<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 3, 1996
REGISTRATION NO. 333-01807
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- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
SALOMON INC
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 22-1660266
(STATE OF INCORPORATION) (I.R.S. EMPLOYER IDENTIFICATION NO.)
SEVEN WORLD TRADE CENTER
NEW YORK, NEW YORK 10048
(212) 783-7000
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
------------------------
ARNOLD S. OLSHIN, ESQ., SECRETARY
SALOMON INC
SEVEN WORLD TRADE CENTER
NEW YORK, NEW YORK 10048
(212) 783-7000
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
------------------------
COPIES TO:
JOHN W. WHITE, ESQ. ALAN L. BELLER, ESQ.
CRAVATH, SWAINE & MOORE CLEARY, GOTTLIEB, STEEN & HAMILTON
825 EIGHTH AVENUE ONE LIBERTY PLAZA
NEW YORK, NEW YORK 10019 NEW YORK, NEW YORK 10006
------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE OF THE SECURITIES TO THE
PUBLIC: At such time (from time to time) after the effective date of this
Registration Statement as agreed upon by Salomon Inc and the Underwriters in
light of market conditions.
------------------------
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. / /
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. /x/
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration number of the earlier effective
registration statement for the same offering. / /________
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /_______
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. /x/
------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS AMOUNT TO BE OFFERING PRICE AGGREGATE OFFERING AMOUNT OF
OF SECURITIES TO BE REGISTERED REGISTERED PER UNIT(1) PRICE(1)(2) REGISTRATION FEE(3)
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Debt Securities(5)(9).........
Preferred Stock (without par
value)(6)(7)(9)...............
Depositary Shares(7)(9).......
(4) (4) (4) (4)
Purchase Rights(7)............
Common Stock, par value $1.00
per share(8)(9)...............
Warrants(10)..................
Index Warrants(11)............
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Total $3,608,892,237(12) 100% $3,608,892,237(12) $1,244,446(3)
- ------------------------------------------------------------------------------------------------------------
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</TABLE>
(footnotes on next page)
Pursuant to Rule 429 under the Securities Act of 1933, as amended (the
'Securities Act'), the Prospectuses and Prospectus Supplements included in this
Registration Statement also relate to (i) the Debt Securities and Warrants to
Purchase Debt Securities previously registered under the Registrant's
Registration Statements on Form S-3 (Nos. 33-41932, -49136, -57922, -51269,
- -54929), (ii) the Preferred Stock previously registered under the Registrant's
Registration Statement on Form S-3 (Registration No. 33-48199) and (iii) the
Index Warrants previously registered under the Registrant's Registration
Statement on Form S-3 (No. 33-56481). This Registration Statement constitutes
Post-Effective Amendment No. 3 to Registrant's Registration Statement on Form
S-3 (No. 33-57922), Post-Effective Amendment No. 3 to Registrant's Registration
Statement on Form S-3 (No. 33-49136), Post-Effective Amendment No. 2 to
Registrant's Registration Statement on Form S-3 (No. 33-51269), Post-Effective
Amendment No. 3 to Registrant's Registration Statement on Form S-3 (No.
33-41932), Post-Effective Amendment No. 1 to Registrant's Registration Statement
on Form S-3 (No. 33-48199), Post-Effective Amendment No. 1 to Registrant's
Registration Statement on Form S-3 (No. 33-54929) and Post-Effective Amendment
No. 1 to Registrant's Registration Statement on Form S-3 (No. 33-56481).
------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(A), MAY DETERMINE.
- --------------------------------------------------------------------------------
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<PAGE>
(footnotes continued from previous page)
- ------------------
(1) The proposed maximum offering price per unit will be determined from time
to time by the Registrant in connection with the issuance by the Registrant
of the securities registered hereunder.
(2) The proposed maximum aggregate offering price has been estimated solely for
the purpose of calculating the registration fee pursuant to Rule 457 under
the Securities Act of 1933.
(3) A filing fee aggregating $2,203,830 was previously paid in connection with
registration statements filed earlier relating to the registration of in
the aggregate $6,391,107,763 of securities.
(4) Not applicable pursuant to General Instruction II.D. of Form S-3.
(5) Subject to note (12) below, there is being registered hereunder an
indeterminate principal amount of Debt Securities as may be sold, from time
to time. If any Debt Securities are issued at an original issue discount,
then the offering price shall be in such greater principal amount as shall
result in an aggregate initial offering price not to exceed
$ .
(6) Subject to note (12) below, there is being registered hereunder an
indeterminate number of shares of Preferred Stock as may be sold, from time
to time.
(7) Subject to note (12) below, there is being registered hereunder an
indeterminate number of Depositary Shares to be evidenced by Depositary
Receipts issued pursuant to a Deposit Agreement. In the event the
Registrant elects to offer to the public fractional interests in shares of
Preferred Stock registered hereunder, Depositary Receipts will be
distributed to those persons purchasing such fractional interests and the
shares of Preferred Stock will be issued to the depositary under the
Deposit Agreement. In addition, subject to note (12), there is being
registered hereunder an indeterminate number of Preferred Stock Purchase
Rights.
(8) Subject to note (12), there is being registered hereunder an indeterminate
number of shares of Common Stock, par value $1.00 per share, as may be sold
from time to time.
(9) Subject to note (12) below, there is being registered hereunder an
indeterminate number of shares of Debt Securities Preferred Stock,
Depositary Shares and Common Stock, as shall be issuable upon conversion or
redemption, or upon the exercise of Warrants registered hereunder of Debt
Securities, Preferred Stock or Depositary Shares, as the case may be,
registered hereunder.
(10) Subject to note (12) below, there is being registered hereunder an
indeterminate amount and number of Warrants, representing rights to
purchase Debt Securities, Preferred Stock or Common Stock registered
hereunder.
(11) Subject to note (12) below, there is being registered hereunder an
indeterminate number of Index Warrants representing rights to receive an
amount of cash or a number of securities that will be determined by
reference to prices, yields, levels or other specified objective measure or
changes in an index or differences between two or more indexes.
(12) In no event will the aggregate offering price of all securities issued from
time to time pursuant to this Registration Statement exceed $3,608,892,237
or the equivalent thereof in one or more foreign currencies, foreign
currency units or composite currencies. The aggregate amount of Common
Stock registered hereunder is further limited to that which is permissible
under Rule 415(a)(4) under the Securities Act of 1933. The securities
registered hereunder may be sold separately or as units with other
securities registered hereunder. In addition, subject to the above, there
is being registered an indeterminate amount of all the types of securities
being registered hereunder that will be offered and sold by affiliates of
the Company, including Salomon Brothers Inc, in market-making transactions
at negotiated prices relating to prevailing market prices at the time of
sale.
<PAGE>
INTRODUCTORY NOTE
This Registration Statement contains (i) a form of Prospectus relating to
Debt Securities, Preferred Stock, Depositary Shares, Common Stock, Warrants to
Purchase Debt Securities, Preferred Stock and Common Stock and Index Warrants
(the 'Basic Prospectus'), (ii) a form of Prospectus relating to the Notes,
Series G (the 'Series G Prospectus'), (iii) a form of Prospectus Supplement to
the Basic Prospectus relating to the offering by Salomon Inc of its Medium-Term
Notes, Series D and E, in registered form (the 'Registered Prospectus
Supplement') and (iv) a form of Prospectus Supplement to the Basic Prospectus
relating to the offering by Salomon Inc of its Medium-Term Notes, Series D and
E, in bearer form (the 'Bearer Prospectus Supplement'). The Registered
Prospectus Supplement and the Bearer Prospectus Supplement are forms which may
be used, among others, by Salomon Inc to offer its Debt Securities and Warrants
to Purchase Debt Securities under the Registration Statement and will not be
used as a supplement to the Series G Prospectus. Although the amount of
securities shown on the cover page of the Basic Prospectus, the Series G
Prospectus, the Registered Prospectus Supplement and the Bearer Prospectus
Supplement exceeds in the aggregate the amount of securities registered under
this Registration Statement, the aggregate amount offered and sold hereunder
will not exceed the aggregate amount registered under this Registration
Statement.
<PAGE>
SUBJECT TO COMPLETION DATED APRIL 3, 1996
PROSPECTUS SUPPLEMENT
(To Prospectus Dated April , 1996)
$10,000,000,000
SALOMON INC
MEDIUM-TERM NOTES, SERIES D AND SERIES E
DUE MORE THAN NINE MONTHS FROM DATE OF ISSUE
Salomon Inc (the 'Company') may from time to time offer pursuant to this
Prospectus Supplement its Medium-Term Notes, Series D (the 'Series D Notes'),
and its Medium-Term Notes, Series E (the 'Series E Notes' and, together with the
Series D Notes, the 'Notes'), with an aggregate initial public offering price or
purchase price of up to $10,000,000,000, or the equivalent thereof in one or
more foreign or composite currencies (including the European Currency Unit
('ECU')), subject to reduction as a result of the sale of other securities under
the Registration Statement of which this Prospectus Supplement and the
accompanying Prospectus form a part or under a Registration Statement to which
this Prospectus Supplement and the accompanying Prospectus relate. The amount of
Notes sold of either series will reduce the amount of Notes of the other series
that may be sold. In addition to the Notes in registered form ('Registered
Notes') being offered hereby in the United States, the Company may offer Notes
in bearer form ('Bearer Notes') in a concurrent offering outside the United
States. The amount of Bearer Notes sold will reduce the amount of Registered
Notes that may be sold hereunder. See 'Description of Registered
Notes--General'.
The Series D Notes will be issued as Senior Indebtedness, and the Series E Notes
will be issued as subordinated debt. Subordinated debt will be subordinated to
all Senior Indebtedness. See 'Description of Debt Securities--Subordinated Debt'
in the Prospectus.
Unless otherwise specified in the applicable Pricing Supplement, each Registered
Note will mature on a Business Day more than nine months from its date of issue
(the 'Stated Maturity'), which maturity date may be subject to extension at the
option of the Company. Each Registered Note may also be subject to redemption at
the option of the Company, or to repayment at the option of the Holder, prior to
maturity. Each Registered Note will be denominated in the currency designated by
the Company (the 'Specified Currency'). See 'Important Currency Information' and
'Currency Risks'. A Registered Note may bear interest at a fixed rate (a 'Fixed
Rate Note'), which may be zero in the case of certain Discount Notes, or at a
floating rate (a 'Floating Rate Note') determined by reference to LIBOR, the CD
Rate, the Commercial Paper Rate, the Federal Funds Rate, the Treasury Rate or
any other Base Rate, as selected by the purchaser and agreed to by the Company,
adjusted by the Spread or Spread Multiplier, if any, applicable to such Note.
Such fixed rate, Spread or Spread Multiplier may be subject to change as
described in the applicable Pricing Supplement. Unless otherwise indicated,
interest on each Fixed Rate Note will be payable semiannually in arrears on each
March 15 and September 15 (each an 'Interest Payment Date') and at Stated
Maturity. A Registered Note may be issued as an amortizing note (an 'Amortizing
Note') on which a portion or all the principal amount is payable prior to Stated
Maturity in accordance with a schedule, by application of a formula, or by
reference to an index. A Registered Note may be issued as an indexed note (an
'Indexed Note') on which the amount of any interest payment, in the case of an
Indexed Rate Note, and/or the principal amount payable at maturity, in the case
of an Indexed Principal Note, will be determined by reference to the level of
prices, or changes in prices, or differences between prices, of securities,
currencies, intangibles, goods, articles or commodities or by application of a
formula. See 'Description of Registered Notes--Indexed Notes'. The Specified
Currency, interest rate or interest rate formula, reset provisions, Issue Price,
Stated Maturity, Interest Payment Dates, redemption, repayment and extension
provisions and certain other terms with respect to each Registered Note will be
established at the time of issuance and set forth in a pricing supplement to
this Prospectus Supplement (a 'Pricing Supplement').
Each Registered Note will be represented either by a Global Security registered
in the name of a nominee of The Depository Trust Company, as Depositary (a
'Book-Entry Note'), or, if specified in the applicable Pricing Supplement, by a
certificate issued in temporary or definitive form (a 'Certificated Note').
Beneficial interests in Global Securities representing Book-Entry Notes will be
shown on, and transfers thereof will be effected only through, records
maintained by the Depositary and its participants. Book-Entry Notes will not be
issuable as Certificated Notes except under the circumstances described herein.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT, ANY PRICING SUPPLEMENT
HERETO OR THE ACCOMPANYING PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
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<S> <C> <C> <C>
PRICE TO AGENT'S PROCEEDS TO THE
PUBLIC(1) COMMISSION(2) COMPANY(2)(3)
Per Registered Note... 100.000% .125%-.750% 99.250%-99.875%
Total(4).............. $10,000,000,000 $12,500,000-$75,000,000 $9,925,000,000-$9,875,000,000
<CAPTION>
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</TABLE>
(1) Unless otherwise specified in the applicable Pricing Supplement, the price
to public will be 100% of the principal amount.
(2) The Company will pay to Salomon Brothers Inc (the 'Agent') a commission of
from .125% to .750% of the principal amount of any Registered Note,
depending upon its Stated Maturity, sold through the Agent.
(3) Before deduction of expenses payable by the Company estimated at $4,525,000,
including reimbursement of certain expenses of the Agent.
(4) Or the equivalent thereof in foreign or composite currencies.
The Registered Notes are being offered on a continuous basis by the Company
through the Agent, which has agreed to use its reasonable efforts to solicit
orders to purchase Registered Notes. The Company may also sell Registered Notes
at a discount to the Agent for its own account or for resale to one or more
purchasers at varying prices related to prevailing market prices at the time of
resale or, if set forth in the applicable Pricing Supplement, at a fixed public
offering price, as determined by the Agent. In addition, the Agent may offer
Registered Notes purchased by it as principal to other dealers. Unless otherwise
specified in the applicable Pricing Supplement, any Registered Note purchased by
the Agent as principal will be purchased at 100% of the principal amount thereof
less a percentage equal to the commission applicable to an agency sale of a
Registered Note of identical maturity. The Registered Notes will not be listed
on any securities exchange, and there can be no assurance that the maximum
amount of Registered Notes offered by this Prospectus Supplement will be sold or
that there will be a secondary market for the Registered Notes. The Company
reserves the right to withdraw, cancel or modify the offer made hereby without
notice. The Company or the Agent may reject any order to purchase Registered
Notes, whether or not solicited, in whole or in part. See 'Plan of
Distribution'.
This Prospectus Supplement, the related Pricing Supplement and the accompanying
Prospectus may be used by the Company, the Agent, a wholly owned subsidiary of
the Company, or other affiliates of the Company in connection with offers and
sales related to secondary market transactions in the Registered Notes offered
hereby and approximately $4,219,135,125 of Registered Notes initially sold
pursuant to earlier prospectuses, as described herein. The Agent or other such
Company affiliates may act as principal or agent in such transactions. Such
sales will be made at varying prices related to prevailing market prices at the
time of sale.
- -------------------------------------------------
SALOMON BROTHERS INC
- --------------------------------------------------------------------------------
The date of this Prospectus Supplement is April , 1996.
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus and any prospectus supplement shall not constitute
an offer to sell or the solicitation of an offer to buy nor shall there be
any sale of these securities in any State in which such offer, solicitation or
sale would be unlawful prior to registration or qualification under the
securities laws of any such State.
<PAGE>
IN CONNECTION WITH THIS OFFERING, THE AGENT MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE NOTES OFFERED
HEREBY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET.
SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
Pursuant to a Prospectus and Prospectus Supplement each dated February 25,
1992 (and applicable Pricing Supplements), filed with the Commission under
Registration No. 33-41932, a Prospectus and Prospectus Supplement each dated
February 12, 1993 (and applicable Pricing Supplements), filed with the
Commission under Registration Statement No. 33-57922, a Prospectus and
Prospectus Supplement each dated December 14, 1993 (and applicable Pricing
Supplements) filed with the Commission under Registration Statement 33-51269,
and a Prospectus and Prospectus Supplements each dated October 12, 1994 (and
applicable Pricing Supplements) filed with the Commission under Registration
Statement No. 33-54929 the Company had outstanding as of March 31, 1996
approximately $6,082,166,841 of its Medium-Term Notes, Series D and E, of which
approximately $4,219,135,125 were Registered Notes and approximately
$1,863,031,716 were Bearer Notes. The Registered Notes offered by this
Prospectus Supplement are part of the same series of Notes as the Notes
described in the preceding sentence.
SALOMON INC
Salomon Inc was incorporated in 1960 under the laws of the State of
Delaware. Salomon Inc conducts global investment banking, global securities and
commodities trading, and U.S. oil refining and gathering activities. Investment
banking activities are conducted by Salomon Brothers Holding Company Inc and its
subsidiaries ('Salomon Brothers'), including Salomon Brothers Inc. Salomon
Brothers provides capital raising, advisory, trading and risk management
services to its customers, and executes proprietary trading strategies on its
own behalf. Salomon Inc's commodities trading activities are conducted by the
Company's wholly-owned subsidiary, Phibro Inc. and its subsidiaries. Oil
refining and gathering activities are conducted by Basis Petroleum, Inc.
IMPORTANT CURRENCY INFORMATION
Purchasers are required to pay for each Registered Note in the Specified
Currency for such Note. If requested by a prospective purchaser of a Registered
Note having a Specified Currency other than U.S. dollars, the Agent may at its
discretion arrange for the exchange of U.S. dollars into such Specified Currency
to enable the purchaser to pay for such Note. Each such exchange will be made by
the Agent on such terms and subject to such conditions, limitations and charges
as the Agent may from time to time establish in accordance with its regular
foreign exchange practice. All costs of exchange will be borne by the purchaser.
References herein to 'U.S. dollars' or '$' are to the lawful currency of
the United States.
DESCRIPTION OF REGISTERED NOTES
The following description of the particular terms of the Registered Notes
supplements, and to the extent inconsistent therewith replaces, the description
of the general terms and provisions of the Debt Securities set forth in the
Prospectus, to which description reference is hereby made.
GENERAL
The Series D Notes are a series of Debt Securities issued under the Senior
Debt Indenture, and the Series E Notes are a series of Debt Securities issued
under the Subordinated Debt Indenture. At the date of this Prospectus
Supplement, the Notes offered pursuant to this Prospectus Supplement are limited
to an aggregate initial public offering price or purchase price of up to
$10,000,000,000 or the
S-2
<PAGE>
equivalent thereof in one or more foreign or composite currencies, which amount
is subject to reduction as a result of the sale of other securities under the
Registration Statement of which this Prospectus Supplement and the accompanying
Prospectus form a part or under a Registration Statement to which this
Prospectus Supplement and the accompanying Prospectus relate. In addition, the
Company had outstanding as of March 31, 1996 approximately $4,219,135,125 of
Series D Registered Notes and approximately $1,863,031,716 of Series D Bearer
Notes sold pursuant to earlier prospectuses. The aggregate amount of Notes may
be increased from time to time to such larger amount as may be authorized by the
Company. The U.S. dollar equivalent of the public offering price or purchase
price of a Note having a Specified Currency other than U.S. dollars will be
determined on the basis of the noon buying rate in New York City for cable
transfers in foreign currencies as certified for customs purposes by the Federal
Reserve Bank of New York (the 'Market Exchange Rate') for such Specified
Currency on the applicable issue date. Such determination will be made by the
Company or its agent, as exchange rate agent for both series of Notes (the
'Exchange Rate Agent').
The Series D Notes will constitute part of the Senior Indebtedness of the
Company and will rank pari passu with all other unsecured debt of the Company
except subordinated debt. The Series E Notes will be subordinate and junior in
the right of payment, to the extent and in the manner set forth in the
Subordinated Debt Indenture, to all Senior Indebtedness of the Company. See
'Description of Debt Securities--Subordinated Debt' in the Prospectus. As of
December 31, 1995, the aggregate principal amount of Senior Indebtedness
outstanding was $114.2 billion, consisting of the following: $13.0 billion of
term debt, $.8 billion in commercial paper and $100.4 billion in other
short-term borrowings.
The Notes will consist of Registered Notes and Bearer Notes, each of which
will be offered on a continuous basis. Registered Notes will be issued in fully
registered form only, without coupons. Registered Notes may not be exchanged for
Bearer Notes.
Each Registered Note will be issued initially as either a Book-Entry Note
or, if specified in the applicable Pricing Supplement, a Certificated Note.
Except as set forth in the Prospectus under 'Description of Debt
Securities--Global Securities', Book-Entry Notes will not be issuable as
Certificated Notes. See 'Book-Entry System' below.
Unless otherwise specified in the applicable Pricing Supplement, the
authorized denominations of Registered Notes denominated in U.S. dollars will be
$1,000 and any larger amount that is an integral multiple of $1,000, and the
authorized denominations of Registered Notes having a Specified Currency other
than U.S. dollars will be the approximate equivalents thereof in the Specified
Currency.
Unless otherwise specified in the applicable Pricing Supplement, each
Registered Note will mature on a Business Day more than nine months from its
date of issue, as selected by the purchaser and agreed to by the Company (the
'Stated Maturity'), which maturity date may be subject to extension at the
option of the Company. Each Registered Note may also be subject to redemption at
the option of the Company, or to repayment at the option of the Holder, prior to
its Stated Maturity. Notwithstanding the foregoing, each Registered Note having
a Specified Currency of Japanese yen will have a Stated Maturity of not less
than one year from its Original Issue Date (as defined below), and will not be
subject to optional redemption or repayment prior to such time. Each Registered
Note having a Specified Currency of Pounds Sterling will mature in compliance
with such regulations as the Bank of England may promulgate from time to time.
The Pricing Supplement relating to a Registered Note will describe the
following terms: (i) the Specified Currency for such Note; (ii) whether such
Note is a Fixed Rate Note, a Floating Rate Note, an Amortizing Note and/or an
Indexed Note; (iii) the price (expressed as a percentage of the aggregate
principal amount or face amount thereof) at which such Note will be issued (the
'Issue Price'); (iv) the date on which such Note will be issued (the 'Original
Issue Date'); (v) the date of the Stated Maturity; (vi) if such Note is a Fixed
Rate Note, the rate per annum at which such Note will bear interest, if any, and
whether and the manner in which such rate may be changed prior to its Stated
Maturity; (vii) if such Note is a Floating Rate Note, the Base Rate, the Initial
Interest Rate, the Interest Reset Period or the
S-3
<PAGE>
Interest Reset Dates, the Interest Payment Dates, and, if applicable, the Index
Maturity, the Maximum Interest Rate, the Minimum Interest Rate, the Spread or
Spread Multiplier (all as defined below), and any other terms relating to the
particular method of calculating the interest rate for such Note and whether and
the manner in which such Spread or Spread Multiplier may be changed prior to
Stated Maturity; (viii) whether such Note is an Original Issue Discount Note (as
defined below); (ix) if such Note is an Amortizing Note, the terms for repayment
prior to Stated Maturity; (x) if such Note is an Indexed Note, in the case of an
Indexed Rate Note, the manner in which the amount of any interest payment will
be determined or, in the case of an Indexed Principal Note, its Face Amount and
the manner in which the principal amount payable at Stated Maturity will be
determined; (xi) whether such Note may be redeemed at the option of the Company,
or repaid at the option of the Holder, prior to Stated Maturity as described
under 'Optional Redemption, Repayment and Repurchase' below and, if so, the
provisions relating to such redemption or repayment, including, in the case of
an Original Issue Discount Note or Indexed Note, the information necessary to
determine the amount due upon redemption or repayment; (xii) whether such Note
is subject to an optional extension beyond its Stated Maturity as described
under 'Extension of Maturity' below; and (xiii) any other terms of such Note not
inconsistent with the provisions of the Indenture under which such Note will be
issued.
'Business Day' with respect to any Registered Note means any day, other
than a Saturday or Sunday, that is (i) not a day on which banking institutions
are authorized or required by law or regulation to be closed in (a) The City of
New York or (b) if the Specified Currency for such Note is other than U.S.
dollars, the financial center of the country issuing such Specified Currency
(which, in the case of ECU, shall be Brussels, Belgium) and (ii) if such Note is
a LIBOR Note (as defined below), a London Banking Day. 'London Banking Day' with
respect to any Registered Note means any day on which dealings in deposits in
the Specified Currency of such Note are transacted in the London interbank
market.
