<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 19, 1994
REGISTRATION NO. 33-54929
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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AMENDMENT NO. 1
TO
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(4)
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<S> <C> <C> <C> <C>
Debt Securities and
Warrants to Purchase
Debt Securities...... $10,000,000,000 100% $10,000,000,000 $3,448,276
</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 $10,000,000,000.
(3) Estimated solely for the purpose of calculating the registration fee.
(4) $1,724,138 of the registration fee was previously paid upon the initial
filing of the Registration Statement.
-------------------
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 SEPTEMBER 19, 1994
PROSPECTUS SUPPLEMENT
(To Prospectus Dated September , 1994)
$10,009,700,000
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 $10,009,700,000, 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)................ $10,009,700,000 $12,512,125-$75,072,750 $9,934,627,250-$9,997,187,875
</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
$4,525,000, 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 $6,947,600,000 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 September , 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 September 13, 1994 approximately
$9,220,300,000 of its Medium-Term Notes, Series D and E, of which approximately
$6,947,600,000 were Registered Notes and approximately $2,272,700,000 were
Bearer Notes. The Registered Notes offered by this Prospectus Supplement are
part of the same series of Notes as the Notes described in the preceding
sentence.
SALOMON INC
Salomon Inc was incorporated in 1960 under the laws of the State of Delaware.
Its major operating units are engaged principally in securities, commodities
trading and oil refining activities. Securities and related activities are
conducted by Salomon Brothers Holding Company Inc and its subsidiaries and
commodities trading by the Phibro Division of the Company. Oil refining
activities are conducted by Phibro Energy USA, Inc., the owner of several oil
refineries and other asset-based businesses.
IMPORTANT CURRENCY INFORMATION
Purchasers are required to pay for each Registered Note in the Specified
Currency for such Note. If requested by a prospective purchaser of a Registered
Note having a Specified Currency other than U.S. dollars, the Agent may at its
discretion arrange for the exchange of U.S. dollars into such Specified
Currency to enable the purchaser to pay for such Note. Each such exchange will
be made by the Agent on such terms and subject to such conditions, limitations
and charges as the Agent may from time to time establish in accordance with its
regular foreign exchange practice. All costs of exchange will be borne by the
purchaser.
References herein to "U.S. dollars" or "$" 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 $10,009,700,000 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 September 13,
1994 approximately $6,947,600,000 of Series D Registered Notes and
approximately $2,272,700,000 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
June 30, 1994, the aggregate principal amount of Senior Indebtedness
outstanding was $98.7 billion, consisting of the following: $14.2 billion of
term debt, $1.0 billion in commercial paper and $83.5 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.
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. Unless otherwise specified in the applicable 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. However, if with
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respect to any Fixed Rate Note, "Accrue to Pay" is specified in the applicable
Pricing Supplement, and any Interest Payment Date with respect to such Fixed
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. Each
payment of interest in respect of an Interest Payment Date shall include
interest accrued through the day before such Interest Payment Date. Unless
otherwise specified in the applicable Pricing Supplement, interest on Fixed
Rate Notes will be computed on the basis of a 360-day year of twelve 30-day
months ("30 over 360").
FLOATING RATE NOTES
From its Original Issue Date to but not including the first Interest Reset
Date (the "Initial Interest Period"), each Floating Rate Note will bear
interest at the Initial Interest Rate set forth, or otherwise described in the
Pricing Supplement. From each Interest Reset Date to but not including the
following Interest Reset Date (each such period, an "Interest Reset Period";
and together with the Initial Interest Period, the "Interest Periods"), the
interest rate for each Floating Rate Note 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.
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The interest rate on each Floating Rate Note will be reset daily, weekly,
monthly, quarterly, semiannually or annually (each day on which the interest
rate is reset, 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 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 involving Floating Rate Notes issued prior to September 16, 1994 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, the rate of
interest that goes into effect on any Interest Reset Date shall be determined
on a date (the "Rate Determination Date") preceding such Interest Reset Date,
as further described below. Such Rate Determination Date may be referred to
below as a "CD Rate Determination Date" in the case of a CD Rate Note, a
"Commercial Paper Rate Determination Date" in the case of a Commercial Paper
Rate Note, a "Federal Funds Rate Determination Date" in the case of a Federal
Funds Rate Note, a "LIBOR Determination Date" in the case of a LIBOR Note or a
"Treasury Rate Determination Date" or a "Constant Maturity Treasury Rate
Determination Date" in the case of a Treasury Rate Note.
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, unless otherwise specified in the applicable Pricing Supplement, by
dividing the interest rate in effect on such day by 360 ("Actual over 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 ("Actual over
Actual"), 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
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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; provided, however, if with respect to any Floating Rate
Note, the applicable Pricing Supplement provides that the Note does not Accrue
to Pay, if an Interest Payment Date with respect to such Floating Rate Note
would otherwise be a day that is not a Business Day, such Interest Payment Date
shall not be postponed; provided, further, that any payment required to be made
in respect of a Floating Rate Note that does not Accrue to Pay 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 dates, and no additional
interest shall accrue as a result of such delayed payment.
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
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"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).
"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.
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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 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 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. If "LIBOR Telerate" is
designated in the applicable Pricing Supplement, "Designated LIBOR Page"
means 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), and LIBOR for such Interest Reset Period will be the relevant
offered rate as determined by the Calculation Agent. If "LIBOR Reuters" is
designated in the applicable Pricing Supplement, "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) provided that at least two such offered rates appear on the
Designated LIBOR Page, in which case, "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 LIBOR cannot be determined as above (either because the
Designated LIBOR Page is no longer available or because less than two rates
appear on page "LIBO" on the Reuters Monitor
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Money Rate Services) 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 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
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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.
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.
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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 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.
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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 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
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(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 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
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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 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
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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 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
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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.
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.
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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.
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.
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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.
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
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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 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
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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.
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.
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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 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
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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 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.
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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 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.
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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.
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.
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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 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.
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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 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.
S-28
<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 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-17
Risks of Indexed Notes..................................................... S-19
United States Tax Considerations........................................... S-20
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>
$10,009,700,000
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 SEPTEMBER , 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 SEPTEMBER 19, 1994
PROSPECTUS SUPPLEMENT
(To Prospectus Dated September , 1994)
U.S.$10,009,700,000
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.$10,009,700,000, 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 having a
Specified Currency of German deutsche marks will have a Stated Maturity of not
less than two years. 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.$10,009,700,000 described in
the first paragraph above plus U.S.$2,272,700,000 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.$10,009,700,000 U.S.$12,512,125-U.S.$75,072,750 U.S.$9,934,627,250-U.S.$9,997,187,875
</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.$4,525,000, 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.$2,272,700,000 of Bearer
Notes sold pursuant to earlier prospectuses, as described herein. The Agent or
other such Company affiliates may act as principal or agent in such
transactions. Such sales will be made at varying prices related to prevailing
market prices at the time of sale.
SALOMON BROTHERS HONG KONG LIMITED
SALOMON BROTHERS INTERNATIONAL LIMITED
SALOMON BROTHERS AG
The date of this Prospectus Supplement is September , 1994.
<PAGE>
No dealer, salesperson or any other person has been authorized to give any
information or to make any representations other than those contained in this
Prospectus Supplement (including the accompanying Pricing Supplement) and the
accompanying Prospectus (the "Prospectus") in connection with the offer
contained herein and, if given or made, such information or representations
must not be relied upon as having been authorized by the Company or an Agent.
Neither the delivery of this Prospectus Supplement (including the accompanying
Pricing Supplement) and the Prospectus nor any sale made hereunder shall,
under any circumstances, create an implication that there has been no change
in the affairs of the Company since the dates as of which information is given
in this Prospectus Supplement (including the accompanying Pricing Supplement)
and the Prospectus. This Prospectus Supplement (including the accompanying
Pricing Supplement) and the Prospectus do not constitute an offer or
solicitation by anyone in any jurisdiction in which such offer or solicitation
is not authorized or in which the person making such offer or solicitation is
not qualified to do so or to any person to whom it is unlawful to make such
offer or solicitation.
References herein to "U.S. dollars" or "U.S.$" 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 September 13, 1994
approximately U.S. $9,220,300,000 of its Medium-Term Notes, Series D and E, of
which approximately U.S. $2,272,700,000 were Bearer Notes and approximately
U.S. $6,947,600,000 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-25
Risks of Indexed Notes............. S-28
Taxation in the United States...... S-29
Plan of Distribution............... S-30
General Information................ S-31
</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.$10,009,700,000 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 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 June 30, 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 June 30, 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 JUNE 30,
--------------------------------------------------------- ------------------
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 $175,528 $169,265
Term debt................ 11,692 8,533 7,082 4,976 2,911 14,228 9,866
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 3,783 3,864
</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-
as............. Chairman of the Board and Chief Executive of Archer Daniels
Midland Company
Warren E.
Buffett*....... Chairman of the Board and Chief Executive Officer of
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.
Maughan........ Executive Vice President of the Company and Chairman and
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.
