicable Pricing Supplement, the
"Commercial Paper Rate" for each Interest Reset Period will be determined by
the Calculation Agent for such Commercial Paper Rate
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Note as of the second Business Day prior to the Interest Reset Date for such
Interest Reset Period (a "Commercial Paper Rate Determination Date") and shall
be the Money Market Yield (as defined below) on such Commercial Paper Rate
Determination Date of the rate for commercial paper having the Index Maturity
specified in the applicable Pricing Supplement, as such rate shall be published
in H.15(519) under the heading "Commercial Paper". In the event that such rate
is not published prior to 3:00 p.m., New York City time, on the Calculation
Date (as defined below) pertaining to such Commercial Paper Rate Determination
Date, then the "Commercial Paper Rate" for such Interest Reset Period shall be
the Money Market Yield on such Commercial Paper Rate Determination Date of the
rate for commercial paper of the specified Index Maturity as published in
Composite Quotations under the heading "Commercial Paper". If by 3:00 p.m., New
York City time, on such Calculation Date such rate is not yet published in
either H.15(519) or Composite Quotations, then the "Commercial Paper Rate" for
such Interest Reset Period shall be the Money Market Yield of the arithmetic
mean of the offered rates, as of 11:00 a.m., New York City time, on such
Commercial Paper Rate Determination Date of three leading dealers of commercial
paper in The City of New York selected by the Calculation Agent for such
Commercial Paper Rate Note for commercial paper of the specified Index Maturity
placed for an industrial issuer whose bonds are rated "AA" or the equivalent by
a nationally recognized rating agency; provided, however, that if the dealers
selected as aforesaid by such Calculation Agent are not quoting offered rates
as mentioned in this sentence, the "Commercial Paper Rate" for such Interest
Reset Period will be the same as the Commercial Paper Rate for the immediately
preceding Interest Reset Period (or, if there was no such Interest Reset
Period, the Initial Interest Rate).
"Money Market Yield" shall be a yield calculated in accordance with the
following formula:
D X 360
Money Market Yield = --------------- X 100
360 - (D X M)
where "D" refers to the applicable per annum rate for commercial paper quoted
on a bank discount basis and expressed as a decimal, and "M" refers to the
actual number of days in the specified Index Maturity.
The "Calculation Date" pertaining to any Commercial Paper Rate Determination
Date shall be the tenth calendar day after such Commercial Paper Rate
Determination Date or, if such day is not a Business Day, the next succeeding
Business Day.
Federal Funds Rate Notes
Each Federal Funds Rate Note will bear interest for each Interest Reset
Period at the interest rate calculated with reference to the Federal Funds Rate
and the Spread or Spread Multiplier, if any, specified in such Note and in the
applicable Pricing Supplement.
Unless otherwise specified in the applicable Pricing Supplement, the "Federal
Funds Rate" for each Interest Reset Period shall be the effective rate on the
Interest Reset Date for such Interest Reset Period (a "Federal Funds Rate
Determination Date") for Federal Funds as published in H.15(519) under the
heading "Federal Funds (Effective)". In the event that such rate is not
published prior to 3:00 p.m., New York City time, on the Calculation Date (as
defined below) pertaining to such Federal Funds Rate Determination Date, the
"Federal Funds Rate" for such Interest Reset Period shall be the rate on such
Federal Funds Rate Determination Date as published in Composite Quotations
under the heading "Federal Funds/Effective Rate". If by 3:00 p.m., New York
City time, on such Calculation Date such rate is not yet published in either
H.15(519) or Composite Quotations, then the "Federal Funds Rate" for such
Interest Reset Period shall be the rate on such Federal Funds Rate
Determination Date made publicly available by the Federal Reserve Bank of New
York which is equivalent to the rate which appears in H.15(519) under the
heading "Federal Funds (Effective)"; provided, however, that if such rate is
not made publicly available by the Federal Reserve Bank of New York by 3:00
p.m., New York City time, on such Calculation Date, the "Federal Funds Rate"
for such Interest Reset Period will be
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the same as the Federal Funds Rate in effect for the immediately preceding
Interest Reset Period (or, if there was no such Interest Reset Period, the
Initial Interest Rate). In the case of a Federal Funds Rate Note that resets
daily, the interest rate on such Note for the period from and including a
Monday to but excluding the succeeding Monday will be reset by the Calculation
Agent for such Note on such second Monday (or, if not a Business Day, on the
next succeeding Business Day) to a rate equal to the average of the Federal
Funds Rates in effect with respect to each such day in such week.
The "Calculation Date" pertaining to any Federal Funds Rate Determination
Date shall be the next succeeding Business Day.
LIBOR Notes
Each LIBOR Note will bear interest for each Interest Reset Period at the
interest rate calculated with reference to LIBOR and the Spread or Spread
Multiplier, if any, specified in such Note and in the applicable Pricing
Supplement.
With respect to LIBOR indexed to the offered rates for U.S. dollar deposits,
"LIBOR" for each Interest Reset Period will be determined by the Calculation
Agent for such LIBOR Notes as follows:
(i) On the second London Banking Day prior to the Interest Reset Date for
such Interest Reset Period (a "LIBOR Determination Date"), the Calculation
Agent for such LIBOR Note will determine the arithmetic mean of the offered
rates for deposits in U.S. dollars for the period of the Index Maturity
specified in the applicable Pricing Supplement, commencing on such Interest
Reset Date, which appear on the Designated LIBOR Page at approximately
11:00 a.m., London time, on such LIBOR Determination Date. "Designated
LIBOR Page" "LIBOR Telerate", which shall be the display designated as page
"3750" on the Dow Jones Telerate Service (or such other page as may replace
page "3750" on such service or such other service as may be nominated by
the British Bankers' Association for the purpose of displaying the London
interbank offered rates of major banks), unless "LIBOR Reuters" is
designated in the applicable Pricing Supplement, in which case "Designated
LIBOR Page" means the display designated as page "LIBO" on the Reuters
Monitor Money Rates Service (or such other page as may replace the LIBO
page on such service or such other service as may be nominated by the
British Bankers' Association for the purpose of displaying London interbank
offered rates of major banks). If at least two such offered rates appear on
the Designated LIBOR Page, "LIBOR" for such Interest Reset Period will be
the arithmetic mean of such offered rates as determined by the Calculation
Agent for such LIBOR Note.
(ii) If fewer than two offered rates appear on the Designated LIBOR Page
on such LIBOR Determination Date, the Calculation Agent for such LIBOR Note
will request the principal London offices of each of four major banks in
the London interbank market selected by such Calculation Agent to provide
such Calculation Agent with its offered quotations for deposits in the
Specified Currency for the period of the specified Index Maturity,
commencing on such Interest Reset Date, to prime banks in the London
interbank market at approximately 11:00 a.m., London time, on such LIBOR
Determination Date and in a principal amount equal to an amount of not less
than $1,000,000 or the equivalent thereof in the Specified Currency that is
representative of a single transaction in such market at such time. If at
least two such quotations are provided, "LIBOR" for such Interest Reset
Period will be the arithmetic mean of such quotations. If fewer than two
such quotations are provided, "LIBOR" for such Interest Reset Period will
be the arithmetic mean of rates quoted by three major banks in The City of
New York selected by the Calculation Agent for such LIBOR Note at
approximately 11:00 a.m., New York City time, on such LIBOR Determination
Date for loans in the Specified Currency to leading European banks, for the
period of the specified Index Maturity, commencing on such Interest Reset
Date, and in a principal amount equal to an amount of not less than
$1,000,000 or the equivalent thereof in the Specified Currency that is
representative of a single transaction in such market at such time;
provided, however, that if fewer than three banks selected as aforesaid by
such Calculation Agent are quoting rates as mentioned
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in this sentence, "LIBOR" for such Interest Reset Period will be the same
as LIBOR for the immediately preceding Interest Reset Period (or, if there
was no such Interest Reset Period, the Initial Interest Rate).
Treasury Rate Notes
Each Treasury Rate Note will bear interest for each Interest Reset Period at
the interest rate calculated with reference to the Treasury Rate and the Spread
or Spread Multiplier, if any, specified in such Note and in the applicable
Pricing Supplement.
Unless "Constant Maturity" is specified or unless otherwise specified in the
applicable Pricing Supplement, the "Treasury Rate" for each Interest Reset
Period will be the rate for the auction held on the Treasury Rate Determination
Date (as defined below) for such Interest Reset Period of direct obligations of
the United States ("Treasury securities") having the Index Maturity specified
in the applicable Pricing Supplement, as such rate shall be published in
H.15(519) under the heading "U.S. Government Securities-Treasury bills-auction
average (investment)" or, in the event that such rate is not published prior to
3:00 p.m., New York City time, on the Calculation Date (as defined below)
pertaining to such Treasury Rate Determination Date, the auction average rate
(expressed as a bond equivalent on the basis of a year of 365 or 366 days, as
applicable, and applied on a daily basis) on such Treasury Rate Determination
Date as otherwise announced by the United States Department of the Treasury. In
the event that the results of the auction of Treasury securities having the
specified Index Maturity are not published or reported as provided above by
3:00 p.m., New York City time, on such Calculation Date, or if no such auction
is held on such Treasury Rate Determination Date, then the "Treasury Rate" for
such Interest Reset Period shall be calculated by the Calculation Agent for
such Treasury Rate Note and shall be a yield to maturity (expressed as a bond
equivalent on the basis of a year of 365 or 366 days, as applicable, and
applied on a daily basis) of the arithmetic mean of the secondary market bid
rates, as of approximately 3:30 p.m., New York City time, on such Treasury Rate
Determination Date, of three leading primary United States government
securities dealers selected by such Calculation Agent for the issue of Treasury
securities with a remaining maturity closest to the specified Index Maturity;
provided, however, that if the dealers selected as aforesaid by such
Calculation Agent are not quoting bid rates as mentioned in this sentence, then
the "Treasury Rate" for such Interest Reset Period will be the same as the
Treasury Rate for the immediately preceding Interest Reset Period (or, if there
was no such Interest Reset Period, the Initial Interest Rate).
The "Treasury Rate Determination Date" for each Interest Reset Period will be
the day of the week in which the Interest Reset Date for such Interest Reset
Period falls on which Treasury securities would normally be auctioned. Treasury
securities are normally sold at auction on Monday of each week, unless that day
is legal holiday, in which case the auction is normally held on the following
Tuesday, except that such auction may be held on the preceding Friday. If, as
the result of a legal holiday, an auction is so held on the preceding Friday,
such Friday will be the Treasury Rate Determination Date pertaining to the
Interest Reset Period commencing in the next succeeding week. If an auction
date shall fall on any day that would otherwise be an Interest Reset Date for a
Treasury Rate Note, then such Interest Reset Date shall instead be the Business
Day immediately following such auction date.
If "Constant Maturity" is specified in the applicable Pricing Supplement, the
"Treasury Rate" for each Interest Reset Period will be the rate that is set
forth in the Federal Reserve Board publication H.15(519) opposite the caption
"U.S. Government/Securities/Treasury Constant Maturities/" in the Index
Maturity with respect to the applicable Constant Maturity Treasury Rate
Determination Date (as defined below). If the H.15(519) is not published, the
"Constant Maturity-Treasury Rate" shall be the rate that was set forth on
Telerate Page 7055, or its successor page (as determined by the Calculation
Agent), on the applicable Constant Maturity Treasury Rate Determination Date
opposite the applicable Index Maturity. If no such rate is set forth, then the
Constant Maturity Treasury Rate for such Interest Reset Period shall be
established by the Calculation Agent as follows. The Calculation Agent will
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contact the Federal Reserve Board and request the Constant Maturity Treasury
Rate, in the applicable Index Maturity, for the Constant Maturity Treasury
Determination Date. If the Federal Reserve Board does not provide such
information, then the Constant Maturity Treasury Rate for such Interest Reset
Date will be the arithmetic mean of bid-side quotations, expressed in terms of
yield, reported by three leading U.S. government securities dealers (one of
which may be Salomon Brothers Inc), according to their written records, as of
3:00 p.m. (New York City time) on the Constant Maturity Treasury Rate
Determination Date, for the noncallable U.S. Treasury Note that is nearest in
maturity to the Index Maturity, but not less than exactly the Index Maturity
and for the noncallable U.S. Treasury Note that is nearest in maturity to the
Index Maturity, but not more than exactly the Index Maturity. The Calculation
Agent shall calculate the Constant Maturity Treasury Rate by interpolating to
the Index Maturity based on an actual/actual date count basis, the yield on the
two Treasury Notes selected. If the Calculation Agent cannot obtain three such
adjusted quotations, the Constant Maturity Treasury Rate for such Interest
Reset Date will be the arithmetic mean of all such quotations, or if only one
such quotation is obtained, such quotation, obtained by the Calculation Agent.
In all events, the Calculation Agent shall continue polling dealers until at
least one adjusted yield quotation can be determined.
"The Constant Maturity Treasury Rate Determination Date" shall be the tenth
Business Day prior to the Interest Reset Date for the applicable Interest Reset
Period.
The Treasury constant maturity rate for a Treasury security maturity (the
"CMT Rate") as published in H.15(519) as of any Business Day is intended to be
indicative of the yield of a U.S. Treasury security having as of such Business
Day a remaining term to maturity equivalent to such maturity. The CMT Rate as
of any Business Day is based upon an interpolation by the U.S. Treasury of the
daily yield curve of outstanding Treasury securities. This yield curve, which
relates the yield on a security to its time to maturity, is based on the over-
the-counter market bid yields on actively traded Treasury securities. Such
yields are calculated from composites of quotations reported by leading U.S.
government securities dealers, which may include Salomon Brothers Inc. Certain
constant maturity yield values are read from the yield curve. Such
interpolation from the yield curve provides a theoretical yield for a Treasury
security having ten years to maturity, for example, even if no outstanding
Treasury security has as of such date exactly ten years remaining to maturity.
The "Calculation Date" pertaining to any Treasury Rate Determination Date or
Constant Maturity Rate Determination Date, as applicable, shall be the tenth
calendar day after such Treasury Rate Determination Date or Constant Maturity
Rate Determination Date, as applicable, or, if such a day is not a Business
Day, the next succeeding Business Day.
AMORTIZING NOTES
The Company may from time to time offer Notes ("Amortizing Notes") on which a
portion or all the principal amount is payable prior to Stated Maturity in
accordance with a schedule or by application of a formula. Further information
concerning additional terms and conditions of any Amortizing Notes, including
terms for repayment thereof, will be set forth in the applicable Pricing
Supplement.
CERTIFICATED NOTES
If the Depositary is at any time unwilling or unable to continue as
depositary and a successor depositary is not appointed by the Company within 90
days, the Company will issue Notes in definitive form in exchange for each
Global Certificate. In addition, the Company may at any time and in its sole
discretion determine not to have Notes represented by Global Certificates and,
in such event, will issue individual Notes in definitive form in exchange for
Global Certificates. In either instance, a beneficial owner of Notes
represented by a Global Certificate will be entitled to have such Notes
registered in its name and will be entitled to physical delivery of such Notes
in definitive form. Individual Notes so issued will be issued as registered
Debt Securities, without coupons, in one or more authorized denominations
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as described above under "General" (Section 305). Payments of interest on such
Notes (other than interest payable at Stated Maturity) will be made by check
mailed to the registered Holders thereof. Principal and interest payable at the
Stated Maturity of any such Note will be paid in immediately available funds
upon surrender of such Note at the corporate trust office or agency of the
Trustee in the City of New York (Section 307).
Certificated Notes may be transferred or exchanged at the corporate trust
office or agency of the Trustee in the City of New York, subject to the
limitations provided in the Indenture, without the payment of any service
charge, other than any tax or governmental charge payable in connection
therewith (Section 305).
If a certificated Note is mutilated, destroyed, lost or stolen, it may be
replaced at the corporate trust office or agency of the Trustee in the City of
New York upon payment by the Holder of such expenses as may be incurred by the
Company and the Trustee in connection therewith and the furnishing of such
evidence and indemnity as the Company and the Trustee may require. Mutilated
Notes must be surrendered before new Notes will be issued (Section 306).
LIMITATION ON LIENS
The 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 Notes (Section 1205). The term
"Restricted Subsidiary" is defined in the Indenture to mean each of Phibro
Energy, Inc. and Salomon 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.
EVENTS OF DEFAULT
The following events will constitute Events of Default with respect to the
Notes under the Indenture: (i) default in the payment of the principal of (and
premium, if any, on) any Note when due; (ii) default for 30 days in the payment
of any interest on any Note when due; (iii) default in the performance of any
other applicable covenant in the Indenture, continued for 60 days after written
notice thereof by the Trustee or the Holders of at least 25% in principal
amount of the Notes then Outstanding; and (iv) certain events of bankruptcy,
insolvency or reorganization (Section 501).
The Indenture provides that if an Event of Default specified therein shall
occur and be continuing, either the Trustee thereunder or the Holders of at
least 25% in principal amount of the Notes then Outstanding may declare the
principal of and all accrued interest on all such Notes to be due and payable
immediately. In certain cases, the Holders of a majority in principal amount of
the Outstanding Notes may on behalf of the Holders of all such Notes waive,
rescind and annul such declaration and its consequences (Section 502).
The Indenture contains a provision entitling the Trustee, subject to the duty
of the Trustee during the continuance of an Event of Default to act with the
required standard of care, to be indemnified by the Holders of the Notes before
proceeding to exercise any right or power under the Indenture with respect to
the Notes at the request of such Holders (Section 603). The Indenture provides
that no Holder of a Note may institute any proceeding, judicial or otherwise,
to enforce the Indenture except in the case of failure of the Trustee, for 60
days, to act after it receives (i) written notice of such Event of Default from
such Holder, (ii) a written request to enforce the Indenture by the Holders of
at least 25% in principal amount of the Notes then Outstanding (and the Trustee
receives no direction inconsistent with such written request from the Holders
of a majority in principal amount of the Notes then
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Outstanding) and (iii) an offer of reasonable indemnity (Section 507). This
provision will not prevent any Holder of a Note from enforcing payment of the
principal thereof (and premium, if any, thereon) and interest thereon at the
respective due dates thereof (Section 508). The Holders of a majority in
principal amount of the Notes then Outstanding may direct the time, method and
place of conducting any proceedings for any remedy available to the Trustee or
of exercising any trust or power conferred on the Trustee with respect to the
Notes. However, the Trustee may refuse to follow any direction that conflicts
with law or the Indenture or that would be unjustly prejudicial to Holders not
joining therein (Section 512).
The Indenture provides that the Trustee will, within 90 days after the
occurrence of any default with respect to the Notes, give to the Holders of
Notes notice of each such default known to the Trustee, 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 interest on any Note, 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
Notes (Section 602).
The Company will be required to file annually with the Trustee a certificate
of an appropriate officer of the Company as to the absence of certain defaults
under the terms of the Indenture (Section 1206).
MODIFICATION AND WAIVER
The Indenture contains provisions for convening meetings of Holders to
consider matters affecting their interests (Article Nine).
Modifications of and amendments to the Indenture may be made by the Company
and the Trustee with the consent of the Holders of a majority in principal
amount of the Outstanding Debt Securities of each series affected by such
modification or amendment; provided, however, that no such modification or
amendment may, among other things, 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 payable on, any Debt Security;
(ii) reduce the principal amount of, or any interest on or any premium payable
upon redemption of, any Debt Security; (iii) impair the right to institute suit
for the enforcement of any payment on or with respect to any Debt Security; or
(iv) 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 Indenture or for waiver of compliance with
certain provisions of the Indenture or waiver of certain defaults (Section
1102).
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 Indenture before the time
for such compliance (Section 1207). 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
Indenture with respect to the Debt Securities of that series, except a default
in the payment of the principal of (and premium, if any) or any interest on any
Debt Securities or 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
The 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 Indenture and on the
Debt Securities; (iii) after giving effect to the transaction, no Event of
Default and no event that, after notice or lapse of time, or both, would become
an Event of Default shall have occurred and be continuing; and (iv) certain
other conditions are met (Section 1001).
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CONCERNING THE TRUSTEE
The Company and certain of its subsidiaries maintain lines of credit and have
other customary banking relationships with the Trustee and certain of its
affiliates.
UNITED STATES TAX CONSIDERATIONS
The following is a summary of the principal U.S. Federal income tax
considerations that may be relevant to a holder of a Note that is (i) a U.S.
Person (as defined below) or that otherwise is subject to U.S. Federal certain
holders of Notes including income taxation on a net income basis in respect of
a Note (a "U.S. Holder") or (ii) a non-U.S. Person. This summary is based on
U.S. Federal income tax laws, regulations, rulings and decisions now in effect,
all of which are subject to prospective or retroactive change. Except to the
extent discussed below under "Non-United States Persons", this summary deals
only with U.S. Holders that will hold Notes as capital assets. Except as
expressly indicated, it deals only with initial holders and 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 Notes as a position in a "straddle" for tax purposes or as part of a
"synthetic security" or other integrated investment (including a "conversion
transaction") comprised of a Note 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 Notes or to the
holders thereof.
As used in this Prospectus, "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.
Investors should consult their own tax advisors in determining the tax
consequences to them of holding Notes, 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.
U.S. HOLDERS
PAYMENTS OF INTEREST
In general, interest on a Note (other than certain payments on a Discount
Note, as defined and described below under "Original Issue Discount") will be
taxable to a U.S. Holder as ordinary income at the time it is received or
accrued, depending on the holder's method of accounting for tax purposes.
ORIGINAL ISSUE DISCOUNT
The following discussion summarizes the United States Federal income tax
consequences to U.S. Holders of Notes issued with original issue discount
("OID"). U.S. Holders of Notes issued with OID generally will be subject to
special tax accounting rules provided in the Internal Revenue Code of 1986, as
amended (the "Code"). On February 2, 1994, the Treasury Department published
final regulations (the "OID Regulations"), which expand and illustrate the
rules provided by the Code.
General. A Note will be treated as issued with OID (a "Discount Note") if the
excess of the Note's "stated redemption price at maturity" over its issue price
is greater than a de minimis amount (set forth in the Code and the OID
Regulations). Generally, the issue price of a Note (or any Note that is part of
an issue of Notes) will be the first price at which a substantial amount of
Notes that are part of such issue of Notes are sold (other than to
underwriters, placement agents or wholesalers). Under the OID
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Regulations, the "stated redemption price at maturity" of a Note is the sum of
all payments provided by the Note that are not payments of "qualified stated
interest". A "qualified stated interest" payment includes any stated interest
payment on a Note that is unconditionally payable at least annually at a single
fixed rate (or at certain floating rates) that appropriately takes into account
the length of the interval between stated interest payments.
In general, if the excess of a Note's stated redemption price at maturity
over its issue price is less than 1/4 of one percent of the Note's stated
redemption price at maturity multiplied by the number of complete years to
maturity, then such excess constitutes "de minimis OID". Under the OID
Regulations, unless the election described below under "Election to Treat All
Interest as Original Issue Discount" is made, such a Note will not be treated
as issued with OID (in which case the following paragraphs under "Original
Issue Discount" will not apply) and a U.S. Holder of such a Note will recognize
capital gain with respect to such de minimis OID as stated principal payments
on the Note are made. The amount of such gain with respect to each such payment
will equal the product of the total amount of the Note's de minimis OID and a
fraction, the numerator of which is the amount of the principal payment made
and the denominator of which is the stated principal amount of the Note.
In certain cases, Notes that bear stated interest and are issued at par may
be deemed to bear OID for Federal income tax purposes, with the result that the
inclusion of interest in income for Federal income tax purposes may vary from
the actual cash payments of interest made on such Notes, generally accelerating
income for cash method taxpayers. Under the OID Regulations, a Note may be a
Discount Note where, among other things, (i) a Note bearing interest at a
floating rate (a "Floating Rate Note") provides for a maximum interest rate or
a minimum interest rate that is reasonably expected as of the issue date to
cause the yield on the debt instrument to be significantly less, in the case of
a maximum rate, or more, in the case of a minimum rate, than the expected yield
determined without the maximum or minimum rate, as the case may be; (ii) a
Floating Rate Note provides for significant front-loading or back-loading of
interest; or (iii) certain Notes bear interest at a floating rate in
combination with one or more other floating or fixed rates. Notice will be
given in the applicable Pricing Supplement when the Company determines that a
particular Note will be a Discount Note.
The Code and the OID Regulations provide rules that require a U.S. Holder of
a Discount Note having a maturity of more than one year from its date of issue
to include OID in gross income before the receipt of cash attributable to such
income, without regard to the holder's method of accounting for tax purposes.
The amount of OID includible in gross income by a U.S. Holder of a Discount
Note is the sum of the "daily portions" of OID with respect to the Discount
Note for each day during the taxable year or portion of the taxable year in
which the U.S. Holder holds such Discount Note ("accrued OID"). The daily
portion is determined by allocating to each day in any "accrual period" a pro
rata portion of the OID allocable to that accrual period. Under the OID
Regulations, accrual periods with respect to a Note may be any set of periods
(which may be of varying lengths) selected by the U.S. Holder as long as (i) no
accrual period is longer than one year and (ii) each scheduled payment of
interest or principal on the Note occurs on the first day or final day of an
accrual period.
The amount of OID allocable to an accrual period equals the excess of (a) the
product of the Discount Note's adjusted issue price at the beginning of the
accrual period and the Discount Note's yield to maturity (determined on the
basis of compounding at the close of each accrual period and properly adjusted
for the length of the accrual period) over (b) the sum of any payments of
qualified stated interest on the Discount Note allocable to the accrual period.
In the case of a Discount Note that is a Floating Rate Note, both the yield to
maturity and the qualified stated interest will be determined for these
purposes as though the Note will bear interest in all periods at a fixed rate
generally equal to the rate that would be applicable to interest payments on
the Note on its date of issue or, in the case of certain Floating Rate Notes,
the rate that reflects the yield that is reasonably expected for the Note.
(Additional rules may apply if interest on a Floating Rate Note is based on
more than one interest index). The "adjusted issue price" of a Discount Note at
the beginning of the first accrual period is the issue price and at the
beginning of any accrual period thereafter is (x) the sum of the issue price of
such
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Discount Note, the accrued OID for each prior accrual period (determined
without regard to the amortization of any acquisition premium or bond premium,
which are discussed below), and the amount of any qualified stated interest on
the Note that has accrued prior to the beginning of the accrual period but is
not payable until a later date, less (y) any prior payments on the Discount
Note that were not qualified stated interest payments. If a payment (other than
a payment of qualified stated interest) is made on the first day of an accrual
period, then the adjusted issue price at the beginning of such accrual period
is reduced by the amount of the payment. All payments on a Discount Note (other
than a payment of qualified stated interest) generally will be viewed first as
payments of previously accrued OID (to the extent thereof), with payments made
for the earliest accrual periods first, and then as a payment of principal. If
a portion of the initial purchase price of a Note is attributable to interest
that accrued prior to the Note's issue date, the first stated interest payment
on the Note is to be made within one year of the Note's issue date and such
payment will equal or exceed the amount of pre-issuance accrued interest, then
the issue price will be decreased by the amount of pre-issuance accrued
interest, in which case a portion of the first stated interest payment will be
treated as a return of the excluded pre-issuance accrued interest and not as an
amount payable on the Note.
The OID Regulations contain certain special rules that generally allow any
reasonable method to be used in determining the amount of OID allocable to a
short initial accrual period (if all other accrual periods are of equal length)
and require that the amount of OID allocable to the final accrual period equal
the excess of the amount payable at the maturity of the Discount Note (other
than any payment of qualified stated interest) over the Discount Note's
adjusted issue price as of the beginning of such final accrual period. In
addition, if an interval between payments of qualified stated interest on a
Discount Note contains more than one accrual period, then the amount of
qualified stated interest payable at the end of such interval is allocated pro
rata (on the basis of their relative lengths) between the accrual periods
contained in the interval.
U.S. Holders of Discount Notes generally will have to include in income
increasingly greater amounts of OID over the life of the Notes.
Acquisition Premium. A U.S. Holder that purchases a Discount Note for an
amount in excess of its issue price but less than its stated redemption price
at maturity (any such excess being "acquisition premium"), and that does not
make the election described below under "Original Issue Discount--Election To
Treat All Interest as Original Issue Discount", is permitted to reduce the
daily portions of OID by a fraction, the numerator of which is the excess of
the U.S. Holder's purchase price for the Note over the issue price, and the
denominator of which is the excess of the sum of all amounts payable on the
Note after the purchase date, other than payments of qualified stated interest,
over the Note's issue price. Alternatively, a U.S. Holder may elect to compute
OID accruals as described under "Original Issue Discount--General" above,
treating the U.S. Holder's purchase price as the issue price.
Short-Term Notes. Under the Code, special rules apply with respect to OID on
Notes that mature one year or less from the date of issuance ("Short-Term
Notes"). In general, a cash basis U.S. Holder of a Short-Term Note is not
required to include OID in income as it accrues for United States Federal
income tax purposes unless it elects to do so. Accrual basis U.S. Holders and
certain other U.S. Holders, including banks, regulated investment companies,
dealers in securities and cash basis U.S. Holders who so elect, are required to
include OID in income as it accrues on Short-Term Notes on a straight-line
basis or, at the election of the U.S. Holder, under the constant yield method
(based on daily compounding). In the case of U.S. Holders not required and not
electing to include OID in income currently, any gain realized on the sale or
retirement of Short-Term Notes will be ordinary income to the extent of the OID
accrued on a straight-line basis (unless an election is made to accrue the
original issue discount under the constant yield method) through the date of
sale or retirement. U.S. Holders who are not required and do not elect to
include OID on Short-Term Notes in income as it accrues will be required to
defer deductions for interest on borrowings allocable to Short-Term Notes in an
amount not exceeding the deferred income until the deferred income is realized.
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Any U.S. Holder of a Short-Term Note can elect to apply the rules in the
preceding paragraph taking into account the amount of "acquisition discount",
if any, with respect to the Note (rather than the OID with respect to such
Note). Acquisition discount is the excess of the stated redemption price at
maturity of the Short-Term Note over the U.S. Holder's purchase price therefor.
Acquisition discount will be treated as accruing on a ratable basis or, at the
election of the U.S. Holder, on a constant yield basis.
For purposes of determining the amount of OID subject to these rules, the OID
Regulations provide that no interest payments on a Short-Term Note are
qualified stated interest, but instead such interest payments are included in
the Short-Term Notes's stated redemption price at maturity.
NOTES PURCHASED AT A PREMIUM
Under the Code, a U.S. Holder that purchases a Note for an amount in excess
of its stated redemption price at maturity will not be subject to the OID rules
and may elect to treat such excess as "amortizable bond premium", in which case
the amount of qualified stated interest required to be included in the U.S.
Holder's income each year with respect to interest on the Note will be reduced
by the amount of amortizable bond premium allocable (based on the Note's yield
to maturity) to such year. Any election to amortize bond premium is applicable
to all bonds (other than bonds the interest on which is excludible from gross
income) held by the U.S. Holder at the beginning of the first taxable year to
which the election applies or thereafter acquired by the U.S. Holder, and may
not be revoked without the consent of the Internal Revenue Service ("IRS"). See
also "Original Issue Discount--Election to Treat All Interest as Original Issue
Discount".
NOTES PURCHASED AT A MARKET DISCOUNT
A Note, other than a Short-Term Note, will be treated as issued at a market
discount (a "Market Discount Note") if the amount for which a U.S. Holder
purchased the Note is less than the Note's issue price, subject to a de minimis
rule similar to the rule relating to de minimis OID described under "Original
Issue Discount--General".
In general, any gain recognized on the maturity or disposition of a Market
Discount Note will be treated as ordinary income to the extent that such gain
does not exceed the accrued market discount on such Note. Alternatively, a U.S.
Holder of a Market Discount Note may elect to include market discount in income
currently over the life of the Market Discount Note. Such an election applies
to all debt instruments with market discount acquired by the electing U.S.
Holder on or after the first day of the first taxable year to which the
election applies and may not be revoked without the consent of the IRS.
Market discount accrues on a straight-line basis unless the U.S. Holder
elects to accrue such discount on a constant yield to maturity basis. Such an
election is applicable only to the Market Discount Note with respect to which
it is made and is irrevocable. A U.S. Holder of a Market Discount Note that
does not elect to include market discount in income currently generally will be
required to defer deductions for interest on borrowings allocable to such Note
in an amount not exceeding the accrued market discount on such Note until the
maturity or disposition of such Note.
The market discount rules do not apply to a Short-Term Note.
ELECTION TO TREAT ALL INTEREST AS ORIGINAL ISSUE DISCOUNT.
Any U.S. Holder may elect to include in gross income all interest that
accrues on a Note using the constant yield method described above under the
heading "Original Issue Discount--General," with the modifications described
below. For purposes of this election, interest includes stated interest, OID,
de minimis OID, market discount, acquisition discount, de minimis market
discount and unstated interest, as adjusted by any amortizable bond premium or
acquisition premium.
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In applying the constant yield method to a Note with respect to which this
election has been made, the issue price of such Note will equal the electing
U.S. Holder's adjusted basis in the Note immediately after its acquisition, the
issue date of the Note will be the date of its acquisition by the electing U.S.
Holder, and no payments on the Note will be treated as payments of qualified
stated interest. This election is generally applicable only to the Note with
respect to which it is made and may not be revoked without the consent of the
IRS. If this election is made with respect to a Note with amortizable bond
premium, the electing U.S. Holder will be deemed to have elected to apply
amortizable bond premium against interest with respect to all debt instruments
with amortizable bond premium (other than debt instruments the interest on
which is excludible from gross income) held by such electing U.S. Holder as of
the beginning of the taxable year in which the election is made or any debt
instruments acquired thereafter. The deemed election with respect to
amortizable bond premium may not be revoked without the consent of the IRS.
If the election described above to apply the constant yield method to all
interest on a Note is made with respect to a Market Discount Note, as defined
above, then the electing U.S. Holder will be treated as having made the
election discussed above under "Notes Purchased at a Market Discount" to
include market discount in income currently over the life all debt instruments
held or thereafter acquired by such U.S. Holder.
PURCHASE, SALE AND RETIREMENT OF THE NOTES
A U.S. Holder's tax basis in a Note will generally equal its U.S dollar cost,
increased by the amount of any OID or market discount (or acquisition discount,
in the case of a Short-Term Note) included in the U.S. Holder's income with
respect to the Note and the amount, if any, of income attributable to de
minimis OID included in the U.S. Holder's income with respect to the Note, and
reduced by the sum of (i) the amount of any payments that are not qualified
stated interest payments, and (ii) the amount of any amortizable bond premium
applied to reduce interest on the Note. A U.S. Holder generally will recognize
gain or loss on the sale or retirement of a Note equal to the difference
between the amount realized on the sale or retirement and the U.S. Holder's tax
basis in such Note. Except to the extent described above under "Original Issue
Discount--Short Term Notes" or "Market Discount", and except to the extent
attributable to accrued but unpaid interest, gain or loss recognized on the
sale or retirement of a Note will be capital gain or loss and will be long-term
capital gain or loss if the Note was held for more than one year.
NON-UNITED STATES PERSONS
Under the U.S. Federal income tax laws as in effect on the date of this
Prospectus and subject to the discussion of backup withholding below, payments
of principal (and premium, if any) and interest, including OID, by the Company
or any agent of the Company (acting in its capacity as such) to any holder of a
Note that is not a U.S. Person will not be subject to U.S. Federal withholding
tax; provided, in the case of interest, including OID, that (i) such holder
does not actually or constructively own 10% or more of the total combined
voting power of all classes of stock of the Company entitled to vote, (ii) such
holder is not a controlled foreign corporation for U.S. tax purposes that is
related to the Company (directly or indirectly) through stock ownership and
(iii) either (A) the beneficial owner of the Note certifies to the Company or
its agent, under penalties of perjury, that it is not a U.S. Person and
provides its name and address or (B) a securities clearing organization, bank
or other financial institution that holds customers' securities in the ordinary
course of its trade or business (a "financial institution") and holds the Note
certifies to the Company or its agent under penalties of perjury that such
statement has been received from the beneficial owner by it or by another
financial institution and furnishes the payor with a copy thereof.
If a holder of a Note that is not a U.S. Person is engaged in a trade or
business in the United States and interest, including OID, on the Note is
effectively connected with the conduct of such trade or
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business, such holder, although exempt from the withholding tax discussed in
the preceding paragraph (provided that such holder furnishes a properly
executed IRS Form 4224 on or before any payment date to claim such exemption),
may be subject to U.S. Federal income tax on such interest, and OID, in the
same manner as if it were a U.S. Person. In addition, if such a holder is a
foreign corporation, it may be subject to a branch profits tax equal to 30% of
its effectively connected earnings and profits for the taxable year, subject to
certain adjustments. For purposes of the branch profits tax, interest
(including OID) on a Note will be included in the earnings and profits of such
holder if such interest (or OID) is effectively connected with the conduct by
such holder of a trade or business in the United States.
Any capital gain or market discount realized upon the sale, exchange,
retirement or other disposition of a Note by a holder that is not a U.S. Person
will not be subject to U.S. Federal income or withholding taxes if (i) such
gain is not effectively connected with a U.S. trade or business of the holder
and (ii) in the case of an individual, such holder (A) is not present in the
United States for 183 days or more in the taxable year of the sale, exchange,
retirement or other disposition or (B) does not have a tax home (as defined in
Section 911(d)(3) of the Code) in the United States in the taxable year of the
sale, exchange, retirement or other disposition and the gain is not
attributable to an office or other fixed place of business maintained by such
individual in the United States.
Notes held by an individual who is neither a citizen nor a resident of the
United States for U.S. Federal tax purposes at the time of such individual's
death will not be subject to U.S. Federal estate tax provided that the income
from such Notes was not or would not have been effectively connected with a
U.S. trade or business of such individual and that such individual qualified
for the exemption from U.S. Federal withholding tax (without regard to the
certification requirements) that is described above.
BACKUP WITHHOLDING AND INFORMATION REPORTING
For each calendar year in which the Notes are outstanding, the Company is
required to provide the IRS with certain information, including the holder's
name, address and taxpayer identification number (either the holder's Social
Security number or its employer identification number, as the case may be), the
aggregate amount of principal and interest paid (including OID, if any) to that
holder during the calendar year and the amount of tax withheld, if any. This
obligation, however, does not apply with respect to certain U.S. holders,
including corporations, tax-exempt organizations, qualified pension and profit
sharing trusts and individual retirement accounts.
In the event that a U.S. holder subject to the reporting requirements
described above fails to supply its taxpayer identification number in the
manner required by applicable law, provides an incorrect taxpayer
identification number that is used by a payor on an information return or
underreports its tax liability, the Company, its agents or paying agents or a
broker may be required to "backup" withhold a tax equal to 31 percent of each
payment of interest (including OID) and principal (and premium, if any) on the
Notes. This backup withholding is 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.
Under current Treasury Regulations, backup withholding and information
reporting will not apply to payments made by the Company or any agent thereof
(in its capacity as such) to a holder of a Note that is not a U.S. person if
such holder has provided the required certification that it is not a U.S.
person as set forth in clause (iii) in the first paragraph under "Non-United
States Persons" above, or has otherwise established an exemption (provided that
neither the Company nor its agent has actual knowledge that the holder is a
U.S. person or that the conditions of any exemption are not in fact satisfied).
Payment of the proceeds from the sale of a Note to or through a foreign
office of a broker will not be subject to information reporting or backup
withholding, except that if the broker is a U.S. person, a
22
<PAGE>
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 a Note 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
taxpayer identification number or otherwise establishes an exemption from
information reporting and backup withholding.
PLAN OF DISTRIBUTION
Subject to the terms and conditions set forth in an underwriting agreement
(the "Underwriting Agreement") entered into by the Company and the Underwriter,
the Company has agreed to sell to the Underwriter, and the Underwriter has
agreed to purchase, the Notes from time to time. Notes acquired by the
Underwriter pursuant to the Underwriting Agreement are expected to be offered
either directly to the public or to certain dealers (the "Dealers") that will
then reoffer the Notes to the public. Sales by the Underwriter to any Dealer
will be made pursuant to an agreement between the Underwriter and such Dealer
(each a "Dealer Agreement").
The Pricing Supplement with respect to each offering of Notes by the Company
will set forth, among other things, the price to public of such Notes and the
proceeds to the Company from such sale, any underwriting discounts and other
items constituting Underwriter's compensation, and any discounts or concessions
allowed, reallowed or paid to Dealers. The Company will pay underwriting
compensation in connection with any issue of Notes of from not more than .500%
to not more than 2.750% of the principal amount of Notes sold by an
underwriter, depending upon the Stated Maturity. After any initial public
offering of Notes, the price to public of such Notes, and the related
underwriting discount and selling concession, may be changed.
The Underwriter has advised the Company that all initial offers by it and by
the Dealers, unless otherwise set forth in the applicable Pricing Supplement,
are proposed to be made at prices equal to 100% of the principal amount of the
Notes being sold, less, in the case of an offer by the Underwriter to a Dealer,
a price concession not in excess of the amount set forth in the applicable
Pricing Supplement. Offers and sales by the Underwriter or Dealers subsequent
to the initial offering may be at varying prices determined at the time of
sale.
If specified in the applicable Pricing Supplement, Notes may also be sold
directly by the Company, through underwriters other than the Underwriter, or
through underwriters acting as agents, from time to time. Any underwriters
other than the Underwriter will agree to act in accordance with this Plan of
Distribution as if they were the Underwriter. Unless otherwise specified in
such Pricing Supplement, any underwriter acting as agent will be acting on a
best efforts basis for the period of its appointment. All commissions payable
by the Company to any such underwriter, whether acting as principal or as
agent, will be set forth in such Pricing Supplement.
The Notes will not be listed on any securities exchange and will not be
traded, when issued, on any other established trading market. The Underwriter
or any Dealer may make a market in the Notes, but are not obligated to do so.
Any market-making so undertaken may be discontinued at any time without notice.
There can thus be no assurance that a secondary market for the Notes will exist
or as to the liquidity of any such market. Moreover, the Company reserves the
right to withdraw, cancel or modify the offer made hereby at any time without
notice, and any such withdrawal, cancellation or modification also may
adversely affect the liquidity of the Notes.
The Underwriting Agreement provides, and the terms of each Dealer Agreement
will provide, that the obligations of the Underwriter or a Dealer to purchase
Notes will be subject to certain conditions precedent. The Underwriter will be
obligated to purchase all the Notes offered by any Pricing Supplement naming it
if any such Notes are purchased.
23
<PAGE>
The Company has agreed to indemnify the Underwriter against certain
liabilities, including liabilities under the Securities Act, or to contribute
to payments that the Underwriter may be required to make in respect thereof.
Salomon Brothers Inc is an indirect wholly owned subsidiary of the Company,
and its participation in the offer and sale of Notes complies with Schedule E
of the By-Laws of the National Association of Securities Dealers, Inc.
regarding underwriting securities of an affiliate. Schedule E provides, among
other things, that Notes may not be purchased from or sold to a customer
discretionary account by the Underwriter or a Dealer without the prior specific
written approval of the customer.
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 Notes 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 Notes 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 Notes 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 Notes 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 NOTES SHOULD CONSULT WITH ITS COUNSEL.
EXPERTS
The financial statements and related schedules included in the 1993 Form 10-K
have been audited by Arthur Andersen & Co., independent public accountants, to
the extent and for the periods indicated in their reports included therein, and
are incorporated by reference in this Prospectus in reliance upon such reports
and upon the authority of said firm as experts in accounting and auditing in
giving such reports.
LEGAL OPINIONS
Certain legal matters relating to the Notes will be passed upon for the
Company by Cravath, Swaine & Moore, New York, New York, and for the Underwriter
by Cleary, Gottlieb, Steen & Hamilton, New York, New York.
24
<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 (INCLUDING THE ACCOMPANYING PRICING SUPPLEMENT) IN CONNECTION WITH
THE OFFER CONTAINED HEREIN AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRE-
SENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR
THE UNDERWRITER. NEITHER THE DELIVERY OF THIS PROSPECTUS (INCLUDING THE ACCOM-
PANYING PRICING SUPPLEMENT) NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIR-
CUMSTANCES, CREATE AN IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS
OF THE COMPANY SINCE THE DATES AS OF WHICH INFORMATION IS GIVEN IN THIS PRO-
SPECTUS (INCLUDING THE ACCOMPANYING PRICING SUPPLEMENT). THIS PROSPECTUS (IN-
CLUDING THE ACCOMPANYING PRICING SUPPLEMENT) DOES NOT CONSTITUTE AN OFFER OR
SOLICITATION BY ANYONE IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICI
TATION IS NOT AUTHORIZED OR IN WHICH THE PERSON
MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO OR TO ANY PERSON
TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION.
----------------
TABLE OF CONTENTS
PAGE
----
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 the Notes.................................................... 3
United States Tax Considerations............................................ 17
Plan of Distribution........................................................ 23
ERISA Matters............................................................... 24
Experts..................................................................... 24
Legal Opinions.............................................................. 24
$1,000,000,000
SALOMON INC
NOTES, SERIES G
DUE MORE THAN NINE
MONTHS FROM DATE OF ISSUE
- --------------------
SALOMON BROTHERS INC
----------------------------------
PROSPECTUS
DATED AUGUST , 1994
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.*
<TABLE>
<S> <C>
Commission Registration Fee...................................... $1,724,138
Accounting Fees.................................................. 50,000
Trustees' Fees and Expenses...................................... 175,000
Blue Sky Fees and Expenses....................................... 20,000
Printing and Engraving Fees...................................... 200,000
Rating Agency Fees............................................... 190,000
NASD Fee......................................................... 30,500
Legal Fees and Expenses.......................................... 300,000
Miscellaneous.................................................... 10,362
----------
Total.......................................................... $2,700,000
==========
</TABLE>
- --------
* All amounts are estimated except for the Commission registration fee and
the NASD fee.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Reference is made to Section 145 of the Delaware General Corporation Law
which provides for indemnification of directors and officers in certain
circumstances.
Article Fourteenth of the registrant's Certificate of Incorporation provides
for indemnification of directors and officers of the registrant against certain
liabilities incurred as a result of their duties as such and Article Sixteenth
of the registrant's Certificate of Incorporation provides for the elimination
of the monetary liability of directors for certain actions as such. The
registrant's Certificate of Incorporation, as amended, is filed as Exhibit 4(a)
to the Registration Statement on Form S-3 (No. 2-84733) filed June 29, 1983,
Exhibit 3 to the Quarterly Report on Form 10-Q for the quarter ended June 30,
1986 and Exhibit 3 to the Quarterly Report on Form 10-Q for the quarter ended
June 30, 1987.
The registrant maintains insurance policies covering liabilities of directors
and officers to the extent not covered by indemnification from the registrant,
subject to the conditions and exclusions of the policies, deductible
provisions, a maximum amount of coverage of $75 million and disputes with
insurers about availability of coverage.
For the undertaking with respect to indemnification, see Item 17 herein.
See the Form of proposed Underwriting Agreement, the Form of Global Selling
Agency Agreement and the Form of Continuous Underwriting Agreement filed as
Exhibit 1(a), (b) and (c) for certain indemnification provisions.
ITEM 16. EXHIBITS.
<TABLE>
<S> <C>
1(a)--Form of Underwriting Agreement for Debt Securities to be
distributed in the United States (incorporated by reference to
Exhibit 1(a) to Registration Statement No. 33-57922). A form of
Underwriting Agreement relating to any other offering of Securities
(and not filed as an Exhibit hereto) will be filed as an Exhibit to
a Current Report on Form 8-K and incorporated herein by reference.
1(b)--Form of Global Selling Agency Agreement.
1(c)--Continuous Underwriting Agreement between Salomon Inc and Salomon
Brothers Inc relating to the Notes, Series G.
4(a)--Senior Debt Indenture, dated as of December 1, 1988, between
Salomon Inc and Citibank, N.A., as Trustee (incorporated by
reference from Exhibit 8 to the Company's Current Report on Form 8-
K dated December 29, 1988).
</TABLE>
- --------
+ To be filed.
II-1
<PAGE>
<TABLE>
<C> <S>
4(b) --First Supplemental Indenture dated as of September 7, 1990 to
Senior Debt Indenture dated as of December 1, 1988 between Salomon
Inc and Citibank, N.A. (incorporated by reference to Exhibit 4(b) to
Registration Statement No. 33-39502).
4(c) --Second Supplemental Indenture dated June 12, 1991 to Senior Debt
Indenture dated as of December 1, 1988 between Salomon Inc and
Citibank, N.A. (incorporated by reference to Exhibit 4(c) to
Registration Statement No. 33-41209).
4(d) --Third Supplemental Indenture, dated as of July 1, 1992 to Senior
Debt Indenture, dated as of December 1, 1988 between Salomon Inc and
Citibank, N.A. (incorporated by reference from Exhibit 4(d) to
Registration Statement
No. 33-49136).
4(e) --Fourth Supplemental Indenture, dated as of October 29, 1992,
between Salomon Inc and Citibank, N.A. (incorporated by reference to
Exhibit 4(e) to Registration Statement No. 33-57922).
4(f) --Fifth Supplemental Indenture dated as of December 14, 1993, between
Salomon Inc and Citibank, N.A.
4(g) --Subordinated Debt Indenture, dated as of December 1, 1988, between
Salomon Inc and Bankers Trust Company, as Trustee (incorporated by
reference from Exhibit 7 to the Company's Current Report on Form 8-K
dated August 2, 1989).
4(h) --First Supplemental Indenture dated as of September 7, 1990 to
Subordinated Debt Indenture dated as of December 1, 1988 between
Salomon Inc and Bankers Trust Company (incorporated by reference
from Exhibit 4(b) to Registration Statement No. 33-39502).
4(i) --Second Supplemental Indenture dated as of December 14, 1993,
between Salomon Inc and Bankers Trust Company.
4(j) --Senior Debt Indenture, dated as of January 20, 1993, between
Salomon Inc and BankAmerica National Trust Company, as Trustee
(incorporated by reference from Exhibit 3 to the Company's Current
Report on Form 8-K dated January 12, 1993).
4(k) --Senior Debt Indenture, dated as of February 8, 1993, between
Salomon Inc and The First National Bank of Chicago, as Trustee
(incorporated by reference from Exhibit 3 to the Company's Current
Report on Form 8-K dated February 1, 1993).
4(l) --Senior Debt Indenture, dated as of July 28, 1992, between Salomon
Inc and United States Trust Company of New York, as Trustee
(incorporated by reference from Exhibit 4.1 to the Company's Current
Report on Form 8-K dated July 28, 1992).
4(m) --Senior Debt Indenture, dated as of October 27, 1993, between
Salomon Inc and The Bank of New York, as Trustee (incorporated by
reference from Exhibit 3 to the Company's Current Report on Form 8-K
dated October 27, 1993).
4(n) --Form of Senior Debt Indenture (incorporated by reference from
Exhibit 4(f) to Registration Statement No. 33-41932).
4(o) --Form of Subordinated Debt Indenture (incorporated by reference from
Exhibit 4(g) to Registration Statement No. 33-41932).
4(p) --Forms of Medium-Term Registered Notes, Series D and Series E.
4(q) --Forms of Medium-Term Bearer Notes, Series D and Series E.
4(r) --Forms of Medium-Term Temporary Global Notes, Series D and Series E.
4(s) --Forms of Medium-Term Permanent Global Notes, Series D and Series E.
4(t) --Forms of Notes, Series G.
4(u) --Form of proposed Warrant Agreement for Warrants not attached to
Debt Securities, with form of proposed Warrant Certificate attached
as Exhibit A thereto, for Warrants in registered form (incorporated
by reference from Exhibit 4(c) to Registration Statement No. 33-
25002). A form of Warrant Agreement relating to any Warrants in
bearer form will be filed as an Exhibit to a Current Report on Form
8-K and incorporated herein by reference.
</TABLE>
- --------
+ To be filed.
II-2
<PAGE>
<TABLE>
<S> <C>
4(v) --Form of proposed Warrant Agreement for Warrants attached to Debt Securities,
with form of proposed Warrant Certificate attached as Exhibit A thereto, for
Warrants in registered form (incorporated by reference from Exhibit 4(d) to
Registration Statement No. 33-25002). A form of Warrant Agreement relating to
any Warrants in bearer form will be filed as an Exhibit to a Current Report on
Form 8-K and incorporated herein by reference.
4(w) --Senior Debt Indenture, dated as of January 18, 1994, between Salomon Inc and
Chemical Bank, as Trustee (incorporated by reference from Exhibit 4 to the
Company's Current Report on Form 8-K dated January 18, 1994).
5 --Opinion of Cravath, Swaine & Moore.
12 --Calculation of Ratios of Earnings to Fixed Charges (incorporated by reference
from Exhibit 12(a) to the Company's Quarterly Report on Form 10-Q for the
quarter ended March 31, 1994).
23(a) --Consent of Arthur Andersen & Co.
23(b) --Consent of Cravath, Swaine & Moore (included in Exhibit 5).
24 --Powers of Attorney.
25(a) --Form T-1 Statement of Eligibility and Qualification of BankAmerica National
Trust Company under the Trust Indenture Act of 1939.*
25(b) --Form T-1 Statement of Eligibility and Qualification of The Bank of New York
under the Trust Indenture Act of 1939.*
25(c) --Form T-1 Statement of Eligibility and Qualification of Chemical Bank under
the Trust Indenture Act of 1939.*
25(d) --Form T-1 Statement of Eligibility and Qualification of Citibank, N.A. under
the Trust Indenture Act of 1939.*
25(e) --Form T-1 Statement of Eligibility and Qualification of The First National
Bank of Chicago under the Trust Indenture Act of 1939.*
25(f) --Form T-1 Statement of Eligibility and Qualification of United States Trust
Company of New York under the Trust Indenture Act of 1939.*
</TABLE>
- --------
+ To be filed.
* A Form T-1 Statement of Eligibility and Qualification of Trustees other than
those as to which Form T-1s are filed herewith may be filed as an Exhibit to
a Current Report on Form 8-K and incorporated herein by reference.
ITEM 17. UNDERTAKINGS.
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made of the
securities registered hereby, a post-effective amendment to this registration
statement:
(i) to include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933, as amended;
(ii) to reflect in the prospectus any facts or events arising after the
effective date of this registration statement (or the most recent post-
effective amendment hereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in this
registration statement; and
(iii) to include any material information with respect to the plan of
distribution not previously disclosed in this registration statement or any
material change to such information in this registration statement;
II-3
<PAGE>
provided, however, that the undertakings set forth in clauses (i) and (ii)
above do not apply if the information required to be included in a post-
effective amendment by those clauses is contained in periodic reports filed by
the registrant pursuant to section 13 or section 15(d) of the Securities
Exchange Act of 1934, as amended, that are incorporated by reference in this
registration statement.
(2) That, for the purpose of determining any liability under the Securities
Act of 1933, as amended, each such post-effective amendment shall be deemed to
be a new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any of
the securities being registered which remain unsold at the termination of the
offering.
(4) That, for purposes of determining any liability under the Securities Act
of 1933, as amended, each filing of the registrant's annual report pursuant to
section 13(a) or section 15(d) of the Securities Exchange Act of 1934, as
amended, that is incorporated by reference in this registration statement shall
be deemed to be a new registration statement relating to the securities offered
herein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
(5) Insofar as indemnification for liabilities arising under the Securities
Act of 1933, as amended, may be permitted to directors, officers and
controlling persons of the registrant pursuant to the provisions described
under Item 15 above, or otherwise, the registrant has been advised that in the
opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in such Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the registrant of expenses incurred or
paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered hereby, the registrant will, unless in the opinion of its counsel
the matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in such Act and will be governed by the
final adjudication of such issue.
(6) For purposes of determining any liability under the Securities Act of
1933, as amended, the information omitted from the form of prospectus filed as
part of this registration statement in reliance upon Rule 430A and contained in
a form of prospectus filed by the registrant pursuant to Rule 424(b) (1) or (4)
or 497(h) under the Securities Act shall be deemed to be part of this
registration statement as of the time it was declared effective.
(7) For the purpose of determining any liability under the Securities Act of
1933, as amended, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
II-4
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, SALOMON INC
CERTIFIES THAT IT HAS REASONABLE GROUNDS TO BELIEVE THAT IT MEETS ALL OF THE
REQUIREMENTS FOR FILING ON FORM S-3 AND HAS DULY CAUSED THIS REGISTRATION
STATEMENT OR AMENDMENT THERETO TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED,
THEREUNTO DULY AUTHORIZED, IN THE CITY OF NEW YORK, STATE OF NEW YORK, ON THE
4TH DAY OF AUGUST, 1994.
Salomon Inc
/s/ Arnold S. Olshin
By: __________________________________
(ARNOLD S. OLSHIN, SECRETARY)
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS REGISTRATION
STATEMENT OR AMENDMENT THERETO HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS
IN THE CAPACITIES WITH SALOMON INC AND ON THE DATES INDICATED.
SIGNATURES TITLE DATE
/s/ Robert E. Denham Chief Executive August 4, 1994
- ------------------------------------ Officer, Chairman
(ROBERT E. DENHAM) and Director
* Chief Financial August 4, 1994
- ------------------------------------ Officer
(JEROME H. BAILEY)
/s/ David C. Fisher Principal August 4, 1994
- ------------------------------------ Accounting Officer
(DAVID C. FISHER) and Controller
* Director August 4, 1994
- ------------------------------------
(DWAYNE O. ANDREAS)
* Director August 4, 1994
- ------------------------------------
(WARREN E. BUFFETT)
Director
- ------------------------------------
(CLAIRE M. FAGIN)
* Director August 4, 1994
- ------------------------------------
(ANDREW J. HALL)
* Director August 4, 1994
- ------------------------------------
(GEDALE B. HOROWITZ)
* Director August 4, 1994
- ------------------------------------
(DERYCK C. MAUGHAN)
* Director August 4, 1994
- ------------------------------------
(WILLIAM F. MAY)
Director
- ------------------------------------
(CHARLES T. MUNGER)
* Director August 4, 1994
- ------------------------------------
(LOUIS A. SIMPSON)
Director
- ------------------------------------
(ROBERT G. ZELLER)
- --------
* The undersigned, by signing his name hereto, does hereby sign this
registration statement or amendment thereto on behalf of each of the above-
indicated directors and officers of Salomon Inc pursuant to powers of
attorney executed on behalf of each such director and officer.
/s/ Arnold S. Olshin
By: ________________________________
(ARNOLD S. OLSHIN, ATTORNEY-IN-
FACT)
II-5
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER EXHIBIT PAGE
- ------- ------- ------------
<S> <C> <C>
1(a) --Form of proposed Underwriting Agreement for Debt Securities to be
distributed in the United States (incorporated by reference to Exhibit
1(a) to Registration Statement No. 33-57922). A form of Underwriting
Agreement relating to any other offering of Securities (and not filed
as an Exhibit hereto) will be filed as an Exhibit to a Current Report
on Form 8-K and incorporated herein by reference.
1(b) --Form of Global Selling Agency Agreement.+
1(c) --Form of Continuous Underwriting Agreement between Salomon Inc and
Salomon Brothers Inc relating to the Notes, Series G.+
4(a) --Senior Debt Indenture, dated as of December 1, 1988, between Salomon
Inc and Citibank, N.A., as Trustee (incorporated by reference from
Exhibit 8 to the Company's Current Report on Form 8-K dated December
29, 1988).
4(b) --First Supplemental Indenture dated as of September 7, 1990 to Senior
Debt Indenture dated as of December 1, 1988 between Salomon Inc and
Citibank, N.A. (incorporated by reference to Exhibit 4(b) to
Registration Statement No. 33-39502).
4(c) --Second Supplemental Indenture dated June 12, 1991 to Senior Debt
Indenture dated as of December 1, 1988 between Salomon Inc and
Citibank, N.A. (incorporated by reference to Exhibit 4(c) to
Registration Statement No. 33-41209).
4(d) --Third Supplemental Indenture, dated as of July 1, 1992 to Senior Debt
Indenture, dated as of December 1, 1988 between Salomon Inc and
Citibank, N.A. (incorporated by reference from Exhibit 4(d) to
Registration Statement
No. 33-49136).
4(e) --Fourth Supplemental Indenture, dated as of October 29, 1992, between
Salomon Inc and Citibank, N.A. (incorporated by reference from Exhibit
4(e) to Registration Statement No. 33-57922).
4(f) --Fifth Supplemental Indenture, dated as of December 14, 1993, between
Salomon Inc and Citibank, N.A. (incorporated by reference to Exhibit
4(f) to Registration Statement No. 33-51269).
4(g) --Subordinated Debt Indenture, dated as of December 1, 1988, between
Salomon Inc and Bankers Trust Company, as Trustee (incorporated by
reference from Exhibit 7 to the Company's Current Report on Form 8-K
dated August 2, 1989).
4(h) --First Supplemental Indenture dated as of September 7, 1990 to
Subordinated Debt Indenture dated as of December 1, 1988 between
Salomon Inc and Bankers Trust Company (incorporated by reference from
Exhibit 4(b) to Registration Statement No. 33-39502).
4(i) --Second Supplemental Indenture dated as of December 14, 1993, between
Salomon Inc and Bankers Trust Company (incorporated by reference to
Exhibit 4(i) to Registration Statement No. 33-51269).
4(j) --Senior Debt Indenture, dated as of January 20, 1993, between Salomon
Inc and BankAmerica National Trust Company, as Trustee (incorporated by
reference from Exhibit 3 to the Company's Current Report on Form 8-K
dated January 12, 1993).
4(k) --Senior Debt Indenture, dated as of February 8, 1993, between Salomon
Inc and The First National Bank of Chicago, as Trustee (incorporated by
reference from Exhibit 3 to the Company's Current Report on Form 8-K
dated February 1, 1993).
</TABLE>
- --------
+ Filed herewith.
<PAGE>
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER EXHIBIT PAGE
------- ------- ------------
<S> <C> <C>
4(l) --Senior Debt Indenture, dated as of July 28, 1992, between Salomon Inc
and United States Trust Company of New York, as Trustee (incorporated
by reference from Exhibit 4.1 to the Company's Current Report on Form
8-K dated July 28, 1992).
4(m) --Senior Debt Indenture, dated as of October 27, 1993, between Salomon
Inc and The Bank of New York, as Trustee (incorporated by reference
from Exhibit 3 to the Company's Current Report on Form 8-K dated
October 27, 1993).
4(n) --Form of Senior Debt Indenture (incorporated by reference from Exhibit
4(f) to Registration Statement No. 33-41932).
4(o) --Form of Subordinated Debt Indenture (incorporated by reference from
Exhibit 4(g) to Registration Statement No. 33-41932).
4(p) --Forms of Medium-Term Registered Notes, Series D and Series E.+
4(q) --Forms of Medium-Term Bearer Notes, Series D and Series E.+
4(r) --Forms of Medium-Term Temporary Global Notes, Series D and Series E.+
4(s) --Forms of Medium-Term Permanent Global Notes, Series D and Series E.+
4(t) --Forms of Notes, Series G.+
4(u) --Form of proposed Warrant Agreement for Warrants not attached to Debt
Securities, with form of proposed Warrant Certificate attached as
Exhibit A thereto, for Warrants in registered form (incorporated by
reference from Exhibit 4(c) to Registration Statement No. 33-25002). A
form of Warrant Agreement relating to any Warrants in bearer form will
be filed as an Exhibit to a Current Report on Form 8-K and incorporated
herein by reference.
4(v) --Form of proposed Warrant Agreement for Warrants attached to Debt
Securities, with form of proposed Warrant Certificate attached as
Exhibit A thereto, for Warrants in registered form (incorporated by
reference from Exhibit 4(d) to Registration Statement No. 33-25002). A
form of Warrant Agreement relating to any Warrants in bearer form will
be filed as an Exhibit to a Current Report on Form 8-K and incorporated
herein by reference.
4(w) --Senior Debt Indenture, dated as of January 18, 1994, between Salomon
Inc and Chemical Bank, as Trustee (incorporated by reference from
Exhibit 4 to the Company's Current Report on Form 8-K dated January 18,
1994).
5 --Opinion of Cravath, Swaine & Moore.+
12 --Calculation of Ratios of Earnings to Fixed Charges (incorporated by
reference from Exhibit 12(a) to the Company's Quarterly Report on Form
10-Q for the quarter ended March 31, 1994).
23(a) --Consent of Arthur Andersen & Co.+
23(b) --Consent of Cravath, Swaine & Moore (included in Exhibit 5).+
24 --Powers of Attorney.+
25(a) --Form T-1 Statement of Eligibility and Qualification of BankAmerica
National Trust Company under the Trust Indenture Act of 1939.*
25(b) --Form T-1 Statement of Eligibility and Qualification of The Bank of New
York under the Trust Indenture Act of 1939.*
25(c) --Form T-1 Statement of Eligibility and Qualification of Chemical Bank
under the Trust Indenture Act of 1939.*
25(d) --Form T-1 Statement of Eligibility and Qualification of Citibank, N.A.
under the Trust Indenture Act of 1939.*
25(e) --Form T-1 Statement of Eligibility and Qualification of The First
National Bank of Chicago under the Trust Indenture Act of 1939.*
25(f) --Form T-1 Statement of Eligibility and Qualification of United States
Trust Company of New York under the Trust Indenture Act of 1939.*
</TABLE>
- --------
+ Filed herewith.
* A Form T-1 Statement of Eligibility and Qualification of other Trustees
other than those as to which Form T-1s are filed herewith may be filed as
an Exhibit to a Current Report on Form 8-K and incorporated herein by
reference.
<PAGE>
Exhibit 1(b)
Salomon Inc
Medium-Term Notes, Series D and Series E
Euro-Medium-Term Notes, Series D and Series E
Form of Global Selling Agency Agreement
____________, 1994
New York, New York
Salomon Brothers Inc
Seven World Trade Center
New York, New York 10048
("U.S. Agent")
Salomon Brothers International Limited
Victoria Plaza
111 Buckingham Palace Road
London SW1W 0SB
ENGLAND
Salomon Brothers Hong Kong Limited
Three Exchange Square
Suite 1802
HONG KONG
(together with Salomon Brothers International Limited,
the "International Agents")
Salomon Brothers Aktiengesellschaft
WiesenhuttenstraBe 10
6000 Frankfurt am Main 1
FEDERAL REPUBLIC OF GERMANY
("DM Agent")
Dear Sirs:
Salomon Inc, a Delaware corporation (the "Company"), confirms its agreement
with each of you with respect to the issue and sale by the Company of up to
[$5,000,000,000] aggregate principal amount of its Medium-Term Notes, Series D
and Series E (the "Medium-Term Notes") and Euro-Medium-Term Notes, Series D and
Series E (the "Euro Medium-Term Notes"; and together with the Medium-Term Notes,
the "Notes"). The Notes, Series D will be issued under an indenture (the
"Senior Debt Indenture") dated as of December 1, 1988, as amended from time to
time, between the Company and Citibank, N.A., as trustee. The Notes, Series E
will be issued under an indenture (the "Subordinated Debt Indenture"; and
together with the Senior Debt Indenture, the "Indentures") dated as of December
1, 1988, as amended from time to time, between the Company and Bankers Trust
Company, as trustee
<PAGE>
(together with Citibank, N.A., the "Trustees"). Unless otherwise specifically
provided for and set forth in a supplement to the Prospectus referred to below,
the Medium-Term Notes will be issued in minimum denominations of $1,000 and in
denominations exceeding such amount by integral multiples of $1,000 and will be
issued only in fully registered form, and the Euro Medium-Term Notes will be
issued in minimum denominations of U.S. $25,000 and in denominations exceeding
such amount by integral multiples of $5,000 and will be issued only in bearer
form, and the Notes will have the interest rates, maturities, and, if
applicable, other terms set forth in a supplement to the applicable Prospectus
referred to below. The Medium-Term Notes will be issued, and the terms thereof
established, in accordance with the Indentures and the Medium-Term Notes
Administrative Procedures attached hereto as Exhibit A (the "U.S. Procedures")
(unless a Terms Agreement (as defined in Section 2(b)) modifies or otherwise
supersedes such U.S. Procedures with respect to the Medium-Term Notes issued
pursuant to such Terms Agreement). The U.S. Procedures may only be amended by
written agreement of the Company and the U.S. Agent after notice to, and with
the approval of, the Trustees. The Euro Medium-Term Notes will be issued, and
the terms thereof established, in accordance with the Indentures and the Euro
Medium-Term Notes Administrative Procedures attached hereto as Exhibit B (the
"Euro Procedures") (unless a Terms Agreement modifies or otherwise supersedes
such Euro Procedures with respect to the Euro Medium-Term Notes issued pursuant
to such Terms Agreement). The Euro Procedures may only be amended by written
agreement of the Company and the International Agents after notice to, and with
the approval of, the Trustees. Any amendment of the U.S. Procedures or of the
Euro Procedures relating to Notes denominated in Deutsche Marks ("DMs") or
paying principal or interest in DMs (collectively, "DM Notes") shall require the
approval of the DM Agent. For purposes of this Agreement, the term "Agent" shall
refer to any one of you, and the terms "U.S. Agent", "International Agent" and
"DM Agent" shall refer to such of you as is indicated on the cover page of this
Agreement, acting solely in your capacity as agent for the Company pursuant to
Section 2(a) and not as principal; the term "Purchaser" shall refer to one of
you acting solely as principal pursuant to Section 2(b) and not as agent; and
the term "you" shall refer to you collectively whether at any time any one of
you is acting in both such capacities or in either such capacity. In acting
under this Agreement, in whatever capacity, each of you is acting individually
and not jointly.
1. Representations and Warranties. The Company represents and warrants
------------------------------
to, and agrees with, you as set forth below in this Section 1. Certain terms
used in this Section 1 are defined in paragraph (d) hereof.
2
<PAGE>
(a) The Company meets the requirements for use of Form S-3 under the
Securities Act of 1933 (the "Act"), and has filed with the Securities and
Exchange Commission (the "Commission") a registration statement on such
Form (File Numbers: 33-______) including a basic prospectus, which has
become effective for the registration under the Act of $[5,000,000,000]
aggregate principal amount of debt securities (the "Securities"), including
the Notes, and Warrants to purchase Securities (the "Warrants"). Such
registration statement, as amended at the date of this Agreement, meets the
requirements set forth in Rule 415(a)(1)(ix) or (x) under the Act and
complies in all other material respects with said Rule. The Company has
included in such registration statement, or has filed or will file with the
Commission pursuant to the applicable paragraph of Rule 424(b) under the
Act, a supplement to the form of prospectus included in such registration
statement relating to the Medium-Term Notes and the plan of distribution
thereof (the "U.S. Prospectus Supplement") and a supplement to the form of
prospectus included in such registration statement relating to the Euro
Medium-Term Notes and the plan of distribution thereof (the "Euro
Prospectus Supplement"; and together with the U.S. Prospectus Supplement,
the "Prospectus Supplements"). In connection with the sale of Notes the
Company proposes to file with the Commission pursuant to the applicable
paragraph of Rule 424(b) under the Act further supplements to those
supplements (each, a "Pricing Supplement") specifying the interest rates,
maturity dates and, if appropriate, other similar terms of the Notes sold
pursuant hereto or the offering thereof.
(b) As of the Execution Time, on the Effective Date, when any
supplement to the Prospectus is filed with the Commission, as of the date
of a Terms Agreement and at the date of delivery by the Company of any
Notes sold hereunder (a "Closing Date"), (i) the Registration Statement, as
amended as of any such time, and the Prospectus, as supplemented as of any
such time, and the Indentures will comply in all material respects with the
applicable requirements of the Act, the Trust Indenture Act of 1939 (the
"Trust Indenture Act") and the Securities Exchange Act of 1934 (the
"Exchange Act") and the respective rules thereunder; (ii) the Registration
Statement, as amended as of any such time, did not or will not contain any
untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein not misleading; and (iii) the Prospectus, as supplemented as of any
such time, will not contain any untrue statement of a material fact or omit
to state a material fact necessary in order to make the statements therein,
in the light of the circumstances under
3
<PAGE>
which they were made, not misleading; provided, however, that the Company
-------- -------
makes no representations or warranties as to (i) that part of the
Registration Statement which shall constitute the Statements of Eligibility
and Qualification (Form T-1) under the Trust Indenture Act of the Trustees
or (ii) the information contained in or omitted from the Registration
Statement or the Prospectus (or any supplement thereto) in reliance upon
and in conformity with information furnished in writing to the Company by
any of you specifically for inclusion in the Registration Statement and the
Prospectus (or any supplement thereto).
(c) As of the time any Notes are issued and sold hereunder, the
applicable Indenture will constitute a legal, valid and binding instrument
enforceable against the Company in accordance with its terms and such Notes
will have been duly authorized, executed, authenticated and, when paid for
by the purchasers thereof, will constitute legal, valid and binding
obligations of the Company entitled to the benefits of the applicable
Indenture.
(d) The terms which follow, when used in this Agreement, shall have
the meanings indicated. The term "the Effective Date" shall mean the date
on which the Execution Time occurs and each date that any post-effective
amendment or amendments to the Registration Statement became or becomes
effective and each date after the date hereof on which a document
incorporated by reference in the Registration Statement is filed.
"Execution Time" shall mean the date and time that this Agreement is
executed and delivered by the parties hereto. "Basic Prospectus" shall mean
the form of basic prospectus relating to the Securities and Warrants
contained in the Registration Statement at the Effective Date. "Prospectus"
shall mean the Basic Prospectus as supplemented by the U.S. Prospectus
Supplement or the Euro Prospectus Supplement, as the case may be.
"Registration Statement" shall mean the registration statement referred to
in paragraph (a) above, including incorporated documents, exhibits and
financial statements, as amended at the Execution Time. "Rule 415" and
"Rule 424" refer to such rules under the Act. Any reference herein to the
Registration Statement, the Basic Prospectus, the Prospectus Supplements,
the Pricing Supplements or the Prospectus shall be deemed to refer to and
include the documents incorporated by reference therein pursuant to Item 12
of Form S-3 that were filed under the Exchange Act on or before the
Effective Date of the Registration Statement or the issue date of the Basic
Prospectus, the Prospectus Supplements, the Pricing Supplements or the
Prospectus, as the case may be; and any reference herein to the terms
"amend", "amendment" or "supplement" with respect to the Registration
Statement, the Basic Prospectus, the
4
<PAGE>
Prospectus Supplements, or the Pricing Supplements or the Prospectus shall
be deemed to refer to and include the filing of any document under the
Exchange Act after the Effective Date of the Registration Statement or the
issue date of the Basic Prospectus, the Prospectus Supplements, the Pricing
Supplements or the Prospectus, as the case may be, deemed to be
incorporated therein by reference.
2. Appointment of Agents. (a) Subject to the terms and conditions set
---------------------
forth herein, the Company hereby authorizes the U.S. Agent, the International
Agents and the DM Agent to act as its agents to solicit offers for the purchase
of all or part of the Medium-Term Notes, Euro Medium-Term Notes and DM Notes,
respectively, from the Company; provided, however, the Company will place DM
-------- -------
Notes only through the DM Agent, acting as agent, and the DM Agent may itself
place DM Notes with the U.S. Agent or the International Agents; provided,
--------
further however, that only the International Agents and DM Agent may solicit
- ---------------
offers for the purchase of Euro Medium-Term Notes.
On the basis of the representations and warranties, and subject to the
terms and conditions set forth herein, each of the U.S. Agent, the International
Agents and the DM Agent agrees, as agent of the Company, to use its reasonable
efforts to solicit offers to purchase Medium-Term Notes, Euro Medium-Term Notes
and DM Notes, respectively, from the Company upon the terms and conditions set
forth in the applicable Prospectus (and any supplement thereto) and in the U.S.
or Euro Procedures, as applicable. Each Agent shall make reasonable efforts to
assist the Company in obtaining performance by each purchaser whose offer to
purchase Notes has been solicited by such Agent and accepted by the Company, but
such Agent shall not, except as otherwise provided in this Agreement, be
obligated to disclose the identity of any purchaser or have any liability to the
Company in the event any such purchase is not consummated for any reason.
Except as provided in Section 2(b), under no circumstances will any Agent be
obligated to purchase any Notes for its own account. It is understood and
agreed, however, that any of you may purchase Notes as principal pursuant to
Section 2(b).
The Company reserves the right, in its sole discretion, to instruct the
U.S. Agent, the International Agents and the DM Agent to suspend at any time,
for any period of time or permanently, the solicitation of offers to purchase
Notes. Upon receipt of instructions from the Company, the U.S. Agent, the
International Agents or the DM Agent (or any or all of them), as the case may
be, will forthwith suspend solicitation of offers to purchase Notes from the
Company until such time as the Company has advised them that such solicitation
may be resumed.
5
<PAGE>
The Company agrees to pay each Agent a commission, on the Closing Date with
respect to each sale of Notes by the Company as a result of a solicitation made
by such Agent, in an amount equal to that percentage specified in Schedule I
hereto of the aggregate principal amount of the Notes sold by the Company;
provided, however, in the case of any DM Notes, such amount shall be divided
- -------- -------
between the DM Agent and the other Agent, if any, that solicited the sale of
such Note, in such proportion as may be agreed upon by the DM Agent and such
other Agent. Such commission shall be payable as specified in the U.S. or Euro
Procedures, as applicable.
Subject to the provisions of this Section and to the U.S. or Euro
Procedures, as applicable, offers for the purchase of Notes may be solicited by
an Agent as agent for the Company at such time and in such amounts as such Agent
shall deem advisable. The Company may from time to time offer Notes for sale
otherwise than through an Agent; provided, however, that so long as this
-------- -------
Agreement is in effect the Company shall not solicit or accept offers to
purchase Notes through any agent other than an Agent.
If the Company defaults in its obligations to deliver Notes to a purchaser
whose offer it has accepted, the Company shall indemnify and hold each of you
harmless against any loss, claim or damage arising from or as a result of such
default by the Company.
(b) Subject to the terms and conditions stated herein, whenever the
Company and any of you determine that the Company shall sell Notes directly to
any of you as principal, each such sale of Notes shall be made in accordance
with the terms of this Agreement and a supplemental agreement relating to such
sale; provided, however, any DM Notes will be sold to the DM Agent which may
-------- -------
resell the DM Notes to the U.S. Agent or the International Agents. Each such
supplemental agreement (which may be either an oral or written agreement) is
herein referred to as a "Terms Agreement". Each Terms Agreement shall describe
the Notes to be purchased by the Purchaser pursuant thereto and shall specify
the aggregate principal amount of such Notes, the price to be paid to the
Company for such Notes, the maturity date of such Notes, the rate at which
interest will be paid on such Notes, the dates on which interest will be paid on
such Notes and the record date with respect to each such payment of interest,
the Closing Date for the purchase of such Notes, the place of delivery of the
Notes and payment therefor, the method of payment and any requirements for the
delivery of opinions of counsel, certificates from the Company or its officers
or a letter from the Company's independent public accountants as described in
Section 6(b). Any such Terms Agreement may also specify the period of time
referred to in Section 4(q). Any written Terms Agreement may be in the form
attached hereto as Exhibit C. The Purchaser's commitment to purchase Notes
shall be deemed to have
6
<PAGE>
been made on the basis of the representations and warranties of the Company
herein contained and shall be subject to the terms and conditions herein set
forth.
Delivery of the certificates for Notes sold to the Purchaser pursuant to a
Terms Agreement shall be made not later than the Closing Date agreed to in such
Terms Agreement, against payment of funds to the Company in the net amount due
to the Company for such Notes by the method and in the form set forth in the
U.S. or Euro Procedures, as applicable, unless otherwise agreed to between the
Company and the Purchaser in such Terms Agreement.
Unless otherwise agreed to between the Company and the Purchaser in a Terms
Agreement, any Note sold to a Purchaser (i) shall be purchased by such Purchaser
at a price equal to 100% of the principal amount thereof less a percentage equal
to the commission applicable to an agency sale of a Note of identical maturity
and (ii) may be resold by such Purchaser at varying prices from time to time or,
if set forth in the applicable Terms Agreement and Pricing Supplement, at a
fixed public offering price. In connection with any resale of Notes purchased,
a Purchaser may use a selling or dealer group and may reallow to any broker or
dealer any portion of the discount or commission payable pursuant hereto.
3. Offering and Sale of Notes. The U.S. Agent, the International Agents,
--------------------------
the DM Agent and the Company agree to perform the respective duties and
obligations specifically provided to be performed by them in the U.S. or Euro
Procedures, as the case may be.
In connection with any offering of Euro Medium-Term Notes, either of the
International Agents (or, in the case of DM Notes, the DM Agent) may act as
stabilizing agent (the "Stabilizing Agent"), and as Stabilizing Agent may over-
allot or effect transactions which stabilize or maintain the market price of the
Euro Medium-Term Notes at a level which might not otherwise prevail. Such
stabilizing, if commenced, may be discontinued at any time. The Stabilizing
Agent, whose identity shall be disclosed in the supplement to the applicable
Prospectus relating to such offering of Euro Medium-Term Notes, shall comply
with all applicable laws.
4. Agreements. The Company agrees with you that:
-----------
(a) Prior to the termination of the offering of the Notes (including by
way of resale by a Purchaser of Notes), the Company will not file any
amendment of the Registration Statement or supplement to the Prospectus
(except for (i) periodic or current reports filed under the Exchange Act,
(ii) a supplement relating to any offering of Notes
7
<PAGE>
providing solely for the specification of or a change in the maturity
dates, interest rates, issuance prices or other similar terms of any Notes
or (iii) a supplement relating to an offering of Securities other than the
Notes or to an offering of Warrants) unless the Company has furnished each
of you a copy for your review prior to filing and given each of you a
reasonable opportunity to comment on any such proposed amendment or
supplement. Subject to the foregoing sentence, the Company will cause each
supplement to the Prospectus to be filed with the Commission pursuant to
the applicable paragraph of Rule 424(b) within the time period prescribed
and will provide evidence satisfactory to you of such filing. The Company
will promptly advise each of you (i) when the Prospectus, and any
supplement thereto, shall have been filed with the Commission pursuant to
Rule 424(b), (ii) when any amendment of the Registration Statement shall
have been filed or become effective, (iii) of any request by the Commission
for any amendment of the Registration Statement or supplement to the
Prospectus or for any additional information, (iv) of the issuance by the
Commission of any stop order suspending the effectiveness of the
Registration Statement or the institution or threatening of any proceeding
for that purpose and (v) of the receipt by the Company of any notification
with respect to the suspension of the qualification of the Notes for sale
in any jurisdiction or the initiation or threatening of any proceeding for
such purpose. The Company will use its best efforts to prevent the issuance
of any such stop order and, if issued, to obtain as soon as possible the
withdrawal thereof.
(b) If, at any time when a prospectus relating to the Notes is
required to be delivered under the Act, any event occurs as a result of
which the Prospectus as then supplemented would include any untrue
statement of a material fact or omit to state any material fact necessary
to make the statements therein, in the light of the circumstances under
which they were made, not misleading, or if it shall be necessary to amend
the Registration Statement or to supplement the Prospectus to comply with
the Act or the Exchange Act or the respective rules thereunder, the Company
promptly will (i) notify each of you to suspend solicitation of offers to
purchase Notes (and, if so notified by the Company, each of you shall
forthwith suspend such solicitation and cease using the Prospectus as then
supplemented), (ii) prepare and file with the Commission, subject to the
first sentence of paragraph (a) of this Section 4, an amendment or
supplement which will correct such statement or omission or effect such
compliance and (iii) supply any supplemented Prospectus to each of you in
such quantities as you may reasonably request. If such amendment or
supplement, and any documents, certificates and opinions furnished
8
<PAGE>
to each of you pursuant to paragraph (g) of this Section 4 in connection
with the preparation or filing of such amendment or supplement are
satisfactory in all respects to you, you will, upon the filing of such
amendment or supplement with the Commission and upon the effectiveness of
an amendment to the Registration Statement, if such an amendment is
required, resume your obligation to solicit offers to purchase Notes
hereunder.
(c) The Company, during the period when a prospectus relating to the
Notes is required to be delivered under the Act, will file promptly all
documents required to be filed with the Commission pursuant to Section
13(a), 13(c), 14 or 15(d) of the Exchange Act and will furnish to each of
you copies of such documents. In addition, on or prior to the date on which
the Company makes any announcement to the general public concerning
earnings or concerning any other event which is required to be described,
or which the Company proposes to describe, in a document filed pursuant to
the Exchange Act, the Company will furnish to each of you the information
contained or to be contained in such announcement. The Company also will
furnish to each of you copies of all press releases or announcements
furnished to news or wire services and any other material press releases
and announcements. The Company will immediately notify each of you of (i)
any decrease in the rating of the Notes or any other debt securities of the
Company by any "nationally recognized statistical rating organization" (as
defined for purposes of Rule 436(g) under the Act) or (ii) any notice given
of any intended or potential decrease in any such rating or of a possible
change in any such rating that does not indicate the direction of the
possible change, as soon as the Company learns of any such decrease or
notice.
(d) As soon as practicable, the Company will make generally
available to its security holders and to each of you an earnings statement
or statements of the Company and its subsidiaries which will satisfy the
provisions of Section 11(a) of the Act and Rule 158 under the Act.
(e) The Company will furnish to each of you and your counsel, without
charge, copies of the Registration Statement (including exhibits thereto)
and, so long as delivery of a prospectus may be required by the Act, as
many copies of the Prospectus and any supplement thereto as you may
reasonably request.
(f) The Company will arrange for the qualification of the Notes for
sale under the laws of such jurisdictions as any of you may designate, will
maintain such qualifications in effect so long as required for the
distribution of the Notes, and will arrange for the determination of the
9
<PAGE>
legality of the Notes for purchase by institutional investors.
(g) The Company shall furnish to each of you such information,
documents, certificates of officers of the Company and opinions of counsel
for the Company relating to the business, operations and affairs of the
Company, the Registration Statement, the Prospectus, and any amendments
thereof or supplements thereto, the Indentures, the Notes, this Agreement,
the Procedures and the performance by the Company and you of its and your
respective obligations hereunder and thereunder as any of you may from time
to time and at any time prior to the termination of this Agreement
reasonably request.
(h) The Company shall, whether or not any sale of the Notes is
consummated, (i) pay all expenses incident to the performance of its
obligations under this Agreement and any Terms Agreement, including the
fees and disbursements of its accountants and counsel, the cost of printing
or other production and delivery of the Registration Statement, the
Prospectus, all amendments thereof and supplements thereto, the Indentures,
this Agreement, any Terms Agreement and all other documents relating to the
offering, the cost of preparing, printing, packaging and delivering the
Notes, the costs incurred in connection with listing the Notes on the
Luxembourg Stock Exchange, the fees and disbursements, including fees of
counsel, incurred in compliance with Section 4(f), the fees and
disbursements of the Trustees and the fees of any agency that rates the
Notes, (ii) reimburse each of you as requested for all out-of-pocket
expenses (including without limitation advertising expenses), if any,
incurred by you in connection with this Agreement, and (iii) pay the fees
and expenses of your counsel incurred in connection with this Agreement.
(i) Each acceptance by the Company of an offer to purchase Notes
will be deemed to be an affirmation that its representations and warranties
contained in this Agreement are true and correct at the time of such
acceptance, as though made at and as of such time, and a covenant that such
representations and warranties will be true and correct at the time of
delivery to the purchaser of the Notes relating to such acceptance, as
though made at and as of such time (it being understood that for purposes
of the foregoing affirmation and covenant such representations and
warranties shall relate to the Registration Statement and Prospectus as
amended or supplemented at each such time). Each such acceptance by the
Company of an offer for the purchase of Notes shall be deemed to constitute
an additional representation, warranty and agreement by the Company that,
as of the settlement date for the sale of such Notes, after giving
10
<PAGE>
effect to the issuance of such Notes, of any other Notes to be issued on or
prior to such settlement date and of any other Securities and of Warrants
to be issued and sold by the Company on or prior to such settlement date,
the aggregate amount of Securities (including any Notes) and Warrants which
have been issued and sold by the Company will not exceed the amount of
Securities and Warrants registered pursuant to the Registration Statement.
The Company will inform you promptly, upon your request, of the aggregate
offering price or purchase price of Securities and Warrants registered
under the Registration Statement that remain unsold.
(j) Each time that the Registration Statement or the Prospectus is
amended or supplemented (other than by an amendment or supplement relating
to any offering of Securities other than the Notes or to any offering of
Warrants or providing solely for the specification of or a change in the
maturity dates, the interest rates, the issuance prices or other similar
terms of any Notes sold pursuant hereto), the Company will deliver or cause
to be delivered promptly to each of you a certificate of the Company,
signed by the Chairman of the Board or the President and the principal
financial or accounting officer of the Company, dated the date of the
effectiveness of such amendment or the date of the filing of such
supplement, in form reasonably satisfactory to you, of the same tenor as
the certificate referred to in Section 5(d) but modified to relate to the
last day of the fiscal quarter for which financial statements of the
Company were last filed with the Commission and to the Registration
Statement and the Prospectus as amended and supplemented to the time of the
effectiveness of such amendment or the filing of such supplement.
(k) Each time that the Registration Statement or the Prospectus is
amended or supplemented (other than by an amendment or supplement (i)
relating to any offering of Securities other than the Notes or to any
offering of Warrants, (ii) providing solely for the specification of or a
change in the maturity dates, the interest rates, the issuance prices or
other similar terms of any Notes sold pursuant hereto or (iii) setting
forth or incorporating by reference financial statements or other
information as of and for a fiscal quarter, unless, in the case of clause
(iii) above, in the reasonable judgment of any of you, such financial
statements or other information are of such a nature that an opinion of
counsel should be furnished), the Company shall furnish or cause to be
furnished promptly to each of you a written opinion of counsel of the
Company satisfactory to each of you, dated the date of the effectiveness of
such amendment or the date
11
<PAGE>
of the filing of such supplement, in form satisfactory to each of you,
of the same tenor as the opinion referred to in Section 5(b) but modified
to relate to the Registration Statement and the Prospectus as amended and
supplemented to the time of the effectiveness of such amendment or the
filing of such supplement or, in lieu of such opinion, counsel last
furnishing such an opinion to you may furnish each of you with a letter to
the effect that you may rely on such last opinion to the same extent as
though it were dated the date of such letter authorizing reliance (except
that statements in such last opinion will be deemed to relate to the
Registration Statement and the Prospectus as amended and supplemented to
the time of the effectiveness of such amendment or the filing of such
supplement).
(l) Each time that the Registration Statement or the Prospectus is
amended or supplemented to include or incorporate amended or supplemental
financial information, the Company shall cause its independent public
accountants promptly to furnish each of you a letter, dated the date of the
effectiveness of such amendment or the date of the filing of such
supplement, in form satisfactory to each of you, of the same tenor as the
letter referred to in Section 5(e) with such changes as may be necessary to
reflect the amended and supplemented financial information included or
incorporated by reference in the Registration Statement and the Prospectus,
as amended or supplemented to the date of such letter; provided, however,
-------- -------
that, if the Registration Statement or the Prospectus is amended or
supplemented solely to include or incorporate by reference financial
information as of and for a fiscal quarter, the Company's independent
public accountants may limit the scope of such letter, which shall be
satisfactory in form to each of you, to the unaudited financial statements,
the related "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and any other information of an accounting,
financial or statistical nature included in such amendment or supplement,
unless, in the reasonable judgment of any of you, such letter should cover
other information or changes in specified financial statement line items.
(m) The Company and its affiliates will comply with the provisions
of U.S. Treasury Regulations 1.163-5(c)(2)(i)(D)(1) and (2).
(n) The Company will use its best efforts to obtain the listing of
the Euro Medium-Term Notes on the Luxembourg Stock Exchange, to furnish to
such Exchange all documents, information and undertakings that may be
reasonably necessary in order to effect such listing, and to cause such
12
<PAGE>
listing to be continued so long as any of the Euro Medium-Term Notes
remain outstanding.
(o) The Company or its designated agent shall submit such reports or
information as may be required from time to time by applicable law,
regulations and guidelines promulgated by Japanese governmental and
regulatory authorities in respect of the issue and purchase of Notes
denominated in Japanese yen.
(p) The Company will issue DM Notes in compliance with the guidelines
of the German Federal Central Bank regarding the issue of DM-denominated
debt securities (the "Guidelines").
(q) During the period, if any, specified (whether orally or in
writing) in any Terms Agreement, the Company shall not, without the prior
consent of the Purchaser thereunder, offer, sell or contract to sell, or
otherwise dispose of, directly or indirectly, or announce the offering of,
any debt securities issued or guaranteed by the Company (other than the
Notes being sold pursuant to such Terms Agreement).
(r) The Company confirms as of the date hereof, and during the term
of this Agreement, that it is in compliance with all provisions of Section
1 of Laws of Florida, Chapter 92-198, An Act Relating to Disclosure of
--------------------------------
Doing Business with Cuba, and the Company further agrees that if it
------------------------
commences engaging in business with the government of Cuba or with any
person or affiliate located in Cuba after the date the Registration
Statement becomes or has become effective with the Securities and Exchange
Commission or with the Florida Department of Banking and Finance (the
"Department"), whichever date is later, or if the information reported in
the Prospectus, if any, concerning the Company's business with Cuba changes
in any material way, the Company will provide the Department notice of such
business or change, as appropriate, in a form acceptable to the Department.
Each of the International Agents and the DM Agent represents to and
agrees with the Company that:
(s) Except to the extent permitted under U.S. Treas. Reg. Section
1.163-5(c)(2)(i)(D) (the "D Rules"), (i) it has not offered or sold, and
during the restricted period will not offer or sell, Euro Medium-Term Notes
to a person who is within the United States or its possessions or to a
United States person, and (ii) it has not delivered and will not deliver
within the United States or its possessions definitive Euro Medium-Term
Notes that are sold during the restricted period.
13
<PAGE>
(t) It has and throughout the restricted period will have in effect
procedures reasonably designed to ensure that its employees or agents who
are directly engaged in selling Euro Medium-Term Notes are aware that such
Euro-Medium-Term Notes may not be offered or sold during the restricted
period to a person who is within the United States or its possessions or to
a United States person, except as permitted by the D Rules.
(u) If it is a United States person, it represents that it is
acquiring the Euro Medium-Term Notes for purposes of resale in connection
with their original issuance and if it retains Euro Medium-Term Notes for
its own account, it will only do so in accordance with the requirements of
U.S. Treas. Reg. Section 1.163-5(c)(2)(i)(D)(6).
(v) With respect to each of its affiliates that acquires Euro Medium-
Term Notes from it for the purpose of offering or selling such Euro Medium-
Term Notes during the restricted period, it repeats and confirms the
representations and agreements contained in Sections 4(s), (t) and (u) on
such affiliate's behalf.
Furthermore, the International Agents and DM Agent have not entered
and will not enter into any contractual arrangement with respect to the
distribution or delivery of Euro Medium-Term Notes, except with their
affiliates or with the prior written consent of the Company.
Terms used in Sections 4(s), (t), (u) and (v) have the meanings given
to them by the U.S. Internal Revenue Code and regulations thereunder,
including the D Rules. For these purposes, the "restricted period" with
respect to a Euro Medium-Term Note generally ends upon the expiration of
the 40-day period beginning on the issue date of such Euro Medium-Term
Note, unless either International Agent or the DM Agent holds such Euro
Medium-Term Note as part of an unsold allotment or subscription, in which
case the "restricted period" continues for so long as such International
Agent or the DM Agent holds such Euro Medium-Term Note.
(w) The terms of Notes denominated in Japanese Yen that will be
issued will be limited to those which have been recognized by Japanese
authorities.
(x) (i) It has not offered or sold and will not for so long as
Part III of the Companies Act 1985 remains in force in relation to the Euro
Medium-Term Notes, offer or sell in the United Kingdom, by means of any
document, any Euro Medium-Term Notes other than to persons whose ordinary
business it is to buy or sell shares or debentures, whether
14
<PAGE>
as principal or agent, or in circumstances which do not constitute an offer
to the public within the meaning of the Companies Act 1985, (ii) it has
complied and will comply with all applicable provisions of the Financial
Services Act 1986 with respect to anything done by it in relation to the
Euro Medium-Term Notes in, from or otherwise involving the United Kingdom,
(iii) it has only issued or passed on and will only issue or pass on to any
person in the United Kingdom any document received by it in connection with
the issue of the Euro Medium-Term Notes if that person is of a kind who
falls within Article 9(3) of the Financial Services Act 1986 (Investment
Advertisements) (Exemptions) Order 1988 and (iv) once the provisions of
Part V of the Financial Services Act 1986 come into force, it will not,
directly or indirectly, issue or cause to be issued in the United Kingdom
any advertisement offering the Euro Medium-Term Notes in circumstances
which would require (for the avoidance of any contravention of those
provisions) a prospectus to have been delivered to the Registrar of
Companies in England and Wales.
(y) It will not offer, sell, resell or deliver any Notes to any
person in any jurisdiction if such offer, sale, resale or delivery shall be
prohibited by law or regulation.
Each Agent represents to and agrees with the Company that:
(z) It will not offer or sell any Note directly or indirectly in
Japan or to residents of Japan or for the benefit of any Japanese person
(which term as used herein means any person resident in Japan, including
any corporation or other entity organized under the laws of Japan) or to
others for reoffering or resale directly or indirectly in Japan or to any
Japanese person during the period of 90 days from the issue date of such
Note (which Note is denominated in Japanese yen) or 180 days from the issue
date of the Note (which Note is a Dual Currency Note, Reverse Dual Currency
Note or Optional Dual Currency Note) and that thereafter it will not do so,
except under circumstances which will result in compliance with any
applicable laws, regulations and ministerial guidelines of Japan taken as a
whole. Furthermore, in connection with the issuance of Notes denominated in
Japanese yen, the Company and you each agree to comply with all applicable
laws, regulations and guidelines as amended from time to time of the
Japanese governmental and regulatory authorities.
The DM Agent represents to and agrees with the Company that:
15
<PAGE>
(aa) It is a credit institution according to the German Banking Act;
and
(bb) It will notify the German Federal Central Bank at the end of each
month of the amounts, dates of issue and other terms of all DM Notes issued
by the Company during such month and will provide such other information
about DM Notes to the German Central Bank as may be required.
5. Conditions to the Obligations of the Agents. The obligations of
--------------------------------------------
each Agent to solicit offers to purchase the Notes shall be subject to the
accuracy of the representations and warranties on the part of the Company
contained herein as of the Execution Time, on the Effective Date, when any
supplement to the Prospectus is filed with the Commission and as of each Closing
Date, to the accuracy of the statements of the Company made in any certificates
pursuant to the provisions hereof, to the performance by the Company of its
obligations hereunder and to the following additional conditions:
(a) If filing of the Prospectus, or any supplement thereto, is
required pursuant to Rule 424(b), the Prospectus, and any such supplement,
shall have been filed in the manner and within the time period required by
Rule 424(b); and no stop order suspending the effectiveness of the
Registration Statement shall have been issued and no proceedings for that
purpose shall have been instituted or threatened.
(b) The Company shall have furnished to each Agent the opinion of
Cravath, Swaine & Moore, counsel for the Company, and/or Robert H.
Mundheim, General Counsel for the Company, and/or Arnold S. Olshin,
Secretary for the Company, dated the Execution Time, to the effect, in
aggregate, that:
(i) each of the Company and Salomon Brothers Inc (the
"Subsidiary") has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the jurisdiction in
which it is chartered or organized, with full corporate power and
authority to own its properties and conduct its business as described
in the Prospectus;
(ii) the Company's authorized equity capitalization is as set
forth in the Prospectus; and the Medium-Term Notes and the Euro
Medium-Term Notes conform to the descriptions thereof contained in the
applicable Prospectus (subject to the insertion in the Notes of the
maturity dates, the interest rates and other similar terms thereof
which will be described in supplements to the applicable Prospectus as
contemplated by the last sentence of Section 1(a) of this Agreement);
16
<PAGE>
(iii) each of the Indentures has been duly authorized, executed and
delivered, has been duly qualified under the Trust Indenture Act, and
constitutes a legal, valid and binding instrument enforceable against the
Company in accordance with its terms (subject to applicable bankruptcy,
reorganization, insolvency, moratorium or other laws affecting creditors'
rights generally from time to time in effect); and the Notes have been duly
authorized and when executed and authenticated in accordance with the
provisions of the applicable Indenture and when delivered to and paid for
by the purchasers thereof, will constitute legal, valid and binding
obligations of the Company entitled to the benefits of the applicable
Indenture (subject to applicable bankruptcy, reorganization, insolvency,
moratorium or other laws affecting creditors' rights generally from time to
time in effect);
(iv) to the best knowledge of such counsel, there is no pending or
threatened action, suit or proceeding before any court or governmental
agency, authority or body or any arbitrator involving the Company or any of
its subsidiaries, of a character required to be disclosed in the
Registration Statement that is not adequately disclosed in the Prospectus;
and the statements included or incorporated by reference in the Prospectus
describing any legal proceedings or material contracts or agreements
relating to the Company fairly summarize such matters;
(v) the Registration Statement has become effective under the Act;
any required filing of the Prospectus, pursuant to Rule 424(b) has been or
will be made in the manner and within the time period required by Rule
424(b); to the best knowledge of such counsel, no stop order suspending the
effectiveness of the Registration Statement has been issued and no
proceedings for that purpose have been instituted or threatened; and the
Registration Statement and the Prospectus (other than the financial
statements and other financial and statistical information contained
therein as to which such counsel need express no opinion) comply as to form
in all material respects with the applicable requirements of the Act, the
Exchange Act and the Trust Indenture Act and the respective rules
thereunder; and such counsel has no reason to believe that the Registration
Statement on the Effective Date or the Execution Date contains any
17
<PAGE>
untrue statement of a material fact or omits to state any material fact
required to be stated therein or necessary to make the statements therein
not misleading or that the Prospectus includes any untrue statement of a
material fact or omits to state any material fact required to be stated
therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading;
(vi) this Agreement has been duly authorized, executed and delivered
by the Company;
(vii) no consent, approval, authorization or order of any court or
governmental agency or body in the United States is required for the
consummation of the transactions contemplated herein except such as have
been obtained under the Act and such as may be required under the blue sky
laws of any jurisdiction in connection with the sale of the Notes as
contemplated by this Agreement and such other approvals (specified in such
opinion) as have been obtained;
(viii) neither the execution and delivery of the Indentures, the issue
and sale of the Notes, nor the consummation of any other of the
transactions herein contemplated nor the fulfillment of the terms hereof
will conflict with, result in a breach or violation of, or constitute a
default under any law applicable to or the charter or by-laws of the
Company or the terms of any indenture or other agreement or instrument
known to such counsel and to which the Company or any of its subsidiaries
is a party or bound, or any judgment, order regulation or decree known to
such counsel to be applicable to the Company or any of its subsidiaries of
any court, regulatory body, administrative agency, governmental body or
arbitrator having jurisdiction over the Company or any of its subsidiaries;
(ix) no holders of securities of the Company have rights to the
registration of such securities under the Registration Statement; and
(x) the information contained in the U.S. Prospectus Supplement
under the caption "United States Tax Considerations" and in the Euro
Prospectus Supplement under the caption "Taxation in the United States" are
fair and accurate summaries of the principal Federal income tax
consequences associated with the ownership of the Medium-Term Notes and the
Euro Medium-Term Notes, respectively.
18
<PAGE>
In rendering such opinion, such counsel may rely (A) as to matters
involving the application of laws of any jurisdiction other than the States
of New York and Delaware or the United States, to the extent deemed proper
and specified in such opinion, upon the opinion of other counsel of good
standing believed to be reliable and who are satisfactory to counsel for
the Agents and (B) as to matters of fact, to the extent deemed proper, on
certificates of responsible officers of the Company and public officials.
References to the Prospectus in this paragraph (b) include any supplements
thereto at the date such opinion is rendered.
(c) Each Agent shall have received from Cleary, Gottlieb, Steen &
Hamilton, counsel for the Agents, such opinion or opinions, dated the date
hereof, with respect to the issuance and sale of the Notes, the Indentures,
the Registration Statement, the Prospectus (together with any supplement
thereto) and other related matters as the Agents may reasonably require,
and the Company shall have furnished to such counsel such documents as they
request for the purpose of enabling them to pass upon such matters.
(d) The Company shall have furnished to each Agent a certificate of
the Company, signed by the Senior Vice President and the Controller of the
Company, dated the Execution Time, to the effect that the signers of such
certificate have carefully examined the Registration Statement, the
Prospectus, any supplement to the Prospectus and this Agreement and that:
(i) the representations and warranties of the Company in
this Agreement are true and correct in all material respects on and
as of the date hereof with the same effect as if made on the date
hereof and the Company has complied with all the agreements and
satisfied all the conditions on its part to be performed or satisfied
as a condition to the obligation of the Agents to solicit offers to
purchase the Notes;
(ii) no stop order suspending the effectiveness of the
Registration Statement has been issued and no proceedings for that
purpose have been instituted or, to the Company's knowledge,
threatened; and
(iii) since the date of the most recent financial statements
included in the Prospectus (exclusive of any supplement thereto),
there has been no material adverse change in the condition (financial
or other), earnings, business or properties of the Company and its
subsidiaries, whether or not arising from transactions in the
ordinary course of business, except as set forth
19
<PAGE>
in or contemplated in the Prospectus (exclusive of any supplement thereto).
(e) At the Execution Time, Arthur Andersen & Co. shall have
furnished to each Agent a letter or letters (which may refer to letters
previously delivered to the Agents), dated as of the Execution Time, in
form and substance satisfactory to the Agents, confirming that they are
independent accountants within the meaning of the Act and the Exchange Act
and the respective applicable published rules and regulations thereunder
and stating in effect that:
(i) in their opinion the audited financial statements,
financial statement schedules and pro forma financial statements, if
any, included or incorporated in the Registration Statement and the
Prospectus and reported on by them comply in form in all material
respects with the applicable accounting requirements of the Act and
the Exchange Act and the related published rules and regulations;
(ii) on the basis of a reading of the latest unaudited
financial statements made available by the Company and its
subsidiaries; their limited review in accordance with standards
established by the American Institute of Certified Public Accountants
of the unaudited interim financial information as indicated in their
reports incorporated in the Registration Statement and the
Prospectus; carrying out certain specified procedures (but not an
examination in accordance with generally accepted auditing standards)
which would not necessarily reveal matters of significance with
respect to the comments set forth in such letter; a reading of the
minutes of the meetings of the stockholders, directors and executive
committees of the Company and the Subsidiaries; and inquiries of
certain officials of the Company who have responsibility for
financial and accounting matters of the Company and its subsidiaries
as to transactions and events subsequent to the date of the most
recent audited financial statements included or incorporated in the
Prospectus, nothing came to their attention which caused them to
believe that:
(1) any unaudited financial statements included or
incorporated in the Registration Statement and the Prospectus do
not comply in form in all material respects with applicable
accounting requirements and with the published rules and
regulations of the Commission with respect to financial
statements included or incorporated in quarterly reports on Form
10-Q
20
<PAGE>
under the Exchange Act; and said unaudited financial statements
are not in conformity with generally accepted accounting
principles applied on a basis substantially consistent with that
of the audited financial statements included or incorporated in
the Registration Statement and the Prospectus;
(2) with respect to the period subsequent to the date of
the most recent financial statements (other than any capsule
information), audited or unaudited, included or incorporated in
the Registration Statement and the Prospectus, there were any
changes, at a specified date not more than five business days
prior to the date of the letter, in the consolidated long-term
debt or capital stock of the Company and its subsidiaries or
decreases in the stockholders' equity of the Company and its
subsidiaries as compared with the amounts shown on the most
recent consolidated balance sheet included or incorporated in
the Registration Statement and the Prospectus, or for the period
from the date of the most recent financial statements included
or incorporated in the Registration Statement and the Prospectus
to such specified date there were any decreases, as compared
with the corresponding period in the preceding year, in net
revenues or income before taxes or in total or per share amounts
of net income of the Company and its subsidiaries, except in all
instances for changes or decreases set forth in such letter, in
which case the letter shall be accompanied by an explanation by
the Company as to the significance thereof unless said
explanation is not deemed necessary by the Agents; or
(3) the amounts included in any unaudited "capsule"
information included or incorporated in the Registration
Statement and the Prospectus do not agree with the amounts set
forth in the unaudited financial statements for the same periods
or were not determined on a basis substantially consistent with
that of the corresponding amounts in the audited financial
statements included or incorporated in the Registration
Statement and the Prospectus;
(iii) they have performed certain other specified procedures
as a result of which they determined that certain information of an
accounting, financial or statistical nature (which is limited to
accounting,
21
<PAGE>
financial or statistical information derived from the general
accounting records of the Company and its subsidiaries) set forth in
the Registration Statement and the Prospectus and in Exhibit 12 to
the Registration Statement, including the information included or
incorporated in Items 1, 2, 6, 7 and 11 of the Company's Annual
Report on Form 10-K, incorporated in the Registration Statement and
the Prospectus, and the information included in the "Management's
Discussion and Analysis of Financial Condition and Results of
Operations" included or incorporated in the Company's Quarterly
Reports on Form 10-Q, incorporated in the Registration Statement and
the Prospectus, agrees with the accounting records of the Company and
its subsidiaries, excluding any questions of legal interpretation;
and
(iv) if unaudited pro forma financial statements are included
or incorporated in the Registration Statement and the Prospectus, on
the basis of a reading of the unaudited pro forma financial
statements, carrying out certain specified procedures, inquiries of
certain officials of the Company who have responsibility for
financial and accounting matters, and proving the arithmetic accuracy
of the application of the pro forma adjustments to the historical
amounts in the pro forma financial statements, nothing came to their
attention which caused them to believe that the pro forma financial
statements do not comply in form in all material respects with the
applicable accounting requirements of Rule 11-02 of Regulation S-X or
that the pro forma adjustments have not been properly applied to the
historical amounts in the compilation of such statements.
References to the Prospectus in this paragraph (e) include any
supplement thereto at the date of the letter.
(f) Prior to the Execution Time, the Company shall have furnished
to each Agent such further information, documents, certificates and
opinions of counsel as the Agents may reasonably request.
If any of the conditions specified in this Section 5 shall not have
been fulfilled in all material respects when and as provided in this Agreement,
or if any of the opinions and certificates mentioned above or elsewhere in this
Agreement shall not be in all material respects reasonably satisfactory in form
and substance to such Agents and counsel for the Agents, this Agreement and all
obligations of any Agent hereunder may be canceled at any time by the Agents.
Notice of such cancelation
22
<PAGE>
shall be given to the Company in writing or by telephone or telegraph confirmed
in writing.
The documents required to be delivered by this Section 5 shall be delivered
at the office of Cleary, Gottlieb, Steen & Hamilton, counsel for the Agents, at
One Liberty Plaza, New York, New York, on the date hereof.
6. Conditions to the Obligations of the Purchaser. The obligations
-----------------------------------------------
of a Purchaser to purchase any Notes will be subject to the accuracy of the
representations and warranties on the part of the Company herein as of the date
of the related Terms Agreement and as of the Closing Date for such Notes, to the
performance and observance by the Company of all covenants and agreements herein
contained on its part to be performed and observed and to the following
additional conditions precedent:
(a) No stop order suspending the effectiveness of the Registration
Statement shall have been issued and no proceedings for that purpose shall
have been instituted or threatened.
(b) To the extent agreed to between the Company and the Purchaser in
a Terms Agreement, the Purchaser shall have received, appropriately
updated, (i) a certificate of the Company, dated as of the Closing Date, to
the effect set forth in Section 5(d) (except that references to the
Prospectus shall be to the Prospectus as supplemented as of the date of
such Terms Agreement), (ii) the opinion of Cravath, Swaine & Moore, counsel
for the Company, dated as of the Closing Date, to the effect set forth in
Section 5(b), (iii) the opinion of Cleary, Gottlieb, Steen & Hamilton,
counsel for the Purchaser, dated as of the Closing Date, to the effect set
forth in Section 5(c), and (iv) the letter of Arthur Andersen & Co.,
independent accountants for the Company, dated as of the Closing Date, to
the effect set forth in Section 5(e).
(c) Prior to the Closing Date, the Company shall have furnished to
the Purchaser such further information, certificates and documents as the
Purchaser may reasonably request.
If any of the conditions specified in this Section 6 shall not have
been fulfilled in all material respects when and as provided in this Agreement
and the applicable Terms Agreement, or if any of the opinions and certificates
mentioned above or elsewhere in this Agreement or such Terms Agreement and
required to be delivered to the Purchaser pursuant to the terms hereof and
thereof shall not be in all material respects reasonably satisfactory in form
and substance to the Purchaser and its counsel, such Terms Agreement and all
obligations of the
23
<PAGE>
Purchaser thereunder and with respect to the Notes subject thereto may be
canceled at, or at any time prior to, the respective Closing Date by the
Purchaser. Notice of such cancelation shall be given to the Company in writing
or by telephone or telegraph confirmed in writing.
7. Right of Person who Agreed to Purchase to Refuse to Purchase. (a) The
-------------------------------------------------------------
Company agrees that any person who has agreed to purchase and pay for any Note
pursuant to a solicitation by any of the Agents shall have the right to refuse
to purchase such Note if, at the Closing Date therefor, any condition set forth
in Section 5 or 6, as applicable, shall not be satisfied.
(b) The Company agrees that any person who has agreed to purchase and pay
for any Note pursuant to a solicitation by any of the Agents shall have the
right to refuse to purchase such Note if, subsequent to the agreement to
purchase such Note, any change, condition or development specified in any of
Sections 9(b)(i) through (v) shall have occurred (with the judgment of the Agent
that presented the offer to purchase such Note being substituted for any
judgment of a Purchaser required therein) the effect of which is, in the
judgment of the Agent which presented the offer to purchase such Note, so
material and adverse as to make it impractical or inadvisable to proceed with
the delivery of such Note (it being understood that under no circumstance shall
any such Agent have any duty or obligation to the Company or any such person to
exercise the judgment permitted to be exercised under this Section 7(b) and
Section 9(b)).
8. Indemnification and Contribution. (a) The Company agrees to indemnify
---------------------------------
and hold harmless each of you, the directors, officers and employees and agents
of each of you and each person who controls each of you within the meaning of
either the Act or the Exchange Act against any and all losses, claims, damages
or liabilities, joint or several, to which you or any of them may become subject
under the Act, the Exchange Act or other Federal or state statutory law or
regulation, at common law or otherwise, insofar as such losses, claims, damages
or liabilities (or actions in respect thereof) arise out of or are based upon
any untrue statement or alleged untrue statement of a material fact contained in
the registration statement for the registration of the Securities as originally
filed or in any amendment thereof, or in the Prospectus or any preliminary
Prospectus, or in any amendment thereof or supplement thereto, or arise out of
or are based upon the omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements therein
not misleading, and agrees to reimburse each such indemnified party, as
incurred, for any legal or other expenses reasonably incurred by them in
connection with investigating or defending any such loss, claim, damage,
liability or action; provided, however, that the Company will not be liable in
-------- -------
any such case to the extent that any such loss,
24
<PAGE>
claim, damage or liability arises out of or is based upon any such untrue
statement or alleged untrue statement or omission or alleged omission made
therein in reliance upon and in conformity with written information furnished to
the Company by any of you specifically for inclusion therein. This indemnity
agreement will be in addition to any liability which the Company may otherwise
have.
(b) Each of you agrees to indemnify and hold harmless the Company, each of
its directors, each of its officers who signs the Registration Statement and
each person who controls the Company within the meaning of either the Act or the
Exchange Act, to the same extent as the foregoing indemnity from the Company to
you, but only with reference to written information relating to such of you
furnished to the Company by such of you specifically for inclusion in the
documents referred to in the foregoing indemnity. This indemnity agreement will
be in addition to any liability which you may otherwise have. The Company
acknowledges that (i) the statements set forth in the last paragraph of the
cover page of, and the penultimate sentence of the second paragraph under the
caption "Plan of Distribution" in, the U.S. Prospectus Supplement and in the
last sentence under the caption "Plan of Distribution" in the Basic Prospectus
constitute the only information furnished in writing by the U.S. Agent for
inclusion in the documents referred to in the foregoing indemnity, and the U.S.
Agent hereby confirms that such statements are correct and (ii) the statements
set forth in the last paragraph of the cover page of, and the penultimate
sentence of the second paragraph under the caption "Plan of Distribution" in,
the Euro Prospectus Supplement constitute the only information furnished in
writing by the International Agents for inclusion in the documents referred to
in the foregoing indemnity, and the International Agents hereby confirm that
such statements are correct.
(c) Promptly after receipt by an indemnified party under this Section 8 of
notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against the indemnifying party under this
Section 8, notify the indemnifying party in writing of the commencement thereof;
but the failure so to notify the indemnifying party (i) will not relieve it from
liability under paragraph (a) or (b) above unless and to the extent it did not
otherwise learn of such action and such failure results in the forfeiture by the
indemnifying party of substantial rights and defenses and (ii) will not, in any
event, relieve the indemnifying party from any obligations to any indemnified
party other than the indemnification obligation provided in paragraph (a) or (b)
above. The indemnifying party shall be entitled to appoint counsel of the
indemnifying party's choice at the indemnifying party's expense to represent the
indemnified party in any action for which indemnification is sought (in which
case the indemni-
25
<PAGE>
fying party shall not thereafter be responsible for the fees and expenses of any
separate counsel retained by the indemnified party or parties except as set
forth below); provided, however, that such counsel shall be satisfactory to the
-------- -------
indemnified party. Notwithstanding the indemnifying party's election to appoint
counsel to represent the indemnified party in an action, the indemnified party
shall have the right to employ separate counsel (including local counsel), and
the indemnifying party shall bear the reasonable fees, costs and expenses of
such separate counsel if (i) the use of counsel chosen by the indemnifying party
to represent the indemnified party would present such counsel with a conflict of
interest, (ii) the actual or potential defendants in, or targets of, any such
action include both the indemnified party and the indemnifying party and the
indemnified party shall have reasonably concluded that there may be legal
defenses available to it and/or other indemnified parties which are different
from or additional to those available to the indemnifying party, (iii) the
indemnifying party shall not have employed counsel satisfactory to the
indemnified party to represent the indemnified party within a reasonable time
after notice of the institution of such action or (iv) the indemnifying party
shall authorize the indemnified party to employ separate counsel at the expense
of the indemnifying party. An indemnifying party will not, without the prior
written consent of the indemnified parties, settle or compromise or consent to
the entry of any judgment with respect to any pending or threatened claim,
action, suit or proceeding in respect of which indemnification or contribution
may be sought hereunder (whether or not the indemnified parties are actual or
potential parties to such claim or action) unless such settlement, compromise or
consent includes an unconditional release of each indemnified party from all
liability arising out of such claim, action, suit or proceeding.
(d) In the event that the indemnity provided in paragraph (a) or (b) of
this Section 8 is unavailable to or insufficient to hold harmless an indemnified
party for any reason, the Company and each of you agree to contribute to the
aggregate losses, claims, damages and liabilities (including legal or other
expenses reasonably incurred in connection with investigating or defending same)
(collectively "Losses") to which the Company and one or more of you may be
subject in such proportion as is appropriate to reflect the relative benefits
received by the Company and by each of you from the offering of the Notes from
which such Losses arise; provided, however, that in no case shall any of you be
-------- -------
responsible for any amount in excess of the commissions received by you in
connection with the sale of Notes from which such Losses arise (or, in the case
of Notes sold pursuant to a Terms Agreement, the aggregate commissions that
would have been received if such commissions had been payable). If the
allocation provided by the immediately preceding sentence is unavailable for any
reason, the Company and each of you shall contribute in such proportion as is
appropriate
26
<PAGE>
to reflect not only such relative benefits but also the relative fault of the
Company and of each of you in connection with the statements or omissions which
resulted in such Losses as well as any other relevant equitable considerations.
Benefits received by the Company shall be deemed to be equal to the total net
proceeds from the offering (before deducting expenses) of the Notes from which
such Losses arise, and benefits received by each of you shall be deemed to be
equal to the total commissions received by such of you in connection with the
Notes from which such Losses arise (or, if the case of Notes sold pursuant to a
Terms Agreement, the aggregate commissions that would have been received by such
of you if such commissions had been payable). Relative fault shall be determined
by reference to whether any alleged untrue statement or omission relates to
information provided by the Company or any of you. The Company and each of you
agree that it would not be just and equitable if contribution were determined by
pro rata allocation or any other method of allocation which does not take
account of the equitable considerations referred to above. Notwithstanding the
provisions of this paragraph (d), no person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation. For purposes of this Section 8, each person who controls any
of you within the meaning of the Act or the Exchange Act and each director,
officer, employee and agent of any of you shall have the same rights to
contribution as you and each person who controls the Company within the meaning
of either the Act or the Exchange Act, each officer of the Company who shall
have signed the Registration Statement and each director of the Company shall
have the same rights to contribution as the Company, subject in each case to the
applicable terms and conditions of this paragraph (d).
