<PAGE>
As filed with the Securities and Exchange Commission on June 26, 1996
Registration No. 1-4346
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-A
FOR REGISTRATION OF CERTAIN CLASSES OF SECURITIES
PURSUANT TO SECTION 12(b) OR (g) OF THE
SECURITIES EXCHANGE ACT OF 1934
SALOMON INC
(Exact Name of Registrant as Specified in its Charter)
Delaware 22-1660266
(State of Incorporation or Organization) (I.R.S. Employer
Identification no.)
Seven World Trade Center,
New York, New York 10048
(Address of principal executive offices) (Zip code)
If this Form relates to the registration of a If this Form relates to the
class of debt securities and is effective registration of a class of debt
upon filing pursuant to General securities and is to become
Instruction A(c)(1) please check the effective simultaneously with
following box. . /X/ the effectiveness of a
concurrent registration
statement under the Securities
Act of 1933 pursuant to General
Instruction A(c)(2) please check
the following box. / /
Securities to be registered pursuant to Section 12(b) of the Act:
Title of Each Class Name of Each Exchange on Which
to be so Registered Each Class is to be Registered
------------------- ------------------------------
U.S. Dollar Increase Warrants American Stock Exchange, Inc.
on the Japanese Yen Expiring June 1998
Securities to be registered pursuant to Section 12(g) of the Act:
None
(Title of class)
<PAGE>
Item 1. Description of Registrant's Securities to be Registered.
For a description of the securities to be registered
hereunder, reference is made to the information under the headings "Description
of Warrants" and "Description of Index Warrants"on pages 22 through 28 of the
registrant's Prospectus dated April 5, 1996 (Registration No. 333-01807), as
supplemented by the information under the headings "Risk Factors Relating to the
Warrants," and "Description of the Warrants" on pages S-8 through S-16 and S-17
through S-27, respectively, of the registrant's Prospectus Supplement, Subject
to Completion, dated June 19, 1996, filed on June 20, 1996, which information is
hereby incorporated herein by reference and made part of this application in its
entirety.
Item 2. Exhibits.
I. Form of Warrant Agreement among the Registrant,
Citibank, N.A., as Warrant Agent, and Salomon Brothers Inc as Spot Rate
Reference Agent, including as Exhibit A thereto the Form of Warrant Certificate.
II. Prospectus Supplement, Subject to Completion, dated June
19, 1996, to the Prospectus dated April 5, 1996 (which supplement includes
therein the Prospectus dated April 5, 1996).
<PAGE>
SIGNATURE
Pursuant to the requirements of Section 12 of the Securities
Exchange Act of 1934, the registrant has duly caused this registration statement
or amendment thereto to be signed on its behalf by the undersigned, thereunto
duly authorized.
Salomon Inc
(Registrant)
Date: June 26, 1996 By: /s/ Richard J. Carbone
---------------------------------
Name: Richard J. Carbone
Title: Principal Accounting
Officer and Controller
3
<PAGE>
INDEX TO EXHIBITS
Exhibit No. Exhibit
1. Form of Warrant Agreement among the Registrant, Citibank,
N.A., as Warrant Agent, and Salomon Brothers Inc as Spot Rate
Reference Agent, including as Exhibit A thereto the Form of
Warrant Certificate.
2. Prospectus Supplement, Subject to Completion, dated June 19,
1996, to the Prospectus dated April 5, 1996 (which supplement
includes therein the Prospectus dated April 5, 1996).
4
<PAGE>
[DRAFT of 20 Jun 96]
SALOMON INC
and
CITIBANK, N.A., Warrant Agent
and
SALOMON BROTHERS INC, Spot Rate Reference Agent
-------------------------
WARRANT AGREEMENT
dated as of June __, 1996
------------
U.S. Dollar Increase Warrants
on the Japanese Yen
Expiring June __, 1998
<PAGE>
TABLE OF CONTENTS2/
<TABLE>
<CAPTION>
PAGE
<S> <C>
PARTIES ..................................................................................................... 1
RECITALS..................................................................................................... 1
ARTICLE I
SECTION 1.01. Issuance of Warrants.......................................................................... 1
SECTION 1.02. Form, Execution and Delivery of Warrant Certificates.......................................... 2
SECTION 1.03. Warrant Certificates.......................................................................... 3
SECTION 1.04. Registration of Transfers and Exchanges....................................................... 3
SECTION 1.05. Mutilated or Missing Warrant Certificates..................................................... 4
SECTION 1.06. Registered Holders............................................................................ 5
SECTION 1.07. Global Warrant Certificate.................................................................... 5
ARTICLE II
SECTION 2.01. Duration of Warrants; Minimum Exercise Amounts; Notice of Exercise............................ 7
SECTION 2.02. Exercise and Delivery of Warrants............................................................. 8
SECTION 2.03. Automatic Exercise of Warrants................................................................ 14
SECTION 2.04. Limitation of Number of Exercisable Warrants.................................................. 16
SECTION 2.05. Covenant of the Company....................................................................... 16
SECTION 2.06. Return of Money Held Unclaimed for Two Years.................................................. 17
SECTION 2.07. Return of Global Warrant Certificate.......................................................... 17
ARTICLE III
SECTION 3.01. Warrantholder of Warrant May Enforce Rights................................................... 17
ARTICLE IV
SECTION 4.01. Warrants Acquired by the Company.............................................................. 17
SECTION 4.02. Payment of Taxes.............................................................................. 18
ARTICLE V
SECTION 5.01. Warrant Agent................................................................................. 18
SECTION 5.02. Conditions of Warrant Agent's Obligations..................................................... 18
SECTION 5.03. Resignation and Appointment of Successor...................................................... 20
ARTICLE VI
SECTION 6.01. Amendment..................................................................................... 21
SECTION 6.02. Notices and Demands to the Company, the Warrant Agent and the Spot Rate Reference Agent....... 22
SECTION 6.03. Addresses for Notices......................................................................... 22
SECTION 6.04. Notices to Holders............................................................................ 22
SECTION 6.05. Obtaining of Approvals........................................................................ 22
SECTION 6.06. Persons Having Rights Under This Agreement.................................................... 23
SECTION 6.07. Inspection of Agreement....................................................................... 23
SECTION 6.08. Headings...................................................................................... 23
</TABLE>
- - --------
2. The Table of Contents is not a part of the Warrant Agreement.
<PAGE>
<TABLE>
<CAPTION>
Page
-----
<S> <C>
SECTION 6.09. Counterparts................................................................................ 23
SECTION 6.10. APPLICABLE LAW.............................................................................. 23
TESTIMONIUM................................................................................................ 28
SIGNATURES................................................................................................. 28
</TABLE>
EXHIBIT A - Form of Warrant Certificate
EXHIBIT B-1 - Form of Global Warrant Certificate
EXHIBIT B-2 - Notice of Exercise [For Warrants Represented by the Global
Warrant Certificate]
EXHIBIT C-1 - Confirmation of Exercise and Notice of Rejection [For Warrants
Represented by Warrant Certificates]
EXHIBIT C-2 - Confirmation of Exercise and Notice of Rejection [For Warrants
Represented by the Global Warrant Certificate]
EXHIBIT D-1 - Notice of Rejection Relating to Limit Option [For Warrants
Represented by Warrant Certificates]
EXHIBIT D-2 - Notice of Rejection Relating to Limit Option [For Warrants
Represented by the Global Warrant Certificate]
<PAGE>
WARRANT AGREEMENT, dated as of June __, 1996, among SALOMON
INC, a corporation organized and existing under the laws of the State of
Delaware (the "Company"), CITIBANK, N.A., a national banking association
organized and existing under the laws of the United States of America (the
"Warrant Agent"), and SALOMON BROTHERS INC, a corporation organized and existing
under the laws of the State of Delaware (the "Spot Rate Reference Agent").
WHEREAS the Company proposes to sell warrants (the "Warrants"
or, individually, a "Warrant") representing the right to receive from the
Company the amount, if any, in U.S. dollars determined by reference to decreases
in the value of the Japanese yen relative to the U.S. dollar on the terms and
conditions set forth in this Agreement; and
WHEREAS the Company desires the Warrant Agent to act on behalf
of the Company, and the Warrant Agent is willing so to act, in connection with
the issuance, transfer and exercise of the Warrants, and the Company desires to
set forth herein, among other things, the provisions of the Warrants and the
terms and conditions on which they may be issued, transferred, exercised and
canceled;
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE I
ISSUANCE OF WARRANTS AND FORM,
EXECUTION, DELIVERY AND REGISTRATION
OF WARRANT CERTIFICATES AND
GLOBAL WARRANT CERTIFICATE
SECTION 1.01. Issuance of Warrants. (a) The Warrants will
constitute direct, unconditional and unsecured obligations of the Company and
will rank on a parity with the Company's other unsecured contractual obligations
and with the Company's unsecured and unsubordinated debt.
(b) Each Warrant shall represent the right, subject to the
provisions contained herein, to receive the Cash Settlement Value (as defined
herein) of such Warrant. In no event shall a registered or beneficial holder of
a Warrant (each a "Warrantholder") be entitled to receive any interest on any
Cash Settlement Value.
(c) Forty-five calendar days after the date of this Agreement
each Warrantholder will have a one-time option to convert the form in which such
Warrantholder holds his Warrants from certificated to book-entry form (the
"Conversion Option"). The Conversion Option will be available for forty-five
calendar days from June 15, 1995, through July 29, 1995 (the "Conversion Option
Period"). To utilize the Conversion Option a Warrantholder must deliver or
arrange to deliver his Warrants to an entity (a "Participant")
<PAGE>
entitled to execute, clear and settle transactions through the Depository (as
defined herein) through which such Warrantholder's beneficial interest after
electing the Conversion Option will be maintained, who will then deposit the
Warrants with the Depository or its nominee. Once a Warrantholder has elected
the Conversion Option such Warrantholder may hold his Warrants only in
book-entry form and will not be able to change his election or withdraw from the
book-entry system during the Conversion Option Period or thereafter.
Accordingly, except as hereinafter provided, ownership of the Warrants in
certificated form will no longer be available to Warrantholders who have elected
the Conversion Option and ownership of the Warrants surrendered under the
Conversion Option will be represented by a single certificate (the "Global
Warrant Certificate"); provided, however, that if the Depository is at any time
unwilling or unable to continue as securities depository for the Warrants and a
successor Depository is not appointed by the Company within 90 days, the Company
will reissue Warrant Certificates (as defined herein) in exchange for the Global
Warrant Certificate. In addition, the Company may at any time determine not to
have the Warrants represented by a Global Warrant Certificate and, in such
event, will issue Warrant Certificates in exchange for the Global Warrant
Certificate. In either instance, and in accordance with the provisions of this
Agreement, each Warrantholder will be entitled to have a number of Warrants
equal to such Warrantholder's beneficial interest in the Global Warrant
Certificate registered in the name of the Warrantholder and will be entitled to
physical delivery of such Warrants in certificated form by a Participant. The
provisions of Section 1.07 shall apply only if and when the Conversion Option is
utilized and a Global Warrant Certificate is issued hereunder. Unless the
context shall otherwise require, and subject to the provisions of Section 1.07,
all references in this Agreement to the Warrant Certificates (other than in
Sections 1.02, 1.03, 1.04, 1.05, 1.06 and 1.07) shall include the Global Warrant
Certificate in the event that the Global Warrant Certificate is issued.
(d) Warrantholders shall not be entitled to hold Warrants in
certificated form through CEDEL or Euroclear (as such terms are defined herein).
SECTION 1.02. Form, Execution and Delivery of Warrant
Certificates. (a) The Warrants, whenever issued, shall be represented by
certificates in registered form substantially in the form set forth in Exhibit A
hereto (the "Warrant Certificates"), with such appropriate insertions,
omissions, substitutions and other variations as are required or permitted by
this Agreement, and may represent any number of whole Warrants. The Warrant
Certificates may have imprinted or otherwise reproduced thereon such letters,
numbers or other marks of identification or designation and such legends or
endorsements as the officers of the Company executing the same may approve
(execution thereof to be conclusive evidence of such approval) and which are not
inconsistent with the provisions of this Agreement, or as may be required to
comply with any law or with any rule or regulation made pursuant thereto, or
with any rule or regulation of any stock exchange on which the Warrants may be
listed, or of the Depository, or to conform to usage. Warrant Certificates shall
be signed on behalf of the Company by its chairman, its president or one of its
vice presidents and under its corporate seal reproduced thereon and attested by
its secretary or an assistant secretary. The signature of any of such officers
may be either manual or facsimile. Typographical and other minor errors
<PAGE>
or defects in any such signature shall not affect the validity or enforceability
of any Warrant Certificate that has been duly countersigned and delivered by the
Warrant Agent.
(b) In case any officer of the Company who shall have signed a
Warrant Certificate, either manually or by facsimile signature, shall cease to
be such officer before such Warrant Certificate shall have been countersigned
and delivered by the Warrant Agent to the Company or delivered by the Company,
such Warrant Certificate nevertheless may be countersigned and delivered as
though the person who signed such Warrant Certificate had not ceased to be such
officer of the Company; and the Warrant Certificate may be signed on behalf of
the Company by any person who, at the actual date of the execution of such
Warrant Certificate, shall be a proper officer of the Company to sign such
Warrant Certificate, although at the date of the execution of this Warrant
Agreement any such person was not such officer.
SECTION 1.03. Warrant Certificates. Each Warrant Certificate,
when signed on behalf of the Company in accordance with Section 1.02, shall be
delivered to the Warrant Agent, which shall manually countersign and deliver the
same to or upon the order of the Company. Each Warrant Certificate shall be
dated the date of its countersignature. A Warrant Certificate shall not be valid
for any purpose, and no Warrant evidenced thereby shall be exercisable, unless
and until such Warrant Certificate has been countersigned by the manual
signature of the Warrant Agent. Such countersignature by the Warrant Agent upon
any Warrant Certificate signed by the Company in accordance with Section 1.02
shall be conclusive evidence that the Warrant Certificate so countersigned has
been duly issued hereunder.
SECTION 1.04. Registration of Transfers and Exchanges. (a)
Except as otherwise provided herein or in the Warrant Certificate, the Warrant
Agent shall from time to time register the transfer of any outstanding Warrant
Certificates upon the records to be maintained by it for that purpose (the
"Warrant Register") at the Warrant Agent's Office (as defined herein), subject
to such reasonable regulations as the Company or the Warrant Agent may
prescribe, upon surrender thereof, duly endorsed, or accompanied by a written
instrument or instruments of transfer in form satisfactory to the Warrant Agent
and the Company, duly executed by, the registered holder(s) thereof or by the
duly appointed legal representative thereof or by a duly authorized attorney,
such signature to be guaranteed by a bank or trust company with a correspondent
office in The City of New York or by a member of a national securities exchange.
Upon any such registration of transfer, a new Warrant Certificate shall be
issued to the transferee(s) and the surrendered Warrant Certificate shall be
canceled by the Warrant Agent.
(b) At the option of a Warrantholder, Warrant Certificates may
be exchanged for other Warrant Certificates, of like tenor and representing an
equal number of unexercised Warrants, upon surrender to the Warrant Agent of the
Warrant Certificates to be exchanged at its offices maintained for such purpose
(the location of which shall be provided to the Company), which shall be south
of Chambers Street in the Borough of Manhattan, The City of New York (the
"Warrant Agent's Office"), and which are, on the date of this Agreement,
<PAGE>
111 Wall Street, New York, New York 10043, Attention: Corporate Trust
Department, or at the office of any successor Warrant Agent (as provided in
Section 5.03). Upon surrender of any Warrant Certificate for exchange, the
Warrant Agent shall cancel such Warrant Certificate, and the Company shall
execute, and the Warrant Agent shall countersign and deliver, in accordance with
Sections 1.02 and 1.03, one or more new Warrant Certificates of like tenor and
representing an equal number of unexercised Warrants.
(c) Warrant Certificates issued upon transfer or exchange
pursuant to Section 1.04(a) or (b) shall be valid obligations of the Company,
evidencing the same obligations of the Company as the Warrant Certificates
surrendered for transfer or exchange, and entitled to the same benefits under
this Agreement as were such Warrant Certificates prior to such surrender.
(d) Except as provided in Section 1.05, no service charge
shall be made for any registration of transfer or exchange of Warrant
Certificates, but the Company may require payment of a sum sufficient to cover
any tax or other governmental charge that may be imposed in connection with any
registration of transfer or exchange of Warrant Certificates, other than
exchanges pursuant to this Section 1.04 not involving any transfer.
(e) In the event that upon any exercise of Warrants evidenced
by a Warrant Certificate the number of Warrants exercised shall be less than the
total number of Warrants evidenced by such Warrant Certificate, there shall be
issued to the holder thereof or his assignee a new Warrant Certificate
evidencing the number of Warrants not exercised.
SECTION 1.05. Mutilated or Missing Warrant Certificates. (a)
If any Warrant Certificate is mutilated, lost, stolen or destroyed, the Company
may in its discretion execute, and the Warrant Agent may countersign and
deliver, in exchange and substitution for and upon cancellation of the mutilated
Warrant Certificate, or in lieu of the Warrant Certificate lost, stolen or
destroyed, a new Warrant Certificate of like tenor and representing an equal
number of unexercised Warrants, bearing an identification number not
contemporaneously outstanding, but only (in case of loss, theft or destruction)
upon receipt of evidence satisfactory to the Company and the Warrant Agent of
such loss, theft or destruction of such Warrant Certificate and security or
indemnity, if requested, also satisfactory to them. Applicants for such
substitute Warrant Certificates shall also comply with such other reasonable
regulations and pay such other reasonable charges as the Company or the Warrant
Agent may prescribe.
(b) In case any such mutilated, lost, stolen or destroyed
Warrant Certificate has been or is about to be exercised, or deemed to be
exercised, the Company in its absolute discretion may, instead of issuing a new
Warrant Certificate, direct the Warrant Agent to treat the same as if it had
received a Notice of Exercise (as defined herein) in proper form in respect
thereof, as provided herein, or as being subject to automatic exercise, as the
case may be.
(c) Each new Warrant Certificate issued pursuant to this
Section 1.05 in lieu of any mutilated, lost, stolen or destroyed Warrant
Certificate shall be an original, additional
<PAGE>
contractual obligation of the Company, whether or not, in the case of any lost,
stolen or destroyed Warrant Certificate, such Warrant Certificate shall at any
time be enforceable by anyone, and shall be entitled to the same benefits under
this Agreement as the Warrant Certificate that was mutilated, lost, stolen or
destroyed.
(d) Upon the issuance of any new Warrant Certificate in
accordance with this Section 1.05, the Company may require the payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
relation thereto and any other expenses (including the fees and expenses of the
Warrant Agent) connected therewith.
(e) The provisions of this Section 1.05 are exclusive and
shall preclude (to the extent lawful) any other rights and remedies with respect
to the replacement or payment of mutilated, lost, stolen or destroyed Warrant
Certificates.
SECTION 1.06. Registered Holders. Prior to due presentment for
registration of transfer, the Company, the Warrant Agent, and any agent of the
Company or the Warrant Agent, may deem and treat the person in whose name a
Warrant Certificate shall be registered in the Warrant Register (a "Registered
Holder") as the absolute owner of the Warrants evidenced thereby
(notwithstanding any notation of ownership or other writing thereon) for any
purpose whatsoever, and as the person entitled to exercise the rights
represented by the Warrants evidenced thereby, and neither the Company nor the
Warrant Agent, nor any agent of the Company or the Warrant Agent, shall be
affected by any notice to the contrary. This Section 1.06 shall be without
prejudice to the rights of Warrantholders as described elsewhere herein.
SECTION 1.07. Global Warrant Certificate. (a) Any Global
Warrant Certificate issued in accordance with Section 1.01 shall be
substantially in the form set forth in Exhibit B-1 hereto, with such appropriate
insertions, omissions, substitutions and other variations as are required or
permitted by this Agreement, and may represent any number of whole Warrants. The
Global Warrant Certificate may have imprinted or otherwise reproduced thereon
such letters, numbers or other marks of identification or designation and such
legends or endorsements as the officers of the Company executing the same may
approve (execution thereof to be conclusive evidence of such approval) and which
are not inconsistent with the provisions of this Agreement, or as may be
required to comply with any law or with any rule or regulation made pursuant
thereto, or with any rule or regulation of any stock exchange on which the
Warrants may be listed, or of the Depository, or to conform to usage. The Global
Warrant Certificate shall be signed on behalf of the Company upon the same
conditions, in substantially the same manner and with the same effect as the
Warrant Certificates.
(b) The Warrant Agent is authorized, from time to time during
the Conversion Option Period, upon receipt of a Global Warrant Certificate from
the Company, duly executed on behalf of the Company, to countersign such Global
Warrant Certificate. The Global Warrant Certificate shall be manually
countersigned and dated the date of its countersignature by the Warrant Agent
and shall not be valid for any purpose unless so countersigned. The Warrant
Agent shall deliver the Global Warrant Certificate to or upon the order of
the
<PAGE>
Company against receipt of an appropriate amount of Certificated Warrants
(such Certificated Warrants shall be destroyed or otherwise disposed of in
accordance with instructions provided by the Company). One or more Global
Warrant Certificates may be executed by the Company and delivered to the Warrant
Agent on or after the date of execution of this Agreement; provided that only
one Global Warrant Certificate shall be outstanding at any one time.
The Company reserves the right to issue, from time to time
after the date of execution of this Agreement, additional Warrants, and in
connection therewith the Global Warrant Certificate may be exchanged for a new
Global Warrant Certificate to reflect the issuance by the Company of such
additional Warrants. To effect such an exchange the Company shall deliver to the
Warrant Agent a new Global Warrant Certificate duly executed on behalf of the
Company as provided in Section 1.02. The Warrant Agent shall authenticate the
new Global Warrant Certificate as provided in this Section and shall deliver the
new Global Warrant Certificate to the Depository in exchange for, and upon
receipt of, the Global Warrant Certificate then held by the Depository. The
Warrant Agent shall cancel the Global Warrant Certificate delivered to it by the
Depository, destroy such Global Warrant Certificate and provide a certificate of
destruction to the Company.
(c) The Global Warrant Certificate will initially be
registered in the name of a nominee of The Depository Trust Company (the
"Depository", which term, as used herein, includes any successor securities
depository selected by the Company). The Warrant holdings of the Participants
will be recorded on the books of the Depository. The holdings of customers of
the Participants and the identity of the Warrantholders will be reflected on the
books and records of such Participants and will not be known to the Warrant
Agent, the Company or the Depository. The Global Warrant Certificate will be
held by the Depository or its agent.
The Company may from time to time select a new entity to act
as Depository with respect to the Warrants and, if such selection is made, the
Company shall promptly give the Warrant Agent notice to such effect identifying
the new Depository, and the Global Warrant Certificate shall be delivered to the
Warrant Agent and shall be transferred to the new Depository as provided below
as promptly as possible. Appropriate changes may be made in the forms of the
Global Warrant Certificate, the Notice of Exercise and the related notices to be
delivered in connection with an exercise to reflect the selection of the new
Depository.
(d) Except as otherwise provided herein or in the Global
Warrant Certificate, the Warrant Agent shall from time to time register the
transfer of the Global Warrant Certificate in its records (which may be
maintained electronically), subject to such reasonable regulations as the
Company or the Warrant Agent may prescribe, only to the Depository, to another
nominee of the Depository, to a successor Depository or to a nominee of a
successor Depository, upon surrender of such Global Warrant Certificate, duly
endorsed, or accompanied by a written instrument or instruments of transfer in
form satisfactory to the Warrant Agent and the Company, duly executed by the
Registered Holder thereof or by the duly appointed legal representative thereof,
or by its duly authorized attorney, such signature to be guaranteed by a bank or
trust company with a correspondent office in The City of New
<PAGE>
York or by a member of a national securities exchange. Upon any such
registration of transfer, a new Global Warrant Certificate shall be issued to
the transferee and the surrendered Global Warrant Certificate shall be canceled
by the Warrant Agent.
The Global Warrant Certificate may be transferred as provided
above at the option of the holder thereof, when surrendered to the Warrant
Agent's Office, or at the office of any successor Warrant Agent (as provided in
Section 5.03), for another Global Warrant Certificate of like tenor and
representing an equal number of unexercised Warrants.
ARTICLE II
DURATION AND EXERCISE OF WARRANTS
SECTION 2.01. Duration of Warrants; Minimum Exercise Amounts;
Notice of Exercise. Subject to the limitations set forth herein and in Section
2.03, each Warrant may be irrevocably exercised in whole but not in part, at or
prior to 3:00 p.m., New York City time, on any New York Business Day from its
date of issuance until 3:00 p.m., New York City time, on the earlier of (i) the
New York Business Day immediately preceding June __, 1998 (the "Expiration
Date") and (ii) the Delisting Date (as defined herein). Except in the event of
automatic exercise, each Warrant shall be irrevocably exercised either (i) in
the case of Warrants represented by Warrant Certificates ("Certificated
Warrants"), by surrender to the Warrant Agent (at its address as set forth in
such form of notice or at such other address as the Warrant Agent may specify
from time to time) of the Warrant Certificate representing such Warrant, with
the Notice of Exercise duly completed and executed by the Registered Holder of
such Warrant or (ii) in the case of Warrants represented by the Global Warrant
Certificate ("Book-Entry Warrants"), upon receipt by the Warrant Agent of such
Warrant delivered free on the records of the Depository to the Warrant Agent's
Depository Participant Account (entitled Citibank, N.A. Corporate Trust Warrant
Agent Account, No. 2659, or such other account at the Depository as the Warrant
Agent shall designate in writing to the Company) (the "Warrant Account")
pursuant to a Notice of Exercise to the Warrant Agent from a Participant, in the
case of Book-Entry Warrants held through the Depository, CEDEL, in the case of
such Warrants held through CEDEL, or a Euroclear participant, in the case of
such Warrants held through Euroclear, acting, directly or indirectly, on behalf
of the Warrantholder; provided, however, that Notices of Exercise are subject to
rejection by the Warrant Agent as provided herein. Not fewer than 500 Warrants
in either certificated or book-entry form may be exercised by or on behalf of
any one Warrantholder at any one time, except in the event of automatic exercise
on the Expiration Date or the Delisting Date or as provided in Section 2.04. A
Notice of Exercise shall be unconditional. Except as provided in Section
2.02(b), the Warrant Agent shall be entitled, with no duty of inquiry, to rely
conclusively on any Notice of Exercise received by it. "Notice of Exercise"
means an irrevocable notice of exercise to the Warrant Agent at its address,
which notice (A) for Certificated Warrants, shall be on the reverse of the
Warrant Certificate or on such other form as the Company and the Warrant Agent
may approve, and (B) for Book-Entry Warrants, shall be substantially in the form
set forth in Exhibit B-2 hereto or such other form as the Company and the
Warrant Agent may
<PAGE>
approve and may be given by facsimile transmission. For purposes of this
Agreement, "New York Business Day" means any day other than a Saturday, Sunday
or a day on which the American Stock Exchange (the "AMEX") is not open for
securities trading or commercial banks in New York City are required or
authorized by law or executive order to remain closed.
SECTION 2.02. Exercise and Delivery of Warrants. (a) Except in
the event of automatic exercise on the Expiration Date or the Delisting Date, or
in the event of a postponement pursuant to Section 2.04, the valuation date (the
"Valuation Date") for a Warrant shall be the first New York Business Day next
succeeding the New York Business Day (the "Exercise Date") on which the Warrant
Agent has received (i) in the case of Warrants other than those held through the
facilities of Centrale de Livraison de Valeurs Mobilieres S.A. ("CEDEL") or the
Euroclear System ("Euroclear"), either (A) for Certificated Warrants, the
Warrant Certificate representing such Warrant with the Notice of Exercise duly
completed and executed or (B) for Book-Entry Warrants, the Warrant with the
Notice of Exercise duly completed and executed, in either case, at or prior to
3:00 p.m., New York City time (the "Notice Date"); and if the Warrant Agent
shall receive any such Warrant Certificate or Warrant or Notice of Exercise
after 3:00 p.m., New York City time, on such New York Business Day, then such
Warrant Certificate or Warrant shall be deemed to have been received at or prior
to 3:00 p.m., New York City time, on the New York Business Day next succeeding
such New York Business Day (which shall be considered the Notice Date), and in
such event the Valuation Date shall be the next New York Business Day following
the New York Business Day on which the Warrant Agent is deemed to have received
such Warrant Certificate or Warrant together with the Notice of Exercise or (ii)
in the case of Warrants held through the facilities of CEDEL or Euroclear, the
Notice of Exercise (by facsimile transmission) at or prior to 3:00 p.m., New
York City time, provided that the Warrant is received by the Warrant Agent by
3:00 p.m., New York City time, on the applicable Valuation Date; and if the
Warrant Agent shall receive such Notice of Exercise after 3:00 p.m., on any New
York Business Day, then the Notice of Exercise shall be deemed to have been
received at or prior to 3:00 p.m., New York City time, on the next succeeding
New York Business Day (which shall be considered the Notice Date), and in such
event the Valuation Date shall be the next New York Business Day following the
New York Business Day on which the Warrant Agent is deemed to have received such
Notice of Exercise; provided, however, that if the Warrant Agent receives the
Warrant after 3:00 p.m., New York City time, on the Valuation Date, then the
Exercise Date for such Warrant shall be the day on which such Warrant is
received or, if such day is not a New York Business Day, the next succeeding New
York Business Day, and the Valuation Date for such Warrant shall be the first
New York Business Day following such Exercise Date; provided further, however,
that in the case of exercises by Euroclear participants, Euroclear must, by
tested telex to the Warrant Agent by 9:00 a.m., New York City time, on the
Valuation Date, confirm (a "Euroclear Confirmation") that the Warrants will be
received by the Warrant Agent by 3:00 p.m., New York City time, on such Date. If
such Euroclear Confirmation is received after 9:00 a.m., New York City time, on
the Valuation Date, the Company will be entitled to direct the Warrant Agent to
reject the related Notice of Exercise or waive the requirement for timely
delivery of such Euroclear Confirmation. Any Warrant Certificate or Warrant
received after
<PAGE>
3:00 p.m., New York City time, on the earlier of (1) the New York Business Day
immediately preceding the Expiration Date and (2) the last New York Business Day
prior to the effective date on which the Warrants are delisted from, or
permanently suspended from trading on (within the meaning of the Securities
Exchange Act of 1934 and the rules and regulations of the Securities and
Exchange Commission thereunder), the AMEX and not accepted at the same time for
listing on another United States national securities exchange (such New York
Business Day being the "Delisting Date") (or, in the case of Warrants held
through the facilities of CEDEL or Euroclear, after 3:00 p.m., New York City
time, on the first New York Business Day following such dates), shall be deemed
not to have been delivered and the related Notice of Exercise shall be void and
of no effect; provided, however, that if the Company first receives notice of
such delisting or suspension of the Warrants on the same day on which such
Warrants are delisted or suspended, such day will be deemed the Delisting Date
for purposes of this Agreement.
(b) The Warrant Agent shall, in the case of Warrants other
than those held through CEDEL or Euroclear, following receipt of proper delivery
of a Warrant in accordance with Section 2.02(a), accompanied by a completed
Notice of Exercise, and, in the case of Warrants held through CEDEL or
Euroclear, following receipt of proper delivery of a completed Notice of
Exercise in accordance with Section 2.02(a):
(i) promptly (1) for Certificated Warrants, determine whether
such Notice of Exercise has been duly completed and is in proper form duly
executed by the Registered Holder thereof or by the duly appointed legal
representative thereof or by a duly authorized attorney, (2) for Book-Entry
Warrants not held through CEDEL or Euroclear, determine whether such Notice of
Exercise has been duly completed and is in proper form and (3) for Book-Entry
Warrants held through CEDEL or Euroclear, determine whether such Notice of
Exercise has been duly completed and is in proper form duly executed by CEDEL or
the Euroclear participant tendering such Warrant, as applicable; and if the
Warrant Agent determines that the Notice of Exercise has not been duly completed
or is not in proper form or, in the case of Certificated Warrants, has not been
so executed, the Warrant Agent promptly shall (X) reject such Notice of Exercise
and shall send to the entity that executed such Notice of Exercise a notice of
rejection substantially in the form set forth in Exhibit C-1 or Exhibit C-2
hereto, as appropriate, and, in the case of Certificated Warrants, return to the
Registered Holder that submitted such Notice of Exercise, by first class mail,
the Warrant Certificates evidencing such Warrants, or, in the case of Book-Entry
Warrants, shall redeliver such Warrants (to the extent received in the case of
Warrants held through CEDEL or Euroclear) free through the facilities of the
Depository to the account from which they were transferred to the Warrant Agent
and (Y) in either case, shall not take the actions required by clauses (ii)-(ix)
below with respect to such Notice of Exercise or the related Warrants; provided,
however, that the Warrant Agent shall deliver a copy of the Notice of Exercise
relating to such Warrants to the Company as required by Section 2.02(b)(ix)
below and the Company may waive any defect in the form of such Notice of
Exercise;
(ii) with respect to each Warrant held through Euroclear for
which a Notice of Exercise was received, promptly telephone Euroclear to
determine whether Euroclear
<PAGE>
anticipates that it will be able to provide a Euroclear Confirmation as required
by Section 2.02(a);
(iii) notify the Company and the Spot Rate Reference Agent
(and such other parties (not to exceed two) as the Company shall designate in
writing) by 5:00 p.m., New York City time, on the New York Business Day that
such Notice of Exercise has been received (or shall be deemed to have been
received) of (A) the total number of Warrants covered by such Notice of
Exercise, (B) the number of such Warrants subject to the Limit Option (as
defined herein) ("Contingently Tendered Warrants"), (C) the number of such
Warrants not subject to the Limit Option and (D) the number of such Warrants, if
any, as to which Euroclear has not advised the Warrant Agent that it anticipates
being able to provide a Euroclear Confirmation as required by Section 2.02(a);
(iv) with respect to Warrants held through Euroclear,
determine whether the Warrant Agent has received by 9:00 a.m., New York City
time, on the Valuation Date relating to such Warrants, Euroclear Confirmations
with respect to such Warrants as required by Section 2.02(a), and if the Warrant
Agent has not received any such Euroclear Confirmation by such time, notify the
Company (and such other parties (not to exceed two) as the Company shall
designate in writing) by 10:00 a.m., New York City time, on such Valuation Date
of the number of such Warrants in respect of which the Warrant Agent has not
received such Euroclear Confirmations and (except to the extent the Company has
notified the Warrant Agent that it has waived the requirement of timely delivery
of such Euroclear Confirmation) send to the Euroclear participant that executed
such Notice of Exercise for which no related Euroclear Confirmation was received
(at the address specified in such notice) a notice of rejection substantially in
the form set forth in Exhibit C-2 hereto;
(v) if any of the Warrants covered by such Notice of Exercise
constitute Contingently Tendered Warrants, the Warrant Agent shall, by 5:00
p.m., New York City time, on the first New York Business Day following the New
York Business Day that such Notice of Exercise has been received (or shall be
deemed to have been received), (A) obtain from the Spot Rate Reference Agent the
Reference Rate (as defined herein) for such Warrants and the Spot Rate (as
defined herein) for the New York Business Day that, but for the provisions of
Section 2.02(g), would be the Valuation Date for such Warrants, (B) determine in
accordance with Section 2.02(g) whether such Contingently Tendered Warrants will
be subject to exercise after giving effect to the Limit Option and, if such
Warrants will not be subject to exercise, send to the Registered Holder, in the
case of Certificated Warrants, or to the Participant, in the case of the
Book-Entry Warrants, that submitted such Notice of Exercise a notice of
rejection substantially in the form set forth in Exhibit D-1 or Exhibit D-2
hereto, as appropriate, with respect to such Warrants and, in the case of
Certificated Warrants, return to the Registered Holder that submitted such
Notice of Exercise, by first class mail, the Warrant Certificates evidencing
such Warrants, or, in the case of Book-Entry Warrants (to the extent received in
the case of Warrants held through CEDEL and Euroclear), redeliver the Warrants
free through the facilities of the Depository to the account of such Participant
and (C) notify the Company and the Spot Rate Reference Agent as to whether such
Contingently Tendered Warrants will be subject to exercise;
<PAGE>
(vi) by 5:00 p.m., New York City time, on the first New York
Business Day following the New York Business Day that such Notice of Exercise
has been received (or shall be deemed to have been received), (A) determine the
sum of (1) the number of such Warrants not subject to the Limit Option (i.e.,
the number of Warrants determined pursuant to clause (iii)(C) above) plus (2)
the number of such Warrants that are Contingently Tendered Warrants that will be
subject to exercise notwithstanding the Limit Option (i.e., the number of
Warrants so identified pursuant to clause (v)(B) above) (all of such Warrants,
the "Exercised Warrants") and (B) notify the Company and the Spot Rate Reference
Agent of the total number of Exercised Warrants so determined (if such number is
zero, the Warrant Agent shall not take the actions required by clauses (vii) and
(viii) with respect to such Notice of Exercise or the related Warrants);
(vii) calculate the Cash Settlement Value of the Exercised
Warrants (excluding any Warrants held through CEDEL or Euroclear as to which
timely delivery of the related Warrant has not been made) as of their Valuation
Date in the manner set forth in Section 2.02(d) by no later than 3:00 p.m., New
York City time, on the New York Business Day next succeeding the Valuation Date
(unless the Cash Settlement Value shall be calculated by the Spot Rate Reference
Agent);
(viii) notify the Company (and such other parties (not to
exceed two) as the Company shall designate in writing) by 5:00 p.m., New York
City time, on the New York Business Day next succeeding the Valuation Date of
the Cash Settlement Value payable in respect of the Exercised Warrants, and send
notices of confirmation substantially in the form included in Exhibit C-1 or
Exhibit C-2 hereto, as appropriate, to the appropriate Registered Holder or
Participant specifying therein the reference number assigned by the Warrant
Agent to each accepted Notice of Exercise; and
(ix) promptly deliver a copy of each Notice of Exercise to the
Company and advise the Company of such other matters relating to the Exercised
Warrants as the Company shall reasonably request. Any notice to be given to the
Company by the Warrant Agent pursuant to this Section 2.02 or Section 2.03 shall
be by telephone (promptly confirmed in writing) or telecopy.