Simpson*....... President and Chief Executive Officer, Capital Operations,
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 June 30, 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 June 30, 1994, other than
the issuance of approximately $625 million of additional term debt (net of
term debt retired) as of August 31, 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............. $75,328
Bank borrowings............................................ 3,146
Securities loaned.......................................... 1,914
Deposit liabilities........................................ 1,295
Commercial paper........................................... 913
Other...................................................... 1,866
-------
Total short-term borrowings.............................. $84,462
=======
Collateralized mortgage obligations.......................... $ 3,339
=======
Term debt.................................................... $14,228
=======
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; 155,600,071 shares issued).................... 156
Additional paid-in capital................................. 299
Retained earnings.......................................... 5,007
Cumulative translation adjustments......................... (1)
Equity Partnership Plan, net............................... (21)
Common stock held in treasury, at cost (49,863,335 shares). (1,657)
-------
Total stockholders' equity............................... $ 4,095
=======
</TABLE>
- --------
In addition to the items included in the table above, the Company's
liabilities at June 30, 1994 included financial and commodities-related
instruments sold, not yet purchased, and other contractual commitments of
$57.1 billion, and payables and accrued liabilities of $11.6 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
June 30, 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.
S-7
<PAGE>
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.$10,009,700,000 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 September 13,
1994 approximately U.S. $2,272,700,000 of Series D Bearer Notes and
approximately U.S. $6,947,600,000 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"). 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
S-8
<PAGE>
Pricing Supplement prior to its 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 German deutsche marks will have a Stated
Maturity of not less than two years from the 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 regulations as the Bank of England may promulgate from time to time.
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). "London Banking Day" with respect to any Bearer Notes 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 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 June 30, 1994, the aggregate principal
S-9
<PAGE>
amount of Senior Indebtedness outstanding was U.S. $98.7 billion, consisting of
the following: U.S. $14.2 billion of term debt, U.S. $1.0 billion in commercial
paper and U.S. $83.5 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
S-10
<PAGE>
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.
S-11
<PAGE>
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. Unless otherwise specified
in the applicable 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. However, if with respect to any
Fixed Rate Note, "Accrue to Pay" is specified in the applicable Pricing
Supplement, and any Interest Payment Date with respect to such Fixed 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. Each payment of
interest in respect of an Interest Payment Date shall include interest accrued
through the day before such Interest Payment Date. Unless otherwise specified
in the applicable Pricing Supplement, interest on Fixed Rate Notes will be
computed on the basis of a 360-day year of twelve 30-day months ("30 over
360").
FLOATING RATE NOTES
From its Original Issue Date to but not including the first Interest Reset
Date (the "Initial Interest Period"), each Floating Rate Note will bear
interest at the Initial Interest Rate set forth, or otherwise described in the
Pricing Supplement. From each Interest Reset Date to but not including the
following Interest Reset Date (each such period, an "Interest Reset Period";
and together with the Initial Interest
S-12
<PAGE>
Period, the "Interest Periods"), the interest rate for each Floating Rate Note
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"), (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 (each day on which the interest
rate is reset, 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 involving Floating Rate Notes issued prior to September 16, 1994 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
S-13
<PAGE>
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, the rate of
interest that goes into effect on any Interest Reset Date shall be determined
on a date (the "Rate Determination Date") preceding such Interest Reset Date,
as further described below. Such Rate Determination Date may be referred to
below as a "CD Rate Determination Date" in the case of a CD Rate Note, a
"Commercial Paper Rate Determination Date" in the case of a Commercial Paper
Rate Note, a "Federal Funds Rate Determination Date" in the case of a Federal
Funds Rate Note, a "LIBOR Determination Date" in the case of a LIBOR Note or a
"Treasury Rate Determination Date" or a "Constant Maturity Treasury Rate
Determination Date" in the case of a Treasury Rate Note.
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, unless otherwise specified in the applicable Pricing Supplement, by
dividing the interest rate in effect on such day by 360 ("Actual over 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 ("Actual over
Actual"), 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; provided, however, if with respect to any
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Floating Rate Note, the applicable Pricing Supplement provides that the Note
does not Accrue to Pay, if an Interest Payment Date with respect to such
Floating Rate Note would otherwise be a day that is not a Business Day, such
Interest Payment Date shall not be postponed; provided, further, that any
payment required to be made in respect of a Floating Rate Note that does not
Accrue to Pay 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 dates, and no additional interest shall accrue as a result of such delayed
payment.
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 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
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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 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 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. If "LIBOR Telerate" is
designated in the applicable Pricing Supplement, "Designated LIBOR Page"
means 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), and LIBOR for Interest Reset Period will be the relevant offered
rate as determined by the Calculation Agent. If "LIBOR Reuters" is
designated in the applicable Pricing Supplement, "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) provided that at least two such offered rates appear on the
Designated LIBOR Page, in which case, "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 LIBOR cannot be determined as above (either because the
Designated LIBOR Page is no longer available or because less than two rates
appear on page "LIBO" on the Reuters Monitor Money Rate Services) 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
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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 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 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
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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 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
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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"). The issuance 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 deutsche mark
denominated debt obligations. 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 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
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(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 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
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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 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
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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 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
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<PAGE>
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.
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
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<PAGE>
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 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.
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<PAGE>
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 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
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<PAGE>
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.
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.
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<PAGE>
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.
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.
S-28
<PAGE>
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 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.
S-29
<PAGE>
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 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.
For so long as Part III of the Companies Act 1985 remains in force in
relation to the Bearer Notes, 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 or under
circumstances that do not constitute an offer to the public within the meaning
of the Companies Act 1985. Once the provisions of law which replace Part III of
the Companies Act 1985 in relation to offers of securities come into force,
Bearer Notes may not be offered in circumstances which would require (for the
avoidance of any contravention of those provisions) the publication of a
prospectus in accordance with those provisions. All applicable provisions of
the Financial Services 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.
S-30
<PAGE>
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 a person who is of a kind described
in Article 9(3) of the Financial Services Act of 1986 (Investment
Advertisements) (Exemptions) Order 1988 (as amended) or is a person to whom the
publication or document may otherwise lawfully be issued or passed on.
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 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
S-31
<PAGE>
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-32
<PAGE>
REGISTERED OFFICE OF SALOMON INC Seven World Trade Center New York, New York
10048
TRUSTEE FOR SERIES D NOTES Citibank, TRUSTEE FOR SERIES E NOTES Bankers
N.A. 120 Wall Street New York, New York Trust Company Four Albany Street New
10043 York, New York 10015
PRINCIPAL PAYING AGENT FOR SERIES D PRINCIPAL PAYING AGENT FOR SERIES E
NOTES Citibank, N.A. Issuer Services NOTES Bankers Trust Company 1 Appold
336 Strand London, WC2R 0EA Street, Broadgate London, EC2A 2HE
PAYING AGENT FOR SERIES D NOTES PAYING AGENT FOR SERIES E NOTES Bankers
Citibank (Luxembourg) S.A. 16, Avenue Trust Luxembourg, S.A. P. O. Box 807 14
Marie Therese Luxembourg Boulevard F.D. Roosevelt L-2450
Luxembourg
LEGAL ADVISOR TO SALOMON INC Cravath, LEGAL ADVISOR TO THE AGENTS Cleary,
Swaine & Moore 825 Eighth Avenue New Gottlieb, Steen & Hamilton One Liberty
York, N.Y. 10019 Plaza 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>
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.
SUBJECT TO COMPLETION DATED SEPTEMBER 19, 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 $10,009,700,000, 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.
- -------------------------------
SALOMON BROTHERS INC
--------------------------------------------------------------------------
The date of this Prospectus is September , 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 .89 for the six months ended June
30, 1994 and was 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. For the
six months ended June 30, 1994, earnings were insufficient to cover fixed
charges by $235 million. Fixed charges consist largely of interest expense,
including capitalized interest, and a portion of rental expense representative
of the interest factor.
DESCRIPTION OF DEBT SECURITIES
The Debt Securities will constitute either senior or subordinated debt of the
Company and will be issued, in the case of Debt Securities that will be senior
debt, under a senior debt indenture (as amended from time to time, the "Senior
Debt Indenture") and, in the case of Debt Securities that will be subordinated
debt, under a subordinated debt indenture (as amended from time to time, the
"Subordinated Debt Indenture"). The Senior Debt Indenture and the Subordinated
Debt Indenture are sometimes hereinafter referred to individually as an
"Indenture" and collectively as the "Indentures." The institutions named as
trustees under the Indentures are hereinafter referred to individually as a
"Trustee" and collectively as the "Trustees." Forms of the Indentures have been
filed with the Commission and are incorporated by reference as part of the
Registration Statement. The following summaries of certain provisions of the
Indentures and the Debt Securities do not purport to be complete and such
summaries are subject to the detailed provisions of the applicable Indenture to
which reference is hereby made for a full description of such provisions,
including the definition of certain terms used, and for other information
regarding the Debt Securities. Numerical references in parentheses below are to
sections in the applicable Indenture or, if no Indenture is specified, to
sections in each of the Indentures. Wherever particular sections or defined
terms of the applicable Indenture are referred to, such sections or defined
terms are incorporated herein by reference as part of the statement made, and
the statement is qualified in its entirety by such reference.