'Original Issue Discount Note' means (i) a Registered Note, including any
such Note whose interest rate is zero, that has a stated redemption price at
Stated Maturity that exceeds its Issue Price by at least 0.25% of its stated
redemption price at Stated Maturity, multiplied by the number of full years from
the Original Issue Date to the Stated Maturity for such Note and (ii) any other
Registered Note designated by the Company as issued with original issue discount
for United States Federal income tax purposes.
A 'basis point' or 'bp' equals one one-hundredth of a percentage point.
PAYMENT OF PRINCIPAL AND INTEREST
The principal of and any premium and interest on each Registered Note are
payable by the Company in the Specified Currency for such Note. If the Specified
Currency for a Registered Note is other than U.S. dollars, the Company will
(unless otherwise specified in the applicable Pricing Supplement) arrange to
convert all payments in respect of such Note into U.S. dollars in the manner
described in the following paragraph. The Holder of a Registered Note having a
Specified Currency other than U.S. dollars may (if the applicable Pricing
Supplement and such Note so indicate) elect to receive all payments in respect
of such Note in the Specified Currency by delivery of a written notice to the
Trustee for such Note not later than fifteen calendar days prior to the
applicable payment date, except under the circumstances described under
'Currency Risks--Payment Currency' below. Such election will remain in effect
until revoked by written notice to such Trustee received not later than fifteen
calendar days prior to the applicable payment date.
In the case of a Registered Note having a Specified Currency other than
U.S. dollars, the amount of any U.S. dollar payment in respect of such
Registered Note will be determined by the Exchange Rate Agent based on the
highest firm bid quotation expressed in U.S. dollars received by the Exchange
Rate Agent at approximately 11:00 a.m., New York City time, on the second
Business Day preceding the applicable payment date (or, if no such rate is
quoted on such date, the last date on which such rate was quoted), from three
(or, if three are not available, then two) recognized foreign exchange dealers
in
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The City of New York (one of which may be the Agent and another of which may be
the Exchange Rate Agent) selected by the Exchange Rate Agent, for the purchase
by the quoting dealer, for settlement on such payment date, of the aggregate
amount of such Specified Currency payable on such payment date in respect of all
Registered Notes denominated in such Specified Currency. All currency exchange
costs will be borne by the Holders of such Notes by deductions from such
payments. If no such bid quotations are available, such payments will be made in
such Specified Currency, unless such Specified Currency is unavailable due to
the imposition of exchange controls or to other circumstances beyond the
Company's control, in which case such payments will be made as described under
'Currency Risks--Payment Currency' below.
Unless otherwise specified in the applicable Pricing Supplement, U.S.
dollar payments of interest on Registered Notes (other than interest payable at
Stated Maturity) will be made, except as provided below, by check mailed to the
Registered Holders of such Notes (which, in the case of Global Securities
representing Book-Entry Notes, will be a nominee of the Depositary); provided,
however, that, in the case of a Registered Note issued between a Regular Record
Date and the related Interest Payment Date, unless otherwise specified in the
related Pricing Supplement, interest for the period beginning on the Original
Issue Date for such Note and ending on such Interest Payment Date shall be paid
on the next succeeding Interest Payment Date to the Registered Holder of such
Note on the related Regular Record Date. A Holder of $10,000,000 (or the
equivalent thereof in a Specified Currency other than U.S. dollars) or more in
aggregate principal amount of Registered Notes of like tenor and term shall be
entitled to receive such U.S. dollar payments by wire transfer of immediately
available funds, but only if appropriate wire transfer instructions have been
received in writing by the Trustee for such Notes not later than fifteen
calendar days prior to the applicable Interest Payment Date. Simultaneously with
the election by any Holder to receive payments in a Specified Currency other
than U.S. dollars (as provided above), such Holder shall provide appropriate
wire transfer instructions to the Trustee for such Notes. Unless otherwise
specified in the applicable Pricing Supplement, principal and any premium and
interest payable at the Stated Maturity of a Registered Note will be paid in
immediately available funds upon surrender of such Note at the corporate trust
office or agency of the Trustee for such Note in The City of New York.
Any payment required to be made in respect of a Registered Note on a date
(including the day of Stated Maturity) that is not a Business Day for such Note
need not be made on such date, but may be made on the next succeeding Business
Day with the same force and effect as if made on such date, and no additional
interest shall accrue as a result of such delayed payment.
Unless otherwise specified in the applicable Pricing Supplement, if the
principal of any Discount Note is declared to be due and payable immediately as
described under 'Description of Debt Securities--Events of Default' in the
Prospectus, the amount of principal due and payable with respect to such Note
shall be limited to the aggregate principal amount (or face amount, in the case
of an Indexed Principal Note) of such Note multiplied by the sum of its Issue
Price (expressed as a percentage of the aggregate principal amount) plus the
original issue discount amortized from the date of issue to the date of
declaration, which amortization shall be calculated using the 'interest method'
(computed in accordance with generally accepted accounting principles in effect
on the date of declaration).
The Regular Record Date with respect to any Interest Payment Date for a
Floating Rate Note or for an Indexed Rate Note shall be the date (whether or not
a Business Day) fifteen calendar days immediately preceding such Interest
Payment Date, and for a Fixed Rate Note (unless otherwise specified in the
applicable Pricing Supplement) shall be the March 1 or September 1 (whether or
not a Business Day) immediately preceding such Interest Payment Date.
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FIXED RATE NOTES
Each Fixed Rate Note will bear interest from its Original Issue Date, or
from the last Interest Payment Date to which interest has been paid or duly
provided for, at the rate per annum stated in the applicable Pricing Supplement
until the principal amount thereof is paid or made available for payment, except
as described below under 'Subsequent Interest Periods' and 'Extension of
Maturity', and except that if so specified in the applicable Pricing Supplement,
the rate of interest payable on certain Fixed Rate Notes may be subject to
adjustment from time to time as described in such Pricing Supplement. Unless
otherwise set forth in the applicable Pricing Supplement, interest on each Fixed
Rate Note will be payable semiannually in arrears on each March 15 and September
15 (each such day being an 'Interest Payment Date') and at Stated Maturity.
Unless otherwise specified in the applicable Pricing Supplement, if an Interest
Payment Date with respect to any Fixed Rate Note would otherwise be a day that
is not a Business Day, such Interest Payment Date shall not be postponed;
provided, however, that any payment required to be made in respect of such Note
on a date (including the day of Stated Maturity) that is not a Business Day for
such Note need not be made on such date, but may be made on the next succeeding
Business Day with the same force and effect as if made on such date, and no
additional interest shall accrue as a result of such delayed payment. However,
if with respect to any Fixed Rate Note, 'Accrue to Pay' is specified in the
applicable Pricing Supplement, and any Interest Payment Date with respect to
such Fixed Rate Note would otherwise be a day that is not a Business Day, such
Interest Payment Date shall be postponed to the next succeeding Business Day.
Each payment of interest in respect of an Interest Payment Date shall include
interest accrued through the day before such Interest Payment Date. Unless
otherwise specified in the applicable Pricing Supplement, interest on Fixed Rate
Notes will be computed on the basis of a 360-day year of twelve 30-day months
('30 over 360').
FLOATING RATE NOTES
From its Original Issue Date to but not including the first Interest Reset
Date (the 'Initial Interest Period'), each Floating Rate Note will bear interest
at the Initial Interest Rate set forth, or otherwise described in the Pricing
Supplement. From each Interest Reset Date to but not including the following
Interest Reset Date (each such period, an 'Interest Reset Period'; and together
with the Initial Interest Period, the 'Interest Periods'), the interest rate for
each Floating Rate Note will be determined by reference to an interest rate
basis (the 'Base Rate'), plus or minus the Spread, if any, or multiplied by the
Spread Multiplier, if any. The 'Spread' is the number of basis points that may
be specified in the applicable Pricing Supplement as being applicable to such
Note, and the 'Spread Multiplier' is the percentage that may be specified in the
applicable Pricing Supplement as being applicable to such Note, except in each
case as described below under 'Subsequent Interest Periods' and 'Extension of
Maturity', and except that if so specified in the applicable Pricing Supplement,
the Spread or Spread Multiplier on certain Floating Rate Notes may be subject to
adjustment from time to time as described in such Pricing Supplement. The
applicable Pricing Supplement will designate one of the following Base Rates as
applicable to a Floating Rate Note: (i) LIBOR (a 'LIBOR Note'), (ii) the
Commercial Paper Rate (a 'Commercial Paper Rate Note'), (iii) the Treasury Rate
(a 'Treasury Rate Note'), (iv) the Federal Funds Rate (a 'Federal Funds Rate
Note'), (v) the CD Rate (a 'CD Rate Note') or (vi) such other Base Rate as is
set forth in such Pricing Supplement and in such Note. The 'Index Maturity' for
any Floating Rate Note is the period of maturity of the instrument or obligation
from which the Base Rate is calculated. 'H.15(519)' means the publication
entitled 'Statistical Release H.15(519), 'Selected Interest Rates' ', or any
successor publication, published by the Board of Governors of the Federal
Reserve System. 'Composite Quotations' means the daily statistical release
entitled 'Composite 3:30 p.m. Quotations for U.S. Government Securities'
published by the Federal Reserve Bank of New York.
As specified in the applicable Pricing Supplement, a Floating Rate Note may
also have either or both of the following (in each case expressed as a rate per
annum on a simple interest basis): (i) a
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maximum limitation, or ceiling, on the rate at which interest may accrue during
any interest period ('Maximum Interest Rate') and (ii) a minimum limitation, or
floor, on the rate at which interest may accrue during any interest period
('Minimum Interest Rate'). In addition to any Maximum Interest Rate that may be
applicable to any Floating Rate Note, the interest rate on a Floating Rate Note
will in no event be higher than the maximum rate permitted by applicable law, as
the same may be modified by United States law of general application. The Notes
will be governed by the law of the State of New York and, under such law as of
the date of this Prospectus Supplement, the maximum rate of interest under
provisions of the penal law, with certain exceptions, is 25% per annum on a
simple interest basis. Such maximum rate of interest only applies to obligations
that are less than $2,500,000.
The Company will appoint, and enter into agreements with, agents (each a
'Calculation Agent') to calculate interest rates on Floating Rate Notes. Unless
otherwise specified in a Pricing Supplement, Citibank, N.A. shall be the
Calculation Agent for each Series D Floating Rate Note and Bankers Trust Company
shall be the Calculation Agent for each Series E Floating Rate Note. All
determinations of interest by the Calculation Agent shall, in the absence of
manifest error, be conclusive for all purposes and binding on the holders of the
Floating Rate Notes.
The interest rate on each Floating Rate Note will be reset daily, weekly,
monthly, quarterly, semiannually or annually (each day on which the interest
rate is reset, an 'Interest Reset Date'), as specified in the applicable Pricing
Supplement. Unless otherwise specified in the applicable Pricing Supplement, the
Interest Reset Dates will be, in the case of Floating Rate Notes that reset
daily, each Business Day; in the case of Floating Rate Notes (other than
Treasury Rate Notes) that reset weekly, Wednesday of each week; in the case of
Treasury Rate Notes that reset weekly, Tuesday of each week (except as provided
below under 'Treasury Rate Notes'); in the case of Floating Rate Notes that
reset monthly, the third Wednesday of each month; in the case of Floating Rate
Notes that reset quarterly, the third Wednesday of March, June, September and
December of each year; in the case of Floating Rate Notes that reset
semiannually, the third Wednesday of each of two months of each year specified
in the applicable Pricing Supplement; and, in the case of Floating Rate Notes
that reset annually, the third Wednesday of one month of each year specified in
the applicable Pricing Supplement; provided, however, that in all instances
involving Floating Rate Notes issued prior to September 16, 1994 the interest
rate in effect for the ten days immediately prior to Stated Maturity will be
that in effect on the tenth day preceding Stated Maturity. If an Interest Reset
Date for any Floating Rate Note would otherwise be a day that is not a Business
Day, such Interest Reset Date shall be postponed to the next succeeding Business
Day, except that, in the case of a LIBOR Note, if such Business Day is in the
next succeeding calendar month, such Interest Reset Date shall be the
immediately preceding Business Day.
Unless otherwise specified in the applicable Pricing Supplement, the rate
of interest that goes into effect on any Interest Reset Date shall be determined
on a date (the 'Rate Determination Date') preceding such Interest Reset Date, as
further described below. Such Rate Determination Date may be referred to below
as a 'CD Rate Determination Date' in the case of a CD Rate Note, a 'Commercial
Paper Rate Determination Date' in the case of a Commercial Paper Rate Note, a
'Federal Funds Rate Determination Date' in the case of a Federal Funds Rate
Note, a 'LIBOR Determination Date' in the case of a LIBOR Note or a 'Treasury
Rate Determination Date' or a 'Constant Maturity Treasury Rate Determination
Date' in the case of a Treasury Rate Note.
Unless otherwise specified in the applicable Pricing Supplement, interest
payable in respect of Floating Rate Notes shall be the accrued interest from and
including the Original Issue Date or the last date to which interest has been
paid, as the case may be, to but excluding the applicable Interest Payment Date.
In the case of a Floating Rate Note that resets daily or weekly, interest
payable shall be the accrued interest from and including the Original Issue Date
or the last date to which interest has been accrued and paid, as the case may
be, to but excluding the Record Date immediately preceding the applicable
Interest Payment Date, except that, at Stated Maturity, interest payable will
include interest accrued to but excluding the date of Stated Maturity.
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With respect to a Floating Rate Note with more than one Interest Reset Date
during any period for which accrued interest is being calculated, accrued
interest shall be calculated by multiplying the principal amount of such Note
(or, in the case of a Floating Rate Note that is an Indexed Principal Note, its
Face Amount) by an accrued interest factor. Such accrued interest factor will be
computed by adding the interest factors calculated for each day in the period
for which accrued interest is being calculated. The interest factor (expressed
as a decimal calculated to seven decimal places without rounding) for each such
day is computed, unless otherwise specified in the applicable Pricing
Supplement, by dividing the interest rate in effect on such day by 360 ('Actual
over 360'), in the case of LIBOR Notes, Commercial Paper Rate Notes, Federal
Funds Rate Notes and CD Rate Notes, or by the actual number of days in the year
('Actual over Actual'), in the case of Treasury Rate Notes. For purposes of
making the foregoing calculation, the interest rate in effect on any Interest
Reset Date will be the applicable rate as reset on such date. With respect to
all other Floating Rate Notes, accrued interest shall be calculated by
multiplying the principal amount of such Note (or, in the case of a Floating
Rate Note that is an Indexed Principal Note, its Face Amount) by the interest
rate in effect during the period for which accrued interest is being calculated,
and multiplying that product by the quotient obtained by dividing the number of
days in the period for which accrued interest is being calculated by 360, in the
case of LIBOR Notes, Commercial Paper Rate Notes, Fedral Funds Rate Notes and CD
Rate Notes, or by the actual number of days in the year, in the case of Treasury
Rate Notes.
Unless otherwise specified in the applicable Pricing Supplement, all
percentages resulting from any calculation of the rate of interest on a Floating
Rate Note will be rounded, if necessary, to the nearest 1/100,000 of 1%
(.0000001), with five one-millionths of a percentage point rounded upward, and
all currency amounts used in or resulting from such calculation on Floating Rate
Notes will be rounded to the nearest one-hundredth of a unit (with .005 of a
unit being rounded upward).
Unless otherwise indicated in the applicable Pricing Supplement and except
as provided below, interest will be payable, in the case of Floating Rate Notes
that reset daily, weekly or monthly, on the third Wednesday of each month or on
the third Wednesday of March, June, September and December of each year, as
specified in the applicable Pricing Supplement; in the case of Floating Rate
Notes that reset quarterly, on the third Wednesday of March, June, September,
and December of each year; in the case of Floating Rate Notes that reset
semiannually, on the third Wednesday of each of two months of each year
specified in the applicable Pricing Supplement; and, in the case of Floating
Rate Notes that reset annually, on the third Wednesday of one month of each year
specified in the applicable Pricing Supplement (each such day being an 'Interest
Payment Date'). If an Interest Payment Date with respect to any Floating Rate
Note would otherwise be a day that is not a Business Day, such Interest Payment
Date shall be postponed to the next succeeding Business Day, except that, in the
case of a LIBOR Note, if such Business Day is in the next succeeding calendar
month, such Interest Payment Date shall be the immediately preceding Business
Day; provided, however, if with respect to any Floating Rate Note, the
applicable Pricing Supplement provides that the Note does not Accrue to Pay, if
an Interest Payment Date with respect to such Floating Rate Note would otherwise
be a day that is not a Business Day, such Interest Payment Date shall not be
postponed; provided, further, that any payment required to be made in respect of
a Floating Rate Note that does not Accrue to Pay on a date (including the day of
Stated Maturity) that is not a Business Day for such Note need not be made on
such date, but may be made on the next succeeding Business Day with the same
force and effect as if made on such dates, and no additional interest shall
accrue as a result of such delayed payment.
Upon the request of the Holder of any Floating Rate Note, the Calculation
Agent for such Note will provide the interest rate then in effect and, if
determined, the interest rate that will become effective on the next Interest
Reset Date with respect to such Floating Rate Note.
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CD Rate Notes
Each CD Rate Note will bear interest for each Interest Reset Period at the
interest rate calculated with reference to the CD Rate and the Spread or Spread
Multiplier, if any, specified in such Note and in the applicable Pricing
Supplement.
Unless otherwise specified in the applicable Pricing Supplement, the 'CD
Rate' for each Interest Reset Period shall be the rate as of the second Business
Day prior to the Interest Reset Date for such Interest Reset Period (a 'CD Rate
Determination Date') for negotiable certificates of deposit having the Index
Maturity designated in the applicable Pricing Supplement as published in
H.15(519) under the heading 'CDs (Secondary Market)'. In the event that such
rate is not published prior to 3:00 p.m., New York City time, on the Calculation
Date (as defined below) pertaining to such CD Rate Determination Date, then the
'CD Rate' for such Interest Reset Period will be the rate on such CD Rate
Determination Date for negotiable certificates of deposit of the Index Maturity
designated in the applicable Pricing Supplement as published in Composite
Quotations under the heading 'Certificates of Deposit'. If by 3:00 p.m., New
York City time, on such Calculation Date such rate is not yet published in
either H.15(519) or Composite Quotations, then the 'CD Rate' for such Interest
Reset Period will be calculated by the Calculation Agent for such CD Rate Note
and will be the arithmetic mean of the secondary market offered rates as of
10:00 a.m., New York City time, on such CD Rate Determination Date of three
leading nonbank dealers in negotiable U.S. dollar certificates of deposit in The
City of New York selected by the Calculation Agent for such CD Rate Note for
negotiable certificates of deposit of major United States money center banks of
the highest credit standing (in the market for negotiable certificates of
deposit) with a remaining maturity closest to the Index Maturity designated in
the Pricing Supplement in a denomination of $5,000,000; provided, however, that
if the dealers selected as aforesaid by such Calculation Agent are not quoting
offered rates as mentioned in this sentence, the 'CD Rate' for such Interest
Reset Period will be the same as the CD Rate for the immediately preceding
Interest Reset Period (or, if there was no such Interest Reset Period, the
Initial Interest Rate).
The 'Calculation Date' pertaining to any CD Rate Determination Date shall
be the tenth calendar day after such CD Rate Determination Date or, if such day
is not a Business Day, the next succeeding Business Day.
Commercial Paper Rate Notes
Each Commercial Paper Rate Note will bear interest for each Interest Reset
Period at the interest rate calculated with reference to the Commercial Paper
Rate and the Spread or Spread Multiplier, if any, specified in such Note and in
the applicable Pricing Supplement.
Unless otherwise specified in the applicable Pricing Supplement, the
'Commercial Paper Rate' for each Interest Reset Period will be determined by the
Calculation Agent for such Commercial Paper Rate Note as of the second Business
Day prior to the Interest Reset Date for such Interest Reset Period (a
'Commercial Paper Rate Determination Date') and shall be the Money Market Yield
(as defined below) on such Commercial Paper Rate Determination Date of the rate
for commercial paper having the index Maturity specified in the applicable
Pricing Supplement, as such rate shall be published in H.15(519) under the
heading 'Commercial Paper'. In the event that such rate is not published prior
to 3:00 p.m., New York City time, on the Calculation Date (as defined below)
pertaining to such Commercial Paper Rate Determination Date, then the
'Commercial Paper Rate' for such Interest Reset Period shall be the Money Market
Yield on such Commercial Paper Rate Determination Date of the rate for
commercial paper of the specified Index Maturity as published in Composite
Quotations under the heading 'Commercial Paper'. If by 3:00 p.m., New York City
time, on such Calculation Date such rate is not yet published in either
H.15(519) or Composite Quotations, then the 'Commercial Paper Rate' for such
Interest Reset Period shall be the Money Market Yield of the arithmetic mean of
the offered rates, as of 11:00 a.m., New York City time, on such Commercial
Paper Rate Determination Date of three leading dealers of commercial paper in
The City of New York selected by the Calculation Agent for such
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Commercial Paper Rate Note for commercial paper of the specified Index Maturity
placed for an industrial issuer whose bonds are rated 'AA' or the equivalent by
a nationally recognized rating agency; provided, however, that if the dealers
selected as aforesaid by such Calculation Agent are not quoting offered rates as
mentioned in this sentence, the 'Commercial Paper Rate' for such Interest Reset
Period will be the same as the Commercial Paper Rate for the immediately
preceding Interest Reset Period (or, if there was no such Interest Reset Period,
the Initial Interest Rate).
'Money Market Yield' shall be a yield calculated in accordance with the
following formula:
D X 360
Money Market Yield = --------------- X 100
360 - (D X M)
where 'D' refers to the applicable per annum rate for commercial paper quoted on
a bank discount basis and expressed as a decimal, and 'M' refers to the actual
number of days in the specified Index Maturity.
The 'Calculation Date' pertaining to any Commercial Paper Rate
Determination Date shall be the tenth calendar day after such Commercial Paper
Rate Determination Date or, if such day is not a Business Day, the next
succeeding Business Day.
Federal Funds Rate Notes
Each Federal Funds Rate Note will bear interest for each Interest Reset
Period at the interest rate calculated with reference to the Federal Funds Rate
and the Spread or Spread Multiplier, if any, specified in such Note and in the
applicable Pricing Supplement.
Unless otherwise specified in the applicable Pricing Supplement, the
'Federal Funds Rate' for each Interest Reset Period shall be the effective rate
on the Interest Reset Date for such Interest Reset Period (a 'Federal Funds Rate
Determination Date') for Federal Funds as published in H.15(519) under the
heading 'Federal Funds (Effective)'. In the event that such rate is not
published prior to 3:00 p.m., New York City time, on the Calculation Date (as
defined below) pertaining to such Federal Funds Rate Determination Date, the
'Federal Funds Rate' for such Interest Reset Period shall be the rate on such
Federal Funds Rate Determination Date as published in Composite Quotations under
the heading 'Federal Funds/Effective Rate'. If by 3:00 p.m., New York City time,
on such Calculation Date such rate is not yet published in either H.15(519) or
Composite Quotations, then the 'Federal Funds Rate' for such Interest Reset
Period shall be the rate on such Federal Funds Rate Determination Date made
publicly available by the Federal Reserve Bank of New York which is equivalent
to the rate which appears in H.15(519) under the heading 'Federal Funds
(Effective)'; provided, however, that if such rate is not made publicly
available by the Federal Reserve Bank of New York by 3:00 p.m., New York City
time, on such Calculation Date, the 'Federal Funds Rate' for such Interest Reset
Period will be the same as the Federal Funds Rate in effect for the immediately
preceding Interest Reset Period (or, if there was no such Interest Reset Period,
the Initial Interest Rate). In the case of a Federal Funds Rate Note that resets
daily, the interest rate on such Note for the period from and including a Monday
to but excluding the succeeding Monday will be reset by the Calculation Agent
for such Note on such second Monday (or, if not a Business Day, on the next
succeeding Business Day) to a rate equal to the average of the Federal Funds
Rates in effect with respect to each such day in such week.