Except in the case of Warrants subject to automatic exercise,
if on any Valuation Date the Cash Settlement Value for any Warrants then
exercised would be zero, then the attempted exercise of such Warrants shall be
void and of no effect and either (i) for Certificated Warrants, the Warrant
Certificate evidencing such Warrants shall be promptly returned by the Warrant
Agent to the Registered Holder by first class mail or (ii) for Book-Entry
Warrants, the Warrants shall be transferred by the Warrant Agent back to the
Participant that submitted them free on the records of the Depository (to the
extent received in the case of Warrants held through CEDEL or Euroclear) and, in
either case, such Warrantholder shall be permitted to re-exercise such Warrants
prior to the Expiration Date or the Delisting Date, as the case may be.
<PAGE>
(c) Provided that the Company has made adequate funds
available to the Warrant Agent in a timely manner, which shall in no event be
later than 3:00 p.m., New York City time, on the fifth New York Business Day
following a Valuation Date (the "Settlement Date"), the Warrant Agent will be
responsible for making its payment available either (A) for Certificated
Warrants, to each appropriate Registered Holder in the form of a cashier's check
or an official bank check, or (in the case of payments of at least $100,000) by
wire transfer to a U.S. dollar account maintained by such Registered Holder in
the United States (at such Registered Holder's election as specified in the
applicable Notice of Exercise), after 3:00 p.m., New York City time, but prior
to the close of business, on such Settlement Date or (B) for Book-Entry
Warrants, to each appropriate Participant by wire transfer to a U.S. dollar
account maintained by such Participant in the United States, after 3:00 p.m.,
New York City time, but prior to the close of business, on such Settlement Date.
For either clause (A) or (B) above, such payment shall be in the amount of the
aggregate Cash Settlement Value in respect of the Warrant Certificates or
Warrants that were delivered to the Warrant Agent (together with the related
Notice of Exercise) as provided in Sections 2.01 and 2.02(a) and (b).
(d) The "Cash Settlement Value" of a Warrant will equal an
amount in U.S. dollars (rounded down to the nearest cent) which is the greater
of (i) zero and (ii) the amount computed by subtracting from U.S. $100 an amount
equal to the product of U.S. $100 times a fraction, the numerator of which is
(yen)____ per U.S. $1.00 and the denominator of which is the Spot Rate. The
"Spot Rate" on any Valuation Date will be determined by the Spot Rate Reference
Agent and will equal (i) the noon buying rate per U.S. $1.00 in The City of New
York on such Valuation Date for cable transfers in Japanese yen as certified for
customs purposes by the Federal Reserve Bank of New York (the "Noon Buying
Rate"), as reported on page 1FEE of The Reuter Monitor Money Rates Service (or
such page as may replace that page), or (ii) if the Noon Buying Rate does not
appear on such page by 1:00 p.m., New York City time, on such Valuation Date,
the Noon Buying Rate on such Valuation Date as otherwise announced by the
Federal Reserve Bank of New York, or (iii) if the Federal Reserve Bank of New
York has not quoted such Noon Buying Rate by 1:30 p.m., New York City time, on
such Valuation Date, the offered spot rate of Japanese yen per U.S. $1.00 on
such Valuation Date, which offered spot rate shall be calculated by the Spot
Rate Reference Agent by (A) obtaining at approximately 1:30 p.m., New York City
time, a quote for a transaction amount approximately equivalent to U.S. $100
times the aggregate number of Warrants which were properly exercised on the
related Exercise Date from each of five leading market makers (other than the
Spot Rate Reference Agent) in the foreign exchange markets for Japanese yen
selected by the Spot Rate Reference Agent, (B) discarding the highest and lowest
quotes obtained and (C) averaging the three remaining quotes to determine such
offered spot rate.
The Spot Rate used to determine the Cash Settlement Value on
any Valuation Date will be rounded to the second decimal place (e.g., ___.00),
rounding up if the next succeeding decimal place, without regard to rounding, is
five or higher. Any such Cash Settlement Value will be rounded downwards, if
necessary, to the nearest cent. In no event shall a Warrantholder be entitled to
any interest on any Cash Settlement Value.
<PAGE>
References in this Agreement to "U.S. dollars" or "U.S. $" are
to the lawful currency of the United States of America. References to "Japanese
yen" or "(yen)" are to the lawful currency of Japan.
(e) In the event a Global Warrant Certificate is issued, the
Warrant Agent shall cause its records, which may be kept electronically, to be
marked to reflect the reduction in the number of Warrants represented by the
Global Warrant Certificate by the number of Warrants that were delivered to the
Warrant Account and for which payment has been made as provided in Section
2.02(c) promptly after such delivery and payment. Absent manifest error, the
Warrant Agent's records shall be conclusive evidence of such matters.
(f) The Company has appointed Salomon Brothers Inc and Salomon
Brothers Inc accepts such appointment, to be the Company's Spot Rate Reference
Agent to make such calculations as may be required, including, without
limitation, calculation of the Spot Rate and any Reference Rate. The Spot Rate
Reference Agent shall timely communicate each Spot Rate and any Reference Rate
to the Warrant Agent. The Spot Rate Reference Agent shall act as an independent
expert and not as an agent of the Company, and, unless otherwise provided by
this Agreement, its calculations and determinations under this Agreement shall,
absent manifest error, be final and binding on the Company, the Warrant Agent,
the Warrantholders and any Participant. Any such calculations will be made
available to a Warrantholder for inspection at the Warrant Agent's Office.
The Company agrees, for the benefit of the Warrantholders from
time to time of the Warrants, that there shall at all times be a Spot Rate
Reference Agent hereunder until all the Warrants are no longer outstanding or
until monies for the payment of all outstanding Warrants, if any, shall have
been paid to the Warrant Agent and shall have been returned to the Company as
provided in Section 2.06, whichever occurs earlier. Resignation, removal and
appointment of the Spot Rate Reference Agent shall be in accordance with the
procedures set forth for the resignation, removal and appointment of the Warrant
Agent, as provided in Section 5.03, except that a successor Spot Rate Reference
Agent need not be a banking institution with offices south of Chambers Street in
the Borough of Manhattan, The City of New York, and may only be appointed if
such successor has been nominated by the Company and approved by the predecessor
Spot Rate Reference Agent.
The Company agrees promptly to pay the Spot Rate Reference
Agent the compensation to be agreed upon with the Company for all services
rendered by the Spot Rate Reference Agent hereunder. The Company also agrees to
indemnify the Spot Rate Reference Agent for, and to hold it harmless against,
any loss, liability, cost or expense (including reasonable attorneys' fees and
expenses) incurred by the Spot Rate Reference Agent by reason of its being made
a party to a suit or claim arising out of this Agreement; provided, however,
that such indemnity shall in no event apply to the extent that any such loss,
liability, cost or expense is a result of the negligence, bad faith or breach of
this Agreement on its part in connection with the services rendered by it
hereunder. The indemnity obligation of the Company shall continue
notwithstanding the termination of this Agreement or the resignation or removal
of the Spot Rate Reference Agent.
<PAGE>
(g) Except in the event of an automatic exercise (as described
in Section 2.03 below), in connection with any exercise of Warrants, the related
Notice of Exercise may specify that such exercise is subject to the condition
that the Spot Rate used to determine the Cash Settlement Value of such Warrants
shall not have declined by five or more Japanese yen per U.S. dollar from the
Reference Rate for such Warrants. "Reference Rate", with respect to any
Contingently Tendered Warrants, means the Spot Rate on the New York Business Day
that such Notice of Exercise has been received (or shall be deemed to have been
received). The option of a Warrantholder to condition an exercise of Warrants as
provided in this Section 2.02(g) is herein referred to as the "Limit Option". If
a Warrantholder elects the Limit Option in connection with any exercise of
Warrants, the following provisions shall apply:
(i) To be valid, such election must be specified in the
related Notice of Exercise. Each of the Warrant Agent and the Company shall be
entitled to rely conclusively on such Notice of Exercise, as received by the
Warrant Agent, in determining whether such election has been validly made. In
connection with any exercise of 500 or more Warrants, a Warrantholder may elect
to subject only a portion of such Warrants to the Limit Option; provided,
however, that the number of such Warrants subject to the Limit Option and the
number of such Warrants not subject to the Limit Option shall in each case not
be less than 500. Registered Holders and Participants shall be required to
certify that the number of Warrants exercised on behalf of any Warrantholder
pursuant to the related Notice of Exercise that is subject to the Limit Option
is not less than 500.
(ii) The Reference Rate shall be determined by the Spot Rate
Reference Agent, which determination shall be conclusive and binding for all
purposes relating to such exercise.
(iii) In the event that the Spot Rate for the first New York
Business Day following the New York Business Day that such Notice of Exercise
has been received (or shall be deemed to have been received) (i.e., for the day
that, but for the provisions of this Section 2.02(g), would be the Valuation
Date for such Warrants) has declined by five or more Japanese yen per U.S.
dollar from the Reference Rate for such Warrants, such Warrants (A) shall not be
subject to exercise and shall be treated for all purposes of this Agreement and
the Warrant Certificates and Global Warrant Certificate as if the related Notice
of Exercise had never been received by the Warrant Agent, and (B) shall not
constitute "Exercised Warrants" for purposes of Section 2.02(b). If such Spot
Rate has not declined by five or more Japanese yen per U.S. dollar from such
Reference Rate, such Warrants shall be subject to exercise as provided in this
Section 2.02 and shall be deemed to be "Exercised Warrants" for such purposes.
The Warrant Agent's determination shall be conclusive and binding for all
purposes relating to such Warrants.
SECTION 2.03. Automatic Exercise of Warrants. All Warrants for
which the Warrant Agent has not received a Notice of Exercise in proper form at
or prior to 3:00 p.m., New York City time, on the earlier of (i) the New York
Business Day preceding the Expiration Date and (ii) the Delisting Date, or for
which the Warrant Agent has received a
<PAGE>
Notice of Exercise in proper form but with respect to which timely delivery of
the relevant Warrants has not been made, will be deemed automatically exercised
on such date without any requirement of a Notice of Exercise to the Warrant
Agent. The Exercise Date for such Warrants shall be the Expiration Date or the
Delisting Date, as the case may be, and the Valuation Date for such Warrants
shall be the first New York Business Day following the Exercise Date for such
Warrants.
The Warrant Agent shall by 5:00 p.m., New York City time, on
the Expiration Date or the Delisting Date, as the case may be, notify the
Company (and such other parties (not to exceed two) as the Company shall
designate in writing) of the number of Warrants to be automatically exercised on
such day. The Warrant Agent shall (i) by 3:00 p.m., New York City time, on the
New York Business Day next succeeding the Valuation Date, calculate for such
Warrants the Cash Settlement Value (in the manner provided in Section 2.02(d))
of the Warrants to be automatically exercised, (ii) by 5:00 p.m., New York City
time, on the New York Business Day next succeeding such Valuation Date, notify
the Company (and such other parties (not to exceed two) as the Company shall
designate in writing) of the Cash Settlement Value payable in respect of such
exercised Warrants and (iii) advise the Company of such other matters relating
to the exercised Warrants as the Company shall reasonably request.
With respect to Certificated Warrants subject to automatic
exercise, the Company shall make available to the Warrant Agent, not later than
3:00 p.m., New York City time, on the fourth New York Business Day following the
Valuation Date for automatically exercised Warrants (the "Automatic Settlement
Date"), funds in an amount equal to, and for the payment of, the aggregate Cash
Settlement Value of such Warrants. Subject to such funds having been made
available as provided in the preceding sentence, the Warrant Agent will be
responsible for making its payment available to each appropriate Registered
Holder in the form of a cashier's check or an official bank check, or (in the
case of payments of at least $100,000) by wire transfer to a U.S. dollar account
maintained by such Registered Holder in the United States (at such Registered
Holder's election), after 3:00 p.m., New York City time, but prior to the close
of business, on the Automatic Settlement Date, against receipt by the Warrant
Agent at the Warrant Agent's Office from such Registered Holder of its Warrant
Certificates. Such payment shall be equal to the aggregate Cash Settlement Value
of the Warrants evidenced by such Warrant Certificates. All Warrant Certificates
delivered to the Warrant Agent shall thereafter be promptly canceled by the
Warrant Agent.
With respect to Book-Entry Warrants subject to automatic
exercise, the Company shall make available to the Warrant Agent, not later than
3:00 p.m., New York City time, on the Automatic Settlement Date, funds in an
amount equal to, and for the payment of, the aggregate Cash Settlement Value of
such Warrants. Subject to such funds having been made available as provided in
the preceding sentence, the Warrant Agent will be responsible for making funds
available to the Depository in accordance with procedures agreed upon between
the Depository and the Warrant Agent, against receipt of the Global Warrant
Certificate, after 3:00 p.m., New York City time, but prior to the close of
business, on the Automatic Settlement Date, such funds to be in an amount equal
to the aggregate Cash Settlement Value of the Book-Entry Warrants subject to
such automatic exercise.
<PAGE>
The Company will advise the Warrant Agent as soon as
practicable of the date of any expected delisting or permanent suspension of
trading of the Warrants and will immediately inform the Warrant Agent after the
Company has received notice that such delisting or suspension has occurred, but
in no event will notice of such delisting or suspension be given to the Warrant
Agent later than 9:30 a.m., New York City time, on the New York Business Day
following the date that such delisting or suspension occurs. The Company will
use its best efforts to notify the Warrantholders, or cause the Warrantholders
to be notified, as promptly as practicable of any expected delisting or
suspension of trading of the Warrants.
SECTION 2.04. Limitation of Number of Exercisable Warrants.
All exercises of Warrants (other than on the Expiration Date or the Delisting
Date) shall be subject, at the Company's option, to the limitation that not more
than 1,000,000 Warrants in total may be exercised on any Exercise Date and not
more than 250,000 Warrants may be exercised by or on behalf of any person or
entity, either individually or in concert with any other person or entity, on
any Exercise Date. If any New York Business Day would otherwise, under the terms
hereof, be the Exercise Date in respect of more than 1,000,000 Warrants, then
upon the Company's exercising such option (by giving notice thereof to the
Warrant Agent not later than 5:00 p.m., New York City time, on the New York
Business Day immediately following such Exercise Date), 1,000,000 of such
Warrants shall be deemed exercised on such Exercise Date (selected by the
Warrant Agent on a pro rata basis, but if, as a result of such pro rata
selection, any Registered Holders would be deemed to have exercised less than
500 Warrants, then the Warrant Agent shall first select additional Warrants of
such Registered Holders so that no such Registered Holder shall be deemed to
have exercised less than 500 Warrants), and the remainder of such Warrants (the
"Remaining Warrants") shall be deemed exercised on the following New York
Business Day (notwithstanding the minimum exercise requirement of Section 2.01
and subject to successive applications of this Section 2.04); provided, however,
that any Remaining Warrant in respect of which a Notice of Exercise was
delivered on a given Notice Date shall be deemed exercised before any other
Warrants in respect of which a Notice of Exercise was delivered on a later
Notice Date. If any individual Warrantholder attempts to exercise more than
250,000 Warrants on any New York Business Day, then at the Company's election
(as notified to the Warrant Agent by giving notice thereof to the Warrant Agent
not later than 5:00 p.m., New York City time, on the New York Business Day
following such New York Business Day) 250,000 of such Warrants shall be deemed
exercised on such New York Business Day and the remainder shall be deemed
exercised on the following New York Business Day (subject to successive
applications of this Section 2.04). The date on which any Warrant is deemed
exercised under the preceding sentences shall for all purposes of this Agreement
be the "Exercise Date" in respect of such Warrant.
SECTION 2.05. Covenant of the Company. The Company covenants,
for the benefit of the Warrantholders, that it will not seek the delisting of
the Warrants from, or suspension of their trading on, the AMEX unless the
Company has, at the same time, arranged for listing on another United States
national securities exchange.
<PAGE>
SECTION 2.06. Return of Money Held Unclaimed for Two Years.
Except as otherwise provided herein, any money deposited with or paid to the
Warrant Agent for the payment of the Cash Settlement Value of any Warrants and
not applied but remaining unclaimed for two years after the date upon which such
Cash Settlement Value shall have become due and payable shall be repaid by the
Warrant Agent to the Company and the holders of such Warrants shall thereafter
look only to the Company for any payment which such holders may be entitled to
collect and all liability of the Warrant Agent with respect to such money shall
thereupon cease; provided, however, that the Warrant Agent, before making any
such repayment, may at the expense of the Company notify (i) in the case of
Certificated Warrants, the Registered Holders or (ii) in the case of Book-Entry
Warrants, the Participants concerned, that said money has not been so applied
and remains unclaimed and that after a date named in the notification any
unclaimed balance of said money then remaining will be returned to the Company.
SECTION 2.07. Return of Global Warrant Certificate. In the
event a Global Warrant Certificate is issued, at such time as all of the
Warrants evidenced by such Certificate have been exercised (including pursuant
to an automatic exercise) and all payments to the Participants made as provided
herein, the Warrant Agent shall destroy the canceled Global Warrant Certificate
(unless instructed by the Company to deliver the Global Warrant Certificate to
the Company) and shall provide a certificate of destruction to the Company.
ARTICLE III
OTHER PROVISIONS RELATING TO
RIGHTS OF WARRANTHOLDERS
SECTION 3.01. Warrantholder of Warrant May Enforce Rights.
Notwithstanding any of the provisions of this Agreement, any Warrantholder,
without the consent of the Warrant Agent, may, in and for its own behalf,
enforce, and may institute and maintain, any suit, action or proceeding against
the Company suitable to enforce, or otherwise in respect of, its right to
exercise, and to receive payment for, its Warrants as provided in this
Agreement.
ARTICLE IV
WARRANTS ACQUIRED BY THE COMPANY;
PAYMENT OF TAXES
SECTION 4.01. Warrants Acquired by the Company. In the event
the Company shall purchase or otherwise acquire Warrants, such Warrants may, at
the option of the Company, be (i) in the case of Certificated Warrants,
delivered to the Warrant Agent, and if so delivered, the Warrant Agent shall
promptly note the cancellation of such Warrants on the records of the Warrant
Agent or (ii) in the case of Book-Entry Warrants, surrendered free
<PAGE>
through a Participant to the Depository for credit to the account of the Warrant
Agent maintained at the Depository, and if so credited, the Warrant Agent shall
promptly note the cancellation of such Warrants by notation on the records of
the Warrant Agent. In the case of Book-Entry Warrants, such Warrants may also,
at the option of the Company, be resold by the Company directly or to or through
any of its affiliates in lieu of being surrendered to the Depository. No Warrant
Certificate shall be countersigned in lieu of or in exchange for any Warrant
which is canceled as provided herein, except as otherwise expressly permitted by
this Agreement.
Any canceled Warrant Certificate held by the Warrant Agent
under this Agreement shall be destroyed by the Warrant Agent unless otherwise
directed by the Company, and the Warrant Agent shall deliver a certificate of
destruction to the Company evidencing the same.
SECTION 4.02. Payment of Taxes. The Company will pay all
stamp, withholding and other duties, if any, attributable to the initial
issuance of Warrants; provided, however, that, anything in this Agreement to the
contrary notwithstanding, the Company shall not be required to pay any tax or
other governmental charge which may be payable in respect of any transfer
involving any beneficial or record interest in, or ownership interest of, any
Warrants, Warrant Certificates or Global Warrant Certificate, which tax or other
governmental charge shall be paid by the appropriate Warrantholder or Registered
Holder.
ARTICLE V
CONCERNING THE WARRANT AGENT
SECTION 5.01. Warrant Agent. (a) The Company hereby appoints
Citibank, N.A. ("Citibank") as Warrant Agent of the Company in respect of the
Warrants upon the terms and subject to the conditions set forth herein; and
Citibank hereby accepts such appointment. The Warrant Agent shall have the
powers and authority granted to and conferred upon it in this Agreement and such
further powers and authority to act on behalf of the Company as the Company may
hereafter grant to or confer upon it. All of the terms and provisions with
respect to such powers and authority contained in any Warrant Certificates or
the Global Warrant Certificate are subject to and governed by the terms and
provisions hereof.
(b) Citibank covenants and agrees to maintain an office,
staffed by qualified personnel, with adequate facilities for the discharge of
its responsibilities under this Agreement, including, without limitation, the
computation of the Cash Settlement Value and the timely settlement of the
Warrants upon exercise thereof.
SECTION 5.02. Conditions of Warrant Agent's Obligations. The
Warrant Agent accepts its obligations herein set forth upon the terms and
conditions hereof, including the following, to all of which the Company agrees
and to all of which the rights hereunder of the holders from time to time of the
Warrants shall be subject:
<PAGE>
(a) The Company agrees promptly to pay the Warrant Agent the
compensation to be agreed upon with the Company for all services rendered by the
Warrant Agent and to reimburse the Warrant Agent for its reasonable
out-of-pocket expenses (including attorneys' fees and expenses) incurred by the
Warrant Agent without negligence, bad faith or breach of this Agreement on its
part in connection with the services rendered by it hereunder. The Company also
agrees to indemnify the Warrant Agent for, and to hold it harmless against, any
loss, liability or expense (including reasonable attorneys' fees and expenses)
incurred without negligence, bad faith or breach of this Agreement on the part
of the Warrant Agent, arising out of or in connection with its acting as such
Warrant Agent hereunder, as well as the reasonable costs and expenses of
defending against any claim of liability in the premises.
(b) In acting under this Agreement, the Warrant Agent is
acting solely as agent of the Company and does not assume any obligation or
relationship of agency or trust for or with any of the owners or holders of the
Warrants.
(c) The Warrant Agent may consult with counsel satisfactory to
it, and the opinion of such counsel shall be full and complete authorization and
protection in respect of any action taken, suffered or omitted by it hereunder
in good faith and in accordance with the opinion of such counsel.
(d) The Warrant Agent shall be protected and shall incur no
liability for or in respect of any action taken or thing suffered by it in
reliance upon any notice, direction, consent, certificate, affidavit, statement
or other paper or document reasonably believed by it to be genuine and to have
been presented or signed by the proper parties.
(e) The Warrant Agent, and its officers, directors and
employees, may become the owner of, or acquire any interest in, any Warrants or
other obligations of the Company, with the same rights that it or they would
have if it were not the Warrant Agent hereunder and, to the extent permitted by
applicable law, it or they may engage or be interested in any financial or other
transaction with the Company and may act on, or as depository, trustee or agent
for, any committee or body of holders of Warrants or other obligations of the
Company as freely as if it were not the Warrant Agent hereunder.
(f) The Warrant Agent shall not be under any liability for
interest on any monies at any time received by it pursuant to any of the
provisions of this Agreement nor shall it be obligated to segregate such monies
from other monies held by it, except as required by law. The Warrant Agent shall
not be responsible for advancing funds on behalf of the Company.
(g) The Warrant Agent shall not be under any responsibility
with respect to the validity or sufficiency of this Agreement or the execution
and delivery hereof (except the due execution and delivery hereof by the Warrant
Agent) or with respect to the validity or execution of the Warrant Certificates
or the Global Warrant Certificate (except its countersignature thereof).
<PAGE>
(h) The recitals contained herein and in the Warrant
Certificates or the Global Warrant Certificate (except as to the Warrant Agent's
countersignature thereon) shall be taken as the statements of the Company, and
the Warrant Agent assumes no responsibility for the correctness of the same.
(i) The Warrant Agent shall be obligated to perform such
duties as are herein specifically set forth, and no implied duties or
obligations shall be read into this Agreement against the Warrant Agent. The
Warrant Agent shall not be under any obligation to take any action hereunder
likely to involve it in any expense or liability, the payment of which is not,
in its reasonable opinion, assured to it. The Warrant Agent shall not be
accountable or under any duty or responsibility for the application by the
Company of any proceeds. The Warrant Agent shall have no duty or responsibility
in case of any default by the Company in the performance of its covenants or
agreements contained in any Warrant Certificate or the Global Warrant
Certificate or in the case of the receipt of any written demand from a holder of
a Warrant with respect to such default, including, without limiting the
generality of the foregoing, any duty or responsibility to initiate or attempt
to initiate any proceedings at law or otherwise or, except as provided in
Section 6.02 hereof, to make any demand upon the Company.
SECTION 5.03. Resignation and Appointment of Successor. (a)
The Company agrees, for the benefit of the holders from time to time of the
Warrants, that there shall at all times be a Warrant Agent hereunder until all
the Warrants are no longer outstanding or until monies for the payment of all
outstanding Warrants, if any, shall have been paid to the Warrant Agent and
shall have been returned to the Company as provided in Section 2.06, whichever
occurs earlier.
(b) The Warrant Agent may at any time resign as such agent by
giving written notice to the Company of such intention on its part, specifying
the date on which its desired resignation shall become effective, subject to the
appointment of a successor Warrant Agent and acceptance of such appointment by
such successor Warrant Agent as hereinafter provided. The Warrant Agent
hereunder may be removed at any time by the filing with it of an instrument in
writing signed by or on behalf of the Company and specifying such removal and
the date when it shall become effective. Such resignation or removal shall take
effect upon the appointment by the Company, as hereinafter provided, of a
successor Warrant Agent (which shall be a banking institution organized under
the laws of the United States of America or one of the states thereof and having
an office south of Chambers Street in the Borough of Manhattan, The City of New
York) and the acceptance of such appointment by such successor Warrant Agent. In
the event a successor Warrant Agent has not been appointed and accepted its
duties within 90 days of the Warrant Agent's notice of resignation, the Warrant
Agent may apply to any court of competent jurisdiction for the designation of a
successor Warrant Agent. The obligation of the Company under Section 5.02(a)
shall continue to the extent set forth therein notwithstanding the resignation
or removal of the Warrant Agent.
<PAGE>
(c) In case at any time the Warrant Agent shall give notice of
its intent to resign, or shall be removed, or shall become incapable of acting,
or shall be adjudged a bankrupt or insolvent, or make an assignment for the
benefit of its creditors, or consent to the appointment of a receiver or
custodian of all or any substantial part of its property, or shall admit in
writing its inability to pay or meet its debts as they mature, or if a receiver
or custodian of it or of all or any substantial part of its property shall be
appointed, or if any public officer shall have taken charge or control of the
Warrant Agent or of its property or affairs for the purpose of rehabilitation,
conservation or liquidation, a successor Warrant Agent, qualified as aforesaid,
shall be promptly appointed by the Company by an instrument in writing, filed
with the successor Warrant Agent. Upon the appointment as aforesaid of a
successor Warrant Agent and acceptance by the latter of such appointment, the
Warrant Agent so superseded shall cease to be Warrant Agent hereunder.
(d) Any successor Warrant Agent appointed hereunder shall
execute, acknowledge and deliver to its predecessor and to the Company an
instrument accepting such appointment hereunder, and thereupon such successor
Warrant Agent, without any further act, deed or conveyance, shall become vested
with all the authority, rights, powers, trust, immunities, duties and
obligations of such predecessor with like effect as if originally named as
Warrant Agent hereunder, and such predecessor, upon payment of its charges and
disbursements then unpaid, shall thereupon become obligated to transfer, deliver
and pay over, and such successor Warrant Agent shall be entitled to receive, all
monies, securities and other property on deposit with or held by such
predecessor (including, without limitation, the Warrant Register), as Warrant
Agent hereunder.
(e) Any corporation into which the Warrant Agent hereunder may
be merged or converted or any corporation with which the Warrant Agent may be
consolidated, or any corporation resulting from any merger, conversion or
consolidation to which the Warrant Agent shall be a party, or any corporation to
which the Warrant Agent shall sell or otherwise transfer all or substantially
all the corporate trust assets and business of the Warrant Agent, provided that
it shall be qualified as aforesaid, shall be the successor Warrant Agent under
this Agreement without the execution or filing of any paper or any further act
on the part of any of the parties hereto.
ARTICLE VI
MISCELLANEOUS
SECTION 6.01. Amendment. (a) This Agreement and the terms of
the Warrants may be amended by the Company, the Warrant Agent and the Spot Rate
Reference Agent, without the consent of the Warrantholders, for the purpose of
curing any ambiguity, or of curing, correcting or supplementing any defective or
inconsistent provision contained herein or therein or in any other manner which
the Company may deem necessary or desirable and which, as determined by the
Company in its sole discretion, will not adversely affect the interests of the
holders of the Warrants. Notwithstanding anything in this Section 6.01 to the
<PAGE>
contrary, this Agreement may not be amended to provide for the countersigning by
the Warrant Agent of Warrant Certificates evidencing in the aggregate in excess
of 1,050,000 Warrants unless and until the Warrant Agent has received notice
from the AMEX or any successor United States national securities exchange that
the additional Warrants in excess of 1,050,000 have been approved for listing on
such exchange.
(b) The Company, the Warrant Agent and the Spot Rate Reference
Agent may modify or amend this Agreement, with the consent of Warrantholders
holding not less than a majority in number of the then outstanding Warrants
affected by such modification or amendment, for any purpose; provided, however,
that no such modification or amendment that increases the Strike Rate, shortens
the period of time during which the Warrants may be exercised, or otherwise
materially and adversely affects the exercise rights of the Warrantholders or
reduces the percentage of the number of outstanding Warrants, the consent of
whose holders is required for modification or amendment of this Agreement, may
be made without the consent of each Warrantholder affected thereby.
SECTION 6.02. Notices and Demands to the Company, the Warrant
Agent and the Spot Rate Reference Agent. If the Warrant Agent or the Spot Rate
Reference Agent shall receive any notice or demand addressed to the Company by
any Warrantholder pursuant to the provisions of this Agreement, the Warrant
Agent or the Spot Rate Reference Agent, as the case may be, shall promptly
forward such notice or demand to the Company.
SECTION 6.03. Addresses for Notices. Any communications to the
Warrant Agent with respect to this Agreement shall be addressed to Citibank,
N.A., 120 Wall Street, New York, New York 10043, Attention: Corporate Trust
Department (telephone: (212) 412-6209; facsimile: (212) 480-1613), and any
communications to the Company with respect to this Agreement shall be addressed
to Salomon Inc, Seven World Trade Center, New York, New York 10048, Attention:
_________ (telephone: (212) 783-____; facsimile: (212) 783-_______), and any
communications to the Spot Rate Reference Agent with respect to this Agreement
shall be addressed to Salomon Brothers Inc, Seven World Trade Center, New York,
New York 10048, Attention: Ramesh Memon (telephone: (212) 783-3783; facsimile:
(212) 783-1098 (or such other address as shall be specified in writing by the
Warrant Agent, the Company or the Spot Rate Reference Agent, respectively).
SECTION 6.04. Notices to Holders. The Company may cause to
have notice given to the holders of Warrants by providing the Warrant Agent with
a form of notice to be distributed by (a) in the case of Certificated Warrants,
the Warrant Agent to the Warrantholders or (b) in the case of Book-Entry
Warrants, the Depository with a form of such notice to be distributed by the
Depository to Participants in accordance with the custom and practices of the
Depository.
SECTION 6.05. Obtaining of Approvals. The Company will from
time to time take all action which may be necessary to obtain and keep effective
(a) any and all permits, consents and approvals of governmental agencies and
authorities and the AMEX or any successor United States national securities
exchange and (b) any and all filings or notices
<PAGE>
under United States Federal and state securities laws, which may be or become
required in connection with the issuance, sale, trading, transfer or delivery of
the Warrant Certificates, the Global Warrant Certificate or the exercise of the
Warrants.
SECTION 6.06. Persons Having Rights Under This Agreement.
Nothing in this Agreement expressed or implied and nothing that may be inferred
from any of the provisions hereof is intended, or shall be construed, to confer
upon, or give to, any person or corporation other than the Company, the Warrant
Agent, the Spot Rate Reference Agent, the registered holder of the Global
Warrant Certificate and the Warrantholders any right, remedy or claim under or
by reason of this Agreement or of any covenant, condition, stipulation, promise
or agreement hereof; and all covenants, conditions, stipulations, promises and
agreements contained in this Agreement shall be for the sole and exclusive
benefit of the Company, the Warrant Agent, the Spot Rate Reference Agent, and
their respective successors, the registered holder of the Global Warrant
Certificate and of the Warrantholders.
SECTION 6.07. Inspection of Agreement. A copy of this
Agreement shall be available at all reasonable times at the Warrant Agent's
Office for inspection by the Warrantholders, Participants or any person
certified by any Participant to be an indirect participant of the Depository or
any person certified by any Participant to be a Warrantholder, in each case, on
behalf of whom such Participant holds Warrants.
SECTION 6.08. Headings. The descriptive headings of the
several Articles and Sections of this Agreement are inserted for convenience
only and shall not control or affect the meaning or construction of any of the
provisions hereof.
SECTION 6.09. Counterparts. This Agreement may be executed by
the parties hereto in any number of counterparts, each of which counterpart,
when so executed and delivered, shall be deemed to be an original, but all such
counterparts taken together shall constitute but one and the same instrument.
Delivery of an executed counterpart of a signature page of this Agreement by
facsimile transmission shall be effective as delivery of a manually executed
counterpart of this Agreement.
SECTION 6.10. APPLICABLE LAW. THIS AGREEMENT AND EACH
WARRANT SHALL BE GOVERNED BY, AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF
THE STATE OF NEW YORK.
[Signature Page Follows]
<PAGE>
IN WITNESS WHEREOF, this Agreement has been duly executed by
the parties hereto as of the day and year first above written.