Unless otherwise provided in the applicable Prospectus Supplement, the
Trustee under the Senior Debt Indenture will be Citibank, N.A., a national
banking association, under an indenture dated as of December 1, 1988, as
amended from time to time, and the Trustee under the Subordinated Debt
3
<PAGE>
Indenture will be Bankers Trust Company, a New York banking corporation, under
an indenture dated as of December 1, 1988, as amended from time to time. Copies
of the respective Indentures under which Citibank, N.A. and Bankers Trust
Company serve as Trustees have been filed with the Commission and are
incorporated by reference as part of the Registration Statement.
GENERAL
Neither of the Indentures limits the amount of Debt Securities that may be
issued thereunder and each Indenture provides that Debt Securities may be
issued from time to time in series (Section 301). The Debt Securities to be
issued under either of the Indentures will be unsecured senior or subordinated
obligations of the Company as set forth below.
Reference is made to the Prospectus Supplement for a description of the
following terms of the Debt Securities in respect of which this Prospectus is
being delivered: (i) the title and series of such Debt Securities, whether such
Debt Securities will be senior or subordinated debt of the Company and under
which indenture such Debt Securities are being issued; (ii) the limit, if any,
upon the aggregate principal amount of such Debt Securities; (iii) the dates on
which or periods during which such Debt Securities may be issued and the dates
on which, or the range of dates within which, the principal of (and premium, if
any, on) such Debt Securities will be payable; (iv) the rate or rates or the
method of determination thereof, at which such Debt Securities will bear
interest, if any; the date or dates from which such interest will accrue; the
dates on which such interest will be payable; and, in the case of Registered
Securities, the Regular Record Dates for the interest payable on such Interest
Payment Dates; (v) the obligation, if any, of the Company to redeem or purchase
such Debt Securities pursuant to any sinking fund or analogous provisions, or
at the option of a Holder, and the periods within which or the dates on which,
the prices at which and the terms and conditions upon which such Debt
Securities will be redeemed or repurchased, in whole or in part, pursuant to
such obligation; (vi) the periods within which or the dates on which, the
prices at which and the terms and conditions upon which such Debt Securities
may be redeemed, if any, in whole or in part, at the option of the Company;
(vii) if other than denominations of $1,000 and any integral multiple thereof,
the denominations in which such Debt Securities will be issuable; (viii)
whether such Debt Securities are to be issued as Discount Securities (as
defined below) and the amount of discount with which such Debt Securities will
be issued; (ix) provisions, if any, for the defeasance of such Debt Securities;
(x) whether such Debt Securities are to be issued as Registered Securities or
Bearer Securities or both and, if Bearer Securities are to be issued, whether
Coupons will be attached thereto, whether Bearer Securities of the series may
be exchanged for Registered Securities having the same terms and the
circumstances under which and the place or places at which any such exchanges,
if permitted, may be made; (xi) whether such Debt Securities are to be issued
in whole or in part in the form of one or more Global Securities and, if so,
the identity of the Depositary (as defined below) for such Global Security or
Securities; (xii) if a temporary Debt Security is to be issued with respect to
such Debt Securities, whether any interest thereon payable on an Interest
Payment Date prior to the issuance of a definitive Debt Security of the series
will be credited to the account of the Persons entitled thereto on such
Interest Payment Date; (xiii) if a temporary Global Security is to be issued
with respect to such Debt Securities, the terms upon which beneficial interests
in such temporary Global Security may be exchanged in whole or in part for
beneficial interests in a definitive Global Security or for individual Debt
Securities of the series and the terms upon which beneficial interests in a
definitive Global Security, if any, may be exchanged for individual Debt
Securities having the same terms; (xiv) if other than United States dollars,
the foreign or composite currency in which such Debt Securities are to be
denominated, or in which payment of the principal of (and premium, if any) and
any interest on such Debt Securities will be made and the circumstances, if
any, when such currency of payment may be changed; (xv) if the principal of
(and premium, if any) or any interest on such Debt Securities are to be
payable, at the election of the Company or a Holder, in a currency other than
that in which such Debt Securities are denominated or stated to be payable, the
periods within which, and the terms and conditions upon which, such election
4
<PAGE>
may be made and the time and the manner of determining the exchange rate
between the currency in which such Debt Securities are denominated or stated to
be payable and the currency in which such Debt Securities are to be paid
pursuant to such election; (xvi) if the amount of payments of principal of (and
premium, if any) or any interest on such Debt Securities may be determined with
reference to an index based on a currency or currencies other than that in
which such Debt Securities are stated to be payable, the manner in which such
amounts shall be determined; (xvii) if the amount of payments of principal of
(and premium, if any) or any interest on such Debt Securities may be determined
with reference to an index based on the prices, changes in prices, or
differences between prices, of securities, currencies, intangibles, goods,
articles or commodities, or otherwise by application of a formula, the manner
in which such amounts shall be determined; (xviii) any additional Events of
Default (as defined below) or restrictive covenants provided for with respect
to such Debt Securities; (xix) whether and under what circumstances the Company
will pay additional interest on such Debt Securities held by a Person who is
not a U.S. Person in respect of any tax, assessment or governmental charge
withheld or deducted and, if so, whether the Company will have the option to
redeem such Debt Securities under such circumstances; (xx) whether and under
what circumstances the Company will be obligated to redeem such Debt Securities
if certain events occur involving United States information reporting
requirements; and (xxi) any other terms of such Debt Securities not
inconsistent with the provisions of the Indenture under which they are issued
(Section 301).
Unless otherwise indicated in the applicable Prospectus Supplement, Debt
Securities will be issued only as Registered Securities in denominations of
$1,000 and any integral multiple thereof and will be payable only in United
States dollars (Section 302).
If Bearer Securities are issued, the Federal income tax consequences and
other special considerations applicable to such Bearer Securities will be
described in the Prospectus Supplement relating thereto.
If the amount of payments of principal of (and premium, if any) or any
interest on Debt Securities is determined with reference to any type of index
or formula or changes in prices of particular securities, currencies,
intangibles, goods, articles or commodities, the Federal income tax
consequences, specific terms and other information with respect to such Debt
Securities and such index or formula, securities, currencies, intangibles,
goods, articles or commodities will be described in the Prospectus Supplement
relating thereto.
If the principal of (and premium, if any) or any interest on Debt Securities
are payable in a foreign or composite currency, the restrictions, elections,
Federal income tax consequences, specific terms and other information with
respect to such Debt Securities and such currency will be described in the
Prospectus Supplement relating thereto.
Debt Securities may be sold at a substantial discount below their stated
principal amount, bearing no interest or interest at a rate that at the time of
issuance is below market rates ("Discount Securities"). Debt Securities may be
variable rate debt securities that may be exchangeable for fixed rate debt
securities. Federal income tax consequences and other special considerations
applicable to any such Debt Securities will be described in the Prospectus
Supplement relating thereto.
Unless otherwise provided in the applicable Prospectus Supplement, the
principal of (and premium, if any) and any interest on Debt Securities will be
payable (in the case of Registered Securities) at the corporate trust office or
agency of the applicable Trustee in the City and State of New York or (in the
case of Bearer Securities) at the principal London office of the applicable
Trustee; provided, however, that payment of interest on Registered Securities
may be made at the option of the Company by check mailed to the Registered
Holders thereof or, if so provided in the applicable Prospectus Supplement, at
5
<PAGE>
the option of a Holder by wire transfer to an account designated by such Holder
(Section 307). Except as otherwise provided in the applicable Prospectus
Supplement, no payment on a Bearer Security will be made by mail to an address
in the United States or by wire transfer to an account maintained by the Holder
thereof in the United States.
Unless otherwise provided in the applicable Prospectus Supplement, Registered
Securities may be transferred or exchanged at the corporate trust office or
agency of the applicable Trustee in the City and State of New York, subject to
the limitations provided in the applicable Indenture, without the payment of
any service charge, other than any tax or governmental charge payable in
connection therewith (Section 305). Bearer Securities will be transferable by
delivery. Provisions with respect to the exchange of Bearer Securities will be
described in the applicable Prospectus Supplement.
All moneys paid by the Company to a Paying Agent for the payment of principal
of (and premium, if any) or any interest on any Debt Security that remain
unclaimed at the end of two years after such principal, premium or interest
shall have become due and payable will be repaid to the Company, and the Holder
of such Debt Security or any Coupon appertaining thereto will thereafter look
only to the Company for payment thereof (Section 1204).
Unless otherwise indicated in the applicable Prospectus Supplement, the
covenants contained in the Indenture and the Debt Securities would not afford
Holders protection in the event of a highly leveraged or other similar
transaction that may adversely affect Holders.