The 'Calculation Date' pertaining to any Federal Funds Rate Determination
Date shall be the next succeeding Business Day.
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LIBOR Notes
Each LIBOR Note will bear interest for each Interest Reset Period at the
interest rate calculated with reference to LIBOR and the Spread or Spread
Multiplier, if any, specified in such Note and in the applicable Pricing
Supplement.
'LIBOR' for each Interest Reset Period will be determined by the
Calculation Agent for such LIBOR Notes as follows:
(i) On the second London Banking Day prior to the Interest Reset Date
for such Interest Reset Period (a 'LIBOR Determination Date'), the
Calculation Agent for such LIBOR Note will determine the offered rates for
deposits in the Specified Currency for the period of the Index Maturity
specified in the applicable Pricing Supplement, commencing on such Interest
Reset Date, which appear on the Designated LIBOR Page at approximately
11:00 a.m., London time, on such LIBOR Determination Date. If 'LIBOR
Telerate' is designated in the applicable Pricing Supplement, 'Designated
LIBOR Page' means the display designated as page '3750' on the Dow Jones
Telerate Service (or such other page as may replace page '3750' on such
service or such other service as may be nominated by the British Bankers'
Association for the purpose of displaying the London interbank offered
rates of major banks), and LIBOR for such Interest Reset Period will be the
relevant offered rate as determined by the Calculation Agent. If 'LIBOR
Reuters' is designated in the applicable Pricing Supplement, 'Designated
LIBOR Page' means the display designated as page 'LIBO' on the Reuters
Monitor Money Rates Service (or such other page as may replace the LIBO
page on such service or such other service as may be nominated by the
British Bankers' Association for the purpose of displaying London interbank
offered rates of major banks) provided that at least two such offered rates
appear on the Designated LIBOR Page, in which case, 'LIBOR' for such
Interest Reset Period will be the arithmetic mean of such offered rates as
determined by the Calculation Agent for such LIBOR Note.
(ii) If LIBOR cannot be determined as above (either because the
Designated LIBOR Page is no longer available or because less than two rates
appear on page 'LIBO' on the Reuters Monitor Money Rate Services) on such
LIBOR Determination Date, the Calculation Agent for such LIBOR Note will
request the principal London offices of each of four major banks in the
London interbank market selected by such Calculation Agent to provide such
Calculation Agent with its offered quotations for deposits in the Specified
Currency for the period of the specified Index Maturity, commencing on such
Interest Reset Date, to prime banks in the London interbank market at
approximately 11:00 a.m., London time, on such LIBOR Determination Date and
in a principal amount equal to an amount of not less than $1,000,000 or the
approximate equivalent thereof in the Specified Currency that is
representative of a single transaction in such market at such time. If at
least two such quotations are provided, 'LIBOR' for such Interest Reset
Period will be the arithmetic mean of such quotations. If fewer than two
such quotations are provided, 'LIBOR' for such Interest Reset Period will
be the arithmetic mean of rates quoted by three major banks in The City of
New York selected by the Calculation Agent for such LIBOR Note at
approximately 11:00 a.m., New York City time, on such LIBOR Determination
Date for loans in the Specified Currency to leading European banks, for the
period of the specified Index Maturity, commencing on such Interest Reset
Date, and in a principal amount equal to an amount of not less than
$1,000,000 or the approximate equivalent thereof in the Specified Currency
that is representative of a single transaction in such market at such time;
provided, however, that if fewer than three banks selected as aforesaid by
such Calculation Agent are quoting rates as mentioned in this sentence,
'LIBOR' for such Interest Reset Period will be the same as LIBOR for the
immediately preceding Interest Reset Period (or, if there was no such
Interest Reset Period, the Initial Interest Rate).
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Treasury Rate Notes
Each Treasury Rate Note will bear interest for each Interest Reset Period
at the interest rate calculated with reference to the Treasury Rate and the
Spread or Spread Multiplier, if any, specified in such Note and in the
applicable Pricing Supplement.
Unless 'Constant Maturity' is specified or unless otherwise specified in
the applicable Pricing Supplement, the 'Treasury Rate' for each Interest Reset
Period will be the rate for the auction held on the Treasury Rate Determination
Date (as defined below) for such Interest Reset Period of direct obligations of
the United States ('Treasury securities') having the Index Maturity specified in
the applicable Pricing Supplement, as such rate shall be published in H.15(519)
under the heading 'U.S. Government Securities-Treasury bills-auction average
(investment)' or, in the event that such rate is not published prior to 3:00
p.m., New York City time, on the Calculation Date (as defined below) pertaining
to such Treasury Rate Determination Date, the auction average rate (expressed as
a bond equivalent on the basis of a year of 365 or 366 days, as applicable, and
applied on a daily basis) on such Treasury Rate Determination Date as otherwise
announced by the United States Department of the Treasury. In the event that the
results of the auction of Treasury securities having the specified Index
Maturity are not published or reported as provided above by 3:00 p.m., New York
City time, on such Calculation Date, or if no such auction is held on such
Treasury Rate Determination Date, then the 'Treasury Rate' for such Interest
Reset Period shall be calculated by the Calculation Agent for such Treasury Rate
Note and shall be a yield to maturity (expressed as a bond equivalent on the
basis of a year of 365 or 366 days, as applicable, and applied on a daily basis)
of the arithmetic mean of the secondary market bid rates, as of approximately
3:30 p.m., New York City time, on such Treasury Rate Determination Date, of
three leading primary United States government securities dealers selected by
such Calculation Agent for the issue of Treasury securities with a remaining
maturity closest to the specified Index Maturity; provided, however, that if the
dealers selected as aforesaid by such Calculation Agent are not quoting bid
rates as mentioned in this sentence, then the 'Treasury Rate' for such Interest
Reset Period will be the same as the Treasury Rate for the immediately preceding
Interest Reset Period (or, if there was no such Interest Reset Period, the
Initial Interest Rate).
The 'Treasury Rate Determination Date' for each Interest Reset Period will
be the day of the week in which the Interest Reset Date for such Interest Reset
Period falls on which Treasury securities would normally be auctioned. Treasury
securities are normally sold at auction on Monday of each week, unless that day
is legal holiday, in which case the auction is normally held on the following
Tuesday, except that such auction may be held on the preceding Friday. If, as
the result of a legal holiday, an auction is so held on the preceding Friday,
such Friday will be the Treasury Rate Determination Date pertaining to the
Interest Reset Period commencing in the next succeeding week. If an auction date
shall fall on any day that would otherwise be an Interest Reset Date for a
Treasury Rate Note, then such Interest Reset Date shall instead be the Business
Day immediately following such auction date.
If 'Constant Maturity' is specified in the applicable Pricing Supplement,
the 'Treasury Rate' for each Interest Reset Period will be the rate that is set
forth in the Federal Reserve Board publication H.15(519) opposite the caption
'U.S. Government/Securities/Treasury Constant Maturities/' in the Index Maturity
with respect to the applicable Constant Maturity Treasury Rate Determination
Date (as defined below). If the H.15(519) is not published, the 'Constant
Maturity--Treasury Rate' shall be the rate that was set forth on Telerate Page
7055, or its successor page (as determined by the Calculation Agent), on the
applicable Constant Maturity Treasury Rate Determination Date opposite the
applicable Index Maturity. If no such rate is set forth, then the Constant
Maturity Treasury Rate for such Interest Reset Period shall be established by
the Calculation Agent as follows. The Calculation Agent will contact the Federal
Reserve Board and request the Constant Maturity Treasury Rate, in the applicable
Index Maturity, for the Constant Maturity Treasury Rate Determination Date. If
the Federal Reserve Board does not provide such information, then the Constant
Maturity Treasury Rate for such Interest Reset Date will be the arithmetic mean
of bid-side quotations, expressed in terms of yield, reported by three leading
U.S. government securities dealers (one of which may be Salomon Brothers Inc),
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according to their written records, as of 3:00 p.m. (New York City time) on the
Constant Maturity Treasury Rate Determination Date, for the noncallable U.S.
Treasury Note that is nearest in maturity to the Index Maturity, but not less
than exactly the Index Maturity and for the noncallable U.S. Treasury Note that
is nearest in maturity to the Index Maturity, but not more than exactly the
Index Maturity. The Calculation Agent shall calculate the Constant Maturity
Treasury Rate by interpolating to the Index Maturity based on an actual/actual
date count basis, the yield on the two Treasury Notes selected. If the
Calculation Agent cannot obtain three such adjusted quotations, the Constant
Maturity Treasury Rate for such Interest Reset Date will be the arithmetic mean
of all such quotations, or if only one such quotation is obtained, such
quotation, obtained by the Calculation Agent. In all events, the Calculation
Agent shall continue polling dealers until at least one adjusted yield quotation
can be determined.
'The Constant Maturity Treasury Rate Determination Date' shall be the tenth
Business Day prior to the Interest Reset Date for the applicable Interest Reset
Period.
The Treasury constant maturity rate for a Treasury security maturity (the
'CMT Rate') as published in H.15(519) as of any Business Day is intended to be
indicative of the yield of a U.S. Treasury security having as of such Business
Day a remaining term to maturity equivalent to such maturity. The CMT Rate as of
any Business Day is based upon an interpolation by the U.S. Treasury of the
daily yield curve of outstanding Treasury securities. This yield curve, which
relates the yield on a security to its time to maturity, is based on the
over-the-counter market bid yields on actively traded Treasury securities. Such
yields are calculated from composites of quotations reported by leading U.S.
government securities dealers, which may include Salomon Brothers Inc. Certain
constant maturity yield values are read from the yield curve. Such interpolation
from the yield curve provides a theoretical yield for a Treasury security having
ten years to maturity, for example, even if no outstanding Treasury security has
as of such date exactly ten years remaining to maturity.
The 'Calculation Date' pertaining to any Treasury Rate Determination Date
or Constant Maturity Rate Determination Date, as applicable, shall be the tenth
calendar day after such Treasury Rate Determination Date or Constant Maturity
Rate Determination Date, as applicable, or, if such a day is not a Business Day,
the next succeeding Business Day.
SUBSEQUENT INTEREST PERIODS
The Pricing Supplement relating to each Registered Note will indicate
whether the Company has the option to reset the interest rate (in the case of a
Fixed Rate Note) with respect to such Registered Note or the Spread or Spread
Multiplier (in the case of a Floating Rate Note) with respect to such Registered
Note and, if so, the date or dates on which such interest rate or such Spread or
Spread Multiplier, as the case may be, may be reset (each an 'Optional Reset
Date').
The Company shall notify the Trustee for a Registered Note whether or not
it intends to exercise such option with respect to such Registered Note at least
45 but not more than 60 days prior to an Optional Reset Date for such Registered
Note. Not later than 40 days prior to such Optional Reset Date, the Trustee for
such Registered Note will mail to the Holder of such Registered Note a notice
(the 'Reset Notice'), first class, postage prepaid, indicating whether the
Company has elected to reset the interest rate (in the case of a Fixed Rate
Note) or the Spread or Spread Multiplier (in the case of a Floating Rate Note)
and if so, (i) such new interest rate or such new Spread or Spread Multiplier,
as the case may be; and (ii) the provisions, if any, for redemption during the
period from such Optional Reset Date to the next Optional Reset Date or, if
there is no such next Optional Reset Date, to the Stated Maturity of such
Registered Note (each such period a 'Subsequent Interest Period'), including the
date or dates on which or the period or periods during which and the price or
prices at which such redemption may occur during such Subsequent Interest
Period.
Notwithstanding the foregoing, not later than 20 days prior to an Optional
Reset Date for a Registered Note, the Company may, at its option, revoke the
interest rate (in the case of a Fixed Rate Note) or the Spread or Spread
Multiplier (in the case of a Floating Rate Note) provided for in the Reset
Notice with respect to such Optional Reset Date and establish a higher interest
rate (in the case of a
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Fixed Rate Note) or a higher Spread or Spread Multiplier (in the case of a
Floating Rate Note) for the Subsequent Interest Period commencing on such
Optional Reset Date by causing the Trustee for such Registered Note to mail
notice of such higher interest rate or higher Spread or Spread Multiplier, as
the case may be, first class, postage prepaid, to the Holder of such Registered
Note. Such notice shall be irrevocable. All Registered Notes with respect to
which the interest rate or Spread or Spread Multiplier is reset on an Optional
Reset Date will bear such higher interest rate (in the case of Fixed Rate Notes)
or higher Spread or Spread Multiplier (in the case of Floating Rate Notes),
whether or not tendered for repayment.
The Holder of a Registered Note will have the option to elect repayment of
such Note by the Company on each Optional Reset Date at a price equal to the
principal amount thereof, plus interest accrued to such Optional Reset Date. In
order for a Registered Note to be repaid on an Optional Reset Date, the Holder
thereof must follow the procedures set forth below under 'Optional Redemption,
Repayment and Repurchase' for optional repayment, except that the period for
delivery of such Registered Note or notification to the Trustee for such
Registered Note shall be at least 25 but not more than 35 days prior to such
Optional Reset Date, and except that a Holder who has tendered a Registered Note
for repayment pursuant to a Reset Notice may, by written notice to the Trustee
for such Registered Note, revoke any such tender for repayment until the close
of business on the tenth day prior to such Optional Reset Date.
AMORTIZING NOTES
The Company may from time to time offer Registered Notes ('Amortizing
Notes') on which a portion or all the principal amount is payable prior to
Stated Maturity in accordance with a schedule, by application of a formula, or
by reference to an Index (as defined below). Further information concerning
additional terms and conditions of any Amortizing Notes, including terms for
repayment thereof, will be set forth in the applicable Pricing Supplement.
INDEXED NOTES
The Company may from time to time offer Registered Notes ('Indexed Notes')
on which certain or all interest payments (in the case of an 'Indexed Rate
Note'), and/or the principal amount payable at Stated Maturity or earlier
redemption or retirement (in the case of an 'Indexed Principal Note'), is
determined by reference to the principal amount of such Notes (or, in the case
of an Indexed Principal Note, to the amount designated in the applicable Pricing
Supplement as the 'Face Amount' of such Indexed Note) and by reference to
prices, changes in prices, or differences between prices, of securities,
currencies, intangibles, goods, articles or commodities or by such other
objective price, economic or other measures as are described in the applicable
Pricing Supplement (the 'Index'). A description of the Index used in any
determination of an interest or principal payment, and the method or formula by
which interest or principal payments will be determined by reference to such
Index, will be set forth in the applicable Pricing Supplement.
In the case of a Fixed Rate Note, Floating Rate Note or Indexed Rate Note
that is also an Indexed Principal Note, the amount of any interest payment will
be determined by reference to the Face Amount of such Indexed Note unless
specified otherwise in the applicable Pricing Supplement. In the case of an
Indexed Principal Note, the principal amount payable at Stated Maturity or any
earlier redemption or repayment of the Indexed Note may be different from the
Face Amount.
If the determination of the Index on which any interest payment or the
principal amount of an Indexed Note is calculated or announced by a third party,
which may be Salomon Brothers Inc or another affiliate of the Company, and such
third party either suspends the calculation or announcement of such Index or
changes the basis upon which such Index is calculated (other than changes
consistent with policies in effect at the time such Indexed Note was issued and
permitted changes described in the applicable Pricing Supplement), then such
Index shall be calculated for purposes of such Indexed Note by another third
party selected by the Company, which may be Salomon Brothers Inc or another
affiliate of the Company, subject to the same conditions and controls as applied
to the original third party. If for
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any reason such Index cannot be calculated on the same basis and subject to the
same conditions and controls as applied to the original third party, then the
indexed interest payments, if any, or any indexed principal amount of such
Indexed Note shall be calculated in the manner set forth in the applicable
Pricing Supplement. Any determination of such third party shall in the absence
of manifest error be binding on all parties.
BOOK-ENTRY SYSTEM
Upon issuance, and subject to the rules of the Depositary, all Fixed Rate
Book-Entry Notes having the same Original Issue Date and otherwise identical
terms will be represented by a single Global Security. Each Global Security
representing Book-Entry Notes will be deposited with, or on behalf of, The
Depository Trust Company, New York, New York (the 'Depositary'), and registered
in the name of a nominee of the Depositary. Book-Entry Notes will not be
exchangeable for Certificated Notes and, except under the circumstances
described in the Prospectus under 'Description of Debt Securities--Global
Securities', will not otherwise be issuable as Certificated Notes.
The Depositary has advised the Company and the Agent as follows: The
Depositary is a limited-purpose trust company organized under New York Banking
Law, a 'banking organization' within the meaning of the New York Banking Law, a
member of the Federal Reserve System, a 'clearing corporation' within the
meaning of the New York Uniform Commercial Code, and a 'clearing agency'
registered pursuant to the provisions of Section 17A of the Securities Exchange
Act of 1934, as amended. The Depositary was created to hold securities of its
participants and to facilitate the clearance and settlement of securities
transactions among its participants in such securities through electronic
book-entry changes in accounts of the participants, thereby eliminating the need
for physical movement of securities certificates. The Depositary's participants
include securities brokers and dealers (including the Agent), banks, trust
companies, clearing corporations, and certain other organizations, some of whom
(and/or their representatives) own the Depositary. Access to the Depositary's
book-entry system is also available to others, such as banks, brokers, dealers
and trust companies that clear through or maintain a custodial relationship with
a participant, either directly or indirectly.
A further description of the Depositary's procedures with respect to Global
Securities representing Book-Entry Notes is set forth in the Prospectus under
'Description of Debt Securities-Global Securities'. The Depositary has confirmed
to the Company, the Agent and the Trustees that it intends to follow such
procedures.
EXTENSION OF MATURITY
The Pricing Supplement relating to each Registered Note will indicate
whether the Company has the option to extend the Stated Maturity of such Note
for one or more periods of whole years from one to five (each an 'Extension
Period') up to but not beyond the date (the 'Final Maturity') set forth in such
Pricing Supplement.
The Company may exercise such option with respect to a Registered Note by
notifying the Trustee for such Registered Note at least 45 but not more than 60
days prior to the old Stated Maturity of such Registered Note. Not later than 40
days prior to the old Stated Maturity of such Registered Note, the Trustee for
such Registered Note will mail to the Holder of such Registered Note a notice
(the 'Extension Notice'), first class, postage prepaid. The Extension Notice
will set forth (i) the election of the Company to extend the Stated Maturity of
such Registered Note; (ii) the new Stated Maturity; (iii) in the case of a Fixed
Rate Note, the interest rate applicable to the Extension Period or, in the case
of a Floating Rate Note, the Spread or Spread Multiplier applicable to the
Extension Period; and (iv) the provisions, if any, for redemption during the
Extension Period, including the date or dates on which or the period or periods
during which and the price or prices at which such redemption may occur during
the Extension Period. Upon the mailing by such Trustee of an Extension Notice to
the Holder of a Registered Note, the Stated Maturity of such Registered Note
shall be extended automatically, and, except as modified by the Extension Notice
and as described in the next paragraph, such Registered Note will have the same
terms as prior to the mailing of such Extension Notice.
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Notwithstanding the foregoing, not later than 20 days prior to the old
Stated Maturity of such Registered Note, the Company may, at its option, revoke
the interest rate (in the case of a Fixed Rate Note) or the Spread or Spread
Multiplier (in the case of a Floating Rate Note) provided for in the Extension
Notice for such Registered Note and establish a higher interest rate (in the
case of a Fixed Rate Note) or a higher Spread or Spread Multiplier (in the case
of a Floating Rate Note) for the Extension Period, by causing the Trustee for
such Registered Note to mail notice of such higher interest rate or higher
Spread or Spread Multiplier, as the case may be, first class, postage prepaid,
to the Holder of such Registered Note. Such notice shall be irrevocable. All
Registered Notes with respect to which the Stated Maturity is extended will bear
such higher interest rate (in the case of Fixed Rate Notes) or higher Spread or
Spread Multiplier (in the case of Floating Rate Notes) for the Extension Period,
whether or not tendered for repayment.
If the Company extends the Stated Maturity of a Registered Note, the Holder
of such Registered Note will have the option to elect repayment of such
Registered Note by the Company on the old Stated Maturity at a price equal to
the principal amount thereof, plus interest accrued to such date. In order for a
Registered Note to be repaid on the old Stated Maturity once the Company has
extended the Stated Maturity thereof, the Holder thereof must follow the
procedures set forth below under 'Optional Redemption, Repayment and Repurchase'
for optional repayment, except that the period for delivery of such Registered
Note or notification to the Trustee for such Registered Note shall be at least
25 but not more than 35 days prior to the old Stated Maturity and except that a
Holder who has tendered a Registered Note for repayment pursuant to an Extension
Notice may, by written notice to the Trustee for such Registered Note, revoke
any such tender for repayment until the close of business on the tenth day
before the old Stated Maturity.
OPTIONAL REDEMPTION, REPAYMENT AND REPURCHASE
The Pricing Supplement relating to each Registered Note will indicate
either that such Note cannot be redeemed prior to its Stated Maturity or that
such Note will be redeemable at the option of the Company, in whole or in part,
and the date or dates (each an 'Optional Redemption Date') on which such Note
may be redeemed and the price (the 'Redemption Price') at which (together with
accrued interest to such Optional Redemption Date) such Note may be redeemed on
each such Optional Redemption Date. The Company may exercise such option with
respect to a Registered Note by notifying the Trustee for such Note at least 45
days prior to any Optional Redemption Date. Unless otherwise specified in the
applicable Pricing Supplement, at least 30 but not more than 60 days prior to
the date of redemption, such Trustee shall mail notice of such redemption, first
class, postage prepaid, to the Holder of such Registered Note. In the event of
redemption of a Registered Note in part only, a new Note or Notes for the
unredeemed portion thereof shall be issued to the Holder thereof upon the
cancellation thereof. The Registered Notes will not be subject to any sinking
fund.
The Pricing Supplement relating to each Registered Note will also indicate
whether the Holder of such Note will have the option to elect repayment of such
Note by the Company prior to its Stated Maturity, and, if so, such Pricing
Supplement will specify the date or dates on which such Note may be repaid (each
an 'Optional Repayment Date') and the price (the 'Optional Repayment Price') at
which, together with accrued interest to such Optional Repayment Date, such Note
may be repaid on each such Optional Repayment Date.
In order for a Registered Note to be repaid, the Trustee for such
Registered Note must receive, at least 30 but not more than 45 days prior to an
Optional Repayment Date (i) such Registered Note with the form entitled 'Option
to Elect Repayment' on the reverse thereof duly completed, or (ii) a telegram,
telex, facsimile transmission or letter from a member of a national securities
exchange or the National Association of Securities Dealers, Inc. or a commercial
bank or trust company in the United States setting forth the name of the Holder
of such Registered Note, the principal amount of such Registered Note to be
repaid, the certificate number or a description of the tenor and terms of such
Registered Note, a statement that the option to elect repayment is being
exercised thereby and a guarantee that the Registered Note to be repaid with the
form entitled 'Option to Elect Repayment' on the reverse of
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the Registered Note duly completed will be received by such Trustee not later
than five Business Days after the date of such telegram, telex, facsimile
transmission or letter. If the procedure described in clause (ii) of the
preceding sentence is followed, then such Registered Note and form duly
completed must be received by such Trustee by such fifth Business Day. Any
tender of a Registered Note by the Holder for repayment (except pursuant to a
Reset Notice or an Extension Notice) shall be irrevocable. The repayment option
may be exercised by the Holder of a Registered Note for less than the entire
principal amount of such Note provided that the principal amount of such Note
remaining outstanding after repayment is an authorized denomination. Upon such
partial repayment, such Registered Note shall be cancelled and a new Note or
Notes for the remaining principal amount thereof shall be issued in the name of
the Holder of such repaid Note.