9. Termination. (a) This Agreement will continue in effect until
-----------
terminated as provided in this Section 9. This Agreement may be terminated by
either the Company as to any Agent or by any Agent insofar as this Agreement
relates to such Agent giving written notice of such termination to such Agent or
the Company, as the case may be. This Agreement shall so terminate at the close
of business on the first business day following the receipt of such notice by
the party to whom such notice is given. In the event of such termination, no
party shall have any liability to the other party hereto, except as provided in
the fourth paragraph of Section 2(a), Section 4(h), Section 8 and Section 10.
(b) Each Terms Agreement shall be subject to termination in the absolute
discretion of the Purchaser, by notice given to the Company prior to delivery of
any payment for any Note to be purchased thereunder, if prior to such time (i)
there shall have occurred, subsequent to the agreement to
27
<PAGE>
purchase such Note, any change, or any development involving a prospective
change, in or affecting the business or properties of the Company and its
subsidiaries the effect of which is, in the judgment of the Purchaser, so
material and adverse as to make it impractical or inadvisable to proceed with
the offering or delivery of such Note, (ii) there shall have been, subsequent to
the agreement to purchase such Note, any decrease in the rating of any of the
Company's debt securities by any "nationally recognized statistical rating
organization" (as defined for purposes of Rule 436(g) under the Act) or any
notice given of any intended or potential decrease in any such rating or of a
possible change in any such rating that does not indicate the direction of the
possible change, (iii) trading in any securities issued by the Company shall
have been suspended or halted by the Commission or on any exchange (whether U.S.
or foreign), or trading in securities generally on the New York Stock Exchange,
The International Stock Exchange of the United Kingdom and the Republic of
Ireland or the Luxembourg Stock Exchange shall have been suspended or limited or
minimum prices shall have been established on any such exchange, (iv) a banking
moratorium shall have been declared by either U.S. Federal or New York State
authorities or by bank regulatory authorities in London or Luxembourg, or
exchange controls shall have been imposed by the United States or by any country
the currency of which will be used to make any payment in respect of the Notes
or (v) there shall have occurred any outbreak or escalation of hostilities or
declaration by the United States or the United Kingdom of a national emergency
or war, or other calamity or crisis or any other substantial change in national
or international monetary, financial, political or economic conditions the
effect of which makes it, in the judgment of the Purchaser, impracticable or
inadvisable to proceed with the offering or delivery of such Notes as
contemplated by the Prospectus (exclusive of any supplement thereto).
10. Survival of Certain Provisions. The respective agreements,
------------------------------
representations, warranties, indemnities and other statements of the Company or
its officers and of each of you set forth in or made pursuant to this Agreement
will remain in full force and effect, regardless of any investigation made by or
on behalf of you or the Company or any of the directors, officers, employees,
agents or controlling persons referred to in Section 8 hereof, and will survive
delivery of and payment for the Notes. The provisions of Sections 4(h) and 8
hereof shall survive the termination or cancelation of this Agreement. The
provisions of this Agreement (including without limitation Section 7 hereof)
applicable to any purchase of a Note for which an agreement to purchase exists
prior to the termination hereof shall survive any termination of this Agreement.
If at the time of termination of this Agreement the Purchaser shall own any
Notes with the intention of selling them, the provisions of Section 4 shall
remain in effect until such Notes are sold by the Purchaser.
28
<PAGE>
11. Notices. All communications hereunder will be in writing and
-------
effective only on receipt, and, if sent to an Agent, will be mailed, delivered
or telegraphed and confirmed to such Agent, at the address specified in Schedule
I hereto; or, if sent to the Company, will be mailed, delivered or telegraphed
and confirmed to it at Seven World Trade Center, New York, New York 10048,
attention of the Secretary.
12. Successors. This Agreement will inure to the benefit of and be
----------
binding upon the parties hereto, their respective successors, the directors,
officers, employees, agents and controlling persons referred to in Section 8
hereof and, to the extent provided in Section 7, any person who has agreed to
purchase Notes, and no other person will have any right or obligation hereunder.
13. Applicable Law. This Agreement will be governed by and construed in
--------------
accordance with the laws of the State of New York.
29
<PAGE>
If the foregoing is in accordance with your understanding of our agreement,
please sign and return to us the enclosed duplicate hereof, whereupon this
letter and your acceptance shall represent a binding agreement between the
Company and you.
Very truly yours,
SALOMON INC
By:
___________________________
Name:
Title:
The foregoing Agreement is
hereby confirmed and accepted
as of the date hereof.
SALOMON BROTHERS INC
By:
___________________________
Name:
Title:
SALOMON BROTHERS INTERNATIONAL LIMITED
By:
____________________________
Name:
Title:
By:
____________________________
Name:
Title:
SALOMON BROTHERS HONG KONG LIMITED
By:
____________________________
Name:
Title:
SALOMON BROTHERS AKTIENGESELLSCHAFT
By:
____________________________
Name:
Title:
30
<PAGE>
SCHEDULE I
Commissions:
- -----------
The Company agrees to pay each Agent a commission equal to the following
percentage of the principal amount of each Note sold on an agency basis by such
Agent:
Term Commission Rate
---- ---------------
More than nine months to .125%
less than twelve months
Twelve months to less than .150
eighteen months
Eighteen months to less than .200
two years
Two years to less than .250
three years
Three years to less than .350
four years
Four years to less than .450
five years
Five years to less than .500
six years
Six years to less than .550
seven years
Seven years to less than .600
ten years
Ten years to less than .675
fifteen years
Fifteen years to less than .700
twenty years
Twenty years or longer .750
Unless otherwise specified in the applicable Terms Agreement, the
discount or commission payable to a Purchaser shall be determined on the basis
of the commission schedule set forth above.
Address for Notices to U.S. Agent:
- ----------------------------------
Notices to Salomon Brothers Inc shall be directed to it at Seven World
Trade Center, New York, New York 10048, Attention of the Medium-Term Note
Department.
Address for Notices to International Agents:
- --------------------------------------------
Notices to Salomon Brothers International Limited shall be directed to
it at Victoria Plaza, 111 Buckingham Palace Road, London SWIW 0SB England,
Attention of Medium-Term Note Department. Notices to Salomon Brothers Hong
Limited shall be directed to it at Salomon Brothers Hong Kong Limited, Three
<PAGE>
Exchange Square, Suite 1802, Hong Kong, Attention of Medium-Term Note Depart-
ment.
Address for Notices to DM Agent:
- --------------------------------
Notices to Salomon Brothers Aktiengesellschaft shall be directed to it
at WiesenhuttenstraBe 10, 6000 Frankfurt am Main 1, Federal Republic of Germany,
Attention of .
<PAGE>
EXHIBIT A
---------
SALOMON INC
Medium-Term Note Administrative Procedures
------------------------------------------
____________, 1994
The Medium-Term Notes, Series D (the "Series D Notes") and Medium-Term
Notes, Series E (the "Series E Notes"; and together with the Series D Notes, the
"Notes") of Salomon Inc (the "Company") are to be offered on a continuing basis.
Salomon Brothers Inc, as agent (the "Agent"), has agreed to solicit purchases of
Notes issued in fully registered form. The Agent will not be obligated to
purchase Notes for its own account. The Notes are being sold pursuant to a
Global Selling Agency Agreement between the Company and the agents named therein
(including the Agent) dated the date hereof (the "Agency Agreement"). The Notes
have been registered with the Securities and Exchange Commission (the
"Commission"). Citibank, N.A. is the trustee under the Indenture, dated as of
December 1, 1988, as amended from time to time, under which the Series D Notes
will be issued (the "Senior Debt Indenture"). Bankers Trust Company is the
trustee (together with Citibank, N.A., the "Trustees") under the Indenture,
dated as of December 1, 1988, as amended from time to time, under which the
Series E Notes will be issued (the "Subordinated Debt Indenture"; and together
with the Senior Debt Indenture, the "Indentures"). The Series D Notes will
constitute part of the senior debt of the Company and will rank equally with all
other unsecured and unsubordinated debt of the Company. The Series E Notes will
be subordinate and junior in the right of payment to all Senior Indebtedness of
the Company, to the extent and in the manner set forth in the Subordinated Debt
Indenture.
The Agency Agreement provides that Notes may also be purchased by the
Agent acting solely as principal and not as agent. In the event of any such
purchase, the functions of both the Agent and the beneficial owner under the
administrative procedures set forth below shall be performed by the Agent acting
solely as principal, unless otherwise agreed to between the Company and the
Agent acting as principal.
Each Note will be represented by either a Global Security (as defined
hereinafter) or a certificate delivered to the Holder thereof or a Person
designated by such Holder (a "Certificated Note"). Each Global Security
representing Series D Notes will be delivered to Citibank, N.A. ("Citibank"),
and each Global Security representing Series E Notes will be delivered to
Bankers Trust Company ("Bankers Trust"), each acting as agent for The Depository
Trust Company or any successor depository selected by the Company ("DTC", which
term, as used herein, includes any successor depository selected by the
Company), and will be recorded in the book-entry system maintained by DTC (a
"Book-
<PAGE>
Entry Note"). Until such time as the operating requirements of DTC permit
otherwise, only Notes denominated and payable in U.S. dollars may be issued as
Book-Entry Notes. An owner of a Book-Entry Note will not be entitled to receive
a certificate representing such Note.
The procedures to be followed during, and the specific terms of, the
solicitation of orders by the Agent and the sale as a result thereof by the
Company are explained below. Administrative and record-keeping responsibilities
will be handled for the Company by its Treasury Department. The Company will
advise the Agent and the Trustees in writing of those persons handling
administrative responsibilities with whom the Agent and the Trustees are to
communicate regarding orders to purchase Notes and the details of their
delivery.
Administrative procedures and specific terms of the offering are
explained below. Book-Entry Notes will be issued in accordance with the
administrative procedures set forth in Part I hereof, as adjusted in accordance
with changes in DTC's operating requirements, and Certificated Notes will be
issued in accordance with the administrative procedures set forth in Part II
hereof. Unless otherwise defined herein, terms defined in the Indentures and
the Notes shall be used herein as therein defined. Notes for which interest is
calculated on the basis of a fixed interest rate, which may be zero, are
referred to herein as "Fixed Rate Notes". Notes for which interest is
calculated on the basis of a floating interest rate are referred to herein as
"Floating Rate Notes". To the extent the procedures set forth below conflict
with the provisions of the Notes, the Indentures, DTC's operating requirements
or the Agency Agreement, the relevant provisions of the Notes, the Indentures,
DTC's operating requirements and the Agency Agreement shall control.
PART I
Administrative Procedures for
-----------------------------
Book-Entry Notes
----------------
In connection with the qualification of the Book-Entry Notes for
eligibility in the book-entry system maintained by DTC, Citibank and Bankers
Trust (together, the "DTC Agents") will perform the custodial, document control
and administrative functions described below for the Series D Notes and the
Series E Notes, respectively. Citibank will perform such functions in
accordance with its respective obligations under a Letter of Representations
from the Company and Citibank to DTC dated as of the date hereof and a Medium-
Term Note Certificate Agreement between Citibank and DTC, dated as of October
31, 1988 and as amended to date, and its obligations as a participant in DTC,
including DTC's Same-Day Funds Settlement system ("SDFS").
A-34
<PAGE>
Bankers Trust will perform such functions in accordance with its respective
obligations under a Letter of Representations from the Company and Bankers Trust
to DTC dated as of June 23, 1989 and a Certificate Agreement between DTC and
Bankers Trust, dated as of October 21, 1988 and as amended to date, and its
obligations as a participant in DTC, including DTC's SDFS.
Issuance: On any date of settlement (as defined under
- -------- "Settlement" below) for one or more Book-Entry
Notes, the Company will issue a single global
security in fully registered form without coupons (a
"Global Security") representing up to $100,000,000
principal amount of all such Book-Entry Notes of the
same Series that have the same original issue date,
original issue discount provisions, if any, Interest
Payment Dates, Regular Record Dates, Interest Payment
Period, redemption repayment and extension
provisions, if any, Stated Maturity, and, in the case
of Fixed Rate Notes, interest rate, or, in the case
of Floating Rate Notes, initial interest rate, Base
Rate, Index Maturity, Interest Reset Period, Interest
Reset Dates, Spread or Spread Multiplier, if any,
minimum interest rate, if any, and maximum interest
rate, if any (collectively, the "Terms"). Each
Global Security will be dated and issued as of the
date of its authentication by the applicable Trustee.
Each Global Security will bear an original issue
date, which will be (i) with respect to an original
Global Security (or any portion thereof), the
original issue date specified in such Global Security
and (ii) following a consolidation of Global
Securities, with respect to the Global Security
resulting from such consolidation, the most recent
Interest Payment Date to which interest has been paid
or duly provided for on the predecessor Global
Securities, regardless of the date of authentication
of such resulting Global Security. No Global
Security will represent (i) both Fixed Rate and
Floating Rate Book-Entry Notes or (ii) any
Certificated Note or (iii)
A-35
<PAGE>
both Series D Notes and Series E Notes.
Identification The Company has arranged with the CUSIP Service
- -------------- Bureau of Standard & Poor's Corporation (the "CUSIP
Numbers: Service Bureau") for the reservation of two series of
- ------- CUSIP numbers, one for Series D Notes and one for
Series E Notes, each of which series consists of
approximately 900 CUSIP numbers and relates to Global
Securities representing Book-Entry Notes and book-
entry medium-term notes issued by the Company with
other series designations. The DTC Agents, the
Company and DTC have obtained from the CUSIP Service
Bureau a written list of such reserved CUSIP numbers.
The Company will assign CUSIP numbers to Global
Securities as described below under Settlement
Procedure "B". DTC will notify the CUSIP Service
Bureau periodically of the CUSIP numbers that the
Company has assigned to Global Securities. Each DTC
Agent will notify the Company at any time when fewer
than 100 of the reserved CUSIP numbers remain
unassigned to Global Securities, and, if it deems
necessary, the Company will reserve additional CUSIP
numbers for assignment to Global Securities. Upon
obtaining such additional CUSIP numbers, the Company
shall deliver a list of such additional CUSIP numbers
to either or both DTC Agents, as needed, and to DTC.
Registration: Global Securities will be issued only in fully
- ------------ registered form without coupons. Each Global
Security will be registered in the name of CEDE &
CO., as nominee for DTC, on the securities register
for the Notes (the "Securities Register"). The
beneficial owner of a Book-Entry Note (or one or more
indirect participants in DTC designated by such
owner) will designate one or more participants in DTC
(with respect to such Book-Entry Note, the
"Participants") to act as
A-36
<PAGE>
agent or agents for such owner in connection with the
book-entry system maintained by DTC, and DTC will
record in book-entry form, in accordance with
instructions provided by such Participants, a credit
balance with respect to such beneficial owner in such
Book-Entry Note in the account of such Participants.
The ownership interest of such beneficial owner (or
such participant) in such Book-Entry Note will be
recorded through the records of such Participants or
through the separate records of such Participants and
one or more indirect participants in DTC.
Transfers: Transfers of a Book-Entry Note will be accomplished
- --------- by book entries made by DTC and, in turn, by
Participants (and in certain cases, one or more
indirect participants in DTC) acting on behalf of
beneficial transferors and transferees of such Note.
Exchanges: Each DTC Agent may deliver to DTC and the CUSIP
- --------- Service Bureau at any time a written notice of
consolidation (a copy of which shall be attached to
the resulting Global Security described below)
specifying (i) the CUSIP numbers of two or more
outstanding Global Securities that represent (A)
Fixed Rate Book-Entry Notes of the same Series and
having the same Terms and for which interest has been
paid to the same date or (B) Floating Rate Book-Entry
Notes of the same Series and having the same Terms
and for which interest has been paid to the same
date, (ii) a date, occurring at least thirty days
after such written notice is delivered and at least
thirty days before the next Interest Payment Date for
such Book-Entry Notes, on which such Global
Securities shall be exchanged for a single
replacement Global Security and (iii) a new CUSIP
number, obtained from the Company, to be assigned to
such replacement Global Security. Upon receipt of
such a notice, DTC
A-37
<PAGE>
will send to its participants (including the DTC
Agent for such replacement Global Security) a written
reorganization notice to the effect that such
exchange will occur on such date. Prior to the
specified exchange date, such DTC Agent will deliver
to the CUSIP Service Bureau a written notice setting
forth such exchange date and such new CUSIP number
and stating that, as of such exchange date, the CUSIP
numbers of the Global Securities to be exchanged will
no longer be valid. On the specified exchange date,
such DTC Agent will exchange such Global Securities
for a single Global Security bearing the new CUSIP
number and the CUSIP numbers of the exchanged Global
Securities will, in accordance with CUSIP Service
Bureau procedures, be canceled and not immediately
reassigned. Notwithstanding the foregoing, if the
Global Securities to be exchanged exceed $100,000,000
in aggregate principal amount, one Global Security
will be authenticated and issued to represent each
$100,000,000 of principal amount of the exchanged
Global Securities and an additional Global Security
will be authenticated and issued to represent any
remaining principal amount of such Global Securities
(see "Denominations" below).
Maturities: Each Book-Entry Note will mature on a date not less
- ---------- than nine months after the settlement date for such
Note. A Floating Rate Book-Entry Note will mature
only on an Interest Payment Date for such Note. Any
Note denominated in Japanese yen will mature on a
date not less than one year from the Original Issue
Date (as defined below) for such Note. Any Note
denominated in Pounds Sterling will mature on a date
not less than one year, nor more than five years,
after its Original Issue Date.
A-38
<PAGE>
Denominations: Book-Entry Notes will be issued in principal amounts
- ------------- of $1,000 or any amount in excess thereof that is
an integral multiple of $1,000. Global Securities
will be denominated in principal amounts not in
excess of $100,000,000. If one or more Book-Entry
Notes having an aggregate principal amount in excess
of $100,000,000 would, but for the preceding
sentence, be represented by a single Global Security,
then one Global Security will be authenticated and
issued to represent each $100,000,000 principal
amount of such Book-Entry Note or Notes and an
additional Global Security will be authenticated and
issued to represent any remaining principal amount of
such Book-Entry Note or Notes. In such a case, each
of the Global Securities representing such Book-Entry
Note or Notes shall be assigned the same CUSIP
number.
Interest: General. Interest, if any, on each Book-Entry Note
- -------- -------
will accrue from the original issue date for the
first interest period or the last date to which
interest has been paid, if any, for each subsequent
interest period, on the Global Security representing
such Book-Entry Note, and will be calculated and paid
in the manner described in such Book-Entry Note and
in the Prospectus (as defined in the Agency
Agreement), as supplemented by the applicable Pricing
Supplement. Interest payable at the Maturity of a
Book-Entry Note will be payable to the Person to whom
the principal of such Note is payable. Standard &
Poor's Corporation will use the information received
in the pending deposit message described under
Settlement Procedure "C" below in order to include
the amount of any interest payable and certain other
information regarding the related Global Security in
the appropriate (daily or weekly) bond report
published by Standard & Poor's Corporation.
A-39
<PAGE>
Regular Record Dates. The Regular Record Date with
--------------------
respect to any Interest Payment Date for a Floating-
Rate Note shall be the date (whether or not a
Business Day) fifteen calendar days immediately
preceding such Interest Payment Date and for a Fixed
Rate Note (unless otherwise specified in the
applicable Pricing Supplement) shall be the March 1
or September 1 (whether or not a Business Day)
immediately preceding such Interest Payment Date.
Payments of Payment of Interest Only. Promptly after each
- ----------- ------------------------
Principal and Regular Record Date, the DTC Agent for each Global
- ------------- Security will deliver to the Company and DTC a
Interest: written notice setting forth, by CUSIP number, the
- -------- amount of interest to be paid on each Global
Security on the following Interest Payment Date
(other than an Interest Payment Date coinciding with
Maturity) and the total of such amounts. DTC will
confirm the amount payable on each Global Security on
such Interest Payment Date by reference to the
appropriate (daily or weekly) bond reports published
by Standard & Poor's Corporation. The Company will
pay to the Trustee for the Notes represented by such
Global Security the total amount of interest due on
such Interest Payment Date (other than at Maturity),
and such Trustee will pay such amount to DTC, at the
times and in the manner set forth below under "Manner
of Payment". If any Interest Payment Date for a Book-
Entry Note is not a Business Day, the payment due on
such day shall be made on the next succeeding
Business Day and no interest shall accrue on such
payment for the period from and after such Interest
Payment Date.
Payments at Maturity. On or about the first Business
--------------------
Day of each month, each DTC Agent will, with respect
to the Global Securities for which it acts as DTC
Agent, deliver to the Company, DTC
A-40
<PAGE>
and the applicable Trustee a written list of
principal and interest to be paid on each Global
Security maturing in the following month. The DTC
Agent for each Global Security, the Company and DTC
will confirm the amounts of such principal and
interest payments with respect to each such Global
Security on or about the fifth Business Day preceding
the Maturity of such Global Security. On or before
Maturity, the Company will pay to the Trustee for the
Notes represented by such Global Security the
principal amount of such Global Security, together
with interest due at such Maturity. Such Trustee will
pay such amount to DTC at the times and in the manner
set forth below under "Manner of Payment". If any
Maturity of a Global Security representing Book-Entry
Notes is not a Business Day, the payment due on such
day shall be made on the next succeeding Business Day
and no interest shall accrue on such payment for the
period from and after such Maturity. Promptly after
payment to DTC of the principal and interest due at
Maturity of such Global Security, the Trustee for
such Global Security will cancel such Global Security
in accordance with the applicable Indenture and so
advise the Company.
Manner of Payment. The total amount of any principal
-----------------
and interest due on Global Securities on any Interest
Payment Date or at Maturity shall be paid by the
Company to the Trustee for the Notes represented by
such Global Security in immediately available funds
no later than 9:30 A.M. (New York City time) on such
date. The Company will make such payment on such
Global Securities by instructing such Trustee to
withdraw funds from an account maintained by the
Company with the DTC Agent for the Notes represented
by such Global Securities. The Company will confirm
any such instructions in writing to such
A-41
<PAGE>
Trustee. Prior to 10 A.M. (New York City time) on the
date of Maturity or as soon as possible thereafter,
such Trustee will pay by separate wire transfer
(using Fedwire message entry instructions in a form
previously specified by DTC) to an account at the
Federal Reserve Bank of New York previously specified
by DTC, in funds available for immediate use by DTC,
each payment of principal (together with interest
thereon) due on a Global Security on such date. On
each Interest Payment Date (other than at Maturity),
interest payments shall be made to DTC, in funds
available for immediate use by DTC, in accordance
with existing arrangements between the relevant DTC
Agent and DTC. On each such date, DTC will pay, in
accordance with its SDFS operating procedures then in
effect, such amounts in funds available for immediate
use to the respective Participants in whose names the
Book-Entry Notes represented by such Global
Securities are recorded in the book-entry system
maintained by DTC. None of the Company (as issuer or
as paying agent), the Trustee or such DTC Agent shall
have any direct responsibility or liability for the
payment by DTC to such Participants of the principal
of and interest on the Book-Entry Notes.
Withholding Taxes. The amount of any taxes required
-----------------
under applicable law to be withheld from any interest
payment on a Book-Entry Note will be determined and
withheld by the Participant, indirect participant in
DTC or other Person responsible for forwarding
payments and materials directly to the beneficial
owner of such Note.
Procedures upon Company Notice to Trustee regarding Exercise of
- --------------- -----------------------------------------------
Company's Exercise Optional Reset. Not less than 45 or more than 60
- ------------------ --------------
of Optional Reset days before an Optional Reset Date as set forth in a
- ----------------- Book-Entry Note, the Company will notify the Trustee
or Optional Extension for such Book-Entry Note whether it is exercising
- --------------------- its option to reset the interest rate or Spread or
of Maturity: Spread Multiplier, as the case may be, for
- -----------
A-42
<PAGE>
such Book-Entry Note, and if so, (i) the new interest
rate or Spread or Spread Multiplier, as the case may
be, for such Book-Entry Note during the period from
such Optional Reset Date to the next Optional Reset
Date as set forth in such Book-Entry Note or, if
there is no such next Optional Reset Date, to the
Stated Maturity of such Book-Entry Note (the
"Subsequent Interest Period"); and (ii) the
provisions, if any, for redemption of such Book-Entry
Note during such Subsequent Interest Period,
including the date or dates on which or the period or
periods during which such redemption may occur during
such Subsequent Interest Period.
Company Notice to Trustee regarding Exercise of
-----------------------------------------------
Optional Extension of Maturity. If the Company
------------------------------
elects to exercise an option, as set forth in a Book-
Entry Note, to extend the Stated Maturity of such
Note, it will so notify the Trustee for such Book-
Entry Note no less than 45 or more than 60 days
before the Stated Maturity of such Book-Entry Note,
and will further indicate (i) the new Stated
Maturity; (ii) the interest rate or Spread or Spread
Multiplier, as the case may be, applicable to the
extension period; and (iii) the provisions, if any,
for redemption of such Book-Entry Note during such
extension period, including the date or dates on
which or the period or periods during which such
redemption may occur during such extension period.
Trustee Notice to DTC regarding Company's Exercise of
-----------------------------------------------------
Optional Extension or Reset. Upon receipt of notice
---------------------------
from the Company regarding the Company's exercise of
either an optional extension of maturity or an
optional reset, the Trustee for the
A-43
<PAGE>
Book-Entry Note will hand-deliver a notice to DTC not
less than 40 days before the Optional Reset Date (in
which case a "Reset Notice") or the Stated Maturity
(in which case an "Extension Notice"), as the case
may be, which Reset Notice or Extension Notice shall
identify such Book-Entry Note by CUSIP number and
shall contain the information required by the terms
of the Book-Entry Note.
Trustee Notice to Company regarding Option to be
------------------------------------------------
Repaid. If, after receipt of either a Reset Notice
------
or an Extension Notice, DTC exercises the option for
repayment by tendering the Global Security
representing the Book-Entry Note to be repaid as set
forth in such Note, the Trustee for such Book-Entry
Note shall give notice to the Company not less than
22 days before the Optional Reset Date or the old
Stated Maturity, as the case may be, of the principal
amount of Book-Entry Notes to be repaid on such
Optional Reset Date or old Stated Maturity, as the
case may be.
Company Notice regarding New Interest Rate or New
-------------------------------------------------
Spread or Spread Multiplier. If the Company elects
---------------------------
to revoke the interest rate or Spread or Spread
Multiplier and establish a higher interest rate or
Spread or Spread Multiplier for a Optional Reset
Period or extension period, as the case may be, it
shall, not less than 20 days before such Optional
Reset Date or old Stated Maturity, so notify the
Trustee for the affected Book-Entry Note. The
Trustee will immediately thereafter notify DTC of the
new interest rate or Spread or Spread Multiplier
applicable to such Book-Entry Note.
Trustee Notice to Company regarding DTC Revocation of
-----------------------------------------------------
Option to be Repaid. If, after DTC has tendered any
-------------------
Book-Entry Notes for repayment pursuant to an
Extension Notice or an Optional
A-44
<PAGE>
Reset Notice, DTC then revokes such tender for
repayment, the Trustee for such Book-Entry Notes
shall give notice to the Company not less than five
days prior to the Stated Maturity or Optional Reset
Date, as the case may be, of such revocation and of
the principal amount of Book-Entry Notes for which
tender for repayment has been revoked.
Deposit of Repayment Price. On or before any old
--------------------------
Stated Maturity where the Maturity has been extended,
and on or before any Optional Reset Date, the Company
shall deposit with such Trustee an amount of money
sufficient to pay the principal amount, plus interest
accrued to such old Stated Maturity or Optional Reset
Date, as the case may be, for all the Book-Entry
Notes or portions thereof for which such Trustee
serves as Trustee and which are to be repaid on such
old Stated Maturity or Optional Reset Date, as the
case may be. Such Trustee will use such money to
repay such Book-Entry Notes pursuant to the terms set
forth in such Notes.
Procedures upon Company Notice to Trustee regarding Exercise of
- --------------- -----------------------------------------------
Company's Optional Redemption. At least 45 days prior to the
- --------- -------------------
Exercise of date on which it intends to redeem a Book-Entry Note,
- ----------- the Company will notify the Trustee for such Book-
Optional Entry Note that it is exercising such option with
- -------- respect to such Book-Entry Note on such date.
Redemption:
- ----------
Trustee Notice to DTC regarding Company's Exercise of
-----------------------------------------------------
Optional Redemption. After receipt of notice that
-------------------
the Company is exercising its option to redeem a
Book-Entry Note, the Trustee will, at least 30 days
before the redemption date for such Book-Entry Note,
hand deliver to DTC a notice identifying such Book-
Entry Note by CUSIP number and informing DTC of the
Company's exercise of such
A-45
<PAGE>
option with respect to such Book-Entry Note.
Deposit of Redemption Price. On or before any
---------------------------
redemption date, the Company shall deposit with such
Trustee an amount of money sufficient to pay the
redemption price, plus interest accrued to such
redemption date, for all the Book-Entry Notes or
portions thereof for which such Trustee serves as
Trustee and which are to be repaid on such redemption
date. Such Trustee will use such money to repay such
Book-Entry Notes pursuant to the terms set forth in
such Notes.
Payments of Prin- Trustee Notice to Company of Option to be Repaid.
- ----------------- ------------------------------------------------
cipal and Interest Upon receipt of notice of exercise of the option for
- ------------------ repayment and the Global Securities representing the
Upon Exercise of Book-Entry Notes so to be repaid as set forth in such
- ---------------- Notes, the Trustee for such Book-Entry Notes shall
Optional Repayment (unless such notice was received pursuant to the
- ------------------ Company's exercise of an optional reset or an
(Except Pursuant to optional extension of maturity, in each of which
- ------------------- cases the relevant procedures set forth above are to
Company's Exercise be followed) give notice to the Company not less than
- ------------------ 20 days prior to each Optional Repayment Date of such
of Optional Reset or Optional Repayment Date and of the principal amount
- -------------------- of Book-Entry Notes to be repaid on such Optional
Optional Extension: Repayment Date.
- ------------------
Deposit of Repayment Price. On or prior to any
--------------------------
Optional Repayment Date, the Company shall deposit
with such Trustee an amount of money sufficient to
pay the optional repayment price, and accrued
interest thereon to such date, of all the Book-Entry
Notes or portions thereof which are to be repaid on
such date. Such Trustee will use such money to repay
such Book-Entry Notes pursuant to the terms set forth
in such Notes.
A-46
<PAGE>
Procedure for Rate The Company and the Agent will discuss from time to
- ------------------ time the aggregate principal amount of, the issuance
Setting and price of, and the interest rates to be borne by,
- ----------- Book-Entry Notes that may be sold as a result of the
Posting: solicitation of orders by the Agent. If the Company
- ------- decides to set prices of, and rates borne by, any
Book-Entry Notes in respect of which the Agent is to
solicit orders (the setting of such prices and rates
to be referred to herein as "posting") or if the
Company decides to change prices or rates previously
posted by it, it will promptly advise the Agent of
the prices and rates to be posted.
Acceptance and Unless otherwise instructed by the Company, the Agent
- -------------- will advise the Company promptly by telephone of all
Rejection of orders to purchase Book-Entry Notes received by the
- ------------ Agent, other than those rejected by it in whole or in
Orders: part in the reasonable exercise of its discretion.
- ------ Unless otherwise agreed by the Company and the Agent,
the Company has the right to accept orders to
purchase Book-Entry Notes and may reject any such
orders in whole or in part.
Preparation of If any order to purchase a Book-Entry Note is
- -------------- accepted by or on behalf of the Company, the Company
Pricing will prepare a pricing supplement (a "Pricing
- ------- Supplement") reflecting the terms of such Book-Entry
Supplement: Note and will arrange to have ten copies thereof
- ---------- filed with the Commission in accordance with the
applicable paragraph of Rule 424(b) under the Act and
will supply at least ten copies thereof (and
additional copies if requested) to the Agent. The
Agent will cause a Prospectus and Pricing Supplement
to be delivered to the purchaser of such Book-Entry
Note.
In each instance that a Pricing Supplement is
prepared, the Agent will affix the Pricing Supplement
to Prospectuses prior to their use.
A-47
<PAGE>
Outdated Pricing Supplements (other than those
retained for files), will be destroyed.
Suspension of Subject to the Company's representations, warranties
- ------------- and covenants contained in the Agency Agreement, the
Solicitation; Company may instruct the Agent to suspend at any
- ------------ time, for any period of time or permanently, the
Amendment or solicitation of orders to purchase Book-Entry Notes.
- ------------ Upon receipt of such instructions, the Agent will
Supplement: forthwith suspend solicitation until such time as the
- ---------- Company has advised them that such solicitation may
be resumed.
In the event that at the time the Company suspends
solicitation of purchases there shall be any orders
outstanding for settlement, the Company will promptly
advise the Agent, the Trustees and the DTC Agents
whether such orders may be settled and whether copies
of the Prospectus as in effect at the time of the
suspension, together with the appropriate Pricing
Supplement, may be delivered in connection with the
settlement of such orders. The Company will have the
sole responsibility for such decision and for any
arrangements that may be made in the event that the
Company determines that such orders may not be
settled or that copies of such Prospectus may not be
so delivered.
Delivery of A copy of the Prospectus and a Pricing Supplement
- ----------- relating to a Book-Entry Note must accompany or
Prospectus: precede the earliest of any written offer of such
- ---------- Book-Entry Note, confirmation of the purchase of such
Book-Entry Note and payment for such Book-Entry Note
by its purchaser. If notice of a change in the terms
of the Book-Entry Notes is received by the Agent
between the time an order for a Book-Entry Note is
placed and the time written confirmation thereof is
sent by the Agent to a customer or his agent, such
confirmation shall be accompanied by a
A-48
<PAGE>
Prospectus and Pricing Supplement setting forth the
terms in effect when the order was placed. The Agent
will deliver a Prospectus and Pricing Supplement as
herein described with respect to each Book-Entry Note
sold by it. The Company will make such delivery if
such Book-Entry Note is sold directly by the Company
to a purchaser (other than the Agent).
Confirmation: For each order to purchase a Book-Entry Note
- ------------ solicited by the Agent and accepted by or on behalf
of the Company, the Agent will issue a confirmation
to the purchaser, with a copy to the Company, setting
forth the details set forth above and delivery and
payment instructions.
Settlement: The receipt by the Company of immediately available
- ---------- funds in payment for a Book-Entry Note and the
authentication and issuance of the Global Security
representing such Book-Entry Note shall constitute
"settlement" with respect to such Book-Entry Note.
All orders accepted by the Company will be settled on
the fifth Business Day following the date of sale of
such Book-Entry Note pursuant to the timetable for
settlement set forth below unless the Company and the
purchaser agree to settlement on another day which
shall be no earlier than the next Business Day
following the date of sale.
Settlement Settlement Procedures with regard to each Book-Entry
- ---------- Note sold by the Company through the Agent, as
Procedures: agent, shall be as follows:
- ----------
A. The Agent will advise the Company by telephone of
the following settlement information:
1. Principal or face amount.
2. Series.
3. Stated Maturity.
A-49
<PAGE>
4. In the case of a Fixed Rate Book-Entry Note,
the interest rate and reset, redemption,
repayment and extension provisions (if any)
or, in the case of a Floating Rate Book-
Entry Note, the Base Rate, initial interest
rate (if known at such time), Index
Maturity, Spread or Spread Multiplier (if
any), minimum interest rate (if any),
maximum interest rate (if any) and reset,
redemption, repayment and extension
provisions (if any).
5. Interest Payment Dates and the Interest
Payment Period.
6. Redemption or amortization provisions, if
any.
7. Settlement date.
8. Any other terms necessary to describe the
Book-Entry Note.
9. Price.
10. Agent's commission, determined as provided
in Section 2 of the Agency Agreement.
11. Whether such Book-Entry Note is issued at an
original issue discount and, if so, the
total amount of OID, the yield to maturity
and the initial accrual period OID.
B. The Company will assign a CUSIP number to the
Global Security representing such Book-Entry Note
and then advise the relevant DTC Agent by
telephone (confirmed in writing at any time on
the same date) or electronic transmission of the
information set forth in Settlement Procedure "A"
above and such CUSIP number. The Company will
also notify the Agent by
A-50
<PAGE>
telephone of such CUSIP
number as soon as practicable. Each such
communication by the Company shall constitute a
representation and warranty by the Company to the
DTC Agent for such Note, the Trustee for such
Note and the Agent that (i) such Note is then,
and at the time of issuance and sale thereof will
be, duly authorized for issuance and sale by the
Company and (ii) such Note, and the Global
Security representing such Note, will conform
with the terms of the Indenture for such Note.
C. Such DTC Agent will enter a pending deposit
message through DTC's Participant Terminal System
providing the following settlement information to
DTC (which shall route such information to
Standard & Poor's Corporation), the Agent and,
upon request, the Trustee for such Notes:
1. The information set forth in Settlement
Procedure "A".
2. Identification as a Fixed Rate Book-Entry
Note or a Floating Rate Book-Entry Note.
3. Initial Interest Payment Date for such Book-
Entry Note, number of days by which such
date succeeds the related Regular Record
Date and amount of interest payable on such
Interest Payment Date.
4. The Interest Payment Period.
5. CUSIP number of the Global Security
representing such Book-Entry Note.
6. Whether such Global Security will represent
any other Book-Entry Note (to the extent
known at such time).
A-51
<PAGE>
D. To the extent the Company has not already done
so, the Company will deliver to the Trustee for
such Notes a Global Security in a form that has
been approved by the Company, the Agent and the
Trustee.
E. The Trustee will complete such Book-Entry Note,
stamp the appropriate legend, as instructed by
DTC, if not already set forth thereon, and
authenticate the Global Security representing
such Book-Entry Note.
F. DTC will credit such Book-Entry Note to such DTC
Agent's participant account at DTC.
G. Such DTC Agent will enter an SDFS deliver order
through DTC's Participant Terminal System
instructing DTC to (i) debit such Book-Entry Note
to such DTC Agent's participant account and
credit such Book-Entry Note to the Agent's
participant account and (ii) debit the Agent's
settlement account and credit such DTC Agent's
settlement account for an amount equal to the
price of such Book-Entry Note less the Agent's
commission. The entry of such a deliver order
shall constitute a representation and warranty by
such DTC Agent to DTC that (i) the Global
Security representing such Book-Entry Note has
been issued and authenticated and (ii) such DTC
Agent is holding such Global Security pursuant to
the MediumTerm Note Certificate Agreement between
such DTC Agent and DTC.
H. The Agent will enter an SDFS deliver order
through DTC's Participant Terminal System
instructing DTC (i) to debit such Book-Entry Note
to the Agent's participant account and credit
such Book-Entry Note to the
A-52
<PAGE>
participant accounts of the Participants with
respect to such Book-Entry Note and (ii) to
debit the settlement accounts of such
Participants and credit the settlement account
of the Agent for an amount equal to the price of
such Book-Entry Note.
I. Transfers of funds in accordance with SDFS
deliver orders described in Settlement Procedures
"G" and "H" will be settled in accordance with
SDFS operating procedures in effect on the
settlement date.
J. Such DTC Agent will, upon receipt of funds from
the Agent in accordance with Settlement Procedure
"G", credit to an account of the Company
maintained at such DTC Agent funds available for
immediate use in the amount transferred to such
DTC Agent in accordance with Settlement Procedure
"G".
K. The Agent will confirm the purchase of such Book-
Entry Note to the purchaser either by
transmitting to the Participants with respect to
such Book-Entry Note a confirmation order or
orders through DTC's institutional delivery
system or by mailing a written confirmation to
such purchaser.
L. Periodically, each DTC Agent will send to the
Company a statement setting forth the principal
amount of Registered Notes Outstanding as of the
date of such statement and setting forth a brief
description of any sales of which the Company has
advised such DTC Agent but which have not yet
been settled.
Settlement For orders of Book-Entry Notes solicited by the Agent
- ---------- and accepted by the Company for settlement on the
Procedures
- ----------
Timetable:
- ---------
A-53
<PAGE>
first Business Day after the sale date, Settlement
Procedures "A" through "K" set forth above shall be
completed as soon as possible but not later than the
respective times (New York City time) set forth
below:
Settlement
Procedure Time
--------- ----
A 11:00 A.M. on the sale date
B 12:00 Noon on the sale date
C 2:00 P.M. on the sale date
D 3:00 P.M. on the day before
settlement
E 9:00 A.M. on settlement date
F 10:00 A.M. on settlement
date
G-H 2:00 P.M. on settlement
date
I 4:45 P.M. on settlement
date
J-K 5:00 P.M. on settlement
date
If a sale is to be settled more than one Business
Day after the sale date, Settlement Procedures
"A", "B" and "C" shall be completed as soon as
practicable but no later than 11:00 A.M. and 12:00
Noon on the first Business Day after the sale date
and no later than 2:00 P.M. on the Business Day
before the settlement date, respectively. If the
initial interest rate for a Floating Rate Book-
Entry Note has not been determined at the time
that Settlement Procedure "A" is completed,
Settlement Procedures "B" and "C" shall be
completed as soon as such rate has been determined
but no later than 12:00 Noon and 2:00 P.M.,
respectively, on the Business Day before the
settlement date. Settlement Procedure "I" is
subject to extension in accordance with any
extension of Fedwire closing deadlines and in the
other events specified in SDFS operating
A-54
<PAGE>
procedures in effect on the settlement date.
If settlement of a Book-Entry Note is rescheduled
or canceled, the DTC Agent for such Book-Entry
Notes will deliver to DTC, through DTC's
Participant Terminal System, a cancelation message
to such effect by no later than 2:00 P.M. on the
Business Day immediately preceding the scheduled
settlement date.
Failure to Settle: If the DTC Agent for a Book-Entry Note fails to
- ----------------- enter an SDFS deliver order with respect to a
Book-Entry Note pursuant to Settlement Procedure
"G", such DTC Agent may deliver to DTC, through
DTC's Participant Terminal System, as soon as
practicable, a withdrawal message instructing DTC
to debit such Book-Entry Note to such DTC Agent's
participant account. DTC will process the
withdrawal message, provided that such DTC Agent's
participant account contains a principal amount of
the Global Security representing such Book-Entry
Note that is at least equal to the principal
amount to be debited. If a withdrawal message is
processed with respect to all the Book-Entry Notes
represented by a Global Security, the Trustee for
the Notes represented by such Global Security will
cancel such Global Security in accordance with the
applicable Indenture and so advise the Company and
will make appropriate entries in its records. The
CUSIP number assigned to such Global Security
shall, in accordance with CUSIP Service Bureau
procedures, be canceled and not immediately
reassigned. If a withdrawal message is processed
with respect to one or more, but not all, of the
Book-Entry Notes represented by a Global Security,
the DTC Agent for such Book-Entry Notes will
exchange such Global
A-55
<PAGE>
Security for two Global Securities, one of which
shall represent such Book-Entry Notes and shall be
canceled immediately after issuance and the other
of which shall represent the other Book-Entry
Notes previously represented by the surrendered
Global Security and shall bear the CUSIP number of
the surrendered Global Security.
If the purchase price for any Book-Entry Note is
not timely paid to the Participants with respect
to such Note by the beneficial purchaser thereof
(or a Person, including an indirect participant in
DTC, acting on behalf of such purchaser), such
Participants and, in turn, the Presenting Agent
may enter SDFS deliver orders through DTC's
Participant Terminal System reversing the orders
entered pursuant to Settlement Procedures "H" and
"G", respectively. Thereafter, the DTC Agent for
such Book-Entry Note will deliver the withdrawal
message and take the related actions described in
the preceding paragraph. If such failure shall
have occurred for any reason other than a default
by the Agent in the performance of its obligations
hereunder and under the Agency Agreement, then the
Company will reimburse the Agent for the loss of
the use of the funds during the period when they
were credited to the account of the Company.
Notwithstanding the foregoing, upon any failure to
settle with respect to a Book-Entry Note, DTC may
take any actions in accordance with its SDFS
operating procedures then in effect. In the event
of a failure to settle with respect to one or
more, but not all, of the Book-Entry Notes to have
been represented by a Global Security, the DTC
Agent for such Book-Entry Note or Notes will
provide, in
A-56
<PAGE>
accordance with Settlement Procedure "E", for the
authentication and issuance of a Global Security
representing the other Book-Entry Notes to have
been represented by such Global Security and will
make appropriate entries in its records.
Trustees Not to Nothing herein shall be deemed to require either
- --------------- Trustee to risk or expend its own funds in
Risk Funds: connection with any payment to the Company, DTC,
- ---------- the Agent or the purchaser, it being understood by
all parties that payments made by either Trustee
to the Company, DTC, the Agent or the purchaser
shall be made only to the extent that funds are
provided to such Trustee for such purpose.
Authenticity of The Company will cause each of the Trustees to
- --------------- furnish the Agent from time to time with the
Signatures: specimen signatures of each of such Trustee's
- ---------- officers, employees or agents who has been
authorized by such Trustee to authenticate Book-
Entry Notes, but the Agent will not have any
obligation or liability to the Company or the
Trustee in respect of the authenticity of the
signature of any officer, employee or agent of the
Company or the Trustee on any Book-Entry Note.
Payment of The Agent shall forward to the Company, on a
- ---------- monthly basis, a statement of the out-of-pocket
Expenses: expenses incurred by such Agent during that month
- -------- that are reimbursable to it pursuant to the terms
of the Agency Agreement. The Company will remit
payment to the Agent currently on a monthly basis.
Advertising The Company will determine with the Agents the
- ----------- amount of advertising that may be appropriate in
Costs: soliciting offers to purchase the Book-Entry
- ----- Notes. Advertising
A-57
<PAGE>
expenses will be paid by the Company.
A-58
<PAGE>
PART II
Administrative Procedures for Certificated Notes
------------------------------------------------
Each Trustee will serve as registrar and transfer agent in connection
with the Certificated Notes for which it serves as Trustee.
Issuance: Each Certificated Note will be dated and issued as of
- -------- the date of its authentication by the applicable
Trustee. Each Certificated Note will bear an
Original Issue Date, which will be (i) with respect
to an original Certificated Note (or any portion
thereof), its original issuance date (which will be
the settlement date) and (ii) with respect to any
Certificated Note (or portion thereof) issued
subsequently upon transfer or exchange of a
Certificated Note or in lieu of a destroyed, lost or
stolen Certificated Note, the Original Issue Date of
the predecessor Certificated Note, regardless of the
date of authentication of such subsequently issued
Certificated Note.
Registration: Certificated Notes will be issued only in fully
- ------------ registered form without coupons.
Maturities: Each Certificated Note will mature on a date not less
- ---------- than nine months after the settlement date for such
Note. A Floating Rate Certificated Note will mature
only on an Interest Payment Date for such Note. Any
Note denominated in Japanese yen will mature on a
date not less than one year from the Original Issue
Date (as defined below) for such Note. Any Note
denominated in Pounds Sterling will mature on a date
not less than one year, nor more than five years,
after its Original Date.
Denominations: The denomination of any Certificated Note denominated
- ------------- in U.S. dollars will be a minimum of $1,000 or any
amount in excess thereof that is an integral
multiple of $1,000. The authorized denominations of
Certificated Notes
A-59
<PAGE>
denominated in any other currency will be specified
pursuant to "Settlement Procedures" below.
Interest: General. Interest, if any, on each Certificated Note
- -------- -------
will accrue from the original issue date for the
first interest period or the last date to which
interest has been paid, if any, for each subsequent
interest period, and will be calculated and paid in
the manner described in such Note and in the
Prospectus, as supplemented by the applicable Pricing
Supplement. Unless otherwise specified therein, each
payment of interest on a Certificated Note will
include interest accrued to but excluding the
Interest Payment Date (provided that, in the case of
Certificated Notes which reset daily or weekly,
interest payments will include accrued interest to
and including the Regular Record Date immediately
preceding the Interest Payment Date) or to but
excluding Maturity (other than a Maturity of a Fixed
Rate Certificated Note occurring on the 31st day of a
month, in which case such payment of interest will
include interest accrued to but excluding the 30th
day of such month).
Regular Record Dates. The Regular Record Dates with
--------------------
respect to any Interest Payment Date for a Floating
Rate Note shall be the date (whether or not a
Business Day) fifteen calendar days immediately
preceding such Interest Payment Date and for a Fixed
Rate Note (unless otherwise specified in the
applicable Pricing Supplement) shall be the March 1
or September 1 (whether or not a Business Day)
immediately preceding such Interest Payment Date.
Payments of Interest, if any, on each Certificated Note will be
- ----------- calculated and paid in the manner described in such
Interest: Note and in the Prospectus, as supplemented by the
- -------- applicable Pricing Supplement. Unless otherwise
provided in the
A-60
<PAGE>
Indenture for such Certificated Note or the
Certificated Note, the first payment of interest on
any Certificated Note originally issued between a
Record Date and an Interest Payment Date will be made
on the next succeeding Interest Payment Date.
Interest payable at the Maturity of a Certificated
Note will be payable to the Person to whom the
principal of such Note is payable. Unless other
arrangements are made, all interest payments
(excluding interest payments made on the Maturity
Date) will be made by check mailed to the person
entitled thereto as provided above.
Within 10 days following each Record Date, the
Trustees will inform the Company of the total amount
of the interest payments to be made by the Company on
the next succeeding Interest Payment Date. The
Trustees will provide monthly to the Company a list
of the principal and interest to be paid on
Certificated Notes maturing in the next succeeding
month.
The Company will be responsible for withholding taxes
on interest paid on Certificated Notes as required by
applicable law.
If any interest Payment Date for or the Maturity of a
Certificated Note is not a Business Day, the payment
due on such day shall be made on the next succeeding
Business Day and no interest shall accrue on such
payment for the period from and after such Interest
Payment Date or Maturity, as the case may be.
Procedure for Rate The Company and the Agent will discuss from time to
- ------------------ time the aggregate principal amount of, the issuance
Setting and price of, and the interest rates to be borne by,
- ----------- Notes that may be sold as a result of the
Posting: solicitation of orders by the Agent. If the Company
- ------- decides to set prices of, and rates borne by, any
Notes in respect
A-61
<PAGE>
of which the Agent is to solicit orders (the setting
of such prices and rates to be referred to herein as
"posting") or if the Company decides to change prices
or rates previously posted by it, it will promptly
advise the Agent of the prices and rates to be
posted.
Acceptance and Unless otherwise instructed by the Company, the Agent
- -------------- will advise the Company promptly by telephone of all
Rejection of Orders: orders to purchase Certificated Notes received by the
- ------------------- Agent, other than those rejected by it in whole or in
part in the reasonable exercise of its discretion.
Unless otherwise agreed by the Company and the Agent,
the Company has the sole right to accept orders to
purchase Certificated Notes and may reject any such
orders in whole or in part. Before accepting any
order to purchase a Certificated Note to be settled
in less than three Business Days, the Company shall
verify that the Trustee for such Certificated Note
will have adequate time to prepare and authenticate
such Note.
Preparation of If any order to purchase a Certificated Note is
- -------------- accepted by or on behalf of the Company, the Company
Pricing Supplement: will prepare a pricing supplement (a "Pricing
- ------------------ Supplement") reflecting the terms of such
Certificated Note and will arrange to have ten copies
thereof filed with the Commission in accordance with
the applicable paragraph of Rule 424(b) under the Act
and will supply at least ten copies thereof (and
additional copies if requested) to the Agent. The
Agent will cause a Prospectus and Pricing Supplement
to be delivered to the purchaser of such Certificated
Note.
In each instance that a Pricing Supplement is
prepared, the Presenting Agent will affix the Pricing
Supplement to Prospectuses prior to their use.
Outdated Pricing Supplements
A-62
<PAGE>
(other than those retained for files), will be
destroyed.
Suspension of Subject to the Company's representations, warranties
- ------------- and covenants contained in the Agency Agreement, the
Solicitation; Company may instruct the Agent to suspend at any time
- ------------ for any period of time or permanently, the
Amendment or solicitation of orders to purchase Certificated
- ------------ Notes. Upon receipt of such instructions, the Agent
Supplement: will forthwith suspend solicitation until such time
- ---------- as the Company has advised them that such
solicitation may be resumed.
In the event that at the time the Company suspends
solicitation of purchases there shall be any orders
outstanding for settlement, the Company will promptly
advise the Agent, the Trustee and the Trustees
whether such orders may be settled and whether copies
of the Prospectus as in effect at the time of the
suspension, together with the appropriate Pricing
Supplement, may be delivered in connection with the
settlement of such orders. The Company will have the
sole responsibility for such decision and for any
arrangements that may be made in the event that the
Company determines that such orders may not be
settled or that copies of such Prospectus may not be
so delivered.
Delivery of A copy of the Prospectus and a Pricing Supplement
- ----------- relating to a Certificated Note must accompany or
Prospectus: precede the earliest of any written offer of such
- ---------- Certificated Note, confirmation of the purchase of
such Certificated Note and payment for such
Certificated Note by its purchaser. If notice of a
change in the terms of the Certificated Notes is
received by the Agent between the time an order for a
Certificated Note is placed and the time written
confirmation thereof is sent by the Agent to a
customer or his agent, such confirmation shall be
accompanied by a Prospectus and Pricing Supplement
setting
A-63
<PAGE>
forth the terms in effect when the order was
placed. The Agent will deliver a Prospectus and
Pricing Supplement as herein described with respect
to each Certificated Note sold by it. The Company
will make such delivery if such Certificated Note is
sold directly by the Company to a purchaser (other
than the Agent).
Confirmation: For each order to purchase a Certificated Note
- ------------ solicited by the Agent and accepted by or on behalf
of the Company, the Agent will issue a confirmation
to the purchaser, with a copy to the Company, setting
forth the details set forth above and delivery and
payment instructions.
Settlement: The receipt by the Company of immediately available
- ---------- funds in exchange for an authenticated Certificated
Note delivered to the Agent and the Agent's delivery
of such Certificated Note against receipt of
immediately available funds shall, with respect to
such Certificated Note, constitute "settlement". All
orders accepted by the Company will be settled on the
fifth Business Day following the date of sale
pursuant to the timetable for settlement set forth
below, unless the Company and the purchaser agree to
settlement on another day which shall be no earlier
than the next Business Day following the date of
sale.
Settlement Settlement Procedures with regard to each
- ---------- Certificated Note sold by the Company through the
Procedures: Agent, as agent, shall be as follows:
- ----------
A. The Agent will advise the Company by telephone of
the following settlement information, in time for
the Trustee for such Certificated Note to prepare
and authenticate the required Note:
1. Name in which such Certificated Note is to
be registered ("Registered Owner").
A-64
<PAGE>
2. Address of the Registered Owner and address
for payment of principal and interest.
3. Taxpayer identification number of the
Registered Owner (if available).
4. Principal or face amount.
5. Series.
6. Stated Maturity.
7. In the case of a Fixed Rate Certificated
Note, the interest rate and reset,
redemption, repayment and extension
provisions (if any) or, in the case of a
Floating Rate Certificated Note, the Base
Rate, initial interest rate (if known at
such time), Index Maturity, Spread or Spread
Multiplier (if any), minimum interest rate
(if any), maximum interest rate (if any) and
reset, redemption, repayment and extension
provisions (if any).
8. Interest Payment Dates and the Interest
Payment Period.
9. Specified Currency and whether the option to
elect payment in a Specified Currency
applies and if the Specified Currency is
not U.S. dollars, the authorized
denominations.
10. Redemption, repayment, amortization or
extension provisions, if any.
11. Settlement date.
12. Price (including currency).
13. Presenting Agent's commission, determined as
provided in Sec-
A-65
<PAGE>
tion 2 of the Agency Agreement.
14. Whether such Certificated Note is issued at
an original issue discount, and, if so, the
total amount of OID and the yield to
maturity.
15. Any other terms necessay to describe the
Certificated Note.
B. The Company will advise the relevant Trustee by
telephone (confirmed in writing at any time on
the sale date) or electronic transmission of the
information set forth in Settlement Procedure "A"
above and the name of the Presenting Agent.
C. The Company will deliver to the relevant
Trustee a pre-printed four-ply packet for such
Certificated Note, which packet will contain the
following documents in forms that have been
approved by Company, the Agents and the Trustee:
1. Certificated Note with customer
confirmation.
2. Stub One - For Trustee.
3. Stub Two - For Agent.
4. Stub Three - For the Company.
D. The Trustee will complete such Certificated Note
and will authenticate such Certificated Note and
deliver it (with the confirmation) and Stubs One
and Two to the Agent, and the Agent will
acknowledge receipt of the Note by stamping or
otherwise marking Stub One and returning it to
the Trustee. Such delivery will be made only
against such acknowledgment of receipt and
evi-
A-66
<PAGE>
dence that instructions have been given by the
Agent for payment to such account as the Company
shall have specified in funds available for
immediate use, of an amount equal to the price of
such Certificated Note less the Agent's
commission. In the event that the instructions
given by the Agent for payment to the account of
the Company are revoked, the Company will as
promptly as possible wire transfer to the account
of the Agent an amount of immediately available
funds equal to the amount of such payment made.
E. The Agent will deliver such Certificated Note
(with the confirmation) to the customer against
payment in immediately payable funds. The Agent
will obtain the acknowledgement of receipt of
such Certificated Note by retaining Stub Two.
F. The Trustee will send Stub Three to the Company
by first-class mail.
Settlement For orders of Certificated Notes solicited by the
- ---------- Agent, as agent, and accepted by the Company,
Procedures Settlement Procedures "A" through "F" set forth above
- ---------- shall be completed on or before the respective times
Timetable: (New York City time) set forth below:
- ---------
A-67
<PAGE>
Settlement
Procedure Time
--------- ----
A 2:00 P.M. on the day
before
settlement
B-C 3:00 P.M. on the day
before
settlement
D 2:15 P.M. on settlement
date
E 3:00 P.M. on settlement
date
F 5:00 P.M. on settlement
date
Procedures upon Company Notice to Trustee
- --------------- -------------------------
Company's Exercise regarding Exercise of Optional
- ------------------ ------------------------------
of Optional Reset Reset. Not less than 45 or more than 60 days before
- ----------------- -----
or Extension of an Optional Resent Date as set forth in a
- --------------- Certificated Note, the Company will notify the
Maturity: Trustee for such Certificated
- -------- Note whether it is exercising its option to reset the
interest rate or Spread or Spread Multiplier, as the
case may be, for such Certificated Note, and if so,
(i) the new interest rate or Spread or Spread
Multiplier, as the case may be, for such Certificated
Note during the period from such Optional Reset Date
to the next Optional Reset Date as set forth in such
Certificated Note or, if there is no such next
Optional Reset Date, to the State Maturity of such
Certificated Note (the "Subsequent Interest Period");
and (ii) the provisions, if any, for redemption of
such Certificated Note during such Subsequent
Interest Period, including the date or dates on which
or the period or periods during which such redemption
may occur during such Subsequent Interest Period.
Company Notice to Trustee regarding Exercise of
-----------------------------------------------
Optional Extension of Maturity. If the Company
------------------------------
elects to exercise an option, as set forth in a
Certificated Note, to extend the Stated Maturity of
such Note, it will so notify the Trustee for such
Certificated Note not less than 45 or more than 60
days
A-68
<PAGE>
before the Stated Maturity of such Certificated
Note, and will further indicate (i) the new Stated
Maturity; (ii) the interest rate or Spread or Spread
Multiplier, as the case may be, applicable to the
extension period; and (iii) the provisions, if any,
for redemption of such Certificated Note during such
extension period, including the date or dates on
which or the period or periods during which such
redemption may occur during such extension period.
Trustee Notice to Holders regarding Company's
---------------------------------------------
Exercise of Optional Extension or Reset. Upon
---------------------------------------
receipt of notice from the Company regarding the
Company's exercise of either an optional extension of
maturity or an optional reset, the Trustee for the
Certificated Note will mail a notice, first class,
postage prepaid, to the Holder of the Certificated
Note not less than 40 days before the Optional Reset
Date (in which case a "Reset Notice") or the Stated
Maturity (in which case an "Extension Notice"), as
the case may be, which Reset Notice or Extension
Notice shall contain the information required by the
terms of the Certificated Note.
Trustee Notice to Company regarding Option to be
------------------------------------------------
Repaid. If, after receipt of either a Reset Notice
------
or an Extension Notice, any Holder of a Certificated
Note exercises the option for repayment by tendering
the Certificated Note to be repaid as set forth in
the Certificated Note, the Trustee for such
Certificated Note shall give notice to the Company
not less than 22 days before the Optional Reset Date,
or the old Stated Maturity, as the case may be, of
the principal amount of Certificated Notes to be
repaid on such Optional Reset Date or old Stated
Maturity, as the case may be.
Company Notice regarding New Interest Rate or New
-------------------------------------------------
Spread or Spread Multiplier. If the Company elects
---------------------------
to revoke the interest rate or Spread or Spread
Multiplier and establish a higher
A-69
<PAGE>
interest rate or Spread or Spread Multiplier for an
Optional Reset Period or extension period, as the
case may be, it shall, not less than 20 days before
such Optional Reset Date or old Stated Maturity, so
notify the Trustee for the affected Certificated
Note. The Trustee will immediately thereafter notify
the Holder of such Certificated Note, by first class
mail, postage prepaid, of the new higher interest
rate or Spread or Spread Multiplier applicable to
such Certificated Note.
Trustee Notice to Company regarding Holder
------------------------------------------
Revocation of Option to be Repaid. If, after the
---------------------------------
Holder of a Certificated Note has tendered such Note
for repayment pursuant to an Extension Notice or an
Optional Reset Notice, such Holder revokes such
tender for repayment, the Trustee for such
Certificated Note shall give notice to the Company
not less than five days prior to the Stated Maturity
or Optional Reset Date, as the case may be, of such
revocation and of the principal amount of
Certificated Notes for which tender for repayment has
been revoked.
Deposit of Repayment Price. On or before any old
--------------------------
Stated Maturity where the Maturity has been extended,
and on or before any Optional Reset Date, the Company
shall deposit with such Trustee an amount of money
sufficient to pay the principal amount, plus interest
accrued to such old Stated Maturity or Optional Reset
Date, as the case may be, for all the Certificated
Notes or portions thereof for which such Trustee
serves as Trustee and which are to be repaid on such
old Stated Maturity or Optional Reset Date, as the
case may be. Such Trustee will use such money to
repay such Certificated Notes pursuant to the terms
set forth in such Notes.
Procedures upon Company Notice to Trustee regarding Exercise of
- --------------- -----------------------------------------------
Company's Optional Redemption. At least 45 days prior to the
- --------- -------------------
Exercise of date on which it intends to redeem a
- -----------
Optional
- --------
A-70
<PAGE>
Redemption: Certificated Note, the Company will notify the
- ---------- Trustee for such Certificated Note that it is
exercising such option with respect to such Note on
such date.
Trustee Notice to Holders regarding Company's
---------------------------------------------
Exercise of Optional Redemption. After receipt of
-------------------------------
notice that the Company is exercising its option to
redeem a Certificated Note, the Trustee for such
Certificated Note will, at least 30 days before the
redemption date for such Certificated Note, mail a
notice, first class, postage prepaid, to the Holder
of such Certificated Note, informing such Holder of
the Company's exercise of such option with respect to
such Certificated Note.
Deposit of Redemption Price. On or before any
---------------------------
redemption date, the Company shall deposit with such
Trustee an amount of money sufficient to pay the
redemption price, plus interest accrued to such
redemption date, for all the Certificated Notes or
portions thereof for which such Trustee serves as
Trustee and which are to be repaid on such redemption
date. Such Trustee will use such money to repay such
Certificated Notes pursuant to the terms set forth in
such Notes.
Payments of Prin- Trustee Notice to Company of Option to be Repaid.
- ----------------- ------------------------------------------------
cipal and Interest Upon receipt of notice of exercise of the option for
- ------------------ repayment and the Certificated Notes to be repaid as
Upon Exercise of set forth in such Notes, the Trustee for such
- ---------------- Certificated Notes shall (unless such notice was
Optional Repayment received pursuant to the Company's exercise of an
- ------------------ optional reset or an optional extension of maturity,
(Except Pursuant to in each of which cases the relevant procedures set
- ------------------- forth above shall be followed) give notice to the
Company's Exercise of Company not less than 20 days prior to each Optional
- --------------------- Repayment Date of such Optional Repayment Date and of
Optional Reset or the principal amount of Certificated Notes to be
- ----------------- repaid on such Optional Repayment Date.
Optional Extension):
- -------------------
Deposit of Repayment Price. On or prior to any
--------------------------
Optional Repayment Date, the
A-71
<PAGE>
Company shall deposit with such Trustee an amount of
money sufficient to pay the Optional Repayment Price,
and accrued interest thereon to such date, of all the
Certificated Notes or portions thereof which are to
be repaid on such date. Such Trustee will use such
money to repay such Certificated Notes pursuant to
the terms set forth in such Notes.
Failure to If a purchaser fails to accept delivery of and make
- ---------- payment for any Certificated Note, the Agent will
Settle: notify the Company and the relevant Trustee by
- ------ telephone and return such Certificated Note to the
Trustee. Upon receipt of such notice, the Company
will immediately wire transfer to the account of the
Agent an amount equal to the amount previously
credited to the account of Company in respect of such
Certificated Note. Such wire transfer will be made on
the settlement date, if possible, and in any event
not later than the Business Day following the
settlement date. If the failure shall have occurred
for any reason other than a default by the Agent in
the performance of its obligations hereunder and
under the Agency Agreement, then the Company will
reimburse the Agent for its loss of the use of the
funds during the period when they were credited to
the account of the Company. Immediately upon receipt
of the Certificated Note in respect of which such
failure occurred, the Trustee will cancel such
Certificated Note in accordance with the applicable
Indenture and so advise the Company, and will make
appropriate entries in its records.
Trustees Not to Nothing herein shall be deemed to require either
- --------------- Trustee to risk or expend its own funds in connection
Risk Funds: with any payment to the Company, the Agent or the
- ---------- purchaser, it being understood by all parties that
payments made by either Trustee to the Company, the
Agent or the purchaser shall be made only to the
extent that funds are provided to such Trustee for
such purpose.
A-72
<PAGE>
Authenticity of The Company will cause each Trustee to furnish the
- --------------- Agent from time to time with the specimen signatures
Signatures: of each of such Trustee's officers, employees or
- ---------- agents who has been authorized by such Trustee to
authenticate Certificated Notes, but the Agent will
not have any obligation or liability to the Company
or a Trustee in respect of the authenticity of the
signature of any officer, employee or agent of the
Company or a Trustee on any Certificated Note.
Payment of The Agent shall forward to the Company, on a monthly
- ---------- basis, a statement of the out-of-pocket expenses
Expenses: incurred by the Agent during that month that are
- -------- reimbursable to it pursuant to the terms of the
Agency Agreement. The Company will remit payment to
the Agent currently on a monthly basis.
Advertising Costs: The Company will determine with the Agent the amount
- ----------------- of advertising that may be appropriate in soliciting
orders to purchase the Certificated Notes.
Advertising expenses will be paid by the Company.
A-73
<PAGE>
EXHIBIT B
---------
SALOMON INC
-----------
Bearer Medium-Term Note Administrative Procedures
-------------------------------------------------
____________, 1994
The Medium-Term Notes, Series D (the "Series D Notes") and the Medium-
Term Notes, Series E (the "Series E Notes" and, together with the Series D
Notes, the "Notes") of Salomon Inc (the "Company") are to be offered on a
continuing basis. Each of Salomon Brothers International Limited, Salomon
Brothers Hong Kong Limited and Salomon Brothers AG have agreed to act as agent
in the solicitation of Notes issuable in bearer form (the "Bearer Notes"), which
will be represented by Global Securities that may be exchanged for individual
Bearer Notes. (The term "Agent" as used in these Administrative Procedures
means, when used in reference to Bearer Notes that are denominated in Deutsche
Marks, Salomon Brothers Aktiengesellschaft, and, when used in reference to all
other Bearer Notes, Salomon Brothers International Limited or Salomon Brothers
Hong Kong Limited). The Agent will not be obligated to purchase Notes for its
own account. The Bearer Notes are being sold pursuant to a Global Selling
Agency Agreement between the Company and the agents named therein (including the
Agent) dated the date hereof (the "Agency Agreement"). The Notes have been
registered with the Securities and Exchange Commission (the "Commission").
Citibank, N.A. is the trustee under the Indenture, dated as of December 1, 1988,
as amended from time to time, covering the Series D Notes (the "Senior Debt
Indenture"). Bankers Trust Company is the trustee (together with Citibank,
N.A., the "Trustees") under the Indenture, dated as of December 1, 1988, as
amended from time to time, covering the Series E Notes (the "Subordinated Debt
Indenture" and together with the Senior Debt Indenture, the "Indentures"). The
Series D Notes will constitute part of the senior debt of the Company and will
rank equally with all other unsecured and unsubordinated debt of the Company.
The Series E Notes will be subordinate and junior in the right of payment to all
Senior Indebtedness of the Company, to the extent and in the manner set forth in
the Subordinated Debt Indenture.
The Agency Agreement provides that Notes may also be purchased by the
Agent acting solely as principal and not as agent. In the event of any such
purchase, the functions of both the Agent and the beneficial owner under the
administrative procedures set forth below shall be performed by the Agent acting
solely as principal, unless otherwise agreed to between the Company and the
Agent acting as principal.
B-74
<PAGE>
The Company has appointed the principal office of Citibank, N.A. in
London as principal paying agent for the payment of the principal of and
interest on the Series D Bearer Notes and has appointed the principal office of
Bankers Trust Company in London as principal paying agent (together the
"Principal Paying Agents") for the payment of principal of and interest on the
Series E Bearer Notes. The Company has appointed Citicorp Investment Bank
(Luxembourg) S.A. in Luxembourg as an additional paying agent for the Series D
Notes and has appointed Bankers Trust Luxembourg, S.A. as an additional paying
agent for the Series E Notes (each a "Paying Agent").
The procedures to be followed during, and the specific terms of, the
solicitation of orders by the Agent and the sale as a result thereof by the
Company are explained below. Administrative and record-keeping responsibilities
will be handled for the Company by its Treasury Department. The Company will
advise the Agent and the Trustees in writing of those persons handling
administrative responsibilities with whom the Agent and the Trustees are to
communicate regarding orders to purchase Bearer Notes and the details of their
delivery.
The Company has appointed Kredietbank S.A. Luxembourgeoise as listing
agent (the "Listing Agent"), which will coordinate with the Principal Paying
Agents and the Agent on a regular basis for the purpose of providing the
Luxembourg Stock Exchange with such information regarding Bearer Notes issued
and outstanding as such Exchange may require.
Administrative procedures and specific terms of the offering are
explained below. Unless otherwise defined herein, terms defined in the
Indenture shall be used as therein defined. To the extent the procedures set
forth below conflict with the provisions of the Bearer Notes, the Indentures or
the Agency Agreement, the relevant provisions of the Bearer Notes, the
Indentures and the Agency Agreement shall control.
Maturities: Each Bearer Note will mature on a date more
- ---------- than nine months after the settlement date
for such Note. A Floating Rate Bearer Note
will mature only on an Interest Payment Date
for such Bearer Note. Any Note denominated
in Japanese yen will mature on a date not
less than one year from the Original Issue
Date (as defined below) for such Note. Any
Note denominated in Pounds Sterling will
mature on a date not less than one year,
B-75
<PAGE>
nor more than five years, after its Original
Issue Date.
Denominations: The denomination of any Bearer Note
- ------------- denominated in U.S. dollars will be a
minimum of U.S.$25,000 or any larger amount
that is an integral multiple of U.S. $5,000.
The authorized denominations of Bearer Notes
denominated in any other currency will be
set forth in such Bearer Notes.
Bearer Form: Bearer Notes will be issued only in bearer
- ----------- form.
Date of Issuance:
- ----------------
Each Bearer Note will be dated and issued as
of the original issue date by the Principal
Paying Agent for such Bearer Note. Each
Bearer Note will bear an Original Issue
Date, which will be (i) with respect to a
temporary Global Security (or any portion
thereof), the date of its original issue as
specified in such Global Security and (ii)
with respect to any Permanent Global
Security or individual Bearer Note (or
portion thereof) issued subsequently upon
transfer or exchange of a Bearer Note or in
lieu of a destroyed, lost or stolen Bearer
Note, the Original Issue Date of the
predecessor Bearer Note, regardless of the
date of authentication of such subsequently
issued Bearer Note.
Temporary Global Securities; Until the 40th day following the date of
- ---------------------------- issuance of a Bearer Note (the "Exchange
Definitive Global Date") and until Final Certification (as
----------------- defined below) with respect to such Bearer
Securities; and Individual Note has occurred, such Bearer Note,
-------------------------- together with all other Bearer Notes that
Bearer Notes: have
------------
B-76
<PAGE>
the same rank, Original Issue Date, currency
of denomination, redemption and repayment
provisions, Stated Maturity and either fixed
interest rate (in the case of Fixed Rate
Notes) or Base Rate, Initial Interest Rate,
interest reset period, Interest Payment
Dates, Minimum Interest Rate, Maximum
Interest Rate, Spread or Spread Multiplier
and Index Maturity (in the case of Floating
Rate Notes) (all such Bearer Notes herein
referred to collectively as a "Tranche"),
will be represented by a single temporary
Global Security in bearer form without
interest coupons. The Company shall execute,
and the Principal Paying Agent for the
Bearer Notes represented by such temporary
Global Security shall authenticate, such
temporary Global Security upon the same
conditions and in substantially the same
manner, and with the same effect, as a
Permanent Global Security. On or prior to
the Closing Date (which should also be the
Original Issue Date), with respect to such
Bearer Notes, the Principal Paying Agent for
such Bearer Notes shall deposit the
temporary Global Security with a common
depositary (the "Depositary") for Centrale
de Livraison de Valeurs Mobilieres S.A.
("CEDEL") and Morgan Guaranty Trust Company
of New York, Brussels office, as operator of
the Euroclear System ("Euroclear") in the
manner specified below under "Details for
Settlement". The interest of each beneficial
owner of such temporary Global Security
B-77
<PAGE>
will be credited to the appropriate account
with CEDEL or Euroclear, as specified below
under "Details for Settlement".
On or after the Exchange Date and provided
that Final Certification (as described
below) has occurred, the interest of the
beneficial owner of such Bearer Note in the
temporary Global Security shall be canceled
and such Bearer Note, together with all
other Bearer Notes of the Tranche as to
which Final Certification has occurred,
shall thereafter be represented by a
Permanent Global Security in bearer form
without interest coupons held in London by
the Depositary. The interest of the
beneficial owner of such Bearer Note in such
Permanent Global Security will be credited
to the appropriate account with CEDEL or
Euroclear.
The beneficial owner of an interest in a
Permanent Global Security may, at any time,
upon 30 days' notice to the Principal Paying
Agent for the Bearer Notes represented by
such Permanent Global Security, given by
such beneficial owner through either CEDEL
or Euroclear, as the case may be, exchange
its beneficial interest in such Permanent
Global Security for one or more individual
Bearer Notes (with coupons attached, if
appropriate) equal in aggregate principal
amount to such beneficial interest. To
effect such exchange, the interest of the
beneficial owner of such Bearer Note in such
Permanent Global Security
B-78
<PAGE>
shall be canceled and one or more individual
Bearer Notes shall be issued to such
beneficial owner, through Euroclear or
CEDEL, as the case may be.
In all events, Bearer Notes will be
delivered by the Principal Paying Agents
only outside the United States.
Final Certification: Final Certification with respect to a
- ------------------- temporary Global Security shall mean the
delivery by Euroclear or CEDEL, as the case
may be, to the Principal Paying Agent for
the Bearer Notes represented by such
Permanent Global Security of a signed
certificate (a "Clearance System
Certificate") in the form set forth in
Appendix 1 hereto with respect to the Bearer
Notes, dated no earlier than the Exchange
Date for such Bearer Notes or, if an
interest payment on the Bearer Notes shall
be due prior to the Exchange Date, dated no
earlier than such Interest Payment Date, to
the effect that Euroclear or CEDEL, as the
case may be, has received certificates
("Certificates of Non-U.S. Beneficial
Ownership") in the form set forth in
Appendix 2 hereto with respect to each of
such Bearer Notes, dated no earlier than ten
days before such Exchange Date or Interest
Payment Date, as the case may be, signed by
the account holders appearing on its records
as entitled to such Bearer Notes, to the
effect that such Bearer Notes (i) are not
beneficially owned by United States persons
and have not been acquired by or on
B-79
<PAGE>
behalf of United States persons, (ii) are
owned by United States persons that are (a)
foreign branches of United States financial
institutions purchasing for their own
account or for resale or (b) United States
persons who acquired the Bearer Notes
through foreign branches of U.S. financial
institutions and who hold the Bearer Notes
through such U.S. financial institutions
(and in either case (a) or (b), each such
financial institution has agreed that it
will comply with the requirements of Section
165(j)(3)(A), (B) or (C) of the Internal
Revenue Code of 1986 and the regulations
thereunder), or (iii) are owned by United
States or foreign financial institutions for
purposes of resale during the restricted
period, in which event such financial
institutions (whether or not also described
in clause (i) or (ii)) shall have certified
that they have not acquired the Bearer Notes
for purposes of resale directly or
indirectly to a United States person or to a
person within the United States or its
possessions.
Payments of Principal: Upon presentation of a Note, the Principal
- --------------------- Paying Agent for such Bearer Note will pay
the principal amount of such Note and the
final installment of interest at Maturity in
immediately available funds. Notes presented
to the Principal Paying Agent for such
Bearer Notes at Maturity for payment will be
cancelled in accordance with the Indenture
under which such Bearer Notes have been
issued.
B-80
<PAGE>
Interest Payments: Interest on each Bearer Note will accrue
- ----------------- from the Original Issue Date of such Bearer
Note and will be calculated and paid in the
manner described in such Bearer Note and
the Prospectus, each as defined in the
Agency Agreement, as supplemented by the
applicable Pricing Supplement; provided,
--------
however, that interest in respect of any
-------
portion of a temporary Global Security for
which Final Certification has not been made
shall not be paid until Final Certification
is received in respect of that portion.
Payments of Principal and Upon receipt of Bearer Notes to be repaid
- ------------------------- as set forth in such Notes, the Trustee or
Interest Upon Exercise of Principal Paying Agent for such Notes shall
------------------------- give notice to the Company not less than 20
Optional Repayment: calendar days prior to each Optional
------------------ Repayment Date of such Optional Repayment
Date and of the principal amount of Bearer
Notes to be repaid on such Optional
Repayment Date.
On or prior to any Optional Repayment Date,
the Company shall deposit with such Trustee
or such Principal Paying Agent an amount of
money sufficient to pay the Optional
Repayment Price, and accrued interest
thereon to such date, of all the Notes or
portions thereof which are to be repaid on
such date. Such Trustee or such Principal
Paying Agent will use such money to repay
such Notes pursuant to the terms set forth
in such Notes.
B-81
<PAGE>
Procedure for Rate Setting The Company and the Agent will discuss from
- -------------------------- time to time the aggregate principal amount
and Posting: of, the issuance price of, and the interest
----------- rates to be borne by, Bearer Notes that may
be sold as a result of the solicitation of
orders by the Agent. If the Company decides
to set prices of, and rates borne by, any
Bearer Notes in respect of which the Agent
is to solicit orders (the setting of such
prices and rates to be referred to herein as
"posting") or if the Company decides to
change prices or rates previously posted by
it, it will promptly advise the Agent of the
prices and rates to be posted.
Acceptance of Orders: If the Company posts prices and rates as
- -------------------- provided above, the Agent as agent for and
on behalf of the Company shall promptly
accept orders received by it to purchase
Bearer Notes at the prices and rates so
posted, subject to (1) any instructions from
the Company received by the Agent concerning
the aggregate principal amount of Bearer
Notes to be sold at the prices and rates so
posted or the period during which such
posted prices and rates are to be in effect,
(2) any instructions from the Company
received by the Agent changing or revoking
any posted prices and rates, (3) compliance
with the securities laws of the United
States and all other jurisdictions and with
the selling restrictions contained in the
Agency Agreement and (4) the Agent's right
to reject any such offer as provided below.
B-82
<PAGE>
If the Company does not post prices and
rates and the Agent receives an order to
purchase Bearer Notes, or, if while posted
prices and rates are in effect, the Agent
receives an order to purchase Bearer Notes
on terms other than those posted by the
Company, the Agent will promptly advise the
Company by telephone of any such order other
than orders rejected by the Agent as
provided below. The Company will have the
sole right to accept any such order to
purchase Bearer Notes and may reject any
such order in whole or in part.
The Agent may, in its discretion reasonably
exercised, reject any order to purchase
Bearer Notes received by it in whole or in
part.
Preparation of Pricing If any order to purchase a Bearer Note is
- ---------------------- accepted by or on behalf of the Company, the
Supplement: Company, with the approval of the Agent,
---------- will prepare a pricing supplement (a
"Pricing Supplement") reflecting the terms
of such Bearer Note and will arrange to have
ten copies thereof filed with the Commission
in accordance with the applicable paragraph
of Rule 424(b) under the Act and will supply
at least ten copies thereof (and additional
copies if requested) to the Agent and one
copy to the Principal Paying Agent for such
Bearer Note. The Principal Paying Agent for
such Bearer Note will cause such Pricing
Supplement to be delivered to the Trustee
for such Bearer Note, to each additional
Paying Agent for such Bearer Note outside
the
B-83
<PAGE>
United States and to the Listing Agent.
The Agent will cause a Pricing Supplement
to be delivered to the purchaser of the
Bearer Note.
In each instance that a Pricing Supplement
is prepared, the Agent will affix copies of
the Pricing Supplement to Prospectuses prior
to their use. Outdated Pricing Supplements,
and the Prospectuses to which they are
attached (other than those retained for
files), will be destroyed.
Suspension of Solicitation; The Company reserves the right, in its sole
- --------------------------- discretion, to instruct the Agent to suspend
Amendment or Supplement: at any time, for any period of time or
----------------------- permanently, the solicitation of orders to
purchase Bearer Notes. Upon receipt of such
instructions, the Agent will forthwith
suspend solicitation of orders to purchase
Bearer Notes from the Company until such
time as the Company has advised it that such
solicitation may be resumed.
In the event that at the time the Company
suspends solicitation of purchases there
shall be any orders outstanding for
settlement, the Company will promptly advise
the Agent and each of the Principal Paying
Agents whether such orders may be settled
and whether copies of the Prospectus as in
effect at the time of the suspension,
together with the appropriate Pricing
Supplement, may be delivered in connection
with the settlement of such orders. The
Company will have the sole responsibility
for such
B-84
<PAGE>
decision and for any arrangements that may
be made in the event that the Company
determines that such orders may not be
settled or that copies of such Prospectus
may not be so delivered. If the Company
decides to amend or supplement the
Registration Statement (as defined in the
Agency Agreement) or the Prospectus (except
for an amendment or supplement relating to
an offering of Securities other than the
Notes or to an offering of Warrants or
providing solely for the specification of or
a change in the maturity dates, the interest
rates, the issuance prices or other terms of
any Notes), it will promptly advise the
Agent and the Trustees and will furnish the
Agent and the Trustees with the proposed
amendment or supplement and with such
certificates and opinions as are required,
all in accordance with the terms of the
Agency Agreement. The Company will file with
the Commission any supplement to the
Prospectus relating to the Bearer Notes,
provide the Agent with copies of any such
supplement, and confirm to the Agent that
such supplement has been filed with the
Commission pursuant to the applicable
paragraph of Rule 424(b).
Delivery of Prospectus: A copy of the Prospectus and a Pricing
- ---------------------- Supplement relating to a Bearer Note must
accompany or precede any written offer of
such Note, confirmation of the purchase of
such Note and payment for such Note by its
purchaser. If notice of a change in the
terms of the Bearer Notes is received by
B-85
<PAGE>
the Agent between the time an order for a
Bearer Note is placed and the time written
confirmation thereof is sent by the Agent to
a customer or his agent, such confirmation
shall be accompanied by a Prospectus and
Pricing Supplement setting forth the terms
in effect when the order was placed. Subject
to the second preceding paragraph, the Agent
will deliver a Prospectus and Pricing
Supplement as herein described with respect
to each Bearer Note sold by it. The
Principal Paying Agent for such Bearer Note
will make such delivery if such Note is sold
directly by the Company to a purchaser
(other than the Agent).
Confirmation: For each order to purchase a Bearer Note
- ------------ solicited by the Agent and accepted by or on
behalf of the Company, the Agent will issue
a confirmation to the purchaser, with a copy
to the Company, setting forth the details
set forth below, delivery and payment
instructions and the language required by
Section 8(a)(3) of the Agency Agreement.
Settlement: Subject to Section 6 of the Agency
- ---------- Agreement, the Closing Date with respect to
any order to purchase Bearer Notes accepted
by or on behalf of the Company will be the
seventh day next succeeding the date of
acceptance, or if such day is a day on which
commercial banks in New York City or London
or CEDEL or Euroclear are required or
authorized to be closed, the next succeeding
day on which
B-86
<PAGE>
commercial banks in New York City and London
and Euroclear and CEDEL are not required or
authorized to be closed (a "Business Day")
unless otherwise agreed by the purchaser and
the Company and shall be specified upon
acceptance of such offer.
Details for Settlement: For each offer to purchase a Bearer Note
- ---------------------- that is accepted by or on behalf of the
Company, the Agent will provide (unless
provided by the purchaser directly to the
Company) by telephone the following
information to the Company:
1. Rank.
2. Principal or face amount.
3. In the case of a Fixed-Rate Note, the
interest rate and redemption and
repayment provisions (if any), or, in
the case of a Floating Rate Note, the
Base Rate, Initial Interest Rate (if
known at such time), Index Maturity,
Spread or Spread Multiplier (if any),
Minimum Interest Rate (if any), Maximum
Interest Rate (if any) and redemption
and repayment provisions (if any).
4. Price.
5. Closing Date.
6. Stated Maturity.
7. Any other term necessary to describe
the Bearer Note.
8. Agent's commission, determined as
provided in Section 2 of the Agency
Agreement.
9. Agent's account number at CEDEL or
Euroclear.
B-87
<PAGE>
The Agent will advise the Company and the
Principal Paying Agent for such Bearer Note
of the foregoing information (unless
provided by the purchaser directly to the
Company) for each offer to purchase a Bearer
Note solicited by the Agent and accepted by
the Company in time for the Principal Paying
Agent for such Bearer Note to prepare and
authenticate the temporary Global Security
and deliver it at least one day prior to
settlement to the Depositary in London. The
Principal Paying Agent for such Bearer Note
will instruct Euroclear or CEDEL, as the
case may be, to credit such Bearer Note to
the distribution account of such Principal
Paying Agent with Euroclear or CEDEL, as the
case may be, for onward credit to the
account of the Agent against payment.
Concurrently therewith and in consideration
thereof, the Agent for such Bearer Note will
give instructions to Euroclear or CEDEL, as
the case may be, to credit the account of
the Principal Paying Agent for such Bearer
Note against delivery of such Bearer Note
with an amount equal to the initial public
offering price of such Bearer Note, less the
applicable commission determined as provided
in Section 2 of the Agency Agreement. The
Principal Paying Agent for such Bearer Note
will remit all such funds received to the
designated account of the Company. The
Principal Paying Agent for such Bearer Note
will notify the Agent of both the Euro-clear
and CEDEL Reference
B-88
<PAGE>
Numbers for such Bearer Note and will notify
the Listing Agent of the issuance of such
Bearer Note. Before accepting any order to
purchase a Bearer Note to be settled in less
than three Business Days, the Company shall
verify that the Principal Paying Agent for
such Bearer Note will have adequate time to
prepare and authenticate the temporary
Global Security that will represent such
Bearer Note.
The Agent will provide appropriate
documentation to the Principal Paying Agent
for such Bearer Note, including the
information necessary for the preparation
and authentication of the temporary Global
Security that will represent such Bearer
Note. Prior to preparing such temporary
Global Security for delivery (but in any
case no later than 10:00 AM, London time, on
the Business Day next preceding the Closing
Date therefor), the Principal Paying Agent
for such Bearer Note will confirm receipt of
such instruction to the Agent by telephone.
Bearer Note Deliveries and Upon receipt of appropriate documentation
- -------------------------- and instructions with respect to the
Cash Payment: Bearer Notes constituting a Tranche, the
------------ Company will cause the Principal Paying
Agent for such Bearer Notes to prepare and
authenticate a temporary Global Security
representing such Tranche and to insert
thereon (1) the rank, (2) the principal
amount of such Tranche, (3) the Original
Issue Date, (4) the Stated Maturity, (5) the
interest rate (in the case of a
B-89
<PAGE>
Fixed-Rate Note) and redemption and
repayment provisions (if any) or the Base
Rate, Initial Interest Rate, Index Maturity,
Spread or Spread Multiplier, Minimum
Interest Rate and Maximum Interest Rate (in
the case of a Floating Rate Note) and
redemption and repayment provisions (if any)
and (6) any other terms required to be
inserted thereon.
On the Closing Date, the Principal Paying
Agent for the Bearer Notes represented by
such Tranche will credit such Bearer Note to
its distribution account with CEDEL or
Euroclear and the Agent will make payment to
such Principal Paying Agent against delivery
of such Bearer Note, through Euroclear or
CEDEL, as the case may be, in immediately
available funds, in an amount equal to the
issuance price of such Bearer Note less the
Agent's commission. The Principal Paying
Agent for such Bearer Note will remit all
such funds received to the designated
account of the Company.
Such payment shall be made by the Agent only
upon prior receipt by the Agent of
immediately available funds from or on
behalf of the purchaser unless the Agent
decides, at its option, to advance its own
funds for such payment against subsequent
receipt of funds from the purchaser.
B-90
<PAGE>
Failure to Settle: If on the relevant Issue Date the Agent
- ----------------- does not pay the subscription price due
from it in respect of any Note (the
"Defaulted Note") and, as a result, the
Defaulted Note remains in the distribution
account of the Principal Paying Agent for
such Note with Euroclear or CEDEL after such
Issue Date (rather than being credited to
the Agent's account against payment), such
Principal Paying Agent will continue to hold
the Defaulted Note to the order of the
Company.
If such Principal Paying Agent pays an
amount (the "Advance") to the Company on
the basis that a payment (the "Payment") has
been, or will be, received from the relevant
Agent and if the Payment has not been, or is
not, received by such Principal Paying Agent
on the date such Principal Paying Agent pays
the Company, the Company shall upon being
requested to do so repay to such Principal
Paying Agent the Advance and shall pay
interest (on a 360 days basis) sufficient to
cover any overdraft costs incurred by such
Principal Paying Agent, as certified by such
Principal Paying Agent, until the earlier of
repayment in full of the Advance and receipt
in full by such Principal Paying Agent of
the Payment.
If the Agent, at its own option, has
advanced its own funds for payment against
subsequent receipt of funds from the
purchaser, and if the purchaser shall fail
to make payment for the Bearer Note on the
Closing Date therefor, the
B-91
<PAGE>
Agent will promptly notify the Principal
Paying Agent for such Bearer Note, the
Depositary and the Company by telephone,
promptly confirmed in writing (but no later
than the next Business Day). In such event
the Agent shall instruct Euroclear or CEDEL,
as the case maybe, to transfer such
Defaulted Note to the distribution account
of the Principal Paying Agent for such
Bearer Note who will continue to hold the
Defaulted Note to the order of the Company.
Upon (i) confirmation from such Principal
Paying Agent in writing (which may be by
telex or telecopy) that such Principal
Paying Agent is holding the Defaulted Note
for the account of the Company, and (ii)
confirmation from the Agent in writing
(which may be given by telex or telecopy)
that the Agent has not received payment from
the purchaser (the matters referred to in
clauses (i) and (ii) are referred to
hereinafter as the "Confirmations"), the
Company will promptly pay to the Agent an
amount in immediately available funds equal
to the amount previously paid by the Agent
in respect of such Bearer Note. Such payment
will be made not later than the Business Day
following the date of receipt of the
Confirmations. The Principal Paying Agent
for such Bearer Note and the Depositary will
make such revisions to the temporary Global
Security representing such Bearer Note as
are necessary to reflect the cancelation of
such
B-92
<PAGE>
portion of such Global Security.
If a purchaser shall fail to make payment
for such Bearer Note for any reason other
than the failure of the Agent to provide the
necessary information to the Company as
described above for settlement or to provide
a confirmation to the purchaser within a
reasonable period of time as described above
or otherwise to satisfy its obligation
hereunder or in the Agency Agreement, and if
the Agent shall have otherwise complied with
its obligations hereunder and in the Agency
Agreement, the Company will reimburse the
Agent on an equitable basis for its loss of
the use of funds during the period when they
were credited to the account of the Company.
Principal Paying Agents Not Nothing herein shall be deemed to require
- --------------------------- either Principal Paying Agent to risk or
to Risk Funds: expend its own funds in connection with any
------------- payment to the Company, or the Agent or the
purchaser, it being understood by all
parties that payments made by the Principal
Paying Agents to the Company, or the Agent
or a purchaser shall be made only to the
extent that funds are provided to the
Principal Paying Agents for such purpose.
Authenticity of Signatures: The Company will cause each Principal
- -------------------------- Paying Agent to furnish the Agent from
time to time with the specimen signatures of
each of such Principal Paying Agent's
officers, employees or agents who has been
authorized by such Principal Paying Agent to
B-93
<PAGE>
authenticate Bearer Notes (including Global
Securities representing Bearer Notes), but
the Agent will have no obligation or
liability to the Company or to either
Principal Paying Agent in respect of the
authenticity of the signature of any
officer, employee or agent of the Company or
either Principal Paying Agent on any Bearer
Note.
Payment of Expenses: The Agent shall forward to the Company, on
- ------------------- a monthly basis, a statement of the
out-of-pocket expenses incurred by the Agent
during that month that are reimbursable to
it pursuant to the terms of the Agency
Agreement. The Company will remit payment
to the Agent currently on a monthly basis.
Advertising Costs: The Company will determine with the Agent
- ----------------- the amount of advertising that may be
appropriate in soliciting orders to purchase
the Bearer Notes. Advertising expenses will
be paid by the Company.
B-94
<PAGE>
APPENDIX 1
[FORM OF CERTIFICATION TO BE GIVEN
BY THE EUROCLEAR OPERATOR OR CEDEL]
CERTIFICATION
Salomon Inc
Medium Term Notes, Series [D][E]
(the "Notes")
This is to certify that, based solely on certifications we have
received in writing, by tested telex or by electronic transmission from member
organizations appearing in our records as persons being entitled to a portion of
the principal amount set forth below (our "Member Organizations") substantially
to the effect set forth in the Medium-Term Note Administrative Procedures
attached to the Selling Agency Agreement relating to the Notes, as of the date
hereof, _________ principal amount of the above-captioned Notes (i) is owned by
persons that are not citizens or residents of the United States, domestic
partnerships, domestic corporations or any estate or trust the income of which
is subject to United States Federal income taxation regardless of its source
("United States persons"), (ii) is owned by United States persons that are (a)
foreign branches of United States financial institutions (as defined in U.S.
Treasury Regulations Section 1.165-12(c)(1)(v)) ("financial institutions")
purchasing for their own account or for resale, or (b) United States persons who
acquired the Notes through foreign branches of United States financial
institutions and who hold the Notes through such United States financial
institutions on the date hereof (and in either case (a) or (b), each such United
States financial institution has agreed, on its own behalf or through its agent,
that we may advise the Issuer or the Issuer's agent that it will comply with the
requirements of Section 165(j)(3)(A), (B) or (C) of the Internal Revenue Code of
1986, as amended, and the regulations thereunder), or (iii) is owned by United
States or foreign financial institutions for purposes of resale during the
restricted period (as defined in U.S. Treasury Regulations Section 1.163-
5(c)(2)(i)(D)(7)), which United States or foreign financial institutions
described in clause (iii) above (whether or not also described in clause (i) or
(ii)) have certified that they have not acquired the Notes for purposes of
resale directly or indirectly to a United States person or to a person within
the United States or its possessions.
We further certify (i) that we are not making available herewith for
exchange (or, if relevant, exercise of any rights or
B-95
<PAGE>
collection of any interest) any portion of the temporary global Note excepted in
such certifications and (ii) that as of the date hereof we have not received any
notification from any of our Member Organizations to the effect that the
statements made by such Member Organizations with respect to any portion of the
part submitted herewith for exchange (or, if relevant, exercise of any rights or
collection of any interest) are no longer true and cannot be relied upon as the
date hereof.
We understand that this certification is required in connection with
certain tax laws of the United States. In connection therewith, if
administrative or legal proceedings are commenced or threatened in connection
with which this certification is or would be relevant, we irrevocably authorize
you to produce this certification to any interested party in such proceedings.
Dated: ______________, 199__/1/
Yours faithfully,
[MORGAN GUARANTY TRUST COMPANY
OF NEW YORK,
Brussels office,
as operator of the Euroclear
System]
or
[CEDEL S.A.]
By_____________________________
- ---------------------
/1/ [The earlier of the Exchange Date and the first Interest Payment Date on
the applicable Notes.]
B-96
<PAGE>
APPENDIX 2
[FORM OF CERTIFICATION TO BE GIVEN
BY AN ACCOUNT HOLDER OF EUROCLEAR OR CEDEL]
CERTIFICATION
Salomon Inc
Medium Term Notes, Series [D][E]
This is to certify that as of the date hereof, and except as set forth
below, the above-captioned Notes (the "Notes") held by you for our account (i)
are owned by person(s) that are not citizens or residents of the United States,
domestic partnerships, domestic corporations or any estate or trust the income
of which is subject to United States Federal income taxation regardless of its
source ("United States person(s)"), (ii) are owned by United States person(s)
that are (a) foreign branches of United States financial institutions (as
defined in U.S. Treasury Regulations Section 1.165-12(c)(1)(v)) ("financial
institutions") purchasing for their own account or for resale, or (b) United
States person(s) who acquired the Notes through foreign branches of United
States financial institutions and who hold the Notes through such United States
financial institutions on the date hereof (and in either case (a) or (b), each
such United States financial institution hereby agrees, on its own behalf or
through its agent, that you may advise the Issuer or the Issuer's agent that it
will comply with the requirements of Section 165(j)(3)(A), (B) or (C) of the
Internal Revenue Code of 1986, as amended, and the regulations thereunder), or
(iii) are owned by United States or foreign financial institution(s) for
purposes of resale during the restricted period (as defined in U.S. Treasury
Regulations Section 1.163-5(c)(2)(i)(D)(7)), and in addition if the owner of the
Notes is a United States or foreign financial institution described in clause
(iii) above (whether or not also described in clause (i) or (ii)) this is to
further certify that such financial institution has not acquired the Notes for
purposes of resale directly or indirectly to a United States person or to a
person within the United States or its possessions.
As used herein, "United States" means the United States of America
(including the States and the District of Columbia); and its "possessions"
include Puerto Rico, the U.S. Virgin Islands, Guam, American Samoa, Wake Island
and the Northern Mariana Islands.
We undertake to advise you promptly by tested telex on or prior to the
date on which you intend to submit your
B-97
<PAGE>
certification relating to the Notes in accordance with your Operating Procedures
if any applicable statement herein is not correct on such date, and in the
absence of any such notification it may be assumed that this certification
applies as of such date.
This certification excepts and does not relate to $______ of principal
amount of the Notes as to which we are not able to certify and as to which we
understand exchange and delivery of definitive Notes (or, if relevant, exercise
of any rights or collection of any interest) cannot be made until we do so
certify.
We understand that this certification is required in connection with
certain tax laws of the United States. In connection therewith, if
administrative or legal proceedings are commenced or threatened in connection
with which this certification is or would be relevant, we irrevocably authorize
you to produce this certification to any interested party in such proceedings.
Dated: _________________, 19__
[To be dated no earlier than
the 10th day before the earlier
of the Exchange Date and the
first Interest Payment Date
on the Notes]
[Name of Account Holder]
By:_________________________
(Authorized Signatory)
Name:
Title:
B-98
<PAGE>
Exhibit C
---------
TERMS AGREEMENT
---------------
Attention: Subject in all respects to the terms and conditions contained in the
Global Selling Agency Agreement dated _________, 1994, between Salomon Brothers
Inc, Salomon Brothers International Limited, Salomon Brothers Hong Kong Limited,
Salomon Brothers Aktiengesellschaft and Salomon Inc, the undersigned agrees to
purchase the following Notes of Salomon Inc:
Principal Amount: Issue Price:
Purchaser: Original Issue Date:
Initial Interest Rate: Stated Maturity:
Reoffering Price:
[ ] Varying prices from time to time related to
prevailing prices at the time of resale
[ ] Fixed price of __% of Principal Amount
Specified Currency:
(If other than U.S. dollars)
Authorized Denominations:
(If other than as set forth in the Prospectus Supplement)
Interest Payment Dates:
(If other than as set forth in the Prospectus Supplement)
Indexed Principal Note: [ ] Yes (see attached) [ ] No
Floating Rate: [ ] Indexed Rate: [ ] (See attached)
Initial Interest Rate:
Base Rate: [ ] CD Rate [ ] Commercial Paper Rate [ ] Federal
Funds Rate [ ] LIBOR Telerate [ ] LIBOR Reuters
[ ] Treasury Rate [ ] Treasury
Rate Constant Maturity [ ] Other (see attached)
Interest Reset Period or Interest Reset Dates:
Interest Rate Reset: [ ] The Interest Rate may not be changed prior to Stated
Maturity.
[ ] The Interest Rate may be changed
prior to Stated Maturity (see attached)
Optional Reset Dates (if applicable):
Index Maturity:
C-1
<PAGE>
Spread (+/-):
Spread Multiplier:
Spread Reset: [ ] The Spread or Spread Multiplier may not be changed prior
to Stated Maturity.
[ ] The Spread or Spread Multiplier may be changed prior to
Stated Maturity (see attached).
Maximum Interest Rate:
Minimum Interest Rate:
Amortizing Note: [ ] Yes [ ] No
Amortization Schedule:
Optional Redemption: [ ] Yes [ ] No
Optional Redemption Dates:
Redemption Prices:
Optional Repayment: [ ] Yes [ ] No
Optional Repayment Dates:
Optional Repayment Prices:
Discount Note: [ ] Yes [ ] No
Total Amount of OID:
Yield to Maturity:
Place of Delivery of Notes:
Method of Payment for the Notes:
Period of time, if any, for which the Company shall not, without the prior
consent of the Purchaser, offer, sell or contract to sell, or otherwise dispose
of, directly or indirectly, or announce the offering of, any debt securities
issued by the Company (other than the Notes being sold pursuant to this Terms
Agreement):
Requirements for delivery, if any, of opinions of counsel, certificates from the
Company or its officers or a letter from the Company's independent public
accountants:
Date:
[Purchaser]
By__________________________
Accepted: SALOMON INC
By_________________________
C-2
<PAGE>
EXHIBIT 1 (c)
Salomon Inc
Notes, Series G
Due More Than Nine Months From Date of Issue
Form of Continuous Underwriting Agreement
New York, New York
____________, 1994
Salomon Brothers Inc
Seven World Trade Center
New York, NY 10048
Ladies and Gentlemen:
Salomon Inc, a Delaware corporation (the "Company"), proposes to sell
-------
to you, as underwriter (the "Underwriter"), from time to time certain of its
-----------
Notes, Series G (the "Notes"). As of the date hereof, the Company has
authorized the issuance of up to $____________ aggregate public offering price
of the Notes. It is understood that the Company may from time to time authorize
the issuance and sale of additional amounts of the Notes and that such Notes may
be purchased by you pursuant to the terms of this Agreement, all as though the
issuance and sale of such Notes were authorized by the Company as of the date
hereof. The Notes will be issued, and the terms thereof established, under and
in accordance with an indenture dated as of December 1, 1988, as amended from
time to time between the Company and Citibank, N.A., as trustee (the "Trustee")
-------
(such indenture, as from time to time amended, the "Indenture"), and the Note
---------
Administrative Procedures attached hereto as Exhibit A (the "Procedures").
----------
1. Representations and Warranties. The Company represents and
------------------------------
warrants to, and agrees with, the Underwriter as set forth below in this Section
1. Certain terms used in this Section 1 are defined in paragraph (c) hereof.
(a) The Company meets the requirements for use of Form S-3 under the
Securities Act of 1933, as amended (the "Act"). The Company has filed with
---
the Securities and Exchange Commission (the "Commission") a registration
----------
statements on such Form (File Number: 33-_______), including a basic
prospectus, which registration statements have become effective, for the
registration under the Act of $__________ aggregate public offering price
or purchase
<PAGE>
price of debt securities (the "Securities") relating to the Notes. The
----------
Company may from time to time file with the Commission additional
registration statements for the registration of additional amounts of
Securities. At the time of the offer and sale of any Note pursuant to this
Agreement, such Note shall be registered pursuant to an effective
registration statement under the Act. Each registration statement under
which Notes are offered or sold pursuant to this Agreement, as amended at
the date of this Agreement and at the date of such offer and sale, meets
and will meet the requirements set forth in Rule 415(a)(1)(ix) or (x) under
the Act and complies and will comply in all other material respects with
said Rule. The Company has included and will include in each such
registration statement, or has filed or will file with the Commission
pursuant to the applicable paragraph of Rule 424(b) under the Act,
supplements (each, a "Pricing Supplement") to the form of prospectus
------------------
included in each such registration statement, and each of such Pricing
Supplements will specify, among other things, the interest rates, maturity
dates and, if appropriate, other terms of the Notes sold pursuant hereto or
of the offering thereof.
(b) On the Effective Date, when any supplement to the Prospectus is
filed with the Commission, at the Execution Time, on the Closing Date, as
of the date of any Terms Agreement (as defined in Section 2 hereof) and at
the date of delivery by the Company of any Notes sold hereunder (a
"Settlement Date"), (i) the Registration Statement, as amended as of any
----------------
such time, and the Prospectus, as supplemented as of any such time, and the
Indenture complied and will comply in all material respects with the
applicable requirements of the Act, the Securities Exchange Act of 1934, as
amended (the "Exchange Act") and the Trust Indenture Act of 1939, as
------------
amended (the "Trust Indenture Act") and the respective rules and
-------------------
regulations thereunder; (ii) the Registration Statement, as amended as of
any such time, did not and will not contain an untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading; and
(iii) the Prospectus, as supplemented as of any such time, did not and will
not contain an untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were or will be made, not
misleading; provided, however, that the Company makes no representations or
-------- -------
warranties as to the information contained in or omitted from the
Registration Statement or the Prospectus (or any supplement thereto) (i) in
that part of the Registration Statement that shall constitute the Statement
of Eligibility and Qualification on Form T-1 under the Trust Indenture Act
2
<PAGE>
of the Trustee or (ii) in reliance upon and in conformity with information
furnished in writing to the Company by the Underwriter specifically for
inclusion in the Registration Statement or the Prospectus (or any
supplement thereto).
(c) The following terms, when used in this Agreement, shall have the
meanings indicated herein, unless otherwise required by context.
"Effective Date" shall mean each date that the Registration Statement and
---------------
any post-effective amendment or amendments thereto became or becomes
effective and each date after the date hereof on which a document that is
incorporated by reference in the Registration Statement is filed.
"Execution Time" shall mean the date and time that this Agreement is
---------------
executed and delivered by the parties hereto. "Closing Date" shall mean
------------
the date that is the [eighth] business day subsequent to the Execution
Time. "Basic Prospectus" shall mean the form of basic prospectus relating
----------------
to the Notes that is a part of the Registration Statement at the Effective
Date. "Prospectus" shall mean the Basic Prospectus as supplemented by each
----------
Pricing Supplement. "Registration Statement" shall mean, as of any date,
----------------------
each effective registration statement relating to the Securities pursuant
to which Notes are or may then be offered and sold, including incorporated
documents, exhibits and financial statements, as amended at such date.
"Rule 415" and "Rule 424" refer to such rules under the Act. Any reference
--------- --------
herein to the Registration Statement, the Basic Prospectus, the Pricing
Supplement or the Prospectus shall be deemed to refer to and include the
documents incorporated by reference therein pursuant to Item 12 of Form S-3
that were filed under the Exchange Act on or before the Effective Date of
the Registration Statement or the issue date of the Basic Prospectus, the
Pricing Supplement or the Prospectus, as the case may be; and any reference
herein to the terms "amend", "amendment" or "supplement" with respect to
the Registration Statement, the Basic Prospectus, the Pricing Supplement or
the Prospectus shall be deemed to refer to and include (i) the filing of
any document under the Exchange Act after the Effective Date of the
Registration Statement or the issue date of the Basic Prospectus, the
Pricing Supplement or the Prospectus, as the case may be, deemed to be
incorporated therein by reference and (ii) with respect to the Registration
Statement, the filing of any additional registration statement relating to
Securities if Notes are to be offered or sold under such additional
registration statement.
2. Purchase, Sale and Resale of the Notes. (a) Subject to the terms
--------------------------------------
and conditions and in reliance upon the representations and warranties herein
set forth, from time to time to the extent set forth in one or more supplemental
agreements that shall be substantially in the form of Exhibit B
3
<PAGE>
hereto (each, a "Terms Agreement"), the Company agrees to sell to the
---------------
Underwriter, and the Underwriter agrees to purchase from the Company, Notes in
accordance with the terms and conditions herein and in the applicable Terms
Agreement. Each Terms Agreement shall, among other things, (i) describe the
Notes to be purchased by the Underwriter pursuant thereto and (ii) specifically
state the principal amount of, the price to be paid to the Company for, the rate
at which interest will be paid on, and the Settlement Date of, such Notes.
(b) The Underwriter hereby agrees that it will not resell Notes
purchased under Section 2(a) above except (i) to persons who are not brokers or
dealers (as such terms are defined in Sections 3(a)(4) and (5) of the Exchange
Act) or other securities intermediaries or (ii) in accordance with the terms and
provisions of, and pursuant to, a Master Selected Dealers Agreement (a "Dealers
-------
Agreement"), substantially in the form of Exhibit C hereto, to dealers (the
- ---------
"Dealers") that have duly executed and delivered such a Dealers Agreement to the
- --------
Underwriter. The Underwriter will furnish to the Company a true and complete
copy of the Dealers Agreement executed by any particular Dealer prior to any
sale of Notes by the Underwriter to such Dealer hereunder.
3. Delivery and Payment. Delivery of and payment for the Notes shall
--------------------
be made in accordance with the Procedures.
4. Agreements. The Company agrees with the Underwriter that:
----------
(a) Prior to the termination of the offering of the Notes, the
Company will not file any amendment of the Registration Statement or
supplement to the Prospectus (except for (i) periodic or current reports
filed under the Exchange Act, (ii) a supplement relating to any offering of
Notes providing solely for the specification of or a change in the maturity
dates, interest rates, issuance prices or other similar terms of any Notes
or (iii) a supplement relating to an offering of Securities other than the
Notes), unless the Company has furnished you a copy for your review prior
to filing, and will not file any such proposed amendment or supplement to
which you reasonably object. Subject to the foregoing sentence, the
Company will cause each supplement to the Prospectus to be filed with the
Commission pursuant to the applicable paragraph of Rule 424(b) within the
time period prescribed therein and will provide evidence satisfactory to
you of such filing. The Company will promptly advise you (i) when the
Prospectus, and any supplement thereto, shall have been filed with the
Commission pursuant to Rule 424(b), (ii) when, prior to termination of the
offering of the Notes, any amendment to the Registration Statement shall
have been filed or become
4
<PAGE>
effective, (iii) of any request by the Commission for any amendment of the
Registration Statement or supplement to the Prospectus or for any
additional information, (iv) of the issuance by the Commission of any stop
order suspending the effectiveness of the Registration Statement or the
institution or threatening of any proceeding for such purpose and (v) of
the receipt by the Company of any notification with respect to the
suspension of the qualification of the Notes for sale in any jurisdiction
or the initiation or threatening of any proceeding for such purpose. The
Company will use its best efforts to prevent the issuance of any such stop
order and, if issued, to obtain as soon as possible the withdrawal thereof.
(b) If, at any time when a prospectus relating to the Notes is
required to be delivered under the Act, any event occurs as a result of
which the Prospectus would include any untrue statement of a material fact
or omit to state any material fact necessary to make the statements therein
in the light of the circumstances under which they were made not
misleading, or if it shall be necessary to amend the Registration Statement
or to supplement the Prospectus to comply with the Act or the Exchange Act
or the respective rules thereunder, the Company promptly will prepare and
file with the Commission, subject to the first sentence of paragraph (a) of
this Section 4, an amendment or supplement which will correct such
statement or omission or effect such compliance.
(c) The Company, during the period when a prospectus relating to the
Notes is required to be delivered under the Act, will file promptly all
documents required to be filed with the Commission pursuant to Section
13(a), 13(c), 14 or 15(d) of the Exchange Act and will furnish to you
copies of such documents. In addition, on or prior to the date on which
the Company makes any announcement to the general public concerning
earnings or concerning any other event which is required to be described,
or which the Company proposes to describe, in a document filed pursuant to
the Exchange Act, the Company will furnish to you the information contained
or to be contained in such announcement. The Company also will furnish to
you copies of all press releases or announcements furnished to news or wire
services and any other material press releases and announcements. The
Company will immediately notify you of (i) any decrease in the rating of
the Notes or any other debt securities of the Company by any "nationally
recognized statistical rating organization" (as defined for purposes of
Rule 436(g) under the Act) or (ii) any notice given of any intended or
potential decrease in any such rating or of a possible change in any such
rating that does not indicate
5
<PAGE>
the direction of the possible change, as soon as the Company learns of any
such decrease or notice.
(d) As soon as practicable, the Company will make generally available
to its security holders and to you an earnings statement or statements of
the Company and its subsidiaries which will satisfy the provisions of
Section 11(a) of the Act and Rule 158 under the Act.
(e) The Company will furnish to the Underwriter and its counsel,
without charge, copies of the Registration Statement (including exhibits
thereto) and, so long as delivery of a prospectus by the Underwriter or
Dealer may be required by the Act, as many copies of the Basic Prospectus
as the Underwriter may reasonably request. The Company will pay the
expenses of printing or other production of all documents relating to the
offering.
(f) The Company will arrange for the qualification of the Notes for
sale under the laws of such jurisdictions as you may designate (except that
the Company will not be obligated to execute or file any general consent to
service of process or to qualify as a foreign corporation to do business
under the laws of any such jurisdiction), will maintain such qualifications
in effect so long as required for the distribution of the Notes, will, if
requested by you, arrange for the determination of the legality of the
Notes for purchase by institutional investors and will pay the fee of the
National Association of Securities Dealers, Inc. in connection with its
review of the offering.
(g) The Company will furnish to you such information, documents,
certificates of officers of the Company and opinions of counsel for the
Company relating to the business, operations and affairs of the Company,
the Registration Statement, the Prospectus, and any amendments thereof or
supplements thereto, the Indenture, the Notes, this Agreement, each of the
Terms Agreements, the Procedures and the performance by the Company and you
of its and your respective obligations hereunder and thereunder as you may
reasonably request from time to time and at any time prior to the
termination of this Agreement.
(h) The Company will, whether or not any sale of Notes is
consummated, (i) pay all expenses incident to the performance of its
obligations under this Agreement and each Terms Agreement, including the
fees and disbursements of its accountants and counsel, the cost of printing
or other production and delivery of the Registration Statement, the
Prospectus, all amendments thereof and supplements thereto, the Indenture,
this Agreement, each of the Terms Agreements and all other documents
relating to the offering, the cost
6
<PAGE>
of preparing, printing, packaging and delivering the Notes, the fees and
disbursements including, without limitation, fees of counsel incurred in
compliance with Section 4(f) hereof, the fees and disbursements of the
Trustee and the fees of any agency that rates the Notes and (ii) pay the
reasonable fees and expenses of your counsel incurred in connection with
this Agreement.
(i) Each acceptance by the Company of an offer to purchase Notes will
be deemed to be a reconfirmation to you of the representations and
warranties of the Company in Section 1(b) hereof.
(j) Each time that the Registration Statement or the Prospectus is
amended or supplemented (other than by an amendment relating to any
offering of Securities other than the Notes or by a supplement providing
solely for the specification of or a change in the maturity dates, the
interest rates, the issuance prices or other terms of any Notes) , upon
request by the Underwriter, the Company will deliver or cause to be
delivered promptly to you a certificate of the Company, signed by the
Chairman of the Board or the Vice Chairman and the principal financial or
accounting officer of the Company, dated the date of the effectiveness of
such amendment or the date of the filing of such supplement, in form
reasonably satisfactory to you, of the same tenor as the certificate
referred to in Section 5(d) hereof but modified to relate to the last day
of the fiscal quarter for which financial statements of the Company were
last filed with the Commission and to the Registration Statement and the
Prospectus as amended and supplemented to the time of the effectiveness of
such amendment or the filing of such supplement.
(k) Each time that the Registration Statement or the Prospectus is
amended or supplemented (other than by an amendment or supplement (i)
relating to any offering of Securities other than the Notes, (ii) providing
solely for the specification of or a change in the maturity dates, the
interest rates, the issuance prices or other terms of any Notes or (iii)
setting forth or incorporating by reference financial statements or other
information as of and for a fiscal quarter, unless, in the case of clause
(iii) above, in your reasonable judgment, such financial statements or
other information are of such a nature that an opinion of counsel should be
furnished), upon request by the Underwriter, the Company shall furnish or
cause to be furnished promptly to you a written opinion of counsel of the
Company satisfactory to you, dated the date of the effectiveness of such
amendment or the date of the filing of such supplement, in form
satisfactory to you, of the same tenor as the opinion referred to in
Section 5(b) hereof but
7
<PAGE>
modified to relate to the Registration Statement and the Prospectus as
amended and supplemented to the time of the effectiveness of such amendment
or the filing of such supplement or, in lieu of such opinion, counsel last
furnishing such an opinion to you may furnish you with a letter to the
effect that you may rely on such last opinion to the same extent as though
it were dated the date of such letter authorizing reliance (except that
statements in such last opinion will be deemed to relate to the
Registration Statement and the Prospectus as amended and supplemented to
the time of the effectiveness of such amendment or the filing of such
supplement).
(l) Each time that the Registration Statement or the Prospectus is
amended or supplemented to set forth amended or supplemental financial
information, upon request by the Underwriter, the Company shall cause its
independent public accountants promptly to furnish you a letter, dated the
date of the effectiveness of such amendment or the date of the filing of
such supplement, in form satisfactory to you, of the same tenor as the
letter referred to in Section 5(e) hereof with such changes as may be
necessary to reflect the amended or supplemental financial information
included or incorporated by reference in the Registration Statement and the
Prospectus, as amended or supplemented to the date of such letter;
provided, however, that, if the Registration Statement or the Prospectus is
-------- -------
amended or supplemented solely to include or incorporate by reference
financial information as of and for a fiscal quarter, the Company's
independent public accountants may limit the scope of such letter, which
shall be satisfactory in form to you, to the unaudited financial
statements, the related section entitled "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and any other
information of an accounting, financial or statistical nature included in
such amendment or supplement, unless, in your reasonable judgment, such
letter should cover other information or changes in specified financial
statement line items.
(m) The Company confirms as of the date hereof that it is, and during
the term of this Agreement, will be in compliance with all provisions of
Section 1 of Laws of Florida, Chapter 92-198, An Act Relating to Disclosure
-----------------------------
of Doing Business with Cuba, and the Company further agrees that if it
---------------------------
commences engaging in business with the government of Cuba or with any
person or affiliate located in Cuba after the date the Registration
Statement becomes or has become effective with the Securities and Exchange
Commission or with the Florida Department of Banking and Finance (the
"Department"), whichever date is later, or if the information reported in
the Prospectus, if any, concerning the Company's business with Cuba or with
any
8
<PAGE>
person or affiliate located in Cuba changes in any material way, the
Company will provide the Department notice of such business or change, as
appropriate, in a form acceptable to the Department.