GLOBAL SECURITIES
Debt Securities having the same issue date and the same terms may be issued
in whole or in part in the form of one or more Global Securities that will be
deposited with, or on behalf of, a depositary (the "Depositary") identified in
the Prospectus Supplement relating to such Debt Securities. Global Securities
may be issued in either registered or bearer form and in either temporary or
definitive form. Unless and until it is exchanged in whole or in part for the
individual Debt Securities represented thereby, a Global Security may not be
transferred except as a whole by the Depositary for such Global Security to a
nominee of such Depositary or by a nominee of such Depositary to such
Depositary or another nominee of such Depositary or by such Depositary or any
such nominee to a successor of such Depositary or a nominee of such successor
(Sections 303 and 305).
The specific terms of the depositary arrangement with respect to any Debt
Securities of a series will be described in the Prospectus Supplement relating
to such series. The Company anticipates that the following provisions will
apply to all depositary arrangements.
Upon the issuance of a Global Security, the Depositary for such Global
Security will credit, on its book-entry registration and transfer system, the
respective principal amounts of the individual Debt Securities represented by
such Global Security to the accounts of institutions that have accounts with
such Depositary ("participants"). The accounts to be credited shall be
designated by the underwriters of such Debt Securities or, if such Debt
Securities are offered and sold directly by the Company or through one or more
agents, by the Company or such agent or agents. Ownership of beneficial
interests in a Global Security will be limited to participants or Persons that
may hold beneficial interests through participants. Ownership of beneficial
interests in a Global Security will be shown on, and the transfer of that
ownership will be effected only through, records maintained by the Depositary
for such Global Security or by participants or Persons that hold through
participants. The laws of some states require that certain purchasers of
securities take physical delivery of such securities. Such limits and such laws
may limit the market for beneficial interests in a Global Security.
So long as the Depositary for a Global Security, or its nominee, is the owner
of such Global Security, such Depositary or such nominee, as the case may be,
will be considered the sole Holder of the individual Debt Securities
represented by such Global Security for all purposes under the Indenture
governing such Debt Securities. Except as set forth below, owners of beneficial
interests in a Global Security will not be entitled to have any of the
individual Debt Securities represented by such Global
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Security registered in their names, will not receive or be entitled to receive
physical delivery of any such Debt Securities and will not be considered the
Holders thereof under the Indenture governing such Debt Securities.
Subject to the restrictions discussed under "Limitations on Issuance of
Bearer Securities and Bearer Warrants" below, payments of principal of (and
premium, if any) and any interest on individual Debt Securities represented by
a Global Security will be made to the Depositary or its nominee, as the case
may be, as the Holder of such Global Security. None of the Company, the Trustee
for such Debt Securities, any Paying Agent or the Security Registrar for such
Debt Securities will have any responsibility or liability for any aspect of the
records relating to or payments made on account of beneficial interests in such
Global Security or for maintaining, supervising or reviewing any records
relating to such beneficial interests.
The Company expects that the Depositary for any Debt Securities, upon receipt
of any payment of principal, premium or interest in respect of a definitive
Global Security representing any of such Debt Securities, will credit
immediately participants' accounts with payments in amounts proportionate to
their respective beneficial interests in the principal amount of such Global
Security as shown on the records of such Depositary. The Company also expects
that payments by participants to owners of beneficial interests in such Global
Security held through such participants will be governed by standing
instructions and customary practices, as is now the case with securities held
for the accounts of customers in bearer form or registered in "street name",
and will be the responsibility of such participants. Receipt by owners of
beneficial interests in a temporary Global Security of payments of principal,
premium or interest in respect thereof will be subject to the restrictions
discussed under "Limitations on Issuance of Bearer Securities and Bearer
Warrants" below.
If the Depositary for any Debt Securities is at any time unwilling or unable
to continue as depositary and a successor depositary is not appointed by the
Company within ninety days, the Company will issue individual Debt Securities
in exchange for the Global Security or Securities representing such Debt
Securities. In addition, the Company may at any time and in its sole discretion
determine not to have certain Debt Securities represented by one or more Global
Securities and, in such event, will issue individual Debt Securities in
exchange for the Global Security or Securities representing such Debt
Securities. Further, if the Company so specifies with respect to any Debt
Securities, an owner of a beneficial interest in a Global Security representing
such Debt Securities may, on terms acceptable to the Company and the Depositary
for such Global Security, receive individual Debt Securities in exchange for
such beneficial interest. In any such instance, an owner of a beneficial
interest in a Global Security will be entitled to physical delivery of
individual Debt Securities represented by such Global Security equal in
principal amount to such beneficial interest and to have such Debt Securities
registered in its name (if the Debt Securities are issuable as Registered
Securities). Individual Debt Securities so issued will be issued (a) as
Registered Securities in denominations, unless otherwise specified by the
Company, of $1,000 and integral multiples thereof if the Debt Securities are
issuable as Registered Securities, (b) as Bearer Securities in the denomination
or denominations specified by the Company if the Debt Securities are issuable
as Bearer Securities or (c) as either Registered or Bearer Securities, if the
Debt Securities are issuable in either form (Section 305). See, however,
"Limitations on Issuance of Bearer Securities and Bearer Warrants" below for a
description of certain restrictions on the issuance of individual Bearer
Securities in exchange for beneficial interests in a Global Security.
SENIOR DEBT
The Debt Securities and Coupons that will constitute part of the senior debt
of the Company will be issued under the Senior Debt Indenture and will rank
pari passu with all other unsecured debt of the Company except subordinated
debt.
SUBORDINATED DEBT
The Debt Securities and Coupons that will constitute part of the subordinated
debt of the Company will be issued under the Subordinated Debt Indenture and
will be subordinate and junior in the right of
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payment, to the extent and in the manner set forth in the Subordinated Debt
Indenture, to all "Senior Indebtedness" of the Company. The Subordinated Debt
Indenture defines "Senior Indebtedness" as the following indebtedness or
obligations, whether outstanding at the date of such Indenture or thereafter
incurred, assumed, guaranteed or otherwise created, unless in the instrument
creating or evidencing any such indebtedness or obligation or pursuant to which
the same is outstanding it is provided that such indebtedness or obligation is
not superior in right of payment to the subordinated Debt Securities and any
appurtenant Coupons: (a) all indebtedness of the Company (including
indebtedness of others guaranteed by the Company), other than the subordinated
Debt Securities and any appurtenant Coupons and other than the debt securities
issuable under the indenture dated as of July 1, 1986 between the Company and
Bank of New York, as trustee, that (i) is for money borrowed, (ii) arises in
connection with the acquisition of any business, properties, securities or
assets of any kind, other than in the ordinary course of the Company's business
as heretofore conducted or (iii) is secured, in whole or in part, by real or
personal property, (b) obligations of the Company (including obligations of
others guaranteed by the Company) as lessee under leases required to be
capitalized on the balance sheet of the lessee under generally accepted
accounting principles and leases of property or assets made as part of any sale
and lease-back transaction and (c) amendments, renewals, extensions,
modifications and refundings of any such indebtedness or obligation
(Subordinated Debt Indenture, Section 101). The subordinated Debt Securities
and any appurtenant Coupons will not be superior in right of payment to the
debt securities issuable under the indenture dated as of July 1, 1986 between
the Company and Bank of New York, as trustee (Subordinated Debt Indenture,
Section 1601).
In the event (a) of any insolvency or bankruptcy proceedings, or any
receivership, liquidation, reorganization or other similar proceedings in
respect of the Company or a substantial part of its property, or (b) that (i) a
default shall have occurred with respect to the payment of principal of (and
premium, if any) or any interest on or other monetary amounts due and payable
on any Senior Indebtedness, or (ii) there shall have occurred an event of
default (other than a default in the payment of principal, premium, if any, or
interest, or other monetary amounts due and payable) with respect to any Senior
Indebtedness, as defined therein or in the instrument under which the same is
outstanding, permitting the holder or holders thereof to accelerate the
maturity thereof (with notice or lapse of time, or both), and such event of
default shall have continued beyond the period of grace, if any, in respect
thereof, and such default or event of default shall not have been cured or
waived or shall not have ceased to exist, or (c) that the principal of and
accrued interest on the subordinated Debt Securities issued under the
Subordinated Debt Indenture shall have been declared due and payable upon an
Event of Default pursuant to Section 502 thereof and such declaration shall not
have been rescinded and annulled as provided therein, then the holders of all
Senior Indebtedness shall first be entitled to receive payment of the full
amount due thereon, or provision shall be made for such payment in money or
money's worth, before the Holders of any of the subordinated Debt Securities or
Coupons issued under the Subordinated Debt Indenture are entitled to receive a
payment on account of the principal of (and premium, if any) or any interest on
the indebtedness evidenced by such Debt Securities or such Coupons
(Subordinated Debt Indenture, Section 1601). If this Prospectus is being
delivered in connection with a series of subordinated Debt Securities, the
related Prospectus Supplement will set forth the amount of Senior Indebtedness
outstanding as of the most recent practicable date.