If a Registered Note is represented by a Global Security, the Depositary's
nominee will be the Holder of such Note and therefore will be the only entity
that can exercise a right to repayment. In order to ensure that the Depositary's
nominee will timely exercise a right to repayment with respect to a particular
Registered Note, the beneficial owner of such Note must instruct the broker or
other direct or indirect participant through which it holds an interest in such
Note to notify the Depositary of its desire to exercise a right to repayment.
Different firms have different cut-off times for accepting instructions from
their customers and, accordingly, each beneficial owner should consult the
broker or other direct or indirect participant through which it holds an
interest in a Registered Note in order to ascertain the cut-off time by which
such an instruction must be given in order for timely notice to be delivered to
the Depositary.
Notwithstanding anything in this Prospectus Supplement to the contrary, if
a Registered Note is an Original Issue Discount Note (other than an Indexed
Note), the amount payable on such Note in the event of redemption or repayment
prior to its Stated Maturity (other than pursuant to an optional redemption by
the Company at a stated Redemption Price) shall be the Amortized Face Amount of
such Note as of the date of redemption or the date of repayment, as the case may
be. The Amortized Face Amount of a Note on any date shall be the amount equal to
(i) the Issue Price set forth on the face of the applicable Pricing Supplement
plus (ii) that portion of the difference between such Issue Price and the stated
principal amount of such Note that has accrued by such date at (x) the Bond
Yield to Maturity set forth on the face of the applicable Pricing Supplement or
(y) if so specified in the applicable Pricing Supplement, the Bond Yield to Call
set forth on the face thereof (computed in each case in accordance with
generally accepted United States bond yield computation principles), provided,
however, that in no event shall the Amortized Face Amount of a Note exceed its
stated principal amount. The Bond Yield to Call listed on the face of a Pricing
Supplement shall be computed on the basis of the first occuring Optional
Redemption Date with respect to such Note and the amount payable on such
Optional Redemption Date. In the event that any such Note is not redeemed on
such first occuring Optional Redemption Date, the Bond Yield to Call with
respect to such Note shall be recomputed on such Optional Redemption Date on the
basis of the next occuring Optional Redemption Date and the amount payable on
such Optional Redemption Date, and shall continue to be so recomputed on each
succeeding Optional Redemption Date until the Note is so redeemed.
The Company may at any time purchase Registered Notes at any price in the
open market or otherwise. Registered Notes so purchased by the Company may, at
the discretion of the Company, be held or resold or surrendered to the Trustee
for such Notes for cancellation.
DEFEASANCE
The defeasance provisions described in the Prospectus will not be
applicable to the Registered Notes.
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CURRENCY RISKS
EXCHANGE RATES AND EXCHANGE CONTROLS
An investment in a Registered Note having a Specified Currency other than
U.S. dollars entails significant risks that are not associated with a similar
investment in a security denominated in U.S. dollars. Such risks include,
without limitation, the possibility of significant changes in rates of exchange
between the U.S. dollar and such Specified Currency and the possibility of the
imposition or modification of foreign exchange controls with respect to such
Specified Currency. Such risks generally depend on factors over which the
Company has no control and which cannot be readily foreseen, such as economic
and political events and the supply of and demand for the relevant currencies.
In recent years, rates of exchange between the U.S. dollar and certain
currencies have been highly volatile, and such volatility may be expected in the
future. Fluctuations in any particular exchange rate that have occurred in the
past are not necessarily indicative, however, of fluctuations in the rate that
may occur during the term of any Registered Note. Depreciation of the Specified
Currency for a Registered Note against the U.S. dollar would result in a
decrease in the effective yield of such Note below its coupon rate and, in
certain circumstances, could result in a substantial loss to the investor on a
U.S. dollar basis.
Governments have from time to time imposed, and may in the future impose,
exchange controls that could affect exchange rates as well as the availability
of a Specified Currency for making payments in respect of Registered Notes
denominated in such currency. At present, the Company has identified the
following currencies in which payments of principal, premium and interest on
Registered Notes may be made: Australian dollars, Canadian dollars, Danish
kroner, English pounds sterling, French francs, German deutsche marks, Hong Kong
dollars, Italian lire, Japanese yen, New Zealand dollars, U.S. dollars and ECU.
However, the Company may determine at any time to issue Registered Notes with
Specified Currencies other than those listed. There can be no assurances that
exchange controls will not restrict or prohibit payments of principal, premium
or interest in any Specified Currency. Even if there are no actual exchange
controls, it is possible that, on a payment date with respect to any particular
Registered Note, the currency in which amounts then due in respect of such Note
are payable would not be available to the Company. In that event, the Company
will make such payments in the manner set forth under 'Description of Registered
Notes--Payment of Principal and Interest' above.
THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS DO NOT DESCRIBE
ALL THE RISKS OF AN INVESTMENT IN REGISTERED NOTES DENOMINATED IN A CURRENCY
OTHER THAN U.S. DOLLARS, AND THE COMPANY DISCLAIMS ANY RESPONSIBILITY TO ADVISE
PROSPECTIVE PURCHASERS OF SUCH RISKS AS THEY EXIST AT THE DATE OF THIS
PROSPECTUS SUPPLEMENT OR AS SUCH RISKS MAY CHANGE FROM TIME TO TIME. PROSPECTIVE
PURCHASERS SHOULD CONSULT THEIR OWN FINANCIAL AND LEGAL ADVISORS AS TO THE RISKS
ENTAILED BY AN INVESTMENT IN REGISTERED NOTES DENOMINATED IN A CURRENCY OTHER
THAN U.S. DOLLARS. SUCH NOTES ARE NOT AN APPROPRIATE INVESTMENT FOR PERSONS WHO
ARE UNSOPHISTICATED WITH RESPECT TO FOREIGN CURRENCY TRANSACTIONS.
The information set forth in this Prospectus Supplement is directed to
prospective purchasers of Registered Notes who are United States residents, and
the Company disclaims any responsibility to advise prospective purchasers who
are residents of countries other than the United States with respect to any
matters that may affect the purchase or holding of, or receipt of payments of
principal, premium or interest in respect of, Registered Notes. Such persons
should consult their own advisors with regard to such matters.
Any Pricing Supplement relating to Registered Notes having a Specified
Currency other than U.S. dollars will contain a description of any material
exchange controls affecting such currency and any other required information
concerning such currency.
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PAYMENT CURRENCY
Except as set forth below, if payment in respect of a Registered Note is
required to be made in a Specified Currency other than U.S. dollars and such
currency is unavailable due to the imposition of exchange controls or other
circumstances beyond the Company's control or is no longer used by the
government of the country issuing such currency or for the settlement of
transactions by public institutions of or within the international banking
community, then all payments in respect of such Note shall be made in U.S.
dollars until such currency is again available or so used. The amounts so
payable on any date in such currency shall be converted into U.S. dollars on the
basis of the most recently available Market Exchange Rate for such currency or
as otherwise indicated in the applicable Pricing Supplement. Any payment in
respect of such Note made under such circumstances in U.S. dollars will not
constitute an Event of Default under the Indenture under which such Note shall
have been issued.
If payment in respect of a Registered Note is required to be made in ECU
and ECU are no longer used in the European Monetary System, then all payments in
respect of such Note shall be made in U.S. dollars until ECU are again so used.
The amount of each payment in U.S. dollars shall be computed on the basis of the
equivalent of ECU in U.S. dollars, determined as described below, as of the
second Business Day prior to the date on which such payment is due.
The equivalent of ECU in U.S. dollars as of any date (the 'Day of
Valuation') shall be determined for Series D Notes by the Trustee for such Notes
and for Series E Notes by the Exchange Rate Agent, on the following basis. The
component currencies of ECU for this purpose (the 'Components') shall be the
currency amounts that were components of ECU as of the last date on which ECU
were used in the European Monetary System. The equivalent of ECU in U.S. dollars
shall be calculated by aggregating the U.S. dollar equivalents of the
Components. The U.S. dollar equivalent of each of the Components shall be
determined by such Trustee or such Exchange Rate Agent, as the case may be, on
the basis of the most recently available Market Exchange Rates for such
Components or as otherwise indicated in the applicable Pricing Supplement.
If the official unit of any component currency is altered by way of
combination or subdivision, the number of units of that currency as a Component
shall be divided or multiplied in the same proportion. If two or more component
currencies are consolidated into a single currency, the amounts of those
currencies as Components shall be replaced by an amount in such single currency
equal to the sum of the amounts of the consolidated component currencies
expressed in such single currency. If any component currency is divided into two
or more currencies, the amount of that currency as a Component shall be replaced
by amounts of such two or more currencies, each of which shall be equal to the
amount of the former component currency divided by the number of currencies into
which that currency was divided.
All determinations referred to above made by the Trustee for the Series D
Notes or the Exchange Rate Agent, as the case may be, shall be at its sole
discretion and shall, in the absence of manifest error, be conclusive for all
purposes and binding on holders of Registered Notes.
FOREIGN CURRENCY JUDGMENTS
The Notes will be governed by and construed in accordance with the law of
the State of New York. Courts in the United States customarily have not rendered
judgments for money damages denominated in any currency other than the U.S.
dollar. A 1987 amendment to the Judiciary Law of the State of New York provides,
however, that an action based upon an obligation denominated in a currency other
than U.S. dollars will be rendered in the foreign currency of the underlying
obligation and converted into U.S. dollars at the rate of exchange prevailing on
the date of the entry of the judgment or decree.
RISKS OF INDEXED NOTES
An investment in Indexed Notes may entail significant risks that are not
associated with a similar investment in a debt instrument that has a fixed
principal amount, is denominated in U.S. dollars and bears interest at either a
fixed rate or a floating rate determined by reference to nationally published
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interest rate references. The risks of a particular Indexed Note will depend on
the terms of such Indexed Note, but may include, without limitation, the
possibility of significant changes in the prices of securities, currencies,
intangibles, goods, articles or commodities or of other objective price,
economic or other measures making up the relevant Index (the 'Underlying
Assets'). Such risks generally depend on factors over which the Company has no
control and which cannot readily be foreseen, such as economic and political
events and the supply of and demand for the Underlying Assets. In recent years,
currency exchange rates and prices for various Underlying Assets have been
highly volatile, and such volatility may be expected in the future. Fluctuations
in any such rates or prices that have occurred in the past are not necessarily
indicative, however, of fluctuations that may occur during the term of any
Indexed Note.
In considering whether to purchase Indexed Notes, investors should be aware
that the calculation of amounts payable in respect of Indexed Notes may involve
reference to an Index determined by an affiliate of the Company or to prices
which are published solely by third parties or entities which are not subject to
regulation under the laws of the United States.
THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS DO NOT DESCRIBE
ALL THE RISKS ON AN INVESTMENT IN INDEXED NOTES, AND THE COMPANY DISCLAIMS ANY
RESPONSIBILITY TO ADVISE PROSPECTIVE PURCHASERS OF SUCH RISKS AS THEY EXIST AT
THE DATE OF THIS PROSPECTUS SUPPLEMENT OR AS SUCH RISKS MAY CHANGE FROM TIME TO
TIME. THE RISK OF LOSS AS A RESULT OF THE LINKAGE OF PRINCIPAL OR INTEREST
PAYMENTS ON INDEXED NOTES TO AN INDEX AND TO THE UNDERLYING ASSETS CAN BE
SUBSTANTIAL. PROSPECTIVE PURCHASERS SHOULD CONSULT THEIR OWN FINANCIAL AND LEGAL
ADVISORS AS TO THE RISKS ENTAILED BY AN INVESTMENT IN INDEXED NOTES. AN INDEXED
NOTE IS NOT AN APPROPRIATE INVESTMENT FOR PERSONS WHO ARE UNSOPHISTICATED WITH
RESPECT TO TRANSACTIONS IN THE UNDERLYING ASSETS OF ANY INDEX RELEVANT TO THAT
INDEXED NOTE.
UNITED STATES TAX CONSIDERATIONS
The following is a summary of the principal U.S. Federal income tax
consequences resulting from the beneficial ownership of Registered Notes by
certain persons. This summary does not purport to consider all the possible U.S.
Federal tax consequences of the purchase, ownership or disposition of the
Registered Notes and is not intended to reflect the individual tax position of
any beneficial owner. It deals only with Registered Notes held as capital
assets. Moreover, except as expressly indicated, it addresses initial purchasers
and does not address beneficial owners that may be subject to special tax rules,
such as banks, insurance companies, dealers in securities or currencies,
purchasers that hold Registered Notes (or currencies or composite currencies
other than U.S. dollars ('Foreign Currency')) as a hedge against currency risks
or as part of a straddle with other investments or as part of a 'synthetic
security' or other integrated investment (including a 'conversion transaction')
comprised of a Registered Note and one or more other investments, or purchasers
that have a 'functional currency' other than the U.S. dollar. Except to the
extent discussed below under 'Non-U.S. Holders', this summary is not applicable
to non-United States persons not subject to U.S. Federal income tax on their
worldwide income. This summary is based upon the U.S. Federal tax laws and
regulations as now in effect and as currently interpreted and does not take into
account possible changes in such tax laws or such interpretations, any of which
may be applied retroactively. It does not include any description of the tax
laws of any state, local or foreign governments that may be applicable to the
Registered Notes or holders thereof and it does not discuss the tax treatment of
Registered Notes denominated in certain hyperinflationary currencies or dual
currency Registered Notes. Persons considering the purchase of Registered Notes
should consult their own tax advisors concerning the application of the U.S.
Federal tax laws to their particular situations as well as any consequences to
them under the laws of any other taxing jurisdiction.
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U.S. HOLDERS
PAYMENTS OF INTEREST
In general, interest on a Registered Note, whether payable in U.S. dollars
or a Foreign Currency (other than certain payments on a Discount Note, as
defined and described below under 'Original Issue Discount'), will be taxable to
a beneficial owner who or which is (i) a citizen or resident of the United
States, (ii) a corporation created or organized under the laws of the United
States or any State thereof (including the District of Columbia) or (iii) a
person otherwise subject to United States Federal income taxation on its
worldwide income (a 'U.S. Holder') as ordinary income at the time it is received
or accrued, depending on the holder's method of accounting for tax purposes. If
an interest payment is denominated in or determined by reference to a Foreign
Currency, then special rules, described below under 'Foreign Currency Notes',
apply.
ORIGINAL ISSUE DISCOUNT
The following discussion summarizes the United States Federal income tax
consequences to U.S. Holders of Registered Notes issued with original issue
discount ('OID'). U.S. Holders of Registered Notes issued with OID generally
will be subject to special tax accounting rules provided in the Internal Revenue
Code of 1986, as amended (the 'Code'). Treasury Department regulations (the 'OID
Regulations') illustrate the rules provided by the Code.
Special rules apply to OID on a Discount Note that is denominated in
Foreign Currency. See 'Foreign Currency Notes--Foreign Currency Discount Notes'.
General. A Registered Note will be treated as issued with OID (a 'Discount
Note') if the excess of the Registered Note's 'stated redemption price at
maturity' over its issue price is greater than a de minimis amount (set forth in
the Code and the OID Regulations). Generally, the issue price of a Registered
Note (or any Registered Note that is part of an issue of Registered Notes) will
be the first price at which a substantial amount of Registered Notes that are
part of such issue of Registered Notes are sold (other than to underwriters,
placement agents or wholesalers). Under the OID Regulations, the 'stated
redemption price at maturity' of a Registered Note is the sum of all payments
provided by the Note that are not payments of 'qualified stated interest'. A
'qualified stated interest' payment includes any stated interest payment on a
Registered Note that is unconditionally payable at least annually at a single
fixed rate (or at certain floating rates) that appropriately takes into account
the length of the interval between stated interest payments.
In general, if the excess of a Registered Note's stated redemption price at
maturity over its issue price is less than 1/4 of one percent of the Note's
stated redemption price at maturity multiplied by the number of complete years
to maturity, then such excess constitutes 'de minimis OID'. Under the OID
Regulations, unless the election described below under 'Election to Treat All
Interest as Original Issue Discount' is made, such a Note will not be treated as
issued with OID (in which case the following paragraphs under 'Original Issue
Discount' will not apply) and a U.S. Holder of such a Note will recognize
capital gain with respect to such de minimis OID as stated principal payments on
the Note are made. The amount of such gain with respect to each such payment
will equal the product of the total amount of the Registered Note's de minimis
OID and a fraction, the numerator of which is the amount of the principal
payment made and the denominator of which is the stated principal amount of the
Registered Note.
In certain cases, Registered Notes that bear stated interest and are issued
at par may be deemed to bear OID for Federal income tax purposes, with the
result that the inclusion of interest in income for Federal income tax purposes
may vary from the actual cash payments of interest made on such Notes, generally
accelerating income for cash method taxpayers. Under the OID Regulations, a
Registered Note may be a Discount Note where, among other things, (i) a Note
bearing interest at a floating rate (a 'Floating Rate Note') provides for a
maximum interest rate or a minimum interest rate that is reasonably expected as
of the issue date to cause the yield on the debt instrument to be significantly
less, in the case of a maximum rate, or more, in the case of a minimum rate,
than the expected yield
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determined without the maximum or minimum rate, as the case may be; (ii) a
Floating Rate Note provides for significant front-loading or back-loading of
interest; or (iii) certain Registered Notes bear interest at a floating rate in
combination with one or more other floating or fixed rates. Notice will be given
in the applicable Pricing Supplement when the Company determines that a
particular Registered Note will be a Discount Note.
The Code and the OID Regulations provide rules that require a U.S. Holder
of a Discount Note having a maturity of more than one year from its date of
issue to include OID in gross income before the receipt of cash attributable to
such income, without regard to the holder's method of accounting for tax
purposes. The amount of OID includible in gross income by a U.S. Holder of a
Discount Note is the sum of the 'daily portions' of OID with respect to the
Discount Note for each day during the taxable year or portion of the taxable
year in which the U.S. Holder holds such Discount Note ('accrued OID'). The
daily portion is determined by allocating to each day in any 'accrual period' a
pro rata portion of the OID allocable to that accrual period. Under the OID
Regulations, accrual periods with respect to a Note may be any set of periods
(which may be of varying lengths) selected by the U.S. Holder as long as (i) no
accrual period is longer than one year and (ii) each scheduled payment of
interest or principal on the Note occurs on the first day or final day of an
accrual period.
The amount of OID allocable to an accrual period equals the excess of (a)
the product of the DIscount Note's adjusted issue price at the beginning of the
accrual period and the Discount Note's yield to maturity (determined on the
basis of compounding at the close of each accrual period and properly adjusted
for the length of the accrual period) over (b) the sum of any payments of
qualified stated interest on the Discount Note allocable to the accrual period.
In the case of a Discount Note that is a Floating Rate Note, both the yield to
maturity and the qualified stated interest will be determined for these purposes
as though the Note will bear interest in all periods at a fixed rate generally
equal to the rate that would be applicable to interest payments on the Note on
its date of issue or, in the case of certain Floating Rate Notes, the rate that
reflects the yield that is reasonably expected for the Note. (Additional rules
may apply if interest on a Floating Rate Note is based on more than one interest
index). The 'adjusted issue price' of a Discount Note at the beginning of the
first accrual period is the issue price and at the beginning of any accrual
period thereafter is (x) the sum of the issue price of such Discount Note, the
accrued OID for each prior accrual period (determined without regard to the
amortization of any acquisition premium or bond premium, which are discussed
below), and the amount of any qualified stated interest on the Note that has
accrued prior to the beginning of the accrual period but is not payable until a
later date, less (y) any prior payments on the Discount Note that were not
qualified stated interest payments. If a payment (other than a payment of
qualified stated interest) is made on the first day of an accrual period, then
the adjusted issue price at the beginning of such accrual period is reduced by
the amount of the payment. All payments on a Discount Note (other than a payment
of qualified stated interest) generally will be viewed first as payments of
previously accrued OID (to the extent thereof), with payments made for the
earliest accrual periods first, and then as a payment of principal. If a portion
of the initial purchase price of a Registered Note is attributable to interest
that accrued prior to the Note's issue date, the first stated interest payment
on the Note is to be made within one year of the Note's issue date and such
payment will equal or exceed the amount of pre-issuance accrued interest, then
the issue price will be decreased by the amount of pre-issuance accrued
interest, in which case a portion of the first stated interest payment will be
treated as a return of the excluded pre-issuance accrued interest and not as an
amount payable on the Registered Note.
The OID Regulations contain certain special rules that generally allow any
reasonable method to be used in determining the amount of OID allocable to a
short initial accrual period (if all other accrual periods are of equal length)
and require that the amount of OID allocable to the final accrual period equal
the excess of the amount payable at the maturity of the Discount Note (other
than any payment of qualified stated interest) over the Discount Note's adjusted
issue price as of the beginning of such final accrual period. In addition, if an
interval between payments of qualified stated interest on a Discount Note
contains more than one accrual period, then the amount of qualified stated
interest payable at the
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end of such interval is allocated pro rata (on the basis of their relative
lengths) between the accrual periods contained in the interval.
U.S. Holders of Discount Notes generally will have to include in income
increasingly greater amounts of OID over the life of the Notes.
Acquisition Premium. A U.S. Holder that purchases a Discount Note for an
amount in excess of its issue price but less than its stated redemption price at
maturity (any such excess being 'acquisition premium'), and that does not make
the election described below under 'Original Issue Discount--Election to Treat
All Interest as Original Issue Discount', is permitted to reduce the daily
portions of OID by a fraction, the numerator of which is the excess of the U.S.
Holder's purchase price for the Note over the issue price, and the denominator
of which is the excess of the sum of all amounts payable on the Note after the
purchase date, other than payments of qualified stated interest, over the Note's
issue price. Alternatively, a U.S. Holder may elect to compute OID accruals as
described under 'Original Issue Discount-General' above, treating the U.S.
Holder's purchase price as the issue price.
Optional Redemption. If the Company has an option to redeem a Discount
Note, or the Holder has an option to cause a Note to be repurchased, prior to
the Discount Note's stated maturity, such option will be presumed to be
exercised if, by utilizing any date on which such Note may be redeemed or
repurchased as the maturity date and the amount payable on such date in
accordance with the terms of such Note (the 'redemption price') as the stated
redemption price at maturity, the yield on the Discount Note would be (i) in the
case of an option of the Company, lower than its yield to stated maturity, or
(ii) in the case of an option of the Holder, higher than its yield to stated
maturity. If such option is not in fact exercised when presumed to be exercised,
the Discount Note would be treated solely for OID purposes as if it were
redeemed or repurchased, and a new Discount Note were issued, on the presumed
exercise date for an amount equal to the Discount Note's adjusted issue price on
that date.
Short-Term Notes. Under the Code, special rules apply with respect to OID
on Registered Notes that mature one year or less from the date of issuance
('Short-Term Notes'). In general, a cash basis U.S. Holder of a Short-Term Note
is not required to include OID in income as it accrues for United States Federal
income tax purposes unless it elects to do so. Accrual basis U.S. Holders and
certain other U.S. Holders, including banks, regulated investment companies,
dealers in securities and cash basis U.S. Holders who so elect, are required to
include OID in income as it accrues on Short-Term Notes on a straight-line basis
or, at the election of the U.S. Holder, under the constant yield method (based
on daily compounding). In the case of U.S. Holders not required and not electing
to include OID in income currently, any gain realized on the sale or retirement
of Short-Term Notes will be ordinary income to the extent of the OID accrued on
a straight-line basis (unless an election is made to accrue the original issue
discount under the constant yield method) through the date of sale or
retirement. U.S. Holders who are not required and do not elect to include OID on
Short-Term Notes in income as it accrues will be required to defer deductions
for interest on borrowings allocable to Short-Term Notes in an amount not
exceeding the deferred income until the deferred income is realized.
Any U.S. Holder of a Short-Term Note can elect to apply the rules in the
preceding paragraph taking into account the amount of 'acquisition discount', if
any, with respect to the Note (rather than the OID with respect to such Note).
Acquisition discount is the excess of the stated redemption price at maturity of
the Short-Term Note over the U.S. Holder's purchase price therefor. Acquisition
discount will be treated as accruing on a ratable basis or, at the election of
the U.S. Holder, on a constant yield basis.