5. Conditions to the Obligations of the Underwriter. The obligations
------------------------------------------------
of the Underwriter to purchase Notes shall be subject to the accuracy of the
representations and warranties on the part of the Company contained herein as of
the Execution Time, on the Effective Date, on the Closing Date, when any
supplement to the Prospectus is filed with the Commission and as of each
Settlement Date, to the accuracy of the statements of the Company made in any
certificates pursuant to the provisions hereof, to the performance by the
Company of its obligations hereunder and to the following additional conditions:
(a) If the filing of the Prospectus, or any supplement thereto, is
required pursuant to Rule 424(b), the Prospectus, and any such supplement,
shall have been filed in the manner and within the time period required by
Rule 424(b); and no stop order suspending the effectiveness of the
Registration Statement shall have been issued and no proceedings for that
purpose shall have been instituted or threatened.
(b) The Company shall have furnished to the Underwriter the opinion
of Cravath, Swaine & Moore, counsel for the Company, and/or Arnold S.
Olshin, secretary for the Company, dated the Closing Date, to the effect,
in aggregate, that:
(i) each of the Company, Salomon Brothers Inc (the "Subsidiary")
----------
has been duly incorporated and is validly existing as a corporation in
good standing under the laws of the jurisdiction in which it is
chartered or organized, with full corporate power and authority to own
its properties and conduct its business as described in the Basic
Prospectus;
(ii) the Company's authorized equity capitalization is as set
forth in the Basic Prospectus; and the Notes conform to the
description thereof contained in the Basic Prospectus (subject to the
insertion in the Notes of the maturity dates, the interest rates and
other terms thereof which will be described in supplements to the
Basic Prospectus as contemplated by the final sentence of Section 1(a)
of this Agreement);
(iii) the Indenture has been duly authorized, executed and
delivered, has been duly qualified under the Trust Indenture Act, and
constitutes a legal, valid
9
<PAGE>
and binding instrument enforceable against the Company in accordance
with its terms (subject, as to enforcement of remedies, to applicable
bankruptcy, reorganization, insolvency, moratorium or other laws
affecting creditors' rights generally from time to time in effect);
and the Notes have been duly authorized and, when executed and
authenticated in accordance with the provisions of the Indenture and
delivered to and paid for by the purchasers thereof, will constitute
legal, valid and binding obligations of the Company entitled to the
benefits of such Indenture (subject, as to enforcement of remedies, to
applicable bankruptcy, reorganization, insolvency, moratorium or other
laws affecting creditors' rights generally from time to time in
effect);
(iv) to the best knowledge of such counsel, there is no pending
or threatened action, suit or proceeding before any court or
governmental agency, authority or body or any arbitrator involving the
Company or any of its subsidiaries, of a character required to be
disclosed in the Registration Statement that is not adequately
disclosed in the Basic Prospectus; and the statements included or
incorporated in the Basic Prospectus describing any legal proceedings
or material contracts or agreements relating to the Company fairly
summarize such matters;
(v) the Registration Statement has become effective under the
Act; any required filing of the Basic Prospectus, and any supplements
thereto, pursuant to Rule 424(b) has been made in the manner and
within the time period required by Rule 424(b); to the best knowledge
of such counsel, no stop order suspending the effectiveness of the
Registration Statement has been issued, no proceedings for that
purpose have been instituted or threatened, and the Registration
Statement and the Basic Prospectus (other than the financial
statements and other financial and statistical information contained
therein as to which such counsel need express no opinion) comply as to
form in all material respects with the applicable requirements of the
Act, the Exchange Act and the Trust Indenture Act and the respective
rules thereunder; and such counsel has no reason to believe that the
Registration Statement at the Closing Date contained an untrue
statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading or that the Basic Prospectus includes an untrue
statement of a material fact or omits to state a material fact
necessary in order to make the statements
10
<PAGE>
therein, in the light of the circumstances under which they were made,
not misleading;
(vi) this Agreement has been duly authorized, executed and
delivered by the Company;
(vii) no consent, approval, authorization or order of any court
or governmental agency or body is required for the consummation of the
transactions contemplated herein except such as have been obtained
under the Act and such as may be required under the blue sky laws of
any jurisdiction in connection with the sale of the Notes as
contemplated by this Agreement and such other approvals (specified in
such opinion) as have been obtained;
(viii) neither the execution and delivery of the Indenture, the
issue and sale of the Notes, nor the consummation of any other of the
transactions herein contemplated nor the fulfillment of the terms
hereof will conflict with, result in a breach of, or constitute a
default under, the charter or by-laws of the Company or the terms of
any indenture or other agreement or instrument known to such counsel
and to which the Company or any of its subsidiaries is a party or
bound, or any order or decree known to such counsel to be applicable
to the Company or any of its subsidiaries of any court, regulatory
body, administrative agency, governmental body or arbitrator having
jurisdiction over the Company or any of its subsidiaries; and
(ix) no holders of securities of the Company have rights to the
registration of such securities under the Registration Statement.
In rendering such opinion, such counsel may rely (A) as to matters
involving the application of laws of any jurisdiction other than the States
of New York and Delaware or the United States, to the extent deemed proper
and specified in such opinion, upon the opinion of other counsel of good
standing believed to be reliable and who are satisfactory to counsel for
the Underwriter and (B) as to matters of fact, to the extent deemed proper,
on certificates of responsible officers of the Company and public
officials. References to the Prospectus in this paragraph (b) include any
supplements thereto at the date such opinion is rendered.
(c) You shall have received from Cleary, Gottlieb, Steen & Hamilton,
counsel for the Underwriter, such opinion or opinions, dated the Closing
Date, with respect to the
11
<PAGE>
issuance and sale of the Notes, the Indenture, the Registration Statement,
the Prospectus (together with any supplement thereto) and other related
matters as you may reasonably require, and the Company shall have furnished
to such counsel such documents as they request for the purpose of enabling
them to pass upon such matters.
(d) The Company shall have furnished to you a certificate of the
Company, signed by the Chairman of the Board or the Vice Chairman and the
principal financial or accounting officer of the Company, dated the Closing
Date, to the effect that the signer of such certificate has carefully
examined the Registration Statement, the Prospectus, and this Agreement and
that:
(i) the representations and warranties of the Company in this
Agreement are true and correct in all material respects on and as of
the Closing Date, and the Company has complied with all the agreements
and satisfied all the conditions on its part to be performed or
satisfied as of the Closing Date as a condition to the obligation of
the Underwriter to purchase Notes;
(ii) no stop order suspending the effectiveness of the
Registration Statement has been issued and no proceedings for that
purpose have been instituted or, to the Company's knowledge,
threatened; and
(iii) since the date of the most recent financial statements
included in the Prospectus (exclusive of any supplement thereto),
there has been no material adverse change in the condition (financial
or other), earnings, business or properties of the Company and its
subsidiaries, whether or not arising from transactions in the ordinary
course of business, except as set forth in or contemplated in the
Prospectus (exclusive of any supplement thereto).
(e) At the Closing Date, Arthur Andersen & Co. shall have furnished
to you a letter or letters (which may refer to letters previously delivered
to the Underwriter), dated as of the Closing Date, in form and substance
satisfactory to the Underwriter, confirming that they are independent
accountants within the meaning of the Act and the Exchange Act and the
respective applicable published rules and regulations thereunder and
stating in effect that:
(i) in their opinion the audited financial statements, financial
statement schedules and pro forma financial statements, if any,
included or incorporated in the Registration Statement and the
Prospectus and
12
<PAGE>
reported on by them comply in form in all material respects with the
applicable accounting requirements of the Act and the Exchange Act and
the related published rules and regulations;
(ii) on the basis of a reading of the latest unaudited financial
statements made available by the Company and its subsidiaries;
carrying out certain specified procedures (but not an examination in
accordance with generally accepted auditing standards) which would not
necessarily reveal matters of significance with respect to the
comments set forth in such letter; a reading of the minutes of the
meetings of the stockholders, directors and executive committees of
the Company and the Subsidiary; and inquiries of certain officials of
the Company who have responsibility for financial and accounting
matters of the Company and its subsidiaries as to transactions and
events subsequent to the date of the most recent audited financial
statements included or incorporated in the Prospectus, nothing came to
their attention which caused them to believe that:
(1) any unaudited financial statements included or
incorporated in the Registration Statement and the Prospectus do
not comply in form in all material respects with applicable
accounting requirements and with the published rules and
regulations of the Commission with respect to financial
statements included or incorporated in quarterly reports on Form
10-Q under the Exchange Act; and said unaudited financial
statements are not in conformity with generally accepted
accounting principles applied on a basis substantially consistent
with that of the audited financial statements included or
incorporated in the Registration Statement and the Prospectus;
(2) with respect to the period subsequent to the date of
the most recent financial statements (other than any capsule
information), audited or unaudited, included or incorporated in
the Registration Statement and the Prospectus, there were any
changes, at a specified date not more than five business days
prior to the date of the letter, in the consolidated long-term
debt or capital stock of the Company and its subsidiaries or
decreases in the stockholders' equity of the Company and its
subsidiaries as compared with the amounts shown on the most
recent consolidated balance sheet included or incorporated in the
13
<PAGE>
Registration Statement and the Prospectus, or for the period from
the date of the most recent financial statements included or
incorporated in the Registration Statement and the Prospectus to
such specified date there were any decreases, as compared with
the corresponding period in the preceding year, in total or per
share amounts of earnings before income taxes or of net earnings
of the Company and its subsidiaries, except in all instances for
changes or decreases set forth in such letter, in which case the
letter shall be accompanied by an explanation by the Company as
to the significance thereof unless said explanation is not deemed
necessary by you; or
(3) the amounts included in any unaudited "capsule"
information included or incorporated in the Registration
Statement and the Prospectus do not agree with the amounts set
forth in the unaudited financial statements for the same periods
or were not determined on a basis substantially consistent with
that of the corresponding amounts in the audited financial
statements included or incorporated in the Registration Statement
and the Prospectus;
(iii) they have performed certain other specified procedures as
a result of which they determined that certain information of an
accounting, financial or statistical nature (which is limited to
accounting, financial or statistical information derived from the
general accounting records of the Company and its subsidiaries) set
forth in the Registration Statement and the Prospectus, including the
information included or incorporated in Items 1, 2, 6 and 7 of the
Company's Annual Report on Form 10-K, incorporated in the Registration
Statement and the Prospectus, and the information included under the
caption "Management's Discussion and Analysis of Financial Condition
and Results of Operations" included or incorporated in the Company's
Quarterly Reports on Form 10-Q, incorporated in the Registration
Statement and the Prospectus, agrees with the accounting records of
the Company and its subsidiaries, excluding any questions of legal
interpretation; and
(iv) if unaudited pro forma financial statements are included or
incorporated in the Registration Statement and the Prospectus, on the
basis of a reading of the unaudited pro forma financial statements,
carrying out certain specified procedures, inquiries of certain
officials of the Company and the acquired
14
<PAGE>
company who have responsibility for financial and accounting matters,
and proving the arithmetic accuracy of the application of the pro
forma adjustments to the historical amounts in the pro forma financial
statements, nothing came to their attention which caused them to
believe that the pro forma financial statements do not comply in form
in all material respects with the applicable accounting requirements
of Rule 11-02 of Regulation S-X or that the pro forma adjustments have
not been properly applied to the historical amounts in the compilation
of such statements.
References to the Prospectus in this paragraph (e) include any
supplement thereto at the date of the letter.
(f) Prior to the Closing Date, the Company shall have furnished to
the Underwriter such further information, documents, certificates and
opinions of counsel as the Underwriter may reasonably request.
If any of the conditions specified in this Section 5 shall not have
been fulfilled in all material respects when and as provided in this Agreement,
or if any of the opinions and certificates mentioned above or elsewhere in this
Agreement shall not be in all material respects reasonably satisfactory in form
and substance to the Underwriter and its counsel, this Agreement and all of the
obligations of the Underwriter hereunder may be cancelled at any time by the
Underwriter. Notice of such cancellation shall be given to the Company in
writing or by telephone or telegraph confirmed in writing.
The documents required to be delivered by this Section 5 shall be
delivered at the office of Cleary, Gottlieb, Steen & Hamilton, counsel for the
Underwriter, at One Liberty Plaza, New York, New York, at 11:00 a.m., New York
City time, on the Closing Date.
6. Reimbursement of Underwriters' Expenses. If the sale of the Notes
---------------------------------------
provided for herein is not consummated because any condition to the obligations
of the Underwriter set forth in Section 5 hereof is not satisfied, because of
any termination pursuant to Section 8 hereof or because of any refusal,
inability or failure on the part of the Company to perform any agreement herein
or comply with any provision hereof other than by reason of a default by the
Underwriter, the Company will reimburse the Underwriter upon demand for all out-
of-pocket expenses (including reasonable fees and disbursements of counsel) that
shall have been incurred by it in connection with the proposed purchase and sale
of the Notes.
15
<PAGE>
7. Indemnification and Contribution. (a) The Company agrees to
--------------------------------
indemnify and hold harmless the Underwriter, the directors, officers, employees
and agents of the Underwriter and each person who controls the Underwriter
within the meaning of either the Act or the Exchange Act against any and all
losses, claims, damages or liabilities, joint or several, to which they or any
of them may become subject under the Act, the Exchange Act or other Federal or
state statutory law or regulation, at common law or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement as originally filed or in
any amendment thereof, or in the Prospectus or any preliminary Prospectus, or in
any amendment thereof or supplement thereto, or arise out of or are based upon
the omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, and
agrees to reimburse such indemnified party, as incurred, for any legal or other
expenses reasonably incurred by them in connection with investigating or
defending any such loss, claim, damage, liability or action; provided, however,
-------- -------
that the Company will not be liable in any such case to the extent that any such
loss, claim, damage or liability arises out of or is based upon any such untrue
statement or alleged untrue statement or omission or alleged omission made
therein in reliance upon and in conformity with written information furnished to
the Company by or on behalf of the Underwriter specifically for inclusion
therein. This indemnity agreement will be in addition to any liability which
the Company may otherwise have.
(b) The Underwriter agrees to indemnify and hold harmless the
Company, each of its directors, each of its officers who sign the Registration
Statement and each person who controls the Company within the meaning of either
the Act or the Exchange Act, to the same extent as the indemnity provided for in
Section 7(a) from the Company to the Underwriter, but only with reference to
written information relating to the Underwriter furnished to the Company by the
Underwriter specifically for inclusion in the documents referred to in the
indemnity provided for in Section 7(a). This indemnity agreement will be in
addition to any liability which the Underwriter may otherwise have. The Company
acknowledges that the statements set forth in the last two paragraphs of the
cover page, and under the heading "Plan of Distribution", in the Prospectus
constitute the only information furnished in writing by or on behalf of the
Underwriter for inclusion in the documents referred to in the indemnity provided
for in Section 7(a), and you, as the Underwriter, confirm that such statements
are correct.
(c) Promptly after receipt by an indemnified party under this Section
7 of notice of the commencement of any action,
16
<PAGE>
such indemnified party will, if a claim in respect thereof is to be made against
the indemnifying party under this Section 7, notify the indemnifying party in
writing of the commencement thereof; but the failure so to notify the
indemnifying party (i) will not relieve it from liability under paragraph (a) or
(b) above unless and to the extent it did not otherwise learn of such action and
such failure results in the forfeiture by the indemnifying party of substantial
rights and defenses and (ii) will not, in any event, relieve the indemnifying
party from any obligations to any indemnified party other than the
indemnification obligation provided in paragraph (a) or (b) above. The
indemnifying party shall be entitled to appoint counsel of the indemnifying
party's choice at the indemnifying party's expense to represent the indemnified
party in any action for which indemnification is sought (in which case the
indemnifying party shall not thereafter be responsible for the fees and expenses
of any separate counsel retained by the indemnified party or parties except as
set forth below); provided, however, that such counsel shall be satisfactory to
-------- -------
the indemnified party. Notwithstanding the indemnifying party's election to
appoint counsel to represent the indemnified party in an action, the indemnified
party shall have the right to employ separate counsel (including local counsel),
and the indemnifying party shall bear the reasonable fees, costs and expenses of
such separate counsel if (i) the use of counsel chosen by the indemnifying party
to represent the indemnified party would present such counsel with a conflict of
interest, (ii) the actual or potential defendants in, or targets of, any such
action include both the indemnified party and the indemnifying party and the
indemnified party shall have reasonably concluded that there may be legal
defenses available to it and/or other indemnified parties which are different
from or additional to those available to the indemnifying party, (iii) the
indemnifying party shall not have employed counsel satisfactory to the
indemnified party to represent the indemnified party within a reasonable time
after notice of the commencement of such action or (iv) the indemnifying party
shall authorize the indemnified party to employ separate counsel at the expense
of the indemnifying party. An indemnifying party will not, without the prior
written consent of the indemnified parties, settle or compromise or consent to
the entry of any judgment with respect to any pending or threatened claim,
action, suit or proceeding in respect of which indemnification or contribution
may be sought hereunder (whether or not the indemnified parties are actual or
potential parties to such claim or action) unless such settlement, compromise or
consent includes an unconditional release of each indemnified party from all
liability arising out of such claim, action, suit or proceeding.
(d) In the event that the indemnity provided in paragraph (a) or (b)
of this Section 7 is unavailable to or insufficient to hold harmless an
indemnified party for any
17
<PAGE>
reason, the Company and the Underwriter agree to contribute to the aggregate
losses, claims, damages and liabilities (including legal or other expenses
reasonably incurred in connection with investigating or defending the same)
(collectively "Losses") to which the Company and the Underwriter may be subject
in such proportion as is appropriate to reflect the relative benefits received
by the Company and by the Underwriter from the offering of the Securities;
provided, however, that in no case shall the Underwriter (except as may be
- -------- -------
provided in any agreement among underwriters relating to the offering of the
Securities) be responsible for any amount in excess of the underwriting discount
or commission applicable to the Securities purchased by the Underwriter
hereunder. If the allocation provided by the immediately preceding sentence is
unavailable for any reason, the Company and the Underwriter shall contribute in
such proportion as is appropriate to reflect not only such relative benefits but
also the relative fault of the Company and of the Underwriter in connection with
the statements or omissions which resulted in such Losses as well as any other
relevant equitable considerations. Benefits received by the Company shall be
deemed to be equal to the total net proceeds from the offering (before deducting
expenses), and benefits received by the Underwriter shall be deemed to be equal
to the total underwriting discounts and commissions, in each case as set forth
on the cover page of the Prospectus. Relative fault shall be determined by
reference to whether any alleged untrue statement or omission relates to
information provided by the Company or the Underwriter. The Company and the
Underwriter agree that it would not be just and equitable if contribution were
determined by pro rata allocation or any other method of allocation which does
not take account of the equitable considerations referred to above.
Notwithstanding the provisions of this paragraph (d), no person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. For purposes of this Section 7, each person who
controls the Underwriter within the meaning of either the Act or the Exchange
Act and each director, officer, employee and agent of the Underwriter shall have
the same rights to contribution as the Underwriter, and each person who controls
the Company within the meaning of either the Act or the Exchange Act, each
officer of the Company who shall have signed the Registration Statement and each
director of the Company shall have the same rights to contribution as the
Company, subject in each case to the applicable terms and conditions of this
paragraph (d).
8. Termination. (a) This Agreement will continue in effect until
-----------
terminated as provided in this Section 8. This Agreement may be terminated by
either the Company or the Underwriter giving written notice of such termination
to the other party hereto. This Agreement shall so terminate at the close of
business on the first business day following the receipt
18
<PAGE>
of such notice by the party to whom such notice is given. In the event of such
termination, no party shall have any liability to the other party hereto, except
as provided in Section 4(h), Section 7 and Section 9 hereof.
(b) Each Terms Agreement shall be subject to termination in the
absolute discretion of the Underwriter, by notice given to the Company prior to
delivery of any payment for Notes to be purchased thereunder, if prior to such
time (i) trading in the Company's Common Stock shall have been suspended by the
Commission or the New York Stock Exchange or trading in securities generally on
the New York Stock Exchange shall have been suspended or limited or minimum
prices shall have been established on such Exchange, (ii) a banking moratorium
shall have been declared either by Federal or New York State authorities or
(iii) there shall have occurred any outbreak or material escalation of
hostilities or other calamity or crisis, the effect of which on the financial
markets or the United States is such as to make it, in the judgment of the
Underwriter, impracticable or inadvisable to proceed with the offering or
delivery of the Notes as contemplated in the Prospectus.
9. Representations and Indemnities to Survive. The respective
------------------------------------------
agreements, representations, warranties, indemnities and other statements of the
Company or its officers and of the Underwriter set forth in or made pursuant to
this Agreement will remain in full force and effect, regardless of any
investigation made by or on behalf of the Underwriter or the Company or any of
the officers, directors or controlling persons referred to in Section 7 hereof,
and will survive delivery of and payment for the Notes. The provisions of
Sections 4(g) and 7 hereof shall survive the termination or cancellation of this
Agreement.
10. Notices. All communications hereunder will be in writing and
-------
effective only on receipt, and, if sent to the Underwriter, will be mailed,
delivered or telegraphed and confirmed to Salomon Brothers Inc at Seven World
Trade Center, New York, New York 10048, Attention of the Legal Department; or,
if sent to the Company, will be mailed, delivered or telegraphed and confirmed
to it at Seven World Trade Center, New York, New York 10048, Attention of the
Secretary.
11. Successors. This Agreement will inure to the benefit of and be
----------
binding upon the parties hereto and their respective successors and the officers
and directors and controlling persons referred to in Section 7 hereof, and no
other person will have any right or obligation hereunder.
12. Applicable Law. This Agreement will be governed by and construed
--------------
in accordance with the laws of the State of New York.
19
<PAGE>
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to us the enclosed duplicate hereof, whereupon
this letter and your acceptance shall represent a binding agreement between the
Company and the Underwriter.
Very truly yours,
Salomon Inc
By:_________________________
Name:
Title:
The foregoing Agreement is hereby
confirmed and accepted as of the
date hereof.
Salomon Brothers Inc
By:________________________
Name:
Title:
20
<PAGE>
EXHIBIT A
SALOMON INC
Note Administrative Procedures
------------------------------
_____________, 1994
The Notes, Series G (the "Notes") of Salomon Inc (the "Company") are
----- -------
being offered on a continuous basis. The Notes are being sold to Salomon
Brothers Inc (the "Underwriter") pursuant to a Continuous Underwriting Agreement
-----------
between the Company and the Underwriter dated as of the date hereof (the
"Underwriting Agreement") and one or more terms agreements substantially in the
- -----------------------
form attached to the Underwriting Agreement as Exhibit B (each, a "Terms
-----
Agreement"). The Notes are being resold by the Underwriter to (i) customers of
- ---------
the Underwriter or (ii) selected broker-dealers for distribution to their
customers pursuant to Master Selected Dealers Agreements (each, a "Dealers
-------
Agreement") substantially in the form attached to the Underwriting Agreement as
- ---------
Exhibit C. The Notes have been registered with the Securities and Exchange
Commission (the "Commission") and will be issued under an indenture dated as of
----------
December 1, 1988, as amended from time to time between the Company and Citibank,
N.A., as trustee (the "Trustee") (such indenture, as amended from time to time,
-------
the "Indenture"). Terms used herein but not defined shall have the meanings
---------
assigned to them in the Indenture, unless otherwise required by the context.
The Notes will constitute part of the senior debt of the Company and will rank
equally with all other unsecured and unsubordinated debt of the Company.
The Notes will be issued only in fully registered form without
coupons, and each tranche of the Notes (a "Tranche") will have the annual
-------
interest rate, maturity and other terms set forth in a Pricing Supplement (as
defined in the Underwriting Agreement). Each Tranche will be represented by
(i) one or more global certificates (each, a "Global Certificate") without
------------------
coupons registered in the name of the nominee of the depositary, The Depository
Trust Company, or any successor depositary selected by the Company ("DTC", which
---
term, as used herein, includes any successor depositary selected by the
Company), each Global Certificate representing up to $150,000,000 principal
amount of all such Notes that have the same interest rate and Stated Maturity or
(ii) one or more certificates ("Individual Certificates") registered in the name
-----------------------
of, and delivered to, the Holder thereof or a Person designated by such Holder.
Each Global Certificate representing all or part of a Tranche will be delivered
to the Trustee, as custodian for DTC, and each of the Notes in such Tranche (a
"Book-Entry Note") will be recorded in the book-entry system maintained by DTC.
- ----------------
An owner of a
A-1
<PAGE>
Book-Entry Note will not be entitled to receive a certificate representing such
Note except in the circumstances described in the Prospectus (as defined in the
Underwriting Agreement).
Administrative procedures to be followed in connection with, and
certain specific terms of, the offering of Notes for sale by the Underwriter and
the sale as a result thereof by the Company are stated below. Book-Entry Notes
will be issued in accordance with the administrative procedures set forth in
Part I hereof, and notes represented by Individual Certificates ("Certificated
------------
Notes") will be issued in accordance with the administrative procedures set
- -----
forth in Part II hereof. The Company will advise the Underwriter and the
Trustee in writing of those persons handling administrative responsibilities
with whom the Underwriter and the Trustee are to communicate regarding orders to
purchase Notes and the details of their delivery. To the extent the procedures
set forth below conflict with the provisions of the Notes, the Indenture or the
Underwriting Agreement, the relevant provisions of the Notes, the Indenture and
the Underwriting Agreement shall control.
PART I: ADMINISTRATIVE PROCEDURES FOR BOOK-ENTRY NOTES
Procedure for The Company and the Underwriter will
- ------------- discuss from time to time the aggregate
Rate Setting principal amount and maturities of, and the interest rates
- ------------ to be borne by, each Tranche of Book-Entry Notes that may
and Posting: be purchased by the Underwriter.
- -----------
If the Company decides to set aggregate principal amounts
and maturities of, and rates to be borne by, any Tranche to
be purchased by the Underwriter (the setting of such
amounts, maturities and rates by the Company to be referred
to herein as a "Posting"), or if the Company decides to
-------
change amounts, maturities or rates previously posted, the
Company will promptly advise the Underwriter of the amounts,
maturities and rates to be posted.
Offering of Notes: In the event that there is a Posting, the Underwriter will
- ----------------- communicate the aggregate principal amount and maturities
of, and the interest rates to be borne by, each Tranche that
is the subject of the Posting to each of the broker-dealers
(the "Dealers") that has entered into a Dealers Agreement
-------
with the Underwriter and, pursuant to such Dealers
A-2
<PAGE>
Agreement, will solicit offers to purchase the Notes in the
Tranche from the Dealers.
Purchase of The Underwriter will, no later
- ----------- than 10 A.M. (New York City time) on
Notes by the third day subsequent to the day on which such Posting
- -------- occurs, or if such third day is not a day on which
the Underwriter: commercial banks in New York City are not required or
- --------------- authorized to be closed (such a day, a "Business Day", on
------------
the next succeeding Business Day, or on such later Business
Day and time as shall be mutually agreed upon by the Company
and the Underwriter (any such day, a "Trade Date"), (i)
----------
complete, execute and deliver to the Company a Terms
Agreement that sets forth, among other things, the amount of
each Tranche that the Underwriter is offering to purchase or
(ii) inform the Company that none of the Notes of a
particular Tranche will be purchased by the Underwriter.
Immediately upon receipt of a completed and executed Terms
Agreement from the Underwriter, the Company will (i) execute
and deliver such Terms Agreement to the Underwriter or (ii)
inform the Underwriter that its offer to purchase the Notes
of a particular Tranche has been rejected.
Preparation of If any offer by the Underwriter to purchase
- -------------- Notes is accepted by or on behalf of the
Pricing Company, the Company, with the approval of the Underwriter,
- ------- will prepare a Pricing Supplement reflecting the terms of
Supplement: each Tranche and will arrange to have ten copies thereof
- ---------- filed with the Commission in accordance with the applicable
paragraph of Rule 424(b) under the Securities Act of 1933,
as amended (the "Act"), and will supply one copy of such
Pricing Supplement to the Underwriter and to the Trustee.
The Underwriter will deliver, or will cause to be delivered,
copies of the applicable Pricing Supplement to (i) each of
the Dealers that purchased such Notes pursuant to a Dealers
Agreement in sufficient amounts so that a copy of the
applicable Pricing Supplement can be delivered to each such
Dealer and each purchaser of Notes from such Dealer and (ii)
each purchaser of Notes from the Underwriter (other than
such Dealers).
A-3
<PAGE>
In each instance that a Pricing Supplement is prepared, the
Underwriter will affix, or will cause to be affixed, copies
of the Pricing Supplement to the Basic Prospectus prior to
its distribution to purchasers of the Notes from the
Underwriter (other than Dealers that are purchasers of Notes
from the Underwriter with a view to their distribution
pursuant to a Dealers Agreement) and will be responsible for
determining that such Dealers have sufficient copies of the
most current version of the Pricing Supplements and the
related Basic Prospectus to deliver copies of such Pricing
Supplement attached to the Basic Prospectus to every
purchaser of the Notes, as appropriate. The Underwriter and
the Dealers will destroy any Pricing Supplements, and any
Basic Prospectuses to which they are attached (other than
those retained for files), that remain in their possession
after Pricing Supplements have been delivered to the
purchasers of Notes.
Delivery of A copy of the Basic Prospectus and a
- ----------- Pricing Supplement relating to a Book-Entry Note must
Prospectus: accompany or precede any written offer of such Note,
- ----------- confirmation of the purchase of such Note and payment for
such Note by its purchaser (other than the Underwriter or a
Dealer). The Underwriter and the Dealers will deliver a
Basic Prospectus and Pricing Supplement as herein described
with respect to each Book-Entry Note sold by any of them,
along with a confirmation of sale, to each purchaser on the
day immediately following the Trade Date. The Trustee will
make such delivery if such Note is sold directly by the
Company to a purchaser (other than the Underwriter).
Issuance: On the Settlement Date (as defined in the Underwriting
- -------- Agreement) for each Tranche sold pursuant to the
Underwriting Agreement, the Company will cause the Trustee
to issue one or more Global Certificates. Each Global
Certificate will be dated and issued as of the date of its
authentication by the Trustee.
Registration: Each Global Certificate will be registered in the name of
- ------------ CEDE & CO., as nominee for DTC, on the Security Register.
The beneficial
A-4
<PAGE>
owner of a Book-Entry Note (or an indirect participant in
DTC designated by such owner) will designate a participant
in DTC (with respect to such Note, the "Participant") to act
-----------
as agent for such beneficial owner in connection with the
book-entry system maintained by DTC, and DTC will record in
book-entry form, in accordance with instructions provided by
the Participant, a credit balance indicating that the
Participant is the record holder of the Note. The ownership
interest of the beneficial owner in such Note will be
recorded through the records of the Participant or through
the separate records of the Participant and an indirect
participant in DTC.
Denominations: Book-Entry Notes will be issued in principal amounts of
- ------------- $5,000 or any amount in excess thereof that is an integral
multiple of $1,000. Global Certificates will be denominated
in principal amounts not in excess of $150,000,000. If a
Tranche having an aggregate principal amount in excess of
$150,000,000 would, but for the preceding sentence, be
represented by a single Global Certificate, then one Global
Certificate will be authenticated and issued to represent
each $150,000,000 principal amount of such Tranche and an
additional Global Certificate will be authenticated and
issued to represent any remaining principal amount of such
Tranche.
Settlement: The receipt by the Company of immediately available funds in
- ---------- payment for a Tranche and the authentication and issuance of
the Global Certificate(s) representing such Tranche shall
constitute "Settlement" with respect to the Notes
----------
constituting such Tranche. The Settlement Date with respect
to any purchase of Book-Entry Notes from the Company by the
Underwriter will be a date on or before the fifth Business
Day next succeeding the Trade Date, unless otherwise agreed
by the Underwriter and the Company and specified in the
applicable Terms Agreement.
Settlement The following Settlement Procedures will
- ---------- be performed by the Company, the Trustee, the Underwriter
Procedures: and each of the Dealers with regard to each Tranche of Book-
- ---------- Entry Notes issued by the Company on a Trade Date:
A-5
<PAGE>
A. The Underwriter will advise the Company in writing of the
following settlement information:
1. Aggregate principal amount.
2. Stated maturity.
3. Interest rate.
4. Monthly, quarterly or semi-annual interest payments.
5. Settlement date.
6. Underwriter's price.
7. Dealers' selling concession.
8. Any other terms necessary to describe the relevant
Tranche.
B. The Company will advise the Trustee by telephone (confirmed
in writing at any time on the same date) or electronic
transmission (i) of the information set forth in Settlement
Procedure "A" above and (ii) that the Notes are Book-Entry
Notes.
C. The Trustee will enter a pending deposit message through
DTC's Participant Terminal System, providing the following
settlement information to DTC, the Underwriter and Standard
& Poor's Corporation:
1. The information set forth in Settlement Procedure "A".
2. Initial Interest Payment Date for such Tranche of Notes,
number of days by which such date succeeds the related
Regular Record Date and amount of interest payable on
such Interest Payment Date.
3. CUSIP number of the Global Certificate(s) representing
such Tranche of Notes.
4. Whether such Global Certificate(s) will represent any
other Tranche of Book-Entry Notes (to the extent known
at such time).
D. The Trustee will complete the Global Certificate(s)
representing such Tranche.
E. The Trustee will authenticate the Global Certificate(s)
representing such Tranche.
F. DTC will credit such Tranche to the Trustee's participant
account at DTC.
G. The Trustee will enter a Same-Day Funds Settlement System
("SDFS") deliver order
------
A-6
<PAGE>
through DTC's Participant Terminal System instructing DTC to
(i) debit such Tranche to the Trustee's participant account
and credit the Notes belonging to such Tranche to the
Underwriter's participant account and (ii) debit the
Underwriter's settlement account and credit the Trustee's
settlement account for an amount equal to the aggregate
principal amount of such Notes, less the underwriting
discount. The entry of such a deliver order shall
constitute a representation and warranty by the Trustee to
DTC that (i) the Global Certificate(s) representing such
Book-Entry Notes has or have been issued and authenticated
and (ii) the Trustee is holding such Global Certificate(s)
pursuant to the Medium-Term Notes Certificate Agreement
dated October 31, 1988 between the Trustee and DTC.
H. The Underwriter will enter an SDFS deliver order through
DTC's Participant Terminal System instructing DTC (i) to
debit Notes received from the Trustee pursuant to settlement
procedure "G" above to the Underwriter's participant account
and to credit such Notes to the participant accounts of
Participants that (A) will hold such Notes as Dealers that
purchased the Notes from the Underwriter pursuant to a
Dealers Agreement or as representatives of such Dealers or
(B) will hold the Notes on behalf of a purchaser of the
Notes from the Underwriter (other than such Dealers), (ii)
in the case of Participants that will hold the Notes as
described in (A) above, to debit the settlement accounts of
such Participants and credit the settlement account of the
Underwriter for an amount equal to the aggregate principal
amount of such Notes, less the applicable selling
concession, and, (iii) in the case of Participants that will
hold the Notes as described in (B) above, to debit the
settlement accounts of such Participants and credit the
settlement account of the Underwriter for an amount equal to
the aggregate principal amount of such Notes.
I. Transfers of funds in accordance with SDFS deliver orders
described in Settlement Procedures "G" and "H" will be
settled in
A-7
<PAGE>
accordance with SDFS operating procedures in effect on the
Settlement Date.
J. The Trustee will credit to an account of the Company
maintained at the Trustee funds available for immediate use
in the amount transferred to the Trustee in accordance with
Settlement Procedure "G".
Settlement Settlement Procedures "A" through "J" set
- ---------- forth above shall be completed as soon as
Procedures possible but not later than the respective times (New York
- ---------- City time) set forth below:
Timetable:
- ---------
Settlement
Procedure Time
--------- ----
A 11:00 A.M. on the Trade date
B 12:00 Noon on the Trade date
C 2:00 P.M. on the Business Day before
Settlement Date
D 3:00 P.M. on Business Day before
Settlement Date
E 9:00 A.M. on Settlement Date
F 10:00 A.M. on Settlement Date
G-H 2:00 P.M. on Settlement Date
I 4:45 P.M. on Settlement Date
J 5:00 P.M. on Settlement Date
Settlement Procedure "I" is subject to extension in
accordance with the events specified in SDFS operating
procedures in effect on the Settlement Date.
If Settlement of a Tranche of Book-Entry Notes is
rescheduled or cancelled, the
A-8
<PAGE>
Trustee will deliver to DTC, through DTC's Participant
Terminal System, a cancellation message to such effect by no
later than 2:00 P.M. on the Business Day immediately
preceding the scheduled Settlement Date.
Trustee Not to Nothing herein shall be deemed to require
- -------------- the Trustee to risk or expend its own funds in connection
Risk Funds: with any payment to the Company, or the Underwriter or any
- ---------- Dealer, it being understood by all parties that payments
made by the Trustee to the Company or the Underwriter shall
be made only to the extent that funds are provided to such
Trustee for such purpose.
Authenticity of The Company will cause the Trustee to
- --------------- furnish the Underwriter from time to time with specimen
Signatures: signatures of the Trustee's officers, employees or agents
- ---------- who have been authorized by the Trustee to authenticate
Global Certificates, but the Underwriter will not have any
obligation or liability to the Company or the Trustee in
respect of the authenticity of the signature of any officer,
employee or agent of the Company or the Trustee on any
Global Certificate.
PART II: ADMINISTRATIVE PROCEDURES FOR CERTIFICATED NOTES
The Trustee will serve as registrar and transfer agent in connection
with the Certificated Notes.
Procedure for The Company and the Underwriter will discuss from time
- ------------- to time the aggregate principal amount and maturities
Rate Setting of, and the interest rates to be borne by, each
- ------------ Tranche of Certificated Notes that may be purchased
and Posting: by the Underwriter. If the Company decides to set
- ----------- aggregate principal amounts and maturities of, and rates
to be borne by, any Tranche to be purchased by the
Underwriter (the setting of such amounts, maturities and
rates to be referred to herein as "Posting"), or if the
-------
Company decides to change amounts, maturities or rates
previously posted, the Company will promptly advise the
Underwriter of the amounts, maturities and rates to be
posted.
A-9
<PAGE>
Offering of Notes: In the event that there is a Posting, the Underwriter will
- ----------------- communicate the aggregate principal amount and maturities
of, and the interest rates to be borne by, each Tranche of
Certificated Notes that is the subject of the Posting to
each of the broker-dealers (the "Dealers") that have entered
into a Dealers Agreement with the Underwriter and, pursuant
to such Dealers Agreement, will solicit offers to purchase
the Notes in the Tranche from the Dealers.
Purchase of The Underwriter will, no later than 10 A.M.
- ----------- (New York City time) on the third Business
Notes by the Day subsequent to the day on which such Posting occurs, or
- ------------ if such third day is not a Business Day, on the next
Underwriter: succeeding Business Day, or on such later day and time as
- ----------- shall be mutually agreed upon by the Company and the
Underwriter (any such day a "Trade Date"), (i) complete,
----------
execute and deliver a Terms Agreement that sets forth, among
other things, the amount of each Tranche that the
Underwriter is offering to purchase or (ii) inform the
Company that none of the Notes of a particular Tranche will
be purchased by the Underwriter. Immediately upon receipt
of a completed and executed Terms Agreement from the
Underwriter, the Company will (i) execute and deliver such
Terms Agreement to the Underwriter or (ii) inform the
Underwriter that its offer to purchase the Notes of a
particular Tranche has been rejected.
Preparation of If any offer by the Underwriter to
- -------------- purchase Notes is accepted by or on
Pricing behalf of the Company, the Company, with the approval of the
- ------- Underwriter, will prepare a Pricing Supplement reflecting
Supplement: the terms of each Tranche and will arrange to have ten
- ---------- copies thereof filed with the Commission in accordance with
the applicable paragraph of Rule 424(b) under the Securities
Act of 1933, as amended (the "Act") and will supply one copy
of such Pricing Supplement to the Underwriter and to the
Trustee. The Underwriter will deliver, or will cause to be
delivered copies of the applicable Pricing Supplement to (i)
each of the Dealers that purchased such Notes pursuant to a
Dealers Agreement in sufficient amounts so that a copy of
the Pricing Supplement can be
A-10
<PAGE>
delivered to each such Dealer and each purchaser of Notes
from such Dealer and (ii) each purchaser of Notes from the
Underwriter (other than such Dealers).
In each instance that a Pricing Supplement is prepared, the
Underwriter will affix, or will cause to be affixed, copies
of the Pricing Supplement to the Basic Prospectus prior to
their distribution to purchasers of the Notes from the
Underwriter (other than Dealers that are purchasing Notes
from the Underwriter with a view to their distribution
pursuant to a Dealers Agreement) and will be responsible for
determining that such Dealers have sufficient copies of the
most current version of the Pricing Supplements and the
related Basic Prospectuses to deliver copies of such Pricing
Supplement attached to the Basic Prospectus to every
purchaser of the Notes, as appropriate. The Underwriter and
the Dealers will destroy any Pricing Supplements, and any
Basic Prospectuses to which they are attached (other than
those retained for files), that remain in their possession
after Pricing Supplements have been delivered to the
purchasers of Notes.
Delivery of A copy of the Basic Prospectus and a Pricing
- ----------- Supplement relating to a Certificated Note must accompany or
Prospectus: precede any written offer of such Note, confirmation of the
- ---------- purchase of such Note and payment for such Note by its
purchaser (other than the Underwriter or a Dealer). The
Underwriter and the Dealers will deliver a Basic Prospectus
and Pricing Supplement as herein described with respect to
each Certificated Note sold by any of them, along with a
confirmation of sale, to each purchaser on the Business Day
immediately following the Trade Date. The Trustee will make
such delivery if such Note is sold directly by the Company
to a purchaser (other than the Underwriter).
Issuance: On the Settlement Date (as defined in the Underwriting
- -------- Agreement) for each Tranche sold pursuant to the
Underwriting Agreement, the Company will cause the Trustee
to issue Individual Certificates representing the Notes in
the Tranche. Each Individual Certificate will be dated and
issued as of
A-11
<PAGE>
the date of its authentication by the Trustee.
Registration: Certificated Notes will be issued only in fully registered
- ------------ form without coupons.
Denominations: The denomination of any Certificated Note will be a minimum
- ------------- of $5,000 or any amount in excess thereof that is an
integral multiple of $1,000.
Settlement: The Settlement Date with respect to any purchase of
- ---------- Certificated Notes from the Company by the Underwriter will
be a date on or before the fifth day that is a Business Day
next succeeding the Trade Date, unless otherwise agreed by
the Underwriter and the Company and specified in the
applicable Terms Agreement. The Company will instruct the
Trustee to effect delivery of Certificated Notes no later
than 3:00 P.M., New York City time, on the Settlement Date
to the Underwriter.
Settlement The following Settlement Procedures will
- ---------- be performed by the Company, the Trustee, the Underwriter
Procedures: and each of the Dealers with regard to each Tranche of
- ---------- Certificated Notes issued by the Company on a Trade Date:
A. The Underwriter will advise the Company in writing of
the following settlement information:
1. Aggregate principal amount.
2. Stated maturity.
3. Interest rate.
4. Monthly, quarterly or semi-annual interest payments.
5. Settlement date.
6. Underwriter's price.
7. Dealers' selling concession.
8. Any other terms necessary to describe the relevant
Tranche.
B. The Company will advise the Trustee by telephone
(confirmed in writing at any time on the same date) or
electronic transmission (i) of the information set forth
in Settlement Procedure "A" above and (ii) that the
Notes are Certificated Notes.
A-12
<PAGE>
C. The Trustee will complete the Individual Certificates
representing such Tranche.
D. The Trustee will authenticate the Individual
Certificates representing such Tranche.
E. Delivery of each Certificated Note by the Trustee will
be made when the Trustee receives notice from the
Company that it has received payment from the
Underwriter of an amount in immediately available funds
equal to the face value of such Certificated Note less
the Underwriter's discount.
Settlement Settlement Procedures "A" through "E" set
- ---------- forth above shall be completed as soon as
Procedures possible but not later than the respective times (New York
- ---------- City time) set forth below:
Timetable:
- ---------
Settlement
Procedure Time
--------- ----
A-B 3:00 P.M. on Business Day before
Settlement Date
C-D 2:15 P.M. on Settlement Date
E 3:00 P.M. on Settlement Date
Trustee Not to Nothing herein shall be deemed to require
- -------------- the Trustee to risk or expend its own funds in connection
Risk Funds: with any payment to the Company, or the Underwriter or any
- ---------- Dealer, it being understood by all parties that payments
made by the Trustee to the Company or the Underwriter shall
be made only to the extent that funds are provided to such
Trustee for such purpose.
Authenticity of The Company will cause the Trustee to
- --------------- furnish the Underwriter from time to time with specimen
Signatures: signatures of the Trustee's officers, employees or agents
- ---------- who have been authorized by the Trustee to authenticate
Certificated Notes, but the Underwriter will not have any
obligation or liability to the Company or the Trustee in
respect of the
A-13
<PAGE>
authenticity of the signature of any officer, employee or
agent of the Company or the Trustee on any Certificated
Note.
A-14
<PAGE>
EXHIBIT B
Salomon Brothers Inc
Notes, Series C
FORM OF TERMS AGREEMENT
Salomon Inc
Seven World Trade Center
New York, New York 10048
Attention:
Subject in all respects to the terms and conditions of the
Underwriting Agreement (the "Agreement") dated ____________, 1994 between
---------
Salomon Brothers Inc and you, the undersigned agrees to purchase the following
Notes of Salomon Inc. Terms used but not defined herein shall have the meanings
assigned to such terms in the Agreement:
Principal Amount:
Interest Rate:
Monthly, Quarterly or Semi-annual Interest Payments:
Stated Maturity:
Price to Public:
Purchase Price:
Settlement Date and Time:
Survivor's Option:
Form: (If Certificated Notes)
Place of Delivery: (If Certificated Notes)
Salomon Brothers Inc
By:____________________________
Name:
Title:
Accepted [ at 10 A.M.]:
Salomon Inc
By:______________________
Name:
Title:
B-1
<PAGE>
EXHIBIT C
Salomon Brothers Inc Letterhead
Form of Master Selected Dealer Agreement
----------------------------------------
[Name of Dealer]
[Dealer's Address]
Dear Sirs:
In connection with public offerings of securities after the date
hereof for which we are acting as manager of an underwriting syndicate or are
otherwise responsible for the distribution of securities to the public by means
of an offering of securities for sale to selected dealers, you may be offered
the right as such a selected dealer to purchase as principal a portion of such
securities. This will confirm our mutual agreement as to the general terms and
conditions applicable to your participation in any such selected dealer group
organized by us as follows.
1. Applicability of this Agreement. The terms and conditions of this
-------------------------------
Agreement shall be applicable to any public offering of securities
("Securities"), pursuant to a registration statement filed under the Securities
----------
Act of 1933 (the "Securities Act"), or exempt from registration thereunder
--------------
(other than a public offering of Securities effected wholly outside the United
States of America), wherein Salomon Brothers Inc (acting for its own account or
for the account of any underwriting or similar group or syndicate) is
responsible for managing or otherwise implementing the sale of the Securities to
selected dealers ("Selected Dealers") and has expressly informed you that such
----------------
terms and conditions shall be applicable. Any such offering of Securities to
you as a Selected Dealer is hereinafter called an "Offering". In the case of
--------
any Offering where we are acting for the account of any underwriting or similar
group or syndicate ("Underwriters"), the terms and conditions of this Agreement
------------
shall be for the benefit of, and binding upon, such Underwriters, including, in
the case of any Offering where we are acting with others as representatives of
Underwriters, such other representatives.
2. Conditions of Offering; Acceptance and Purchases. Any Offering
------------------------------------------------
will be subject to delivery of the Securities and their acceptance by us and any
other Underwriters, may be subject to the approval of all legal matters by
counsel and the satisfaction of other conditions, and may be made on the basis
of
C-1
<PAGE>
reservation of Securities or an allotment against subscription. We will advise
you by telegram, telex or other form of written communication ("Written
-------
Communication", which term, in the case of any Offering described in Section
- -------------
3(a) or 3(b) hereof, may include a prospectus or offering circular) of the
particular method and supplementary terms and conditions (including, without
limitation, the information as to prices and offering date referred to in
Section 3(c) hereof) of any Offering in which you are invited to participate.
To the extent such supplementary terms and conditions are inconsistent with any
provision herein, such terms and conditions shall supersede any such provision.
Unless otherwise indicated in any such Written Communication, acceptances and
other communications by you with respect to an Offering should be sent to
Salomon Brothers Inc, Seven World Trade Center, New York, New York 10048
(Telecopy: (212) 783-4120). We reserve the right to reject any acceptance in
whole or in part. Unless notified otherwise by us, Securities purchased by you
shall be paid for on such date as we shall determine, on one day's prior notice
to you, by certified or official bank check, in an amount equal to the Public
Offering Price (as hereinafter defined) or, if we shall so advise you, at such
Public Offering Price less the Concession (as hereinafter defined), payable in
New York Clearing House funds to the order of Salomon Brothers Inc, Seven World
Trade Center, New York, New York 10048, against delivery of the Securities. If
Securities are purchased and paid for at such Public Offering Price, such
Concession will be paid after the termination of the provisions of Section 3(c)
hereof with respect to such Securities. Notwithstanding the foregoing, unless
notified otherwise by us, payment for and delivery of Securities purchased by
you shall be made through the facilities of The Depository Trust Company, if you
are a member, unless you have otherwise notified us prior to the date specified
in a Written Communication to you from us or, if you are not a member,
settlement may be made through a correspondent who is a member pursuant to
instructions which you will send to us prior to such specified date.
3. Representations, Warranties and Agreements.
------------------------------------------
(a) Registered Offerings. In the case of any Offering of Securities
--------------------
that are registered under the Securities Act ("Registered Offering"), we shall
-------------------
provide you with such number of copies of each preliminary prospectus and of the
final prospectus relating thereto as you may reasonably request for the purposes
contemplated by the Securities Act and the Securities Exchange Act of 1934 (the
"Exchange Act") and the applicable rules and regulations of the Securities and
------------
Exchange Commission thereunder. You represent and warrant that you are familiar
with Rule 15c2-8 under the Exchange Act relating to the distribution of
preliminary and final prospectuses and agree that you will comply therewith.
You agree to make a record of your distribution of each preliminary prospectus
and, when furnished with copies of
C-2
<PAGE>
any revised preliminary prospectus, you will, upon our request, promptly forward
copies thereof to each person to whom you have theretofore distributed a
preliminary prospectus. You agree that in purchasing Securities in a Registered
Offering you will rely upon no statement whatsoever, written or oral, other than
the statements in the final prospectus delivered to you by us. You will not be
authorized by the issuer or other seller of Securities offered pursuant to a
prospectus or by any Underwriter to give any information or to make any
representation not contained in the prospectus in connection with the sale of
such Securities.
(b) Offerings Pursuant to Offering Circular. In the case of any
---------------------------------------
Offering of Securities, other than a Registered Offering, which is made pursuant
to an offering circular or other document comparable to a prospectus in a
Registered Offering, we shall provide you with such number of copies of each
preliminary offering circular and of the final offering circular relating
thereto as you may reasonably request. You agree that you will comply with the
applicable Federal and state laws, and the applicable rules and regulations of
any regulatory body promulgated thereunder, governing the use and distribution
of offering circulars by brokers or dealers. You agree that in purchasing
Securities pursuant to an offering circular you will rely upon no statements
whatsoever, written or oral, other than the statements in the final offering
circular delivered to you by us. You will not be authorized by the issuer or
other seller of Securities offered pursuant to an offering circular or by any
Underwriter to give any information or to make any representation not contained
in the offering circular in connection with the sale of such Securities.
(c) Offer and Sale to the Public. With respect to any Offering of
----------------------------
Securities, we will inform you by a Written Communication of the public offering
price, the selling concession, the reallowance (if any) to dealers and the time
when you may commence selling Securities to the public. After such public
offering has commenced, we may change the public offering price, the selling
concession and the reallowance to dealers. The offering price, selling
concession and reallowance (if any) to dealers at any time in effect with
respect to an Offering are hereinafter referred to, respectively, as the "Public
------
Offering Price", the "Concession" and the "Reallowance". With respect to each
- -------------- ---------- -----------
Offering of Securities, until the provisions of this Section 3(c) shall be
terminated pursuant to Section 4 hereof, you agree to offer Securities to the
public only at the Public Offering Price, except that if a Reallowance is in
effect, a reallowance from the Public Offering Price not in excess of such
Reallowance may be allowed as consideration for services rendered in connection
with distribution to dealers who are actually engaged in the investment banking
or securities business, who execute the written agreement prescribed by section
24(c) of Article III of
C-3
<PAGE>
the Rules of Fair Practice of the National Association of Securities Dealers,
Inc. (the "NASD") and who are either members in good standing of the NASD or
----
foreign banks, dealers or institutions not eligible for membership in the NASD
who represent to you that they will promptly reoffer such Securities at the
Public Offering Price and will abide by the conditions with respect to foreign
banks, dealers and institutions set forth in Section 3(e) hereof.
(d) Over-allotment; Stabilization; Unsold Allotments. We may, with
------------------------------------------------
respect to any Offering, be authorized to over-allot in arranging sales to
Selected Dealers, to purchase and sell Securities for long or short account and
to stabilize or maintain the market price of the Securities. You agree that,
upon our request at any time and from time to time prior to the termination of
the provisions of Section 3(c) hereof with respect to any Offering, you will
report to us the amount of Securities purchased by you pursuant to such Offering
which then remain unsold by you and will, upon our request at any such time,
sell to us for our account or the account of one or more Underwriters such
amount of such unsold Securities as we may designate at the Public Offering
Price less an amount to be determined by us not in excess of the Concession.
If, prior to the later of (i) the termination of the provisions of Section 3(c)
hereof with respect to any Offering or (ii) the covering by us of any short
position created by us in connection with such Offering for our account or the
account of one or more Underwriters, we purchase or contract to purchase for our
account or the account of one or more Underwriters in the open market or
otherwise any Securities purchased by you under this Agreement as part of such
Offering, you agree to pay us on demand an amount equal to the Concession with
respect to such Securities (unless you shall have purchased such Securities
pursuant to Section 2 hereof at the Public Offering Price in which case we shall
not be obligated to pay such Concession to you pursuant to Section 2) plus
transfer taxes and broker's commissions or dealer's mark-up, if any, paid in
connection with such purchase or contract to purchase.
(e) NASD. You represent and warrant that you are actually engaged in
----
the investment banking or securities business and either a member in good
standing of the NASD or, if you are not such a member, you are a foreign bank,
dealer or institution not eligible for membership in the NASD which agrees to
make no sales within the United States, its territories or its possessions or to
persons who are citizens thereof or residents therein, and in making other sales
to comply with the NASD's interpretation with respect to free riding and
withholding. You further represent, by your participation in an Offering, that
you have provided to us all documents and other information required to be filed
with respect to you, any related person or any person associated with you or any
such related person pursuant to the supplementary requirements of the NASD's
interpretation with
C-4
<PAGE>
respect to review of corporate financing as such requirements relate to such
Offering.
You agree that, in connection with any purchase or sale of the
Securities wherein a selling concession, discount or other allowance is received
or granted, (1) you will comply with the provisions of section 24 of Article III
of the NASD's Rules of Fair Practice and (2) if you are a non-NASD member broker
or dealer in a foreign country, you will also comply (a) as though you were an
NASD member, with the provision of sections 8 and 36 thereof and (b) with
section 25 thereof as that section applies to a non-NASD member broker or dealer
in a foreign country.
You further agree that, in connection with any purchase of securities
from us that is not otherwise covered by the terms of this Agreement (whether we
are acting as manager, as a member of an underwriting syndicate or a selling
group or otherwise), if a selling concession, discount or other allowance is
granted to you, clauses (1) and (2) of the preceding paragraph will be
applicable.
(f) Relationship among Underwriters and Selected Dealers. We may buy
----------------------------------------------------
Securities from or sell Securities to any Underwriter or Selected Dealer and,
without consent, the Underwriters (if any) and the Selected Dealers may purchase
Securities from and sell Securities to each other at the Public Offering Price
less all or any part of the Concession. You are not authorized to act as agent
for us, any Underwriter or the issuer or other seller of any Securities in
offering Securities to the public or otherwise. Neither we nor any Underwriter
shall be under any obligation to you except for obligations assumed hereby or in
any Written Communication from us in connection with any Offering. Nothing
contained herein or in any Written Communication from us shall constitute the
Selected Dealers an association or partners with us or any Underwriter or with
one another. If the Selected Dealers, among themselves or with the
Underwriters, should be deemed to constitute a partnership for Federal income
tax purposes, then you elect to be excluded from the application of Subchapter
K, Chapter 1, Subtitle A of the Internal Revenue Code of 1986 and agree not to
take any position inconsistent with that election. You authorize us, in our
discretion, to execute and file on your behalf such evidence of that election as
may be required by the Internal Revenue Service. In connection with any
Offering, you shall be liable for your proportionate amount of any tax, claim,
demand or liability that may be asserted against you alone or against one or
more Selected Dealers participating in such Offering, or against us or the
Underwriters, based upon the claim that the Selected Dealers, or any of them,
constitute an association, an unincorporated business or other entity,
including, in each case, your proportionate amount of any expense incurred in
defending against any such tax, claim, demand or liability.
C-5
<PAGE>
(g) Blue Sky Laws. Upon application to us, we shall inform you as to
-------------
any advice we have received from counsel concerning the jurisdictions in which
Securities have been qualified for sale or are exempt under the securities or
blue sky laws of such jurisdictions, but we do not assume any obligation or
responsibility as to your right to sell Securities in any such jurisdiction.
(h) Compliance with Law. You agree that in selling Securities
-------------------
pursuant to any Offering (which agreement shall also be for the benefit of the
issuer or other seller of such Securities) you will comply with all applicable
laws, rules and regulations, including the applicable provisions of the
Securities Act and the Exchange Act, the applicable rules and regulations of the
Securities and Exchange Commission thereunder, the applicable rules and
regulations of the NASD, the applicable rules and regulations of any securities
exchange having jurisdiction over the Offering and the applicable laws, rules
and regulations specified in Section 3(b) hereof.
4. Termination, Supplements and Amendments. This Agreement shall
---------------------------------------
continue in full force and effect until terminated by a written instrument
executed by each of the parties hereto. This Agreement may be supplemented or
amended by us by written notice thereof to you, and any such supplement or
amendment to this Agreement shall be effective with respect to any Offering to
which this Agreement applies after the date of such supplement or amendment.
Each reference to "this Agreement" herein shall, as appropriate, be to this
Agreement as so amended and supplemented. The terms and conditions set forth in
Section 3(c) hereof with regard to any Offering will terminate at the close of
business on the 30th day after the commencement of the public offering of the
Securities to which such Offering relates, but in our discretion may be extended
by us for a further period not exceeding 30 days and in our discretion, whether
or not extended, may be terminated at any earlier time.
5. Successors and Assigns. This Agreement shall be binding on, and
----------------------
inure to the benefit of, the parties hereto and other persons specified in
Section 1 hereof, and the respective successors and assigns of each of them.
6. Governing Law. This Agreement and the terms and conditions set
-------------
forth herein with respect to any Offering together with such supplementary terms
and conditions with respect to such Offering as may be contained in any Written
Communication from us to you in connection therewith shall be governed by, and
construed in accordance with, the laws of the State of New York.
Please confirm by signing and returning to us the enclosed copy of
this Agreement that your subscription to, or your acceptance of any reservation
of, any Securities pursuant to
C-6
<PAGE>
an Offering shall constitute (i) acceptance of and agreement to the terms and
conditions of this Agreement (as supplemented and amended pursuant to Section 4
hereof) together with and subject to any supplementary terms and conditions
contained in any Written Communication from us in connection with such Offering,
all of which shall constitute a binding agreement between you and us,
individually or as representative of any Underwriters, (ii) confirmation that
your representations and warranties set forth in Section 3 hereof are true and
correct at that time, (iii) confirmation that your agreements set forth in
Sections 2 and 3 hereof have been and will be fully performed by you to the
extent and at the times required thereby and (iv) in the case of any Offering
described in Section 3(a) and 3(b) hereof, acknowledgement that you have
requested and received from us sufficient copies of the final prospectus or
offering circular, as the case may be, with respect to such Offering in order to
comply with your undertakings in Section 3(a) or 3(b) hereof.
Very truly yours,
Salomon Brothers Inc
By:_________________________
Name:
Title:
CONFIRMED:........................., 19....
...........................................
(Name of Dealer)
By:........................................
(Sign name and print title)
C-7
<PAGE>
FORM OF SERIES D FLOATING RATE OR INDEXED RATE NOTE
REGISTERED PRINCIPAL AMOUNT
OR FACE AMOUNT
NO. FL _______ SALOMON INC
MEDIUM-TERM NOTE, SERIES D
(FLOATING OR INDEXED RATE) CUSIP
Due More Than Nine Months from Date of Issue
IF APPLICABLE, THE "TOTAL AMOUNT OF OID" AND "YIELD TO MATURITY" SET
FORTH BELOW WILL BE COMPLETED SOLELY FOR THE PURPOSES OF APPLYING THE FEDERAL
INCOME TAX ORIGINAL ISSUE DISCOUNT ("OID") RULES.
Issue Price: Original Issue Date:
Initial Interest Rate: Stated Maturity:
Specified Currency:
(If other than U.S. dollars)
Authorized Denominations:
(If other than as set forth in the Prospectus Supplement)
Base Rate: [ ] CD Rate [ ] Commercial Paper [ ]Federal Funds Rate
[ ] LIBOR Telerate [ ] LIBOR Reuters [ ] Treasury Rate
[ ] Treasury Rate Constant Maturity [ ] Other (see attached)
Interest Reset Period Index Maturity:
or Interest Reset Dates:
Interest Payment Dates:
(If other than as set forth in the Prospectus Supplement)
Indexed Principal Note: [ ] Yes (see attached) [ ] No
Floating Rate: [ ] Indexed Interest Rate: [ ] (see attached)
Spread Multiplier: Spread (+/-):
Spread Reset: [ ] The Spread or Spread Multiplier may not be changed prior to
Stated Maturity.
[ ] The Spread or Spread Multiplier may be changed prior to
Stated Maturity (see attached).
Optional Reset Dates (if applicable):
Maximum Interest Rate: Minimum Interest Rate:
<PAGE>
Amortizing Note: [ ] Yes [ ] No
Amortization Schedule:
Optional Redemption: [ ] Yes [ ] No
Optional Redemption Dates:
Redemption Prices:
Optional Repayment: [ ] Yes [ ] No
Optional Repayment Dates:
Optional Repayment Prices:
Optional Extension of Stated Maturity: [ ] Yes [ ] No
Final Maturity:
Discount Note: [ ] Yes [ ] No
Total Amount of OID:
Yield to Maturity:
2
<PAGE>
SALOMON INC, a corporation duly organized and existing under the laws
of the State of Delaware (herein referred to as the "Company") for value
received hereby promises to pay CEDE & Co. or registered assigns, (a) the
Principal Amount or, in the case of an Indexed Principal Note, the Face Amount
adjusted by reference to prices, changes in prices, or differences between
prices, of securities, currencies, intangibles, goods, articles or commodities
or by such other objective price, economic or other measures (an "Index") as
described above, in the Specified Currency on the Stated Maturity shown above or
earlier if and to the extent so provided herein, and (b) to pay accrued interest
(i) if this is a Floating Rate Note, on the Principal Amount then outstanding
(or, in the case of an Indexed Principal Note, the Face Amount then outstanding,
at the Initial Interest Rate shown above from the Original Issue Date shown
above until the first Interest Reset Date shown above following the Original
Issue Date and thereafter at the Base Rate shown above, adjusted by the Spread
or Spread Multiplier, if any, shown above, determined in accordance with the
provisions on the reverse hereof, or (ii) if this is an Indexed Rate Note, on
the Principal Amount then outstanding (or in the case of an Indexed Principal
Note, the Face Amount, as reduced by any repayment of principal hereof) at a
rate determined by reference to an Index as described above, until, in either
case, the Principal Amount or the Face Amount is paid or duly provided for in
accordance with the terms hereof. The interest so payable, and punctually paid
or duly provided for, on each Interest Payment Date specified herein will, as
provided in the Indenture referred to below, be paid to the person in whose name
this Note (or one or more Predecessor Securities) is registered at the close of
business on the Regular Record Date for such interest, which, in the case of any
Interest Payment Date shall be the date (whether or not a Business Day), fifteen
calendar days immediately preceding such Interest Payment Date and, in the case
of interest payable at Maturity shall be the Stated Maturity of this Note.
Notwithstanding the foregoing, if this Note is issued between a Regular Record
Date and the related Interest Payment Date, the interest so payable for the
period from the Original Issue Date to such Interest Payment Date shall be paid
on the next succeeding Interest Payment Date to the Registered Holder hereof on
the related Regular Record Date. Any such interest not so punctually paid or
duly provided for shall forthwith cease to be payable to the Registered Holder
hereof on such Regular Record Date and may be paid to the Person in whose name
this Note (or one or more Predecessor Securities) is registered at the close of
business on a Special Record Date for the payment of such Defaulted Interest to
be fixed by the Trustee, notice whereof shall be given to Holders of Notes not
less than ten days prior to such Special Record Date, or may be paid at any time
in any other lawful manner not inconsistent with the requirements of any
securities exchange on which the Registered Notes may be listed, and upon such
notice as may be
3
<PAGE>
required by such exchange, all as more fully provided in said Indenture.
For purposes of this Note, "Business Day" means any day, other than a
Saturday or Sunday, that is (a) not a day on which banking institutions are
authorized or required by law or regulation to be closed in (i) The City of New
York or (ii) if the Specified Currency shown above (as defined below) is other
than U.S. dollars, the financial center of the country issuing the Specified
Currency (which, in the case of ECU, shall be Brussels, Belgium) and (b) if the
Base Rate specified above is LIBOR, a London Banking Day. "London Banking Day"
means any day on which dealings in deposits in the Specified Currency are
transacted in the London interbank market.
If this Note is an Amortizing Note as shown on the face hereof, a
portion or all the principal amount of the Note is payable prior to Stated
Maturity in accordance with a schedule, by application of a formula, or by
reference to an index (as described above).
The principal hereof and any premium and interest hereon are payable
by the Company in the Specified Currency shown above. If the Specified Currency
shown above is other than U.S. dollars, the Company will arrange to convert all
payments in respect hereof into U.S. dollars in the manner described on the
reverse hereof. The Holder hereof may, if so indicated above, elect to receive
all payments in respect hereof in the Specified Currency by delivery of a
written notice to the Trustee not later than fifteen calendar days prior to the
applicable payment date. Such election will remain in effect until revoked by
written notice to the Trustee received not later than fifteen calendar days
prior to the applicable payment date. If the Company determines that the
Specified Currency is not available for making payments in respect hereof due to
the imposition of exchange controls or other circumstances beyond the Company's
control or is no longer used by the government of the country issuing such
currency or for the settlement of transactions by public institutions or within
the international banking community, then the Holder hereof may not so elect to
receive payments in the Specified Currency, and any such outstanding election
shall be automatically suspended, and payments shall be in U.S. dollars, until
the Company determines that the Specified Currency is again available for making
such payments.
Payments of interest in U.S. dollars (other than interest payable at
Maturity) will be made by check mailed to the address of the Person entitled
thereto as such address shall appear on the Security Register on the applicable
Record Date, provided that, if the Holder hereof is the Holder of U.S.
--------
$10,000,000 (or the equivalent thereof in a currency other than U.S. dollars
determined as provided on the reverse hereof) or
4
<PAGE>
more in aggregate principal amount of Registered Notes of like tenor and term,
such U.S. dollar interest payments will be made by wire transfer of immediately
available funds, but only if appropriate wire transfer instructions have been
received in writing by the Trustee not less than fifteen calendar days prior to
the applicable Interest Payment Date. Simultaneously with any election by the
Holder hereof to receive payments in respect hereof in the Specified Currency
(if other than U.S. dollars), such Holder shall provide appropriate wire
transfer instructions to the Trustee and all such payments will be made by wire
transfer of immediately available funds to an account maintained by the payee
with a bank located outside the United States. The principal hereof and any
premium and interest hereon payable at Maturity will be paid in immediately
available funds upon surrender of this Note at the corporate trust office or
agency of the Trustee located in the City and State of New York.
REFERENCE IS HEREBY MADE TO THE FURTHER PROVISIONS OF THIS NOTE SET
FORTH ON THE REVERSE HEREOF, AND SUCH FURTHER PROVISIONS SHALL FOR ALL PURPOSES
HAVE THE SAME EFFECT AS THOUGH FULLY SET FORTH IN THIS PLACE.
This Note shall not become valid or obligatory for any purpose unless
and until this Note has been authenticated by Citibank, N.A., or its successor,
as Trustee.
5
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Note to be executed
under its corporate seal.
Dated:
SALOMON INC
By ______________________________________
Chairman of the Board of Directors,
President and Chief Executive Officer
Attest _________________________________
Secretary
CERTIFICATE OF AUTHENTICATION
This is one of the Notes issued under the within-mentioned Indenture.
CITIBANK, N.A.
as Trustee
By _____________________________________
Authorized Signatory
6
<PAGE>
SALOMON INC
MEDIUM-TERM NOTE, SERIES D
(FLOATING OR INDEXED RATE)
This Note is one of a series of duly authorized debt securities of the
Company (the "Debt Securities") issued or to be issued in one or more series
under an indenture, dated as of December 1, 1988 (the "Indenture") between the
Company and Citibank, N.A., as trustee (the "Trustee", which term includes any
successor Trustee under the Indenture) to which indenture and all indentures
supplemental thereto reference is hereby made for a statement of the respective
rights, limitations of rights, duties and immunities thereunder of the Company,
the Trustee and the Holders of the Debt Securities and of the terms upon which
the Debt Securities are, and are to be, authenticated and delivered. The U.S.
dollar equivalent of the public offering price or purchase price of Notes
denominated in currencies other than U.S. dollars will be determined by the
Company or its agent on the basis of the noon buying rate in New York City for
cable transfers in foreign currencies as certified for customs purposes by the
Federal Reserve Bank of New York (the "Market Exchange Rate") for such
currencies on the applicable issue dates.
Unless otherwise specified above, the authorized denominations of
Registered Notes denominated in U.S. dollars will be U.S.$1,000 and any larger
amount that is an integral multiple of U.S.$1,000. The authorized denominations
of Registered Notes denominated in a currency other than U.S. dollars will be as
set forth on the respective faces thereof.
Each Registered Note will be issued initially as either a Book-Entry
Note or, if so specified above, a Certificated Note. Only Registered Notes
denominated and payable in U.S. dollars may be issued as Book-Entry Notes and
such Notes will not be exchangeable for Certificated Notes and, except as
otherwise provided in the Indenture, will not otherwise be issuable as
Certificated Notes.
If the Specified Currency is other than U.S. dollars, the amount of
any U.S. dollar payment to be made in respect hereof will be determined by the
Company or its agent based on the highest firm bid quotation expressed in U.S.
dollars received by the Company or its agent at approximately 11:00 a.m., New
York City time, on the second Business Day preceding the applicable payment date
(or, if no such rate is quoted on such date, the last date on which such rate
was quoted) from three (or, if three are not available, then two) recognized
foreign exchange dealers in The City of New York selected by the Company or its
agent (one of which may be Salomon Brothers Inc) for the purchase by the quoting
dealer, for settlement on such payment date, of the aggregate amount of the
Specified Currency payable on such payment date in respect of all Registered
Notes denominated in
7
<PAGE>
such Specified Currency. All currency exchange costs will be borne by the
Holders of such Registered Notes by deductions from such payments. If no such
bid quotations are available, then such payments will be made in the Specified
Currency, unless the Specified Currency is unavailable due to the imposition of
exchange controls or to other circumstances beyond the Company's control, in
which case payment will be made as described in the next paragraph.
Except as set forth below with respect to payments in ECU, if any
payment in respect hereof is required to be made in a Specified Currency other
than U.S. dollars and such currency is unavailable due to the imposition of
exchange controls or other circumstances beyond the Company's control or is no
longer used by the government of the country issuing such currency or for the
settlement of transactions by public institutions of or within the international
banking community, then such payment shall be made in U.S. dollars until such
currency is again available or so used. The amount so payable in such foreign
currency shall be converted into U.S. dollars on the basis of the most recently
available Market Exchange Rate for such currency or as otherwise indicated on
the face hereof. Any payment made under such circumstances in U.S. dollars will
not constitute an Event of Default under the Indenture. If any payment in
respect hereof is required to be made in European Currency Units ("ECU") and ECU
is no longer used in the European Monetary System, then such payment shall be
made in U.S. dollars until ECU is again so used. The amount of such payment in
U.S. dollars shall be computed on the basis of the equivalent of the ECU in U.S.
dollars as of the second Business Day prior to the date on which such payment is
due. The equivalent of the ECU in U.S. dollars as of any date shall be
determined by the Company or its agent on the following basis. The component
currencies of the ECU for this purpose (the "Components") shall be the currency
amounts that were components of the ECU as of the last date on which the ECU was
used in the European Monetary System. The equivalent of the ECU in U.S. dollars
shall be calculated by aggregating the U.S. dollar equivalents of the
Components. The U.S. dollar equivalent of each of the Components shall be
determined by the Company or its agent on the basis of the most recently
available Market Exchange Rates for such Components or as otherwise indicated on
the face hereof. If the official unit of any component currency is altered by
way of combination or subdivision, the number of units of that currency as a
Component shall be divided or multiplied in the same proportion. If two or more
component currencies are consolidated into a single currency, the amounts of
those currencies as Components shall be replaced by an amount of such single
currency equal to the sum of the amounts of the consolidated component
currencies expressed in such single currency. If any component currency is
divided into two or more currencies, the amount of that currency as a Component
shall be replaced by amounts of such two or more currencies, each of which
8
<PAGE>
shall be equal to the amount of the former component currency divided by the
number of currencies into which such currency was divided.
If so specified on the face hereof, the Spread or Spread Multiplier on
this Note may be reset by the Company on the date or dates specified on the face
hereof (each an "Optional Reset Date"). Not later than 40 days prior to each
Optional Reset Date, the Trustee will mail to the Holder of this Note a notice
(the "Reset Notice"), first class, postage prepaid, indicating whether the
Company has elected to reset the Spread or Spread Multiplier, and if so, (i)
such new Spread or Spread Multiplier and (ii) the provisions, if any, for
redemption during the period from such Optional Reset Date to the next Optional
Reset Date, or, if there is no such next Optional Reset Date, to the Stated
Maturity of this Note (each such period, a "Subsequent Interest Period"),
including the date or dates on which or the period or periods during which and
the price or prices at which such redemption may occur during the Subsequent
Interest Period.
Notwithstanding the foregoing, not later than 20 days prior to the
Optional Reset Date, the Company may, at its option, revoke the Spread or Spread
Multiplier provided for in the Reset Notice and establish a higher Spread or
Spread Multiplier for the Subsequent Interest Period by causing the Trustee to
mail notice of such higher Spread or Spread Multiplier to the Holder of this
Note. Such notice shall be irrevocable. All Registered Notes with respect to
which the Spread or Spread Multiplier is reset on an Optional Reset Date will
bear such higher Spread or Spread Multiplier.
The Holder of this Note will have the option to elect repayment by the
Company on each Optional Reset Date at a price equal to the principal amount
hereof, plus interest accrued to such Optional Reset Date. In order to obtain
repayment on an Optional Reset Date, the Holder must follow the procedures set
forth below for optional repayment, except that the period for delivery or
notification to the Trustee shall be at least 25 but not more than 35 days prior
to such Optional Reset Date, and except that if the Holder has tendered this
Note for repayment pursuant to a Reset Notice, the Holder may, by written notice
to the Trustee, revoke such tender for repayment until the close of business on
the tenth day before the Optional Reset Date.
If so specified on the face hereof, the Maturity of this Note may be
extended at the option of the Company for the period or periods of whole years
specified on the face hereof (each an "Extension Period") up to but not beyond
the date (the "Final Maturity") set forth on the face hereof. If the Company
exercises such option, the Trustee will mail to the Holder of this Note not
later than 40 days prior to the old Stated Maturity a notice (the "Extension
Notice") first class, postage prepaid
9
<PAGE>
indicating (i) the election of the Company to extend the Maturity, (ii) the new
Stated Maturity, (iii) the Spread or Spread Multiplier applicable to the
Extension Period, and (iv) the provisions, if any, for redemption during such
Extension Period. Upon the Trustee's mailing of the Extension Notice, the
Maturity of this Note shall be extended automatically and, except as modified by
the Extension Notice and as described in the next paragraph, this Note will have
the same terms as prior to the mailing of such Notice.
Notwithstanding the foregoing, not later than 20 days prior to the old
Stated Maturity of this Note, the Company may, at its option, revoke the Spread
or Spread Multiplier provided for in the Extension Notice and establish a higher
Spread or Spread Multiplier for the Extension Period by causing the Trustee to
mail notice of such higher Spread or Spread Multiplier, first class, postage
prepaid to the Holder of this Note. Such notice shall be irrevocable. All
Registered Notes with respect to which the Maturity is extended will bear such
higher Spread or Spread Multiplier.
If the Company extends the Maturity of this Note, the Holder will have
the option to elect repayment of this Note by the Company on the old Stated
Maturity at a price equal to the principal amount hereof, plus interest accrued
to such date. In order to obtain repayment on such old Stated Maturity once the
Company has extended the Maturity hereof, the Holder must follow the procedures
set forth below for optional repayment, except that the period for delivery or
notification to the Trustee shall be at least 25 but not more than 35 days
before the such old Stated Maturity, and except that if the Holder has tendered
this Note for repayment pursuant to an Extension Notice, the Holder may, by
written notice to the Trustee, revoke such tender for repayment until the close
of business on the tenth calendar day before the old Stated Maturity.
If so specified on the face hereof, the Company may, at its option,
redeem this Note in whole, or from time to time in part, on or after the date
designated as the Initial Redemption Date on the face hereof, at prices
declining from a specified premium, if any, to par, together with accrued
interest to the date of redemption. The Company may exercise such option by
causing the Trustee to mail a notice of such redemption at least 30 but not more
than 60 days prior to the date of redemption unless otherwise specified on the
face hereof. In the event of redemption of this Note in part only, a new Note
or Notes for the unredeemed portion hereof shall be issued in the name of the
Holder hereof upon the cancellation hereof.
If so specified on the face hereof, this Note will be repayable prior
to Maturity at the option of the Holder on the Optional Repayment Dates shown on
the face hereof at the Optional
10
<PAGE>
Repayment Prices shown on the face hereof, together with accrued interest to the
date of repayment. In order for this Note to be repaid, the Trustee must
receive at least 30 but not more than 45 days prior to an Optional Repayment
Date (i) this Note with the form below entitled "Option to Elect Repayment" duly
completed; or (ii) a telegram, telex, facsimile transmission or letter from a
member of a national securities exchange or the National Association of
Securities Dealers, Inc. or a commercial bank or trust company in the United
States of America setting forth the name of the Holder of this Note, the
principal amount of the Note to be repaid, the certificate number or a
description of the tenor and terms of this Note, a statement that the option to
elect repayment is being exercised thereby and a guarantee that this Note with
the form below entitled "Option to Elect Repayment" duly completed will be
received by the Trustee not later than five Business Days after the date of such
telegram, telex, facsimile transmission or letter. If the procedure described
in clause (ii) of the preceding sentence is followed, this Note with form duly
completed must be received by the Trustee by such fifth Business Day. Any
tender of this Note for repayment (except pursuant to a Reset Notice or an
Extension Notice) shall be irrevocable. The repayment option may be exercised
by the Holder of this Note for less than the entire principal amount of the Note
provided that the principal amount of this Note remaining outstanding after
- --------
repayment is an authorized denomination. Upon such partial repayment, this Note
shall be cancelled and a new Note or Notes for the remaining principal amount
hereof shall be issued in the name of the Holder of this Note.
This Note will not be subject to any sinking fund.
Notwithstanding anything herein to the contrary, if this Note is a
Discount Note, the amount payable in the event of redemption or repayment prior
to the Stated Maturity hereof, in lieu of the principal amount due at the Stated
Maturity hereof, shall be the Amortized Face Amount of this Note as of the
redemption date or the date of repayment, as the case may be. The "Amortized
Face Amount" of this Note shall be the amount equal to (a) the Issue Price (as
set forth on the face hereof) plus (b) that portion of the difference between
the Issue Price and the principal amount hereof that has accrued at the Yield to
Maturity (as set forth on the face hereof) (computed in accordance with
generally accepted United States bond yield computation principles) at the date
as of which the Amortized Face Amount is calculated, but in no event shall the
Amortized Face Amount of this Note exceed its principal amount.
Unless otherwise specified on the face hereof, if this Note is a
Floating Rate Note, this Note will bear interest from its Original Issue Date to
the first Interest Reset Date (as defined below) at the Initial Interest Rate
set forth on the face
11
<PAGE>
hereof. Thereafter, the interest rate hereon for each Interest Reset Period (as
defined below) will be determined by reference to the Base Rate specified on the
face hereof, plus or minus the Spread, if any, or multiplied by the Spread
Multiplier, if any, specified on the face hereof. The Base Rates that may be
specified on the face hereof are LIBOR, the Commercial Paper Rate, the Treasury
Rate, the Federal Funds Rate, the CD Rate or any other Base Rate specified on
the face hereof. "H.15(519)" means the publication entitled "Statistical Release
H.15(519), Selected Interest Rates" or any successor publication, published by
the Board of Governors of the Federal Reserve System.
As specified on the face hereof, this Note may also have either or
both of the following (in each case expressed as a rate per annum on a simple
interest basis): (i) a maximum limitation, or ceiling, on the rate at which
interest may accrue during any interest period ("Maximum Interest Rate") and
(ii) a minimum limitation, or floor, on the rate at which interest may accrue
during any interest period ("Minimum Interest Rate"). In addition to any
Maximum Interest Rate that may be specified on the face hereof, the interest
rate will in no event be higher than the maximum rate permitted by applicable
law, as the same may be modified by United States law of general application.
The interest rate hereon will be reset daily, weekly, monthly,
quarterly, semiannually or annually (such period being the "Interest Reset
Period" specified on the face hereof, and the first day of each Interest Reset
Period being an "Interest Reset Date"). Unless otherwise specified on the face
hereof, the Interest Reset Dates will be, if this Note resets daily, each
Business Day; if this Note (unless this Note is a Treasury Rate Note) resets
weekly, Wednesday of each week; if this Note is a Treasury Rate Note that resets
weekly, Tuesday of each week (except as provided below under "Determination of
Treasury Rate"); if this Note resets monthly, the third Wednesday of each month;
if this Note resets quarterly, the third Wednesday of March, June, September and
December of each year; if this Note resets semiannually, the third Wednesday of
the two months of each year specified on the face hereof; and if this Note
resets annually, the third Wednesday of the month of each year specified on the
face hereof; provided, however, that in all instances the interest rate in
-------- -------
effect for the ten days immediately prior to the Maturity hereof will be that in
effect on the tenth day preceding Maturity. If an Interest Reset Date would
otherwise be a day that is not a Business Day, such Interest Reset Date shall be
postponed to the next succeeding Business Day, except that, if the Base Rate
specified on the face hereof is LIBOR and such Business Day is in the next
succeeding calendar month, such Interest Reset Date shall be the immediately
preceding Business Day.
12
<PAGE>
Unless otherwise specified on the face hereof, the interest payable
hereon on each Interest Payment Date shall be the accrued interest from and
including the Original Issue Date or the last date to which interest has been
paid, as the case may be, to but excluding such Interest Payment Date, provided,
--------
however, that if the interest rate is reset daily or weekly, the interest
- -------
payable hereon shall be the accrued interest from and including the Original
Issue Date or the last date to which interest has been accrued and paid, as the
case may be, to but excluding the Record Date immediately preceding such
Interest Payment Date, except that, at Maturity, the interest payable will
include interest accrued to, but excluding, the date of Maturity. Accrued
interest shall be calculated by multiplying the principal amount hereof (or if
this Note is an Indexed Principal Note, the Face Amount specified on the face
hereof) by an accrued interest factor. Such accrued interest factor will be
computed by adding the interest factors calculated for each day in the period
for which accrued interest is being calculated. The interest factor (expressed
as a decimal calculated to seven decimal places without rounding) for each such
day is computed by dividing the interest rate in effect on such day by 360 if
the Base Rate specified on the face hereof is the Commercial Paper Rate, the
Federal Funds Rate, the CD Rate or LIBOR, or by the actual number of days in the
year, if the Base Rate specified on the face hereof is the Treasury Rate. For
purposes of making the foregoing calculation, the interest rate in effect on any
Interest Reset Date will be the applicable rate as reset on such date. Unless
otherwise specified on the face hereof, all percentages resulting from any
calculation of the rate of interest hereof will be rounded, if necessary, to the
nearest 1/100,000 of 1% (.0000001), with five one-millionths of a percentage
point rounded upward, and all currency amounts used in or resulting from such
calculation will be rounded to the nearest one-hundredth of a unit (with .005 of
a unit being rounded upward).
Unless otherwise specified on the face hereof, interest will be
payable, if this Note resets daily, weekly or monthly, on the third Wednesday of
each month or on the third Wednesday of March, June, September and December of
each year, as specified on the face hereof; if this Note resets quarterly, on
the third Wednesday of March, June, September and December of each year; if this
Note resets semiannually, on the third Wednesday of the two months of each year
specified on the face hereof; and if this Note resets annually, on the third
Wednesday of the month of each year specified on the face hereof (each such day
being an "Interest Payment Date"). If an Interest Payment Date would otherwise
fall on a day that is not a Business Day, such Interest Payment Date shall be
postponed to the next succeeding Business Day, except that, if the Base Rate
specified on the face hereof is LIBOR and such Business Day is in the next
succeeding calendar
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<PAGE>
month, such Interest Payment Date shall be the immediately preceding Business
Day.
The Company has appointed and entered into an agreement with an agent
(a "Calculation Agent") to calculate the interest rates on Floating Rate Notes.
Unless otherwise specified on the face hereof, Citibank, N.A. shall be the
Calculation Agent. At the request of the Holder hereof, the Calculation Agent
will provide the interest rate then in effect and, if determined, the interest
rate that will become effective on the next Interest Reset Date. All
determinations of interest rates by the Calculation Agent shall, in the absence
of manifest error, be conclusive for all purposes and binding on the Holder
hereof.
Subject to applicable provisions of law and except as specified
herein, on each Interest Reset Date the rate of interest shall be the rate
determined in accordance with the provisions of the applicable heading below.
Determination of CD Rate
If the Base Rate specified on the face hereof is the CD Rate, this
Note will bear interest for each Interest Reset Period at the interest rate
calculated with reference to the CD Rate and the Spread or Spread Multiplier, if
any, specified on the face hereof. The "CD Rate" for each Interest Reset Period
shall be the rate as of the second Business Day prior to the Interest Reset Date
for such Interest Reset Period (a "CD Rate Determination Date") for negotiable
certificates of deposit having the Index Maturity specified on the face hereof
as published in H.15(519) under the heading "CDs (Secondary Market)". In the
event that such rate is not published prior to 3:00 p.m., New York City time, on
the Calculation Date (as defined below) pertaining to such CD Rate Determination
Date, then the "CD Rate" for such Interest Reset Period will be the rate on such
CD Rate Determination Date for negotiable certificates of deposit of the Index
Maturity specified on the face hereof as published by the Federal Reserve Bank
of New York in its daily statistical release "Composite 3:30 p.m. Quotations for
U.S. Government Securities" ("Composite Quotations") under the heading
"Certificates of Deposit". If by 3:00 p.m., New York City time, on such
Calculation Date such rate is not yet published in either H.15(519) or Composite
Quotations, then the "CD Rate" for such Interest Reset Period will be calculated
by the Calculation Agent and will be the arithmetic mean of the secondary market
offered rates as of 10:00 a.m., New York City time, on such CD Rate
Determination Date of three leading nonbank dealers in negotiable U.S. dollar
certificates of deposit in The City of New York selected by the Calculation
Agent for negotiable certificates of deposit of major United States money center
banks of the highest credit standing (in the market for negotiable certificates
of deposit) with a remaining maturity closest to the
14
<PAGE>
Index Maturity on the face hereof in a denomination of $5,000,000, provided,
--------
however, that if the dealers selected as aforesaid by the Calculation Agent are
- -------
not quoting offered rates as mentioned in this sentence, the CD Rate for such
Interest Reset Period will be the same as the CD Rate for the immediately
preceding Interest Reset Period (or, if there was no such Interest Reset Period,
the Initial Interest Rate).
The "Calculation Date" pertaining to any CD Rate Determination Date
shall be the tenth calendar day after such CD Rate Determination Date or, if
such day is not a Business Day, the next succeeding Business Day.
Determination of Commercial Paper Rate
If the Base Rate shown on the face hereof is the Commercial Paper
Rate, this Note will bear interest for each Interest Reset Period at the
interest rate calculated with reference to the Commercial Paper Rate and the
Spread or Spread Multiplier, if any, specified on the face hereof. The
"Commercial Paper Rate" for each Interest Reset Period will be determined by the
Calculation Agent as of the second Business Day prior to the Interest Reset Date
for such Interest Reset Period (a "Commercial Paper Rate Determination Date")
and shall be the Money Market Yield (as defined below) on such Commercial Paper
Rate Determination Date of the rate for commercial paper having the Index
Maturity specified on the face hereof, as such rate shall be published in
H.15(519) under the heading "Commercial Paper". In the event that such rate is
not published prior to 3:00 p.m., New York City time, on the tenth calendar day
after such Commercial Paper Rate Determination Date or, if such day is not a
Business Day, the next succeeding Business Day, (the "Calculation Date") then
the Commercial Paper Rate for such Interest Reset Period shall be the Money
Market Yield on such Commercial Paper Rate Determination Date of the rate for
commercial paper of the Index Maturity specified on the face hereof as published
in Composite Quotations under the heading "Commercial Paper". If by 3:00 p.m.,
New York City time, on such Calculation Date such rate is not yet published in
either H.15(519) or Composite Quotations, then the "Commercial Paper Rate" for
such Interest Reset Period shall be the Money Market Yield of the arithmetic
mean of the offered rates as of 11:00 a.m., New York City time, on such
Commercial Paper Rate Determination Date of three leading dealers of commercial
paper in The City of New York selected by the Calculation Agent for commercial
paper of the Index Maturity specified on the face hereof placed for an
industrial issuer whose bonds are rated "AA" or the equivalent by a nationally
recognized rating agency, provided, however, that if the dealers selected as
-------- -------
aforesaid by the Calculation Agent are not quoting offered rates as mentioned in
this sentence, the "Commercial Paper Rate" for such Interest Reset Period will
be the same as the Commercial Paper Rate for
15
<PAGE>
the immediately preceding Interest Reset Period (or, if there was no such
Interest Reset Period, the Initial Interest Rate).
"Money Market Yield" shall be the yield calculated in accordance
with the following formula:
D x 360
Money Market Yield = -------------- X 100
360 - (D x M)
where "D" refers to the applicable per annum rate for commercial paper quoted on
a bank discount basis and expressed as a decimal and "M" refers to the actual
number of days in the Index Maturity specified on the face hereof.
The "Calculation Date" pertaining to any Commercial Paper Rate
Determination Date shall be the tenth calendar day after such Commercial Paper
Rate Determination Date or, if such day is not a Business Day, the next
succeeding Business Day.
Determination of Federal Funds Rate
If the Base Rate specified on the face hereof is the Federal Funds
Rate, this Note will bear interest for each Interest Reset Period at the
interest rate calculated with reference to the Federal Funds Rate and Spread or
Spread Multiplier, if any, specified on the face hereof. The "Federal Funds
Rate" for each Interest Reset Period shall be the effective rate on the Interest
Reset Date for such Interest Reset Period (a "Federal Funds Rate Determination
Date") for Federal Funds as published in H.15(519) under the heading "Federal
Funds (Effective)". In the event that such rate is not published prior to 3:00
p.m., New York City time, on the Calculation Date (as defined below) pertaining
to such Federal Funds Rate Determination Date, the "Federal Funds Rate" for such
Interest Reset Period shall be the rate on such Federal Funds Rate Determination
Date as published in Composite Quotations under the heading "Federal
Funds/Effective Rate". If by 3:00 p.m., New York City time, on such Calculation
Date, such rate is not yet published in either H.15(519) or Composite
Quotations, then the "Federal Funds Rate" for such Interest Reset Period shall
be the rate on such Federal Funds Rate Determination Date made publicly
available by the Federal Reserve Bank of New York which is equivalent to the
rate which appears in H.15(519) under the heading "Federal Funds (Effective)",
provided, however, that if such rate is not made publicly available by the
- -------- -------
Federal Reserve Bank of New York by 3:00 p.m., New York City time, on such
Calculation Date, the "Federal Funds Rate" for such Interest Reset Period will
be the same as the Federal Funds Rate in effect for the immediately preceding
Interest Reset Period (or, if there is no such Interest Reset Period, the
Initial Interest Rate). If this Note resets daily, the interest rate on this
Note for the period from and including a Monday to but excluding the
16
<PAGE>
succeeding Monday will be reset by the Calculation Agent on such second Monday
(or, if not a Business Day, on the next succeeding Business Day) to a rate equal
to the average of the Federal Funds Rates in effect with respect to each such
day in such week.
The "Calculation Date" pertaining to any Federal Funds Rate
Determination Date shall be the next succeeding Business Day.
Determination of LIBOR
If the Base Rate specified on the face hereof is LIBOR, this Note will
bear interest for each Interest Reset Period at the interest rate calculated
with reference to LIBOR and the Spread or Spread Multiplier, if any, specified
on the face hereof. "LIBOR" for each Interest Reset Period will be determined
by the Calculation Agent as follows:
(i) On the second London Banking Day prior to the Interest Reset Date
for such Interest Reset Period (a "LIBOR Determination Date"), the
Calculation Agent for such LIBOR Note will determine the arithmetic mean of
the offered rates for deposits in the Specified Currency for the period of
the Index Maturity specified on the face hereof, commencing on such
Interest Reset Date, which appear on the Designated LIBOR Page at
approximately 11:00 a.m., London time, on such LIBOR Determination Date.
"Designated LIBOR Page" means either (a) if "LIBOR Telerate" is designated
on the face hereof, the display designated as page "3750" on the Dow Jones
Telerate Service (or such other page as may replace page "3750" on such
service or such other service as may be nominated by the British Bankers'
Association for the purpose of displaying the London interbank offered
rates of major banks) or (b) if "LIBOR Reuters" is designated on the face
hereof, the display designated as page "LIBO" on the Reuters Monitor Money
Rates Service (or such other page as may replace the LIBO page on such
service or such other service as may be nominated by the British Bankers'
Association for the purpose of displaying London interbank offered rates of
major banks). If neither LIBOR Reuters nor LIBOR Telerate is specified on
the face hereof, LIBOR will be determined as if LIBOR Telerate had been
specified. If at least two such offered rates appear on the Designated
LIBOR Page, "LIBOR" for such Interest Reset Period will be the arithmetic
mean of such offered rates as determined by the Calculation Agent for such
LIBOR Note.
(ii) If fewer than two offered rates appear on the Designated LIBOR
Page on such LIBOR Determination Date, the Calculation Agent will request
the principal London offices of each of four major banks in the London
interbank market selected by the Calculation Agent to provide the
Calculation
17
<PAGE>
Agent with its offered quotations for deposits in the Specified Currency
for the period of the Index Maturity specified on the face hereof,
commencing on such Interest Reset Date, to prime banks in the London
interbank market at approximately 11:00 a.m., London time, on such LIBOR
Determination Date and in a principal amount equal to an amount of not less
than $1,000,000 or the approximate equivalent thereof in the Specified
Currency that is representative of a single transaction in such market at
such time. If at least two such quotations are provided, "LIBOR" for such
Interest Reset Period will be the arithmetic mean of such quotations. If
fewer than two such quotations are provided, "LIBOR" for such Interest
Reset Period will be the arithmetic mean of rates quoted by three major
banks in The City of New York selected by the Calculation Agent at
approximately 11:00 a.m., New York City time, on such LIBOR Determination
Date for loans in the Specified Currency to leading European banks for the
period of the Index Maturity specified on the face hereof, commencing on
such Interest Reset Date, and in a principal amount equal to an amount of
not less than $1,000,000 or the approximate equivalent thereof in the
Specified Currency that is representative of a single transaction in such
market at such time, provided, however, that if fewer than three banks
-------- -------
selected as aforesaid by the Calculation Agent are quoting rates as
mentioned in this sentence, "LIBOR" for such Interest Reset Period will be
the same as LIBOR for the immediately preceding Interest Reset Period (or,
if there was no such Interest Reset Period, the Initial Interest Rate).
Determination of Treasury Rate
If the Base Rate specified on the face hereof is the Treasury Rate,
this Note will bear interest for each Interest Reset Period at the interest rate
calculated with reference to the Treasury Rate and the Spread or Spread
Multiplier, if any, specified on the face hereof. The "Treasury Rate" for each
Interest Reset Period will be the rate for the auction held on the Treasury Rate
Determination Date (as defined below) for such Interest Reset Period of direct
obligations of the United States ("Treasury bills") having the Index Maturity
specified on the face hereof, as published in H.15(519) under the heading "U.S.
Government Securities-Treasury bills-auction average (investment)" or, if not so
published by 3:00 p.m., New York City time, on the tenth calendar day after such
Treasury Rate Determination Date (or, if such day is not a Business Day, the
next succeeding Business Day) (the "Calculation Date"), the auction average rate
(expressed as a bond equivalent on the basis of a year of 365 or 366 days, as
applicable, and applied on a daily basis) on such Treasury Rate Determination
Date as otherwise announced by the United States Department of the
18
<PAGE>
Treasury. In the event that the results of the auction of Treasury bills having
the Index Maturity specified on the face hereof are not published or reported as
provided above by 3:00 p.m., New York City time, on such Calculation Date, or if
no such auction is held on such Treasury Rate Determination Date, then the
"Treasury Rate" for such Interest Reset Period shall be calculated by the
Calculation Agent and shall be a yield to maturity (expressed as a bond
equivalent on the basis of a year of 365 or 366 days, as applicable, and applied
on a daily basis) of the arithmetic mean of the secondary market bid rates as of
approximately 3:30 p.m., New York City time, on such Treasury Rate Determination
Date, of three leading primary United States government securities dealers
selected by the Calculation Agent for the issue of Treasury bills with a
remaining maturity closest to the Index Maturity specified on the face hereof,
provided, however, that if the dealers selected as aforesaid by the Calculation
- -------- -------
Agent are not quoting bid rates as mentioned in this sentence, then the
"Treasury Rate" for such Interest Reset Period will be the same as the Treasury
Rate for the immediately preceding Interest Reset Period (or, if there was no
such Interest Reset Period, the Initial Interest Rate).
The "Treasury Rate Determination Date" for each Interest Reset Period
will be the day of the week in which the Interest Reset Date for such Interest
Reset Period falls on which Treasury bills would normally be auctioned.
Treasury bills are normally sold at auction on Monday of each week, unless that
day is a legal holiday, in which case the auction is normally held on the
following Tuesday, except that such auction may be held on the preceding Friday.
If, as the result of a legal holiday, an auction is so held on the preceding
Friday, such Friday will be the Treasury Rate Determination Date pertaining to
the Interest Reset Period commencing in the next succeeding week. If an auction
date shall fall on any day that would otherwise be an Interest Reset Date for a
Note whose Base Rate is the Treasury Rate, then such Interest Reset Date shall
instead be the Business Day immediately following such auction date.
If "Constant Maturity" is specified in the applicable Pricing
Supplement, the "Treasury Rate" for each Interest Reset Period will be the rate
that is set forth in the Federal Reserve Board publication H.15(519) opposite
the caption "U.S. Government/Securities/Treasury Constant Maturities/" in the
Index Maturity with respect to the applicable Constant Maturity Treasury Rate
Determination Date (as defined below). If the H.15(519) is not published, the
"Constant Maturity -- Treasury Rate" shall be the rate that was set forth on
Telerate Page 7055, or its successor page (as determined by the Calculation
Agent), on the applicable Constant Maturity Treasury Rate Determination Date
opposite the applicable Index Maturity. If no such rate is set forth, then the
constant Maturity Treasury Rate for such Interest Reset Period shall be
established by the Calculation
19
<PAGE>
Agent as follows. The Calculation Agent will contact the Federal Reserve Board
and request the Constant Maturity Treasury Rate, in the applicable Index
Maturity, for the Constant Maturity Treasury Rate Determination Date. If the
Federal Reserve Board does not provide such information, then the Constant
Maturity Treasury Rate for such Interest Reset Date will be the arithmetic mean
of bid-side quotations, expressed in terms of yield, reported by three leading
U.S. government securities dealers (one of which may be Salomon Brothers Inc),
according to their written records, as of 3:00 p.m. (New York City time) on the
Constant Maturity Treasury rate Determination Date, for the noncallable U.S.
Treasury Note that is nearest in maturity to the Index Maturity, but not less
than exactly the Index Maturity and for the noncallable U.S. Treasury Note that
is nearest in maturity to the Index Maturity, but not more than exactly the
Index Maturity. The Calculation Agent shall calculate the Constant Maturity
Treasury Rate by interpolating to the Index Maturity based on an actual/actual
date count basis, the yield on the two Treasury Notes selected. If the
Calculation Agent cannot obtain three such adjusted quotations, the Constant
Maturity Treasury Rate for such Interest Reset Date will be the arithmetic mean
of all such quotations, or if only one such quotation is obtained, such
quotation, obtained by the Calculation Agent. In all events, the Calculation
Agent shall continue polling dealers until at least one adjusted yield quotation
can be determined.
"The Constant Maturity Treasury Rate Determination Date" shall be the
tenth Business Day prior to the Interest Reset Date for the applicable Interest
Reset Period.
The "Calculation Date" pertaining to any Treasury Rate Determination
Date or Constant Maturity Rate Determination Date, as applicable, shall be the
tenth calendar day after such Treasury Rate Determination Date or Constant
Maturity Rate Determination Date, as applicable, or, if such a day is not a
Business Day, the next succeeding Business Day.
Indexed Notes
If this note is an Indexed Note, then certain or all interest
payments, in the case of an Indexed Rate Note, and/or the principal amount
payable at Stated Maturity or earlier redemption or retirement, in the case of
an Indexed Principal Note, is determined by reference to the amount designated
on the face hereof as the Face Amount of this Note and by reference to the Index
as described on the face hereof. If this Note is a Floating Rate Note or
Indexed Rate Note that is also an Indexed Principal Note, the amount of any
interest payment will be determined by reference to the Face Amount described on
the face hereof unless otherwise specified. If this Note is an Indexed
Principal Note, the principal amount payable at Stated Maturity or any earlier
redemption or repayment of this Note may be
20
<PAGE>
different from the Face Amount. If the determination of the Index is calculated
or announced by a third party, which may be Salomon Brothers Inc or another
affiliate of the Company, and such third party either suspends the calculation
or announcement of such Index or changes the basis upon which such Index is
calculated (other than changes consistent with policies in effect at the time
this Note was issued and permitted changes described on the face hereof), then
such Index shall be calculated for this Note's purposes by another third party,
which may be Salomon Brothers Inc or another affiliate of the Company, selected
by the Company subject to the same conditions and controls as applied to the
original third party. If for any reason such Index cannot be calculated on the
same basis and subject to the same conditions and controls as applied to the
original third party, then the indexed interest payments, if any, or any indexed
principal amount of this Note shall be calculated in the manner described on the
face hereof. Any determination of such third party shall in the absence of
manifest error be binding on all parties.
As provided in the Indenture and subject to certain limitations
therein set forth, this Note is exchangeable for a like aggregate principal
amount of Registered Notes of different authorized denominations, as requested
by the Person surrendering the same.
As provided in the Indenture and subject to certain limitations
therein set forth, the transfer of this Note is registrable on the Security
Register of the Company, upon surrender of this Note for registration of
transfer at the office or agency of the Company in the Borough of Manhattan, the
City and State of New York, duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Company, the Security
Registrar and the Trustee duly executed by the Holder hereof or his attorney
duly authorized in writing, and thereupon one or more new Registered Notes of
this series, of authorized denominations and for the same aggregate principal
amount, will be issued to the designated transferee or transferees.
No service charge shall be made for any such registration of transfer
or exchange, but the Company may require payment of a sum sufficient to cover
any tax or other governmental charge payable in connection therewith.
Prior to due presentment of this Note for registration of transfer,
the Company, the Trustee and any agent of the Company or the Trustee may treat
the Person in whose name this Note is registered as the Holder hereof for all
purposes, whether or not this Note be overdue, and neither the Company, the
Trustee nor any such agent shall be affected by notice to the contrary.
21
<PAGE>
If an Event of Default with respect to the Debt Securities of this
series shall have occurred and be continuing, the principal of all the Debt
Securities of this series may be declared due and payable in this manner and
with the effect provided in the Indenture.
In case this Note shall at any time become mutilated, destroyed,
stolen or lost and this Note or evidence of the loss, theft, or destruction
hereof (together with such indemnity and such other documents or proof as may be
required by the Company or the Trustee) shall be delivered to the principal
corporate trust office of the Trustee, a new Registered Note of like tenor and
principal amount will be issued by the Company in exchange for, or in lieu of,
this Note. All expenses and reasonable charges associated with procuring such
indemnity and with the preparation, authentication and delivery of a new
Registered Note shall be borne by the Holder of this Note.
The Indenture permits, with certain exceptions as therein provided,
the amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Holders of the Debt Securities of each series to
be affected under the Indenture at any time by the Company and the Trustee with
the consent of the Holders of not less than a majority in aggregate principal
amount of Debt Securities at the time outstanding of each series to be affected.
The Indenture also contains provisions permitting the Holders of specified
percentages in aggregate principal amount of the Debt Securities of any series
at the time outstanding, on behalf of the Holders of all the Debt Securities of
such series, to waive compliance by the Company with certain provisions of the
Indenture and certain past defaults under the Indenture and their consequences.
Any such consent or waiver by the Holder of this Debt Security shall be
conclusive and binding upon such Holder and upon all future Holders of this Debt
Security and of any Debt Security issued upon the registration of transfer
hereof or in exchange hereof or in lieu hereof, whether or not notation of such
consent or waiver is made upon the Debt Security.
Holders of Debt Securities may not enforce their rights pursuant to
the Indenture or the Note except as provided in the Indenture. No reference
herein to the Indenture and no provision of this Note or of the Indenture shall
alter or impair the obligation of the Company, which is absolute and
unconditional, to pay the principal of (and premium, if any) and interest on
this Note at the times, place and rate, and the coin or currency, herein
prescribed.
This Note shall be deemed to be a contract made and to be performed
solely in the State of New York and for all purposes be governed by, and
construed in accordance with, the laws of
22
<PAGE>
said State without regard to the conflicts of law rules of said State.
All terms used in this Note that are defined in the Indenture shall
have the meanings assigned to them in the Indenture.
23
<PAGE>
ABBREVIATIONS
The following abbreviations, when used in the inscription on the face of
this instrument, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM - as tenants in common UNIF GIFT MIN ACT -
____________Custodian____________
TEN ENT - as tenants by the entireties (Cust) (Minor)
JT TEN - as joint tenants with right of Under Uniform Gifts to Minors Act
survivorship and not as tenants _________________________________
in common
(State)
Additional abbreviations may also be used though not in the above list
________________________________________________
OPTION TO ELECT REPAYMENT
The undersigned hereby irrevocably requests and instructs the Company to
repay $________ principal amount of the within Note, pursuant to its terms, on
the "Optional Repayment Date" first occurring after the date of receipt of the
within Note as specified below, together with interest thereon accrued to the
date of repayment, to the undersigned at:
________________________________________________________________________________
________________________________________________________________________________
(Please Print or Type Name and Address of the Undersigned)
and to issue to the Undersigned, pursuant to the terms of the Indenture, a new
Note or Notes representing the remaining principal amount of this Note.
For this Option to Elect Repayment to be effective, this Note with the
Option to Elect Repayment duly completed must be received by the Company within
the relevant time period set forth above at its office or agency in the Borough
of Manhattan, the City and State of New York, located initially at the office of
the Trustee at, if delivery is by hand, 130 John Street, Street Level, New York,
New York, or, if delivery is by mail, 450 West 33rd Street, Attention:
Corporate Trust Department, New York, New York 10001.
Dated:
___________________________________________________
Note: The signature to this Option to Elect
Repayment must correspond with the name as written
upon the face of the within Note in every
particular without alteration or enlargement or any
change whatsoever.
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto
Please insert Social Security or Other
Identifying Number of Assignee
______________________________________
________________________________________________________________________________
________________________________________________________________________________
Please Print or Type Name and Address Including Zip Code of Assignee
________________________________________________________________________________
the within Note and all rights thereunder, hereby irrevocably constituting and
appointing
_______________________________________________________________________ attorney
to transfer such Note on the books of Salomon Inc with full power of
substitution in the premises.
Dated: ______________________ _______________________________________________
Signature
_______________________________________________
NOTICE: The signature to this assignment must
correspond with the name as it appears upon the
face of the Note in every particular, without
alteration or enlargement or any change
whatsoever.
24
<PAGE>
FORM OF SERIES E FLOATING RATE OR INDEXED RATE NOTE
REGISTERED PRINCIPAL AMOUNT
OR FACE AMOUNT
NO. FL _______ SALOMON INC
MEDIUM-TERM NOTE, SERIES E
(FLOATING OR INDEXED RATE) CUSIP
Due More Than Nine Months from Date of Issue
IF APPLICABLE, THE "TOTAL AMOUNT OF OID" AND "YIELD TO MATURITY" SET
FORTH BELOW WILL BE COMPLETED SOLELY FOR THE PURPOSES OF APPLYING THE FEDERAL
INCOME TAX ORIGINAL ISSUE DISCOUNT ("OID") RULES.
Issue Price: Original Issue Date:
Initial Interest Rate: Stated Maturity:
Specified Currency:
(If other than U.S. dollars)
Authorized Denominations:
(If other than as set forth in the Prospectus Supplement)
Base Rate: [ ] CD Rate [ ] Commercial Paper [ ] Federal Funds Rate
[ ] LIBOR Telerate [ ] LIBOR Reuters [ ] Treasury Rate
[ ] Treasury Rate Constant Maturity [ ] Other (see attached)
Interest Reset Period Index Maturity:
or Interest Reset Dates:
Interest Payment Dates:
(If other than as set forth in the Prospectus Supplement)
Indexed Principal Note: [ ] Yes (see attached) [ ] No
Floating Rate: [ ] Indexed Interest Rate: [ ] (see attached)
Spread Multiplier: Spread (+/-):
Spread Reset: [ ] The Spread or Spread Multiplier may not be changed
prior to Stated Maturity.
[ ] The Spread or Spread Multiplier may be changed prior to
Stated Maturity (see attached).
Optional Reset Dates (if applicable):
Maximum Interest Rate: Minimum Interest Rate:
<PAGE>
Amortizing Note: [ ] Yes [ ] No
Amortization Schedule:
Optional Redemption: [ ] Yes [ ] No
Optional Redemption Dates:
Redemption Prices:
Optional Repayment: [ ] Yes [ ] No
Optional Repayment Dates:
Optional Repayment Prices:
Optional Extension of Stated Maturity: [ ] Yes [ ] No
Final Maturity:
Discount Note: [ ] Yes [ ] No
Total Amount of OID:
Yield to Maturity:
2
<PAGE>
SALOMON INC, a corporation duly organized and existing under the laws
of the State of Delaware (herein referred to as the "Company") for value
received hereby promises to pay CEDE & Co. or registered assigns, (a) the
Principal Amount or, in the case of an Indexed Principal Note, the Face Amount
adjusted by reference to prices, changes in prices, or differences between
prices, of securities, currencies, intangibles, goods, articles or commodities
or by such other objective price, economic or other measures (an "Index") as
described above, in the Specified Currency on the Stated Maturity shown above or
earlier if and to the extent so provided herein, and (b) to pay accrued interest
(i) if this is a Floating Rate Note, on the Principal Amount then outstanding
(or, in the case of an Indexed Principal Note, the Face Amount then outstanding)
at the Initial Interest Rate shown above from the Original Issue Date shown
above until the first Interest Reset Date shown above following the Original
Issue Date and thereafter at the Base Rate shown above, adjusted by the Spread
or Spread Multiplier, if any, shown above, determined in accordance with the
provisions on the reverse hereof, or (ii) if this is an Indexed Rate Note, on
the Principal Amount then outstanding (or in the case of an Indexed Principal
Note, the Face Amount then outstanding, at a rate determined by reference to an
Index as described above, until, in either case, the Principal Amount then
outstanding or the Face Amount is paid or duly provided for in accordance with
the terms hereof. The interest so payable, and punctually paid or duly provided
for, on each Interest Payment Date specified herein will, as provided in the
Indenture referred to below, be paid to the person in whose name this Note (or
one or more Predecessor Securities) is registered at the close of business on
the Regular Record Date for such interest, which, in the case of any Interest
Payment Date shall be the date (whether or not a Business Day), fifteen calendar
days immediately preceding such Interest Payment Date and, in the case of
interest payable at Maturity shall be the Stated Maturity of this Note.
Notwithstanding the foregoing, if this Note is issued between a Regular Record
Date and the related Interest Payment Date, the interest so payable for the
period from the Original Issue Date to such Interest Payment Date shall be paid
on the next succeeding Interest Payment Date to the Registered Holder hereof on
the related Regular Record Date. Any such interest not so punctually paid or
duly provided for shall forthwith cease to be payable to the Registered Holder
hereof on such Regular Record Date and may be paid to the Person in whose name
this Note (or one or more Predecessor Securities) is registered at the close of
business on a Special Record Date for the payment of such Defaulted Interest to
be fixed by the Trustee, notice whereof shall be given to Holders of Notes not
less than ten days prior to such Special Record Date, or may be paid at any time
in any other lawful manner not inconsistent with the requirements of any
securities exchange on which the Registered Notes may be listed, and upon such
notice as may be
3
<PAGE>
required by such exchange, all as more fully provided in said Indenture.
For purposes of this Note, "Business Day" means any day, other than a
Saturday or Sunday, that is (a) not a day on which banking institutions are
authorized or required by law or regulation to be closed in (i) The City of New
York or (ii) if the Specified Currency shown above (as defined below) is other
than U.S. dollars, the financial center of the country issuing the Specified
Currency (which, in the case of ECU, shall be Brussels, Belgium) and (b) if the
Base Rate specified above is LIBOR, a London Banking Day. "London Banking Day"
means any day on which dealings in deposits in the Specified Currency are
transacted in the London interbank market.
The indebtedness evidenced by this Note is, to the extent set forth in
the Indenture, expressly subordinated and subject in right of payment to the
prior payment in full of Senior Indebtedness as defined in the Indenture, and
this Note is issued subject to such provisions, and each Holder of this Note, by
accepting the same, agrees to and shall be bound by such provisions and
authorizes and directs the Trustee in his behalf to take such action as may be
necessary or appropriate to acknowledge or effectuate the subordination as
provided in the Indenture and appoints the Trustee as his attorney-in-fact for
any and all such purposes.
If this Note is an Amortizing Note as shown on the face hereof, a
portion or all the principal amount of the Note is payable prior to Stated
Maturity in accordance with a schedule, by application of a formula, or by
reference to an index (as described above).
The principal hereof and any premium and interest hereon are payable
by the Company in the Specified Currency shown above. If the Specified Currency
shown above is other than U.S. dollars, the Company will arrange to convert all
payments in respect hereof into U.S. dollars in the manner described on the
reverse hereof. The Holder hereof may, if so indicated above, elect to receive
all payments in respect hereof in the Specified Currency by delivery of a
written notice to the Trustee not later than fifteen calendar days prior to the
applicable payment date. Such election will remain in effect until revoked by
written notice to the Trustee received not later than fifteen calendar days
prior to the applicable payment date. If the Company determines that the
Specified Currency is not available for making payments in respect hereof due to
the imposition of exchange controls or other circumstances beyond the Company's
control or is no longer used by the government of the country issuing such
currency or for the settlement of transactions by public institutions or within
the international banking community, then the Holder hereof may not so elect to
receive
4
<PAGE>
payments in the Specified Currency, and any such outstanding election shall be
automatically suspended, and payments shall be in U.S. dollars, until the
Company determines that the Specified Currency is again available for making
such payments.
Payments of interest in U.S. dollars (other than interest payable at
Maturity) will be made by check mailed to the address of the Person entitled
thereto as such address shall appear on the Security Register on the applicable
Record Date, provided that, if the Holder hereof is the Holder of U.S.
--------
$10,000,000 (or the equivalent thereof in a currency other than U.S. dollars
determined as provided on the reverse hereof) or more in aggregate principal
amount of Registered Notes of like tenor and term, such U.S. dollar interest
payments will be made by wire transfer of immediately available funds, but only
if appropriate wire transfer instructions have been received in writing by the
Trustee not less than fifteen calendar days prior to the applicable Interest
Payment Date. Simultaneously with any election by the Holder hereof to receive
payments in respect hereof in the Specified Currency (if other than U.S.
dollars), such Holder shall provide appropriate wire transfer instructions to
the Trustee and all such payments will be made by wire transfer of immediately
available funds to an account maintained by the payee with a bank located
outside the United States. The principal hereof and any premium and interest
hereon payable at Maturity will be paid in immediately available funds upon
surrender of this Note at the corporate trust office or agency of the Trustee
located in the City and State of New York.
REFERENCE IS HEREBY MADE TO THE FURTHER PROVISIONS OF THIS NOTE SET
FORTH ON THE REVERSE HEREOF, AND SUCH FURTHER PROVISIONS SHALL FOR ALL PURPOSES
HAVE THE SAME EFFECT AS THOUGH FULLY SET FORTH IN THIS PLACE.
This Note shall not become valid or obligatory for any purpose unless
and until this Note has been authenticated by Bankers Trust Company, or its
successor, as Trustee.
5
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Note to be executed
under its corporate seal.
Dated:
SALOMON INC
By
--------------------------------------
Chairman of the Board of Directors,
President and Chief Executive Officer
Attest
---------------------------------
Secretary
CERTIFICATE OF AUTHENTICATION
This is one of the Notes issued under the within-mentioned Indenture.
BANKERS TRUST COMPANY
as Trustee
By
--------------------------------------
Authorized Signatory
6
<PAGE>
SALOMON INC
MEDIUM-TERM NOTE, SERIES E
(FLOATING OR INDEXED RATE)
This Note is one of a series of duly authorized debt securities of the
Company (the "Debt Securities") issued or to be issued in one or more series
under an indenture, dated as of December 1, 1988 (the "Indenture") between the
Company and Bankers Trust Company, as trustee (the "Trustee", which term
includes any successor Trustee under the Indenture) to which indenture and all
indentures supplemental thereto reference is hereby made for a statement of the
respective rights, limitations of rights, duties and immunities thereunder of
the Company, the Trustee and the Holders of the Debt Securities and of the terms
upon which the Debt Securities are, and are to be, authenticated and delivered.
The U.S. dollar equivalent of the public offering price or purchase price of
Notes denominated in currencies other than U.S. dollars will be determined by
the Company or its agent on the basis of the noon buying rate in New York City
for cable transfers in foreign currencies as certified for customs purposes by
the Federal Reserve Bank of New York (the "Market Exchange Rate") for such
currencies on the applicable issue dates.
Unless otherwise specified above, the authorized denominations of
Registered Notes denominated in U.S. dollars will be U.S.$1,000 and any larger
amount that is an integral multiple of U.S.$1,000. The authorized denominations
of Registered Notes denominated in a currency other than U.S. dollars will be as
set forth on the respective faces thereof.
Each Registered Note will be issued initially as either a Book-Entry
Note or, if so specified above, a Certificated Note. Only Registered Notes
denominated and payable in U.S. dollars may be issued as Book-Entry Notes and
such Notes will not be exchangeable for Certificated Notes and, except as
otherwise provided in the Indenture, will not otherwise be issuable as
Certificated Notes.