SALOMON INC,
by
--------------------------
Name:
Title:
CITIBANK, N.A.,
by
--------------------------
Name: John W. Reasor
Title: Vice President
SALOMON BROTHERS INC,
by
--------------------------
Name:
Title:
<PAGE>
EXHIBIT A
[FORM OF WARRANT CERTIFICATE]
[FACE]
Number YNW-CUSIP No. ______________
SALOMON INC
U.S. Dollar Increase Warrants
on the Japanese Yen
Expiring June __, 1998
This Warrant Certificate certifies that ______________, or
registered assigns, is the registered holder of _________ U.S. Dollar Increase
Warrants on the Japanese Yen Expiring June __, 1998 (the "Warrants"). Upon
receipt by the Warrant Agent of this Warrant Certificate and the Notice of
Exercise on the reverse hereof (or a Notice of Exercise in substantially
identical form delivered herewith), duly completed and executed, at the offices
of the Warrant Agent in the Borough of Manhattan, The City of New York, each
Warrant entitles the beneficial owner thereof (each a "Warrantholder") to
receive, subject to the conditions set forth herein and in the Warrant
Agreement, from Salomon Inc (the "Company") the cash settlement value in U.S.
dollars (rounded down to the nearest cent) (the "Cash Settlement Value") which
is the greater of (i) zero and (ii) the amount computed by subtracting from U.S.
$100 an amount equal to the product of U.S. $100 times a fraction, the numerator
of which is (yen)____ per U.S. $1.00 and the denominator of which is the Spot
Rate (as defined herein). In no event shall a Warrantholder be entitled to any
interest on any Cash Settlement Value.
Subject to the terms of the Warrant Agreement, each Warrant
may be irrevocably exercised, in whole but not in part, at or prior to 3:00
p.m., New York City time, on any New York Business Day from its date of issuance
until 3:00 p.m., New York City time, on the earlier of (i) the New York Business
Day immediately preceding June __, 1998 (the "Expiration Date") and (ii) the
Delisting Date (as defined herein), after which time the Warrants shall expire
and all Warrants evidenced hereby shall be automatically exercised and shall
otherwise be void. Except in the event of automatic exercise of the Warrants as
set forth herein and in the Warrant Agreement, or as otherwise provided in the
Warrant Agreement, not fewer than 500 Warrants may be exercised by or on behalf
of any one Warrantholder at any one time.
<PAGE>
Reference is hereby made to the further provisions of this
Warrant Certificate set forth on the reverse hereof and such further provisions
shall for all purposes have the same effect as though fully set forth at this
place.
This Warrant Certificate shall not be valid unless
countersigned by the Warrant Agent.
IN WITNESS WHEREOF, Salomon Inc has caused this instrument to
be duly executed.
Dated: ____________________ SALOMON INC,
by
-----------------------------
Robert E. Denham
Chairman and Chief
Executive Officer
[SEAL]
Attest:
by:
-----------------------------
Arnold S. Olshin
Secretary
Countersigned for authentication
purposes only as of the date
above written:
CITIBANK, N.A.,
as Warrant Agent
by
-----------------------
Authorized Officer
<PAGE>
[FORM OF WARRANT CERTIFICATE]
[REVERSE]
SALOMON INC
The Warrants evidenced by this Warrant Certificate are part of
a duly authorized issue of Warrants issued by the Company pursuant to a Warrant
Agreement, dated as of June __, 1996 (the "Warrant Agreement"), among the
Company, Citibank, N.A. (the "Warrant Agent") and Salomon Brothers Inc (the
"Spot Rate Reference Agent") and is subject to the terms and provisions
contained in the Warrant Agreement, to all of which terms and provisions each
Warrantholder consents by acceptance of this Warrant Certificate and which
Warrant Agreement is hereby incorporated by reference in and made a part of this
Warrant Certificate. A copy of the Warrant Agreement is on file at the Warrant
Agent's Office (as defined herein).
The Warrants constitute direct, unconditional and unsecured
obligations of the Company and rank on a parity with the Company's other
unsecured contractual obligations and with the Company's unsecured and
unsubordinated debt.
Subject to the provisions hereof and of the Warrant Agreement,
each Warrant may be irrevocably exercised, in whole but not in part, at or prior
to 3:00 p.m., New York City time, on any New York Business Day (as defined
herein) from its date of issuance until 3:00 p.m., New York City time, on the
earlier of (i) the New York Business Day immediately preceding the Expiration
Date and (ii) the Delisting Date (as defined herein). The holder of Warrants
evidenced by this Warrant Certificate may exercise them by surrendering this
Warrant Certificate and attached Notice of Exercise (or a Notice of Exercise in
substantially identical form), duly completed and executed, to the Warrant
Agent's offices in the Borough of Manhattan, The City of New York (the "Warrant
Agent's Office"), which are, on the date hereof, located at 111 Wall Street, New
York, New York 10043, Attention: Corporate Trust Department. Except in the event
of automatic exercise of the Warrants as set forth herein and in the Warrant
Agreement, or as otherwise provided in the Warrant Agreement, not fewer than 500
Warrants may be exercised by or on behalf of any one Warrantholder at any one
time.
The "Cash Settlement Value" of a Warrant will equal an amount
in U.S. dollars (rounded down to the nearest cent) which is the greater of (i)
zero and (ii) the amount computed by subtracting from U.S. $100 an amount equal
to the product of U.S. $100 times a fraction, the numerator of which is
(yen) ____ per U.S. $1.00 and the denominator of which is the Spot Rate. The
"Spot Rate" on any Valuation Date will be determined by the Spot Rate Reference
Agent and will equal (a) the noon buying rate per U.S. $1.00 in The City of New
York on such Valuation Date for cable transfers in Japanese yen as certified for
customs purposes by the Federal Reserve Bank of New York (the "Noon Buying
Rate"), as reported on page 1FEE of The Reuter Monitor Money Rates Service (or
such page as may replace that page), or (b) if the Noon Buying Rate does not
appear on such page by 1:00 p.m., New York City time, on such Valuation Date,
the Noon Buying Rate on such Valuation Date as otherwise
<PAGE>
announced by the Federal Reserve Bank of New York, or (c) if the Federal Reserve
Bank of New York has not quoted such Noon Buying Rate by 1:30 p.m., New York
City time, on such Valuation Date, the offered spot rate of Japanese yen per
U.S. $1.00 on such Valuation Date, which offered spot rate shall be calculated
by the Spot Rate Reference Agent by (1) obtaining at approximately 1:30 p.m.,
New York City time, a quote for a transaction amount approximately equivalent to
U.S. $100 times the aggregate number of Warrants which were properly exercised
on the related Exercise Date from each of five leading market makers (other than
the Spot Rate Reference Agent) in the foreign exchange markets for Japanese yen
selected by the Spot Rate Reference Agent, (2) discarding the highest and lowest
quotes obtained and (3) averaging the three remaining quotes to determine such
offered spot rate.
The Spot Rate used to determine the Cash Settlement Value on
any Valuation Date will be rounded to the second decimal place (e.g., ___.00),
rounding up if the next succeeding decimal place, without regard to rounding, is
five or higher. Any such Cash Settlement Value will be rounded downwards, if
necessary, to the nearest cent.
The Company has appointed Salomon Brothers Inc (the "Spot
Reference Agent") to be its Spot Rate Reference Agent to make such calculations
as may be required upon the occurrence of certain circumstances, as described in
the Warrant Agreement and herein, including, without limitation, calculation of
the Spot Rate and any Reference Rate. The Spot Rate Reference Agent shall act as
an independent expert and not as an agent of the Company, and, unless otherwise
provided by the Warrant Agreement, its calculations and determinations under the
Warrant Agreement and this Warrant Certificate shall, absent manifest error, be
final and binding on the Company, the Warrant Agent and the Warrantholders.
Subject to the Warrant Agreement and this Warrant Certificate,
and except in the case of exercise (whether automatic or by Notice of Exercise)
on the Expiration Date or the Delisting Date, or in the case of a postponement
due to there being exercised a number of Warrants in excess of the maximum
permitted number on a given day, the valuation date (the "Valuation Date") for a
Warrant shall be the New York Business Day next succeeding the New York Business
Day (the "Exercise Date") on which the Warrant Agent has received the Warrant
Certificate representing such Warrant, with the Notice of Exercise below (or a
Notice of Exercise in substantially identical form delivered herewith), duly
completed and executed, at or prior to 3:00 p.m., New York City time (the
"Notice Date"); and if the Warrant Agent shall receive any such Warrant
Certificate after 3:00 p.m., New York City time, on such date, then such Warrant
Certificate shall be deemed to have been received at or prior to 3:00 p.m., New
York City time, on the next succeeding New York Business Day (which shall be
considered the Notice Date), and in such event the Valuation Date shall be the
New York Business Day following the New York Business Day on which the Warrant
Agent is deemed to have received such Warrant Certificate together with the
Notice of Exercise. Any Warrant Certificate received after 3:00 p.m., New York
City time, on the earlier of (i) the New York Business Day immediately preceding
the Expiration Date and (ii) the last New York Business Day prior to the
effective date on which the Warrants are delisted from, or permanently suspended
from trading on (within the meaning of the Securities Exchange Act of 1934 and
the
<PAGE>
rules and regulations of the Securities and Exchange Commission thereunder), the
American Stock Exchange and not accepted at the same time for listing on another
United States national securities exchange (such New York Business Day being the
"Delisting Date"), shall be deemed not to have been delivered and the related
Notice of Exercise shall be void and of no effect; provided, however, that if
the Company first receives notice of such delisting or suspension of the
Warrants on the same day on which such Warrants are delisted or suspended, such
day will be deemed the Delisting Date for purposes of the Warrant Agreement and
this Warrant Certificate.
If the Notice of Exercise is not rejected as provided in the
Warrant Agreement, then the Warrant Agent or the Spot Rate Reference Agent, as
the case may be, will determine the Cash Settlement Value of the exercised
Warrants in accordance with the terms of the Warrant Agreement. Any exercise of
the Warrants will be irrevocable, except as provided in the immediately
succeeding sentence and for the limited circumstances in which an exercise may
be treated as contingent pursuant to the Limit Option, as provided in the
Warrant Agreement. Except in the case of Warrants subject to automatic exercise,
if on any Valuation Date the Cash Settlement Value for any Warrants then
exercised would be zero, then in such case, the exercise of such Warrants shall
be void and of no effect and the Warrant Certificate evidencing such Warrants
will be promptly returned by the Warrant Agent to the Registered Holder by first
class mail at the Company's expense and such Warrantholder shall be permitted to
re-exercise such Warrants prior to the Expiration Date or the Delisting Date, as
the case may be.
Except in the case of Warrants subject to automatic exercise,
payment shall be made available to each appropriate Registered Holder on the
fifth New York Business Day following the Valuation Date for such Warrants in
the form of a cashier's check or an official bank check, or (in the case of
payments of at least $100,000) by wire transfer to a U.S. dollar bank account
maintained by such Registered Holder in the United States (at such Registered
Holder's election as specified in the Notice of Exercise), in an amount equal to
the aggregate Cash Settlement Value of the exercised Warrants.
All Warrants for which the Warrant Agent has not received a
Notice of Exercise in proper form at or prior to 3:00 p.m., New York City time,
on the earlier of (i) the New York Business Day preceding the Expiration Date
and (ii) the Delisting Date, or for which the Warrant Agent has received a
Notice of Exercise in proper form but with respect to which timely delivery of
the relevant Warrant Certificate has not been made, will be deemed automatically
exercised on such date without any requirement of a Notice of Exercise to the
Warrant Agent. The Valuation Date for such Warrants shall be the first New York
Business Day following the Expiration Date or the Delisting Date, as the case
may be.
Payment with respect to automatically exercised Warrants shall
be made available to each appropriate Registered Holder in the form of a
cashier's check or an official bank check, or (in the case of payments of at
least $100,000) by wire transfer to a U.S. dollar account maintained by such
Registered Holder in the United States (at such Registered Holder's election),
on the fourth New York Business Day following the Valuation Date for
<PAGE>
automatically exercised Warrants, against receipt by the Warrant Agent at the
Warrant Agent's Office from the Registered Holder of its Warrant Certificates.
Such payment shall be in the amount of the aggregate Cash Settlement Value in
respect of the Warrants, evidenced by the Warrant Certificates, that were
automatically exercised on the Expiration Date or the Delisting Date, as the
case may be.
All exercises of Warrants (other than on the Expiration Date
or the Delisting Date) shall be subject, at the Company's option, to the
limitation that not more than 1,000,000 Warrants in total may be exercised on
any Exercise Date and not more than 250,000 Warrants may be exercised by or on
behalf of any person or entity, either individually or in concert with any other
person or entity, on any Exercise Date. If any New York Business Day would
otherwise, under the terms hereof, be the Exercise Date in respect of more than
1,000,000 Warrants, then upon the Company's exercising such option (by giving
notice thereof to the Warrant Agent not later than 5:00 p.m., New York City
time, on the New York Business Day immediately following such Exercise Date),
1,000,000 of such Warrants shall be deemed exercised on such Exercise Date
(selected by the Warrant Agent on a pro rata basis, but if, as a result of such
pro rata selection, any Registered Holders would be deemed to have exercised
less than 500 Warrants, then the Warrant Agent shall first select additional
Warrants of such Registered Holders so that no such Registered Holder shall be
deemed to have exercised less than 500 Warrants), and the remainder of such
Warrants (the "Remaining Warrants") shall be deemed exercised on the following
New York Business Day (notwithstanding the minimum exercise requirement in the
Warrant Agreement and subject to successive applications of this paragraph);
provided, however, that any Remaining Warrant in respect of which a Notice of
Exercise was delivered on a given Notice Date shall be deemed exercised before
any other Warrants in respect of which a Notice of Exercise was delivered on a
later Notice Date. If any individual Warrantholder attempts to exercise more
than 250,000 Warrants on any New York Business Day, then at the Company's
election (as notified to the Warrant Agent by giving notice thereof to the
Warrant Agent not later than 5:00 p.m., New York City time, on the New York
Business Day immediately following such New York Business Day) 250,000 of such
Warrants shall be deemed exercised on such New York Business Day and the
remainder shall be deemed exercised on the following New York Business Day
(subject to successive applications of this paragraph). The date on which any
Warrant is deemed exercised under the preceding sentences shall for all purposes
of this Warrant Certificate be deemed to be the "Exercise Date" in respect of
such Warrant.
Prior to due presentment for registration of transfer, the
Company, the Warrant Agent, and any agent of the Company or the Warrant Agent,
may deem and treat the registered owner hereof as the absolute owner of the
Warrants evidenced hereby (notwithstanding any notation of ownership or other
writing hereon) for any purpose whatsoever, and as the person entitled to
exercise the rights represented by the Warrants evidenced hereby, and neither
the Company nor the Warrant Agent, nor any agent of the Company or the Warrant
Agent, shall be affected by any notice to the contrary.
The Warrant Agent shall, in accordance with the Warrant
Agreement, from time to time register the transfer of this Warrant Certificate
upon the records to be maintained by it
<PAGE>
for that purpose at the Warrant Agent's Office upon surrender hereof, duly
endorsed, or accompanied by a written instrument or instruments of transfer in
form satisfactory to the Warrant Agent and the Company, duly executed by the
Registered Holder(s) hereof or by their duly appointed legal representative or
duly authorized attorney, such signature to be guaranteed by a bank or trust
company with a correspondent office in The City of New York or by a member of a
national securities exchange. Upon any such registration of transfer, a new
Warrant Certificate shall be issued to the transferee(s).
As provided in the Warrant Agreement and subject to certain
limitations, this Warrant Certificate may be exchanged for other Warrant
Certificates, of like tenor and representing an equal number of Warrants, upon
surrender to the Warrant Agent of this Warrant Certificate at the Warrant
Agent's Office.
No service charge shall be made for any registration of
transfer or exchange of this Warrant Certificate, but the Company may require
payment of a sum sufficient to cover any tax or other governmental charge that
may be imposed in connection with any registration of transfer or exchange of
this Warrant Certificate, other than exchanges pursuant to the Warrant Agreement
not involving any transfer.
Capitalized terms included herein but not defined herein have
the meanings assigned thereto in the Warrant Agreement.
References herein to "U.S. dollars" or "U.S. $" are to the
lawful currency of the United States of America. References herein to "Japanese
yen" or "(yen)" are to the lawful currency of Japan. As used herein, a "New York
Business Day" means any day other than a Saturday, Sunday or a day on which the
American Stock Exchange is not open for securities trading or commercial banks
in New York City are required or authorized by law or executive order to remain
closed.
The Warrant Agreement and the terms of the Warrants are
subject to amendment, as provided in the Warrant Agreement.
THIS WARRANT CERTIFICATE SHALL BE GOVERNED BY, AND INTERPRETED
IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
<PAGE>
NOTICE OF EXERCISE
Citibank, N.A.
Corporate Trust Department, 5th Floor
111 Wall Street
New York, New York 10043
1. This Notice |_| DOES |_| DOES NOT relate to "Contingently
Tendered Warrants" subject to a Limit Option, as provided for in the Warrant
Agreement. If this Notice of Exercise relates to 500 or more Warrants and any of
such Warrants are Contingently Tendered Warrants, _______ of such Warrants are
Contingently Tendered Warrants and _______ are not. If the Spot Rate used to
determine the Cash Settlement Value of Contingently Tendered Warrants is less
than the Reference Rate by five or more Japanese yen per U.S. dollar, a Notice
of Exercise with respect to such Contingently Tendered Warrants shall be void
and of no effect (and shall be disregarded for all purposes of the Warrant
Agreement).
2. Subject to paragraph 1, the undersigned (the "Owner")
hereby irrevocably exercises __________ Warrants (the "Exercised Warrants") and
delivers to you herewith a Warrant Certificate or Certificates, registered in
the Owner's name, representing a number of Warrants at least equal to the number
of Exercised Warrants. Each beneficial owner of Warrants that is exercising
Warrants pursuant to this Notice of Exercise is exercising no fewer than 500
Warrants.
3. The Owner hereby directs the Warrant Agent (a) to pay the
Cash Settlement Value, if any, with respect to the Exercised Warrants:
|_| By cashier's check or an official bank check; or
|_| By wire transfer to the following U.S. dollar bank
account in the United States:
(Minimum payments of $100,000 only)
Bank:
ABA Routing No.:
Account No.: __________ Reference:
<PAGE>
; and (b) if the number of Exercised Warrants is less than the number of
Warrants represented by the enclosed Warrant Certificate, to deliver a Warrant
Certificate representing the unexercised Warrants to _________________________.
Dated: _________, 19___
(Owner)
by
Authorized Signature
Address: _____________________
Telephone: (___) _____ - _______
<PAGE>
EXHIBIT B-1
[FORM OF GLOBAL WARRANT CERTIFICATE]
No. ____ CUSIP No. _____________
SALOMON INC
U.S. Dollar Increase Warrants
on the Japanese Yen
Expiring June __, 1998
This certifies that CEDE & Co., or registered assigns, is the
registered holder of _____________ U.S. Dollar Increase Warrants on the Japanese
Yen Expiring June __, 1998 (the "Warrants"). Each Warrant entitles the
beneficial owner thereof (each a "Warrantholder") to receive, subject to the
conditions set forth herein and in the Warrant Agreement, from Salomon Inc (the
"Company") the cash settlement value in U.S. dollars (rounded down to the
nearest cent) (the "Cash Settlement Value") which is the greater of (i) zero and
(ii) the amount computed by subtracting from U.S. $100 an amount equal to the
product of U.S. $100 times a fraction, the numerator of which is (yen)_____ per
U.S. $1.00 and the denominator of which is the Spot Rate. The "Spot Rate" on any
Valuation Date will be determined by the Spot Rate Reference Agent and will
equal (a) the noon buying rate per U.S. $1.00 in The City of New York on such
Valuation Date for cable transfers in Japanese yen as certified for customs
purposes by the Federal Reserve Bank of New York (the "Noon Buying Rate"), as
reported on page 1FEE of The Reuter Monitor Money Rates Service (or such page as
may replace that page), or (b) if the Noon Buying Rate does not appear on such
page by 1:00 p.m., New York City time, on such Valuation Date, the Noon Buying
Rate on such Valuation Date as otherwise announced by the Federal Reserve Bank
of New York, or (c) if the Federal Reserve Bank of New York has not quoted such
Noon Buying Rate by 1:30 p.m., New York City time, on such Valuation Date, the
offered spot rate of Japanese yen per U.S. $1.00 on such Valuation Date, which
offered spot rate shall be calculated by the Spot Rate Reference Agent by (1)
obtaining at approximately 1:30 p.m., New York City time, a quote for a
transaction amount approximately equivalent to U.S. $100 times the aggregate
number of Warrants which were properly exercised on the related Exercise Date
from each of five leading market makers (other than the Spot Rate Reference
Agent) in the foreign exchange markets for Japanese yen selected by the Spot
Rate Reference Agent, (2) discarding the highest and lowest quotes obtained and
(3) averaging the three remaining quotes to determine such offered spot rate.
The Spot Rate used to determine the Cash Settlement Value on
any Valuation Date will be rounded to the second decimal place (e.g., ___.00),
rounding up if the next
<PAGE>
succeeding decimal place, without regard to rounding, is five or higher. Any
such Cash Settlement Value will be rounded downwards, if necessary, to the
nearest cent. In no event shall a Warrantholder be entitled to any interest on
any Cash Settlement Value.
Subject to the terms of the Warrant Agreement, each Warrant
may be irrevocably exercised, in whole but not in part, at or prior to 3:00
p.m., New York City time, on any New York Business Day from its date of issuance
until 3:00 p.m., New York City time, on the earlier of (i) the New York Business
Day immediately preceding June __, 1998 (the "Expiration Date") and (ii) the
Delisting Date (as defined herein), after which time the Warrants shall expire
and all Warrants evidenced hereby shall be void. The holder of Warrants
evidenced by this Global Warrant Certificate may exercise them only upon
delivery of such Warrant free to the Warrant Account and pursuant to an
irrevocable Notice of Exercise to the Warrant Agent from a Participant acting on
behalf of such Warrantholder. Except in the event of automatic exercise of the
Warrants, as set forth herein and in the Warrant Agreement, not fewer than 500
Warrants may be exercised by or on behalf of any one Warrantholder at any one
time.
This Global Warrant Certificate shall not be valid unless
countersigned by the Warrant Agent.
The Warrants evidenced by this Global Warrant Certificate are
part of a duly authorized issue of Warrants issued by the Company pursuant to a
Warrant Agreement, dated as of June __, 1996 (the "Warrant Agreement"), among
the Company, Citibank, N.A. (the "Warrant Agent") and Salomon Brothers Inc (the
"Spot Rate Reference Agent"), and is subject to the terms and provisions
contained in the Warrant Agreement, to all of which terms and provisions the
Warrantholders, the entities through which such Warrantholders hold their
beneficial interests in the Warrants and the registered holder of this Global
Warrant Certificate consent by acceptance of this Global Warrant Certificate by
the Depository and which Warrant Agreement is hereby incorporated by reference
in and made a part of this Global Warrant Certificate. A copy of the Warrant
Agreement is on file at the Warrant Agent's Office, which is located at 111 Wall
Street, 5th Floor, New York, New York 10043.
The Warrants constitute direct, unconditional and unsecured
obligations of the Company and rank on a parity with the Company's other
unsecured contractual obligations and with the Company's unsecured and
unsubordinated debt.
Subject to the Warrant Agreement and this Global Warrant
Certificate, and except in the event of exercise (whether automatic or by Notice
of Exercise) on the Expiration Date or the Delisting Date, or in the case of a
postponement due to there being exercised a number of Warrants in excess of the
maximum permitted number on a given day, the valuation date (the "Valuation
Date") for a Warrant shall be the first New York Business Day (as defined
herein) next succeeding the New York Business Day (the "Exercise Date") on which
the Warrant Agent has received (i) in the case of Warrants other than those held
through the facilities of Centrale de Livraison de Valeurs Mobilieres S.A.
("CEDEL") or the Euroclear System ("Euroclear"), the Warrant, with the Notice of
Exercise (or a Notice of Exercise in
<PAGE>
substantially identical form), duly completed and executed, at or prior to 3:00
p.m., New York City time (the "Notice Date"); and if the Warrant Agent shall
receive any such Warrant after 3:00 p.m., New York City time, on such date, then
such Warrant shall be deemed to have been received at or prior to 3:00 p.m., New
York City time, on the next succeeding New York Business Day (which shall be
considered the Notice Date), and in such event the Valuation Date shall be the
next New York Business Day following the New York Business Day on which the
Warrant Agent is deemed to have received such Warrant together with the Notice
of Exercise or (ii) in the case of Warrants held through the facilities of CEDEL
or Euroclear, the Notice of Exercise (by facsimile transmission) at or prior to
3:00 p.m., New York City time; provided that the Warrant is received by the
Warrant Agent by 3:00 p.m., New York City time, on the New York Business Day
next succeeding the Exercise Date; and if the Warrant Agent shall receive such
Notice of Exercise after 3:00 p.m., New York City time, on such date, then the
Notice of Exercise shall be deemed to have been received at or prior to 3:00
p.m., New York City time, on the next succeeding New York Business Day (which
shall be considered the Notice Date), and in such event the Valuation Date shall
be the next New York Business Day following the New York Business Day on which
the Warrant Agent is deemed to have received such Notice of Exercise; provided,
however, that if the Warrant Agent receives the Warrant after 3:00 p.m., New
York City time, on the Valuation Date, then the Exercise Date for such Warrant
shall be the day on which such Warrant is received or, if such day is not a New
York Business Day, the next succeeding New York Business Day, and the Valuation
Date for such Warrant shall be the first New York Business Day following such
Exercise Date; provided further, however, in the case of exercises by Euroclear
participants, Euroclear must, by tested telex to the Warrant Agent by 9:00 a.m.,
New York City time, on the Valuation Date, confirm that the Warrants will be
received by the Warrant Agent on such date, provided that if such telex
communication is received after 9:00 a.m., New York City time, on the Valuation
Date, the Company will be entitled to direct the Warrant Agent to reject the
related Notice of Exercise or waive the requirement for timely delivery of such
telex communication. Any Warrant received after 3:00 p.m., New York City time,
on the earlier of (a) the New York Business Day immediately preceding the
Expiration Date and (b) the last New York Business Day prior to the effective
date on which the Warrants are delisted from, or permanently suspended from
trading on (within the meaning of the Securities Exchange Act of 1934 and the
rules and regulations of the Securities and Exchange Commission thereunder), the
American Stock Exchange (the "AMEX") and not accepted at the same time for
listing on another United States national securities exchange (such New York
Business Day being the "Delisting Date") (or, in the case of Warrants held
through the facilities of CEDEL or Euroclear, after 3:00 p.m., New York City
time, on the first New York Business Day following such dates), shall be deemed
not to have been delivered and the related Notice of Exercise shall be void and
of no effect; provided, however, that if the Company first receives notice of
the delisting or suspension of the Warrants on the same day on which such
Warrants are delisted or suspended, such day will be deemed the Delisting Date
for purposes of the Warrant Agreement and this Global Warrant Certificate.
All Warrants for which the Warrant Agent has not received a
Notice of Exercise in proper form by 3:00 p.m., New York City time, on the
earlier of (i) the New York
<PAGE>
Business Day preceding the Expiration Date and (ii) the Delisting Date, or for
which the Warrant Agent has received a Notice of Exercise in proper form but
with respect to which timely delivery of the related Warrant has not been made,
will be deemed automatically exercised on such date without any requirement of a
Notice of Exercise to the Warrant Agent. The Valuation Date shall be the first
New York Business Day following the Expiration Date or the Delisting Date, as
the case may be.
All exercises of Warrants (other than on the Expiration Date
or the Delisting Date) shall be subject, at the Company's option, to the
limitation that not more than 1,000,000 Warrants in total may be exercised on
any Exercise Date and not more than 250,000 Warrants may be exercised by or on
behalf of any person or entity, either individually or in concert with any other
person or entity, on any Exercise Date. If any New York Business Day would
otherwise, under the terms hereof be the Exercise Date in respect of more than
1,000,000 Warrants, then upon the Company's exercising such option (by giving
notice thereof to the Warrant Agent not later than 5:00 p.m., New York City
time, on the Business Day immediately following such Exercise Date), 1,000,000
of such Warrants shall be deemed exercised on such Exercise Date (selected by
the Warrant Agent on a pro rata basis, but if, as a result of such pro rata
selection, any Registered Holders would be deemed to have exercised less than
500 Warrants, then the Warrant Agent shall first select additional Warrants of
such Registered Holders so that no such Registered Holder shall be deemed to
have exercised less than 500 Warrants), and the remainder of such Warrants (the
"Remaining Warrants") shall be deemed exercised on the following New York
Business Day (notwithstanding the minimum exercise requirement in the Warrant
Agreement and subject to successive applications of this paragraph); provided,
however, that any Remaining Warrant in respect of which a Notice of Exercise was
delivered on a given Notice Date shall be deemed exercised before any other
Warrants in respect of which a Notice of Exercise was delivered on a later
Notice Date. If any individual Warrantholder attempts to exercise more than
250,000 Warrants on any New York Business Day, then at the Company's election
(as notified to the Warrant Agent by giving notice thereof to the Warrant Agent
not later than 5:00 p.m., New York City time, on the New York Business Day
following such New York Business Day) 250,000 of such Warrants shall be deemed
exercised on such New York Business Day and the remainder shall be deemed
exercised on the following New York Business Day (subject to successive
applications of this paragraph). The date on which any Warrant is deemed
exercised under the preceding sentences shall for all purposes of this Global
Warrant Certificate be deemed to be the "Exercise Date" in respect of such
Warrant.
Prior to due presentment for registration of transfer, the
Company, the Warrant Agent, and any agent of the Company or the Warrant Agent,
may deem and treat the registered owner hereof as the absolute owner of the
Warrants evidenced hereby (notwithstanding any notation of ownership or other
writing hereon) for any purpose whatsoever, and as the person entitled to
exercise the rights represented by the Warrants evidenced hereby, and neither
the Company nor the Warrant Agent, nor any agent of the Company or the Warrant
Agent, shall be affected by any notice to the contrary.
<PAGE>
The Warrant Agent shall, in accordance with the Warrant
Agreement, from time to time register the transfer of this Global Warrant
Certificate in its records (which may be maintained electronically) to be
maintained by it for that purpose at the Warrant Agent's Office upon surrender
hereof, duly endorsed, or accompanied by a written instrument or instruments of
transfer in form satisfactory to the Warrant Agent, duly executed by the
registered holder hereof or by the duly appointed legal representative or duly
authorized attorney thereof, such signature to be guaranteed by a bank or trust
company with a correspondent office in The City of New York or by a member of a
national securities exchange. Upon any such registration of transfer, a new
Global Warrant Certificate shall be issued to the transferee.
Exercises of Warrants may be subject to the Limit Option as
provided in the Warrant Agreement.
Capitalized terms included herein but not defined herein have
the meanings assigned thereto in the Warrant Agreement.
References herein to "U.S. dollars" or "U.S. $" are to the
lawful currency of the United States of America. References herein to "Japanese
yen" or "(yen)" are to the lawful currency of Japan. As used herein, a "New York
Business Day" means any day other than a Saturday, Sunday or a day on which the
AMEX is not open for securities trading or commercial banks in New York City are
required or authorized by law or executive order to remain closed.
The Warrant Agreement and the terms of the Warrants are
subject to amendment, as provided in the Warrant Agreement.
THIS GLOBAL WARRANT CERTIFICATE SHALL BE GOVERNED BY, AND
INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
<PAGE>
IN WITNESS WHEREOF, Salomon Inc has caused this instrument to
be duly executed.
Dated: ________, 19___ SALOMON INC,
by
Name:
Title:
[Corporate Seal]
Attest:
- - --------------------
Assistant Secretary
Countersigned for authentication
purposes only as of the date
above written:
CITIBANK, N.A.,
as Warrant Agent,
by
------------------------
Authorized Officer
<PAGE>
EXHIBIT B-2
NOTICE OF EXERCISE
[For Warrants Represented by the
Global Warrant Certificate]
Citibank, N.A.
c/o Citicorp Data Distribution Inc.
404 Sette Drive
Paramus, New Jersey 07652
1. We refer to the Warrant Agreement, dated as of June __, 1996 (the
"Warrant Agreement"), among Salomon Inc (the "Company"), Citibank, N.A., as
warrant agent (the "Warrant Agent"), and Salomon Brothers Inc, as spot rate
reference agent (the "Spot Rate Reference Agent"). On behalf of certain
beneficial owners, each of whom is exercising no fewer than 500 Warrants that
are covered by this Notice of Exercise and whose Warrants have been transferred
to the Warrant Agent's DTC Participant Account--Citibank, N.A. Corporate Trust
Warrant Agent Account, No. 2659 (the "Warrant Account"), we hereby irrevocably
exercise ___________ Warrants (the "Tendered Warrants"). We hereby acknowledge
that the Warrants being exercised and this Notice of Exercise must be received
by you by 3:00 p.m., New York City time, on a New York Business Day (or, in the
case of Warrants held through the facilities of Centrale de Livraison de Valeurs
Mobilieres S.A. ("CEDEL") or the Euroclear System ("Euroclear"), the Warrants
must be received by such time on the next succeeding New York Business Day) in
order for the Valuation Date for the Tendered Warrants to be the New York
Business Day following such New York Business Day and that, if the Warrants
being exercised and this Notice of Exercise are received by you after 3:00 p.m.,
New York City time, on a New York Business Day (or, in the case of Warrants held
through CEDEL or Euroclear, if Warrants are not received by 3:00 p.m., New York
City time, on the first New York Business Day following such New York Business
Day), the Valuation Date of the Tendered Warrants shall be the next New York
Business Day next succeeding such New York Business Day, in each case subject to
certain provisions of the Warrant Agreement.
2. If you determine that this Notice of Exercise has not been duly
completed, or is not in proper form, this Notice of Exercise will be void and of
no effect and will be deemed not to have been delivered.
<PAGE>
3. We hereby direct you to make payment to us of amounts payable to
our clients as a result of the exercise of the Warrants hereunder by wire
transfer to the following U.S. dollar bank account in the United States:
Bank:
ABA Routing No.:
Account No.: __________ Reference:
4. The Exercised Warrants covered hereby [are] [are not] subject to
the Limit Option.1/
5. Each client on whose behalf we are exercising Warrants pursuant to
this Notice of Exercise has certified to us that it is not exercising in excess
of 250,000 Warrants on behalf of any single person or entity.
[For Participants] [6. We hereby certify that we are a Participant of
The Depository Trust Company (the "Depository") with the present right to use
and receive its services.]
Capitalized terms used but not defined herein have the meanings
assigned thereto in the Warrant Agreement.
Dated: ____________, 19___
[NAME OF DEPOSITORY PARTICIPANT]
[Participant Number]
[NAME OF EUROCLEAR PARTICIPANT]
[CENTRALE DE LIVRAISON DE VALEURS
MOBILIERES S.A.]
by
Authorized Signature
Address: ________________________
Telephone: (____) _____-________
- - -------------
1. Separate Notices of Exercise shall be submitted with respect to Warrants
subject to the Limit Option.
<PAGE>
EXHIBIT C-1
CONFIRMATION OF EXERCISE
[For Warrants Represented by Warrant Certificates]
We hereby confirm receipt of your Notice of Exercise with
respect to _______________ Warrants (the "Exercised Warrants") and the related
Warrant Certificates, which Notice we have found to be duly completed and in
proper form. The Valuation Date of the Exercised Warrants was the close of
business on ____________ in New York City.
[As set forth in your Notice of Exercise, none of the Warrants
covered thereby is subject to the Limit Option. Accordingly, for purposes
hereof, all such Warrants shall constitute Exercised Warrants, which number we
hereby confirm to be __________________.] [Your Notice of Exercise stated that
the Warrants covered thereby are subject to the Limit Option. The applicable
Reference Rate for such Warrants is _______ and the Spot Rate for the date that
would otherwise be the Valuation Date for such Warrants is ____________. Such
Spot Rate is not less than such Reference Rate by five or more Japanese yen per
U.S. dollar. Accordingly, for purposes hereof, all such Warrants shall
constitute Exercised Warrants. We hereby confirm the number of such Exercised
Warrants to be __________.]
We hereby confirm that the aggregate Cash Settlement Value of
the Exercised Warrants is $_____________ ($_____ per Warrant), which will be
made available to you [in the form of a cashier's check or an official bank
check] [by wire transfer to the bank account designated in your Notice of
Exercise] for payment on the fifth New York Business Day following the Valuation
Date for such Warrants.
