<PAGE>
FORM 8-A
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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) (IRS 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 If this Form relates to the
registration of a class of debt registration of a class of debt
securities and is effective upon securities and is to become effective
filing pursuant to General simultaneously with the effectiveness
Instruction A(c)(1) please check of a concurrent registration
the following box /x/ 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
- - - - ------------------- ------------------------------
Resettable Exchangeable American Stock Exchange, Inc.
Standard & Poor's 500
Index Notes
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 Debt Securities" in the
registrant's Prospectus dated April 5, 1996
(Registration No. 333-01807), as supplemented by the
information under the heading "Description of SPINS" in
the registrant's Prospectus Supplement, Subject to
Completion, dated May 10, 1996, filed on May 11, 1996,
which information is hereby incorporated herein by
reference and made part of this application in its
entirety.
Item 2. EXHIBITS
1 Proposed form of Note.
2 Senior Debt Indenture, dated as of October 27, 1993,
between Salomon Inc and The Bank of New York, as Trustee
(incorporated by reference to Exhibit 3 to the Company's
Current Report on Form 8-K dated October 27, 1993).
3 Prospectus Supplement, Subject to Completion, dated May
10, 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 to be signed on its behalf by the
undersigned, thereto duly authorized.
SALOMON INC
Dated: May 30, 1996
By: /s/ Richard J. Carbone
-----------------------------
Richard J. Carbone
Principal Accounting
Officer and Controller
<PAGE>
INDEX TO EXHIBITS
Exhibit No. Exhibit
- - - - ----------- -------
1 Proposed form of Note.
2 Senior Debt Indenture, dated as of October 27,
1993, between Salomon Inc and The Bank of New York,
as Trustee (incorporated by reference to Exhibit 3
to the Company's Current Report on Form 8-K dated
October 27, 1993).
3 Prospectus Supplement, Subject to Completion, dated
May 10, 1996, to the Prospectus dated April 5, 1996
(which supplement includes therein the Prospectus
dated April 5, 1996).
DRAFT, 5/29/96
SALOMON INC
Resettable Exchangeable Standard & Poor's 500 Index Notes ("SPINs") Due 2001
NO. R-__ PRINCIPAL AMOUNT:
__________________ SPINs $______________________
($1,000 times the number of SPINs
represented by this Debt Security).
CUSIP NO.: 79549B BC 0
SALOMON INC, a corporation duly organized and existing under the laws
of the State of Delaware (the "Company," which term includes any successor
corporation under the Indenture hereinafter referred to), for value received,
hereby promises to pay, subject to a prior exercise of the Exchange Right (as
defined herein), to __________________ or registered assigns, on May __, 2001
(the "Maturity Date") the Amount Payable at Maturity (as defined herein)
determined in accordance with the procedures described herein. This Debt
Security will not bear periodic payments of interest, is not subject to
redemption or any sinking fund prior to maturity, and is not subject to the
defeasance provisions of the within-mentioned indenture.
The "Amount Payable at Maturity" shall be, subject to a prior
exercise of the Exchange Right with respect to this Debt Security, the greater
of (i) the principal amount of this Debt Security and (ii) the product of (A)
the principal amount of this Debt Security and (B) a fraction, the numerator of
which is the Final Index Value (as defined herein) of the of the S&P 500
Composite Stock Price Index (the "S&P 500 Index") published by Standard & Poor's
("S&P"), a Division of The McGraw Hill Companies, Inc., and the denominator of
which is equal to the product of (x) 1.0x and (y) the Initial Index Value (as
defined herein) of the S&P 500 Index.
The Amount Payable at Maturity shall be calculated by Salomon
Brothers Inc (the "Calculation Agent") and written notice thereof shall be
provided to the Trustee and the Paying Agent as provided on the face hereof.
The Calculation Agent's determination of the Amount Payable at Maturity shall be
conclusive and binding absent manifest error.
On any Exchange Date (as defined herein), the holder of this Debt
Security will be entitled upon (i) completion by the holder and delivery to the
Trustee and the Calculation Agent of an Official Notice of Exchange (in the
form attached hereto) prior to 11:00 a.m. New York City time on such date and
(ii) delivery on such date of this Debt Security to the Trustee, to exchange
this Debt Security (the "Exchange Right") for an amount in dollars equal to the
product of (A) the principal amount of this Debt Security and (B) a fraction,
the numerator of which is the Index Value (as defined herein) of the S&P 500
Index on the applicable Determination Date (as defined herein), and the
denominator of which is equal to the product of (x) 1.0x and (y) the Initial
Index Value (as defined herein) of the S&P 500 Index. Such payment will be made
five Business Days (as defined herein) after the Determination Date with respect
to any Exchange Date, subject to delivery of this Debt Security to the Trustee
on the Exchange Date.
Payment of principal and any cash payable upon exercise of the
Exchange Right in respect of this Debt Security shall be made upon presentation
and surrender of this Debt Security at the corporate trust office of the Trustee
in the borough of Manhattan, the City and State of New York, in such coin or
currency of the United States as at the time of payment is legal tender for
payment of public and private debts.
Reference is hereby made to the further provisions of this Debt
Security set forth on the reverse hereof, which further provisions shall for all
purposes have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been duly
executed by the Trustee by manual signature, this Debt Security shall not be
entitled to any benefit under the Indenture or be valid or obligatory for any
purposes.
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed under its corporate seal.
SALOMON INC,
by
_______________________
Name:
Title:
Corporate Seal
Attest:
by
________________________
Name:
Title:
Dated: ________, 1996
CERTIFICATE OF AUTHENTICATION
This is one of the Debt Securities referred to in
the within-mentioned Indenture.
The Bank of New York,
as Trustee
by
______________________
Authorized Signatory
2
[Form of Reverse of Note]
SALOMON INC
Resettable Exchangeable Standard & Poor's 500 Index Notes ("SPINs")
Due 2001
This security is one of the duly authorized issue of debt securities
of the Company (the "Debt Securities"), issued or to be issued in one or more
series under an indenture, dated as of October 27, 1993 (the "Indenture"),
between the Company and The Bank of New York, as trustee (the "Trustee," which
term includes any successor Trustee under the Indenture), to which Indenture and
all indentures supplemental thereto reference is hereby made for a statement of
the respective rights, limitations of rights, duties and immunities thereunder
of the Company, the Trustee and each of the Holders of the Debt Securities and
of the terms upon which the Debt Securities are, and are to be, authenticated
and delivered. All terms used in this Debt Security which are not defined
herein shall have the meanings assigned to them in the Indenture.
As used herein:
(a) The "Initial Index Value" will initially equal _____, the closing
value of the S&P 500 Index at the regular official weekday close of trading on
May __, 1996, and will be subject to reset on the Reset Date, as provided in the
following sentence. In the event that the Index Value as of the Determination
Date with respect to the Reset Date is less than _____, the Initial Index Value
shall be reset on such Reset Date so as to be equal to the greater of (i) such
Index Value as of such Determination Date and (ii) a value equal to [___]% of
the Initial Index Value as of May __, 1996. In the event that the Initial Index
Value is so reset, such reset Initial Index Value shall be used in the
calculation of all amounts due at maturity or upon an exercise of the Exchange
Right at any time following such Reset Date. The Initial Index Value may only
be reset on the Reset Date, and shall not be reset thereafter.
(b) The "Final Index Value" will be the Index Value on the
Determination Date with respect to the Maturity Date, as determined by the
Calculation Agent.
(c) The "Index Value," as of any Determination Date, will equal the
closing value of the S&P 500 Index or any Successor Index (as defined below) at
the regular official weekday close of trading on such Determination Date.
References herein to the S&P 500 Index shall be deemed to include any Successor
Index, unless the context requires otherwise.
(d) An "Exchange Date" will be any Trading Day that falls during the
period beginning [November ___ ,1997] and ending on the [fifth] scheduled
Trading Day prior to the Maturity Date. A "Trading Day" means a day, as
determined by the Calculation Agent, on which trading is generally conducted (i)
on the New York Stock Exchange ("NYSE"), American Stock Exchange ("AMEX"), and
the NASDAQ National Market ("NASDAQ NMS"), (ii) on the Chicago Mercantile
Exchange, (iii) on the Chicago Board of Options Exchange and (iv) in the
over-the-counter market for equity securities in the United States.
(e) The "Reset Date" will be May ___, 1997.
(f) The "Determination Date" will be (i) with respect to any Exchange
Date, such Exchange Date, (ii) with respect to the Reset Date, such Reset Date
and (iii) with respect to the Maturity Date, the [fifth] scheduled Trading Day
prior to the Maturity Date, unless, in any such case, there is a Market
Disruption Event on such Trading Day. If a Market Disruption Event occurs on
any such Trading Day, the Determination Date shall be the immediately succeeding
Trading Day during which no Market Disruption Event shall have occurred;
provided that if a Market Disruption Event has occurred on each of the [five]
Trading Days immediately succeeding (a) such Exchange Date, (b) such Reset Date,
or (c) such [fifth] scheduled Trading Day prior to the Maturity Date, then the
relevant Determination Date will be deemed to be the earlier of (x) such [fifth]
succeeding Trading Day or (y) the [second] scheduled Trading Day prior to the
Maturity Date, notwithstanding the occurrence of a Market Disruption Event on
such day (an "Extended Determination Date"). With respect to
3
any such Extended Determination Date on which a Market Disruption Event occurs,
the Calculation Agent will determine the value of the S&P 500 Index on such
Extended Determination Date in accordance with the formula for and method of
calculating the S&P 500 Index last in effect prior to the commencement of the
Market Disruption Event, using the closing price (or, if trading in the relevant
securities has been materially suspended or materially limited, its good faith
estimate of the closing price that would have prevailed but for such suspension
or limitation) on such Trading Day of each security most recently comprising the
S&P 500 Index.
(g) "Market Disruption Event" means, with respect to the S&P
500 Index: (i) a suspension, absence or material limitation of trading of 100 or
more of the securities included in the S&P 500 Index on the primary market for
such securities for more than two hours of trading or during the one-half hour
period preceding the close of trading in such market; or the suspension,
absence or material limitation of trading on the primary market for trading in
futures or options contracts related to the S&P 500 Index during the one- half
hour period preceding the close of trading in the applicable market, in each
case as determined by the Calculation Agent in its sole discretion; and (ii) a
determination by the Calculation Agent in its sole discretion that the event
described in clause (i) above materially interfered with the ability of the
Company or any of its affiliates to unwind all or a material portion of the
hedge with respect to the SPINs.