For purposes of determining the amount of OID subject to these rules, the
OID Regulations provide that no interest payments on a Short-Term Note are
qualified stated interest, but instead such interest payments are included in
the Short-Term Note's stated redemption price at maturity.
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NOTES PURCHASED AT A PREMIUM
Under the Code, a U.S. Holder that purchases a Registered Note for an
amount in excess of its stated redemption price at maturity will not be subject
to the OID rules and may elect to treat such excess as 'amortizable bond
premium', in which case the amount of qualified stated interest required to be
included in the U.S. Holder's income each year with respect to interest on the
Registered Note will be reduced by the amount of amortizable bond premium
allocable (based on the Note's yield to maturity) to such year. Any election to
amortize bond premium is applicable to all bonds (other than bonds the interest
on which is excludible from gross income) held by the U.S. Holder at the
beginning of the first taxable year to which the election applies or thereafter
acquired by the U.S. Holder, and may not be revoked without the consent of the
Internal Revenue Service ('IRS'). See also 'Original Issue Discount--Election to
Treat All Interest as Original Issue Discount'.
NOTES PURCHASED AT A MARKET DISCOUNT
A Registered Note, other than a Short-Term Note, will be treated as issued
at a market discount (a 'Market Discount Note') if the amount for which a U.S.
Holder purchased the Registered Note is less than the Note's issue price,
subject to a de minimis rule similar to the rule relating to de minimis OID
described under 'Original Issue Discount--General'.
In general, any gain recognized on the maturity or disposition of a Market
Discount Note will be treated as ordinary income to the extent that such gain
does not exceed the accrued market discount on such Note. Alternatively, a U.S.
Holder of a Market Discount Note may elect to include market discount in income
currently over the life of the Market Discount Note. Such an election applies to
all debt instruments with market discount acquired by the electing U.S. Holder
on or after the first day of the first taxable year to which the election
applies and may not be revoked without the consent of the IRS.
Market discount accrues on a straight-line basis unless the U.S. Holder
elects to accrue such discount on a constant yield to maturity basis. Such an
election is applicable only to the Market Discount Note with respect to which it
is made and is irrevocable. A. U.S. Holder of a Market Discount Note that does
not elect to include market discount in income currently generally will be
required to defer deductions for interest on borrowings allocable to such Note
in an amount not exceeding the accrued market discount on such Note until the
maturity or disposition of such Note.
The market discount rules do not apply to a Short-Term Note.
ELECTION TO TREAT ALL INTEREST AS ORIGINAL ISSUE DISCOUNT
Any U.S. Holder may elect to include in gross income all interest that
accrues on a Registered Note using the constant yield method described above
under the heading 'Original Issue Discount-General,' with the modifications
described below. For purposes of this election, interest includes stated
interest, OID, de minimis OID, market discount, acquisition discount, de minimis
market discount and unstated interest, as adjusted by any amortizable bond
premium or acquisition premium.
In applying the constant yield method to a Registered Note with respect to
which this election has been made, the issue price of such Note will equal the
electing U.S. Holder's adjusted basis in the Note immediately after its
acquisition, the issue date of the Note will be the date of its acquisition by
the electing US. Holder, and no payments on the Note will be treated as payments
of qualified stated interest. This election is generally applicable only to the
Registered Note with respect to which it is made and may not be revoked without
the consent of the IRS. If this election is made with respect to a Registered
Note with amortizable bond premium, the electing U.S. Holder will be deemed to
have elected to apply amortizable bond premium against interest with respect to
all debt instruments with amortizable bond premium (other than debt instruments
the interest on which is excludible from gross income) held by such electing
U.S. Holder as of the beginning of the taxable year in which the election is
made or any debt instruments acquired thereafter. The deemed election with
respect to amortizable bond premium may not be revoked without the consent of
the IRS.
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If the election described above to apply the constant yield method to all
interest on a Registered Note is made with respect to a Market Discount Note, as
defined above, then the electing U.S. Holder will be treated as having made the
election discussed above under 'Notes Purchased at a Market Discount' to include
market discount in income currently over the life of all debt instruments held
or thereafter acquired by such U.S. Holder.
PURCHASE, SALE AND RETIREMENT OF THE NOTES
General. A U.S. Holder's tax basis in a Registered Note will generally
equal its U.S. dollar cost (which, in the case of a Note purchased with a
Foreign Currency, will be the U.S. dollar value of the purchase price on the
date of purchase), increased by the amount of any OID or market discount (or
acquisition discount, in the case of a Short-Term Note) included in the U.S.
Holder's income with respect to the Note and the amount, if any, of income
attributable to de minimis OID included in the U.S. Holder's income with respect
to the Note, and reduced by the sum of (i) the amount of any payments that are
not qualified stated interest payments, and (ii) the amount of any amortizable
bond premium applied to reduce interest on the Note. A U.S. Holder generally
will recognize gain or loss on the sale or retirement of a Registered Note equal
to the difference between the amount realized on the sale or retirement and the
U.S. Holder's tax basis in such Note. The amount realized on a sale or
retirement for an amount in Foreign Currency will be the U.S. dollar value of
such amount on the date of sale or retirement. Except to the extent described
above under 'Original Issue Discount--Short Term Notes' or 'Market Discount' or
below under 'Foreign Currency Notes--Exchange Gain or Loss', and except to the
extent attributable to accrued but unpaid interest, gain or loss recognized on
the sale or retirement of a Registered Note will be capital gain or loss and
will be long-term capital gain or loss if the Note was held for more than one
year.
FOREIGN CURRENCY NOTES
Interest Payments. If an interest payment is denominated in or determined
by reference to a Foreign Currency, the amount of income recognized by a cash
basis U.S. Holder will be the U.S. dollar value of the interest payment, based
on the exchange rate in effect on the date of receipt, regardless of whether the
payment is in fact converted into U.S. dollars. Accrual basis U.S. Holders may
determine the amount of income recognized with respect to such interest payments
in accordance with either of two methods. Under the first method, the amount of
income recognized will be based on the average exchange rate in effect during
the interest accrual period (or, with respect to an accrual period that spans
two taxable years, the partial period within the taxable year). Under the second
method, an accrual basis U.S. Holder may elect to translate interest income into
U.S. dollars at the spot exchange rate in effect on the last day of the accrual
period or, in the case of an accrual period that spans two taxable years, at the
exchange rate in effect on the last day of the partial period within the taxable
year. Upon receipt of an interest payment (including a payment attributable to
accrued but unpaid interest upon the sale or retirement of a Note) determined by
reference to a Foreign Currency, an accrual basis U.S. Holder will recognize
ordinary income or loss measured by the difference between the exchange rate
used to accrue such income and the exchange rate in effect on the date of
receipt, regardless of whether the payment is in fact converted into U.S.
dollars. Additionally, under the second method, if a payment of interest is
actually received within 5 business days of the last day of the accrual period
or taxable year, an accrual basis U.S. Holder applying the second method may
instead translate such accrued interest into U.S. dollars at the spot exchange
rate in effect on the day of actual receipt (in which case no exchange gain or
loss will result). Any election to apply the second method will apply to all
debt instruments held by the U.S. Holder at the beginning of the first taxable
year to which the election applies or thereafter acquired by the U.S. Holder and
may not be revoked without the consent of the IRS.
Exchange of Amounts in Other than U.S. Dollars. Foreign Currency received
as interest on a Note or on the sale or retirement of a Note will have a tax
basis equal to its U.S. dollar value at the time such interest is received or at
the time of such sale or retirement, as the case may be. Foreign Currency
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that is purchased will generally have a tax basis equal to the U.S. dollar value
of the Foreign Currency on the date of purchase. Any gain or loss recognized on
a sale or other disposition of a Foreign Currency (including its use to purchase
Notes or upon exchange for U.S. dollars) will be ordinary income or loss.
Foreign Currency Discount Notes. OID for any accrual period on a Discount
Note that is denominated in a Foreign Currency will be determined in the Foreign
Currency and then translated into U.S. dollars in the same manner as stated
interest accrued by an accrual basis U.S. Holder. Upon receipt of an amount
attributable to original issue discount (whether in connection with a payment of
interest or the sale or retirement of a Note), a U.S. Holder may recognize
ordinary income or loss.
Amortizable Bond Premium. In the case of a Registered Note that is
denominated in a Foreign Currency, bond premium will be computed in units of
Foreign Currency, and amortizable bond premium will reduce interest income in
units of the Foreign Currency. At the time amortized bond premium offsets
interest income, a U.S. Holder may realize ordinary income or loss, measured by
the difference between exchange rates at that time and at the time of the
acquisition of the Registered Notes.
Market Discount. Market discount is determined in units of the Foreign
Currency, accrued market discount that is required to be taken into account on
the maturity or earlier disposition of a Registered Note is translated into U.S.
dollars at the exchange rate on the maturity or the disposition date, as the
case may be (and no part is treated as exchange gain or loss), accrued market
discount currently includible in income by an electing U.S. Holder is translated
into U.S. dollars at the average exchange rate for the accrual period (or the
partial accrual period during which the U.S. Holder held the Registered Note)
and exchange gain or loss is determined on maturity or disposition of the
Registered Note (as the case may be) in the manner described in 'Foreign
Currency Notes--Interest Payments', above, with respect to the computation of
exchange gain or loss on the receipt of accrued interest by an accrual method
holder.
Exchange Gain or Loss. Gain or loss recognized by a U.S. Holder on the
sale or retirement of a Registered Note that is attributable to changes in
exchange rates will be treated as ordinary income or loss. However, exchange
gain or loss is taken into account only to the extent of total gain or loss
realized on the transaction.
INDEXED NOTES
The tax treatment of a U.S. Holder of an Indexed Note will depend on
factors including the specific index or indices used to determine indexed
payments on the Note and the amount and timing of any noncontingent payments of
principal and interest. Tax considerations relevant to holders of Indexed Notes
will be discussed in the applicable Pricing Supplement.
NON-U.S. HOLDERS
Subject to the discussion of backup withholding below, payments of
principal (and premium, if any) and interest (including OID) by the Company or
any agent of the Company (acting in its capacity as such) to any holder of a
Note that is not a U.S. Holder (a 'Non-U.S. Holder') will not be subject to U.S.
Federal withholding tax, provided, in the case of interest (including OID), that
(i) the Non-U.S. Holder does not actually or constructively own 10% or more of
the total combined voting power of all classes of stock of the Company entitled
to vote, (ii) the Non-U.S. Holder is not a controlled foreign corporation for
U.S. tax purposes that is related to the Company (directly or indirectly)
through stock ownership and (iii) either (A) the Non-U.S. Holder certifies to
the Company or its agent under penalties of perjury that it is not a United
States person and provides its name and address or (B) a securities clearing
organization, bank or other financial institution that holds customers'
securities in the ordinary course of its trade or business (a 'financial
institution') and holds the Registered Note certifies to the Company or its
agent under penalties of perjury that such statement has been received from the
Non-U.S. Holder by it or by another financial institution and furnishes the
payor with a copy thereof.
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If a Non-U.S. Holder is engaged in a trade or business in the United States
and interest (including OID) on the Registered Note is effectively connected
with the conduct of such trade or business, the Non-U.S. Holder, although exempt
from the withholding tax discussed in the preceding paragraph (provided that
such holder furnishes a properly executed IRS Form 4224 on or before any payment
date to claim such exemption), may be subject to U.S. Federal income tax on such
interest (or OID) in the same manner as if it were a U.S. Holder. In addition,
if the Non-U.S. Holder is a foreign corporation, it may be subject to a branch
profits tax equal to 30% of its effectively connected earnings and profits for
the taxable year, subject to certain adjustments. For purposes of the branch
profits tax, interest (including OID) on a Note will be included in the earnings
and profits of such holder if such interest (or OID) is effectively connected
with the conduct by such holder of a trade or business in the United States.
Any capital gain, market discount or exchange gain realized on the sale,
exchange, retirement or other disposition of the Registered Note by a Non-U.S.
Holder will not be subject to U.S. Federal income or withholding taxes if (i)
such gain is not effectively connected with a U.S. trade or business of the
Non-U.S. Holder and (ii) in the case of an individual, such Non-U.S. Holder (A)
is not present in the United States for 183 days or more in the taxable year of
the sale, exchange, retirement or other disposition or (B) does not have a tax
home (as defined in Section 911(d)(3) of the Code) in the United States in the
taxable year of the sale, exchange, retirement or other disposition and the gain
is not attributable to an office or other fixed place of business maintained by
such individual in the United States.
Registered Notes held by an individual who is neither a citizen nor a
resident of the United States for U.S. Federal tax purposes at the time of such
individual's death will not be subject to U.S. Federal estate tax, provided that
the income from such Notes was not or would not have been effectively connected
with a U.S. trade or business of such individual and that such individual
qualified for the exemption from U.S. Federal withholding tax (without regard to
the certification requirements) described above.
PURCHASERS OF REGISTERED NOTES WHO ARE NON-U.S. HOLDERS SHOULD CONSULT
THEIR OWN TAX ADVISORS WITH RESPECT TO THE POSSIBLE APPLICABILITY OF UNITED
STATES WITHHOLDING AND OTHER TAXES UPON INCOME REALIZED IN RESPECT OF THE NOTES.
BACKUP WITHHOLDING AND INFORMATION REPORTING
For each calendar year in which the Notes are outstanding, the Company is
required to provide the IRS with certain information, including the holder's
name, address and taxpayer identification number (either the holder's Social
Security number or its employer identification number, as the case may be), the
aggregate amount of principal and interest paid (including OID, if any) to that
holder during the calendar year and the amount of tax withheld, if any. This
obligation, however, does not apply with respect to certain U.S. holders,
including corporations, tax-exempt organizations, qualified pension and profit
sharing trusts and individual retirement accounts.
In the event that a U.S. holder subject to the reporting requirements
described above fails to supply its taxpayer identification number in the manner
required by applicable law, provides an incorrect taxpayer identification number
that is used by a payor on an information return or underreports its tax
liability, the Company, its agents or paying agents or a broker may be required
to 'backup' withhold a tax equal to 31 percent of each payment of interest
(including OID) and principal (and premium, if any) on the Notes. This backup
withholding is not an additional tax and may be credited against the U.S.
holder's U.S. Federal income tax liability, provided that the required
information is furnished to the IRS.
Under current Treasury Regulations, backup withholding and information
reporting will not apply to payments made by the Company or any agent thereof
(in its capacity as such) to a holder of a Note that is not a U.S. person if
such holder has provided the required certification that it is not a U.S. person
as set forth in clause (iii) in the first paragraph under 'Non-U.S. Holders'
above, or has otherwise
S-27
<PAGE>
established an exemption (provided that neither the Company nor its agent has
actual knowledge that the holder is a U.S. person or that the conditions of any
exemption are not in fact satisfied).
Payment of the proceeds from the sale of a Note to or through a foreign
office of a broker will not be subject to information reporting or backup
withholding, except that if the broker is a U.S. person, a controlled foreign
corporation for U.S. tax purposes or a foreign person 50 percent or more of
whose gross income from all sources for the three-year period ending with the
close of its taxable year preceding the payment was effectively connected with a
U.S. trade or business, information reporting may apply to such payments.
Payment of the proceeds from a sale of a Note to or through the U.S. office of a
broker is subject to information reporting and backup withholding unless the
holder or beneficial owner certifies as to its taxpayer identification number or
otherwise establishes an exemption from information reporting and backup
withholding.
PLAN OF DISTRIBUTION
The Registered Notes are being offered on a continuous basis by the Company
through the Agent, which has agreed to use its reasonable efforts to solicit
orders to purchase Registered Notes. The Company will have the sole right to
accept orders to purchase Registered Notes and may reject proposed purchases in
whole or in part. The Agent shall have the right, in its discretion reasonably
exercised and without notice to the Company, to reject any proposed purchase of
Registered Notes in whole or in part. The Company will pay the Agent a
commission of from not more than .125% to not more than .750% of the principal
amount of Registered Notes sold through it, depending upon the Stated Maturity.
The Company may also sell Registered Notes at a discount to the Agent for
its own account or for resale to one or more purchasers at varying prices
related to prevailing market prices at the time of resale or, if set forth in
the applicable Pricing Supplement, at a fixed public offering price, as
determined by the Agent. After any initial public offering of Registered Notes
to be resold to purchasers at a fixed public offering price, the public offering
price and any concession or discount may be changed. In addition, the Agent may
offer Registered Notes purchased by it as principal to other dealers. Registered
Notes sold by the Agent to a dealer may be sold at a discount and, unless
otherwise specified in the applicable Pricing Supplement, such discount allowed
will not be in excess of the discount received by the Agent from the Company.
Unless otherwise specified in the applicable Pricing Supplement, any Registered
Note purchased by the Agent as principal will be purchased at 100% of the
principal amount or face amount thereof less a percentage equal to the
commission applicable to an agency sale of a Registered Note of identical
maturity.
No Registered Note will have an established trading market when issued. The
Registered Notes will not be listed on any securities exchange. The Agent may
make a market in the Registered Notes, but the Agent is not obligated to do so
and may discontinue any market-making at any time without notice. There can be
no assurance of a secondary market for any Registered Notes, or that the
Registered Notes will be sold. The Agent, whether acting as agent or principal,
may be deemed to be an 'underwriter' within the meaning of the Securities Act.
The Company has agreed to indemnify the Agent against certain liabilities,
including liabilities under the Securities Act, or to contribute to payments
that the Agent may be required to make in respect thereof.
The Registered Notes have not been and will not be registered under the
Securities and Exchange Law of Japan (the 'Securities and Exchange Law').
Accordingly, the Agent will represent and agree that it has not, directly or
indirectly, offered or sold and will not, directly or indirectly, offer or sell
any Registered Notes in Japan or to a resident of Japan except pursuant to an
exemption from the registration requirements of, and otherwise in compliance
with the Securities and Exchange Law and other relevant laws and regulations of
Japan. As used in this paragraph, 'resident of Japan' means any person resident
in Japan, including any corporation or other entity organized under the laws of
Japan or located in Japan.
S-28
<PAGE>
In addition to the Registered Notes being offered through the Agent as
described herein, Bearer Notes that may have terms identical or similar to the
terms of the Registered Notes may be concurrently offered by the Company on a
continuous basis outside the United States by Salomon Brothers International
Limited, Salomon Brothers AG or Salomon Brothers Hong Kong Limited pursuant to
the Global Selling Agency Agreement between the Company, the Agent, Salomon
Brothers International Limited, Salomon Brothers AG and Salomon Brothers Hong
Kong Limited (the 'Selling Agency Agreement'). Pursuant to the Selling Agency
Agreement, Salomon Brothers International Limited, Salomon Brothers AG and
Salomon Brothers Hong Kong Limited may also purchase Bearer Notes as principal
for their own accounts or for resale. Any Bearer Notes so offered and sold will
reduce correspondingly the maximum aggregate principal amount of Registered
Notes that may be offered by this Prospectus Supplement and the Prospectus.
S-29
<PAGE>
NO DEALER, SALESPERSON OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THE
PROSPECTUS SUPPLEMENT (INCLUDING THE ACCOMPANYING PRICING 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 AGENT. NEITHER THE DELIVERY OF THIS PROSPECTUS
SUPPLEMENT (INCLUDING THE ACCOMPANYING PRICING SUPPLEMENT AND THE PROSPECTUS)
NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE AN
IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE
THE DATES AS OF WHICH INFORMATION IS GIVEN IN THIS PROSPECTUS SUPPLEMENT
(INCLUDING THE ACCOMPANYING PRICING SUPPLEMENT) AND THE PROSPECTUS. THIS
PROSPECTUS SUPPLEMENT (INCLUDING THE ACCOMPANYING PRICING SUPPLEMENT) AND THE
PROSPECTUS DO NOT CONSTITUTE AN OFFER OR SOLICITATION BY ANYONE IN ANY
JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED OR IN WHICH
THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO OR TO ANY
PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
PROSPECTUS SUPPLEMENT
Salomon Inc................................................................ S-2
Important Currency Information............................................. S-2
Description of Registered Notes............................................ S-2
Currency Risks............................................................. S-18
Risks of Indexed Notes..................................................... S-19
United States Tax Considerations........................................... S-20
Plan of Distribution....................................................... S-28
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>
$10,000,000,000
SALOMON INC
MEDIUM-TERM NOTES,
SERIES D AND SERIES E
DUE MORE THAN NINE
MONTHS FROM DATE OF ISSUE
- -------------------------
Salomon Brothers Inc
-----------------------------------
PROSPECTUS SUPPLEMENT
DATED APRIL , 1996
<PAGE>
SUBJECT TO COMPLETION DATED APRIL 3, 1996
PROSPECTUS SUPPLEMENT
(To Prospectus Dated April , 1996)
U.S.$10,000,000,000
SALOMON INC
MEDIUM-TERM NOTES, SERIES D AND SERIES E
DUE MORE THAN NINE MONTHS FROM DATE OF ISSUE
Salomon Inc (the 'Company') may from time to time offer pursuant to this
Prospectus Supplement its Medium-Term Notes, Series D (the 'Series D Notes'),
and its Medium-Term Notes, Series E (the 'Series E Notes' and, together with the
Series D Notes, the 'Notes'), with an aggregate initial public offering price or
purchase price of up to U.S.$10,000,000,000, or the equivalent thereof in one or
more other currencies, including the European Currency Unit ('ECU'), subject to
reduction as a result of the sale of other securities under the Registration
Statement of which this Prospectus Supplement and the accompanying Prospectus
form a part or under a Registration Statement to which this Prospectus
Supplement and the accompanying Prospectus relate. The amount of Notes sold of
either series will reduce the amount of Notes of the other series that may be
sold. In addition to the Notes in bearer form ('Bearer Notes') being offered
hereby, the Company may offer Notes in registered form ('Registered Notes') in
the United States. Any Registered Notes sold will reduce the amount of Bearer
Notes that may be sold hereunder. See 'Description of Bearer Notes--General'.
The Series D Notes will be issued as Senior Indebtedness, and the Series E Notes
will be issued as subordinated debt. Subordinated debt will be subordinated to
all Senior Indebtedness. See 'Description of Debt Securities--Subordinated Debt'
in the Prospectus.
Each Bearer Note will not, in connection with its original issuance, or during
the period of 40 days after its Original Issue Date, be offered, sold or
delivered, directly or indirectly, within the United States or to U.S. Persons,
except to the extent permitted under U.S. Treasury regulations. See 'Plan of
Distribution'. All Bearer Notes that have the same Original Issue Date and
otherwise identical terms will be represented initially by a Temporary Global
Note to be delivered to a common depositary outside the United States for
Euroclear and CEDEL. Beneficial interests in a Temporary Global Note will be
exchangeable for beneficial interests in a Permanent Global Note or for
individual Bearer Notes only in the manner and upon compliance with the
procedures described under 'Description of Bearer Notes--Denomination, Form and
Transfer'.
Payments in respect of Bearer Notes will be made without deduction for United
States withholding taxes to the extent described herein. Each Bearer Note may be
redeemed in whole, at the Redemption Price thereof, if certain events occur
involving United States withholding taxes or information reporting requirements.
See 'Tax Redemption' and 'Special Tax Redemption' under 'Description of Bearer
Notes'.