If the Specified Currency is other than U.S. dollars, the amount of
any U.S. dollar payment to be made in respect hereof will be determined by the
Company or its agent based on the highest firm bid quotation expressed in U.S.
dollars received by the Company or its agent at approximately 11:00 a.m., New
York City time, on the second Business Day preceding the applicable payment date
(or, if no such rate is quoted on such date, the last date on which such rate
was quoted) from three (or, if three are not available, then two) recognized
foreign exchange dealers in The City of New York selected by the Company or its
agent (one of which may be Salomon Brothers Inc) for the purchase by the quoting
dealer, for settlement on such payment date, of the aggregate amount of the
Specified Currency payable on such payment date in respect of all Registered
Notes denominated in
7
<PAGE>
such Specified Currency. All currency exchange costs will be borne by the
Holders of such Registered Notes by deductions from such payments. If no such
bid quotations are available, then such payments will be made in the Specified
Currency, unless the Specified Currency is unavailable due to the imposition of
exchange controls or to other circumstances beyond the Company's control, in
which case payment will be made as described in the next paragraph.
Except as set forth below with respect to payments in ECU, if any
payment in respect hereof is required to be made in a Specified Currency other
than U.S. dollars and such currency is unavailable due to the imposition of
exchange controls or other circumstances beyond the Company's control or is no
longer used by the government of the country issuing such currency or for the
settlement of transactions by public institutions of or within the international
banking community, then such payment shall be made in U.S. dollars until such
currency is again available or so used. The amount so payable in such foreign
currency shall be converted into U.S. dollars on the basis of the most recently
available Market Exchange Rate for such currency or as otherwise indicated on
the face hereof. Any payment made under such circumstances in U.S. dollars will
not constitute an Event of Default under the Indenture. If any payment in
respect hereof is required to be made in European Currency Units ("ECU") and ECU
is no longer used in the European Monetary System, then such payment shall be
made in U.S. dollars until ECU is again so used. The amount of such payment in
U.S. dollars shall be computed on the basis of the equivalent of the ECU in U.S.
dollars as of the second Business Day prior to the date on which such payment is
due. The equivalent of the ECU in U.S. dollars as of any date shall be
determined by the Company or its agent on the following basis. The component
currencies of the ECU for this purpose (the "Components") shall be the currency
amounts that were components of the ECU as of the last date on which the ECU was
used in the European Monetary System. The equivalent of the ECU in U.S. dollars
shall be calculated by aggregating the U.S. dollar equivalents of the
Components. The U.S. dollar equivalent of each of the Components shall be
determined by the Company or its agent on the basis of the most recently
available Market Exchange Rates for such Components or as otherwise indicated on
the face hereof. If the official unit of any component currency is altered by
way of combination or subdivision, the number of units of that currency as a
Component shall be divided or multiplied in the same proportion. If two or more
component currencies are consolidated into a single currency, the amounts of
those currencies as Components shall be replaced by an amount of such single
currency equal to the sum of the amounts of the consolidated component
currencies expressed in such single currency. If any component currency is
divided into two or more currencies, the amount of that currency as a Component
shall be replaced by amounts of such two or more currencies, each of which
8
<PAGE>
shall be equal to the amount of the former component currency divided by the
number of currencies into which such currency was divided.
If so specified on the face hereof, the Spread or Spread Multiplier on
this Note may be reset by the Company on the date or dates specified on the face
hereof (each an "Optional Reset Date"). Not later than 40 days prior to each
Optional Reset Date, the Trustee will mail to the Holder of this Note a notice
(the "Reset Notice"), first class, postage prepaid, indicating whether the
Company has elected to reset the Spread or Spread Multiplier, and if so, (i)
such new Spread or Spread Multiplier and (ii) the provisions, if any, for
redemption during the period from such Optional Reset Date to the next Optional
Reset Date, or, if there is no such next Optional Reset Date, to the Stated
Maturity of this Note (each such period, a "Subsequent Interest Period"),
including the date or dates on which or the period or periods during which and
the price or prices at which such redemption may occur during the Subsequent
Interest Period.
Notwithstanding the foregoing, not later than 20 days prior to the
Optional Reset Date, the Company may, at its option, revoke the Spread or Spread
Multiplier provided for in the Reset Notice and establish a higher Spread or
Spread Multiplier for the Subsequent Interest Period by causing the Trustee to
mail notice of such higher Spread or Spread Multiplier to the Holder of this
Note. Such notice shall be irrevocable. All Registered Notes with respect to
which the Spread or Spread Multiplier is reset on an Optional Reset Date will
bear such higher Spread or Spread Multiplier.
The Holder of this Note will have the option to elect repayment by the
Company on each Optional Reset Date at a price equal to the principal amount
hereof, plus interest accrued to such Optional Reset Date. In order to obtain
repayment on an Optional Reset Date, the Holder must follow the procedures set
forth below for optional repayment, except that the period for delivery or
notification to the Trustee shall be at least 25 but not more than 35 days prior
to such Optional Reset Date, and except that if the Holder has tendered this
Note for repayment pursuant to a Reset Notice, the Holder may, by written notice
to the Trustee, revoke such tender for repayment until the close of business on
the tenth day before the Optional Reset Date.
If so specified on the face hereof, the Maturity of this Note may be
extended at the option of the Company for the period or periods of whole years
specified on the face hereof (each an "Extension Period") up to but not beyond
the date (the "Final Maturity") set forth on the face hereof. If the Company
exercises such option, the Trustee will mail to the Holder of this Note not
later than 40 days prior to the old Stated Maturity a notice (the "Extension
Notice") first class, postage prepaid
9
<PAGE>
indicating (i) the election of the Company to extend the Maturity, (ii) the new
Stated Maturity, (iii) the Spread or Spread Multiplier applicable to the
Extension Period, and (iv) the provisions, if any, for redemption during such
Extension Period. Upon the Trustee's mailing of the Extension Notice, the
Maturity of this Note shall be extended automatically and, except as modified by
the Extension Notice and as described in the next paragraph, this Note will have
the same terms as prior to the mailing of such Notice.
Notwithstanding the foregoing, not later than 20 days prior to the old
Stated Maturity of this Note, the Company may, at its option, revoke the Spread
or Spread Multiplier provided for in the Extension Notice and establish a higher
Spread or Spread Multiplier for the Extension Period by causing the Trustee to
mail notice of such higher Spread or Spread Multiplier, first class, postage
prepaid to the Holder of this Note. Such notice shall be irrevocable. All
Registered Notes with respect to which the Maturity is extended will bear such
higher Spread or Spread Multiplier.
If the Company extends the Maturity of this Note, the Holder will have
the option to elect repayment of this Note by the Company on the old Stated
Maturity at a price equal to the principal amount hereof, plus interest accrued
to such date. In order to obtain repayment on such old Stated Maturity once the
Company has extended the Maturity hereof, the Holder must follow the procedures
set forth below for optional repayment, except that the period for delivery or
notification to the Trustee shall be at least 25 but not more than 35 days
before the such old Stated Maturity, and except that if the Holder has tendered
this Note for repayment pursuant to an Extension Notice, the Holder may, by
written notice to the Trustee, revoke such tender for repayment until the close
of business on the tenth calendar day before the old Stated Maturity.
If so specified on the face hereof, the Company may, at its option,
redeem this Note in whole, or from time to time in part, on or after the date
designated as the Initial Redemption Date on the face hereof, at prices
declining from a specified premium, if any, to par, together with accrued
interest to the date of redemption. The Company may exercise such option by
causing the Trustee to mail a notice of such redemption at least 30 but not more
than 60 days prior to the date of redemption unless otherwise specified on the
face hereof. In the event of redemption of this Note in part only, a new Note
or Notes for the unredeemed portion hereof shall be issued in the name of the
Holder hereof upon the cancellation hereof.
If so specified on the face hereof, this Note will be repayable prior
to Maturity at the option of the Holder on the Optional Repayment Dates shown on
the face hereof at the Optional
10
<PAGE>
Repayment Prices shown on the face hereof, together with accrued interest to the
date of repayment. In order for this Note to be repaid, the Trustee must
receive at least 30 but not more than 45 days prior to an Optional Repayment
Date (i) this Note with the form below entitled "Option to Elect Repayment" duly
completed; or (ii) a telegram, telex, facsimile transmission or letter from a
member of a national securities exchange or the National Association of
Securities Dealers, Inc. or a commercial bank or trust company in the United
States of America setting forth the name of the Holder of this Note, the
principal amount of the Note to be repaid, the certificate number or a
description of the tenor and terms of this Note, a statement that the option to
elect repayment is being exercised thereby and a guarantee that this Note with
the form below entitled "Option to Elect Repayment" duly completed will be
received by the Trustee not later than five Business Days after the date of such
telegram, telex, facsimile transmission or letter. If the procedure described
in clause (ii) of the preceding sentence is followed, this Note with form duly
completed must be received by the Trustee by such fifth Business Day. Any
tender of this Note for repayment (except pursuant to a Reset Notice or an
Extension Notice) shall be irrevocable. The repayment option may be exercised
by the Holder of this Note for less than the entire principal amount of the Note
provided that the principal amount of this Note remaining outstanding after
- --------
repayment is an authorized denomination. Upon such partial repayment, this Note
shall be cancelled and a new Note or Notes for the remaining principal amount
hereof shall be issued in the name of the Holder of this Note.
This Note will not be subject to any sinking fund.
Notwithstanding anything herein to the contrary, if this Note is a
Discount Note, the amount payable in the event of redemption or repayment prior
to the Stated Maturity hereof, in lieu of the principal amount due at the Stated
Maturity hereof, shall be the Amortized Face Amount of this Note as of the
redemption date or the date of repayment, as the case may be. The "Amortized
Face Amount" of this Note shall be the amount equal to (a) the Issue Price (as
set forth on the face hereof) plus (b) that portion of the difference between
the Issue Price and the principal amount hereof that has accrued at the Yield to
Maturity (as set forth on the face hereof) (computed in accordance with
generally accepted United States bond yield computation principles) at the date
as of which the Amortized Face Amount is calculated, but in no event shall the
Amortized Face Amount of this Note exceed its principal amount.
Unless otherwise specified on the face hereof, if this Note is a
Floating Rate Note, this Note will bear interest from its Original Issue Date to
the first Interest Reset Date (as defined below) at the Initial Interest Rate
set forth on the face
11
<PAGE>
hereof. Thereafter, the interest rate hereon for each Interest Reset Period (as
defined below) will be determined by reference to the Base Rate specified on the
face hereof, plus or minus the Spread, if any, or multiplied by the Spread
Multiplier, if any, specified on the face hereof. The Base Rates that may be
specified on the face hereof are LIBOR, the Commercial Paper Rate, the Treasury
Rate, the Federal Funds Rate, the CD Rate or any other Base Rate specified on
the face hereof. "H.15(519)" means the publication entitled "Statistical Release
H.15(519), Selected Interest Rates" or any successor publication, published by
the Board of Governors of the Federal Reserve System.
As specified on the face hereof, this Note may also have either or
both of the following (in each case expressed as a rate per annum on a simple
interest basis): (i) a maximum limitation, or ceiling, on the rate at which
interest may accrue during any interest period ("Maximum Interest Rate") and
(ii) a minimum limitation, or floor, on the rate at which interest may accrue
during any interest period ("Minimum Interest Rate"). In addition to any
Maximum Interest Rate that may be specified on the face hereof, the interest
rate will in no event be higher than the maximum rate permitted by applicable
law, as the same may be modified by United States law of general application.
The interest rate hereon will be reset daily, weekly, monthly,
quarterly, semiannually or annually (such period being the "Interest Reset
Period" specified on the face hereof, and the first day of each Interest Reset
Period being an "Interest Reset Date"). Unless otherwise specified on the face
hereof, the Interest Reset Dates will be, if this Note resets daily, each
Business Day; if this Note (unless this Note is a Treasury Rate Note) resets
weekly, Wednesday of each week; if this Note is a Treasury Rate Note that resets
weekly, Tuesday of each week (except as provided below under "Determination of
Treasury Rate"); if this Note resets monthly, the third Wednesday of each month;
if this Note resets quarterly, the third Wednesday of March, June, September and
December of each year; if this Note resets semiannually, the third Wednesday of
the two months of each year specified on the face hereof; and if this Note
resets annually, the third Wednesday of the month of each year specified on the
face hereof; provided, however, that in all instances the interest rate in
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effect for the ten days immediately prior to the Maturity hereof will be that in
effect on the tenth day preceding Maturity. If an Interest Reset Date would
otherwise be a day that is not a Business Day, such Interest Reset Date shall be
postponed to the next succeeding Business Day, except that, if the Base Rate
specified on the face hereof is LIBOR and such Business Day is in the next
succeeding calendar month, such Interest Reset Date shall be the immediately
preceding Business Day.
12
<PAGE>
Unless otherwise specified on the face hereof, the interest payable
hereon on each Interest Payment Date shall be the accrued interest from and
including the Original Issue Date or the last date to which interest has been
paid, as the case may be, to but excluding such Interest Payment Date, provided,
--------
however, that if the interest rate is reset daily or weekly, the interest
- -------
payable hereon shall be the accrued interest from and including the Original
Issue Date or the last date to which interest has been accrued and paid, as the
case may be, to but excluding the Record Date immediately preceding such
Interest Payment Date, except that, at Maturity, the interest payable will
include interest accrued to, but excluding, the date of Maturity. Accrued
interest shall be calculated by multiplying the principal amount hereof (or if
this Note is an Indexed Principal Note, the Face Amount specified on the face
hereof) by an accrued interest factor. Such accrued interest factor will be
computed by adding the interest factors calculated for each day in the period
for which accrued interest is being calculated. The interest factor (expressed
as a decimal calculated to seven decimal places without rounding) for each such
day is computed by dividing the interest rate in effect on such day by 360 if
the Base Rate specified on the face hereof is the Commercial Paper Rate, the
Federal Funds Rate, the CD Rate or LIBOR, or by the actual number of days in the
year, if the Base Rate specified on the face hereof is the Treasury Rate. For
purposes of making the foregoing calculation, the interest rate in effect on any
Interest Reset Date will be the applicable rate as reset on such date. Unless
otherwise specified on the face hereof, all percentages resulting from any
calculation of the rate of interest hereof will be rounded, if necessary, to the
nearest 1/100,000 of 1% (.0000001), with five one-millionths of a percentage
point rounded upward, and all currency amounts used in or resulting from such
calculation will be rounded to the nearest one-hundredth of a unit (with .005 of
a unit being rounded upward).
Unless otherwise specified on the face hereof, interest will be
payable, if this Note resets daily, weekly or monthly, on the third Wednesday of
each month or on the third Wednesday of March, June, September and December of
each year, as specified on the face hereof; if this Note resets quarterly, on
the third Wednesday of March, June, September and December of each year; if this
Note resets semiannually, on the third Wednesday of the two months of each year
specified on the face hereof; and if this Note resets annually, on the third
Wednesday of the month of each year specified on the face hereof (each such day
being an "Interest Payment Date"). If an Interest Payment Date would otherwise
fall on a day that is not a Business Day, such Interest Payment Date shall be
postponed to the next succeeding Business Day, except that, if the Base Rate
specified on the face hereof is LIBOR and such Business Day is in the next
succeeding calendar
13
<PAGE>
month, such Interest Payment Date shall be the immediately preceding Business
Day.
The Company has appointed and entered into an agreement with an agent
(a "Calculation Agent") to calculate the interest rates on Floating Rate Notes.
Unless otherwise specified on the face hereof, Bankers Trust Company shall be
the Calculation Agent. At the request of the Holder hereof, the Calculation
Agent will provide the interest rate then in effect and, if determined, the
interest rate that will become effective on the next Interest Reset Date. All
determinations of interest rates by the Calculation Agent shall, in the absence
of manifest error, be conclusive for all purposes and binding on the Holder
hereof.
Subject to applicable provisions of law and except as specified
herein, on each Interest Reset Date the rate of interest shall be the rate
determined in accordance with the provisions of the applicable heading below.
Determination of CD Rate
If the Base Rate specified on the face hereof is the CD Rate, this
Note will bear interest for each Interest Reset Period at the interest rate
calculated with reference to the CD Rate and the Spread or Spread Multiplier, if
any, specified on the face hereof. The "CD Rate" for each Interest Reset Period
shall be the rate as of the second Business Day prior to the Interest Reset Date
for such Interest Reset Period (a "CD Rate Determination Date") for negotiable
certificates of deposit having the Index Maturity specified on the face hereof
as published in H.15(519) under the heading "CDs (Secondary Market)". In the
event that such rate is not published prior to 3:00 p.m., New York City time, on
the Calculation Date (as defined below) pertaining to such CD Rate Determination
Date, then the "CD Rate" for such Interest Reset Period will be the rate on such
CD Rate Determination Date for negotiable certificates of deposit of the Index
Maturity specified on the face hereof as published by the Federal Reserve Bank
of New York in its daily statistical release "Composite 3:30 p.m. Quotations for
U.S. Government Securities" ("Composite Quotations") under the heading
"Certificates of Deposit". If by 3:00 p.m., New York City time, on such
Calculation Date such rate is not yet published in either H.15(519) or Composite
Quotations, then the "CD Rate" for such Interest Reset Period will be calculated
by the Calculation Agent and will be the arithmetic mean of the secondary market
offered rates as of 10:00 a.m., New York City time, on such CD Rate
Determination Date of three leading nonbank dealers in negotiable U.S. dollar
certificates of deposit in The City of New York selected by the Calculation
Agent for negotiable certificates of deposit of major United States money center
banks of the highest credit standing (in the market for negotiable
14
<PAGE>
certificates of deposit) with a remaining maturity closest to the Index Maturity
on the face hereof in a denomination of $5,000,000, provided, however, that if
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the dealers selected as aforesaid by the Calculation Agent are not quoting
offered rates as mentioned in this sentence, the CD Rate for such Interest Reset
Period will be the same as the CD Rate for the immediately preceding Interest
Reset Period (or, if there was no such Interest Reset Period, the Initial
Interest Rate).
The "Calculation Date" pertaining to any CD Rate Determination Date
shall be the tenth calendar day after such CD Rate Determination Date or, if
such day is not a Business Day, the next succeeding Business Day.
Determination of Commercial Paper Rate
If the Base Rate shown on the face hereof is the Commercial Paper
Rate, this Note will bear interest for each Interest Reset Period at the
interest rate calculated with reference to the Commercial Paper Rate and the
Spread or Spread Multiplier, if any, specified on the face hereof. The
"Commercial Paper Rate" for each Interest Reset Period will be determined by the
Calculation Agent as of the second Business Day prior to the Interest Reset Date
for such Interest Reset Period (a "Commercial Paper Rate Determination Date")
and shall be the Money Market Yield (as defined below) on such Commercial Paper
Rate Determination Date of the rate for commercial paper having the Index
Maturity specified on the face hereof, as such rate shall be published in
H.15(519) under the heading "Commercial Paper". In the event that such rate is
not published prior to 3:00 p.m., New York City time, on the tenth calendar day
after such Commercial Paper Rate Determination Date or, if such day is not a
Business Day, the next succeeding Business Day, (the "Calculation Date") then
the Commercial Paper Rate for such Interest Reset Period shall be the Money
Market Yield on such Commercial Paper Rate Determination Date of the rate for
commercial paper of the Index Maturity specified on the face hereof as published
in Composite Quotations under the heading "Commercial Paper". If by 3:00 p.m.,
New York City time, on such Calculation Date such rate is not yet published in
either H.15(519) or Composite Quotations, then the "Commercial Paper Rate" for
such Interest Reset Period shall be the Money Market Yield of the arithmetic
mean of the offered rates as of 11:00 a.m., New York City time, on such
Commercial Paper Rate Determination Date of three leading dealers of commercial
paper in The City of New York selected by the Calculation Agent for commercial
paper of the Index Maturity specified on the face hereof placed for an
industrial issuer whose bonds are rated "AA" or the equivalent by a nationally
recognized rating agency, provided, however, that if the dealers selected as
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aforesaid by the Calculation Agent are not quoting offered rates as mentioned in
this sentence, the "Commercial Paper Rate" for such Interest
15
<PAGE>
Reset Period will be the same as the Commercial Paper Rate for the immediately
preceding Interest Reset Period (or, if there was no such Interest Reset Period,
the Initial Interest Rate).
"Money Market Yield" shall be the yield calculated in accordance with
the following formula:
D X 360
Money Market Yield = ------------- X 100
360 - (D X M)
where "D" refers to the applicable per annum rate for commercial paper quoted on
a bank discount basis and expressed as a decimal and "M" refers to the actual
number of days in the Index Maturity specified on the face hereof.
The "Calculation Date" pertaining to any Commercial Paper Rate
Determination Date shall be the tenth calendar day after such Commercial Paper
Rate Determination Date or, if such day is not a Business Day, the next
succeeding Business Day.
Determination of Federal Funds Rate
If the Base Rate specified on the face hereof is the Federal Funds
Rate, this Note will bear interest for each Interest Reset Period at the
interest rate calculated with reference to the Federal Funds Rate and Spread or
Spread Multiplier, if any, specified on the face hereof. The "Federal Funds
Rate" for each Interest Reset Period shall be the effective rate on the Interest
Reset Date for such Interest Reset Period (a "Federal Funds Rate Determination
Date") for Federal Funds as published in H.15(519) under the heading "Federal
Funds (Effective)". In the event that such rate is not published prior to 3:00
p.m., New York City time, on the Calculation Date (as defined below) pertaining
to such Federal Funds Rate Determination Date, the "Federal Funds Rate" for such
Interest Reset Period shall be the rate on such Federal Funds Rate Determination
Date as published in Composite Quotations under the heading "Federal
Funds/Effective Rate". If by 3:00 p.m., New York City time, on such Calculation
Date, such rate is not yet published in either H.15(519) or Composite
Quotations, then the "Federal Funds Rate" for such Interest Reset Period shall
be the rate on such Federal Funds Rate Determination Date made publicly
available by the Federal Reserve Bank of New York which is equivalent to the
rate which appears in H.15(519) under the heading "Federal Funds (Effective)",
provided, however, that if such rate is not made publicly available by the
- -------- -------
Federal Reserve Bank of New York by 3:00 p.m., New York City time, on such
Calculation Date, the "Federal Funds Rate" for such Interest Reset Period will
be the same as the Federal Funds Rate in effect for the immediately preceding
Interest Reset Period (or, if there
16
<PAGE>
is no such Interest Reset Period, the Initial Interest Rate). If this Note
resets daily, the interest rate on this Note for the period from and including a
Monday to but excluding the succeeding Monday will be reset by the Calculation
Agent on such second Monday (or, if not a Business Day, on the next succeeding
Business Day) to a rate equal to the average of the Federal Funds Rates in
effect with respect to each such day in such week.
The "Calculation Date" pertaining to any Federal Funds Rate
Determination Date shall be the next succeeding Business Day.
Determination of LIBOR
If the Base Rate specified on the face hereof is LIBOR, this Note will
bear interest for each Interest Reset Period at the interest rate calculated
with reference to LIBOR and the Spread or Spread Multiplier, if any, specified
on the face hereof. "LIBOR" for each Interest Reset Period will be determined
by the Calculation Agent as follows:
(i) On the second London Banking Day prior to the Interest Reset Date
for such Interest Reset Period (a "LIBOR Determination Date"), the
Calculation Agent for such LIBOR Note will determine the arithmetic mean of
the offered rates for deposits in the Specified Currency for the period of
the Index Maturity specified on the face hereof, commencing on such
Interest Reset Date, which appear on the Designated LIBOR Page at
approximately 11:00 a.m., London time, on such LIBOR Determination Date.
"Designated LIBOR Page" means either (a) if "LIBOR Telerate" is designated
on the face hereof, the display designated as page "3750" on the Dow Jones
Telerate Service (or such other page as may replace page "3750" on such
service or such other service as may be nominated by the British Bankers'
Association for the purpose of displaying the London interbank offered
rates of major banks) or (b) if "LIBOR Reuters" is designated on the face
hereof, the display designated as page "LIBO" on the Reuters Monitor Money
Rates Service (or such other page as may replace the LIBO page on such
service or such other service as may be nominated by the British Bankers'
Association for the purpose of displaying London interbank offered rates of
major banks). If neither LIBOR Reuters nor LIBOR Telerate is specified on
the face hereof, LIBOR will be determined as if LIBOR Telerate had been
specified. If at least two such offered rates appear on the Designated
LIBOR Page, "LIBOR" for such Interest Reset Period will be the arithmetic
mean of such offered rates as determined by the Calculation Agent for such
LIBOR Note.
(ii) If fewer than two offered rates appear on the Designated LIBOR
Page on such LIBOR Determination Date, the
17
<PAGE>
Calculation Agent will request the principal London offices of each of four
major banks in the London interbank market selected by the Calculation
Agent to provide the Calculation Agent with its offered quotations for
deposits in the Specified Currency for the period of the Index Maturity
specified on the face hereof, commencing on such Interest Reset Date, to
prime banks in the London interbank market at approximately 11:00 a.m.,
London time, on such LIBOR Determination Date and in a principal amount
equal to an amount of not less than $1,000,000 or the approximate
equivalent thereof in the Specified Currency that is representative of a
single transaction in such market at such time. If at least two such
quotations are provided, "LIBOR" for such Interest Reset Period will be the
arithmetic mean of such quotations. If fewer than two such quotations are
provided, "LIBOR" for such Interest Reset Period will be the arithmetic
mean of rates quoted by three major banks in The City of New York selected
by the Calculation Agent at approximately 11:00 a.m., New York City time,
on such LIBOR Determination Date for loans in the Specified Currency to
leading European banks for the period of the Index Maturity specified on
the face hereof, commencing on such Interest Reset Date, and in a principal
amount equal to an amount of not less than $1,000,000 or the approximate
equivalent thereof in the Specified Currency that is representative of a
single transaction in such market at such time, provided, however, that if
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fewer than three banks selected as aforesaid by the Calculation Agent are
quoting rates as mentioned in this sentence, "LIBOR" for such Interest
Reset Period will be the same as LIBOR for the immediately preceding
Interest Reset Period (or, if there was no such Interest Reset Period, the
Initial Interest Rate).
Determination of Treasury Rate
If the Base Rate specified on the face hereof is the Treasury Rate,
this Note will bear interest for each Interest Reset Period at the interest rate
calculated with reference to the Treasury Rate and the Spread or Spread
Multiplier, if any, specified on the face hereof. The "Treasury Rate" for each
Interest Reset Period will be the rate for the auction held on the Treasury Rate
Determination Date (as defined below) for such Interest Reset Period of direct
obligations of the United States ("Treasury bills") having the Index Maturity
specified on the face hereof, as published in H.15(519) under the heading "U.S.
Government Securities-Treasury bills-auction average (investment)" or, if not so
published by 3:00 p.m., New York City time, on the tenth calendar day after such
Treasury Rate Determination Date (or, if such day is not a Business Day, the
next succeeding Business Day) (the "Calculation Date"), the auction average rate
(expressed as a bond equivalent on the basis
18
<PAGE>
of a year of 365 or 366 days, as applicable, and applied on a daily basis) on
such Treasury Rate Determination Date as otherwise announced by the United
States Department of the Treasury. In the event that the results of the auction
of Treasury bills having the Index Maturity specified on the face hereof are not
published or reported as provided above by 3:00 p.m., New York City time, on
such Calculation Date, or if no such auction is held on such Treasury Rate
Determination Date, then the "Treasury Rate" for such Interest Reset Period
shall be calculated by the Calculation Agent and shall be a yield to maturity
(expressed as a bond equivalent on the basis of a year of 365 or 366 days, as
applicable, and applied on a daily basis) of the arithmetic mean of the
secondary market bid rates as of approximately 3:30 p.m., New York City time, on
such Treasury Rate Determination Date, of three leading primary United States
government securities dealers selected by the Calculation Agent for the issue of
Treasury bills with a remaining maturity closest to the Index Maturity specified
on the face hereof, provided, however, that if the dealers selected as aforesaid
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by the Calculation Agent are not quoting bid rates as mentioned in this
sentence, then the "Treasury Rate" for such Interest Reset Period will be the
same as the Treasury Rate for the immediately preceding Interest Reset Period
(or, if there was no such Interest Reset Period, the Initial Interest Rate).
The "Treasury Rate Determination Date" for each Interest Reset Period
will be the day of the week in which the Interest Reset Date for such Interest
Reset Period falls on which Treasury bills would normally be auctioned.
Treasury bills are normally sold at auction on Monday of each week, unless that
day is a legal holiday, in which case the auction is normally held on the
following Tuesday, except that such auction may be held on the preceding Friday.
If, as the result of a legal holiday, an auction is so held on the preceding
Friday, such Friday will be the Treasury Rate Determination Date pertaining to
the Interest Reset Period commencing in the next succeeding week. If an auction
date shall fall on any day that would otherwise be an Interest Reset Date for a
Note whose Base Rate is the Treasury Rate, then such Interest Reset Date shall
instead be the Business Day immediately following such auction date.
If "Constant Maturity" is specified in the applicable Pricing
Supplement, the "Treasury Rate" for each interest Reset Period will be the rate
that is set forth in the Federal Reserve Board publication H.15(519) opposite
the caption "U.S. Government/Securities/Treasury Constant Maturities/" in the
Index Maturity with respect to the applicable Constant Maturity Treasury Rate
Determination Date (as defined below). If the H.15(519) is not published, the
"Constant Maturity -- Treasury Rate" shall be the rate that was set forth on
Telerate Page 7055, or its successor page (as determined by the Calculation
Agent), on the applicable Constant Maturity Treasury Rate Determination
19
<PAGE>
Date opposite the applicable Index Maturity. If no such rate is set forth, then
the constant Maturity Treasury Rate for such Interest Reset Period shall be
established by the Calculation Agent as follows. The Calculation Agent will
contact the Federal Reserve Board and request the Constant Maturity Treasury
Rate, in the applicable Index Maturity, for the Constant Maturity Treasury Rate
Determination Date. If the Federal Reserve Board does not provide such
information, then the Constant Maturity Treasury Rate for such Interest Reset
Date will be the arithmetic mean of bid-side quotations, expressed in terms of
yield, reported by three leading U.S. government securities dealers (one of
which may be Salomon Brothers Inc), according to their written records, as of
3:00 p.m. (New York City time) on the Constant Maturity Treasury rate
Determination Date, for the noncallable U.S. Treasury Note that is nearest in
maturity to the Index Maturity, but not less than exactly the Index Maturity and
for the noncallable U.S. Treasury Note that is nearest in maturity to the Index
Maturity, but not more than exactly the Index Maturity. The Calculation Agent
shall calculate the Constant Maturity Treasury Rate by interpolating to the
Index Maturity based on an actual/actual date count basis, the yield on the two
Treasury Notes selected. If the Calculation Agent cannot obtain three such
adjusted quotations, the Constant Maturity Treasury Rate for such Interest Reset
Date will be the arithmetic mean of all such quotations, or if only one such
quotation is obtained, such quotation, obtained by the Calculation Agent. In all
events, the Calculation Agent shall continue polling dealers until at least one
adjusted yield quotation can be determined.
"The Constant Maturity Treasury Rate Determination Date" shall be the
tenth Business Day prior to the Interest Reset Date for the applicable Interest
Reset Period.
The "Calculation Date" pertaining to any Treasury Rate Determination
Date or Constant Maturity Rate Determination Date, as applicable, shall be the
tenth calendar day after such Treasury Rate Determination Date or Constant
Maturity Rate Determination Date, as applicable, or, if such a day is not a
Business Day, the next succeeding Business Day.
Indexed Notes
If this note is an Indexed Note, then certain or all interest
payments, in the case of an Indexed Rate Note, and/or the principal amount
payable at Stated Maturity or earlier redemption or retirement, in the case of
an Indexed Principal Note, is determined by reference to the amount designated
on the face hereof as the Face Amount of this Note and by reference to the Index
as described on the face hereof. If this Note is a Floating Rate Note or
Indexed Rate Note that is also an Indexed Principal Note, the amount of any
interest payment will be determined by reference to the Face Amount described on
the face
20
<PAGE>
hereof unless otherwise specified. If this Note is an Indexed Principal Note,
the principal amount payable at Stated Maturity or any earlier redemption or
repayment of this Note may be different from the Face Amount. If the
determination of the Index is calculated or announced by a third party, which
may be Salomon Brothers Inc or another affiliate of the Company, and such third
party either suspends the calculation or announcement of such Index or changes
the basis upon which such Index is calculated (other than changes consistent
with policies in effect at the time this Note was issued and permitted changes
described on the face hereof), then such Index shall be calculated for this
Note's purposes by another third party, which may be Salomon Brothers Inc or
another affiliate of the Company, selected by the Company subject to the same
conditions and controls as applied to the original third party. If for any
reason such Index cannot be calculated on the same basis and subject to the same
conditions and controls as applied to the original third party, then the indexed
interest payments, if any, or any indexed principal amount of this Note shall be
calculated in the manner described on the face hereof. Any determination of
such third party shall in the absence of manifest error be binding on all
parties.
As provided in the Indenture and subject to certain limitations
therein set forth, this Note is exchangeable for a like aggregate principal
amount of Registered Notes of different authorized denominations, as requested
by the Person surrendering the same.
As provided in the Indenture and subject to certain limitations
therein set forth, the transfer of this Note is registrable on the Security
Register of the Company, upon surrender of this Note for registration of
transfer at the office or agency of the Company in the Borough of Manhattan, the
City and State of New York, duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Company, the Security
Registrar and the Trustee duly executed by the Holder hereof or his attorney
duly authorized in writing, and thereupon one or more new Registered Notes of
this series, of authorized denominations and for the same aggregate principal
amount, will be issued to the designated transferee or transferees.
No service charge shall be made for any such registration of transfer
or exchange, but the Company may require payment of a sum sufficient to cover
any tax or other governmental charge payable in connection therewith.
Prior to due presentment of this Note for registration of transfer,
the Company, the Trustee and any agent of the Company or the Trustee may treat
the Person in whose name this Note is registered as the Holder hereof for all
purposes, whether
21
<PAGE>
or not this Note be overdue, and neither the Company, the Trustee nor any such
agent shall be affected by notice to the contrary.
If an Event of Default with respect to the Debt Securities of this
series shall have occurred and be continuing, the principal of all the Debt
Securities of this series may be declared due and payable in this manner and
with the effect provided in the Indenture.
In case this Note shall at any time become mutilated, destroyed,
stolen or lost and this Note or evidence of the loss, theft, or destruction
hereof (together with such indemnity and such other documents or proof as may be
required by the Company or the Trustee) shall be delivered to the principal
corporate trust office of the Trustee, a new Registered Note of like tenor and
principal amount will be issued by the Company in exchange for, or in lieu of,
this Note. All expenses and reasonable charges associated with procuring such
indemnity and with the preparation, authentication and delivery of a new
Registered Note shall be borne by the Holder of this Note.
The Indenture permits, with certain exceptions as therein provided,
the amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Holders of the Debt Securities of each series to
be affected under the Indenture at any time by the Company and the Trustee with
the consent of the Holders of not less than a majority in aggregate principal
amount of Debt Securities at the time outstanding of each series to be affected.
The Indenture also contains provisions permitting the Holders of specified
percentages in aggregate principal amount of the Debt Securities of any series
at the time outstanding, on behalf of the Holders of all the Debt Securities of
such series, to waive compliance by the Company with certain provisions of the
Indenture and certain past defaults under the Indenture and their consequences.
Any such consent or waiver by the Holder of this Debt Security shall be
conclusive and binding upon such Holder and upon all future Holders of this Debt
Security and of any Debt Security issued upon the registration of transfer
hereof or in exchange hereof or in lieu hereof, whether or not notation of such
consent or waiver is made upon the Debt Security.
Holders of Debt Securities may not enforce their rights pursuant to
the Indenture or the Note except as provided in the Indenture. No reference
herein to the Indenture and no provision of this Note or of the Indenture shall
alter or impair the obligation of the Company, which is absolute and
unconditional, to pay the principal of (and premium, if any) and interest on
this Note at the times, place and rate, and the coin or currency, herein
prescribed.
22
<PAGE>
This Note shall be deemed to be a contract made and to be performed
solely in the State of New York and for all purposes be governed by, and
construed in accordance with, the laws of said State without regard to the
conflicts of law rules of said State.
All terms used in this Note that are defined in the Indenture shall
have the meanings assigned to them in the Indenture.
23
<PAGE>
ABBREVIATIONS
The following abbreviations, when used in the inscription on the face of
this instrument, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM - as tenants in common UNIF GIFT MIN ACT -
____________Custodian____________
TEN ENT - as tenants by the entireties (Cust) (Minor)
JT TEN - as joint tenants with right of Under Uniform Gifts to Minors Act
survivorship and not as tenants _________________________________
in common
(State)
Additional abbreviations may also be used though not in the above list
________________________________________________
OPTION TO ELECT REPAYMENT
The undersigned hereby irrevocably requests and instructs the Company to
repay $________ principal amount of the within Note, pursuant to its terms, on
the "Optional Repayment Date" first occurring after the date of receipt of the
within Note as specified below, together with interest thereon accrued to the
date of repayment, to the undersigned at:
________________________________________________________________________________
________________________________________________________________________________
(Please Print or Type Name and Address of the Undersigned)
and to issue to the Undersigned, pursuant to the terms of the Indenture, a new
Note or Notes representing the remaining principal amount of this Note.
For this Option to Elect Repayment to be effective, this Note with the
Option to Elect Repayment duly completed must be received by the Company within
the relevant time period set forth above at its office or agency in the Borough
of Manhattan, the City and State of New York, located initially at the office of
the Trustee at, if delivery is by hand, 130 John Street, Street Level, New York,
New York, or, if delivery is by mail, 450 West 33rd Street, Attention:
Corporate Trust Department, New York, New York 10001.
Dated:
___________________________________________________
Note: The signature to this Option to Elect
Repayment must correspond with the name as written
upon the face of the within Note in every
particular without alteration or enlargement or any
change whatsoever.
FOR VALUE RECEIVED, the undersigned hereby sell(s),
assign(s) and transfer(s) unto
Please insert Social Security or Other
Identifying Number of Assignee
____________________________________________
______________________________________________________________________________
________________________________________________________________________________
Please Print or Type Name and Address Including Zip Code of Assignee
________________________________________________________________________________
the within Note and all rights thereunder, hereby irrevocably constituting and
appointing
_______________________________________________________________________ attorney
to transfer such Note on the books of Salomon Inc with full power of
substitution in the premises.
Dated: _______________________ ___________________________________________
Signature
___________________________________________
NOTICE: The signature to this assignment
must correspond with the name as it appears
upon the face of the Note in every
particular, without alteration or
enlargement or any change whatsoever.
<PAGE>
FORM OF SERIES D FIXED RATE NOTE
REGISTERED PRINCIPAL AMOUNT
OR FACE AMOUNT
SALOMON INC
No. FX- MEDIUM-TERM NOTE, SERIES D
(FIXED RATE) CUSIP
Due More Than Nine Months from Date of Issue
IF APPLICABLE, THE "TOTAL AMOUNT OF OID" AND "YIELD TO MATURITY" SET FORTH BELOW
WILL BE COMPLETED SOLELY FOR THE PURPOSES OF APPLYING THE FEDERAL INCOME TAX
ORIGINAL ISSUE DISCOUNT ("OID") RULES
Issue Price: Original Issue Date:
Specified Currency:
(If other than U.S. Dollars)
Authorized Denominations:
(If other than as set forth in the
Prospectus Supplement)
Interest Payment Dates:
(If other than as set forth in the
Prospectus Supplement)
Indexed Principal Note: [ ] Yes (see attached) [ ] No
Interest Rate: Stated Maturity:
Interest Rate Reset: [ ] The Interest Rate may not be
changed prior to Stated Maturity.
[ ] The Interest Rate may be changed
prior to Stated Maturity
(see attached)
Optional Reset Dates (if applicable):
<PAGE>
Amortizing Note: [ ] Yes [ ] No
Amortization Schedule:
Optional Redemption: [ ] Yes [ ] No
Optional Redemption Dates:
Redemption Prices:
Optional Repayment: [ ] Yes [ ] No
Optional Repayment Dates:
Optional Repayment Prices:
Optional Extension of Stated Maturity: [ ] Yes [ ] No
Final Maturity:
Discount Note: [ ] Yes [ ] No
Total Amount of OID:
Yield to Maturity:
2
<PAGE>
SALOMON INC, a corporation duly organized and existing under the
laws of the State of Delaware (herein referred to as the "Company"), for
value received hereby promises to pay CEDE & Co. or registered assigns, (a)
the Principal Amount or, in the case of an Indexed Principal Note, the Face
Amount adjusted by reference to prices, changes in prices, or differences
between prices, of securities, currencies, intangibles, goods, articles or
commodities or by such other objective price, economic or other measures (an
"Index") as described on the face hereof, in the Specified Currency on the
Stated Maturity shown above or earlier if and to the extent so provided
herein and (b) to pay accrued interest on the Principal Amount then
outstanding (or in the case of an Indexed Principal Note, the Face Amount,
then outstanding) at the Interest Rate shown above from the Original Issue
Date shown above or from the most recent date to which interest has been paid
or duly provided for, semiannually in arrears on March 15 and September 15 of
each year and at Maturity, until, in either case, the Principal Amount then
outstanding or the Face Amount is paid or duly provided for in accordance
with the terms hereof. Interest on this Note, if any, will be computed on
the basis of a 360-day year of twelve 30-day months. The interest so
payable, and punctually paid or duly provided for, on any Interest Payment
Date will, as provided in the Indenture referred to on the reverse hereof, be
paid to the Person in whose name this Note (or one or more Predecessor
Securities) is registered at the close of business on the Regular Record Date
for such interest, which, in the case of interest payable on a March 15, or
September 15 (other than interest payable at Maturity) shall be the March 1
or September 1 (whether or not a Business Day), as the case may be, next
preceding such Interest Payment Date and, in the case of interest payable at
Maturity, shall be the Stated Maturity of this Note. Notwithstanding the
foregoing, if this Note is issued between a Regular Record Date and the
related Interest Payment Date, the interest so payable for the period from
the Original Issue Date to such Interest Payment Date shall be paid on the
next succeeding Interest Payment Date to the Registered Holder hereof on the
related Regular Record Date. Any such interest not so punctually paid or
duly provided for shall forthwith cease to be payable to the Registered
Holder hereof on such Regular Record Date, and may be paid to the Person in
whose name this Note (or one or more Predecessor Securities) is registered at
the close of business on a Special Record Date for the payment of such
Defaulted Interest to be fixed by the Trustee, notice whereof shall be given
to Holders of Notes not less than ten days prior to such Special Record Date,
or may be paid at any time in any other lawful manner not inconsistent with
the requirements of any securities exchange on which the Registered Notes may
be listed, and upon such notice as may be required by such exchange, all as
more fully provided in said
3
<PAGE>
Indenture. For purposes of this Note, "Business Day" means any day, other
than a Saturday or Sunday, that is not a day on which banking institutions
are authorized or required by law or regulation to be closed in (i) The City
of New York or (ii) if the Specified Currency shown above (as defined below)
is other than U.S. dollars, the financial center of the country issuing such
Specified Currency (which, in the case of ECU, shall be Brussels, Belgium).
If this Note is an Amortizing Note as shown on the face hereof, a
portion or all the principal amount of the Note is payable prior to Stated
Maturity in accordance with a schedule, by application of a formula, or by
reference to an index (as described above).
The principal hereof and any premium and interest hereon are
payable by the Company in the Specified Currency shown above. If the
Specified Currency shown above is other than U.S. dollars, the Company will
arrange to convert all payments in respect hereof into U.S. dollars in the
manner described on the reverse hereof. The Holder hereof may, if so
indicated above, elect to receive all payments in respect hereof in the
Specified Currency by delivery of a written notice to the Trustee not later
than fifteen calendar days prior to the applicable payment date. Such
election will remain in effect until revoked by written notice to the Trustee
received not later than fifteen calendar days prior to the applicable payment
date. If the Company determines that the Specified Currency is not available
for making payments in respect hereof due to the imposition of exchange
controls or other circumstances beyond the Company's control or is no longer
used by the government of the country issuing such currency or for the
settlement of transactions by public institutions or within the international
banking community, then the Holder hereof may not so elect to receive
payments in the Specified Currency, and any such outstanding election shall
be automatically suspended, and payments shall be in U.S. dollars, until the
Company determines that the Specified Currency is again available for making
such payments.
Payments of interest in U.S. dollars (other than interest payable
at Maturity) will be made by check mailed to the address of the Person
entitled thereto as such address shall appear on the Security Register on the
applicable Record Date, provided that, if the Holder hereof is the Holder of
--------
U.S. $10,000,000 (or the equivalent thereof in a currency other than U.S.
dollars determined as provided on the reverse hereof) or more in aggregate
principal amount of Registered Notes of like tenor and term, such U.S. dollar
interest payments will be made by wire transfer of immediately available
funds, but only if appropriate wire transfer instructions have been received
in writing by the Trustee not
4
<PAGE>
less than fifteen calendar days prior to the applicable Interest Payment
Date. Simultaneously with any election by the Holder hereof to receive
payments in respect hereof in the Specified Currency (if other than U.S.
dollars), such Holder shall provide appropriate wire transfer instructions to
the Trustee and all such payments will be made by wire transfer of
immediately available funds to an account maintained by the payee with a bank
located outside the United States. The principal hereof and any premium and
interest hereon payable at Maturity will be paid in immediately available
funds upon surrender of this Note at the corporate trust office or agency of
the Trustee located in the City and State of New York.
REFERENCE IS HEREBY MADE TO THE FURTHER PROVISIONS OF THIS NOTE SET
FORTH ON THE REVERSE HEREOF, AND SUCH FURTHER PROVISIONS SHALL FOR ALL
PURPOSES HAVE THE SAME EFFECT AS THOUGH FULLY SET FORTH IN THIS PLACE.
This Note shall not become valid or obligatory for any purpose
unless and until this Note has been authenticated by Citibank, N.A., or its
successor, as Trustee.
5
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Note to be executed
under its corporate seal.
Dated:
SALOMON INC
By____________________________________
Chairman of the Board of Directors,
President and Chief Executive Officer
Attest________________________________
Secretary
CERTIFICATE OF AUTHENTICATION
This is one of the Registered Notes issued under the within-
mentioned Indenture.
CITIBANK, N.A.
as Trustee
By____________________________________
Authorized Signatory
6
<PAGE>
SALOMON INC
MEDIUM-TERM NOTE, SERIES D
(FIXED RATE)
This Note is one of a series of duly authorized debt securities of
the Company (the "Debt Securities") issued or to be issued in one or more
series under an indenture dated as of December 1, 1988 (the "Indenture")
between the Company and Citibank, N.A., as trustee (the "Trustee", which term
includes any successor Trustee under the Indenture) to which Indenture and
all indentures supplemental thereto reference is hereby made for a statement
of the respective rights, limitations of rights, duties and immunities
thereunder of the Company, the Trustee and the Holders of the Debt Securities
and of the terms upon which the Debt Securities are, and are to be,
authenticated and delivered. The U.S. dollar equivalent of the public
offering price or purchase price of Notes denominated in currencies other
than U.S. dollars will be determined by the Company or its agent, on the
basis of the noon buying rate in New York City for cable transfers in foreign
currencies as certified for customs purposes by the Federal Reserve Bank of
New York (the "Market Exchange Rate") for such currencies on the applicable
issue dates.
Unless otherwise specified on the face hereof, the authorized
denominations of Registered Notes denominated in U.S. dollars will be
U.S.$1,000 and any larger amount that is an integral multiple of U.S.$1,000.
The authorized denominations of Registered Notes denominated in a currency
other than U.S. dollars will be as set forth on the respective faces thereof.
Each Registered Note will be issued initially as either a Book-
Entry Note or a Certificated Note. Only Registered Notes denominated and
payable in U.S. dollars may be issued as Book-Entry Notes, and such Notes
will not be exchangeable for Certificated Notes and, except as otherwise
provided in the Indenture, will not otherwise be issuable as Certificated
Notes.
If the Specified Currency is other than U.S. dollars, the amount of
any U.S. dollar payment to be made in respect hereof will be determined by
the Company or its agent based on the highest firm bid quotation expressed in
U.S. dollars received by the Company or its agent at approximately 11:00
a.m., New York City time, on the second Business Day preceding the applicable
payment date (or, if no such rate is quoted on such date, the last date on
which such rate was quoted), from three (or, if three are not available, then
two) recognized foreign exchange dealers in The City of New York selected by
the Company or its agent (one of which may be
7
<PAGE>
Salomon Brothers Inc) for the purchase by the quoting dealer, for settlement
on such payment date, of the aggregate amount of the Specified Currency
payable on such payment date in respect of all Registered Notes denominated
in such Specified Currency. All currency exchange costs will be borne by the
Holders of such Registered Notes by deductions from such payments. If no
such bid quotations are available, then such payments will be made in the
Specified Currency, unless the Specified Currency is unavailable due to the
imposition of exchange controls or to other circumstances beyond the
Company's control, in which case payment will be made as described in the
next paragraph.
Except as set forth below with respect to payments in ECU, if any
payment in respect hereof is required to be made in a Specified Currency
other than U.S. dollars and such currency is unavailable due to the
imposition of exchange controls or other circumstances beyond the Company's
control or is no longer used by the government of the country issuing such
currency or for the settlement of transactions by public institutions of or
within the international banking community, then such payment shall be made
in U.S. dollars until such currency is again available or so used. The
amount so payable in such foreign currency shall be converted into U.S.
dollars on the basis of the most recently available Market Exchange Rate for
such currency or as otherwise indicated on the face hereof. Any payment made
under such circumstances in U.S. dollars will not constitute an Event of
Default under the Indenture. If any payment in respect hereof is required to
be made in European Currency Units ("ECU") and ECU is no longer used in the
European Monetary System, then such payment shall be made in U.S. dollars
until ECU is again so used. The amount of such payment in U.S. dollars shall
be computed on the basis of the equivalent of the ECU in U.S. dollars as of
the second Business Day prior to the date on which such payment is due. The
equivalent of the ECU in U.S. dollars as of any date shall be determined by
the Company or its agent on the following basis. The component currencies of
the ECU for this purpose (the "Components") shall be the currency amounts
that were components of the ECU as of the last date on which the ECU was used
in the European Monetary System. The equivalent of the ECU in U.S. dollars
shall be calculated by aggregating the U.S. dollar equivalents of the
Components. The U.S. dollar equivalent of each of the Components shall be
determined by the Company or its agent on the basis of the most recently
available Market Exchange Rates for such Components or as otherwise indicated
on the face hereof. If the official unit of any component currency is
altered by way of combination or subdivision, the number of units of that
currency as a Component shall be divided or multiplied in the same
proportion. If two or more component currencies are consolidated into a
single currency, the amounts of those
8
<PAGE>
currencies as Components shall be replaced by an amount in such single
currency equal to the sum of the amounts of the consolidated component
currencies expressed in such single currency. If any component currency is
divided into two or more currencies, the amount of that currency as a
Component shall be replaced by amounts of such two or more currencies, each
of which shall be equal to the amount of the former component currency
divided by the number of currencies into which that currency was divided.
The interest payable hereon on each Interest Payment Date shall
include interest accrued through the day before such Interest Payment Date.
If so specified on the face hereof, the interest rate on this Note
may be reset by the Company on the date or dates specified on the face hereof
(each an "Optional Reset Date"). Not later than 40 days prior to each
Optional Reset Date, the Trustee will mail to the Holder of this Note a
notice (the "Reset Notice"), first class, postage prepaid, indicating whether
the Company has elected to reset the interest rate, and if so, (i) such new
interest rate, and (ii) the provisions, if any, for redemption during the
period from such Optional Reset Date to the next Optional Reset Date, or if
there is no such next Optional Reset Date, to the Stated Maturity of this
Note (each such period a "Subsequent Interest Period"), including the date or
dates on which or the period or periods during which and the price or prices
at which such redemption may occur during the Subsequent Interest Period.
Notwithstanding the foregoing, not later than 20 days prior to the
Optional Reset Date, the Company may, at its option, revoke the interest rate
provided for in the Reset Notice and establish a higher interest rate for the
Subsequent Interest Period by causing the Trustee to mail notice of such
higher interest rate to the Holder of this Note. Such notice shall be
irrevocable. All Registered Notes with respect to which the interest rate is
reset on an Optional Reset Date will bear such higher interest rate.
The Holder of this Note will have the option to elect repayment by
the Company on each Optional Reset Date at a price equal to the principal
amount hereof, plus interest accrued to such Optional Reset Date. In order
to obtain repayment on an Optional Reset Date, the Holder must follow the
procedures set forth below for optional repayment, except that the period for
delivery or notification to the Trustee shall be at least 25 but not more
than 35 days prior to such Optional Reset Date, and except that if the Holder
has tendered this Note for repayment pursuant to a Reset Notice, the Holder
may, by written notice to the Trustee, revoke such
9
<PAGE>
tender for repayment until the close of business on the tenth day before the
Optional Reset Date.
If so specified on the face hereof, the Maturity of this Note may
be extended at the option of the Company for the period or periods of whole
years specified on the face hereof, (each an "Extension Period"), up to but
not beyond the date (the "Final Maturity") set forth on the face hereof. If
the Company exercises such option, the Trustee will mail to the Holder of
this Note not later than 40 days prior to the old Stated Maturity a notice
(the "Extension Notice"), first class, postage prepaid indicating (i) the
election of the Company to extend the Maturity, (ii) the new Stated Maturity,
(iii) the interest rate applicable to the Extension Period, and (iv) the
provisions, if any, for redemption during such Extension Period. Upon the
Trustee's mailing of the Extension Notice, the Maturity of this Note shall be
extended automatically and, except as modified by the Extension Notice and as
described in the next paragraph, this Note will have the same terms as prior
to the mailing of such Notice.
Notwithstanding the foregoing, not later than 20 days prior to the
old Stated Maturity of this Note, the Company may, at its option, revoke the
interest rate provided for in the Extension Notice and establish a higher
interest rate for the Extension Period by causing the Trustee to mail notice
of such higher interest rate, first class, postage prepaid, to the Holder of
this Note. Such notice shall be irrevocable. All Registered Notes with
respect to which the Maturity is extended will bear such higher interest
rate.
If the Company extends the Maturity of this Note, the Holder will
have the option to elect repayment of this Note by the Company on the old
Stated Maturity at a price equal to the principal amount hereof, plus
interest accrued to such date. In order to obtain repayment on the old
Stated Maturity once the Company has extended the Maturity hereof, the Holder
must follow the procedures set forth below for optional repayment, except
that the period for delivery or notification to the Trustee shall be at least
25 but not more than 35 days prior to the old Stated Maturity, and except
that if the Holder has tendered this Note for repayment pursuant to an
Extension Notice, the Holder may, by written notice to the Trustee, revoke
such tender for repayment until the close of business on the tenth day before
the old Stated Maturity.
If so specified on the face hereof, the Company may, at its option,
redeem this Note in whole, or from time to time in part, on or after the date
designated as the Initial Redemption Date on the face hereof, at prices
declining from a specified premium, if any, to par, together with accrued
interest to the date of redemption. The Company may exercise
10
<PAGE>
such option by causing the Trustee to mail a notice of such redemption at
least 30 but not more than 60 days prior to the date of redemption. In the
event of redemption of this Note in part only, a new Note or Notes for the
unredeemed portion hereof shall be issued in the name of the Holder hereof
upon the cancellation hereof.
If so specified on the face hereof, this Note will be repayable
prior to Maturity at the option of the Holder on the Optional Repayment Dates
shown on the face hereof at the Optional Repayment Prices shown on the face
hereof, together with accrued interest to the date of repayment. In order
for this Note to be repaid, the Trustee must receive at least 30 but not more
than 45 days prior to an Optional Repayment Date (i) this Note with the form
below entitled "Option to Elect Repayment" duly completed; or (ii) a
telegram, telex, facsimile transmission or letter from a member of a national
securities exchange or the National Association of Securities Dealers, Inc.
or a commercial bank or trust company in the United States of America setting
forth the name of the Holder of this Note, the principal amount of the Note
to be repaid, the certificate number or a description of the tenor and terms
of this Note, a statement that the option to elect repayment is being
exercised thereby and a guarantee that this Note with the form below entitled
"Option to Elect Repayment" duly completed will be received by the Trustee
not later than five Business Days after the date of such telegram, telex,
facsimile transmission or letter. If the procedure described in clause (ii)
of the preceding sentence is followed, this Note with form duly completed
must be received by the Trustee by such fifth Business Day. Any tender of
this Note for Repayment (except pursuant to a Reset Notice or an Extension
Notice) shall be irrevocable. The repayment option may be exercised by the
Holder of this Note for less than the entire principal amount of the Note
provided that the principal amount of this Note remaining outstanding after
--------
repayment is an authorized denomination. Upon such partial repayment, this
Note shall be cancelled and a new Note or Notes for the remaining principal
amount hereof shall be issued in the name of the Holder of this Note.
This Note will not be subject to any sinking fund.
Notwithstanding anything herein to the contrary, if this Note is a
Discount Note, the amount payable in the event of redemption or repayment
prior to the Stated Maturity hereof, in lieu of the principal amount due at
the Stated Maturity hereof, shall be the Amortized Face Amount of this Note
as of the redemption date or the date of repayment, as the case may be. The
"Amortized Face Amount" of this Note shall be the amount equal to (a) the
Issue Price (as set forth on the face hereof) plus (b) that portion of the
difference
11
<PAGE>
between the Issue Price and the principal amount hereof that has accrued at
the Yield to Maturity (as set forth on the face hereof) (computed in
accordance with generally accepted United States bond yield computation
principles) at the date as of which the Amortized Face Amount is calculated,
but in no event shall the Amortized Face Amount of this Note exceed its
principal amount.
If this Note is an Indexed Principal Note, then the principal
amount payable at Stated Maturity or earlier redemption or retirement, is
determined by reference to the amount designated on the face hereof as the
Face Amount of this Note and by reference to the Index as described on the
face hereof. If this Note is an Indexed Principal Note, the principal amount
payable at Stated Maturity or any earlier redemption or repayment of this
Note may be different from the Face Amount. If the determination of the
Index is calculated or announced by a third party, which may be Salomon
Brothers Inc or another affiliate of the Company and such third party either
suspends the calculation or announcement of such Index or changes the basis
upon which such Index is calculated (other than changes consistent with
policies in effect at the time this Note was issued and permitted changes
described on the face hereof), then such Index shall be calculated for this
Note's purposes by another third party selected by the Company, which may be
Salomon Brothers Inc or another affiliate of the Company subject to the same
conditions and controls as applied to the original third party. If for any
reason such Index cannot be calculated on the same basis and subject to the
same conditions and controls as applied to the original third party, then any
indexed principal amount of this Note shall be calculated in the manner
described on the face hereof. Any determination of such third party shall in
the absence of manifest error be binding on all parties.
As provided in the Indenture and subject to certain limitations
therein set forth, this Note is exchangeable for a like aggregate principal
amount of Registered Notes of different authorized denominations, as
requested by the Person surrendering the same.
As provided in the Indenture and subject to certain limitations
therein set forth, the transfer of this Note is registrable on the Security
Register of the Company, upon surrender of this Note for registration of
transfer at the office or agency of the Company in the Borough of Manhattan,
the City and State of New York, duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Company, the Security
Registrar and the Trustee duly executed by the Holder hereof or his attorney
duly authorized in writing, and thereupon one or more new Registered Notes of
this series, of authorized denominations
12
<PAGE>
and for the same aggregate principal amount, will be issued to the designated
transferee or transferees.
No service charge shall be made for any such registration of
transfer or exchange, but the Company may require payment of a sum sufficient
to cover any tax or other governmental charge payable in connection
therewith.
Prior to due presentment of this Note for registration of transfer,
the Company, the Trustee and any agent of the Company or of the Trustee may
treat the person in whose name this Note is registered as the Holder hereof
for all purposes, whether or not this Note be overdue, and neither the
Company, the Trustee nor such agent shall be affected by notice to the
contrary.
If an event of Default with respect to the Debt Securities of the
series shall have occurred and be continuing, the principal of all the Debt
Securities of this series may be declared due and payable in the manner and
with the effect provided in the Indenture.
In case this Note shall at any time become mutilated, destroyed,
stolen or lost and this Note or evidence of the loss, theft or destruction
hereof (together with such indemnity and such other documents or proof as may
be required by the Company or the Trustee) shall be delivered to the
principal corporate trust office of the Trustee, a new Registered Note of
like tenor and principal amount will be issued by the Company in exchange
for, or in lieu of, this Note. All expenses and reasonable charges
associated with procuring such indemnity and with the preparation,
authentication and delivery of a new Registered Note shall be borne by the
Holder of this Note.
The Indenture permits, with certain exceptions as therein provided,
the amendment thereof and the modification of the rights and obligations of
the Company and the rights of the Holders of the Debt Securities of each
series to be affected under the Indenture at any time by the Company and the
Trustee with the consent of the Holders of not less than a majority in
aggregate principal amount of the Debt Securities at the time Outstanding of
each series to be affected. The Indenture also contains provisions
permitting the Holders of specified percentages in aggregate principal amount
of the Debt Securities of any series at the time Outstanding, on behalf of
the Holders of all Debt Securities of such series, to waive compliance by the
Company with certain provisions of the Indenture and certain past defaults
under the Indenture and their consequences. Any such consent or waiver by
the Holder of this Debt Security shall be conclusive and binding upon such
Holder and upon all future Holders of this Debt
13
<PAGE>
Security and of any Debt Security issued upon the registration of transfer
hereof or in exchange herefor or in lieu hereof, whether or not notation of
such consent or waiver is made upon this Debt Security.
Holders of Debt Securities may not enforce their rights pursuant to
the Indenture or the Debt Securities except as provided in the Indenture. No
reference herein to the Indenture and no provision of this Note or of the
Indenture shall alter or impair the obligation of the Company, which is
absolute and unconditional, to pay the principal of (and premium, if any) and
interest on this Note at the times, place and rate, and in the coin or
currency, herein prescribed.
This Note shall be deemed to be a contract made and to be performed
solely in the State of New York, and for all purposes shall be governed by,
and construed in accordance with, the laws of said State without regard to
the conflicts of law rules of said State.
All terms used in this Note that are defined in the Indenture shall
have the meanings assigned to them in the Indenture.
14
<PAGE>
ABBREVIATIONS
The following abbreviations, when used in the inscription on the face of this
instrument, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM -as tenants in common UNIF GIFT MIN ACT- ________Custodian________
TEN ENT -as tenants by the (Cust) (Minor)
entireties
JT ENT -as joint tenants with Under Uniform Gifts to
right of survivorship and Minors Act
not as tenants in common ________________________
(State)
Additional abbreviations may also be used though not in the above list
____________________________________________________
OPTION TO ELECT REPAYMENT
The undersigned hereby irrevocably requests and instructs the Company to
repay $__________ principal amount of the within Note, pursuant to its terms,
on the "Optional Repayment Date" first occurring after the date of receipt of
the within Note as specified below, together with interest thereon accrued to
the date or repayment, to the undersigned at:
________________________________________________________________________________
________________________________________________________________________________
(Please Print or Type Name and Address of the Undersigned)
and to issue to the undersigned, pursuant to the terms of the Indenture, a
new Note or Notes representing the remaining principal amount of this Note.
For this Option to Elect Repayment to be effective, this Note with the
Option to Elect Repayment duly completed must be received by the Company
within the relevant time period set forth above at its office or agency in
the Borough of Manhattan, the City and State of New York, located initially
at the office of the Trustee at, if delivery is by hand, 130 John Street,
Street Level, New York, New York or, if delivery is by mail, 450 West 33rd
Street, Attention: Corporate Trust Department, New York, New York 10001.
Dated:
____________________________________________
Note: The signature to this Option to Elect
Repayment must correspond with the name as
written upon the face of the within Note in
every particular without alteration or
enlargement or any change whatsoever.
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto
Please insert Social Security or Other
Identifying Number of Assignee
__________________________________________
_____________________________________________________________________________
Please Print or Type Name and Address Including Zip Code of
Assignee
_____________________________________________________________________________
the within Note and all rights thereunder, hereby irrevocably constituting
and appointing
___________________________________________________________________ attorney
to transfer such Note on the books of Salomon Inc with full power of
substitution in the premises.
15
<PAGE>
Dated: ______________ ____________________________________________________
Signature
____________________________________________________
NOTICE: The signature to this assignment must
correspond with the name as it appears upon the face
of the Note in every particular, without alteration
or enlargement or any change whatsoever
16
<PAGE>
FORM OF SERIES E FIXED RATE NOTE
REGISTERED PRINCIPAL AMOUNT
OR FACE AMOUNT
SALOMON INC
No. FX- MEDIUM-TERM NOTE, SERIES E
(FIXED RATE) CUSIP
Due More Than Nine Months from Date of Issue
IF APPLICABLE, THE "TOTAL AMOUNT OF OID" AND "YIELD TO MATURITY" SET FORTH BELOW
WILL BE COMPLETED SOLELY FOR THE PURPOSES OF APPLYING THE FEDERAL INCOME TAX
ORIGINAL ISSUE DISCOUNT ("OID") RULES
Issue Price: Original Issue Date:
Specified Currency:
(If other than U.S. Dollars)
Authorized Denominations:
(If other than as set forth in the
Prospectus Supplement)
Interest Payment Dates:
(If other than as set forth in the
Prospectus Supplement)
Indexed Principal Note: [ ] Yes (see attached) [ ] No
Interest Rate: Stated Maturity:
Interest Rate Reset: [ ] The Interest Rate may not be
changed prior to Stated Maturity.
[ ] The Interest Rate may be changed
prior to Stated Maturity
(see attached)
Optional Reset Dates (if applicable):
<PAGE>
Amortizing Note: [ ] Yes [ ] No
Amortization Schedule:
Optional Redemption: [ ] Yes [ ] No
Optional Redemption Dates:
Redemption Prices:
Optional Repayment: [ ] Yes [ ] No
Optional Repayment Dates:
Optional Repayment Prices:
Optional Extension of Stated Maturity: [ ] Yes [ ] No
Final Maturity:
Discount Note: [ ] Yes [ ] No
Total Amount of OID:
Yield to Maturity:
2
<PAGE>
SALOMON INC, a corporation duly organized and existing under the
laws of the State of Delaware (herein referred to as the "Company"), for
value received hereby promises to pay CEDE & Co. or registered assigns, (a)
the Principal Amount or, in the case of an Indexed Principal Note, the Face
Amount adjusted by reference to prices, changes in prices, or differences
between prices, of securities, currencies, intangibles, goods, articles or
commodities or by such other objective price, economic or other measures (an
"Index") as described on the face hereof, in the Specified Currency on the
Stated Maturity shown above or earlier if and to the extent so provided
herein, and (b) to pay accrued interest on said Principal Amount outstanding
(or in the case of an Indexed Principal Note, the Face Amount then
outstanding) at the Interest Rate shown above from the Original Issue Date
shown above or from the most recent date to which interest has been paid or
duly provided for, semiannually in arrears on March 15 and September 15 of
each year and at Maturity, until, in either case, the Principal Amount then
outstanding or the Face Amount is paid or duly provided for in accordance
with the terms hereof. Interest on this Note, if any, will be computed on
the basis of a 360-day year of twelve 30-day months. The interest so
payable, and punctually paid or duly provided for, on any Interest Payment
Date will, as provided in the Indenture referred to on the reverse hereof, be
paid to the Person in whose name this Note (or one or more Predecessor
Securities) is registered at the close of business on the Regular Record Date
for such interest, which, in the case of interest payable on a March 15, or
September 15 (other than interest payable at Maturity) shall be the March 1
or September 1 (whether or not a Business Day), as the case may be, next
preceding such Interest Payment Date and, in the case of interest payable at
Maturity, shall be the Stated Maturity of this Note. Notwithstanding the
foregoing, if this Note is issued between a Regular Record Date and the
related Interest Payment Date, the interest so payable for the period from
the Original Issue Date to such Interest Payment Date shall be paid on the
next succeeding Interest Payment Date to the Registered Holder hereof on the
related Regular Record Date. Any such interest not so punctually paid or
duly provided for shall forthwith cease to be payable to the Registered
Holder hereof on such Regular Record Date, and may be paid to the Person in
whose name this Note (or one or more Predecessor Securities) is registered at
the close of business on a Special Record Date for the payment of such
Defaulted Interest to be fixed by the Trustee, notice whereof shall be given
to Holders of Notes not less than ten days prior to such Special Record Date,
or may be paid at any time in any other lawful manner not inconsistent with
the requirements of any securities exchange on which the Registered Notes may
be listed, and upon such notice as may be
3
<PAGE>
required by such exchange, all as more fully provided in said Indenture.
For purposes of this Note, "Business Day" means any day, other than
a Saturday or Sunday, that is not a day on which banking institutions are
authorized or required by law or regulation to be closed in (i) The City of
New York or (ii) if the Specified Currency shown above (as defined below) is
other than U.S. dollars, the financial center of the country issuing such
Specified Currency (which, in the case of ECU, shall be Brussels, Belgium).
The indebtedness evidenced by this Note is, to the extent set forth
in the Indenture, expressly subordinated and subject in right of payment to
the prior payment in full of Senior Indebtedness as defined in the Indenture,
and this Note is issued subject to such provisions, and each Holder of this
Note, by accepting the same, agrees to and shall be bound by such provisions
and authorizes and directs the Trustee in his behalf to take such action as
may be necessary or appropriate to acknowledge or effectuate the
subordination as provided in the Indenture and appoints the Trustee as his
attorney-in-fact for any and all such purposes.
If this Note is an Amortizing Note as shown on the face hereof, a
portion or all the principal amount of the Note is payable prior to Stated
Maturity in accordance with a schedule, by application of a formula, or by
reference to an index (as described above).
The principal hereof and any premium and interest hereon are
payable by the Company in the Specified Currency shown above. If the
Specified Currency shown above is other than U.S. dollars, the Company will
arrange to convert all payments in respect hereof into U.S. dollars in the
manner described on the reverse hereof. The Holder hereof may, if so
indicated above, elect to receive all payments in respect hereof in the
Specified Currency by delivery of a written notice to the Trustee not later
than fifteen calendar days prior to the applicable payment date. Such
election will remain in effect until revoked by written notice to the Trustee
received not later than fifteen calendar days prior to the applicable payment
date. If the Company determines that the Specified Currency is not available
for making payments in respect hereof due to the imposition of exchange
controls or other circumstances beyond the Company's control or is no longer
used by the government of the country issuing such currency or for the
settlement of transactions by public institutions or within the international
banking community, then the Holder hereof may not so elect to receive
payments in the Specified Currency, and any such outstanding election shall
be automatically suspended, and payments shall be in
4
<PAGE>
U.S. dollars, until the Company determines that the Specified Currency is
again available for making such payments.
Payments of interest in U.S. dollars (other than interest payable
at Maturity) will be made by check mailed to the address of the Person
entitled thereto as such address shall appear on the Security Register on the
applicable Record Date, provided that, if the Holder hereof is the Holder of
--------
U.S. $10,000,000 (or the equivalent thereof in a currency other than U.S.
dollars determined as provided on the reverse hereof) or more in aggregate
principal amount of Registered Notes of like tenor and term, such U.S. dollar
interest payments will be made by wire transfer of immediately available
funds, but only if appropriate wire transfer instructions have been received
in writing by the Trustee not less than fifteen calendar days prior to the
applicable Interest Payment Date. Simultaneously with any election by the
Holder hereof to receive payments in respect hereof in the Specified Currency
(if other than U.S. dollars), such Holder shall provide appropriate wire
transfer instructions to the Trustee and all such payments will be made by
wire transfer of immediately available funds to an account maintained by the
payee with a bank located outside the United States. The principal hereof
and any premium and interest hereon payable at Maturity will be paid in
immediately available funds upon surrender of this Note at the corporate
trust office or agency of the Trustee located in the City and State of New
York.
REFERENCE IS HEREBY MADE TO THE FURTHER PROVISIONS OF THIS NOTE SET
FORTH ON THE REVERSE HEREOF, AND SUCH FURTHER PROVISIONS SHALL FOR ALL
PURPOSES HAVE THE SAME EFFECT AS THOUGH FULLY SET FORTH IN THIS PLACE.
This Note shall not become valid or obligatory for any purpose
unless and until this Note has been authenticated by Bankers Trust Company,
or its successor, as Trustee.
5
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Note to be executed
under its corporate seal.
Dated:
SALOMON INC
By____________________________________
Chairman of the Board of Directors,
President and Chief Executive Officer
Attest________________________________
Secretary
CERTIFICATE OF AUTHENTICATION
This is one of the Registered Notes issued under the within-
mentioned Indenture.
BANKERS TRUST COMPANY
as Trustee
By____________________________________
Authorized Signatory
6
<PAGE>
SALOMON INC
MEDIUM-TERM NOTE, SERIES E
(FIXED RATE)
This Note is one of a series of duly authorized debt securities of
the Company (the "Debt Securities") issued or to be issued in one or more
series under an indenture dated as of December 1, 1988 (the "Indenture")
between the Company and Bankers Trust Company, as trustee (the "Trustee",
which term includes any successor Trustee under the Indenture) to which
Indenture and all indentures supplemental thereto reference is hereby made
for a statement of the respective rights, limitations of rights, duties and
immunities thereunder of the Company, the Trustee and the Holders of the Debt
Securities and of the terms upon which the Debt Securities are, and are to
be, authenticated and delivered. The U.S. dollar equivalent of the public
offering price or purchase price of Notes denominated in currencies other
than U.S. dollars will be determined by the Company or its agent, on the
basis of the noon buying rate in New York City for cable transfers in foreign
currencies as certified for customs purposes by the Federal Reserve Bank of
New York (the "Market Exchange Rate") for such currencies on the applicable
issue dates.
Unless otherwise specified on the face hereof, the authorized
denominations of Registered Notes denominated in U.S. dollars will be
U.S.$1,000 and any larger amount that is an integral multiple of U.S.$1,000.
The authorized denominations of Registered Notes denominated in a currency
other than U.S. dollars will be as set forth on the respective faces thereof.
Each Registered Note will be issued initially as either a Book-
Entry Note or a Certificated Note. Only Registered Notes denominated and
payable in U.S. dollars may be issued as Book-Entry Notes, and such Notes
will not be exchangeable for Certificated Notes and, except as otherwise
provided in the Indenture, will not otherwise be issuable as Certificated
Notes.
If the Specified Currency is other than U.S. dollars, the amount of
any U.S. dollar payment to be made in respect hereof will be determined by
the Company or its agent based on the highest firm bid quotation expressed in
U.S. dollars received by the Company or its agent at approximately 11:00
a.m., New York City time, on the second Business Day preceding the applicable
payment date (or, if no such rate is quoted on such date, the last date on
which such rate was quoted), from three (or, if three are not available, then
two) recognized foreign exchange dealers in The City of New York selected by
the Company or its agent (one of which may be
7
<PAGE>
Salomon Brothers Inc) for the purchase by the quoting dealer, for settlement
on such payment date, of the aggregate amount of the Specified Currency
payable on such payment date in respect of all Registered Notes denominated
in such Specified Currency. All currency exchange costs will be borne by the
Holders of such Registered Notes by deductions from such payments. If no
such bid quotations are available, then such payments will be made in the
Specified Currency, unless the Specified Currency is unavailable due to the
imposition of exchange controls or to other circumstances beyond the
Company's control, in which case payment will be made as described in the
next paragraph.
Except as set forth below with respect to payments in ECU, if any
payment in respect hereof is required to be made in a Specified Currency
other than U.S. dollars and such currency is unavailable due to the
imposition of exchange controls or other circumstances beyond the Company's
control or is no longer used by the government of the country issuing such
currency or for the settlement of transactions by public institutions of or
within the international banking community, then such payment shall be made
in U.S. dollars until such currency is again available or so used. The
amount so payable in such foreign currency shall be converted into U.S.
dollars on the basis of the most recently available Market Exchange Rate for
such currency or as otherwise indicated on the face hereof. Any payment made
under such circumstances in U.S. dollars will not constitute an Event of
Default under the Indenture. If any payment in respect hereof is required to
be made in European Currency Units ("ECU") and ECU is no longer used in the
European Monetary System, then such payment shall be made in U.S. dollars
until ECU is again so used. The amount of such payment in U.S. dollars shall
be computed on the basis of the equivalent of the ECU in U.S. dollars as of
the second Business Day prior to the date on which such payment is due. The
equivalent of the ECU in U.S. dollars as of any date shall be determined by
the Company or its agent on the following basis. The component currencies of
the ECU for this purpose (the "Components") shall be the currency amounts
that were components of the ECU as of the last date on which the ECU was used
in the European Monetary System. The equivalent of the ECU in U.S. dollars
shall be calculated by aggregating the U.S. dollar equivalents of the
Components. The U.S. dollar equivalent of each of the Components shall be
determined by the Company or its agent on the basis of the most recently
available Market Exchange Rates for such Components or as otherwise indicated
on the face hereof. If the official unit of any component currency is
altered by way of combination or subdivision, the number of units of that
currency as a Component shall be divided or multiplied in the same
proportion. If two or more component currencies are consolidated into a
single currency, the amounts of those
8
<PAGE>
currencies as Components shall be replaced by an amount in such single
currency equal to the sum of the amounts of the consolidated component
currencies expressed in such single currency. If any component currency is
divided into two or more currencies, the amount of that currency as a
Component shall be replaced by amounts of such two or more currencies, each
of which shall be equal to the amount of the former component currency
divided by the number of currencies into which that currency was divided.
The interest payable hereon on each Interest Payment Date shall
include interest accrued through the day before such Interest Payment Date.
If so specified on the face hereof, the interest rate on this Note
may be reset by the Company on the date or dates specified on the face hereof
(each an "Optional Reset Date"). Not later than 40 days prior to each
Optional Reset Date, the Trustee will mail to the Holder of this Note a
notice (the "Reset Notice"), first class, postage prepaid, indicating whether
the Company has elected to reset the interest rate, and if so, (i) such new
interest rate, and (ii) the provisions, if any, for redemption during the
period from such Optional Reset Date to the next Optional Reset Date, or if
there is no such next Optional Reset Date, to the Stated Maturity of this
Note (each such period a "Subsequent Interest Period"), including the date or
dates on which or the period or periods during which and the price or prices
at which such redemption may occur during the Subsequent Interest Period.
Notwithstanding the foregoing, not later than 20 days prior to the
Optional Reset Date, the Company may, at its option, revoke the interest rate
provided for in the Reset Notice and establish a higher interest rate for the
Subsequent Interest Period by causing the Trustee to mail notice of such
higher interest rate to the Holder of this Note. Such notice shall be
irrevocable. All Registered Notes with respect to which the interest rate is
reset on an Optional Reset Date will bear such higher interest rate.
The Holder of this Note will have the option to elect repayment by
the Company on each Optional Reset Date at a price equal to the principal
amount hereof, plus interest accrued to such Optional Reset Date. In order
to obtain repayment on an Optional Reset Date, the Holder must follow the
procedures set forth below for optional repayment, except that the period for
delivery or notification to the Trustee shall be at least 25 but not more
than 35 days prior to such Optional Reset Date, and except that if the Holder
has tendered this Note for repayment pursuant to a Reset Notice, the Holder
may, by written notice to the Trustee, revoke such
9
<PAGE>
tender for repayment until the close of business on the tenth day before the
Optional Reset Date.
If so specified on the face hereof, the Maturity of this Note may
be extended at the option of the Company for the period or periods of whole
years specified on the face hereof, (each an "Extension Period"), up to but
not beyond the date (the "Final Maturity") set forth on the face hereof. If
the Company exercises such option, the Trustee will mail to the Holder of
this Note not later than 40 days prior to the old Stated Maturity a notice
(the "Extension Notice"), first class, postage prepaid indicating (i) the
election of the Company to extend the Maturity, (ii) the new Stated Maturity,
(iii) the interest rate applicable to the Extension Period, and (iv) the
provisions, if any, for redemption during such Extension Period. Upon the
Trustee's mailing of the Extension Notice, the Maturity of this Note shall be
extended automatically and, except as modified by the Extension Notice and as
described in the next paragraph, this Note will have the same terms as prior
to the mailing of such Notice.
Notwithstanding the foregoing, not later than 20 days prior to the
old Stated Maturity of this Note, the Company may, at its option, revoke the
interest rate provided for in the Extension Notice and establish a higher
interest rate for the Extension Period by causing the Trustee to mail notice
of such higher interest rate, first class, postage prepaid, to the Holder of
this Note. Such notice shall be irrevocable. All Registered Notes with
respect to which the Maturity is extended will bear such higher interest
rate.
If the Company extends the Maturity of this Note, the Holder will
have the option to elect repayment of this Note by the Company on the old
Stated Maturity at a price equal to the principal amount hereof, plus
interest accrued to such date. In order to obtain repayment on the old
Stated Maturity once the Company has extended the Maturity hereof, the Holder
must follow the procedures set forth below for optional repayment, except
that the period for delivery or notification to the Trustee shall be at least
25 but not more than 35 days prior to the old Stated Maturity, and except
that if the Holder has tendered this Note for repayment pursuant to an
Extension Notice, the Holder may, by written notice to the Trustee, revoke
such tender for repayment until the close of business on the tenth day before
the old Stated Maturity.
If so specified on the face hereof, the Company may, at its option,
redeem this Note in whole, or from time to time in part, on or after the date
designated as the Initial Redemption Date on the face hereof, at prices
declining from a specified premium, if any, to par, together with accrued
interest to the date of redemption. The Company may exercise
10
<PAGE>
such option by causing the Trustee to mail a notice of such redemption at
least 30 but not more than 60 days prior to the date of redemption. In the
event of redemption of this Note in part only, a new Note or Notes for the
unredeemed portion hereof shall be issued in the name of the Holder hereof
upon the cancellation hereof.
If so specified on the face hereof, this Note will be repayable
prior to Maturity at the option of the Holder on the Optional Repayment Dates
shown on the face hereof at the Optional Repayment Prices shown on the face
hereof, together with accrued interest to the date of repayment. In order
for this Note to be repaid, the Trustee must receive at least 30 but not more
than 45 days prior to an Optional Repayment Date (i) this Note with the form
below entitled "Option to Elect Repayment" duly completed; or (ii) a
telegram, telex, facsimile transmission or letter from a member of a national
securities exchange or the National Association of Securities Dealers, Inc.
or a commercial bank or trust company in the United States of America setting
forth the name of the Holder of this Note, the principal amount of the Note
to be repaid, the certificate number or a description of the tenor and terms
of this Note, a statement that the option to elect repayment is being
exercised thereby and a guarantee that this Note with the form below entitled
"Option to Elect Repayment" duly completed will be received by the Trustee
not later than five Business Days after the date of such telegram, telex,
facsimile transmission or letter. If the procedure described in clause (ii)
of the preceding sentence is followed, this Note with form duly completed
must be received by the Trustee by such fifth Business Day. Any tender of
this Note for Repayment (except pursuant to a Reset Notice or an Extension
Notice) shall be irrevocable. The repayment option may be exercised by the
Holder of this Note for less than the entire principal amount of the Note
provided that the principal amount of this Note remaining outstanding after
--------
repayment is an authorized denomination. Upon such partial repayment, this
Note shall be cancelled and a new Note or Notes for the remaining principal
amount hereof shall be issued in the name of the Holder of this Note.
This Note will not be subject to any sinking fund.
Notwithstanding anything herein to the contrary, if this Note is a
Discount Note, the amount payable in the event of redemption or repayment
prior to the Stated Maturity hereof, in lieu of the principal amount due at
the Stated Maturity hereof, shall be the Amortized Face Amount of this Note
as of the redemption date or the date of repayment, as the case may be. The
"Amortized Face Amount" of this Note shall be the amount equal to (a) the
Issue Price (as set forth on the face hereof) plus (b) that portion of the
difference
11
<PAGE>
between the Issue Price and the principal amount hereof that has accrued at
the Yield to Maturity (as set forth on the face hereof) (computed in
accordance with generally accepted United States bond yield computation
principles) at the date as of which the Amortized Face Amount is calculated,
but in no event shall the Amortized Face Amount of this Note exceed its
principal amount.
If this Note is an Indexed Principal Note, then the principal
amount payable at Stated Maturity or earlier redemption or retirement, is
determined by reference to the amount designated on the face hereof as the
Face Amount of this Note and by reference to the Index as described on the
face hereof. If this Note is an Indexed Principal Note, the principal amount
payable at Stated Maturity or any earlier redemption or repayment of this
Note may be different from the Face Amount. If the determination of the
Index is calculated or announced by a third party, which may be Salomon
Brothers Inc or another affiliate of the Company and such third party either
suspends the calculation or announcement of such Index or changes the basis
upon which such Index is calculated (other than changes consistent with
policies in effect at the time this Note was issued and permitted changes
described on the face hereof), then such Index shall be calculated for this
Note's purposes by another third party selected by the Company, which may be
Salomon Brothers Inc or another affiliate of the Company subject to the same
conditions and controls as applied to the original third party. If for any
reason such Index cannot be calculated on the same basis and subject to the
same conditions and controls as applied to the original third party, then any
indexed principal amount of this Note shall be calculated in the manner
described on the face hereof. Any determination of such third party shall in
the absence of manifest error be binding on all parties.
As provided in the Indenture and subject to certain limitations
therein set forth, this Note is exchangeable for a like aggregate principal
amount of Registered Notes of different authorized denominations, as
requested by the Person surrendering the same.
As provided in the Indenture and subject to certain limitations
therein set forth, the transfer of this Note is registrable on the Security
Register of the Company, upon surrender of this Note for registration of
transfer at the office or agency of the Company in the Borough of Manhattan,
the City and State of New York, duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Company, the Security
Registrar and the Trustee duly executed by the Holder hereof or his attorney
duly authorized in writing, and thereupon one or more new Registered Notes of
this series, of authorized denominations
12
<PAGE>
and for the same aggregate principal amount, will be issued to the designated
transferee or transferees.
No service charge shall be made for any such registration of
transfer or exchange, but the Company may require payment of a sum sufficient
to cover any tax or other governmental charge payable in connection
therewith.
Prior to due presentment of this Note for registration of transfer,
the Company, the Trustee and any agent of the Company or of the Trustee may
treat the person in whose name this Note is registered as the Holder hereof
for all purposes, whether or not this Note be overdue, and neither the
Company, the Trustee nor such agent shall be affected by notice to the
contrary.
If an event of Default with respect to the Debt Securities of the
series shall have occurred and be continuing, the principal of all the Debt
Securities of this series may be declared due and payable in the manner and
with the effect provided in the Indenture.
In case this Note shall at any time become mutilated, destroyed,
stolen or lost and this Note or evidence of the loss, theft or destruction
hereof (together with such indemnity and such other documents or proof as may
be required by the Company or the Trustee) shall be delivered to the
principal corporate trust office of the Trustee, a new Registered Note of
like tenor and principal amount will be issued by the Company in exchange
for, or in lieu of, this Note. All expenses and reasonable charges
associated with procuring such indemnity and with the preparation,
authentication and delivery of a new Registered Note shall be borne by the
Holder of this Note.
The Indenture permits, with certain exceptions as therein provided,
the amendment thereof and the modification of the rights and obligations of
the Company and the rights of the Holders of the Debt Securities of each
series to be affected under the Indenture at any time by the Company and the
Trustee with the consent of the Holders of not less than a majority in
aggregate principal amount of the Debt Securities at the time Outstanding of
each series to be affected. The Indenture also contains provisions
permitting the Holders of specified percentages in aggregate principal amount
of the Debt Securities of any series at the time Outstanding, on behalf of
the Holders of all Debt Securities of such series, to waive compliance by the
Company with certain provisions of the Indenture and certain past defaults
under the Indenture and their consequences. Any such consent or waiver by
the Holder of this Debt Security shall be conclusive and binding upon such
Holder and upon all future Holders of this Debt
13
<PAGE>
Security and of any Debt Security issued upon the registration of transfer
hereof or in exchange herefor or in lieu hereof, whether or not notation of
such consent or waiver is made upon this Debt Security.
Holders of Debt Securities may not enforce their rights pursuant to
the Indenture or the Debt Securities except as provided in the Indenture. No
reference herein to the Indenture and no provision of this Note or of the
Indenture shall alter or impair the obligation of the Company, which is
absolute and unconditional, to pay the principal of (and premium, if any) and
interest on this Note at the times, place and rate, and in the coin or
currency, herein prescribed.
This Note shall be deemed to be a contract made and to be performed
solely in the State of New York, and for all purposes shall be governed by,
and construed in accordance with, the laws of said State without regard to
the conflicts of law rules of said State.
All terms used in this Note that are defined in the Indenture shall
have the meanings assigned to them in the Indenture.
14
<PAGE>
ABBREVIATIONS
The following abbreviations, when used in the inscription on the face of this
instrument, shall be construed as though they were written out in full
according to applicable laws or regulations:
UNIF GIFT MIN ACT-
TEN COM -as tenants in common _________Custodian___________
TEN ENT -as tenants by the entireties (Cust) (Minor)
JT ENT -as joint tenants with right of Under Uniform Gifts to Minors
survivorship and not as tenants
in common _____________________________
(State)
Additional abbreviations may also be used though not in the above list
- --------------------------------------------------------------------------------
OPTION TO ELECT REPAYMENT
The undersigned hereby irrevocably requests and instructs the Company to
repay $__________ principal amount of the within Note, pursuant to its terms, on
the "Optional Repayment Date" first occurring after the date of receipt of the
within Note as specified below, together with interest thereon accrued to the
date or repayment, to the undersigned at:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Please Print or Type Name and Address of the Undersigned)
and to issue to the undersigned, pursuant to the terms of the Indenture, a new
Note or Notes representing the remaining principal amount of this Note.
For this Option to Elect Repayment to be effective, this Note with the
Option to Elect Repayment duly completed must be received by the Company within
the relevant time period set forth above at its office or agency in the Borough
of Manhattan, the City and State of New York, located initially at the office of
the Trustee at, if delivery is by hand, 130 John Street, Street Level, New York,
New York or, if delivery is by mail, 450 West 33rd Street, Attention: Corporate
Trust Department, New York, New York 10001.
Dated:
____________________________________________
Note: The signature to this Option to Elect
Repayment must correspond with the name as
written upon the face of the within Note in
every particular without alteration or
enlargement or any change whatsoever.
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto
Please insert Social Security or Other
Identifying Number of Assignee
___________________________________________
________________________________________________________________________________
________________________________________________________________________________
Please Print or Type Name and Address Including Zip Code of Assignee
________________________________________________________________________________
the within Note and all rights thereunder, hereby irrevocably constituting
and appointing
_______________________________________________________________________attorney
to transfer such Note on the books of Salomon Inc with full power of
substitution in the premises.
15
<PAGE>
Dated: ______________________ _______________________________________
Signature
____________________________________________________
NOTICE: The signature to this assignment must
correspond with the name as it appears upon the face
of the Note in every particular, without alteration
or enlargement or any change whatsoever
16
<PAGE>
FORM OF SERIES D FLOATING RATE OR INDEXED RATE BEARER NOTE
BEARER PRINCIPAL AMOUNT
OR FACE AMOUNT
SALOMON INC
No. FL- MEDIUM-TERM NOTE, SERIES D
(FLOATING RATE OR INDEXED RATE) CUSIP
Due More Than Nine Months from Date of Issue
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 SECTION 165(j) AND 1287(a) OF THE INTERNAL REVENUE CODE.
IF APPLICABLE, THE "TOTAL AMOUNT OF OID" AND "YIELD TO MATURITY" SET
FORTH BELOW WILL BE COMPLETED SOLELY FOR THE PURPOSES OF APPLYING THE FEDERAL
INCOME TAX ORIGINAL ISSUE DISCOUNT ("OID") RULES
Issue Price: Original Issue Date:
Initial Interest Rate: Stated Maturity:
Specified Currency:
(If other than U.S. Dollars)
Authorized Denominations:
(If other than as set forth in the Prospectus Supplement)
Base Rate: [ ] CD Rate [ ] Commercial Paper [ ] Federal Funds Rate
[ ] LIBOR Telerate [ ] LIBOR Reuters [ ] Treasury Rate
[ ] Treasury Rate Constant Maturity [ ] Other (see attached)
Interest Reset Period Index Maturity:
or Interest Reset Dates:
Interest Payment Dates:
(If other than as set forth in the Prospectus Supplement)
Indexed Principal Note: [ ] Yes (see attached) [ ] No
Floating Rate: [ ] Indexed Interest Rate [ ] (See attached)
Spread Multiplier: Spread (+/-):
Spread Reset: [ ] The Spread or Spread Multiplier may not be changed prior to
Stated Maturity.
[ ] The Spread or Spread Multiplier may be changed prior to
Stated Maturity (see attached).
<PAGE>
Optional Reset Dates (if applicable):
Maximum Interest Rate: Minimum Interest Rate:
Amortizing Note: [ ] Yes [ ] No
Amortization Schedule:
Optional Redemption: [ ] Yes [ ] No
Optional Redemption Dates:
Redemption Prices:
Optional Repayment: [ ] Yes [ ] No
Optional Repayment Dates:
Optional Repayment Prices:
Optional Extension of Stated Maturity: [ ] Yes [ ] No
Final Maturity:
Discount Note: [ ] Yes [ ] No
Total Amount of OID:
Yield to Maturity:
IF THE SPECIFIED CURRENCY OF THIS NOTE IS POUNDS STERLING, THE FOLLOWING
APPLIES: THIS NOTE IS ISSUED IN ACCORDANCE WITH THE REGULATIONS MADE UNDER
SECTION 4 OF THE BANKING ACT 1987.
2
<PAGE>
SALOMON INC, a corporation duly organized and existing under the laws of
the State of Delaware (the "Company"), for value received, hereby promises to
pay to bearer, upon presentation and surrender hereof, or earlier if and to
the extent so provided herein, (a) the Principal Amount or, in the case of an
Indexed Principal Note, the Face Amount adjusted by reference to prices,
changes in prices, or differences between prices, of securities, currencies,
intangibles, goods, articles or commodities or by such other objective price,
economic or other measures (an "Index") as described on the face hereof, in
the Specified Currency on the Stated Maturity shown above or earlier if and
to the extent so provided herein, and (b) to pay accrued interest (i) if this
is a Floating Rate Note, on the Principal Amount then outstanding (or in the
case of an Indexed Principal Note, the Face Amount then outstanding), at the
Initial Interest Rate shown above from the Original Issue Date shown above
until the first Interest Reset Date shown above following the Original Issue
Date and thereafter at the Base Rate shown above, adjusted by the Spread or
Spread Multiplier, if any, shown above, determined in accordance with the
provisions on the reverse hereof, or (ii) if this is an Indexed Rate Note, on
the principal amount then outstanding (or in the case of an Indexed Principal
Note, the Face Amount, then outstanding) at a rate adjusted by reference to
an Index described on the face hereof, in arrears to the bearer of the
interest coupons attached hereto (the "Coupons") upon surrender thereof as
they shall severally mature at the rates per annum and on the dates,
determined as described on the reverse hereof, until, in either case, the
Principal Amount or the Face Amount is paid or duly provided for in
accordance with the terms hereof.
For purposes of this Note, "Business Day" means any day, other than a
Saturday or Sunday, that is not a day on which banking institutions are
authorized or required by law or regulation to be closed in (a) The City of
New York, (b) London, England, (c) the place in which this Note or any Coupon
is presented for payment or (d) if the Specified Currency (as defined below)
is other than U.S. dollars, the financial center of the country issuing the
Specified Currency (which in the case of European Currency Units ("ECU")
shall be Brussels, Belgium).
If this Note is an Amortizing Note as shown on the face hereof, a
portion or all the principal amount of the Note is payable prior to Stated
Maturity in accordance with a schedule, by application of a formula, or by
reference to an index (as described above).
Except under certain circumstances for Notes having Specified Currencies
other than U.S. dollars, payments of the principal hereof and any premium and
interest hereon will be made only in the Specified Currency. Payments in
respect of this Note and any Coupon will be made only against surrender
<PAGE>
of this Note or such Coupon, at the offices of the Paying Agents outside the
United States listed on the reverse hereof. At the direction of the Holder
of this Note or any Coupon, and subject to applicable laws and regulations,
such payments will be made by check drawn on a bank in The City of New York
(in the case of U.S. dollar payments) or outside the United States (in the
case of payments in a currency other than U.S. dollars) mailed to an address
outside the United States furnished by the Holder hereof or, at the option of
the Holder hereof, by wire transfer (pursuant to written instructions
supplied by the Holder hereof) to an account maintained by the payee with a
bank located outside the United States. No payment in respect of this Note
or any Coupon will be made upon presentation of this Note or such Coupon at
any office or agency of the Trustee or any other paying agency maintained by
the Company in the United States, nor will any such payment be made by
transfer to an account, or by mail to an address, in the United States.
Notwithstanding the foregoing, if U.S. dollar payments in respect of this
Note or any Coupons at the offices of all Paying Agents outside the United
States become illegal or are effectively precluded because of the imposition
of exchange controls or similar restrictions on the full payment or receipt
of such amounts in U.S. dollars, the Company will appoint an office or agency
(which may be the Trustee) in the United States at which such payments may be
made.
REFERENCE IS HEREBY MADE TO THE FURTHER PROVISIONS OF THIS NOTE SET
FORTH ON THE REVERSE HEREOF, AND SUCH FURTHER PROVISIONS SHALL FOR ALL
PURPOSES HAVE THE SAME EFFECT AS THOUGH FULLY SET FORTH IN THIS PLACE.
This Note shall not become valid or obligatory for any purpose unless
and until this Note has been authenticated by Citibank, N.A., or its
successor, as Trustee.
2
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Note to be executed
under its corporate seal.
Dated:
SALOMON INC
By_____________________________________
Chairman of the Board of Directors,
President and Chief Executive Officer
[Seal]
Attest:________________________________
Secretary
CERTIFICATE OF AUTHENTICATION
This is one of the Bearer Notes issued under the within-mentioned
Indenture.
CITIBANK, N.A.
as Trustee
By_____________________________________
Authorized Officer
3
<PAGE>
SALOMON INC
MEDIUM-TERM NOTE, SERIES D
(FLOATING OR INDEXED RATE)
General
-------
This Note is one of a series of duly authorized debt securities of the
Company (the "Debt Securities") issued or to be issued in one or more series
under an indenture dated as of December 1, 1988 (the "Indenture") between the
Company and Citibank, N.A., as trustee (the "Trustee", which term includes
any successor Trustee under the Indenture), to which Indenture and all
indentures supplemental thereto reference is hereby made for a statement of
the respective rights, limitations of rights, duties and immunities
thereunder of the Company, the Trustee and the Holders of the Debt Securities
and of the terms upon which the Debt Securities are, and are to be,
authenticated and delivered. The U.S. dollar equivalent of the public
offering price or purchase price of Notes denominated in currencies other
than U.S. dollars will be determined by the Company or its agent, on the
basis of the noon buying rate in New York City for cable transfers in foreign
currencies as certified for customs purposes by the Federal Reserve Bank of
New York (the "Market Exchange Rate") for such currencies on the applicable
issue dates.
Unless otherwise specified on the face hereof, the authorized
denominations of Bearer Notes denominated in U.S. dollars will be U.S.$25,000
and any larger amount that is an integral multiple of U.S.$5,000. The
authorized denominations of Bearer Notes having a specified currency other
than U.S. dollars will be, unless otherwise specified herein, the approximate
equivalents thereof in the Specified Currency.
If so specified on the face hereof, this Note will be redeemable at the
option of the Company in whole or from time to time in part, on any date on
or after the date designated as the Initial Redemption Date on the face
hereof, upon the Company's giving the Trustee at least 45 days' notice, at
the Redemption Price determined as provided on the face hereof. If redeemed
prior to its Stated Maturity, this Note must be presented for payment
together with all unmatured Coupons, if any, appertaining hereto, failing
which the amount of any missing unmatured Coupon will be deducted from the
sum due for payment. The Bearer Notes will not be subject to any sinking
fund.
The Bearer Notes may be redeemed at the option of the Company in whole,
but not in part, at any time on giving not less than 30 or more than 60 days'
notice as set forth below, which notice shall be irrevocable, at their
Redemption Prices,
<PAGE>
if the Company has or will become obligated to pay additional interest on the
Bearer Notes as described below as a result of any change in, or amendment
to, the laws (or any regulations or rulings promulgated thereunder) of the
United States or any political subdivision or taxing authority thereof or
therein, or any change in the application or official interpretation of such
laws, regulations or rulings, which change or amendment becomes effective on
or after the Original Issue Date, and such obligation cannot be avoided by
the Company taking reasonable measures available to it. No such notice of
redemption shall be given earlier than 90 days prior to the earliest date on
which the Company would be obligated to pay such additional interest were a
payment in respect of the Bearer Notes then due. Prior to the publication of
any notice of redemption pursuant to this paragraph, the Company shall
deliver to the Trustee a certificate stating that the Company is entitled to
effect such redemption and setting forth a statement of facts showing that
the conditions precedent to the right of the Company so to redeem have
occurred, and an opinion of independent counsel to the effect that the
Company has or will become obligated to pay such additional interest as a
result of such change or amendment.
If so specified on the face hereof, this Note will be repayable prior to
its Stated Maturity at the option of the Holder on the Optional Repayment
Dates shown on the face hereof at the Optional Repayment Prices shown on the
face hereof, together with accrued interest to the date of repayment. In
order for this Note to be repaid, the Principal Paying Agent (as specified
below) must receive the Note at least 30 but not more than 45 days prior to
an Optional Repayment Date. Any tender of this Note for repayment shall be
irrevocable. The repayment option may be exercised by the Holder hereof for
less than the entire principal amount hereof, provided that the principal
--------
amount of the Note remaining outstanding after repayment is an authorized
denomination. Upon such partial repayment, this Note shall be cancelled and
a new Note or Notes for the remaining principal amount hereof shall be issued
to the Holder of this Note.
Payment of Additional Interest
------------------------------
The Company will, subject to the exceptions and limitations set forth
below, pay as additional interest to the Holder of this Note or any Coupon
that is a United States Alien (as defined below) such amounts as may be
necessary so that every net payment on this Note or such Coupon, after
deduction or withholding for or on account of any present or future tax,
assessment or other governmental charge imposed upon or as a result of such
payment by the United States (or any political subdivision or taxing
authority thereof or therein), will not be less than the amount provided in
this
2
<PAGE>
Note or such Coupon to be then due and payable. However, the Company will
not be required to make any such payment of additional interest to such
Holder for or an account of:
(a) any tax, assessment or other governmental charge that would
not have been imposed but for (i) the existence of any present or former
connection between such Holder (or between a fiduciary, settlor or
beneficiary of, or a Person holding a power over, such Holder, if such
Holder is an estate or a trust, or a member or shareholder of such
Holder, if such Holder is a partnership or a corporation) and the United
States, including, without limitation, such Holder (or such fiduciary,
settlor, beneficiary, Person holding a power, member or shareholder)
being or having been a citizen or resident thereof or being or having
been engaged in trade or business or present therein or having or having
had a permanent establishment therein or (ii) such Holder's past or
present status as a passive foreign investment company, a personal
holding company, foreign personal holding company, a controlled foreign
corporation for United States tax purposes or private foundation or
other tax-exempt organization with respect to the United States or as a
corporation that accumulates earnings to avoid United States federal
income tax;
(b) any estate, inheritance, gift, sales, transfer or personal
property tax or any similar tax, assessment or other governmental
charge;
(c) any tax, assessment or other governmental charge that would
not have been imposed but for the presentation by the Holder of this
Note or such Coupon for payment more than 15 days after the date on
which such payment became due and payable or on which payment thereof
was duly provided for, whichever occurred later;
(d) any tax, assessment or other governmental charge that is
payable otherwise than by deduction or withholding from a payment on
this Note or such Coupon;
(e) any tax, assessment or other governmental charge required to
be deducted or withheld by any Paying Agent from a payment on this Note
or such Coupon, if such payment can be made without such deduction or
withholding by any other Paying Agent;
(f) any tax, assessment or other governmental charge that would
not have been imposed but for a failure to comply with any applicable
certification, documentation, information or other reporting requirement
concerning the nationality, residence, identity or
3
<PAGE>
connection with the United States of the Holder or beneficial owner of
this Note or such Coupon if, without regard to any tax treaty, such
compliance is required by statute or regulation of the United States as
a pre-condition to relief or exemption from such tax, assessment or
other governmental charge; or
(g) any tax, assessment or other governmental charge imposed on a
Holder that actually or constructively owns ten percent or more of the
combined voting power of all classes of stock of the Company (taking
into account applicable attribution of ownership rules under Section
871(h)(3) of the Internal Revenue Code of 1986, as amended) or is a
controlled foreign corporation related to the Company through stock
ownership;
nor shall such additional interest be paid with respect to a payment on this
Note or such Coupon to a Holder that is a fiduciary or partnership or other
than the sole beneficial owner of such payment to the extent a beneficiary or
settlor with respect to such fiduciary or a member of such partnership or a
beneficial owner would not have been entitled to the additional interest had
such beneficiary, settlor, member or beneficial owner been the Holder of this
Note or such Coupon.
The term "United States Alien" means any person who, for United
States federal income tax purposes, is a foreign corporation, a nonresident
alien individual, a nonresident alien fiduciary of a foreign estate or trust,
or a foreign partnership one or more of the members of which is, for United
States federal income tax purposes, a foreign corporation, a nonresident
alien individual or a nonresident alien fiduciary of a foreign estate or
trust.
The Company has initially appointed as its Paying Agents for Bearer
Notes of this Series the offices listed below:
Principal Paying Agent:
Citibank, N.A.
Issuer Services
336 Strand
London, WC2R OEA
Paying Agent:
Citibank (Luxembourg), S.A.
16 Avenue Marie Therese
Luxembourg
4
<PAGE>
The Company reserves the right at any time to vary or terminate the
appointment of any Paying Agent and to appoint additional or other Paying
Agents and to approve any change in the office through which any Paying Agent
acts, provided that there will at all times be a Paying Agent (which may be
the Trustee) in at least one city in Europe, which, so long as Bearer Notes
are listed on the Luxembourg Stock Exchange and that exchange shall so
require, shall include Luxembourg. Notice of any such termination or
appointment and of any changes in the specified offices of the Trustee or any
Paying Agent will be given to the Holder hereof as described below.
Unless otherwise specified on the face hereof, if this Note is a
Floating Rate Note, this Note will bear interest from its Original Issue Date
to the first Interest Reset Date (as defined below) at the Initial Interest
Rate set forth on the face hereof. Thereafter, the interest rate hereon for
each Interest Reset Period (as defined below) will be determined by reference
to an interest rate basis (the "Base Rate"), plus or minus the Spread, if
any, or multiplied by the Spread Multiplier, if any. The "Spread" is the
number of basis points (one basis point equals one one-hundredth of a
percentage point) that may be specified on the face hereof, and the "Spread
Multiplier" is the percentage that may be specified on the face hereof. The
face of this Note will designate one of the following Base Rates as
applicable hereto: (i) the CD Rate (a "CD Rate Note"), (ii) the Commercial
Paper Rate (a "Commercial Paper Rate Note"), (iii) the Federal Funds Rate (a
"Federal Funds Rate Note"), (iv) LIBOR (a "LIBOR Note"), (v) the Treasury
Rate (a "Treasury Rate Note") or (vi) such other Base Rate as is set forth on
the face hereof. The "Index Maturity" is the period of maturity of the
instrument or obligation from which the Base Rate is calculated. "H.15(519)"
means the publication entitled "Statistical Release H.15(519), Selected
Interest Rates", or any successor publication, published by the Board of
Governors of the Federal Reserve System. "Composite Quotations" means the
daily statistical release entitled "Composite 3:30 p.m. Quotations for U.S.
Government Securities" published by the Federal Reserve Bank of New York.
Unless otherwise specified on the face hereof, the interest payable
hereon shall be the accrued interest from and including the Original Issue
Date or the last date to which interest has been paid, as the case may be, to
but excluding the applicable Interest Payment Date; provided, however, that
-------- -------
if the interest rate is reset daily or weekly, interest payable shall be the
accrued interest from and including the Original Issue Date or the last date
to which interest has been accrued and paid, as the case may be, to but
excluding the date fifteen calendar days immediately preceding the
5
<PAGE>
applicable Interest Payment Date, except that interest payable at Maturity
will include interest accrued to but excluding the date of Maturity. Accrued
interest will be calculated by multiplying the principal amount hereof (or if
this Note is an Indexed Principal Note, the Face Amount specified on the face
hereof) by an accrued interest factor. Such accrued interest factor shall be
computed by adding the interest factors calculated for each day in the period
for which accrued interest is being calculated. The interest factor
(expressed as a decimal calculated to seven decimal places without rounding)
for each such day shall be computed by dividing the interest rate in effect
on such day by 360 if the Base Rate specified on the face hereof is the CD
Rate, the Commercial Paper Rate, the Federal Funds Rate or LIBOR, or by the
actual number of days in the year if the Base Rate specified on the face
hereof is the Treasury Rate. For purposes of making the foregoing
calculation, the interest rate in effect on any Interest Reset Date will be
the applicable rate as reset on such date. Unless otherwise specified on the
face hereof, all percentages resulting from any calculation of the rate of
interest hereon will be rounded, if necessary, to the nearest 1/100,000 of 1%
(.0000001), with five one-millionths of a percentage point rounded upward,
and all currency amounts used in or resulting from such calculation will be
rounded to the nearest one-hundredth of a unit (with .005 of a unit being
rounded upward).
As specified on the face hereof, the interest rate hereon will be
reset daily, weekly, monthly, quarterly, semiannually or annually (such
period being the "Interest Reset Period", and the first day of each Interest
Reset Period being an "Interest Reset Date"). Unless otherwise specified on
the face hereof, the Interest Reset Date will be, if this Note resets daily,
each Business Day; if this Note is not a Treasury Rate Note and it resets
weekly, Wednesday of each week; if this Note is a Treasury Rate Note that
resets weekly, Tuesday of each week (except as provided below under
"Determination of Treasury Rate"); if this Note resets monthly, the third
Wednesday of each month; if this Note resets quarterly, the third Wednesday
of March, June, September and December of each year; if this Note resets
semiannually, the third Wednesday of each of two months of each year
specified on the face hereof; and if this Note resets annually, the third
Wednesday of one month of each year specified on the face hereof; provided,
--------
however, that in all instances the interest rate in effect for the ten days
-------
immediately prior to Maturity will be that in effect on the tenth day
preceding the date of Maturity. If an Interest Reset Date for this Note
would otherwise be a day that is not a Business Day, such Interest Reset Date
shall be postponed to the next succeeding Business Day, except that if this
Note is a LIBOR Note and such Business Day is in the next succeeding
6
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calendar month, such Interest Reset Date shall be the immediately preceding
Business Day. Notwithstanding the foregoing, the interest rate hereon during
any interest period shall not be greater than the Maximum Interest Rate, if
any, or less than the Minimum Interest Rate, if any, shown on the face
hereof. In addition to any Maximum Interest Rate that may be applicable
hereto, the interest rate hereon during any interest period will in no event
be higher than the maximum rate permitted by applicable law as the same may
be modified by United States law of general application. This Note will be
governed by the law of the State of New York and, under such law, the maximum
rate of interest, with certain exceptions, is 25% per annum on a simple
interest basis.
Unless otherwise indicated on the face hereof and except as
provided below, interest will be payable, if this Note resets daily, weekly
or monthly, on the third Wednesday of each month or on the third Wednesday of
March, June, September and December of each year, as specified on the face
hereof; if this Note resets quarterly, on the third Wednesday of March, June,
September and December of each year; if this Note resets semiannually, on the
third Wednesday of each of the two months of each year specified on the face
hereof; and if this Note resets annually, on the third Wednesday of the month
of each year specified on the face hereof (each such day being an "Interest
Payment Date"). If any Interest Payment Date would otherwise be a day that
is not a Business Day, such Interest Payment Date shall be postponed to the
next succeeding Business Day, except that, if the Base Rate specified on the
face hereof is LIBOR and such Business Day is in the next succeeding calendar
month, such Interest Payment Date shall be the immediately preceding Business
Day.
The Company will appoint, and enter into an agreement with, an
agent ("Calculation Agent") to calculate interest rates on this Note. All
determinations of interest rates by the Calculation Agent shall, in the
absence of manifest error, be conclusive for all purposes and binding on the
Holder hereof. Unless otherwise specified on the face hereof, Citibank, N.A.
shall be the Calculation Agent for this Note. At the request of the Holder
hereof, the Calculation Agent will provide the interest rate then in effect
and, if determined, the interest rate that will become effective on the next
Interest Reset Date. In addition, such information will be communicated to
the Luxembourg Stock Exchange and will be made available at the offices of
the Paying Agent in Luxembourg and at the Luxembourg Stock Exchange.
Subject to applicable provisions of law and except as specified
herein, on each Interest Reset Date the rate of interest hereon shall be the
rate determined in accordance with the provisions under the applicable
heading below.
7
<PAGE>
Determination of CD Rate
------------------------
If the Base Rate specified on the face hereof is the CD Rate, this
Note will bear interest for each Interest Reset Period at the interest rate
calculated with reference to the CD Rate and the Spread or Spread Multiplier,
if any, specified on the face hereof. The "CD Rate" for each Interest Reset
Period shall be the rate as of the second Business Day prior to the Interest
Reset Date for such Interest Reset Period (a "CD Rate Determination Date")
for negotiable certificates of deposit having the Index Maturity specified on
the face hereof as published in H.15(519) under the heading "CDs (Secondary
Market)". In the event that such rate is not published prior to 3:00 p.m.,
New York City time, on the Calculation Date (as defined below) pertaining to
such CD Rate Determination Date, then the "CD Rate" for such Interest Reset
Period will be the rate on such CD Rate Determination Date for negotiable
certificates of deposit of the Index Maturity specified on the face hereof as
published in Composite Quotations under the heading "Certificates of
Deposit". If by 3:00 p.m., New York City time, on such Calculation Date such
rate is not yet published in either H.15(519) or Composite Quotations, then
the "CD Rate" for such Interest Reset Period will be calculated by the
Calculation Agent and will be the arithmetic mean of the secondary market
offered rates as of 10:00 a.m., New York City time, on such CD Rate
Determination Date, of three leading nonbank dealers in negotiable U.S.
dollar certificates of deposit in The City of New York selected by the
Calculation Agent for negotiable certificates of deposit of major United
States money center banks of the highest credit standing (in the market for
negotiable certificates of deposit) with a remaining maturity closest to the
Index Maturity specified on the face hereof in a denomination of $5,000,000;
provided, however, that if the dealers selected as aforesaid by the
-------- -------
Calculation Agent are not quoting offered rates as mentioned in this
sentence, the "CD Rate" for such Interest Reset Period will be the same as
the CD Rate for the immediately preceding Interest Reset Period (or, if there
was no such Interest Period, the Initial Interest Rate).
The "Calculation Date" pertaining to any CD Rate Determination Date
shall be the tenth calendar day after such CD Rate Determination Date or, if
such day is not a Business Day, the next succeeding Business Day.
Determination of Commercial Paper Rate
--------------------------------------
If the Base Rate specified on the face hereof is the Commercial
Paper Rate, this Note will bear interest for each Interest Reset Period at
the interest rate calculated with reference to the Commercial Paper Rate and
the Spread or Spread Multiplier, if any, specified on the face hereof. The
8
<PAGE>
"Commercial Paper Rate" for each Interest Reset Period will be determined by
the Calculation Agent as of the second Business Day prior to the Interest
Reset Date for such Interest Reset Period (a "Commercial Paper Rate
Determination Date") and shall be the Money Market Yield (as defined below)
on such Commercial Paper Rate Determination Date of the rate for commercial
paper having the Index Maturity specified on the face hereof, as such rate
shall be published in H.15(519) under the heading "Commercial Paper". In the
event that such rate is not published prior to 3:00 p.m., New York City time,
on the Calculation Date (as defined below) pertaining to such Commercial
Paper Rate Determination Date, then the "Commercial Paper Rate" for such
Interest Reset Period shall be the Money Market Yield on such Commercial
Paper Rate Determination Date of the rate for commercial paper of the Index
Maturity specified on the face hereof as published in Composite Quotations
under the heading "Commercial Paper". If by 3:00 p.m., New York City time,
on such Calculation Date such rate is not yet published in either H.15(519)
or Composite Quotations, then the "Commercial Paper Rate" for such Interest
Reset Period shall be the Money Market Yield of the arithmetic mean of the
offered rates, as of 11:00 a.m., New York City time, on such Commercial Paper
Rate Determination Date of three leading dealers of commercial paper in The
City of New York selected by the Calculation Agent for commercial paper of
the Index Maturity specified on the face hereof placed for an industrial
issuer whose bonds are rated "AA" or the equivalent thereof by a nationally
recognized rating agency; provided, however, that if the dealers selected as
-------- -------
aforesaid by the Calculation Agent are not quoting offered rates as mentioned
in this sentence, the "Commercial Paper Rate" for such Interest Reset Period
will be the same as the Commercial Paper Rate for the immediately preceding
Interest Reset Period (or, if there was no such Interest Reset Period, the
Initial Interest Rate).
"Money Market Yield" shall be a yield calculated in accordance with
the following formula:
D x 360
Money Market Yield = ------------- x 100
360 - (D x M)
where "D" refers to the applicable per annum rate for commercial paper quoted
on a bank discount basis and expressed as a decimal, and "M" refers to the
actual number of days in the Index Maturity specified on the face hereof.
The "Calculation Date" pertaining to any Commercial Paper Rate
Determination Date shall be the tenth calendar day after such Commercial
Paper Rate Determination Date or, if such day is not a Business Day, the next
succeeding Business Day.
9
<PAGE>
Determination of Federal Funds Rate
-----------------------------------
If the Base Rate specified on the face hereof is the Federal Funds
Rate, this Note will bear interest for each Interest Reset Period at the
interest rate calculated with reference to the Federal Funds Rate and the
Spread or Spread Multiplier, if any, specified on the face hereof. The
"Federal Funds Rate" for each Interest Reset Period shall be the effective
rate on the Interest Reset Date for such Interest Reset Period (a "Federal
Funds Rate Determination Date") for Federal Funds as published in H.15(519)
under the heading "Federal Funds (Effective)". In the event that such rate
is not published prior to 3:00 p.m., New York City time, on the Calculation
Date (as defined below) pertaining to such Federal Funds Rate Determination
Date, the "Federal Funds Rate" for such Interest Reset Period shall be the
rate on such Federal Funds Rate Determination Date as published in Composite
Quotations under the heading "Federal Funds/Effective Rate". If by 3:00
p.m., New York City time, on such Calculation Date such rate is not yet
published in either H.15(519) or Composite Quotations, then the "Federal
Funds Rate" for such Interest Reset Period shall be the rate on such Federal
Funds Rate Determination Date made publicly available by the Federal Reserve
Bank of New York which is equivalent to the rate which appears in H.15(519)
under the heading "Federal Funds (Effective)"; provided, however, that if
-------- -------
such rate is not made publicly available by the Federal Reserve Bank of New
York by 3:00 p.m., New York City time, on such Calculation Date, then the
"Federal Funds Rate" for such Interest Reset Period will be the same as the
Federal Funds Rate in effect for the immediately preceding Interest Reset
Period (or, if there was no such Interest Reset Period, the Initial Interest
Rate). If this Note resets daily, the interest rate hereon for the period
from and including a Monday to but excluding the succeeding Monday will be
reset by the Calculation Agent on such second Monday (or, if not a Business
Day, on the next succeeding Business Day) to a rate equal to the average of
the Federal Funds Rates in effect with respect to each such day in such week.
The "Calculation Date" pertaining to any Federal Funds Rate
Determination Date shall be the next succeeding Business Day.