For purposes of determining whether a Market Disruption Event has
occurred: (1) a limitation on the hours or number of days of trading will not
constitute a Market Disruption Event if it results from an announced change in
the regular business hours of the relevant exchange or market, (2) a decision to
permanently discontinue trading in the relevant futures or options contract will
not constitute a Market Disruption Event, (3) limitations pursuant to NYSE Rule
80A (or any applicable rule or regulation enacted or promulgated by the NYSE,
any other self-regulatory organization or the Securities and Exchange Commission
of similar scope, as determined by the Calculation Agent) on trading during
significant market fluctuations shall constitute a Market Disruption Event, (4)
a suspension of trading in a futures or options contract on the S&P 500 Index by
the primary securities market related to such contract by reason of (x) a price
change exceeding limits set by such exchange or market, (y) an imbalance of
orders relating to such contracts or (z) a disparity in bid and ask quotes
relating to such contracts will constitute a suspension or material limitation
of trading in futures or options contracts related to the S&P 500 Index and (5)
"a suspension, absence or material limitation of trading" on the primary market
on which futures or options contracts related to the S&P 500 Index are traded
will not include any time when such market is itself closed for trading under
ordinary circumstances.
(h) "Business Day" means any day that is not a Saturday, a Sunday or
a day on which the NYSE or banking institutions or trust companies in the City
of New York are authorized or obligated by law or executive order to close.
If S&P discontinues publication of the S&P 500 Index and S&P or
another entity publishes a successor or substitute index that the Calculation
Agent determines, in its sole discretion, to be comparable to the discontinued
S&P 500 Index (such index being referred to herein as a "Successor Index"), then
the relevant Index Value shall be determined by reference to the value of such
Successor Index at the close of trading on the NYSE, the AMEX, NASDAQ NMS or the
relevant exchange or market for the Successor Index on the applicable
Determination Date.
Upon any selection by the Calculation Agent of a Successor Index, the
Calculation Agent shall cause written notice thereof to be furnished to the
Trustee, to the Company and to the holders of the SPINs within three Trading
Days of such selection.
If S&P discontinues publication of the S&P 500 Index prior to, and
such discontinuance is continuing on, any Determination Date and the Calculation
Agent determines that no Successor Index is available at such time, then on such
Determination Date, the Calculation Agent shall determine the Index Value on
such Determination Date. The Index Value shall be computed by the Calculation
Agent in accordance with the formula for and method of calculating the S&P 500
Index last in effect prior to such discontinuance, using the closing price (or,
if trading in the relevant securities has been materially suspended or
materially limited, its good
4
faith estimate of the closing price that would have prevailed but for such
suspension or limitation) on such Determination Date of each security most
recently comprising the S&P 500 Index.
If at any time the method of calculating the S&P 500 Index or a
Successor Index, or the value thereof, is changed in a material respect, or if
the S&P 500 Index or a Successor Index is in any other way modified so that such
index does not, in the opinion of the Calculation Agent, fairly represent the
value of the S&P 500 Index or such Successor Index had such changes or
modifications not been made, then, from and after such time, the Calculation
Agent shall, at the close of business in New York City on each Determination
Date, make such calculations and adjustments as, in the good faith judgment of
the Calculation Agent, may be necessary in order to arrive at a value of a stock
index comparable to the S&P 500 Index or such Successor Index, as the case may
be, as if such changes or modifications had not been made, and calculate the
Index Value with reference to the S&P 500 Index or such Successor Index, as
adjusted. Accordingly, if the method of calculating the S&P 500 Index or a
Successor Index is modified so that the value of such index is a fraction of
what it would have been if it had not been modified (e.g., due to a split in the
index), then the Calculation Agent shall adjust such index in order to arrive at
a value of the S&P 500 Index or such Successor Index as if it had not been
modified (e.g., as if such split had not occurred).
The Trustee shall not at any time be under any duty or responsibility
to any holder of this Debt Security to determine whether any facts exist which
may require any adjustment to the Index Value or the Final Index Value or with
respect to the nature or extent of any such adjustment when made or with respect
to the method employed in making the same.
Upon exercise by the holder of this Debt Security of the Exchange
Right, prior to 9:30 a.m. on the first Business Day succeeding the
Determination Date with respect to the applicable Exchange Date, the Company
shall, or shall cause the Calculation Agent to, provide written notice to the
Trustee at its New York office, on which notice the Trustee may conclusively
rely, (i) of its receipt of the applicable "Official Notice of Exchange," (ii)
of the number of SPINs to be exchanged and (iii) of the amount of cash to be
paid per SPIN to be exchanged.
The Company shall, or shall cause the Calculation Agent to, deliver
such cash to the Trustee for delivery to the holders. Such delivery or payment
shall be made five Business Days after the Determination Date with respect to
such Exchange Date, subject to delivery of this Debt Security to the Trustee on
the Exchange Date as aforesaid.
All dollar amounts resulting from the calculation of the payment
amounts due upon exchange or at maturity will be rounded to the nearest cent
with one-half cent being rounded upwards.
If the number of SPINs to be exchanged is less than the number
represented by this Debt Security, the Trustee shall issue to the holder hereof,
a new Debt Security having identical terms and provisions and representing a
number of SPINs equal to the difference between the number of SPINs represented
by this Debt Security and the number of SPINs so exchanged by the Holder. All
such exchanges will be free of charge, but the Company may require payment of a
sum sufficient to cover any tax or other governmental charge in connection
therewith.
If an Event of Default with respect to the SPINs shall have occurred
and be continuing, the principal of all the SPINs may be declared due and
payable in the manner and with the effect provided in the Indenture. In case an
Event of Default with respect to any SPINs shall have occurred and be
continuing, the amount declared due and payable upon any acceleration of the
SPINs will be determined by the Calculation Agent and will be equal to, for each
such SPIN, the greater of (i) $1,000 and (ii) an amount in dollars equal to the
product of (A) $1,000 and (B) a fraction, the numerator of which is the Index
Value of the S&P 500 Index determined as though the Determination Date were the
date of acceleration, and the denominator of which is equal to the product of
(x) 1.0x and (y) the Initial Index Value of the S&P 500 Index as of such date of
acceleration.
5
The SPINs are issuable only in registered form without coupons in
denominations representing a whole number of SPINs.
The Trustee will from time to time register the transfer of this Debt
Security upon surrender thereof at the principal corporate trust office of the
Trustee, duly endorsed by, or accompanied by a written instrument or instruments
of transfer in a form satisfactory to the Trustee duly executed by the holder
thereof, a duly appointed legal representative or a duly authorized attorney.
Such signature must be guaranteed. A new Debt Security will be issued to the
transferee upon any such registration of transfer.
At the option of a holder, this Debt Security may be exchanged for
other Debt Securities representing a like number of SPINs, upon surrender to the
Trustee at the Trustee's Office of this Debt Security. The Company will
thereupon execute, and the Trustee will authenticate and deliver, one or more
new Debt Securities representing such like number of SPINs.
If any Debt Security is mutilated, lost, stolen or destroyed, the
Company shall execute, and the Trustee shall authenticate and deliver, in
exchange and substitution for such mutilated Debt Security, or in replacement
for such lost, stolen or destroyed Debt Security, a new Debt Security
representing the same number of SPINs represented by such Debt Security, but
only upon receipt of evidence satisfactory to the Company and to the Trustee of
loss, theft or destruction of such Debt Security and security or indemnity, if
requested, satisfactory to them. Holders requesting replacement Debt Securities
must also comply with such other reasonable regulations as the Company or the
Trustee may prescribe.
No service charge will be made for any registration of transfer or
exchange of Debt Securities, but the Company may require the payment of a sum
sufficient to cover any tax or government 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 Debt Securities,
the Company may require the payment of a sum sufficient to cover any tax or
other governmental charge that may be imposed in connection therewith and any
other expenses (including the fees and expenses of the Trustee) connected
therewith.
The Company may, at its option, elect to make SPINs available in
book-entry form ("Book-Entry SPINs"). If the Company makes such an election,
the holder hereof may (but will not be required to) exchange this Debt Security
for Book-Entry SPINs, which will be represented by a beneficial interest in a
global security, by causing this Debt Security to be delivered to the Trustee on
or after the Initial Certificate Exchange Date (as defined below). The Trustee
shall arrange for delivery of the Debt Security so delivered to The Depository
Trust Company (the "Depositary"), in proper form for deposit into the
Depositary's book-entry system. Debt Securities received by the Depositary for
exchange during the period commencing on a date designated by the Company (the
"Initial Certificate Exchange Date") and ending on the 45th day after the
Initial Certificate Exchange Date (the "Initial Certificate Exchange Period")
will be exchanged for Book-Entry SPINs by the close of business on the Business
Day on which they are received by the Depositary (if received by the Depositary
by its then applicable cut-off time for same day credit) or on the following
Business Day (if received by the Depositary by its then applicable cut-off time
for next-day credit). After the last day of the Initial Certificate Exchange
Period, the Depositary will not be required to accept delivery of Debt
Securities in exchange for Book-Entry SPINs, but the Depositary may permit such
Debt Securities to be so exchanged on a case-by-case basis. It is anticipated
that after the Initial Certificate Exchange Period, Debt Securities delivered to
the Depositary in good order and in proper form for deposit will be accepted by
the Depositary for exchange for Book-Entry SPINs generally within three to four
Business Days after delivery to the Depositary. However, there can be no
assurance that such Debt Securities will be accepted for exchange or, if
accepted, that such exchange will occur within such time period. Debt
Securities surrendered at any time for exchange for Book-Entry SPINs may not be
delivered for settlement or transfer until such exchange has been effected.
In the event that the Company elects to make the SPINs available in
book-entry form, it will so notify the Depositary and the Trustee by facsimile
and first-class mail and the Trustee shall so notify the holder hereof by
first-class mail. Exchanges of Debt Securities for Book-Entry SPINs will
commence on the Initial Certificate Exchange Date, which will be approximately
five Business Days after the date on which the Company
6
notifies the Depositary and the Trustee that it has elected to permit such
exchanges. Holders of SPINs that desire to exchange their Debt Securities for
Book-Entry SPINs should contact their broker or a participant to ascertain
whether the Company has elected to make Book-Entry SPINs available, and if the
Company has made such election, to obtain information on procedures for
submitting their Debt Securities to the Trustee for delivery to the Depositary,
including the proper form for submission and (during the Initial Certificate
Exchange Period) the cut-off times for same-day and next-day exchange. A Debt
Security that is held on behalf of a beneficial owner in nominee or "street
name" may be automatically exchanged for Book-Entry SPINs by the broker or other
entity that is the registered holder of such SPINs, without any action of or
consent by the beneficial owner of the SPINs.