Unless otherwise specified in the applicable Pricing Supplement, each Bearer
Note will mature on a Business Day more than nine months from its date of issue
(the 'Stated Maturity'), with the final maturity to be agreed upon by the
Company and the purchaser at the time of issuance. Each Bearer Note having a
Specified Currency of German deutsche marks will not include provisions
permitting redemption prior to the second anniversary of the Original Issue Date
of the Notes. Each Bearer Note may be subject to redemption at the option of the
Company, or to repayment at the option of the Holder, prior to maturity. Each
Bearer Note will be denominated in the currency, which may be U.S. dollars or
other currencies (including ECU), designated by the Company (the 'Specified
Currency'). See 'Currency Risks'. A Bearer Note may bear interest at a fixed
rate (a 'Fixed Rate Note'), which may be zero in the case of certain Discount
Notes, or at a floating rate (a 'Floating Rate Note') determined by reference to
LIBOR, the CD Rate, the Commercial Paper Rate, the Federal Funds Rate, the
Treasury Rate or any other Base Rate, as selected by the purchaser and agreed to
by the Company, adjusted by the Spread or Spread Multiplier, if any, applicable
to such Note. Such fixed rate, Spread or Spread Multiplier may be subject to
change as described in the applicable Pricing Supplement. Unless otherwise
indicated, interest on each Fixed Rate Note will be payable annually in arrears
on each September 15 (each an 'Interest Payment Date') and at Stated Maturity. A
Bearer Note may be issued as an amortizing note (an 'Amortizing Note') on which
a portion or all the principal amount is payable prior to Stated Maturity in
accordance with a schedule, by application of a formula, or by reference to an
index. A Bearer Note may be issued as an indexed note (an 'Indexed Note') on
which the amount of any interest payment, in the case of an Indexed Rate Note,
and/or the principal amount payable at maturity, in the case of an Indexed
Principal Note, will be determined by reference to the level of prices, or
changes in prices, or differences between prices, of securities, currencies,
intangibles, goods, articles or commodities or by application of a formula. See
'Description of Bearer Notes--Indexed Notes'. The Specified Currency, interest
rate or interest rate formula, Issue Price, Stated Maturity, Interest Payment
Dates, redemption and repayment provisions and certain other terms with respect
to each Bearer Note will be established at the time of issuance and set forth in
a pricing supplement to this Prospectus Supplement (a 'Pricing Supplement').
In accordance with guidelines set by the German central bank, Salomon Brothers
AG has agreed to act as the arranger of all Bearer Notes denominated or payable
in, or linked to, German deutsche marks and has confirmed that it is an
authorized credit institution in accordance with the current guidelines of the
German central bank. Application has been made to list the Bearer Notes on the
Luxembourg Stock Exchange. The amount of Bearer Notes that may be listed on the
Luxembourg Stock Exchange is limited to the U.S.$10,000,000,000 described in the
first paragraph above plus U.S.$ of Bearer Notes sold pursuant to
earlier prospectuses.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT, ANY PRICING SUPPLEMENT
HERETO OR THE ACCOMPANYING PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRICE TO AGENT'S PROCEEDS TO THE
PUBLIC(1) COMMISSION(2) COMPANY(2) (3)
<S> <C> <C> <C>
Per Bearer Note... 100.000% .125%-.750% 99.250%-99.875%
Total(4).......... U.S.$10,000,000,000 U.S.$12,500,000-U.S.$75,000,000 U.S.$9,925,000,000-U.S.$9,987,500,000
</TABLE>
- --------------------------------------------------------------------------------
(1) Unless otherwise specified in the applicable Pricing Supplement, the price
to public will be 100% of the principal amount.
(2) The Company will pay to Salomon Brothers International Limited, Salomon
Brothers AG and Salomon Brothers Hong Kong Limited (each an 'Agent') a
commission of from .125% to .750% of the principal amount of any Bearer
Note, depending upon its Stated Maturity, sold through the Agent.
(3) Before deduction of expenses payable by the Company estimated at
U.S.$4,525,000, including reimbursement of certain expenses of the Agent.
(4) Or the equivalent thereof in other currencies (including ECU).
The Bearer Notes are being offered on a continuous basis by the Company through
the Agents, each of which has agreed to use its reasonable efforts to solicit
orders to purchase Bearer Notes. The Company may also sell Bearer Notes at a
discount to an Agent for its own account or for resale to one or more purchasers
at varying prices related to prevailing market prices at the time of resale or,
if set forth in the applicable Pricing Supplement, at a fixed public offering
price, as determined by the Agent. In addition, an Agent may offer Bearer Notes
purchased by it as principal to other dealers. Unless otherwise specified in the
applicable Pricing Supplement, any Bearer Note purchased by an Agent as
principal will be purchased at 100% of the principal amount thereof less a
percentage equal to the commission applicable to an agency sale of a Bearer Note
of identical maturity. There can be no assurance that the maximum amount of
Bearer Notes offered by this Prospectus Supplement will be sold or that there
will be a secondary market for the Bearer Notes. The Company reserves the right
to withdraw, cancel or modify the offer made hereby without notice. The Company
or an Agent may reject any order to purchase Bearer Notes, whether or not
solicited, in whole or in part. See 'Plan of Distribution'.
This Prospectus Supplement, the related Pricing Supplement and the accompanying
Prospectus may be used by the Company, the Agents, each of which is a wholly
owned subsidiary of the Company, or other affiliates of the Company in
connection with offers and sales related to secondary market transactions in the
Bearer Notes offered hereby and approximately U.S.$1,863,031,716 of Bearer Notes
sold pursuant to earlier prospectuses, as described herein. The Agents or other
such Company affiliates may act as principal or agent in such transactions. Such
sales will be made at varying prices related to prevailing market prices at the
time of sale.
SALOMON BROTHERS HONG KONG LIMITED
SALOMON BROTHERS INTERNATIONAL LIMITED
SALOMON BROTHERS AG
The date of this Prospectus Supplement is April , 1996.
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus and any prospectus supplement shall not constitute
an offer to sell or the solicitation of an offer to buy nor shall there be
any sale of these securities in any State in which such offer, solicitation or
sale would be unlawful prior to registration or qualification under the
securities laws of any such State.
<PAGE>
IN CONNECTION WITH THIS OFFERING, ANY ONE OF THE AGENTS MAY OVER-ALLOT OR
EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE NOTES
OFFERED HEREBY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
No dealer, salesperson or any other person has been authorized to give any
information or to make any representations other than those contained in this
Prospectus Supplement (including the accompanying Pricing Supplement) and the
accompanying Prospectus (the 'Prospectus') in connection with the offer
contained herein and, if given or made, such information or representations must
not be relied upon as having been authorized by the Company or an Agent. Neither
the delivery of this Prospectus Supplement (including the accompanying Pricing
Supplement) and the Prospectus nor any sale made hereunder shall, under any
circumstances, create an implication that there has been no change in the
affairs of the Company since the dates as of which information is given in this
Prospectus Supplement (including the accompanying Pricing Supplement) and the
Prospectus. This Prospectus Supplement (including the accompanying Pricing
Supplement) and the Prospectus do not constitute an offer or solicitation by
anyone in any jurisdiction in which such offer or solicitation is not authorized
or in which the person making such offer or solicitation is not qualified to do
so or to any person to whom it is unlawful to make such offer or solicitation.
References herein to 'U.S. dollars' or 'U.S.$' are to the lawful currency
to the United States.
Pursuant to a Prospectus and Prospectus Supplement each dated February 25,
1992 (and applicable Pricing Supplements), filed with the Commission under
Registration Statement No. 33-41932, and a Prospectus and Prospectus Supplements
each dated February 12, 1993 (and applicable Pricing Supplements), filed with
the Commission under Registration Statement No. 33-57922, a Prospectus and
Prospectus Supplements each dated December 14, 1993 (and applicable Pricing
Supplements) filed with the Commission under Registration Statement No.
33-51269, and a Prospectus and Prospectus Supplements each dated October 12,
1994 (and applicable Pricing Supplements), filed with the Commission under
Registration Statement No. 33-54929, the Company had outstanding as of March 31,
1996 approximately U.S. $6,082,166,841 of its Medium-Term Notes, Series D and E,
of which approximately U.S. $1,863,031,716 were Bearer Notes and approximately
U.S. $4,219,135,125 were Registered Notes. The Bearer Notes offered by this
Prospectus Supplement are part of the same series of Notes as the Notes
described in the preceding sentence.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PROSPECTUS SUPPLEMENT PAGE
- --------------------------------------------------------------------------- ----
<S> <C>
Incorporation of Certain Documents
by Reference............................................................. S-3
Salomon Inc................................................................ S-4
Selected Financial Information............................................. S-5
Directors and Officers of the Company...................................... S-6
Capitalization............................................................. S-7
Description of Bearer Notes................................................ S-8
Currency Risks............................................................. S-25
Risks of Indexed Notes..................................................... S-28
Taxation in the United States.............................................. S-29
Plan of Distribution....................................................... S-30
General Information........................................................ S-31
<CAPTION>
PROSPECTUS (SELECTED PROVISIONS) PAGE
- --------------------------------------------------------------------------- ----
<S> <C>
Available Information...................................................... 2
Incorporation of Certain Documents
by Reference............................................................. 2
Salomon Inc................................................................ 3
Use of Proceeds............................................................ 3
Ratio of Earnings to Fixed Charges
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>
S-2
<PAGE>
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents, filed by the Company with the Commission pursuant
to Section 13 of the Securities Exchange Act of 1934 (the 'Exchange Act') (File
No. 1-4346), are incorporated herein by reference and shall be deemed to be
disclosed herein: (i) the Annual Report on Form 10-K for the year ended December
31, 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 the Prospectus and prior to the termination of the
offering of the Securities (including the Bearer Notes) shall be deemed to be
incorporated by reference herein.
Any statement contained in the Prospectus or this Prospectus Supplement or
in a document incorporated or deemed to be incorporated by reference in the
Prospectus or this Prospectus Supplement shall be deemed to be modified or
superseded for purposes of the Prospectus and this Prospectus Supplement to the
extent that a statement contained in the Prospectus or this Prospectus
Supplement or in any subsequently filed document which also is or is deemed to
be incorporated by reference in the Prospectus or this Prospectus Supplement
modifies or supersedes such statement. Any such statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of the Prospectus and this Prospectus Supplement.
Copies of any documents incorporated herein by reference will be available
free of charge at the office of Kredietbank S.A. Luxembourgeoise (the 'Listing
Agent'), 43 Boulevard Royal, Luxembourg City 2955, Luxembourg. Any person
receiving a copy of this Prospectus Supplement may obtain, without charge, upon
written or oral request, a copy of any document incorporated by reference
herein, except for the exhibits to such documents (unless such exhibits are
specifically incorporated by reference). Written or oral requests should be
addressed to Salomon Brothers International Limited, Victoria Plaza, 111
Buckingham Palace Road, London SW1W 0SB (telephone: 44-171-721-3625).
This Prospectus Supplement may be used for the offer, sale (including in
secondary market transactions) and listing of Bearer Notes with an aggregate
initial public offering price or purchase price of up to U.S.$10,000,000,000 or
the equivalent thereof in other currencies, subject to reduction as a result of
the sale of other securities under the Registration Statement of which this
Prospectus Supplement and the accompanying Prospectus form a part or under a
Registration Statement to which this Prospectus Supplement and the accompanying
Prospectus relate. Pursuant to the Global Selling Agency Agreement between the
Company, the Agents and Salomon Brothers Inc (the 'Selling Agency Agreement'),
the Company will represent to the Agent that as of the Original Issue Date of
any Bearer Note, neither the Prospectus nor any amendment thereof or supplement
thereto will contain an untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading (subject to certain
exceptions contained in the Selling Agency Agreement). The Company has given an
undertaking in connection with the listing of the Bearer Notes on the Luxembourg
Stock Exchange to the effect that, so long as any Bearer Notes are issued by the
Company, in the event of any material adverse change in the business or
financial position of the Company and in the terms and conditions of the Notes
that is not reflected in the Prospectus as then amended or supplemented, the
Company will prepare an amendment or supplement to the Prospectus or publish a
new Prospectus for use in connection with any subsequent offering and listing by
the Company of Bearer Notes.
S-3
<PAGE>
SALOMON INC
GROUP PROFILE
Salomon Inc was incorporated in 1960 under the laws of the State of
Delaware. 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. ('Phibro') and its subsidiaries.
Oil refining and gathering activities are conducted by Basis Petroleum, Inc.
('Basis Petroleum').
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.
SALOMON BROTHERS
Salomon Brothers is an international investment banking firm that provides
a variety of capital raising, market making and brokerage services to its
clients worldwide, and engages in proprietary trading activities for its own
account. Salomon Brothers has branches, subsidiaries or representative offices
in Australia, Canada, China, France, Germany, Hong Kong, India, Italy, Japan,
Korea, Malaysia, Mexico, Russia, Singapore, Spain, Switzerland, Taiwan,
Thailand, the United Kingdom and the United States, and affiliate relationships
in Argentina, Brazil, Indonesia and Korea. Salomon Brothers provides various
services for its government, financial institution and corporate clients
including fixed income and equity sales and trading, foreign exchange trading,
emerging markets activities, fixed income and equity market research, investment
banking and funds management. Salomon Brothers also executes trading and
arbitrage strategies for its own account using debt, equity, and related
derivative instruments. Principal operating subsidiaries of Salomon Brothers
Holding Company Inc are Salomon Brothers Inc in New York, Salomon Brothers
International Limited in London, Salomon Brothers Asia Limited in Tokyo, Salomon
Brothers AG in Frankfurt with a branch in Tokyo, Salomon (International) Finance
AG in Zug, Switzerland, and Salomon Swapco Inc in New York.
PHIBRO
Phibro conducts a global commodities dealer business through its principal
offices in Westport (Connecticut), London and Singapore. Commodities traded
include crude oil, refined oil products, natural gas, electricity, metals,
petrochemicals, ethanol, plastics, coal, coke, fertilizers, sugar, cocoa, grains
and coffee. Phibro makes extensive use of futures markets and is a participant
in the OTC derivatives market.
BASIS PETROLEUM
Basis Petroleum, with headquarters in Houston, Texas, owns and operates
three oil refineries in the U.S. Gulf Coast area, with a combined design crude
oil throughput capacity of approximately 272,000 barrels per day and additional
throughputs of purchased feedstocks of approximately 39,000 barrels per day.
S-4
<PAGE>
SELECTED FINANCIAL INFORMATION
The following selected financial information of the Company and its
consolidated subsidiaries with respect to the years 1991 through 1995 has been
derived from audited financial statements contained in the 1995 10-K. Such
information should be read in conjunction with the consolidated financial
statements and related notes contained in the 1995 10-K, which is incorporated
herein by reference.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------------------------------------
1995 1994 1993 1992 1991
-------- -------- -------- -------- --------
(Millions of U.S. Dollars)
<S> <C> <C> <C> <C> <C>
Consolidated revenues, net of
interest expense................. $ 3,151 $ 1,386 $ 4,199 $ 3,859 $ 3,527
Income (loss) before taxes and
cumulative effect of change in
accounting principles by segment:
Salomon Brothers................. $ 704 (963) 1,575 (1) 1,390 (2) 1,036 (3)
Phibro........................... 85 81 (15)(1) (194) 47
Basis Petroleum.................. (91) 18 (46)(1) (47) (80)
Corporate and Other.............. 10 33 (49)(1) (93) (84)
-------- -------- -------- -------- --------
Consolidated income (loss) before
taxes and cumulative effect of
changes in accounting
principles....................... $ 708 $ (831) $ 1,465 (1) $ 1,056 $ 919
Consolidated net income (loss)..... $ 457 $ (399) $ 827 $ 550 $ 507
<CAPTION>
AT DECEMBER 31,
--------------------------------------------------------------
1995 1994 1993 1992 1991
-------- -------- -------- -------- --------
(Millions of U.S. Dollars)
<S> <C> <C> <C> <C> <C>
Total assets....................... $188,428 $172,452 $184,835 $159,459 $ 97,424
Term debt.......................... 13,045 15,202 11,692 8,533 7,082
Redeemable preferred stock......... 560 700 700 700 700
Stockholders' equity:
Preferred........................ 312 312 312 112 112
Common........................... 3,831 3,480 4,234 3,519 3,255
</TABLE>
- ------------------
(1) Does not include a $65 million charge that is the cumulative effect of a
change in accounting principles. The charge is allocated as follows: Salomon
Brothers $35 million; Phibro Division $1 million; Phibro USA $6 million and
Corporate and Other $23 million.
(2) Salomon Brothers' 1992 results include a $185 million pretax charge related
to the settlement with U.S. government authorities of investigations into
the U.S. Treasury auction matters.
(3) Salomon Brothers' 1991 results include a $200 million pretax charge related
to the establishment of a reserve associated with the U.S. Treasury auction
and related matters.
S-5
<PAGE>
DIRECTORS AND OFFICERS OF THE COMPANY
The directors of the Company, together with their principal occupations,
are:
<TABLE>
<CAPTION>
NAME OCCUPATION
- ----------------------- --------------------------------------------------------
<S> <C>
Dwayne O. Andreas...... Chairman of the Board and Chief Executive of Archer
Daniels Midland Company
Warren E. Buffett*..... Chairman of the Board and Chief Executive Officer of
Berkshire Hathaway Inc.
Robert E. Denham*...... Chairman and Chief Executive Officer of the Company
Claire M. Fagin........ Leadership Professor, School of Nursing, University of
Pennsylvania
John L. Haseltine...... Managing Director of Salomon Brothers Inc
Gedale B. Horowitz..... Executive Vice President of the Company
Deryck C. Maughan...... Executive Vice President of the Company and Chairman and
Chief Executive Officer of Salomon Brothers Inc
David O. Maxwell....... Retired Chairman and Chief Executive Officer of Federal
National Mortgage Association
William F. May*........ Chairman and Chief Executive Officer of the Statue of
Liberty-Ellis Island Foundation, Inc.
Charles T. Munger...... Vice Chairman of the Board of Berkshire Hathaway Inc.
Shigeru Myojin......... Vice Chairman of Salomon Brothers Inc
Louis A. Simpson*...... President and Chief Executive Officer, Capital
Operations, of GEICO Corporation
Robert G. Zeller*...... Retired investment banker
</TABLE>
- ------------------
* Executive committee member.
The officers of the Company, in addition to those directors who serve as
officers of the Company, are:
<TABLE>
<CAPTION>
NAME TITLE
- ----------------------- --------------------------------------------------------
<S> <C>
Jerome H. Bailey....... Chief Financial Officer
Walter E. Baker........ Senior Vice President
Richard J. Carbone..... Controller
Linda Descano Nelson... Vice President--Environmental Affairs
William J. Jennings.... Senior Vice President
Thomas W. Jasper....... Treasurer
Robert H. Mundheim..... Executive Vice President and General Counsel
Gerald P. Nagy......... Vice President--Taxes
Arnold S. Olshin....... Secretary
</TABLE>
S-6
<PAGE>
CAPITALIZATION
The following table sets forth the capitalization of the Company and its
consolidated subsidiaries as of December 31, 1995. The largest component of
short-term capitalization is securities sold under agreements to repurchase,
which are collateralized principally by U.S. government and agency securities.
There have been no material changes to the capitalization of the Company as a
result of the issuance of securities, including the Notes, since December 31,
1995, other than the following. On February 13, 1996, the Company issued 500,000
shares of 8.40% Cumulative Preferred Stock, Series E. In the normal course of
business, the Company's short-term borrowings outstanding may vary significantly
at any particular point in time.
<TABLE>
<CAPTION>
(MILLIONS OF
U.S. DOLLARS)
<S> <C>
Short-term borrowings:
Securities sold under agreements to repurchase.............. $ 91,813
Bank borrowings............................................. 3,856
Securities loaned........................................... 1,040
Deposit liabilities......................................... 1,347
Commercial paper............................................ 797
Other....................................................... 2,304
-------------
Total short-term borrowings............................ $ 101,157
-------------
-------------
Collateralized mortgage obligations............................. $ 2,337
-------------
-------------
Term debt....................................................... $ 13,045
-------------
-------------
Redeemable preferred stock, without par value (700,000 Series A
cumulative convertible shares, redeemable at assigned value,
issued and outstanding)(1).................................... $ 560
-------------
-------------
Stockholders' equity:
Preferred stock, without par value (consisting of (a)
225,000 Series C cumulative shares issued and outstanding,
represented by 4,500,000 Depositary Shares, each
representing a one-twentieth interest in a share of such
Preferred Stock, redeemable only at the Company's option
at any time on or after June 30, 1996, at a price of $500
per share, and (b) 400,000 Series D cumulative shares
issued and outstanding, represented by 8,000,000 De-
positary Shares, each representing a one-twentieth
interest in a share of such Preferred Stock, redeemable
only at the Company's option at any time after March 31,
1998 at a price of $500 per share)(1)..................... $ 312
Common stock, par value $1 per share (250,000,000 shares
authorized; 155,642,470 shares issued).................... 156
Additional paid-in capital.................................. 296
Retained earnings........................................... 5,001
Cumulative translation adjustments.......................... 13
Common stock held in treasury, at cost (49,194,744
shares)................................................... (1,635)
-------------
Total stockholders' equity............................. $ 4,143
-------------
-------------
</TABLE>
- ------------
In addition to the items included in the table above, the Company's
liabilities at December 31, 1995 included financial and commodities-related
instruments sold, not yet purchased, and other contractual commitments of $57.5
billion, and payables and accrued liabilities of $9.7 billion. The Company
repurchased approximately 41,000 shares of its common stock during 1995 at an
aggregate cost of $1.6 million under a share repurchase program authorized by
the Company's Board of Directors. As of December 31, 1995, the Company was
authorized to repurchase approximately 9.8 million shares of common stock under
such program.
(1) The Company is authorized to issue an aggregate of 5,000,000 shares of
preferred stock.
See Note 9 to the Company's consolidated financial statements incorporated
herein by reference from the Company's 1995 10-K for a description of the
preferred share purchase rights outstanding and the authorization of a series of
preferred stock purchasable upon exercise of such rights.
S-7
<PAGE>
DESCRIPTION OF BEARER NOTES
The following description of the particular terms of the Bearer Notes
supplements, and to the extent inconsistent therewith replaces, the description
of the general terms and provisions of the Debt Securities set forth in the
Prospectus, to which description reference is hereby made. Numerical references
in parentheses below are to sections in the Senior Debt Indenture and the
Subordinated Debt Indenture. Wherever particular sections or defined terms of
the Indentures are referred to, such sections or defined terms are incorporated
herein by reference as part of the statement made, and the statement is
qualified in its entirety by such reference.
GENERAL
The Series D Notes are a series of Debt Securities issued under the Senior
Debt Indenture, and the Series E Notes are a series of Debt Securities issued
under the Subordinated Debt Indenture. At the date of this Prospectus
Supplement, the Notes offered pursuant to this Prospectus Supplement are limited
to an aggregate initial public offering price or purchase price of up to U.S.
$10,000,000,000 or the equivalent thereof in one or more other currencies
(including ECU), which amount is subject to reduction as a result of the sale of
other securities under the Registration Statement of which this Prospectus
Supplement and the accompanying Prospectus form a part or under a Registration
Statement to which this Prospectus Supplement and the accompanying Prospectus
relate. In addition, the Company had outstanding as of March 31, 1996
approximately U.S. $1,863,031,716 of Series D Bearer Notes and approximately
U.S. $4,219,135,125 of Series D Registered Notes sold pursuant to earlier
prospectuses. The aggregate amount of Notes may be increased from time to time
to such larger amount as may be authorized by the Company. The U.S. dollar
equivalent of the public offering price or purchase price of a Note having a
Specified Currency other than U.S. dollars will be determined on the basis of
the noon buying rate in New York City for cable transfers in foreign currencies
as certified for customs purposes by the Federal Reserve Bank of New York (the
'Market Exchange Rate') for such Specified Currency on the applicable issue
date. Such determination will be made by the Company or its agent, as exchange
rate agent for both Series of Notes (the 'Exchange Rate Agent').
The Notes will consist of Bearer Notes and Registered Notes, each of which
will be offered on a continuous basis. In connection with their original
issuance or during the period of 40 days after their Original Issue Dates,
Bearer Notes will not be offered, sold or delivered, directly or indirectly, to
a U.S. Person or to any person within the United States, except to the extent
permitted under U.S. Treasury regulations, as more fully set forth under 'Plan
of Distribution'. As used herein, 'United States' means the United States of
America and its possessions, and 'U.S. Person' means a citizen or resident of
the United States, a corporation, partnership or other entity created or
organized in or under the laws of the United States, or an estate or trust the
income of which is subject to United States federal income taxation regardless
of its source.