LIMITATION ON LIENS
The Senior Debt Indenture provides that the Company will not, and will not
permit any Restricted Subsidiary to, incur, issue, assume, guarantee or suffer
to exist any indebtedness for borrowed money if the payment of such
indebtedness is secured by a pledge of, lien on or security interest in any
shares of stock of any Restricted Subsidiary without effectively providing for
the equal and ratable securing of the payment of the Debt Securities issued
thereunder (Senior Debt Indenture, Section 1205). The term "Restricted
Subsidiary" is defined in the Senior Debt Indenture to mean each of Salomon
Brothers Inc, Phibro Energy Inc. and, with respect to the Company's Medium-Term
Notes Series D and E, Philipp Brothers, Inc. and any Subsidiary of the Company
owning, directly or indirectly, any of the common stock of, or succeeding to
any substantial part of the business now conducted by, any of such
corporations. As of December 31, 1992, Phibro Energy Inc. was merged with and
into Salomon Inc.
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EVENTS OF DEFAULT
The following will constitute Events of Default under each Indenture with
respect to any series of Debt Securities issued thereunder: (i) default in the
payment of the principal of (and premium, if any, on) any Debt Security of such
series when due; (ii) default for 30 days in the payment of any interest on any
Debt Security of such series or of any related Coupon when due; (iii) default
in the deposit of any sinking fund payment, when and as due by the terms of any
Debt Security of such series; (iv) default in the performance of any other
covenant in such Indenture, continued for 60 days after written notice thereof
by the applicable Trustee or the Holders of at least 25% in principal amount of
the Debt Securities of such series then Outstanding; and (v) certain events of
bankruptcy, insolvency or reorganization (Section 501). Any additional Events
of Default provided with respect to a series of Debt Securities will be set
forth in the applicable Prospectus Supplement. No Event of Default with respect
to a particular series of Debt Securities issued under either Indenture
necessarily constitutes an Event of Default with respect to any other series of
Debt Securities.
Each Indenture provides that if an Event of Default specified therein shall
occur and be continuing with respect to a series of Debt Securities issued
thereunder, either the Trustee thereunder or the Holders of at least 25% in
principal amount of the Debt Securities of such series then Outstanding may
declare the principal of and all accrued interest on all Debt Securities of
such series (or, in the case of Discount Securities, an amount equal to such
portion of the principal amount thereof as will be specified in the related
Prospectus Supplement) to be due and payable. In certain cases, the Holders of
a majority in principal amount of the Debt Securities then Outstanding of a
series may, on behalf of the Holders of all such Debt Securities, rescind and
annul such declaration and its consequences (Section 502).
Each Indenture contains a provision entitling the Trustee thereunder, subject
to the duty of such Trustee during the continuance of a default to act with the
required standard of care, to be indemnified by the Holders of the Debt
Securities or any Coupons of any series thereunder before proceeding to
exercise any right or power under such Indenture with respect to such series at
the request of such Holders (Section 603). Each Indenture provides that no
Holder of a Debt Security or any Coupon of any series thereunder may institute
any proceeding, judicial or otherwise, to enforce such Indenture except in the
case of failure of the Trustee thereunder, for 60 days, to act after it
receives (i) written notice of such default, (ii) a written request to enforce
such Indenture by the Holders of at least 25% in aggregate principal amount of
the Debt Securities then Outstanding of such series (and the Trustee receives
no direction inconsistent with such written request from the Holders of a
majority in aggregate principal amount of the Debt Securities then outstanding
of such series) and (iii) an offer of reasonable indemnity (Section 507). This
provision will not prevent any Holder of any such Debt Security from enforcing
payment of the principal thereof (and premium, if any, thereon) and any
interest thereon or of any such Coupon from enforcing payment thereof at the
respective due dates thereof (Section 508). The Holders of a majority in
aggregate principal amount of the Debt Securities then Outstanding of any
series may direct the time, method and place of conducting any proceedings for
any remedy available to the applicable Trustee or of exercising any trust or
power conferred on it with respect to the Debt Securities of such series.
However, such Trustee may refuse to follow any direction that conflicts with
law or the applicable Indenture or that would be unjustly prejudicial to
Holders not joining therein (Section 512).
Each Indenture provides that the Trustee thereunder will, within 90 days
after the occurrence of a default with respect to any series of Debt Securities
thereunder known to it, give to the Holders of Debt Securities and Coupons of
such series notice of such default, unless such default shall have been cured
or waived; but, except in the case of a default in the payment of the principal
of (and premium, if any) or any interest on any Debt Security or of any Coupon
of such series or in the payment of any sinking fund installment with respect
to Debt Securities of such series, the Trustee shall be protected in
withholding such notice if it determines in good faith that the withholding of
such notice is in the interest of the Holders of such Debt Securities and
Coupons (Section 602).
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The Company will be required to file annually with each Trustee a certificate
of an appropriate officer of the Company as to the absence of certain defaults
under the terms of the appropriate Indenture (Senior Debt Indenture, Section
1206; Subordinated Debt Indenture, Section 1205).
MODIFICATION AND WAIVER
Each Indenture contains provisions for convening meetings of Holders to
consider matters affecting their interests (Article Nine).
Modifications of and amendments to each Indenture may be made by the Company
and the Trustee thereunder with the consent of the Holders of a majority in
principal amount of the Debt Securities then Outstanding of each series issued
thereunder that is affected by such modification or amendment, voting
separately; provided, however, that no such modification or amendment may,
without the consent of the Holder of each Outstanding Debt Security affected
thereby: (i) change the Stated Maturity of the principal of, or any installment
of interest or additional amounts payable on, any Debt Security or Coupon; (ii)
reduce the principal amount (including the amount payable on a Discount
Security upon the acceleration of the Maturity thereof) of, or any interest on
or any premium payable upon redemption of, or additional amounts payable on,
any Debt Security or Coupon; (iii) change the currency or composite currency of
denomination or payment of the principal of (and premium, if any, on) or any
interest or additional amounts payable on any Debt Security or Coupon; (iv)
impair the right to institute suit for the enforcement of any payment on or
with respect to any Debt Security or Coupon; (v) reduce the percentage of the
principal amount of the Outstanding Debt Securities of any series, the consent
of the Holders of which is required for modification or amendment of the
applicable Indenture with respect to waiver of compliance with certain
provisions of the applicable Indenture or waiver of certain defaults; (vi)
limit the Company's obligation to maintain a Paying Agent outside the
UnitedStates for Bearer Securities; or (vii) limit the obligation of the
Company to redeem certain Bearer Securities if certain events occur involving
United States information reporting requirements (Section 1102).
The Subordinated Debt Indenture may not be amended to alter or impair the
subordination of the subordinated Debt Securities issued thereunder without the
consent of each holder of Senior Indebtedness then outstanding (Subordinated
Debt Indenture, Section 1107).
The Holders of a majority in principal amount of the Outstanding Debt
Securities of each series may, on behalf of all Holders of Debt Securities of
that series, waive, insofar as that series is concerned, compliance by the
Company with certain restrictive provisions of the applicable Indenture before
the time for such compliance (Senior Debt Indenture, Section 1207; Subordinated
Debt Indenture, Section 1206). The Holders of a majority in principal amount of
the Outstanding Debt Securities of each series may, on behalf of all Holders of
Debt Securities of that series, waive any past default under the applicable
Indenture with respect to Debt Securities of that series, except a default in
the payment of the principal of (and premium, if any) or any interest on any
such Debt Security or in the payment of any Coupon of that series and except a
default in respect of a covenant or provision the modification or amendment of
which would require the consent of the Holder of each Outstanding Debt Security
affected thereby (Section 513).
CONSOLIDATION, MERGER AND TRANSFER OR LEASE OF ASSETS
Each Indenture provides that the Company may not consolidate with or merge
into any corporation, or transfer or lease its assets substantially as an
entirety to any Person, unless (i) the successor corporation or transferee or
lessee (the "Successor Corporation") is a corporation organized under the laws
of the United States or any political subdivision thereof; (ii) the Successor
Corporation assumes the Company's obligations under the applicable Indenture
and on the Debt Securities and any Coupons issued thereunder; (iii) after
giving effect to the transaction no Event of Default and no event that, after
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notice or lapse of time, or both, would become an Event of Default shall have
occurred and be continuing; (iv) the Successor Corporation waives any right to
redeem any Bearer Security under circumstances in which the Successor
Corporation would be entitled to redeem such Bearer Security but the Company
would not have been so entitled if such consolidation, merger, transfer or
lease had not occurred; and (v) certain other conditions are met (Section
1001).
DEFEASANCE
If so specified in the applicable Prospectus Supplement with respect to Debt
Securities of any series that are Registered Securities payable only in United
States dollars, the Company, at its option, (i) will be discharged from any and
all obligations in respect of the Debt Securities of such series (except for
certain obligations to register the transfer or exchange of Debt Securities of
such series, replace stolen, lost or mutilated Debt Securities of such series,
maintain paying agencies and hold moneys for payment in trust) or (ii) will not
be subject to provisions of the applicable Indenture described above under
"Limitation on Liens" and "Consolidation, Merger and Transfer or Lease of
Assets" with respect to the Debt Securities of such series, in each case if the
Company deposits with the applicable Trustee, in trust, money or U.S.