The Indenture permits, with certain exceptions as therein provided,
the amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Holders of the Debt Securities of each series to
be affected under the Indenture at any time by the Company and a majority in
aggregate principal amount of the Debt Securities at the time Outstanding of
each series to be affected. The Indenture also contains provisions permitting
the Holders of specified percentages in aggregate principal amount of the Debt
Securities of any series at the time Outstanding, on behalf of the Holders of
all the Debt Securities of such series, to waive compliance by the Company with
certain provisions of the Indenture and certain past defaults under the
Indenture and their consequences. Any such consent or waiver by the Holder of
this Debt Security shall be conclusive and binding upon such Holder and upon all
future Holders of this Debt Security and of any Debt Security issued upon the
registration of or transfer hereof or in exchange herefor or in lieu hereof,
whether or not notation of such consent or waiver is made upon this Debt
Security.
The holder of this Debt Security may not enforce such holder's rights
pursuant to the Indenture or the Debt Securities except as provided in the
Indenture. No reference herein to the Indenture and no provision of this Debt
Security or of the Indenture shall alter or impair the obligation of the
Company, which is absolute and unconditional, to pay the principal of this Debt
Security at the times, place and rate, and in the coin or currency, herein
described.
Prior to the due presentation of this Debt Security for registration
of transfer, the Company, the Trustee and any agent of the Company or the
Trustee may treat the Person in whose name this Debt Security is registered as
the owner hereof for all purposes, whether or not this Debt Security is overdue,
and neither the Company, the Trustee nor any such agent shall be affected by
notice to the contrary.
7
OFFICIAL NOTICE OF EXCHANGE
Dated: ____________, ____
(date must be after November __, 1997)
Attention: Corporate Trust Services Window
The Bank of New York
101 Barclay Street, 21st Floor
New York, New York 10286
Salomon Inc
Seven World Trade Center
New York, New York 10048
Salomon Brothers Inc, as Calculation Agent
Seven World Trade Center
New York, New York 10048
Attn:
Fax: (212) 783-_______
Ladies and Gentlemen:
The undersigned holder of the Resettable Exchangeable Standard & Poor's
500 Index Notes Due May , ____ of Salomon Inc (the "SPINs") hereby irrevocably
elects to exercise with respect to the number of SPINs indicated below, as of
the date hereof (or, if this letter is received after 11:00 a.m. on any Trading
Day, as of the next Trading Day, provided that such day is on or prior to the
[fifth] scheduled Trading Day prior to May __, ___), the Exchange Right as
described in the Prospectus Supplement dated May __, 1996 and the Prospectus
dated April 5, 1996 related to Registration Statement No. 333-01807.
Capitalized terms not defined herein have the meanings given to such terms in
the Prospectus Supplement. Please date and acknowledge receipt of this notice
in the place provided below on the date of receipt, and fax a copy to the fax
number indicated. Upon receipt of this notice, the Company will deliver [five]
Business Days after the Determination Date with respect to such Exchange Date,
an amount in dollars with respect to each SPIN being exchanged, as determined by
the Calculation Agent, equal to the product of (A) $1,000 and (B) a fraction,
the numerator of which is the applicable Index Value of the S&P 500 Index in
respect of such Determination Date, and the denominator of which is equal to the
product of (x) 1.0x and (y) the Initial Index Value of the S&P 500 Index as of
such Determination Date, in accordance with the terms of the SPINs, as described
in the Prospectus Supplement.
Very truly yours,
--------------------------------
[Name of Holder]
By:
----------------------------
[Title]
--------------------------------
[Fax No.]
--------------------------------
Number of SPINs surrendered
for exchange
Receipt of the above Official Notice of Exchange is hereby acknowledged
8
The Bank of New York, as Trustee
By:
------------------------------------------------
Title:
Date and time of acknowledgement
-----------------
Salomon Inc, as Issuer
Salomon Brothers Inc, as Calculation Agent
By Salomon Brothers Inc, as Calculation Agent
By:
------------------------------------------------
Title:
Date and time of acknowledgement
-----------------
9
ABBREVIATIONS
The following abbreviations, when used in the inscription on the face
of this instrument, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM as tenants in common UNIF GIFT MIN ACT - _____ Custodian _____
TEN ENT as tenants by the entireties (Cust) (Minor)
JT TEN as joint tenants with right Under Uniform Gifts to Minors Act
of survivorship and not as __________________________________
tenants in common (State)
Additional abbreviations may also be used though not in the above list.
------------------------------------------------------------
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto
Please insert Social Security or Taxpayer I.D. or other
Identifying Number of Assignee
/ / / /-/ / / /-/ / / / /_______________________________________________________
- - - - --------------------------------------------------------------------------------
Please Print or Type Name and Address Including Postal Zip Code of Assignee
- - - - --------------------------------------------------------------------------------
the within Debt Security and all rights thereunder, hereby irrevocably
constituting and appointing
- - - - -------------------------------------------------------------- attorney to
transfer said Debt Security on the books of Salomon Inc with full power of
substitution in the premises.
Dated:
____________________________________
Signature
Signature guarantee:
_____________________________________________
_____________________________________________
NOTICE: The signature to this assignment must
correspond with the name as it appears upon the face
of the within Debt Security in every particular, without
alteration or enlargement or any change whatsoever.
10
INFORMATION CONTAINED IN THIS PRELIMINARY PROSPECTUS SUPPLEMENT IS SUBJECT TO
COMPLETION OR AMENDMENT. A REGISTRATION STATEMENT RELATING TO THESE SECURITIES
HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES
MAY NOT BE SOLD NOR MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE DELIVERY OF A
FINAL PROSPECTUS SUPPLEMENT AND PROSPECTUS. THIS PRELIMINARY PROSPECTUS
SUPPLEMENT AND 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,
MAY 10, 1996
PROSPECTUS SUPPLEMENT
(To Prospectus Dated April 5, 1996)
, , RESETTABLE EXCHANGEABLE SPINs
(RESETTABLE EXCHANGEABLE STANDARD & POOR'S 500 INDEX NOTES)
SALOMON INC
RESETTABLE EXCHANGEABLE STANDARD & POOR'S 500 INDEX NOTES ('SPINs') DUE 2001
The principal amount of each of the Resettable Exchangeable Standard & Poor's
500 Index Notes, Due 2001 (each, a 'SPIN', and in the aggregate, the 'SPINs') of
Salomon Inc ('Salomon' or the 'Company') being offered hereby will be $1,000.
The SPINs will mature on May , 2001 (the 'Maturity Date'). The SPINs will not
bear periodic payments of interest and are not subject to redemption or any
sinking fund prior to maturity. At maturity (including as a result of
acceleration or otherwise), a holder of a SPIN will be entitled to receive, with
respect to each SPIN, and subject to the prior exercise of the Exchange Right
(as described below), the greater of (i) $1,000 and (ii) an amount in dollars
equal to the product of (A) $1,000 and (B) a fraction, the numerator of which is
the Final Index Value (as defined herein) of the S&P 500 Composite Stock Price
Index (the 'S&P 500 Index') published by Standard & Poor's ('S&P'), a Division
of The McGraw Hill Companies, Inc., and the denominator of which is equal to the
product of (x) 1.0x and (y) the Initial Index Value (as defined herein) of the
S&P 500 Index.
On any Exchange Date (as defined below), the holder of a SPIN will have the
right (the 'Exchange Right'), subject to the completion by the holder and
delivery to the Company and the Calculation Agent of an Official Notice of
Exchange prior to 11:00 a.m. New York City time on such date, to exchange each
such SPIN for an amount in dollars with respect to each SPIN so exchanged equal
to the product of (A) $1,000 and (B) a fraction, the numerator of which is the
applicable Index Value (as defined herein) of the S&P 500 Index, and the
denominator of which is equal to the product of (x) 1.0x and (y) the Initial
Index Value (as defined herein) of the S&P 500 Index. An Exchange Date will be
any Trading Day (as defined herein) that falls during the period beginning
[November , 1997] and ending on the [seventh] scheduled Trading Day prior to
the Maturity Date.
The Initial Index Value as of date hereof is . The Initial Index Value
is subject to reset on May , 1997 (the 'Reset Date'). If the Index Value on
such Reset Date is less than , the Initial Index Value shall be reset on
such Reset Date so as to be equal to the greater of (i) such Index Value as of
such Reset Date and (ii) a value equal to [ ]% of the Initial Index Value as
of the date hereof. For information as to the calculation of the Initial Index
Value, Index Values, the Final Index Value, the calculation and the composition
of the S&P 500 Index and certain United States federal income tax consequences
to holders of the SPINs, see 'Description of the SPINs,' 'The Standard & Poor's
500 Composite Stock Price Index,' and 'Certain United States Federal Income Tax
Consequences' in this Pricing Supplement.
SEE 'RISK FACTORS RELATING TO SPINs' BEGINNING ON PAGE S-2 FOR A DISCUSSION OF
CERTAIN FACTORS THAT SHOULD BE CAREFULLY CONSIDERED BY PROSPECTIVE PURCHASERS.
Application will be made to list the SPINs on the American Stock Exchange, Inc.
(the 'AMEX'). The AMEX symbol for the SPINs is ' '.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
- - - - -------------------------------------------------------------
PRICE TO UNDERWRITING PROCEEDS TO
PUBLIC(1) DISCOUNT(1)(2) COMPANY(3)
<S> <C> <C> <C>
Per SPIN....... % % %
Total(4)....... $ $ $
- - - - -------------------------------------------------------------
</TABLE>
(1) The price to public and underwriting discounts and commissions for investors
purchasing [ ] or more SPINs in any single transaction will be
$ and $ , respectively, subject to the holding period
requirement described under 'Plan of Distribution' herein. Should investors
who are subject to the holding period requirements sell their SPINs once the
holding period requirement is no longer applicable, the market price of the
SPINs may be adversely affected. See 'Plan of Distribution' 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 $ .
(4) The Company has granted to the Underwriters an option, exercisable within 30
days of the date of this Prospectus Supplement, to purchase up to an
aggregate of additional SPINs at the price to public less
underwriting discounts and commissions, for the purpose of covering
over-allotments, if any. If the Underwriters exercise such option in full,
the total price to public, underwriting discounts and commissions and
proceeds to Company will, subject to note 1 above, be $ ,
$ , and $ , respectively. See 'Plan of Distribution'.
The SPINs 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 SPINs will be made at the office of on behalf of
Salomon Brothers Inc, Seven World Trade Center, New York, New York, on or about
May , 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 SPINs and may, at its option, hold or resell such
SPINs. Salomon Brothers Inc, an indirect wholly-owned subsidiary of the Company,
expects to offer and sell previously-issued SPINs in the course of its business
as a broker-dealer. Salomon Brothers Inc 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 Inc,
in connection with such transactions. Such sales, if any, will be made at
varying prices related to prevailing market prices at the time of sale.