Capitalized terms included herein but not defined have the
meanings assigned thereto in the Warrant Agreement, dated as of June __, 1996,
among Salomon Inc, Citibank, N.A. and Salomon Brothers Inc.
Dated: _____________, 19___
CITIBANK, N.A., as Warrant Agent,
by
Authorized Signature
<PAGE>
NOTICE OF REJECTION
[For Warrants Represented by Warrant Certificates]
You are hereby notified that the Notice of Exercise delivered
by you was determined by us not to have been [duly completed] [in proper form],
as set forth in the Warrant Agreement (the "Warrant Agreement"), dated as of
June __, 1996, among Salomon Inc, Citibank, N.A. and Salomon Brothers Inc.
Accordingly, we have rejected your Notice of Exercise as being unsatisfactory as
to form.
Capitalized terms included herein but not defined have the
meanings assigned thereto in the Warrant Agreement.
Dated: _____________, 19___
CITIBANK, N.A., as Warrant Agent,
by
Authorized Signature
<PAGE>
EXHIBIT C-2
CONFIRMATION OF EXERCISE
[For Warrants Represented by the Global Warrant Certificate]
[Name of Depository Participant]
[Name of Euroclear Participant]
[Centrale de Livraison de Valeurs
Mobilieres S.A.]
[Address]
We hereby confirm receipt of your Notice of Exercise with
respect to _______________ Warrants (the "Exercised Warrants") which were
transferred by you to our DTC Participant Account No. 2659. We have found such
Notice to be duly completed and in proper form, and we have verified, in the
manner provided in the Warrant Agreement (the "Warrant Agreement"), dated as of
June __, 1996, among Salomon Inc, Citibank, N.A. and Salomon Brothers Inc, that
you are a Depository Participant. The Valuation Date of the Exercised Warrants
was the close of business on ____________ in New York City.
[As set forth in your Notice of Exercise, none of the Warrants
covered thereby is subject to the Limit Option. Accordingly, for purposes
hereof, all such Warrants shall constitute Exercised Warrants, which number we
hereby confirm to be __________________.] [Your Notice of Exercise stated that
the Warrants covered thereby are subject to the Limit Option. The applicable
Reference Rate for such Warrants is _______ and the Spot Rate for the date that
would otherwise be the Valuation Date for such Warrants is ________________.
Such Spot Rate is not less than such Reference Rate by five or more Japanese yen
per U.S. dollar. Accordingly, for purposes hereof, all such Warrants shall
constitute Exercised Warrants. We hereby confirm the number of such Exercised
Warrants to be __________.]
We hereby confirm that the aggregate Cash Settlement Value of
the Exercised Warrants is $_____________ ($_____ per Warrant), which will be
made available to you by wire transfer to the bank account designated in your
Notice of Exercise for payment on the fifth New York Business Day following the
Valuation Date for such Warrants.
Capitalized terms included herein but not defined have the
meanings assigned thereto in the Warrant Agreement.
Dated: _____________, 19___
CITIBANK, N.A., as Warrant Agent,
by
Authorized Signature
<PAGE>
NOTICE OF REJECTION
[For Warrants Represented by the Global Warrant Certificate]
[Name of Depository Participant]
[Name of Euroclear Participant]
[Centrale de Livraison de Valeurs
Mobilieres S.A.]
[Address]
You are hereby notified that [the Notice of Exercise delivered
by you was determined by us not to have been [duly completed] [in proper form]]
[such Warrants were not transferred to our DTC Participant Account No. 2659 on a
timely basis as provided in the Warrant Agreement] [we did not receive from
Euroclear a Euroclear Confirmation that proper delivery of the Warrants to which
the Notice of Exercise delivered by you relates would be made on a timely
basis], as set forth in the Warrant Agreement (the "Warrant Agreement"), dated
as of June __, 1996, among Salomon Inc, Citibank, N.A. and Salomon Brothers Inc.
Accordingly, we have rejected your Notice of Exercise as being unsatisfactory as
to form.
Capitalized terms included herein but not defined have the
meanings assigned thereto in the Warrant Agreement.
Dated: _____________, 19___
CITIBANK, N.A., as Warrant Agent,
by
Authorized Signature
<PAGE>
EXHIBIT D-1
NOTICE OF REJECTION
RELATING TO LIMIT OPTION
[For Warrants Represented by Warrant Certificates]
We refer to your Notice of Exercise dated ___________, 19___,
with respect to __________ Warrants that were subject to the Limit Option. The
applicable Reference Rate for such Warrants is _____ and the Spot Rate for the
date that would otherwise be the Valuation Date for such Warrants is _______.
Such Spot Rate is less than the Reference Rate for such Warrants by five
Japanese yen per U.S. dollar or more. Accordingly, we have rejected such Notice
of Exercise pursuant to the Limit Option.
Capitalized terms included herein but not defined have the
meanings assigned thereto in the Warrant Agreement, dated as of June __, 1996,
among Salomon Inc, Citibank, N.A. and Salomon Brothers Inc.
Dated: ______________, 19___
CITIBANK, N.A., as Warrant Agent,
by
Authorized Signature
<PAGE>
EXHIBIT D-2
NOTICE OF REJECTION
RELATING TO LIMIT OPTION
[For Warrants Represented by the Global Warrant Certificate]
[Name of Depository Participant]
[Name of Euroclear Participant]
[Centrale de Livraison de Valeurs
Mobilieres S.A.]
[Address]
We refer to your Notice of Exercise dated ____________, 19___,
with respect to __________ Warrants that were subject to the Limit Option. The
applicable Reference Rate for such Warrants is _____ and the Spot Rate for the
date that would otherwise be the Valuation Date for such Warrants is ______.
Such Spot Rate is less than the Reference Rate for such Warrants by five or more
Japanese yen per U.S. dollar. Accordingly, we have rejected such Notice of
Exercise pursuant to the Limit Option.
Capitalized terms included herein but not defined have the
meanings assigned thereto in the Warrant Agreement, dated as of June __, 1996,
among Salomon Inc, Citibank, N.A. and Salomon Brothers Inc.
Dated: ______________, 19___
CITIBANK, N.A., as Warrant Agent,
by
Authorized Signature
<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 WITHOUT
THE DELIVERY OF A FINAL PROSPECTUS SUPPLEMENT AND PROSPECTUS. THIS PRELIMINARY
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
JUNE 19, 1996
PROSPECTUS SUPPLEMENT
(To Prospectus Dated April 5, 1996)
1,000,000 WARRANTS
SALOMON INC
U.S. DOLLAR INCREASE WARRANTS ON THE JAPANESE YEN
EXPIRING JUNE , 1998
Each Warrant will entitle the holder thereof to receive from Salomon Inc (the
'Company'), upon exercise (including automatic exercise), an amount in U.S.
dollars calculated by reference to decreases in the value of the Japanese yen
relative to the U.S. dollar. Such amount (the 'Cash Settlement Value') will
equal the greater of (i) zero and (ii) the amount (rounded down to the nearest
cent) computed by subtracting from U.S. $100 an amount equal to the product of
U.S. $100 times a fraction, the numerator of which is yen per U.S. $1.00
(the 'Strike Rate') and the denominator of which is the spot exchange rate of
the Japanese yen for the U.S. dollar (expressed as a number of Japanese yen per
U.S. dollar and determined by the Spot Rate Reference Agent (as hereinafter
defined) as provided herein) on the applicable valuation date (the 'Spot Rate').
If the Strike Rate is equal to or exceeds the Spot Rate for such valuation date,
the Cash Settlement Value will be zero; in which case, the Warrantholder will be
permitted, subject to certain exceptions, to re-exercise such Warrant prior to
the Expiration Date (as hereinafter defined) or the Delisting Date (as
hereinafter defined). The Strike Rate is equal to the spot exchange rate of the
Japanese yen for the U.S. dollar quoted by the Spot Rate Reference Agent at
approximately , New York City time, on June , 1996, and,
accordingly, the Cash Settlement Value of the Warrants as of such time was zero.
(Continued on following page)
THE WARRANTS INVOLVE A HIGH DEGREE OF RISK, INCLUDING FOREIGN EXCHANGE RISKS AND
THE RISK OF EXPIRING WORTHLESS IF THE U.S. DOLLAR DOES NOT APPRECIATE, OR IF IT
DEPRECIATES, AGAINST THE JAPANESE YEN. IN ADDITION, IN THE ABSENCE OF
COUNTERVAILING FACTORS, SUCH AS AN APPRECIATION OF THE U.S. DOLLAR AGAINST THE
JAPANESE YEN, THE MARKET VALUE OF THE WARRANTS IS EXPECTED TO DECREASE AS THE
TIME REMAINING TO THE EXPIRATION DATE DECREASES. SEE 'RISK FACTORS RELATING TO
THE WARRANTS--CERTAIN FACTORS AFFECTING VALUE AND TRADING PRICE OF WARRANTS'
HEREIN. PURCHASERS SHOULD BE PREPARED TO SUSTAIN A TOTAL LOSS OF THE PURCHASE
PRICE OF THEIR WARRANTS AND ARE ADVISED TO CONSIDER CAREFULLY THE INFORMATION
UNDER 'RISK FACTORS RELATING TO THE WARRANTS' AND 'EXCHANGE RATES' HEREIN, AS
WELL AS THE OTHER INFORMATION HEREIN AND IN THE PROSPECTUS.
SEE 'RISK FACTORS RELATING TO THE WARRANTS' BEGINNING ON PAGE S-8 FOR A
DISCUSSION OF THESE AND CERTAIN OTHER FACTORS THAT SHOULD BE CAREFULLY
CONSIDERED BY PROSPECTIVE PURCHASERS.
Application will be made to list the Warrants on the AMEX. The AMEX symbol for
the Warrants is OPY.WS.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
- - -------------------------------------------------------------------------------
PRICE TO UNDERWRITING PROCEEDS TO
PUBLIC(1) DISCOUNTS(1)(2) COMPANY(3)
Per Warrant..... $ $ $
Total........... $ $ $
- - -------------------------------------------------------------------------------
(1) The price to public and underwriting discounts and commissions for investors
purchasing 100,000 or more Warrants in any single transaction will be $
per Warrant and $ per Warrant, respectively, subject to the holding period
requirement described under 'Underwriting' herein. Should investors who are
subject to the holding period requirements sell their Warrants once the
holding period requirement is no longer applicable, the market price of the
warrant may be adversely affected. See 'Underwriting' herein.
(2) The Company has agreed to indemnify the Underwriters against certain
liabilities including liabilities under the Securities Act of 1933.
(3) Before deducting expenses payable by the Company estimated at $ .
The Warrants are offered subject to receipt and acceptance by the Underwriters,
to prior sale and to the Underwriters' right to reject any order in whole or in
part and to withdraw, cancel or modify the offer without notice. It is expected
that delivery of the Warrants will be made at the office of Salomon Brothers
Inc, Seven World Trade Center, New York, New York, on or about July , 1996 in
exchange for immediately available funds.
The Company or one or more of its subsidiaries may from time to time purchase or
acquire a position in the Warrants and may, at its option, hold or resell such
Warrants. Salomon Brothers Inc ('Salomon Brothers'), an indirect wholly-owned
subsidiary of the Company, expects to offer and sell previously-issued Warrants
in the course of its business as a broker-dealer. Salomon Brothers may act as
principal or agent in such transactions. This Prospectus Supplement and the
accompanying prospectus may be used by the Company or any of its subsidiaries,
including Salomon Brothers, in connection with such transactions. Such sales, if
any, will be made at varying prices related to prevailing market prices at the
time of sale.
SALOMON BROTHERS INC OPPENHEIMER & CO., INC.
The date of this Prospectus Supplement is June , 1996.
<PAGE>
(Continued from previous page)
The Warrants are unsecured contractual obligations of the Company and will rank
on a parity with the Company's other unsecured contractual obligations and with
the Company's unsecured and unsubordinated debt.
The Warrants will be exercisable immediately upon issuance and may be exercised
until 3:00 P.M., New York City time, on the New York Business Day (as
hereinafter defined) immediately preceding the expiration date for the Warrants,
which is June , 1998 (the 'Expiration Date'), or until their earlier
expiration on the last New York Business Day prior to the effective date of
their delisting from, or permanent suspension from trading on, the American
Stock Exchange (the 'AMEX') and failure to list the Warrants on another national
securities exchange (the 'Delisting Date'). Any Warrant not exercised at or
before 3:00 P.M., New York City time, on such New York Business Day will be
automatically exercised on such date. See 'Description of the Warrants--Exercise
and Settlement of Warrants' herein.
The valuation of and payment for any exercised Warrant may be postponed as a
result of the exercise of a number of Warrants exceeding the limits on exercise
described herein under 'Description of the Warrants--Maximum Exercise Amount',
in which case the Warrantholder will receive a Cash Settlement Value for such
Warrant determined as of a later date. See 'Description of the Warrants--
Maximum Exercise Amount' herein.
A Warrantholder may exercise no fewer than 500 Warrants at any one time, except
in the event of automatic exercise. A Warrantholder tendering Warrants for
exercise will have the option of specifying that such Warrants are not to be
exercised if the Spot Rate for the applicable valuation date has declined by
five or more Japanese yen per U.S. dollar from the Spot Rate for the applicable
exercise date. All exercises of Warrants (other than on the Expiration Date for
the Warrants or on the Delisting Date) are subject, at the Company's option, to
the limitation that not more than 1,000,000 Warrants in total may be exercised
on any exercise date for the Warrants and not more than 250,000 Warrants may be
exercised by or on behalf of any person or entity, either individually or in
concert with any other person or entity, on any exercise date for the Warrants.
See 'Risk Factors Relating to the Warrants' and 'Description of the Warrants'
herein.
As discussed in greater detail under 'Risk Factors Relating to the Warrants--
Certain Factors Affecting Value and Trading Price of Warrants' and '--Effect of
Credit Rating Reduction,' the trading price of a Warrant at any time is
expected to be affected by the creditworthiness of the Company and a number of
interrelated factors including, among others, (i) the prevailing Spot Rate, (ii)
the volatility of the exchange rate of the Japanese yen per U.S. dollar, (iii)
the time remaining to the Expiration Date of the Warrants and (iv) the interest
rate differential between U.S. dollar and Japanese yen fixed income instruments.
------------------------
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY EFFECT TRANSACTIONS WHICH
STABILIZE OR MAINTAIN THE MARKET PRICE OF THE WARRANTS OFFERED HEREBY AT A LEVEL
ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH TRANSACTIONS
MAY BE EFFECTED ON THE AMERICAN STOCK EXCHANGE, IN THE OVER-THE-COUNTER MARKET
OR OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
------------------------
FOR NORTH CAROLINA INVESTORS ONLY: THE COMMISSIONER OF INSURANCE OF THE STATE OF
NORTH CAROLINA HAS NOT APPROVED OR DISAPPROVED THIS OFFERING, NOR HAS THE
COMMISSIONER PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT
OR THE ACCOMPANYING PROSPECTUS.
S-2
<PAGE>
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents, filed by the Company with the Securities and
Exchange Commission (the 'Commission') pursuant to Section 13 of the Securities
Exchange Act of 1934, as amended (the 'Exchange Act') (File No. 1-4346), are
incorporated herein by reference: (i) the Company's Annual Report on Form 10-K
for the year ended December 31, 1995; (ii) the Company's Quarterly Report on
Form 10-Q for the quarter ended March 31, 1996; and (iii) the Company's Current
Reports on Form 8-K dated January 23, 1996, February 1, 1996, February 12, 1996,
April 23, 1996, April 29, 1996 and May 30, 1996. See 'Incorporation of Certain
Documents by Reference' in the Prospectus.
------------------------
References herein to 'U.S. dollar', 'dollar', 'U.S. $' are '$' are to the
lawful currency of the United States of America. References to 'Japanese yen' or
'yen' are to the lawful currency of Japan. As used herein, 'New York Business
Day' means any day other than a Saturday or Sunday or a day on which the AMEX is
not open for securities trading or commercial banks in New York City are
required or authorized by law or executive order to remain closed.
S-3
<PAGE>
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more detailed
information appearing elsewhere in the Prospectus and this Prospectus Supplement
and in the documents incorporated therein and herein by reference. Appendix A
hereto ('Index of Terms') contains a listing of defined terms and pages on which
they are defined in this Prospectus Supplement.
THE OFFERING
Securities
Offered........ 1,000,000 U.S. Dollar Increase Warrants on the Japanese Yen
Expiring June , 1998 (the 'Warrants').
Determination of
Cash Settlement
Value of
Warrants....... Each Warrant will entitle the holder thereof to receive from
the Company, upon exercise (including automatic exercise), an
amount in U.S. dollars calculated by reference to decreases in
the value of the Japanese yen relative to the U.S. dollar.
Such amount (the 'Cash Settlement Value') will equal the
greater of (i) zero and (ii) the amount (rounded down to the
nearest cent) computed by subtracting from U.S. $100 an amount
equal to the product of U.S. $100 times a fraction, the
numerator of which is per U.S. dollar (the 'Strike
Rate') and the denominator of which is the Noon Buying Rate
(as hereinafter defined) on the applicable valuation date, as
determined by the Spot Rate Reference Agent as described
herein, or, if such Noon Buying Rate is not available, such
other rate as described herein on such valuation date (the
'Spot Rate'). This amount is described by the following
formula:
CASH SETTLEMENT VALUE = THE GREATER OF
YEN/U.S. $1.00
(i) $0 AND (ii) $100 - [$100 X (----------------)]
SPOT RATE
If the Strike Rate is equal to or exceeds the Spot Rate for
such valuation date, the Cash Settlement Value will be zero;
in which case, the Warrantholder will be permitted, subject to
certain exceptions, to re-exercise such Warrant prior to the
Expiration Date or the Delisting Date. The Strike Rate is
equal to the spot exchange rate of the Japanese yen for the
U.S. dollar quoted by the Spot Rate Reference Agent at
approximately , New York City time, on June ,
1996, and, accordingly, the Cash Settlement Value of the
Warrants as of such time was zero. See 'Description of the
Warrants--Determination of Cash Settlement Value of Warrants'
herein for the method by which the Spot Rate and the Cash
Settlement Value will be calculated.
Price............ $ per Warrant.
Exercise of
Warrants....... The Warrants will be exercisable immediately upon issuance and
may be exercised until 3:00 P.M., New York City time, on the
New York Business Day (as hereinafter defined) immediately
preceding the expiration date for the Warrants, which is June
, 1998 (the 'Expiration Date'), or until their earlier
expiration on the last New York Business Day prior to the
effective date of their delisting from, or permanent
suspension from trading on, the American Stock Exchange (the
'AMEX') and failure to list the Warrants on another United
States national securities exchange (the 'Delisting Date').
S-4
<PAGE>
Any Warrant not exercised at or before the Expiration Date or
any Delisting Date will be automatically exercised on such
date. See 'Description of the Warrants--Exercise and
Settlement of Warrants' herein.
Exercise
Amount......... A Warrantholder may exercise no fewer than 500 Warrants at any
one time, except in the event of automatic exercise. See
'Description of the Warrants--Minimum Exercise Amount' herein.
All exercises of Warrants (other than on the Expiration Date
or the Delisting Date) are subject, at the Company's option,
to the limitation that not more than 1,000,000 Warrants in
total may be exercised on any Exercise Date and not more than
250,000 Warrants may be exercised by or on behalf of any
person or entity, either individually or in concert with any
other person or entity, on any Exercise Date. See 'Description
of the Warrants--Maximum Exercise Amount' herein.
Certain Risk
Factors........ The Warrants are highly speculative and involve a high degree
of risk, including (but not limited to) foreign exchange risks
and the risk of expiring worthless if the U.S. dollar does not
appreciate, or if it depreciates, against the Japanese yen. In
addition, in the absence of countervailing factors, such as an
appreciation of the U.S. dollar against the Japanese yen, the
trading value of the Warrants is expected to decrease as the
time remaining to the Expiration Date decreases. See 'Risk
Factors Relating to the Warrants--Certain Factors Affecting
Value and Trading Price of Warrants' herein. If a Warrant is
not exercised and if at expiration one U.S. dollar is worth
yen or less, the Warrant will expire worthless.
PROSPECTIVE PURCHASERS OF THE WARRANTS SHOULD RECOGNIZE THAT
THEIR WARRANTS MAY EXPIRE WORTHLESS. PURCHASERS SHOULD BE
PREPARED TO SUSTAIN A TOTAL LOSS OF THE PURCHASE PRICE OF
THEIR WARRANTS. WARRANTHOLDERS WILL BEAR THE FOREIGN EXCHANGE
RISKS OF THE U.S. DOLLAR AS COMPARED TO THE JAPANESE YEN. THE
WARRANTS ARE APPROPRIATE INVESTMENTS ONLY FOR INVESTORS WHO
ARE ABLE TO UNDERSTAND AND BEAR THE RISK OF A SPECULATIVE
INVESTMENT IN THE WARRANTS. See 'Risk Factors Relating to the
Warrants', 'Description of the Warrants', 'Exchange Rates' and
'Certain United States Federal Income Tax Considerations'
herein and 'Description of Index Warrants--Special
Considerations Relating to Index Warrants' in the Prospectus.
As discussed in greater detail under 'Risk Factors Relating to
the Warrants--Certain Factors Affecting Value and Trading
Price of Warrants' and '--Effect of Credit Rating Reduction',
the trading price of a Warrant at any time is expected to be
affected by the creditworthiness of the Company and a number
of interrelated factors including, among others, (i) the
prevailing Spot Rate, (ii) the volatility of the exchange rate
of the Japanese yen per U.S. dollar, (iii) the time remaining
to the Expiration Date of the Warrants and (iv) the interest
rate differential between U.S. dollar and Japanese yen fixed
income instruments.
Warrantholders will be subject to foreign exchange risk which
may have important economic and tax consequences to them. See
S-5
<PAGE>
'Exchange Rates' and 'Certain United States Federal Income Tax
Considerations' herein.
It is not possible to predict how the Warrants will trade in
the secondary market or whether such market will be liquid or
illiquid. To the extent Warrants are exercised, the number of
Warrants outstanding will decrease, resulting in a decrease in
the liquidity of the Warrants. In addition, the Company or one
or more of its affiliates may from time to time purchase
Warrants, resulting in a decrease in the liquidity of the
Warrants.
Application will be made to list the Warrants on the AMEX. In
the event the Warrants are delisted from, or permanently
suspended from trading on (within the meaning of the
Securities Exchange Act of 1934 and the rules and regulations
thereunder), the AMEX and not accepted at the same time for
listing on another national securities exchange, Warrants not
previously exercised will be deemed automatically exercised on
the Delisting Date, and the Cash Settlement Value, if any,
shall be calculated and settled as provided below under
'Description of the Warrants--Delisting of Warrants'. In the
event of a delisting or suspension of trading on the AMEX, the
Company will use its best efforts to list the Warrants on
another United States national securities exchange.
Except in the event of automatic exercise, a Warrantholder
must tender at least 500 Warrants at any one time in order to
exercise his Warrants. Thus, except in such an event,
Warrantholders with fewer than 500 Warrants will need either
to sell their Warrants or to purchase additional Warrants,
incurring transaction costs in each case, in order to realize
upon their investment.
A Warrantholder will not be able to determine, at the time of
exercise of a Warrant, the Spot Rate that will be used in
calculating the Cash Settlement Value of such Warrant (and
will thus be unable to determine such Cash Settlement Value).
In addition, the Valuation Date for exercised Warrants may be
postponed as a result of the exercise of a number of Warrants
exceeding the limits on exercise described below under
'Description of the Warrants--Maximum Exercise Amount'. Any
downward movement in the value of the U.S. dollar relative to
the Japanese yen between the time a Warrantholder submits an
Exercise Notice and the time the Spot Rate for such exercise
is determined (which period will, at a minimum, represent an
entire New York Business Day (as hereinafter defined) and, in
the case of a postponement of a Valuation Date resulting from
the exercise of a number of Warrants exceeding limits on
exercise described below under 'Description of the Warrants--
Maximum Exercise Amount', may be substantially longer) will
result, subject to such Warrantholder's previous election to
use the Limit Option (as hereinafter defined; see 'Description
of the Warrants--Limit Option' herein), in such Warrantholder
receiving a Cash Settlement Value that is less than the Cash
Settlement Value anticipated by such Warrantholder (including
a zero Cash Settlement Value) based on the Spot Rate most
recently reported prior to exercise.
S-6
<PAGE>
INVESTORS ARE ADVISED TO CONSIDER CAREFULLY THE FOREGOING RISK
FACTORS AND THE RISKS AND OTHER MATTERS DISCUSSED UNDER 'RISK
FACTORS RELATING TO THE WARRANTS', 'DESCRIPTION OF THE
WARRANTS', 'EXCHANGE RATES' AND 'CERTAIN UNITED STATES FEDERAL
INCOME TAX CONSIDERATIONS' HEREIN AND 'DESCRIPTION OF INDEX
WARRANTS--SPECIAL CONSIDERATIONS RELATING TO INDEX WARRANTS'
IN THE PROSPECTUS PRIOR TO PURCHASING THE WARRANTS.
Who Should
Invest......... The AMEX requires that the Warrants be sold only to investors
whose accounts have been approved for options trading, and
further requires that its members and member organizations and
registered employees thereof make certain suitability
determinations before recommending transactions in Warrants.
As indicated above, investors should be prepared to sustain a
total loss of the purchase price of the Warrants.
Investment decisions relating to exchange rate currency
warrants, such as the Warrants offered hereby, require an
investor to predict the direction of movements in the relevant
currency exchange rate as well as the amount and timing of
those movements. Exchange rate currency warrants may change
substantially in value, or lose all of their value, with
relatively small movements in the relevant currency exchange
rate. Moreover, an exchange rate currency warrant is a
'wasting asset' in that, in the absence of countervailing
factors, such as an offsetting movement in the level of the
relevant currency exchange rate, the market value of an
exchange rate currency warrant will tend to decrease over time
and the warrant will have no market value after the time for
exercise has expired. Accordingly, exchange rate currency
warrants, such as the Warrants offered hereby, involve a high
degree of risk and are not appropriate for every investor.
Investors who are considering purchasing the Warrants should
be able to understand and bear the risk of a speculative
investment in the Warrants, be experienced with respect to
options and option transactions and understand the risks of
foreign exchange transactions. Such investors should reach an
investment decision only after careful consideration with
their advisers of the suitability of the Warrants in light of
their particular financial circumstances and the information
set forth in this Prospectus Supplement and the Prospectus.
See 'Risk Factors Relating to the Warrants' herein. As
indicated above, investors should be prepared to sustain a
total loss of the purchase price of the Warrants.
Listing.......... Application will be made to list the Warrants on the American
Stock Exchange.
Warrant Trading
Symbol......... OPY.WS
CUSIP Number.....
Warrant Agent.... Citibank, N.A.
Spot Rate
Reference
Agent.......... Salomon Brothers Inc
S-7
<PAGE>
RISK FACTORS RELATING TO THE WARRANTS
The Warrants involve a high degree of risk, including foreign exchange
risks. Prospective purchasers of the Warrants should recognize that their
Warrants may expire worthless. Purchasers should be prepared to sustain a total
loss of the purchase price of their Warrants. Prospective purchasers of the
Warrants should be experienced with respect to options and options transactions,
should understand the risks of foreign currency transactions and should reach an
investment decision only after careful consideration, with their advisers, of
the suitability of the Warrants in light of their particular financial
circumstances, the information set forth below and the information set forth
under 'Description of Warrants', 'Exchange Rates' and 'Certain United States
Federal Income Tax Considerations' herein.
GENERAL MARKET AND TIMING RISKS
The beneficial owner of a Warrant (a 'Warrantholder')* will receive a cash
payment from the Company upon exercise (including automatic exercise) only if
such Warrant has a Cash Settlement Value greater than zero at such time. The
'Cash Settlement Value' of a Warrant will equal the greater of (i) zero and (ii)
the amount (rounded down to the nearest cent) computed by subtracting from U.S.
$100 an amount equal to the product of U.S. $100 times a fraction, the numerator
of which is per U.S. dollar (the 'Strike Rate') and the denominator
of which is the Noon Buying Rate (as hereinafter defined) on the applicable
valuation date, as determined by the Spot Rate Reference Agent as described
herein, or, if such Noon Buying Rate is not available, such other rate as
described herein on such valuation date (the 'Spot Rate'). If the Strike Rate is
equal to or exceeds the Spot Rate for such valuation date, the Cash Settlement
Value will be zero; in which case, the Warrantholder will be permitted, subject
to certain exceptions, to re-exercise such Warrant prior to the Expiration Date
or the Delisting Date (both as hereinafter defined). The Strike Rate is equal to
the spot exchange rate of the Japanese yen for the U.S. dollar quoted by the
Spot Rate Reference Agent at approximately , New York City time,
on , 1996, and, accordingly, the Cash Settlement Value of the
Warrants as of such time was zero. See 'Description of the
Warrants--Determination of Cash Settlement Value of Warrants' herein.
Warrantholders will be subject to foreign exchange risk which may have
important economic and tax consequences to them. See 'Exchange Rates' and
'Certain United States Federal Income Tax Considerations' herein.
Investment decisions relating to exchange rate currency warrants, such as
the Warrants offered hereby, require the investor to predict the direction of
movements in the relevant currency exchange rate as well as the amount and
timing of those movements. Exchange rate currency warrants may change
substantially in value, or lose all of their value, with relatively small
movements in the relevant currency exchange rate. Moreover, an exchange rate
currency warrant is a 'wasting asset' in that, in the absence of countervailing
factors, such as an offsetting movement in the relevant currency exchange rate,
the market value of an exchange rate currency warrant will tend to decrease over
time and the warrant will have no market value after the time for exercise has
expired. Accordingly, exchange rate currency warrants, such as the Warrants
offered hereby, involve a high degree of risk and are not appropriate for every
investor. Investors who are considering purchasing the Warrants must be able to
understand and bear the risk of a speculative investment in the Warrants, be
experienced with respect to options and option transactions and understand the
risks of foreign exchange transactions. Such investors should reach an
investment decision only after careful consideration, with their advisors, of
the suitability of the Warrants in light of their particular financial
circumstances and the information set forth in this Prospectus Supplement and in
the Prospectus.
- - ------------------
* Refer to 'Index of Terms' attached hereto as Appendix A for a listing of
defined terms and pages on which they are defined in this Prospectus
Supplement.
S-8
<PAGE>
CERTAIN FACTORS AFFECTING VALUE AND TRADING PRICE OF WARRANTS
The Warrants will have a Cash Settlement Value of zero at the time of their
initial public offering. The Cash Settlement Value of the Warrants at any time
prior to expiration is expected typically to be less than the trading price of
the Warrants at that time. The difference between the trading price and the Cash
Settlement Value will reflect, among other things, a 'time value' for the
Warrants. The 'time value' of the Warrants will depend partly upon the length of
the period remaining to expiration and expectations concerning the value of the
Japanese yen, as compared to the U.S. dollar during such period. The expiration
date of the Warrants will be accelerated should such Warrants be delisted from,
or should there be a permanent suspension of their trading on, the AMEX, unless
the Warrants simultaneously are accepted for listing on another national
securities exchange. Any such acceleration would result in the total loss of any
otherwise remaining 'time value', and could occur when such Warrants are
out-of-the-money, thus resulting in the total loss of the purchase price of such
Warrants.
Warrantholders should be aware that the Company and its affiliates take
positions in various non-U.S. currencies, including, from time to time, the
Japanese yen, to facilitate client transactions and as principal positions for
the Company or such affiliates' own accounts. Through such activities, the
Company and its affiliates may take positions in the Japanese yen that are
inconsistent with an investment in the Warrants.
Before purchasing, exercising or selling Warrants, Warrantholders should
carefully consider, among other things, (i) the trading price of the Warrants,
(ii) the exchange rate or rates of the Japanese yen, as compared to the U.S.
dollar at such time, (iii) the time remaining to expiration, (iv) the probable
range of Cash Settlement Values, and (v) any related transaction costs.
The trading price of a Warrant at any time is expected to be dependent on
(i) the relationship between the Strike Rate and the Spot Rate at such time, and
(ii) a number of other interrelated factors, including those listed below. The
relationship among these factors is complex. However, the expected effect on the
trading price of a Warrant of each of the factors listed below, assuming in each
case that all other factors are held constant, is as follows:
(1) The prevailing Spot Rate of the Japanese yen. If the value of the
Japanese yen falls in relation to the U.S. dollar, the trading price of a
Warrant is expected to increase; if the value of the Japanese yen rises in
relation to the U.S. dollar, the trading price of a Warrant is expected to
decrease.
(2) The volatility of the exchange rate of the Japanese yen. If the
volatility of the exchange rate of the Japanese yen as compared to the U.S.
dollar increases, the trading price of the Warrants is expected to
increase; if such volatility decreases, the trading price of the Warrants
is expected to decrease.
(3) The time remaining to the expiration date of the Warrants. As the
time remaining to the expiration date of the Warrants decreases, the
trading price of the Warrants is expected to decrease.
(4) The interest rate differential between U.S. dollar and Japanese
yen fixed income instruments. If interest rates applicable to fixed income
instruments denominated in Japanese yen increase relative to interest rates
applicable to fixed income instruments denominated in U.S. dollars, the
trading price of the Warrants is expected to increase. If interest rates
applicable to fixed income instruments denominated in U.S. dollars increase
relative to interest rates applicable to fixed income instruments
denominated in Japanese yen, the trading price of the Warrants is expected
to decrease. However, such increases or decreases in the relevant interest
rate differential would also be expected to affect the prevailing Spot Rate
of the Japanese yen in a way that would be expected to have an opposite
effect on the trading price of the Warrants.
As noted above, these hypothetical scenarios are based on the assumption that
all other factors are held constant. In reality, it is unlikely that only one
factor would change in isolation because changes in
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one factor usually cause, or result from, changes in others. Some of the factors
referred to above are in turn influenced by various political, economic and
other factors referred to herein.
RISKS ASSOCIATED WITH EXCHANGE RATE OF JAPANESE YEN PER U.S. DOLLAR
The spot exchange rate of the Japanese yen as compared to the U.S. dollar
will be used in calculating the Cash Settlement Value of a Warrant upon
exercise. Appreciation of the U.S. dollar against the Japanese yen (i.e.,
depreciation of the Japanese yen against the U.S. dollar) will result in a
greater Cash Settlement Value. Conversely, depreciation of the U.S. dollar
against the Japanese yen (i.e., appreciation of the Japanese yen against the
U.S. dollar) will result in a lesser or zero Cash Settlement Value.
Warrantholders will thus bear the foreign exchange risk of the U.S. dollar as
compared to the Japanese yen. Significant and unpredictable fluctuations in the
Japanese yen/U.S. dollar exchange rate have occurred in the past, and it is
impossible to predict the direction, magnitude or frequency of any fluctuations
in that rate that may occur over the term of the Warrants. See 'Exchange Rates'
herein.
The spot exchange rate of the Japanese yen as compared to the U.S. dollar
is at any moment a result of the supply of and demand for the two currencies,
and changes in the rate result over time from the interaction of many diverse
factors directly or indirectly affecting economic and political conditions in
Japan and the United States, including, without limitation, economic and
political developments in other countries. Of particular importance are the
relative rates of inflation, interest rate levels, the balance of payments and
the extent of governmental surpluses or deficits in Japan and the United States,
all of which are in turn sensitive to the monetary, fiscal and trade policies
pursued by the governments of Japan, the United States and other countries
important to international trade and finance.