Government Obligations that through the payment of interest thereon and
principal thereof in accordance with their terms will provide money in an
amount sufficient to pay all the principal of (and premium, if any) and any
interest on the Debt Securities of such series on the dates such payments are
due in accordance with the terms of such Debt Securities. To exercise any such
option under either of the Indentures, the Company is required to deliver to
the applicable Trustee an opinion of counsel to the effect that (1) the deposit
and related defeasance would not cause the Holders of the Debt Securities of
such series to recognize income, gain or loss for Federal income tax purposes
and, in the case of a discharge pursuant to clause (i), a ruling to such effect
received from or published by the United States Internal Revenue Service, and
(2) if the Debt Securities of such series are then listed on the New York Stock
Exchange, such Debt Securities would not be delisted from the New York Stock
Exchange as a result of the exercise of such option (Sections 1501 and 1502).
Defeasance provisions, if any, with respect to any other Debt Securities of any
series will be described in the applicable Prospectus Supplement.
REPLACEMENT DEBT SECURITIES
Unless otherwise provided in the applicable Prospectus Supplement, if a Debt
Security of any series or any related Coupon is mutilated, destroyed, lost or
stolen, it may be replaced at the corporate trust office or agency of the
applicable Trustee in the City and State of New York (in the case of Registered
Securities) or at the principal London office of the applicable Trustee (in the
case of Bearer Securities and Coupons) upon payment by the Holder of such
expenses as may be incurred by the Company and the applicable Trustee in
connection therewith and the furnishing of such evidence and indemnity as the
Company and such Trustee may require. Mutilated Debt Securities and Coupons
must be surrendered before new Debt Securities (with or without Coupons) will
be issued (Section 306).
NOTICES
Unless otherwise provided in the applicable Prospectus Supplement, any notice
required to be given to a Holder of a Debt Security of any series that is a
Registered Security will be mailed to the last address of such Holder set forth
in the applicable Security Register. Any notice required to be given to a
Holder of a Debt Security that is a Bearer Security will be published in a
daily morning newspaper of general circulation in the city or cities specified
in the Prospectus Supplement relating to such Bearer Security (Section 105).
CONCERNING THE TRUSTEES
The Company and certain of its subsidiaries maintain lines of credit and have
other customary banking relationships with Citibank, N.A. and Bankers Trust
Company, and certain of their respective affiliates, and may have such
relationships with other Trustees and their affiliates.
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DESCRIPTION OF WARRANTS
The following description of the terms of the Warrants sets forth certain
general terms and provisions of the Warrants to which any Prospectus Supplement
may relate. The particular terms of the Warrants offered by any Prospectus
Supplement and the extent, if any, to which such general provisions may apply
to the Warrants so offered will be described in the Prospectus Supplement
relating to such Warrants.
Warrants may be offered independently of or together with any series of Debt
Securities offered by a Prospectus Supplement and may be attached to or
separate from such Debt Securities. Each series of Warrants will be issued
under a separate warrant agreement (a "Warrant Agreement") to be entered into
between the Company and a bank or trust company, as warrant agent (the "Warrant
Agent"), all as described in the Prospectus Supplement relating to such series
of Warrants. The Warrant Agent will act solely as the agent of the Company
under the applicable Warrant Agreement and in connection with the certificates
for the Warrants (the "Warrant Certificates"), if any, of such series, and will
not assume any obligation or relationship of agency or trust for or with any
holders of such Warrant Certificates or beneficial owners of Warrants. Copies
of the form of Warrant Agreement for Warrants sold together with Debt
Securities and the form of Warrant Agreement for Warrants sold separate from
Debt Securities, including the respective forms of Warrant Certificates, have
previously been filed with the Commission and are incorporated by reference as
part of the Registration Statement. The following summaries of certain
provisions of the forms of Warrant Agreements and Warrant Certificates do not
purport to be complete and are subject to, and are qualified in their entirety
by reference to, all the provisions of the Warrant Agreements and the Warrant
Certificates.
GENERAL
Reference is hereby made to the Prospectus Supplement relating to the
particular series of Warrants, if any, offered thereby for the terms of such
Warrants, including, where applicable: (i) the offering price; (ii) the
currency or currencies in which such Warrants are being offered; (iii) the
designation, aggregate principal amount, currency or currencies, denominations
and other terms of the series of Debt Securities purchasable upon exercise of
such Warrants; (iv) the designation and terms of the series of Debt Securities
with which such Warrants are being offered and the number of such Warrants
being offered with each such Debt Security; (v) the date on and after which
such Warrants and the related series of Debt Securities will be transferable
separately; (vi) the principal amount of the Debt Securities purchasable upon
exercise of each such Warrant and the price at which and currency or currencies
in which such principal amount of Debt Securities may be purchased upon such
exercise; (vii) the date on which the right to exercise such Warrants shall
commence and the date (the "Expiration Date") on which such right shall expire;
(viii) whether such Warrants are to be issuable as Registered Warrants or
Bearer Warrants; (ix) whether such Warrants are extendable and the period or
periods of such extendability; (x) the terms upon which any Bearer Warrants of
such series may be exchanged for Registered Warrants of such series; (xi)
whether such Warrants will be issued in certificated or uncertificated form;
(xii) United States Federal income tax consequences; and (xiii) any other terms
of such Warrants not inconsistent with the applicable Warrant Agreement.
Registered Warrants of any series will be exchangeable into Registered
Warrants of the same series representing in the aggregate the number of
Warrants surrendered for exchange. Warrant Certificates, to the extent
exchangeable, may be presented for exchange, and Registered Warrants may be
presented for transfer, at the corporate trust office of the Warrant Agent for
such series of Warrants (or any other office indicated in the Prospectus
Supplement relating to such series of Warrants). Prior to the exercise of their
Warrants, holders of Warrants will not have any of the rights of Holders of the
Debt Securities of the series purchasable upon such exercise, including the
right to receive payments of principal of, premium, if any, or interest, if
any, on, the Debt Securities purchasable upon such exercise, or to enforce any
of the covenants in the applicable Indenture. Bearer Warrants will be
transferable by delivery. The applicable Prospectus Supplement will describe
the terms of exchange applicable to any Bearer Warrants.
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EXERCISE OF WARRANTS
Each Warrant will entitle the holder thereof to purchase such principal
amount of the related series of Debt Securities at such exercise price as shall
in each case be set forth in, or calculable as set forth in, the Prospectus
Supplement relating to such Warrant. Registered Warrants of a series may be
exercised at the corporate trust office of the Warrant Agent for such series
(or any other office indicated in the Prospectus Supplement relating to such
series) at any time prior to 5:00 P.M., New York City time (unless otherwise
indicated in the related Prospectus Supplement), on the Expiration Date set
forth in the Prospectus Supplement relating to such series of Warrants. After
the close of business on the Expiration Date relating to such series of
Warrants (or such later date to which such Expiration Date may be extended by
the Company), unexercised Warrants of such series will become void.
Registered Warrants of a series may be exercised by delivery to the
appropriate Warrant Agent of payment, as provided in the Prospectus Supplement
relating to such series of Warrants, of the consideration required to purchase
the principal amount of the series of Debt Securities purchasable upon such
exercise, together with certain information as set forth on the reverse side of
the Warrant Certificate evidencing such Warrants. Such Warrants will be deemed
to have been exercised upon receipt of the exercise price, subject to the
receipt of the Warrant Certificate evidencing such Warrants within five
business days. Upon receipt of such payment and such Warrant Certificate,
properly completed and duly executed, at the corporate trust office of the
appropriate Warrant Agent (or any other office indicated in the Prospectus
Supplement relating to such series of Warrants), the Company will, as soon as
practicable, issue and deliver the principal amount of the series of Debt
Securities purchasable upon such exercise. Only Registered Securities will be
issued and delivered upon exercise of Registered Warrants. If fewer than all of
the Warrants represented by a Registered Warrant are exercised, a new
Registered Warrant will be issued and delivered for the remaining amount of
Warrants. Special provisions relating to the exercise of any Bearer Warrants
will be described in the related Prospectus Supplement.
LIMITATIONS ON ISSUANCE OF BEARER SECURITIES AND BEARER WARRANTS
In compliance with United States Federal income tax laws and regulations the
Company and any underwriter, agent or dealer participating in the offering of
any Bearer Security will agree that, in connection with the original issuance
of such Bearer Security and during the period ending 40 days after the issue
date of such Bearer Security, they will not offer, sell or deliver such Bearer
Security, directly or indirectly, to a U.S. Person or to any person within the
United States, except to the extent permitted under U.S. Treasury regulations.