- - - - --------------------
SALOMON BROTHERS INC
- - - - --------------------------------------------------------------------------------
The date of this Prospectus Supplement is May , 1996.
<PAGE>
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE SPINs 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.
------------------------
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; and (ii) the Company's Current Reports on
Form 8-K dated January 23, 1996, February 1, 1996, February 12, 1996 and April
23, 1996. See 'Incorporation of Certain Documents by Reference' in the
Prospectus.
------------------------
RISK FACTORS RELATING TO SPINs
An investment in the SPINs entails significant risks not associated with
similar investments in a conventional security, including the following.
COMPARISON TO OTHER DEBT SECURITIES
If the Final Index Value of the S&P 500 Index is less than 1.0x times the
Initial Index Value, the holders of the SPINs will receive only $1,000 in
respect of each SPIN held at maturity. Because the Final Index Value will be
based upon the closing value of the S&P 500 Index on a specified Determination
Date, a significant increase in the S&P 500 Index subsequent to issuance may be
substantially or entirely offset by subsequent decreases in the value of the S&P
500 Index on or prior to such Determination Date.
The SPINs do not bear periodic payments of interest. Because the Final
Index Value of the S&P 500 Index may be less than, equal to or only slightly
greater than 1.0x times the Initial Index Value, the effective yield to maturity
on the SPINs (which is linked to the amount by which such Final Index Value
exceeds such Initial Index Value) may be less than that which would be payable
on a conventional fixed-rate debt security of the Company.
The return of only $1,000 in respect of each SPIN held at maturity may not
compensate the holder for any opportunity cost implied by inflation and other
factors relating to the time value of money. Any appreciation of the S&P 500
Index so that the Final Index Value of the S&P 500 Index is greater than 1.0x
times the Initial Index Value will not reflect the payment of dividends on the
stocks underlying the S&P 500 Index. Therefore the yield to maturity based on
any appreciation of the Final Index Value relative to the Initial Index Value
will not be the same yield as would be produced if such underlying stocks were
purchased and held for a similar period.
POSSIBLE ILLIQUIDITY OF THE SECONDARY MARKET
Application will be made to list the SPINs on the AMEX. However, there can
be no assurance as to whether there will be a secondary market in the SPINs or
if there were to be such a secondary market, whether such market would be liquid
or illiquid. The SPINs are novel and innovative securities and there is
currently no secondary market for the SPINs. It is expected that any secondary
market for the SPINs
S-2
<PAGE>
will be affected by the creditworthiness of the Company and by a number of
factors, including, but not limited to, the volatility of the S&P 500 Index,
dividend rates on the stocks underlying the S&P 500 Index, the time remaining to
the maturity of the SPINs and market interest rates. In addition, the Final
Index Value depends on a number of interrelated factors, including economic,
financial and political events, over which the Company has no control. The value
of the SPINs prior to maturity is expected to depend primarily on the extent of
the appreciation or depreciation of the S&P 500 Index and market interest rates.
The price at which a holder will be able to sell the SPINs prior to maturity may
be at a discount, which could be substantial, from the par amount thereof, if,
at such time, the S&P 500 Index is less than, equal to, or not sufficiently
above the Index Value on the date of this Prospectus Supplement.
RELATIONSHIP OF SPINs AND THE S&P 500 INDEX
The historical S&P 500 Index values should not be taken as an indication of
the future performance of the S&P 500 Index during the term of the SPINs. While
the trading prices of the stocks underlying the S&P 500 Index will determine the
value of the S&P 500 Index, it is impossible to predict whether the value of the
S&P 500 Index will fall or rise. Trading prices of the stocks underlying the S&P
500 Index will be influenced by both the complex and interrelated political,
economic, financial and other factors that can affect the capital markets
generally and the equity trading markets on which the underlying stocks are
traded, and by various circumstances that can influence the values of the
underlying stocks in a specific market segment or a particular underlying stock.
The policies of S&P concerning additions, deletions and substitutions of
the stocks underlying the S&P 500 Index and the manner in which S&P takes
account of certain changes affecting such underlying stocks may affect the value
of the S&P 500 Index. The policies of S&P with respect to the calculation of the
S&P 500 Index could also affect the value of the S&P 500 Index. S&P may
discontinue or suspend calculation or dissemination of the S&P 500 Index. Any
such actions could affect the value of the SPINs. See 'S&P 500 Index' below.
AFFILIATION OF THE COMPANY AND CALCULATION AGENT
Because the Calculation Agent is an affiliate of the Company, potential
conflicts of interest may exist between the Calculation Agent and the holders of
the SPINs, including with respect to certain determinations and judgments that
the Calculation Agent must make in determining the Index Values or whether a
Market Disruption Event has occurred. See 'S&P 500 Index--Discontinuance of the
S&P 500 Index; Alteration of Method of Calculation' and 'Exchange Right' below.
Salomon Brothers Inc, 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 SPINs to restrict the use of information relating to
the calculation of the Index Values that the Calculation Agent may be required
to make prior to their dissemination. Salomon Brothers is obligated to carry out
its duties and functions as Calculation Agent in good faith and using its
reasonable judgment.
OTHER CONSIDERATIONS
If a bankruptcy proceeding is commenced in respect of the Company, the
claim of a holder of SPINs may, under Section 502(b)(2) of Title 11 of the
United States Code, be limited to the par amount of such SPINs.
It is suggested that prospective investors who consider purchasing the
SPINs should reach an investment decision only after carefully considering the
suitability of the SPINs in light of their particular circumstances.
Investors should also consider the tax consequences of investing in the
SPINs. See 'Certain United States Federal Income Tax Consequences' below.
S-3
<PAGE>
RECENT DEVELOPMENTS
On April 23, 1996, the Company announced first quarter 1996 net income of
$276 million, compared to net income of $81 million in the same period a year
ago. Fully diluted earnings per share were $2.21 and $0.59 for the three month
periods ended March 31, 1996 and 1995, respectively. Book value per common share
was $37.98 at March 31, 1996.
DESCRIPTION OF SPINs
The following description of the particular terms of the SPINs offered
hereby (referred to in the Prospectus as the 'Offered Securities') supplements
the description of the general terms and provisions of the Debt Securities set
forth in the Prospectus, to which description reference is hereby made. The
following summary of the SPINs is qualified in its entirety by reference to the
Senior Debt Indenture referred to in the Prospectus.
GENERAL
The SPINs are a series of Debt Securities issued under the Senior Debt
Indenture described in the accompanying Prospectus. The aggregate number of
SPINs issued will be limited to , , , subject to the over-allotment option
granted by the Company to the Underwriters (see 'Plan of Distribution' herein).
The SPINs will mature on May , 2001, will constitute part of the senior debt
of the Company and will rank pari passu with all other unsecured and
unsubordinated debt of the Company. The SPINs will be issued only in fully
registered form and in denominations of integral multiples of one SPIN. The
SPINs will not be subject to redemption prior to maturity.
Reference should be made to the accompanying Prospectus for a detailed
summary of additional provisions of the SPINs and of the Senior Debt Indenture
under which the SPINs will be issued. For a discussion of certain federal income
tax consequences to Holders of the SPINs, see 'Certain United States Federal
Income Tax Consequences.'
INTEREST
The SPINs will not bear periodic payments of interest.
PAYMENT AT MATURITY
At maturity (including as a result of acceleration or otherwise), a holder
of a SPIN will be entitled to receive, with respect to each SPIN, and subject to
a prior exercise of the Exchange Right with respect to such SPIN, the greater of
(i) $1,000 and (ii) an amount in dollars equal to the product of (A) $1,000 and
(B) a fraction, the numerator of which is the Final Index Value (as defined
herein) of the S&P Index, and the denominator of which is equal to the product
of (x) 1.0x and (y) the Initial Index Value (as defined herein) of the S&P 500
Index.
EXCHANGE RIGHT
On any Exchange Date, the holder of a SPIN will be entitled upon (i)
completion by the holder and delivery to the Company and the Calculation Agent
of an Official Notice of Exchange (in the form of Annex A attached hereto) prior
to 11:00 a.m. New York City time on such date and (ii) delivery on such date of
such SPINs to the Trustee, to exchange each such SPIN for an amount in dollars
to the product of (A) $1,000 and (B) a fraction, the numerator of which is the
Index Value (as defined herein) of the S&P 500 Index on the applicable
Determination Date, and the denominator of which is equal to the product of (x)
1.0x and (y) the Initial Index Value (as defined herein) of the S&P 500 Index.
Such payment will be made five Business Days after the Determination Date with
respect to any Exchange Date, subject to delivery of any such SPINs to the
Trustee on the Exchange Date. 'Business Day' means any day that is not a
Saturday, a Sunday or a day on which the New York Stock Exchange
S-4
<PAGE>
('NYSE') or banking institutions or trust companies in the City of New York are
authorized or obligated by law or executive order to close. Upon an exercise of
the Exchange Right or at maturity, the Company shall, or shall cause the
Calculation Agent to, deliver to the Trustee for delivery to the holders the
cash to which the holders are entitled. All dollar amounts resulting from the
calculation of the payment amounts due upon exchange or at maturity will be
rounded to the nearest cent with one-half cent being rounded upwards.
The 'Initial Index Value' will initially equal , the closing value of
the S&P 500 Index at the regular official weekday close of trading on the date
of this Prospectus Supplement, and will be subject to reset on May , 1997 (the
'Reset Date'), as provided in the following sentence. In the event that the
Index Value as of the Determination Date with respect to the Reset Date is less
than , the Initial Index Value shall be reset on such Reset Date so as to
be equal to the greater of (i) such Index Value as of such Determination Date
and (ii) a value equal to [ ]% of the Initial Index Value as of the date
hereof. In the event that the Initial Interest Value is so reset, such reset
Initial Index Value shall be used in the calculation of all amounts due at
maturity or upon an exercise of the Exchange Right at any time following such
Reset Date. The Initial Interest Value may only be reset on the Reset Date, and
shall not be reset thereafter. The 'Final Index Value' will be the Index Value
on the Determination Date with respect to the Maturity Date, as determined by
the Calculation Agent. The 'Index Value', as of any Determination Date, will
equal the closing value of the S&P 500 Index or any Successor Index (as defined
below) at the regular official weekday close of trading on such Determination
Date. See 'S&P 500 Index--Discontinuance of the S&P 500 Index; Alteration of
Method of Calculation' below. References herein to the S&P 500 Index shall be
deemed to include any Successor Index, unless the context requires otherwise. An
'Exchange Date' will be any Trading Day that falls during the period beginning
[November , 1997] and ending on the [seventh] scheduled Trading Day prior to
the Maturity Date. A 'Trading Day' means a day, as determined by the Calculation
Agent, on which trading is generally conducted (i) on the NYSE, AMEX, and the
NASDAQ National Market ('NASDAQ NMS'), (ii) on the Chicago Mercantile Exchange,
(iii) on the Chicago Board of Options Exchange and (iv) in the over-the-counter
market for equity securities in the United States.