Determination of LIBOR
----------------------
If the Base Rate specified on the face hereof is LIBOR, this Note
will bear interest for each Interest Reset Period at the interest rate
calculated with reference to LIBOR and the Spread or Spread Multiplier, if
any, specified on the face hereof. "LIBOR" for each Interest Reset Period
will be determined by the Calculation Agent as follows:
10
<PAGE>
(i) On the second London Banking Day prior to the Interest Reset
Date for such Interest Reset Period (a "LIBOR Determination Date"), the
Calculation Agent for such LIBOR Note will determine the arithmetic mean
of the offered rates for deposits in the Specified Currency for the
period of the Index Maturity specified in the applicable Pricing
Supplement, commencing on such Interest Reset Date, which appear on the
Designated LIBOR Page at approximately 11:00 a.m., London time, on such
LIBOR Determination Date. "Designated LIBOR Page" means either (a) if
"LIBOR Telerate" is designated in the applicable Pricing Supplement, the
display designated as page "3750" on the Dow Jones Telerate Service (or
such other page as may replace page "3750" on such service or such other
service as may be nominated by the British Bankers' Association for the
purpose of displaying the London interbank offered rates of major banks)
or (b) if "LIBOR Reuters" is designated in the applicable Pricing
Supplement, the display designated as page "LIBO" on the Reuters Monitor
Money Rates Service (or such other page as may replace the LIBO page on
such service or such other service as may be nominated by the British
Bankers' Association for the purpose of displaying London interbank
offered rates of major banks). If neither LIBOR Reuters nor LIBOR
Telerate is specified in the applicable Pricing Supplement, LIBOR will
be determined as if LIBOR Telerate had been specified. It at least two
such offered rates appear on the Designated LIBOR Page, "LIBOR" for such
Interest Reset Period will be the arithmetic mean of such offered rates
as determined by the Calculation Agent for such LIBOR Note.
(ii) If fewer than two offered rates appear on the Designated LIBOR
Page on such LIBOR Determination Date, the Calculation Agent will
request the principal London offices of each of four major banks in the
London interbank market selected by the Calculation Agent to provide the
Calculation Agent with its offered quotations for deposits in the
Specified Currency for the period of the Index Maturity specified on the
face hereof, commencing on such Interest Reset Date, to prime banks in
the London interbank market at approximately 11:00 a.m., London time, on
such LIBOR Determination Date and in a principal amount equal to an
amount of not less than U.S.$1,000,000 or the approximate equivalent
thereof in the Specified Currency that is representative of a single
transaction in such market at such time. If at least two such quotations
are provided, "LIBOR" for such Interest Reset Period will be the
arithmetic mean of such quotations. If fewer than two such quotations
are provided, "LIBOR" for such Interest Reset Period will be the
arithmetic mean of rates quoted by three major banks
11
<PAGE>
in The City of New York selected by the Calculation Agent at
approximately 11:00 a.m., New York City time, on such LIBOR
Determination Date for loans in the Specified Currency to leading
European banks, for the period of the Index Maturity specified on the
face hereof, commencing on such Interest Reset Date, and in a principal
amount equal to an amount of not less than U.S.$1,000,000 or the
approximate equivalent thereof in the Specified Currency that is
representative of a single transaction in such market at such time;
provided, however, that if fewer than three banks selected as aforesaid
-------- -------
by the Calculation Agent are quoting rates as mentioned in this
sentence, "LIBOR" for such Interest Reset Period will be the same as
LIBOR for the immediately preceding Interest Reset Period (or, if there
was no such Interest Reset Period, the Initial Interest Rate).
Determination of Treasury Rate
------------------------------
If the Base Rate specified on the face hereof is the Treasury Rate,
this Note will bear interest for each Interest Reset Period at the interest
rate calculated with reference to the Treasury Rate and the Spread or Spread
Multiplier, if any, specified on the face hereof. The "Treasury Rate" for
each Interest Reset Period will be the rate for the auction held on the
Treasury Rate Determination Date (as defined below) for such Interest Reset
Period of direct obligations of the United States ("Treasury bills") having
the Index Maturity specified on the face hereof, as such rate shall be
published in H.15(519) under the heading "U.S. Government Securities-Treasury
bills-auction average (investment)" or, in the event that such rate is not
published prior to 3:00 p.m., New York City time, on the Calculation Date (as
defined below) pertaining to such Treasury Rate Determination Date, the
auction average rate (expressed as a bond equivalent on the basis of a year
of 365 or 366 days, as applicable, and applied on a daily basis) on such
Treasury Rate Determination Date as otherwise announced by the United States
Department of the Treasury. In the event that the results of the auction of
Treasury bills having the Index Maturity specified on the face hereof are not
published or reported as provided above by 3:00 p.m., New York City time, on
such Calculation Date, or if no such auction is held on such Treasury Rate
Determination Date, then the "Treasury Rate" for such Interest Reset Period
shall be calculated by the Calculation Agent and shall be a yield to maturity
(expressed as a bond equivalent on the basis of a year of 365 or 366 days, as
applicable, and applied on a daily basis) of the arithmetic mean of the
secondary market bid rates, as of approximately 3:30 p.m., New York City
time, on such Treasury Rate Determination Date, of three leading primary
United States government securities dealers selected by the Calculation Agent
for the issue of Treasury bills with
12
<PAGE>
a remaining maturity closest to the Index Maturity specified on the face
hereof; provided, however, that if the dealers selected as aforesaid by the
-------- -------
Calculation Agent are not quoting bid rates as mentioned in this sentence,
then the "Treasury Rate" for such Interest Reset Period will be the same as
the Treasury Rate for the immediately preceding Interest Reset Period (or, if
there was no such Interest Reset Period, the Initial Interest Rate).
The "Treasury Rate Determination Date" for each Interest Reset
Period will be the day of the week in which the Interest Reset Date for such
Interest Reset Period falls on which Treasury bills would normally be
auctioned. Treasury bills are normally sold at auction on Monday of each
week, unless that day is a legal holiday, in which case the auction is
normally held on the following Tuesday, except that such auction may be held
on the preceding Friday. If, as the result of a legal holiday, an auction is
so held on the preceding Friday, such Friday will be the Treasury Rate
Determination Date pertaining to the Interest Reset Period commencing in the
next succeeding week. If an auction date shall fall on any day that would
otherwise be an Interest Reset Date for a Treasury Rate Note, then such
Interest Reset Date shall instead be the Business Day immediately following
such auction date.
If "Constant Maturity" is specified in the applicable Pricing
Supplement, the "Treasury Rate" for each Interest Reset Period will be the
rate that is set forth in the Federal Reserve Board publication H.15(519)
opposite the caption "U.S. Government/Securities/Treasury Constant
Maturities/" in the Index Maturity with respect to the applicable Constant
Maturity Treasury Rate Determination Date (as defined below). If the
H.15(519) is not published, the "Constant Maturity -- Treasury Rate" shall be
the rate that was set forth on Telerate Page 7055, or its successor page (as
determined by the Calculation Agent), on the applicable Constant Maturity
Treasury Rate Determination Date opposite the applicable Index Maturity. If
no such rate is set forth, then the constant Maturity Treasury Rate for such
Interest Reset Period shall be established by the Calculation Agent as
follows. The Calculation Agent will contact the Federal Reserve Board and
request the Constant Maturity Treasury Rate, in the applicable Index
Maturity, for the Constant Marurity Treasury Rate Determination Date. If the
Federal Reserve Board does not provide such information, then the Constant
Maturity Treasury Rate for such Interest Reset Date will be the arithmetic
mean of bid-side quotations, expressed in terms of yield, reported by three
leading U.S. government securities dealers (one of which may be Salomon
Brothers Inc), according to their written records, as of 3:00 p.m. (New York
City time) on the Constant Maturity Treasury rate Determination Date, for the
noncallable U.S.
13
<PAGE>
Treasury Note that is nearest in maturity to the Index Maturity, but not less
than exactly the Index Maturity and for the noncallable U.S. Treasury Note
that is nearest in maturity to the Index Maturity, but not more than exactly
the Index Maturity. The Calculation Agent shall calculate the Constant
Maturity Treasury Rate by interpolating to the Index Maturity based on an
actual/actual date count basis, the yield on the two Treasury Notes selected.
If the Calculation Agent cannot obtain three such adjusted quotations, the
Constant Maturity Treasury Rate for such Interest Reset Date will be the
arithmetic mean of all such quotations, or if only one such quotation is
obtained, such quotation, obtained by the Calculation Agent. In all events,
the Calculation Agent shall continue polling dealers until at least one
adjusted yield quotation can be determined.
"The Constant Maturity Treasury Rate Determination Date" shall be
the tenth Business Day prior to the Interest Reset Date for the applicable
Interest Reset Period.
The "Calculation Date" pertaining to any Treasury Rate
Determination Date or Constant Maturity Rate Determination Date, as
applicable, shall be the tenth calendar day after such Treasury Rate
Determination Date or Constant Maturity Rate Determination Date, as
applicable, or, if such a day is not a Business Day, the next succeeding
Business Day.
If this note is an Indexed Note, then certain or all interest
payments, in the case of an Indexed Rate Note, and/or the principal amount
payable at Stated Maturity or earlier redemption or retirement, in the case
of an Indexed Principal Note, is determined by reference to the amount
designated on the face hereof as the Face Amount of this Note and by
reference to the Index as described on the face hereof. If this Note is a
Floating Rate Note or Indexed Rate Note that is also an Indexed Principal
Note, the amount of any interest payment will be determined by reference to
the Face Amount described on the face hereof unless otherwise specified. If
this Note is an Indexed Principal Note, the principal amount payable at
Stated Maturity or any earlier redemption or repayment of this Note may be
different from the Face Amount. If the determination of the Index is
calculated or announced by a third party, which may be Salomon Brothers Inc
or another affiliate of the Company, and such third party either suspends the
calculation or announcement of such Index or changes the basis upon which
such Index is calculated (other than changes consistent with policies in
effect at the time this Note was issued and permitted changes described on
the face hereof), then such Index shall be calculated for this Note's
purposes by another third party, which may be Salomon Brothers Inc or another
affiliate of the Company, selected by the Company subject to the same
conditions and controls as applied to the
14
<PAGE>
original third party. If for any reason such Index cannot be calculated on
the same basis and subject to the same conditions and controls as applied to
the original third party, then the indexed interest payments, if any, or any
indexed principal amount of this Note shall be calculated in the manner
described on the face hereof. Any determination of such third party shall in
the absence of manifest error be binding on all parties.
Payment in Currencies Other Than the Specified Currency
-------------------------------------------------------
Except as set forth below with respect to payments in ECU, if
payment in respect of this Note or any Coupon is required to be made in a
specified currency other than U.S. dollars (a "Specified Currency") and such
currency is unavailable due to the imposition of exchange controls or other
circumstances beyond the Company's control or is no longer used by the
government of the country issuing such currency or for the settlement of
transactions by public institutions of or within the international banking
community, then all payments shall be made in U.S. dollars until such
currency is again available or so used. The amounts so payable on any date
in such currency shall be converted into U.S. dollars on the basis of the
most recently available Market Exchange Rate for such currency or as
otherwise indicated on the face hereof. Any payment made under such
circumstances in U.S. dollars will not constitute an Event of Default under
the Indenture.
If payment in respect of this Note or any Coupon is required to be
made in ECU and the ECU is not then used in the European Monetary System (the
"EMS"), then the Trustee shall, without liability on its part, choose a
component currency (the "Payment Currency") of the ECU in which all payments
in respect hereof shall be made until the ECU is again so used. The amount
of each payment in such Payment Currency shall be computed on the basis of
the equivalent of the ECU in that currency, determined as described below, as
of the fourth Luxembourg business day prior to the date on which such payment
is due. Notice of the Payment Currency selected by the Trustee shall be
given as described below. Any payment made under such circumstances in the
Payment Currency will not constitute an Event of Default under the Indenture.
Notwithstanding the foregoing, on the first Luxembourg business day
on which the ECU is no longer used in the EMS, the Trustee shall, without
liability on its part, choose a Payment Currency in which all payments with
respect to Bearer Notes and Coupons denominated in ECU having a due date
prior thereto but not yet presented for payment are to be made. The amount
of each payment in such Payment Currency shall be computed on the basis of
the equivalent of the ECU in
15
<PAGE>
that currency, determined as described below, as of such first Luxembourg
business day. Any payment made under such circumstances in the Payment
Currency will not constitute an Event of Default under the Indenture.
The equivalent of the ECU in the relevant Payment Currency as of
any date (the "Day of Valuation") shall be determined by the Luxembourg Stock
Exchange on the following basis. The component currencies of the ECU for
this purpose (the "Components") shall be the currency amounts that were
components of the ECU when the ECU was most recently used in the EMS or for
the settlement of transactions by public institutions of or within the
European Community. The equivalent of the ECU in the Payment Currency shall
be calculated by, first, aggregating the U.S. dollar equivalents of the
Components, and then, using the rate used for determining the U.S. dollar
equivalents of the Components in the Payment Currency as set forth below,
calculating the equivalent in the Payment Currency of such aggregate amount
in U.S. dollars.
The U.S. dollar equivalent of each of the Components shall be
determined by the Luxembourg Stock Exchange on the basis of the middle spot
delivery quotations prevailing at 2:30 p.m. Luxembourg time on the Day of
Valuation, as obtained by the Luxembourg Stock Exchange from one or more
major banks, selected by the Trustee (with the approval of the Company) in
the country of issue of the Component in question.
If the official unit of any component currency of the ECU is
altered by way of combination or subdivision, the number of units of that
currency as a Component shall be divided or multiplied in the same
proportion. If two or more component currencies are consolidated into a
single currency, the amounts of those currencies as Components shall be
replaced by an amount in such single currency equal to the sum of the amounts
of the consolidated component currencies expressed in such single currency.
If any component currency is divided into two or more currencies, the amount
of that currency as a Component shall be replaced by amounts of such two or
more currencies, each of which shall be equal to the amount of the former
component currency divided by the number of currencies into which that
currency was divided.
If no direct quotations are available for a Component on a Day of
Valuation from any of the banks selected by the Trustee (with the approval of
the Company) for this purpose, because foreign exchange markets are closed in
the country of issue of that Component, or for any other reason, in computing
the U.S. dollar equivalent of such Component the Luxembourg Stock Exchange
shall (except as provided below) use the most recent direct quotations for
such Component obtained
16
<PAGE>
by it; provided that such most recent quotations may be used only if they
--------
were prevailing in the country of issue not more than two Luxembourg business
days before such Day of Valuation. Beyond such period of two Luxembourg
business days, the Luxembourg Stock Exchange shall determine the U.S. dollar
equivalent of such Component on the basis of cross rates derived from the
middle spot delivery quotations for such Component and for the U.S. dollar
prevailing at 2:30 p.m. Luxembourg time on such Day of Valuation, as obtained
by the Luxembourg Stock Exchange from one or more major banks, selected by
the Trustee (with the approval of the Company) in a country other than the
country of issue of such Component. Notwithstanding the foregoing, within
such period of two Luxembourg business days, the Luxembourg Stock Exchange
shall determine the U.S. dollar equivalent of such Component on the basis of
such cross rates if the Trustee and the Company judge that the equivalent so
calculated is more representative than the U.S. dollar equivalent calculated
on the basis of such most recent direct quotations. Unless otherwise
specified by the Trustee, if there is more than one market for dealing in any
component currency by reason of foreign exchange regulations or for any other
reason, the market to be referred to in respect of such currency shall be
that upon which a nonresident issuer of securities denominated in such
currency would purchase such currency in order to make payments in respect of
such securities.
All determinations referred to above made by the Trustee or the
Luxembourg Stock Exchange shall be at their respective sole discretion
(except to the extent expressly provided herein that any determination made
by the Trustee is subject to the approval of the Company) and shall, in the
absence of manifest error, be conclusive for all purposes and binding on
Holders of the Bearer Notes and any Coupons, and the Trustee shall have no
liability therefor.
If an Event of Default with respect to the Notes shall have
occurred and be continuing, the principal of all Notes may be declared due
and payable in the manner and with the effect provided in the Indenture.
If this Note is a Discount Note, the amount payable in the event of
redemption or repayment prior to its Stated Maturity, shall be the Amortized
Face Amount of this Note as of the date of redemption or the date of
repayment, as the case may be. The "Amortized Face Amount" of this Note
shall be the amount equal to (a) the Issue Price (set forth on the face
hereof) plus (b) that portion of the difference between the Issue Price and
the principal amount hereof that has accrued at the Yield to Maturity (set
forth on the face hereof) (computed in accordance with generally accepted
United States bond yield computation principles) by such date of
17
<PAGE>
redemption or repayment, but in no event shall the Amortized Face Amount of
this Note exceed its principal amount.
As provided in the Indenture and subject to certain limitations
therein set forth, this Note is exchangeable for a like aggregate principal
amount of Bearer Notes of different authorized denominations, as requested by
the Person surrendering the same.
No service charge shall be made for any such exchange, but the
Company may require payment of a sum sufficient to cover any tax or other
governmental charge payable in connection therewith.
In case this Note or any Coupon shall at any time become mutilated,
destroyed, stolen or lost, it may be replaced at the specified office of the
Principal Paying Agent in London; or, so long as the Bearer Notes are listed
on the Luxembourg Stock Exchange, at the specified office of the Paying Agent
in Luxembourg, upon payment by the claimant of such expenses as may be
incurred in connection therewith and, in the case of destruction, theft or
loss, on such terms as to evidence and indemnity as the Company or the
Trustee may reasonably require. Mutilated or defaced Bearer Notes or Coupons
must be surrendered before replacements will be issued.
The Indenture permits, with certain exceptions as therein provided,
the amendment thereof and the modification of the rights and obligations of
the Company and the rights of the Holders of the Debt Securities of each
series to be affected under the Indenture at any time by the Company and the
Trustee with the consent of the Holders of not less than a majority in
aggregate principal amount of the Debt Securities at the time Outstanding of
each series to be affected. The Indenture also contains provisions
permitting the Holders of specified percentages in aggregate principal amount
of the Debt Securities of any series at the time Outstanding, on behalf of
the Holders of all the Debt Securities of such series, to waive compliance by
the Company with certain provisions of the Indenture and certain past
defaults under the Indenture and their consequences. Any such consent or
waiver by the Holder of this Debt Security shall be conclusive and binding
upon such Holder and upon all future Holders of this Debt Security and of any
Debt Security issued upon the registration of transfer hereof or in exchange
herefor or in lieu hereof, whether or not notation of such consent or waiver
is made upon this Debt Security.
Holders of Debt Securities of this series may not enforce their
rights pursuant to the Indenture or such Debt Securities except as provided
in the Indenture. No reference
18
<PAGE>
herein to the Indenture and no provision of this Note or of the Indenture
shall alter or impair the obligation of the Company, which is absolute and
unconditional, to pay the principal of (and premium, if any) and interest on
this Note at the times, place and rate, and in the coin or currency, herein
prescribed.
The Company may, without the consent of the Holders of the Notes,
consolidate with, merge into, or transfer substantially all of its assets to,
a corporation that is a U.S. Person, provided that the successor corporation
assumes all obligations of the Company under the Notes and certain other
conditions are met, including a waiver by the successor corporation of any
right to redeem the Notes under circumstances in which the successor
corporation would be entitled to redeem the Notes but the Company would not
have been entitled to do so.
Except as provided above, the obligation to pay the principal
hereof (and premium, if any) and interest hereon in the designated currency
of payment is of the essence. To the fullest extent possible under
applicable law, judgments in respect of this Note shall be given in such
currency. The obligation of the Company to make such payments in the
designated currency of payment shall, notwithstanding any payment in any
other currency (whether pursuant to a judgment or otherwise), be discharged
only to the extent of the amount in the designated currency of payment that
the Holder of this Note may, in accordance with normal banking procedures,
purchase with the sum paid in such other currency (after any premium and cost
of exchange) on the business day in the country of issue of the designated
currency of payment or in the international banking community (in the case of
a composite currency) immediately following the day on which such Holder
receives such payment. If the amount in the designated currency of payment
that may be so purchased is for any reason less than the amount originally
due, the Company shall, as a separate and independent obligation, pay such
additional amounts in the designated currency of payment as may be necessary
to compensate for any such shortfall.
All notices to Holders of this Note will be deemed to have been
duly given if published on two separate Business Days in a leading London
daily newspaper (which is expected to be the Financial Times) and, so long as
---------------
the Bearer Notes are listed on the Luxembourg Stock Exchange and such
exchange so requires, in Luxembourg in a newspaper of general circulation in
Luxembourg (which is expected to be the Luxemburger Wort). Such notices
----------- ----
shall be deemed to have been given on the date of the first such publication.
19
<PAGE>
If the Specified Currency of this Note is Pounds sterling, the
following applies: The Company is not an institution authorised under the
Banking Act 1987 of the United Kingdom, and this Note is a medium-term note
issued in accordance with regulations made under Section 4 of the Banking Act
1987. The Company represents that as of the date of issuance of this Note,
(1) the Company is in compliance with its listing obligations to The
International Stock Exchange of the United Kingdom and the Republic of
Ireland Limited in connection with the Company's securities that are listed
on such Exchange; and (2) since information was last published in compliance
with such listing obligations, the Company, having made all reasonable
enquiries, has not become aware of any change in circumstances which could
reasonably be regarded as significantly and adversely affecting its ability
to meet its obligations on this Note as they fall due. Repayment of
principal and payment of interest and any premium on this Note have not been
guaranteed by any person.
This Note shall be deemed to be a contract made and to be performed
solely in the State of New York, and for all purposes shall be governed by,
and construed in accordance with, the laws of said State without regard to
the conflicts of law rules of said State.
All terms used in this Note that are defined in the Indenture shall
have the meanings assigned to them in the Indenture.
20
<PAGE>
FORM OF SERIES D FIXED RATE BEARER NOTE
BEARER PRINCIPAL AMOUNT
OR FACE AMOUNT
SALOMON INC
No. FX- MEDIUM-TERM NOTE, SERIES D
(FIXED RATE) CUSIP
Due More Than Nine Months from Date of Issue
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 SECTION 165(j) AND 1287(a) OF THE INTERNAL REVENUE CODE.
IF APPLICABLE, THE "TOTAL AMOUNT OF OID" AND "YIELD TO MATURITY" SET
FORTH BELOW WILL BE COMPLETED SOLELY FOR THE PURPOSES OF APPLYING THE FEDERAL
INCOME TAX ORIGINAL ISSUE DISCOUNT ("OID") RULES
Issue Price: Original Issue Date:
Specified Currency:
(if other than U.S. Dollars)
Authorized Denominations:
(If other than as set forth in the
Prospectus Supplement)
Interest Payment Dates:
(If other than as set forth in the
Prospectus Supplement)
Indexed Principal Note: [_] Yes (see attached) [_] No
Interest Rate: Stated Maturity:
Interest Rate Reset: [_] The Interest Rate may not be
changed prior to Stated Maturity.
[_] The Interest Rate may be changed
prior to Stated Maturity (see
attached).
Optional Reset Dates (if applicable)
<PAGE>
Amortizing Note: [_] Yes [_] No
Amortization Schedule:
Optional Redemption: [_] Yes [_] No
Optional Redemption Dates:
Redemption Prices:
Optional Repayment: [_] Yes [_] No
Optional Repayment Dates:
Optional Repayment Prices:
Discount Note: [_] Yes [_] No
Total Amount of OID:
Yield to Maturity:
IF THE SPECIFIED CURRENCY OF THIS NOTE IS POUNDS STERLING, THE FOLLOWING
APPLIES: THIS NOTE IS ISSUED IN ACCORDANCE WITH THE REGULATIONS MADE UNDER
SECTION 4 OF THE BANKING ACT 1987.
2
<PAGE>
SALOMON INC, a corporation duly organized and existing under the laws of
the State of Delaware (the "Company"), for value received, hereby promises to
pay to bearer, upon presentation and surrender hereof, (a) the Principal Amount
or, in the case of an Indexed Principal Note, the Face Amount adjusted by
reference to prices, changes in prices, or differences between prices, of
securities, currencies, intangibles, goods, articles or commodities or by such
other objective price, economic or other measures (an "Index") as described on
the face hereof, in the Specified Currency on the Stated Maturity shown above or
earlier if and to the extent so provided herein, and (b) to pay accrued interest
on the Principal Amount then outstanding (or in the case of an Indexed Principal
Note, the Face Amount, then outstanding) to the bearer of the interest coupons
attached hereto (the "Coupons") at the Interest Rate shown above, annually in
arrears on September 15 of each year (the "Interest Payment Date"), commencing
with the September 15 following the Original Issue Date shown above upon
presentation and surrender of the Coupons as they shall severally mature, and on
the Stated Maturity shown above, or upon earlier redemption or repayment, until,
in either case, the Principal Amount then outstanding or the Face Amount is paid
or duly provided for in accordance with the terms hereof. Interest on this
Note, if any, will be computed on the basis of a 360-day year of twelve 30-day
months. Any payment of principal, premium or interest required to be made in
respect hereof on a date that is not a Business Day (as defined below) need not
be made on such date, but may be made on the next succeeding Business Day with
the same force and effect as if made on such date, and no additional interest
shall accrue as a result of such delayed payment.
For purposes of this Note, "Business Day" means any day, other than a
Saturday or Sunday, that is not a day on which banking institutions are
authorized or required by law or regulation to be closed in (a) The City of New
York, (b) London, England, (c) the place in which this Note or any Coupon is
presented for payment or (d) if the Specified Currency (as defined below) is
other than U.S. dollars, the financial center of the country issuing the
Specified Currency (which, in the case of European Currency Units ("ECU"), shall
be Brussels, Belgium).
If this Note is an Amortizing Note as shown on the face hereof, a portion
or all the principal amount of the Note is payable prior to Stated Maturity in
accordance with a schedule, by application of a formula, or by reference to an
index (as described above).
Except under certain circumstances for Notes having Specified Currencies
other than U.S. dollars, payments of the principal hereof and any premium and
interest hereon will be made only in the Specified Currency. Payments in
respect of this Note
3
<PAGE>
and any Coupon will be made only against surrender of this Note or such Coupon
at the offices of the Paying Agents outside the United States listed on the
reverse hereof. At the direction of the Holder of this Note or any Coupon, and
subject to applicable laws and regulations, such payments will be made by check
drawn on a bank in The City of New York (in the case of U.S. dollar payments) or
outside the United States (in the case of payments in a currency other than U.S.
dollars) mailed to an address outside the United States furnished by the Holder
hereof or, at the option of the Holder hereof, by wire transfer (pursuant to
written instructions supplied by the Holder hereof) to an account maintained by
the payee with a bank located outside the United States. No payment in respect
of this Note or any Coupon will be made upon presentation of this Note or such
Coupon at any office or agency of the Trustee or any other paying agency
maintained by the Company in the United States, nor will any such payment be
made by transfer to an account, or by mail to an address, in the United States.
Notwithstanding the foregoing, if U.S. dollar payments in respect of this Note
or any Coupons at the offices of all Paying Agents outside the United States
become illegal or are effectively precluded because of the imposition of
exchange controls or similar restrictions on the full payment or receipt of such
amounts in U.S. dollars, the Company will appoint an office or agency (which may
be the Trustee) in the United States at which such payments may be made.
REFERENCE IS HEREBY MADE TO THE FURTHER PROVISIONS OF THIS NOTE SET FORTH
ON THE REVERSE HEREOF, AND SUCH FURTHER PROVISIONS SHALL FOR ALL PURPOSES HAVE
THE SAME EFFECT AS THOUGH FULLY SET FORTH IN THIS PLACE.
This Note shall not become valid or obligatory for any purpose unless and
until this Note has been authenticated by Citibank, N.A., or its successor, as
Trustee.
4
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Note to be executed under
its corporate seal.
Dated:
SALOMON INC
By_____________________________________
Chairman of the Board of Directors,
President and Chief Executive Officer
[Seal]
Attest:________________________________
Secretary
CERTIFICATE OF AUTHENTICATION
This is one of the Bearer Notes issued under the within-mentioned
Indenture.
CITIBANK, N.A.
as Trustee
By_____________________________________
Authorized Signatory
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<PAGE>
SALOMON INC
MEDIUM-TERM NOTE, SERIES D
(FIXED RATE)
General
-------
This Note is one of a series of duly authorized debt securities of
the Company (the "Debt Securities") issued or to be issued in one or more
series under an indenture dated as of December 1, 1988 (the "Indenture")
between the Company and Citibank, N.A., as trustee (the "Trustee", which term
includes any successor Trustee under the Indenture), to which Indenture and
all indentures supplemental thereto reference is hereby made for a statement
of the respective rights, limitations of rights, duties and immunities
thereunder of the Company, the Trustee and the Holders of the Debt Securities
and of the terms upon which the Debt Securities are, and are to be,
authenticated and delivered. The U.S. dollar equivalent of the public
offering price or purchase price of Notes denominated in currencies other
than U.S. dollars will be determined by the Company or its agent, on the
basis of the noon buying rate in New York City for cable transfers in foreign
currencies as certified for customs purposes by the Federal Reserve Bank of
New York (the "Market Exchange Rate") for such currencies on the applicable
issue dates.
Unless otherwise specified on the face hereof, the authorized
denominations of Bearer Notes denominated in U.S. dollars will be U.S.$25,000
and any larger amount that is an integral multiple of U.S.$5,000. The
authorized denominations of Bearer Notes having a specified currency other
than U.S. dollars will be, unless otherwise specified herein, the approximate
equivalents thereof in the Specified Currency.
If so specified on the face hereof, this Note will be redeemable at
the option of the Company in whole or from time to time in part, on any date
on or after the date designated as the Initial Redemption Date on the face
hereof, upon the Company's giving the Trustee at least 45 days' notice, at
the Redemption Price determined as provided on the face hereof. If redeemed
prior to its Stated Maturity, this Note must be presented for payment
together with all unmatured Coupons, if any, appertaining hereto, failing
which the amount of any missing unmatured Coupon will be deducted from the
sum due for payment. The Bearer Notes will not be subject to any sinking
fund.
The Bearer Notes may be redeemed at the option of the Company in
whole, but not in part, at any time on giving at least 30 but not more than
60 days' notice as set forth below, which notice shall be irrevocable, at
their Redemption Prices, if the Company has or will become obligated to pay
additional interest
1
<PAGE>
on the Bearer Notes as described below as a result of any change in, or
amendment to, the laws (or any regulations or rulings promulgated thereunder)
of the United States or any political subdivision or taxing authority thereof
or therein, or any change in the application or official interpretation of
such laws, regulations or rulings, which change or amendment becomes
effective on or after the Original Issue Date, and such obligation cannot be
avoided by the Company taking reasonable measures available to it. No such
notice of redemption shall be given earlier than 90 days prior to the
earliest date on which the Company would be obligated to pay such additional
interest were a payment in respect of the Bearer Notes then due. Prior to
the publication of any notice of redemption pursuant to this paragraph, the
Company shall deliver to the Trustee a certificate stating that the Company
is entitled to effect such redemption and setting forth a statement of facts
showing that the conditions precedent to the right of the Company so to
redeem have occurred, and an opinion of independent counsel to the effect
that the Company has or will become obligated to pay such additional interest
as a result of such change or amendment.
If so specified on the face hereof, this Note will be repayable
prior to its Stated Maturity at the option of the Holder on the Optional
Repayment Dates shown on the face hereof at the Optional Repayment Prices
shown on the face hereof, together with accrued interest to the date of
repayment. In order for this Note to be repaid, the Principal Paying Agent
(as specified below) must receive the Note at least 30 but not more than 45
days prior to an Optional Repayment Date. Any tender of this Note for
repayment shall be irrevocable. The repayment option may be exercised by the
Holder hereof for less than the entire principal amount hereof, provided that
--------
the principal amount of the Note remaining outstanding after repayment is an
authorized denomination. Upon such partial repayment, this Note shall be
cancelled and a new Note or Notes for the remaining principal amount hereof
shall be issued to the Holder of this Note.
Payment of Additional Interest
------------------------------
The Company will, subject to the exceptions and limitations set
forth below, pay as additional interest to the Holder of this Note or any
Coupon that is a United States Alien (as defined below) such amounts as may
be necessary so that every net payment on this Note or such Coupon, after
deduction or withholding for or on account of any present or future tax,
assessment or other governmental charge imposed upon or as a result of such
payment by the United States (or any political subdivision or taxing
authority thereof or therein), will not be less than the amount provided in
this Note or such Coupon to be then due and payable. However, the Company
will not be required
2
<PAGE>
to make any such payment of additional interest to such Holder for or on
account of:
(a) any tax, assessment or other governmental charge that would
not have been imposed but for (i) the existence of any present or former
connection between such Holder (or between a fiduciary, settlor or
beneficiary of, or a Person holding a power over, such Holder, if such
Holder is an estate or a trust, or a member or shareholder of such
Holder, if such Holder is a partnership or a corporation) and the United
States, including, without limitation, such Holder (or such fiduciary,
settlor, beneficiary, Person holding a power, member or shareholder)
being or having been a citizen or resident thereof or being or having
been engaged in trade or business or present therein or having or having
had a permanent establishment therein or (ii) such Holder's past or
present status as a passive foreign investment company, a personal
holding company, foreign personal holding company, a controlled foreign
corporation for United States tax purposes or private foundation or
other tax-exempt organization with respect to the United States or as a
corporation that accumulates earnings to avoid United States federal
income tax;
(b) any estate, inheritance, gift, sales, transfer or personal
property tax or any similar tax, assessment or other governmental
charge;
(c) any tax, assessment or other governmental charge that would
not have been imposed but for the presentation by the Holder of this
Note or such Coupon for payment more than 15 days after the date on
which such payment became due and payable or on which payment thereof
was duly provided for, whichever occurred later;
(d) any tax, assessment or other governmental charge that is
payable otherwise than by deduction or withholding from a payment on
this Note or such Coupon;
(e) any tax, assessment or other governmental charge required to
be deducted or withheld by any Paying Agent from a payment on this Note
or such Coupon, if such payment can be made without such deduction or
withholding by any other Paying Agent;
(f) any tax, assessment or other governmental charge that would
not have been imposed but for a failure to comply with any applicable
certification, documentation, information or other reporting requirement
concerning the nationality, residence, identity or connection with the
United States of the Holder or beneficial owner of this Note or such
Coupon if, without regard to any tax treaty, such
3
<PAGE>
compliance is required by statute or regulation of the United States as
a pre-condition to relief or exemption from such tax, assessment or
other governmental charge; or
(g) any tax, assessment or other governmental charge imposed on a
Holder that actually or constructively owns ten percent or more of the
combined voting power of all classes of stock of the Company (taking
into account applicable attribution of ownership rules under Section
871(h)(3) of the Internal Revenue Code of 1986, as amended) or is a
controlled foreign corporation related to the Company through stock
ownership;
nor shall such additional interest be paid with respect to a payment on this
Note or such Coupon to a Holder that is a fiduciary or partnership or other
than the sole beneficial owner of such payment to the extent a beneficiary or
settlor with respect to such fiduciary or a member of such partnership or a
beneficial owner would not have been entitled to the additional interest had
such beneficiary, settlor, member or beneficial owner been the Holder of this
Note or such Coupon.
The term "United States Alien" means any person who, for United
States federal income tax purposes, is a foreign corporation, a nonresident
alien individual, a nonresident alien fiduciary of a foreign estate or trust,
or a foreign partnership one or more of the members of which is, for United
States federal income tax purposes, a foreign corporation, a nonresident
alien individual or a nonresident alien fiduciary of a foreign estate or
trust.
If the Company shall determine that any payment made outside the
United States by the Company or any of its Paying Agents in respect of this
Note or any Coupon (an "Affected Security") would, under any present or
future laws or regulations of the United States, be subject to any
certification, documentation, information or other reporting requirement of
any kind, the effect of which requirement is the disclosure to the Company,
any Paying Agent or any governmental authority of the nationality, residence
or identity of a beneficial owner of such Affected Security that is a United
States Alien (other than such a requirement (a) that would not be applicable
to a payment made by the Company or any one of its Paying Agents (i) directly
to the beneficial owner or (ii) to a custodian, nominee or other agent of the
beneficial owner or (b) that can be satisfied by such custodian, nominee or
other agent certifying to the effect that the beneficial owner is a United
States Alien; provided, that, in any case referred to in clause (a)(ii) or
--------
(b), payment by the custodian, nominee or agent to the beneficial owner is
not otherwise subject to any such requirement), then the Company shall elect
either (x) to redeem such Affected Securities in whole, but not in part, at
their Redemption Price, or (y) if the
4
<PAGE>
conditions described in the next succeeding paragraph are satisfied, to pay
the additional interest specified in such paragraph. The Company shall make
such determination as soon as practicable and publish prompt notice thereof
(the "Determination Notice") stating the effective date of such
certification, documentation, information or other reporting requirement,
whether the Company elects to redeem the Affected Securities or to pay the
additional interest specified in the next succeeding paragraph and (if
applicable) the last date by which the redemption of the Affected Securities
must take place, as provided in the next succeeding sentence. If any
Affected Securities are to be redeemed pursuant to this paragraph, the
redemption shall take place on such date, not later than one year after the
publication of the Determination Notice, as the Company shall specify by
notice given to the Trustee at least 60 days before the Redemption Date.
Notice of such redemption shall be given to the Holders of the Affected
Securities at least 30 but not more than 60 days prior to the Redemption
Date. Notwithstanding the foregoing, the Company shall not so redeem the
Affected Securities if the Company shall subsequently determine, at least 30
days prior to the Redemption Date, that subsequent payments on the Affected
Securities would not be subject to any such certification, documentation,
information or other reporting requirement, in which case the Company shall
publish prompt notice of such subsequent determination and any earlier
redemption notice given pursuant to this paragraph shall be revoked and of no
further effect. Prior to the publication of any Determination Notice
pursuant to this paragraph, the Company shall deliver to the Trustee a
certificate stating that the Company is obligated to make such determination
and setting forth a statement of facts showing that the conditions precedent
to the obligation of the Company to redeem the Affected Securities or to pay
the additional interest specified in the next succeeding paragraph have
occurred, and an opinion of independent counsel to the effect that such
conditions have occurred.
If and so long as the certification, documentation, information or
other reporting requirement referred to in the preceding paragraph would be
fully satisfied by payment of a backup withholding tax or similar charge, the
Company may elect to pay as additional interest such amounts as may be
necessary so that every net payment made outside the United States following
the effective date of such requirement by the Company or any of its Paying
Agents in respect of any Affected Security of which the beneficial owner is a
United States Alien (but without any requirement that the nationality,
residence or identity of such beneficial owner be disclosed to the Company,
any Paying Agent or any governmental authority), after deduction or
withholding for or on account of such backup withholding tax or similar
charge (other than a backup withholding tax or similar charge that (i) would
not be applicable in the circumstances referred to in the parenthetical
clause of the first sentence of the preceding
5
<PAGE>
paragraph or (ii) is imposed as a result of presentation of such Affected
Security for payment more than 15 days after the date on which such payment
became due and payable or on which payment thereof was duly provided for,
whichever occurred later), will not be less than the amount provided in such
Affected Security to be then due and payable. If the Company elects to pay
additional interest pursuant to this paragraph, then the Company shall have
the right to redeem the Affected Securities at any time in whole, but not in
part, at their Redemption Prices, subject to the provisions of the last three
sentences of the immediately preceding paragraph. If the Company elects to
pay additional interest pursuant to this paragraph and the condition
specified in the first sentence of this paragraph should no longer be
satisfied, then the Company shall redeem the Affected Securities in whole,
but not in part, at their Redemption Price, subject to the provisions of the
last three sentences of the immediately preceding paragraph. Any redemption
payments made by the Company pursuant to the two immediately preceding
sentences shall be subject to the continuing obligation of the Company to pay
additional interest pursuant to this paragraph.
The interest payable hereon on each Interest Payment Date will
include interest accrued through the day before such Interest Payment Date.
The Company has initially appointed as its Paying Agents for Bearer
Notes of this Series the offices listed below:
Principal Paying Agent:
Citibank, N.A.
Issuer Services
336 Strand
London, WC2R OEA
Paying Agent:
Citibank (Luxembourg) S.A.
16 Avenue Marie Therese
Luxembourg
The Company reserves the right at any time to vary or terminate the
appointment of any Paying Agent and to appoint additional or other Paying
Agents and to approve any change in the office through which any Paying Agent
acts, provided that there will at all times be a Paying Agent (which may be
the Trustee) in at least one city in Europe which, so long as Bearer Notes
are listed on the Luxembourg Stock Exchange and that exchange shall so
require, shall include Luxembourg. Notice of any such termination or
appointment and of any changes in the specified offices of the Trustee or any
Paying Agent will be given to the Holder hereof as described below.
6
<PAGE>
Payment in Currencies Other Than the Specified Currency
-------------------------------------------------------
Except as set forth below with respect to payments in ECU, if
payment in respect of this Note or any Coupon is required to be made in a
specified currency other than U.S. dollars (a "Specified Currency") and such
currency is unavailable due to the imposition of exchange controls or other
circumstances beyond the Company's control or is no longer used by the
government of the country issuing such currency or for the settlement of
transactions by public institutions of or within the international banking
community, then all payments shall be made in U.S. dollars until such
currency is again available or so used. The amounts so payable on any date
in such currency shall be converted into U.S. dollars on the basis of the
most recently available Market Exchange Rate for such currency or as
otherwise indicated on the face hereof. Any payment made under such
circumstances in U.S. dollars will not constitute an Event of Default under
the Indenture.
If payment in respect of this Note or any Coupon is required to be
made in ECU and the ECU is not then used in the European Monetary System (the
"EMS"), then the Trustee shall, without liability on its part, choose a
component currency (the "Payment Currency") of the ECU in which all payments
in respect hereof shall be made until the ECU is again so used. The amount
of each payment in such Payment Currency shall be computed on the basis of
the equivalent of the ECU in that currency, determined as described below, as
of the fourth Luxembourg business day prior to the date on which such payment
is due. Notice of the Payment Currency selected by the Trustee shall be
given as described below. Any payment made under such circumstances in the
Payment Currency will not constitute an Event of Default under the Indenture.
Notwithstanding the foregoing, on the first Luxembourg business day
on which the ECU is no longer used in the EMS, the Trustee shall, without
liability on its part, choose a Payment Currency in which all payments with
respect to Bearer Notes and Coupons denominated in ECU having a due date
prior thereto but not yet presented for payment are to be made. The amount
of each payment in such Payment Currency shall be computed on the basis of
the equivalent of the ECU in that currency, determined as described below, as
of such first Luxembourg business day. Any payment made under such
circumstances in the Payment Currency will not constitute an Event of Default
under the Indenture.
The equivalent of the ECU in the relevant Payment Currency as of
any date (the "Day of Valuation") shall be determined by the Luxembourg Stock
Exchange on the following basis. The component currencies of the ECU for
this purpose (the "Components") shall be the currency amounts that were
components of the ECU when the ECU was most recently used in the EMS or for
7
<PAGE>
the settlement of transactions by public institutions of or within the
European Community. The equivalent of the ECU in the Payment Currency shall
be calculated by, first, aggregating the U.S. dollar equivalents of the
Components, and then, using the rate used for determining the U.S. dollar
equivalents of the Components in the Payment Currency as set forth below,
calculating the equivalent in the Payment Currency of such aggregate amount
in U.S. dollars.
The U.S. dollar equivalent of each of the Components shall be
determined by the Luxembourg Stock Exchange on the basis of the middle spot
delivery quotations prevailing at 2:30 p.m. Luxembourg time on the Day of
Valuation, as obtained by the Luxembourg Stock Exchange from one or more
major banks, selected by the Trustee (with the approval of the Company), in
the country of issue of the Component in question.
If the official unit of any component currency of the ECU is
altered by way of combination or subdivision, the number of units of that
currency as a Component shall be divided or multiplied in the same
proportion. If two or more component currencies are consolidated into a
single currency, the amounts of those currencies as Components shall be
replaced by an amount in such single currency equal to the sum of the amounts
of the consolidated component currencies expressed in such single currency.
If any component currency is divided into two or more currencies, the amount
of that currency as a Component shall be replaced by amounts of such two or
more currencies, each of which shall be equal to the amount of the former
component currency divided by the number of currencies into which that
currency was divided.
If no direct quotations are available for a Component on a Day of
Valuation from any of the banks selected by the Trustee (with the approval of
the Company) for this purpose, because foreign exchange markets are closed in
the country of issue of that Component, or for any other reason, in computing
the U.S. dollar equivalent of such Component the Luxembourg Stock Exchange
shall (except as provided below) use the most recent direct quotations for
such Component obtained by it; provided that such most recent quotations may
--------
be used only if they were prevailing in the country of issue not more than
two Luxembourg business days before such Day of Valuation. Beyond such
period of two Luxembourg business days, the Luxembourg Stock Exchange shall
determine the U.S. dollar equivalent of such Component on the basis of cross
rates derived from the middle spot delivery quotations for such Component and
for the U.S. dollar prevailing at 2:30 p.m. Luxembourg time on such Day of
Valuation, as obtained by the Luxembourg Stock Exchange from one or more
major banks, selected by the Trustee (with the approval of the Company), in a
country other than the country of issue of such Component. Notwithstanding
the foregoing, within such period of
8
<PAGE>
two Luxembourg business days, the Luxembourg Stock Exchange shall determine
the U.S. dollar equivalent of such Component on the basis of such cross rates
if the Trustee and the Company judge that the equivalent so calculated is
more representative than the U.S. dollar equivalent calculated on the basis
of such most recent direct quotations. Unless otherwise specified by the
Trustee, if there is more than one market for dealing in any component
currency by reason of foreign exchange regulations or for any other reason,
the market to be referred to in respect of such currency shall be that upon
which a nonresident issuer of securities denominated in such currency would
purchase such currency in order to make payments in respect of such
securities.
All determinations referred to above made by the Trustee or the
Luxembourg Stock Exchange shall be at their respective sole discretion
(except to the extent expressly provided herein that any determination made
by the Trustee is subject to the approval of the Company) and shall, in the
absence of manifest error, be conclusive for all purposes and binding on
Holders of the Bearer Notes and any Coupons, and the Trustee shall have no
liability therefor.
If an Event of Default with respect to the Notes shall have
occurred and be continuing, the principal of all Notes may be declared due
and payable in the manner and with the effect provided in the Indenture.
If this Note is a Discount Note, the amount payable in the event of
redemption or repayment prior to its Stated Maturity shall be the Amortized
Face Amount of this Note as of the date of redemption or the date of
repayment, as the case may be. The "Amortized Face Amount" of this Note
shall be the amount equal to (a) the Issue Price (set forth on the face
hereof) plus (b) that portion of the difference between the Issue Price and
the principal amount hereof that has accrued at the Yield to Maturity (set
forth on the face hereof) (computed in accordance with generally accepted
United States bond yield computation principles) by such date of redemption
or repayment, but in no event shall the Amortized Face Amount of this Note
exceed its principal amount.
If this note is an Indexed Principal Note, then the principal
amount payable at Stated Maturity or earlier redemption or retirement, is
determined by reference to the amount designated on the face hereof as the
Face Amount of this Note and by reference to an Index as described on the
face hereof. If this Note is an Indexed Principal Note, the principal amount
payable at Stated Maturity or any earlier redemption or repayment of this
Note may be different from the Face Amount. If the determination of the
Index is calculated or announced by a third party, which may be Salomon
Brothers Inc or another affiliate of the Company and such third party either
suspends the calculation
9
<PAGE>
or announcement of such Index or changes the basis upon which such Index is
calculated (other than changes consistent with policies in effect at the time
this Note was issued and permitted changes described on the face hereof),
then such Index shall be calculated for this Note's purposes by another third
party selected by the Company, which may be Salomon Brothers Inc or another
affiliate of the Company subject to the same conditions and controls as
applied to the original third party. If for any reason such Index cannot be
calculated on the same basis and subject to the same conditions and controls
as applied to the original third party, then any indexed principal amount of
this Note shall be calculated in the manner described on the face hereof.
Any determination of such third party shall in the absence of manifest error
be binding on all parties.
As provided in the Indenture and subject to certain limitations
therein set forth, this Note is exchangeable for a like aggregate principal
amount of Bearer Notes of different authorized denominations, as requested by
the Person surrendering the same.
No service charge shall be made for any such exchange, but the
Company may require payment of a sum sufficient to cover any tax or other
governmental charge payable in connection therewith.
In case this Note or any Coupon shall at any time become mutilated,
destroyed, stolen or lost, it may be replaced at the specified office of the
Principal Paying Agent in London; or, so long as the Bearer Notes are listed
on the Luxembourg Stock Exchange, at the specified office of the Paying Agent
in Luxembourg, upon payment by the claimant of such expenses as may be
incurred in connection therewith and, in the case of destruction, theft or
loss, on such terms as to evidence and indemnity as the Company or the
Trustee may reasonably require. Mutilated or defaced Bearer Notes or Coupons
must be surrendered before replacements will be issued.
The Indenture permits with certain exceptions as therein provided,
the amendment thereof and the modification of the rights and obligations of
the Company and the rights of the Holders of the Debt Securities of each
series to be affected under the Indenture at any time by the Company and the
Trustee with the consent of the Holders of not less than a majority in
aggregate principal amount of the Debt Securities at the time Outstanding of
each series to be affected. The Indenture also contains provisions
permitting the Holders of specified percentages in aggregate principal amount
of the Debt Securities of any series at the time Outstanding, on behalf of
the Holders of all the Debt Securities of such series, to waive compliance by
the Company with certain provisions of the Indenture and certain past
defaults under the Indenture and their consequences. Any
10
<PAGE>
such consent or waiver by the Holder of this Debt Security shall be
conclusive and binding upon such Holder and upon all future Holders of this
Debt Security and of any Debt Security issued upon the registration of
transfer hereof or in exchange herefor or in lieu hereof, whether or not
notation of such consent or waiver is made upon this Debt Security.
Holders of Debt Securities of this series may not enforce their
rights pursuant to the Indenture or such Debt Securities except as provided
in the Indenture. No reference herein to the Indenture and no provision of
this Note or of the Indenture shall alter or impair the obligation of the
Company, which is absolute and unconditional, to pay the principal of (and
premium, if any) and interest on this Note at the times, place and rate, and
in the coin or currency, herein prescribed.
The Company may, without the consent of the Holders of the Notes,
consolidate with, merge into, or transfer substantially all of its assets to,
a corporation that is a U.S. Person, provided that the successor corporation
assumes all obligations of the Company under the Notes and certain other
conditions are met, including a waiver by the successor corporation of any
right to redeem the Notes under circumstances in which the successor
corporation would be entitled to redeem the Notes but the Company would not
have been entitled to do so.
Except as provided above, the obligation to pay the principal
hereof (and premium if any) and interest hereon in the designated currency of
payment is of the essence. To the fullest extent possible under applicable
law, judgments in respect of this Note shall be given in such currency. The
obligation of the Company to make such payments in the designated currency of
payment shall, notwithstanding any payment in any other currency (whether
pursuant to a judgment or otherwise), be discharged only to the extent of the
amount in the designated currency of payment that the Holder of this Note
may, in accordance with normal banking procedures, purchase with the sum paid
in such other currency (after any premium and cost of exchange) on the
business day in the country of issue of the designated currency of payment or
in the international banking community (in the case of a composite currency)
immediately following the day on which such Holder receives such payment. If
the amount in the designated currency of payment that may be so purchased is
for any reason less than the amount originally due, the Company shall, as a
separate and independent obligation, pay such additional amounts in the
designated currency of payment as may be necessary to compensate for any such
shortfall.
All notices to Holders of this Note will be deemed to have been
duly given if published on two separate Business Days in a leading London
daily newspaper (which is expected to be the Financial Times) and, so long as
---------------
the Bearer Notes are listed on
11
<PAGE>
the Luxembourg Stock Exchange and such exchange so requires, in Luxembourg in
a newspaper of general circulation in Luxembourg (which is expected to be the
Luxemburger Wort). Such notices shall be deemed to have been given on the
----------- ----
date of the first such publication.
If the Specified Currency of this Note is Pounds sterling, the
following applies: The Company is not an institution authorised under the
Banking Act 1987 of the United Kingdom, and this Note is a medium-term note
issued in accordance with regulations made under Section 4 of the Banking Act
1987. The Company represents that as of the date of issuance of this Note,
(1) the Company is in compliance with its listing obligations to The
International Stock Exchange of the United Kingdom and the Republic of
Ireland Limited in connection with the Company's securities that are listed
on such Exchange; and (2) since information was last published in compliance
with such listing obligations, the Company, having made all reasonable
enquiries, has not become aware of any change in circumstances which could
reasonably be regarded as significantly and adversely affecting its ability
to meet its obligations on this Note as they fall due. Repayment of
principal and payment of interest and any premium on this Note have not been
guaranteed by any person.
This Note shall be deemed to be a contract made and to be performed
solely in the State of New York, and for all purposes shall be governed by,
and construed in accordance with, the laws of said State without regard to
the conflicts of law rules of said State.
All terms used in this Note that are defined in the Indenture shall
have the meanings assigned to them in the Indenture.
12
<PAGE>
FORM OF SERIES E FLOATING RATE OR INDEXED RATE BEARER NOTE
BEARER PRINCIPAL AMOUNT
OR FACE AMOUNT
SALOMON INC
No. FL- MEDIUM-TERM NOTE, SERIES E
(FLOATING RATE OR INDEXED RATE) CUSIP
Due More Than Nine Months from Date of Issue
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 SECTION 165(j) AND 1287(a) OF THE INTERNAL REVENUE CODE.
IF APPLICABLE, THE "TOTAL AMOUNT OF OID" AND "YIELD TO MATURITY" SET
FORTH BELOW WILL BE COMPLETED SOLELY FOR THE PURPOSES OF APPLYING THE FEDERAL
INCOME TAX ORIGINAL ISSUE DISCOUNT ("OID") RULES
Issue Price: Original Issue Date:
Initial Interest Rate: Stated Maturity:
Specified Currency:
(If other than U.S. Dollars)
Authorized Denominations:
(If other than as set forth in the Prospectus Supplement)
Base Rate: [ ] CD Rate [ ] Commercial Paper [ ] Federal Funds Rate
[ ] LIBOR Telerate [ ] LIBOR Reuters [ ] Treasury Rate
[ ] Treasury Rate Constant Maturity [ ] Other (see attached)
Interest Reset Period Index Maturity:
or Interest Reset Dates:
Interest Payment Dates:
(If other than as set forth in the Prospectus Supplement)
Indexed Principal Note: [ ] Yes (see attached) [ ] No
Floating Rate: [ ] Indexed Interest Rate [ ] (See attached)
Spread Multiplier: Spread (+/-):
Spread Reset: [ ] The Spread or Spread Multiplier may not be changed
prior to Stated Maturity.
[ ] The Spread or Spread Multiplier may be changed prior to
Stated Maturity (see attached).
<PAGE>
Optional Reset Dates (if applicable):
Maximum Interest Rate: Minimum Interest Rate:
Amortizing Note: [ ] Yes [ ] No
Amortization Schedule:
Optional Redemption: [ ] Yes [ ] No
Optional Redemption Dates:
Redemption Prices:
Optional Repayment: [ ] Yes [ ] No
Optional Repayment Dates:
Optional Repayment Prices:
Optional Extension of Stated Maturity: [ ] Yes [ ] No
Final Maturity:
Discount Note: [ ] Yes [ ] No
Total Amount of OID:
Yield to Maturity:
IF THE SPECIFIED CURRENCY OF THIS NOTE IS POUNDS STERLING, THE FOLLOWING
APPLIES: THIS NOTE IS ISSUED IN ACCORDANCE WITH THE REGULATIONS MADE UNDER
SECTION 4 OF THE BANKING ACT 1987.
2
<PAGE>
SALOMON INC, a corporation duly organized and existing under the laws of
the State of Delaware (the "Company"), for value received, hereby promises to
pay to bearer, upon presentation and surrender hereof, (a) the Principal
Amount or, in the case of an Indexed Principal Note, the Face Amount adjusted
by reference to prices, changes in prices, or differences between prices, of
securities, currencies, intangibles, goods, articles or commodities or by
such other objective price, economic or other measures (an "Index") as
described on the face hereof, in the Specified Currency on the Stated
Maturity shown above or earlier if and to the extent so provided herein, and
(b) to pay accrued interest (i) if this is a Floating Rate Note, on the
Principal Amount then outstanding (or in the case of an Indexed Principal
Note, the Face Amount then outstanding) at the Initial Interest Rate shown
above from the Original Issue Date shown above until the first Interest Reset
Date shown above following the Original Issue Date and thereafter at the Base
Rate shown above, adjusted by the Spread or Spread Multiplier, if any, shown
above, determined in accordance with the provisions on the reverse hereof, or
(ii) if this is an Indexed Rate Note, on said Principal Amount then
outstanding (or in the case of an Indexed Principal Note, the Face Amount
then outstanding) at a rate adjusted by reference to an Index described on
the face hereof, in arrears to the bearer of the interest coupons attached
hereto (the "Coupons") upon surrender thereof as they shall severally mature
at the rates per annum and on the dates, determined as described on the
reverse hereof, until, in either case, the Principal Amount then outstanding
(or Face Amount) is paid or duly provided for in accordance with the terms
hereof.
For purposes of this Note, "Business Day" means any day, other than a
Saturday or Sunday, that is not a day on which banking institutions are
authorized or required by law or regulation to be closed in (a) The City of
New York, (b) London, England, (c) the place in which this Note or any Coupon
is presented for payment or (d) if the Specified Currency (as defined below)
is other than U.S. dollars, the financial center of the country issuing the
Specified Currency (which in the case of European Currency Units ("ECU")
shall be Brussels, Belgium).
The indebtedness evidenced by this Note is, to the extent set forth in
the Indenture, expressly subordinated and subject in right of payment to the
prior payment in full of Senior Indebtedness as defined in the Indenture, and
this Note is issued subject to such provisions, and each Holder of this Note,
by accepting the same, agrees to and shall be bound by such provisions and
authorizes and directs the Trustee in his behalf to take such action as may
be necessary or appropriate to acknowledge or effectuate the subordination as
provided in
3
<PAGE>
the Indenture and appoints the Trustee as his attorney-in-fact for any and
all such purposes.
If this Note is an Amortizing Note as shown on the face hereof, a
portion or all the principal amount of the Note is payable prior to Stated
Maturity in accordance with a schedule, by application of a formula, or by
reference to an index (as described above).
Except under certain circumstances for Notes having Specified Currencies
other than U.S. dollars, payments of the principal hereof and any premium and
interest hereon will be made only in the Specified Currency. Payments in
respect of this Note and any Coupon will be made only against surrender of
this Note or such Coupon, at the offices of the Paying Agents outside the
United States listed on the reverse hereof. At the direction of the Holder
of this Note or any Coupon, and subject to applicable laws and regulations,
such payments will be made by check drawn on a bank in The City of New York
(in the case of U.S. dollar payments) or outside the United States (in the
case of payments in a currency other than U.S. dollars) mailed to an address
outside the United States furnished by the Holder hereof or, at the option of
the Holder hereof, by wire transfer (pursuant to written instructions
supplied by the Holder hereof) to an account maintained by the payee with a
bank located outside the United States. No payment in respect of this Note
or any Coupon will be made upon presentation of this Note or such Coupon at
any office or agency of the Trustee or any other paying agency maintained by
the Company in the United States, nor will any such payment be made by
transfer to an account, or by mail to an address, in the United States.
Notwithstanding the foregoing, if U.S. dollar payments in respect of this
Note or any Coupons at the offices of all Paying Agents outside the United
States become illegal or are effectively precluded because of the imposition
of exchange controls or similar restrictions on the full payment or receipt
of such amounts in U.S. dollars, the Company will appoint an office or agency
(which may be the Trustee) in the United States at which such payments may be
made.
REFERENCE IS HEREBY MADE TO THE FURTHER PROVISIONS OF THIS NOTE SET
FORTH ON THE REVERSE HEREOF, AND SUCH FURTHER PROVISIONS SHALL FOR ALL
PURPOSES HAVE THE SAME EFFECT AS THOUGH FULLY SET FORTH IN THIS PLACE.
This Note shall not become valid or obligatory for any purpose unless
and until this Note has been authenticated by Bankers Trust Company, or its
successor, as Trustee.
4
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Note to be executed
under its corporate seal.
Dated:
SALOMON INC
By_____________________________________
Chairman of the Board of Directors,
President and Chief Executive Officer
[Seal]
Attest:________________________________
Secretary
CERTIFICATE OF AUTHENTICATION
This is one of the Bearer Notes issued under the within-mentioned
Indenture.
BANKERS TRUST COMPANY
as Trustee
By_____________________________________
Authorized Officer
5
<PAGE>
SALOMON INC
MEDIUM-TERM NOTE, SERIES E
(FLOATING OR INDEXED RATE)
General
-------
This Note is one of a series of duly authorized debt securities of the
Company (the "Debt Securities") issued or to be issued in one or more series
under an indenture dated as of December 1, 1988 (the "Indenture") between the
Company and Bankers Trust Company, as trustee (the "Trustee", which term
includes any successor Trustee under the Indenture), to which Indenture and
all indentures supplemental thereto reference is hereby made for a statement
of the respective rights, limitations of rights, duties and immunities
thereunder of the Company, the Trustee and the Holders of the Debt Securities
and of the terms upon which the Debt Securities are, and are to be,
authenticated and delivered. The U.S. dollar equivalent of the public
offering price or purchase price of Notes denominated in currencies other
than U.S. dollars will be determined by the Company or its agent, on the
basis of the noon buying rate in New York City for cable transfers in foreign
currencies as certified for customs purposes by the Federal Reserve Bank of
New York (the "Market Exchange Rate") for such currencies on the applicable
issue dates.
Unless otherwise specified on the face hereof, the authorized
denominations of Bearer Notes denominated in U.S. dollars will be U.S.$25,000
and any larger amount that is an integral multiple of U.S.$5,000. The
authorized denominations of Bearer Notes having a specified currency other
than U.S. dollars will be, unless otherwise specified herein, the approximate
equivalents thereof in the Specified Currency.
If so specified on the face hereof, this Note will be redeemable at the
option of the Company in whole or from time to time in part, on any date on
or after the date designated as the Initial Redemption Date on the face
hereof, upon the Company's giving the Trustee at least 45 days' notice, at
the Redemption Price determined as provided on the face hereof. If redeemed
prior to its Stated Maturity, this Note must be presented for payment
together with all unmatured Coupons, if any, appertaining hereto, failing
which the amount of any missing unmatured Coupon will be deducted from the
sum due for payment. The Bearer Notes will not be subject to any sinking
fund.
The Bearer Notes may be redeemed at the option of the Company in whole,
but not in part, at any time on giving not
6
<PAGE>
less than 30 or more than 60 days' notice as set forth below, which notice
shall be irrevocable, at their Redemption Prices, if the Company has or will
become obligated to pay additional interest on the Bearer Notes as described
below as a result of any change in, or amendment to, the laws (or any
regulations or rulings promulgated thereunder) of the United States or any
political subdivision or taxing authority thereof or therein, or any change
in the application or official interpretation of such laws, regulations or
rulings, which change or amendment becomes effective on or after the Original
Issue Date, and such obligation cannot be avoided by the Company taking
reasonable measures available to it. No such notice of redemption shall be
given earlier than 90 days prior to the earliest date on which the Company
would be obligated to pay such additional interest were a payment in respect
of the Bearer Notes then due. Prior to the publication of any notice of
redemption pursuant to this paragraph, the Company shall deliver to the
Trustee a certificate stating that the Company is entitled to effect such
redemption and setting forth a statement of facts showing that the conditions
precedent to the right of the Company so to redeem have occurred, and an
opinion of independent counsel to the effect that the Company has or will
become obligated to pay such additional interest as a result of such change
or amendment.
If so specified on the face hereof, this Note will be repayable prior to
its Stated Maturity at the option of the Holder on the Optional Repayment
Dates shown on the face hereof at the Optional Repayment Prices shown on the
face hereof, together with accrued interest to the date of repayment. In
order for this Note to be repaid, the Principal Paying Agent (as specified
below) must receive the Note at least 30 but not more than 45 days prior to
an Optional Repayment Date. Any tender of this Note for repayment shall be
irrevocable. The repayment option may be exercised by the Holder hereof for
less than the entire principal amount hereof, provided that the principal
--------
amount of the Note remaining outstanding after repayment is an authorized
denomination. Upon such partial repayment, this Note shall be cancelled and
a new Note or Notes for the remaining principal amount hereof shall be issued
to the Holder of this Note.
Payment of Additional Interest
------------------------------
The Company will, subject to the exceptions and limitations set forth
below, pay as additional interest to the Holder of this Note or any Coupon
that is a United States Alien (as defined below) such amounts as may be
necessary so that every net payment on this Note or such Coupon, after
deduction or withholding for or on account of any present or future tax,
assessment or other governmental charge imposed upon or as a result of such
payment by the United States (or
7
<PAGE>
any political subdivision or taxing authority thereof or therein), will not
be less than the amount provided in this Note or such Coupon to be then due
and payable. However, the Company will not be required to make any such
payment of additional interest to such Holder for or an account of:
(a) any tax, assessment or other governmental charge that would
not have been imposed but for (i) the existence of any present or former
connection between such Holder (or between a fiduciary, settlor or
beneficiary of, or a Person holding a power over, such Holder, if such
Holder is an estate or a trust, or a member or shareholder of such
Holder, if such Holder is a partnership or a corporation) and the United
States, including, without limitation, such Holder (or such fiduciary,
settlor, beneficiary, Person holding a power, member or shareholder)
being or having been a citizen or resident thereof or being or having
been engaged in trade or business or present therein or having or having
had a permanent establishment therein or (ii) such Holder's past or
present status as a passive foreign investment company, a personal
holding company, foreign personal holding company, a controlled foreign
corporation for United States tax purposes or private foundation or
other tax-exempt organization with respect to the United States or as a
corporation that accumulates earnings to avoid United States federal
income tax;
(b) any estate, inheritance, gift, sales, transfer or personal
property tax or any similar tax, assessment or other governmental
charge;
(c) any tax, assessment or other governmental charge that would
not have been imposed but for the presentation by the Holder of this
Note or such Coupon for payment more than 15 days after the date on
which such payment became due and payable or on which payment thereof
was duly provided for, whichever occurred later;
(d) any tax, assessment or other governmental charge that is
payable otherwise than by deduction or withholding from a payment on
this Note or such Coupon;
(e) any tax, assessment or other governmental charge required to
be deducted or withheld by any Paying Agent from a payment on this Note
or such Coupon, if such payment can be made without such deduction or
withholding by any other Paying Agent;
(f) any tax, assessment or other governmental charge that would
not have been imposed but for a failure to comply with any applicable
certification,
8
<PAGE>
documentation, information or other reporting requirement concerning the
nationality, residence, identity or connection with the United States of
the Holder or beneficial owner of this Note or such Coupon if, without
regard to any tax treaty, such compliance is required by statute or
regulation of the United States as a pre-condition to relief or
exemption from such tax, assessment or other governmental charge; or
(g) any tax, assessment or other governmental charge imposed on a
Holder that actually or constructively owns ten percent or more of the
combined voting power of all classes of stock of the Company (taking
into account applicable attribution of ownership rules under Section
871(h)(3) of the Internal Revenue Code of 1986, as amended) or is a
controlled foreign corporation related to the Company through stock
ownership;
nor shall such additional interest be paid with respect to a payment on this
Note or such Coupon to a Holder that is a fiduciary or partnership or other
than the sole beneficial owner of such payment to the extent a beneficiary or
settlor with respect to such fiduciary or a member of such partnership or a
beneficial owner would not have been entitled to the additional interest had
such beneficiary, settlor, member or beneficial owner been the Holder of this
Note or such Coupon.
The term "United States Alien" means any person who, for United
States federal income tax purposes, is a foreign corporation, a nonresident
alien individual, a nonresident alien fiduciary of a foreign estate or trust,
or a foreign partnership one or more of the members of which is, for United
States federal income tax purposes, a foreign corporation, a nonresident
alien individual or a nonresident alien fiduciary of a foreign estate or
trust.
The Company has initially appointed as its Paying Agents for Bearer
Notes of this Series the offices listed below:
Principal Paying Agent:
Bankers Trust Company
1 Appold Street, Broadgate
London, EC2A 2HE
Paying Agent:
Bankers Trust Luxembourg, S.A.
P.O. Box 807
14 Boulevard F.D. Roosevelt
L-2450 Luxembourg
9
<PAGE>
The Company reserves the right at any time to vary or terminate the
appointment of any Paying Agent and to appoint additional or other Paying
Agents and to approve any change in the office through which any Paying Agent
acts, provided that there will at all times be a Paying Agent (which may be
the Trustee) in at least one city in Europe, which, so long as Bearer Notes
are listed on the Luxembourg Stock Exchange and that exchange shall so
require, shall include Luxembourg. Notice of any such termination or
appointment and of any changes in the specified offices of the Trustee or any
Paying Agent will be given to the Holder hereof as described below.
Unless otherwise specified on the face hereof, if this Note is a
Floating Rate Note, this Note will bear interest from its Original Issue Date
to the first Interest Reset Date (as defined below) at the Initial Interest
Rate set forth on the face hereof. Thereafter, the interest rate hereon for
each Interest Reset Period (as defined below) will be determined by reference
to an interest rate basis (the "Base Rate"), plus or minus the Spread, if
any, or multiplied by the Spread Multiplier, if any. The "Spread" is the
number of basis points (one basis point equals one one-hundredth of a
percentage point) that may be specified on the face hereof, and the "Spread
Multiplier" is the percentage that may be specified on the face hereof. The
face of this Note will designate one of the following Base Rates as
applicable hereto: (i) the CD Rate (a "CD Rate Note"), (ii) the Commercial
Paper Rate (a "Commercial Paper Rate Note"), (iii) the Federal Funds Rate (a
"Federal Funds Rate Note"), (iv) LIBOR (a "LIBOR Note"), (v) the Treasury
Rate (a "Treasury Rate Note") or (vi) such other Base Rate as is set forth on
the face hereof. The "Index Maturity" is the period of maturity of the
instrument or obligation from which the Base Rate is calculated. "H.15(519)"
means the publication entitled "Statistical Release H.15(519), Selected
Interest Rates", or any successor publication, published by the Board of
Governors of the Federal Reserve System. "Composite Quotations" means the
daily statistical release entitled "Composite 3:30 p.m. Quotations for U.S.
Government Securities" published by the Federal Reserve Bank of New York.
Unless otherwise specified on the face hereof, the interest payable
hereon shall be the accrued interest from and including the Original Issue
Date or the last date to which interest has been paid, as the case may be, to
but excluding the applicable Interest Payment Date; provided, however, that
-------- -------
if the interest rate is reset daily or weekly, interest payable shall be the
accrued interest from and including the Original Issue Date or the last date
to which interest has been accrued and paid, as the case may be, to but
excluding the date fifteen calendar days immediately preceding the
10
<PAGE>
applicable Interest Payment Date, except that interest payable at Maturity
will include interest accrued to but excluding the date of Maturity. Accrued
interest will be calculated by multiplying the principal amount hereof (or if
this Note is an Indexed Principal Note, the Face Amount specified on the face
hereof) by an accrued interest factor. Such accrued interest factor shall be
computed by adding the interest factors calculated for each day in the period
for which accrued interest is being calculated. The interest factor
(expressed as a decimal calculated to seven decimal places without rounding)
for each such day shall be computed by dividing the interest rate in effect
on such day by 360 if the Base Rate specified on the face hereof is the CD
Rate, the Commercial Paper Rate, the Federal Funds Rate or LIBOR, or by the
actual number of days in the year if the Base Rate specified on the face
hereof is the Treasury Rate. For purposes of making the foregoing
calculation, the interest rate in effect on any Interest Reset Date will be
the applicable rate as reset on such date. Unless otherwise specified on the
face hereof, all percentages resulting from any calculation of the rate of
interest hereon will be rounded, if necessary, to the nearest 1/100,000 of 1%
(.0000001), with five one-millionths of a percentage point rounded upward,
and all currency amounts used in or resulting from such calculation will be
rounded to the nearest one-hundredth of a unit (with .005 of a unit being
rounded upward).
As specified on the face hereof, the interest rate hereon will be
reset daily, weekly, monthly, quarterly, semiannually or annually (such
period being the "Interest Reset Period", and the first day of each Interest
Reset Period being an "Interest Reset Date"). Unless otherwise specified on
the face hereof, the Interest Reset Date will be, if this Note resets daily,
each Business Day; if this Note is not a Treasury Rate Note and it resets
weekly, Wednesday of each week; if this Note is a Treasury Rate Note that
resets weekly, Tuesday of each week (except as provided below under
"Determination of Treasury Rate"); if this Note resets monthly, the third
Wednesday of each month; if this Note resets quarterly, the third Wednesday
of March, June, September and December of each year; if this Note resets
semiannually, the third Wednesday of each of two months of each year
specified on the face hereof; and if this Note resets annually, the third
Wednesday of one month of each year specified on the face hereof; provided,
--------
however, that in all instances the interest rate in effect for the ten days
-------
immediately prior to Maturity will be that in effect on the tenth day
preceding the date of Maturity. If an Interest Reset Date for this Note
would otherwise be a day that is not a Business Day, such Interest Reset Date
shall be postponed to the next succeeding Business Day, except that if this
Note is a LIBOR Note and such Business Day is in the next succeeding
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calendar month, such Interest Reset Date shall be the immediately preceding
Business Day. Notwithstanding the foregoing, the interest rate hereon during
any interest period shall not be greater than the Maximum Interest Rate, if
any, or less than the Minimum Interest Rate, if any, shown on the face
hereof. In addition to any Maximum Interest Rate that may be applicable
hereto, the interest rate hereon during any interest period will in no event
be higher than the maximum rate permitted by applicable law as the same may
be modified by United States law of general application. This Note will be
governed by the law of the State of New York and, under such law, the maximum
rate of interest, with certain exceptions, is 25% per annum on a simple
interest basis.
Unless otherwise indicated on the face hereof and except as
provided below, interest will be payable, if this Note resets daily, weekly
or monthly, on the third Wednesday of each month or on the third Wednesday of
March, June, September and December of each year, as specified on the face
hereof; if this Note resets quarterly, on the third Wednesday of March, June,
September and December of each year; if this Note resets semiannually, on the
third Wednesday of each of the two months of each year specified on the face
hereof; and if this Note resets annually, on the third Wednesday of the month
of each year specified on the face hereof (each such day being an "Interest
Payment Date"). If any Interest Payment Date would otherwise be a day that
is not a Business Day, such Interest Payment Date shall be postponed to the
next succeeding Business Day, except that, if the Base Rate specified on the
face hereof is LIBOR and such Business Day is in the next succeeding calendar
month, such Interest Payment Date shall be the immediately preceding Business
Day.
The Company will appoint, and enter into an agreement with, an
agent ("Calculation Agent") to calculate interest rates on this Note. All
determinations of interest rates by the Calculation Agent shall, in the
absence of manifest error, be conclusive for all purposes and binding on the
Holder hereof. Unless otherwise specified on the face hereof, Bankers Trust
Company shall be the Calculation Agent for this Note. At the request of the
Holder hereof, the Calculation Agent will provide the interest rate then in
effect and, if determined, the interest rate that will become effective on
the next Interest Reset Date. In addition, such information will be
communicated to the Luxembourg Stock Exchange and will be made available at
the offices of the Paying Agent in Luxembourg and at the Luxembourg Stock
Exchange.
Subject to applicable provisions of law and except as specified
herein, on each Interest Reset Date the rate of
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<PAGE>
interest hereon shall be the rate determined in accordance with the
provisions under the applicable heading below.
Determination of CD Rate
------------------------
If the Base Rate specified on the face hereof is the CD Rate, this
Note will bear interest for each Interest Reset Period at the interest rate
calculated with reference to the CD Rate and the Spread or Spread Multiplier,
if any, specified on the face hereof. The "CD Rate" for each Interest Reset
Period shall be the rate as of the second Business Day prior to the Interest
Reset Date for such Interest Reset Period (a "CD Rate Determination Date")
for negotiable certificates of deposit having the Index Maturity specified on
the face hereof as published in H.15(519) under the heading "CDs (Secondary
Market)". In the event that such rate is not published prior to 3:00 p.m.,
New York City time, on the Calculation Date (as defined below) pertaining to
such CD Rate Determination Date, then the "CD Rate" for such Interest Reset
Period will be the rate on such CD Rate Determination Date for negotiable
certificates of deposit of the Index Maturity specified on the face hereof as
published in Composite Quotations under the heading "Certificates of
Deposit". If by 3:00 p.m., New York City time, on such Calculation Date such
rate is not yet published in either H.15(519) or Composite Quotations, then
the "CD Rate" for such Interest Reset Period will be calculated by the
Calculation Agent and will be the arithmetic mean of the secondary market
offered rates as of 10:00 a.m., New York City time, on such CD Rate
Determination Date, of three leading nonbank dealers in negotiable U.S.
dollar certificates of deposit in The City of New York selected by the
Calculation Agent for negotiable certificates of deposit of major United
States money center banks of the highest credit standing (in the market for
negotiable certificates of deposit) with a remaining maturity closest to the
Index Maturity specified on the face hereof in a denomination of $5,000,000;
provided, however, that if the dealers selected as aforesaid by the
-------- -------
Calculation Agent are not quoting offered rates as mentioned in this
sentence, the "CD Rate" for such Interest Reset Period will be the same as
the CD Rate for the immediately preceding Interest Reset Period (or, if there
was no such Interest Period, the Initial Interest Rate).
The "Calculation Date" pertaining to any CD Rate Determination Date
shall be the tenth calendar day after such CD Rate Determination Date or, if
such day is not a Business Day, the next succeeding Business Day.
Determination of Commercial Paper Rate
--------------------------------------
If the Base Rate specified on the face hereof is the Commercial
Paper Rate, this Note will bear interest for each
13
<PAGE>
Interest Reset Period at the interest rate calculated with reference to the
Commercial Paper Rate and the Spread or Spread Multiplier, if any, specified
on the face hereof. The "Commercial Paper Rate" for each Interest Reset
Period will be determined by the Calculation Agent as of the second Business
Day prior to the Interest Reset Date for such Interest Reset Period (a
"Commercial Paper Rate Determination Date") and shall be the Money Market
Yield (as defined below) on such Commercial Paper Rate Determination Date of
the rate for commercial paper having the Index Maturity specified on the face
hereof, as such rate shall be published in H.15(519) under the heading
"Commercial Paper". In the event that such rate is not published prior to
3:00 p.m., New York City time, on the Calculation Date (as defined below)
pertaining to such Commercial Paper Rate Determination Date, then the
"Commercial Paper Rate" for such Interest Reset Period shall be the Money
Market Yield on such Commercial Paper Rate Determination Date of the rate for
commercial paper of the Index Maturity specified on the face hereof as
published in Composite Quotations under the heading "Commercial Paper". If
by 3:00 p.m., New York City time, on such Calculation Date such rate is not
yet published in either H.15(519) or Composite Quotations, then the
"Commercial Paper Rate" for such Interest Reset Period shall be the Money
Market Yield of the arithmetic mean of the offered rates, as of 11:00 a.m.,
New York City time, on such Commercial Paper Rate Determination Date of three
leading dealers of commercial paper in The City of New York selected by the
Calculation Agent for commercial paper of the Index Maturity specified on the
face hereof placed for an industrial issuer whose bonds are rated "AA" or the
equivalent thereof by a nationally recognized rating agency; provided,
--------
however, that if the dealers selected as aforesaid by the Calculation Agent
-------
are not quoting offered rates as mentioned in this sentence, the "Commercial
Paper Rate" for such Interest Reset Period will be the same as the Commercial
Paper Rate for the immediately preceding Interest Reset Period (or, if there
was no such Interest Reset Period, the Initial Interest Rate).
"Money Market Yield" shall be a yield calculated in accordance with
the following formula:
Money Market Yield = D x 360 x 100
---------------
360 - (D x M)
where "D" refers to the applicable per annum rate for commercial paper quoted
on a bank discount basis and expressed as a decimal, and "M" refers to the
actual number of days in the Index Maturity specified on the face hereof.
The "Calculation Date" pertaining to any Commercial Paper Rate
Determination Date shall be the tenth calendar day
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<PAGE>
after such Commercial Paper Rate Determination Date or, if such day is not a
Business Day, the next succeeding Business Day.
Determination of Federal Funds Rate
-----------------------------------
If the Base Rate specified on the face hereof is the Federal Funds
Rate, this Note will bear interest for each Interest Reset Period at the
interest rate calculated with reference to the Federal Funds Rate and the
Spread or Spread Multiplier, if any, specified on the face hereof. The
"Federal Funds Rate" for each Interest Reset Period shall be the effective
rate on the Interest Reset Date for such Interest Reset Period (a "Federal
Funds Rate Determination Date") for Federal Funds as published in H.15(519)
under the heading "Federal Funds (Effective)". In the event that such rate
is not published prior to 3:00 p.m., New York City time, on the Calculation
Date (as defined below) pertaining to such Federal Funds Rate Determination
Date, the "Federal Funds Rate" for such Interest Reset Period shall be the
rate on such Federal Funds Rate Determination Date as published in Composite
Quotations under the heading "Federal Funds/Effective Rate". If by 3:00
p.m., New York City time, on such Calculation Date such rate is not yet
published in either H.15(519) or Composite Quotations, then the "Federal
Funds Rate" for such Interest Reset Period shall be the rate on such Federal
Funds Rate Determination Date made publicly available by the Federal Reserve
Bank of New York which is equivalent to the rate which appears in H.15(519)
under the heading "Federal Funds (Effective)"; provided, however, that if
-------- -------
such rate is not made publicly available by the Federal Reserve Bank of New
York by 3:00 p.m., New York City time, on such Calculation Date, then the
"Federal Funds Rate" for such Interest Reset Period will be the same as the
Federal Funds Rate in effect for the immediately preceding Interest Reset
Period (or, if there was no such Interest Reset Period, the Initial Interest
Rate). If this Note resets daily, the interest rate hereon for the period
from and including a Monday to but excluding the succeeding Monday will be
reset by the Calculation Agent on such second Monday (or, if not a Business
Day, on the next succeeding Business Day) to a rate equal to the average of
the Federal Funds Rates in effect with respect to each such day in such week.
The "Calculation Date" pertaining to any Federal Funds Rate
Determination Date shall be the next succeeding Business Day.
Determination of LIBOR
----------------------
If the Base Rate specified on the face hereof is LIBOR, this Note
will bear interest for each Interest Reset
15
<PAGE>
Period at the interest rate calculated with reference to LIBOR and the Spread
or Spread Multiplier, if any, specified on the face hereof. "LIBOR" for each
Interest Reset Period will be determined by the Calculation Agent as follows:
(i) On the second London Banking Day prior to the Interest Reset
Date for such Interest Reset Period (a "LIBOR Determination Date"), the
Calculation Agent for such LIBOR Note will determine the arithmetic mean
of the offered rates for deposits in the Specified Currency for the
period of the Index Maturity specified in the applicable Pricing
Supplement, commencing on such Interest Reset Date, which appear on the
Designated LIBOR Page at approximately 11:00 a.m., London time, on such
LIBOR Determination Date. "Designated LIBOR Page" means either (a) if
"LIBOR Telerate" is designated in the applicable Pricing Supplement, the
display designated as page "3750" on the Dow Jones Telerate Service (or
such other page as may replace page "3750" on such service or such other
service as may be nominated by the British Bankers' Association for the
purpose of displaying the London interbank offered rates of major banks)
or (b) if "LIBOR Reuters" is designated in the applicable Pricing
Supplement, the display designated as page "LIBO" on the Reuters Monitor
Money Rates Service (or such other page as may replace the LIBO page on
such service or such other service as may be nominated by the British
Bankers' Association for the purpose of displaying London interbank
offered rates of major banks). If neither LIBOR Reuters nor LIBOR
Telerate is specified in the applicable Pricing Supplement, LIBOR will
be determined as if LIBOR Telerate had been specified. It at least two
such offered rates appear on the Designated LIBOR Page, "LIBOR" for such
Interest Reset Period will be the arithmetic mean of such offered rates
as determined by the Calculation Agent for such LIBOR Note.
(ii) If fewer than two offered rates appear on the Designated
LIBOR Page on such LIBOR Determination Date, the Calculation Agent will
request the principal London offices of each of four major banks in the
London interbank market selected by the Calculation Agent to provide the
Calculation Agent with its offered quotations for deposits in the
Specified Currency for the period of the Index Maturity specified on the
face hereof, commencing on such Interest Reset Date, to prime banks in
the London interbank market at approximately 11:00 a.m., London time, on
such LIBOR Determination Date and in a principal amount equal to an
amount of not less than U.S.$1,000,000 or the approximate equivalent
thereof in the Specified Currency that is representative of a single
transaction in such market at such time. If at least two
16
<PAGE>
such quotations are provided, "LIBOR" for such Interest Reset Period
will be the arithmetic mean of such quotations. If fewer than two such
quotations are provided, "LIBOR" for such Interest Reset Period will be
the arithmetic mean of rates quoted by three major banks in The City of
New York selected by the Calculation Agent at approximately 11:00 a.m.,
New York City time, on such LIBOR Determination Date for loans the
Specified Currency to leading European banks, for the period of the
Index Maturity specified on the face hereof, commencing on such Interest
Reset Date, and in a principal amount equal to an amount of not less
than U.S.$1,000,000 or the approximate equivalent thereof in the
Specified Currency that is representative of a single transaction in
such market at such time; provided, however, that if fewer than three
-------- -------
banks selected as aforesaid by the Calculation Agent are quoting rates
as mentioned in this sentence, "LIBOR" for such Interest Reset Period
will be the same as LIBOR for the immediately preceding Interest Reset
Period (or, if there was no such Interest Reset Period, the Initial
Interest Rate).
Determination of Treasury Rate
------------------------------
If the Base Rate specified on the face hereof is the Treasury Rate,
this Note will bear interest for each Interest Reset Period at the interest
rate calculated with reference to the Treasury Rate and the Spread or Spread
Multiplier, if any, specified on the face hereof. The "Treasury Rate" for
each Interest Reset Period will be the rate for the auction held on the
Treasury Rate Determination Date (as defined below) for such Interest Reset
Period of direct obligations of the United States ("Treasury bills") having
the Index Maturity specified on the face hereof, as such rate shall be
published in H.15(519) under the heading "U.S. Government Securities-Treasury
bills-auction average (investment)" or, in the event that such rate is not
published prior to 3:00 p.m., New York City time, on the Calculation Date (as
defined below) pertaining to such Treasury Rate Determination Date, the
auction average rate (expressed as a bond equivalent on the basis of a year
of 365 or 366 days, as applicable, and applied on a daily basis) on such
Treasury Rate Determination Date as otherwise announced by the United States
Department of the Treasury. In the event that the results of the auction of
Treasury bills having the Index Maturity specified on the face hereof are not
published or reported as provided above by 3:00 p.m., New York City time, on
such Calculation Date, or if no such auction is held on such Treasury Rate
Determination Date, then the "Treasury Rate" for such Interest Reset Period
shall be calculated by the Calculation Agent and shall be a yield to maturity
(expressed as a bond equivalent on the basis of a year of 365 or 366 days, as
applicable, and applied on a daily basis) of
17
<PAGE>
the arithmetic mean of the secondary market bid rates, as of approximately
3:30 p.m., New York City time, on such Treasury Rate Determination Date, of
three leading primary United States government securities dealers selected by
the Calculation Agent for the issue of Treasury bills with a remaining
maturity closest to the Index Maturity specified on the face hereof;
provided, however, that if the dealers selected as aforesaid by the
-------- -------
Calculation Agent are not quoting bid rates as mentioned in this sentence,
then the "Treasury Rate" for such Interest Reset Period will be the same as
the Treasury Rate for the immediately preceding Interest Reset Period (or, if
there was no such Interest Reset Period, the Initial Interest Rate).
The "Treasury Rate Determination Date" for each Interest Reset
Period will be the day of the week in which the Interest Reset Date for such
Interest Reset Period falls on which Treasury bills would normally be
auctioned. Treasury bills are normally sold at auction on Monday of each
week, unless that day is a legal holiday, in which case the auction is
normally held on the following Tuesday, except that such auction may be held
on the preceding Friday. If, as the result of a legal holiday, an auction is
so held on the preceding Friday, such Friday will be the Treasury Rate
Determination Date pertaining to the Interest Reset Period commencing in the
next succeeding week. If an auction date shall fall on any day that would
otherwise be an Interest Reset Date for a Treasury Rate Note, then such
Interest Reset Date shall instead be the Business Day immediately following
such auction date.
If "Constant Maturity" is specified in the applicable Pricing
Supplement, the "Treasury Rate" for each Interest Reset Period will be the
rate that is set forth in the Federal Reserve Board publication H.15(519)
opposite the caption "U.S. Government/Securities/Treasury Constant
Maturities/" in the Index Maturity with respect to the applicable Constant
Maturity Treasury Rate Determination Date (as defined below). If the
H.15(519) is not published, the "Constant Maturity -- Treasury Rate" shall be
the rate that was set forth on Telerate Page 7055, or its successor page (as
determined by the Calculation Agent), on the applicable Constant Maturity
Treasury Rate Determination Date opposite the applicable Index Maturity. If
no such rate is set forth, then the constant Maturity Treasury Rate for such
Interest Reset Period shall be established by the Calculation Agent as
follows. The Calculation Agent will contact the Federal Reserve Board and
request the Constant Maturity Treasury Rate, in the applicable Index
Maturity, for Constant Maturity Treasury Rate Determination Date. If the
Federal Reserve Board does not provide such information, then the Constant
Maturity Treasury Rate for such Interest Reset Date will be the arithmetic
mean of bid-side
18
<PAGE>
quotations, expressed in terms of yield, reported by three leading U.S.
government securities dealers (one of which may be Salomon Brothers Inc),
according to their written records, as of 3:00 p.m. (New York City time) on
the Constant Maturity Treasury rate Determination Date, for the noncallable
U.S. Treasury Note that is nearest in maturity to the Index Maturity, but not
less than exactly the Index Maturity and for the noncallable U.S. Treasury
Note that is nearest in maturity to the Index Maturity, but not more than
exactly the Index Maturity. The Calculation Agent shall calculate the
Constant Maturity Treasury Rate by interpolating to the Index Maturity based
on an actual/actual date count basis, the yield on the two Treasury Notes
selected. If the Calculation Agent cannot obtain three such adjusted
quotations, the Constant Maturity Treasury Rate for such Interest Reset Date
will be the arithmetic mean of all such quotations, or if only one such
quotation is obtained, such quotation, obtained by the Calculation Agent. In
all events, the Calculation Agent shall continue polling dealers until at
least one adjusted yield quotation can be determined.
"The Constant Maturity Treasury Rate Determination Date" shall be
the tenth Business Day prior to the Interest Reset Date for the applicable
Interest Reset Period.
The "Calculation Date" pertaining to any Treasury Rate
Determination Date or Constant Maturity Rate Determination Date, as
applicable, shall be the tenth calendar day after such Treasury Rate
Determination Date or Constant Maturity Rate Determination Date, as
applicable, or, if such a day is not a Business Day, the next succeeding
Business Day.
If this note is an Indexed Note, then certain or all interest
payments, in the case of an Indexed Rate Note, and/or the principal amount
payable at Stated Maturity or earlier redemption or retirement, in the case
of an Indexed Principal Note, is determined by reference to the amount
designated on the face hereof as the Face Amount of this Note and by
reference to the Index as described on the face hereof. If this Note is a
Floating Rate Note or Indexed Rate Note that is also an Indexed Principal
Note, the amount of any interest payment will be determined by reference to
the Face Amount described on the face hereof unless otherwise specified. If
this Note is an Indexed Principal Note, the principal amount payable at
Stated Maturity or any earlier redemption or repayment of this Note may be
different from the Face Amount. If the determination of the Index is
calculated or announced by a third party, which may be Salomon Brothers Inc
or another affiliate of the Company, and such third party either suspends the
calculation or announcement of such Index or changes the basis upon which
such Index is calculated (other than changes consistent with policies in
effect at the time this Note was
19
<PAGE>
issued and permitted changes described on the face hereof), then such Index
shall be calculated for this Note's purposes by another third party, which
may be Salomon Brothers Inc or another affiliate of the Company, selected by
the Company subject to the same conditions and controls as applied to the
original third party. If for any reason such Index cannot be calculated on
the same basis and subject to the same conditions and controls as applied to
the original third party, then the indexed interest payments, if any, or any
indexed principal amount of this Note shall be calculated in the manner
described on the face hereof. Any determination of such third party shall in
the absence of manifest error be binding on all parties.
Payment in Currencies Other Than the Specified Currency
-------------------------------------------------------
Except as set forth below with respect to payments in ECU, if
payment in respect of this Note or any Coupon is required to be made in a
specified currency other than U.S. dollars (a "Specified Currency") and such
currency is unavailable due to the imposition of exchange controls or other
circumstances beyond the Company's control or is no longer used by the
government of the country issuing such currency or for the settlement of
transactions by public institutions of or within the international banking
community, then all payments shall be made in U.S. dollars until such
currency is again available or so used. The amounts so payable on any date
in such currency shall be converted into U.S. dollars on the basis of the
most recently available Market Exchange Rate for such currency or as
otherwise indicated on the face hereof. Any payment made under such
circumstances in U.S. dollars will not constitute an Event of Default under
the Indenture.
If payment in respect of this Note or any Coupon is required to be
made in ECU and the ECU is not then used in the European Monetary System (the
"EMS"), then the Trustee shall, without liability on its part, choose a
component currency (the "Payment Currency") of the ECU in which all payments
in respect hereof shall be made until the ECU is again so used. The amount
of each payment in such Payment Currency shall be computed on the basis of
the equivalent of the ECU in that currency, determined as described below, as
of the fourth Luxembourg business day prior to the date on which such payment
is due. Notice of the Payment Currency selected by the Trustee shall be
given as described below. Any payment made under such circumstances in the
Payment Currency will not constitute an Event of Default under the Indenture.
Notwithstanding the foregoing, on the first Luxembourg business day
on which the ECU is no longer used in the EMS, the Trustee shall, without
liability on its part,
20
<PAGE>
choose a Payment Currency in which all payments with respect to Bearer Notes
and Coupons denominated in ECU having a due date prior thereto but not yet
presented for payment are to be made. The amount of each payment in such
Payment Currency shall be computed on the basis of the equivalent of the ECU
in that currency, determined as described below, as of such first Luxembourg
business day. Any payment made under such circumstances in the Payment
Currency will not constitute an Event of Default under the Indenture.
The equivalent of the ECU in the relevant Payment Currency as of
any date (the "Day of Valuation") shall be determined by the Luxembourg Stock
Exchange on the following basis. The component currencies of the ECU for
this purpose (the "Components") shall be the currency amounts that were
components of the ECU when the ECU was most recently used in the EMS or for
the settlement of transactions by public institutions of or within the
European Community. The equivalent of the ECU in the Payment Currency shall
be calculated by, first, aggregating the U.S. dollar equivalents of the
Components, and then, using the rate used for determining the U.S. dollar
equivalents of the Components in the Payment Currency as set forth below,
calculating the equivalent in the Payment Currency of such aggregate amount
in U.S. dollars.
The U.S. dollar equivalent of each of the Components shall be
determined by the Luxembourg Stock Exchange on the basis of the middle spot
delivery quotations prevailing at 2:30 p.m. Luxembourg time on the Day of
Valuation, as obtained by the Luxembourg Stock Exchange from one or more
major banks, selected by the Trustee (with the approval of the Company) in
the country of issue of the Component in question.
If the official unit of any component currency of the ECU is
altered by way of combination or subdivision, the number of units of that
currency as a Component shall be divided or multiplied in the same
proportion. If two or more component currencies are consolidated into a
single currency, the amounts of those currencies as Components shall be
replaced by an amount in such single currency equal to the sum of the amounts
of the consolidated component currencies expressed in such single currency.
If any component currency is divided into two or more currencies, the amount
of that currency as a Component shall be replaced by amounts of such two or
more currencies, each of which shall be equal to the amount of the former
component currency divided by the number of currencies into which that
currency was divided.
If no direct quotations are available for a Component on a Day of
Valuation from any of the banks selected by the Trustee (with the approval of
the Company) for this
21
<PAGE>
purpose, because foreign exchange markets are closed in the country of issue
of that Component, or for any other reason, in computing the U.S. dollar
equivalent of such Component the Luxembourg Stock Exchange shall (except as
provided below) use the most recent direct quotations for such Component
obtained by it; provided that such most recent quotations may be used only if
--------
they were prevailing in the country of issue not more than two Luxembourg
business days before such Day of Valuation. Beyond such period of two
Luxembourg business days, the Luxembourg Stock Exchange shall determine the
U.S. dollar equivalent of such Component on the basis of cross rates derived
from the middle spot delivery quotations for such Component and for the U.S.
dollar prevailing at 2:30 p.m. Luxembourg time on such Day of Valuation, as
obtained by the Luxembourg Stock Exchange from one or more major banks,
selected by the Trustee (with the approval of the Company) in a country other
than the country of issue of such Component. Notwithstanding the foregoing,
within such period of two Luxembourg business days, the Luxembourg Stock
Exchange shall determine the U.S. dollar equivalent of such Component on the
basis of such cross rates if the Trustee and the Company judge that the
equivalent so calculated is more representative than the U.S. dollar
equivalent calculated on the basis of such most recent direct quotations.
Unless otherwise specified by the Trustee, if there is more than one market
for dealing in any component currency by reason of foreign exchange
regulations or for any other reason, the market to be referred to in respect
of such currency shall be that upon which a nonresident issuer of securities
denominated in such currency would purchase such currency in order to make
payments in respect of such securities.
All determinations referred to above made by the Trustee or the
Luxembourg Stock Exchange shall be at their respective sole discretion
(except to the extent expressly provided herein that any determination made
by the Trustee is subject to the approval of the Company) and shall, in the
absence of manifest error, be conclusive for all purposes and binding on
Holders of the Bearer Notes and any Coupons, and the Trustee shall have no
liability therefor.
If an Event of Default with respect to the Notes shall have
occurred and be continuing, the principal of all Notes may be declared due
and payable in the manner and with the effect provided in the Indenture.
If this Note is a Discount Note, the amount payable in the event of
redemption or repayment prior to its Stated Maturity, shall be the Amortized
Face Amount of this Note as of the date of redemption or the date of
repayment, as the case may be. The "Amortized Face Amount" of this Note
shall be the amount equal to (a) the Issue Price (set forth on the
22
<PAGE>
face hereof) plus (b) that portion of the difference between the Issue Price
and the principal amount hereof that has accrued at the Yield to Maturity
(set forth on the face hereof) (computed in accordance with generally
accepted United States bond yield computation principles) by such date of
redemption or repayment, but in no event shall the Amortized Face Amount of
this Note exceed its principal amount.
As provided in the Indenture and subject to certain limitations
therein set forth, this Note is exchangeable for a like aggregate principal
amount of Bearer Notes of different authorized denominations, as requested by
the Person surrendering the same.
No service charge shall be made for any such exchange, but the
Company may require payment of a sum sufficient to cover any tax or other
governmental charge payable in connection therewith.
In case this Note or any Coupon shall at any time become mutilated,
destroyed, stolen or lost, it may be replaced at the specified office of the
Principal Paying Agent in London; or, so long as the Bearer Notes are listed
on the Luxembourg Stock Exchange, at the specified office of the Paying Agent
in Luxembourg, upon payment by the claimant of such expenses as may be
incurred in connection therewith and, in the case of destruction, theft or
loss, on such terms as to evidence and indemnity as the Company or the
Trustee may reasonably require. Mutilated or defaced Bearer Notes or Coupons
must be surrendered before replacements will be issued.
The Indenture permits, with certain exceptions as therein provided,
the amendment thereof and the modification of the rights and obligations of
the Company and the rights of the Holders of the Debt Securities of each
series to be affected under the Indenture at any time by the Company and the
Trustee with the consent of the Holders of not less than a majority in
aggregate principal amount of the Debt Securities at the time Outstanding of
each series to be affected. The Indenture also contains provisions
permitting the Holders of specified percentages in aggregate principal amount
of the Debt Securities of any series at the time Outstanding, on behalf of
the Holders of all the Debt Securities of such series, to waive compliance by
the Company with certain provisions of the Indenture and certain past
defaults under the Indenture and their consequences. Any such consent or
waiver by the Holder of this Debt Security shall be conclusive and binding
upon such Holder and upon all future Holders of this Debt Security and of any
Debt Security issued upon the registration of transfer hereof or in exchange
herefor or in
23
<PAGE>
lieu hereof, whether or not notation of such consent or waiver is made upon
this Debt Security.
Holders of Debt Securities of this series may not enforce their
rights pursuant to the Indenture or such Debt Securities except as provided
in the Indenture. No reference herein to the Indenture and no provision of
this Note or of the Indenture shall alter or impair the obligation of the
Company, which is absolute and unconditional, to pay the principal of (and
premium, if any) and interest on this Note at the times, place and rate, and
in the coin or currency, herein prescribed.
The Company may, without the consent of the Holders of the Notes,
consolidate with, merge into, or transfer substantially all of its assets to,
a corporation that is a U.S. Person, provided that the successor corporation
assumes all obligations of the Company under the Notes and certain other
conditions are met, including a waiver by the successor corporation of any
right to redeem the Notes under circumstances in which the successor
corporation would be entitled to redeem the Notes but the Company would not
have been entitled to do so.
Except as provided above, the obligation to pay the principal
hereof (and premium, if any) and interest hereon in the designated currency
of payment is of the essence. To the fullest extent possible under
applicable law, judgments in respect of this Note shall be given in such
currency. The obligation of the Company to make such payments in the
designated currency of payment shall, notwithstanding any payment in any
other currency (whether pursuant to a judgment or otherwise), be discharged
only to the extent of the amount in the designated currency of payment that
the Holder of this Note may, in accordance with normal banking procedures,
purchase with the sum paid in such other currency (after any premium and cost
of exchange) on the business day in the country of issue of the designated
currency of payment or in the international banking community (in the case of
a composite currency) immediately following the day on which such Holder
receives such payment. If the amount in the designated currency of payment
that may be so purchased is for any reason less than the amount originally
due, the Company shall, as a separate and independent obligation, pay such
additional amounts in the designated currency of payment as may be necessary
to compensate for any such shortfall.
All notices to Holders of this Note will be deemed to have been
duly given if published on two separate Business Days in a leading London
daily newspaper (which is expected to be the Financial Times) and, so long as
---------------
the Bearer Notes are listed on the Luxembourg Stock Exchange and such
exchange so
24
<PAGE>
requires, in Luxembourg in a newspaper of general circulation in Luxembourg
(which is expected to be the Luxemburger Wort). Such notices shall be deemed
----------- ----
to have been given on the date of the first such publication.
If the Specified Currency of this Note is Pounds sterling, the
following applies: The Company is not an institution authorised under the
Banking Act 1987 of the United Kingdom, and this Note is a medium-term note
issued in accordance with regulations made under Section 4 of the Banking Act
1987. The Company represents that as of the date of issuance of this Note,
(1) the Company is in compliance with its listing obligations to The
International Stock Exchange of the United Kingdom and the Republic of
Ireland Limited in connection with the Company's securities that are listed
on such Exchange; and (2) since information was last published in compliance
with such listing obligations, the Company, having made all reasonable
enquiries, has not become aware of any change in circumstances which could
reasonably be regarded as significantly and adversely affecting its ability
to meet its obligations on this Note as they fall due. Repayment of
principal and payment of interest and any premium on this Note have not been
guaranteed by any person.
This Note shall be deemed to be a contract made and to be performed
solely in the State of New York, and for all purposes shall be governed by,
and construed in accordance with, the laws of said State without regard to
the conflicts of law rules of said State.
All terms used in this Note that are defined in the Indenture shall
have the meanings assigned to them in the Indenture.
25
<PAGE>
FORM OF SERIES E FIXED RATE BEARER NOTE
BEARER PRINCIPAL AMOUNT
OR FACE AMOUNT
SALOMON INC
No. FX- MEDIUM-TERM NOTE, SERIES E
(FIXED RATE) CUSIP
Due More Than Nine Months from Date of Issue
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 SECTION 165(j) AND 1287(a) OF THE INTERNAL REVENUE CODE.
IF APPLICABLE, THE "TOTAL AMOUNT OF OID" AND "YIELD TO MATURITY" SET
FORTH BELOW WILL BE COMPLETED SOLELY FOR THE PURPOSES OF APPLYING THE FEDERAL
INCOME TAX ORIGINAL ISSUE DISCOUNT ("OID") RULES
Issue Price: Original Issue Date:
Specified Currency:
(if other than U.S. Dollars)
Authorized Denominations:
(If other than as set forth in the
Prospectus Supplement)
Interest Payment Dates:
(If other than as set forth in the
Prospectus Supplement)
Indexed Principal Note: [ ] Yes (see attached) [ ] No
Interest Rate: Stated Maturity:
Interest Rate Reset: [ ] The Interest Rate may not be changed prior to
Stated Maturity.
[ ] The Interest Rate may be changed prior to Stated
Maturity (see attached).
Optional Reset Dates (if applicable)
<PAGE>
Amortizing Note: [ ] Yes [ ] No
Amortization Schedule:
Optional Redemption: [ ] Yes [ ] No
Optional Redemption Dates:
Redemption Prices:
Optional Repayment: [ ] Yes [ ] No
Optional Repayment Dates:
Optional Repayment Prices:
Discount Note: [ ] Yes [ ] No
Total Amount of OID:
Yield to Maturity:
IF THE SPECIFIED CURRENCY OF THIS NOTE IS POUNDS STERLING, THE FOLLOWING
APPLIES: THIS NOTE IS ISSUED IN ACCORDANCE WITH THE REGULATIONS MADE UNDER
SECTION 4 OF THE BANKING ACT 1987.
2
<PAGE>
SALOMON INC, a corporation duly organized and existing under the laws
of the State of Delaware (the "Company"), for value received, hereby promises to
pay to bearer, upon presentation and surrender hereof, (a) the Principal Amount,
in the case of an Indexed Principal Note, the Face Amount adjusted by reference
to prices, changes in prices, or differences between prices, of securities,
currencies, intangibles, goods, articles or commodities or by such other
objective price, economic or other measures (an "Index") as described on the
face hereof, in the Specified Currency on said Stated Maturity shown above or
earlier if and to the extent so provided herein, and (b) to pay accrued interest
on the Principal Amount then outstanding (or in the case of an Indexed Principal
Note, the Face Amount then outstanding, as reduced by any repayment of principal
hereof) to the bearer of the interest coupons attached hereto (the "Coupons") at
the Interest Rate shown above, annually in arrears on September 15 of each year
(the "Interest Payment Date"), commencing with the September 15 following the
Original Issue Date shown above upon presentation and surrender of the Coupons
as they shall severally mature, and on the Stated Maturity shown above, or upon
earlier redemption or repayment, until, in either case, the Principal Amount
then outstanding or the Face Amount is paid or duly provided for in accordance
with the terms hereof. Interest on this Note, if any, will be computed on the
basis of a 360-day year of twelve 30-day months. Any payment of principal,
premium or interest required to be made in respect hereof on a date that is not
a Business Day (as defined below) need not be made on such date, but may be made
on the next succeeding Business Day with the same force and effect as if made on
such date, and no additional interest shall accrue as a result of such delayed
payment.
For purposes of this Note, "Business Day" means any day, other than a
Saturday or Sunday, that is not a day on which banking institutions are
authorized or required by law or regulation to be closed in (a) The City of New
York, (b) London, England, (c) the place in which this Note or any Coupon is
presented for payment or (d) if the Specified Currency (as defined below) is
other than U.S. dollars, the financial center of the country issuing the
Specified Currency (which, in the case of European Currency Units ("ECU"), shall
be Brussels, Belgium).
The indebtedness evidenced by this Note is, to the extent set forth in
the Indenture, expressly subordinated and subject in right of payment to the
prior payment in full of Senior Indebtedness as defined in the Indenture, and
this Note is issued subject to such provisions, and each Holder of this Note, by
accepting the same, agrees to and shall be bound by such provisions and
authorizes and directs the Trustee in his behalf to take such action as may be
necessary or appropriate to acknowledge or effectuate the subordination as
provided in the
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<PAGE>
Indenture and appoints the Trustee as his attorney-in-fact for any and all such
purposes.
If this Note is an Amortizing Note as shown on the face hereof, a
portion or all the principal amount of the Note is payable prior to Stated
Maturity in accordance with a schedule, by application of a formula, or by
reference to an index (as described above).
Except under certain circumstances for Notes having Specified
Currencies other than U.S. dollars, payments of the principal hereof and any
premium and interest hereon will be made only in the Specified Currency.
Payments in respect of this Note and any Coupon will be made only against
surrender of this Note or such Coupon at the offices of the Paying Agents
outside the United States listed on the reverse hereof. At the direction of the
Holder of this Note or any Coupon, and subject to applicable laws and
regulations, such payments will be made by check drawn on a bank in The City of
New York (in the case of U.S. dollar payments) or outside the United States (in
the case of payments in a currency other than U.S. dollars) mailed to an address
outside the United States furnished by the Holder hereof or, at the option of
the Holder hereof, by wire transfer (pursuant to written instructions supplied
by the Holder hereof) to an account maintained by the payee with a bank located
outside the United States. No payment in respect of this Note or any Coupon
will be made upon presentation of this Note or such Coupon at any office or
agency of the Trustee or any other paying agency maintained by the Company in
the United States, nor will any such payment be made by transfer to an account,
or by mail to an address, in the United States. Notwithstanding the foregoing,
if U.S. dollar payments in respect of this Note or any Coupons at the offices of
all Paying Agents outside the United States become illegal or are effectively
precluded because of the imposition of exchange controls or similar restrictions
on the full payment or receipt of such amounts in U.S. dollars, the Company will
appoint an office or agency (which may be the Trustee) in the United States at
which such payments may be made.
REFERENCE IS HEREBY MADE TO THE FURTHER PROVISIONS OF THIS NOTE SET
FORTH ON THE REVERSE HEREOF, AND SUCH FURTHER PROVISIONS SHALL FOR ALL PURPOSES
HAVE THE SAME EFFECT AS THOUGH FULLY SET FORTH IN THIS PLACE.
This Note shall not become valid or obligatory for any purpose unless
and until this Note has been authenticated by Bankers Trust Company, or its
successor, as Trustee.
4
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Note to be executed
under its corporate seal.
Dated:
SALOMON INC
By_____________________________________
Chairman of the Board of Directors,
President and Chief Executive Officer
[Seal]
Attest:________________________________
Secretary
CERTIFICATE OF AUTHENTICATION
This is one of the Bearer Notes issued under the within-mentioned
Indenture.
BANKERS TRUST COMPANY
as Trustee
By_____________________________________
Authorized Signatory
5
<PAGE>
SALOMON INC
MEDIUM-TERM NOTE, SERIES E
(FIXED RATE)
General
-------
This Note is one of a series of duly authorized debt securities of
the Company (the "Debt Securities") issued or to be issued in one or more
series under an indenture dated as of December 1, 1988 (the "Indenture")
between the Company and Bankers Trust Company, as trustee (the "Trustee",
which term includes any successor Trustee under the Indenture), to which
Indenture and all indentures supplemental thereto reference is hereby made
for a statement of the respective rights, limitations of rights, duties and
immunities thereunder of the Company, the Trustee and the Holders of the Debt
Securities and of the terms upon which the Debt Securities are, and are to
be, authenticated and delivered. The U.S. dollar equivalent of the public
offering price or purchase price of Notes denominated in currencies other
than U.S. dollars will be determined by the Company or its agent, on the
basis of the noon buying rate in New York City for cable transfers in foreign
currencies as certified for customs purposes by the Federal Reserve Bank of
New York (the "Market Exchange Rate") for such currencies on the applicable
issue dates.
Unless otherwise specified on the face hereof, the authorized
denominations of Bearer Notes denominated in U.S. dollars will be U.S.$25,000
and any larger amount that is an integral multiple of U.S.$5,000. The
authorized denominations of Bearer Notes having a specified currency other
than U.S. dollars will be, unless otherwise specified herein, the approximate
equivalents thereof in the Specified Currency.
If so specified on the face hereof, this Note will be redeemable at
the option of the Company in whole or from time to time in part, on any date
on or after the date designated as the Initial Redemption Date on the face
hereof, upon the Company's giving the Trustee at least 45 days' notice, at
the Redemption Price determined as provided on the face hereof. If redeemed
prior to its Stated Maturity, this Note must be presented for payment
together with all unmatured Coupons, if any, appertaining hereto, failing
which the amount of any missing unmatured Coupon will be deducted from the
sum due for payment. The Bearer Notes will not be subject to any sinking
fund.
The Bearer Notes may be redeemed at the option of the Company in
whole, but not in part, at any time on giving at least 30 but not more than
60 days' notice as set forth below, which notice shall be irrevocable, at
their Redemption Prices, if the Company has or will become obligated to pay
additional interest
1
<PAGE>
on the Bearer Notes as described below as a result of any change in, or
amendment to, the laws (or any regulations or rulings promulgated thereunder)
of the United States or any political subdivision or taxing authority thereof
or therein, or any change in the application or official interpretation of
such laws, regulations or rulings, which change or amendment becomes
effective on or after the Original Issue Date, and such obligation cannot be
avoided by the Company taking reasonable measures available to it. No such
notice of redemption shall be given earlier than 90 days prior to the
earliest date on which the Company would be obligated to pay such additional
interest were a payment in respect of the Bearer Notes then due. Prior to
the publication of any notice of redemption pursuant to this paragraph, the
Company shall deliver to the Trustee a certificate stating that the Company
is entitled to effect such redemption and setting forth a statement of facts
showing that the conditions precedent to the right of the Company so to
redeem have occurred, and an opinion of independent counsel to the effect
that the Company has or will become obligated to pay such additional interest
as a result of such change or amendment.
If so specified on the face hereof, this Note will be repayable
prior to its Stated Maturity at the option of the Holder on the Optional
Repayment Dates shown on the face hereof at the Optional Repayment Prices
shown on the face hereof, together with accrued interest to the date of
repayment. In order for this Note to be repaid, the Principal Paying Agent
(as specified below) must receive the Note at least 30 but not more than 45
days prior to an Optional Repayment Date. Any tender of this Note for
repayment shall be irrevocable. The repayment option may be exercised by the
Holder hereof for less than the entire principal amount hereof, provided that
--------
the principal amount of the Note remaining outstanding after repayment is an
authorized denomination. Upon such partial repayment, this Note shall be
cancelled and a new Note or Notes for the remaining principal amount hereof
shall be issued to the Holder of this Note.
Payment of Additional Interest
------------------------------
The Company will, subject to the exceptions and limitations set
forth below, pay as additional interest to the Holder of this Note or any
Coupon that is a United States Alien (as defined below) such amounts as may
be necessary so that every net payment on this Note or such Coupon, after
deduction or withholding for or on account of any present or future tax,
assessment or other governmental charge imposed upon or as a result of such
payment by the United States (or any political subdivision or taxing
authority thereof or therein), will not be less than the amount provided in
this Note or such Coupon to be then due and payable. However, the Company
will not be required
2
<PAGE>
to make any such payment of additional interest to such Holder for or on
account of:
(a) any tax, assessment or other governmental charge that would
not have been imposed but for (i) the existence of any present or former
connection between such Holder (or between a fiduciary, settlor or
beneficiary of, or a Person holding a power over, such Holder, if such
Holder is an estate or a trust, or a member or shareholder of such
Holder, if such Holder is a partnership or a corporation) and the United
States, including, without limitation, such Holder (or such fiduciary,
settlor, beneficiary, Person holding a power, member or shareholder)
being or having been a citizen or resident thereof or being or having
been engaged in trade or business or present therein or having or having
had a permanent establishment therein or (ii) such Holder's past or
present status as a passive foreign investment company, a personal
holding company, foreign personal holding company, a controlled foreign
corporation for United States tax purposes or private foundation or
other tax-exempt organization with respect to the United States or as a
corporation that accumulates earnings to avoid United States federal
income tax;
(b) any estate, inheritance, gift, sales, transfer or personal
property tax or any similar tax, assessment or other governmental
charge;
(c) any tax, assessment or other governmental charge that would
not have been imposed but for the presentation by the Holder of this
Note or such Coupon for payment more than 15 days after the date on
which such payment became due and payable or on which payment thereof
was duly provided for, whichever occurred later;
(d) any tax, assessment or other governmental charge that is
payable otherwise than by deduction or withholding from a payment on
this Note or such Coupon;
(e) any tax, assessment or other governmental charge required to
be deducted or withheld by any Paying Agent from a payment on this Note
or such Coupon, if such payment can be made without such deduction or
withholding by any other Paying Agent;
(f) any tax, assessment or other governmental charge that would
not have been imposed but for a failure to comply with any applicable
certification, documentation, information or other reporting requirement
concerning the nationality, residence, identity or connection with the
United States of the Holder or beneficial owner of this Note or such
Coupon if, without regard to any tax treaty, such
3
<PAGE>
compliance is required by statute or regulation of the United States as
a pre-condition to relief or exemption from such tax, assessment or
other governmental charge; or
(g) any tax, assessment or other governmental charge imposed on a
Holder that actually or constructively owns ten percent or more of the
combined voting power of all classes of stock of the Company (taking
into account applicable attribution of ownership rules under Section
871(h)(3) of the Internal Revenue Code of 1986, as amended) or is a
controlled foreign corporation related to the Company through stock
ownership;
nor shall such additional interest be paid with respect to a payment on this
Note or such Coupon to a Holder that is a fiduciary or partnership or other
than the sole beneficial owner of such payment to the extent a beneficiary or
settlor with respect to such fiduciary or a member of such partnership or a
beneficial owner would not have been entitled to the additional interest had
such beneficiary, settlor, member or beneficial owner been the Holder of this
Note or such Coupon.
The term "United States Alien" means any person who, for United
States federal income tax purposes, is a foreign corporation, a nonresident
alien individual, a nonresident alien fiduciary of a foreign estate or trust,
or a foreign partnership one or more of the members of which is, for United
States federal income tax purposes, a foreign corporation, a nonresident
alien individual or a nonresident alien fiduciary of a foreign estate or
trust.
If the Company shall determine that any payment made outside the
United States by the Company or any of its Paying Agents in respect of this
Note or any Coupon (an "Affected Security") would, under any present or
future laws or regulations of the United States, be subject to any
certification, documentation, information or other reporting requirement of
any kind, the effect of which requirement is the disclosure to the Company,
any Paying Agent or any governmental authority of the nationality, residence
or identity of a beneficial owner of such Affected Security that is a United
States Alien (other than such a requirement (a) that would not be applicable
to a payment made by the Company or any one of its Paying Agents (i) directly
to the beneficial owner or (ii) to a custodian, nominee or other agent of the
beneficial owner or (b) that can be satisfied by such custodian, nominee or
other agent certifying to the effect that the beneficial owner is a United
States Alien; provided, that, in any case referred to in clause (a)(ii) or
--------
(b), payment by the custodian, nominee or agent to the beneficial owner is
not otherwise subject to any such requirement), then the Company shall elect
either (x) to redeem such Affected Securities in whole, but not in part, at
their Redemption Price, or (y) if the
4
<PAGE>
conditions described in the next succeeding paragraph are satisfied, to pay
the additional interest specified in such paragraph. The Company shall make
such determination as soon as practicable and publish prompt notice thereof
(the "Determination Notice") stating the effective date of such
certification, documentation, information or other reporting requirement,
whether the Company elects to redeem the Affected Securities or to pay the
additional interest specified in the next succeeding paragraph and (if
applicable) the last date by which the redemption of the Affected Securities
must take place, as provided in the next succeeding sentence. If any
Affected Securities are to be redeemed pursuant to this paragraph, the
redemption shall take place on such date, not later than one year after the
publication of the Determination Notice, as the Company shall specify by
notice given to the Trustee at least 60 days before the Redemption Date.
Notice of such redemption shall be given to the Holders of the Affected
Securities at least 30 but not more than 60 days prior to the Redemption
Date. Notwithstanding the foregoing, the Company shall not so redeem the
Affected Securities if the Company shall subsequently determine, at least 30
days prior to the Redemption Date, that subsequent payments on the Affected
Securities would not be subject to any such certification, documentation,
information or other reporting requirement, in which case the Company shall
publish prompt notice of such subsequent determination and any earlier
redemption notice given pursuant to this paragraph shall be revoked and of no
further effect. Prior to the publication of any Determination Notice
pursuant to this paragraph, the Company shall deliver to the Trustee a
certificate stating that the Company is obligated to make such determination
and setting forth a statement of facts showing that the conditions precedent
to the obligation of the Company to redeem the Affected Securities or to pay
the additional interest specified in the next succeeding paragraph have
occurred, and an opinion of independent counsel to the effect that such
conditions have occurred.