The Spot Rate on any given day will determine whether the Warrants have a
Cash Settlement Value greater than zero on such day. The Warrants will be
'at-the-money' (i.e., their Cash Settlement Value will be zero) when initially
offered and on any given day if the Spot Rate is equal to the Strike Rate, will
be 'out-of-the-money' (i.e., their Cash Settlement Value will be zero) on any
given day if the Spot Rate is below the Strike Rate and will be 'in-the-money'
(i.e., their Cash Settlement Value will be greater than zero) on any given day
only if the Spot Rate exceeds the Strike Rate. An increase in the positive
difference, if any, between the Spot Rate and the Strike Rate will result in a
greater Cash Settlement Value, and a decrease in such difference will result in
a lesser or zero Cash Settlement Value. Potential profit or loss upon exercise
(including automatic exercise) of a Warrant will be a function of the Cash
Settlement Value of such Warrant upon exercise, the purchase price of such
Warrant and any related transaction costs.
Foreign exchange rates can either be fixed by sovereign governments or
float. Exchange rates of most economically developed nations, including Japan,
are generally permitted to fluctuate in value relative to the U.S. dollar.
Governments, however, sometimes do not allow their currencies to float freely in
response to economic forces. Sovereign governments in fact use a variety of
techniques, such as intervention by a country's central bank or imposition of
regulatory controls or taxes, to affect the exchange rates of their currencies.
Governments may also issue a new currency to replace an existing currency or
alter the exchange rate or relative exchange characteristics by devaluation or
revaluation of a currency. Thus, a special risk in purchasing Warrants is that
their liquidity, trading value and Cash Settlement Value could be affected by
governmental actions which could change or interfere with previously freely
determined currency valuations, fluctuations in those valuations in response to
other market forces and the movement of currencies across borders. There will be
no adjustment or change in the terms of the Warrants in the event that exchange
rates should become fixed, or in the event of any devaluation or revaluation or
imposition of exchange or other regulatory controls or taxes, or in the event of
other developments affecting the Japanese yen, the U.S. dollar or any other
currency. In contrast, the Options Clearing Corporation (the 'OCC'), a clearing
agency regulated by the Securities and Exchange Commission has reserved the
authority to adjust the terms of its standardized options for certain
governmental actions and to impose special exercise settlement procedures.
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The interbank market in foreign currencies is a global, around-the-clock
market. Therefore, the hours of trading for the Warrants will not conform to the
hours during which the Japanese yen and the U.S. dollar are traded. To the
extent that any national securities exchange on which the Warrants are traded is
closed while the market for the Japanese yen remains open, significant price and
rate movements may take place in the underlying foreign exchange markets that
will not be reflected immediately in the price of a Warrant on such exchange.
The possibility of such movements should be taken into account in relating
closing prices for the Warrants on such exchange to prices and rates in the
underlying foreign exchange markets.
There is no systematic reporting of last-sale information for foreign
currencies. Reasonably current bid and offer information is available on the
floor of any exchange where foreign currency is traded, in certain brokers'
offices, in bank foreign currency trading offices, and to others who wish to
subscribe for this information, but such information will not necessarily
reflect the Noon Buying Rate or other rate, used to calculate the Spot Rate.
There is no regulatory requirement that available bid and offer information be
firm or revised on a timely basis. The absence of last-sale information and the
limited availability of quotations to individual investors may make it difficult
for many investors to obtain timely, accurate data about the state of the
underlying foreign exchange market. In addition, the quotation information that
is available is representative of very large round lot or 'wholesale'
transactions in the interbank market and does not reflect exchange rates for
smaller odd lot or 'retail' transactions. Because more favorable rates are
generally obtained in large transactions, the rate that will be obtained at any
given time in connection with the exercise of a small aggregate number of
Warrants is likely to be less favorable than the rates reported in quotation
information generally available to investors at such time.
In general, a wholesale round lot quote would be obtained in a transaction
valued at approximately $5 million or more and a retail odd lot quote would be
obtained in a transaction valued at less than approximately $5 million.
Furthermore, the difference between a wholesale round lot quote and a retail odd
lot quote generally would not be expected to exceed approximately one percent.
However, on any given day and in the context of any particular transaction, the
distinction between, and the size of, a wholesale round lot transaction and a
retail odd lot transaction and the variation of the difference between the
related quotes can vary, in some cases materially, because of the many factors
that influence the foreign exchange market, as more fully discussed above.
Accordingly, no assurance can be given as to whether the aggregate number of
Warrants exercised on any day will constitute a wholesale round lot transaction
or a retail odd lot transaction or as to the quotes to be obtained in connection
therewith.
RISKS AND COSTS ASSOCIATED WITH CONVERSION AND EXERCISE OF WARRANTS
The Warrants initially will be issued as certificates in registered form.
Warrantholders cannot, however, hold certificated positions through CEDEL or
Euroclear (as such terms are hereinafter defined). Accordingly, a beneficial
owner of Warrants holding such Warrants indirectly (for instance, through a
broker that holds such Warrants in 'street' name) may exercise such Warrants
only through such owner's registered holder. In the case of a beneficial owner
holding Warrants through his broker in 'street' name, such beneficial owner must
direct his broker, who may in turn need to direct another intermediary, to
deliver an Exercise Notice (as hereinafter defined) and the related Warrants to
the Warrant Agent (as hereinafter defined). To ensure that an Exercise Notice
and the related Warrants will be delivered to the Warrant Agent before 3:00
P.M., New York City time, on a given New York Business Day, a beneficial holder
of Warrants may have to give exercise instructions to his broker or other
intermediary substantially earlier than 3:00 P.M., New York City time, on such
day. Different brokerage firms may have different cut-off times for accepting
and implementing exercise instructions from their customers. Therefore,
Warrantholders should consult with their brokers or other intermediaries, if
applicable, as to applicable cut-off times and other exercise mechanics. See
'Description of the Warrants--Exercise and Settlement of Warrants' and '--Limit
Option' herein.
Forty-five calendar days after the closing of the offering (which closing
is expected to be June , 1996), each registered holder of a Warrant will have
the option to convert the form in which such
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Warrantholder holds his Warrants from certificated to book-entry form (the
'Conversion Option') within a forty-five calendar day period. Such conversion
will occur only through the facilities of The Depository Trust Company, New
York, New York ('DTC', which term, as used herein and in the Prospectus,
includes any successor depository selected by the Company). See 'Description of
the Warrants--Book-Entry Conversion' herein and 'Description of Index
Warrants--Book-Entry Procedures and Settlement for Index Warrants' in the
Prospectus. To exercise Warrants, a registered holder of a Warrant who has
utilized the Conversion Option must direct a broker, who may, in turn, need to
direct a participating organization in DTC (a 'Participant'), to transfer
Warrants held by DTC on behalf of such Warrantholder and to submit an Exercise
Notice to the Warrant Agent. A Warrantholder may desire that the New York
Business Day on which his Warrants and an Exercise Notice are delivered on his
behalf to the Warrant Agent will constitute the Exercise Date for the Warrants
being exercised (for example, to utilize the Limit Option most effectively). To
achieve such objective, a Warrantholder holding Warrants in book-entry form must
cause such Warrants to be transferred free on the records of DTC to, and such
Exercise Notice to be received by, the Warrant Agent at or prior to 3:00 P.M.,
New York City time, on such New York Business Day; provided, however, that in
the case of Warrants in book-entry form held through CEDEL or Euroclear, the
Warrants must be transferred to the Warrant Agent prior to 3:00 P.M., New York
City time, on the applicable Valuation Date. To ensure that such Warrants and
Exercise Notice will be received by the Warrant Agent at or prior to such time,
such Warrantholder must give the appropriate direction to his broker before such
broker's (and, if such broker is not a Participant, the applicable
Participant's) cut-off time for accepting exercise instructions from customers
for that day. Different brokerage firms may have different cut-off times for
accepting and implementing exercise instructions from their customers.
Therefore, Warrantholders holding their Warrants in book-entry form should
consult with their brokers or other intermediaries, if applicable, as to
applicable cut-off times and other exercise mechanics. Under no circumstances
may Warrants in certificated form be exercised through the facilities of CEDEL
or Euroclear. The Company has been informed by CEDEL and Euroclear that such
clearing agencies will only clear, and facilitate exercises of, Warrants in
book-entry form. See 'Description of the Warrants--Exercise and Settlement of
Warrants', '--CEDEL and Euroclear' and '--Limit Option' herein. Forms of
Exercise Notice for Warrants held in book-entry form may be obtained at the
Warrant Agent's Office (as hereinafter defined), during the Warrant Agent's
normal business hours. See 'Description of the Warrants--General' herein.
The Company will have the option to limit the number of Warrants
exercisable on any date to 1,000,000 and, in conjunction with such limitation,
to limit the number of Warrants exercisable by any person or entity on such date
to 250,000. In the event that the total number of Warrants being exercised on
any date exceeds such maximum number and the Company elects to limit the number
of Warrants exercisable on such date, a Warrantholder may not be able to
exercise on such date all Warrants that such holder desires to exercise.
Warrants to be exercised on such date will be selected on a pro rata basis. The
Warrants tendered for exercise but not exercised on such date will be
automatically exercised on the next date on which Warrants may be exercised,
subject to the same daily maximum limitation and delayed exercise provisions
described in this paragraph. Any such limitation will not apply in the event of
automatic exercise, including at expiration.
A Warrantholder may exercise no fewer than 500 Warrants at any time, except
in the event of automatic exercise. Accordingly, except in the event of
automatic exercise of the Warrants, Warrantholders with fewer than 500 Warrants
will need either to sell their Warrants or to purchase additional Warrants,
thereby incurring transaction costs, in order to realize upon their investment.
Furthermore, such Warrantholders incur the risk that there may be differences
between the trading price of the Warrants and the Cash Settlement Value of such
Warrants.
If a Warrant is not exercised prior to 3:00 P.M., New York City time, on
the earlier of (i) the New York Business Day preceding the Expiration Date and
(ii) the Delisting Date, and if the Strike Rate equals or exceeds the Spot Rate
on the appropriate Valuation Date, such Warrant will expire worthless and the
Warrantholder will have sustained a total loss of the purchase price of such
Warrant.
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RISKS DUE TO DELAY OR POSTPONEMENT OF VALUATION OF WARRANTS
Except under the circumstances described in the next paragraph, the
Valuation Date for an exercised Warrant will be the first New York Business Day
after the related Exercise Date. The Exercise Date for an exercised Warrant,
subject to certain exceptions described under 'Exercise and Settlement of
Warrants', 'Limit Option' and 'Automatic Exercise' under 'Description of the
Warrants' herein, will be the New York Business Day on which such Warrant and an
Exercise Notice in proper form are received by the Warrant Agent if received at
or prior to 3:00 P.M., New York City time, on such day; if such Warrant and
Exercise Notice are received after such time, the Exercise Date will be the next
succeeding New York Business Day. See 'Description of the Warrants--Exercise and
Settlement of Warrants' herein.
The Valuation Date for an exercised Warrant will occur after the Exercise
Date (see 'Description of the Warrants--Exercise and Settlement of Warrants'
herein). Therefore, a Warrantholder will not be able to determine, at the time
of exercise of a Warrant, the Spot Rate that will be used in calculating the
Cash Settlement Value of such Warrant (and will thus be unable to determine such
Cash Settlement Value). In addition, the Valuation Date for exercised Warrants
may be postponed as a result of the exercise of a number of Warrants exceeding
the limits on exercise described below under 'Description of the
Warrants--Maximum Exercise Amount'.
Any downward movement in the value of the U.S. dollar relative to the
Japanese yen between the time a Warrantholder submits an Exercise Notice and the
time the Spot Rate for such exercise is determined (which period will, at a
minimum, represent an entire New York Business Day and, in the case of a
Valuation Date postponed as a result of there being exercised a number of
Warrants exceeding the maximum permissible amount, may be substantially longer)
will, subject to the Limit Option described in the next paragraph and under
'Description of the Warrants--Limit Option' herein, result in such Warrantholder
receiving a Cash Settlement Value that is less than the Cash Settlement Value
anticipated by such Warrantholder (including a zero Cash Settlement Value) based
on the Spot Rate most recently reported prior to exercise.
Except in the event of automatic exercise, a Warrantholder may be able to
limit to some extent the risk associated with any downward movement in the value
of the U.S. dollar relative to the Japanese yen between an Exercise Date and the
applicable Valuation Date if such Warrantholder, in connection with an exercise
of Warrants, elects the Limit Option. Pursuant to the Limit Option, Warrants
tendered for exercise will not be exercised if the Spot Rate for the applicable
Valuation Date has declined by five or more Japanese yen per U.S. dollar from
the Spot Rate for the applicable Exercise Date. See 'Description of the
Warrants--Limit Option' herein.
OFFERING PRICE OF WARRANTS
The initial offering price of Warrants may be in excess of the price that a
commercial user of a Japanese yen might pay in the interbank market for a
comparable option involving significantly larger amounts of Japanese yen.
CERTAIN RISK CONDITIONS
The purchaser of a Warrant may lose his entire investment. This risk
reflects the nature of a Warrant as an asset which, other factors held constant,
tends to decline in value over time and which may, depending on the prevailing
Spot Rate as compared to the Strike Rate, become worthless when it expires.
Assuming all other factors are held constant, the more a Warrant is
'out-of-the-money' and the shorter its remaining term to expiration, the greater
the risk that a purchaser of the Warrant will lose all or part of his
investment. This means that if the Spot Rate at expiration is less than or equal
to the Strike Rate, then a Warrantholder who has not sold his Warrant in the
secondary market prior to expiration will necessarily lose his entire investment
in the Warrant upon expiration.
The risk of the loss of some or all of the purchase price of a Warrant upon
expiration means that, in order to recover and realize a return upon his
investment, a purchaser of a Warrant must generally be correct about both the
direction, timing and magnitude of an anticipated change in the value of the
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Japanese yen in relation to the U.S. dollar. If the Spot Rate as compared to the
Strike Rate does not rise before the Warrant expires to an extent sufficient to
cover a purchaser's cost of the Warrant (i.e., the purchase price plus
transaction costs, if any), the purchaser will lose all or part of his
investment in such Warrant upon expiration. Warrantholders will thus bear the
foreign exchange risks of the U.S. dollar in relation to the Japanese yen.
EFFECT OF CREDIT RATING REDUCTION
The value of the Warrants is expected to be affected, in part, by
investors' general appraisal of the Company's creditworthiness. Such perceptions
are generally influenced by the ratings accorded to the Company's outstanding
securities by the standard statistical rating services, such as Moody's
Investors Service, Inc. and Standard & Poor's Corporation. A reduction in the
rating, if any, accorded to outstanding debt securities of the Company by one of
these rating agencies could result in a reduction in the trading value of the
Warrants.
WARRANTS ARE UNSECURED OBLIGATIONS
The Warrants are unsecured contractual obligations of the Company and will
rank on a parity with the Company's other unsecured contractual obligations and
with the Company's unsecured and unsubordinated debt. The Company may issue
several issues of Warrants relating to various currencies or currency indices.
However, no assurance can be given that the Company will issue any Warrants
other than the Warrants to which this Prospectus Supplement relates. At any
given time the number of Warrants outstanding may be substantial. Options and
warrants provide opportunities for investment and pose risks to investors as a
result of fluctuations in the value of the underlying investment. In general,
certain of the risks associated with the Warrants are similar to those generally
applicable to other options or warrants of private corporate issuers. However,
unlike options or warrants on equities or debt securities, which are priced
primarily on the basis of the value of a single underlying security, the trading
value of a Warrant is likely to reflect primarily present and expected rates of
exchange of the Japanese yen as compared to the U.S. dollar.
The Warrants are not standardized foreign currency options of the type
issued by the OCC. For example, unlike purchasers of OCC standardized options
who have the credit benefits of guarantees and margin and collateral deposits by
OCC clearing members to protect the OCC from a clearing member's failure,
purchasers of Warrants must look solely to the Company for performance of its
obligations to pay the Cash Settlement Value upon the exercise or expiration of
the Warrants. In addition, OCC standardized options provide for physical
delivery of the underlying foreign currency (rather than cash settlement in U.S.
dollars), and permit immediate determination of value upon exercise. Further,
the market for the Warrants is not expected to be generally as liquid as the
market for some OCC standardized options.
CERTAIN CONSIDERATIONS REGARDING HEDGING
Prospective purchasers intending to purchase Warrants to hedge against the
market risk associated with investing in Japanese yen, should recognize the
complexities of utilizing Warrants in this manner. For example, the value of the
Warrants may not exactly correlate with the value of the Japanese yen. Due to
fluctuating supply and demand for the Warrants, there is no assurance that their
value will correlate with movements of the Japanese yen until their expiration.
INVESTOR SUITABILITY
The AMEX requires that the Warrants be sold only to investors whose
accounts have been approved for options trading. In addition, the AMEX requires
that its members and member organizations and registered employees thereof make
certain suitability determinations before recommending transactions in the
Warrants. It is suggested that investors considering the purchase of the
Warrants be experienced with respect to options on securities and option
transactions and reach an investment decision only after carefully considering,
with their advisers, the suitability of the Warrants in light of their
particular circumstances. The Warrants are not suitable for persons solely
dependent upon
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a fixed income, for retirement plan accounts or for accounts under the Uniform
Gift to Minors Act. Before making any investment in the Warrants, it is
important that a prospective investor become informed about and understand the
nature of the Warrants in general, the specific terms of the Warrants and the
nature of the relevant currency exchange rate. An investor should understand the
consequences of liquidating his investment in a Warrant by exercising it as
opposed to selling it. It is especially important for an investor to be familiar
with the procedures governing the exercise of Warrants, since a failure to
properly exercise a Warrant prior to its expiration could result in the loss of
his entire investment. This includes knowing when Warrants are exercisable and
how to exercise them.
OTHER CONSIDERATIONS
It is not possible to predict the price at which the Warrants will trade in
the secondary market or whether such market will be liquid or illiquid. If
additional warrants or options relating to the Japanese yen are subsequently
offered to the public, the supply of warrants and options relating to Japanese
yen in the market will increase, which could cause the price at which the
Warrants and such other warrants and options trade in the secondary market to
decline significantly.
Application will be made to list the Warrants on the AMEX. In the event the
Warrants are delisted from, or permanently suspended from trading on (within the
meaning of the Securities Exchange Act of 1934 and the rules and regulations
thereunder), the AMEX and not accepted at the same time for listing on another
United States national securities exchange, Warrants not previously exercised
will be deemed automatically exercised on the Delisting Date, and the Cash
Settlement Value, if any, shall be calculated and settled as provided under
'Description of the Warrants--Delisting of Warrants' herein. In the event of a
delisting or suspension of trading on the AMEX, the Company will use its best
efforts to list the Warrants on another United States national securities
exchange. If the Warrants are not listed or traded on any securities exchange,
pricing information for the Warrants may be more difficult to obtain and the
liquidity of the Warrants may be adversely affected. To the extent Warrants are
exercised, the number of Warrants outstanding will decrease, resulting in a
lessening of the liquidity of the Warrants. In addition, the Company or one or
more of its affiliates may from time to time purchase and exercise the Warrants,
resulting in a lessening in the liquidity of the Warrants. A lessening of the
liquidity of the Warrants may cause, in turn, an increase in volatility
associated with the price of the Warrants.
Potential investors should also be aware that Salomon Brothers, in its
capacity as Spot Rate Reference Agent, is under no obligation to take the
interests of the Warrantholders into consideration in the event it determines
the Cash Settlement Value of the Warrants. Because Salomon Brothers is an
affiliate of the Company, conflicts of interest may arise in connection with
Salomon Brothers Inc performing its role as Spot Rate Reference Agent. Salomon
Brothers, as a registered broker-dealer, is required to maintain policies and
procedures regarding the handling and use of confidential proprietary
information, and such policies and procedures will be in effect throughout the
term of the Warrants to restrict the use of information relating to the
calculation of the Cash Settlement Value prior to its dissemination of such
calculations. Salomon Brothers is obligated to carry out its duties and
functions as Determination Agent in good faith and using its reasonable
judgment.
Salomon Brothers and its affiliates may from time to time engage in
transactions involving the Japanese yen for their proprietary accounts and for
other accounts under their management, which may influence the value of the
Japanese yen and therefore the value of the Warrants. Salomon Brothers Inc and
its affiliates may also be the writers of the hedge of the Company's obligations
under the Warrants and would, in such a case, be obligated to pay to the Company
upon exercise of Warrants an amount equal to the value of the exercised
Warrants. See 'Use of Proceeds' in the Prospectus and 'Use of Proceeds and
Hedging' herein. Accordingly, under certain circumstances, conflicts of interest
may arise between Salomon Brothers' responsibilities as Spot Rate Reference
Agent with respect to the Warrants and its obligations under its hedge.
Prospective investors in the Warrants should be aware that the Warrants
will be treated as 'section 1256 contracts' which must be 'marked-to-market'
(i.e., treated as sold at fair market value) on the last business day of each
year for U.S. Federal income tax purposes. Accordingly, a United States Holder
of
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a Warrant may incur U.S. Federal income tax liability on an annual basis in
respect of an increase in the value of the Warrant without the receipt of any
cash attributable thereto. See 'Certain United States Federal Income Tax
Considerations.'
INVESTORS ARE ADVISED TO CONSIDER CAREFULLY THE FOREGOING RISK FACTORS AND
THE RISKS AND OTHER MATTERS DISCUSSED UNDER 'DESCRIPTION OF INDEX
WARRANTS--SPECIAL CONSIDERATIONS RELATING TO INDEX WARRANTS' IN THE PROSPECTUS
AND 'EXCHANGE RATES' AND 'CERTAIN UNITED STATES FEDERAL INCOME TAX
CONSIDERATIONS' HEREIN, AS WELL AS THE OTHER INFORMATION IN THE PROSPECTUS AND
HEREIN, PRIOR TO PURCHASING THE WARRANTS.
USE OF PROCEEDS AND HEDGING
The net proceeds to be received by the Company from the sale of the
Warrants will be used for general corporate purposes and, in part, by the
Company or one or more of its affiliates in connection with hedging the
Company's obligations under the Warrants. On or prior to the date of this
Prospectus Supplement, the Company, through its subsidiaries and others, will
hedge its anticipated exposure in connection with the Warrants by the purchase
and sale of exchange traded and over-the-counter options on, or other derivative
or synthetic instruments related to, the futures contracts on the Japanese yen
and/or U.S. dollar and options on such futures contracts. From time to time
after the initial offering and prior to the maturity of the Warrants, depending
on market conditions (including the prevailing Japanese yen/U.S. dollar exchange
rate from time to time), in connection with hedging with respect to the
Warrants, the Company expects that it or one or more of its subsidiaries will
increase or decrease their initial hedging positions using dynamic hedging
techniques and may take long or short positions in the Japanese yen and/or U.S.
dollar, listed or over-the-counter options contracts in, or other derivative or
synthetic instruments related to the Japanese yen and/or U.S. dollar. In
addition, the Company or one or more of its subsidiaries may purchase or
otherwise acquire a long or short position in Warrants from time to time and
may, in their sole discretion, hold, resell or retire such Warrants. The Company
or one or more of its subsidiaries may also take positions in other types of
appropriate financial instruments that may become available in the future. To
the extent that the Company or one or more of its subsidiaries may have a hedge
position in the Japanese yen or options contracts in, or other derivative or
synthetic instruments related to, the Japanese yen, the Company or one or more
of its subsidiaries may liquidate a portion of their holdings at or about the
time of the expiration of the Warrants. Depending, among other things, on future
market conditions, the aggregate amount and the composition of such positions
are likely to vary over time. Profits or losses from any such position cannot be
ascertained until such position is closed out and any offsetting position or
positions are taken into account. Although the Company has no reason to believe
that its hedging activity will have a material impact on the price of such
options, stocks, futures contracts and options on futures contracts or on the
prevailing Japanese yen/U.S. dollar exchange rate from time to time, there can
be no assurance that the Company will not affect such prices or exchange rate as
a result of its hedging activities. See also 'Use of Proceeds' in the
accompanying Prospectus.
S-16
<PAGE>
DESCRIPTION OF THE WARRANTS
GENERAL
The Warrants will be issued pursuant to a Warrant Agreement (the 'Warrant
Agreement'), to be dated as of , between the Company, Citibank, N.A.,
as Warrant Agent (the 'Warrant Agent'), and Salomon Brothers as Spot Rate
Reference Agent. The following summaries of certain provisions of the Warrants
and the Warrant Agreement do not purport to be complete and reference is made to
all the provisions of the Warrant Agreement (including the form of Warrant
Certificate and global Warrant certificate attached as exhibits thereto). The
Warrant Agreement will be available for inspection by any Warrantholder at the
office of the Warrant Agent (the 'Warrant Agent's Office') which is currently
located at 111 Wall Street, 5th Floor, New York, New York 10043, during the
Warrant Agent's normal business hours. See 'Description of Warrants' and
'Description of Index Warrants' in the Prospectus.
The aggregate number of Warrants to be issued is set forth on the cover
page of this Prospectus Supplement and is subject to the right of the Company to
'reopen' the issue of Warrants and issue additional Warrants with substantially
identical terms at a later time.
A Warrant will not require or entitle a Warrantholder to purchase U.S.
dollars from, or sell Japanese yen to, the Company. Upon exercise of a Warrant,
the Company will make only a U.S. dollar cash payment in the amount of the Cash
Settlement Value, if any, of such Warrant. The Company is under no obligation
to, nor will it, sell U.S. dollars to, or purchase Japanese yen from,
Warrantholders in connection with the exercise of any Warrants. Warrantholders
will not receive any interest on any Cash Settlement Value.
DETERMINATION OF CASH SETTLEMENT VALUE OF WARRANTS
Each Warrant will entitle the Warrantholder to receive, upon exercise
(including automatic exercise), the Cash Settlement Value of such Warrant. The
'Cash Settlement Value' of a Warrant will equal an amount in U.S. dollars
(rounded down to the nearest cent) which is the greater of (i) zero and (ii) the
amount computed by subtracting from U.S. $100 an amount equal to the product of
U.S. $100 times a fraction, the numerator of which is per U.S. $1.00
(the 'Strike Rate') and the denominator of which is the Spot Rate (as defined
below). This amount is described by the following formula:
CASH SETTLEMENT VALUE = THE GREATER OF
YEN/U.S. $1.00
(i) $0 AND (ii) $100 - [$100 X (----------------)]
SPOT RATE
The 'Spot Rate' on any Valuation Date will be determined by the Spot Rate
Reference Agent and will equal (i) the noon buying rate per U.S. $1.00 in The
City of New York on such Valuation Date for cable transfers in Japanese yen as
certified for customs purposes by the Federal Reserve Bank of New York (the
'Noon Buying Rate'), as reported on page 1FEE of The Reuter Monitor Money Rates
Service (or such page as may replace that page), or (ii) if the Noon Buying Rate
does not appear on such page by 1:00 P.M., New York City time, on such Valuation
Date, the Noon Buying Rate on such Valuation Date as otherwise announced by the
Federal Reserve Bank of New York, or (iii) if the Federal Reserve Bank of New
York has not quoted such Noon Buying Rate by 1:30 P.M., New York City time, on
such Valuation Date, the offered spot rate of Japanese yen per U.S. $1.00 on
such Valuation Date, which offered spot rate shall be calculated by the Spot
Rate Reference Agent by (a) obtaining at approximately 1:30 P.M., New York City
time, a quote for a transaction amount approximately equivalent to U.S. $100
times the aggregate number of Warrants which were properly exercised on the
related Exercise Date from each of five leading market makers (other than
Salomon Brothers) in the foreign exchange markets for Japanese yen selected by
the Spot Rate Reference Agent, (b) discarding the highest and lowest quotes
obtained and (c) averaging the three remaining quotes to determine such offered
spot rate. Because more favorable rates are generally obtained in large
transactions, the offered spot rate that will be calculated, if necessary,
pursuant to clause (iii) above in the event the Noon Buying Rate is not
available in connection with the exercise of a small aggregate number of
Warrants may be less favorable than the rate that will be calculated if a
greater number of Warrants were exercised. No
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<PAGE>
assurance can be given as to the aggregate number of Warrants which may be
exercised on any given day.
The Spot Rate used to determine the Cash Settlement Value on any Valuation
Date will be rounded to the second decimal place (e.g., .00), rounding up if
the next succeeding decimal place, without regard to rounding, is five or
higher. Any such Cash Settlement Value will be rounded down, if necessary, to
the nearest cent.
HYPOTHETICAL WARRANT VALUES ON EXERCISE
Set forth below is an illustrative example demonstrating the Cash
Settlement Values of a Warrant based on various hypothetical Spot Rates and a
hypothetical Strike Rate. The illustrative Cash Settlement Values in the table
do not reflect any 'time value' for a Warrant, which may be reflected in trading
value, and are not necessarily indicative of potential profit or loss, which are
also affected by purchase price and transaction costs. The actual Strike Rate
will be set on the pricing date of the offering whereupon the hypothetical spot
rates and cash settlement values set forth below will be modified to reflect
such actual Strike Rate.
<TABLE>
<CAPTION>
HYPOTHETICAL CASH SETTLEMENT VALUE
SPOT RATE (ALSO KNOWN AS 'INTRINSIC
(YEN /U.S. $1.00) VALUE') OF A WARRANT
- - ----------------- -------------------------
<S> <C>
140.00 ......................... U.S. $22.14
135.00 ......................... 19.26
130.00 ......................... 16.15
125.00 ......................... 12.80
120.00 ......................... 9.17
115.00 ......................... 5.22
110.00 ......................... 0.91
109.00 (Strike Rate) or below .. 0.00
</TABLE>
WARRANT CERTIFICATES
The Warrants initially will be issued as certificates in registered form
(each, a 'Warrant Certificate'). The Warrant Agent will from time to time
register the transfer of any outstanding Warrant Certificate upon surrender
thereof at the Warrant Agent's Office duly endorsed by, or accompanied by a
written instrument or instruments of transfer in form satisfactory to the
Warrant Agent duly executed by, the registered holder thereof, a duly appointed
legal representative or a duly authorized attorney. Such signature must be
guaranteed by a bank or trust company having a correspondent office in New York
City or by a member of a national securities exchange. A new Warrant Certificate
will be issued to the transferee upon any such registration of transfer.
At the option of a registered holder of a Warrant, Warrant Certificates may
be exchanged for other Warrant Certificates representing an equal number of
Warrants, upon surrender to the Warrant Agent at the Warrant Agent's Office of
the Warrant Certificates to be exchanged. The Company will thereupon execute,
and the Warrant Agent will countersign and deliver, one or more new Warrant
Certificates representing such equal number of Warrants.
In the event that, after any exercise of Warrants evidenced by a Warrant
Certificate, the number of Warrants exercised is fewer than the total number of
Warrants evidenced by such Certificate, a new Warrant Certificate evidencing the
number of Warrants not exercised will be issued to the registered holder or his
assignee. See 'Minimum Exercise Amount' below.
If any Warrant Certificate is mutilated, lost, stolen or destroyed, the
Company may in its discretion execute, and the Warrant Agent may countersign and
deliver, in exchange and substitution for such mutilated Warrant Certificate or
in replacement for such lost, stolen or destroyed Warrant Certificate, a new
Warrant Certificate representing an equal number of Warrants, but only (in the
case of loss, theft or destruction) upon receipt of evidence satisfactory to the
Company and the Warrant Agent of loss, theft or destruction of such Warrant
Certificate and security or indemnity, if requested, satisfactory to them.
Warrantholders requesting replacement Warrant Certificates must also comply with
such other reasonable regulations and pay such reasonable charges as the Company
or the Warrant Agent may prescribe. In the event that all the Warrants
represented by any such mutilated, lost, stolen or destroyed
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<PAGE>
Warrant Certificate have been or are about to be exercised (including upon
automatic exercise), the Company in its discretion may, instead of issuing a new
Warrant Certificate, direct the Warrant Agent to treat such Warrant Certificate
as if the Warrant Agent had received an Exercise Notice in proper form in
respect thereof or as being subject to automatic exercise, as the case may be.
No service charge will be made for any registration of transfer or exchange
of Warrant Certificates, but the Company may require the payment of a sum
sufficient to cover any tax or governmental charge that may be imposed in
connection therewith, other than exchanges not involving any transfer. In the
case of the replacement of mutilated, lost, stolen or destroyed Warrant
Certificates, the Company may require the payment of a sum sufficient to cover
any tax or other governmental charge that may be imposed in relation thereto and
any other expenses (including the fees and expenses of the Warrant Agent)
connected therewith.
Warrantholders may not hold certificated positions through CEDEL or
Euroclear, but may hold Warrants in book-entry form through the facilities of
CEDEL or Euroclear after they have been converted from certificated to
book-entry form. See 'Book-Entry Conversion' and 'CEDEL and Euroclear' below.
BOOK-ENTRY CONVERSION
Forty-five calendar days after the closing of the offering (which closing
date is expected to be , 1996), each registered holder of a Warrant will
have the option to convert the form in which such holder holds his Warrants from
certificated to book-entry form by utilizing the Conversion Option. The
Conversion Option will be available for forty-five calendar days (the
'Conversion Option Period') and is expected to run from , through
1996.
In order to be exchanged for a Warrant in book-entry form, the Warrant
Certificate evidencing such certificated Warrant must be delivered to DTC, in
proper form for deposit, by a Participant. Accordingly, a registered holder of a
Warrant who is not a Participant must deliver his Warrant Certificate, in proper
form for deposit, to a Participant, either directly or through an indirect
participant in DTC (such as a bank, brokerage firm, dealer or trust company that
clears through, or maintains a custodial relationship with, a Participant) or a
brokerage firm which maintains an account with a Participant, in order to have
his certificated Warrant exchanged for a Warrant in book-entry form.
Warrantholders who desire to exchange their certificated Warrants for Warrants
in book-entry form should contact their brokers or other Participants or
indirect participants to obtain information on procedures for submitting their
Warrant Certificates to DTC, including the proper form for submission, and
(during the Conversion Option Period) the cut-off times for same day and next
day exchange. Certificated Warrants which are held by a Warrantholder in nominee
or 'street' name may be automatically exchanged into book-entry form by the
broker or other entity in whose name the Warrant Certificates evidencing such
certificated Warrants are registered, without action of, or consent by, the
beneficial owner of such certificated Warrants. Under no circumstances may
certificated Warrants be converted into Warrants in book-entry form through the
facilities of CEDEL or Euroclear.
Certificated Warrants received by DTC for exchange during the Conversion
Option Period will be exchanged for Warrants in book-entry form by the close of
business on the New York Business Day that the Warrant Certificates evidencing
such certificated Warrants are received by DTC (if received by DTC at its then
applicable cut-off time for same day credit) or on the following New York
Business Day (if received by DTC at its then applicable cut-off time for next
day credit). After the last day of the Conversion Option Period, DTC will not be
required to accept delivery of certificated Warrants for exchange for book-entry
Warrants, but may permit certificated Warrants to be so exchanged on a case-
by-case basis. However, there can be no assurance that such certificated
Warrants would be accepted for exchange. Certificated Warrants surrendered at
any time for exchange for book-entry Warrants may not be exercised or delivered
for settlement of transfer until such exchange has been effected. Accordingly,
if an increase in the Spot Rate were to occur after a certificated Warrant had
been surrendered for exchange into book-entry form, a Warrantholder would not be
able to take advantage of the increase by exercising his Warrant until such
exchange had been effected. Because certificated Warrants are not required to be
exchanged for Warrants in book-entry form, it is likely that not all
certificated Warrants will be so exchanged. Accordingly, a Warrantholder
purchasing Warrants in
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<PAGE>
secondary market trading after commencement of the Conversion Option Period may
wish to consult with his broker or another Participant or indirect participant
if he wishes to purchase Warrants only in book-entry form and not certificated
form.
The Company has been informed by CEDEL and Euroclear that such clearing
agencies will only clear Warrants in book-entry form.
Once a registered holder of a Warrant has elected the Conversion Option,
such holder may hold his Warrants only in book-entry form and will not be able
to change his election or withdraw from the book-entry system during the
Conversion Option Period or thereafter. Accordingly, except in certain limited
circumstances described in the Prospectus under 'Description of Index Warrants--
Book-Entry Procedures and Settlement for Index Warrants', ownership of the
Warrants in certificated form will no longer be available to investors who have
elected the Conversion Option.