Payments in respect of Bearer Notes will be made without deduction for
United States withholding taxes to the extent described under 'Payment of
Additional Interest' below. Each Bearer Note may be redeemed at the Redemption
Price applicable thereto, if certain events occur involving United States
withholding taxes or information reporting requirements. See 'Tax Redemption'
and 'Special Tax Redemption' below. Other than in such event, Bearer Notes may
not be redeemed by the Company prior to Stated Maturity (as defined below)
unless otherwise specified in the applicable Pricing Supplement. See 'Optional
Redemption, Repayment and Repurchase' below. The Bearer Notes will not be
subject to any sinking fund.
Unless otherwise specified in the applicable Pricing Supplement, each
Bearer Note will mature at par on a Business Day more than nine months from its
Original Issue Date (as defined below), as selected by the purchaser and agreed
to by the Company (the 'Stated Maturity'). Each Bearer Note may also be subject
to redemption at the option of the Company, or to repayment at the option of the
Holder, at a price specified in the applicable Pricing Supplement prior to its
Stated Maturity.
S-8
<PAGE>
Notwithstanding the foregoing, each Bearer Note having a Specified Currency of
Japanese yen will have a Stated Maturity of not less than one year from its
Original Issue Date, and will not be subject to optional redemption or repayment
prior to such time. Each Bearer Note having a Specified Currency of German
deutsche marks will have a Stated Maturity of not less than two years from the
Original Issue Date and will not be subject to optional redemption or repayment
prior to such time. Each Bearer Note having a Specified Currency of Pounds
Sterling will mature in compliance with such regulations as the Bank of England
may promulgate from time to time. No Bearer Note will be issued without a final
maturity.
The Pricing Supplement relating to a Bearer Note will describe the
following terms: (i) the Specified Currency for such Note; (ii) whether such
Note is a Fixed Rate Note, a Floating Rate Note, an Amortizing Note and/or an
Indexed Note; (iii) the price (expressed as a percentage of the aggregate
principal amount or face amount thereof) at which such Note will be issued (the
'Issue Price'); (iv) the date on which such Note will be issued (the 'Original
Issue Date'); (v) the date of the Stated Maturity; (vi) if such Note is a Fixed
Rate Note, the rate per annum at which such Note will bear interest, if any, and
whether and the manner in which such rate may be changed prior to its Stated
Maturity; (vii) if such Note is a Floating Rate Note, the Base Rate, the Initial
Interest Rate, the Interest Reset Period or the Interest Reset Dates, the
Interest Payment Dates, and, if applicable, the Index Maturity, the Maximum
Interest Rate, the Minimum Interest Rate, the Spread or Spread Multiplier (all
as defined below), and any other terms relating to the particular method of
calculating the interest rate for such Note and whether and the manner in which
such Spread or Spread Multiplier may be changed prior to Stated Maturity; (viii)
whether such Note is an Original Issue Discount Note (as defined below); (ix) if
such Note is an Amortizing Note, the terms for repayment prior to Stated
Maturity; (x) if such Note is an Indexed Note, in the case of an Indexed Rate
Note, the manner in which the amount of any interest payment will be determined
or, in the case of an Indexed Principal Note, its Face Amount and the manner in
which the principal amount payable at Stated Maturity will be determined; (xi)
whether such Note may be redeemed at the option of the Company, or repaid at the
option of the Holder, prior to Stated Maturity as described under 'Optional
Redemption, Repayment and Repurchase' below and, if so, the provisions relating
to such redemption or repayment, including, in the case of an Original Issue
Discount Note or Indexed Note, the information necessary to determine the amount
due upon redemption or repayment; and (xii) any other terms of such Note not
inconsistent with the provisions of the Indenture under which such Note will be
issued.
'Business Day' with respect to any Bearer Note means any day, other than a
Saturday or Sunday, that is not a day on which banking institutions are
authorized or required by law or regulation to be closed in (a) The City of New
York, (b) London, England, (c) the place in which such Note or any Coupon
relating thereto is presented for payment or (d) if the Specified Currency for
such Note is other than U.S. dollars, the financial center of the country
issuing such Specified Currency (which, in the case of ECU, shall be Brussels,
Belgium). 'London Banking Day' with respect to any Bearer Notes means any day on
which dealings in deposits in the Specified Currency of such Note are transacted
in the London interbank market.
'Original Issue Discount Note' means (i) a Bearer Note, including any such
Note whose interest rate is zero, that has a stated redemption price at Stated
Maturity that exceeds its Issue Price by at least 0.25% of its stated redemption
price at Stated Maturity, multiplied by the number of full years from the
Original Issue Date to the Stated Maturity for such Note and (ii) any other
Bearer Note designated by the Company as issued with original issue discount for
United States Federal income tax purposes.
A 'basis point' or 'bp' equals one one-hundredth of a percentage point.
STATUS
The Series D Notes will be issued under the Senior Debt Indenture, will
constitute part of the Senior Indebtedness of the Company and will rank pari
passu with all other unsecured debt of the Company except subordinated debt. The
Series E Notes will be issued under the Subordinated Debt Indenture
S-9
<PAGE>
and will be subordinate and junior in the right of payment, to the extent and in
the manner set forth in the Subordinated Debt Indenture, to all Senior
Indebtedness of the Company. See 'Description of Debt Securities--Subordinated
Debt' in the Prospectus. As of December 31, 1995, the aggregate principal amount
of Senior Indebtedness outstanding was U.S. $114.2 billion, consisting of the
following: U.S. $13.0 billion of term debt, U.S. $.8 billion in commercial paper
and U.S. $100.4 billion in other short-term borrowings.
DENOMINATION, FORM AND TRANSFER
Unless otherwise provided in the applicable Pricing Supplement, the minimum
aggregate principal amount of Bearer Notes that may be purchased is U.S. $25,000
or the approximate equivalent thereof in other currencies. Unless otherwise
provided in the applicable Pricing Supplement, the authorized denominations of
Bearer Notes denominated in U.S. dollars will be U.S. $10,000 and any larger
amount that is an integral multiple of U.S. $1,000, and the authorized
denominations of Bearer Notes having a Specified Currency other than U.S.
dollars will be the approximate equivalents thereof in the Specified Currency.
All Bearer Notes that have the same Original Issue Date and otherwise
identical terms will be represented initially by interests in a single temporary
Global Security in bearer form, without Coupons (a 'Temporary Global Note'), to
be deposited with a common depositary in London (the 'Depositary') for Morgan
Guaranty Trust Company of New York, Brussels office, as operator of the
Euroclear System ('Euroclear') and Cedel Bank, Societe Anonyme ('CEDEL'), for
credit to the accounts designated by or on behalf of the purchasers thereof. On
or after the 40th day following the issuance of a Temporary Global Note (the
'Exchange Date'), and subject to the receipt of a Certificate of Non-U.S.
Beneficial Ownership, beneficial interests in that Temporary Global Note will be
exchangeable for interests in a definitive Global Security in bearer form,
without Coupons (a 'Permanent Global Note'), in a denomination equal to the
aggregate principal amount of all interests in the Temporary Global Note so
exchanged. A 'Certificate of Non-U.S. Beneficial Ownership' is a certificate, to
the effect that a beneficial interest in a Temporary Global Note is owned by a
person that is not a U.S. Person or is owned by or through a financial
institution in compliance with applicable U.S. Treasury regulations, that is
delivered in respect of the Exchange Date or in respect of any Interest Payment
Date prior to the Exchange Date. Each Permanent Global Note will be deposited
with the Depositary for credit to the account or accounts designated by or on
behalf of the beneficial owner or owners thereof. Interests in a Permanent
Global Note may be exchanged in whole, or if permitted by such procedures as
Euroclear or CEDEL may prescribe from time to time, in part, for one or more
individual Bearer Notes, with appropriate Coupons attached, in any authorized
denomination or denominations. No Bearer Note will be delivered in or to the
United States and its possessions. References herein to 'Bearer Notes' shall,
except where otherwise indicated, include interests in a Temporary or Permanent
Global Note as well as individual Bearer Notes and any appurtenant Coupons.
Transfers of interests in a Temporary or Permanent Global Note will be made
by Euroclear or CEDEL in accordance with their customary operating procedures.
Title to individual Bearer Notes and Coupons will pass by physical delivery. The
bearer of each Coupon, whether or not the Coupon is attached to an individual
Bearer Note, shall be subject to and bound by all the provisions contained in
the individual Bearer Note to which such Coupon relates. The bearer of any
individual Bearer Note and any Coupon may, to the fullest extent permitted by
applicable law, be treated at all times by all persons and for all purposes as
the absolute owner of such Note or Coupon, as the case may be, regardless of any
notice of ownership, theft or loss or of any writing thereon.
The following legend will appear on each Global Note and on all individual
Bearer Notes and any Coupons: 'Any United States Person who holds this
obligation will be subject to limitations under the United States income tax
laws, including the limitations provided in Sections 165(j) and 1287(a) of the
Internal Revenue Code.' The sections referred to in the legend provide that,
with certain exceptions, a United States taxpayer who holds an interest in a
Global Note or an individual Bearer Note or Coupon
S-10
<PAGE>
will not be permitted to deduct any loss with respect to, and will not be
eligible for capital gain treatment with respect to any gain realized on a sale,
exchange, redemption or other disposition of, an interest in such Global Note or
such individual Bearer Note or Coupon. See 'Limitations on Issuance of Bearer
Securities and Bearer Warrants' in the accompanying Prospectus.
Bearer Notes may not be exchanged for Registered Notes.
PAYMENTS AND PAYING AGENTS
Unless otherwise specified in the applicable Pricing Supplement and except,
under certain circumstances, for Bearer Notes having Specified Currencies other
than U.S. dollars, payments of the principal of and any premium and interest on
a Bearer Note will be made only in the Specified Currency for such Note. See
'Currency Risks' below.
Interest on each Temporary Global Note will be paid to each of Euroclear
and CEDEL with respect to that portion of such Temporary Global Note held for
its account, but only upon receipt as of the relevant Interest Payment Date of a
Certificate of Non-U.S. Beneficial Ownership and upon notation thereon of such
payment. Each of Euroclear and CEDEL will undertake in such circumstances to
credit such interest received by it to the respective accounts having an
interest in such Temporary Global Note.
The principal of and any premium or interest on each Permanent Global Note
will be paid to each of Euroclear and CEDEL with respect to that portion of such
Permanent Global Note held for its account upon notation thereon of such
payment. Each of Euroclear and CEDEL will undertake in such circumstances to
credit such principal, premium and interest received by it to the respective
accounts having an interest in such Permanent Global Note. All such payments
will be made to Euroclear and CEDEL in immediately available funds.
A payment in respect of an individual Bearer Note or any Coupon will be
made only against surrender of such Note or Coupon at the offices of such Paying
Agents outside the United States and its possessions as the Company may from
time to time appoint. At the direction of the Holder of such a Note or Coupon,
and subject to applicable laws and regulations, such payments will be made by
check drawn on a bank in The City of New York (in the case of a U.S. dollar
payment) or outside the United States (in the case of a payment in a currency
other than U.S. dollars) mailed to an address outside the United States and its
possessions furnished by such Holder or, at the option of such Holder, by wire
transfer (pursuant to written instructions supplied by such Holder) to an
account maintained by the payee with a bank located outside the United States
and its possessions. No payment in respect of an individual Bearer Note or
Coupon will be made upon presentation of such Note or Coupon at any office or
agency of either Trustee or any other paying agency maintained by the Company in
the United States and its possessions, nor will any such payment be made by
transfer to an account, or by mail to an address, in the United States and its
possessions. Notwithstanding the foregoing, if U.S. dollar payments in respect
of Bearer Notes or any Coupons at the offices of all Paying Agents outside the
United States and its possessions become illegal or are effectively precluded
because of the imposition of exchange controls or similar restrictions on the
full payment or receipt of such amounts in U.S. dollars, the Company will
appoint an office or agency (which may be a Trustee) in the United States at
which such payments may be made.
Payments of principal and interest (if any) with respect to Notes
denominated and payable in ECU will be made at the specified office of a Paying
Agent outside the United States and its possessions by credit or transfer to an
ECU account located outside the United States and its possessions specified by
the payee. Payments in a component currency (if required, as set forth under
'Currency Risks-Payment Currency' below) will be made in the Payment Currency
(as defined below) at the specified office of a Paying Agent in the country of
the Payment Currency or, if none or at the option of the holder, at the
specified office of any Paying Agent outside the United States and its
possessions either by a check drawn on, or by transfer to an account specified
by the payee with, a bank in the financial center of the
S-11
<PAGE>
country of the Payment Currency. Payments will be subject in all cases to any
fiscal or other laws and regulations applicable thereto, but without prejudice
to the provisions regarding taxation discussed below.
The specified offices of the Trustees and the names and offices of the
initial Paying Agents are set forth at the end of this Prospectus Supplement.
The Company reserves the right at any time to vary or terminate the appointment
of any Paying Agent and to appoint additional or other Paying Agents and to
approve any change in the office through which any Paying Agent acts, provided
that there will at all times be a Paying Agent (which may be a Trustee) in at
least one city in Europe, which, so long as the Bearer Notes are listed on the
Luxembourg Stock Exchange and the rules of that exchange shall so require, shall
include Luxembourg. Notice of any such termination or appointment and of any
changes in the specified offices of a Trustee or any Paying Agent will be given
to the Holders of Bearer Notes in accordance with 'Notices' below.
Any payment required to be made in respect of a Bearer Note on a date
(including the day of Stated Maturity) that is not a Business Day for such Note
need not be made on such date, but may be made on the next succeeding Business
Day with the same force and effect as if made on such date, and no additional
interest shall accrue as a result of such delayed payment.
Unless otherwise specified in the applicable Pricing Supplement, if the
principal of any Discount Note is declared to be due and payable immediately as
described under 'Description of Debt Securities--Events of Default' in the
Prospectus, the amount of principal due and payable with respect to such Note
shall be limited to the aggregate principal amount (or face amount, in the case
of an Indexed Principal Note) of such Note multiplied by the sum of its Issue
Price (expressed as a percentage of the aggregate principal amount) plus the
original issue discount amortized from the date of issue to the date of
declaration, which amortization shall be calculated using the 'interest method'
(computed in accordance with generally accepted accounting principles in effect
on the date of declaration).
FIXED RATE NOTES
Each Fixed Rate Note will bear interest from its Original Issue Date, or
from the last Interest Payment Date to which interest has been paid or duly
provided for, at the rate per annum stated in the applicable Pricing Supplement
until the principal amount thereof is paid or made available for payment, except
that, if so specified in the applicable Pricing Supplement, the rate of interest
payable on certain Fixed Rate Notes may be subject to adjustment from time to
time as described in such Pricing Supplement. Unless otherwise set forth in the
applicable Pricing Supplement, interest on each Fixed Rate Note will be payable
annually in arrears on each September 15 (each such day being an 'Interest
Payment Date') and at Stated Maturity. Unless otherwise specified in the
applicable Pricing Supplement, if an Interest Payment Date with respect to any
Fixed Rate Note would otherwise be a day that is not a Business Day, such
Interest Payment Date shall not be postponed; provided, however, that any
payment required to be made in respect of such Note on a date (including the day
of Stated Maturity) that is not a Business Day for such Note need not be made on
such date, but may be made on the next succeeding Business Day with the same
force and effect as if made on such date, and no additional interest shall
accrue as a result of such delayed payment. However, if with respect to any
Fixed Rate Note, 'Accrue to Pay' is specified in the applicable Pricing
Supplement, and any Interest Payment Date with respect to such Fixed Rate Note
would otherwise be a day that is not a Business Day, such Interest Payment Date
shall be postponed to the next succeeding Business Day. Each payment of interest
in respect of an Interest Payment Date shall include interest accrued through
the day before such Interest Payment Date. Unless otherwise specified in the
applicable Pricing Supplement, interest on Fixed Rate Notes will be computed on
the basis of a 360-day year of twelve 30-day months ('30 over 360').
S-12
<PAGE>
FLOATING RATE NOTES
From its Original Issue Date to but not including the first Interest Reset
Date (the 'Initial Interest Period'), each Floating Rate Note will bear interest
at the Initial Interest Rate set forth, or otherwise described in the Pricing
Supplement. From each Interest Reset Date to but not including the following
Interest Reset Date (each such period, an 'Interest Reset Period'; and together
with the Initial Interest Period, the 'Interest Periods'), the interest rate for
each Floating Rate Note will be determined by reference to an interest rate
basis (the 'Base Rate'), plus or minus the Spread, if any, or multiplied by the
Spread Multiplier, if any. The 'Spread' is the number of basis points that may
be specified in the applicable Pricing Supplement as being applicable to such
Note, and the 'Spread Multiplier' is the percentage that may be specified in the
applicable Pricing Supplement as being applicable to such Note, except that, if
so specified in the applicable Pricing Supplement, the Spread or Spread
Multiplier on certain Floating Rate Notes may be subject to adjustment from time
to time as described in such Pricing Supplement. The applicable Pricing
Supplement will designate one of the following Base Rates as applicable to a
Floating Rate Note:(i) LIBOR (a 'LIBOR Note'), (ii) the Commercial Paper Rate (a
'Commercial Paper Rate Note'),(iii) the Treasury Rate (a 'Treasury Rate Note'),
(iv) the Federal Funds Rate (a 'Federal Funds Rate Note'), (v) the CD Rate (a
'CD Rate Note') or (vi) such other Base Rate as is set forth in such Pricing
Supplement and in such Note. The 'Index Maturity' for any Floating Rate Note is
the period of maturity of the instrument or obligation from which the Base Rate
is calculated. 'H.15(519)' means the publication entitled 'Statistical Release
H.15(519), 'Selected Interest Rates' ', or any successor publication, published
by the Board of Governors of the Federal Reserve System. 'Composite Quotations'
means the daily statistical release entitled 'Composite 3:30 p.m. Quotations for
U.S. Government Securities' published by the Federal Reserve Bank of New York.
As specified in the applicable Pricing Supplement, a Floating Rate Note may
also have either or both of the following (in each case expressed as a rate per
annum on a simple interest basis): (i) a maximum limitation, or ceiling, on the
rate at which interest may accrue during any interest period ('Maximum Interest
Rate') and (ii) a minimum limitation, or floor, on the rate at which interest
may accrue during any interest period ('Minimum Interest Rate'). In addition to
any Maximum Interest Rate that may be applicable to any Floating Rate Note, the
interest rate on a Floating Rate Note will in no event be higher than the
maximum rate permitted by applicable law, as the same may be modified by United
States law of general application. The Notes will be governed by the law of the
State of New York and, under such law as of the date of this Prospectus
Supplement, the maximum rate of interest under provisions of the penal law, with
certain exceptions, is 25% per annum on a simple interest basis. Such maximum
rate of interest only applies to obligations that are less than $2,500,000.
The Company will appoint, and enter into agreements with, agents (each a
'Calculation Agent') to calculate interest rates on Floating Rate Notes. Unless
otherwise specified in a Pricing Supplement, Citibank, N.A. shall be the
Calculation Agent for each Series D Floating Rate Note and Bankers Trust Company
shall be the Calculation Agent for each Series E Floating Rate Note. All
determinations of interest by the Calculation Agents shall, in the absence of
manifest error, be conclusive for all purposes and binding on the holders of the
Floating Rate Notes.
The interest rate on each Floating Rate Note will be reset daily, weekly,
monthly, quarterly, semiannually or annually (each day on which the interest
rate is reset, an 'Interest Reset Date'), as specified in the applicable Pricing
Supplement. Unless otherwise specified in the applicable Pricing Supplement, the
Interest Reset Date will be, in the case of Floating Rate Notes that reset
daily, each Business Day; in the case of Floating Rate Notes (other than
Treasury Rate Notes) that reset weekly, Wednesday of each week; in the case of
Treasury Rate Notes that reset weekly, Tuesday of each week (except as provided
below under 'Treasury Rate Notes' below); in the case of Floating Rate Notes
that reset monthly, the third Wednesday of each month; in the case of Floating
Rate Notes that reset quarterly, the third Wednesday of March, June, September
and December of each year; in the case of Floating Rate Notes that reset
semiannually, the third Wednesday of each of two months of each year specified
in the applicable Pricing Supplement; and, in the case of Floating Rate Notes
that reset
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annually, the third Wednesday of one month of each year specified in the
applicable Pricing Supplement; provided, however, that in all instances
involving Floating Rate Notes issued prior to September 16, 1994 the interest
rate for the ten days immediately prior to Stated Maturity will be that in
effect on the tenth day preceding Stated Maturity. If an Interest Reset Date for
any Floating Rate Note would otherwise be a day that is not a Business Day, such
Interest Reset Date shall be postponed to the next succeeding Business Day,
except that in the case of a LIBOR Note, if such Business Day is in the next
succeeding calendar month, such Interest Reset Date shall be the immediately
preceding Business Day.
Unless otherwise specified in the applicable Pricing Supplement, the rate
of interest that goes into effect on any Interest Reset Date shall be determined
on a date (the 'Rate Determination Date') preceding such Interest Reset Date, as
further described below. Such Rate Determination Date may be referred to below
as a 'CD Rate Determination Date' in the case of a CD Rate Note, a 'Commercial
Paper Rate Determination Date' in the case of a Commercial Paper Rate Note, a
'Federal Funds Rate Determination Date' in the case of a Federal Funds Rate
Note, a 'LIBOR Determination Date' in the case of a LIBOR Note or a 'Treasury
Rate Determination Date' or a 'Constant Maturity Treasury Rate Determination
Date' in the case of a Treasury Rate Note.
Unless otherwise specified in the applicable Pricing Supplement, interest
payable in respect of Floating Rate Notes shall be the accrued interest from and
including the Original Issue Date or the last date to which interest has been
paid, as the case may be, to but excluding the applicable Interest Payment Date.
In the case of a Floating Rate Note that resets daily or weekly, interest
payable shall be the accrued interest from and including the Original Issue Date
or the last date to which interest has been accrued and paid, as the case may
be, to but excluding the date 15 calendar days immediately preceding the
applicable Interest Payment Date, except that, at Stated Maturity, interest
payable will include interest accrued to but excluding the date of Stated
Maturity.
With respect to a Floating Rate Note with more than one Interest Reset Date
during any period for which accrued interest is being calculated, accrued
interest shall be calculated by multiplying the principal amount of such Note
(or in the case of a Floating Rate Note that is an Indexed Principal Note, its
Face Amount) by an accrued interest factor. Such accrued interest factor will be
computed by adding the interest factors calculated for each day in the period
for which accrued interest is being calculated. The interest factor (expressed
as a decimal calculated to seven decimal places without rounding) for each such
day is computed, unless otherwise specified in the applicable Pricing
Supplement, by dividing the interest rate in effect on such day by 360 ('Actual
over 360'), in the case of LIBOR Notes, Commercial Paper Rate Notes, Federal
Funds Rate Notes and CD Rate Notes, or by the actual number of days in the year
('Actual over Actual'), in the case of Treasury Rate Notes. For purposes of
making the foregoing calculation, the interest rate in effect on any Interest
Reset Date will be the applicable rate as reset on such date. With respect to
all other Floating Rate Notes, accrued interest shall be calculated by
multiplying the principal amount of such Note (or, in the case of a Floating
Rate Note that is an Indexed Principal Note, its Face Amount) by the interest
rate in effect during the period for which accrued interest is being calculated,
and multiplying that product by the quotient obtained by dividing the number of
days in the period for which accrued interest is being calculated by 360, in the
case of LIBOR Notes, Commercial Paper Rate Notes, Federal Funds Rate Notes and
CD Rate Notes, or by the actual number of days in the year, in the case of
Treasury Rate Notes.
Unless otherwise specified in the applicable Pricing Supplement, all
percentages resulting from any calculation of the rate of interest on a Floating
Rate Note will be rounded, if necessary, to the nearest 1/100,000 of 1%
(.0000001), with five one-millionths of a percentage point rounded upward, and
all currency amounts used in or resulting from such calculation on Floating Rate
Notes will be rounded to the nearest one-hundredth of a unit (with .005 of a
unit being rounded upward).