The 'Determination Date' will be (i) with respect to any Exchange Date,
such Exchange Date, (ii) with respect to the Reset Date, such Reset Date and
(iii) with respect to the Maturity Date, the [seventh] scheduled Trading Day
prior to the Maturity Date and, unless, in any such case, there is a Market
Disruption Event on such Trading Day. If a Market Disruption Event occurs on any
such Trading Day, the Determination Date shall be the immediately succeeding
Trading Day during which no Market Disruption Event shall have occurred;
provided that if a Market Disruption Event has occurred on each of the [five]
Trading Days immediately succeeding (a) such Exchange Date, (b) such Reset Date,
or (c) such [seventh]scheduled Trading Day prior to the Maturity Date, then the
relevant Determination Date will be deemed to be the earlier of (x) such [fifth]
succeeding Trading Day or (y) the [second] scheduled Trading Day prior to the
Maturity Date, notwithstanding the occurrence of a Market Disruption Event on
such day (an 'Extended Determination Date'). With respect to any such Extended
Determination Date on which a Market Disruption Event occurs, the Calculation
Agent will determine the value of the S&P 500 Index on such Extended
Determination Date in accordance with the formula for and method of calculating
the S&P 500 Index last in effect prior to the commencement of the Market
Disruption Event, using the closing price (or, if trading in the relevant
securities has been materially suspended or materially limited, its good faith
estimate of the closing price that would have prevailed but for such suspension
or limitation) on such Trading Day of each security most recently comprising the
S&P 500 Index.
'Market Disruption Event' means, with respect to the S&P 500 Index:
(i) a suspension, absence or material limitation of trading of 100 or
more of the securities included in the S&P 500 Index on the primary market
for such securities for more than two hours of trading or during the
one-half hour period preceding the close of trading in such market; or the
suspension, absence or material limitation of trading on the primary market
for trading in futures or
S-5
<PAGE>
options contracts related to the S&P 500 Index during the one-half hour
period preceding the close of trading in the applicable market, in each
case as determined by the Calculation Agent in its sole discretion; and
(ii) a determination by the Calculation Agent in its sole discretion
that the event described in clause (i) above materially interfered with the
ability of the Company or any of its affiliates to unwind all or a material
portion of the hedge with respect to the SPINs.
For purposes of determining whether a Market Disruption Event has occurred:
(1) a limitation on the hours or number of days of trading will not constitute a
Market Disruption Event if it results from an announced change in the regular
business hours of the relevant exchange or market, (2) a decision to permanently
discontinue trading in the relevant futures or options contract will not
constitute a Market Disruption Event, (3) limitations pursuant to New York Stock
Exchange Rule 80A (or any applicable rule or regulation enacted or promulgated
by the NYSE, any other self-regulatory organization or the Securities and
Exchange Commission of similar scope, as determined by the Calculation Agent) on
trading during significant market fluctuations shall constitute a Market
Disruption Event, (4) a suspension of trading in a futures or options contract
on the S&P 500 Index by the primary securities market related to such contract
by reason of (x) a price change exceeding limits set by such exchange or market,
(y) an imbalance of orders relating to such contracts or (z) a disparity in bid
and ask quotes relating to such contracts will constitute a suspension or
material limitation of trading in futures or options contracts related to the
S&P 500 Index and (5) 'a suspension, absence or material limitation
of trading' on the primary market on which futures or options contracts related
to the S&P 500 Index are traded will not include any time when such market is
itself closed for trading under ordinary circumstances.
REDEMPTION; DEFEASANCE
The SPINs are not subject to redemption prior to maturity and are not
subject to the defeasance provisions described in the accompanying Prospectus
under 'Description of Debt Securities--Defeasance'.
CERTIFICATES
The SPINs initially will be evidenced by certificates in fully registered
form (each, a 'Certificate'). , as trustee (the 'Trustee'), will from
time to time register the transfer of any outstanding Certificate upon surrender
thereof at the office of the Trustee, which is currently located at
, New York, New York 100 (the 'Trustee's Office'), duly endorsed
by, or accompanied by a written instrument or instruments of transfer in a form
satisfactory to the Trustee duly executed by the holder thereof, a duly
appointed legal representative or a duly authorized attorney. Such signature
must be guaranteed by a bank or trust company having a correspondent office in
New York City or by a broker or dealer that is a member of the National
Association of Securities Dealers, Inc. (the 'NASD') or a member of a U.S.
national securities exchange. A new Certificate will be issued to the transferee
upon any such registration of transfer.
At the option of a holder, Certificates may be exchanged for other
Certificates representing a like number of SPINs, upon surrender to the Trustee
at the Trustee's Office of the Certificates to be exchanged. The Company will
thereupon execute, and the Trustee will authenticate and deliver, one or more
new Certificates representing such like number of SPINs.
If any Certificate is mutilated, lost, stolen or destroyed, the Company
shall execute, and the Trustee shall authenticate and deliver, in exchange and
substitution for such mutilated Certificate, or in replacement for such lost,
stolen or destroyed Certificate, a new Certificate representing the same number
of SPINs represented by such Certificate, but only upon receipt of evidence
satisfactory to the Company and to the Trustee of loss, theft or destruction of
such Certificate and security or indemnity, if
S-6
<PAGE>
requested, satisfactory to them. Holders requesting replacement Certificates
must also comply with such other reasonable regulations as the Company or the
Trustee may prescribe.
No service charge will be made for any registration of transfer or exchange
of Certificates, but the Company may require the payment of a sum sufficient to
cover any tax or government charge that may be imposed in connection therewith,
other than exchanges not involving any transfer. In the case of the replacement
of mutilated, lost, stolen or destroyed Certificates, the Company may require
the payment of a sum sufficient to cover any tax or other governmental charge
that may be imposed in connection therewith and any other expenses (including
the fees and expenses of the Trustee) connected therewith.
BOOK-ENTRY SPINs
Optional Exchange for Book-Entry SPINs. Following the issuance of the
SPINs, the Company may, at its option, elect to make the SPINs available in
book-entry form ('Book-Entry SPINs'). If the Company makes such an election,
holders may (but are not required to) exchange Certificates for Book-Entry
SPINs, which will be represented by a beneficial interest in a Global Security
(as defined below), by causing the Certificates to be delivered to the Trustee
on or after the Initial Certificate Exchange Date (as defined below). The
Trustee shall arrange for delivery of the Certificates so delivered to The
Depository Trust Company (the 'Depositary'), in proper form for deposit into the
Depositary's book-entry system. Certificates received by the Depositary for
exchange during the period commencing on a date designated by the Company (the
'Initial Certificate Exchange Date') and ending on the 45th day after the
Initial Certificate Exchange Date (the 'Initial Certificate Exchange Period')
will be exchanged for Book-Entry SPINs by the close of business on the Business
Day on which they are received by the Depositary (if received by the Depositary
by its then applicable cut-off time for same day credit) or on the following
Business Day (if received by the Depositary by its then applicable cut-off time
for next-day credit). After the last day of the Initial Certificate Exchange
Period, the Depositary will not be required to accept delivery of Certificates
in exchange for Book-Entry SPINs, but the Depositary may permit such
Certificates to be so exchanged on a case-by-case basis. It is anticipated that
after the Initial Certificate Exchange Period, Certificates delivered to the
Depositary in good order and in proper form for deposit will be accepted by the
Depositary for exchange for Book-Entry SPINs generally within three to four
Business Days after delivery to the Depositary. However, there can be no
assurance that such Certificates will be accepted for exchange or, if accepted,
that such exchange will occur within such time period. Certificates surrendered
at any time for exchange for Book-Entry SPINs may not be delivered for
settlement or transfer until such exchange has been effected. Accordingly,
persons purchasing SPINs in secondary market trading after the Initial
Certificate Exchange Date may wish to make specific arrangements with brokers or
the Depositary's participants if they wish to purchase only Book-Entry SPINs and
not Certificates.
In the event that the Company elects to make the SPINs available in
book-entry form, it will so notify the Depositary and the Trustee by facsimile
and first-class mail and the Trustee shall so notify each holder of a
Certificate by first-class mail. Exchanges of Certificates for Book-Entry SPINs
will commence on the Initial Certificate Exchange Date, which will be
approximately five Business Days after the date on which the Company notifies
the Depositary and the Trustee that it has elected to permit such exchanges.
Holders of SPINs that desire to exchange their Certificates for Book-Entry SPINs
should contact their broker or a participant to ascertain whether the Company
has elected to make Book-Entry SPINs available, and if the Company has made such
election, to obtain information on procedures for submitting their Certificates
to the Trustee for delivery to the Depositary, including the proper form for
submission and (during the Initial Certificate Exchange Period) the cut-off
times for same-day and next-day exchange. A Certificate that is held on behalf
of a beneficial owner in nominee or 'street name' may be automatically exchanged
for Book-Entry SPINs by the broker or other entity that is the registered holder
of such SPINs, without any action of or consent by the beneficial owner of the
SPINs.
S-7
<PAGE>
Book-Entry System. Any Book-Entry SPINs will be represented by a single
global security (a 'Global Security'), which will be deposited with, or on
behalf of, the Depositary, and registered in the name of a nominee of the
Depositary. Certificates that have been exchanged for Book-Entry SPINs may not
be reexchanged for Certificates, except under the limited circumstances
described in the accompanying Prospectus under 'Description of Debt Securities--
Global Securities.' Unless and until it is exchanged in whole or in
part for Certificates, the Global Security may not be transferred except as a
whole by the Depositary to a nominee of the Depositary or by a nominee of the
Depositary to the Depositary or another nominee of the Depositary.
The Depositary has advised the Company as follows: The Depositary is a
limited-purpose trust company organized under the New York Banking Law, a
'banking organization' within the meaning of the New York Banking Law, a member
of the Federal Reserve System, a 'clearing corporation' within the meaning of
the New York Uniform Commercial Code and a 'clearing agency' registered pursuant
to the provisions of Section 17A of the Securities Exchange Act of 1934, as
amended. The Depositary was created to hold securities of its participants and
to facilitate the clearance and settlement of transactions among its
participants in such securities through electronic book-entry changes in
accounts of the participants, thereby eliminating the need for physical movement
of securities certificates. The Depositary's participants include securities
brokers and dealers (including the Underwriters), banks, trust companies,
clearing corporations and certain other organizations, some of whom (and/or
their representatives) own the Depositary. Access to the Depositary book-entry
system is also available to others, such as banks, brokers, dealers and trust
companies that clear through or maintain a custodial relationship with a
participant, either directly or indirectly.