If and so long as the certification, documentation, information or
other reporting requirement referred to in the preceding paragraph would be
fully satisfied by payment of a backup withholding tax or similar charge, the
Company may elect to pay as additional interest such amounts as may be
necessary so that every net payment made outside the United States following
the effective date of such requirement by the Company or any of its Paying
Agents in respect of any Affected Security of which the beneficial owner is a
United States Alien (but without any requirement that the nationality,
residence or identity of such beneficial owner be disclosed to the Company,
any Paying Agent or any governmental authority), after deduction or
withholding for or on account of such backup withholding tax or similar
charge (other than a backup withholding tax or similar charge that (i) would
not be applicable in the circumstances referred to in the parenthetical
clause of the first sentence of the preceding
5
<PAGE>
paragraph or (ii) is imposed as a result of presentation of such Affected
Security for payment more than 15 days after the date on which such payment
became due and payable or on which payment thereof was duly provided for,
whichever occurred later), will not be less than the amount provided in such
Affected Security to be then due and payable. If the Company elects to pay
additional interest pursuant to this paragraph, then the Company shall have
the right to redeem the Affected Securities at any time in whole, but not in
part, at their Redemption Prices, subject to the provisions of the last three
sentences of the immediately preceding paragraph. If the Company elects to
pay additional interest pursuant to this paragraph and the condition
specified in the first sentence of this paragraph should no longer be
satisfied, then the Company shall redeem the Affected Securities in whole,
but not in part, at their Redemption Price, subject to the provisions of the
last three sentences of the immediately preceding paragraph. Any redemption
payments made by the Company pursuant to the two immediately preceding
sentences shall be subject to the continuing obligation of the Company to pay
additional interest pursuant to this paragraph.
The interest payable hereon on each Interest Payment Date will
include interest accrued through the day before such Interest Payment Date.
The Company has initially appointed as its Paying Agents for Bearer
Notes of this Series the offices listed below:
Bankers Trust Company
1 Appold Street, Broadgate
London, EC2A 2HE
Paying Agent:
Bankers Trust Luxembourg, S.A.
P.O. Box 807
14 Boulevard F.D. Roosevelt
L-2450 Luxembourg
The Company reserves the right at any time to vary or terminate the
appointment of any Paying Agent and to appoint additional or other Paying
Agents and to approve any change in the office through which any Paying Agent
acts, provided that there will at all times be a Paying Agent (which may be
the Trustee) in at least one city in Europe which, so long as Bearer Notes
are listed on the Luxembourg Stock Exchange and that exchange shall so
require, shall include Luxembourg. Notice of any such termination or
appointment and of any changes in the specified offices of the Trustee or any
Paying Agent will be given to the Holder hereof as described below.
Payment in Currencies Other Than the Specified Currency
-------------------------------------------------------
6
<PAGE>
Except as set forth below with respect to payments in ECU, if
payment in respect of this Note or any Coupon is required to be made in a
specified currency other than U.S. dollars (a "Specified Currency") and such
currency is unavailable due to the imposition of exchange controls or other
circumstances beyond the Company's control or is no longer used by the
government of the country issuing such currency or for the settlement of
transactions by public institutions of or within the international banking
community, then all payments shall be made in U.S. dollars until such
currency is again available or so used. The amounts so payable on any date
in such currency shall be converted into U.S. dollars on the basis of the
most recently available Market Exchange Rate for such currency or as
otherwise indicated on the face hereof. Any payment made under such
circumstances in U.S. dollars will not constitute an Event of Default under
the Indenture.
If payment in respect of this Note or any Coupon is required to be
made in ECU and the ECU is not then used in the European Monetary System (the
"EMS"), then the Trustee shall, without liability on its part, choose a
component currency (the "Payment Currency") of the ECU in which all payments
in respect hereof shall be made until the ECU is again so used. The amount
of each payment in such Payment Currency shall be computed on the basis of
the equivalent of the ECU in that currency, determined as described below, as
of the fourth Luxembourg business day prior to the date on which such payment
is due. Notice of the Payment Currency selected by the Trustee shall be
given as described below. Any payment made under such circumstances in the
Payment Currency will not constitute an Event of Default under the Indenture.
Notwithstanding the foregoing, on the first Luxembourg business day
on which the ECU is no longer used in the EMS, the Trustee shall, without
liability on its part, choose a Payment Currency in which all payments with
respect to Bearer Notes and Coupons denominated in ECU having a due date
prior thereto but not yet presented for payment are to be made. The amount
of each payment in such Payment Currency shall be computed on the basis of
the equivalent of the ECU in that currency, determined as described below, as
of such first Luxembourg business day. Any payment made under such
circumstances in the Payment Currency will not constitute an Event of Default
under the Indenture.
The equivalent of the ECU in the relevant Payment Currency as of
any date (the "Day of Valuation") shall be determined by the Luxembourg Stock
Exchange on the following basis. The component currencies of the ECU for
this purpose (the "Components") shall be the currency amounts that were
components of the ECU when the ECU was most recently used in the EMS or for
the settlement of transactions by public institutions of or within the
European Community. The equivalent of the ECU in the
7
<PAGE>
Payment Currency shall be calculated by, first, aggregating the U.S. dollar
equivalents of the Components, and then, using the rate used for determining
the U.S. dollar equivalents of the Components in the Payment Currency as set
forth below, calculating the equivalent in the Payment Currency of such
aggregate amount in U.S. dollars.
The U.S. dollar equivalent of each of the Components shall be
determined by the Luxembourg Stock Exchange on the basis of the middle spot
delivery quotations prevailing at 2:30 p.m. Luxembourg time on the Day of
Valuation, as obtained by the Luxembourg Stock Exchange from one or more
major banks, selected by the Trustee (with the approval of the Company), in
the country of issue of the Component in question.
If the official unit of any component currency of the ECU is
altered by way of combination or subdivision, the number of units of that
currency as a Component shall be divided or multiplied in the same
proportion. If two or more component currencies are consolidated into a
single currency, the amounts of those currencies as Components shall be
replaced by an amount in such single currency equal to the sum of the amounts
of the consolidated component currencies expressed in such single currency.
If any component currency is divided into two or more currencies, the amount
of that currency as a Component shall be replaced by amounts of such two or
more currencies, each of which shall be equal to the amount of the former
component currency divided by the number of currencies into which that
currency was divided.
If no direct quotations are available for a Component on a Day of
Valuation from any of the banks selected by the Trustee (with the approval of
the Company) for this purpose, because foreign exchange markets are closed in
the country of issue of that Component, or for any other reason, in computing
the U.S. dollar equivalent of such Component the Luxembourg Stock Exchange
shall (except as provided below) use the most recent direct quotations for
such Component obtained by it; provided that such most recent quotations may
--------
be used only if they were prevailing in the country of issue not more than
two Luxembourg business days before such Day of Valuation. Beyond such
period of two Luxembourg business days, the Luxembourg Stock Exchange shall
determine the U.S. dollar equivalent of such Component on the basis of cross
rates derived from the middle spot delivery quotations for such Component and
for the U.S. dollar prevailing at 2:30 p.m. Luxembourg time on such Day of
Valuation, as obtained by the Luxembourg Stock Exchange from one or more
major banks, selected by the Trustee (with the approval of the Company), in a
country other than the country of issue of such Component. Notwithstanding
the foregoing, within such period of two Luxembourg business days, the
Luxembourg Stock Exchange shall determine the U.S. dollar equivalent of such
Component on the
8
<PAGE>
basis of such cross rates if the Trustee and the Company judge that the
equivalent so calculated is more representative than the U.S. dollar
equivalent calculated on the basis of such most recent direct quotations.
Unless otherwise specified by the Trustee, if there is more than one market
for dealing in any component currency by reason of foreign exchange
regulations or for any other reason, the market to be referred to in respect
of such currency shall be that upon which a nonresident issuer of securities
denominated in such currency would purchase such currency in order to make
payments in respect of such securities.
All determinations referred to above made by the Trustee or the
Luxembourg Stock Exchange shall be at their respective sole discretion
(except to the extent expressly provided herein that any determination made
by the Trustee is subject to the approval of the Company) and shall, in the
absence of manifest error, be conclusive for all purposes and binding on
Holders of the Bearer Notes and any Coupons, and the Trustee shall have no
liability therefor.
If an Event of Default with respect to the Notes shall have
occurred and be continuing, the principal of all Notes may be declared due
and payable in the manner and with the effect provided in the Indenture.
If this Note is a Discount Note, the amount payable in the event of
redemption or repayment prior to its Stated Maturity shall be the Amortized
Face Amount of this Note as of the date of redemption or the date of
repayment, as the case may be. The "Amortized Face Amount" of this Note
shall be the amount equal to (a) the Issue Price (set forth on the face
hereof) plus (b) that portion of the difference between the Issue Price and
the principal amount hereof that has accrued at the Yield to Maturity (set
forth on the face hereof) (computed in accordance with generally accepted
United States bond yield computation principles) by such date of redemption
or repayment, but in no event shall the Amortized Face Amount of this Note
exceed its principal amount.
If this note is an Indexed Principal Note, then the principal
amount payable at Stated Maturity or earlier redemption or retirement, is
determined by reference to the amount designated on the face hereof as the
Face Amount of this Note and by reference to an Index as described on the
face hereof. If this Note is an Indexed Principal Note, the principal amount
payable at Stated Maturity or any earlier redemption or repayment of this
Note may be different from the Face Amount. If the determination of the
Index is calculated or announced by a third party, which may be Salomon
Brothers Inc or another affiliate of the Company and such third party either
suspends the calculation or announcement of such Index or changes the basis
upon which such Index is calculated (other than changes consistent with
9
<PAGE>
policies in effect at the time this Note was issued and permitted changes
described on the face hereof), then such Index shall be calculated for this
Note's purposes by another third party selected by the Company, which may be
Salomon Brothers Inc or another affiliate of the Company subject to the same
conditions and controls as applied to the original third party. If for any
reason such Index cannot be calculated on the same basis and subject to the
same conditions and controls as applied to the original third party, then any
indexed principal amount of this Note shall be calculated in the manner
described on the face hereof. Any determination of such third party shall in
the absence of manifest error be binding on all parties.
As provided in the Indenture and subject to certain limitations
therein set forth, this Note is exchangeable for a like aggregate principal
amount of Bearer Notes of different authorized denominations, as requested by
the Person surrendering the same.
No service charge shall be made for any such exchange, but the
Company may require payment of a sum sufficient to cover any tax or other
governmental charge payable in connection therewith.
In case this Note or any Coupon shall at any time become mutilated,
destroyed, stolen or lost, it may be replaced at the specified office of the
Principal Paying Agent in London; or, so long as the Bearer Notes are listed
on the Luxembourg Stock Exchange, at the specified office of the Paying Agent
in Luxembourg, upon payment by the claimant of such expenses as may be
incurred in connection therewith and, in the case of destruction, theft or
loss, on such terms as to evidence and indemnity as the Company or the
Trustee may reasonably require. Mutilated or defaced Bearer Notes or Coupons
must be surrendered before replacements will be issued.
The Indenture permits with certain exceptions as therein provided,
the amendment thereof and the modification of the rights and obligations of
the Company and the rights of the Holders of the Debt Securities of each
series to be affected under the Indenture at any time by the Company and the
Trustee with the consent of the Holders of not less than a majority in
aggregate principal amount of the Debt Securities at the time Outstanding of
each series to be affected. The Indenture also contains provisions
permitting the Holders of specified percentages in aggregate principal amount
of the Debt Securities of any series at the time Outstanding, on behalf of
the Holders of all the Debt Securities of such series, to waive compliance by
the Company with certain provisions of the Indenture and certain past
defaults under the Indenture and their consequences. Any such consent or
waiver by the Holder of this Debt Security shall be conclusive and binding
upon such Holder and upon all future
10
<PAGE>
Holders of this Debt Security and of any Debt Security issued upon the
registration of transfer hereof or in exchange herefor or in lieu hereof,
whether or not notation of such consent or waiver is made upon this Debt
Security.
Holders of Debt Securities of this series may not enforce their
rights pursuant to the Indenture or such Debt Securities except as provided
in the Indenture. No reference herein to the Indenture and no provision of
this Note or of the Indenture shall alter or impair the obligation of the
Company, which is absolute and unconditional, to pay the principal of (and
premium, if any) and interest on this Note at the times, place and rate, and
in the coin or currency, herein prescribed.
The Company may, without the consent of the Holders of the Notes,
consolidate with, merge into, or transfer substantially all of its assets to,
a corporation that is a U.S. Person, provided that the successor corporation
assumes all obligations of the Company under the Notes and certain other
conditions are met, including a waiver by the successor corporation of any
right to redeem the Notes under circumstances in which the successor
corporation would be entitled to redeem the Notes but the Company would not
have been entitled to do so.
Except as provided above, the obligation to pay the principal
hereof (and premium if any) and interest hereon in the designated currency of
payment is of the essence. To the fullest extent possible under applicable
law, judgments in respect of this Note shall be given in such currency. The
obligation of the Company to make such payments in the designated currency of
payment shall, notwithstanding any payment in any other currency (whether
pursuant to a judgment or otherwise), be discharged only to the extent of the
amount in the designated currency of payment that the Holder of this Note
may, in accordance with normal banking procedures, purchase with the sum paid
in such other currency (after any premium and cost of exchange) on the
business day in the country of issue of the designated currency of payment or
in the international banking community (in the case of a composite currency)
immediately following the day on which such Holder receives such payment. If
the amount in the designated currency of payment that may be so purchased is
for any reason less than the amount originally due, the Company shall, as a
separate and independent obligation, pay such additional amounts in the
designated currency of payment as may be necessary to compensate for any such
shortfall.
All notices to Holders of this Note will be deemed to have been
duly given if published on two separate Business Days in a leading London
daily newspaper (which is expected to be the Financial Times) and, so long as
---------------
the Bearer Notes are listed on the Luxembourg Stock Exchange and such
exchange so requires, in Luxembourg in a newspaper of general circulation in
Luxembourg
11
<PAGE>
(which is expected to be the Luxemburger Wort). Such notices shall be deemed
----------- ----
to have been given on the date of the first such publication.
If the Specified Currency of this Note is Pounds sterling, the
following applies: The Company is not an institution authorised under the
Banking Act 1987 of the United Kingdom, and this Note is a medium-term note
issued in accordance with regulations made under Section 4 of the Banking Act
1987. The Company represents that as of the date of issuance of this Note,
(1) the Company is in compliance with its listing obligations to The
International Stock Exchange of the United Kingdom and the Republic of
Ireland Limited in connection with the Company's securities that are listed
on such Exchange; and (2) since information was last published in compliance
with such listing obligations, the Company, having made all reasonable
enquiries, has not become aware of any change in circumstances which could
reasonably be regarded as significantly and adversely affecting its ability
to meet its obligations on this Note as they fall due. Repayment of
principal and payment of interest and any premium on this Note have not been
guaranteed by any person.
This Note shall be deemed to be a contract made and to be performed
solely in the State of New York, and for all purposes shall be governed by,
and construed in accordance with, the laws of said State without regard to
the conflicts of law rules of said State.
All terms used in this Note that are defined in the Indenture shall
have the meanings assigned to them in the Indenture.
12
<PAGE>
FORM OF SERIES D TEMPORARY GLOBAL NOTE
SALOMON INC
TEMPORARY GLOBAL NOTE
(FLOATING OR INDEXED RATE)
representing
BEARER PRINCIPAL
No. FL-_________ OR FACE AMOUNT
TRANCHE NO. ___
MEDIUM-TERM NOTES, SERIES D
THIS SECURITY IS A TEMPORARY GLOBAL NOTE, WITHOUT COUPONS,
EXCHANGEABLE FOR AN INTEREST IN A PERMANENT GLOBAL NOTE, WITHOUT COUPONS,
REPRESENTING (AND EXCHANGEABLE FOR) INDIVIDUAL BEARER NOTES. THE RIGHTS
ATTACHING TO THIS NOTE AND THE CONDITIONS AND PROCEDURES GOVERNING ITS EXCHANGE
FOR A PERMANENT GLOBAL NOTE ARE AS SPECIFIED IN THE INDENTURE (AS DEFINED
HEREIN).
UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR THE
INDIVIDUAL BEARER NOTES REPRESENTED HEREBY, THIS GLOBAL SECURITY MAY NOT BE
TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY
OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE
DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR
A NOMINEE OF SUCH SUCCESSOR DEPOSITARY.
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.
IF APPLICABLE, THE "TOTAL AMOUNT OF OID" AND "YIELD TO MATURITY" SET
FORTH BELOW WILL BE COMPLETED SOLELY FOR THE PURPOSES OF APPLYING THE FEDERAL
INCOME TAX ORIGINAL ISSUE DISCOUNT ("OID") RULES.
<PAGE>
Issue Price: Original Issue Date:
Initial Interest Rate: Stated Maturity:
Specified Currency:
(If other than U.S. Dollars)
Authorized Denominations:
(If other than as set forth in the Prospectus Supplement)
Base Rate: [ ] CD Rate [ ] Commercial Paper [ ] Federal Funds Rate
[ ] LIBOR Telerate [ ] LIBOR Reuters [ ] Treasury Rate
[ ] Treasury Rate Constant Maturity [ ] Other (see attached)
Interest Reset Period Index Maturity:
or Interest Reset Dates:
Interest Payment Dates:
(If other than as set forth in the Prospectus Supplement)
Indexed Principal Note: [ ] Yes (see attached) [ ] No
Floating Rate: [ ] Indexed Interest Rate [ ] (See attached)
Spread Multiplier: Spread (+/-):
Spread Reset: [ ] The Spread or Spread Multiplier may not be changed prior
to Stated Maturity.
[ ] The Spread or Spread Multiplier may be changed prior to
Stated Maturity (see attached).
Optional Reset Dates (if applicable):
Maximum Interest Rate: Minimum Interest Rate:
Amortizing Note: [ ] Yes [ ] No
Amortization Schedule:
Optional Redemption: [ ] Yes [ ] No
Optional Redemption Dates:
Redemption Prices:
Optional Repayment: [ ] Yes [ ] No
Optional Repayment Dates:
2
<PAGE>
Optional Repayment Prices:
Optional Extension of Stated Maturity: [ ] Yes [ ] No
Final Maturity:
Discount Note: [ ] Yes [ ] No
Total Amount of OID:
Yield to Maturity:
IF THE SPECIFIED CURRENCY OF THIS NOTE IS POUNDS STERLING, THE FOLLOWING
APPLIES: THIS NOTE IS ISSUED IN ACCORDANCE WITH THE REGULATIONS MADE UNDER
SECTION 4 OF THE BANKING ACT 1987.
3
<PAGE>
SALOMON INC, a corporation duly organized and existing under the laws of
the State of Delaware (the "Company"), for value received, hereby promises to
pay to bearer, upon presentation and surrender hereof, (a) the Principal Amount
then outstanding or, in the case of an Indexed Principal Note, the Face Amount
adjusted by reference to prices, changes in prices, or differences between
prices, of securities, currencies, intangibles, goods, articles or commodities
or by such other objective price, economic or other measures (an "Index") as
described on the face hereof, in the Specified Currency on the Stated Maturity
shown above, or earlier if and to the extent provided herein, and (b) to pay
accrued interest (i) if this is a Floating Rate Note, on the Principal Amount
then outstanding (or in the case of an Indexed Principal Note, the Face Amount
then outstanding, as reduced by any repayment of principal hereof) at the
Initial Interest Rate shown above from the Original Issue Date shown above until
the first Interest Reset Date shown above following the Original Issue Date and
thereafter at the Base Rate shown above, adjusted by the Spread or Spread
Multiplier, if any, shown above, determined in accordance with the provisions on
the reverse of the Permanent Global Note (as defined below) to be exchanged for
this Note, or (ii) if this is an Indexed Rate Note, on said principal amount (or
in the case of an Indexed Principal Note, the Face Amount then outstanding), at
a rate adjusted by reference to an Index described on the face hereof, until, in
either case, the Principal Amount then outstanding or the Face Amount is paid or
duly provided for in accordance with the terms hereof; but, in the case of
principal, only after exchange of this Note for interests in a Permanent Global
Note, as provided herein and in the Indenture (as defined on the reverse hereof)
and, in the case of interest due on or before the exchange of this Note for
interests in a Permanent Global Note, any interest payable will be paid to each
of Euro-clear and CEDEL (as defined below) with respect to that portion of this
Note held for its account, but only upon receipt in each case, as of the
relevant Interest Payment Date, of a Certificate of Non-U.S. Beneficial
Ownership (as defined on the reverse hereof). Each of Euro-clear and CEDEL will
undertake in such circumstances to credit such interest received by it in
respect of this Note to the respective accounts having an interest therein.
For purposes of this Note, "Business Day" means any day, other than a
Saturday or Sunday, that is not a day on which banking institutions are
authorized or required by law or regulation to be closed in (a) The City of New
York, (b) London, England, (c) the place in which this Note is presented for
payment or (d) if the Specified Currency (as defined below) is other than U.S.
dollars, the financial center of the country issuing the Specified Currency
(which in the case of European Currency Units shall be Brussels, Belgium).
4
<PAGE>
If this Note is an Amortizing Note as shown on the face hereof, a portion
or all the principal amount of the Note is payable prior to Stated Maturity in
accordance with a schedule, by application of a formula, or by reference to an
index (as described above).
This Note will be deposited with a common depositary in London (the
"Depositary") for Morgan Guaranty Trust Company of New York, Brussels office, as
operator of the Euro-clear System ("Euro-clear") and Centrale de Livraison de
Valeurs Mobilieres S.A. ("CEDEL"), for credit to the accounts designated by or
on behalf of the purchasers hereof. On or after the 40th day following the
issuance of this Note, beneficial interests in this Note will be exchangeable
for interests in a definitive Global Security in bearer form, without Coupons
attached (a "Permanent Global Note"), in a denomination equal to the aggregate
principal amount of all interests in this Note so exchanged, only upon receipt
(at such time or in connection with an Interest Payment Date prior to such day)
of a Certificate of Non-U.S. Beneficial Ownership. Each Permanent Global Note
will be deposited with the Depositary for credit to the account or accounts
designated by or on behalf of the beneficial owner or owners thereof. The
beneficial owner of a Bearer Note represented by an interest in a Permanent
Global Note may, upon 30 days' notice to the Trustee given through either Euro-
clear or CEDEL, exchange such interest for one or more individual Bearer Notes,
with appropriate Coupons attached, in any authorized denomination or
denominations. References herein to "Bearer Notes" shall, except where
otherwise indicated, include interests in a Permanent Global Note as well as
individual Bearer Notes and any appurtenant Coupons. Upon any exchange of any
portion of this Note for an interest in a Permanent Global Note, the portion of
the principal amount hereof so exchanged shall be endorsed by the Trustee on the
Schedule of Exchanges hereto, and the principal amount hereof shall be reduced
for all purposes by the amount so exchanged.
Except as otherwise provided herein or in the Indenture, until exchanged in
whole for an interest in a Permanent Global Note, this Note shall in all
respects be entitled to the same benefits and be subject to the same terms and
conditions of and the Company shall be subject to the same restrictions as those
contained on the Permanent Global Note and in the Indenture.
REFERENCE IS HEREBY MADE TO THE FURTHER PROVISIONS OF THIS NOTE SET FORTH
ON THE REVERSE HEREOF, AND SUCH FURTHER PROVISIONS SHALL FOR ALL PURPOSES HAVE
THE SAME EFFECT AS THOUGH FULLY SET FORTH IN THIS PLACE.
This Note shall not become valid or obligatory for any purpose unless and
until this Note has been authenticated by Citibank, N.A. or its successor as
Trustee.
5
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Note to be executed under
its corporate seal.
Dated:
SALOMON INC
By___________________________________
Senior Vice President
(Seal)
Attest_______________________________
Secretary
CERTIFICATE OF AUTHENTICATION
This is one of the Notes issued under the within mentioned Indenture.
CITIBANK, N.A.
as Trustee
By__________________________________
Authorized Officer
6
<PAGE>
SALOMON INC
MEDIUM-TERM NOTE, SERIES D
(FLOATING OR INDEXED RATE)
This Note represents one or more Bearer Notes having the same Original
Issue Date and otherwise identical in terms of a series of a duly authorized
issue of securities of the Company designated as specified in the title hereof,
and issued and to be issued in either registered or bearer form under the
Subordinated Debt Indenture dated as of December 1, 1988 (the "Indenture"),
between the Company and Citibank, N.A., as Trustee (the "Trustee"). This Note
is governed by the terms and conditions of the Permanent Global Note to be
issued in exchange for this Note, which terms and conditions are incorporated
herein by reference mutatis mutandis and, except as otherwise provided herein,
------- --------
shall be binding on the Company, the Holder hereof and the Holders of the Bearer
Notes represented hereby as if fully set forth herein. Capitalized terms used
in this Note that are defined in the Indenture or the Permanent Global Note and
are not otherwise defined herein shall have the meanings assigned to them
therein.
The indebtedness evidenced by this Note is, to the extent set forth in
the Indenture, expressly subordinated and subject in right of payment to the
prior payment in full of Senior Indebtedness as defined in the Indenture, and
this Note is issued subject to such provisions, and each Holder of this Note, by
accepting the same, agrees to and shall be bound by such provisions and
authorizes and directs the trustee in this behalf to take such actions as may be
necessary or appropriate to acknowledge or effectuate the subordination provided
in the Indenture and appoints the Trustee as his attorney-in-fact for any and
all such purposes.
Any payment of principal, premium or interest required to be made in
respect hereof on a date that is not a business day need not be made on such
date, but may be made on the next succeeding Business Day with the same force
and effect as if made on such date, and no additional interest shall accrue as a
result of such delayed payment.
Except as set forth on the Permanent Global Note regarding payments
made in currencies other than the Specified Currency when the Specified Currency
is unavailable, the principal hereof and any premium and interest hereon will be
paid by the Company in such coin or currency as specified above as at the time
of payment shall be legal tender for the payment of public and private debts
(the "Specified Currency"), at the office of any paying agent located outside
the United States as the Company may appoint from time to time (the "Paying
Agents").
7
<PAGE>
As used herein, a "Certificate of Non-U.S. Beneficial Ownership" is a
certificate, in the form adopted by the Company, as to beneficial ownership by
persons other than United States persons or as to other qualifying ownership by
or through financial institutions in compliance with applicable U.S. Treasury
regulations.
If the Specified Currency of this Note is Pounds sterling, the
following applies: The Company is not an institution authorized under the
Banking Act 1987 of the United Kingdom, and this Note is a medium-term note
issued in accordance with regulations made under Section 4 of the Banking Act
1987. The Company represents that as of the date of issuance of this Note, (1)
the Company is in compliance with its listing obligations to The International
Stock Exchange of the United Kingdom and the Republic of Ireland Limited in
connection with the Company's securities that are listed on such Exchange; and
(2) since information was last published in compliance with such listing
obligations, the Company, having made all reasonable enquiries, has not become
aware of any change in circumstances which could reasonably be regarded as
significantly and adversely affecting its ability to meet its obligations on
this Note as they fall due. Repayment of principal and payment of interest and
any premium on this Note have not been guaranteed by any person.
This Note shall be deemed to be a contract made and to be performed
solely in the State of New York, and for all purposes shall be governed by, and
construed in accordance with, the laws of said State without regard to the
conflicts of law rules of said State.
8
<PAGE>
SCHEDULE OF EXCHANGES
The following exchanges of a portion of this Note for interests in a
Permanent Global Note and the following payments of interest in respect of this
Note have been made.
Principal
Amount
Date of Exchanged for Remaining
Exchange or an Interest in Principal Notation made
Interest Interest a Permanent Amount of on behalf of
Payment Paid Global Note this Note the Trustee
___________ ________ ______________ _________ _____________
___________ ________ ______________ _________ _____________
___________ ________ ______________ _________ _____________
___________ ________ ______________ _________ _____________
___________ ________ ______________ _________ _____________
___________ ________ ______________ _________ _____________
___________ ________ ______________ _________ _____________
___________ ________ ______________ _________ _____________
___________ ________ ______________ _________ _____________
___________ ________ ______________ _________ _____________
___________ ________ ______________ _________ _____________
___________ ________ ______________ _________ _____________
___________ ________ ______________ _________ _____________
___________ ________ ______________ _________ _____________
9
<PAGE>
FORM OF SERIES E TEMPORARY GLOBAL NOTE
SALOMON INC
TEMPORARY GLOBAL NOTE
(FLOATING OR INDEXED RATE)
representing
BEARER PRINCIPAL OR FACE AMOUNT
No. FL-_________ TRANCHE NO. ___
MEDIUM-TERM NOTES, SERIES E
THIS SECURITY IS A TEMPORARY GLOBAL NOTE, WITHOUT COUPONS,
EXCHANGEABLE FOR AN INTEREST IN A PERMANENT GLOBAL NOTE, WITHOUT COUPONS,
REPRESENTING (AND EXCHANGEABLE FOR) INDIVIDUAL BEARER NOTES. THE RIGHTS
ATTACHING TO THIS NOTE AND THE CONDITIONS AND PROCEDURES GOVERNING ITS EXCHANGE
FOR A PERMANENT GLOBAL NOTE ARE AS SPECIFIED IN THE INDENTURE (AS DEFINED
HEREIN).
UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR THE
INDIVIDUAL BEARER NOTES REPRESENTED HEREBY, THIS GLOBAL SECURITY MAY NOT BE
TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY
OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE
DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR
A NOMINEE OF SUCH SUCCESSOR DEPOSITARY.
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.
IF APPLICABLE, THE "TOTAL AMOUNT OF OID" AND "YIELD TO MATURITY" SET
FORTH BELOW WILL BE COMPLETED SOLELY FOR THE PURPOSES OF APPLYING THE FEDERAL
INCOME TAX ORIGINAL ISSUE DISCOUNT ("OID") RULES.
<PAGE>
Issue Price: Original Issue Date:
Initial Interest Rate: Stated Maturity:
Specified Currency:
(If other than U.S. Dollars)
Authorized Denominations:
(If other than as set forth in the Prospectus Supplement)
Base Rate: [ ] CD Rate [ ] Commercial Paper [ ] Federal Funds Rate
[ ] LIBOR Telerate [ ] LIBOR Reuters [ ] Treasury Rate
[ ] Treasury Rate Constant Maturity [ ]Other (see attached)
Interest Reset Period Index Maturity:
or Interest Reset Dates:
Interest Payment Dates:
(If other than as set forth in the Prospectus Supplement)
Indexed Principal Note: [ ] Yes (see attached) [ ] No
Floating Rate: [ ] Indexed Interest Rate [ ] (See attached)
Spread Multiplier: Spread (+/-):
Spread Reset: [ ] The Spread or Spread Multiplier may not be changed prior
to Stated Maturity.
[ ] The Spread or Spread Multiplier may be changed prior to
Stated Maturity (see attached).
Optional Reset Dates (if applicable):
Maximum Interest Rate: Minimum Interest Rate:
Amortizing Note: [ ] Yes [ ] No
Amortization Schedule:
Optional Redemption: [ ] Yes [ ] No
Optional Redemption Dates:
Redemption Prices:
Optional Repayment: [ ] Yes [ ] No
Optional Repayment Dates:
2
<PAGE>
Optional Repayment Prices:
Optional Extension of Stated Maturity: [ ] Yes [ ] No
Final Maturity:
Discount Note: [ ] Yes [ ] No
Total Amount of OID:
Yield to Maturity:
IF THE SPECIFIED CURRENCY OF THIS NOTE IS POUNDS STERLING, THE FOLLOWING
APPLIES: THIS NOTE IS ISSUED IN ACCORDANCE WITH THE REGULATIONS MADE UNDER
SECTION 4 OF THE BANKING ACT 1987.
3`
<PAGE>
SALOMON INC, a corporation duly organized and existing under the laws of
the State of Delaware (the "Company"), for value received, hereby promises to
pay to bearer, upon presentation and surrender hereof, (a) the Principal Amount
or, in the case of an Indexed Principal Note, the Face Amount adjusted by
reference to prices, changes in prices, or differences between prices, of
securities, currencies, intangibles, goods, articles or commodities or by such
other objective price, economic or other measures (an "Index") as described on
the face hereof, in the Specified Currency on the Stated Maturity shown above or
earlier if and to the extent herein, and (b) to pay accrued interest (i) if this
is a Floating Rate Note, on the Principal Amount then outstanding (or in the
case of an Indexed Principal Note, the Face Amount then outstanding, at the
Initial Interest Rate shown above from the Original Issue Date shown above until
the first Interest Reset Date shown above following the Original Issue Date and
thereafter at the Base Rate shown above, adjusted by the Spread or Spread
Multiplier, if any, shown above, determined in accordance with the provisions on
the reverse of the Permanent Global Note (as defined below) to be exchanged for
this Note, or (ii) if this is an Indexed Rate Note, on said Principal Amount
then outstanding (or in the case of an Indexed Principal Note, the Face Amount
then outstanding, at a rate adjusted by reference to an Index described on the
face hereof, until, in either case, the Principal Amount then outstanding or
Face Amount is paid or duly provided for in accordance with the terms hereof;
but, in the case of principal, only after exchange of this Note for interests in
a Permanent Global Note, as provided herein and in the Indenture (as defined on
the reverse hereof) and, in the case of interest due on or before the exchange
of this Note for interests in a Permanent Global Note, any interest payable will
be paid to each of Euro-clear and CEDEL (as defined below) with respect to that
portion of this Note held for its account, but only upon receipt in each case,
as of the relevant Interest Payment Date, of a Certificate of Non-U.S.
Beneficial Ownership (as defined on the reverse hereof). Each of Euro-clear and
CEDEL will undertake in such circumstances to credit such interest received by
it in respect of this Note to the respective accounts having an interest
therein.
For purposes of this Note, "Business Day" means any day, other than a
Saturday or Sunday, that is not a day on which banking institutions are
authorized or required by law or regulation to be closed in (a) The City of New
York, (b) London, England, (c) the place in which this Note is presented for
payment or (d) if the Specified Currency (as defined below) is other than U.S.
dollars, the financial center of the country issuing the Specified Currency
(which in the case of European Currency Units shall be Brussels, Belgium).
The indebtedness evidenced by this Note is, to the extent
4
<PAGE>
set forth in the Indenture, expressly subordinated and subject in right of
payment to the prior payment in full of Senior Indebtedness as defined in the
Indenture, and this Note is issued subject to such provisions, and each Holder
of this Note, by accepting the same, agrees to and shall be bound by such
provisions and authorizes and directs the Trustee in his behalf to take such
action as may be necessary or appropriate to acknowledge or effectuate the
subordination as provided in the Indenture and appoints the Trustee as his
attorney-in-fact for any and all such purposes.
If this Note is an Amortizing Note as shown on the face hereof, a portion
or all the principal amount of the Note is payable prior to Stated Maturity in
accordance with a schedule, by application of a formula, or by reference to an
index (as described above).
This Note will be deposited with a common depositary in London (the
"Depositary") for Morgan Guaranty Trust Company of New York, Brussels office, as
operator of the Euro-clear System ("Euro-clear") and Centrale de Livraison de
Valeurs Mobilieres S.A. ("CEDEL"), for credit to the accounts designated by or
on behalf of the purchasers hereof. On or after the 40th day following the
issuance of this Note, beneficial interests in this Note will be exchangeable
for interests in a definitive Global Security in bearer form, without Coupons
attached (a "Permanent Global Note"), in a denomination equal to the aggregate
principal amount of all interests in this Note so exchanged, only upon receipt
(at such time or in connection with an Interest Payment Date prior to such day)
of a Certificate of Non-U.S. Beneficial Ownership. Each Permanent Global Note
will be deposited with the Depositary for credit to the account or accounts
designated by or on behalf of the beneficial owner or owners thereof. The
beneficial owner of a Bearer Note represented by an interest in a Permanent
Global Note may, upon 30 days' notice to the Trustee given through either Euro-
clear or CEDEL, exchange such interest for one or more individual Bearer Notes,
with appropriate Coupons attached, in any authorized denomination or
denominations. References herein to "Bearer Notes" shall, except where
otherwise indicated, include interests in a Permanent Global Note as well as
individual Bearer Notes and any appurtenant Coupons. Upon any exchange of any
portion of this Note for an interest in a Permanent Global Note, the portion of
the principal amount hereof so exchanged shall be endorsed by the Trustee on the
Schedule of Exchanges hereto, and the principal amount hereof shall be reduced
for all purposes by the amount so exchanged.
Except as otherwise provided herein or in the Indenture, until exchanged in
whole for an interest in a Permanent Global Note, this Note shall in all
respects be entitled to the same benefits and be subject to the same terms and
conditions of and the Company shall be subject to the same restrictions as those
5
<PAGE>
contained on the Permanent Global Note and in the Indenture.
REFERENCE IS HEREBY MADE TO THE FURTHER PROVISIONS OF THIS NOTE SET FORTH
ON THE REVERSE HEREOF, AND SUCH FURTHER PROVISIONS SHALL FOR ALL PURPOSES HAVE
THE SAME EFFECT AS THOUGH FULLY SET FORTH IN THIS PLACE.
This Note shall not become valid or obligatory for any purpose unless and
until this Note has been authenticated by Bankers Trust Company or its successor
as Trustee.
6
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Note to be executed under
its corporate seal.
Dated:
SALOMON INC
By___________________________________
Senior Vice President
(Seal)
Attest_______________________________
Secretary
CERTIFICATE OF AUTHENTICATION
This is one of the Notes issued under the within mentioned Indenture.
BANKERS TRUST COMPANY
as Trustee
By__________________________________
Authorized Officer
7
<PAGE>
SALOMON INC
MEDIUM-TERM NOTE, SERIES E
(FLOATING OR INDEXED RATE)
This Note represents one or more Bearer Notes having the same Original
Issue Date and otherwise identical in terms of a series of a duly authorized
issue of securities of the Company designated as specified in the title hereof,
and issued and to be issued in either registered or bearer form under the
Subordinated Debt Indenture dated as of December 1, 1988 (the "Indenture"),
between the Company and Bankers Trust Company, as Trustee (the "Trustee"). This
Note is governed by the terms and conditions of the Permanent Global Note to be
issued in exchange for this Note, which terms and conditions are incorporated
herein by reference mutatis mutandis and, except as otherwise provided herein,
------- --------
shall be binding on the Company, the Holder hereof and the Holders of the Bearer
Notes represented hereby as if fully set forth herein. Capitalized terms used
in this Note that are defined in the Indenture or the Permanent Global Note and
are not otherwise defined herein shall have the meanings assigned to them
therein.
The indebtedness evidenced by this Note is, to the extent set forth in
the Indenture, expressly subordinated and subject in right of payment to the
prior payment in full of Senior Indebtedness as defined in the Indenture, and
this Note is issued subject to such provisions, and each Holder of this Note, by
accepting the same, agrees to and shall be bound by such provisions and
authorizes and directs the trustee in this behalf to take such actions as may be
necessary or appropriate to acknowledge or effectuate the subordination provided
in the Indenture and appoints the Trustee as his attorney-in-fact for any and
all such purposes.
Any payment of principal, premium or interest required to be made in
respect hereof on a date that is not a business day need not be made on such
date, but may be made on the next succeeding Business Day with the same force
and effect as if made on such date, and no additional interest shall accrue as a
result of such delayed payment.
Except as set forth on the Permanent Global Note regarding payments
made in currencies other than the Specified Currency when the Specified Currency
is unavailable, the principal hereof and any premium and interest hereon will be
paid by the Company in such coin or currency as specified above as at the time
of payment shall be legal tender for the payment of public and private debts
(the "Specified Currency"), at the office of any paying agent located outside
the United States as the Company may appoint from time to time (the "Paying
Agents").
8
<PAGE>
As used herein, a "Certificate of Non-U.S. Beneficial Ownership" is a
certificate, in the form adopted by the Company, as to beneficial ownership by
persons other than United States persons or as to other qualifying ownership by
or through financial institutions in compliance with applicable U.S. Treasury
regulations.
If the Specified Currency of this Note is Pounds sterling, the
following applies: The Company is not an institution authorized under the
Banking Act 1987 of the United Kingdom, and this Note is a medium-term note
issued in accordance with regulations made under Section 4 of the Banking Act
1987. The Company represents that as of the date of issuance of this Note, (1)
the Company is in compliance with its listing obligations to The International
Stock Exchange of the United Kingdom and the Republic of Ireland Limited in
connection with the Company's securities that are listed on such Exchange; and
(2) since information was last published in compliance with such listing
obligations, the Company, having made all reasonable enquiries, has not become
aware of any change in circumstances which could reasonably be regarded as
significantly and adversely affecting its ability to meet its obligations on
this Note as they fall due. Repayment of principal and payment of interest and
any premium on this Note have not been guaranteed by any person.
This Note shall be deemed to be a contract made and to be performed
solely in the State of New York, and for all purposes shall be governed by, and
construed in accordance with, the laws of said State without regard to the
conflicts of law rules of said State.
9
<PAGE>
SCHEDULE OF EXCHANGES
The following exchanges of a portion of this Note for interests in a
Permanent Global Note and the following payments of interest in respect of this
Note have been made.
Principal
Amount
Date of Exchanged for Remaining
Exchange or an Interest in Principal Notation made
Interest Interest a Permanent Amount of on behalf of
Payment Paid Global Note this Note the Trustee
___________ ________ ______________ _________ _____________
___________ ________ ______________ _________ _____________
___________ ________ ______________ _________ _____________
___________ ________ ______________ _________ _____________
___________ ________ ______________ _________ _____________
___________ ________ ______________ _________ _____________
___________ ________ ______________ _________ _____________
___________ ________ ______________ _________ _____________
___________ ________ ______________ _________ _____________
___________ ________ ______________ _________ _____________
___________ ________ ______________ _________ _____________
___________ ________ ______________ _________ _____________
___________ ________ ______________ _________ _____________
___________ ________ ______________ _________ _____________
10
<PAGE>
FORM OF SERIES D TEMPORARY GLOBAL FIXED RATE NOTE
SALOMON INC
TEMPORARY GLOBAL NOTE
(FIXED RATE)
representing
BEARER PRINCIPAL OR FACE AMOUNT
No. FX-_________ TRANCHE NO. ___
MEDIUM-TERM NOTES, SERIES D
THIS SECURITY IS A TEMPORARY GLOBAL NOTE, WITHOUT COUPONS, EXCHANGEABLE FOR
AN INTEREST IN A PERMANENT GLOBAL NOTE, WITHOUT COUPONS, REPRESENTING (AND
EXCHANGEABLE FOR) INDIVIDUAL BEARER NOTES. THE RIGHTS ATTACHING TO THIS NOTE
AND THE CONDITIONS AND PROCEDURES GOVERNING ITS EXCHANGE FOR A PERMANENT GLOBAL
NOTE ARE AS SPECIFIED IN THE INDENTURE (AS DEFINED HEREIN).
UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR THE INDIVIDUAL
BEARER NOTES REPRESENTED HEREBY, THIS GLOBAL SECURITY MAY NOT BE TRANSFERRED
EXCEPT AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A
NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY
OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE
OF SUCH SUCCESSOR DEPOSITARY.
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.
IF APPLICABLE, THE "TOTAL AMOUNT OF OID" AND "YIELD TO MATURITY" SET FORTH
BELOW WILL BE COMPLETED SOLELY FOR THE PURPOSES OF APPLYING THE FEDERAL INCOME
TAX ORIGINAL ISSUE DISCOUNT ("OID") RULES.
<PAGE>
Issue Price: Original Issue Date:
Specified Currency:
(if other than U.S. Dollars)
Authorized Denominations:
(If other than as set forth in the
Prospectus Supplement)
Interest Payment Dates:
(If other than as set forth in the
Prospectus Supplement)
Indexed Principal Note: [ ] Yes (see attached) [ ] No
Interest Rate: Stated Maturity:
Interest Rate Reset: [ ] The Interest Rate may not be
changed prior to Stated Maturity.
[ ] The Interest Rate may be changed
prior to Stated Maturity (see attached).
Optional Reset Dates (if applicable)
Amortizing Note: [ ] Yes [ ] No
Amortization Schedule:
Optional Redemption: [ ] Yes [ ] No
Optional Redemption Dates:
Redemption Prices:
Optional Repayment: [ ] Yes [ ] No
Optional Repayment Dates:
Optional Repayment Prices:
Discount Note: [ ] Yes [ ] No
Total Amount of OID:
Yield to Maturity:
IF THE SPECIFIED CURRENCY OF THIS NOTE IS POUNDS STERLING, THE
2
<PAGE>
FOLLOWING APPLIES: THIS NOTE IS ISSUED IN ACCORDANCE WITH THE REGULATIONS MADE
UNDER SECTION 4 OF THE BANKING ACT 1987.
3
<PAGE>
SALOMON INC, a corporation duly organized and existing under the laws
of the State of Delaware (the "Company"), for value received, hereby promises to
pay to bearer, upon presentation and surrender hereof, (a) the Principal Amount
or, in the case of an Indexed Principal Note, the Face Amount adjusted by
reference to prices, changes in prices, or differences between prices, of
securities, currencies, intangibles, goods, articles or commodities or by such
other objective price, economic or other measures (an "Index") as described on
the face hereof, in the Specified Currency on the Stated Maturity shown above or
earlier if and to the extent so provided herein, and (b) to pay accrued interest
on the Principal Amount then outstanding (or in the case of an Indexed Principal
Note, the Face Amount then outstanding, to the bearer of the interest coupons
attached hereto (the "Coupons") at the Interest Rate shown above, annually in
arrears on September 15 of each year (the "Interest Payment Date"), commencing
with the September 15 following the Original Issue Date shown above upon
presentation and surrender of the Coupons as they shall severally mature, and on
the Stated Maturity shown above, or upon earlier redemption or repayment, until,
in either case, the Principal Amount then outstanding or the Face Amount is paid
or duly provided for in accordance with the terms hereof; but, in the case of
principal, only after exchange of this Note for interests in a Permanent Global
Note, as provided herein and in the Indenture (as defined on the reverse hereof)
and, in the case of interest due on or before the exchange of this Note for
interests in a Permanent Global Note, any interest payable will be paid to each
of Euro-clear and CEDEL (as defined below) with respect to that portion of this
Note held for its account, but only upon receipt in each case, as of the
relevant Interest Payment Date, of a Certificate of Non-U.S. Beneficial
Ownership (as defined on the reverse hereof). Each of Euro-clear and CEDEL will
undertake in such circumstances to credit such interest received by it in
respect of this Note to the respective accounts having an interest therein.
For purposes of this Note, "Business Day" means any day, other than a
Saturday or Sunday, that is not a day on which banking institutions are
authorized or required by law or regulation to be closed in (a) The City of New
York, (b) London, England, (c) the place in which this Note is presented for
payment or (d) if the Specified Currency (as defined below) is other than U.S.
dollars, the financial center of the country issuing the Specified Currency
(which in the case of European Currency Units shall be Brussels, Belgium).
If this Note is an Amortizing Note as shown on the face hereof, a
portion or all the principal amount of the Note is payable prior to Stated
Maturity in accordance with a schedule, by application of a formula, or by
reference to an index (as described above).
4
<PAGE>
This Note will be deposited with a common depositary in London (the
"Depositary") for Morgan Guaranty Trust Company of New York, Brussels office, as
operator of the Euro-clear System ("Euro-clear") and Centrale de Livraison de
Valeurs Mobilieres S.A. ("CEDEL"), for credit to the accounts designated by or
on behalf of the purchasers hereof. On or after the 40th day following the
issuance of this Note, beneficial interests in this Note will be exchangeable
for interests in a definitive Global Security in bearer form, without Coupons
attached (a "Permanent Global Note"), in a denomination equal to the aggregate
principal amount of all interests in this Note so exchanged, only upon receipt
(at such time or in connection with an Interest Payment Date prior to such day)
of a Certificate of Non-U.S. Beneficial Ownership. Each Permanent Global Note
will be deposited with the Depositary for credit to the account or accounts
designated by or on behalf of the beneficial owner or owners thereof. The
beneficial owner of a Bearer Note represented by an interest in a Permanent
Global Note may, upon 30 days' notice to the Trustee given through either Euro-
clear or CEDEL, exchange such interest for one or more individual Bearer Notes,
with appropriate Coupons attached, in any authorized denomination or
denominations. References herein to "Bearer Notes" shall, except where
otherwise indicated, include interests in a Permanent Global Note as well as
individual Bearer Notes and any appurtenant Coupons. Upon any exchange of any
portion of this Note for an interest in a Permanent Global Note, the portion of
the principal amount hereof so exchanged shall be endorsed by the Trustee on the
Schedule of Exchanges hereto, and the principal amount hereof shall be reduced
for all purposes by the amount so exchanged.
Except as otherwise provided herein or in the Indenture, until
exchanged in whole for an interest in a Permanent Global Note, this Note shall
in all respects be entitled to the same benefits and be subject to the same
terms and conditions of and the Company shall be subject to the same
restrictions as those contained on the Permanent Global Note and in the
Indenture.
REFERENCE IS HEREBY MADE TO THE FURTHER PROVISIONS OF THIS NOTE SET
FORTH ON THE REVERSE HEREOF, AND SUCH FURTHER PROVISIONS SHALL FOR ALL PURPOSES
HAVE THE SAME EFFECT AS THOUGH FULLY SET FORTH IN THIS PLACE.
This Note shall not become valid or obligatory for any purpose unless
and until this Note has been authenticated by Citibank, N.A., or its successor
as Trustee.
5
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Note to be executed
under its corporate seal.
Dated:
SALOMON INC
By___________________________________
Senior Vice President
[Seal]
Attest_______________________________
Secretary
CERTIFICATE OF AUTHENTICATION
This is one of the Notes issued under the within mentioned Indenture.
CITIBANK, N.A.
as Trustee
By__________________________________
Authorized Officer
6
<PAGE>
SALOMON INC
MEDIUM-TERM NOTE, SERIES D
(FIXED RATE)
This Note represents one or more Bearer Notes having the same Original
Issue Date and otherwise identical in terms of a series of a duly authorized
issue of securities of the Company designated as specified in the title hereof,
and issued and to be issued in either registered or bearer form under the Senior
Debt Indenture, dated as of December 1, 1988 (the "Indenture"), between the
Company and Citibank, N.A., as Trustee (the "Trustee"). This Note is governed
by the terms and conditions of the Permanent Global Note to be issued in
exchange for this Note, which terms and conditions are incorporated herein by
reference mutatis mutandis and, except as otherwise provided herein, shall be
------- --------
binding on the Company, the Holder hereof and the Holders of the Bearer Notes
represented hereby as if fully set forth herein. Capitalized terms used in this
Note that are defined in the Indenture or the Permanent Global Note and are not
otherwise defined herein shall have the meanings assigned to them therein.
Any payment of principal, premium or interest required to be made in
respect hereof on a date that is not a Business Day need not be made on such
date, but may be made on the next succeeding Business Day with the same force
and effect as if made on such date, and no additional interest shall accrue as a
result of such delayed payment.
Except as set forth on the Permanent Global Note regarding payments
made in currencies other than the Specified Currency when the Specified Currency
is unavailable, the principal hereof and any premium and interest hereon will be
paid by the Company in such coin or currency as specified above as at the time
of payment shall be legal tender for the payment of public and private debts
(the "Specified Currency"), at the office of any paying agent located outside
the United States as the Company may appoint from time to time (the "Paying
Agents").
As used herein, a "Certificate of Non-U.S. Beneficial Ownership" is a
certificate, in the form adopted by the Company, as to beneficial ownership by
persons other than United States persons or as to other qualifying ownership by
or through financial institutions in compliance with applicable U.S. Treasury
regulations.
If the Specified Currency of this Note is Pounds sterling, the
following applies: The Company is not an institution authorized under the
Banking Act 1987 of the United Kingdom, and this Note is a medium-term note
issued in accordance with regulations made under Section 4 of the Banking Act
1987.
7
<PAGE>
The Company represents that as of the date of issuance of this Note, (1) the
Company is in compliance with its listing obligations to The International Stock
Exchange of the United Kingdom and the Republic of Ireland Limited in connection
with the Company's securities that are listed on such Exchange; and (2) since
information was last published in compliance with such listing obligations, the
Company, having made all reasonable enquiries, has not become aware of any
change in circumstances which could reasonably be regarded as significantly and
adversely affecting its ability to meet its obligations on this Note as they
fall due. Repayment of principal and payment of interest and any premium on
this Note have not been guaranteed by any person.
This Note shall be deemed to be a contract made and to be performed
solely in the State of New York, and for all purposes shall be governed by, and
construed in accordance with, the laws of said State without regard to the
conflicts of law rules of said State.
8
<PAGE>
SCHEDULE OF EXCHANGES
The following exchanges of a portion of this Note for interests in a
Permanent Global Note and the following payments of interest in respect of this
Note have been made.
<TABLE>
<CAPTION>
Principal
Amount
Date of Exchanged for Remaining
Exchange or an Interest in Principal Notation made
Interest Interest a Permanent Amount of on behalf of
Payment Paid Global Note this Note the Trustee
- ------------- -------- -------------- --------- -------------
<S> <C> <C> <C> <C>
_____________ ________ ______________ _________ _____________
_____________ ________ ______________ _________ _____________
_____________ ________ ______________ _________ _____________
_____________ ________ ______________ _________ _____________
_____________ ________ ______________ _________ _____________
_____________ ________ ______________ _________ _____________
_____________ ________ ______________ _________ _____________
_____________ ________ ______________ _________ _____________
_____________ ________ ______________ _________ _____________
_____________ ________ ______________ _________ _____________
_____________ ________ ______________ _________ _____________
_____________ ________ ______________ _________ _____________
_____________ ________ ______________ _________ _____________
</TABLE>
9
<PAGE>
FORM OF SERIES E TEMPORARY GLOBAL FIXED RATE NOTE
SALOMON INC
TEMPORARY GLOBAL NOTE
(FIXED RATE)
representing
BEARER PRINCIPAL OR FACE AMOUNT
No. FX-_________ TRANCHE NO. ___
MEDIUM-TERM NOTES, SERIES E
THIS SECURITY IS A TEMPORARY GLOBAL NOTE, WITHOUT COUPONS, EXCHANGEABLE FOR
AN INTEREST IN A PERMANENT GLOBAL NOTE, WITHOUT COUPONS, REPRESENTING (AND
EXCHANGEABLE FOR) INDIVIDUAL BEARER NOTES. THE RIGHTS ATTACHING TO THIS NOTE
AND THE CONDITIONS AND PROCEDURES GOVERNING ITS EXCHANGE FOR A PERMANENT GLOBAL
NOTE ARE AS SPECIFIED IN THE INDENTURE (AS DEFINED HEREIN).
UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR THE INDIVIDUAL
BEARER NOTES REPRESENTED HEREBY, THIS GLOBAL SECURITY MAY NOT BE TRANSFERRED
EXCEPT AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A
NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY
OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE
OF SUCH SUCCESSOR DEPOSITARY.
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.
IF APPLICABLE, THE "TOTAL AMOUNT OF OID" AND "YIELD TO MATURITY" SET FORTH
BELOW WILL BE COMPLETED SOLELY FOR THE PURPOSES OF APPLYING THE FEDERAL INCOME
TAX ORIGINAL ISSUE DISCOUNT ("OID") RULES.
<PAGE>
Issue Price: Original Issue Date:
Specified Currency:
(if other than U.S. Dollars)
Authorized Denominations:
(If other than as set forth in the
Prospectus Supplement)
Interest Payment Dates:
(If other than as set forth in the
Prospectus Supplement)
Indexed Principal Note: [ ] Yes (see attached) [ ] No
Interest Rate: Stated Maturity:
Interest Rate Reset: [ ] The Interest Rate may not be
changed prior to Stated Maturity.
[ ] The Interest Rate may be changed
prior to Stated Maturity (see
attached).
Optional Reset Dates (if applicable)
Amortizing Note: [ ] Yes [ ] No
Amortization Schedule:
Optional Redemption: [ ] Yes [ ] No
Optional Redemption Dates:
Redemption Prices:
Optional Repayment: [ ] Yes [ ] No
Optional Repayment Dates:
Optional Repayment Prices:
Discount Note: [ ] Yes [ ] No
Total Amount of OID:
Yield to Maturity:
2
<PAGE>
IF THE SPECIFIED CURRENCY OF THIS NOTE IS POUNDS STERLING, THE FOLLOWING
APPLIES: THIS NOTE IS ISSUED IN ACCORDANCE WITH THE REGULATIONS MADE UNDER
SECTION 4 OF THE BANKING ACT 1987.
3
<PAGE>
SALOMON INC, a corporation duly organized and existing under the laws
of the State of Delaware (the "Company"), for value received, hereby promises to
pay to bearer, upon presentation and surrender hereof, (a) the Principal Amount
or, in the case of an Indexed Principal Note, the Face Amount adjusted by
reference to prices, changes in prices, or differences between prices, of
securities, currencies, intangibles, goods, articles or commodities or by such
other objective price, economic or other measures (an "Index") as described on
the face hereof, in the Specified Currency on the Stated Maturity shown above or
earlier if and to the extent so provided herein, and (b) to pay accrued interest
on the Principal Amount then outstanding (or in the case of an Indexed Principal
Note, the Face Amount then outstanding, as reduced by any repayment of principal
hereof) to the bearer of the interest coupons attached hereto (the "Coupons") at
the Interest Rate shown above, annually in arrears on September 15 of each year
(the "Interest Payment Date"), commencing with the September 15 following the
Original Issue Date shown above upon presentation and surrender of the Coupons
as they shall severally mature, and on the Stated Maturity shown above, or upon
earlier redemption or repayment, until, in either case, Principal Amount then
outstanding is paid or duly provided for in accordance with the terms hereof;
but, in the case of principal, only after exchange of this Note for interests in
a Permanent Global Note, as provided herein and in the Indenture (as defined on
the reverse hereof) and, in the case of interest due on or before the exchange
of this Note for interests in a Permanent Global Note, any interest payable will
be paid to each of Euro-clear and CEDEL (as defined below) with respect to that
portion of this Note held for its account, but only upon receipt in each case,
as of the relevant Interest Payment Date, of a Certificate of Non-U.S.
Beneficial Ownership (as defined on the reverse hereof). Each of Euro-clear and
CEDEL will undertake in such circumstances to credit such interest received by
it in respect of this Note to the respective accounts having an interest
therein.
For purposes of this Note, "Business Day" means any day, other than a
Saturday or Sunday, that is not a day on which banking institutions are
authorized or required by law or regulation to be closed in (a) The City of New
York, (b) London, England, (c) the place in which this Note is presented for
payment or (d) if the Specified Currency (as defined below) is other than U.S.
dollars, the financial center of the country issuing the Specified Currency
(which in the case of European Currency Units shall be Brussels, Belgium).
The indebtedness evidenced by this Note is, to the extent set forth in
the Indenture, expressly subordinated and subject in right of payment to the
prior payment in full of Senior Indebtedness as defined in the Indenture, and
this Note is issued subject to such provisions, and each Holder of this Note,
4
<PAGE>
by accepting the same, agrees to and shall be bound by such provisions and
authorizes and directs the Trustee in his behalf to take such action as may be
necessary or appropriate to acknowledge or effectuate the subordination as
provided in the Indenture and appoints the Trustee as his attorney-in-fact for
any and all such purposes.
If this Note is an Amortizing Note as shown on the face hereof, a
portion or all the principal amount of the Note is payable prior to Stated
Maturity in accordance with a schedule, by application of a formula, or by
reference to an index (as described above).
This Note will be deposited with a common depositary in London (the
"Depositary") for Morgan Guaranty Trust Company of New York, Brussels office, as
operator of the Euro-clear System ("Euro-clear") and Centrale de Livraison de
Valeurs Mobilieres S.A. ("CEDEL"), for credit to the accounts designated by or
on behalf of the purchasers hereof. On or after the 40th day following the
issuance of this Note, beneficial interests in this Note will be exchangeable
for interests in a definitive Global Security in bearer form, without Coupons
attached (a "Permanent Global Note"), in a denomination equal to the aggregate
principal amount of all interests in this Note so exchanged, only upon receipt
(at such time or in connection with an Interest Payment Date prior to such day)
of a Certificate of Non-U.S. Beneficial Ownership. Each Permanent Global Note
will be deposited with the Depositary for credit to the account or accounts
designated by or on behalf of the beneficial owner or owners thereof. The
beneficial owner of a Bearer Note represented by an interest in a Permanent
Global Note may, upon 30 days' notice to the Trustee given through either Euro-
clear or CEDEL, exchange such interest for one or more individual Bearer Notes,
with appropriate Coupons attached, in any authorized denomination or
denominations. References herein to "Bearer Notes" shall, except where
otherwise indicated, include interests in a Permanent Global Note as well as
individual Bearer Notes and any appurtenant Coupons. Upon any exchange of any
portion of this Note for an interest in a Permanent Global Note, the portion of
the principal amount hereof so exchanged shall be endorsed by the Trustee on the
Schedule of Exchanges hereto, and the principal amount hereof shall be reduced
for all purposes by the amount so exchanged.
Except as otherwise provided herein or in the Indenture, until
exchanged in whole for an interest in a Permanent Global Note, this Note shall
in all respects be entitled to the same benefits and be subject to the same
terms and conditions of and the Company shall be subject to the same
restrictions as those contained on the Permanent Global Note and in the
Indenture.
5
<PAGE>
REFERENCE IS HEREBY MADE TO THE FURTHER PROVISIONS OF THIS NOTE SET
FORTH ON THE REVERSE HEREOF, AND SUCH FURTHER PROVISIONS SHALL FOR ALL PURPOSES
HAVE THE SAME EFFECT AS THOUGH FULLY SET FORTH IN THIS PLACE.
This Note shall not become valid or obligatory for any purpose unless
and until this Note has been authenticated by Bankers Trust Company, or its
successor as Trustee.
IN WITNESS WHEREOF, the Company has caused this Note to be executed
under its corporate seal.
Dated:
SALOMON INC
By___________________________________
Senior Vice President
[Seal]
Attest_______________________________
Secretary
CERTIFICATE OF AUTHENTICATION
This is one of the Notes issued under the within mentioned Indenture.
BANKERS TRUST COMPANY
as Trustee
By__________________________________
Authorized Officer
6
<PAGE>
SALOMON INC
MEDIUM-TERM NOTE, SERIES E
(FIXED RATE)
This Note represents one or more Bearer Notes having the same Original
Issue Date and otherwise identical in terms of a series of a duly authorized
issue of securities of the Company designated as specified in the title hereof,
and issued and to be issued in either registered or bearer form under the Senior
Debt Indenture, dated as of December 1, 1988 (the "Indenture"), between the
Company and Bankers Trust Company, as Trustee (the "Trustee"). This Note is
governed by the terms and conditions of the Permanent Global Note to be issued
in exchange for this Note, which terms and conditions are incorporated herein by
reference mutatis mutandis and, except as otherwise provided herein, shall be
------- --------
binding on the Company, the Holder hereof and the Holders of the Bearer Notes
represented hereby as if fully set forth herein. Capitalized terms used in this
Note that are defined in the Indenture or the Permanent Global Note and are not
otherwise defined herein shall have the meanings assigned to them therein.
Any payment of principal, premium or interest required to be made in
respect hereof on a date that is not a Business Day need not be made on such
date, but may be made on the next succeeding Business Day with the same force
and effect as if made on such date, and no additional interest shall accrue as a
result of such delayed payment.
Except as set forth on the Permanent Global Note regarding payments
made in currencies other than the Specified Currency when the Specified Currency
is unavailable, the principal hereof and any premium and interest hereon will be
paid by the Company in such coin or currency as specified above as at the time
of payment shall be legal tender for the payment of public and private debts
(the "Specified Currency"), at the office of any paying agent located outside
the United States as the Company may appoint from time to time (the "Paying
Agents").
As used herein, a "Certificate of Non-U.S. Beneficial Ownership" is a
certificate, in the form adopted by the Company, as to beneficial ownership by
persons other than United States persons or as to other qualifying ownership by
or through financial institutions in compliance with applicable U.S. Treasury
regulations.
If the Specified Currency of this Note is Pounds sterling, the
following applies: The Company is not an institution authorized under the
Banking Act 1987 of the United Kingdom, and this Note is a medium-term note
issued in accordance with regulations made under Section 4 of the Banking Act
1987.
7
<PAGE>
The Company represents that as of the date of issuance of this Note, (1) the
Company is in compliance with its listing obligations to The International Stock
Exchange of the United Kingdom and the Republic of Ireland Limited in connection
with the Company's securities that are listed on such Exchange; and (2) since
information was last published in compliance with such listing obligations, the
Company, having made all reasonable enquiries, has not become aware of any
change in circumstances which could reasonably be regarded as significantly and
adversely affecting its ability to meet its obligations on this Note as they
fall due. Repayment of principal and payment of interest and any premium on
this Note have not been guaranteed by any person.
This Note shall be deemed to be a contract made and to be performed
solely in the State of New York, and for all purposes shall be governed by, and
construed in accordance with, the laws of said State without regard to the
conflicts of law rules of said State.
8
<PAGE>
SCHEDULE OF EXCHANGES
The following exchanges of a portion of this Note for interests in a
Permanent Global Note and the following payments of interest in respect of this
Note have been made.
Principal
Amount
Date of Exchanged for Remaining
Exchange or an Interest in Principal Notation made
Interest Interest a Permanent Amount of on behalf of
Payment Paid Global Note this Note the Trustee
_____________ ________ ______________ _________ _____________
_____________ ________ ______________ _________ _____________
_____________ ________ ______________ _________ _____________
_____________ ________ ______________ _________ _____________
_____________ ________ ______________ _________ _____________
_____________ ________ ______________ _________ _____________
_____________ ________ ______________ _________ _____________
_____________ ________ ______________ _________ _____________
_____________ ________ ______________ _________ _____________
_____________ ________ ______________ _________ _____________
_____________ ________ ______________ _________ _____________
_____________ ________ ______________ _________ _____________
_____________ ________ ______________ _________ _____________
_____________ ________ ______________ _________ _____________
9
<PAGE>
FORM OF
SERIES D PERMANENT GLOBAL FLOATING OR INDEXED RATE NOTE
BEARER PRINCIPAL AMOUNT
No. FL-__________ OR FACE AMOUNT
SALOMON INC
PERMANENT GLOBAL NOTE
(Floating or Indexed Rate)
representing
MEDIUM-TERM NOTES, SERIES D
Due More Than Nine Months from Date of Issue
THIS SECURITY IS A PERMANENT GLOBAL NOTE, WITHOUT COUPONS,
EXCHANGEABLE FOR INDIVIDUAL BEARER NOTES, WITH COUPONS, IF ANY, IN THE
DENOMINATION OF U.S. $ 25,000 OR ANY LARGER AMOUNT THAT IS AN INTEGRAL MULTIPLE
OF U.S. $5,000 (OR SUCH OTHER DENOMINATIONS AS ARE SPECIFIED BELOW FOR ANOTHER
CURRENCY). THE RIGHTS ATTACHING TO THIS NOTE AND THE CONDITIONS AND PROCEDURES
GOVERNING ITS EXCHANGE FOR INDIVIDUAL BEARER NOTES ARE AS SPECIFIED IN THE
INDENTURE (AS DEFINED HEREIN).
UNLESS AND UNTIL IT IS EXCHANGE IN WHOLE OR IN PART FOR THE INDIVIDUAL
BEARER NOTES REPRESENTED HEREBY, THIS GLOBAL SECURITY MAY NOT BE TRANSFERRED
EXCEPT AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A
NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY
OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE
OF SUCH SUCCESSOR DEPOSITARY.
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 SECTION 165(j) AND 1287(a) OF THE INTERNAL REVENUE CODE.
IF APPLICABLE, THE "TOTAL AMOUNT OF OID" AND "YIELD TO MATURITY" SET
FORTH BELOW WILL BE COMPLETED SOLELY FOR THE PURPOSES OF APPLYING THE FEDERAL
INCOME TAX ORIGINAL ISSUE DISCOUNT ("OID") RULES.
Issue Price: Original Issue Date:
Initial Interest Rate: Stated Maturity:
Specified Currency:
(If other than U.S. Dollars)
Authorized Denominations:
(If other than as set forth in the Prospectus
Supplement)
<PAGE>
Base Rate: [ ] CD Rate [ ] Commercial Paper [ ] Federal Funds Rate
[ ] LIBOR Telerate [ ] LIBOR Reuters [ ] Treasury Rate
[ ] Treasury Rate Constant Maturity [ ] Other (see attached)
Interest Reset Period Index Maturity:
or Interest Reset Dates:
Interest Payment Dates:
(If other than as set forth in the Prospectus
Supplement)
Indexed Principal Note: [ ] Yes (see attached) [ ] No
Floating Rate: [ ] Indexed Interest Rate [ ] (See attached)
Spread Multiplier: Spread (+/-):
Spread Reset: [ ] The Spread or Spread Multiplier may not be
changed prior to Stated Maturity.
[ ] The Spread or Spread Multiplier may be changed
prior to Stated Maturity (see attached).
Optional Reset Dates (if applicable):
Maximum Interest Rate: Minimum Interest Rate:
Amortizing Note: [ ] Yes [ ] No
Amortization Schedule:
Optional Redemption: [ ] Yes [ ] No
Optional Redemption Dates:
Redemption Prices:
Optional Repayment: [ ] Yes [ ] No
Optional Repayment Dates:
Optional Repayment Prices:
Optional Extension of Stated Maturity: [ ] Yes [ ] No
Final Maturity:
Discount Note: [ ] Yes [ ] No
Total Amount of OID:
Yield to Maturity:
2
<PAGE>
IF THE SPECIFIED CURRENCY OF THIS NOTE IS POUNDS STERLING, THE FOLLOWING
APPLIES: THIS NOTE IS ISSUED IN ACCORDANCE WITH THE REGULATIONS MADE UNDER
SECTION 4 OF THE BANKING ACT 1987.
3
<PAGE>
SALOMON INC, a corporation duly organized and existing under the laws of
the State of Delaware (the "Company"), for value received, hereby promises to
pay to bearer, upon presentation and surrender hereof, (a) the Principal Amount
or, in the case of an Indexed Principal Note, the Face Amount adjusted by
reference to prices, changes in prices, or differences between prices, of
securities, currencies, intangibles, goods, articles or commodities or by such
other objective price, economic or other measures (an "Index") as described on
the face hereof, in the Specified Currency on the Stated Maturity shown above or
earlier if and to the extent so provided herein, and (b) to pay accrued interest
(i) if this is a Floating Rate Note, on the Principal Amount then outstanding
(or in the case of an Indexed Principal Note, the Face Amount then outstanding,
as reduced by any repayment of principal hereof) at the Initial Interest Rate
shown above from the Original Issue Date shown above until the first Interest
Reset Date shown above following the Original Issue Date and thereafter at the
Base Rate shown above, adjusted by the Spread or Spread Multiplier, if any,
shown above, determined in accordance with the provisions on the reverse hereof,
or (ii) if this is an Indexed Rate Note, on the Principal Amount then
outstanding (or in the case of an Indexed Principal Note, the Face Amount then
outstanding, at a rate adjusted by reference to an Index described on the face
hereof at the rates per annum and on the dates, determined as described on the
reverse hereof, until, in either case, the Principal Amount then outstanding or
the Face Amount is paid or duly provided for in accordance with the terms
hereof.
For purposes of this Note, "Business Day" means any day, other than a
Saturday or Sunday, that is not a day on which banking institutions are
authorized or required by law or regulation to be closed in (a) The City of New
York, (b) London, England, (c) the place in which this Note or any Coupon is
presented for payment or (d) if the Specified Currency (as defined below) is
other than U.S. dollars, the financial center of the country issuing the
Specified Currency (which in the case of European Currency Units ("ECU") shall
be Brussels, Belgium).
If this Note is an Amortizing Note as shown on the face hereof, a portion
or all the principal amount of the Note is payable prior to Stated Maturity in
accordance with a schedule, by application of a formula, or by reference to an
index (as described above).
This Note is exchangeable in whole or from time to time in part without
charge for individual Bearer Notes, with appropriate Coupons attached, if any,
in the denomination of U.S.$25,000 or any larger amount that is an integral
multiple of U.S.$5,000 (or such other denominations as are specified above for
another currency), upon 30 days' notice to the Trustee given through either
Euro-clear or CEDEL. Upon any exchange of any portion of
4
<PAGE>
this Note for individual Bearer Notes, the portion of the principal amount
hereof so exchanged shall be endorsed by the Trustee in the Schedule of
Issuances, Exchanges and Aggregate principal amount hereto, and the principal
amount hereof shall be reduced for all purposes by the amount so exchanged.
Except as otherwise provided herein or in the Indenture, until exchanged
in full for individual Bearer Notes, this Note shall in all respects be entitled
to the same benefits and subject to the same terms and conditions of, and the
Company shall be subject to the same restrictions as those contained on the
individual Bearer Notes and in the Indenture.
Except under certain circumstances for Notes having Specified Currencies
other than U.S. dollars, payments of the principal hereof and any premium and
interest hereon will be made only in the Specified Currency. Payments in
respect of this Note and any Coupon will be made only against surrender of this
Note or such Coupon, at the offices of the Paying Agents outside the United
States listed on the reverse hereof. At the direction of the Holder of this
Note or any Coupon, and subject to applicable laws and regulations, such
payments will be made by check drawn on a bank in The City of New York (in the
case of U.S. dollar payments) or outside the United States (in the case of
payments in a currency other than U.S. dollars) mailed to an address outside the
United States furnished by the Holder hereof or, at the option of the Holder
hereof, by wire transfer (pursuant to written instructions supplied by the
Holder hereof) to an account maintained by the payee with a bank located outside
the United States. No payment in respect of this Note or any Coupon will be
made upon presentation of this Note or such Coupon at any office or agency of
the Trustee or any other paying agency maintained by the Company in the United
States, nor will any such payment be made by transfer to an account, or by mail
to an address, in the United States. Notwithstanding the foregoing, if U.S.
dollar payments in respect of this Note or any Coupons at the offices of all
Paying Agents outside the United States become illegal or are effectively
precluded because of the imposition of exchange controls or similar restrictions
on the full payment or receipt of such amounts in U.S. dollars, the Company will
appoint an office or agency (which may be the Trustee) in the United States at
which such payments may be made.
REFERENCE IS HEREBY MADE TO THE FURTHER PROVISIONS OF THIS NOTE SET FORTH
ON THE REVERSE HEREOF, AND SUCH FURTHER PROVISIONS SHALL FOR ALL PURPOSES HAVE
THE SAME EFFECT AS THOUGH FULLY SET FORTH IN THIS PLACE.
This Note shall not become valid or obligatory for any purpose unless and
until this Note has been authenticated by Citibank, N.A., or its successor, as
Trustee.
5
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Note to be executed under
its corporate seal.
Dated:
SALOMON INC
By_____________________________________
Chairman of the Board of Directors,
[seal] President and Chief Executive Officer
Attest________________________________
Secretary
CERTIFICATE OF AUTHENTICATION
This is one of the Notes issued under the within-mentioned Indenture.
CITIBANK, N.A.
as Trustee
By____________________________________
Authorized Signatory
6
<PAGE>
SALOMON INC
MEDIUM-TERM NOTE, SERIES D
(FLOATING OR INDEXED RATE)
General
- -------
This Note is one of a series of duly authorized debt securities of the
Company (the "Debt Securities") issued or to be issued in one or more series
under an indenture dated as of December 1, 1988 (the "Indenture") between the
Company and Citibank, N.A., as trustee (the "Trustee", which term includes any
successor Trustee under the Indenture), to which Indenture and all indentures
supplemental thereto reference is hereby made for a statement of the respective
rights, limitations of rights, duties and immunities thereunder of the Company,
the Trustee and the Holders of the Debt Securities and of the terms upon which
the Debt Securities are, and are to be, authenticated and delivered. The U.S.
dollar equivalent of the public offering price or purchase price of Notes
denominated in currencies other than U.S. dollars will be determined by the
Company or its agent, on the basis of the noon buying rate in New York City for
cable transfers in foreign currencies as certified for customs purposes by the
Federal Reserve Bank of New York (the "Market Exchange Rate") for such
currencies on the applicable issue dates.
Unless otherwise specified on the face hereof, the authorized
denominations of Bearer Notes denominated in U.S. dollars will be U.S.$25,000
and any larger amount that is an integral multiple of U.S.$5,000. The
authorized denominations of Bearer Notes having a specified currency other than
U.S. dollars will be, unless otherwise specified herein, the approximate
equivalents thereof in the Specified Currency.
If so specified on the face hereof, this Note will be redeemable at the
option of the Company in whole or from time to time in part, on any date on or
after the date designated as the Initial Redemption Date on the face hereof,
upon the Company's giving the Trustee at least 45 days' notice, at the
Redemption Price determined as provided on the face hereof. If redeemed prior
to its Stated Maturity, this Note must be presented for payment. The Bearer
Notes will not be subject to any sinking fund.
The Bearer Notes may be redeemed at the option of the Company in whole,
but not in part, at any time on giving not less than 30 or more than 60 days'
notice as set forth below, which notice shall be irrevocable, at their
Redemption Prices, if the Company has or will become obligated to pay additional
interest on the Bearer Notes as described below as a result of any change
7
<PAGE>
in, or amendment to, the laws (or any regulations or rulings promulgated
thereunder) of the United States or any political subdivision or taxing
authority thereof or therein, or any change in the application or official
interpretation of such laws, regulations or rulings, which change or amendment
becomes effective on or after the Original Issue Date, and such obligation
cannot be avoided by the Company taking reasonable measures available to it. No
such notice of redemption shall be given earlier than 90 days prior to the
earliest date on which the Company would be obligated to pay such additional
interest were a payment in respect of the Bearer Notes then due. Prior to the
publication of any notice of redemption pursuant to this paragraph, the Company
shall deliver to the Trustee a certificate stating that the Company is entitled
to effect such redemption and setting forth a statement of facts showing that
the conditions precedent to the right of the Company so to redeem have occurred,
and an opinion of independent counsel to the effect that the Company has or will
become obligated to pay such additional interest as a result of such change or
amendment.
If so specified on the face hereof, this Note will be repayable prior to
its Stated Maturity at the option of the Holder on the Optional Repayment Dates
shown on the face hereof at the Optional Repayment Prices shown on the face
hereof, together with accrued interest to the date of repayment. In order for
this Note to be repaid, the Principal Paying Agent (as specified below) must
receive the Note at least 30 but not more than 45 days prior to an Optional
Repayment Date. Any tender of this Note for repayment shall be irrevocable.
The repayment option may be exercised by the Holder hereof for less than the
entire principal amount hereof, provided that the principal amount of the Note
--------
remaining outstanding after repayment is an authorized denomination. Upon such
partial repayment, this Note shall be cancelled and a new Note or Notes for the
remaining principal amount hereof shall be issued to the Holder of this Note.
Payment of Additional Interest
- ------------------------------
The Company will, subject to the exceptions and limitations set forth
below, pay as additional interest to the Holder of this Note or any Coupon that
is a United States Alien (as defined below) such amounts as may be necessary so
that every net payment on this Note or such Coupon, after deduction or
withholding for or on account of any present or future tax, assessment or other
governmental charge imposed upon or as a result of such payment by the United
States (or any political subdivision or taxing authority thereof or therein),
will not be less than the amount provided in this Note or such Coupon to be then
due and payable. However, the Company will not be required to make any such
payment of additional interest to such Holder for or an account of:
8
<PAGE>
(a) any tax, assessment or other governmental charge that would
not have been imposed but for (i) the existence of any present or former
connection between such Holder (or between a fiduciary, settlor or
beneficiary of, or a Person holding a power over, such Holder, if such
Holder is an estate or a trust, or a member or shareholder of such
Holder, if such Holder is a partnership or a corporation) and the United
States, including, without limitation, such Holder (or such fiduciary,
settlor, beneficiary, Person holding a power, member or shareholder)
being or having been a citizen or resident thereof or being or having
been engaged in trade or business or present therein or having or having
had a permanent establishment therein or (ii) such Holder's past or
present status as a passive foreign investment company, a personal
holding company, foreign personal holding company, a controlled foreign
corporation for United States tax purposes or private foundation or
other tax-exempt organization with respect to the United States or as a
corporation that accumulates earnings to avoid United States federal
income tax;
(b) any estate, inheritance, gift, sales, transfer or personal
property tax or any similar tax, assessment or other governmental
charge;
(c) any tax, assessment or other governmental charge that would
not have been imposed but for the presentation by the Holder of this
Note or such Coupon for payment more than 15 days after the date on
which such payment became due and payable or on which payment thereof
was duly provided for, whichever occurred later;
(d) any tax, assessment or other governmental charge that is
payable otherwise than by deduction or withholding from a payment on
this Note or such Coupon;
(e) any tax, assessment or other governmental charge required to
be deducted or withheld by any Paying Agent from a payment on this Note
or such Coupon, if such payment can be made without such deduction or
withholding by any other Paying Agent;
(f) any tax, assessment or other governmental charge that would
not have been imposed but for a failure to comply with any applicable
certification, documentation, information or other reporting requirement
concerning the nationality, residence, identity or connection with the
United States of the Holder or beneficial owner of this Note or such
Coupon if, without regard to any tax treaty, such compliance is required
by statute or regulation of the United States as a pre-condition to
relief or
9
<PAGE>
exemption from such tax, assessment or other governmental charge; or
(g) any tax, assessment or other governmental charge imposed on a
Holder that actually or constructively owns ten percent or more of the
combined voting power of all classes of stock of the Company (taking
into account applicable attribution of ownership rules under Section
871(h)(3) of the Internal Revenue Code of 1986, as amended) or is a
controlled foreign corporation related to the Company through stock
ownership;
nor shall such additional interest be paid with respect to a payment on this
Note or such Coupon to a Holder that is a fiduciary or partnership or other than
the sole beneficial owner of such payment to the extent a beneficiary or settlor
with respect to such fiduciary or a member of such partnership or a beneficial
owner would not have been entitled to the additional interest had such
beneficiary, settlor, member or beneficial owner been the Holder of this Note or
such Coupon.
The term "United States Alien" means any person who, for United States
federal income tax purposes, is a foreign corporation, a nonresident alien
individual, a nonresident alien fiduciary of a foreign estate or trust, or a
foreign partnership one or more of the members of which is, for United States
federal income tax purposes, a foreign corporation, a nonresident alien
individual or a nonresident alien fiduciary of a foreign estate or trust.
The Company has initially appointed as its Paying Agents for Bearer
Notes of this Series the offices listed below:
Principal Paying Agent:
Citibank, N.A.
Issuer Services
336 Strand
London, WC2R OEA
Paying Agent:
Citibank (Luxembourg), S.A.
16 Avenue Marie Therese
Luxembourg
The Company reserves the right at any time to vary or terminate the
appointment of any Paying Agent and to appoint additional or other Paying Agents
and to approve any change in the office through which any Paying Agent acts,
provided that there will at all times be a Paying Agent (which may be the
Trustee) in at least one city in Europe, which, so long as Bearer Notes are
listed on the Luxembourg Stock Exchange and that
10
<PAGE>
exchange shall so require, shall include Luxembourg. Notice of any such
termination or appointment and of any changes in the specified offices of the
Trustee or any Paying Agent will be given to the Holder hereof as described
below.
Unless otherwise specified on the face hereof, if this Note is a
Floating Rate Note, this Note will bear interest from its Original Issue Date to
the first Interest Reset Date (as defined below) at the Initial Interest Rate
set forth on the face hereof. Thereafter, the interest rate hereon for each
Interest Reset Period (as defined below) will be determined by reference to an
interest rate basis (the "Base Rate"), plus or minus the Spread, if any, or
multiplied by the Spread Multiplier, if any. The "Spread" is the number of
basis points (one basis point equals one one-hundredth of a percentage point)
that may be specified on the face hereof, and the "Spread Multiplier" is the
percentage that may be specified on the face hereof. The face of this Note will
designate one of the following Base Rates as applicable hereto: (i) the CD Rate
(a "CD Rate Note"), (ii) the Commercial Paper Rate (a "Commercial Paper Rate
Note"), (iii) the Federal Funds Rate (a "Federal Funds Rate Note"), (iv) LIBOR
(a "LIBOR Note"), (v) the Treasury Rate (a "Treasury Rate Note") or (vi) such
other Base Rate as is set forth on the face hereof. The "Index Maturity" is the
period of maturity of the instrument or obligation from which the Base Rate is
calculated. "H.15(519)" means the publication entitled "Statistical Release
H.15(519), Selected Interest Rates", or any successor publication, published by
the Board of Governors of the Federal Reserve System. "Composite Quotations"
means the daily statistical release entitled "Composite 3:30 p.m. Quotations for
U.S. Government Securities" published by the Federal Reserve Bank of New York.
Unless otherwise specified on the face hereof, the interest payable
hereon shall be the accrued interest from and including the Original Issue Date
or the last date to which interest has been paid, as the case may be, to but
excluding the applicable Interest Payment Date; provided, however, that if the
-------- -------
interest rate is reset daily or weekly, interest payable shall be the accrued
interest from and including the Original Issue Date or the last date to which
interest has been accrued and paid, as the case may be, to but excluding the
date fifteen calendar days immediately preceding the applicable Interest Payment
Date, except that interest payable at Maturity will include interest accrued to
but excluding the date of Maturity. Accrued interest will be calculated by
multiplying the principal amount hereof (or if this Note is an Indexed Principal
Note, the Face Amount specified on the face hereof) by an accrued interest
factor. Such accrued interest factor shall be computed by adding the interest
factors calculated for each day in the period for which accrued interest is
being calculated. The interest factor (expressed as a decimal calculated to
seven decimal places
11
<PAGE>
without rounding) for each such day shall be computed by dividing the interest
rate in effect on such day by 360 if the Base Rate specified on the face hereof
is the CD Rate, the Commercial Paper Rate, the Federal Funds Rate or LIBOR, or
by the actual number of days in the year if the Base Rate specified on the face
hereof is the Treasury Rate. For purposes of making the foregoing calculation,
the interest rate in effect on any Interest Reset Date will be the applicable
rate as reset on such date. Unless otherwise specified on the face hereof, all
percentages resulting from any calculation of the rate of interest hereon will
be rounded, if necessary, to the nearest 1/100,000 of 1% (.0000001), with five
one-millionths of a percentage point rounded upward, and all currency amounts
used in or resulting from such calculation will be rounded to the nearest one-
hundredth of a unit (with .005 of a unit being rounded upward).
As specified on the face hereof, the interest rate hereon will be
reset daily, weekly, monthly, quarterly, semiannually or annually (such period
being the "Interest Reset Period", and the first day of each Interest Reset
Period being an "Interest Reset Date"). Unless otherwise specified on the face
hereof, the Interest Reset Date will be, if this Note resets daily, each
Business Day; if this Note is not a Treasury Rate Note and it resets weekly,
Wednesday of each week; if this Note is a Treasury Rate Note that resets weekly,
Tuesday of each week (except as provided below under "Determination of Treasury
Rate"); if this Note resets monthly, the third Wednesday of each month; if this
Note resets quarterly, the third Wednesday of March, June, September and
December of each year; if this Note resets semiannually, the third Wednesday of
each of two months of each year specified on the face hereof; and if this Note
resets annually, the third Wednesday of one month of each year specified on the
face hereof; provided, however, that in all instances the interest rate in
-------- -------
effect for the ten days immediately prior to Maturity will be that in effect on
the tenth day preceding the date of Maturity. If an Interest Reset Date for
this Note would otherwise be a day that is not a Business Day, such Interest
Reset Date shall be postponed to the next succeeding Business Day, except that
if this Note is a LIBOR Note and such Business Day is in the next succeeding
calendar month, such Interest Reset Date shall be the immediately preceding
Business Day. Notwithstanding the foregoing, the interest rate hereon during
any interest period shall not be greater than the Maximum Interest Rate, if any,
or less than the Minimum Interest Rate, if any, shown on the face hereof. In
addition to any Maximum Interest Rate that may be applicable hereto, the
interest rate hereon during any interest period will in no event be higher than
the maximum rate permitted by applicable law as the same may be modified by
United States law of general application. This Note will be governed by the law
of the State of New York and, under such law, the maximum rate of interest, with
certain exceptions, is 25% per annum on a simple interest basis.
12
<PAGE>
Unless otherwise indicated on the face hereof and except as provided
below, interest will be payable, if this Note resets daily, weekly or monthly,
on the third Wednesday of each month or on the third Wednesday of March, June,
September and December of each year, as specified on the face hereof; if this
Note resets quarterly, on the third Wednesday of March, June, September and
December of each year; if this Note resets semiannually, on the third Wednesday
of each of the two months of each year specified on the face hereof; and if this
Note resets annually, on the third Wednesday of the month of each year specified
on the face hereof (each such day being an "Interest Payment Date"). If any
Interest Payment Date would otherwise be a day that is not a Business Day, such
Interest Payment Date shall be postponed to the next succeeding Business Day,
except that, if the Base Rate specified on the face hereof is LIBOR and such
Business Day is in the next succeeding calendar month, such Interest Payment
Date shall be the immediately preceding Business Day.
The Company will appoint, and enter into an agreement with, an agent
("Calculation Agent") to calculate interest rates on this Note. All
determinations of interest rates by the Calculation Agent shall, in the absence
of manifest error, be conclusive for all purposes and binding on the Holder
hereof. Unless otherwise specified on the face hereof, Citibank, N.A. shall be
the Calculation Agent for this Note. At the request of the Holder hereof, the
Calculation Agent will provide the interest rate then in effect and, if
determined, the interest rate that will become effective on the next Interest
Reset Date. In addition, such information will be communicated to the
Luxembourg Stock Exchange and will be made available at the offices of the
Paying Agent in Luxembourg and at the Luxembourg Stock Exchange.
Subject to applicable provisions of law and except as specified
herein, on each Interest Reset Date the rate of interest hereon shall be the
rate determined in accordance with the provisions under the applicable heading
below.
Determination of CD Rate
- ------------------------
If the Base Rate specified on the face hereof is the CD Rate, this
Note will bear interest for each Interest Reset Period at the interest rate
calculated with reference to the CD Rate and the Spread or Spread Multiplier, if
any, specified on the face hereof. The "CD Rate" for each Interest Reset Period
shall be the rate as of the second Business Day prior to the Interest Reset Date
for such Interest Reset Period (a "CD Rate Determination Date") for negotiable
certificates of deposit having the Index Maturity specified on the face hereof
as published in H.15(519) under the heading "CDs (Secondary Market)". In the
event that such rate is not published prior to
13
<PAGE>
3:00 p.m., New York City time, on the Calculation Date (as defined below)
pertaining to such CD Rate Determination Date, then the "CD Rate" for such
Interest Reset Period will be the rate on such CD Rate Determination Date for
negotiable certificates of deposit of the Index Maturity specified on the face
hereof as published in Composite Quotations under the heading "Certificates of
Deposit". If by 3:00 p.m., New York City time, on such Calculation Date such
rate is not yet published in either H.15(519) or Composite Quotations, then the
"CD Rate" for such Interest Reset Period will be calculated by the Calculation
Agent and will be the arithmetic mean of the secondary market offered rates as
of 10:00 a.m., New York City time, on such CD Rate Determination Date, of three
leading nonbank dealers in negotiable U.S. dollar certificates of deposit in The
City of New York selected by the Calculation Agent for negotiable certificates
of deposit of major United States money center banks of the highest credit
standing (in the market for negotiable certificates of deposit) with a remaining
maturity closest to the Index Maturity specified on the face hereof in a
denomination of $5,000,000; provided, however, that if the dealers selected as
-------- -------
aforesaid by the Calculation Agent are not quoting offered rates as mentioned in
this sentence, the "CD Rate" for such Interest Reset Period will be the same as
the CD Rate for the immediately preceding Interest Reset Period (or, if there
was no such Interest Period, the Initial Interest Rate).
The "Calculation Date" pertaining to any CD Rate Determination Date
shall be the tenth calendar day after such CD Rate Determination Date or, if
such day is not a Business Day, the next succeeding Business Day.
Determination of Commercial Paper Rate
- --------------------------------------
If the Base Rate specified on the face hereof is the Commercial Paper
Rate, this Note will bear interest for each Interest Reset Period at the
interest rate calculated with reference to the Commercial Paper Rate and the
Spread or Spread Multiplier, if any, specified on the face hereof. The
"Commercial Paper Rate" for each Interest Reset Period will be determined by the
Calculation Agent as of the second Business Day prior to the Interest Reset Date
for such Interest Reset Period (a "Commercial Paper Rate Determination Date")
and shall be the Money Market Yield (as defined below) on such Commercial Paper
Rate Determination Date of the rate for commercial paper having the Index
Maturity specified on the face hereof, as such rate shall be published in
H.15(519) under the heading "Commercial Paper". In the event that such rate is
not published prior to 3:00 p.m., New York City time, on the Calculation Date
(as defined below) pertaining to such Commercial Paper Rate Determination Date,
then the "Commercial Paper Rate" for such Interest Reset Period shall be the
Money Market Yield on such Commercial Paper Rate Determination Date of the rate
for
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<PAGE>
commercial paper of the Index Maturity specified on the face hereof as published
in Composite Quotations under the heading "Commercial Paper". If by 3:00 p.m.,
New York City time, on such Calculation Date such rate is not yet published in
either H.15(519) or Composite Quotations, then the "Commercial Paper Rate" for
such Interest Reset Period shall be the Money Market Yield of the arithmetic
mean of the offered rates, as of 11:00 a.m., New York City time, on such
Commercial Paper Rate Determination Date of three leading dealers of commercial
paper in The City of New York selected by the Calculation Agent for commercial
paper of the Index Maturity specified on the face hereof placed for an
industrial issuer whose bonds are rated "AA" or the equivalent thereof by a
nationally recognized rating agency; provided, however, that if the dealers
-------- -------
selected as aforesaid by the Calculation Agent are not quoting offered rates as
mentioned in this sentence, the "Commercial Paper Rate" for such Interest Reset
Period will be the same as the Commercial Paper Rate for the immediately
preceding Interest Reset Period (or, if there was no such Interest Reset Period,
the Initial Interest Rate).
"Money Market Yield" shall be a yield calculated in accordance with
the following formula:
Money Market Yield = D x 360 x 100
---------------
360 - (D x M)
where "D" refers to the applicable per annum rate for commercial paper quoted on
a bank discount basis and expressed as a decimal, and "M" refers to the actual
number of days in the Index Maturity specified on the face hereof.
The "Calculation Date" pertaining to any Commercial Paper Rate
Determination Date shall be the tenth calendar day after such Commercial Paper
Rate Determination Date or, if such day is not a Business Day, the next
succeeding Business Day.
Determination of Federal Funds Rate
- -----------------------------------
If the Base Rate specified on the face hereof is the Federal Funds
Rate, this Note will bear interest for each Interest Reset Period at the
interest rate calculated with reference to the Federal Funds Rate and the Spread
or Spread Multiplier, if any, specified on the face hereof. The "Federal Funds
Rate" for each Interest Reset Period shall be the effective rate on the Interest
Reset Date for such Interest Reset Period (a "Federal Funds Rate Determination
Date") for Federal Funds as published in H.15(519) under the heading "Federal
Funds (Effective)". In the event that such rate is not published prior to 3:00
p.m., New York City time, on the Calculation Date (as defined below) pertaining
to such Federal Funds Rate Determination Date, the "Federal Funds Rate" for such
Interest
15
<PAGE>
Reset Period shall be the rate on such Federal Funds Rate Determination Date as
published in Composite Quotations under the heading "Federal Funds/Effective
Rate". If by 3:00 p.m., New York City time, on such Calculation Date such rate
is not yet published in either H.15(519) or Composite Quotations, then the
"Federal Funds Rate" for such Interest Reset Period shall be the rate on such
Federal Funds Rate Determination Date made publicly available by the Federal
Reserve Bank of New York which is equivalent to the rate which appears in
H.15(519) under the heading "Federal Funds (Effective)"; provided, however, that
-------- -------
if such rate is not made publicly available by the Federal Reserve Bank of New
York by 3:00 p.m., New York City time, on such Calculation Date, then the
"Federal Funds Rate" for such Interest Reset Period will be the same as the
Federal Funds Rate in effect for the immediately preceding Interest Reset Period
(or, if there was no such Interest Reset Period, the Initial Interest Rate). If
this Note resets daily, the interest rate hereon for the period from and
including a Monday to but excluding the succeeding Monday will be reset by the
Calculation Agent on such second Monday (or, if not a Business Day, on the next
succeeding Business Day) to a rate equal to the average of the Federal Funds
Rates in effect with respect to each such day in such week.
The "Calculation Date" pertaining to any Federal Funds Rate
Determination Date shall be the next succeeding Business Day.
Determination of LIBOR
- ----------------------
If the Base Rate specified on the face hereof is LIBOR, this Note will
bear interest for each Interest Reset Period at the interest rate calculated
with reference to LIBOR and the Spread or Spread Multiplier, if any, specified
on the face hereof. "LIBOR" for each Interest Reset Period will be determined
by the Calculation Agent as follows:
(i) On the second London Banking Day prior to the Interest Reset
Date for such Interest Reset Period (a "LIBOR Determination Date"), the
Calculation Agent for such LIBOR Note will determine the arithmetic mean
of the offered rates for deposits in the Specified Currency for the
period of the Index Maturity specified in the applicable Pricing
Supplement, commencing on such Interest Reset Date, which appear on the
Designated LIBOR Page at approximately 11:00 a.m., London time, on such
LIBOR Determination Date. "Designated LIBOR Page" means either (a) if
"LIBOR Telerate" is designated in the applicable Pricing Supplement, the
display designated as page "3750" on the Dow Jones Telerate Service (or
such other page as may replace page "3750" on such service or such other
service as may be nominated by the British Bankers' Association for the
purpose of displaying the London
16
<PAGE>
interbank offered rates of major banks) or (b) if "LIBOR Reuters" is
designated in the applicable Pricing Supplement, the display designated
as page "LIBO" on the Reuters Monitor Money Rates Service (or such other
page as may replace the LIBO page on such service or such other service
as may be nominated by the British Bankers' Association for the purpose
of displaying London interbank offered rates of major banks). If
neither LIBOR Reuters nor LIBOR Telerate is specified in the applicable
Pricing Supplement, LIBOR will be determined as if LIBOR Telerate had
been specified. It at least two such offered rates appear on the
Designated LIBOR Page, "LIBOR" for such Interest Reset Period will be
the arithmetic mean of such offered rates as determined by the
Calculation Agent for such LIBOR Note.
(ii) If fewer than two offered rates appear on the Designated
LIBOR Page on such LIBOR Determination Date, the Calculation Agent will
request the principal London offices of each of four major banks in the
London interbank market selected by the Calculation Agent to provide the
Calculation Agent with its offered quotations for deposits in the
Specified Currency for the period of the Index Maturity specified on the
face hereof, commencing on such Interest Reset Date, to prime banks in
the London interbank market at approximately 11:00 a.m., London time, on
such LIBOR Determination Date and in a principal amount equal to an
amount of not less than U.S.$1,000,000 or the approximate equivalent
thereof in the Specified Currency that is representative of a single
transaction in such market at such time. If at least two such
quotations are provided, "LIBOR" for such Interest Reset Period will be
the arithmetic mean of such quotations. If fewer than two such
quotations are provided, "LIBOR" for such Interest Reset Period will be
the arithmetic mean of rates quoted by three major banks in The City of
New York selected by the Calculation Agent at approximately 11:00 a.m.,
New York City time, on such LIBOR Determination Date for loans in the
Specified Currency to leading European banks, for the period of the
Index Maturity specified on the face hereof, commencing on such Interest
Reset Date, and in a principal amount equal to an amount of not less
than U.S.$1,000,000 or the approximate equivalent in the Specified
Currency that is representative of a single transaction in such market
at such time; provided, however, that if fewer than three banks selected
-------- -------
as aforesaid by the Calculation Agent are quoting rates as mentioned in
this sentence, "LIBOR" for such Interest Reset Period will be the same
as LIBOR for the immediately preceding Interest Reset Period (or, if
there was no such Interest Reset Period, the Initial Interest Rate).
17
<PAGE>
Determination of Treasury Rate
------------------------------
If the Base Rate specified on the face hereof is the Treasury Rate,
this Note will bear interest for each Interest Reset Period at the interest rate
calculated with reference to the Treasury Rate and the Spread or Spread
Multiplier, if any, specified on the face hereof. The "Treasury Rate" for each
Interest Reset Period will be the rate for the auction held on the Treasury Rate
Determination Date (as defined below) for such Interest Reset Period of direct
obligations of the United States ("Treasury bills") having the Index Maturity
specified on the face hereof, as such rate shall be published in H.15(519) under
the heading "U.S. Government Securities-Treasury bills-auction average
(investment)" or, in the event that such rate is not published prior to 3:00
p.m., New York City time, on the Calculation Date (as defined below) pertaining
to such Treasury Rate Determination Date, the auction average rate (expressed as
a bond equivalent on the basis of a year of 365 or 366 days, as applicable, and
applied on a daily basis) on such Treasury Rate Determination Date as otherwise
announced by the United States Department of the Treasury. In the event that
the results of the auction of Treasury bills having the Index Maturity specified
on the face hereof are not published or reported as provided above by 3:00 p.m.,
New York City time, on such Calculation Date, or if no such auction is held on
such Treasury Rate Determination Date, then the "Treasury Rate" for such
Interest Reset Period shall be calculated by the Calculation Agent and shall be
a yield to maturity (expressed as a bond equivalent on the basis of a year of
365 or 366 days, as applicable, and applied on a daily basis) of the arithmetic
mean of the secondary market bid rates, as of approximately 3:30 p.m., New York
City time, on such Treasury Rate Determination Date, of three leading primary
United States government securities dealers selected by the Calculation Agent
for the issue of Treasury bills with a remaining maturity closest to the Index
Maturity specified on the face hereof; provided, however, that if the dealers
-------- -------
selected as aforesaid by the Calculation Agent are not quoting bid rates as
mentioned in this sentence, then the "Treasury Rate" for such Interest Reset
Period will be the same as the Treasury Rate for the immediately preceding
Interest Reset Period (or, if there was no such Interest Reset Period, the
Initial Interest Rate).
The "Treasury Rate Determination Date" for each Interest Reset Period
will be the day of the week in which the Interest Reset Date for such Interest
Reset Period falls on which Treasury bills would normally be auctioned.
Treasury bills are normally sold at auction on Monday of each week, unless that
day is a legal holiday, in which case the auction is normally held on the
following Tuesday, except that such auction may be held on the preceding Friday.
If, as the result of a legal holiday, an auction is so held on the preceding
Friday, such Friday will be the Treasury Rate Determination Date pertaining to
the Interest
18
<PAGE>
Reset Period commencing in the next succeeding week. If an auction date shall
fall on any day that would otherwise be an Interest Reset Date for a Treasury
Rate Note, then such Interest Reset Date shall instead be the Business Day
immediately following such auction date.
If "Constant Maturity" is specified in the applicable Pricing
Supplement, the "Treasury Rate" for each Interest Reset Period will be the rate
that is set forth in the Federal Reserve Board publication H.15(519) opposite
the caption "U.S. Government/Securities/Treasury Constant Maturities/" in the
Index Maturity with respect to the applicable Constant Maturity Treasury Rate
Determination Date (as defined below). If the H.15(519) is not published, the
"Constant Maturity -- Treasury Rate" shall be the rate that was set forth on
Telerate Page 7055, or its successor page (as determined by the Calculation
Agent), on the applicable Constant Maturity Treasury Rate Determination Date
opposite the applicable Index Maturity. If no such rate is set forth, then the
constant Maturity Treasury Rate for such Interest Reset Period shall be
established by the Calculation Agent as follows. The Calculation Agent will
contact the Federal Reserve Board and request the Constant Maturity Treasury
Rate, in the applicable Index Maturity, for the Constant Maturity Treasury Rate
Determination Date.If the Federal Reserve Board does not provide such
information, then the Constant Maturity Treasury Rate for such Interest Reset
Date will be the arithmetic mean of bid-side quotations, expressed in terms of
yield, reported by three leading U.S. government securities dealers (one of
which may be Salomon Brothers Inc), according to their written records, as of
3:00 p.m. (New York City time) on the Constant Maturity Treasury rate
Determination Date, for the noncallable U.S. Treasury Note that is nearest in
maturity to the Index Maturity, but not less than exactly the Index Maturity and
for the noncallable U.S. Treasury Note that is nearest in maturity to the Index
Maturity, but not more than exactly the Index Maturity. The Calculation Agent
shall calculate the Constant Maturity Treasury Rate by interpolating to the
Index Maturity based on an actual/actual date count basis, the yield on the two
Treasury Notes selected. If the Calculation Agent cannot obtain three such
adjusted quotations, the Constant Maturity Treasury Rate for such Interest Reset
Date will be the arithmetic mean of all such quotations, or if only one such
quotation is obtained, such quotation, obtained by the Calculation Agent. In all
events, the Calculation Agent shall continue polling dealers until at least one
adjusted yield quotation can be determined.
"The Constant Maturity Treasury Rate Determination Date" shall be the
tenth Business Day prior to the Interest Reset Date for the applicable Interest
Reset Period.
The "Calculation Date" pertaining to any Treasury Rate Determination
Date or Constant Maturity Rate Determination
19
<PAGE>
Date, as applicable, shall be the tenth calendar day after such Treasury Rate
Determination Date or Constant Maturity Rate Determination Date, as applicable,
or, if such a day is not a Business Day, the next succeeding Business Day.
If this note is an Indexed Note, then certain or all interest
payments, in the case of an Indexed Rate Note, and/or the principal amount
payable at Stated Maturity or earlier redemption or retirement, in the case of
an Indexed Principal Note, is determined by reference to the amount designated
on the face hereof as the Face Amount of this Note and by reference to the Index
as described on the face hereof. If this Note is a Floating Rate Note or Indexed
Rate Note that is also an Indexed Principal Note, the amount of any interest
payment will be determined by reference to the Face Amount described on the face
hereof unless otherwise specified. If this Note is an Indexed Principal Note,
the principal amount payable at Stated Maturity or any earlier redemption or
repayment of this Note may be different from the Face Amount. If the
determination of the Index is calculated or announced by a third party, which
may be Salomon Brothers Inc or another affiliate of the Company, and such third
party either suspends the calculation or announcement of such Index or changes
the basis upon which such Index is calculated (other than changes consistent
with policies in effect at the time this Note was issued and permitted changes
described on the face hereof), then such Index shall be calculated for this
Note's purposes by another third party, which may be Salomon Brothers Inc or
another affiliate of the Company, selected by the Company subject to the same
conditions and controls as applied to the original third party. If for any
reason such Index cannot be calculated on the same basis and subject to the same
conditions and controls as applied to the original third party, then the indexed
interest payments, if any, or any indexed principal amount of this Note shall be
calculated in the manner described on the face hereof. Any determination of
such third party shall in the absence of manifest error be binding on all
parties.
Payment in Currencies Other Than the Specified Currency
- -------------------------------------------------------
Except as set forth below with respect to payments in ECU, if payment
in respect of this Note or any Coupon is required to be made in a specified
currency other than U.S. dollars (a "Specified Currency") and such currency is
unavailable due to the imposition of exchange controls or other circumstances
beyond the Company's control or is no longer used by the government of the
country issuing such currency or for the settlement of transactions by public
institutions of or within the international banking community, then all payments
shall be made in U.S. dollars until such currency is again available or so used.
The amounts so payable on any date in such currency shall be converted into U.S.
dollars on the basis of the most recently available Market Exchange Rate for
such currency or as otherwise
20
<PAGE>
indicated on the face hereof. Any payment made under such circumstances in U.S.
dollars will not constitute an Event of Default under the Indenture.
If payment in respect of this Note or any Coupon is required to be
made in ECU and the ECU is not then used in the European Monetary System (the
"EMS"), then the Trustee shall, without liability on its part, choose a
component currency (the "Payment Currency") of the ECU in which all payments in
respect hereof shall be made until the ECU is again so used. The amount of each
payment in such Payment Currency shall be computed on the basis of the
equivalent of the ECU in that currency, determined as described below, as of the
fourth Luxembourg business day prior to the date on which such payment is due.
Notice of the Payment Currency selected by the Trustee shall be given as
described below. Any payment made under such circumstances in the Payment
Currency will not constitute an Event of Default under the Indenture.
Notwithstanding the foregoing, on the first Luxembourg business day on
which the ECU is no longer used in the EMS, the Trustee shall, without liability
on its part, choose a Payment Currency in which all payments with respect to
Bearer Notes and Coupons denominated in ECU having a due date prior thereto but
not yet presented for payment are to be made. The amount of each payment in
such Payment Currency shall be computed on the basis of the equivalent of the
ECU in that currency, determined as described below, as of such first Luxembourg
business day. Any payment made under such circumstances in the Payment Currency
will not constitute an Event of Default under the Indenture.
The equivalent of the ECU in the relevant Payment Currency as of any
date (the "Day of Valuation") shall be determined by the Luxembourg Stock
Exchange on the following basis. The component currencies of the ECU for this
purpose (the "Components") shall be the currency amounts that were components of
the ECU when the ECU was most recently used in the EMS or for the settlement of
transactions by public institutions of or within the European Community. The
equivalent of the ECU in the Payment Currency shall be calculated by, first,
aggregating the U.S. dollar equivalents of the Components, and then, using the
rate used for determining the U.S. dollar equivalents of the Components in the
Payment Currency as set forth below, calculating the equivalent in the Payment
Currency of such aggregate amount in U.S. dollars.
The U.S. dollar equivalent of each of the Components shall be
determined by the Luxembourg Stock Exchange on the basis of the middle spot
delivery quotations prevailing at 2:30 p.m. Luxembourg time on the Day of
Valuation, as obtained by the Luxembourg Stock Exchange from one or more major
banks, selected
21
<PAGE>
by the Trustee (with the approval of the Company) in the country of issue of the
Component in question.
If the official unit of any component currency of the ECU is altered
by way of combination or subdivision, the number of units of that currency as a
Component shall be divided or multiplied in the same proportion. If two or more
component currencies are consolidated into a single currency, the amounts of
those currencies as Components shall be replaced by an amount in such single
currency equal to the sum of the amounts of the consolidated component
currencies expressed in such single currency. If any component currency is
divided into two or more currencies, the amount of that currency as a Component
shall be replaced by amounts of such two or more currencies, each of which shall
be equal to the amount of the former component currency divided by the number of
currencies into which that currency was divided.
If no direct quotations are available for a Component on a Day of
Valuation from any of the banks selected by the Trustee (with the approval of
the Company) for this purpose, because foreign exchange markets are closed in
the country of issue of that Component, or for any other reason, in computing
the U.S. dollar equivalent of such Component the Luxembourg Stock Exchange shall
(except as provided below) use the most recent direct quotations for such
Component obtained by it; provided that such most recent quotations may be used
--------
only if they were prevailing in the country of issue not more than two
Luxembourg business days before such Day of Valuation. Beyond such period of
two Luxembourg business days, the Luxembourg Stock Exchange shall determine the
U.S. dollar equivalent of such Component on the basis of cross rates derived
from the middle spot delivery quotations for such Component and for the U.S.
dollar prevailing at 2:30 p.m. Luxembourg time on such Day of Valuation, as
obtained by the Luxembourg Stock Exchange from one or more major banks, selected
by the Trustee (with the approval of the Company) in a country other than the
country of issue of such Component. Notwithstanding the foregoing, within such
period of two Luxembourg business days, the Luxembourg Stock Exchange shall
determine the U.S. dollar equivalent of such Component on the basis of such
cross rates if the Trustee and the Company judge that the equivalent so
calculated is more representative than the U.S. dollar equivalent calculated on
the basis of such most recent direct quotations. Unless otherwise specified by
the Trustee, if there is more than one market for dealing in any component
currency by reason of foreign exchange regulations or for any other reason, the
market to be referred to in respect of such currency shall be that upon which a
nonresident issuer of securities denominated in such currency would purchase
such currency in order to make payments in respect of such securities.
22
<PAGE>
All determinations referred to above made by the Trustee or the
Luxembourg Stock Exchange shall be at their respective sole discretion (except
to the extent expressly provided herein that any determination made by the
Trustee is subject to the approval of the Company) and shall, in the absence of
manifest error, be conclusive for all purposes and binding on Holders of the
Bearer Notes and any Coupons, and the Trustee shall have no liability therefor.
If an Event of Default with respect to the Notes shall have occurred
and be continuing, the principal of all Notes may be declared due and payable in
the manner and with the effect provided in the Indenture.
If this Note is a Discount Note, the amount payable in the event of
redemption or repayment prior to its Stated Maturity, shall be the Amortized
Face Amount of this Note as of the date of redemption or the date of repayment,
as the case may be. The "Amortized Face Amount" of this Note shall be the
amount equal to (a) the Issue Price (set forth on the face hereof) plus (b) that
portion of the difference between the Issue Price and the principal amount
hereof that has accrued at the Yield to Maturity (set forth on the face hereof)
(computed in accordance with generally accepted United States bond yield
computation principles) by such date of redemption or repayment, but in no event
shall the Amortized Face Amount of this Note exceed its principal amount.
As provided in the Indenture and subject to certain limitations
therein set forth, this Note is exchangeable for a like aggregate principal
amount of Bearer Notes of different authorized denominations, as requested by
the Person surrendering the same.
No service charge shall be made for any such exchange, but the Company
may require payment of a sum sufficient to cover any tax or other governmental
charge payable in connection therewith.
In case this Note or any Coupon shall at any time become mutilated,
destroyed, stolen or lost, it may be replaced at the specified office of the
Principal Paying Agent in London; or, so long as the Bearer Notes are listed on
the Luxembourg Stock Exchange, at the specified office of the Paying Agent in
Luxembourg, upon payment by the claimant of such expenses as may be incurred in
connection therewith and, in the case of destruction, theft or loss, on such
terms as to evidence and indemnity as the Company or the Trustee may reasonably
require. Mutilated or defaced Bearer Notes or Coupons must be surrendered
before replacements will be issued.
23
<PAGE>
The Indenture permits, with certain exceptions as therein provided,
the amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Holders of the Debt Securities of each series to
be affected under the Indenture at any time by the Company and the Trustee with
the consent of the Holders of not less than a majority in aggregate principal
amount of the Debt Securities at the time Outstanding of each series to be
affected. The Indenture also contains provisions permitting the Holders of
specified percentages in aggregate principal amount of the Debt Securities of
any series at the time Outstanding, on behalf of the Holders of all the Debt
Securities of such series, to waive compliance by the Company with certain
provisions of the Indenture and certain past defaults under the Indenture and
their consequences. Any such consent or waiver by the Holder of this Debt
Security shall be conclusive and binding upon such Holder and upon all future
Holders of this Debt Security and of any Debt Security issued upon the
registration of transfer hereof or in exchange herefor or in lieu hereof,
whether or not notation of such consent or waiver is made upon this Debt
Security.
Holders of Debt Securities of this series may not enforce their rights
pursuant to the Indenture or such Debt Securities except as provided in the
Indenture. No reference herein to the Indenture and no provision of this Note
or of the Indenture shall alter or impair the obligation of the Company, which
is absolute and unconditional, to pay the principal of (and premium, if any) and
interest on this Note at the times, place and rate, and in the coin or currency,
herein prescribed.
The Company may, without the consent of the Holders of the Notes,
consolidate with, merge into, or transfer substantially all of its assets to, a
corporation that is a U.S. Person, provided that the successor corporation
assumes all obligations of the Company under the Notes and certain other
conditions are met, including a waiver by the successor corporation of any right
to redeem the Notes under circumstances in which the successor corporation would
be entitled to redeem the Notes but the Company would not have been entitled to
do so.
Except as provided above, the obligation to pay the principal hereof
(and premium, if any) and interest hereon in the designated currency of payment
is of the essence. To the fullest extent possible under applicable law,
judgments in respect of this Note shall be given in such currency. The
obligation of the Company to make such payments in the designated currency of
payment shall, notwithstanding any payment in any other currency (whether
pursuant to a judgment or otherwise), be discharged only to the extent of the
amount in the designated currency of payment that the Holder of this Note may,
in accordance with normal banking procedures, purchase with the sum paid in such
other currency (after any premium and cost of exchange) on the business
24
<PAGE>
day in the country of issue of the designated currency of payment or in the
international banking community (in the case of a composite currency)
immediately following the day on which such Holder receives such payment. If
the amount in the designated currency of payment that may be so purchased is for
any reason less than the amount originally due, the Company shall, as a separate
and independent obligation, pay such additional amounts in the designated
currency of payment as may be necessary to compensate for any such shortfall.
All notices to Holders of this Note will be deemed to have been duly
given if published on two separate Business Days in a leading London daily
newspaper (which is expected to be the Financial Times) and, so long as the
---------------
Bearer Notes are listed on the Luxembourg Stock Exchange and such exchange so
requires, in Luxembourg in a newspaper of general circulation in Luxembourg
(which is expected to be the Luxemburger Wort). Such notices shall be deemed to
----------- ----
have been given on the date of the first such publication.
If the Specified Currency of this Note is Pounds sterling, the
following applies: The Company is not an institution authorised under the
Banking Act 1987 of the United Kingdom, and this Note is a medium-term note
issued in accordance with regulations made under Section 4 of the Banking Act
1987. The Company represents that as of the date of issuance of this Note, (1)
the Company is in compliance with its listing obligations to The International
Stock Exchange of the United Kingdom and the Republic of Ireland Limited in
connection with the Company's securities that are listed on such Exchange; and
(2) since information was last published in compliance with such listing
obligations, the Company, having made all reasonable enquiries, has not become
aware of any change in circumstances which could reasonably be regarded as
significantly and adversely affecting its ability to meet its obligations on
this Note as they fall due. Repayment of principal and payment of interest and
any premium on this Note have not been guaranteed by any person.
This Note shall be deemed to be a contract made and to be performed
solely in the State of New York, and for all purposes shall be governed by, and
construed in accordance with, the laws of said State without regard to the
conflicts of law rules of said State.
All terms used in this Note that are defined in the Indenture shall
have the meanings assigned to them in the Indenture.
25
<PAGE>
FORM OF
SERIES E PERMANENT GLOBAL FLOATING OR INDEXED RATE NOTE
SALOMON INC
BEARER PRINCIPAL
No. FL-__________ OR FACE AMOUNT
PERMANENT GLOBAL NOTE
(Floating or Indexed Rate)
representing
MEDIUM-TERM NOTES, SERIES E
Due More Than Nine Months from Date of Issue
THIS SECURITY IS A PERMANENT GLOBAL NOTE, WITHOUT COUPONS,
EXCHANGEABLE FOR INDIVIDUAL BEARER NOTES, WITH COUPONS, IF ANY, IN THE
DENOMINATION OF U.S. $ 25,000 OR ANY LARGER AMOUNT THAT IS AN INTEGRAL MULTIPLE
OF U.S. $5,000 (OR SUCH OTHER DENOMINATIONS AS ARE SPECIFIED BELOW FOR ANOTHER
CURRENCY). THE RIGHTS ATTACHING TO THIS NOTE AND THE CONDITIONS AND PROCEDURES
GOVERNING ITS EXCHANGE FOR INDIVIDUAL BEARER NOTES ARE AS SPECIFIED IN THE
INDENTURE (AS DEFINED HEREIN).
UNLESS AND UNTIL IT IS EXCHANGE IN WHOLE OR IN PART FOR THE INDIVIDUAL
BEARER NOTES REPRESENTED HEREBY, THIS GLOBAL SECURITY MAY NOT BE TRANSFERRED
EXCEPT AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A
NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY
OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE
OF SUCH SUCCESSOR DEPOSITARY.
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 SECTION 165(j) AND 1287(a) OF THE INTERNAL REVENUE CODE.
IF APPLICABLE, THE "TOTAL AMOUNT OF OID" AND "YIELD TO MATURITY" SET
FORTH BELOW WILL BE COMPLETED SOLELY FOR THE PURPOSES OF APPLYING THE FEDERAL
INCOME TAX ORIGINAL ISSUE DISCOUNT ("OID") RULES.