Bearer Securities will bear a legend to the following effect: "Any United
States Person who holds this obligation will be subject to limitations under
the United States income tax laws, including the limitations provided in
Sections 165(j) and 1287(a) of the Internal Revenue Code." The sections
referred to in the legend provide that, with certain exceptions, a United
States taxpayer who holds Bearer Securities will not be allowed to deduct any
loss with respect to, and will not be eligible for capital gain treatment with
respect to any gain realized on a sale, exchange, redemption or other
disposition of, such Bearer Securities.
As used herein, "United States" means the United States of America and its
possessions, and "U.S. Person" means a citizen or resident of the United
States, a corporation, partnership or other entity created or organized in or
under the laws of the United States, or an estate or trust the income of which
is subject to United States Federal income taxation regardless of its source.
Pending the availability of a definitive Global Security or individual Bearer
Securities, as the case may be, Debt Securities that are issuable as Bearer
Securities may initially be represented by a single temporary Global Security,
without interest coupons, to be deposited with a common depositary in
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London for Morgan Guaranty Trust Company of New York, Brussels Office, as
operator of the Euroclear System ("Euroclear"), and Centrale de Livraison de
Valeurs Mobilieres S.A. ("Cedel") for credit to the accounts designated by or
on behalf of the purchasers thereof. Following the availability of a definitive
Global Security in bearer form, without coupons attached, or individual Bearer
Securities and subject to any further limitations described in the applicable
Prospectus Supplement, the temporary Global Security will be exchangeable for
interests in such definitive Global Security or for such individual Bearer
Securities, respectively, only upon receipt of a "Certificate of Non-U.S.
Beneficial Ownership". A "Certificate of Non-U.S. Beneficial Ownership" is a
certificate to the effect that a beneficial interest in a temporary Global
Security or Bearer Warrant is owned by a person that is not a U.S. Person or is
owned by or through a financial institution in compliance with applicable U.S.
Treasury regulations. In no event will a definitive Bearer Security be
delivered to a purchaser without the receipt of a Certificate of Non-U.S.
Beneficial Ownership. No Bearer Security will be delivered in or to the United
States. If so specified in the applicable Prospectus Supplement, interest on a
temporary Global Security will be paid to each of Euroclear and Cedel with
respect to that portion of such temporary Global Security held for its account,
but only upon receipt as of the relevant Interest Payment Date of a Certificate
of Non-U.S. Beneficial Ownership.
Limitations on the offer, sale, delivery and exercise of Bearer Warrants
(including a requirement that a Certificate of Non-U.S. Beneficial Ownership be
delivered upon exercise of a Bearer Warrant) will be described in the
Prospectus Supplement relating to such Bearer Warrants.
PLAN OF DISTRIBUTION
The Company may sell Securities in any of three ways: (i) through
underwriters or dealers; (ii) directly to one or more purchasers; or (iii)
through agents. The applicable Prospectus Supplement will set forth the terms
of the offering of any Securities, including the names of any underwriters, the
purchase price of such Securities and the proceeds to the Company from such
sale, any underwriting discounts and other items constituting underwriters'
compensation, any initial public offering price, any discounts or concessions
allowed or reallowed or paid to dealers, any securities exchanges on which such
Securities may be listed and any restrictions on the sale and delivery of
Securities in bearer form.
If underwriters are used in the sale, Securities will be acquired by the
underwriters for their own account and may be resold from time to time in one
or more transactions, including negotiated transactions, at a fixed public
offering price or at varying prices determined at the time of sale. Such
Securities may be offered to the public either through underwriting syndicates
represented by managing underwriters or by underwriters without a syndicate.
The Company expects that such managing underwriters or underwriters in the
United States will include Salomon Brothers Inc. Unless otherwise set forth in
the applicable Prospectus Supplement, the obligations of the underwriters to
purchase such Securities will be subject to certain conditions precedent, and
the underwriters will be obligated to purchase all of such Securities if any of
such Securities are purchased. Any initial public offering price and any
discounts or concessions allowed or reallowed or paid to dealers may be changed
from time to time.
Securities may also be offered and sold, if so indicated in the Prospectus
Supplement, in connection with a remarketing upon their purchase, in accordance
with a redemption or repayment pursuant to their terms, by one or more firms
("remarketing firms") acting as principals for their own accounts or as agents
for the Company. Any remarketing firm will be identified and the terms of its
agreement, if any, with the Company and its compensation will be described in
the Prospectus Supplement. Remarketing firms may be deemed to be underwriters
in connection with the Securities remarketed thereby.
Securities may also be sold directly by the Company or through agents
designated by the Company from time to time. Any agent involved in the offer or
sale of Securities will be named, and any commissions payable by the Company to
such agent will be set forth, in the applicable Prospectus
14
<PAGE>
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.
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 SEPTEMBER 19, 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
$4,525,000, 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
$184,065,000 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 September , 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 September 13, 1994 approximately
$184,065,000 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 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 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 .89 for the six months ended June
30, 1994 and was 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. For the
six months ended June 30, 1994, earnings were insufficient to cover fixed
charges by $235 million. 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 September 13, 1994
approximately $184,065,000 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.
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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
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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. Unless otherwise specified in the
applicable 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. However, if with respect to any
Fixed Rate Note, "Accrue to Pay" is specified in the applicable Pricing
Supplement, and any Interest Payment Date with respect to such Fixed 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. Each payment of
interest in respect of an Interest Payment Date shall include interest accrued
through the day before such Interest Payment Date. Unless otherwise specified
in the applicable Pricing Supplement, interest on Fixed Rate Notes will be
computed on the basis of a 360-day year of twelve 30-day months ("30 over
360").
FLOATING RATE NOTES
From its Original Issue Date to but not including the first Interest Reset
Date (the "Initial Interest Period"), each Floating Rate Note will bear
interest at the Initial Interest Rate set forth, or otherwise described in the
Pricing Supplement. From each Interest Reset Date to but not including the
following Interest Reset Date (each such period, an "Interest Reset Period";
and together with the Initial Interest Period, the "Interest Periods"), the
interest rate for each Floating Rate Note 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
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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 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 (each day on which the interest
rate is reset, 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 involving Floating Rate Notes issued
prior to September 16, 1994 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, the rate of
interest that goes into effect on any Interest Reset Date shall be determined
on a date (the "Rate Determination Date") preceding such Interest Reset Date,
as further described below. Such Rate Determination Date may be referred to
below as a "CD Rate Determination Date" in the case of a CD Rate Note, a
"Commercial Paper Rate Determination Date" in the case of a Commercial Paper
Rate Note, a "Federal Funds Rate Determination Date" in the case of a Federal
Funds Rate Note, a "LIBOR Determination Date" in the case of a LIBOR Note or a
"Treasury Rate Determination Date" or a "Constant Maturity Treasury Rate
Determination Date" in the case of a Treasury Rate Note.
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.
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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, unless
otherwise specified in the applicable Pricing Supplement, by dividing the
interest rate in effect on such day by 360 ("Actual over 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 ("Actual over Actual"), 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).
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;
provided, however, if with respect to any Floating Rate Note, the applicable
Pricing Supplement provides that the Note does not Accrue to Pay, if an
Interest Payment Date with respect to such Floating Rate Note would otherwise
be a day that is not a Business Day, such Interest Payment Date shall not be
postponed; provided, further, that any payment required to be made in respect
of a Floating Rate Note that is not Accrue to Pay 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 dates, and no additional interest shall
accrue as a result of such delayed payment.
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
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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).
"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.
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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.
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 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. If "LIBOR Telerate" is
designated in the applicable Pricing Supplement, "Designated LIBOR Page"
means 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), and LIBOR for such Interest Reset Period will be the relevant
offered rate or determined by the Calculation Agent. If "LIBOR Reuters" is
designated in the applicable Pricing Supplement, "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) provided that at least
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two such offered rates appear on the Designated LIBOR Page, in which case
"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 LIBOR cannot be determined as above (either because the
Designated LIBOR Page is not longer available or because less than two
rates appear on page "LIBO" on the Reuters Monitor Money Rate Services) 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 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
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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
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.
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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 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).
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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 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,
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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).
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.
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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 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.
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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 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
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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 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
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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.
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%
21
<PAGE>
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 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.
22
<PAGE>
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 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.
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<PAGE>
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.
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.
24
<PAGE>
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.
25
<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
<TABLE>
<CAPTION>
PAGE
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<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 the Notes.................................................... 3
United States Tax Considerations............................................ 17
Plan of Distribution........................................................ 23
ERISA Matters............................................................... 24
Experts..................................................................... 25
Legal Opinions.............................................................. 25
</TABLE>
$1,000,000,000
SALOMON INC
NOTES, SERIES G
DUE MORE THAN NINE
MONTHS FROM DATE OF ISSUE
- -----------------------------------
SALOMON BROTHERS INC
----------------------------------------------------------------------------
PROSPECTUS
DATED SEPTEMBER , 1994
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.*
<TABLE>
<S> <C>
Commission Registration Fee...................................... $3,448,276
Accounting Fees.................................................. 50,000
Trustees' Fees and Expenses...................................... 275,000
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.................................................... 11,224
----------
Total.......................................................... $4,525,000
==========
</TABLE>
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* 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>
<C> <S>
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>
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<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>
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 June 30, 1994).