A further description of the Depositary's procedures with respect to the
Global Securities is set forth in the Prospectus under 'Description of Debt
Securities--Global Securities.' The Depositary has confirmed to the Company, the
Underwriters and the Trustee that it intends to follow such procedures.
CALCULATION AGENT
The 'Calculation Agent' for the SPINs will be Salomon Brothers Inc
('Salomon Brothers'). All determinations made by the Calculation Agent shall be
at the sole discretion of the Calculation Agent and shall, in the absence of
manifest error, be conclusive for all purposes and binding on the Company and
holders of the SPINs. Because the Calculation Agent is an affiliate of the
Company, potential conflicts of interest may exist between the Calculation Agent
and the holders of the SPINs, including with respect to certain determinations
and judgments that the Calculation Agent must make in determining the Index
Values or whether a Market Disruption Event has occurred. See 'S&P 500
Index--Discontinuance of the S&P 500 Index; Alteration of Method of Calculation'
below and 'Exchange Right' above. Salomon Brothers is obligated to carry out its
duties and functions as Calculation Agent in good faith and using its reasonable
judgment.
S&P 500 INDEX
The S&P 500 Index is published by S&P and is intended to provide a
performance benchmark for the U.S. equity markets. The calculation of the value
of the S&P 500 Index (discussed below in further detail) is based on the
relative value of the aggregate Market Value (as defined below) of the common
stocks of 500 companies (the 'Component Stocks') as of a particular time as
compared to the aggregate average Market Value of the common stocks of 500
similar companies during the base period of the years 1941 through 1943. The
'Market Value' of any Component Stock is the product of the market price per
share and the number of the then outstanding shares of such Component Stock. The
500 companies are not the 500 largest companies listed on the NYSE and not all
500 companies are listed on such exchange. S&P chooses companies for inclusion
in the S&P 500 Index with an aim of achieving a distribution by broad industry
groupings that approximates the distribution of these groupings in the common
stock population of the U .S. equity market. S&P may from time to time, in its
S-8
<PAGE>
sole discretion, add companies to, or delete companies from, the S&P 500 Index
to achieve the objectives stated above. Relevant criteria employed by S&P
include the viability of the particular company, the extent to which that
company represents the industry group to which it is assigned, the extent to
which the company's common stock is widely held and the Market Value and trading
activity of the common stock of that company.
The S&P 500 Index is calculated using a base-weighted aggregate
methodology: the level of the Index reflects the total Market Value of all 500
Component Stocks relative to the S&P 500 Index's base period of 1941-43 (the
'Base Period'). An indexed number is used to represent the results of this
calculation in order to make the value easier to work with and track over time.
The actual total Market Value of the Component Stocks during the Base
Period has been set equal to an indexed value of 10. This is often indicated by
the notation 1941-43=10. In practice, the daily calculation of the S&P 500 Index
is computed by dividing the total Market Value of the Component Stocks by a
number called the Index Divisor. By itself, the Index Divisor is an arbitrary
number. However, in the context of the calculation of the S&P 500 Index, it is
the only link to the original base period value of the Index. The Index Divisor
keeps the Index comparable over time and is the manipulation point for all
adjustments to the S&P 500 Index ('Index Maintenance'). Index Maintenance
includes monitoring and completing the adjustments for company additions and
deletions, share changes, stock splits, stock dividends, and stock price
adjustments due to company restructurings or spin-offs.
To prevent the value of the Index from changing due to corporate actions,
all corporate actions which affect the total Market Value of the Index require
an Index Divisor adjustment. By adjusting the Index Divisor for the change in
total Market Value, the value of the S&P 500 Index remains constant. This helps
maintain the value of the Index as an accurate barometer of stock market
performance and ensures that the movement of the Index does not reflect the
corporate actions of individual companies in the Index. All Index Divisor
adjustments are made after the close of trading and after the calculation of the
closing value of the S&P 500 Index. Some corporate actions, such as stock splits
and stock dividends, require simple changes in the common shares outstanding and
the stock prices of the companies in the Index and do not require Index Divisor
adjustments.
S-9
<PAGE>
The table below summarizes the types of S&P 500 Index maintenance
adjustments and indicates whether or not an Index Divisor adjustment is
required.
<TABLE>
<CAPTION>
DIVISOR
TYPE OF CORPORATE ADJUSTMENT
ACTION ADJUSTMENT FACTOR REQUIRED
- - - - -------------------- ---------------------------------------------- ----------
<S> <C> <C>
Stock split Shares Outstanding multiplied by 2; Stock No
(i.e. 2x1) Price divided by 2
Share issuance Shares Outstanding plus newly issued Shares Yes
(i.e. Change > 5%)
Share repurchase Shares Outstanding minus Repurchased Shares Yes
(i.e. Change > 5%)
Special cash Share Price minus Special Dividend Yes
dividends
Company change Add new company Market Value Minus old company Yes
Market Value
Rights offering Price of parent company minus Yes
Price of Rights
-----------------
Right Ratio
Spin-Offs Price of parent company minus Yes
Price of Spin-Off Co.
-----------------------
Share Exchange Ratio
</TABLE>
Stock splits and stock dividends do not affect the Index Divisor of the S&P
500 Index, because following a split or dividend both the stock price and number
of shares outstanding are adjusted by S&P so that there is no change in the
Market Value of the Component Stock. All stock split and dividend adjustments
are made after the close of trading on the day before the ex-date.
Each of the corporate events exemplified in the table requiring an
adjustment to the Index Divisor has the effect of altering the Market Value of
the Component Stock and consequently of altering the aggregate Market Value of
the Component Stocks (the 'Post-Event Aggregate Market Value'). In order that
the level of the Index (the 'Pre-Event Index Value') not be affected by the
altered Market Value (whether increase or decrease) of the affected Component
Stock, a new Index Divisor ('New Divisor') is derived as follows:
Post-Event Aggregate Market Value
- - - - --------------------------------- = Pre-Event Index Value
New Divisor
Post-Event Aggregate Market Value
New Divisor = ---------------------------------
Pre-Event Index Value
A large part of the S&P 500 Index maintenance process involves tracking the
changes in the number of shares outstanding of each of the S&P 500 Index
companies. Four times a year, on a Friday shortly prior to the end of each
calendar quarter, the share totals of companies in the Index are updated as
required by any changes in the number of shares outstanding. After the totals
are updated the Index Divisor is adjusted to compensate for the net change in
the total Market Value of the Index. In addition, any changes over 5% in the
current common shares outstanding for the S&P 500 Index companies are carefully
reviewed on a weekly basis, and when appropriate, an immediate adjustment is
made to the Index Divisor.
S-10
<PAGE>
DISCONTINUANCE OF THE S&P 500 INDEX; ALTERATION OF METHOD OF CALCULATION
If S&P discontinues publication of the S&P 500 Index and S&P or another
entity publishes a successor or substitute index that the Calculation Agent
determines, in its sole discretion, to be comparable to the discontinued S&P 500
Index (such index being referred to herein as a 'Successor Index'), then the
relevant Index Value shall be determined by reference to the value of such
Successor Index at the close of trading on the NYSE, the AMEX, NASDAQ NMS or the
relevant exchange or market for the Successor Index on the applicable
Determination Date.
Upon any selection by the Calculation Agent of a Successor Index, the
Calculation Agent shall cause written notice thereof to be furnished to the
Trustee, to the Company and to the holders of the SPINs within three Trading
Days of such selection.
If S&P discontinues publication of the S&P 500 Index prior to, and such
discontinuance is continuing on, any Determination Date and the Calculation
Agent determines that no Successor Index is available at such time, then on such
Determination Date, the Calculation Agent shall determine the Index Value on
such Determination Date. The Index Value shall be computed by the Calculation
Agent in accordance with the formula for and method of calculating the S&P 500
Index last in effect prior to such discontinuance, using the closing price (or,
if trading in the relevant securities has been materially suspended or
materially limited, its good faith estimate of the closing price that would have
prevailed but for such suspension or limitation) on such Determination Date of
each security most recently comprising the S&P 500 Index. Notwithstanding these
alternative arrangements, discontinuance of the publication of the S&P 500 Index
may adversely affect the value of the SPINs.
If at any time the method of calculating the S&P 500 Index or a Successor
Index, or the value thereof, is changed in a material respect, or if the S&P 500
Index or a Successor Index is in any other way modified so that such index does
not, in the opinion of the Calculation Agent, fairly represent the value of the
S&P 500 Index or such Successor Index had such changes or modifications not been
made, then, from and after such time, the Calculation Agent shall, at the close
of business in New York City on each Determination Date, make such calculations
and adjustments as, in the good faith judgment of the Calculation Agent, may be
necessary in order to arrive at a value of a stock index comparable to the S&P
500 Index or such Successor Index, as the case may be, as if such changes or
modifications had not been made, and calculate the Index Value with reference to
the S&P 500 Index or such Successor Index, as adjusted. Accordingly, if the
method of calculating the S&P 500 Index or a Successor Index is modified so that
the value of such index is a fraction of what it would have been if it had not
been modified (e.g., due to a split in the index), then the Calculation Agent
shall adjust such index in order to arrive at a value of the S&P 500 Index or
such Successor Index as if it had not been modified (e.g., as if such split had
not occurred).
ALTERNATE DETERMINATION DATE IN CASE OF AN EVENT OF DEFAULT
In case an Event of Default with respect to any SPINs shall have occurred
and be continuing, the amount declared due and payable upon any acceleration of
the SPINs will be determined by the Calculation Agent and will be equal to, for
each such SPIN, the greater of (i) $1,000 and (ii) an amount in dollars equal to
the product of (A) $1,000 and (B) a fraction, the numerator of which is the
Index Value of the S&P 500 Index determined as though the Determination Date
were the date of acceleration, and the denominator of which is equal to the
product of (x) 1.0x and (y) the Initial Index Value of the S&P 500 Index as of
such date of acceleration.
LICENSE AGREEMENT
S&P and Salomon Brothers have entered into a non-exclusive license
agreement providing for the license to Salomon Brothers, and any of its
affiliated or subsidiary companies (including the Company), in exchange for a
fee, of the right to use the S&P 500 Index, which is owned and published by S&P,
in connection with certain securities, including the SPINs.