Issue Price: Original Issue Date:
Initial Interest Rate: Stated Maturity:
Specified Currency:
(If other than U.S. Dollars)
Authorized Denominations:
(If other than as set forth in the Prospectus
Supplement)
<PAGE>
Base Rate: [ ] CD Rate [ ] Commercial Paper [ ] Federal Funds Rate
[ ] LIBOR Telerate [ ] LIBOR Reuters [ ] Treasury Rate
[ ] Treasury Rate Constant Maturity [ ] Other (see attached)
Interest Reset Period Index Maturity:
or Interest Reset Dates:
Interest Payment Dates:
(If other than as set forth in the Prospectus
Supplement)
Indexed Principal Note: [ ] Yes (see attached) [ ] No
Floating Rate: [ ] Indexed Interest Rate [ ] (See attached)
Spread Multiplier: Spread (+/-):
Spread Reset: [ ] The Spread or Spread Multiplier may not be
changed prior to Stated Maturity.
[ ] The Spread or Spread Multiplier may be changed
prior to Stated Maturity (see attached).
Optional Reset Dates (if applicable):
Maximum Interest Rate: Minimum Interest Rate:
Amortizing Note: [ ] Yes [ ] No
Amortization Schedule:
Optional Redemption: [ ] Yes [ ] No
Optional Redemption Dates:
Redemption Prices:
Optional Repayment: [ ] Yes [ ] No
Optional Repayment Dates:
Optional Repayment Prices:
Optional Extension of Stated Maturity: [ ] Yes [ ] No
Final Maturity:
Discount Note: [ ] Yes [ ] No
Total Amount of OID:
Yield to Maturity:
2
<PAGE>
IF THE SPECIFIED CURRENCY OF THIS NOTE IS POUNDS STERLING, THE FOLLOWING
APPLIES: THIS NOTE IS ISSUED IN ACCORDANCE WITH THE REGULATIONS MADE UNDER
SECTION 4 OF THE BANKING ACT 1987.
3
<PAGE>
SALOMON INC, a corporation duly organized and existing under the laws of
the State of Delaware (the "Company"), for value received, hereby promises to
pay to bearer, upon presentation and surrender hereof, (a) the Principal Amount
or, in the case of an Indexed Principal Note, the Face Amount adjusted by
reference to prices, changes in prices, or differences between prices, of
securities, currencies, intangibles, goods, articles or commodities or by such
other objective price, economic or other measures (an "Index") as described on
the face hereof, in the Specified Currency on the Stated Maturity shown above or
earlier if and to the extent so provided herein, and (b) to pay accrued interest
(i) if this is a Floating Rate Note, on the Principal Amount then outstanding
(or in the case of an Indexed Principal Note, then outstanding) at the Initial
Interest Rate shown above from the Original Issue Date shown above until the
first Interest Reset Date shown above following the Original Issue Date and
thereafter at the Base Rate shown above, adjusted by the Spread or Spread
Multiplier, if any, shown above, determined in accordance with the provisions on
the reverse hereof, or (ii) if this is an Indexed Rate Note, on the Principal
Amount then outstanding (or in the case of an Indexed Principal Note, the Face
Amount), at a rate adjusted by reference to an Index described on the face
hereof, in arrears to the bearer hereof at the rates per annum and on the dates,
determined as described on the reverse hereof, until, in either case, the
Principal Amount then outstanding or the Face Amount is paid or duly provided
for in accordance with the terms hereof.
For purposes of this Note, "Business Day" means any day, other than a
Saturday or Sunday, that is not a day on which banking institutions are
authorized or required by law or regulation to be closed in (a) The City of New
York, (b) London, England, (c) the place in which this Note or any Coupon is
presented for payment or (d) if the Specified Currency (as defined below) is
other than U.S. dollars, the financial center of the country issuing the
Specified Currency (which in the case of European Currency Units ("ECU") shall
be Brussels, Belgium).
The indebtedness evidenced by this Note is, to the extent set forth in the
Indenture, expressly subordinated and subject in right of payment to the prior
payment in full of Senior Indebtedness as defined in the Indenture, and this
Note is issued subject to such provisions, and each Holder of this Note, by
accepting the same, agrees to and shall be bound by such provisions and
authorizes and directs the Trustee in his behalf to take such action as may be
necessary or appropriate to acknowledge or effectuate the subordination as
provided in the Indenture and appoints the Trustee as his attorney-in-fact for
any and all such purposes.
If this Note is an Amortizing Note as shown on the face hereof, a portion
or all the principal amount of the Note is
4
<PAGE>
payable prior to Stated Maturity in accordance with a schedule, by application
of a formula, or by reference to an index (as described above).
This Note is exchangeable in whole or from time to time in part without
charge for individual Bearer Notes, with appropriate Coupons attached, if any,
in the denomination of U.S.$25,000 or any larger amount that is an integral
multiple of U.S.$5,000 (or such other denominations as are specified above for
another currency), upon 30 days' notice to the Trustee given through either
Euro-clear or CEDEL. Upon any exchange of any portion of this Note for
individual Bearer Notes, the portion of the principal amount hereof so exchanged
shall be endorsed by the Trustee in the Schedule of Issuances, Exchanges and
Aggregate principal amount hereto, and the principal amount hereof shall be
reduced for all purposes by the amount so exchanged.
Except as otherwise provided herein or in the Indenture, until exchanged
in full for individual Bearer Notes, this Note shall in all respects be entitled
to the same benefits and subject to the same terms and conditions of, and the
Company shall be subject to the same restrictions as those contained on the
individual Bearer Notes and in the Indenture.
Except under certain circumstances for Notes having Specified Currencies
other than U.S. dollars, payments of the principal hereof and any premium and
interest hereon will be made only in the Specified Currency. Payments in
respect of this Note and any Coupon will be made only against surrender of this
Note or such Coupon, at the offices of the Paying Agents outside the United
States listed on the reverse hereof. At the direction of the Holder of this
Note or any Coupon, and subject to applicable laws and regulations, such
payments will be made by check drawn on a bank in The City of New York (in the
case of U.S. dollar payments) or outside the United States (in the case of
payments in a currency other than U.S. dollars) mailed to an address outside the
United States furnished by the Holder hereof or, at the option of the Holder
hereof, by wire transfer (pursuant to written instructions supplied by the
Holder hereof) to an account maintained by the payee with a bank located outside
the United States. No payment in respect of this Note or any Coupon will be
made upon presentation of this Note or such Coupon at any office or agency of
the Trustee or any other paying agency maintained by the Company in the United
States, nor will any such payment be made by transfer to an account, or by mail
to an address, in the United States. Notwithstanding the foregoing, if U.S.
dollar payments in respect of this Note or any Coupons at the offices of all
Paying Agents outside the United States become illegal or are effectively
precluded because of the imposition of exchange controls or similar restrictions
on the full payment or receipt of such amounts in U.S. dollars, the Company will
appoint an
5
<PAGE>
office or agency (which may be the Trustee) in the United States at which such
payments may be made.
REFERENCE IS HEREBY MADE TO THE FURTHER PROVISIONS OF THIS NOTE SET FORTH
ON THE REVERSE HEREOF, AND SUCH FURTHER PROVISIONS SHALL FOR ALL PURPOSES HAVE
THE SAME EFFECT AS THOUGH FULLY SET FORTH IN THIS PLACE.
This Note shall not become valid or obligatory for any purpose unless and
until this Note has been authenticated by Bankers Trust Company, or its
successor, as Trustee.
6
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Note to be executed under
its corporate seal.
Dated:
SALOMON INC
By_____________________________________
Chairman of the Board of Directors,
[seal] President and Chief Executive Officer
Attest________________________________
Secretary
CERTIFICATE OF AUTHENTICATION
This is one of the Notes issued under the within-mentioned Indenture.
BANKERS TRUST COMPANY
as Trustee
By____________________________________
Authorized Signatory
7
<PAGE>
SALOMON INC
MEDIUM-TERM NOTE, SERIES E
(FLOATING OR INDEXED RATE)
General
- -------
This Note is one of a series of duly authorized debt securities of the
Company (the "Debt Securities") issued or to be issued in one or more series
under an indenture dated as of December 1, 1988 (the "Indenture") between the
Company and Bankers Trust Company, as trustee (the "Trustee", which term
includes any successor Trustee under the Indenture), to which Indenture and all
indentures supplemental thereto reference is hereby made for a statement of the
respective rights, limitations of rights, duties and immunities thereunder of
the Company, the Trustee and the Holders of the Debt Securities and of the terms
upon which the Debt Securities are, and are to be, authenticated and delivered.
The U.S. dollar equivalent of the public offering price or purchase price of
Notes denominated in currencies other than U.S. dollars will be determined by
the Company or its agent, on the basis of the noon buying rate in New York City
for cable transfers in foreign currencies as certified for customs purposes by
the Federal Reserve Bank of New York (the "Market Exchange Rate") for such
currencies on the applicable issue dates.
Unless otherwise specified on the face hereof, the authorized
denominations of Bearer Notes denominated in U.S. dollars will be U.S.$25,000
and any larger amount that is an integral multiple of U.S.$5,000. The
authorized denominations of Bearer Notes having a specified currency other than
U.S. dollars will be, unless otherwise specified herein, the approximate
equivalents thereof in the Specified Currency.
If so specified on the face hereof, this Note will be redeemable at the
option of the Company in whole or from time to time in part, on any date on or
after the date designated as the Initial Redemption Date on the face hereof,
upon the Company's giving the Trustee at least 45 days' notice, at the
Redemption Price determined as provided on the face hereof. If redeemed prior
to its Stated Maturity, this Note must be presented for payment. The Bearer
Notes will not be subject to any sinking fund.
The Bearer Notes may be redeemed at the option of the Company in whole,
but not in part, at any time on giving not less than 30 or more than 60 days'
notice as set forth below, which notice shall be irrevocable, at their
Redemption Prices, if the Company has or will become obligated to pay additional
interest on the Bearer Notes as described below as a result of any change
8
<PAGE>
in, or amendment to, the laws (or any regulations or rulings promulgated
thereunder) of the United States or any political subdivision or taxing
authority thereof or therein, or any change in the application or official
interpretation of such laws, regulations or rulings, which change or amendment
becomes effective on or after the Original Issue Date, and such obligation
cannot be avoided by the Company taking reasonable measures available to it. No
such notice of redemption shall be given earlier than 90 days prior to the
earliest date on which the Company would be obligated to pay such additional
interest were a payment in respect of the Bearer Notes then due. Prior to the
publication of any notice of redemption pursuant to this paragraph, the Company
shall deliver to the Trustee a certificate stating that the Company is entitled
to effect such redemption and setting forth a statement of facts showing that
the conditions precedent to the right of the Company so to redeem have occurred,
and an opinion of independent counsel to the effect that the Company has or will
become obligated to pay such additional interest as a result of such change or
amendment.
If so specified on the face hereof, this Note will be repayable prior to
its Stated Maturity at the option of the Holder on the Optional Repayment Dates
shown on the face hereof at the Optional Repayment Prices shown on the face
hereof, together with accrued interest to the date of repayment. In order for
this Note to be repaid, the Principal Paying Agent (as specified below) must
receive the Note at least 30 but not more than 45 days prior to an Optional
Repayment Date. Any tender of this Note for repayment shall be irrevocable.
The repayment option may be exercised by the Holder hereof for less than the
entire principal amount hereof, provided that the principal amount of the Note
--------
remaining outstanding after repayment is an authorized denomination. Upon such
partial repayment, this Note shall be cancelled and a new Note or Notes for the
remaining principal amount hereof shall be issued to the Holder of this Note.
Payment of Additional Interest
- ------------------------------
The Company will, subject to the exceptions and limitations set forth
below, pay as additional interest to the Holder of this Note or any Coupon that
is a United States Alien (as defined below) such amounts as may be necessary so
that every net payment on this Note or such Coupon, after deduction or
withholding for or on account of any present or future tax, assessment or other
governmental charge imposed upon or as a result of such payment by the United
States (or any political subdivision or taxing authority thereof or therein),
will not be less than the amount provided in this Note or such Coupon to be then
due and payable. However, the Company will not be required to make any such
payment of additional interest to such Holder for or an account of:
9
<PAGE>
(a) any tax, assessment or other governmental charge that would
not have been imposed but for (i) the existence of any present or former
connection between such Holder (or between a fiduciary, settlor or
beneficiary of, or a Person holding a power over, such Holder, if such
Holder is an estate or a trust, or a member or shareholder of such
Holder, if such Holder is a partnership or a corporation) and the United
States, including, without limitation, such Holder (or such fiduciary,
settlor, beneficiary, Person holding a power, member or shareholder)
being or having been a citizen or resident thereof or being or having
been engaged in trade or business or present therein or having or having
had a permanent establishment therein or (ii) such Holder's past or
present status as a passive foreign investment company, a personal
holding company, foreign personal holding company, a controlled foreign
corporation for United States tax purposes or private foundation or
other tax-exempt organization with respect to the United States or as a
corporation that accumulates earnings to avoid United States federal
income tax;
(b) any estate, inheritance, gift, sales, transfer or personal
property tax or any similar tax, assessment or other governmental
charge;
(c) any tax, assessment or other governmental charge that would
not have been imposed but for the presentation by the Holder of this
Note or such Coupon for payment more than 15 days after the date on
which such payment became due and payable or on which payment thereof
was duly provided for, whichever occurred later;
(d) any tax, assessment or other governmental charge that is
payable otherwise than by deduction or withholding from a payment on
this Note or such Coupon;
(e) any tax, assessment or other governmental charge required to
be deducted or withheld by any Paying Agent from a payment on this Note
or such Coupon, if such payment can be made without such deduction or
withholding by any other Paying Agent;
(f) any tax, assessment or other governmental charge that would
not have been imposed but for a failure to comply with any applicable
certification, documentation, information or other reporting requirement
concerning the nationality, residence, identity or connection with the
United States of the Holder or beneficial owner of this Note or such
Coupon if, without regard to any tax treaty, such compliance is required
by statute or regulation of the United States as a pre-condition to
relief or
10
<PAGE>
exemption from such tax, assessment or other governmental charge; or
(g) any tax, assessment or other governmental charge imposed on a
Holder that actually or constructively owns ten percent or more of the
combined voting power of all classes of stock of the Company (taking
into account applicable attribution of ownership rules under Section
871(h)(3) of the Internal Revenue Code of 1986, as amended) or is a
controlled foreign corporation related to the Company through stock
ownership;
nor shall such additional interest be paid with respect to a payment on this
Note or such Coupon to a Holder that is a fiduciary or partnership or other than
the sole beneficial owner of such payment to the extent a beneficiary or settlor
with respect to such fiduciary or a member of such partnership or a beneficial
owner would not have been entitled to the additional interest had such
beneficiary, settlor, member or beneficial owner been the Holder of this Note or
such Coupon.
The term "United States Alien" means any person who, for United States
federal income tax purposes, is a foreign corporation, a nonresident alien
individual, a nonresident alien fiduciary of a foreign estate or trust, or a
foreign partnership one or more of the members of which is, for United States
federal income tax purposes, a foreign corporation, a nonresident alien
individual or a nonresident alien fiduciary of a foreign estate or trust.
The Company has initially appointed as its Paying Agents for Bearer
Notes of this Series the offices listed below:
Principal Paying Agent:
Bankers Trust Company
1 Appold Street, Broadgate
London, EC2A 2HE
Paying Agent:
Bankers Trust Luxembourg, S.A.
P.O. Box 807
14 Boulevard F.D. Roosevelt
L-2450 Luxembourg
The Company reserves the right at any time to vary or terminate the
appointment of any Paying Agent and to appoint additional or other Paying Agents
and to approve any change in the office through which any Paying Agent acts,
provided that there will at all times be a Paying Agent (which may be the
Trustee) in at least one city in Europe, which, so long as Bearer Notes are
listed on the Luxembourg Stock Exchange and that
11
<PAGE>
exchange shall so require, shall include Luxembourg. Notice of any such
termination or appointment and of any changes in the specified offices of the
Trustee or any Paying Agent will be given to the Holder hereof as described
below.
Unless otherwise specified on the face hereof, if this Note is a
Floating Rate Note, this Note will bear interest from its Original Issue Date to
the first Interest Reset Date (as defined below) at the Initial Interest Rate
set forth on the face hereof. Thereafter, the interest rate hereon for each
Interest Reset Period (as defined below) will be determined by reference to an
interest rate basis (the "Base Rate"), plus or minus the Spread, if any, or
multiplied by the Spread Multiplier, if any. The "Spread" is the number of
basis points (one basis point equals one one-hundredth of a percentage point)
that may be specified on the face hereof, and the "Spread Multiplier" is the
percentage that may be specified on the face hereof. The face of this Note will
designate one of the following Base Rates as applicable hereto: (i) the CD Rate
(a "CD Rate Note"), (ii) the Commercial Paper Rate (a "Commercial Paper Rate
Note"), (iii) the Federal Funds Rate (a "Federal Funds Rate Note"), (iv) LIBOR
(a "LIBOR Note"), (v) the Treasury Rate (a "Treasury Rate Note") or (vi) such
other Base Rate as is set forth on the face hereof. The "Index Maturity" is the
period of maturity of the instrument or obligation from which the Base Rate is
calculated. "H.15(519)" means the publication entitled "Statistical Release
H.15(519), Selected Interest Rates", or any successor publication, published by
the Board of Governors of the Federal Reserve System. "Composite Quotations"
means the daily statistical release entitled "Composite 3:30 p.m. Quotations for
U.S. Government Securities" published by the Federal Reserve Bank of New York.
Unless otherwise specified on the face hereof, the interest payable
hereon shall be the accrued interest from and including the Original Issue Date
or the last date to which interest has been paid, as the case may be, to but
excluding the applicable Interest Payment Date; provided, however, that if the
-------- -------
interest rate is reset daily or weekly, interest payable shall be the accrued
interest from and including the Original Issue Date or the last date to which
interest has been accrued and paid, as the case may be, to but excluding the
date fifteen calendar days immediately preceding the applicable Interest Payment
Date, except that interest payable at Maturity will include interest accrued to
but excluding the date of Maturity. Accrued interest will be calculated by
multiplying the principal amount hereof (or if this Note is an Indexed Principal
Note, the Face Amount specified on the face hereof) by an accrued interest
factor. Such accrued interest factor shall be computed by adding the interest
factors calculated for each day in the period for which accrued interest is
being calculated. The interest factor (expressed as a decimal calculated to
seven decimal places
12
<PAGE>
without rounding) for each such day shall be computed by dividing the interest
rate in effect on such day by 360 if the Base Rate specified on the face hereof
is the CD Rate, the Commercial Paper Rate, the Federal Funds Rate or LIBOR, or
by the actual number of days in the year if the Base Rate specified on the face
hereof is the Treasury Rate. For purposes of making the foregoing calculation,
the interest rate in effect on any Interest Reset Date will be the applicable
rate as reset on such date. Unless otherwise specified on the face hereof, all
percentages resulting from any calculation of the rate of interest hereon will
be rounded, if necessary, to the nearest 1/100,000 of 1% (.0000001), with five
one-millionths of a percentage point rounded upward, and all currency amounts
used in or resulting from such calculation will be rounded to the nearest one-
hundredth of a unit (with .005 of a unit being rounded upward).
As specified on the face hereof, the interest rate hereon will be
reset daily, weekly, monthly, quarterly, semiannually or annually (such period
being the "Interest Reset Period", and the first day of each Interest Reset
Period being an "Interest Reset Date"). Unless otherwise specified on the face
hereof, the Interest Reset Date will be, if this Note resets daily, each
Business Day; if this Note is not a Treasury Rate Note and it resets weekly,
Wednesday of each week; if this Note is a Treasury Rate Note that resets weekly,
Tuesday of each week (except as provided below under "Determination of Treasury
Rate"); if this Note resets monthly, the third Wednesday of each month; if this
Note resets quarterly, the third Wednesday of March, June, September and
December of each year; if this Note resets semiannually, the third Wednesday of
each of two months of each year specified on the face hereof; and if this Note
resets annually, the third Wednesday of one month of each year specified on the
face hereof; provided, however, that in all instances the interest rate in
-------- -------
effect for the ten days immediately prior to Maturity will be that in effect on
the tenth day preceding the date of Maturity. If an Interest Reset Date for
this Note would otherwise be a day that is not a Business Day, such Interest
Reset Date shall be postponed to the next succeeding Business Day, except that
if this Note is a LIBOR Note and such Business Day is in the next succeeding
calendar month, such Interest Reset Date shall be the immediately preceding
Business Day. Notwithstanding the foregoing, the interest rate hereon during
any interest period shall not be greater than the Maximum Interest Rate, if any,
or less than the Minimum Interest Rate, if any, shown on the face hereof. In
addition to any Maximum Interest Rate that may be applicable hereto, the
interest rate hereon during any interest period will in no event be higher than
the maximum rate permitted by applicable law as the same may be modified by
United States law of general application. This Note will be governed by the law
of the State of New York and, under such law, the maximum rate of interest, with
certain exceptions, is 25% per annum on a simple interest basis.
13
<PAGE>
Unless otherwise indicated on the face hereof and except as provided
below, interest will be payable, if this Note resets daily, weekly or monthly,
on the third Wednesday of each month or on the third Wednesday of March, June,
September and December of each year, as specified on the face hereof; if this
Note resets quarterly, on the third Wednesday of March, June, September and
December of each year; if this Note resets semiannually, on the third Wednesday
of each of the two months of each year specified on the face hereof; and if this
Note resets annually, on the third Wednesday of the month of each year specified
on the face hereof (each such day being an "Interest Payment Date"). If any
Interest Payment Date would otherwise be a day that is not a Business Day, such
Interest Payment Date shall be postponed to the next succeeding Business Day,
except that, if the Base Rate specified on the face hereof is LIBOR and such
Business Day is in the next succeeding calendar month, such Interest Payment
Date shall be the immediately preceding Business Day.
The Company will appoint, and enter into an agreement with, an agent
("Calculation Agent") to calculate interest rates on this Note. All
determinations of interest rates by the Calculation Agent shall, in the absence
of manifest error, be conclusive for all purposes and binding on the Holder
hereof. Unless otherwise specified on the face hereof, Bankers Trust Company
shall be the Calculation Agent for this Note. At the request of the Holder
hereof, the Calculation Agent will provide the interest rate then in effect and,
if determined, the interest rate that will become effective on the next Interest
Reset Date. In addition, such information will be communicated to the
Luxembourg Stock Exchange and will be made available at the offices of the
Paying Agent in Luxembourg and at the Luxembourg Stock Exchange.
Subject to applicable provisions of law and except as specified
herein, on each Interest Reset Date the rate of interest hereon shall be the
rate determined in accordance with the provisions under the applicable heading
below.
Determination of CD Rate
- ------------------------
If the Base Rate specified on the face hereof is the CD Rate, this
Note will bear interest for each Interest Reset Period at the interest rate
calculated with reference to the CD Rate and the Spread or Spread Multiplier, if
any, specified on the face hereof. The "CD Rate" for each Interest Reset Period
shall be the rate as of the second Business Day prior to the Interest Reset Date
for such Interest Reset Period (a "CD Rate Determination Date") for negotiable
certificates of deposit having the Index Maturity specified on the face hereof
as published in H.15(519) under the heading "CDs (Secondary Market)". In the
event that such rate is not published prior to
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<PAGE>
3:00 p.m., New York City time, on the Calculation Date (as defined below)
pertaining to such CD Rate Determination Date, then the "CD Rate" for such
Interest Reset Period will be the rate on such CD Rate Determination Date for
negotiable certificates of deposit of the Index Maturity specified on the face
hereof as published in Composite Quotations under the heading "Certificates of
Deposit". If by 3:00 p.m., New York City time, on such Calculation Date such
rate is not yet published in either H.15(519) or Composite Quotations, then the
"CD Rate" for such Interest Reset Period will be calculated by the Calculation
Agent and will be the arithmetic mean of the secondary market offered rates as
of 10:00 a.m., New York City time, on such CD Rate Determination Date, of three
leading nonbank dealers in negotiable U.S. dollar certificates of deposit in The
City of New York selected by the Calculation Agent for negotiable certificates
of deposit of major United States money center banks of the highest credit
standing (in the market for negotiable certificates of deposit) with a remaining
maturity closest to the Index Maturity specified on the face hereof in a
denomination of $5,000,000; provided, however, that if the dealers selected as
-------- -------
aforesaid by the Calculation Agent are not quoting offered rates as mentioned in
this sentence, the "CD Rate" for such Interest Reset Period will be the same as
the CD Rate for the immediately preceding Interest Reset Period (or, if there
was no such Interest Period, the Initial Interest Rate).
The "Calculation Date" pertaining to any CD Rate Determination Date
shall be the tenth calendar day after such CD Rate Determination Date or, if
such day is not a Business Day, the next succeeding Business Day.
Determination of Commercial Paper Rate
- --------------------------------------
If the Base Rate specified on the face hereof is the Commercial Paper
Rate, this Note will bear interest for each Interest Reset Period at the
interest rate calculated with reference to the Commercial Paper Rate and the
Spread or Spread Multiplier, if any, specified on the face hereof. The
"Commercial Paper Rate" for each Interest Reset Period will be determined by the
Calculation Agent as of the second Business Day prior to the Interest Reset Date
for such Interest Reset Period (a "Commercial Paper Rate Determination Date")
and shall be the Money Market Yield (as defined below) on such Commercial Paper
Rate Determination Date of the rate for commercial paper having the Index
Maturity specified on the face hereof, as such rate shall be published in
H.15(519) under the heading "Commercial Paper". In the event that such rate is
not published prior to 3:00 p.m., New York City time, on the Calculation Date
(as defined below) pertaining to such Commercial Paper Rate Determination Date,
then the "Commercial Paper Rate" for such Interest Reset Period shall be the
Money Market Yield on such Commercial Paper Rate Determination Date of the rate
for
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<PAGE>
commercial paper of the Index Maturity specified on the face hereof as published
in Composite Quotations under the heading "Commercial Paper". If by 3:00 p.m.,
New York City time, on such Calculation Date such rate is not yet published in
either H.15(519) or Composite Quotations, then the "Commercial Paper Rate" for
such Interest Reset Period shall be the Money Market Yield of the arithmetic
mean of the offered rates, as of 11:00 a.m., New York City time, on such
Commercial Paper Rate Determination Date of three leading dealers of commercial
paper in The City of New York selected by the Calculation Agent for commercial
paper of the Index Maturity specified on the face hereof placed for an
industrial issuer whose bonds are rated "AA" or the equivalent thereof by a
nationally recognized rating agency; provided, however, that if the dealers
-------- -------
selected as aforesaid by the Calculation Agent are not quoting offered rates as
mentioned in this sentence, the "Commercial Paper Rate" for such Interest Reset
Period will be the same as the Commercial Paper Rate for the immediately
preceding Interest Reset Period (or, if there was no such Interest Reset Period,
the Initial Interest Rate).
"Money Market Yield" shall be a yield calculated in accordance with
the following formula:
Money Market Yield = D x 360 x 100
---------------
360 - (D x M)
where "D" refers to the applicable per annum rate for commercial paper quoted on
a bank discount basis and expressed as a decimal, and "M" refers to the actual
number of days in the Index Maturity specified on the face hereof.
The "Calculation Date" pertaining to any Commercial Paper Rate
Determination Date shall be the tenth calendar day after such Commercial Paper
Rate Determination Date or, if such day is not a Business Day, the next
succeeding Business Day.
Determination of Federal Funds Rate
- -----------------------------------
If the Base Rate specified on the face hereof is the Federal Funds
Rate, this Note will bear interest for each Interest Reset Period at the
interest rate calculated with reference to the Federal Funds Rate and the Spread
or Spread Multiplier, if any, specified on the face hereof. The "Federal Funds
Rate" for each Interest Reset Period shall be the effective rate on the Interest
Reset Date for such Interest Reset Period (a "Federal Funds Rate Determination
Date") for Federal Funds as published in H.15(519) under the heading "Federal
Funds (Effective)". In the event that such rate is not published prior to 3:00
p.m., New York City time, on the Calculation Date (as defined below) pertaining
to such Federal Funds Rate Determination Date, the "Federal Funds Rate" for such
Interest
16
<PAGE>
Reset Period shall be the rate on such Federal Funds Rate Determination Date as
published in Composite Quotations under the heading "Federal Funds/Effective
Rate". If by 3:00 p.m., New York City time, on such Calculation Date such rate
is not yet published in either H.15(519) or Composite Quotations, then the
"Federal Funds Rate" for such Interest Reset Period shall be the rate on such
Federal Funds Rate Determination Date made publicly available by the Federal
Reserve Bank of New York which is equivalent to the rate which appears in
H.15(519) under the heading "Federal Funds (Effective)"; provided, however, that
-------- -------
if such rate is not made publicly available by the Federal Reserve Bank of New
York by 3:00 p.m., New York City time, on such Calculation Date, then the
"Federal Funds Rate" for such Interest Reset Period will be the same as the
Federal Funds Rate in effect for the immediately preceding Interest Reset Period
(or, if there was no such Interest Reset Period, the Initial Interest Rate). If
this Note resets daily, the interest rate hereon for the period from and
including a Monday to but excluding the succeeding Monday will be reset by the
Calculation Agent on such second Monday (or, if not a Business Day, on the next
succeeding Business Day) to a rate equal to the average of the Federal Funds
Rates in effect with respect to each such day in such week.
The "Calculation Date" pertaining to any Federal Funds Rate
Determination Date shall be the next succeeding Business Day.
Determination of LIBOR
- ----------------------
If the Base Rate specified on the face hereof is LIBOR, this Note will
bear interest for each Interest Reset Period at the interest rate calculated
with reference to LIBOR and the Spread or Spread Multiplier, if any, specified
on the face hereof. "LIBOR" for each Interest Reset Period will be determined
by the Calculation Agent as follows:
(i) On the second London Banking Day prior to the Interest Reset
Date for such Interest Reset Period (a "LIBOR Determination Date"), the
Calculation Agent for such LIBOR Note will determine the arithmetic mean
of the offered rates for deposits in the Specified Currency for the
period of the Index Maturity specified in the applicable Pricing
Supplement, commencing on such Interest Reset Date, which appear on the
Designated LIBOR Page at approximately 11:00 a.m., London time, on such
LIBOR Determination Date. "Designated LIBOR Page" means either (a) if
"LIBOR Telerate" is designated in the applicable Pricing Supplement, the
display designated as page "3750" on the Dow Jones Telerate Service (or
such other page as may replace page "3750" on such service or such other
service as may be nominated by the British Bankers'
17
<PAGE>
Association for the purpose of displaying the London interbank offered
rates of major banks) or (b) if "LIBOR Reuters" is designated in the
applicable Pricing Supplement, the display designated as page "LIBO" on
the Reuters Monitor Money Rates Service (or such other page as may
replace the LIBO page on such service or such other service as may be
nominated by the British Bankers' Association for the purpose of
displaying London interbank offered rates of major banks). If neither
LIBOR Reuters nor LIBOR Telerate is specified in the applicable Pricing
Supplement, LIBOR will be determined as if LIBOR Telerate had been
specified. It at least two such offered rates appear on the Designated
LIBOR Page, "LIBOR" for such Interest Reset Period will be the
arithmetic mean of such offered rates as determined by the Calculation
Agent for such LIBOR Note.
(ii) If fewer than two offered rates appear on the Designated
LIBOR Page on such LIBOR Determination Date, the Calculation Agent will
request the principal London offices of each of four major banks in the
London interbank market selected by the Calculation Agent to provide the
Calculation Agent with its offered quotations for deposits in the
Specified Currency for the period of the Index Maturity specified on the
face hereof, commencing on such Interest Reset Date, to prime banks in
the London interbank market at approximately 11:00 a.m., London time, on
such LIBOR Determination Date and in a principal amount equal to an
amount of not less than U.S.$1,000,000 or the approximate equivalent
thereof in the Specified Currency that is representative of a single
transaction in such market at such time. If at least two such
quotations are provided, "LIBOR" for such Interest Reset Period will be
the arithmetic mean of such quotations. If fewer than two such
quotations are provided, "LIBOR" for such Interest Reset Period will be
the arithmetic mean of rates quoted by three major banks in The City of
New York selected by the Calculation Agent at approximately 11:00 a.m.,
New York City time, on such LIBOR Determination Date for loans in the
Specified Currency to leading European banks, for the period of the
Index Maturity specified on the face hereof, commencing on such Interest
Reset Date, and in a principal amount equal to an amount of not less
than U.S.$1,000,000 or the approximate equivalent thereof in the
Specified Currency that is representative of a single transaction in
such market at such time; provided, however, that if fewer than three
-------- -------
banks selected as aforesaid by the Calculation Agent are quoting rates
as mentioned in this sentence, "LIBOR" for such Interest Reset Period
will be the same as LIBOR for the immediately preceding Interest Reset
Period (or,
18
<PAGE>
if there was no such Interest Reset Period, the Initial Interest Rate).
Determination of Treasury Rate
- ------------------------------
If the Base Rate specified on the face hereof is the Treasury Rate,
this Note will bear interest for each Interest Reset Period at the interest rate
calculated with reference to the Treasury Rate and the Spread or Spread
Multiplier, if any, specified on the face hereof. The "Treasury Rate" for each
Interest Reset Period will be the rate for the auction held on the Treasury Rate
Determination Date (as defined below) for such Interest Reset Period of direct
obligations of the United States ("Treasury bills") having the Index Maturity
specified on the face hereof, as such rate shall be published in H.15(519) under
the heading "U.S. Government Securities-Treasury bills-auction average
(investment)" or, in the event that such rate is not published prior to 3:00
p.m., New York City time, on the Calculation Date (as defined below) pertaining
to such Treasury Rate Determination Date, the auction average rate (expressed as
a bond equivalent on the basis of a year of 365 or 366 days, as applicable, and
applied on a daily basis) on such Treasury Rate Determination Date as otherwise
announced by the United States Department of the Treasury. In the event that
the results of the auction of Treasury bills having the Index Maturity specified
on the face hereof are not published or reported as provided above by 3:00 p.m.,
New York City time, on such Calculation Date, or if no such auction is held on
such Treasury Rate Determination Date, then the "Treasury Rate" for such
Interest Reset Period shall be calculated by the Calculation Agent and shall be
a yield to maturity (expressed as a bond equivalent on the basis of a year of
365 or 366 days, as applicable, and applied on a daily basis) of the arithmetic
mean of the secondary market bid rates, as of approximately 3:30 p.m., New York
City time, on such Treasury Rate Determination Date, of three leading primary
United States government securities dealers selected by the Calculation Agent
for the issue of Treasury bills with a remaining maturity closest to the Index
Maturity specified on the face hereof; provided, however, that if the dealers
-------- -------
selected as aforesaid by the Calculation Agent are not quoting bid rates as
mentioned in this sentence, then the "Treasury Rate" for such Interest Reset
Period will be the same as the Treasury Rate for the immediately preceding
Interest Reset Period (or, if there was no such Interest Reset Period, the
Initial Interest Rate).
The "Treasury Rate Determination Date" for each Interest Reset Period
will be the day of the week in which the Interest Reset Date for such Interest
Reset Period falls on which Treasury bills would normally be auctioned.
Treasury bills are normally sold at auction on Monday of each week, unless that
day is a legal holiday, in which case the auction is normally held on the
following Tuesday, except that such auction may be held on
19
<PAGE>
the preceding Friday. If, as the result of a legal holiday, an auction is so
held on the preceding Friday, such Friday will be the Treasury Rate
Determination Date pertaining to the Interest Reset Period commencing in the
next succeeding week. If an auction date shall fall on any day that would
otherwise be an Interest Reset Date for a Treasury Rate Note, then such Interest
Reset Date shall instead be the Business Day immediately following such auction
date.
If "Constant Maturity" is specified in the applicable Pricing
Supplement, the "Treasury Rate" for each Interest Reset Period will be the rate
that is set forth in the Federal Reserve Board publication H.15(519) opposite
the caption "U.S. Government/Securities/Treasury Constant Maturities/" in the
Index Maturity with respect to the applicable Constant Maturity Treasury Rate
Determination Date (as defined below). If the H.15(519) is not published, the
"Constant Maturity -- Treasury Rate" shall be the rate that was set forth on
Telerate Page 7055, or its successor page (as determined by the Calculation
Agent), on the applicable Constant Maturity Treasury Rate Determination Date
opposite the applicable Index Maturity. If no such rate is set forth, then the
constant Maturity Treasury Rate for such Interest Reset Period shall be
established by the Calculation Agent as follows. The Calculation Agent will
contact the Federal Reserve Board and request the Constant Maturity Treasury
Rate, in the applicable Index Maturity, for the Constant Maturity Treasury Rate
Determination Date.If the Federal Reserve Board does not provide such
information, then the Constant Maturity Treasury Rate for such Interest Reset
Date will be the arithmetic mean of bid-side quotations, expressed in terms of
yield, reported by three leading U.S. government securities dealers (one of
which may be Salomon Brothers Inc), according to their written records, as of
3:00 p.m. (New York City time) on the Constant Maturity Treasury rate
Determination Date, for the noncallable U.S. Treasury Note that is nearest in
maturity to the Index Maturity, but not less than exactly the Index Maturity and
for the noncallable U.S. Treasury Note that is nearest in maturity to the Index
Maturity, but not more than exactly the Index Maturity. The Calculation Agent
shall calculate the Constant Maturity Treasury Rate by interpolating to the
Index Maturity based on an actual/actual date count basis, the yield on the two
Treasury Notes selected. If the Calculation Agent cannot obtain three such
adjusted quotations, the Constant Maturity Treasury Rate for such Interest Reset
Date will be the arithmetic mean of all such quotations, or if only one such
quotation is obtained, such quotation, obtained by the Calculation Agent. In all
events, the Calculation Agent shall continue polling dealers until at least one
adjusted yield quotation can be determined.
"The Constant Maturity Treasury Rate Determination Date" shall be the
tenth Business Day prior to the Interest Reset Date for the applicable Interest
Reset Period.
20
<PAGE>
The "Calculation Date" pertaining to any Treasury Rate Determination
Date or Constant Maturity Rate Determination Date, as applicable, shall be the
tenth calendar day after such Treasury Rate Determination Date or Constant
Maturity Rate Determination Date, as applicable, or, if such a day is not a
Business Day, the next succeeding Business Day.
If this note is an Indexed Note, then certain or all interest
payments, in the case of an Indexed Rate Note, and/or the principal amount
payable at Stated Maturity or earlier redemption or retirement, in the case of
an Indexed Principal Note, is determined by reference to the amount designated
on the face hereof as the Face Amount of this Note and by reference to the Index
as described on the face hereof. If this Note is a Floating Rate Note or Indexed
Rate Note that is also an Indexed Principal Note, the amount of any interest
payment will be determined by reference to the Face Amount described on the face
hereof unless otherwise specified. If this Note is an Indexed Principal Note,
the principal amount payable at Stated Maturity or any earlier redemption or
repayment of this Note may be different from the Face Amount. If the
determination of the Index is calculated or announced by a third party, which
may be Salomon Brothers Inc or another affiliate of the Company, and such third
party either suspends the calculation or announcement of such Index or changes
the basis upon which such Index is calculated (other than changes consistent
with policies in effect at the time this Note was issued and permitted changes
described on the face hereof), then such Index shall be calculated for this
Note's purposes by another third party, which may be Salomon Brothers Inc or
another affiliate of the Company, selected by the Company subject to the same
conditions and controls as applied to the original third party. If for any
reason such Index cannot be calculated on the same basis and subject to the same
conditions and controls as applied to the original third party, then the indexed
interest payments, if any, or any indexed principal amount of this Note shall be
calculated in the manner described on the face hereof. Any determination of
such third party shall in the absence of manifest error be binding on all
parties.
Payment in Currencies Other Than the Specified Currency
- -------------------------------------------------------
Except as set forth below with respect to payments in ECU, if payment
in respect of this Note or any Coupon is required to be made in a specified
currency other than U.S. dollars (a "Specified Currency") and such currency is
unavailable due to the imposition of exchange controls or other circumstances
beyond the Company's control or is no longer used by the government of the
country issuing such currency or for the settlement of transactions by public
institutions of or within the international banking community, then all payments
shall be made in U.S. dollars until such currency is again available or so used.
The amounts so payable on any date in such currency shall
21
<PAGE>
be converted into U.S. dollars on the basis of the most recently available
Market Exchange Rate for such currency or as otherwise indicated on the face
hereof. Any payment made under such circumstances in U.S. dollars will not
constitute an Event of Default under the Indenture.
If payment in respect of this Note or any Coupon is required to be
made in ECU and the ECU is not then used in the European Monetary System (the
"EMS"), then the Trustee shall, without liability on its part, choose a
component currency (the "Payment Currency") of the ECU in which all payments in
respect hereof shall be made until the ECU is again so used. The amount of each
payment in such Payment Currency shall be computed on the basis of the
equivalent of the ECU in that currency, determined as described below, as of the
fourth Luxembourg business day prior to the date on which such payment is due.
Notice of the Payment Currency selected by the Trustee shall be given as
described below. Any payment made under such circumstances in the Payment
Currency will not constitute an Event of Default under the Indenture.
Notwithstanding the foregoing, on the first Luxembourg business day on
which the ECU is no longer used in the EMS, the Trustee shall, without liability
on its part, choose a Payment Currency in which all payments with respect to
Bearer Notes and Coupons denominated in ECU having a due date prior thereto but
not yet presented for payment are to be made. The amount of each payment in
such Payment Currency shall be computed on the basis of the equivalent of the
ECU in that currency, determined as described below, as of such first Luxembourg
business day. Any payment made under such circumstances in the Payment Currency
will not constitute an Event of Default under the Indenture.
The equivalent of the ECU in the relevant Payment Currency as of any
date (the "Day of Valuation") shall be determined by the Luxembourg Stock
Exchange on the following basis. The component currencies of the ECU for this
purpose (the "Components") shall be the currency amounts that were components of
the ECU when the ECU was most recently used in the EMS or for the settlement of
transactions by public institutions of or within the European Community. The
equivalent of the ECU in the Payment Currency shall be calculated by, first,
aggregating the U.S. dollar equivalents of the Components, and then, using the
rate used for determining the U.S. dollar equivalents of the Components in the
Payment Currency as set forth below, calculating the equivalent in the Payment
Currency of such aggregate amount in U.S. dollars.
The U.S. dollar equivalent of each of the Components shall be
determined by the Luxembourg Stock Exchange on the basis of the middle spot
delivery quotations prevailing at 2:30 p.m.
22
<PAGE>
Luxembourg time on the Day of Valuation, as obtained by the Luxembourg Stock
Exchange from one or more major banks, selected by the Trustee (with the
approval of the Company) in the country of issue of the Component in question.
If the official unit of any component currency of the ECU is altered
by way of combination or subdivision, the number of units of that currency as a
Component shall be divided or multiplied in the same proportion. If two or more
component currencies are consolidated into a single currency, the amounts of
those currencies as Components shall be replaced by an amount in such single
currency equal to the sum of the amounts of the consolidated component
currencies expressed in such single currency. If any component currency is
divided into two or more currencies, the amount of that currency as a Component
shall be replaced by amounts of such two or more currencies, each of which shall
be equal to the amount of the former component currency divided by the number of
currencies into which that currency was divided.
If no direct quotations are available for a Component on a Day of
Valuation from any of the banks selected by the Trustee (with the approval of
the Company) for this purpose, because foreign exchange markets are closed in
the country of issue of that Component, or for any other reason, in computing
the U.S. dollar equivalent of such Component the Luxembourg Stock Exchange shall
(except as provided below) use the most recent direct quotations for such
Component obtained by it; provided that such most recent quotations may be used
--------
only if they were prevailing in the country of issue not more than two
Luxembourg business days before such Day of Valuation. Beyond such period of
two Luxembourg business days, the Luxembourg Stock Exchange shall determine the
U.S. dollar equivalent of such Component on the basis of cross rates derived
from the middle spot delivery quotations for such Component and for the U.S.
dollar prevailing at 2:30 p.m. Luxembourg time on such Day of Valuation, as
obtained by the Luxembourg Stock Exchange from one or more major banks, selected
by the Trustee (with the approval of the Company) in a country other than the
country of issue of such Component. Notwithstanding the foregoing, within such
period of two Luxembourg business days, the Luxembourg Stock Exchange shall
determine the U.S. dollar equivalent of such Component on the basis of such
cross rates if the Trustee and the Company judge that the equivalent so
calculated is more representative than the U.S. dollar equivalent calculated on
the basis of such most recent direct quotations. Unless otherwise specified by
the Trustee, if there is more than one market for dealing in any component
currency by reason of foreign exchange regulations or for any other reason, the
market to be referred to in respect of such currency shall be that upon which a
nonresident issuer of securities denominated in such currency would purchase
such currency in order to make payments in respect of such securities.
23
<PAGE>
All determinations referred to above made by the Trustee or the
Luxembourg Stock Exchange shall be at their respective sole discretion (except
to the extent expressly provided herein that any determination made by the
Trustee is subject to the approval of the Company) and shall, in the absence of
manifest error, be conclusive for all purposes and binding on Holders of the
Bearer Notes and any Coupons, and the Trustee shall have no liability therefor.
If an Event of Default with respect to the Notes shall have occurred
and be continuing, the principal of all Notes may be declared due and payable in
the manner and with the effect provided in the Indenture.
If this Note is a Discount Note, the amount payable in the event of
redemption or repayment prior to its Stated Maturity, shall be the Amortized
Face Amount of this Note as of the date of redemption or the date of repayment,
as the case may be. The "Amortized Face Amount" of this Note shall be the
amount equal to (a) the Issue Price (set forth on the face hereof) plus (b) that
portion of the difference between the Issue Price and the principal amount
hereof that has accrued at the Yield to Maturity (set forth on the face hereof)
(computed in accordance with generally accepted United States bond yield
computation principles) by such date of redemption or repayment, but in no event
shall the Amortized Face Amount of this Note exceed its principal amount.
As provided in the Indenture and subject to certain limitations
therein set forth, this Note is exchangeable for a like aggregate principal
amount of Bearer Notes of different authorized denominations, as requested by
the Person surrendering the same.
No service charge shall be made for any such exchange, but the Company
may require payment of a sum sufficient to cover any tax or other governmental
charge payable in connection therewith.
In case this Note or any Coupon shall at any time become mutilated,
destroyed, stolen or lost, it may be replaced at the specified office of the
Principal Paying Agent in London; or, so long as the Bearer Notes are listed on
the Luxembourg Stock Exchange, at the specified office of the Paying Agent in
Luxembourg, upon payment by the claimant of such expenses as may be incurred in
connection therewith and, in the case of destruction, theft or loss, on such
terms as to evidence and indemnity as the Company or the Trustee may reasonably
require. Mutilated or defaced Bearer Notes or Coupons must be surrendered
before replacements will be issued.
24
<PAGE>
The Indenture permits, with certain exceptions as therein provided,
the amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Holders of the Debt Securities of each series to
be affected under the Indenture at any time by the Company and the Trustee with
the consent of the Holders of not less than a majority in aggregate principal
amount of the Debt Securities at the time Outstanding of each series to be
affected. The Indenture also contains provisions permitting the Holders of
specified percentages in aggregate principal amount of the Debt Securities of
any series at the time Outstanding, on behalf of the Holders of all the Debt
Securities of such series, to waive compliance by the Company with certain
provisions of the Indenture and certain past defaults under the Indenture and
their consequences. Any such consent or waiver by the Holder of this Debt
Security shall be conclusive and binding upon such Holder and upon all future
Holders of this Debt Security and of any Debt Security issued upon the
registration of transfer hereof or in exchange herefor or in lieu hereof,
whether or not notation of such consent or waiver is made upon this Debt
Security.
Holders of Debt Securities of this series may not enforce their rights
pursuant to the Indenture or such Debt Securities except as provided in the
Indenture. No reference herein to the Indenture and no provision of this Note
or of the Indenture shall alter or impair the obligation of the Company, which
is absolute and unconditional, to pay the principal of (and premium, if any) and
interest on this Note at the times, place and rate, and in the coin or currency,
herein prescribed.
The Company may, without the consent of the Holders of the Notes,
consolidate with, merge into, or transfer substantially all of its assets to, a
corporation that is a U.S. Person, provided that the successor corporation
assumes all obligations of the Company under the Notes and certain other
conditions are met, including a waiver by the successor corporation of any right
to redeem the Notes under circumstances in which the successor corporation would
be entitled to redeem the Notes but the Company would not have been entitled to
do so.
Except as provided above, the obligation to pay the principal hereof
(and premium, if any) and interest hereon in the designated currency of payment
is of the essence. To the fullest extent possible under applicable law,
judgments in respect of this Note shall be given in such currency. The
obligation of the Company to make such payments in the designated currency of
payment shall, notwithstanding any payment in any other currency (whether
pursuant to a judgment or otherwise), be discharged only to the extent of the
amount in the designated currency of payment that the Holder of this Note may,
in accordance with normal banking procedures, purchase with the sum paid in such
other currency (after any premium and cost of exchange) on the business
25
<PAGE>
day in the country of issue of the designated currency of payment or in the
international banking community (in the case of a composite currency)
immediately following the day on which such Holder receives such payment. If
the amount in the designated currency of payment that may be so purchased is for
any reason less than the amount originally due, the Company shall, as a separate
and independent obligation, pay such additional amounts in the designated
currency of payment as may be necessary to compensate for any such shortfall.
All notices to Holders of this Note will be deemed to have been duly
given if published on two separate Business Days in a leading London daily
newspaper (which is expected to be the Financial Times) and, so long as the
---------------
Bearer Notes are listed on the Luxembourg Stock Exchange and such exchange so
requires, in Luxembourg in a newspaper of general circulation in Luxembourg
(which is expected to be the Luxemburger Wort). Such notices shall be deemed to
----------- ----
have been given on the date of the first such publication.
If the Specified Currency of this Note is Pounds sterling, the
following applies: The Company is not an institution authorised under the
Banking Act 1987 of the United Kingdom, and this Note is a medium-term note
issued in accordance with regulations made under Section 4 of the Banking Act
1987. The Company represents that as of the date of issuance of this Note, (1)
the Company is in compliance with its listing obligations to The International
Stock Exchange of the United Kingdom and the Republic of Ireland Limited in
connection with the Company's securities that are listed on such Exchange; and
(2) since information was last published in compliance with such listing
obligations, the Company, having made all reasonable enquiries, has not become
aware of any change in circumstances which could reasonably be regarded as
significantly and adversely affecting its ability to meet its obligations on
this Note as they fall due. Repayment of principal and payment of interest and
any premium on this Note have not been guaranteed by any person.
This Note shall be deemed to be a contract made and to be performed
solely in the State of New York, and for all purposes shall be governed by, and
construed in accordance with, the laws of said State without regard to the
conflicts of law rules of said State.
All terms used in this Note that are defined in the Indenture shall
have the meanings assigned to them in the Indenture.
26
<PAGE>
FORM OF SERIES D PERMANENT GLOBAL FIXED RATE NOTE
BEARER PRINCIPAL AMOUNT
No. FX-________ OR FACE AMOUNT
SALOMON INC
PERMANENT GLOBAL NOTE
(FIXED RATE)
representing
MEDIUM-TERM NOTE, SERIES D
Due More Than Nine Months from Date of Issue
THIS SECURITY IS A PERMANENT GLOBAL NOTE, WITHOUT COUPONS, EXCHANGEABLE FOR
INDIVIDUAL BEARER NOTES, WITH COUPONS, IF ANY, IN THE DENOMINATION OF U.S. $
25,000 OR ANY LARGER AMOUNT THAT IS AN INTEGRAL MULTIPLE OF U.S. $5,000 (OR SUCH
OTHER DENOMINATIONS AS ARE SPECIFIED BELOW FOR ANOTHER CURRENCY). THE RIGHTS
ATTACHING TO THIS NOTE AND THE CONDITIONS AND PROCEDURES GOVERNING ITS EXCHANGE
FOR INDIVIDUAL BEARER NOTES ARE AS SPECIFIED IN THE INDENTURE (AS DEFINED
HEREIN).
UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR THE INDIVIDUAL
BEARER NOTES REPRESENTED HEREBY, THIS GLOBAL SECURITY MAY NOT BE TRANSFERRED
EXCEPT AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A
NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY
OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE
OF SUCH SUCCESSOR DEPOSITARY.
ANY UNITED STATES PERSON WHO HOLDS THIS OBLIGATION WILL BE SUBJECT TO
LIMITATIONS UNDER THE UNIED STATES INCOME TAX LAWS, INCLUDING THE LIMITATIONS
PROVIDED IN SECTIONS 165(j) AND 1287(a) OF THE INTERNAL REVENUE CODE.
IF APPLICABLE, THE "TOTAL AMOUNT OF OID" AND "YIELD TO MATURITY" SET FORTH
BELOW WILL BE COMPLETED SOLELY FOR THE PURPOSES OF APPLYING THE FEDERAL INCOME
TAX ORIGINAL ISSUE DISCOUNT ("OID") RULES.
<PAGE>
Issue Price: Original Issue Date:
Specified Currency:
(if other than U.S. Dollars)
Authorized Denominations:
(If other than as set forth in the
Prospectus Supplement)
Interest Payment Dates:
(If other than as set forth in the
Prospectus Supplement)
Indexed Principal Note: [ ] Yes (see attached) [ ] No
Interest Rate: Stated Maturity:
Interest Rate Reset: [ ] The Interest Rate may not be changed
prior to Stated Maturity.
[ ] The Interest Rate may be changed
prior to Stated Maturity (see
attached).
Optional Reset Dates (if applicable)
Amortizing Note: [ ] Yes [ ] No
Amortization Schedule:
Optional Redemption: [ ] Yes [ ] No
Optional Redemption Dates:
Redemption Prices:
Optional Repayment: [ ] Yes [ ] No
Optional Repayment Dates:
Optional Repayment Prices:
Discount Note: [ ] Yes [ ] No
Total Amount of OID:
Yield to Maturity:
2
<PAGE>
IF THE SPECIFIED CURRENCY OF THIS NOTE IS POUNDS STERLING, THE FOLLOWING
APPLIES: THIS NOTE IS ISSUED IN ACCORDANCE WITH THE REGULATIONS MADE UNDER
SECTION 4 OF THE BANKING ACT 1987.
3
<PAGE>
SALOMON INC, a corporation duly organized and existing under the
laws of the State of Delaware (the "Company"), for value received, hereby
promises to pay to bearer, upon presentation and surrender hereof, (a) the
Principal Amount or, in the case of an Indexed Principal Note, the Face
Amount adjusted by reference to prices, changes in prices, or differences
between prices, of securities, currencies, intangibles, goods, articles or
commodities or by such other objective price, economic or other measures (an
"Index") as described on the face hereof, in the Specified Currency on the
Stated Maturity shown above or earlier and to the extent so provided herein,
and (b) to pay accrued interest on the Principal Amount then outstanding (or
in the case of an Indexed Principal Note, the Face Amount then outstanding,
to the bearer hereof at the Interest Rate shown above, annually in arrears on
September 15 of each year (the "Interest Payment Date"), commencing with the
September 15 following the Original Issue Date shown above upon presentation
and surrender of the Coupons as they shall severally mature, and on the
Stated Maturity shown above, or upon earlier redemption or repayment, until,
in either case, the Principal Amount then outstanding or the Face Amount is
paid or duly provided for in accordance with the terms hereof. Interest on
this Note, if any, will be computed on the basis of a 360-day year of twelve
30-day months. Any payment of principal, premium or interest required to be
made in respect hereof on a date that is not a Business Day (as defined
below) need not be made on such date, but may be made on the next succeeding
Business Day with the same force and effect as if made on such date, and no
additional interest shall accrue as a result of such delayed payment.
For purposes of this Note, "Business Day" means any day, other than
a Saturday or Sunday, that is not a day on which banking institutions are
authorized or required by law or regulation to be closed in (a) The City of
New York, (b) London, England, (c) the place in which this Note or any Coupon
is presented for payment or (d) if the Specified Currency (as defined below)
is other than U.S. dollars, the financial center of the country issuing the
Specified Currency (which, in the case of European Currency Units ("ECU"),
shall be Brussels, Belgium).
If this Note is an Amortizing Note as shown on the face hereof, a
portion or all the principal amount of the Note is payable prior to Stated
Maturity in accordance with a schedule, by application of a formula, or by
reference to an index (as described above).
This Note is exchangeable in whole or from time to time in part
without charge for individual Bearer Notes, with appropriate Coupons
attached, in the denomination of U.S.$25,000 or any larger amount that is an
integral multiple
4
<PAGE>
of U.S.$5,000 (or such other denominations as are specified above for another
currency), upon 30 days' notice to the Trustee given through either Euro-
clear or CEDEL. Upon any exchange of any portion of this Note for individual
Bearer Notes, the portion of the principal amount hereof so exchanged shall
be endorsed by the Trustee in the Schedule of Issuances, Exchanges and
Aggregate Principal Amount hereto, and the principal amount hereof shall be
reduced for all purposes by the amount so exchanged.
Except as otherwise provided herein or in the Indenture, until
exchanged in full for individual Bearer Notes, this Note shall in all
respects be entitled to the same benefits and subject to the same terms and
conditions of, and the Company shall be subject to the same restrictions as
those contained on the individual Bearer Notes and in the Indenture.
Except under certain circumstances for Notes having Specified
Currencies other than U.S. dollars, payments of the principal hereof and any
premium and interest hereon will be made only in the Specified Currency.
Payments in respect of this Note and any Coupon will be made only against
surrender of this Note or such Coupon, at the offices of the Paying Agents
outside the United States listed on the reverse hereof. At the direction of
the Holder of this Note or any Coupon, and subject to applicable laws and
regulations, such payments will be made by check drawn on a bank in The City
of New York (in the case of U.S. dollar payments) or outside the United
States (in the case of payments in a currency other than U.S. dollars) mailed
to an address outside the United States furnished by the Holder hereof or, at
the option of the Holder hereof, by wire transfer (pursuant to written
instructions supplied by the Holder hereof) to an account maintained by the
payee with a bank located outside the United States. No payment in respect
of this Note or any Coupon will be made upon presentation of this Note or
such Coupon at any office or agency of the Trustee or any other paying agency
maintained by the Company in the United States, nor will any such payment be
made by transfer to an account, or by mail to an address, in the United
States. Notwithstanding the foregoing, if U.S. dollar payments in respect of
this Note or any Coupons at the offices of all Paying Agents outside the
United States become illegal or are effectively precluded because of the
imposition of exchange controls or similar restrictions on the full payment
or receipt of such amounts in U.S. dollars, the Company will appoint an
office or agency (which may be the Trustee) in the United States at which
such payments may be made.
REFERENCE IS HEREBY MADE TO THE FURTHER PROVISIONS OF THIS NOTE SET
FORTH ON THE REVERSE HEREOF, AND SUCH FURTHER PROVISIONS SHALL FOR ALL
PURPOSES HAVE THE SAME EFFECT AS THOUGH FULLY SET FORTH IN THIS PLACE.
5
<PAGE>
This Note shall not become valid or obligatory for any purpose
unless and until this Note has been authenticated by Citibank, N.A., or its
successor, as Trustee.
6
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Note to be executed
under its corporate seal.
Dated:
SALOMON INC
By_____________________________________
Chairman of the Board of Directors,
President and Chief Executive Officer
[seal]
Attest_________________________________
Secretary
CERTIFICATE OF AUTHENTICATION
This is one of the Notes issued under the within-mentioned
Indenture.
CITIBANK, N.A.
as Trustee
By_____________________________________
Authorized Signatory
7
<PAGE>
SALOMON INC
MEDIUM-TERM NOTE, SERIES D
(FIXED RATE)
General
-------
This Note is one of a series of duly authorized debt securities of
the Company (the "Debt Securities") issued or to be issued in one or more
series under an indenture dated as of December 1, 1988 (the "Indenture")
between the Company and Citibank, N.A., as trustee (the "Trustee", which term
includes any successor Trustee under the Indenture), to which Indenture and
all indentures supplemental thereto reference is hereby made for a statement
of the respective rights, limitations of rights, duties and immunities
thereunder of the Company, the Trustee and the Holders of the Debt Securities
and of the terms upon which the Debt Securities are, and are to be,
authenticated and delivered. The U.S. dollar equivalent of the public
offering price or purchase price of Notes denominated in currencies other
than U.S. dollars will be determined by the Company or its agent, on the
basis of the noon buying rate in New York City for cable transfers in foreign
currencies as certified for customs purposes by the Federal Reserve Bank of
New York (the "Market Exchange Rate") for such currencies on the applicable
issue dates.
Unless otherwise specified on the face hereof, the authorized
denominations of Bearer Notes denominated in U.S. dollars will be U.S.$25,000
and any larger amount that is an integral multiple of U.S.$5,000. The
authorized denominations of Bearer Notes having a specified currency other
than U.S. dollars will be, unless otherwise specified herein, the approximate
equivalents thereof in the Specified Currency.
If so specified on the face hereof, this Note will be redeemable at
the option of the Company in whole or from time to time in part, on any date
on or after the date designated as the Initial Redemption Date on the face
hereof, upon the Company's giving the Trustee at least 45 days' notice, at
the Redemption Price determined as provided on the face hereof. If redeemed
prior to its Stated Maturity, this Note must be presented for payment. The
Bearer Notes will not be subject to any sinking fund.
The Bearer Notes may be redeemed at the option of the Company in
whole, but not in part, at any time on giving at least 30 but not more than
60 days' notice as set forth below, which notice shall be irrevocable, at
their Redemption Prices, if the Company has or will become obligated to pay
8
<PAGE>
additional interest on the Bearer Notes as described below as a result of any
change in, or amendment to, the laws (or any regulations or rulings
promulgated thereunder) of the United States or any political subdivision or
taxing authority thereof or therein, or any change in the application or
official interpretation of such laws, regulations or rulings, which change or
amendment becomes effective on or after the Original Issue Date, and such
obligation cannot be avoided by the Company taking reasonable measures
available to it. No such notice of redemption shall be given earlier than 90
days prior to the earliest date on which the Company would be obligated to
pay such additional interest were a payment in respect of the Bearer Notes
then due. Prior to the publication of any notice of redemption pursuant to
this paragraph, the Company shall deliver to the Trustee a certificate
stating that the Company is entitled to effect such redemption and setting
forth a statement of facts showing that the conditions precedent to the right
of the Company so to redeem have occurred, and an opinion of independent
counsel to the effect that the Company has or will become obligated to pay
such additional interest as a result of such change or amendment.
If so specified on the face hereof, this Note will be repayable
prior to its Stated Maturity at the option of the Holder on the Optional
Repayment Dates shown on the face hereof at the Optional Repayment Prices
shown on the face hereof, together with accrued interest to the date of
repayment. In order for this Note to be repaid, the Principal Paying Agent
(as specified below) must receive the Note at least 30 but not more than 45
days prior to an Optional Repayment Date. Any tender of this Note for
repayment shall be irrevocable. The repayment option may be exercised by the
Holder hereof for less than the entire principal amount hereof, provided that
--------
the principal amount of the Note remaining outstanding after repayment is an
authorized denomination. Upon such partial repayment, this Note shall be
cancelled and a new Note or Notes for the remaining principal amount hereof
shall be issued to the Holder of this Note.
Payment of Additional Interest
------------------------------
The Company will, subject to the exceptions and limitations set
forth below, pay as additional interest to the Holder of this Note or any
Coupon that is a United States Alien (as defined below) such amounts as may
be necessary so that every net payment on this Note or such Coupon, after
deduction or withholding for or on account of any present or future tax,
assessment or other governmental charge imposed upon or as a result of such
payment by the United States (or any political subdivision or taxing
authority thereof or therein), will not be less than the amount provided in
this
9
<PAGE>
Note or such Coupon to be then due and payable. However, the Company will
not be required to make any such payment of additional interest to such
Holder for or on account of:
(a) any tax, assessment or other governmental charge that would
not have been imposed but for (i) the existence of any present or former
connection between such Holder (or between a fiduciary, settlor or
beneficiary of, or a Person holding a power over, such Holder, if such
Holder is an estate or a trust, or a member or shareholder of such
Holder, if such Holder is a partnership or a corporation) and the United
States, including, without limitation, such Holder (or such fiduciary,
settlor, beneficiary, Person holding a power, member or shareholder)
being or having been a citizen or resident thereof or being or having
been engaged in trade or business or present therein or having or having
had a permanent establishment therein or (ii) such Holder's past or
present status as a passive foreign investment company, a personal
holding company, foreign personal holding company, a controlled foreign
corporation for United States tax purposes or private foundation or
other tax-exempt organization with respect to the United States or as a
corporation that accumulates earnings to avoid United States federal
income tax;
(b) any estate, inheritance, gift, sales, transfer or personal
property tax or any similar tax, assessment or other governmental
charge;
(c) any tax, assessment or other governmental charge that would
not have been imposed but for the presentation by the Holder of this
Note or such Coupon for payment more than 15 days after the date on
which such payment became due and payable or on which payment thereof
was duly provided for, whichever occurred later;
(d) any tax, assessment or other governmental charge that is
payable otherwise than by deduction or withholding from a payment on
this Note or such Coupon;
(e) any tax, assessment or other governmental charge required to
be deducted or withheld by any Paying Agent from a payment on this Note
or such Coupon, if such payment can be made without such deduction or
withholding by any other Paying Agent;
(f) any tax, assessment or other governmental charge that would
not have been imposed but for a failure to comply with any applicable
certification, documentation, information or other reporting requirement
concerning the nationality, residence, identity or
10
<PAGE>
connection with the United States of the Holder or beneficial owner of
this Note or such Coupon if, without regard to any tax treaty, such
compliance is required by statute or regulation of the United States as
a pre-condition to relief or exemption from such tax, assessment or
other governmental charge; or
(g) any tax, assessment or other governmental charge imposed on a
Holder that actually or constructively owns ten percent or more of the
combined voting power of all classes of stock of the Company (taking
into account applicable attribution of ownership rules under Section
871(h)(3) of the Internal Revenue Code of 1986, as amended) or is a
controlled foreign corporation related to the Company through stock
ownership;
nor shall such additional interest be paid with respect to a payment on this
Note or such Coupon to a Holder that is a fiduciary or partnership or other
than the sole beneficial owner of such payment to the extent a beneficiary or
settlor with respect to such fiduciary or a member of such partnership or a
beneficial owner would not have been entitled to the additional interest had
such beneficiary, settlor, member or beneficial owner been the Holder of this
Note or such Coupon.
The term "United States Alien" means any person who, for United
States federal income tax purposes, is a foreign corporation, a nonresident
alien individual, a nonresident alien fiduciary of a foreign estate or trust,
or a foreign partnership one or more of the members of which is, for United
States federal income tax purposes, a foreign corporation, a nonresident
alien individual or a nonresident alien fiduciary of a foreign estate or
trust.
If the Company shall determine that any payment made outside the
United States by the Company or any of its Paying Agents in respect of this
Note or any Coupon (an "Affected Security") would, under any present or
future laws or regulations of the United States, be subject to any
certification, documentation, information or other reporting requirement of
any kind, the effect of which requirement is the disclosure to the Company,
any Paying Agent or any governmental authority of the nationality, residence
or identity of a beneficial owner of such Affected Security that is a United
States Alien (other than such a requirement (a) that would not be applicable
to a payment made by the Company or any one of its Paying Agents (i) directly
to the beneficial owner or (ii) to a custodian, nominee or other agent of the
beneficial owner or (b) that can be satisfied by such custodian, nominee or
other agent certifying to the effect that the beneficial owner is a United
States Alien; provided,
--------
11
<PAGE>
that, in any case referred to in clause (a)(ii) or (b), payment by the
custodian, nominee or agent to the beneficial owner is not otherwise subject
to any such requirement), then the Company shall elect either (x) to redeem
such Affected Securities in whole, but not in part, at their Redemption
Price, or (y) if the conditions described in the next succeeding paragraph
are satisfied, to pay the additional interest specified in such paragraph.
The Company shall make such determination as soon as practicable and publish
prompt notice thereof (the "Determination Notice") stating the effective date
of such certification, documentation, information or other reporting
requirement, whether the Company elects to redeem the Affected Securities or
to pay the additional interest specified in the next succeeding paragraph and
(if applicable) the last date by which the redemption of the Affected
Securities must take place, as provided in the next succeeding sentence. If
any Affected Securities are to be redeemed pursuant to this paragraph, the
redemption shall take place on such date, not later than one year after the
publication of the Determination Notice, as the Company shall specify by
notice given to the Trustee at least 60 days before the Redemption Date.
Notice of such redemption shall be given to the Holders of the Affected
Securities at least 30 but not more than 60 days prior to the Redemption
Date. Notwithstanding the foregoing, the Company shall not so redeem the
Affected Securities if the Company shall subsequently determine, at least 30
days prior to the Redemption Date, that subsequent payments on the Affected
Securities would not be subject to any such certification, documentation,
information or other reporting requirement, in which case the Company shall
publish prompt notice of such subsequent determination and any earlier
redemption notice given pursuant to this paragraph shall be revoked and of no
further effect. Prior to the publication of any Determination Notice
pursuant to this paragraph, the Company shall deliver to the Trustee a
certificate stating that the Company is obligated to make such determination
and setting forth a statement of facts showing that the conditions precedent
to the obligation of the Company to redeem the Affected Securities or to pay
the additional interest specified in the next succeeding paragraph have
occurred, and an opinion of independent counsel to the effect that such
conditions have occurred.
If and so long as the certification, documentation, information or
other reporting requirement referred to in the preceding paragraph would be
fully satisfied by payment of a backup withholding tax or similar charge, the
Company may elect to pay as additional interest such amounts as may be
necessary so that every net payment made outside the United States following
the effective date of such requirement by the Company or any of its Paying
Agents in respect of any Affected Security of which the beneficial owner is a
United States
12
<PAGE>
Alien (but without any requirement that the nationality, residence or
identity of such beneficial owner be disclosed to the Company, any Paying
Agent or any governmental authority), after deduction or withholding for or
on account of such backup withholding tax or similar charge (other than a
backup withholding tax or similar charge that (i) would not be applicable in
the circumstances referred to in the parenthetical clause of the first
sentence of the preceding paragraph or (ii) is imposed as a result of
presentation of such Affected Security for payment more than 15 days after
the date on which such payment became due and payable or on which payment
thereof was duly provided for, whichever occurred later), will not be less
than the amount provided in such Affected Security to be then due and
payable. If the Company elects to pay additional interest pursuant to this
paragraph, then the Company shall have the right to redeem the Affected
Securities at any time in whole, but not in part, at their Redemption Prices,
subject to the provisions of the last three sentences of the immediately
preceding paragraph. If the Company elects to pay additional interest
pursuant to this paragraph and the condition specified in the first sentence
of this paragraph should no longer be satisfied, then the Company shall
redeem the Affected Securities in whole, but not in part, at their Redemption
Price, subject to the provisions of the last three sentences of the
immediately preceding paragraph. Any redemption payments made by the Company
pursuant to the two immediately preceding sentences shall be subject to the
continuing obligation of the Company to pay additional interest pursuant to
this paragraph.
The interest payable hereon on each Interest Payment Date will
include interest accrued through the day before such Interest Payment Date.
The Company has initially appointed as its Paying Agents for Bearer
Notes of this Series the offices listed below:
Principal Paying Agent:
Citibank, N.A.
Issuer Services
336 Strand
London, WC2R OEA
Paying Agent:
Citibank (Luxembourg) S.A.
16 Avenue Marie Therese
Luxembourg
13
<PAGE>
The Company reserves the right at any time to vary or terminate the
appointment of any Paying Agent and to appoint additional or other Paying
Agents and to approve any change in the office through which any Paying Agent
acts, provided that there will at all times be a Paying Agent (which may be
the Trustee) in at least one city in Europe which, so long as Bearer Notes
are listed on the Luxembourg Stock Exchange and that exchange shall so
require, shall include Luxembourg. Notice of any such termination or
appointment and of any changes in the specified offices of the Trustee or any
Paying Agent will be given to the Holder hereof as described below.
Payment in Currencies Other Than the Specified Currency
-------------------------------------------------------
Except as set forth below with respect to payments in ECU, if
payment in respect of this Note or any Coupon is required to be made in a
specified currency other than U.S. dollars (a "Specified Currency") and such
currency is unavailable due to the imposition of exchange controls or other
circumstances beyond the Company's control or is no longer used by the
government of the country issuing such currency or for the settlement of
transactions by public institutions of or within the international banking
community, then all payments shall be made in U.S. dollars until such
currency is again available or so used. The amounts so payable on any date
in such currency shall be converted into U.S. dollars on the basis of the
most recently available Market Exchange Rate for such currency or as
otherwise indicated on the face hereof. Any payment made under such
circumstances in U.S. dollars will not constitute an Event of Default under
the Indenture.
If payment in respect of this Note or any Coupon is required to be
made in ECU and the ECU is not then used in the European Monetary System (the
"EMS"), then the Trustee shall, without liability on its part, choose a
component currency (the "Payment Currency") of the ECU in which all payments
in respect hereof shall be made until the ECU is again so used. The amount
of each payment in such Payment Currency shall be computed on the basis of
the equivalent of the ECU in that currency, determined as described below, as
of the fourth Luxembourg business day prior to the date on which such payment
is due. Notice of the Payment Currency selected by the Trustee shall be
given as described below. Any payment made under such circumstances in the
Payment Currency will not constitute an Event of Default under the Indenture.
Notwithstanding the foregoing, on the first Luxembourg business day
on which the ECU is no longer used in the EMS, the Trustee shall, without
liability on its part, choose a Payment Currency in which all payments with
respect
14
<PAGE>
to Bearer Notes and Coupons denominated in ECU having a due date prior
thereto but not yet presented for payment are to be made. The amount of each
payment in such Payment Currency shall be computed on the basis of the
equivalent of the ECU in that currency, determined as described below, as of
such first Luxembourg business day. Any payment made under such
circumstances in the Payment Currency will not constitute an Event of Default
under the Indenture.
The equivalent of the ECU in the relevant Payment Currency as of
any date (the "Day of Valuation") shall be determined by the Luxembourg Stock
Exchange on the following basis. The component currencies of the ECU for
this purpose (the "Components") shall be the currency amounts that were
components of the ECU when the ECU was most recently used in the EMS or for
the settlement of transactions by public institutions of or within the
European Community. The equivalent of the ECU in the Payment Currency shall
be calculated by, first, aggregating the U.S. dollar equivalents of the
Components, and then, using the rate used for determining the U.S. dollar
equivalents of the Components in the Payment Currency as set forth below,
calculating the equivalent in the Payment Currency of such aggregate amount
in U.S. dollars.
The U.S. dollar equivalent of each of the Components shall be
determined by the Luxembourg Stock Exchange on the basis of the middle spot
delivery quotations prevailing at 2:30 p.m. Luxembourg time on the Day of
Valuation, as obtained by the Luxembourg Stock Exchange from one or more
major banks, selected by the Trustee (with the approval of the Company), in
the country of issue of the Component in question.
If the official unit of any component currency of the ECU is
altered by way of combination or subdivision, the number of units of that
currency as a Component shall be divided or multiplied in the same
proportion. If two or more component currencies are consolidated into a
single currency, the amounts of those currencies as Components shall be
replaced by an amount in such single currency equal to the sum of the amounts
of the consolidated component currencies expressed in such single currency.
If any component currency is divided into two or more currencies, the amount
of that currency as a Component shall be replaced by amounts of such two or
more currencies, each of which shall be equal to the amount of the former
component currency divided by the number of currencies into which that
currency was divided.
If no direct quotations are available for a Component on a Day of
Valuation from any of the banks selected by the Trustee (with the approval of
the Company) for this purpose, because foreign exchange markets are closed in
the
15
<PAGE>
country of issue of that Component, or for any other reason, in computing the
U.S. dollar equivalent of such Component the Luxembourg Stock Exchange shall
(except as provided below) use the most recent direct quotations for such
Component obtained by it; provided that such most recent quotations may be
--------
used only if they were prevailing in the country of issue not more than two
Luxembourg business days before such Day of Valuation. Beyond such period of
two Luxembourg business days, the Luxembourg Stock Exchange shall determine
the U.S. dollar equivalent of such Component on the basis of cross rates
derived from the middle spot delivery quotations for such Component and for
the U.S. dollar prevailing at 2:30 p.m. Luxembourg time on such Day of
Valuation, as obtained by the Luxembourg Stock Exchange from one or more
major banks, selected by the Trustee (with the approval of the Company), in a
country other than the country of issue of such Component. Notwithstanding
the foregoing, within such period of two Luxembourg business days, the
Luxembourg Stock Exchange shall determine the U.S. dollar equivalent of such
Component on the basis of such cross rates if the Trustee and the Company
judge that the equivalent so calculated is more representative than the U.S.
dollar equivalent calculated on the basis of such most recent direct
quotations. Unless otherwise specified by the Trustee, if there is more than
one market for dealing in any component currency by reason of foreign
exchange regulations or for any other reason, the market to be referred to in
respect of such currency shall be that upon which a nonresident issuer of
securities denominated in such currency would purchase such currency in order
to make payments in respect of such securities.
All determinations referred to above made by the Trustee or the
Luxembourg Stock Exchange shall be at their respective sole discretion
(except to the extent expressly provided herein that any determination made
by the Trustee is subject to the approval of the Company) and shall, in the
absence of manifest error, be conclusive for all purposes and binding on
Holders of the Bearer Notes and any Coupons, and the Trustee shall have no
liability therefor.
If an Event of Default with respect to the Notes shall have
occurred and be continuing, the principal of all Notes may be declared due
and payable in the manner and with the effect provided in the Indenture.
If this Note is a Discount Note, the amount payable in the event of
redemption or repayment prior to its Stated Maturity shall be the Amortized
Face Amount of this Note as of the date of redemption or the date of
repayment, as the case may be. The "Amortized Face Amount" of this Note
shall be the amount equal to (a) the Issue Price (set forth on the face
hereof) plus (b) that portion of the difference between the
16
<PAGE>
Issue Price and the principal amount hereof that has accrued at the Yield to
Maturity (set forth on the face hereof) (computed in accordance with
generally accepted United States bond yield computation principles) by such
date of redemption or repayment, but in no event shall the Amortized Face
Amount of this Note exceed its principal amount.
If this note is an Indexed Principal Note, then the principal
amount payable at Stated Maturity or earlier redemption or retirement, is
determined by reference to the amount designated on the face hereof as the
Face Amount of this Note and by reference to an Index as described on the
face hereof. If this Note is an Indexed Principal Note, the principal amount
payable at Stated Maturity or any earlier redemption or repayment of this
Note may be different from the Face Amount. If the determination of the
Index is calculated or announced by a third party, which may be Salomon
Brothers Inc or another affiliate of the Company and such third party either
suspends the calculation or announcement of such Index or changes the basis
upon which such Index is calculated (other than changes consistent with
policies in effect at the time this Note was issued and permitted changes
described on the face hereof), then such Index shall be calculated for this
Note's purposes by another third party selected by the Company, which may be
Salomon Brothers Inc or another affiliate of the Company subject to the same
conditions and controls as applied to the original third party. If for any
reason such Index cannot be calculated on the same basis and subject to the
same conditions and controls as applied to the original third party, then any
indexed principal amount of this Note shall be calculated in the manner
described on the face hereof. Any determination of such third party shall in
the absence of manifest error be binding on all parties.
As provided in the Indenture and subject to certain limitations
therein set forth, this Note is exchangeable for a like aggregate principal
amount of Bearer Notes of different authorized denominations, as requested by
the Person surrendering the same.
No service charge shall be made for any such exchange, but the
Company may require payment of a sum sufficient to cover any tax or other
governmental charge payable in connection therewith.
In case this Note or any Coupon shall at any time become mutilated,
destroyed, stolen or lost, it may be replaced at the specified office of the
Principal Paying Agent in London; or, so long as the Bearer Notes are listed
on the Luxembourg Stock Exchange, at the specified office of the Paying Agent
in Luxembourg, upon payment by the claimant of such expenses as may be
incurred in connection therewith and,
17
<PAGE>
in the case of destruction, theft or loss, on such terms as to evidence and
indemnity as the Company or the Trustee may reasonably require. Mutilated or
defaced Bearer Notes or Coupons must be surrendered before replacements will
be issued.
The Indenture permits with certain exceptions as therein provided,
the amendment thereof and the modification of the rights and obligations of
the Company and the rights of the Holders of the Debt Securities of each
series to be affected under the Indenture at any time by the Company and the
Trustee with the consent of the Holders of not less than a majority in
aggregate principal amount of the Debt Securities at the time Outstanding of
each series to be affected. The Indenture also contains provisions
permitting the Holders of specified percentages in aggregate principal amount
of the Debt Securities of any series at the time Outstanding, on behalf of
the Holders of all the Debt Securities of such series, to waive compliance by
the Company with certain provisions of the Indenture and certain past
defaults under the Indenture and their consequences. Any such consent or
waiver by the Holder of this Debt Security shall be conclusive and binding
upon such Holder and upon all future Holders of this Debt Security and of any
Debt Security issued upon the registration of transfer hereof or in exchange
herefor or in lieu hereof, whether or not notation of such consent or waiver
is made upon this Debt Security.
Holders of Debt Securities of this series may not enforce their
rights pursuant to the Indenture or such Debt Securities except as provided
in the Indenture. No reference herein to the Indenture and no provision of
this Note or of the Indenture shall alter or impair the obligation of the
Company, which is absolute and unconditional, to pay the principal of (and
premium, if any) and interest on this Note at the times, place and rate, and
in the coin or currency, herein prescribed.
The Company may, without the consent of the Holders of the Notes,
consolidate with, merge into, or transfer substantially all of its assets to,
a corporation that is a U.S. Person, provided that the successor corporation
assumes all obligations of the Company under the Notes and certain other
conditions are met, including a waiver by the successor corporation of any
right to redeem the Notes under circumstances in which the successor
corporation would be entitled to redeem the Notes but the Company would not
have been entitled to do so.
Except as provided above, the obligation to pay the principal
hereof (and premium if any) and interest hereon in the designated currency of
payment is of the essence. To the
18
<PAGE>
fullest extent possible under applicable law, judgments in respect of this
Note shall be given in such currency. The obligation of the Company to make
such payments in the designated currency of payment shall, notwithstanding
any payment in any other currency (whether pursuant to a judgment or
otherwise), be discharged only to the extent of the amount in the designated
currency of payment that the Holder of this Note may, in accordance with
normal banking procedures, purchase with the sum paid in such other currency
(after any premium and cost of exchange) on the business day in the country
of issue of the designated currency of payment or in the international
banking community (in the case of a composite currency) immediately following
the day on which such Holder receives such payment. If the amount in the
designated currency of payment that may be so purchased is for any reason
less than the amount originally due, the Company shall, as a separate and
independent obligation, pay such additional amounts in the designated
currency of payment as may be necessary to compensate for any such shortfall.
All notices to Holders of this Note will be deemed to have been
duly given if published on two separate Business Days in a leading London
daily newspaper (which is expected to be the Financial Times) and, so long as
---------------
the Bearer Notes are listed on the Luxembourg Stock Exchange and such
exchange so requires, in Luxembourg in a newspaper of general circulation in
Luxembourg (which is expected to be the Luxemburger Wort). Such notices
----------- ----
shall be deemed to have been given on the date of the first such publication.
If the Specified Currency of this Note is Pounds sterling, the
following applies: The Company is not an institution authorised under the
Banking Act 1987 of the United Kingdom, and this Note is a medium-term note
issued in accordance with regulations made under Section 4 of the Banking Act
1987. The Company represents that as of the date of issuance of this Note,
(1) the Company is in compliance with its listing obligations to The
International Stock Exchange of the United Kingdom and the Republic of
Ireland Limited in connection with the Company's securities that are listed
on such Exchange; and (2) since information was last published in compliance
with such listing obligations, the Company, having made all reasonable
enquiries, has not become aware of any change in circumstances which could
reasonably be regarded as significantly and adversely affecting its ability
to meet its obligations on this Note as they fall due. Repayment of
principal and payment of interest and any premium on this Note have not been
guaranteed by any person.
This Note shall be deemed to be a contract made and to be performed
solely in the State of New York, and for all purposes shall be governed by,
and construed in accordance
19
<PAGE>
with, the laws of said State without regard to the conflicts of law rules of
said State.
All terms used in this Note that are defined in the Indenture shall
have the meanings assigned to them in the Indenture.
20
<PAGE>
SCHEDULE OF ISSUANCES, EXCHANGES AND AGGREGATE PRINCIPAL AMOUNT
The following issuances and exchanges of a part of this Note have been
made, and the aggregate principal amount of Bearer Notes represented by this
Note at any time is as shown in the last entry of Column III hereof unless
one or more entries have been made in Column IV hereof reflecting exchanges
for individual Bearer Notes, in which event such aggregate principal amount
is as shown in the last entry of Column V hereof.
I. II. III. IV. V. VI.
Principal
Amount Aggregate Notation
Aggregate Exchanged Principal made
Settlement Principal Principal for Indivi- Amount on behalf
Date or Date Amount Amount dual Bearer Remaining of the
of Exchange Issued Issued Notes After Exchange Trustee
____________ _________ _________ ___________ ______________ _________
____________ _________ _________ ___________ ______________ _________
____________ _________ _________ ___________ ______________ _________
____________ _________ _________ ___________ ______________ _________
____________ _________ _________ ___________ ______________ _________
____________ _________ _________ ___________ ______________ _________
____________ _________ _________ ___________ ______________ _________
____________ _________ _________ ___________ ______________ _________
____________ _________ _________ ___________ ______________ _________
____________ _________ _________ ___________ ______________ _________
____________ _________ _________ ___________ ______________ _________
____________ _________ _________ ___________ ______________ _________
____________ _________ _________ ___________ ______________ _________
____________ _________ _________ ___________ ______________ _________
22
<PAGE>
SCHEDULE OF INTEREST PAYMENTS
The following payments of interest in respect of this Note have been
made.
Date of Notation made
Interest Interest on behalf of the
Payment Paid Trustee
________ ________ _________________
________ ________ _________________
________ ________ _________________
________ ________ _________________
________ ________ _________________
________ ________ _________________
________ ________ _________________
________ ________ _________________
________ ________ _________________
________ ________ _________________
________ ________ _________________
________ ________ _________________
________ ________ _________________
________ ________ _________________
22
<PAGE>
FORM OF SERIES E PERMANENT GLOBAL FIXED RATE NOTE
BEARER PRINCIPAL AMOUNT
No. FX-________ OR FACE AMOUNT
SALOMON INC
PERMANENT GLOBAL NOTE
(FIXED RATE)
representing
MEDIUM-TERM NOTE, SERIES E
Due More Than Nine Months from Date of Issue
THIS SECURITY IS A PERMANENT GLOBAL NOTE, WITHOUT COUPONS, EXCHANGEABLE FOR
INDIVIDUAL BEARER NOTES, WITH COUPONS, IF ANY, IN THE DENOMINATION OF U.S. $
25,000 OR ANY LARGER AMOUNT THAT IS AN INTEGRAL MULTIPLE OF U.S. $5,000 (OR SUCH
OTHER DENOMINATIONS AS ARE SPECIFIED BELOW FOR ANOTHER CURRENCY). THE RIGHTS
ATTACHING TO THIS NOTE AND THE CONDITIONS AND PROCEDURES GOVERNING ITS EXCHANGE
FOR INDIVIDUAL BEARER NOTES ARE AS SPECIFIED IN THE INDENTURE (AS DEFINED
HEREIN).
UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR THE INDIVIDUAL
BEARER NOTES REPRESENTED HEREBY, THIS GLOBAL SECURITY MAY NOT BE TRANSFERRED
EXCEPT AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A
NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY
OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE
OF SUCH SUCCESSOR DEPOSITARY.
ANY UNITED STATES PERSON WHO HOLDS THIS OBLIGATION WILL BE SUBJECT TO
LIMITATIONS UNDER THE UNIED STATES INCOME TAX LAWS, INCLUDING THE LIMITATIONS
PROVIDED IN SECTIONS 165(j) AND 1287(a) OF THE INTERNAL REVENUE CODE.
IF APPLICABLE, THE "TOTAL AMOUNT OF OID" AND "YIELD TO MATURITY" SET FORTH
BELOW WILL BE COMPLETED SOLELY FOR THE PURPOSES OF APPLYING THE FEDERAL INCOME
TAX ORIGINAL ISSUE DISCOUNT ("OID") RULES.
<PAGE>
Issue Price: Original Issue Date:
Specified Currency:
(if other than U.S. Dollars)
Authorized Denominations:
(If other than as set forth in the
Prospectus Supplement)
Interest Payment Dates:
(If other than as set forth in the
Prospectus Supplement)
Indexed Principal Note: [ ] Yes (see attached) [ ] No
Interest Rate: Stated Maturity:
Interest Rate Reset: [ ] The Interest Rate may not be
changed prior to Stated Maturity.
[ ] The Interest Rate may be changed
prior to Stated Maturity (see
attached).
Optional Reset Dates (if applicable)
Amortizing Note: [ ] Yes [ ] No
Amortization Schedule:
Optional Redemption: [ ] Yes [ ] No
Optional Redemption Dates:
Redemption Prices:
Optional Repayment: [ ] Yes [ ] No
Optional Repayment Dates:
Optional Repayment Prices:
Discount Note: [ ] Yes [ ] No
Total Amount of OID:
Yield to Maturity:
IF THE SPECIFIED CURRENCY OF THIS NOTE IS POUNDS STERLING, THE FOLLOWING
APPLIES: THIS NOTE IS ISSUED IN ACCORDANCE WITH THE REGULATIONS MADE UNDER
SECTION 4 OF THE BANKING ACT 1987.
2
<PAGE>
SALOMON INC, a corporation duly organized and existing under the
laws of the State of Delaware (the "Company"), for value received, hereby
promises to pay to bearer, upon presentation and surrender hereof, (a) the
Principal Amount or, in the case of an Indexed Principal Note, the Face
Amount adjusted by reference to prices, changes in prices, or differences
between prices, of securities, currencies, intangibles, goods, articles or
commodities or by such other objective price, economic or other measures (an
"Index") as described on the face hereof, in the Specified Currency on the
Stated Maturity shown above or earlier if and to the extent provided herein
and (b) to pay accrued interest on the Principal Amount then outstanding (or
in the case of an Indexed Principal Note, the Face Amount then outstanding),
to the bearer hereof at the Interest Rate shown above, annually in arrears on
September 15 of each year (the "Interest Payment Date"), commencing with the
September 15 following the Original Issue Date shown above and on the Stated
Maturity shown above, or upon earlier redemption or repayment, until, in
either case, the Principal Amount then outstanding or the Face Amount is paid
or duly provided for in accordance with the terms hereof. Interest on this
Note, if any, will be computed on the basis of a 360-day year of twelve 30-
day months. Any payment of principal, premium or interest required to be
made in respect hereof on a date that is not a Business Day (as defined
below) need not be made on such date, but may be made on the next succeeding
Business Day with the same force and effect as if made on such date, and no
additional interest shall accrue as a result of such delayed payment.
For purposes of this Note, "Business Day" means any day, other than
a Saturday or Sunday, that is not a day on which banking institutions are
authorized or required by law or regulation to be closed in (a) The City of
New York, (b) London, England, (c) the place in which this Note or any Coupon
is presented for payment or (d) if the Specified Currency (as defined below)
is other than U.S. dollars, the financial center of the country issuing the
Specified Currency (which, in the case of European Currency Units ("ECU"),
shall be Brussels, Belgium).
The indebtedness evidenced by this Note is, to the extent set forth
in the Indenture, expressly subordinated and subject in right of payment to
the prior payment in full of Senior Indebtedness as defined in the Indenture,
and this Note is issued subject to such provisions, and each Holder of this
Note, by accepting the same, agrees to and shall be bound by such provisions
and authorizes and directs the Trustee in his behalf to take such action as
may be necessary or appropriate to acknowledge or effectuate the
subordination as provided in
3
<PAGE>
the Indenture and appoints the Trustee as his attorney-in-fact for any and
all such purposes.
If this Note is an Amortizing Note as shown on the face hereof, a
portion or all the principal amount of the Note is payable prior to Stated
Maturity in accordance with a schedule, by application of a formula, or by
reference to an index (as described above).
This Note is exchangeable in whole or from time to time in part
without charge for individual Bearer Notes, with appropriate Coupons
attached, in the denomination of U.S.$25,000 or any larger amount that is an
integral multiple of U.S.$5,000 (or such other denominations as are specified
above for another currency), upon 30 days' notice to the Trustee given
through either Euro-clear or CEDEL. Upon any exchange of any portion of this
Note for individual Bearer Notes, the portion of the principal amount hereof
so exchanged shall be endorsed by the Trustee in the Schedule of Issuances,
Exchanges and Aggregate Principal Amount hereto, and the principal amount
hereof shall be reduced for all purposes by the amount so exchanged.
Except as otherwise provided herein or in the Indenture, until
exchanged in full for individual Bearer Notes, this Note shall in all
respects be entitled to the same benefits and subject to the same terms and
conditions of, and the Company shall be subject to the same restrictions as
those contained on the individual Bearer Notes and in the Indenture.
Except under certain circumstances for Notes having Specified
Currencies other than U.S. dollars, payments of the principal hereof and any
premium and interest hereon will be made only in the Specified Currency.
Payments in respect of this Note and any Coupon will be made only against
surrender of this Note or such Coupon, at the offices of the Paying Agents
outside the United States listed on the reverse hereof. At the direction of
the Holder of this Note or any Coupon, and subject to applicable laws and
regulations, such payments will be made by check drawn on a bank in The City
of New York (in the case of U.S. dollar payments) or outside the United
States (in the case of payments in a currency other than U.S. dollars) mailed
to an address outside the United States furnished by the Holder hereof or, at
the option of the Holder hereof, by wire transfer (pursuant to written
instructions supplied by the Holder hereof) to an account maintained by the
payee with a bank located outside the United States. No payment in respect
of this Note or any Coupon will be made upon presentation of this Note or
such Coupon at any office or agency of the Trustee or any other paying agency
maintained by the Company in the United States, nor will any such payment be
made by transfer to an account, or by mail to an address, in
4
<PAGE>
the United States. Notwithstanding the foregoing, if U.S. dollar payments in
respect of this Note or any Coupons at the offices of all Paying Agents
outside the United States become illegal or are effectively precluded because
of the imposition of exchange controls or similar restrictions on the full
payment or receipt of such amounts in U.S. dollars, the Company will appoint
an office or agency (which may be the Trustee) in the United States at which
such payments may be made.
REFERENCE IS HEREBY MADE TO THE FURTHER PROVISIONS OF THIS NOTE SET
FORTH ON THE REVERSE HEREOF, AND SUCH FURTHER PROVISIONS SHALL FOR ALL
PURPOSES HAVE THE SAME EFFECT AS THOUGH FULLY SET FORTH IN THIS PLACE.
This Note shall not become valid or obligatory for any purpose
unless and until this Note has been authenticated by Bankers Trust Company,
or its successor, as Trustee.
5
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Note to be executed
under its corporate seal.
Dated:
SALOMON INC
By_____________________________________
Chairman of the Board of Directors,
President and Chief Executive Officer
[seal]
Attest_________________________________
Secretary
CERTIFICATE OF AUTHENTICATION
This is one of the Notes issued under the within-mentioned
Indenture.
BANKERS TRUST COMPANY
as Trustee
By_____________________________________
Authorized Signatory
6
<PAGE>
SALOMON INC
MEDIUM-TERM NOTE, SERIES E
(FIXED RATE)
General
-------
This Note is one of a series of duly authorized debt securities of
the Company (the "Debt Securities") issued or to be issued in one or more
series under an indenture dated as of December 1, 1988 (the "Indenture")
between the Company and Bankers Trust Company, as trustee (the "Trustee",
which term includes any successor Trustee under the Indenture), to which
Indenture and all indentures supplemental thereto reference is hereby made
for a statement of the respective rights, limitations of rights, duties and
immunities thereunder of the Company, the Trustee and the Holders of the Debt
Securities and of the terms upon which the Debt Securities are, and are to
be, authenticated and delivered. The U.S. dollar equivalent of the public
offering price or purchase price of Notes denominated in currencies other
than U.S. dollars will be determined by the Company or its agent, on the
basis of the noon buying rate in New York City for cable transfers in foreign
currencies as certified for customs purposes by the Federal Reserve Bank of
New York (the "Market Exchange Rate") for such currencies on the applicable
issue dates.
Unless otherwise specified on the face hereof, the authorized
denominations of Bearer Notes denominated in U.S. dollars will be U.S.$25,000
and any larger amount that is an integral multiple of U.S.$5,000. The
authorized denominations of Bearer Notes having a specified currency other
than U.S. dollars will be, unless otherwise specified herein, the approximate
equivalents thereof in the Specified Currency.
If so specified on the face hereof, this Note will be redeemable at
the option of the Company in whole or from time to time in part, on any date
on or after the date designated as the Initial Redemption Date on the face
hereof, upon the Company's giving the Trustee at least 45 days' notice, at
the Redemption Price determined as provided on the face hereof. If redeemed
prior to its Stated Maturity, this Note must be presented for payment. The
Bearer Notes will not be subject to any sinking fund.
The Bearer Notes may be redeemed at the option of the Company in
whole, but not in part, at any time on giving at least 30 but not more than
60 days' notice as set forth below, which notice shall be irrevocable, at
their Redemption Prices, if the Company has or will become obligated to pay
additional interest on the Bearer Notes as described below as
7
<PAGE>
a result of any change in, or amendment to, the laws (or any regulations or
rulings promulgated thereunder) of the United States or any political
subdivision or taxing authority thereof or therein, or any change in the
application or official interpretation of such laws, regulations or rulings,
which change or amendment becomes effective on or after the Original Issue
Date, and such obligation cannot be avoided by the Company taking reasonable
measures available to it. No such notice of redemption shall be given
earlier than 90 days prior to the earliest date on which the Company would be
obligated to pay such additional interest were a payment in respect of the
Bearer Notes then due. Prior to the publication of any notice of redemption
pursuant to this paragraph, the Company shall deliver to the Trustee a
certificate stating that the Company is entitled to effect such redemption
and setting forth a statement of facts showing that the conditions precedent
to the right of the Company so to redeem have occurred, and an opinion of
independent counsel to the effect that the Company has or will become
obligated to pay such additional interest as a result of such change or
amendment.
If so specified on the face hereof, this Note will be repayable
prior to its Stated Maturity at the option of the Holder on the Optional
Repayment Dates shown on the face hereof at the Optional Repayment Prices
shown on the face hereof, together with accrued interest to the date of
repayment. In order for this Note to be repaid, the Principal Paying Agent
(as specified below) must receive the Note at least 30 but not more than 45
days prior to an Optional Repayment Date. Any tender of this Note for
repayment shall be irrevocable. The repayment option may be exercised by the
Holder hereof for less than the entire principal amount hereof, provided that
--------
the principal amount of the Note remaining outstanding after repayment is an
authorized denomination. Upon such partial repayment, this Note shall be
cancelled and a new Note or Notes for the remaining principal amount hereof
shall be issued to the Holder of this Note.
Payment of Additional Interest
------------------------------
The Company will, subject to the exceptions and limitations set
forth below, pay as additional interest to the Holder of this Note or any
Coupon that is a United States Alien (as defined below) such amounts as may
be necessary so that every net payment on this Note or such Coupon, after
deduction or withholding for or on account of any present or future tax,
assessment or other governmental charge imposed upon or as a result of such
payment by the United States (or any political subdivision or taxing
authority thereof or therein), will not be less than the amount provided in
this Note or such Coupon to be then due and payable. However, the
8
<PAGE>
Company will not be required to make any such payment of additional interest
to such Holder for or on account of:
(a) any tax, assessment or other governmental charge that would
not have been imposed but for (i) the existence of any present or former
connection between such Holder (or between a fiduciary, settlor or
beneficiary of, or a Person holding a power over, such Holder, if such
Holder is an estate or a trust, or a member or shareholder of such
Holder, if such Holder is a partnership or a corporation) and the United
States, including, without limitation, such Holder (or such fiduciary,
settlor, beneficiary, Person holding a power, member or shareholder)
being or having been a citizen or resident thereof or being or having
been engaged in trade or business or present therein or having or having
had a permanent establishment therein or (ii) such Holder's past or
present status as a passive foreign investment company, a personal
holding company, foreign personal holding company, a controlled foreign
corporation for United States tax purposes or private foundation or
other tax-exempt organization with respect to the United States or as a
corporation that accumulates earnings to avoid United States federal
income tax;
(b) any estate, inheritance, gift, sales, transfer or personal
property tax or any similar tax, assessment or other governmental
charge;
(c) any tax, assessment or other governmental charge that would
not have been imposed but for the presentation by the Holder of this
Note or such Coupon for payment more than 15 days after the date on
which such payment became due and payable or on which payment thereof
was duly provided for, whichever occurred later;
(d) any tax, assessment or other governmental charge that is
payable otherwise than by deduction or withholding from a payment on
this Note or such Coupon;
(e) any tax, assessment or other governmental charge required to
be deducted or withheld by any Paying Agent from a payment on this Note
or such Coupon, if such payment can be made without such deduction or
withholding by any other Paying Agent;
(f) any tax, assessment or other governmental charge that would
not have been imposed but for a failure to comply with any applicable
certification, documentation, information or other reporting requirement
concerning the nationality, residence, identity or connection with the
United States of the Holder or
9
<PAGE>
beneficial owner of this Note or such Coupon if, without regard to any
tax treaty, such compliance is required by statute or regulation of the
United States as a pre-condition to relief or exemption from such tax,
assessment or other governmental charge; or
(g) any tax, assessment or other governmental charge imposed on a
Holder that actually or constructively owns ten percent or more of the
combined voting power of all classes of stock of the Company (taking
into account applicable attribution of ownership rules under Section
871(h)(3) of the Internal Revenue Code of 1986, as amended) or is a
controlled foreign corporation related to the Company through stock
ownership;
nor shall such additional interest be paid with respect to a payment on this
Note or such Coupon to a Holder that is a fiduciary or partnership or other
than the sole beneficial owner of such payment to the extent a beneficiary or
settlor with respect to such fiduciary or a member of such partnership or a
beneficial owner would not have been entitled to the additional interest had
such beneficiary, settlor, member or beneficial owner been the Holder of this
Note or such Coupon.
The term "United States Alien" means any person who, for United
States federal income tax purposes, is a foreign corporation, a nonresident
alien individual, a nonresident alien fiduciary of a foreign estate or trust,
or a foreign partnership one or more of the members of which is, for United
States federal income tax purposes, a foreign corporation, a nonresident
alien individual or a nonresident alien fiduciary of a foreign estate or
trust.
If the Company shall determine that any payment made outside the
United States by the Company or any of its Paying Agents in respect of this
Note or any Coupon (an "Affected Security") would, under any present or
future laws or regulations of the United States, be subject to any
certification, documentation, information or other reporting requirement of
any kind, the effect of which requirement is the disclosure to the Company,
any Paying Agent or any governmental authority of the nationality, residence
or identity of a beneficial owner of such Affected Security that is a United
States Alien (other than such a requirement (a) that would not be applicable
to a payment made by the Company or any one of its Paying Agents (i) directly
to the beneficial owner or (ii) to a custodian, nominee or other agent of the
beneficial owner or (b) that can be satisfied by such custodian, nominee or
other agent certifying to the effect that the beneficial owner is a United
States Alien; provided, that, in any case referred to in clause (a)(ii) or
--------
(b),
10
<PAGE>
payment by the custodian, nominee or agent to the beneficial owner is not
otherwise subject to any such requirement), then the Company shall elect
either (x) to redeem such Affected Securities in whole, but not in part, at
their Redemption Price, or (y) if the conditions described in the next
succeeding paragraph are satisfied, to pay the additional interest specified
in such paragraph. The Company shall make such determination as soon as
practicable and publish prompt notice thereof (the "Determination Notice")
stating the effective date of such certification, documentation, information
or other reporting requirement, whether the Company elects to redeem the
Affected Securities or to pay the additional interest specified in the next
succeeding paragraph and (if applicable) the last date by which the
redemption of the Affected Securities must take place, as provided in the
next succeeding sentence. If any Affected Securities are to be redeemed
pursuant to this paragraph, the redemption shall take place on such date, not
later than one year after the publication of the Determination Notice, as the
Company shall specify by notice given to the Trustee at least 60 days before
the Redemption Date. Notice of such redemption shall be given to the Holders
of the Affected Securities at least 30 but not more than 60 days prior to the
Redemption Date. Notwithstanding the foregoing, the Company shall not so
redeem the Affected Securities if the Company shall subsequently determine,
at least 30 days prior to the Redemption Date, that subsequent payments on
the Affected Securities would not be subject to any such certification,
documentation, information or other reporting requirement, in which case the
Company shall publish prompt notice of such subsequent determination and any
earlier redemption notice given pursuant to this paragraph shall be revoked
and of no further effect. Prior to the publication of any Determination
Notice pursuant to this paragraph, the Company shall deliver to the Trustee a
certificate stating that the Company is obligated to make such determination
and setting forth a statement of facts showing that the conditions precedent
to the obligation of the Company to redeem the Affected Securities or to pay
the additional interest specified in the next succeeding paragraph have
occurred, and an opinion of independent counsel to the effect that such
conditions have occurred.
If and so long as the certification, documentation, information or
other reporting requirement referred to in the preceding paragraph would be
fully satisfied by payment of a backup withholding tax or similar charge, the
Company may elect to pay as additional interest such amounts as may be
necessary so that every net payment made outside the United States following
the effective date of such requirement by the Company or any of its Paying
Agents in respect of any Affected Security of which the beneficial owner is a
United States Alien (but without any requirement that the nationality,
11
<PAGE>
residence or identity of such beneficial owner be disclosed to the Company,
any Paying Agent or any governmental authority), after deduction or
withholding for or on account of such backup withholding tax or similar
charge (other than a backup withholding tax or similar charge that (i) would
not be applicable in the circumstances referred to in the parenthetical
clause of the first sentence of the preceding paragraph or (ii) is imposed as
a result of presentation of such Affected Security for payment more than 15
days after the date on which such payment became due and payable or on which
payment thereof was duly provided for, whichever occurred later), will not be
less than the amount provided in such Affected Security to be then due and
payable. If the Company elects to pay additional interest pursuant to this
paragraph, then the Company shall have the right to redeem the Affected
Securities at any time in whole, but not in part, at their Redemption Prices,
subject to the provisions of the last three sentences of the immediately
preceding paragraph. If the Company elects to pay additional interest
pursuant to this paragraph and the condition specified in the first sentence
of this paragraph should no longer be satisfied, then the Company shall
redeem the Affected Securities in whole, but not in part, at their Redemption
Price, subject to the provisions of the last three sentences of the
immediately preceding paragraph. Any redemption payments made by the Company
pursuant to the two immediately preceding sentences shall be subject to the
continuing obligation of the Company to pay additional interest pursuant to
this paragraph.
The interest payable hereon on each Interest Payment Date will
include interest accrued through the day before such Interest Payment Date.
The Company has initially appointed as its Paying Agents for Bearer
Notes of this Series the offices listed below:
Principal Paying Agent:
Bankers Trust Company
1 Appold Street, Broadgate
London, EC2A 2HE
Paying Agent:
Bankers Trust Luxembourg, S.A.
P.O. Box 807
14 Boulevard F.D. Roosevelt
L-2450 Luxembourg
The Company reserves the right at any time to vary or terminate the
appointment of any Paying Agent and to
12
<PAGE>
appoint additional or other Paying Agents and to approve any change in the
office through which any Paying Agent acts, provided that there will at all
times be a Paying Agent (which may be the Trustee) in at least one city in
Europe which, so long as Bearer Notes are listed on the Luxembourg Stock
Exchange and that exchange shall so require, shall include Luxembourg.
Notice of any such termination or appointment and of any changes in the
specified offices of the Trustee or any Paying Agent will be given to the
Holder hereof as described below.
Payment in Currencies Other Than the Specified Currency
-------------------------------------------------------
Except as set forth below with respect to payments in ECU, if
payment in respect of this Note or any Coupon is required to be made in a
specified currency other than U.S. dollars (a "Specified Currency") and such
currency is unavailable due to the imposition of exchange controls or other
circumstances beyond the Company's control or is no longer used by the
government of the country issuing such currency or for the settlement of
transactions by public institutions of or within the international banking
community, then all payments shall be made in U.S. dollars until such
currency is again available or so used. The amounts so payable on any date
in such currency shall be converted into U.S. dollars on the basis of the
most recently available Market Exchange Rate for such currency or as
otherwise indicated on the face hereof. Any payment made under such
circumstances in U.S. dollars will not constitute an Event of Default under
the Indenture.
If payment in respect of this Note or any Coupon is required to be
made in ECU and the ECU is not then used in the European Monetary System (the
"EMS"), then the Trustee shall, without liability on its part, choose a
component currency (the "Payment Currency") of the ECU in which all payments
in respect hereof shall be made until the ECU is again so used. The amount
of each payment in such Payment Currency shall be computed on the basis of
the equivalent of the ECU in that currency, determined as described below, as
of the fourth Luxembourg business day prior to the date on which such payment
is due. Notice of the Payment Currency selected by the Trustee shall be
given as described below. Any payment made under such circumstances in the
Payment Currency will not constitute an Event of Default under the Indenture.
Notwithstanding the foregoing, on the first Luxembourg business day
on which the ECU is no longer used in the EMS, the Trustee shall, without
liability on its part, choose a Payment Currency in which all payments with
respect to Bearer Notes and Coupons denominated in ECU having a due date
prior thereto but not yet presented for payment are to be
13
<PAGE>
made. The amount of each payment in such Payment Currency shall be computed
on the basis of the equivalent of the ECU in that currency, determined as
described below, as of such first Luxembourg business day. Any payment made
under such circumstances in the Payment Currency will not constitute an Event
of Default under the Indenture.
The equivalent of the ECU in the relevant Payment Currency as of
any date (the "Day of Valuation") shall be determined by the Luxembourg Stock
Exchange on the following basis. The component currencies of the ECU for
this purpose (the "Components") shall be the currency amounts that were
components of the ECU when the ECU was most recently used in the EMS or for
the settlement of transactions by public institutions of or within the
European Community. The equivalent of the ECU in the Payment Currency shall
be calculated by, first, aggregating the U.S. dollar equivalents of the
Components, and then, using the rate used for determining the U.S. dollar
equivalents of the Components in the Payment Currency as set forth below,
calculating the equivalent in the Payment Currency of such aggregate amount
in U.S. dollars.
The U.S. dollar equivalent of each of the Components shall be
determined by the Luxembourg Stock Exchange on the basis of the middle spot
delivery quotations prevailing at 2:30 p.m. Luxembourg time on the Day of
Valuation, as obtained by the Luxembourg Stock Exchange from one or more
major banks, selected by the Trustee (with the approval of the Company), in
the country of issue of the Component in question.
If the official unit of any component currency of the ECU is
altered by way of combination or subdivision, the number of units of that
currency as a Component shall be divided or multiplied in the same
proportion. If two or more component currencies are consolidated into a
single currency, the amounts of those currencies as Components shall be
replaced by an amount in such single currency equal to the sum of the amounts
of the consolidated component currencies expressed in such single currency.
If any component currency is divided into two or more currencies, the amount
of that currency as a Component shall be replaced by amounts of such two or
more currencies, each of which shall be equal to the amount of the former
component currency divided by the number of currencies into which that
currency was divided.
If no direct quotations are available for a Component on a Day of
Valuation from any of the banks selected by the Trustee (with the approval of
the Company) for this purpose, because foreign exchange markets are closed in
the country of issue of that Component, or for any other reason, in computing
the U.S. dollar equivalent of such Component the
14
<PAGE>
Luxembourg Stock Exchange shall (except as provided below) use the most
recent direct quotations for such Component obtained by it; provided that
--------
such most recent quotations may be used only if they were prevailing in the
country of issue not more than two Luxembourg business days before such Day
of Valuation. Beyond such period of two Luxembourg business days, the
Luxembourg Stock Exchange shall determine the U.S. dollar equivalent of such
Component on the basis of cross rates derived from the middle spot delivery
quotations for such Component and for the U.S. dollar prevailing at 2:30 p.m.
Luxembourg time on such Day of Valuation, as obtained by the Luxembourg Stock
Exchange from one or more major banks, selected by the Trustee (with the
approval of the Company), in a country other than the country of issue of
such Component. Notwithstanding the foregoing, within such period of two
Luxembourg business days, the Luxembourg Stock Exchange shall determine the
U.S. dollar equivalent of such Component on the basis of such cross rates if
the Trustee and the Company judge that the equivalent so calculated is more
representative than the U.S. dollar equivalent calculated on the basis of
such most recent direct quotations. Unless otherwise specified by the
Trustee, if there is more than one market for dealing in any component
currency by reason of foreign exchange regulations or for any other reason,
the market to be referred to in respect of such currency shall be that upon
which a nonresident issuer of securities denominated in such currency would
purchase such currency in order to make payments in respect of such
securities.
All determinations referred to above made by the Trustee or the
Luxembourg Stock Exchange shall be at their respective sole discretion
(except to the extent expressly provided herein that any determination made
by the Trustee is subject to the approval of the Company) and shall, in the
absence of manifest error, be conclusive for all purposes and binding on
Holders of the Bearer Notes and any Coupons, and the Trustee shall have no
liability therefor.
If an Event of Default with respect to the Notes shall have
occurred and be continuing, the principal of all Notes may be declared due
and payable in the manner and with the effect provided in the Indenture.
If this Note is a Discount Note, the amount payable in the event of
redemption or repayment prior to its Stated Maturity shall be the Amortized
Face Amount of this Note as of the date of redemption or the date of
repayment, as the case may be. The "Amortized Face Amount" of this Note
shall be the amount equal to (a) the Issue Price (set forth on the face
hereof) plus (b) that portion of the difference between the Issue Price and
the principal amount hereof that has accrued at the Yield to Maturity (set
forth on the face hereof)
15
<PAGE>
(computed in accordance with generally accepted United States bond yield
computation principles) by such date of redemption or repayment, but in no
event shall the Amortized Face Amount of this Note exceed its principal
amount.
If this note is an Indexed Principal Note, then the principal
amount payable at Stated Maturity or earlier redemption or retirement, is
determined by reference to the amount designated on the face hereof as the
Face Amount of this Note and by reference to an Index as described on the
face hereof. If this Note is an Indexed Principal Note, the principal amount
payable at Stated Maturity or any earlier redemption or repayment of this
Note may be different from the Face Amount. If the determination of the
Index is calculated or announced by a third party, which may be Salomon
Brothers Inc or another affiliate of the Company and such third party either
suspends the calculation or announcement of such Index or changes the basis
upon which such Index is calculated (other than changes consistent with
policies in effect at the time this Note was issued and permitted changes
described on the face hereof), then such Index shall be calculated for this
Note's purposes by another third party selected by the Company, which may be
Salomon Brothers Inc or another affiliate of the Company subject to the same
conditions and controls as applied to the original third party. If for any
reason such Index cannot be calculated on the same basis and subject to the
same conditions and controls as applied to the original third party, then any
indexed principal amount of this Note shall be calculated in the manner
described on the face hereof. Any determination of such third party shall in
the absence of manifest error be binding on all parties.
As provided in the Indenture and subject to certain limitations
therein set forth, this Note is exchangeable for a like aggregate principal
amount of Bearer Notes of different authorized denominations, as requested by
the Person surrendering the same.
No service charge shall be made for any such exchange, but the
Company may require payment of a sum sufficient to cover any tax or other
governmental charge payable in connection therewith.
In case this Note or any Coupon shall at any time become mutilated,
destroyed, stolen or lost, it may be replaced at the specified office of the
Principal Paying Agent in London; or, so long as the Bearer Notes are listed
on the Luxembourg Stock Exchange, at the specified office of the Paying Agent
in Luxembourg, upon payment by the claimant of such expenses as may be
incurred in connection therewith and, in the case of destruction, theft or
loss, on such terms as to evidence and indemnity as the Company or the
Trustee may
16
<PAGE>
reasonably require. Mutilated or defaced Bearer Notes or Coupons must be
surrendered before replacements will be issued.
The Indenture permits with certain exceptions as therein provided,
the amendment thereof and the modification of the rights and obligations of
the Company and the rights of the Holders of the Debt Securities of each
series to be affected under the Indenture at any time by the Company and the
Trustee with the consent of the Holders of not less than a majority in
aggregate principal amount of the Debt Securities at the time Outstanding of
each series to be affected. The Indenture also contains provisions
permitting the Holders of specified percentages in aggregate principal amount
of the Debt Securities of any series at the time Outstanding, on behalf of
the Holders of all the Debt Securities of such series, to waive compliance by
the Company with certain provisions of the Indenture and certain past
defaults under the Indenture and their consequences. Any such consent or
waiver by the Holder of this Debt Security shall be conclusive and binding
upon such Holder and upon all future Holders of this Debt Security and of any
Debt Security issued upon the registration of transfer hereof or in exchange
herefor or in lieu hereof, whether or not notation of such consent or waiver
is made upon this Debt Security.
Holders of Debt Securities of this series may not enforce their
rights pursuant to the Indenture or such Debt Securities except as provided
in the Indenture. No reference herein to the Indenture and no provision of
this Note or of the Indenture shall alter or impair the obligation of the
Company, which is absolute and unconditional, to pay the principal of (and
premium, if any) and interest on this Note at the times, place and rate, and
in the coin or currency, herein prescribed.
The Company may, without the consent of the Holders of the Notes,
consolidate with, merge into, or transfer substantially all of its assets to,
a corporation that is a U.S. Person, provided that the successor corporation
assumes all obligations of the Company under the Notes and certain other
conditions are met, including a waiver by the successor corporation of any
right to redeem the Notes under circumstances in which the successor
corporation would be entitled to redeem the Notes but the Company would not
have been entitled to do so.
Except as provided above, the obligation to pay the principal
hereof (and premium if any) and interest hereon in the designated currency of
payment is of the essence. To the fullest extent possible under applicable
law, judgments in respect of this Note shall be given in such currency. The
17
<PAGE>
obligation of the Company to make such payments in the designated currency of
payment shall, notwithstanding any payment in any other currency (whether
pursuant to a judgment or otherwise), be discharged only to the extent of the
amount in the designated currency of payment that the Holder of this Note
may, in accordance with normal banking procedures, purchase with the sum paid
in such other currency (after any premium and cost of exchange) on the
business day in the country of issue of the designated currency of payment or
in the international banking community (in the case of a composite currency)
immediately following the day on which such Holder receives such payment. If
the amount in the designated currency of payment that may be so purchased is
for any reason less than the amount originally due, the Company shall, as a
separate and independent obligation, pay such additional amounts in the
designated currency of payment as may be necessary to compensate for any such
shortfall.
All notices to Holders of this Note will be deemed to have been
duly given if published on two separate Business Days in a leading London
daily newspaper (which is expected to be the Financial Times) and, so long as
---------------
the Bearer Notes are listed on the Luxembourg Stock Exchange and such
exchange so requires, in Luxembourg in a newspaper of general circulation in
Luxembourg (which is expected to be the Luxemburger Wort). Such notices
----------- ----
shall be deemed to have been given on the date of the first such publication.
If the Specified Currency of this Note is Pounds sterling, the
following applies: The Company is not an institution authorised under the
Banking Act 1987 of the United Kingdom, and this Note is a medium-term note
issued in accordance with regulations made under Section 4 of the Banking Act
1987. The Company represents that as of the date of issuance of this Note,
(1) the Company is in compliance with its listing obligations to The
International Stock Exchange of the United Kingdom and the Republic of
Ireland Limited in connection with the Company's securities that are listed
on such Exchange; and (2) since information was last published in compliance
with such listing obligations, the Company, having made all reasonable
enquiries, has not become aware of any change in circumstances which could
reasonably be regarded as significantly and adversely affecting its ability
to meet its obligations on this Note as they fall due. Repayment of
principal and payment of interest and any premium on this Note have not been
guaranteed by any person.
This Note shall be deemed to be a contract made and to be performed
solely in the State of New York, and for all purposes shall be governed by,
and construed in accordance with, the laws of said State without regard to
the conflicts of law rules of said State.
18
<PAGE>
All terms used in this Note that are defined in the Indenture shall
have the meanings assigned to them in the Indenture.