23(a) --Consent of Arthur Andersen L.L.P.
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.*
25(g) --Form T-1 Statement of Eligibility and Qualification of Bankers Trust Company
under the Trust Indenture Act of 1939.
</TABLE>
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* 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
16TH DAY OF SEPTEMBER, 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
Chief Executive
* Officer, Chairman September 16,
- ------------------------------------ and Director 1994
(ROBERT E. DENHAM)
* Chief Financial
- ------------------------------------ Officer September 16,
(JEROME H. BAILEY) 1994
/s/ David C. Fisher Principal
- ------------------------------------ Accounting Officer September 16,
(DAVID C. FISHER) and Controller 1994
* Director
- ------------------------------------ September 16,
(DWAYNE O. ANDREAS) 1994
* Director
- ------------------------------------ September 16,
(WARREN E. BUFFETT) 1994
Director
* September 16,
- ------------------------------------ 1994
(CLAIRE M. FAGIN)
* Director
- ------------------------------------ September 16,
(ANDREW J. HALL) 1994
* Director
- ------------------------------------ September 16,
(GEDALE B. HOROWITZ) 1994
* Director
- ------------------------------------ September 16,
(DERYCK C. MAUGHAN) 1994
* Director
- ------------------------------------ September 16,
(WILLIAM F. MAY) 1994
Director
* September 16,
- ------------------------------------ 1994
(CHARLES T. MUNGER)
* Director
- ------------------------------------ September 16,
(LOUIS A. SIMPSON) 1994
Director
* September 16,
- ------------------------------------ 1994
(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>
<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 L.L.P.
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.*
25(g) --Form T-1 Statement of Eligibility and Qualification of Bankers Trust
Company 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 23(a)
[LETTERHEAD OF ARTHUR ANDERSEN L.L.P. APPEARS HERE]
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
SALOMON INC AMENDMENT NO. 1 TO FORM S-3 REGISTRATION STATEMENT
DATED SEPTEMBER 19, 1994
$10,000,000,000 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 L.L.P.
ARTHUR ANDERSEN L.L.P.
New York, New York
September 19, 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 6 day of
August, 1994.
/s/ Claire M. Fagin
------------------------
Claire M. Fagin
<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 10 day of
August, 1994.
/s/ Charles T. Munger
------------------------
Charles T. Munger
<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 20 day of
August, 1994.
/s/ Robert G. Zeller
------------------------
Robert G. Zeller
<PAGE>
Exhibit 25(g)
- --------------------------------------------------------------------------------
UNITED STATES
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)_____
__________________________________
BANKERS TRUST COMPANY
(Exact name of trustee as specified in its charter)
NEW YORK 13-4941247
(Jurisdiction of incorporation (I.R.S. Employer
if not a U.S. national bank) Identification no.)
Four Albany Street
New York, New York 10006
(Address of principal (Zip Code)
executive offices)
_________________________
SALOMON INC.
(Exact name of obligor as specified in the charter)
DELAWARE 22-1660266
(State or other jurisdiction (I.R.S. employer
of 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>
-2-
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.
Name Address
---- -------
Federal Reserve Bank (2nd District) New York, N.Y.
Federal Deposit Insurance Corporation Washington, D.C.
New York State Banking Department Albany, N.Y.
(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.
None.
Item 16. List of Exhibits.
Exhibit 1 - Restated Organization Certificate of Bankers Trust
Company dated August 7, 1990 and Certificate of
Amendment of the Organization Certificate of Bankers
Trust Company dated March 21, 1994 - see attached.
Exhibit 2 - Certificate of Authority to commence business -
Incorporated herein by reference to Exhibit 2 filed
with Form T-1 Statement, Registration No. 33-21047.
Exhibit 3 - Authorization of the Trustee to exercise corporate trust
powers - Incorporated herein by reference to Exhibit 2
filed with Form T-1 Statement, Registration No. 33-21047.
Exhibit 4 - A copy of existing By-Laws of Bankers Trust Company,
dated as amended on September 21, 1993. - Incorporated
herein by reference to Exhibit 4 filed with Form T-1
Statement, Registration No. 33-52359.
<PAGE>
-3-
Exhibit 5 - Not applicable.
Exhibit 6 - Consent of Bankers Trust Company required by Section
321(b) of the Act. - Incorporated herein by reference
to Exhibit 4 filed with Form T-1 Statement,
Registration No. 22-18864.
Exhibit 7 - A copy of the latest report of condition of Bankers Trust
Company dated as of March 31, 1994. - Incorporated
herein by reference to Exhibit 7 filed with Form T-1
Statement, Registration No. 33-53703.
Exhibit 8 - Not Applicable
Exhibit 9 - Not Applicable
<PAGE>
Exhibit 1
State of New York
Banking Department
I, CARMINE M. TENGA, Deputy Superintendent of Banks of the State of New
York, DO HEREBY APPROVE, the annexed Certificate entitled "CERTIFICATE OF
AMENDMENT OF THE ORGANIZATION CERTIFICATE OF BANKERS TRUST COMPANY Under Section
8005 of the Banking Law," dated March 21, 1994, providing for an increase in
authorized capital stock from, $951,666,670 consisting of 70,166,667 shares with
a par value of $10 each designated as Common Stock and 250 shares with a par
value of $1,000,000 each designated as Series Preferred Stock to $1,101,666,670
consisting of 85,166,667 shares with a par value of $10 each designated as
Common Stock and 250 shares with a par value of $1,000,000 each designated as
Series Preferred Stock.
Witness, my hand and official seal of the Banking Department at the City of New
York, this 28th day of March in the Year of our Lord one
thousand nine hundred and ninety-four.
/s/Carmine M. Tenga
-----------------------------------
Deputy Superintendent of Banks
<PAGE>
CERTIFICATE OF AMENDMENT
OF THE
ORGANIZATION CERTIFICATE
OF BANKERS TRUST COMPANY
Under Section 8005 of the Banking Law
------------------------
We, James T. Byrne, Jr. and Lea Lahtinen, being respectively a Managing
Director and an Assistant Secretary of BANKERS TRUST COMPANY, do hereby certify:
1. The name of the corporation is Bankers Trust Company.
2. The organization certificate of said corporation was filed by the
Superintendent of Banks on the 5th day of March, 1903.
3. The organization certificate as heretofore amended is hereby amended
to increase the aggregate number of shares which the corporation shall have
authority to issue and to increase the amount of its authorized capital stock in
conformity therewith.
4. Article III of the organization certificate with reference to the
authorized capital stock, the number of shares into which the capital stock
shall be divided, the par value of shares and the capital stock outstanding,
which reads as follows:
"III. Capital Stock: The amount of capital stock which the
corporation is hereafter to have is Nine Hundred Fifty-One Million, Six
Hundred Sixty-Six Thousand, Six Hundred Seventy Dollars ($951,666,670),
divided into Seventy Million, One Hundred Sixty-Six Thousand, Six Hundred
Sixty-Seven (70,166,667) shares with a par value of $10 each designated as
Common Stock and 250 shares with a par value of One Million Dollars
($1,000,000) each designated as Series Preferred Stock."
is hereby amended to read as follows:
"III. The amount of capital stock which the corporation is hereafter
to have is One Billion, One Hundred One Million, Six Hundred Sixty-Six
Thousand, Six Hundred Seventy Dollars ($1,101,666,670), divided into
Eighty-Five Million, One Hundred Sixty-Six Thousand, Six Hundred Sixty-
Seven (85,166,667) shares with a par value of $10 each designated as Common
Stock and 250 shares with a par value of One Million Dollars ($1,000,000)
each designated as Series Preferred Stock."
<PAGE>
5. The foregoing amendment of the organization certificate was authorized
by unanimous written consent signed by the holder of all outstanding shares
entitled to vote thereon.
IN WITNESS WHEREOF, we have made and subscribed this certificate this 21st
day of March, 1994.
/s/James T. Byrne, Jr
---------------------
James T. Byrne, Jr.
Managing Director
/s/ Lea Lahtinen
----------------
Lea Lahtinen
Assistant Secretary
-2-
<PAGE>
State of New York )
) ss.:
County of New York )
Lea Lahtinen, being duly sworn, deposes and says that she is an Assistant
Secretary of Bankers Trust Company, the corporation described in the foregoing
certificate; that she has read the foregoing certificate and knows the contents
thereof, and that the statements therein contained are true.
/s/ Lea Lahtinen
----------------
Lea Lahtinen
Sworn to before me this 21st
day of March, 1994.
/s/ Sandra L. West
- ------------------------------------
Notary Public
-3-
<PAGE>
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939 the
trustee, Bankers Trust Company, 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 4th day of August, 1994.
BANKERS TRUST COMPANY
By /s/Rossana E. Abueva
-------------------------
Rossana E. Abueva
Assistant Vice President