S-11
<PAGE>
The license agreement between S&P and the Company provides that the
following language must be set forth in this Prospectus Supplement:
The SPINs are not sponsored, endorsed, sold or promoted by S&P. S&P
makes no representation or warranty, express or implied, to the holders of
the SPINs or any member of the public regarding the advisability of
investing in securities generally or in the SPINs particularly or the
ability of the S&P 500 Index to track general stock market performance.
S&P's only relationship to the Company with respect to the SPINs is the
licensing of certain trademarks and trade names of S&P and of the S&P 500
Index, which is determined, composed and calculated by S&P without regard
to the Company or the SPINs. S&P has no obligation to take the needs of the
Company or the holders of the SPINs into consideration in determining,
composing or calculating the S&P 500 Index. S&P is not responsible for and
has not participated in the determination of the timing of, prices at, or
quantities of the SPINs to be issued or in the determination or calculation
of the equation by which the SPINs are to be converted into cash. S&P has
no obligation or liability in connection with the administration, marketing
or trading of the SPINs.
S&P DOES NOT GUARANTEE THE ACCURACY AND/OR THE COMPLETENESS OF THE S&P 500
INDEX OR ANY DATA INCLUDED THEREIN AND S&P SHALL HAVE NO LIABILITY FOR ANY
ERRORS, OMISSIONS OR INTERRUPTIONS THEREIN. S&P MAKES NO WARRANTY, EXPRESS OR
IMPLIED, AS TO RESULTS TO BE OBTAINED BY THE COMPANY, HOLDERS OF THE SPINs OR
ANY OTHER PERSON OR ENTITY FROM THE USE OF THE S&P 500 INDEX OR ANY DATA
INCLUDED THEREIN. S&P MAKES NO EXPRESS OR IMPLIED WARRANTIES, AND HEREBY
EXPRESSLY DISCLAIMS ALL WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A
PARTICULAR PURPOSE OR USE WITH RESPECT TO THE S&P 500 INDEX OR ANY DATA INCLUDED
THEREIN. WITHOUT LIMITING ANY OF THE FOREGOING, IN NO EVENT SHALL S&P HAVE ANY
LIABILITY FOR ANY SPECIAL, PUNITIVE, INDIRECT OR CONSEQUENTIAL DAMAGES
(INCLUDING LOST PROFITS), EVEN IF NOTIFIED OF THE POSSIBILITY OF SUCH DAMAGES.
'Standard & Poor's(Registered)', 'S&P(Registered)', 'S&P 500(Registered)',
'Standard & Poor's 500,' and '500' are trademarks of The McGraw-Hill Companies,
Inc. and have been licensed for use by the Company.
PUBLIC INFORMATION
All disclosure contained in this Prospectus Supplement regarding the S&P
500 Index, including, without limitation, its composition, method of calculation
and changes in its components, is derived from publicly available information
prepared by S&P. Neither the Company nor the Underwriters take any
responsibility for the accuracy or completeness of such information.
HISTORICAL INFORMATION
The following table sets forth the high and low daily closing values, as
well as end-of-quarter closing values, of the S&P 500 Index for each quarter in
the period from January 1, 1991 through May , 1996. The historical values of
the S&P 500 Index should not be taken as an indication of future
S-12
<PAGE>
performance, and no assurance can be given that the S&P 500 Index will increase
so as to cause the Final Index Value to be greater than 1.0x times the Initial
Index Value.
<TABLE>
<CAPTION>
DAILY INDEX VALUES
------------------------------
HIGH LOW PERIOD END
------ ------ ----------
<S> <C> <C> <C>
1991
1st Quarter............................. 376.72 311.49 375.22
2nd Quarter............................. 390.45 368.57 371.16
3rd Quarter............................. 396.64 373.33 387.86
4th Quarter............................. 417.09 375.22 417.09
1992
1st Quarter............................. 420.77 403.00 403.69
2nd Quarter............................. 418.49 394.50 408.14
3rd Quarter............................. 425.27 409.16 417.80
4th Quarter............................. 441.28 402.66 435.71
1993
1st Quarter............................. 456.34 429.05 451.67
2nd Quarter............................. 453.85 433.54 450.53
3rd Quarter............................. 463.56 441.43 458.93
4th Quarter............................. 470.94 457.48 466.45
1994
1st Quarter............................. 482.00 445.55 445.76
2nd Quarter............................. 462.37 438.92 444.27
3rd Quarter............................. 476.07 446.13 462.71
4th Quarter............................. 473.77 445.45 459.27
1995
1st Quarter............................. 503.90 459.11 500.71
2nd Quarter............................. 551.07 501.85 544.75
3rd Quarter............................. 586.77 547.09 584.41
4th Quarter............................. 621.69 576.72 615.93
1996
1st Quarter............................. 661.45 548.48 645.50
2nd Quarter (through May , 1996)...... . . .
</TABLE>
USE OF PROCEEDS AND HEDGING
The net proceeds to be received by the Company from the sale of the SPINs
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 SPINs. 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 SPINs by the purchase and sale of exchange
traded and over the counter options on, or other derivative or synthetic
instruments related to, the S&P 500 Index, individual stocks included in the S&P
500 Index, futures contracts on the S&P 500 Index and options on such futures
contracts. From time to time after the initial offering and prior to the
maturity of the SPINs, depending on market conditions (including the value of
the S&P 500 Index), in connection with hedging with respect to the SPINs, 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 S&P 500 Index, individual stocks
included in the S&P 500 Index, listed or over-the-counter options contracts in,
or other derivative or synthetic instruments related to the S&P 500 Index and
such individual stocks. In addition, the Company or one or more of its
subsidiaries may purchase or otherwise
S-13
<PAGE>
acquire a long or short position in SPINs from time to time and may, in their
sole discretion, hold or resell such SPINs. The Company or one or more of its
subsidiaries may also take positions in other types of appropriate financial
instruments that may become available in the future. To the extent that the
Company or one or more of its subsidiaries have a long hedge position in the S&P
500 Index, individual stocks included in the S&P 500 Index or options contracts
in, or other derivative or synthetic instruments related to, the S&P 500 Index
and such underlying stocks, the Company or one or more of its subsidiaries may
liquidate a portion of their holdings at or about the time of the maturity of
the SPINs. 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 value of the S&P 500 Index,
there can be no assurance that the Company will not affect such prices or value
as a result of its hedging activities. See also 'Use of Proceeds' in the
accompanying Prospectus.
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 SPINs that is a United States
person (as defined below). This summary is based on laws, regulations, rulings
and decisions now in effect, all of which are subject to change by legislative,
judicial or regulatory action that in some cases may have retroactive effect.
This summary deals only with United States holders that will hold SPINs 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 SPINs as a part of an integrated investment (including a 'straddle')
comprised of SPINs 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 SPINs
that is (i) a citizen or resident of the United States, (ii) a corporation,
partnership or other entity created or organized in or under the laws of the
United States or any political subdivision thereof, (iii) an estate or trust the
income of which is subject to U.S. federal income taxation regardless of its
source, or (iv) a person otherwise subject to U.S. federal income taxation on a
net basis in respect of such holder's ownership of the SPINs. 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 SPINs, including the application to their
particular situation of the U.S. federal income tax considerations discussed
below, as well as the application of state, local, foreign or other tax laws.
There are no regulations, published rulings or judicial decisions involving
the characterization for federal income tax purposes of securities with terms
substantially the same as the SPINs. The Company intends to treat each SPIN as a
single debt instrument of the Company for U.S. federal income tax purposes. As
described below, however, it is possible that the Internal Revenue Service (the
'Service') will disagree with this characterization of SPINs.
Under the Company's treatment of SPINs as indebtedness of the Company for
U.S. federal income tax purposes, a holder of SPINs will not be required to
accrue income with respect to the SPINs prior to their maturity or earlier
redemption or disposition. Amounts paid by the Company to a holder in respect of
SPINs in excess of their stated principal amount (i.e., the portion of the
payment based on the increase in the S&P 500 Index) at maturity, as a result of
the exercise of the Exchange Right or due to an acceleration of the SPINs
because of an Event of Default (a 'Payment Event') will be considered
'contingent interest' taxable to a holder of SPINs as interest income in the
taxable year of the holder
S-14
<PAGE>
that includes the Determination Date relating to such Payment Event or, in the
case of a cash-method taxpayer, the date the payment is received.
If a holder of SPINs sells or otherwise disposes of SPINs in a taxable
transaction before exercising the Exchange Right or before the SPINs are
redeemed by the Company (a 'disposition'), such holder will recognize gain or
loss equal to the difference between the amount realized on the disposition and
the holder's tax basis (generally, the price paid) for the SPINs. It is likely
that gain recognized on a disposition of SPINs will be characterized as capital
gain rather than ordinary interest income. Any loss recognized by a holder of
SPINs on a disposition generally will be a capital loss. Any capital gain (or
loss) recognized by a holder will be a long-term capital gain (or loss) if such
holder has held such SPINs for more than one year.
Under proposed Treasury regulations relating to debt instruments providing
for contingent payments (the 'Proposed Regulations'), holders of such
instruments would be required to accrue income over the life of the instruments
based on projected payment schedules for the instruments. The Proposed
Regulations are not, however, currently in effect and, if adopted as final
regulations in their current form, would apply only to debt instruments issued
on or after the date that is 60 days after the Proposed Regulations become
final. Thus, the Proposed Regulations will not apply to the SPINs.
The Service may contend that the SPINs should not be classified as
indebtedness of the Company. The Service may argue, for example, that SPINs
should be analyzed as cash settlement options on the S&P 500 that provide for a
minimum payment equal to the principal amount of the SPINs. Under this analysis,
SPINs would be characterized as 'nonequity options' within the meaning of
section 1256(g)(3) of the Internal Revenue Code of 1986 (the 'Code'). As
nonequity options, the SPINs generally would be subject to the 'mark-to-market'
rules of section 1256 of the Code. Under the 'mark-to-market' rules, a holder of
SPINs generally would be required to treat SPINs owned by such holder as if
those SPINs were sold for their fair market value on the last day of each
taxable year. Moreover, any gain (or loss) recognized by a holder from a
disposition of SPINs (or from the application of the 'mark-to-market' rules
described immediately above) would be treated as 60 percent long-term and 40
percent short-term capital gain (or loss), regardless of the holder's holding
period for such SPINs. Under this approach, contingent interest, if any,
received by holders of SPINs on a Payment Event would not be characterized as
interest for U.S. federal income tax purposes, but instead would be considered
part of the amount realized by such holder, and would (to the extent not
previously reflected in income under the 'mark-to-market' rule described above)
be taxed as 60 percent long-term and 40 percent short-term capital gain,
regardless of the holder's holding period for such SPINs.
There can be no assurance that the ultimate U.S. federal income tax
treatment of SPINs will not differ significantly from the treatment that the
Company intends to follow, or from the alternative treatment described above.