19
<PAGE>
SCHEDULE OF ISSUANCES, EXCHANGES AND AGGREGATE PRINCIPAL AMOUNT
The following issuances and exchanges of a part of this Note have been
made, and the aggregate principal amount of Bearer Notes represented by this
Note at any time is as shown in the last entry of Column III hereof unless
one or more entries have been made in Column IV hereof reflecting exchanges
for individual Bearer Notes, in which event such aggregate principal amount
is as shown in the last entry of Column V hereof.
I. II. III. IV. V. VI.
Principal
Amount Aggregate Notation
Aggregate Exchanged Principal made
Settlement Principal Principal for Indivi- Amount on behalf
Date or Date Amount Amount dual Bearer Remaining of the
of Exchange Issued Issued Notes After Exchange Trustee
____________ _________ _________ ___________ ______________ _________
____________ _________ _________ ___________ ______________ _________
____________ _________ _________ ___________ ______________ _________
____________ _________ _________ ___________ ______________ _________
____________ _________ _________ ___________ ______________ _________
____________ _________ _________ ___________ ______________ _________
____________ _________ _________ ___________ ______________ _________
____________ _________ _________ ___________ ______________ _________
____________ _________ _________ ___________ ______________ _________
____________ _________ _________ ___________ ______________ _________
____________ _________ _________ ___________ ______________ _________
____________ _________ _________ ___________ ______________ _________
____________ _________ _________ ___________ ______________ _________
____________ _________ _________ ___________ ______________ _________
20
<PAGE>
SCHEDULE OF INTEREST PAYMENTS
The following payments of interest in respect of
this Note have been made.
Date of Notation made
Interest Interest on behalf of the
Payment Paid Trustee
________ ________ ________________
________ ________ ________________
________ ________ ________________
________ ________ ________________
________ ________ ________________
________ ________ ________________
________ ________ ________________
________ ________ ________________
________ ________ ________________
________ ________ ________________
________ ________ ________________
________ ________ ________________
________ ________ ________________
________ ________ ________________
21
<PAGE>
REGISTERED NO. PRINCIPAL AMOUNT
SALOMON INC
NOTES, SERIES G
(FLOATING RATE) CUSIP
Due More Than Nine Months from Date of Issue
UNLESS THIS GLOBAL NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE
OF THE DEPOSITORY TRUST COMPANY TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF
TRANSFER, EXCHANGE OR PAYMENT, AND ANY NOTE ISSUED IS REGISTERED IN THE NAME OF
CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE
OF THE DEPOSITORY TRUST COMPANY (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO
SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
IF APPLICABLE, THE "TOTAL AMOUNT OF OID" AND "YIELD TO MATURITY" SET
FORTH BELOW WILL BE COMPLETED SOLELY FOR THE PURPOSES OF APPLYING THE FEDERAL
INCOME TAX ORIGINAL ISSUE DISCOUNT ("OID") RULES.
Issue Price: Original Issue Date:
Initial Interest Rate: Stated Maturity:
Authorized Denominations:
(If other than as set forth below)
Base Rate: [ ] CD Rate [ ] Commercial Paper [ ] Federal Funds Rate
[ ] LIBOR Telerate [ ] LIBOR Reuters [ ] Treasury Rate
[ ] Treasury Rate Constant Maturity [ ] Other (see attached)
Interest Reset Period Index Maturity:
or Interest Reset Dates:
Interest Payment Dates:
(If other than as set forth below)
Spread Multiplier: Spread (+/-):
Maximum Interest Rate: Minimum Interest Rate:
Amortizing Note: [ ] Yes [ ] No
Amortization Schedule:
Discount Note: [ ] Yes [ ] No
Total Amount of OID:
Yield to Maturity:
Survivor's Options: [ ] Yes [ ] No
<PAGE>
SALOMON INC, a corporation duly organized and existing under the laws
of the State of Delaware (herein referred to as the "Company") for value
received hereby promises to pay CEDE & Co. or registered assigns, the Principal
Amount in the Specified Currency on the Stated Maturity shown above or earlier,
if and to the extent so provided herein, and to pay accrued interest on the
Principal Amount then outstanding at the Initial Interest Rate shown above from
the Original Issue Date shown above until the first Interest Reset Date shown
above following the Original Issue Date and thereafter at the Base Rate shown
above, adjusted by the Spread or Spread Multiplier, if any, shown above,
determined in accordance with the provisions on the reverse hereof, until the
Principal Amount then outstanding is paid or duly provided for in accordance
with the terms hereof. The interest so payable, and punctually paid or duly
provided for, on each Interest Payment Date specified herein will, as provided
in the Indenture referred to below, be paid to the person in whose name this
Note (or one or more Predecessor Securities) is registered at the close of
business on the Regular Record Date for such interest, which, in the case of any
Interest Payment Date shall be the date (whether or not a Business Day), fifteen
calendar days immediately preceding such Interest Payment Date and, in the case
of interest payable at Maturity shall be the Stated Maturity of this Note.
Notwithstanding the foregoing, if this Note is issued between a Regular Record
Date and the related Interest Payment Date, the interest so payable for the
period from the Original Issue Date to such Interest Payment Date shall be paid
on the next succeeding Interest Payment Date to the Registered Holder hereof on
the related Regular Record Date. Any such interest not so punctually paid or
duly provided for shall forthwith cease to be payable to the Registered Holder
hereof on such Regular Record Date and may be paid to the Person in whose name
this Note (or one or more Predecessor Securities) is registered at the close of
business on a Special Record Date for the payment of such Defaulted Interest to
be fixed by the Trustee, notice whereof shall be given to Holders of Notes not
less than ten days prior to such Special Record Date, or may be paid at any time
in any other lawful manner not inconsistent with the requirements of any
securities exchange on which the Registered Notes may be listed, and upon such
notice as may be required by such exchange, all as more fully provided in said
Indenture.
For purposes of this Note, "Business Day" means any day, other than a
Saturday or Sunday, that is (a) not a day on which banking institutions are
authorized or required by law or regulation to be closed in The City of New York
and (b) if the Base Rate specified above is LIBOR, a London Banking Day.
"London Banking Day" means any day on which dealings in deposits in the
Specified Currency are transacted in the London interbank market.
2
<PAGE>
If this Note is an Amortizing Note as shown on the face hereof, a
portion or all the principal amount of the Note is payable prior to Stated
Maturity in accordance with a schedule, by application of a formula, or by
reference to an index (as described above).
The interest payable hereunder, and punctually paid or duly provided
for, on any Interest Payment Date will be paid to the Person in whose name this
Debt Security, or one or more Predecessor Securities, is registered at the close
of business on the Regular Record Date for such interest, which shall be the
first day of the calendar month in which such Interest Payment Date occurs;
provided, however, that in the case of interest payable at Stated Maturity,
- -------- -------
interest will be paid to the Person so registered at Stated Maturity. Any such
interest not so punctually paid or duly provided for shall forthwith cease to be
payable to the registered Holder on such Regular Record Date by virtue of such
Person having been such Holder, and may either be paid to the Person in whose
name this Debt Security (or one or more Predecessor Securities) is registered at
the close of business on a Special Record Date to be fixed by the Trustee for
the payment of such Defaulted Interest, notice of which having been given to
each Holder of Debt Securities of this series not less than 10 days prior to
such Special Record Date, or be paid at any time in any other lawful manner not
inconsistent with the requirements of any securities exchange on which the Debt
Securities of this series may be listed, and upon such notice as may be required
by such exchange, all as more fully provided in the Indenture.
Payment of the principal of and interest on this Note will be made by
the Company to the Trustee in immediately available funds, and if such payments
are made by the Company, the Trustee in turn will make such payments to the
registered Holder hereof in funds immediately available to such Holder.
REFERENCE IS HEREBY MADE TO THE FURTHER PROVISIONS OF THIS NOTE SET
FORTH BELOW, AND SUCH FURTHER PROVISIONS SHALL FOR ALL PURPOSES HAVE THE SAME
EFFECT AS THOUGH FULLY SET FORTH IN THIS PLACE.
This Note shall not become valid or obligatory for any purpose unless
and until this Note has been authenticated by Citibank, N.A., or its successor,
as Trustee.
3
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Note to be executed
under its corporate seal.
Dated:
SALOMON INC
By ______________________________________
Chairman of the Board of Directors,
President and Chief Executive Officer
Attest _________________________________
Secretary
CERTIFICATE OF AUTHENTICATION
This is one of the Notes issued under the within-mentioned Indenture.
CITIBANK, N.A.
as Trustee
By ______________________________________
Authorized Signatory
4
<PAGE>
SALOMON INC
MEDIUM-TERM NOTE, SERIES G
(FLOATING RATE)
This Note is one of a series of duly authorized debt securities of the
Company (the "Debt Securities") issued or to be issued in one or more series
under an indenture, dated as of December 1, 1988 (the "Indenture") between the
Company and Citibank, N.A., as trustee (the "Trustee", which term includes any
successor Trustee under the Indenture) to which indenture and all indentures
supplemental thereto reference is hereby made for a statement of the respective
rights, limitations of rights, duties and immunities thereunder of the Company,
the Trustee and the Holders of the Debt Securities and of the terms upon which
the Debt Securities are, and are to be, authenticated and delivered.
Unless otherwise specified above, the authorized denominations of
Registered Notes denominated in U.S. dollars will be U.S.$1,000 and any larger
amount that is an integral multiple of U.S.$1,000.
Each Registered Note will be issued initially as either a Book-Entry
Note or, if so specified above, a Certificated Note.
If the Holder of this Note has a Survivor's Option, as indicated
above, to elect repayment of this Note prior to Stated Maturity in the event of
the death of any beneficial owner hereof, then, pursuant to exercise of such
Survivor's Option, the Company will repay this Note (or applicable portion
hereof) when properly tendered for repayment by or on behalf of the Person (the
"Representative") that has authority to act on behalf of the deceased beneficial
owner hereof under the laws of the appropriate jurisdiction (including, without
limitation, the personal representative, executor, surviving joint tenant or
surviving tenant by the entirety of such deceased beneficial owner) at a price
equal to 100 percent of the principal amount payable hereunder with respect to
such beneficial owner, plus accrued interest thereon to the date of such
repayment; provided, however, that the Company may, in its sole discretion,
-------- -------
limit to $2,500,000 the aggregate principal amount of Notes of this series as to
which exercises of the Survivor's Option will be accepted in any calendar year
(the "Annual Put Limitation") and, in the event that the Annual Put Limitation
is applied, limit to $250,000 the aggregate principal amount of Notes (or
portions thereof) as to which exercises of the Survivor's Option will be
accepted in such calendar year with respect to any individual deceased
beneficial owner of Notes; and provided, further, that the Company will not make
-------- -------
any principal payment pursuant to exercise of the Survivor's Option in an amount
that is less than $5,000, and, in the event that the foregoing limitations would
result in the partial repayment to any individual deceased
5
<PAGE>
beneficial owner of Notes, the principal amount owned by such deceased
beneficial owner must not be less than $5,000 as a result of such repayment,
which is the minimum authorized denomination of the Notes. This Note, or any
portion hereof, tendered pursuant to an exercise of the Survivor's Option, may
be withdrawn by a written request of the Holder hereof received by the Trustee
prior to its repayment.
This Note (or any portion hereof), if tendered pursuant to a valid
exercise of the Survivor's Option, will be accepted promptly based on the order
in which all such Notes (or any portion thereof) are tendered, unless the
acceptance hereof would (i) contravene the Annual Put Limitation or (ii) result
in the acceptance during the then current calendar year of an aggregate
principal amount of Notes (or portions thereof) exceeding $250,000 with respect
to any individual deceased beneficial owner. If, as of the end of any calendar
year, the Company has not imposed the Annual Put Limitation or the aggregate
principal amount of Notes that have been accepted pursuant to exercise of the
Survivor's Option during such year has not exceeded the Annual Put Limitation
for such year, any exercise of the Survivor's Option with respect to this Note
(or any portion hereof) not accepted during such calendar year because more than
$250,000 aggregate principal amount of Notes (or portions thereof) was tendered
with respect to the individual deceased beneficial owner hereof will be accepted
in the order all such Notes were tendered, to the extent that any such exercise
would not trigger the Annual Put Limitation, if any, for such calendar year.
This Note (or portion hereof), if accepted for repayment pursuant to exercise of
the Survivor's Option, will be repaid on the first Interest Payment Date that
occurs twenty or more calendar days after the date of such acceptance. If this
Note (or any portion hereof) is tendered for repayment and is not accepted in
any calendar year due to the application of the Annual Put Limitation, then this
Note (or any such portion) will be deemed to be tendered in the following
calendar year based on the order in which all such Notes (or any portion
thereof) were originally tendered, unless this Note (or any such portion hereof)
is withdrawn by the Holder. In the event that this Note (or any portion hereof)
tendered for repayment pursuant to valid exercise of the Survivor's Option is
not accepted, the Trustee will deliver a notice to the affected Representative
by first-class mail to the broker or other entity that represents the deceased
beneficial owner of this Note that states the reasons this Note (or such
portion) has not been accepted for repayment.
Subject to the foregoing, in order for the Survivor's Option to be
validly exercised, the Trustee must receive (i) a written request for repayment
signed by the Representative, and such signature must be guaranteed by a member
firm of a registered national securities exchange or of the National Association
of Securities Dealers, Inc. or a commercial bank or
6
<PAGE>
trust company having an office or correspondent in the United States, (ii)
tender of this Note (or applicable portion hereof), (iii) appropriate evidence
satisfactory to the Company and the Trustee that (A) the Representative has
authority to act on behalf of the applicable deceased beneficial owner hereof,
(B) the death of such beneficial owner has occurred and (C) the deceased was a
beneficial owner hereof at the time of death, and (iv) a certificate
satisfactory to the Trustee from the broker or other entity through which the
deceased beneficial owner has an interest in this Note stating that such broker
or other entity represents the deceased beneficial owner. All questions as to
the eligibility or validity of any exercise of the Survivor's Option will be
determined by the Company, in its sole discretion, which determination will be
final and binding.
This Note will not be subject to any sinking fund.
Notwithstanding anything herein to the contrary, if this Note is a
Discount Note, the amount payable in the event of redemption or repayment prior
to the Stated Maturity hereof, in lieu of the principal amount due at the Stated
Maturity hereof, shall be the Amortized Face Amount of this Note as of the
redemption date or the date of repayment, as the case may be. The "Amortized
Face Amount" of this Note shall be the amount equal to (a) the Issue Price (as
set forth on the face hereof) plus (b) that portion of the difference between
the Issue Price and the principal amount hereof that has accrued at the Yield to
Maturity (as set forth on the face hereof) (computed in accordance with
generally accepted United States bond yield computation principles) at the date
as of which the Amortized Face Amount is calculated, but in no event shall the
Amortized Face Amount of this Note exceed its principal amount.
This Note will bear interest from its Original Issue Date to the first
Interest Reset Date (as defined below) at the Initial Interest Rate set forth on
the face hereof. Thereafter, the interest rate hereon for each Interest Reset
Period (as defined below) will be determined by reference to the Base Rate
specified on the face hereof, plus or minus the Spread, if any, or multiplied by
the Spread Multiplier, if any, specified on the face hereof. The Base Rates
that may be specified on the face hereof are LIBOR, the Commercial Paper Rate,
the Treasury Rate, the Federal Funds Rate, the CD Rate or any other Base Rate
specified on the face hereof. "H.15(519)" means the publication entitled
"Statistical Release H.15(519), Selected Interest Rates" or any successor
publication, published by the Board of Governors of the Federal Reserve System.
As specified on the face hereof, this Note may also have either or
both of the following (in each case expressed as a rate per annum on a simple
interest basis): (i) a maximum limitation, or ceiling, on the rate at which
interest may accrue
7
<PAGE>
during any interest period ("Maximum Interest Rate") and (ii) a minimum
limitation, or floor, on the rate at which interest may accrue during any
interest period ("Minimum Interest Rate"). In addition to any Maximum Interest
Rate that may be specified on the face hereof, the interest rate will in no
event be higher than the maximum rate permitted by applicable law, as the same
may be modified by United States law of general application.
The interest rate hereon will be reset daily, weekly, monthly,
quarterly, semiannually or annually (such period being the "Interest Reset
Period" specified on the face hereof, and the first day of each Interest Reset
Period being an "Interest Reset Date"). Unless otherwise specified on the face
hereof, the Interest Reset Dates will be, if this Note resets daily, each
Business Day; if this Note (unless this Note is a Treasury Rate Note) resets
weekly, Wednesday of each week; if this Note is a Treasury Rate Note that resets
weekly, Tuesday of each week (except as provided below under "Determination of
Treasury Rate"); if this Note resets monthly, the third Wednesday of each month;
if this Note resets quarterly, the third Wednesday of March, June, September and
December of each year; if this Note resets semiannually, the third Wednesday of
the two months of each year specified on the face hereof; and if this Note
resets annually, the third Wednesday of the month of each year specified on the
face hereof; provided, however, that in all instances the interest rate in
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effect for the ten days immediately prior to the Maturity hereof will be that in
effect on the tenth day preceding Maturity. If an Interest Reset Date would
otherwise be a day that is not a Business Day, such Interest Reset Date shall be
postponed to the next succeeding Business Day, except that, if the Base Rate
specified on the face hereof is LIBOR and such Business Day is in the next
succeeding calendar month, such Interest Reset Date shall be the immediately
preceding Business Day.
Unless otherwise specified on the face hereof, the interest payable
hereon on each Interest Payment Date shall be the accrued interest from and
including the Original Issue Date or the last date to which interest has been
paid, as the case may be, to but excluding such Interest Payment Date, provided,
--------
however, that if the interest rate is reset daily or weekly, the interest
- -------
payable hereon shall be the accrued interest from and including the Original
Issue Date or the last date to which interest has been accrued and paid, as the
case may be, to but excluding the Record Date immediately preceding such
Interest Payment Date, except that, at Maturity, the interest payable will
include interest accrued to, but excluding, the date of Maturity. Accrued
interest shall be calculated by multiplying the principal amount hereof by an
accrued interest factor. Such accrued interest factor will be computed by
adding the interest factors calculated for each day in the period for which
accrued interest is being calculated. The interest factor (expressed as a
decimal
8
<PAGE>
calculated to seven decimal places without rounding) for each such day is
computed by dividing the interest rate in effect on such day by 360 if the Base
Rate specified on the face hereof is the Commercial Paper Rate, the Federal
Funds Rate, the CD Rate or LIBOR, or by the actual number of days in the year,
if the Base Rate specified on the face hereof is the Treasury Rate. For
purposes of making the foregoing calculation, the interest rate in effect on any
Interest Reset Date will be the applicable rate as reset on such date. Unless
otherwise specified on the face hereof, all percentages resulting from any
calculation of the rate of interest hereof will be rounded, if necessary, to the
nearest 1/100,000 of 1% (.0000001), with five one-millionths of a percentage
point rounded upward, and all currency amounts used in or resulting from such
calculation will be rounded to the nearest one-hundredth of a unit (with .005 of
a unit being rounded upward).
Interest on each Note will be payable, in arrears, either monthly,
quarterly or semi-annually. In the case of a Note that provides for monthly
interest payments, interest will be payable on the fifteenth day of each
calendar month; provided, however, that in the case of such Note issued between
a Regular Record Date (as defined below) and an Interest Payment Date, interest
will be payable on the next succeeding Interest Payment Date. In the case of a
Note that is three months from (i) the Original Issue Date, if such Note is
issued on the fifteenth day of a calendar month, or (ii) the preceding fifteenth
day of a calendar month prior to the Original Issue Date. In the case of a Note
that provides for semi-annual interest payments, interest will be payable
commencing on the day that is six months from (i) the Original Issue Date, if
such Note is issued on the fifteenth day of a calendar month, or (ii) the
preceding fifteenth day of a calendar month prior to the Original Issue Date.
The Regular Record Date with respect to any interest Payment Date for a Note
will be the first day of the calendar month in which such Interest Payment Date
occurs, except that the Regular Record Date with respect to the final Interest
Payment Date will be the final Interest Payment Date. Each payment of interest
in respect of an Interest Payment Date will include interest accrued to such
Interest Payment Date.
The Company has appointed and entered into an agreement with an agent
(a "Calculation Agent") to calculate the interest rates on Floating Rate Notes.
Unless otherwise specified on the face hereof, Citibank, N.A. shall be the
Calculation Agent. At the request of the Holder hereof, the Calculation Agent
will provide the interest rate then in effect and, if determined, the interest
rate that will become effective on the next Interest Reset Date. All
determinations of interest rates by the Calculation Agent shall, in the absence
of manifest error, be conclusive for all purposes and binding on the Holder
hereof.
9
<PAGE>
Subject to applicable provisions of law and except as specified
herein, on each Interest Reset Date the rate of interest shall be the rate
determined in accordance with the provisions of the applicable heading below.
Determination of CD Rate
If the Base Rate specified on the face hereof is the CD Rate, this
Note will bear interest for each Interest Reset Period at the interest rate
calculated with reference to the CD Rate and the Spread or Spread Multiplier, if
any, specified on the face hereof. The "CD Rate" for each Interest Reset Period
shall be the rate as of the second Business Day prior to the Interest Reset Date
for such Interest Reset Period (a "CD Rate Determination Date") for negotiable
certificates of deposit having the Index Maturity specified on the face hereof
as published in H.15(519) under the heading "CDs (Secondary Market)". In the
event that such rate is not published prior to 3:00 p.m., New York City time, on
the Calculation Date (as defined below) pertaining to such CD Rate Determination
Date, then the "CD Rate" for such Interest Reset Period will be the rate on such
CD Rate Determination Date for negotiable certificates of deposit of the Index
Maturity specified on the face hereof as published by the Federal Reserve Bank
of New York in its daily statistical release "Composite 3:30 p.m. Quotations for
U.S. Government Securities" ("Composite Quotations") under the heading
"Certificates of Deposit". If by 3:00 p.m., New York City time, on such
Calculation Date such rate is not yet published in either H.15(519) or Composite
Quotations, then the "CD Rate" for such Interest Reset Period will be calculated
by the Calculation Agent and will be the arithmetic mean of the secondary market
offered rates as of 10:00 a.m., New York City time, on such CD Rate
Determination Date of three leading nonbank dealers in negotiable U.S. dollar
certificates of deposit in The City of New York selected by the Calculation
Agent for negotiable certificates of deposit of major United States money center
banks of the highest credit standing (in the market for negotiable certificates
of deposit) with a remaining maturity closest to the Index Maturity on the face
hereof in a denomination of $5,000,000, provided, however, that if the dealers
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selected as aforesaid by the Calculation Agent are not quoting offered rates as
mentioned in this sentence, the CD Rate for such Interest Reset Period will be
the same as the CD Rate for the immediately preceding Interest Reset Period (or,
if there was no such Interest Reset Period, the Initial Interest Rate).
The "Calculation Date" pertaining to any CD Rate Determination Date
shall be the tenth calendar day after such CD Rate Determination Date or, if
such day is not a Business Day, the next succeeding Business Day.
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<PAGE>
Determination of Commercial Paper Rate
If the Base Rate shown on the face hereof is the Commercial Paper
Rate, this Note will bear interest for each Interest Reset Period at the
interest rate calculated with reference to the Commercial Paper Rate and the
Spread or Spread Multiplier, if any, specified on the face hereof. The
"Commercial Paper Rate" for each Interest Reset Period will be determined by the
Calculation Agent as of the second Business Day prior to the Interest Reset Date
for such Interest Reset Period (a "Commercial Paper Rate Determination Date")
and shall be the Money Market Yield (as defined below) on such Commercial Paper
Rate Determination Date of the rate for commercial paper having the Index
Maturity specified on the face hereof, as such rate shall be published in
H.15(519) under the heading "Commercial Paper". In the event that such rate is
not published prior to 3:00 p.m., New York City time, on the tenth calendar day
after such Commercial Paper Rate Determination Date or, if such day is not a
Business Day, the next succeeding Business Day, (the "Calculation Date") then
the Commercial Paper Rate for such Interest Reset Period shall be the Money
Market Yield on such Commercial Paper Rate Determination Date of the rate for
commercial paper of the Index Maturity specified on the face hereof as published
in Composite Quotations under the heading "Commercial Paper". If by 3:00 p.m.,
New York City time, on such Calculation Date such rate is not yet published in
either H.15(519) or Composite Quotations, then the "Commercial Paper Rate" for
such Interest Reset Period shall be the Money Market Yield of the arithmetic
mean of the offered rates as of 11:00 a.m., New York City time, on such
Commercial Paper Rate Determination Date of three leading dealers of commercial
paper in The City of New York selected by the Calculation Agent for commercial
paper of the Index Maturity specified on the face hereof placed for an
industrial issuer whose bonds are rated "AA" or the equivalent by a nationally
recognized rating agency, provided, however, that if the dealers selected as
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aforesaid by the Calculation Agent are not quoting offered rates as mentioned in
this sentence, the "Commercial Paper Rate" for such Interest Reset Period will
be the same as the Commercial Paper Rate for the immediately preceding Interest
Reset Period (or, if there was no such Interest Reset Period, the Initial
Interest Rate).
"Money Market Yield" shall be the yield calculated in accordance with
the following formula:
D x 360
Money Market Yield = -------------- X 100
360 - (D x M)
where "D" refers to the applicable per annum rate for commercial paper quoted on
a bank discount basis and expressed as a decimal and "M" refers to the actual
number of days in the Index Maturity specified on the face hereof.
11
<PAGE>
Determination of Federal Funds Rate
If the Base Rate specified on the face hereof is the Federal Funds
Rate, this Note will bear interest for each Interest Reset Period at the
interest rate calculated with reference to the Federal Funds Rate and Spread or
Spread Multiplier, if any, specified on the face hereof. The "Federal Funds
Rate" for each Interest Reset Period shall be the effective rate on the Interest
Reset Date for such Interest Reset Period (a "Federal Funds Rate Determination
Date") for Federal Funds as published in H.15(519) under the heading "Federal
Funds (Effective)". In the event that such rate is not published prior to 3:00
p.m., New York City time, on the Calculation Date (as defined below) pertaining
to such Federal Funds Rate Determination Date, the "Federal Funds Rate" for such
Interest Reset Period shall be the rate on such Federal Funds Rate Determination
Date as published in Composite Quotations under the heading "Federal
Funds/Effective Rate". If by 3:00 p.m., New York City time, on such Calculation
Date, such rate is not yet published in either H.15(519) or Composite
Quotations, then the "Federal Funds Rate" for such Interest Reset Period shall
be the rate on such Federal Funds Rate Determination Date made publicly
available by the Federal Reserve Bank of New York which is equivalent to the
rate which appears in H.15(519) under the heading "Federal Funds (Effective)",
provided, however, that if such rate is not made publicly available by the
- -------- -------
Federal Reserve Bank of New York by 3:00 p.m., New York City time, on such
Calculation Date, the "Federal Funds Rate" for such Interest Reset Period will
be the same as the Federal Funds Rate in effect for the immediately preceding
Interest Reset Period (or, if there is no such Interest Reset Period, the
Initial Interest Rate). If this Note resets daily, the interest rate on this
Note for the period from and including a Monday to but excluding the succeeding
Monday will be reset by the Calculation Agent on such second Monday (or, if not
a Business Day, on the next succeeding Business Day) to a rate equal to the
average of the Federal Funds Rates in effect with respect to each such day in
such week.
The "Calculation Date" pertaining to any Federal Funds Rate
Determination Date shall be the next succeeding Business Day.
Determination of LIBOR
If the Base Rate specified on the face hereof is LIBOR, this Note will
bear interest for each Interest Reset Period at the interest rate calculated
with reference to LIBOR and the Spread or Spread Multiplier, if any, specified
on the face hereof. "LIBOR" for each Interest Reset Period will be determined
by the Calculation Agent as follows:
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<PAGE>
(i) On the second London Banking Day prior to the Interest Reset Date
for such Interest Reset Period (a "LIBOR Determination Date"), the
Calculation Agent for such LIBOR Note will determine the arithmetic mean of
the offered rates for deposits in the Specified Currency for the period of
the Index Maturity specified on the face hereof, commencing on such
Interest Reset Date, which appear on the Designated LIBOR Page at
approximately 11:00 a.m., London time, on such LIBOR Determination Date.
"Designated LIBOR Page" means either (a) if "LIBOR Telerate" is designated
on the face hereof, the display designated as page "3750" on the Dow Jones
Telerate Service (or such other page as may replace page "3750" on such
service or such other service as may be nominated by the British Bankers'
Association for the purpose of displaying the London interbank offered
rates of major banks) or (b) if "LIBOR Reuters" is designated on the face
hereof, the display designated as page "LIBO" on the Reuters Monitor Money
Rates Service (or such other page as may replace the LIBO page on such
service or such other service as may be nominated by the British Bankers'
Association for the purpose of displaying London interbank offered rates of
major banks). If neither LIBOR Reuters nor LIBOR Telerate is specified on
the face hereof, LIBOR will be determined as if LIBOR Telerate had been
specified. If at least two such offered rates appear on the Designated
LIBOR Page, "LIBOR" for such Interest Reset Period will be the arithmetic
mean of such offered rates as determined by the Calculation Agent for such
LIBOR Note.
(ii) If fewer than two offered rates appear on the Designated LIBOR
Page on such LIBOR Determination Date, the Calculation Agent will request
the principal London offices of each of four major banks in the London
interbank market selected by the Calculation Agent to provide the
Calculation Agent with its offered quotations for deposits in the Specified
Currency for the period of the Index Maturity specified on the face hereof,
commencing on such Interest Reset Date, to prime banks in the London
interbank market at approximately 11:00 a.m., London time, on such LIBOR
Determination Date and in a principal amount equal to an amount of not less
than $1,000,000 or the approximate equivalent thereof in the Specified
Currency that is representative of a single transaction in such market at
such time. If at least two such quotations are provided, "LIBOR" for such
Interest Reset Period will be the arithmetic mean of such quotations. If
fewer than two such quotations are provided, "LIBOR" for such Interest
Reset Period will be the arithmetic mean of rates quoted by three major
banks in The City of New York selected by the Calculation Agent at
approximately 11:00 a.m., New York City time, on such LIBOR Determination
Date for loans in the Specified Currency to leading European banks for the
period
13
<PAGE>
of the Index Maturity specified on the face hereof, commencing on such
Interest Reset Date, and in a principal amount equal to an amount of not
less than $1,000,000 or the approximate equivalent thereof in the Specified
Currency that is representative of a single transaction in such market at
such time, provided, however, that if fewer than three banks selected as
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aforesaid by the Calculation Agent are quoting rates as mentioned in this
sentence, "LIBOR" for such Interest Reset Period will be the same as LIBOR
for the immediately preceding Interest Reset Period (or, if there was no
such Interest Reset Period, the Initial Interest Rate).
Determination of Treasury Rate
If the Base Rate specified on the face hereof is the Treasury Rate,
this Note will bear interest for each Interest Reset Period at the interest rate
calculated with reference to the Treasury Rate and the Spread or Spread
Multiplier, if any, specified on the face hereof. The "Treasury Rate" for each
Interest Reset Period will be the rate for the auction held on the Treasury Rate
Determination Date (as defined below) for such Interest Reset Period of direct
obligations of the United States ("Treasury bills") having the Index Maturity
specified on the face hereof, as published in H.15(519) under the heading "U.S.
Government Securities-Treasury bills-auction average (investment)" or, if not so
published by 3:00 p.m., New York City time, on the tenth calendar day after such
Treasury Rate Determination Date (or, if such day is not a Business Day, the
next succeeding Business Day) (the "Calculation Date"), the auction average rate
(expressed as a bond equivalent on the basis of a year of 365 or 366 days, as
applicable, and applied on a daily basis) on such Treasury Rate Determination
Date as otherwise announced by the United States Department of the Treasury. In
the event that the results of the auction of Treasury bills having the Index
Maturity specified on the face hereof are not published or reported as provided
above by 3:00 p.m., New York City time, on such Calculation Date, or if no such
auction is held on such Treasury Rate Determination Date, then the "Treasury
Rate" for such Interest Reset Period shall be calculated by the Calculation
Agent and shall be a yield to maturity (expressed as a bond equivalent on the
basis of a year of 365 or 366 days, as applicable, and applied on a daily basis)
of the arithmetic mean of the secondary market bid rates as of approximately
3:30 p.m., New York City time, on such Treasury Rate Determination Date, of
three leading primary United States government securities dealers selected by
the Calculation Agent for the issue of Treasury bills with a remaining maturity
closest to the Index Maturity specified on the face hereof, provided, however,
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that if the dealers selected as aforesaid by the Calculation Agent are not
quoting bid rates as mentioned in this sentence, then the "Treasury Rate" for
such Interest Reset Period
14
<PAGE>
will be the same as the Treasury Rate for the immediately preceding Interest
Reset Period (or, if there was no such Interest Reset Period, the Initial
Interest Rate).
The "Treasury Rate Determination Date" for each Interest Reset Period
will be the day of the week in which the Interest Reset Date for such Interest
Reset Period falls on which Treasury bills would normally be auctioned.
Treasury bills are normally sold at auction on Monday of each week, unless that
day is a legal holiday, in which case the auction is normally held on the
following Tuesday, except that such auction may be held on the preceding Friday.
If, as the result of a legal holiday, an auction is so held on the preceding
Friday, such Friday will be the Treasury Rate Determination Date pertaining to
the Interest Reset Period commencing in the next succeeding week. If an auction
date shall fall on any day that would otherwise be an Interest Reset Date for a
Note whose Base Rate is the Treasury Rate, then such Interest Reset Date shall
instead be the Business Day immediately following such auction date.
If "Constant Maturity" is specified in the applicable Pricing
Supplement, the "Treasury Rate" for each Interest Reset Period will be the rate
that is set forth in the Federal Reserve Board publication H.15(519) opposite
the caption "U.S. Government/Securities/Treasury Constant Maturities/" in the
Index Maturity with respect to the applicable Constant Maturity Treasury Rate
Determination Date (as defined below). If the H.15(519) is not published, the
"Constant Maturity -- Treasury Rate" shall be the rate that was set forth on
Telerate Page 7055, or its successor page (as determined by the Calculation
Agent), on the applicable Constant Maturity Treasury Rate Determination Date
opposite the applicable Index Maturity. If no such rate is set forth, then the
constant Maturity Treasury Rate for such Interest Reset Period shall be
established by the Calculation Agent as follows. The Calculation Agent will
contact the Federal Reserve Board and request the Constant Maturity Treasury
Rate, in the applicable Index Maturity, for the Constant Maturity Treasury Rate
Determination Date. If the Federal Reserve Board does not provide such
information, then the Constant Maturity Treasury Rate for such Interest Reset
Date will be the arithmetic mean of bid-side quotations, expressed in terms of
yield, reported by three leading U.S. government securities dealers (one of
which may be Salomon Brothers Inc), according to their written records, as of
3:00 p.m. (New York City time) on the Constant Maturity Treasury rate
Determination Date, for the noncallable U.S. Treasury Note that is nearest in
maturity to the Index Maturity, but not less than exactly the Index Maturity and
for the noncallable U.S. Treasury Note that is nearest in maturity to the Index
Maturity, but not more than exactly the Index Maturity. The Calculation Agent
shall calculate the Constant Maturity Treasury Rate by interpolating to the
Index Maturity based on an actual/actual date count basis, the yield on the two
Treasury Notes selected. If the Calculation
15
<PAGE>
Agent cannot obtain three such adjusted quotations, the Constant Maturity
Treasury Rate for such Interest Reset Date will be the arithmetic mean of all
such quotations, or if only one such quotation is obtained, such quotation,
obtained by the Calculation Agent. In all events, the Calculation Agent shall
continue polling dealers until at least one adjusted yield quotation can be
determined.
"The Constant Maturity Treasury Rate Determination Date" shall be the
tenth Business Day prior to the Interest Reset Date for the applicable Interest
Reset Period.
The "Calculation Date" pertaining to any Treasury Rate Determination
Date or Constant Maturity Rate Determination Date, as applicable, shall be the
tenth calendar day after such Treasury Rate Determination Date or Constant
Maturity Rate Determination Date, as applicable, or, if such a day is not a
Business Day, the next succeeding Business Day.
Other
As provided in the Indenture and subject to certain limitations
therein set forth, this Note is exchangeable for a like aggregate principal
amount of Registered Notes of different authorized denominations, as requested
by the Person surrendering the same.
As provided in the Indenture and subject to certain limitations
therein set forth, the transfer of this Note is registrable on the Security
Register of the Company, upon surrender of this Note for registration of
transfer at the office or agency of the Company in the Borough of Manhattan, the
City and State of New York, duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Company, the Security
Registrar and the Trustee duly executed by the Holder hereof or his attorney
duly authorized in writing, and thereupon one or more new Registered Notes of
this series, of authorized denominations and for the same aggregate principal
amount, will be issued to the designated transferee or transferees.
No service charge shall be made for any such registration of transfer
or exchange, but the Company may require payment of a sum sufficient to cover
any tax or other governmental charge payable in connection therewith.
Prior to due presentment of this Note for registration of transfer,
the Company, the Trustee and any agent of the Company or the Trustee may treat
the Person in whose name this Note is registered as the Holder hereof for all
purposes, whether or not this Note be overdue, and neither the Company, the
Trustee nor any such agent shall be affected by notice to the contrary.
16
<PAGE>
If an Event of Default with respect to the Debt Securities of this
series shall have occurred and be continuing, the principal of all the Debt
Securities of this series may be declared due and payable in this manner and
with the effect provided in the Indenture.
In case this Note shall at any time become mutilated, destroyed,
stolen or lost and this Note or evidence of the loss, theft, or destruction
hereof (together with such indemnity and such other documents or proof as may be
required by the Company or the Trustee) shall be delivered to the principal
corporate trust office of the Trustee, a new Registered Note of like tenor and
principal amount will be issued by the Company in exchange for, or in lieu of,
this Note. All expenses and reasonable charges associated with procuring such
indemnity and with the preparation, authentication and delivery of a new
Registered Note shall be borne by the Holder of this Note.
The Indenture permits, with certain exceptions as therein provided,
the amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Holders of the Debt Securities of each series to
be affected under the Indenture at any time by the Company and the Trustee with
the consent of the Holders of not less than a majority in aggregate principal
amount of Debt Securities at the time outstanding of each series to be affected.
The Indenture also contains provisions permitting the Holders of specified
percentages in aggregate principal amount of the Debt Securities of any series
at the time outstanding, on behalf of the Holders of all the Debt Securities of
such series, to waive compliance by the Company with certain provisions of the
Indenture and certain past defaults under the Indenture and their consequences.
Any such consent or waiver by the Holder of this Debt Security shall be
conclusive and binding upon such Holder and upon all future Holders of this Debt
Security and of any Debt Security issued upon the registration of transfer
hereof or in exchange hereof or in lieu hereof, whether or not notation of such
consent or waiver is made upon the Debt Security.
Holders of Debt Securities may not enforce their rights pursuant to
the Indenture or the Note except as provided in the Indenture. No reference
herein to the Indenture and no provision of this Note or of the Indenture shall
alter or impair the obligation of the Company, which is absolute and
unconditional, to pay the principal of (and premium, if any) and interest on
this Note at the times, place and rate, and the coin or currency, herein
prescribed.
This Note shall be deemed to be a contract made and to be performed
solely in the State of New York and for all purposes be governed by, and
construed in accordance with, the laws of
17
<PAGE>
said State without regard to the conflicts of law rules of said State.
Except as otherwise provided herein or in the Indenture, until
exchanged in full for individual Notes, this Note shall in all respects be
entitled to the same benefits and subject to the same terms and conditions of,
and the Company shall be subject to the same restrictions as those contained in,
the individual Notes and in the Indenture.
UNLESS OR UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR THE INDIVIDUAL
----------------------------------------------------------------------
NOTES REPRESENTED HEREBY, THIS GLOBAL NOTE MAY NOT BE TRANSFERRED EXCEPT AS A
- -----------------------------------------------------------------------------
WHOLE BY THE DEPOSITARY (AS DEFINED HEREIN) TO A NOMINEE OF THE DEPOSITARY OR BY
- --------------------------------------------------------------------------------
A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE
- -----------------------------------------------------------------------
DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR
- --------------------------------------------------------------------------------
A NOMINEE OF SUCH SUCCESSOR DEPOSITARY.
- ---------------------------------------
All terms used in this Note that are defined in the Indenture shall
have the meanings assigned to them in the Indenture.
Unless the certificate of authentication hereon has been duly executed
by the Trustee by manual signature, this Note shall not be entitled to any
benefit under the Indenture or be valid or obligatory for any purposes.
18
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Note to be duly
executed under its corporate seal.
Dated:
SALOMON INC
By__________________________
Name : William J. Jennings
Title: Senior Vice President
Corporate Seal
Attest:
By__________________________
Name: Arnold S. Olshin
Title: Secretary
CERTIFICATE OF AUTHENTICATION
This is one of the Debt Securities issued
under the within-mentioned Indenture.
CITIBANK, N.A., as Trustee
By__________________________
Authorized Signatory
19
<PAGE>
ABBREVIATIONS
The following abbreviations, when used in the inscription on the face of
this instrument, shall be construed as though they were written out in full
according to applicable laws or regulations:
UNIF GIFT MIN ACT -
TEN COM - as tenants in common ___________Custodian_____________
TEN ENT - as tenants by the entireties (Cust) (Minor)
JT TEN - as joint tenants with right of Under Uniform Gifts to Minors Act
survivorship and not as tenants _________________________________
in common (State)
Additional abbreviations may also be used though not in the above list
________________________________________________
OPTION TO ELECT REPAYMENT
The undersigned hereby irrevocably requests and instructs the Company to
repay $________ principal amount of the within Note, pursuant to its terms, on
the "Optional Repayment Date" first occurring after the date of receipt of the
within Note as specified below, together with interest thereon accrued to the
date of repayment, to the undersigned at:
________________________________________________________________________________
________________________________________________________________________________
(Please Print or Type Name and Address of the Undersigned)
and to issue to the Undersigned, pursuant to the terms of the Indenture, a new
Note or Notes representing the remaining principal amount of this Note.
For this Option to Elect Repayment to be effective, this Note with the
Option to Elect Repayment duly completed must be received by the Company within
the relevant time period set forth above at its office or agency in the Borough
of Manhattan, the City and State of New York, located initially at the office of
the Trustee at, if delivery is by hand, 130 John Street, Street Level, New York,
New York, or, if delivery is by mail, 450 West 33rd Street, Attention:
Corporate Trust Department, New York, New York 10001.
Dated:
___________________________________________________
Note: The signature to this Option to Elect
Repayment must correspond with the name as written
upon the face of the within Note in every
particular without alteration or enlargement or any
change whatsoever.
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto
Please insert Social Security or Other
Identifying Number of Assignee
__________________________________________
_______________________________________________________________________________
________________________________________________________________________________
Please Print or Type Name and Address Including Zip Code of Assignee
________________________________________________________________________________
the within Note and all rights thereunder, hereby irrevocably constituting and
appointing
______________________________________________________________________ attorney
to transfer such Note on the books of Salomon Inc with full power of
substitution in the premises.
Dated: ______________________ ______________________________________________
Signature
______________________________________________
NOTICE: The signature to this assignment must
correspond with the name as it appears upon the
face of the Note in every particular, without
alteration or enlargement or any change
whatsoever.
20
<PAGE>
REGISTERED NO. PRINCIPAL AMOUNT
GLOBAL NOTE
SALOMON INC
NOTES, SERIES G
(FIXED RATE) CUSIP
Due More Than Nine Months from Date of Issue
UNLESS THIS GLOBAL NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE
OF THE DEPOSITORY TRUST COMPANY TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF
TRANSFER, EXCHANGE OR PAYMENT, AND ANY NOTE ISSUED IS REGISTERED IN THE NAME OF
CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE
OF THE DEPOSITORY TRUST COMPANY (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO
SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
IF APPLICABLE, THE "TOTAL AMOUNT OF OID" AND "YIELD TO MATURITY" SET
FORTH BELOW WILL BE COMPLETED SOLELY FOR THE PURPOSES OF APPLYING THE FEDERAL
INCOME TAX ORIGINAL ISSUE DISCOUNT ("OID") RULES.
Issue Price: Original Issue Date:
Interest Rate: Stated Maturity:
Interest Payment Dates: [ ] monthly,
commencing
[ ] quarterly
commencing
[ ] semi-annually,
commencing
SURVIVOR'S OPTION: [ ] YES [ ] NO
<PAGE>
SALOMON INC, a corporation duly organized and existing under the laws
of the State of Delaware (the "Company", which term includes any successor
corporation under the Indenture hereinafter referred to), for value received,
hereby promises to pay to CEDE & CO., as the nominee of The Depository Trust
Company (the "Depositary"), or registered assigns, (a) the Principal Amount then
outstanding at the Stated Maturity and (b) to pay interest thereon on each
Interest Payment Date and at Stated Maturity, from the Original Issue Date or
from the most recent Interest Payment Date to which interest has been paid or
duly provided for, at the Interest Rate, until the principal then outstanding
hereof becomes due and payable, and at such rate on any overdue principal and
(to the extent that the payment of such interest shall be legally enforceable)
on any overdue installment of interest.
If this Note is an Amortizing Note as shown on the face hereof, a
portion or all the principal amount of the Note is payable prior to Stated
Maturity in accordance with a schedule, by application of a formula, or by
reference to an index (as described above).
This Note is one of a series of duly authorized debt securities of the
Company (the "Debt Securities") issued or to be issued in one or more series
under an indenture, dated as of December 1, 1988 (as amended or supplemented
from time to time, the "Indenture"), between the Company and Citibank, N.A., as
trustee (the "Trustee", which term includes any successor Trustee under the
Indenture), to which Indenture reference is hereby made for a statement of the
respective rights, limitations of rights, duties and immunities thereunder of
the Company, the Trustee and each of the Holders of the Debt Securities and of
the terms upon which the Debt Securities are, and are to be, authenticated and
delivered. All terms used in this Note which are not defined herein shall have
the meanings assigned to them in the Indenture.
The interest payable hereunder, and punctually paid or duly provided
for, on any Interest Payment Date will be paid to the Person in whose name this
Debt Security, or one or more Predecessor Securities, is registered at the close
of business on the Regular Record Date for such interest, which shall be the
first day of the calendar month in which such Interest Payment Date occurs;
provided, however, that in the case of interest payable at Stated Maturity,
- -------- -------
interest will be paid to the Person so registered at Stated Maturity. Any such
interest not so punctually paid or duly provided for shall forthwith cease to be
payable to the registered Holder on such Regular Record Date by virtue of such
Person having been such Holder, and may either be paid to the Person in whose
name this Debt Security (or one or more Predecessor Securities) is registered at
the close of business on a Special Record Date to be fixed by the Trustee for
2
<PAGE>
the payment of such Defaulted Interest, notice of which having been given to
each Holder of Debt Securities of this series not less than 10 days prior to
such Special Record Date, or be paid at any time in any other lawful manner not
inconsistent with the requirements of any securities exchange on which the Debt
Securities of this series may be listed, and upon such notice as may be required
by such exchange, all as more fully provided in the Indenture.
Payment of the principal of and interest on this Note will be made by
the Company to the Trustee in immediately available funds, and if such payments
are made by the Company, the Trustee in turn will make such payments to the
registered Holder hereof in funds immediately available to such Holder.
Interest on this Note will be computed on the basis of a 360-day year
of twelve 30-day months. 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. "Business Day" with respect to this Debt Security
means any day that is not a Saturday, a Sunday or a day on which banking
institutions or trust companies in the City of New York are authorized or
obligated by law or executive order to close.
If the Holder of this Note has a Survivor's Option, as indicated
above, to elect repayment of this Note prior to Stated Maturity in the event of
the death of any beneficial owner hereof, then, pursuant to exercise of such
Survivor's Option, the Company will repay this Note (or applicable portion
hereof) when properly tendered for repayment by or on behalf of the Person (the
"Representative") that has authority to act on behalf of the deceased beneficial
owner hereof under the laws of the appropriate jurisdiction (including, without
limitation, the personal representative, executor, surviving joint tenant or
surviving tenant by the entirety of such deceased beneficial owner) at a price
equal to 100 percent of the principal amount payable hereunder with respect to
such beneficial owner, plus accrued interest thereon to the date of such
repayment; provided, however, that the Company may, in its sole discretion,
-------- -------
limit to $2,500,000 the aggregate principal amount of Notes of this series as to
which exercises of the Survivor's Option will be accepted in any calendar year
(the "Annual Put Limitation") and, in the event that the Annual Put Limitation
is applied, limit to $250,000 the aggregate principal amount of Notes (or
portions thereof) as to which exercises of the Survivor's Option will be
accepted in such calendar year with respect to any individual deceased
beneficial owner of Notes; and provided, further, that
-------- -------
3
<PAGE>
the Company will not make any principal payment pursuant to exercise of the
Survivor's Option in an amount that is less than $5,000, and, in the event that
the foregoing limitations would result in the partial repayment to any
individual deceased beneficial owner of Notes, the principal amount owned by
such deceased beneficial owner must not be less than $5,000 as a result of such
repayment, which is the minimum authorized denomination of the Notes. This
Note, or any portion hereof, tendered pursuant to an exercise of the Survivor's
Option, may be withdrawn by a written request of the Holder hereof received by
the Trustee prior to its repayment.
This Note (or any portion hereof), if tendered pursuant to a valid
exercise of the Survivor's Option, will be accepted promptly based on the order
in which all such Notes (or any portion thereof) are tendered, unless the
acceptance hereof would (i) contravene the Annual Put Limitation or (ii) result
in the acceptance during the then current calendar year of an aggregate
principal amount of Notes (or portions thereof) exceeding $250,000 with respect
to any individual deceased beneficial owner. If, as of the end of any calendar
year, the Company has not imposed the Annual Put Limitation or the aggregate
principal amount of Notes that have been accepted pursuant to exercise of the
Survivor's Option during such year has not exceeded the Annual Put Limitation
for such year, any exercise of the Survivor's Option with respect to this Note
(or any portion hereof) not accepted during such calendar year because more than
$250,000 aggregate principal amount of Notes (or portions thereof) was tendered
with respect to the individual deceased beneficial owner hereof will be accepted
in the order all such Notes were tendered, to the extent that any such exercise
would not trigger the Annual Put Limitation, if any, for such calendar year.
This Note (or portion hereof), if accepted for repayment pursuant to exercise of
the Survivor's Option, will be repaid on the first Interest Payment Date that
occurs twenty or more calendar days after the date of such acceptance. If this
Note (or any portion hereof) is tendered for repayment and is not accepted in
any calendar year due to the application of the Annual Put Limitation, then this
Note (or any such portion) will be deemed to be tendered in the following
calendar year based on the order in which all such Notes (or any portion
thereof) were originally tendered, unless this Note (or any such portion hereof)
is withdrawn by the Holder. In the event that this Note (or any portion hereof)
tendered for repayment pursuant to valid exercise of the Survivor's Option is
not accepted, the Trustee will deliver a notice to the affected Representative
by first-class mail to the broker or other entity that represents the deceased
beneficial owner of this Note that states the reasons this Note (or such
portion) has not been accepted for repayment.
Subject to the foregoing, in order for the Survivor's Option to be
validly exercised, the Trustee must receive (i) a
4
<PAGE>
written request for repayment signed by the Representative, and such signature
must be guaranteed by a member firm of a registered national securities exchange
or of the National Association of Securities Dealers, Inc. or a commercial bank
or trust company having an office or correspondent in the United States, (ii)
tender of this Note (or applicable portion hereof), (iii) appropriate evidence
satisfactory to the Company and the Trustee that (A) the Representative has
authority to act on behalf of the applicable deceased beneficial owner hereof,
(B) the death of such beneficial owner has occurred and (C) the deceased was a
beneficial owner hereof at the time of death, and (iv) a certificate
satisfactory to the Trustee from the broker or other entity through which the
deceased beneficial owner has an interest in this Note stating that such broker
or other entity represents the deceased beneficial owner. All questions as to
the eligibility or validity of any exercise of the Survivor's Option will be
determined by the Company, in its sole discretion, which determination will be
final and binding.
This Note is not subject to any sinking fund.
Other
- -----
As provided in the Indenture and subject to certain limitations
therein set forth, this Note is exchangeable for a like aggregate principal
amount of Registered Notes of different authorized denominations, as requested
by the Person surrendering the same.
As provided in the Indenture and subject to certain limitations
therein set forth, the transfer of this Note is registrable on the Security
Register of the Company, upon surrender of this Note for registration of
transfer at the office or agency of the Company in the Borough of Manhattan, the
City and State of New York, duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Company, the Security
Registrar and the Trustee duly executed by the Holder hereof or his attorney
duly authorized in writing, and thereupon one or more new Registered Notes of
this series, of authorized denominations and for the same aggregate principal
amount, will be issued to the designated transferee or transferees.
If an Event of Default with respect to the Debt Securities of this
series shall have occurred and be continuing, the principal of all the Debt
Securities of this series may be declared due and payable in the manner and with
the effect provided in the Indenture.
The Indenture permits, with certain exceptions as therein provided,
the amendment thereof and the modification of the rights and obligations of the
Company and the rights of the
5
<PAGE>
Holders of the Debt Securities of each series to be affected under the Indenture
at any time by the Company and the Trustee with the consent of the Holders of
not less than a majority in aggregate principal amount of the Debt Securities at
the time Outstanding of each series to be affected. The Indenture also contains
provisions permitting the Holders of specified percentages in aggregate
principal amount of the Debt Securities of any series at the time Outstanding,
on behalf of the Holders of all the Debt Securities of such series, to waive
compliance by the Company with certain provisions of the Indenture and certain
past defaults under the Indenture and their consequences. Any such consent or
waiver by the Holder of this Debt Security shall be conclusive and binding upon
such Holder and upon all future Holders of this Debt Security and of any Debt
Security issued upon the registration of transfer hereof or in exchange herefor
or in lieu hereof, whether or not notation of such consent or waiver is made
upon this Debt Security.
Holders of Debt Securities may not enforce their rights pursuant to
the Indenture or the Debt Securities except as provided in the Indenture. No
reference herein to the Indenture and no provision of this Debt Security or of
the Indenture shall alter or impair the obligation of the Company, which is
absolute and unconditional, to pay the principal of (and premium, if any) and
interest on this Debt Security at the times, place and rate, and in the coin or
currency, herein prescribed.
The Notes of this series are issuable only in registered form without
coupons in denominations of $1,000 and any larger amount that is an integral
multiple of $1,000.
No service charge shall be made for any registration of transfer or
exchange, but the Company may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
Except as otherwise provided herein or in the Indenture, until
exchanged in full for individual Notes, this Note shall in all respects be
entitled to the same benefits and subject to the same terms and conditions of,
and the Company shall be subject to the same restrictions as those contained in,
the individual Notes and in the Indenture.
In case this Note shall at any time become mutilated, destroyed,
stolen or lost and this Note or evidence of the loss, theft, or destruction
hereof (together with such indemnity and such other documents or proof as may be
required by the Company or the Trustee) shall be delivered to the principal
corporate trust office of the Trustee, a new Registered Note of like tenor and
principal amount will be issued by the Company in exchange for, or in lieu of,
this Note. All expenses and reasonable charges associated with procuring such
indemnity and with the
6
<PAGE>
preparation, authentication and delivery of a new Registered Note shall be borne
by the Holder of this Note.
UNLESS OR UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR THE INDIVIDUAL
----------------------------------------------------------------------
NOTES REPRESENTED HEREBY, THIS GLOBAL NOTE MAY NOT BE TRANSFERRED EXCEPT AS A
- -----------------------------------------------------------------------------
WHOLE BY THE DEPOSITARY (AS DEFINED HEREIN) TO A NOMINEE OF THE DEPOSITARY OR BY
- --------------------------------------------------------------------------------
A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE
- -----------------------------------------------------------------------
DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR
- --------------------------------------------------------------------------------
A NOMINEE OF SUCH SUCCESSOR DEPOSITARY.
- ---------------------------------------
Prior to due presentment of this Note for registration of transfer,
the Company, the Trustee and any agent of the Company or the Trustee may treat
the Person in whose name this Note is registered as the owner hereof for all
purposes, whether or not this Note be overdue, and neither the Company, the
Trustee nor any such agent shall be affected by notice to the contrary.
This Note shall be deemed to be a contract made and to be performed
solely in the State of New York and for all purposes be governed by, and
construed in accordance with, the laws of said State without regard to the
conflicts of law rules of said State.
All terms used in this Note that are defined in the Indenture shall
have the meanings assigned to them in the Indenture.
Unless the certificate of authentication hereon has been duly executed
by the Trustee by manual signature, this Note shall not be entitled to any
benefit under the Indenture or be valid or obligatory for any purposes.
7
<PAGE>
IN WITNESS WHEREOF,the Company has caused this Note to be duly
executed under its corporate seal.
Dated:
SALOMON INC
By__________________
Name : William J.Jennings
Title: Senior VicePresident
Corporate Seal
Attest:
By__________________________
Name: Arnold S. Olshin
Title: Secretary
CERTIFICATE OF AUTHENTICATION
This is one of the Debt Securities issued
under the within-mentioned Indenture.
CITIBANK, N.A., as Trustee
By__________________________
Authorized Signatory
All terms used in this Note that are defined in the Indenture shall have
the meanings assigned to them in the Indenture.
8
<PAGE>
[LETTERHEAD OF CRAVATH, SWAINE & MOORE APPEARS HERE]
August 4, 1994
Salomon Inc
-----------
Registration Statement on Form S-3
----------------------------------
Dear Ladies and Gentlemen:
We have acted as special counsel for Salomon Inc, a Delaware corporation
( the "Company"), in connection with the filing by the Company with the
Securities and Exchange Commission (the "Commission") of a Registration
Statement on Form S-3 (the "Registration Statement") relating to (i) debt
securities of the Company, which may be senior (the "Senior Securities") or
subordinated (the "Subordinated Securities"), and collectively with the Senior
Securities, the "Debt Securities" and (ii) warrants to purchase Debt Securities
(the "Warrants"). The Debt Securities and Warrants (collectively, the
"Securities") being registered under the Registration Statement will have an
aggregate initial offering price of up to $5,000,000 or the equivalent thereof
in foreign currencies or composite currencies and will be offered on a continued
or delayed basis pursuant to the provisions of Rule 415 under the Securities Act
of 1933, (the "Act"). Unless otherwise provided in any prospectus supplement
forming a part of the Registration Statement relating to a particular series of
Debt Securities, the Senior Securities will be issued under an Indenture dated
as of December 1, 1988, as amended (the "Senior Indenture"), between the Company
and Citibank, N.A. (the "Senior Trustee"), as Senior Trustee, and the
Subordinated Securities will be issued under an Indenture dated as of December
1, 1988, as amended (the "Subordinated Indenture"), between the Company and
Bankers Trust Company (the "Subordinated Trustee") and together with Citibank,
N.A., the "Trustees") as Subordinated Trustee. The Warrants
<PAGE>
2
will be issued under one or more debt warrant agreements (each, a "Warrant
Agreement"), each to be entered into between the Company and one or more
institutions as identified in the applicable Warrant Agreement.
In connection with the foregoing, we have examined originals, or copies
certified or otherwise identified to our satisfaction, of such documents,
corporate records and other instruments as we have deemed necessary for the
purposes of this opinion, including the following: (a) the Certificate of
Incorporation, as amended of the Company; (b) the By-laws of the Company; (c)
the Senior Indenture; (d) the Subordinated Indenture; (e) the form of the
proposed Warrant Agreement; (f) forms of the Securities; (g) the form of the
Global Selling Agency Agreement; (h) the form of the Continuous Underwriting
Agreement; and (i) resolutions of the Board of Directors of the Company and a
related certificate of an officer of the Company.
Based on the foregoing and subject to (i) proposed additional actions and
proceedings being taken as now contemplated prior to the issuance of the Debt
Securities and/or the Warrants, (ii) the due execution and delivery of the
Global Selling Agency Agreement, the Continuous Underwriting Agreement and/or
the applicable Warrant Agreement and of any other necessary agreements and (iii)
the effectiveness of the Registration Statement under the Act, we are of opinion
as follows:
1. The Company is duly incorporated and is a validly existing corporation
under the laws of the State of Delaware.
2. The Debt Securities and the Warrants, when duly authorized, executed,
authenticated and delivered in accordance with the provisions of the Senior
Indenture, the Subordinated Indenture or the Warrant Agreement, as the case may
be, will be validly issued and will constitute valid and binding obligations of
the Company entitled to the benefits of the Senior Indenture, the Subordinated
Indenture or the Warrant Agreement, as the case may be, enforceable against the
Company in accordance with their terms, subject, as to enforcement of remedies,
to applicable bankruptcy, reorganization, insolvency, fraudulent transfer,
moratorium and other laws affecting creditors' rights generally from time to
time in effect and, as to the enforceability of obligations, to general
principles of equity, regardless of whether such enforceability is considered in
a proceeding in
<PAGE>
equity or at law, except that we express no opinion as to the enforceability of
Section 311 of each of the Senior Indenture and the Subordinated Indenture and
we express no opinion as to whether a court in the United States would render a
judgment with respect to the Debt Securities or Warrants in any currency other
than U.S. dollars.
We are aware that we are referred to under the heading "Legal Opinions" in
the prospectuses forming a part of the Registration Statement, and we hereby
consent to such use of our name therein and to the use of this opinion for
filing with the Registration Statement as Exhibit 5 thereto. In giving this
consent, we do not hereby admit that we are within the category of persons whose
consent is required under Section 7 of the Securities Act or the Rules and
Regulations of the Commission promulgated thereunder.
Very truly yours,
/s/ Cravath, Swaine & Moore
Salomon Inc
Seven World Center
New York, NY 10048
293A
<PAGE>
[LETTERHEAD OF ARTHUR ANDERSEN & CO APPEARS HERE]
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
SALOMON INC FORM S-3 REGISTRATION STATEMENT
DATED AUGUST 4, 1994
$5,000,000,000 Salomon Inc Debt Securities and
Warrants to Purchase Debt Securities
As independent public accountants, we hereby consent to the incorporation by
reference in the above mentioned Registration Statement of our report dated
February 10, 1994 incorporated by reference in Salomon Inc's Form 10-K for the
year ended December 31, 1993 and to all references to our Firm included in the
above mentioned Registration Statement.
/s/ Arthur Andersen & Co.
ARTHUR ANDERSEN & CO.
New York, New York
August 4, 1994
<PAGE>
Exhibit 24
POWER OF ATTORNEY
-----------------
WHEREAS, Salomon Inc proposes to file with the Securities and Exchange
Commission, under the Securities Act of 1933, a Registration Statement to
register debt securities and warrants to purchase debt securities.
NOW, THEREFORE, I, in my capacity as a director of Salomon Inc, hereby
appoint David C. Fisher and Arnold S. Olshin and each of them severally, my true
and lawful attorney or attorneys with power to act with or without the other and
with full power of substitution and resubstitution, to execute in my name, place
and stead, in my capacity as a director of Salomon Inc, said Registration
Statement and any amendments thereto and all instruments necessary or incidental
in connection therewith, and to file same with the Securities and Exchange
Commission, all as fully to all intents and purposes as I might or could do in
person, and I hereby ratify and approve the acts of said attorneys and each of
them.
IN WITNESS WHEREOF, I have executed this instrument this 2nd day of August,
1994.
/s/ Dwayne O. Andreas
--------------------------
Dwayne O. Andreas
<PAGE>
POWER OF ATTORNEY
-----------------
WHEREAS, Salomon Inc proposes to file with the Securities and Exchange
Commission, under the Securities Act of 1933, a Registration Statement to
register debt securities and warrants to purchase debt securities.
NOW, THEREFORE, I, in my capacity as a director of Salomon Inc, hereby
appoint David C. Fisher and Arnold S. Olshin and each of them severally, my true
and lawful attorney or attorneys with power to act with or without the other and
with full power of substitution and resubstitution, to execute in my name, place
and stead, in my capacity as a director of Salomon Inc, said Registration
Statement and any amendments thereto and all instruments necessary or
incidental in connection therewith, and to file same with the Securities and
Exchange Commission, all as fully to all intents and purposes as I might or
could do in person, and I hereby ratify and approve the acts of said attorneys
and each of them.
IN WITNESS WHEREOF, I have executed this instrument this _______ day of
____________, 1994.
/s/ Warren E. Buffett
----------------------
Warren E. Buffett
<PAGE>
POWER OF ATTORNEY
-----------------
WHEREAS, Salomon Inc proposes to file with the Securities and Exchange
Commission, under the Securities Act of 1933, a Registration Statement to
register debt securities and warrants to purchase debt securities.
NOW, THEREFORE, I, in my capacity as Chairman and Chief Executive Officer
and a Director of Salomon Inc, hereby appoint David C. Fisher and Arnold S.
Olshin and each of them severally, my true and lawful attorney or attorneys with
power to act with or without the other and with full power of substitution and
resubstitution, to execute in my name, place and stead, in my capacity as
Chairman and Chief Executive Officer and a Director of Salomon Inc, said
Registration Statement and any amendments thereto and all instruments necessary
or incidental in connection therewith, and to file same with the Securities and
Exchange Commission, all as fully to all intents and purposes as I might or
could do in person, and I hereby ratify and approve the acts of said attorneys
and each of them.
IN WITNESS WHEREOF, I have executed this instrument this ______ day
of _______________, 1994.
/s/ Robert E. Denham
----------------------
Robert E. Denham
<PAGE>
POWER OF ATTORNEY
-----------------
WHEREAS, Salomon Inc proposes to file with the Securities and Exchange
Commission, under the Securities Act of 1933, a Registration Statement to
register debt securities and warrants to purchase debt securities.
NOW, THEREFORE, I, in my capacity as a director of Salomon Inc, hereby
appoint David C. Fisher and Arnold S. Olshin and each of them severally, my true
and lawful attorney or attorneys with power to act with or without the other and
with full power of substitution and resubstitution, to execute in my name, place
and stead, in my capacity as a director of Salomon Inc, said Registration
Statement and any amendments thereto and all instruments necessary or incidental
in connection therewith, and to file same with the Securities and Exchange
Commission, all as fully to all intents and purposes as I might or could do in
person, and I hereby ratify and approve the acts of said attorneys and each of
them.
IN WITNESS WHEREOF, I have executed this instrument this 27th day of July,
1994.
/s/ Andrew J. Hall
-----------------------
Andrew J. Hall
<PAGE>
POWER OF ATTORNEY
-----------------
WHEREAS, Salomon Inc proposes to file with the Securities and Exchange
Commission, under the Securities Act of 1933, a Registration Statement to
register debt securities and warrants to purchase debt securities.
NOW, THEREFORE, I, in my capacity as a director of Salomon Inc, hereby
appoint David C. Fisher and Arnold S. Olshin and each of them severally, my true
and lawful attorney or attorneys with power to act with or without the other and
with full power of substitution and resubstitution, to execute in my name, place
and stead, in my capacity as a director of Salomon Inc, said Registration
Statement and any amendments thereto and all instruments necessary or incidental
in connection therewith, and to file same with the Securities and Exchange
Commission, all as fully to all intents and purposes as I might or could do in
person, and I hereby ratify and approve the acts of said attorneys and each of
them.
IN WITNESS WHEREOF, I have executed this instrument this 26th day of July,
1994.
/s/ Gedale B. Horowitz
--------------------------
Gedale B. Horowitz
<PAGE>
POWER OF ATTORNEY
-----------------
WHEREAS, Salomon Inc proposes to file with the Securities and Exchange
Commission, under the Securities Act of 1933, a Registration Statement to
register debt securities and warrants to purchase debt securities.
NOW, THEREFORE, I, in my capacity as a director of Salomon Inc, hereby
appoint David C. Fisher and Arnold S. Olshin and each of them severally, my true
and lawful attorney or attorneys with power to act with or without the other and
with full power of substitution and resubstitution, to execute in my name, place
and stead, in my capacity as a director of Salomon Inc, said Registration
Statement and any amendments thereto and all instruments necessary or incidental
in connection therewith, and to file same with the Securities and Exchange
Commission, all as fully to all intents and purposes as I might or could do in
person, and I hereby ratify and approve the acts of said attorneys and each of
them.
IN WITNESS WHEREOF, I have executed this instrument this ____ day of
_______________________, 1994.
/s/ Deryck C. Maughan
---------------------------
Deryck C. Maughan
<PAGE>
POWER OF ATTORNEY
-----------------
WHEREAS, Salomon, Inc proposes to file with the Securities and Exchange
Commission, under the Securities Act of 1933, a Registration Statement to
register debt securities and warrants to purchase debt securities.
NOW, THEREFORE, I, in my capacity as a director of Salomon Inc, hereby
appoint David C. Fisher and Arnold S. Olshin and each of them severally, my true
and lawful attorney or attorneys with power to act with or without the other and
with full power of substitution and resubstitution, to execute in my name, place
and stead, in my capacity as a director of Salomon Inc, said Registration
Statement and any amendments thereto and all instruments necessary or incidental
in connection therewith, and to file same with the Securities and Exchange
Commission, all as fully to all intents and purposes as I might or could do in
person, and I hereby ratify and approve the acts of said attorneys and each of
them.
IN WITNESS WHEREOF, I have executed this instrument this 27th day of July,
1994.
/s/ William F. May
-----------------------
William F. May
<PAGE>
POWER OF ATTORNEY
-----------------
WHEREAS, Salomon Inc proposes to file with the Securities and Exchange
Commission, under the Securities Act of 1933, a Registration Statement to
register debt securities and warrants to purchase debt securities.
NOW, THEREFORE, I, in my capacity as a director of Salomon Inc, hereby
appoint David C. Fisher and Arnold S. Olshin and each of them severally, my true
and lawful attorney or attorneys with power to act with or without the other and
with full power of substitution and resubstitution, to execute in my name, place
and stead, in my capacity as a director of Salomon Inc, said Registration
Statement and any amendments thereto and all instruments necessary or incidental
in connection therewith, and to file same with the Securities and Exchange
Commission, all as fully to all intents and purposes as I might or could do in
person, and I hereby ratify and approve the acts of said attorneys and each of
them.
IN WITNESS WHEREOF, I have executed this instrument this 2nd day of August,
1994.
/s/ Louis A. Simpson
------------------------
Louis A. Simpson
<PAGE>
POWER OF ATTORNEY
-----------------
WHEREAS, Salomon Inc proposes to file with the Securities and Exchange
Commission, under the Securities Act of 1933, a Registration Statement to
register debt securities and warrants to purchase debt securities.
NOW, THEREFORE, I, in my capacity as Chief Financial Officer of Salomon
Inc, hereby appoint David C. Fisher and Arnold S. Olshin and each of them
severally, my true and lawful attorney or attorneys with power to act with or
without the other and with full power of substitution and resubstitution, to
execute in my name, place and stead, in my capacity as Chief Financial Officer
of Salomon Inc, said Registration Statement and any amendments thereto and all
instruments necessary or incidental in connection therewith, and to file same
with the Securities and Exchange Commission, all as fully to all intents and
purposes as I might or could do in person, and I hereby ratify and approve the
acts of said attorneys and each of them.
IN WITNESS WHEREOF, I have executed this instrument this ____ day of
_______________________, 1994.
/s/ Jerome H. Bailey
------------------------
Jerome H. Bailey
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
__________________________________
FORM T-1
STATEMENT OF ELIGIBILITY AND QUALIFICATION
UNDER THE TRUST INDENTURE ACT OF 1939
OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY
OF A TRUSTEE PURSUANT TO SECTION 305(b) (2)_____
BANKAMERICA NATIONAL TRUST COMPANY
(Exact name of trustee as specified in its charter)
Not Applicable
(Jurisdiction of incorporation or organization if not a U.S. national bank)
95-3804037
(I.R.S. Employer Identification No.)
One World Trade Center, New York, New York 10048-1191
(Address of principal executive offices) (Zip Code)
General Counsel
Bank of America NT & SA
335 Madison Avenue, 4th Floor
New York, NY 10017
(212) 503-8297
(Name, address and telephone number of agent for services)
-------------------------
SALOMON INC.
(Exact name of obligor as specified in its charter)
Delaware 22-1660266
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Seven World Trade Center
New York, New York 10048
(Address of principal executive offices) (Zip Code)
-------------------------
Debt Securities
(Title of the indenture securities)
<PAGE>
GENERAL
Item 1. General Information.
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising
authority to which it is subject.
Comptroller of the Currency, 250 E Street,
S.W., Washington, D.C. 20219; Federal Deposit
Insurance Corporation, 550 17th Street, N.W.,
Washington, D.C. 20429; Board of Governors of The
Federal Reserve System, 20th and C Streets, N.W.,
Washington, D.C. 20551
(b) Whether it is authorized to exercise corporate trust
powers.
Yes
Item 2. Affiliations with Obligor
If the obligor is an affiliate of the trustee, describe
each such affiliation.
The obligor is not an affiliate of the trustee. (See
Note on Page 3)
Item 16. List of Exhibits
List below are exhibits filed as a part of this
statement of eligibility and qualification.
Exhibit 1 A copy of the Articles of Association
of the Trustee; incorporated herein by
reference to Exhibit 1 filed with Form
T-1 Statement, Registration
No. 33-34670.
Exhibit 2 A copy of the Certificate of Authority
to Commence Business of the Trustee,
incorporated herein by reference to
Exhibit 2 filed with Form T-1 Statement,
Registration No. 2-97868.
Exhibit 3 Included in Exhibit 1.
Exhibit 4 A copy of the existing by-laws of the
Trustee; incorporated herein by
reference to Exhibit 4 filed with
Form T-1 Statement, Registration
No. 33-34670.
Exhibit 5 A copy of each indenture referred to in
Item 4 if the obligor is in default.
Not applicable.
-2-
<PAGE>
Exhibit 6 Consents of BankAmerica National
Trust Company formerly Security Pacific
National Trust Company (New York)
required by Section 321 (b) of the
Trust Indenture Act of 1939;
incorporated herein by reference to
Exhibit 6, filed with Form T-1
Statement, Registration No. 2-97868.
Exhibit 7 A copy of the latest report of the
Trustee published pursuant to the laws
or the requirements of its supervising
or examining authority.
Exhibit 8 A copy of any order pursuant to which
the foreign trustee is authorized to
act as sole trustee under indentures
qualified or to be qualified under the
Act.
Not Applicable.
Exhibit 9 Foreign trustees are required to file a
consent to service of process on
Form F-X.
Not Applicable.
------------------------------
NOTE
Inasmuch as this Form T-1 is filed prior to the ascertainment by
the Trustee of all facts on which to base responsive answers to Item 2 the
answer to said Item is based on incomplete information.
Item 2 may be considered correct unless amended by an amendment to
this Form T-1.
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939
the Trustee, BankAmerica National Trust Company, a national banking
association organized and existing under the laws of the United States of
America, has duly caused this statement of eligibility to be signed on its
behalf by the undersigned, thereunto duly authorized, all in The City of
New York and State of New York, on the 3rd day of August, 1994.
BANKAMERICA NATIONAL TRUST COMPANY
By
Kerry A. Monaghan
Assistant Trust Officer
-3-
<PAGE>
BANKAMERICA NATIONAL TRUST Exhibit 7 to
COMPANY Form T-1
One World Trade Center, 18th Floor
New York City, NY 10006
FDIC Certificate Number 24430
Consolidated Report of Condition for
Insured Commercial Banks for June 30, 1994
All schedules are to be reported in thousands of dollars. Unless otherwise
indicated, report the amount outstanding as of the last business day of the
quarter.
SCHEDULE RC - BALANCE SHEET
Dollar Amounts in Thousands Bil Mil Thou
- --------------------------------------------------------------------------------
Assets
1. Cash and balances due from depository
institutions (from Schedule RC-A):
a. Noninterest-bearing balances and
currency and coin [1]............................235,296
b. Interest-bearing balances [2].................... 10,200
2. Securities:
a. Held-to-maturity securities
(from Schedule RC-B, column A).....................2,562
b. Available-for-sale securities
(from Schedule RC-B, column D).....................4,698
3. Federal funds sold and securities
purchases under agreements to resell:
a. Federal funds sold...............................
b. Securities purchased under
agreements to resell..............................
4. Loans and lease financing receivables:
a. Loans and leases, net of unearned
income (from Schedule RC-C).............151,969
b. LESS: Allowance for loan and
lease losses................................734
c. LESS: Allocated transfer risk
reserve................................
d. Loans and leases, net of
unearned income, allowance,
and reserve (item 4.a minus
4.b and 4.c)....................................151,235
5. Assets held in trading accounts (from
Schedule RC-D)........................................
6. Premises and fixed assets (including
capitalized leases).......................................902
7. Other real estate owned...............................
8. Investments in unconsolidated subsidiaries and
associated companies..................................
9. Customer's liability to this bank on
acceptances outstanding...............................
10. Intangible assets (from Schedule RC-M).................17,958
11. Other assets (from Schedule RC-F)......................34,012
12. Total assets (sum of items 1 through 11...............456,863
_______________
[1] Includes cash items in process of collection and unposted debits.
<PAGE>
[2] Includes time certificates of deposit not held in trading counts.
SCHEDULE RC-CONTINUED
Dollar Amounts in Thousands Bil Mil Thou
- --------------------------------------------------------------------------------
Liabilities
13. Deposits:
a. In domestic offices (sum of totals of columns
A and C from Schedule RC-E)....................... 257,850
(1) Noninterest-bearing [1]........................257,850
(2) Interest-bearing.....................
b. In foreign offices, Edge and Agreement
subsidiaries, and IBFs............................
(1) Noninterest-bearing...........................
(2) Interest-bearing..............................
14. Federal funds purchased and securities
sold under agreements to repurchase:
a. Federal funds purchased........................... 20,000
b. Securities sold under agreements to repurchase....
15. Demand notes issued to the U.S. Treasury.............
16. Other borrowed money................................. 11,646
17. Mortgage indebtedness and obligations
under capitalized leases.............................
18. Bank's liability on acceptances executed
and outstanding......................................
19. Notes and debentures subordinated to deposits........
20. Other liabilities (from Schedule RC-G)............... 35,319
21. Total liabilities (sum of items 13 through 20)....... 324,815
22. Limited-life preferred stock.........................
EQUITY CAPITAL
23. Perpetual preferred stock............................
24. Common Stock......................................... 500
25. Surplus.............................................. 139,063
26. Undivided profits and capital reserves............... (7,515)
27. Cumulative foreign currency translation adjustments..
28. Total equity capital (sum of items 23 through 27).... 132,048
29. Total liabilities, limited-life preferred stock,
and equity capital (sum of items 21,22 and 28)........456,863
_______________
1] Includes total demand deposits and noninterest-bearing time and
savings deposits.
<PAGE>
================================================================================
FORM T-1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2) |__|
----------------------
THE BANK OF NEW YORK
(Exact name of trustee as specified in its charter)
New York 13-5160382
(State of incorporation (I.R.S. employer
if not a U.S. national bank) identification no.)
48 Wall Street, New York, N.Y. 10286
(Address of principal executive offices) (Zip code)
----------------------
SALOMON INC
(Exact name of obligor as specified in its charter)
Delaware 22-1660266
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
Seven World Trade Center
New York, New York 10048
(Address of principal executive offices) (Zip code)
----------------------
Debt Securities
(Title of the indenture securities)
================================================================================
<PAGE>
1. General information. Furnish the following information as to the Trustee:
(a) Name and address of each examining or supervising authority to which
it is subject.
- --------------------------------------------------------------------------------
Name Address
- --------------------------------------------------------------------------------
Superintendent of Banks of the State of 2 Rector Street, New York,
New York N.Y. 10006, and Albany, N.Y.
12203
Federal Reserve Bank of New York 33 Liberty Plaza, New York,
N.Y. 10045
Federal Deposit Insurance Corporation Washington, D.C. 20549
New York Clearing House Association New York, New York
(b) Whether it is authorized to exercise corporate trust powers.
Yes.
2. Affiliations with Obligor.
If the obligor is an affiliate of the trustee, describe each such affilia-
tion.
None. (See Note on page 3.)
16. List of Exhibits.
Exhibits identified in parentheses below, on file with the Commission, are
incorporated herein by reference as an exhibit hereto, pursuant to Rule
7a-29 under the Trust Indenture Act of 1939 (the "Act") and Rule 24 of the
Commission's Rules of Practice.
1. A copy of the Organization Certificate of The Bank of New York
(formerly Irving Trust Company) as now in effect, which contains the
authority to commence business and a grant of powers to exercise
corporate trust powers. (Exhibit 1 to Amendment No. 1 to Form T-1
filed with Registration Statement No. 33-6215, Exhibits 1a and 1b to
Form T-1 filed with Registration Statement No. 33-21672 and Exhibit 1
to Form T-1 filed with Registration Statement No. 33-29637.)
4. A copy of the existing By-laws of the Trustee. (Exhibit 4 to
Form T-1 filed with Registration Statement No. 33-31019.)
-2-
<PAGE>
6. The consent of the Trustee required by Section 321(b) of the Act.
(Exhibit 6 to Form T-1 filed with Registration Statement
No. 33-44051.)
7. A copy of the latest report of condition of the Trustee published
pursuant to law or to the requirements of its supervising or
examining authority.
NOTE
Inasmuch as this Form T-1 is filed prior to the ascertainment by the
Trustee of all facts on which to base a responsive answer to Item 2, the
answer to said Item is based on incomplete information.
Item 2 may, however, be considered as correct unless amended by an
amendment to this Form T-1.
- 3 -
<PAGE>
SIGNATURE
Pursuant to the requirements of the Act, the Trustee, The Bank of New York,
a corporation organized and existing under the laws of the State of New York,
has duly caused this statement of eligibility to be signed on its behalf by
the undersigned, thereunto duly authorized, all in The City of New York, and
State of New York, on the 3rd day of August, 1994.
THE BANK OF NEW YORK
By: /s/ Walter N. Gitlin
---------------------------
Name: Walter N. Gitlin
Title: Vice President
-4-
<PAGE>
Exhibit 7
- --------------------------------------------------------------------------------
Consolidated Report of Condition of
THE BANK OF NEW YORK
of 48 Wall Street, New York, N.Y. 10286
And Foreign and Domestic Subsidiaries,
a member of the Federal Reserve System, at the close of business March 31, 1994,
published in accordance with a call made by the Federal Reserve Bank of this
District pursuant to the provisions of the Federal Reserve Act.
<TABLE>
<CAPTION>
Dollar Amounts
in Thousands
<S> <C>
ASSETS
Cash and balances due from depository institutions:
Noninterest-bearing balances and currency and coin............ $ 2,964,207
Interest-bearing balances..................................... 652,802
Securities:
Held-to-maturity securities................................... 1,554,924
Available-for-sale securities................................. 2,323,496
Federal funds sold in domestic
offices of the bank............................................. 361,621
Loans and lease financing receivables:
Loans and leases, net of unearned
income........................................... 25,419,340
LESS: Allowance for loan and lease
losses...............................................736,749
LESS: Allocated transfer risk
reserve...............................................29,510
Loans and leases, net of unearned income, allowance,
and reserve................................................. 24,653,061
Assets held in trading accounts................................... 2,269,729
Premises and fixed assets (including capitalized leases).......... 649,048
Other real estate owned........................................... 63,724
Investments in unconsolidated subsidiaries and associated
companies....................................................... 166,985
Customers' liability to this bank on acceptances outstanding...... 1,068,405
Intangible assets................................................. 83,775
Other assets...................................................... 1,519,064
------------
Total assets...................................................... $ 38,850,943
============
<CAPTION>
LIABILITIES
<S> <C>
Deposits:
In domestic offices......................................... $ 19,552,324
Noninterest-bearing..............................7,628,562
Interest-bearing................................11,923,762
In foreign offices, Edge and Agreement subsidiaries, and
IBFs....................................................... 9,082,181
Noninterest-bearing................................58,771
Interest-bearing................................9,033,410
Federal funds purchased and securities sold under agreements to
repurchase in domestic offices of the bank and of its Edge and
Agreement subsidiaries, and in IBFs:
Federal funds purchased..................................... 1,459,117
Securities sold under agreements to repurchase.............. 95,459
Demand notes issued to the U.S. Treasury........................ 289,163
Trading liabilities............................................. 968,864
Other borrowed money:
With original maturity of one year or less.................. 996,720
With original maturity of more than one year................ 33,960
Bank's liability on acceptances executed and outstanding........ 1,069,639
Subordinated notes and debentures............................... 1,064,780
Other liabilities............................................... 1,368,384
------------
Total liabilities............................................... 35,890,600
------------
<CAPTION>
EQUITY CAPITAL
<S> <C>
Perpetual preferred stock and related surplus................... 75,000
Common stock.................................................... 942,284
Surplus......................................................... 525,666
Undivided profits and capital reserves.......................... 1,429,219
Net unrealized holding gains (losses) on available-for-sale
securities..................................................... ( 6,246)
Cumulative foreign currency translation adjustments............. ( 5,560)
------------
Total equity capital............................................ 2,960,343
------------
Total liabilities, limited-life preferred stock, and equity
capital........................................................ $ 38,850,943
============
</TABLE>
I, Robert E. Kellman, Senior Vice President and Comptroller of the above-named
bank do hereby declare that this Report of Condition has been prepared in
conformance with the instructions issued by the Board of Governors of the
Federal Reserve System and is true to the best of my knowledge and belief.
Robert E. Kellman
We, the undersigned directors, attest to the correctness of this Report of
Condition and declare that it has been examined by us and to the best of our
knowledge and belief has been prepared in conformance with the instructions
issued by the Board of Governors of the Federal Reserve System and is true and
correct.
++
Alan R. Griffith +
Thomas A. Ranyi + + Directors
J. Carter Bacci +
++
- --------------------------------------------------------------------------------
<PAGE>
___________________________________________________________________
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
_________________________
FORM T-1
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF
A CORPORATION DESIGNATED TO ACT AS TRUSTEE
___________________________________________
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF
A TRUSTEE PURSUANT TO SECTION 305(b)(2) ________
________________________________________
CHEMICAL BANK
(Exact name of trustee as specified in its charter)
New York 13-4994650
(State of incorporation (I.R.S. employer
if not a national bank) identification No.)
270 Park Avenue
New York, New York 10017
(Address of principal executive offices) (Zip Code)
William H. McDavid
General Counsel
270 Park Avenue
New York, New York 10017
Tel: (212) 270-2611
(Name, address and telephone number of agent for service)
_____________________________________________
Salomon Inc
(Exact name of obligor as specified in its charter)
Delaware 22-1660266
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification No.)
Seven World Trade Center
New York, New York 10048
(Address of principal executive offices) (Zip Code)
___________________________________________
Debt Securities and Warrants to Purchase Debt Securities
(Title of the indenture securities)
_____________________________________________________
<PAGE>
GENERAL
Item 1. General Information.
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising authority to which
it is subject. New York State Banking Department, State House, Albany,
New York 12110.
Board of Governors of the Federal Reserve System, Washington, D.C.,
20551 and Federal Reserve Bank of New York, District No. 2, 33 Liberty
Street, New York, N.Y.
Federal Deposit Insurance Corporation, Washington, D.C., 20429.
(b) Whether it is authorized to exercise corporate trust powers.
Yes.
Item 2. Affiliations with the Obligor.
If the obligor is an affiliate of the trustee, describe each such
affiliation.
None.
- 2 -
<PAGE>
16. List of Exhibits
List below all exhibits filed as a part of this Statement of Eligibility.
1. A copy of the Articles of Association of the Trustee as now in effect,
including the Organization Certificate and the Certificates of Amendment dated
February 17, 1969, August 31, 1977, December 31, 1980, September 9, 1982,
February 28, 1985 and December 2, 1991 (see Exhibit 1 to Form T-1 filed in
connection with Registration Statement No. 33-50010, which is incorporated by
reference).
2. A copy of the Certificate of Authority of the Trustee to Commence
Business (see Exhibit 2 to Form T-1 filed in connection with Registration
Statement No. 33-50010, which is incorporated by reference).
3. None, authorization to exercise corporate trust powers being contained
in the documents identified above as Exhibits 1 and 2.
4. A copy of the existing By-Laws of the Trustee (see Exhibit 4 to Form
T-1 filed in connection with Registration Statement No. 33-46892, which is
incorporated by reference).
5. Not applicable.
6. The consent of the Trustee required by Section 321(b) of the Act (see
Exhibit 6 to Form T-1 filed in connection with Registration Statement No. 33-
50010, which is incorporated by reference).
7. A copy of the latest report of condition of the Trustee, published
pursuant to law or the requirements of its supervising or examining authority.
8. Not applicable.
9. Not applicable.
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939 the
Trustee, Chemical Bank, a corporation organized and existing under the laws of
the State of New York, has duly caused this statement of eligibility to be
signed on its behalf by the undersigned, thereunto duly authorized, all in the
City of New York and State of New York, on the 3rd day of August, 1994.
CHEMICAL BANK
By /s/ T. C. Knight
-----------------------------
T. C. Knight
Assistant Vice President
- 3 -
<PAGE>
Exhibit 7 to Form T-1
Bank Call Notice
RESERVE DISTRICT NO. 2
CONSOLIDATED REPORT OF CONDITION OF
Chemical Bank
of 270 Park Avenue, New York, New York 10017
and Foreign and Domestic Subsidiaries,
a member of the Federal Reserve System,
at the close of business March 31, 1994, published in
accordance with a call made by the Federal Reserve Bank of this
District pursuant to the provisions of the Federal Reserve Act.
<TABLE>
<CAPTION>
Dollar Amounts
ASSETS in Millions
<S> <C>
Cash and balances due from depository institutions:
Noninterest-bearing balances and
currency and coin ................................. $ 5,741
Interest-bearing balances ......................... 3,768
Securities ............. ............................
Held to maturity securities.......................... 7,503
Available for sale securities........................ 15,662
Federal Funds sold and securities purchased under
agreements to resell in domestic offices of the
bank and of its Edge and Agreement subsidiaries,
and in IBF's:
Federal funds sold................................. 2,514
Securities purchased under agreements to resell.... 995
Loans and lease financing receivables:
Loans and leases, net of unearned income $61,140
Less: Allowance for loan and lease losses 2,315
Less: Allocated transfer risk reserve... 115
--------
Loans and leases, net of unearned income,
allowance, and reserve............................. 58,710
Assets held in trading accounts...................... 26,249
Premises and fixed assets (including capitalized
leases)............................................ 1,310
Other real estate owned.............................. 642
Investments in unconsolidated subsidiaries and
associated companies............................... 120
Customer's liability to this bank on acceptance
outstanding........................................ 1,093
Intangible assets.................................... 549
Other assets......................................... 7,807
--------
TOTAL ASSETS......................................... $132,663
========
</TABLE>
- 4 -
<PAGE>
LIABILITIES
<TABLE>
<CAPTION>
<S> <C>
Deposits
In domestic offices................................... $49,180
Noninterest-bearing .........................$16,896
Interest-bearing ............................ 32,284
------
In foreign offices, Edge and Agreement subsidiaries,
and IBF's............................................. 25,612
Noninterest-bearing .........................$ 128
Interest-bearing ............................ 25,484
------
Federal funds purchased and securities sold under agree-
ments to repurchase in domestic offices of the bank and
of its Edge and Agreement subsidiaries, and in IBF's
Federal funds purchased............................... 10,710
Securities sold under agreements to repurchase........ 1,789
Demand notes issued to the U.S. Treasury................ 1,493
Trading liabilities..................................... 14,745
Other Borrowed money:
with original maturity of one year or less............ 6,331
with original maturity of more than one year.......... 1,031
Mortgage indebtedness and obligations under capitalized
leases................................................ 21
Bank's liability on acceptances executed and outstanding 1,096
Subordinated notes and debentures....................... 3,500
Other liabilities....................................... 9,562
TOTAL LIABILITIES....................................... 125,070
-------
</TABLE>
EQUITY CAPITAL
<TABLE>
<CAPTION>
<S> <C>
Common stock............................................ 620
Surplus................................................. 4,501
Undivided profits and capital reserves.................. 2,684
Less: Net unrealized loss on marketable equity
securities............................................ (210)
Cumulative foreign currency translation adjustments..... (2)
TOTAL EQUITY CAPITAL.................................... 7,593
-------
TOTAL LIABILITIES, LIMITED-LIFE PREFERRED
STOCK AND EQUITY CAPITAL............................... $132,663
=======
</TABLE>
I, Joseph L. Sclafani, S.V.P. & Controller of the
above-named bank, do hereby declare that this Report of
Condition is true and correct to the best of my knowledge
and belief.
JOSEPH L. SCLAFANI
We, the undersigned directors, attest to the correctness
of this statement of resources and liabilities. We
declare that it has been examined by us, and to the best
of our knowledge and belief has been prepared in confor-
mance with the instructions and is true and correct.
WALTER V. SHIPLEY )
EDWARD D. MILLER )DIRECTORS
WILLIAM B. HARRISON )
- 5 -
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-------------------------
FORM T-1
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
Check if an application to determine eligibility of a
trustee pursuant to Section 305(b)(2)
------
------------------------
CITIBANK, N.A.
(Exact name of trustee as specified in its charter)
13-5266470
(I.R.S. employer
identification no.)
399 Park Avenue, New York, New York 10043
(Address of principal executive office) (Zip Code)
----------------------------
Salomon Inc.
(Exact name of obligor as specified in its charter)
Delaware 22-1660266
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
Seven World Trade Center
New York, New York 10048
(Address of principal executive offices) (Zip Code)
-------------------------
Senior Debt Securities
(Title of the indenture securities)
<PAGE>
Item 1. General Information.
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising authority to which
it is subject.
Comptroller of the Currency, Washington, D.C.
Federal Reserve Bank of New York, New York, NY
33 Liberty Street,
New York, NY
Federal Deposit Insurance Corporation, Washington, D.C.
(b) Whether it is authorized to exercise corporate trust powers.
Yes.
Item 2. Affiliations with the Obligor.
If the obligor is an affiliate of the trustee, describe each such
affiliation.
None.
Item 16. List of Exhibits
----------------
List below all exhibits filed as a part of this Statement of
Eligibility.
Exhibits identified in parentheses below, on file with the
Commission, are incorporated herein by reference as exhibits hereto.
Exhibit 1 - Copy of Articles of Association of the Trustee, as now
in effect. (Exhibit 1 to T-1 Registration Statement
No. 2-79983)
Exhibit 2 - Copy of certificate of authority of the Trustee to
commence business. (Exhibit 2 to T-1 to Registration
Statement No. 2-29577)
Exhibit 3 - Copy of authorization of the Trustee to exercise
corporate trust powers. (Exhibit 3 to T-1 to
Registration Statement No. 2-55519)
<PAGE>
Exhibit 4- Copy of existing By-Laws of the Trustee. (Exhibit 4 to
T-1 to Registration Statement No. 33-34988)
Exhibit 5- Not applicable.
Exhibit 6- The consent of the Trustee required by Section 321(b) of
the Trust Indenture Act of 1939. (Exhibit 6 to T-1 to
Registration Statement No. 33-19227.)
Exhibit 7- Copy of the latest Report of Condition of Citibank, N.A.
as of March 31, 1994 - attached)
Exhibit 8- Not applicable.
Exhibit 9- Not applicable.
-----------------------
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, the
Trustee, Citibank, N.A., a national banking association organized and existing
under the laws of the United States of America, has duly caused this statement
of eligibility to be signed on its behalf by the undersigned, thereunto duly
authorized, all in The City of New York and State of New York, on the 3rd day of
August, 1994.
CITIBANK, N.A.
By /s/ Arthur W. Aslanian
-------------------------
Arthur W. Aslanian
Vice President
3
<PAGE>
Charter No. 1461
Comptroller of the Currency
Northeastern District
REPORT OF CONDITION
CONSOLIDATING
DOMESTIC AND FOREIGN
SUBSIDIARIES OF
CITIBANK, N. A.
of New York in the State of New York, at the close of business on March 31,
1994, published in response to call made by Comptroller of the Currency, under
Title 12, United States Code, Section 161. Charter Number 1461 Comptroller of
the Currency North-eastern District.
ASSETS
<TABLE>
<CAPTION>
Thousands
of dollars
<S> <C>
Cash and balances due from depository institutions:
Noninterest-bearing balances and currency and coin............ $ 6,452,000
Interest-bearing balances..................................... 7,339,000
Securities:
Held-to-maturity securities................................... 3,923,000
Available-for-sale securities................................. 9,604,000
Federal funds sold and securities purchased under agreements to
resell in domestic offices of the bank and of its Edge and
Agreement subsidiaries, and in IBFs:
Federal funds sold.............................................. 1,416,000
Securities purchased under agreements to resell................. 3,128,000
Loans and lease financing receivables:
Loans and leases, net of unearned income...................... $116,456,000
LESS: Allowance for loan and lease losses..................... 3,578,000
Loans and leases, net of unearned income and allowance........ 112,878,000
Assets held in trading accounts................................... 38,412,000
Premises and fixed assets (including capitalized leases).......... 3,107,000
Other real estate owned........................................... 3,170,000
Investments in unconsolidated subsidiaries and associated
companies....................................................... 1,008,000
Customers' liability to this bank on acceptances outstanding...... 1,368,000
Intangible assets................................................. 15,000
Other assets...................................................... 7,397,000
------------
TOTAL ASSETS...................................................... $199,217,000
============
<CAPTION>
LIABILITIES
<S> <C>
Deposits:
In domestic offices......................................... $ 34,936,000
Noninterest-bearing........................ $ 12,668,000
Interest-bearing........................... 22,268,000
------------
In foreign offices, Edge and Agreement subsidiaries, and
IBFs....................................................... 100,380,000
Noninterest-bearing....................... 6,932,000
Interest-bearing.......................... 293,448,000
-----------
Federal funds purchased and securities sold under agreements to
repurchase in domestic offices of the bank and of its Edge and
Agreement subsidiaries, and in IBFs:
Federal funds purchased....................................... 2,556,000
Securities sold under agreements to repurchase................ 1,568,000
Trading liabilities............................................. 21,074,000
Other borrowed money:
With original maturity of one year or less.................. 7,837,000
With original maturity of more than one year................ 3,844,000
Mortgage indebtedness and obligations under capitalized leases.. 220,000
Bank's liability on acceptances executed and outstanding........ 1,386,000
Notes and debentures subordinated to deposits................... 4,700,000
Other liabilities............................................... 9,121,000
------------
TOTAL LIABILITIES............................................... $187,622,000
------------
<CAPTION>
EQUITY CAPITAL
<S> <C>
Common stock.................................................... $ 751,000
Surplus......................................................... 5,928,000
Undivided profits and capital reserves.......................... 5,373,000
Net unrealized holding gains (losses) on available-for-sale
securities..................................................... 191,000
Cumulative foreign currency translation adjustments............. (648,000)
------------
TOTAL EQUITY CAPITAL............................................ $ 11,595,000
------------
TOTAL LIABILITIES AND EQUITY CAPITAL............................ $199,217,000
============
</TABLE>
I, Roger W. Trupin, Controller of the above-named bank do hereby declare that
this Report of Condition is true and correct to the best of my knowledge and
belief.
ROGER W. TRUPIN
We, the undersigned directors, attest to the correctness of this Report of
Condition. We declare that it has been examined by us, and to the best of our
knowledge and belief has been prepared in conformance with the instructions and
is true and correct.
++
PAUL J. COLLINS +
PEI-YUAN CHIA + + Directors
CHRISTOPHER J. STEFFEN +
++
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM T-1
--------
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939
OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY
OF A TRUSTEE PURSUANT TO SECTION 305(b)(2) ___
------------------
THE FIRST NATIONAL BANK OF CHICAGO
(Exact name of trustee as specified in its charter)
A National Banking Association 36-0899825
(I.R.S. employer
identification number)
One First National Plaza, Chicago, Illinois 60670-0126
(Address of principal executive offices) (Zip Code)
The First National Bank of Chicago
One First National Plaza, Suite 0286
Chicago, Illinois 60670-0286
Attn: Lynn A. Godstein, Law Department (312) 732-6919
(Name, address and telephone number of agent for service)
------------------
SALOMON INC
(Exact name of obligor as specified in its charter)
Delaware 22-1660266
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification number)
7 World Trade Center
New York, New York 10048
(Address of principal executive offices) (Zip Code)
Debt Securities
(Title of Indenture Securities)
<PAGE>
Item 1. General Information. Furnish the following information
--------------------
as to the trustee:
(a) Name and address of each examining or supervising
authority to which it is subject.
Comptroller of Currency, Washington, D.C., Federal Deposit
Insurance Corporation, Washington, D.C., The Board of
Governors of the Federal Reserve System, Washington, D.C.
(b) Whether it is authorized to exercise corporate trust
powers.
The trustee is authorized to exercise corporate trust powers.
Item 2. Affiliations With the Obligor. If the obligor is an affiliate
------------------------------
of the trustee, describe each such affiliation.
No such affiliation exists with the trustee.
Item 16. List of exhibits. List below all exhibits filed as a part of
-----------------
this Statement of Eligibility.
1. A copy of the articles of association of the trustee now in
effect.*
2. A copy of the certificates of authority of the trustee to
commence business.*
3. A copy of the authorization of the trustee to exercise
corporate trust powers.*
4. A copy of the existing by-laws of the trustee.*
5. Not Applicable.
6. The consent of the trustee required by Section 321(b) of
the Act.
2
<PAGE>
7. A copy of the latest report of condition of the
trustee published pursuant to law or the
requirements of its supervising or examining
authority.
8. Not Applicable.
9. Not Applicable.
Pursuant to the requirements of the Trust Indenture Act of 1939, as amended, the
trustee, The First National Bank of Chicago, a national banking association
organized and existing under the laws of the United States of America, has duly
caused this Statement of Eligibility to be signed on its behalf by the
undersigned, thereunto duly authorized, all in the City of Chicago and State of
Illinois, on the 6th day of July, 1994.
The First National Bank of Chicago,
Trustee,
By /s/ R.D. Manella
R.D. Manella
Vice President
*Exhibits 1,2,3, and 4 are herein incorporated by reference to Exhibits bearing
identical numbers in Item 12 of the Form T-1 of The First National Bank of
Chicago, filed as Exhibit 26(b) to the Registration Statement on Form S-3 of Dow
Capital B.V. and The Dow Chemical Company, filed with the Securities and
Exchange Commission on June 3, 1991 (Registration No. 33-36314).
3
<PAGE>
EXHIBIT 6
THE CONSENT OF THE TRUSTEE REQUIRED
BY SECTION 321(b) OF THE ACT
July 6, 1994
Securities and Exchange Commission
Washington, D.C. 20549
Gentlemen:
In connection with the qualification of an indenture between SALOMON INC and The
First National Bank of Chicago, the undersigned, in accordance with Section
321(b) of the Trust Indenture Act of 1939, as amended, hereby consents that the
reports of examinations of the undersigned, made by Federal or State authorities
authorized to make such examinations, may be furnished by such authorities to
the Securities and Exchange Commission upon its request therefor.
Very truly yours,
The First National Bank of Chicago
By: /s/ R.D. Manella
R.D. Manella
Vice President
4
<PAGE>
EXHIBIT 7
A copy of the latest report of conditions of the trustee published pursuant to
law or the requirements of its supervising or examining authority.
5
<PAGE>
Legal Title of Bank: The First National Bank of Chicago Call Date: 3/31/94
Address: One First National Plaza, Suite 0460
City, State Zip: Chicago, IL 60670
FDIC Certificate No.: 0/3/6/1/8
---------
ST-BK: 17-1630 FFIEC 031
Page RC-1
Consolidated Report of Condition for Insured Commercial
and State-Chartered Savings Banks for March 31, 1994
All schedules are to be reported in thousands of dollars. Unless otherwise
indicated, report the amount outstanding of the last business day of the
quarter.
Schedule RC-Balance Sheet
<TABLE>
<CAPTION>
C400 less
Dollar Amounts in ------------ than
Thousands RCFD BIL MIL THOU -
----------------- ---- ------------ -----
<S> <C> <C> <C> <C>
ASSETS
1. Cash and balances due from depository institutions (from Schedule
RCA-A):
a. Noninterest-bearing balances and currency and coin(1)............ 0081 3,199,527 1.a.
b. Interest-bearing balances(2)..................................... 0071 7,574,509 1.b.
2. Securities
a. Held-to-maturity securities (from Schedule RC-B, column A)....... 1754 125,951 2.a.
b. Available-for-sale securities (from Schedule RC_B, column D)..... 1773 318,814 2.b.
3. Federal funds sold and securities purchased under agreements to
resell in domestic offices of the bank and its Edge and Agreement
subsidiaries, and in IBFs:
a. Federal Funds sold............................................... 0276 2,711,748 3.a.
b. Securities purchased under agreements to resell.................. 0277 695,723 3.b.
4. Loans and lease financing receivables:
a. Loans and leases, net of unearned income (from Schedule
RC-C)............................................................... RCFD 2122 13,613,912 4.a.
b. LESS: Allowance for loan and lease losses........................ RCFD 3123 352,027 4.b.
c. LESS: Allocated transfer risk reserve............................ RCFD 3128 0 4.c.
d. Loans and leases, net of unearned income, allowance, and
reserve (item 4.a minus 4.b and 4.c)............................. 2125 13,261,885 4.d.
5. Assets held in trading accounts.................................... 3545 8,561,533 5.
6. Premises and fixed assets (including capitalized leases)............ 2145 478,470 6.
7. Other real estate owned (from Schedule RC-M)........................ 2150 95,399 7.
8. Investments in unconsolidated subsidiaries and associated
companies (from Schedule RC-M)...................................... 2130 6,434 8.
9. Customer's liability to this bank on acceptances outstanding........ 2155 452,815 9.
10. Intangible assets (from Schedule RC-M).............................. 2143 140,023 10.
11. Other assets (from Schedule RC-F)................................... 2160 1,048,744 11.
12. Total assets (sum of items 1 through 11)............................ 2170 38,671,575 12.
</TABLE>
- ----------
(1) Includes cash items in process of collection and unposted debits.
(2) Includes time certificates of deposit not held in trading accounts.
6
<PAGE>
Legal Title of Bank: The First National Bank of Chicago
Address: One First National Plaza, Suite 0460
City, State Zip: Chicago, IL 60670
FDIC Certificate No.: 0/3/6/1/8
---------
Call Date: 3/31/94 ST-BK: 17-1630 FFIEC 031
Page RC-2
<TABLE>
<CAPTION>
Schedule RC-Continued
Dollar Amounts in
Thousands Bil Mil Thou
-------------- ------------
<S> <C> <C>
LIABILITIES
13. Deposits:
a. In domestic offices (sum of totals of columns A and C
from Schedule RC-E, part 1)............................. RCON 2200 14,309,869 13.a.
(1) Noninterest-bearing(1).............................. RCON 6631 5,980,761 13.a.(1)
(2) Interest-bearing.................................... RCON 6636 8,329,108 13.a.(2)
b. In foreign offices, Edge and Agreement subsidiaries, and
IBFs (from Schedule RC-E, part II)...................... RCFN 2200 9,813,189 13.b.
(1) Noninterest-bearing................................. RCFN 6631 374,630 13.b.(1)
(2) Interest-bearing.................................... RCFN 6636 9,438,559 13.b.(2)
14. Federal funds purchased and securities sold under agreements
to repurchase in domestic offices of the bank and of
its Edge and Agreement subsidiaries, and in IBFs:
a. Federal funds purchased................................. RCFD 0278 580,252 14.a.
b. Securities sold under agreements to repurchase.......... RCFD 0279 1,543,995 14.b.
15. a. Demand notes issued to the U.S. Treasury................ RCON 2840 102,941 15.a.
b. Trading Liabilities..................................... RCFD 3548 5,353,511 15.b.
16. Other borrowed money:
a. With original maturity of one year or less.............. RCFD 2332 1,590,728 16.a.
b. With original maturity of more than one year............ RCFD 2333 254,470 16.b.
17. Mortgage indebtedness and obligations under capitalized
leases..................................................... RCFD 2910 267,000 17.
18. Bank's liability on acceptance executed and outstanding.... RCFD 2920 452,815 18.
19. Subordinated notes and debentures.......................... RCFD 3200 1,175,000 19.
20. Other liabilities (from Schedule RC-G)..................... RCFD 2930 549,976 20.
21. Total liabilities (sum of items 13 through 20)............. RCFD 2948 35,993,746 21.
22. Limited-Life preferred stock and related surplus........... RCFD 3282 0 22.
EQUITY CAPITAL
23. Perpetual preferred stock and related surplus.............. RCFD 3838 0 23.
24. Common stock............................................... RCFD 3230 200,858 24.
25. Surplus (exclude all surplus related to preferred stock)... RCFD 3839 2,254,940 25.
26. a. Undivided profits and capital reserves.................. RCFD 3632 222,981 26.a.
b. Net unrealized holding gains (losses) on available-for-sale
securities.............................................. RCFD 8434 (8) 26.b.
27. Cumulative foreign currency translation adjustments........ RCFD 3284 (942) 27.
28. Total equity capital (sum of items 23 through 27).......... RCFD 3210 2,677,829 28.
29. Total liabilities, limited-life preferred stock, and equity
capital (sum of items 21, 22, and 28)...................... RCFD 3300 38,671,575 29.
Memorandum
To be reported only with the March Report of Condition.
1. Indicate in the box at the right the number of the statement below that best describes the most
comprehensive level of auditing work performed for the bank by independent external Number
auditors as of any date during 1993............................................................ RCFD 6724 2 M.1.
</TABLE>
1 = Independent audit of the bank conducted in accordance with generally
accepted auditing standards by a certified public accounting firm which
submits a report on the bank
2 = Independent audit of the bank's parent holding company conducted in
accordance with generally accepted auditing standards by a certified public
accounting firm which submits a report on the consolidated holding company
(but not the bank separately)
3 = Directors' examination of the bank conducted in accordance with generally
accepted auditing standards by a certified public accounting firm (may be
required by state chartering authority)
4 = Directors' examination of the bank performed by other external auditors (may
be required by state chartering authority
5 = Review of the bank's financial statements by external auditors
6 = Compilation of the bank's financial statements by external auditors
7 = Other audit procedures (excluding tax preparation work)
8 = No external audit work
- ---------------
(1) Includes total demand deposits and noninterest-bearing time and savings
deposits.
7
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------------
FORM T-1
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF
A CORPORATION DESIGNATED TO ACT AS TRUSTEE
----------------------
CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2)
-----
----------------------
UNITED STATES TRUST COMPANY OF NEW YORK
(Exact name of trustee as specified in its charter)
New York 13-5459866
(Jurisdiction of incorporation (I.R.S. Employer
if not a U.S. national bank) Identification No.)
114 West 47th Street 10036
New York, New York (Zip Code)
(Address of principal
executive offices)
----------------------
Salomon Inc
(Exact name of obligor as specified in its charter)
Delaware 22-1660266
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Seven World Trade Center 10048
New York, New York (Zip Code)
(Address of principal
executive offices)
----------------------
Senior Debt Securities
(Title of the indenture securities)
================================================================================
<PAGE>
GENERAL
1. General Information
-------------------
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising authority to
which it is subject.
Federal Reserve Bank of New York (2nd District), New York, New York
(Board of Governors of the Federal Reserve System).
Federal Deposit Insurance Corporation, Washington, D.C.
New York State Banking Department, Albany, New York
(b) Whether it is authorized to exercise corporate trust powers.
The trustee is authorized to exercise corporate trust
powers.
2. Affiliation with the Obligor
----------------------------
If the obligor is an affiliate of the trustee, describe each such
affiliation.
None.
3. Voting Securities of the Trustee
--------------------------------
2,999,020 shares of Common Stock - par value $5 per share
4. Trusteeships under Other Indentures
-----------------------------------
(a) Title of the securities outstanding under each such indenture.
Not applicable
5. Interlocking Directorates and Similar Relationships with the Obligor or
-----------------------------------------------------------------------
Underwriters
------------
Not applicable.
2
<PAGE>
6. Voting Securities of the Trustee Owned by the Obligor or its Officials
----------------------------------------------------------------------
Not applicable.
7. Voting Securities of the Trustee Owned by Underwriters or their
---------------------------------------------------------------
Officials
---------
Not applicable.
8. Securities of the Obligor Owned or Held by the Trustee
------------------------------------------------------
Not applicable.
9. Securities of Underwriters Owned or Held by the Trustee
-------------------------------------------------------
Not applicable.
10. Ownership or Holdings by the Trustee of Voting Securities of Certain
--------------------------------------------------------------------
Affiliates or Securities Holders of the Obligor
-----------------------------------------------
Not applicable.
11. Ownership or Holdings by the Trustee of any Securities of a Person
------------------------------------------------------------------
Owning 50 Percent or More of the Voting Securities of the Obligor
-----------------------------------------------------------------
Not applicable.
12. Indebtedness of the Obligor to the Trustee
------------------------------------------
Not applicable.
13. Defaults by the Obligor
-----------------------
Not applicable.
14. Affiliations with the Underwriters
----------------------------------
Not applicable.
<PAGE>
15. Foreign Trustee
---------------
Not applicable.
16. List of Exhibits
----------------
T-1.1 - "Chapter 204, Laws of 1853, An Act to Incorporate
the United States Trust Company of New York, as
Amended", is incorporated by reference to Exhibit
T-1.1 to Form T-1 filed on September 20, 1991 with
the Securities and Exchange Commission (the
"Commission") pursuant to the Trust Indenture Act
of 1939 (Registration No. 2221291).
T-1.2 - The trustee was organized by a special act of the
New York Legislature in 1853 prior to the time that
the New York Banking Law was revised to require a
Certificate of authority to commence business.
Accordingly, under New York Banking Law, the Charter
(Exhibit T-1.1) constitutes an equivalent of a
certificate of authority to commence business.
T-1.3 - The authorization of the trustee to exercise corporate
trust powers is contained in the Charter (Exhibit
T-1.1).
T-1.4 - The By-laws of the United States Trust Company of New
York, as amended to date, are incorporated by
reference to Exhibit T-1.4 to Form T-1 filed on
September 20, 1991 with the Commission pursuant to the
Trust Indenture Act of 1939 (Registration No.
2221291).
T-1.6 - The consent of the trustee required by Section 321(b)
of the Trust Indenture Act of 1939, as amended by the
Trust Indenture Reform Act of 1990.
T-1.7 - A copy of the latest report of condition of the
trustee published pursuant to law or the requirements
of its supervising or examining authority.
4
<PAGE>
NOTE
As of August 1, 1994, the trustee had 2,999,020 shares of Common Stock
outstanding, all of which are owned by its parent company, U. S. Trust
Corporation. The term "trustee" in Item 2, refers to each of United States Trust
Company of New York and its parent company, U. S. Trust Corporation.
In answering Item 2 in this statement of eligibility and qualification, as to
matters peculiarly within the knowledge of the obligor or its directors, the
trustee has relied upon information furnished to it by the obligor and will
rely on information to be furnished by the obligor and the trustee disclaims
responsibility for the accuracy or completeness of such information.
--------------------------
Pursuant to the requirements of the Trust Indenture Act of 1939, the trustee,
United States Trust Company of New York, a corporation organized and existing
under the laws of the State of New York, has duly caused this statement of
eligibility and qualification to be signed on its behalf by the undersigned,
thereunto duly authorized, all in the City of New York, and State of New York,
on the 1st day of August, 1994.
UNITED STATES TRUST COMPANY OF
NEW YORK, Trustee
By: /s/ Cynthia Chaney
-------------------------
Cynthia Chaney
Assistant Vice President
CC/byy
(rv:kw072993)
<PAGE>
Exhibit T-1.6
The consent of the trustee required by Section 321 (b)
of the Act.
United States Trust Company of New York
114 West 47th Street
New York
NY 10036
March 19, 1992
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Gentlemen:
Pursuant to the provisions of Section 321 (b) of the Trust Indenture Act of
1939, as amended by the Trust Indenture Reform Act of 1990, and subject to the
limitations set forth therein, United States Trust Company of New York ("U.S.
Trust") hereby consents that reports of examinations of U.S. Trust by Federal,
State, Territorial or District authorities may be furnished by such authorities
to the Securities and Exchange Commission upon request therefor.
Very truly yours,
UNITED STATES TRUST COMPANY
OF NEW YORK
By: /s/ Gerard F. Ganey
-------------------------
Gerard F. Ganey
Senior Vice President
<PAGE>
Exhibit T-1.7
American Banker, May 16, 1994
-------------------------------------
CONSOLIDATED REPORT OF CONDITION OF
United States Trust
Company of New York
and Foreign and Domestic Subsidiaries, a member of the Federal Reserve System,
at the close of business March 31, 1994, published in accordance with a call
made by the Federal Reserve Bank of the District pursuant to the provisions of
the Federal Reserve Act.
<TABLE>
<CAPTION>
Dollar Amounts
ASSETS in Thousands
<S> <C>
Cash and balances due from depository institutions:
Noninterest-bearing balances and currency and coin............ $ 210,329
Interest-bearing balances..................................... 80,000
Securities:
a. Held-to-maturity securities.................................. 396,808
b. Available-for-sale securities................................ 1,196,172
Federal funds sold and securities purchased under agreements to
resell in domestic offices of the bank and of its Edge and
Agreement subsidiaries, and in IBFs:
a. Federal funds sold........................................... 0
b. Securities purchased under agreements to resell.............. 0
Loans and lease financing receivables:
a. Loans and leases, net of unearned income............1,284,921
b. LESS: Allowance for loan and lease losses..............12,168
c. LESS: Allocated transfer risk reserve.......................0
d. Loans and leases, net of unearned income allowance and
reserve..................................................... 1,272,753
Assets held in trading accounts................................... 0
Premises and fixed assets (including capitalized leases).......... 97,879
Other real estate owned........................................... 10,980
Investments in unconsolidated subsidiaries and associated
companies....................................................... 529
Customers' liability to this bank on acceptances outstanding...... 0
Intangible assets................................................. 836
Other assets...................................................... 100,580
------------
TOTAL ASSETS...................................................... $ 3,346,946
============
<CAPTION>
LIABILITIES
<S> <C>
Deposits:
a. In domestic offices.......................................... $ 2,296,230
(1) Noninterest-bearing........................... 1,176,420
(2) Interest-bearing.............................. 1,119,810
b. In foreign offices, Edge and Agreement subsidiaries, and
IBFs......................................................... 5,516
(1) Noninterest-bearing................................... 0
(2) Interest-bearing.................................. 5,516
Federal funds purchased and securities sold under agreements to
repurchase in domestic offices of the bank and of its Edge and
Agreement subsidiaries, and in IBFs:
a. Federal funds purchased...................................... 473,758
b. Securities sold under agreements to repurchase............... 288,900
Demand notes issued to the U.S. Treasury.......................... 14,710
Trading liabilities............................................... 0
Other borrowed money:
With original maturity of one year or less...................... 0
With original maturity of more than one year.................... 0
Mortgage indebtedness and obligations under capitalized leases.... 2,034
Bank's liability on acceptances executed and outstanding.......... 0
Subordinated notes and debentures................................. 12,453
Other liabilities................................................. 81,120
------------
TOTAL LIABILITIES................................................. $ 3,154,830
------------
Limited-Life preferred stock and related surplus.................. 0
------------
EQUITY CAPITAL
Perpetual preferred stock and related surplus..................... $ 0
Common stock...................................................... 14,996
Surplus........................................................... 41,500
Undivided profits and capital reserves............................ 136,582
Net unrealized holding (losses) on available-for-sale securities.. 28
Cumulative foreign currency translation adjustments............... 0
------------
TOTAL EQUITY CAPITAL.............................................. $ 192,115
------------
TOTAL LIABILITIES AND EQUITY CAPITAL.............................. $ 3,346,945
============
</TABLE>
I, Richard E. Brinkmann, Senior Vice President & Comptroller of the above-
named bank do hereby declare that this report of condition has been prepared in
conformance with the instructions issued by the Board of Governors of the
Federal Reserve System and is true to the best of my knowledge and belief.
RICHARD E. BRINKMANN, SVP, Comptroller
April 29, 1994
We, the undersigned trustees, attest the correctness of this Report of
Condition and declare that it has been examined by us and to the best of our
knowledge and belief has been prepared in conformance with the instructions
issued by the Board of Governors of the Federal Reserve System and is true and
correct.
H. MARSHALL SCHWARZ )
JEFFREY S. MAURER ) Trustees
FREDERICK S. WONHAM )