CEDEL AND EUROCLEAR
Warrantholders may hold their Warrants only in book-entry form through
CEDEL or Euroclear if they are participants of such systems, or indirectly
through organizations which are participants in such systems. The common
security registration number used by CEDEL and Euroclear for the Warrants is
. Certificated ownership of Warrants will not be available through such
systems.
CEDEL and Euroclear will hold omnibus book-entry positions on behalf of
their participants through customers' securities accounts in CEDEL's and
Euroclear's names on the books of their respective depositaries which in turn
will hold such positions in customers' securities accounts in the names of the
nominees of the depositaries on the books of DTC. Citibank, N.A. ('Citibank'),
will act as depositary for CEDEL and Morgan Guaranty Trust Company of New York,
New York Office ('Morgan'), will act as depositary for Euroclear (in such
capacities, the 'Depositaries'). All securities in CEDEL or Euroclear are held
on a fungible basis without attribution of specific certificates to specific
securities clearance accounts.
Exercises of book-entry Warrants by persons holding through CEDEL or
Euroclear participants will be effected through DTC, in accordance with DTC
rules, on behalf of the relevant European international clearing system by its
Depositary; however, such transactions will require delivery of exercise
instructions to the relevant European international clearing system by the
participant in such system in accordance with its rules and procedures and
within its established deadlines (European time). The relevant European
international clearing system will, if the exercise meets its requirements,
deliver instructions to its Depositary to take action to effect its exercise of
the Warrants on its behalf by delivering Warrants through DTC and receiving
payment in accordance with its normal procedures for next-day funds settlement.
Payments with respect to the Warrants held through CEDEL or Euroclear will be
credited to the cash accounts of CEDEL participants or Euroclear participants in
accordance with the relevant system's rules and procedures, to the extent
received by its Depositary. See 'Exercise and Settlement of the Warrants' below.
Cedel Bank, S.A. ('CEDEL') is incorporated under the laws of Luxembourg as
a professional depositary. CEDEL holds securities for its participating
organizations and facilitates the clearance and settlement of securities
transactions between CEDEL participants through electronic book-entry changes in
accounts of CEDEL participants, thereby eliminating the need for physical
movement of certificates. Transactions may be settled in CEDEL in any of 28
currencies, including U.S. dollars. CEDEL provides to its participants, among
other things, services for safekeeping, administration, clearance and settlement
of internationally traded securities and securities lending and borrowing. CEDEL
interfaces with domestic markets in several countries. As a professional
depositary, CEDEL is subject to regulation by the Luxembourg Monetary Institute.
CEDEL participants are recognized financial institutions around the world,
including underwriters, securities brokers and dealers, banks, trust companies,
clearing corporations and certain other organizations and may include the
Underwriters (as hereinafter defined). Indirect access to CEDEL is also
available to others, such as banks, brokers, dealers and trust companies that
clear through or maintain a custodial relationship with a CEDEL participant,
either directly or indirectly.
The Euroclear System was created in 1968 to hold securities for
participants in the Euroclear System and to clear and settle transactions
between Euroclear participants through simultaneous
S-20
<PAGE>
electronic book-entry delivery against payment, thereby eliminating the need for
physical movement of certificates and any risk from lack of simultaneous
transfers of securities and cash. Transactions may now be settled in any of 30
currencies, including U.S. dollars. The Euroclear System includes various other
services, including securities lending and borrowing and interfaces with
domestic markets in several countries generally similar to the arrangements for
cross-market transfers with DTC described above. The Euroclear System is
operated by Morgan's Brussels, Belgium office (the 'Euroclear Operator' or
'Euroclear'), under contract with Euroclear Clearance System S.C., a Belgian
cooperative corporation (the 'Cooperative'). Morgan is a member bank of the
United States Federal Reserve System. All operations are conducted by the
Euroclear Operator, and all Euroclear securities clearance accounts and
Euroclear cash accounts are accounts with the Euroclear Operator, not the
Cooperative. The Cooperative establishes policy for the Euroclear System on
behalf of Euroclear participants. Euroclear participants include banks
(including central banks), securities brokers and dealers and other professional
financial intermediaries and may include the Underwriters. Indirect access to
the Euroclear System is also available to other firms that clear through or
maintain a custodial relationship with a Euroclear participant, either directly
or indirectly.
Securities clearance accounts and cash accounts with the Euroclear Operator
are governed by the Terms and Conditions Governing Use of Euroclear and the
related Operating Procedures of the Euroclear System, and applicable Belgian law
(collectively, the 'Terms and Conditions'). The Terms and Conditions govern
transfers of securities and cash within the Euroclear System, withdrawal of
securities and cash from the Euroclear System, and receipt of payments with
respect to securities in the Euroclear System. All securities in the Euroclear
System are held on a fungible basis without attribution of specific certificates
to specific securities clearance accounts. The Euroclear Operator acts under the
Terms and Conditions only on behalf of Euroclear participants, and has no record
of or relationship with persons holding through Euroclear participants.
All information herein on CEDEL and Euroclear is derived from CEDEL or
Euroclear, as the case may be, and reflects the policies of such organizations;
such policies are subject to change without notice.
EXERCISE AND SETTLEMENT OF WARRANTS
The Warrants will be immediately exercisable upon issuance and will expire
on June , 1998 (the 'Expiration Date'). Warrants not exercised (including by
reason of any postponed exercise) at or before 3:00 P.M., New York City time, on
the earlier of (i) the New York Business Day immediately preceding the
Expiration Date and (ii) the Delisting Date will be automatically exercised as
described under 'Automatic Exercise' below.
A Warrantholder may exercise certificated Warrants on any New York Business
Day during the period from the date of issuance of such Warrants until 3:00
P.M., New York City time, on the earlier of (i) the New York Business Day
immediately preceding the Expiration Date and (ii) the Delisting Date, by
delivering or causing to be delivered to the Warrant Agent in New York City the
Warrant Certificate representing such Warrants with the irrevocable notice of
exercise on the reverse thereof (or a notice of exercise in substantially
identical form delivered therewith) (such notice, an 'Exercise Notice') duly
completed and executed. The Warrant Agent's telephone number and facsimile
transmission number for this purpose are (212) 657-7269 and (212) 825-3483,
respectively.
In the case of book-entry Warrants held through the facilities of DTC, a
Warrantholder may exercise such Warrants on any New York Business Day during the
period from the date on which his certificated Warrants have been effectively
converted into book-entry form during the Conversion Option Period (which will
begin forty-five calendar days from the closing of the offering) until 3:00
P.M., New York City time, on the earlier of (i) the New York Business Day
immediately preceding the Expiration Date and (ii) the Delisting Date, by
causing (a) such Warrants to be transferred free to the Warrant Agent on the
records of DTC and (b) a duly completed and executed Exercise Notice to be
delivered on behalf of the Warrantholder by a Participant to the Warrant Agent.
Forms of Exercise Notice for Warrants held through the facilities of DTC may be
obtained from the Warrant Agent at the Warrant Agent's Office. The Warrant
Agent's telephone number and facsimile transmission number for this purpose are
(201) 262-5445 and (201) 262-7521, respectively.
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<PAGE>
In the case of book-entry Warrants held through the facilities of CEDEL or
Euroclear, a Warrantholder may exercise such Warrants on any New York Business
Day during the period from the date on which his certificated Warrants have been
effectively converted into book-entry form during the Conversion Option Period
(which will begin forty-five calendar days from the closing of the offering)
until 3:00 P.M., New York City time, on the earlier of (i) the New York Business
Day immediately preceding the Expiration Date and (ii) the Delisting Date, by
causing (a) such Warrants to be transferred free to the Warrant Agent on the
records of DTC, by giving appropriate instructions to the participant holding
such Warrants in either the CEDEL or Euroclear system, as the case may be, and
(b) a duly completed and executed Exercise Notice to be delivered on behalf of
the Warrantholder by CEDEL or Euroclear, as the case may be, to the Warrant
Agent. Forms of Exercise Notice for Warrants held through the facilities of
either CEDEL or Euroclear may be obtained from the Warrant Agent at the Warrant
Agent's Office or from CEDEL or Euroclear.
Except for Warrants subject to automatic exercise or held in book-entry
form through the facilities of CEDEL or Euroclear, and subject to the Limit
Option, the 'Exercise Date' for a Warrant will be (i) the New York Business Day
on which the Warrant Agent receives the Warrant and Exercise Notice in proper
form with respect to such Warrant, if received at or prior to 3:00 P.M., New
York City time, on such day, or (ii) if the Warrant Agent receives such Warrant
and Exercise Notice after 3:00 P.M., New York City time, on a New York Business
Day, then the New York Business Day next succeeding such New York Business Day.
In the case of Warrants held in book-entry form through the facilities of
CEDEL or Euroclear, except for Warrants subject to automatic exercise, and
subject to the Limit Option, the 'Exercise Date' for a Warrant will be (i) the
New York Business Day on which the Warrant Agent receives the Exercise Notice in
proper form with respect to such Warrant if such Exercise Notice is received at
or prior to 3:00 P.M., New York City time, on such day, provided that the
Warrant is received by the Warrant Agent by 3:00 P.M., New York City time, on
the Valuation Date, or (ii) if the Warrant Agent receives such Exercise Notice
after 3:00 P.M., New York City time, on a New York Business Day, then the New
York Business Day next succeeding such New York Business Day, provided that the
Warrant is received by 3:00 P.M., New York City time, on the Valuation Date
relating to exercises of Warrants on such succeeding New York Business Day. In
the event that the Warrant is received after 3:00 P.M., New York City time, on
the Valuation Date, then the Exercise Date for such Warrant will be the day on
which such Warrant is received or, if such day is not a New York Business Day,
the next succeeding New York Business Day. In the case of Warrants held in
book-entry form through the facilities of CEDEL or Euroclear, in order to ensure
proper exercise on a given New York Business Day, participants in CEDEL or
Euroclear must submit exercise instructions to CEDEL or Euroclear, as the case
may be, by 10:00 A.M., Luxembourg time, in the case of CEDEL and by 10:00 A.M.,
Brussels time (by telex), or 11:00 A.M., Brussels time (by EUCLID), in the case
of Euroclear. In addition, in the case of book-entry exercises by means of the
Euroclear System, (a) participants must also transmit, by facsimile (facsimile
number (201) 262-7521), to the Warrant Agent a copy of the Exercise Notice
submitted to Euroclear by 3:00 P.M., New York City time, on the desired Exercise
Date and (b) Euroclear must confirm by telex to the Warrant Agent by 9:00 A.M.,
New York City time, on the Valuation Date that the Warrants will be received by
the Warrant Agent on such date; provided, that if such telex communication is
received after 9:00 A.M., New York City time, on the Valuation Date, the Company
will be entitled to direct the Warrant Agent to reject the related Exercise
Notice or waive the requirement for timely delivery of such telex communication.
To ensure that an Exercise Notice and the related Warrants will be
delivered to the Warrant Agent before 3:00 P.M., New York City time, on a given
New York Business Day, a Warrantholder may have to give exercise instructions to
his broker or other intermediary substantially earlier than 3:00 P.M., New York
City time, on such day. Different brokerage firms may have different cut-off
times for accepting and implementing exercise instructions from their customers.
Therefore, Warrantholders should consult with their brokers or other
intermediaries, if applicable, as to applicable cut-off times and other exercise
mechanics. See 'Risk Factors Relating to the Warrants--Risks and Costs
Associated with Conversion and Exercise of Warrants' herein.
Except in the case of Warrants subject to automatic exercise, if on any
Valuation Date the Cash Settlement Value for any Warrants then exercised would
be zero, then the attempted exercise of such
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Warrants will be void and of no effect and, in the case of certificated
Warrants, the Warrant Certificate evidencing such Warrants will be returned to
the registered holder by first class mail at the Company's expense or, in the
case of Warrants held through the facilities of DTC, CEDEL or Euroclear, such
Warrants will be transferred back to the Participant (including the
Depositaries) that submitted them free to the Warrant Agent on the records of
DTC, and, in any such case, such Warrantholder will be permitted to re-exercise
such Warrants prior to the Expiration Date or the Delisting Date, as the case
may be.
The 'Valuation Date' for a Warrant will be the first New York Business Day
following the Exercise Date, subject to postponement as a result of the exercise
of a number of Warrants exceeding the limits on exercise described below under
'Maximum Exercise Amount'. The following is an illustration of the timing of an
Exercise Date, the ensuing Valuation Date and the Limit Option Reference Rate
(as hereinafter defined), assuming (i) all relevant dates are New York Business
Days and (ii) the number of exercised Warrants does not exceed the maximum
permissible amount. If the Warrant Agent receives a Warrantholder's Warrants and
Exercise Notice in proper form at or prior to 3:00 P.M., New York City time, on
Monday, October 21, 1996, the Exercise Date for such Warrants will be Monday,
October 21, 1996, and the Valuation Date for such Warrants will be Tuesday,
October 22, 1996 (except that in the case of Warrants held through the
facilities of CEDEL or Euroclear, the Warrants must be received by 3:00 P.M.,
New York City time, on the Valuation Date; if such Warrants are received after
such time, then the Exercise Date for such Warrants will be the day on which
such Warrants are received or, if such day is not a New York Business Day, the
next succeeding New York Business Day, and the Valuation Date for such Warrants
will be the first New York Business Day following such Exercise Date and the
Limit Option Reference Rate will be the Spot Rate on such Exercise Date). The
Spot Rate used to determine the Cash Settlement Value of such Warrants will be
the Spot Rate on Tuesday, October 22, 1996. If the Warrantholder elected the
Limit Option in connection with the exercise of such Warrants, the Limit Option
Reference Rate would be the Spot Rate on Monday, October 21, 1996. If the
Warrant Agent were to receive such Warrantholder's Warrants and Exercise Notice
after 3:00 P.M., New York City time, on Monday, October 21, 1996 (except that in
the case of Warrants held through the facilities of CEDEL or Euroclear, if the
Warrants are received after 3:00 P.M., New York City time, on Tuesday, October
22, 1996), then the Exercise Date for such Warrants would instead be Tuesday,
October 22, 1996, the Valuation Date would be Wednesday, October 23, 1996, and
the applicable Limit Option Reference Rate would be the Spot Rate on Tuesday,
October 22, 1996.
Following receipt of Warrants and the related Exercise Notice in proper
form, the Warrant Agent will, not later than 5:00 P.M., New York City time, on
the applicable Valuation Date, (i) obtain from the Spot Rate Reference Agent the
Spot Rate, (ii) determine the Cash Settlement Value of such Warrants and (iii)
advise the Company of the aggregate Cash Settlement Value of the exercised
Warrants. In the case of certificated Warrants, if the Company has made adequate
funds available to the Warrant Agent in a timely manner as required by the
Warrant Agreement, the Warrant Agent will thereafter be responsible for making
payment available to each registered holder of a Warrant on the fifth New York
Business Day following the Valuation Date in the form of a cashier's check or
official bank check, or (in the case of payments of at least $100,000) by wire
transfer to a U.S. dollar bank account maintained by such holder in the United
States (at such holder's election as specified in the applicable Exercise
Notice), in an amount equal to the aggregate Cash Settlement Value of such
holder's exercised Warrants. In the case of book-entry Warrants, the Company
will be required to make available to the Warrant Agent, no later than 3:00
P.M., New York City time, on the fifth New York Business Day following the
Valuation Date, funds in an amount sufficient to pay the aggregate Cash
Settlement Value of the exercised Warrants. If the Company has made such funds
available by such time, the Warrant Agent will thereafter be responsible for
making funds available to each appropriate Participant (including Citibank and
Morgan, who, in turn, will disburse payments to CEDEL and Euroclear,
respectively, who will be responsible for disbursing such payments to each of
their respective participants, who, in turn, will be responsible for disbursing
payments to the Warrantholders they represent), and such Participant will be
responsible for disbursing such payments to the Warrantholders it represents and
to each brokerage firm for which it acts as agent. Each such brokerage firm will
be responsible for disbursing funds to the Warrantholders that it represents.
S-23
<PAGE>
'Spot Rate Reference Agent' means Salomon Brothers or, in lieu thereof,
another firm selected by the Company to perform the functions of the Spot Rate
Reference Agent in connection with the Warrants.
MINIMUM EXERCISE AMOUNT
No fewer than 500 Warrants may be exercised by a Warrantholder at any one
time, except in the event of automatic exercise of the Warrants. Accordingly,
except in such event, Warrantholders with fewer than 500 Warrants will need
either to sell their Warrants or to purchase additional Warrants, thereby
incurring transaction costs, in order to realize upon their investment.
Warrantholders must satisfy the minimum exercise amount requirement described
above separately with respect to both certificated and book-entry Warrants even
if both kinds of Warrants are to be exercised at the same time. Thus, a
Warrantholder seeking to exercise both certificated and book-entry Warrants at
the same time must still exercise a minimum of 500 of each kind of Warrant in
order to satisfy such requirement. In addition, book-entry Warrants held through
one Participant (including participants in CEDEL or Euroclear) may not be
combined with book-entry Warrants held through another Participant in order to
satisfy the minimum exercise requirement.
MAXIMUM EXERCISE AMOUNT
All exercises of Warrants (other than on the Expiration Date or the
Delisting Date) are subject, at the Company's option, to the limitation that not
more than 1,000,000 Warrants in total may be exercised on any Exercise Date and
not more than 250,000 Warrants may be exercised by or on behalf of any person or
entity, either individually or in concert with any other person or entity, on
any Exercise Date. If any New York Business Day would otherwise, under the terms
of the Warrant Agreement, be the Exercise Date in respect of more than 1,000,000
Warrants, then at the Company's election 1,000,000 of such Warrants shall be
deemed exercised on such Exercise Date (selected by the Warrant Agent on a pro
rata basis, but if, as a result of such pro rata selection, any registered
holders of Warrants would be deemed to have exercised fewer than 500 Warrants,
then the Warrant Agent shall first select additional Warrants of such holders so
that no such holder shall be deemed to have exercised fewer than 500 Warrants),
and the remainder of such Warrants (the 'Remaining Warrants') shall be deemed
exercised on the following New York Business Day (notwithstanding the minimum
exercise requirement and subject to successive applications of this provision);
provided that any Remaining Warrant for which an Exercise Notice was delivered
on a given Exercise Date shall be deemed exercised before any other Warrants for
which an Exercise Notice was delivered on a later Exercise Date. If any
individual Warrantholder attempts to exercise more than 250,000 Warrants on any
New York Business Day, then at the Company's election 250,000 of such Warrants
shall be deemed exercised on such New York Business Day and the remainder shall
be deemed exercised on the following New York Business Day (subject to
successive applications of this provision). As a result of any postponed
exercise as described above, Warrantholders will receive a Cash Settlement Value
determined as of a date later than the otherwise applicable Valuation Date. In
any such case, as a result of any such postponement and subject to the Limit
Option, the Cash Settlement Value actually received by Warrantholders may be
lower than the otherwise applicable Cash Settlement Value if the Valuation Date
of the Warrants had not been postponed.
LIMIT OPTION
Except for Warrants subject to automatic exercise, each Warrantholder, in
connection with any exercise of Warrants, will have the option (the 'Limit
Option') to specify that such Warrants are not to be exercised if the Spot Rate
that would otherwise be used to determine the Cash Settlement Value of such
Warrants has declined by five or more Japanese yen per U.S. dollar from the Spot
Rate for the day specified below (such Rate, the 'Limit Option Reference Rate').
A Warrantholder's election of the Limit Option must be specified in the
applicable Exercise Notice delivered to the Warrant Agent. If such Exercise
Notice in proper form, together with the related Warrants, is received by the
Warrant Agent by 3:00 P.M., New York City time, on a given day (which must be a
New York Business Day), the Limit Option Reference Rate will be the Spot Rate
for such day. If an Exercise Notice and the related
S-24
<PAGE>
Warrants are received after 3:00 P.M., New York City time, on a given day, the
applicable Limit Option Reference Rate will be the Spot Rate for the next day
that is also a New York Business Day.
To ensure that the Limit Option will have its intended effect of limiting
the risk of any downward movement in the value of the U.S. dollar relative to
the Japanese yen between the date on which a Warrantholder submits an Exercise
Notice and the related Valuation Date, such Exercise Notice and the related
Warrants must be received by the Warrant Agent not later than 3:00 P.M., New
York City time, on the New York Business Day on which they are submitted. See
the illustration under 'Exercise and Settlement of Warrants' above and 'Risk
Factors Relating to the Warrants--Risks Due to Delay or Postponement of
Valuation of Warrants' herein.
Following receipt of an Exercise Notice and the related Warrants subject to
the Limit Option, the Warrant Agent will obtain the applicable Limit Option
Reference Rate from the Spot Rate Reference Agent and will determine whether
such Warrants will not be exercised because of the Limit Option. Warrants that
are not exercised will be treated as not having been tendered for exercise, and
either the Warrant Certificate evidencing such Warrants will be returned to the
registered holder by first-class mail at the Company's expense or, in the case
of Warrants held through the facilities of DTC, CEDEL or Euroclear, such
Warrants will be transferred to the account at DTC, CEDEL or Euroclear, as the
case may be, from which they were transferred to the Warrant Agent. To exercise
such Warrants, a Warrantholder will be required to cause the Warrants and a
related Exercise Notice to be submitted again to the Warrant Agent.
Once elected by a Warrantholder in connection with an exercise of Warrants,
the Limit Option will continue to apply, on the basis of the Limit Option
Reference Rate as initially determined for such Warrants, even if the Valuation
Date for such Warrants is postponed, except when such Valuation Date is
postponed until the Expiration Date or the Delisting Date. Pursuant to the Limit
Option, such Warrants will either (i) be exercised on a delayed basis if the
Spot Rate on any applicable postponed Valuation Date is not less than the Limit
Option Reference Rate by five or more Japanese yen per U.S. dollar or (ii) be
excluded from being exercised if, on any applicable postponed Valuation Date,
the Spot Rate is less than the Limit Option Reference Rate by five or more
Japanese yen per U.S. dollar.
In connection with any exercise of 500 or more Warrants, a Warrantholder
may elect to subject the exercise of only a portion of such Warrants to the
Limit Option, provided that the number of Warrants subject to the Limit Option
and the number of Warrants not subject to the Limit Option shall in each case
not be less than 500. A Warrantholder may not combine certificated and
book-entry Warrants in order to meet the 500 Warrant minimum requirement. See
'Minimum Exercise Amount' above.
AUTOMATIC EXERCISE
All Warrants for which the Warrant Agent has not received a valid Exercise
Notice at or prior to 3:00 P.M., New York City time, on the earlier of (i) the
New York Business Day immediately preceding the Expiration Date and (ii) the
Delisting Date, or for which the Warrant Agent has received a valid Exercise
Notice but with respect to which timely delivery of the relevant Warrants has
not been made, will be automatically exercised on such date. The Exercise Date
for such Warrants will be the Expiration Date or the Delisting Date, as the case
may be, or, if such Date is not a New York Business Day, the next succeeding New
York Business Day. The Warrant Agent will obtain from the Spot Rate Reference
Agent the Spot Rate (determined as of the first New York Business Day following
such Date, which will be the Valuation Date for such Warrants) and will
determine the Cash Settlement Value, if any, of such Warrants.
In the case of certificated Warrants subject to automatic exercise, if the
Company has made adequate funds available to the Warrant Agent in a timely
manner as required by the Warrant Agreement, the Warrant Agent will thereafter
be responsible for making a payment available to each registered holder of a
Warrant in the form of a cashier's check or official bank check, or (in the case
of payments of at least $100,000) by wire transfer to a U.S. dollar account
maintained by such holder in the United States (at such holder's election) after
3:00 P.M., New York City time, on the fourth New York Business Day after such
Valuation Date against receipt by the Warrant Agent at the Warrant Agent's
Office of such holder's Warrant Certificates. Such payment will be in an amount
equal to the aggregate Cash Settlement Value of the Warrants evidenced by such
Warrant Certificates.
S-25
<PAGE>
In the case of book-entry Warrants subject to automatic exercise, the
Company will be required to make available to the Warrant Agent, no later than
3:00 P.M., New York City time, on the fourth New York Business Day after such
Valuation Date, funds in an amount sufficient to pay the aggregate Cash
Settlement Value of such Warrants. If the Company has made such funds available
by such time, the Warrant Agent will thereafter be responsible for making funds
available to DTC in an amount sufficient to pay the aggregate Cash Settlement
Value of the Warrants. DTC will be responsible for disbursing such funds to each
appropriate Participant (including Citibank and Morgan, who, in turn, will
disburse payments to CEDEL and Euroclear, respectively, who will be responsible
for disbursing such payments to each of their respective participants, who, in
turn, will be responsible for disbursing payments to the Warrantholders they
represent), and such Participant will be responsible for disbursing such
payments to the Warrantholders it represents and to each brokerage firm for
which it acts as agent. Each such brokerage firm will be responsible for
disbursing funds to the Warrantholders it represents.
LISTING
Application will be made to list the Warrants on the AMEX. The AMEX symbol
for the Warrants is OPY.WS. The AMEX expects to cease trading the Warrants on
such Exchange as of the close of business on the Expiration Date. See 'Risk
Factors Relating to the Warrants--Other Considerations' herein.
DELISTING OF WARRANTS
In the event the Warrants are delisted from, or permanently suspended from
trading on (within the meaning of the Securities Exchange Act of 1934 and the
rules and regulations thereunder), the AMEX and not accepted at the same time
for listing on another United States national securities exchange, Warrants not
previously exercised will be deemed automatically exercised on the last New York
Business Day prior to the effective date of such delisting or trading suspension
(the 'Delisting Date'), and the Cash Settlement Value, if any, shall be
calculated and settled as provided above under 'Automatic Exercise'. The Company
will notify Warrantholders as soon as practicable of such delisting or trading
suspension. However, if the Company first receives notice of the delisting or
suspension on the same day on which the Warrants are delisted or suspended, such
day will be deemed the Delisting Date. The Company will covenant in the Warrant
Agreement that it will not seek delisting of the Warrants from, or suspension of
their trading on, the AMEX unless the Company has, at the same time, arranged
for listing of the Warrants on another United States national securities
exchange.
S-26
<PAGE>
EXCHANGE RATES
EXCHANGE RATES
The following table sets forth the average for the months (and partial
month) indicated, as calculated by the Spot Rate Reference Agent, of the daily
Noon Buying Rates per U.S. $1.00 for Japanese yen in New York City based on data
obtained from the Federal Reserve Bank of New York.
<TABLE>
<CAPTION>
YEN /U.S.$1
-----------
<S> <C>
1991: January.................. 133.70
February................. 130.54
March.................... 137.39
April.................... 137.12
May...................... 138.22
June..................... 139.75
July..................... 137.83
August................... 136.82
September................ 134.30
October.................. 130.77
November................. 129.63
December................. 128.04
1992: January.................. 125.46
February................. 127.70
March.................... 132.86
April.................... 133.49
May...................... 130.77
June..................... 126.84
July..................... 125.88
August................... 126.23
September................ 122.60
October.................. 121.17
November................. 123.88
December................. 124.04
1993: January.................. 124.99
February................. 120.76
March.................... 117.02
April.................... 112.41
May...................... 110.34
June..................... 107.41
July..................... 107.69
August................... 103.77
September................ 105.57
October.................. 107.02
November................. 107.88
December................. 109.87
</TABLE>
S-27
<PAGE>
<TABLE>
<CAPTION>
YEN /U.S.$1
-----------
<S> <C>
1994: January.................. 111.44
February................. 106.30
March.................... 105.10
April.................... 103.48
May...................... 103.75
June..................... 102.53
July..................... 98.45
August................... 99.94
September................ 98.77
October.................. 98.35
November................. 98.04
December................. 100.18
1995: January.................. 99.77
February................. 98.24
March.................... 90.52
April.................... 83.69
May...................... 85.11
June..................... 84.64
July..................... 87.35
August................... 94.74
September................ 100.55
October.................. 100.84
November................. 101.94
December................. 101.85
1996: January.................. 105.75
February................. 105.79
March.................... 105.94
April.................... 107.20
May...................... 106.34
June (through June 14)... 109.07
</TABLE>
The following graph sets forth the movement in such monthly average Noon
Buying Rates for the months (and partial month) presented above:
JAPANESE YEN PER U.S. DOLLAR
MONTHLY AVERAGE NOON BUYING RATES
[GRAPH]
The actual exchange rates for Japanese yen per U.S. $1.00, and the spot
exchange rate determined pursuant to the Warrant Agreement upon exercise of the
Warrants, could materially differ from the Noon Buying Rates as reported by the
Federal Reserve Banks.
S-28
<PAGE>
The information presented in this Prospectus Supplement relating to the
exchange rate of the Japanese yen as compared to the U.S. dollar is furnished as
a matter of information only. Significant and unpredictable fluctuations in the
Japanese yen/U.S. dollar exchange rate have occurred in the past, and it is
impossible to predict the direction, magnitude or frequency of any fluctuations
in that rate that may occur over the term of the Warrants.
The spot exchange rate of the Japanese yen as compared to the U.S. dollar
is at any moment a result of the supply of and demand for the two currencies,
and changes in the rate result over time from the interaction of many diverse
factors directly or indirectly affecting economic and political conditions in
Japan and the United States, including, without limitation, economic and
political developments in other countries. Of particular importance are the
relative rates of inflation, interest rate levels, the balance of payments and
the extent of governmental surpluses or deficits in Japan and the United States,
all of which are in turn sensitive to the monetary, fiscal and trade policies
pursued by the governments of Japan, the United States and other countries
important to international trade and finance.
The spot exchange rate of the Japanese yen as compared to the U.S. dollar
will be used in calculating the Cash Settlement Value of a Warrant upon
exercise. Appreciation of the U.S. dollar against the Japanese yen (i.e.,
depreciation of the Japanese yen against the U.S. dollar) will result in a
greater Cash Settlement Value. Conversely, depreciation of the U.S. dollar
against the Japanese yen (i.e., appreciation of the Japanese yen against the
U.S. dollar) will result in a lesser or zero Cash Settlement Value.
Warrantholders will thus bear the foreign exchange risk of the U.S. dollar as
compared to the Japanese yen. In addition, in the absence of countervailing
factors, such as an appreciation of the U.S. dollar against the Japanese yen,
the trading value of the Warrants is expected to decrease as the time remaining
to the Expiration Date decreases. See 'Risk Factors Relating to the Warrants--
Certain Factors Affecting Value and Trading Price of Warrants.'
EXCHANGE CONTROLS
The amended Foreign Exchange and Foreign Trade Control Law of Japan, which
came into effect in 1980, has deregulated external transactions in principle.
CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
The following is a summary of certain United States federal income tax
considerations that may be relevant to a holder of a Warrant that is a 'United
States person' (as defined below) or that otherwise is subject to United States
federal income taxation on a net income basis in respect of the Warrant (a
'United States Holder'). This summary is based on laws, regulations, rulings and
decisions now in effect, all of which are subject to change. This summary deals
only with United States holders that will hold Warrants as capital assets, and
does not address tax considerations applicable to investors that may be subject
to special tax rules, such as banks, tax-exempt entities, insurance companies or
dealers in securities or currencies, persons that will hold Warrants as a part
of an integrated investment (including a 'straddle') comprised of a Warrant and
one or more other positions or persons that have a 'functional currency' other
than the U.S. dollar.
As used herein, the term 'United States person' means a holder of a Warrant
who is a citizen or resident of the United States, or that is a corporation,
partnership or other entity created or organized in or under the laws of the
United States or any political subdivision thereof or an estate or trust the
income of which is subject to United States federal income taxation regardless
of its source, and the term 'United States' means the United States of America
(including the States and the District of Columbia).
Investors should consult their own tax advisors in determining the tax
consequences to them of holding Warrants, including the application to their
particular situation of the United States federal income tax considerations
discussed below, as well as the application of state, local, foreign or other
tax laws.
S-29
<PAGE>
UNITED STATES HOLDERS
TAXATION OF WARRANTS HELD AT THE CLOSE OF TAXABLE YEAR
Each Warrant will be treated as a 'section 1256 contract' which must be
'marked-to-market' (i.e., treated as sold at fair market value) on the last
business day of each taxable year. Under these mark-to-market rules, a United
States Holder of a Warrant will recognize gain or loss equal to the difference
between the fair market value of the Warrant on the last business day of each
taxable year (as determined by the Warrant's trading price) and the United
States Holder's tax basis for the Warrant. A United States Holder's tax basis in
a Warrant will equal the amount paid for the Warrant, plus or minus the net gain
or loss recognized under the mark-to-market rules by the United States Holder in
respect of the Warrant in prior taxable years. As a result of these
marked-to-market rules, a United States Holder may incur Federal income tax
liability on an annual basis in respect of an increase in the value of the
Warrant without the receipt of cash attributable thereto.
SALE, EXCHANGE AND EXERCISE OF WARRANTS
Upon sale, exchange or exercise (including automatic exercise) of a
Warrant, a United States Holder will recognize gain or loss equal to the
difference between the amount realized, if any, and the United States Holder's
tax basis in the Warrant. A holder of a Warrant which expires out-of-the-money
will recognize loss equal to the tax basis of the Warrant.
CHARACTER OF GAIN OR LOSS
In the absence of a section 988 election as described below, any gain or
loss (described above) will be capital gain or loss and will be 60% long-term
capital gain or loss and 40% short-term capital gain or loss. In addition to the
usual rules that limit the use of capital losses, a noncorporate taxpayer may
elect to carry net capital losses from section 1256 contracts for a taxable year
back to offset net capital gains from section 1256 contracts for the three
preceding taxable years, subject to certain limitations.
A United States Holder may elect under section 988 of the Internal Revenue
Code of 1986, as amended (the 'Code') (a 'section 988 election') to treat any
gain or loss described above as ordinary income or loss. If made, this election
will apply to certain other section 1256 contracts, such as regulated futures
contracts and other nonequity options, held by such United States Holder during
the taxable year for which the election is made or any succeeding taxable year
and may not be revoked without the consent of the Internal Revenue Service. Such
election for any taxable year should be made on or before the first day of such
year or, if later, on or before the first day during such year on which the
United States Holder holds a section 1256 contract. United States Holders should
consult with their own tax advisers concerning the procedures for, and
consequences of, making this election.
NON-UNITED STATES HOLDERS
A holder of Warrants that is not a United States person (a 'non-United
States Holder') will not be subject to U.S. Federal income tax or withholding
tax on any gain realized upon a sale, exercise or other disposition of a
Warrant, unless (i) such gain is effectively connected with the conduct by the
holder of a trade or business in the United States or (ii) in the case of gain
realized by an individual holder, the holder is present in the United States for
183 days or more in the taxable year of the sale, exercise or other disposition
and either (A) such gain or income is attributable to an office or other fixed
place of business maintained in the United States by such holder or (B) such
holder has a tax home in the United States.
The fair market value of a Warrant may be includible in the estate of an
individual non-United States Holder for United States Federal estate tax
purposes, unless an applicable estate tax treaty provides otherwise.
S-30
<PAGE>
UNDERWRITING
Subject to the terms and conditions set forth in the underwriting agreement
dated the date hereof (the 'Underwriting Agreement'), the Company has agreed to
sell to each of the underwriters named below (the 'Underwriters'), and each of
the Underwriters has severally agreed to purchase, the number of Warrants set
forth opposite its name.
NUMBER OF
UNDERWRITERS WARRANTS
--------------------------- ------------
Salomon Brothers Inc ......
Oppenheimer & Co., Inc. ...
------------
Total............ 1,000,000
------------
------------
The Underwriters have advised the Company that they propose to offer the
Warrants to the public initially at the offering price set forth on the cover
page of this Prospectus Supplement, and to certain dealers at such price less a
concession not in excess of $ per Warrant. The Underwriters may allow and such
dealers may reallow a concession not in excess of $ per Warrant to certain
other dealers. After the initial public offering, the public offering price and
such concessions may be changed.