Prospective investors are urged to consult their tax advisors as to the possible
consequences of holding the SPINs.
BACKUP WITHHOLDING TAX
Certain non-corporate United States persons may be subject to backup
withholding tax at a rate of 31 percent on payments of principal, premium and
interest on, and the proceeds of disposition of, the SPINs. Backup withholding
tax will be imposed only if the holder (i) fails to furnish its taxpayer
identification number ('TIN') which, for an individual, would be his or her
Social Security number, (ii) furnishes an incorrect TIN, (iii) is notified by
the Service that it has failed to properly report payments of interest or
dividends or (iv) under certain circumstances, fails to certify, under penalty
of perjury, that it has furnished a correct TIN and has not been notified by the
Service that it is subject to backup withholding tax for failure to report
interest or dividend payments. Holders of SPINs should consult their tax
advisors regarding their qualification for exemption from backup withholding tax
and the procedure for obtaining such an exemption if applicable.
S-15
<PAGE>
The amount of any backup withholding tax imposed on a payment to a holder
of SPINs will be allowed as a credit against such holder's U.S. federal income
tax liability and may entitle such holder to a refund, provided that the
required information is furnished to the Service.
PLAN OF DISTRIBUTION
Subject to the terms and conditions set forth in an Underwriting Agreement
(the 'Underwriting Agreement') among the Company, Salomon Brothers Inc,
, and (the 'Underwriters'), the Company has agreed to
sell to each of the Underwriters, and each of the Underwriters has severally
agreed to purchase the respective number of SPINs set forth opposite its name
below:
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT
NAME OF SPINs
- - - - ------------------------------ ----------------
<S> <C>
Salomon Brothers Inc .........
.........
.........
.........
.........
----------------
Total.......................
----------------
----------------
</TABLE>
In the Underwriting Agreement, the several Underwriters have agreed,
subject to the terms and conditions set forth therein, that the obligations of
the Underwriters are subject to certain conditions precedent and the
Underwriters will be obligated to purchase all of the SPINs offered hereby if
any of the SPINs are purchased.
The Company has been advised by the Underwriters that they propose to offer
the SPINs 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 $[ ] for the purchase of [ ] or more SPINs 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 SPIN. After the initial offering of the SPINs, the offering
price and other selling terms may from time to time be varied by the
Underwriters.
[Generally, delivery of approximately [ ]% of the SPINs (the 'Delivered
SPINs') purchased by an investor at the reduced price will be made on the date
of delivery of the SPINs referred to on the cover of this Prospectus Supplement.
The balance of approximately [ ]% of the SPINs (the 'Escrowed SPINs') 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 SPINs have held all of the Delivered SPINs for 45 days following
the date of this Prospectus Supplement or any shorter period deemed appropriate
by Salomon Brothers If an investor or any account in which the investor has
deposited any of its Delivered Escrowed SPINs fails to satisfy the holding
period requirement, as determined by Salomon Brothers, all of the investor's
Escrowed SPINs will be forfeited by the investor and not delivered to it. The
Escrowed SPINs will instead be delivered to the Underwriters for sale to
investors. This forfeiture will have the effect of increasing the purchase price
per SPINs for such investors to [ ]% of the aggregate principal amount of the
SPINs. Should investors who are subject to the holding period requirement sell
their SPINs once the holding period is no longer applicable, the market price of
the SPINs may be adversely affected. See also 'Plan of Distribution' in the
accompanying Prospectus Supplement.]
The Company has granted to the Underwriters an option, exercisable for the
30-day period after the date of this Prospectus Supplement, to purchase up to an
additional SPINs from the Company at the same price per SPIN as the
initial SPINs to be purchased by the Underwriters. The Underwriters may exercise
such option only for the purpose of covering over-allotments, if any, incurred
in connection
S-16
<PAGE>
with the sale of SPINs offered hereby. To the extent that the Underwriters
exercise such option, each Underwriter will have a firm commitment, subject to
certain conditions, to purchase the same proportion of the SPINs as the number
of SPINs to be purchased and offered by such Underwriter in the above table
bears to the total number of initial SPINs to be purchased by the Underwriters.
The SPINs will be a new issue of securities with no established trading
market. The Underwriters intend to make a market in the SPINs, subject to
applicable laws and regulations. However, the Underwriters are not obligated to
do so and any such market-making may be discontinued at any time at the sole
discretion of the Underwriters without notice. Accordingly, no assurance can be
given as to the liquidity of such market.
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 SPINs may be offered to investors outside the United States. The
Underwriters have further agreed that any offers and sales made outside the
United States will be made in compliance with any selling restrictions
applicable in the jurisdictions where such offers and sales are made.]
The Company or one or more of its subsidiaries may from time to time
purchase or acquire a position in the SPINs and may, at its option, hold or
resell such SPINs. Salomon Brothers expects to offer and sell previously-issued
SPINs 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 SPINs 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 of
the securities of its parent.
In the ordinary course of their respective business, certain of the
Underwriters and their respective affiliates have engaged in and may in the
future engage in commercial and investment banking transactions with the Company
and its affiliates.
[The Underwriters do not intend to confirm sales to accounts over which
they exercise discretionary authority.]
S-17
<PAGE>
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<PAGE>
ANNEX A
OFFICIAL NOTICE OF EXCHANGE
Dated: [On or after [November , 1997]
Salomon Inc
Seven World Trade Center
New York, New York 10048
Salomon Brothers Inc, as Calculation Agent
Seven World Trade Center
New York, New York 10048
Attn:
Fax: (212) 783-
Dear Sirs:
The undersigned holder of the Resettable Exchangeable Standard & Poor's 500
Index Notes Due May , 2001 of Salomon Inc (the 'SPINs') hereby irrevocably
elects to exercise with respect to the number of SPINs indicated below, as of
the date hereof (or, if this letter is received after 11:00 a.m. on any Trading
Day, as of the next Trading Day, provided that such day is on or prior to the
[seventh] scheduled Trading Day prior to May , 2001), the Exchange Right as
described in the Prospectus Supplement dated May , 1996 and the Prospectus
dated April 5, 1996 related to Registration Statement No. 333-01807. Capitalized
terms not defined herein have the meanings given to such terms in the Prospectus
Supplement. Please date and acknowledge receipt of this notice in the place
provided below on the date of receipt, and fax a copy to the fax number
indicated. Upon receipt of this notice, the Company will deliver [five] Business
Days after the Determination Date with respect to such Exchange Date, an amount
in dollars with respect to each SPIN being exchanged, as determined by the
Calculation Agent, equal to the product of (A) $1,000 and (B) a fraction, the
numerator of which is the applicable Index Value of the S&P 500 Index in respect
of such Determination Date, and the denominator of which is equal to the product
of (x) 1.0x and (y) the Initial Index Value of the S&P 500 Index as of such
Determination Date, in accordance with the terms of the SPINs, as described in
the Prospectus Supplement.
Very truly yours,
________________________________________
[Name of Holder]
By: ____________________________________
[Title]
________________________________________
[Fax No.]
________________________________________
Number of SPINs surrendered for exchange
Receipt of the above Official Notice of Exchange is hereby acknowledged.
Salomon Inc, as Issuer
Salomon Brothers Inc, as Calculation Agent
By SALOMON BROTHERS INC, as Calculation Agent
By: __________________________________________
Title:
Date and time
of acknowledgment ____________________________
<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
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Security registered in their names, will not receive or be entitled to receive
physical delivery of any such Debt Securities and will not be considered the
Holders thereof under the Indenture governing such Debt Securities.
Subject to the restrictions discussed under 'Limitations on Issuance of
Bearer Securities and Bearer Warrants' below, payments of principal of (and
premium, if any) and any interest on individual Debt Securities represented by a
Global Security will be made to the Depositary or its nominee, as the case may
be, as the Holder of such Global Security. None of the Company, the Trustee for
such Debt Securities, any Paying Agent or the Security Registrar for such Debt
Securities will have any responsibility or liability for any aspect of the
records relating to or payments made on account of beneficial interests in such
Global Security or for maintaining, supervising or reviewing any records
relating to such beneficial interests.
The Company expects that the Depositary for any Debt Securities, upon
receipt of any payment of principal, premium or interest in respect of a
definitive Global Security representing any of such Debt Securities, will credit
immediately participants' accounts with payments in amounts proportionate to
their respective beneficial interests in the principal amount of such Global
Security as shown on the records of such Depositary. The Company also expects
that payments by participants to owners of beneficial interests in such Global
Security held through such participants will be governed by standing
instructions and customary practices, as is now the case with securities held
for the accounts of customers in bearer form or registered in 'street name', and
will be the responsibility of such participants. Receipt by owners of beneficial
interests in a temporary Global Security of payments of principal, premium or
interest in respect thereof will be subject to the restrictions discussed under
'Limitations on Issuance of Bearer Securities and Bearer Warrants' below.
If the Depositary for any Debt Securities is at any time unwilling or
unable to continue as depositary and a successor depositary is not appointed by
the Company within ninety days, the Company will issue individual Debt
Securities in exchange for the Global Security or Securities representing such
Debt Securities. In addition, the Company may at any time and in its sole
discretion determine not to have certain Debt Securities represented by one or
more Global Securities and, in such event, will issue individual Debt Securities
in exchange for the Global Security or Securities representing such Debt
Securities. Further, if the Company so specifies with respect to any Debt
Securities, an owner of a beneficial interest in a Global Security representing
such Debt Securities may, on terms acceptable to the Company and the Depositary
for such Global Security, receive individual Debt Securities in exchange for
such beneficial interest. In any such instance, an owner of a beneficial
interest in a Global Security will be entitled to physical delivery of
individual Debt Securities represented by such Global Security equal in
principal amount to such beneficial interest and to have such Debt Securities
registered in its name (if the Debt Securities are issuable as Registered
Securities). Individual Debt Securities so issued will be issued (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.
31
<PAGE>
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
<TABLE>
<CAPTION>
PAGE
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<S> <C>
PROSPECTUS SUPPLEMENT
Incorporation of Certain Documents by Reference.................. S-2
Risk Factors Relating to SPINs................................... S-2
Recent Developments.............................................. S-4
Description of SPINs............................................. S-4
S&P 500 Index.................................................... S-8
Use of Proceeds and Hedging...................................... S-13
Certain United States Federal Income Tax Considerations.......... S-14
Plan of Distribution............................................. S-16
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
</TABLE>
SPINs
SALOMON INC
RESETTABLE EXCHANGEABLE
STANDARD & POOR'S 500 INDEX NOTES
DUE 2001
PROSPECTUS SUPPLEMENT
DATED MAY , 1996
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SALOMON BROTHERS INC
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