The Underwriters have taken certain actions to discourage short-term
trading of the Warrants during a period of time following the initial offering
date. Included in these actions is the withholding of the concession to dealers
in connection with the Warrants which were sold by such dealers and which are
repurchased for the account of the Underwriters during such period. In addition,
physical delivery of Warrant Certificates evidencing the Warrants is required to
transfer ownership of such Warrants during such period.
The Underwriting Agreement provides that the obligations of the
Underwriters are subject to certain conditions precedent and that the
Underwriters will purchase all the Warrants if any are purchased.
The Underwriting Agreement provides that the Company will indemnify the
Underwriters against certain liabilities, including liabilities under the
Securities Act of 1933, as amended, or to contribute to payments the
Underwriters may be required to make in respect thereof.
The Company or one or more of its subsidiaries may from time to time
purchase or acquire a position in the Warrants and may, at its option, hold,
resell or retire such Warrants. Salomon Brothers expects to offer and sell
previously-issued Warrants in the course of its business as a broker-dealer.
Salomon Brothers may act as principal or agent in such transactions. This
Prospectus Supplement and the accompanying Prospectus may be used by the Company
or any of its subsidiaries, including Salomon Brothers, in connection with such
transactions. Such sales, if any, will be made at varying prices related to
prevailing market prices at the time of sale.
Salomon Brothers is an indirect wholly-owned subsidiary of the Company. The
participation of Salomon Brothers in the offer and sale of the Warrants complies
with the requirements of Rule 2720 ('Schedule E') of the Conduct Rules of the
National Association of Securities Dealers, Inc. (the 'NASD') regarding the
underwriting by Salomon Brothers of the securities of its parent. Under the
provisions of Schedule E and subject to specific exceptions set forth therein,
when a NASD member such as Salomon Brothers distributes securities of an
affiliate, including its parent, the price of the securities can be no higher
than that recommended by a 'qualified independent underwriter', as such term is
defined in Schedule E, meeting certain standards. In accordance with such
requirements, Oppenheimer & Co., Inc. has agreed to serve as an 'qualified
independent underwriter' and has conducted due diligence and has recommended a
price for the Warrants in connection with the requirements of Schedule E.
The Company has been advised by the Underwriters that they propose to offer
the Warrants directly to the public initially at the public offering price set
forth on the cover page of this Prospectus Supplement (except that the price
will be $ per Warrant for the purchase of 100,000 or more Warrants in
any single transaction, subject to the holding period requirements described
herein) and to certain dealers at a price that represents a concession not in
excess of $ per Warrant. After the initial
S-31
<PAGE>
offering of the Warrants, the offering price and other selling terms may from
time to time be varied by the Underwriters.
Generally, delivery of approximately 97.5% of the Warrants (the 'Delivered
Warrants') purchased by an investor at the reduced price will be made on the
date of delivery of the Warrants referred to on the cover of this Prospectus
Supplement. The balance of approximately 2.5% of the Warrants (the 'Escrowed
Warrants') purchased by each such investor will be held in escrow and delivered
to such investor if the investor and any accounts in which the investor may have
deposited any of its Delivered Warrants have held all of the Delivered Warrants
for 45 days following the date of this Prospectus Supplement or any shorter
period deemed appropriate by the Underwriters. If an investor or any account in
which the investor has deposited any of its Delivered Escrowed Warrants fails to
satisfy the holding period requirement, as determined by the Underwriters, all
of the investor's Escrowed Warrants will be forfeited by the investor and not
delivered to it. The Escrowed Warrants will instead be delivered to the
Underwriters for sale to investors. This forfeiture will have the effect of
increasing the purchase price per Warrant for such investors to 100.0% of the
aggregate principal amount of the Warrants. Should investors who are subject to
the holding period requirement sell their Warrants once the holding period is no
longer applicable, the market price of the Warrants may be adversely affected.
See also 'Plan of Distribution' in the accompanying Prospectus.
Each Underwriter has agreed that:
(i) it has not offered or sold and will not offer or sell prior to the
date six months after their date of issue any Warrants, having a maturity
of one year of greater, to persons in the United Kingdom, except to persons
whose ordinary activities involve them in acquiring, holding, managing or
disposing of investments (as principal or agent) for the purposes of their
business or otherwise in circumstances which have not resulted in an offer
to the public in the United Kingdom within the meaning of the Public Offers
of Securities Regulations 1995;
(ii) it has complied with and will comply with all applicable
provisions of the Financial Services Act 1986 with respect to anything done
by it in relation to the Warrants in, from or otherwise involving the
United Kingdom; and
(iii) it has only issued or passed on and will only issue or pass on
to any person in the United Kingdom any document received by it in
connection with the issue of the Warrants if that person is of a kind
described in Article 11(3) of the Financial Services Act 1986 (Investment
Advertisements) (Exemptions) Order 1995 or is a person to whom such
document may otherwise lawfully be issued or passed on.
LEGAL OPINIONS
The validity of the Warrants will be passed upon for the Company by Arnold
S. Olshin, Secretary of the Company, and for the Underwriters by Cleary,
Gottlieb, Steen & Hamilton, New York, New York.
S-32
<PAGE>
APPENDIX A
INDEX OF TERMS
PAGE ON WHICH
TERM TERM IS DEFINED
- - ----------------------------------- ---------------
AMEX............................... S-2
Cash Settlement Value.............. S-17
CEDEL.............................. S-20
Code............................... S-30
Company............................ S-1
Conversion Option.................. S-12
Conversion Option Period........... S-19
Cooperative........................ S-21
Delisting Date..................... S-2
Depositaries....................... S-20
DTC................................ S-12
Euroclear.......................... S-21
Euroclear Operator................. S-21
Exercise Date...................... S-22
Exercise Notice.................... S-21
Expiration Date.................... S-2
Limit Option....................... S-24
Limit Option Reference Rate........ S-24
Morgan............................. S-20
NASD............................... S-31
New York Business Day.............. S-3
Noon Buying Rate................... S-17
Participant........................ S-12
Remaining Warrants................. S-24
Spot Rate.......................... S-1
Spot Rate Reference Agent.......... S-24
Strike Rate........................ S-1
Underwriters....................... S-31
Underwriting Agreement............. S-31
Valuation Date..................... S-23
Warrant Agent...................... S-17
Warrant Agent's Office............. S-17
Warrant Agreement.................. S-17
Warrant Certificate................ S-18
Warrantholder...................... S-8
Warrants........................... S-4
A-1
<PAGE>
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<PAGE>
PROSPECTUS
SALOMON INC
DEBT SECURITIES
PREFERRED STOCK
DEPOSITARY SHARES
COMMON STOCK AND
WARRANTS
Salomon Inc (the 'Company') intends to issue from time to time (i) debt
securities ('Debt Securities'), which may be subordinated to other indebtedness
of the Company; (ii) warrants ('Debt Warrants') to purchase Debt Securities;
(iii) shares of preferred stock, without par value (the 'Preferred Stock'); (iv)
warrants to purchase shares of Preferred Stock (the 'Preferred Stock Warrants');
(v) depositary shares representing entitlement to all rights and preferences of
a fraction of a share of Preferred Stock of a specified series (the 'Depositary
Shares'); (vi) Common Stock of the Company, par value $1.00 per share (the
'Common Stock'); (vii) warrants to purchase shares of Common Stock (the 'Common
Stock Warrants'); or (viii) warrants ('Index Warrants') representing the right
to receive, upon exercise, an amount in cash or a number of securities that will
be determined by reference to prices, yields, levels or other specified
objective measures (any such measure, an 'Index'), or changes in an Index or
differences between two or more indexes all having an aggregate initial public
offering price or purchase price of up to $10,000,000,000, or the equivalent
thereof in one or more foreign or composite currencies, including the European
Currency Unit ('ECU'). The Debt Warrants, Preferred Stock Warrants and Common
Stock Warrants are referred to herein collectively as 'Warrants', and the Debt
Securities, Preferred Stock, Depositary Shares, Common Stock, the Warrants and
the Index Warrants are referred to herein collectively as the 'Offered
Securities'. The Offered Securities may be offered separately or as units with
other Offered Securities, in separate series in amounts, at prices and on terms
to be determined at or prior to the time of sale. 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 Offered Securities which may be sold hereunder.
The specific terms of the Offered Securities with respect to which this
Prospectus is being delivered will be set forth in an accompanying supplement to
this Prospectus (a 'Prospectus Supplement'), together with the terms of the
offering of the Offered Securities and the initial price and the net proceeds to
the Company from the sale thereof. The Prospectus Supplement will include, with
regard to the particular Offered Securities, the following information: (i) in
the case of Debt Securities, the specific designation, aggregate principal
amount, ranking, authorized denomination, maturity, rate or method of
calculation of interest and dates for payment thereof, any exchangeability,
conversion, redemption, prepayment, or sinking fund provisions, the currency or
currency unit in which principal, premium or interest is payable, the
designation of the trustee acting under the applicable indenture and the initial
offering price; (ii) in the case of Preferred Stock, the designation, number of
shares, liquidation preference per share, initial public offering price,
dividend rate (or method of calculation thereof), dates on which dividends shall
be payable and dates from which dividends shall accrue, any redemption or
sinking fund provisions, any conversion or exchange provisions and whether the
Company has elected to offer the Preferred Stock in the form of Depositary
Shares; (iii) in the case of Common Stock, the number of shares and the terms of
the offering and sale thereof; (iv) in the case of Warrants, the number and
terms thereof, the designation, description and the number of securities
issuable upon exercise, the exercise price, the terms of the offering and sale
thereof and where applicable, the duration and detachability thereof; (v) in the
case of Index Warrants, the aggregate amount and offering price of such Index
Warrants, certain information regarding the relevant Index or Indexes and the
related assets by reference to which an Index is determined (the 'Underlying
Assets'), certain information regarding exercisability and certain information
regarding payment and distribution; and (vi) in the case of all Offered
Securities, whether such Offered Securities will be offered separately or as a
unit with other Offered Securities. The Prospectus Supplement will also contain
information, where applicable, about material United States federal income tax
considerations relating to, and any listing on a securities exchange of, the
Offered Securities covered by such Prospectus Supplement.
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.
The Offered 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. The
Company expects that 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 the Offered 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
the Offered 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 Offered 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 Offered Securities.
The Company or one or more of its subsidiaries may from time to time purchase or
acquire a position in the Offered Securities and may at its option, hold,
resell, cancel or exercise, if applicable, such Offered Securities. Salomon
Brothers Inc expects to offer and sell previously issued Offered 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.
This Prospectus may not be used to consummate sales of Offered Securities unless
accompanied by a Prospectus Supplement.
- - --------------------
SALOMON BROTHERS INC
- - --------------------------------------------------------------------------------
The date of this Prospectus is April 5, 1996.
<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 Offered 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 and to the exhibits thereto. Statements contained herein
concerning the provisions of certain documents are not necessarily complete, and
in each instance, reference is made to the copy of such document filed as an
exhibit to the Registration Statement or otherwise filed with the Commission.
Each such statement is qualified in its entirety by such reference.
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,
1995 (the '1995 10-K'); and (ii) the Current Reports on Form 8-K dated January
23, 1996, February 1, 1996 and February 12, 1996.
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 Offered 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 conducts global investment banking, global securities and
commodities trading, and U.S. oil refining and gathering activities. Investment
banking activities are conducted by Salomon Brothers Holding Company Inc and its
subsidiaries ('Salomon Brothers'), including Salomon Brothers Inc. Salomon
Brothers provides capital raising, advisory, trading and risk management
services to its customers, and executes proprietary trading strategies on its
own behalf. Salomon Inc's commodities trading activities are conducted by the
Company's wholly-owned subsidiary, Phibro Inc. and its subsidiaries. Oil
refining and gathering activities are conducted by Basis Petroleum, Inc. At
December 31, 1995, the Company employed 8,439 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
General. The proceeds to be received by the Company from the sale of the
Offered 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.
Use of Proceeds Relating to Index Warrants. All or a portion of the
proceeds to be received by the Company from the sale of each series of Index
Warrants may be used by the Company or one or more of its subsidiaries to
purchase or maintain positions in all or certain of the Underlying Assets on
which the related Index is based, or options, futures contracts, forward
contracts or swaps, or options on the foregoing, relating to such Index or
Underlying Assets, as the case may be, and, if applicable, to pay the costs and
expenses of hedging any currency, interest rate or other Index-related risk with
respect to such Index Warrants. The Company or one or more of its subsidiaries
may also take hedging positions in other types of appropriate financial
instruments that may become available in the future. To the extent that the
Company or one or more of its subsidiaries has a long hedge position in, options
contracts in, or other derivative or synthetic instruments related to, the
Underlying Assets or Index, the Company or one or more of its subsidiaries may
liquidate all or a portion of its holdings at or about the time of the maturity
of the Index Warrants. Depending on, among other things, future market
conditions, the aggregate amount and composition of such positions are likely to
vary over time. The remainder of the proceeds from the sale of Index Warrants
will be used by the Company or its subsidiaries for general corporate purposes,
as described above.
3
<PAGE>
RATIO OF EARNINGS TO FIXED CHARGES AND
EARNINGS TO FIXED CHARGES AND PREFERRED DIVIDENDS
The following table sets forth the Company's ratios of earnings to fixed
charges and earnings to fixed charges and preferred dividends for each of the
years 1995, 1994, 1993, 1992 and 1991.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------------
1995 1994 1993 1992 1991
---- ----- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Ratio of Earnings to Fixed Charges.... 1.12 0.83* 1.32 1.25 1.16
Ratio of Earnings to Fixed Charges and
Preferred Dividends................. 1.10 0.81* 1.30 1.21 1.14
</TABLE>
Such ratios were calculated by dividing fixed charges and tax equivalent
preferred dividends into the sum of earnings before taxes and fixed charges.
Fixed charges consist largely of interest expense, including capitalized
interest, and a portion of rental expense representative of the interest factor.
Tax equivalent preferred dividends represent the pretax earnings necessary to
cover preferred stock dividend requirements, assuming such earnings are taxed at
the Company's consolidated effective income tax rate.
- - ------------------
* For the year ended December 31, 1994, earnings as defined were inadequate to
cover fixed charges and fixed charges, including preferred dividends. The
amount by which fixed charges exceed earnings as defined for the year ended
December 31, 1994 was $834 million. The amount by which fixed charges,
including preferred dividends, exceeded earnings as defined for the year ended
December 31, 1994 was $963 million.
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 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.
4
<PAGE>
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. 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').
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) the
terms, if any, upon which the Debt Securities may be convertible into or
exchanged for Common Stock, Preferred Stock, other Debt Securities, or warrants
for Debt Securities, Preferred Stock, Common Stock or indebtedness or other
securities of any kind of the Company or any other issuer or obligor and the
terms and conditions upon which such conversion or exchange shall be effected,
including the initial conversion or exchange price or rate, the conversion or
exchange period, and any other additional provisions; (viii) if other than
denominations of $1,000 and any integral multiple thereof, the denominations in
which such Debt Securities will be issuable; (ix) 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; (x) provisions, if any,
for the defeasance of such Debt Securities; (xi) 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; (xii) 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; (xiii) 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; (xiv) 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; (xv) 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; (xvi) if
the principal of (and premium, if any) or any interest on such Debt Securities
are to be payable, at the
5
<PAGE>
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 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;
(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 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;
(xviii) 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 application
of a formula, the manner in which such amounts shall be determined; (xix) any
additional Events of Default (as defined below) or restrictive covenants
provided for with respect to such Debt Securities; (xx) 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; (xxi)
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; (xxii) the terms and conditions, if any, upon which such
Debt Securities series may or shall be convertible into or exchangeable or
exercisable for or payable in, among other things, other securities,
instruments, contracts, currencies, commodities or other forms of property,
rights or interests or any combination of the foregoing; and (xxiii) 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
6
<PAGE>
mailed to the Registered Holders thereof or, if so provided in the applicable
Prospectus Supplement, at 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 for Debt Securities.
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
7
<PAGE>
Security registered in their names, will not receive or be entitled to receive
physical delivery of any such Debt Securities and will not be considered the
Holders thereof under the Indenture governing such Debt Securities.
Subject to the restrictions discussed under 'Limitations on Issuance of
Bearer Securities and Bearer Warrants' below, payments of principal of (and
premium, if any) and any interest on individual Debt Securities represented by a
Global Security will be made to the Depositary or its nominee, as the case may
be, as the Holder of such Global Security. None of the Company, the Trustee for
such Debt Securities, any Paying Agent or the Security Registrar for such Debt
Securities will have any responsibility or liability for any aspect of the
records relating to or payments made on account of beneficial interests in such
Global Security or for maintaining, supervising or reviewing any records
relating to such beneficial interests.
The Company expects that the Depositary for any Debt Securities, upon
receipt of any payment of principal, premium or interest in respect of a
definitive Global Security representing any of such Debt Securities, will credit
immediately participants' accounts with payments in amounts proportionate to
their respective beneficial interests in the principal amount of such Global
Security as shown on the records of such Depositary. The Company also expects
that payments by participants to owners of beneficial interests in such Global
Security held through such participants will be governed by standing
instructions and customary practices, as is now the case with securities held
for the accounts of customers in bearer form or registered in 'street name', and
will be the responsibility of such participants. Receipt by owners of beneficial
interests in a temporary Global Security of payments of principal, premium or
interest in respect thereof will be subject to the restrictions discussed under
'Limitations on Issuance of Bearer Securities and Bearer Warrants' below.
If the Depositary for any Debt Securities is at any time unwilling or
unable to continue as depositary and a successor depositary is not appointed by
the Company within ninety days, the Company will issue individual Debt
Securities in exchange for the Global Security or Securities representing such
Debt Securities. In addition, the Company may at any time and in its sole
discretion determine not to have certain Debt Securities represented by one or
more Global Securities and, in such event, will issue individual Debt Securities
in exchange for the Global Security or Securities representing such Debt
Securities. Further, if the Company so specifies with respect to any Debt
Securities, an owner of a beneficial interest in a Global Security representing
such Debt Securities may, on terms acceptable to the Company and the Depositary
for such Global Security, receive individual Debt Securities in exchange for
such beneficial interest. In any such instance, an owner of a beneficial
interest in a Global Security will be entitled to physical delivery of
individual Debt Securities represented by such Global Security equal in
principal amount to such beneficial interest and to have such Debt Securities
registered in its name (if the Debt Securities are issuable as Registered
Securities). Individual Debt Securities so issued will be issued (i) 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, (ii) as Bearer Securities in the denomination
or denominations specified by the Company if the Debt Securities are issuable as
Bearer Securities or (iii) 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.
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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 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
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'Restricted Subsidiary' is defined in the Senior Debt Indenture to mean each of
Salomon Brothers Inc, Phibro 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.
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
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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).
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 United States
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 notice or
lapse of time, or both, would become an Event of Default shall have occurred and
be
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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) above, 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 PREFERRED STOCK
The following description of the terms of the Preferred Stock sets forth
certain general terms and provisions of the Preferred Stock to which any
Prospectus Supplement may relate. The particular terms of the Preferred Stock
offered by any Prospectus Supplement and the extent, if any, to which such
general terms do not apply to such Preferred Stock will be described in such
Prospectus Supplement. The description of the terms of the Preferred Stock set
forth below and in any Prospectus Supplement does not purport to be complete and
is subject to and qualified in its entirety by reference to the Company's
Certificate of Incorporation, as amended (the 'Certificate of Incorporation'),
including the Certificate of Designations (the 'Certificate of Designations')
relating to the applicable series of Preferred Stock. The Certificate of
Incorporation and any such Certificate of Designations have been or will be
filed as an exhibit to or will be incorporated by reference in the Registration
Statement of which this Prospectus forms a part.
GENERAL
As of the date of this Prospectus, the Company is authorized by its
Certificate of Incorporation to issue (unless otherwise indicated in the
Prospectus Supplement) 5,000,000 shares of preferred stock, without par value,
which may be issued from time to time in one or more series and, subject to the
provisions of the Certificate of Incorporation applicable to all series of
preferred stock, shall have such designations, voting powers, preferences and
relative, participating, optional or other special rights, and qualifications,
limitations or restrictions thereof, as shall be stated in the resolution or
resolutions providing for the issue thereof adopted by the Company's Board of
Directors (the 'Board of Directors') or a duly authorized committee thereof.
As of the date of this Prospectus, there are 560,000 shares of Series A
Cumulative Convertible Preferred Stock, 225,000 shares of 9.50% Cumulative
Preferred Stock, Series C, 400,000 shares of 8.08% Cumulative Preferred, Series
D and 500,000 shares of 8.40% Cumulative Preferred Stock, Series E, of the
Company outstanding. The 8.40% Cumulative Preferred Stock, Series E, the 8.08%
Cumulative Preferred Stock, Series D, the 9.50% Cumulative Preferred Stock,
Series C and the Series A Cumulative Convertible Preferred Stock rank on parity
as to the payment of dividends and the distribution of assets upon liquidation,
dissolution or winding up. There are currently reserved for issuance up to
2,500,000 shares of Series B Junior Participating Preferred Stock of the
Company, which shares are issuable upon the exercise of certain preferred share
purchase rights (collectively, the 'Rights'). The Rights will become exercisable
only if a person or group acquires or (unless exercisability is delayed by the
Board of Directors) announces an offer to acquire 20% or more (which percentage
may be reduced to not less than 10% by the Board of Directors prior to the time
the Rights become exercisable) of the outstanding shares of Common Stock of the
Company. Shares of Series B Junior Participating Preferred Stock issued upon the
exercise of the Rights will rank junior to all shares of any other class of the
Company's preferred stock, including the Preferred Stock offered hereby, with
respect to the payment of dividends and the distribution of assets upon
liquidation, dissolution or winding up.
The Preferred Stock shall have the dividend, liquidation, redemption and
voting rights set forth below unless otherwise specified in the applicable
Prospectus Supplement. Reference is made to the Prospectus Supplement relating
to the particular series of Preferred Stock offered thereby for specific terms,
including: (i) the designation, stated value and liquidation preference of such
Preferred Stock and the number of shares offered; (ii) the initial public
offering price at which such shares will be issued; (iii) the dividend rate or
rates (or method of calculation), the date or dates from which dividends shall
accrue, and whether such dividends shall be cumulative, noncumulative or
partially cumulative and, if cumulative or partially cumulative, the dates from
which dividends shall commence to cumulate; (iv) any redemption or sinking fund
provisions; (v) the amount that shares of such series shall be entitled to
receive in the event of any liquidation, dissolution or winding up of the
Company; (vi) the terms and
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conditions, if any, on which shares of such series shall be convertible into or
exchangeable for shares of stock of any other class or classes, or other series
of the same class, of the Company; (vii) the voting rights, if any, of shares of
such series in addition to those set forth in 'Voting Rights' below; (viii) the
status as to reissuance or sale of shares of such series redeemed, purchased or
otherwise reacquired, or surrendered to the Company on conversion or exchange;
(ix) the conditions and restrictions, if any, on the payment of dividends or on
the making of other distributions on, or the purchase, redemption or other
acquisition by the Company or any subsidiary, of the Common Stock or of any
other class of stock of the Company ranking junior to the shares of such series
as to dividends or upon liquidation; (x) the conditions and restrictions, if
any, on the creation of indebtedness of the Company, or any subsidiary, or on
the issue of any additional stock ranking on a parity with or prior to the
shares of such series as to dividends or upon liquidation; and (xi) any
additional dividend, liquidation, redemption, sinking or retirement fund and
other rights, preferences, privileges, limitations and restrictions of such
Preferred Stock.
The Preferred Stock will, when issued, be fully paid and nonassessable.
Unless otherwise specified in the applicable Prospectus Supplement, the shares
of each series of Preferred Stock will upon issuance rank on a parity in all
respects with the outstanding shares of the Company's Series A Cumulative
Convertible Preferred Stock, the 9.50% Cumulative Preferred Stock, Series C, the
8.08% Cumulative Preferred Stock, Series D, the 8.40% Cumulative Preferred
Stock, Series E and each other then-outstanding series of Preferred Stock of the
Company other than the Series B Junior Participating Preferred Stock, which when
issued will rank junior to all shares of any other class of the Preferred Stock.
The Preferred Stock will have no preemptive rights to subscribe for any
additional securities which may be issued by the Company.
DIVIDENDS
The holders of the Preferred Stock, before any dividends may be declared or
paid to the holders of shares of the Common Stock or of any other capital stock
of the Company ranking junior to the Preferred Stock as to the payment of
dividends, will be entitled to receive, when and as declared by the Board of
Directors or a duly authorized committee thereof, out of the net profits or net
assets of the Company legally available therefor, dividends payable quarterly on
March 31, June 30, September 30 and December 31 of each year at such rates as
will be specified in the applicable Prospectus Supplement. Such rates may be
fixed or variable or both. If variable, the formula used for determining the
dividend rate for each dividend period will be specified in the applicable
Prospectus Supplement. Dividends will be payable to the holders of record as
they appear on the stock transfer records of the Company on such record dates
(not more than 60 days prior to a dividend payment date) as will be fixed by the
Board of Directors or a duly authorized committee thereof. Dividends will be
paid in the form of cash.
Dividends on any series of Preferred Stock may be cumulative, partially
cumulative or noncumulative, as specified in the applicable Prospectus
Supplement. If the Board of Directors fails to declare a dividend payable on a
dividend payment date on any Preferred Stock for which dividends are
noncumulative ('Noncumulative Preferred Stock'), then the holders of such
Noncumulative Preferred Stock will have no right to receive a dividend in
respect of the dividend period relating to such dividend payment date, and the
Company will have no obligation to pay the dividend accrued for such period,
whether or not dividends on such Noncumulative Preferred Stock are declared or
paid on any future dividend payment dates. If dividends on any series of
Preferred Stock are not paid in full or declared in full and sums set apart for
the payment thereof, then no dividends shall be declared and paid on any such
stock unless declared and paid ratably on all shares of each series of Preferred
Stock then outstanding, including dividends accrued or in arrears, if any, in
proportion to the respective amounts that would be payable per share if all such
dividends were declared and paid in full.
The Prospectus Supplement relating to a series of Preferred Stock will
specify the conditions and restrictions, if any, on the payment of dividends or
on the making of other distributions on, or the
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purchase, redemption or other acquisition by the Company or any subsidiary of,
the Common Stock or of any other class of stock of the Company ranking junior to
the shares of such series as to dividends or upon liquidation and any other
preferences, rights, restrictions and qualifications that are not inconsistent
with the Certificate of Incorporation.
LIQUIDATION RIGHTS
Upon any liquidation, dissolution or winding up of the Company (whether
voluntary or involuntary) the holders of Preferred Stock will be entitled to
receive out of the assets of the Company available for distribution to its
stockholders, whether from capital, surplus or earnings, the amount specified in
the applicable Prospectus Supplement for such series, together with all
dividends accrued and unpaid before any distribution of the assets will be made
to the holders of Common Stock or any other class or series of shares ranking
junior to such Preferred Stock upon liquidation, dissolution or winding up, and
will be entitled to no other or further distribution. If upon any liquidation,
dissolution or winding up of the Company, the assets distributable among the
holders of the Preferred Stock shall be insufficient to permit the payment in
full to the holders of the Preferred Stock of all amounts payable to all such
holders, then the entire assets of the Company thus distributable will be
distributed ratably among the holders of the Preferred Stock in proportion to
the respective amounts that would be payable per share if such assets were
sufficient to permit payment in full.
Neither the consolidation, merger or other business combination of the
Company with or into any other individual, firm, corporation or other entity nor
the sale, lease, exchange or conveyance of all or any part of the property,
assets or business of the Company will be deemed to be a liquidation,
dissolution or winding up of the Company.
REDEMPTION
If so specified in the Prospectus Supplement, any series of Preferred Stock
may be redeemable, in whole or in part, at the option of the Company or pursuant
to a retirement or sinking fund or otherwise, on terms and at the times and the
redemption prices specified in the applicable Prospectus Supplement. If less
than all shares of a series of Preferred Stock at the time outstanding are to be
redeemed, the shares of such series to be redeemed will be selected pro rata or
by lot, in such manner as may be prescribed by resolution of the Board of
Directors.
Notice of any redemption of Preferred Stock at the option of the Company
shall be given by publication in a newspaper of general circulation in the
Borough of Manhattan, The City of New York, such publication to be made not less
than 30 nor more than 60 days prior to the redemption date. A similar notice
will be mailed by the Company, postage prepaid, not less than 30 nor more than
60 days prior to such redemption date, addressed to the respective holders of
record of shares of Preferred Stock at the addresses shown on the stock transfer
records of the Company, but the mailing of such notice will not be a condition
of such redemption. In order to facilitate the redemption of shares of Preferred
Stock, the Board of Directors may fix a record date for the determination of
shares of Preferred Stock to be redeemed, and such record date will be not more
than 60 days nor less than 30 days prior to the redemption date.
Prior to the redemption date, the Company will deposit money for the
payment of the redemption price with a bank or trust company doing business in
the Borough of Manhattan, The City of New York, and having a capital and surplus
of at least $10,000,000. Unless the Company fails to make such deposit, on the
redemption date, all dividends on the Preferred Stock called for redemption will
cease to accrue and all rights of the holders of such Preferred Stock as
stockholders of the Company shall cease, except the right to receive the
redemption price (but without interest). Unless otherwise specified in the
applicable Prospectus Supplement, any monies so deposited which remain unclaimed
by the holders of such Preferred Stock at the end of six years after the
redemption date will become the property of, and be paid by such bank or trust
company to, the Company.
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CONVERSION RIGHTS
The terms and conditions, if any, on which shares of the Preferred Stock
are convertible into any other class of the Company's securities will be set
forth in the Prospectus Supplement relating thereto. Such terms will include the
designation of the security into which such shares are convertible, the
conversion price, the conversion period, provisions as to whether conversion
will be at the option of the holder or the Company, the events requiring an
adjustment of the conversion price and provisions affecting conversion in the
event of the redemption of the Preferred Stock. In the case of conversion of the
Preferred Stock into Common Stock or into any other security of the Company for
which there exists an established public trading market at the time of such
conversion, such terms may include provisions under which the amount of such
security to be received by the holders of the Preferred Stock would be
calculated according to the market price of such security as of a time stated in
the Prospectus Supplement.
VOTING RIGHTS
Except as indicated below or in the applicable Prospectus Supplement or as
otherwise from time to time required by law, holders of the Preferred Stock will
have no voting rights.
So long as any shares of Preferred Stock are outstanding, without first
obtaining the consent or approval of the holders of at least two-thirds of the
number of then-outstanding shares of Preferred Stock, and all other series of
the Company's preferred stock (the Preferred Stock and such other series of
preferred stock collectively, the 'Outstanding Preferred Stock'), voting as a
single class, given in person or by proxy at a meeting at which the holders of
such shares are entitled to vote separately as a class, the Company will not:
(i) authorize shares of any class or series of stock having any preference or
priority as to dividends or upon liquidation ('Senior Stock') over the
Outstanding Preferred Stock; (ii) reclassify any shares of stock of the Company
into shares of Senior Stock; (iii) authorize any security exchangeable for,
convertible into or evidencing the right to purchase any shares of Senior Stock;
(iv) amend, alter or repeal the Certificate of Incorporation to alter or change
the preferences, rights or powers of the Outstanding Preferred Stock so as to
affect the Outstanding Preferred Stock adversely unless any such amendment,
alteration or repeal would alter or change the preferences, rights or powers of
one or more, but not all, of the series of the Outstanding Preferred Stock at
the time outstanding, in which case the consent or approval of the holders of at
least two-thirds of the number of the outstanding shares of each such series so
affected will be required in lieu of (or if such consent is required by law, in
addition to) the consent or approval of the holders of at least two-thirds of
the number of shares of Outstanding Preferred Stock voting as a class; or (v)
effect the voluntary liquidation, dissolution or winding up of the Company, or
the sale, lease or exchange of all or substantially all of the assets, property
or business of the Company, or the merger or consolidation of the Company with
or into any other corporation (except a wholly-owned subsidiary of the Company);
provided, however, that no separate vote of the holders of the Outstanding
Preferred Stock as a class will be required in the case of a merger or
consolidation or a sale, exchange or conveyance of all or substantially all of
the assets, property or business of the Company (such transactions being
referred to as a 'reorganization') if (A) the resulting, surviving or acquiring
corporation after such reorganization will have no stock either authorized or
outstanding (except such stock of the Company as may have been authorized or
outstanding immediately preceding such reorganization, or such stock of the
resulting, surviving or acquiring corporation as may be issued in exchange
therefor) ranking prior to, or on a parity with, the Outstanding Preferred Stock
or the stock of the resulting, surviving or acquiring corporation issued in
exchange therefor and (B) each holder of shares of Outstanding Preferred Stock
immediately preceding such reorganization will receive in exchange therefor the
same number of shares of stock, with substantially the same preferences, rights
and powers, of the resulting, surviving or acquiring Corporation.
Unless the Company obtains the consent or approval of the holders of a
majority of shares of the Outstanding Preferred Stock, given in person or by
proxy at a meeting at which the holders of such
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shares are entitled to vote separately as a class, the Company may not amend the
provisions of the Certificate of Incorporation in order to increase the amount
of the authorized preferred stock or to authorize any other stock ranking prior
to or on a parity with the Outstanding Preferred Stock either as to payment of
dividends or distribution of assets upon liquidation, dissolution or winding up.
Each share of Preferred Stock will be entitled to one vote on matters on
which holders of the Preferred Stock are entitled to vote. Since each share of
Outstanding Preferred Stock will be entitled to one vote, the voting power of
any series of Preferred Stock on matters on which holders of such series and
holders of other series of Outstanding Preferred Stock are entitled to vote as a
single class will depend on the number of shares of Outstanding Preferred Stock,
not the aggregate liquidation preference or initial offering price of the shares
of such series.
DESCRIPTION OF DEPOSITARY SHARES
The following summary and the summary in any Prospectus Supplement of the
terms and provisions of the Depositary Shares and Depositary Receipts does not
purport to be complete and is subject to and qualified in its entirety by
reference to the Deposit Agreement relating to the applicable series of
Preferred Stock, which has been or will be filed as an exhibit to or
incorporated by reference in the Registration Statement of which this Prospectus
is a part.
GENERAL
The Company may, at its option, elect to offer fractional interests in
shares of Preferred Stock, rather than full shares of Preferred Stock. In the
event such option is exercised, the Company will provide for the issuance by a
depositary of depositary receipts ('Depositary Receipts') evidencing depositary
shares ('Depositary Shares'). Each Depositary Receipt will represent a
fractional interest (to be specified in the applicable Prospectus Supplement) in
a share of a particular series of the Preferred Stock as more fully described
below.
In the event that the Company offers fractional shares of any series of
Preferred Stock, such shares of the Preferred Stock, if any, will be deposited
under a separate deposit agreement (a 'Deposit Agreement') among the Company, a
bank or trust company selected by the Company and having its principal office in
the United States and having a combined capital and surplus of at least
$50,000,000 (the 'Depositary') and the holders from time to time of the
Depositary Receipts issued by the Depositary thereunder. The applicable
Prospectus Supplement will set forth the name and address of the Depositary.
Subject to the terms of the Deposit Agreement, each owner of a Depositary Share
will be entitled, in proportion to the applicable fractional interest in a share
of Preferred Stock underlying such Depositary Share, to all the rights and
preferences of the Preferred Stock underlying such Depositary Share (including
dividend, voting, redemption and liquidation rights).
Pending the preparation of definitive engraved Depositary Receipts, the
Depositary may, upon the written order of the Company, issue temporary
Depositary Receipts substantially identical to (and entitling the holders
thereof to all the rights pertaining to) the definitive Depositary Receipts but
not in definitive form. Definitive Depositary Receipts will be prepared
thereafter without unreasonable delay, and temporary Depositary Receipts will be
exchangeable for definitive Depositary Receipts at the Company's expense.
DIVIDENDS AND OTHER DISTRIBUTIONS
The Depositary will distribute all cash dividends or other cash
distributions received in respect of the Preferred Stock deposited under a
Deposit Agreement to the record holders of Depositary Shares representing such
Preferred Stock in proportion to the numbers of such Depositary Shares owned by
such holders on the relevant record date. The Depositary will distribute only
such amount, however, as can be distributed without attributing to any holder of
Depositary Shares a fraction of one cent, and any
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balance not so distributable will be held by the Depositary (without liability
for interest thereon) and will be added to and treated as part of the next sum
received by the Depositary for distribution to record holders of Depositary
Receipts then outstanding.
In the event of a distribution other than in cash in respect of Preferred
Stock deposited under a Deposit Agreement, the Depositary will distribute the
property received by it to the record holders of the Depositary Shares entitled
thereto, in proportion, as nearly as may be practicable, to the numbers of
Depositary Shares owned by such holders on the relevant record date, unless the
Depositary determines that it is not feasible to make such distribution, in
which case the Depositary may, with the approval of the Company, adopt such
method as it deems equitable and practicable to effect such distribution,
including the sale of such property and distribution of the net proceeds from
such sale to such holders.
Each Deposit Agreement will also contain provisions relating to the manner
in which any subscription or similar rights offered by the Company to holders of
the Preferred Stock deposited under such Deposit Agreement will be made
available to holders of Depositary Shares.
REDEMPTION OF DEPOSITARY SHARES
If the Preferred Stock deposited under a Deposit Agreement is subject to
redemption in whole or in part, the related Depositary Shares will be redeemed
from the proceeds received by the Depositary as a result of any such redemption
of such Preferred Stock held by the Depositary. Whenever the Company redeems
shares of Preferred Stock held by the Depositary, the Depositary will redeem as
of the same redemption date the number of Depositary Shares representing the
shares of Preferred Stock so redeemed. The Depositary will mail the notice of
redemption not less than 30 and not more than 60 days prior to the date fixed
for redemption to the record holders of the Depositary Shares to be so redeemed.
The redemption price per Depositary Share will be equal to the applicable
fraction of the redemption price per share payable with respect to such
Preferred Stock. If less than all the Depositary Shares are to be redeemed, the
Depositary Shares to be redeemed will be selected by lot or pro rata as may be
determined by the Depositary.
Notice of redemption having been given as described above, from and after
the date fixed for redemption, unless the Company shall have failed to redeem
the shares of Preferred Stock so called for redemption, the Depositary Shares so
called for redemption will no longer be deemed to be outstanding, and all rights
of the holders of such Depositary Shares will cease, except for the right to
receive the monies payable upon such redemption and any money or other property
to which the holders of such Depositary Shares were entitled upon such
redemption, upon surrender to the Depositary of the Depositary Receipts
evidencing such Depositary Shares.
CONVERSION OF DEPOSITARY SHARES
If the Preferred Stock deposited under a Deposit Agreement is convertible
into any other class of the Company's securities, the related Depositary Shares
also will have such conversion rights. The terms and conditions on which such
Depositary Shares are convertible will be set forth in the Prospectus Supplement
relating thereto. The conversion price per Depositary Share will be equal to the
applicable fraction of the conversion price per share applicable to such
Preferred Stock.
VOTING RIGHTS
As soon as practicable after receipt of notice of any meeting at which the
holders of the Preferred Stock deposited under a Deposit Agreement are entitled
to vote, the Depositary will mail the information contained in such notice of
meeting to the holders of the Depositary Shares relating to such Preferred
Shares as of the record date for such meeting. Each such record holder of
Depositary Shares will be
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entitled, subject to any applicable restrictions, to instruct the Depositary as
to the exercise of the voting rights pertaining to the amount of the Preferred
Stock represented by such record holder's Depositary Shares. The Depositary will
endeavor, insofar as practicable, to vote the amount of the Preferred Stock
represented by such Depositary Shares in accordance with any such instructions,
and the Company will agree to take all action which may be deemed necessary by
the Depositary in order to enable the Depositary to do so. The Depositary will
abstain from voting shares of the Preferred Stock deposited under a Deposit
Agreement to the extent that it does not receive specific instructions from the
holders of Depositary Shares representing such Preferred Stock.
WITHDRAWAL OF STOCK
Upon surrender of Depositary Receipts at the principal office of the
relevant Depositary (unless the related Depositary Shares have previously been
called for redemption), and subject to the terms of the related Deposit
Agreement, the owner of the Depositary Shares evidenced thereby is entitled to
delivery of whole shares of Preferred Stock and all money and other property, if
any, represented by such Depositary Shares. Partial shares of Preferred Stock
will not be issued. If the Depositary Receipts delivered by the holder evidence
a number of Depositary Shares in excess of the number of Depositary Shares
representing the number of whole shares of Preferred Stock to be withdrawn, the
relevant Depositary will deliver to such holder at the same time a new
Depositary Receipt evidencing such excess number of Depositary Shares. Holders
of shares of Preferred Stock thus withdrawn will not thereafter be entitled to
deposit such shares under a Deposit Agreement or to receive Depositary Shares
therefor. The Company does not expect that there will be any public trading
market for the Preferred Stock, except as represented by the Depositary Shares.
AMENDMENT AND TERMINATION OF THE DEPOSIT AGREEMENT
The form of Depositary Receipt evidencing any Depositary Shares and any
provision of a Deposit Agreement may at any time and from time to time be
amended by agreement between the Company and the Depositary. However, any
amendment which materially and adversely alters the rights of the existing
holders of Depositary Shares will not be effective unless such amendment has
been approved by the holders of at least a majority of the Depositary Shares
then outstanding under such Deposit Agreement. Each Deposit Agreement will
provide that each holder of Depositary Shares at the time any such amendment
becomes effective which continues to hold such Depositary Shares will be deemed
to have consented to such amendment and will be bound thereby. No such amendment
may impair the right, subject to the terms of the related Deposit Agreement, of
any owner of any Depositary Shares issued under such Deposit Agreement to
surrender the Depositary Receipt evidencing such Depositary Shares with
instructions to the Depositary to deliver to the holder the whole shares of
Preferred Stock represented by such Depositary Shares and all money and other
property, if any, represented thereby, except in order to comply with mandatory
provisions of applicable law. A Deposit Agreement may be terminated by the
Company or the Depositary only if (i) all outstanding Depositary Shares relating
thereto have been redeemed or (ii) there has been a final distribution in
respect of the Preferred Stock of the relevant series in connection with any
liquidation, dissolution or winding up of the Company and such distribution has
been distributed to the holders of the related Depositary Shares.
CHARGES OF DEPOSITARY
The Company will pay all transfer and other taxes and governmental charges
arising solely from the existence of the depositary arrangements. The Company
will pay charges of any Depositary in connection with the initial deposit of
Preferred Stock and the initial issuance of the relevant Depositary Shares and
any redemption of such Preferred Stock. Holders of Depositary Shares will pay
other transfer and other taxes and governmental charges and certain other
charges as are provided in the relevant Deposit Agreement to be for their
accounts.
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MISCELLANEOUS
Each Depositary will forward to the holders of the Depositary Shares all
reports and communications from the Company which are delivered to such
Depositary and which the Company is required to furnish to the holders of the
Preferred Stock. In addition, each Depositary will make available for inspection
by holders of the Depositary Shares at the principal office of such Depositary,
and at such other places as it may from time to time deem advisable, any reports
and communications received from the Company which are received by such
Depositary as the holder of Preferred Stock.
Neither any Depositary nor the Company will assume any obligation or will
be subject to any liability under a Deposit Agreement to holders of the
Depositary Shares other than for its negligence or willful misconduct. Neither
any Depositary nor the Company will be liable if it is prevented or delayed by
law or any circumstance beyond its control in performing its obligations under a
Deposit Agreement. The obligations of the Company and any Depositary under a
Deposit Agreement will be limited to performance in good faith of their duties
thereunder, and they will not be obligated to prosecute or defend any legal
proceeding in respect of any Depositary Shares or Preferred Stock unless
satisfactory indemnity is furnished. The Company and any Depositary may rely on
written advice of counsel or accountants, on information provided by persons
presenting Preferred Stock for deposit, holders of Depositary Shares or other
persons believed in good faith to be competent to give such information and on
documents believed to be genuine and to have been signed or presented by the
proper party or parties.
RESIGNATION AND REMOVAL OF DEPOSITARY
A Depositary may resign at any time by delivering to the Company notice of
its election to do so, and the Company may at any time remove any Depositary,
any such resignation or removal to take effect upon the appointment of a
successor Depositary and its acceptance of such appointment. Such successor
Depositary must be appointed within 60 days after delivery of the notice of
resignation or removal and must be a bank or trust company having its principal
office in the United States of America and having a combined capital and surplus
of at least $50,000,000.
FEDERAL INCOME TAX CONSEQUENCES
Owners of the Depositary Shares will be treated for Federal income tax
purposes as if they were owners of the Preferred Stock represented by such
Depositary Shares.
BOOK-ENTRY PROCEDURES AND SETTLEMENT FOR PREFERRED STOCK AND DEPOSITARY SHARES
The Preferred Stock or Depositary Shares may be issued in certificated or
book-entry form, as specified in the applicable Prospectus Supplement. Preferred
Stock or Depositary Shares issued in book-entry form from the perspective of the
beneficial owners thereof (the 'Shareholders') will be issued in the form of a
single global stock certificate or Depositary Receipt registered in the name of
the nominee of the depository, The Depository Trust Company ('DTC', which term,
as used herein, includes any successor or alternate depository selected by the
Company).
DTC is a limited-purpose trust company which was created to hold securities
for its participating organizations (the 'Participants') and to facilitate the
clearance and settlement of securities transactions between Participants in such
securities through electronic book-entry changes in accounts of its
Participants. Participants include securities brokers and dealers, banks and
trust companies, clearing corporations and certain other organizations. Access
to DTC's 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 ('Indirect Participants'). Persons
who are not Participants may beneficially own securities held by DTC only
through Participants or Indirect Participants.
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DTC's nominee for all purposes will be considered the sole owner or holder
of the Preferred Stock or Depositary Shares held in book-entry form. Owners of
beneficial interests in the global stock certificate or Depositary Receipt will
not be entitled to have Preferred Stock or Depositary Shares registered in their
names, will not receive or be entitled to receive physical delivery of Preferred
Stock or Depositary Shares in definitive form and will not be considered the
holders thereof under the Certificate of Incorporation or any Deposit Agreement.
Neither the Company nor the Depository 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 global stock certificate or Depositary
Receipt, or for maintaining, supervising or reviewing any records relating to
such beneficial ownership interests.
A Shareholder's ownership of Preferred Stock or Depositary Shares will be
recorded on or through the records of the brokerage firm or other entity that
maintains such Shareholder's account. In turn, the total number of shares of
Preferred Stock or Depositary Shares held by an individual brokerage firm for
its clients will be maintained on the records of DTC in the name of such
brokerage firm or other entity (or in the name of a Participant that acts as
agent for the Shareholder's brokerage firm or other entity if such firm or other
entity is not a Participant). Therefore, a Shareholder must rely upon the
records of such brokerage firm or other entity to evidence such Shareholder's
ownership of Preferred Stock or Depositary Shares. Transfer of ownership of any
Preferred Stock or Depositary Shares may be effected only through the brokerage
firm or other entity that maintains a Shareholder's account.
Dividends or other distributions payable in respect of Preferred Stock or
Depositary Shares will be paid by the Company or the Depositary, as the case may
be, to DTC. DTC will be responsible for crediting the amount of payments that it
receives from the Company or the Depositary, as the case may be, to the accounts
of the Participants in accordance with each of their respective standard
procedures. Each Participant will be responsible for disbursing such payments to
the Shareholders 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 Shareholders that it represents. It is
suggested that any purchaser of Preferred Stock or Depositary Shares with
accounts at more than one brokerage firm or other entity only effect
transactions in the Preferred Stock or Depositary Shares through the brokerage
firm or firms or other entity or entities that hold such purchaser's Preferred
Stock or Depositary Shares.
If DTC is at any time unwilling or unable to continue as depository in
respect of a global certificate or Depositary Receipt and a successor depository
is not appointed by the Company or the Depositary, as the case may be, within 90
days, the Company will issue Preferred Stock or Depositary Shares, as the case
may be, in definitive form in exchange for the global stock certificate or
Depositary Receipt. In addition, the Company may at any time determine not to
have the Preferred Stock or Depositary Shares represented by a global stock
certificate or Depositary Receipt, as the case may be, and, in such event, will
issue Preferred Stock or Depositary Shares in definitive form in exchange for
such global stock certificate or Depositary Receipt. In either instance, an
owner of a beneficial interest in the global stock certificate or Depositary
Receipt will be entitled to have Preferred Stock or Depositary Shares equal in
aggregate amount to such beneficial interest registered in its name and will be
entitled to physical delivery of such Preferred Stock or Depositary Shares in
definitive form. The registered owner of such Preferred Stock or Depositary
Shares will be entitled to receive the dividends or other distributions or, if
applicable, the redemption price payable in respect of such Preferred Stock or
Depositary Shares, upon surrender of such Preferred Stock or Depositary Shares
to the Company or the Depositary, as the case may be, in accordance with the
procedures set forth in the Certificate of Incorporation or Deposit Agreement,
respectively.
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DESCRIPTION OF COMMON STOCK
As of the date of this Prospectus, the Company's Certificate of
Incorporation authorizes the issuance of 250,000,000 shares of Common Stock,
$1.00 par value per share. As of December 31, 1995, 106,447,726 shares of Common
Stock were outstanding.
The following description of the capital stock of the Company is subject to
the detailed provisions of the Company's Certificate of Incorporation and bylaws
as currently in effect (the 'Bylaws'). This description does not purport to be
complete or to give full effect to the terms of the provisions of statutory or
common law and is subject to, and qualified in its entirety by reference to, the
Certificate of Incorporation and the Bylaws, each of which has been filed as an
exhibit to or will be incorporated by reference in the Registration Statement of
which this Prospectus is a part.
Subject to the rights of the holders of any outstanding shares of preferred
stock, holders of Common Stock are entitled to receive such dividends, in cash,
securities, or property, as may from time to time be declared by the Board of
Directors. Subject to the provisions of the Bylaws with respect to the closing
of the transfer books and the fixing of a record date, holders of shares of
Common Stock are entitled to one vote per share of Common Stock held on all
matters requiring a vote of the holders of Common Stock. In the event of any
liquidation, dissolution or winding up of the Company, either voluntary or
involuntary, after payment shall have been made to the holders of preferred
stock of the full amount to which they shall be entitled, the holders of Common
Stock shall be entitled to share ratably, according to the number of shares held
by them, in all remaining assets of the Company available for distribution.
Shares of Common Stock are not redeemable and have no subscription, conversion
or preemptive rights.
The outstanding shares of Common Stock are listed on the New York Stock
Exchange and trade under the symbol 'SB'. The transfer agent and registrar for
the Common Stock is First Chicago Trust Company.
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.
The Company may issue Warrants for the purchase of Debt Securities,
Preferred Stock or Common Stock. Warrants may be issued independently or
together with Debt Securities, Preferred Stock or Common Stock offered by any
Prospectus Supplement and may be attached to or separate from any such Offered
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'). 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, 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.
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DEBT WARRANTS
Reference is hereby made to the Prospectus Supplement relating to the
particular series of Debt Warrants, if any, offered thereby for the terms of
such Warrants, including, where applicable: (i) the title of such Debt Warrants;
(ii) the aggregate number of such Debt Warrants; (iii) the offering price, if
any; (iv) the currency or currencies in which such Debt Warrants are being
offered; (v) the designation, aggregate principal amount, currency or
currencies, denominations and other terms of the series of Debt Securities
purchasable upon exercise of such Debt Warrants; (vi) if applicable, the
designation and terms of the series of Debt Securities with which such Debt
Warrants are being offered and the number of such Debt Warrants being offered
with each such Debt Security; (vii) if applicable, the date on and after which
such Debt Warrants and the related series of Debt Securities will be
transferable separately; (viii) the principal amount of the Debt Securities
purchasable upon exercise of each such Debt Warrant and the price at which and
currency or currencies in which such principal amount of Debt Securities may be
purchased upon such exercise (which price may be payable in cash, securities or
other property); (ix) the date on which the right to exercise such Debt Warrants
shall commence and the date (the 'Expiration Date') on which such right shall
expire; (x) whether such Warrants are to be issuable as Registered Warrants or
Bearer Warrants (each, as defined below); (xi) whether such Debt Warrants are
extendable and the period or periods of such extendability; (xii) the terms upon
which any Bearer Warrants of such series may be exchanged for Registered
Warrants of such series; (xiii) whether such Debt Warrants will be issued in
certificated or uncertificated form; (xiv) United States Federal income tax
consequences; (xv) the antidilution provisions of such Debt Warrants, if any;
(xvi) the redemption or call provisions, if any, applicable to such Debt
Warrants; (xvii) any additional terms of the Debt Warrants, including terms,
procedures and limitations relating to the exchange of such Debt Warrants; and
(xviii) any other terms of such Debt Warrants not inconsistent with the
applicable Warrant Agreement.
Warrants for Debt Securities will be issuable in registered form
('Registered Warrants') and may be issuable in bearer form ('Bearer Warrants').
Registered Warrants of any series will be exchangeable into Registered Warrants
of the same series representing in the aggregate the number of Debt 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
Debt Warrants (or any other office indicated in the Prospectus Supplement
relating to such series of Debt Warrants). Prior to the exercise of their Debt
Warrants, holders of Debt 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.
Each Debt 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 Debt 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 Debt
Warrants. After the close of business on the Expiration Date relating to such
series of Debt Warrants (or such later date to which such Expiration Date may be
extended by the Company), unexercised Debt 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 Debt 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
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Certificate evidencing such Debt Warrants. Such Debt Warrants will be deemed to
have been exercised upon receipt of the exercise price, subject to the receipt
of the Warrant Certificate evidencing such Debt 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 Debt
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.
STOCK WARRANTS
The Prospectus Supplement relating to any particular issue of Preferred
Stock Warrants or Common Stock Warrants will describe the terms of such Stock
Warrants, including the following: (i) the title of such Stock Warrants; (ii)
the aggregate number of such Stock Warrants; (iii) the offering price for such
Stock Warrants, if any; (iv) the currency or currency units in which the
offering price, if any, and the exercise price are payable; (v) the designation
and terms of the Common Stock or Preferred Stock purchasable upon exercise of
such Stock Warrants; (vi) if applicable, the designation and terms of such
Offered Securities with which such Stock Warrants are issued and the number of
such Stock Warrants issued with each such Offered Security; (vii) if applicable,
the date from and after which such Stock Warrants and any such Offered
Securities issued therewith will be transferable separately; (viii) the number
of shares of Common Stock or Preferred Stock purchasable upon exercise of a
Stock Warrant and the price at which such shares may be purchased upon exercise;
(ix) the date on which the right to exercise such Stock Warrants shall commence
and the Expiration Date; (x) if applicable, the minimum or maximum amount of
such Stock Warrants that may be exercised at any one time; (xi) whether such
Stock Warrants are extendable and the period or periods of such extendability;
(xii) United States federal income tax consequences; (xiii) the antidilution
provisions of such Stock Warrants, if any; (xiv) the redemption or call
provisions, if any applicable to such Stock Warrants; (xv) any additional terms
of the Stock Warrants, including terms, procedures and limitations relating to
the exchange of such Stock Warrants; and (xvi) any other terms of such Stock
Warrants not inconsistent with the applicable Warrant Agreement.
DESCRIPTION OF INDEX WARRANTS
The following description of the terms of the Index Warrants sets forth
certain general terms and provisions of the Index Warrants to which any
Prospectus Supplement may relate. The particular terms of the Index Warrants
offered by any Prospectus Supplement and the extent, if any, to which such
general provisions do not apply to the Index Warrants so offered will be
described in such Prospectus Supplement.
Each series of Index Warrants will be issued under a separate index warrant
agreement (each, an 'Index Warrant Agreement') to be entered into between the
Company and a bank or trust company, as warrant agent (the 'Index Warrant
Agent'), all as described in the Prospectus Supplement relating to such Index
Warrants. A single bank or trust company may act as Index Warrant Agent for more
than one series of Index Warrants. The Index Warrant Agent will act solely as
the agent of the Company under the applicable Index Warrant Agreement and will
not assume any obligation or relationship of agency or trust for or with any
owners of such Index Warrants. A copy of the form of Index Warrant Agreement,
including the form of index warrant certificate (the 'Index Warrant
Certificate,' or, if issued in global form, the 'Index Warrant Global
Certificate'), is filed as an exhibit to or incorporated by reference in the
Registration Statement. The following summaries of certain provisions of the
Index Warrants and the form of Index Warrant Agreement do not purport to be
complete and are subject to,
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and are qualified in their entirety by reference to, all of the provisions of
the Index Warrant Agreement and the Index Warrant Certificate or Index Warrant
Global Certificate.
GENERAL
The Index Warrant Agreement does not limit the number of Index Warrants
that may be issued thereunder. The Company will have the right to 'reopen' a
previous series of Index Warrants and to issue additional Index Warrants of such
series.
Each Index Warrant will entitle the holder (each, a 'Holder') to receive
from the Company, upon exercise, including any automatic exercise, an amount in
cash or a number of securities that will be determined by reference to prices,
yields, levels or other specified objective measure (any such measure, an
'Index'), or changes in an Index or differences between two or more Indexes. The
assets by reference to which an Index is determined (the 'Underlying Assets')
may be one or more specified securities or securities indexes or one or more
foreign currencies or foreign currency indexes, or a combination thereof. The
Prospectus Supplement for a series of Index Warrants will set forth the formula
or methodology pursuant to which the amount payable or distributable on the
Index Warrants will be determined by reference to the relevant Index or Indexes.
Certain Index Warrants will, if specified in the Prospectus Supplement,
entitle the Holder to receive from the Company, upon automatic exercise at
expiration and under certain other circumstances, a minimum or maximum amount.
The Prospectus Supplement applicable to any series of Index Warrants will
set forth any circumstances in which the payment or distribution, or the
determination of the payment or distribution, on the Index Warrants may be
postponed and the period for which such payment or distribution or determination
may be postponed. Conversely, the Index Warrants may be subject to early
exercise or cancellation in certain circumstances described in the applicable
Prospectus Supplement. The amount due, or the means by which the amount due, on
the Index Warrants may be determined after any such delay or postponement, or
early exercise or cancellation will be set forth in the applicable Prospectus
Supplement.
Unless otherwise specified in the applicable Prospectus Supplement, the
Company will be under no obligation to, nor will it, purchase or take delivery
of or sell or deliver any securities or currencies (including the Underlying
Assets), other than the payment of any cash or distribution of any securities
due on the Index Warrants, from or to Holders pursuant to the Index Warrants.
Unless otherwise specified in the Prospectus Supplement, the Index Warrants
will be deemed to be automatically exercised upon expiration. Upon such
automatic exercise, Holders will be entitled to receive in cash or securities,
depending on the terms of the applicable Prospectus Supplement, the cash amount
or the number of securities due, if any, on such exercise of the Index Warrants.
Reference is hereby made to the Prospectus Supplement relating to the
particular series of Index Warrants offered thereby for the terms of such Index
Warrants, including, where applicable: (i) the aggregate number of such Index
Warrants; (ii) the offering price of such Index Warrants; (iii) the Index or
Indexes by reference to which payment or distribution on such Index Warrants
will be determined; (iv) certain information regarding the Underlying Assets;
(v) the amount due, or the means by which the amount due may be calculated, on
exercise of the Index Warrants, including automatic exercise, or upon
cancellation; (vi) the date on which the Index Warrants may first be exercised
and the date on which they expire; (vii) any minimum number of Index Warrants
exercisable at any one time; (viii) any maximum number of Index Warrants that
may, subject to the Company's election, be exercised by all Holders (or by any
person or entity) on any day; (ix) any provisions permitting a Holder to
condition an exercise of Index Warrants; (x) the method by which the Index
Warrants may be exercised; (xi) the currency in which the Index Warrants will be
denominated and in which payments on the Index Warrants will be made or the
securities that may be distributed in respect of the Index Warrants; (xii) the
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method of making any foreign currency translation applicable to payments or
distributions on the Index Warrants; (xiii) the method of providing for a
substitute Index or Indexes or otherwise determining the amount payable in
connection with the exercise of Index Warrants if an Index changes or is no
longer available; (xiv) the time or times at which amounts will be payable in
respect of such Index Warrants following exercise or automatic exercise; (xv)
any national securities exchange on, or self-regulatory organization with, which
such Index Warrants will be listed; (xvi) any provisions for issuing such Index
Warrants in certificated form; (xvii) if such Index Warrants are not issued in
book-entry form, the place or places at and the procedures by which payments or
distributions on the Index Warrants will be made; and (xviii) any other terms of
such Index Warrants.
Prospective purchasers of Index Warrants should be aware of special United
States federal income tax considerations applicable to instruments such as the
Index Warrants. The Prospectus Supplement relating to each series of Index
Warrants will describe such tax considerations. The summary of United States
federal income tax considerations contained in the Prospectus Supplement will be
presented for informational purposes only, however, and will not be intended as
legal or tax advice to prospective purchasers. Prospective purchasers of Index
Warrants are urged to consult their own tax advisors prior to any acquisition of
Index Warrants.
BOOK-ENTRY PROCEDURES AND SETTLEMENT FOR INDEX WARRANTS
Subject to the rules of the Depository, and unless otherwise specified in
the Prospectus Supplement, the Index Warrants offered thereby will be issued in
the form of a single Index Warrant Global Certificate that will be deposited
with, or on behalf of, a depository (the 'Depository'), which shall be, unless
otherwise specified in the applicable Prospectus Supplement, the Depository
Trust Company, New York, New York ('DTC'). Index Warrants will be registered in
the name of the Depository or a nominee of the Depository. Unless and until it
is exchanged in whole or in part for the individual Index Warrants represented
thereby, an Index Warrant Global Certificate may not be transferred except as a
whole by the Depository to a nominee of the Depository or by a nominee of the
Depository to the Depository or another nominee of the Depository or by the
Depository or any such nominee to a successor of the Depository or a nominee of
such successor.
The Company anticipates that the following provisions will apply to all
depository arrangements.
Upon the issuance of an Index Warrant Global Certificate, the Depository
will credit, on its book-entry registration and transfer system, the respective
numbers of the individual Index Warrants represented by such Index Warrant
Global Certificate to the accounts of institutions that have accounts with the
Depository ('participants'). The accounts to be credited shall be designated by
the underwriters of such Index Warrants or, if such Index Warrants 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 an Index Warrant
Global Certificate will be limited to participants or persons that may hold
beneficial interests through participants. Ownership of beneficial interests in
an Index Warrant Global Certificate will be shown on, and the transfer of that
ownership will be effected only through, records maintained by the Depository
for such Index Warrant Global Certificate 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 an Index Warrant
Global Certificate.
The Depository's nominee for all purposes will be considered the sole owner
or holder of the Index Warrants under the related Index Warrant Agreement.
Except as set forth below, owners of beneficial interests in the Index Warrant
Global Certificate will not be entitled to have any of the individual Index
Warrants represented by such Index Warrant Global Certificate registered in
their names, will not receive or be entitled to receive physical delivery of any
such Index Warrants, and will not be considered the holders thereof under the
related Index Warrant Agreement.
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Neither the Company nor the Index Warrant Agent will have any
responsibility or liability for any aspect of the records relating to or
payments or distributions made on account of beneficial ownership interests in
the Index Warrant Global Certificate or for maintaining, supervising or
reviewing any records relating to such beneficial ownership interests.
If the Depository is at any time unwilling or unable to continue as
depository and a successor depository is not appointed by the Company within 90
days, the Company will issue individual Index Warrant Certificates in exchange
for the Index Warrant Global Certificate. In addition, the Company may at any
time and in its sole discretion determine not to have certain Index Warrants
represented by an Index Warrant Global Certificate and, in such event, will
issue individual Index Warrant Certificates in exchange for such Global
Certificate. Further, if the Company so specifies with respect to any Index
Warrants, an owner of a beneficial interest in an Index Warrant Global
Certificate may, on such terms acceptable to the Company and the Depository,
receive individual Index Warrant in exchange for such beneficial interest. In
any such instance, an owner of a beneficial interest in the Index Warrant Global
Certificate will be entitled to have Index Warrants equal in aggregate number to
such beneficial interest registered in its name and will be entitled to physical
delivery of such Index Warrants. The registered owner of such Index Warrants
will be entitled to receive any amounts payable in respect of such Index
Warrants, upon surrender of such Index Warrants to the Index Warrant Agent in
accordance with the procedures set forth in the Prospectus Supplement.
LISTING
Unless otherwise indicated in the Prospectus Supplement, the Index Warrants
will be listed on a national securities exchange or with a self-regulatory
organization, the rules and regulations of which are filed with the Commission
pursuant to Section 19(b) of the Exchange Act (a 'Self-Regulatory
Organization'), in each case as specified in the Prospectus Supplement. It is
expected that such Self-Regulatory Organization will cease trading a series of
Index Warrants as of the close of business on the related expiration date of
such Index Warrants.
MODIFICATION
The Index Warrant Agreement and the terms of the related Index Warrants may
be amended by the Company and the Index Warrant Agent, without the consent of
the holders of any Index Warrants, for the purpose of curing any ambiguity or of
curing, correcting or supplementing any defective or inconsistent provision
contained therein, maintaining the listing of such Index Warrants on any
national securities exchange or with any other Self-Regulatory Organization or
registration of such Index Warrants under the Exchange Act, permitting the
issuance of individual Index Warrant certificates to Holders, reflecting the
issuance by the Company of additional Index Warrants of the same series or
reflecting the appointment of a successor depository, or for any other purpose
which the Company may deem necessary or desirable and which will not materially
and adversely affect the interests of the Holders.
The Company and the Index Warrant Agent also may modify or amend the Index
Warrant Agreement and the terms of the related Index Warrants, with the consent
of the holders of not less than a majority in number of the then outstanding
Warrants affected by such modification or amendment, for any purposes; provided,
however, that no such modification or amendment that changes the amount to be
paid or the securities to be distributed to the Holder or the manner in which
such amount is to be determined, shortens the period of time during which the
Index Warrants may be exercised, or otherwise materially and adversely affects
the exercise rights of the holders of the Index Warrants or reduces the
percentage of the number of outstanding Index Warrants the consent of whose
holders is required for modification or amendment of the Index Warrant Agreement
or the terms of the related Index Warrants, may be made without the consent of
each Holder affected thereby.
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MERGER, CONSOLIDATION, SALE OR OTHER DISPOSITION
If at any time there is a merger or consolidation involving the Company or
a sale, transfer, conveyance (other than by way of lease) or other disposition
of all or substantially all of the assets of the Company, then the successor or
assuming corporation will succeed to and be substituted for the Company under
the Index Warrant Agreement and the related Index Warrants, with the same effect
as if it had been named in such Index Warrant Agreement and Index Warrants as
the Company. The Company will thereupon be relieved of any further obligation
under such Index Warrant Agreement and Index Warrants and may at any time
thereafter be dissolved, wound up or liquidated.
ENFORCEABILITY OF RIGHTS BY HOLDERS
Any Holder may, without the consent of the Index Warrant Agent or any other
Holder, enforce by appropriate legal action on his own behalf his right to
exercise, and to receive payment for, his Index Warrants.
SPECIAL CONSIDERATIONS RELATING TO INDEX WARRANTS
The Index Warrants involve a high degree of risk, including risks arising
from fluctuations in the values of the Underlying Assets, risks relating to the
Index or Indexes by which payments or distributions on the Index Warrants are
calculated, general risks applicable to the securities or currency markets on
which the Underlying Assets are traded and, in the case of certain Index
Warrants, foreign exchange, interest rate, issuer and other risks. Purchasers
should recognize that their Index Warrants, other than Index Warrants having a
minimum expiration value, may expire worthless. Purchasers should be prepared to
sustain a total loss of the purchase price of their Index Warrants, and are
advised to consider carefully the information set forth herein and under 'Risk
Factors Relating to the Index Warrants' in the applicable Prospectus Supplement.
Prospective purchasers of the Index Warrants should be experienced with respect
to options and options transactions and understand the risks of the Index (and,
if applicable, foreign currency transactions), and should reach an investment
decision only after careful consideration, with their advisers, of the
suitability of the Index Warrants in light of their particular financial
circumstances, the information set forth herein under 'Description of Index
Warrants,' and the information regarding the Index Warrants, the Index and the
Underlying Assets set forth in the 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 'United States Person' means a citizen or resident of the
United States, a corporation, partnership or
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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
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 Offered 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 Offered Securities, including the names of any underwriters,
the purchase price of such Offered 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 Offered Securities may be listed and any restrictions on the sale and
delivery of Offered Securities in bearer form.
If underwriters are used in the sale, the Offered 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 Offered 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 Offered Securities will be subject to certain
conditions precedent, and the underwriters will be obligated to purchase all of
such Offered Securities if any of such Offered 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.
Offered 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
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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 Offered Securities remarketed thereby.
Offered 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 Offered Securities will be named, and any commissions payable
by the Company to such agent will be set forth, in the applicable Prospectus
Supplement. Unless otherwise indicated in the applicable Prospectus Supplement,
any such agent will act on a best efforts basis for the period of its
appointment.
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 Offered 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
Offered Securities may be deemed to be underwriters and any discounts or
commissions received by them on the sale or resale of Offered 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 Offered Securities
complies with the requirements of Schedule E of the By-Laws of the National
Association of Securities Dealers, Inc. regarding the underwriting by Salomon
Brothers Inc of securities of its parent. Salomon Brothers Inc may act as an
underwriter in an 'at the market' equity offering pursuant to Rule 415(a)(4)
under the Securities Act and may make a market in the Offered Securities but is
not obligated to do so.
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 the Offered
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 the Offered 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 Offered 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
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interest or a disqualified person may constitute or result in a prohibited
transaction under ERISA or Section 4975 of the Code, unless such Offered
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), PTCE 90-1 (an exemption for certain
transactions involving insurance company pooled separate accounts), or PTCE
95-60 (an exemption for certain transactions involving insurance company general
accounts). ANY PENSION OR OTHER EMPLOYEE BENEFIT PLAN PROPOSING TO ACQUIRE ANY
OFFERED SECURITIES SHOULD CONSULT WITH ITS COUNSEL.
EXPERTS
The financial statements and related schedules included in the 1995 10-K
have been audited by Arthur Andersen LLP, 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.
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NO DEALER, SALESPERSON OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS SUPPLEMENT AND 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 THE UNDERWRITERS.
NEITHER THE DELIVERY OF THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS NOR ANY
SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT
THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATES AS OF
WHICH INFORMATION IS GIVEN IN THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS.
THIS PROSPECTUS 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 AN
OFFER OR SOLICITATION.
------------------------
TABLE OF CONTENTS
PAGE
PROSPECTUS SUPPLEMENT ----
Prospectus Summary...................................................... S-4
Risk Factors Relating to the Warrants................................... S-8
Use of Proceeds and Hedging............................................. S-16
Description of the Warrants............................................. S-17
Exchange Rates.......................................................... S-27
Certain United States Federal Income Tax Considerations................. S-29
Underwriting............................................................ S-31
Legal Opinions.......................................................... S-32
Appendix A: Index of Terms.............................................. A-1
PROSPECTUS
(Selected Provisions)
Available Information................................................... 2
Incorporation of Certain Documents by Reference......................... 2
Salomon Inc............................................................. 3
Use of Proceeds......................................................... 3
Ratio of Earnings to Fixed Charges and Earnings to Fixed Charges and
Preferred Dividends................................................... 4
Description of Debt Securities.......................................... 4
Description of Warrants................................................. 22
Limitations on Issuance of Bearer Securities and Bearer Warrants........ 28
Plan of Distribution.................................................... 29
ERISA Matters........................................................... 30
Experts................................................................. 31
Legal Opinions.......................................................... 31
1,000,000 WARRANTS
SALOMON INC
U.S. DOLLAR INCREASE WARRANTS
ON THE JAPANESE YEN
EXPIRING JUNE , 1998
SALOMON BROTHERS INC
OPPENHEIMER & CO., INC.
PROSPECTUS SUPPLEMENT
DATED JUNE , 1996