Unless otherwise indicated in the applicable Pricing Supplement and except
as provided below, interest will be payable, in the case of Floating Rate Notes
that reset daily, weekly or monthly, on the
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third Wednesday of each month or on the third Wednesday of March, June,
September and December of each year, as specified in the applicable Pricing
Supplement; in the case of Floating Rate Notes that reset quarterly, on the
third Wednesday of March, June, September and December of each year; in the case
of Floating Rate Notes that reset semiannually, on the third Wednesday of each
of two months of each year specified in the applicable Pricing Supplement; and,
in the case of Floating Rate Notes that reset annually, on the third Wednesday
of one month of each year specified in the applicable Pricing Supplement (each
such day being an 'Interest Payment Date'). If an Interest Payment Date with
respect to any Floating Rate Note would otherwise be a day that is not a
Business Day, such Interest Payment Date shall be postponed to the next
succeeding Business Day, except that, in the case of a LIBOR Note, if such
Business Day is in the next succeeding calendar month, such Interest Payment
Date shall be the immediately preceding Business Day; provided, however, if with
respect to any Floating Rate Note, the applicable Pricing Supplement provides
that the Note does not Accrue to Pay, if an Interest Payment Date with respect
to such Floating Rate Note would otherwise be a day that is not a Business Day,
such Interest Payment Date shall not be postponed; provided, further, that any
payment required to be made in respect of a Floating Rate Note that does not
Accrue to Pay on a date (including the day of Stated Maturity) that is not a
Business Day for such Note need not be made on such date, but may be made on the
next succeeding Business Day with the same force and effect as if made on such
dates, and no additional interest shall accrue as a result of such delayed
payment.
Upon the request of the Holder of any Floating Rate Note, the Calculation
Agent for such Note will provide the interest rate then in effect and, if
determined, the interest rate that will become effective on the next Interest
Reset Date with respect to such Floating Rate Note. In addition, such
information will be communicated to the Luxembourg Stock Exchange and will be
made available at the offices of the Paying Agents in Luxembourg and at the
Luxembourg Stock Exchange as soon as possible after the determination of the
interest rate.
CD Rate Notes
Each CD Rate Note will bear interest for each Interest Reset Period at the
interest rate calculated with reference to the CD Rate and the Spread or Spread
Multiplier, if any, specified in such Note and in the applicable Pricing
Supplement.
Unless otherwise specified in the applicable Pricing Supplement, the 'CD
Rate' for each Interest Reset Period shall be the rate as of the second Business
Day prior to the Interest Reset Date for such Interest Reset Period (a 'CD Rate
Determination Date') for negotiable certificates of deposit having the Index
Maturity designated in the applicable Pricing Supplement as published in
H.15(519) under the heading 'CDs (Secondary Market)'. In the event that such
rate is not published prior to 3:00 p.m., New York City time, on the Calculation
Date (as defined below) pertaining to such CD Rate Determination Date, then the
'CD Rate' for such Interest Reset Period will be the rate on such CD Rate
Determination Date for negotiable certificates of deposit of the Index Maturity
designated in the applicable Pricing Supplement as published in Composite
Quotations under the heading 'Certificates of Deposit'. If by 3:00 p.m., New
York City time, on such Calculation Date such rate is not yet published in
either H.15(519) or Composite Quotations, then the 'CD Rate' for such Interest
Reset Period will be calculated by the Calculation Agent for such CD Rate Note
and will be the arithmetic mean of the secondary market offered rates as of
10:00 a.m., New York City time, on such CD Rate Determination Date of three
leading nonbank dealers in negotiable U.S. dollar certificates of deposit in The
City of New York selected by the Calculation Agent for such CD Rate Note for
negotiable certificates of deposit of major United States money center banks of
the highest credit standing (in the market for negotiable certificates of
deposit) with a remaining maturity closest to the Index Maturity designated in
the Pricing Supplement in a denomination of $5,000,000; provided, however, that
if the dealers selected as aforesaid by such Calculation Agent are not quoting
offered rates as mentioned in this sentence, the 'CD Rate' for such Interest
Reset Period will be the same as the CD Rate for the immediately preceding
Interest Reset Period (or, if there was no such Interest Reset Period, the
Initial Interest Rate).
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The 'Calculation Date' pertaining to any CD Rate Determination Date shall
be the tenth calendar day after such CD Rate Determination Date or, if such day
is not a Business Day, the next succeeding Business Day.
Commercial Paper Rate Notes
Each Commercial Paper Rate Note will bear interest for each Interest Reset
Period at the interest rate calculated with reference to the Commercial Paper
Rate and the Spread or Spread Multiplier, if any, specified in such Note and in
the applicable Pricing Supplement.
Unless otherwise specified in the applicable Pricing Supplement, the
'Commercial Paper Rate' for each Interest Reset Period will be determined by the
Calculation Agent for such Commercial Paper Rate Note as of the second Business
Day prior to the Interest Reset Date for such Interest Reset Period (a
'Commercial Paper Rate Determination Date') and shall be the Money Market Yield
(as defined below) on such Commercial Paper Rate Determination Date of the rate
for commercial paper having the Index Maturity specified in the applicable
Pricing Supplement, as such rate shall be published in H.15(519) under the
heading 'Commercial Paper'. In the event that such rate is not published prior
to 3:00 p.m., New York City time, on the Calculation Date (as defined below)
pertaining to such Commercial Paper Rate Determination Date, then the
'Commercial Paper Rate' for such Interest Reset Period shall be the Money Market
Yield on such Commercial Paper Rate Determination Date of the rate for
commercial paper of the specified Index Maturity as published in Composite
Quotations under the heading 'Commercial Paper'. If by 3:00 p.m., New York City
time, on such Calculation Date such rate is not yet published in either
H.15(519) or Composite Quotations, then the 'Commercial Paper Rate' for such
Interest Reset Period shall be the Money Market Yield of the arithmetic mean of
the offered rates, as of 11:00 a.m., New York City time, on such Commercial
Paper Rate Determination Date of three leading dealers of commercial paper in
The City of New York selected by the Calculation Agent for such Commercial Paper
Rate Note for commercial paper of the specified Index Maturity placed for an
industrial issuer whose bonds are rated 'AA' or the equivalent by a nationally
recognized rating agency; provided, however, that if the dealers selected as
aforesaid by such Calculation Agent are not quoting offered rates as mentioned
in this sentence, the 'Commercial Paper Rate' for such Interest Reset Period
will be the same as the Commercial Paper Rate for the immediately preceding
Interest Reset Period (or, if there was no such Interest Reset Period, the
Initial Interest Rate).
'Money Market Yield' shall be a yield calculated in accordance with the
following formula:
D X 360
Money Market Yield = --------------- X 100
360 - (D X M)
where 'D' refers to the applicable per annum rate for commercial paper quoted on
a bank discount basis and expressed as a decimal, and 'M' refers to the actual
number of days in the specified Index Maturity.
The 'Calculation Date' pertaining to any Commercial Paper Rate
Determination Date shall be the tenth calendar day after such Commercial Paper
Rate Determination Date or, if such day is not a Business Day, the next
succeeding Business Day.
Federal Funds Rate Notes
Each Federal Funds Rate Note will bear interest for each Interest Reset
Period at the interest rate calculated with reference to the Federal Funds Rate
and the Spread or Spread Multiplier, if any, specified in such Note and in the
applicable Pricing Supplement.
Unless otherwise specified in the applicable Pricing Supplement, the
'Federal Funds Rate' for each Interest Reset Period shall be the effective rate
on the Interest Reset Date for such Interest Reset
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Period (a 'Federal Funds Rate Determination Date') for Federal Funds as
published in H.15(519) under the heading 'Federal Funds (Effective)'. In the
event that such rate is not published prior to 3:00 p.m., New York City time, on
the Calculation Date (as defined below) pertaining to such Federal Funds Rate
Determination Date, the 'Federal Funds Rate' for such Interest Reset Period
shall be the rate on such Federal Funds Rate Determination Date as published in
Composite Quotations under the heading 'Federal Funds/Effective Rate'. If by
3:00 p.m., New York City time, on such Calculation Date such rate is not yet
published in either H.15(519) or Composite Quotations, then the 'Federal Funds
Rate' for such Interest Reset Period shall be the rate on such Federal Funds
Rate Determination Date made publicly available by the Federal Reserve Bank of
New York which is equivalent to the rate which appears in H.15(519) under the
heading 'Federal Funds (Effective)'; provided, however, that if such rate is not
made publicly available by the Federal Reserve Bank of New York by 3:00 p.m.,
New York City time, on such Calculation Date, the 'Federal Funds Rate' for such
Interest Reset Period will be the same as the Federal Funds Rate in effect for
the immediately preceding Interest Reset Period (or, if there was no such
Interest Reset Period, the Initial Interest Rate). In the case of a Federal
Funds Rate Note that resets daily, the interest rate on such Note for the period
from and including a Monday to but excluding the succeeding Monday will be reset
by the Calculation Agent for such Note on such second Monday (or, if not a
Business Day, on the next succeeding Business Day) to a rate equal to the
average of the Federal Funds Rates in effect with respect to each such day in
such week.
The 'Calculation Date' pertaining to any Federal Funds Rate Determination
Date shall be the next succeeding Business Day.
LIBOR Notes
Each LIBOR Note will bear interest for each Interest Reset Period at the
interest rate calculated with reference to LIBOR and the Spread or Spread
Multiplier, if any, specified in such Note and in the applicable Pricing
Supplement.
'LIBOR' for each Interest Reset Period will be determined by the
Calculation Agent for such LIBOR Notes as follows:
(i) On the second London Banking Day prior to the Interest Reset Date
for such Interest Reset Period (a 'LIBOR Determination Date'), the
Calculation Agent for such LIBOR Note will determine the offered rates for
deposits in the Specified Currency for the period of the Index Maturity
specified in the applicable Pricing Supplement, commencing on such Interest
Reset Date, which appear on the Designated LIBOR Page at approximately
11:00 a.m., London time, on such LIBOR Determination Date. If 'LIBOR
Telerate' is designated in the applicable Pricing Supplement, 'Designated
LIBOR Page' means the display designated as page '3750' on the Dow Jones
Telerate Service (or such other page as may replace page '3750' on such
service or such other service as may be nominated by the British Bankers'
Association for the purpose of displaying the London interbank offered
rates of major banks), and LIBOR for Interest Reset Period will be the
relevant offered rate as determined by the Calculation Agent. If 'LIBOR
Reuters' is designated in the applicable Pricing Supplement, 'Designated
LIBOR Page' means the display designated as page 'LIBO' on the Reuters
Monitor Money Rates Service (or such other page as may replace the LIBO
page on such service or such other service as may be nominated by the
British Bankers' Association for the purpose of displaying London interbank
offered rates of major banks) provided that at least two such offered rates
appear on the Designated LIBOR Page, in which case, 'LIBOR' for such
Interest Reset Period will be the arithmetic mean of such offered rates as
determined by the Calculation Agent for such LIBOR Note.
(ii) If LIBOR cannot be determined as above (either because the
Designated LIBOR Page is no longer available or because less than two rates
appear on page 'LIBO' on the Reuters Monitor Money Rate Services) on such
LIBOR Determination Date, the Calculation Agent for such LIBOR Note will
request the principal London offices of each of four major banks in the
London interbank
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market selected by such Calculation Agent to provide such Calculation Agent
with its offered quotations for deposits in the Specified Currency for the
period of the specified Index Maturity, commencing on such Interest Reset
Date, to prime banks in the London interbank market at approximately 11:00
a.m., London time, on such LIBOR Determination Date and in a principal
amount equal to an amount of not less than U.S.$1,000,000 or the
approximate equivalent thereof in the Specified Currency that is
representative of a single transaction in such market at such time. If at
least two such quotations are provided, 'LIBOR' for such Interest Reset
Period will be the arithmetic mean of such quotations. If fewer than two
such quotations are provided, 'LIBOR' for such Interest Reset Period will
be the arithmetic mean of rates quoted by three major banks in The City of
New York selected by the Calculation Agent for such LIBOR Note at
approximately 11:00 a.m., New York City time, on such LIBOR Determination
Date for loans in the Specified Currency to leading European banks, for the
period of the specified Index Maturity, commencing on such Interest Reset
Date, and in a principal amount equal to an amount of not less than
U.S.$1,000,000 or the approximate equivalent thereof in the Specified
Currency that is representative of a single transaction in such market at
such time; provided, however, that if fewer than three banks selected as
aforesaid by such Calculation Agent are quoting rates as mentioned in this
sentence, 'LIBOR' for such Interest Reset Period will be the same as LIBOR
for the immediately preceding Interest Reset Period (or, if there was no
such Interest Reset Period, the Initial Interest Rate).
Treasury Rate Notes
Each Treasury Rate Note will bear interest for each Interest Reset Period
at the interest rate calculated with reference to the Treasury Rate and the
Spread or Spread Multiplier, if any, specified in such Note and in the
applicable Pricing Supplement.
Unless 'Constant Maturity' is specified or unless otherwise specified in
the applicable Pricing Supplement, the 'Treasury Rate' for each Interest Reset
Period will be the rate for the auction held on the Treasury Rate Determination
Date (as defined below) for such Interest Reset Period of direct obligations of
the United States ('Treasury securities') having the Index Maturity specified in
the applicable Pricing Supplement as such rate shall be published in H.15(519)
under the heading 'U.S. Government Securities--Treasury bills--auction average
(investment)' or, in the event that such rate is not published prior to 3:00
p.m., New York City time, on the Calculation Date (as defined below) pertaining
to such Treasury Rate Determination Date, the auction average rate (expressed as
a bond equivalent on the basis of a year of 365 or 366 days, as applicable, and
applied on a daily basis) on such Treasury Rate Determination Date as otherwise
announced by the United States Department of the Treasury. In the event that the
results of the auction of Treasury securities having the specified Index
Maturity are not published or reported as provided above by 3:00 p.m., New York
City time, on such Calculation Date, or if no such auction is held on such
Treasury Rate Determination Date, then the 'Treasury Rate' for such Interest
Reset Period shall be calculated by the Calculation Agent for such Treasury Rate
Note and shall be a yield to maturity (expressed as a bond equivalent on the
basis of a year of 365 or 366 days, as applicable, and applied on a daily basis)
of the arithmetic mean of the secondary market bid rates, as of approximately
3:30 p.m., New York City time, on such Treasury Rate Determination Date, of
three leading primary United States government securities dealers selected by
such Calculation Agent for the issue of Treasury securities with a remaining
maturity closest to the specified Index Maturity; provided, however, that if the
dealers selected as aforesaid by such Calculation Agent are not quoting bid
rates as mentioned in this sentence, then the 'Treasury Rate' for such Interest
Reset Period will be the same as the Treasury Rate for the immediately preceding
Interest Reset Period (or, if there was no such Interest Reset Period, the
Initial Interest Rate).
The 'Treasury Rate Determination Date' for each Interest Reset Period will
be the day of the week in which the Interest Reset Date for such Interest Reset
Period falls on which Treasury securities would normally be auctioned. Treasury
securities are normally sold at auction on Monday of each week,
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unless that day is a legal holiday, in which case the auction is normally held
on the following Tuesday, except that such auction may be held on the preceding
Friday. If, as the result of a legal holiday, an auction is so held on the
preceding Friday, such Friday will be the Treasury Rate Determination Date
pertaining to the Interest Reset Period commencing in the next succeeding week.
If an auction date shall fall on any day that would otherwise be an Interest
Reset Date for a Treasury Rate Note, then such Interest Reset Date shall instead
be the Business Day immediately following such auction date.
If 'Constant Maturity' is specified in the applicable Pricing Supplement,
the 'Treasury Rate' for each Interest Reset Period will be the rate that is set
forth in the Federal Reserve Board publication H.15(519) opposite the caption
'U.S. Government/Securities/Treasury Constant Maturities/' in the Index Maturity
with respect to the applicable Constant Maturity Treasury Rate Determination
Date (as defined below). If the H.15(519) is not published, the 'Constant
Maturity-Treasury Rate' shall be the rate that was set forth on Telerate Page
7055, or its successor page (as determined by the Calculation Agent), on the
applicable Constant Maturity Treasury Rate Determination Date opposite the
applicable Index Maturity. If no such rate is set forth, then the Constant
Maturity Treasury Rate for such Interest Reset Period shall be established by
the Calculation Agent as follows. The Calculation Agent will contact the Federal
Reserve Board and request the Constant Maturity Treasury Rate, in the applicable
Index Maturity, for the Constant Maturity Treasury Rate Determination Date. If
the Federal Reserve Board does not provide such information, then the Constant
Maturity Treasury Rate for such Interest Reset Date will be the arithmetic mean
of bid-side quotations, expressed in terms of yield, reported by three leading
U.S. government securities dealers (one of which may be Salomon Brothers Inc),
according to their written records, as of 3:00 p.m. (New York City time) on the
Constant Maturity Treasury Rate Determination Date, for the noncallable U.S.
Treasury Note that is nearest in maturity to the Index Maturity, but not less
than exactly the Index Maturity and for the noncallable U.S. Treasury Note that
is nearest in maturity to the Index Maturity, but not more than exactly the
Index Maturity. The Calculation Agent shall calculate the Constant Maturity
Treasury Rate by interpolating to the Index Maturity based on an actual/actual
date count basis, the yield on the two Treasury Notes selected. If the
Calculation Agent cannot obtain three such adjusted quotations, the Constant
Maturity Treasury Rate for such Interest Reset Date will be the arithmetic mean
of all such quotations, or if only one such quotation is obtained, such
quotation, obtained by the Calculation Agent. In all events, the Calculation
Agent shall continue polling dealers until at least one adjusted yield quotation
can be determined.
'The Constant Maturity Treasury Rate Determination Date' shall be the tenth
Business Day prior to the Interest Reset Date for the applicable Interest Reset
Period.
The Treasury constant maturity rate for a Treasury security maturity (the
'CMT Rate') as published in H.15(519) as of any Business Day is intended to be
indicative of the yield of a U.S. Treasury security having as of such Business
Day a remaining term to maturity equivalent to such maturity. The CMT Rate as of
any Business Day is based upon an interpolation by the U.S. Treasury of the
daily yield curve of outstanding Treasury securities. This yield curve, which
relates the yield on a security to its time to maturity, is based on the
over-the-counter market bid yields on actively traded Treasury securities. Such
yields are calculated from composites of quotations reported by leading U.S.
government securities dealers, which may include Salomon Brothers Inc. Certain
constant maturity yield values are read from the yield curve. Such interpolation
from the yield curve provides a theoretical yield for a Treasury security having
ten years to maturity, for example, even if no outstanding Treasury security has
as of such date exactly ten years remaining to maturity.
The 'Calculation Date' pertaining to any Treasury Rate Determination Date
or Constant Maturity Rate Determination Date, as applicable, shall be the tenth
calendar day after such Treasury Rate Determination Date or Constant Maturity
Rate Determination Date, as applicable, or, if such a day is not a Business Day,
the next succeeding Business Day.
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AMORTIZING NOTES
The Company may from time to time offer Bearer Notes ('Amortizing Notes')
on which a portion or all the principal amount is payable prior to Stated
Maturity in accordance with a schedule, by application of a formula, or by
reference to an Index (as defined below). Further information concerning
additional terms and conditions of any Amortizing Notes, including terms for
repayment thereof will be set forth in the applicable Pricing Supplement.
INDEXED NOTES
The Company may from time to time offer Bearer Notes ('Indexed Notes') on
which certain or all interest payments (in the case of an 'Indexed Rate Note'),
and/or the principal amount payable at Stated Maturity or earlier redemption or
retirement (in the case of an 'Indexed Principal Note'), is determined by
reference to the principal amount of such Notes (or, in the case of an Indexed
Principal Note, to the amount designated in the applicable Pricing Supplement as
the 'Face Amount' of such Indexed Note) and by reference to prices, changes in
prices, or differences between prices, of securities, currencies, intangibles,
goods, articles or commodities or by such other objective price, economic or
other measures as are described in the applicable Pricing Supplement (the
'Index'). The issuance of Indexed Notes denominated in German deutsche marks
will be made in compliance with the policy of the German Central Bank regarding
the indexation of deutsche mark denominated debt obligations. A description of
the Index used in any determination of an interest or principal payment, and the
method or formula by which interest or principal payments will be determined by
reference to such Index, will be set forth in the applicable Pricing Supplement.
In the case of a Fixed Rate Note, Floating Rate Note or Indexed Rate Note
that is also an Indexed Principal Note, the amount of any interest payment will
be determined by reference to the Face Amount of such Indexed Note unless
otherwise specified in the applicable Pricing Supplement. In the case of an
Indexed Principal Note, the principal amount payable at Stated Maturity or any
earlier redemption or repayment of the Indexed Note may be different from the
Face Amount.
If the determination of the Index on which any interest payment or the
principal amount of an Indexed Note is calculated or announced by a third party,
which may be Salomon Brothers Inc or another affiliate of the Company, and such
third party either suspends the calculation or announcement of such Index or
changes the basis upon which such Index is calculated (other than changes
consistent with policies in effect at the time such Indexed Note was issued and
permitted changes described in the applicable Pricing Supplement), then such
Index shall be calculated for purposes of such Indexed Note by another third
party selected by the Company, which may be Salomon Brothers Inc or another
affiliate of the Company, subject to the same conditions and controls as applied
to the original third party. If for any reason such Index cannot be calculated
on the same basis and subject to the same conditions and controls as applied to
the original third party, then the indexed interest payments, if any, or any
indexed principal amount of such Indexed Note shall be calculated in the manner
set forth in the applicable Pricing Supplement. Any determination of such third
party shall in the absence of manifest error be binding on all parties.
OPTIONAL REDEMPTION, REPAYMENT AND REPURCHASE
The Pricing Supplement relating to each Bearer Note will indicate either
that such Note cannot be redeemed (other than as provided under 'Tax Redemption'
and 'Special Tax Redemption' below) prior to its Stated Maturity or that such
Note will be redeemable at the option of the Company in whole or in part, and
the date or dates (each an 'Optional Redemption Date') on which such Note may be
redeemed and the price (the 'Redemption Price') at which (together with accrued
interest to such Optional Redemption Date) such Note may be redeemed on each
such Optional Redemption Date. The Company may exercise such option with respect
to a Bearer Note by notifying the Trustee for such Note at least 45 days prior
to any Optional Redemption Date. At least 30 but not more than 60 days prior to
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the date of redemption, such Trustee shall provide notice of such redemption to
the Holder of such Bearer Note in accordance with 'Notices' below. In the event
of redemption of a Bearer Note in part only, a new Note or Notes for the
unredeemed portion thereof shall be issued to the Holder thereof upon the
cancellation thereof. Bearer Notes redeemed prior to Stated Maturity must be
presented for payment together with all unmatured Coupons, if any, appertaining
thereto, failing which the amount of any missing unmatured Coupon will be
deducted from the sum due for payment. The Bearer Notes will not be subject to
any sinking fund.
The Pricing Supplement relating to each Bearer Note will also indicate
whether the Holder of such Note will have the option to elect repayment of such
Note by the Company prior to its Stated Maturity, and, if so, such Pricing
Supplement will specify the date or dates on which such Note may be repaid (each
an 'Optional Repayment Date') and the price (the 'Optional Repayment Price') at
which, together with accrued interest to such Optional Repayment Date, such Note
may be repaid on each such Optional Repayment Date. Bearer Notes that are to be
repaid prior to Stated Maturity must be presented for payment together with all
unmatured Coupons, if any, pertaining thereto, failing which the amount of any
missing unmatured Coupon will be deducted from the sum due for payment.
In order for a Bearer Note to be repaid, the Principal Paying Agent must
receive the Bearer Note at least 30 but not more than 45 days prior to an
Optional Repayment Date. Any tender of a Bearer Note for repayment shall be
irrevocable. The repayment option may be exercised by the Holder of a Bearer
Note for less than the entire principal amount of such Note, provided that the
principal amount of such Note remaining outstanding after repayment is an
authorized denomination. Upon such partial repayment, such Bearer Note shall be
cancelled and a new Note or Notes for the remaining principal amount thereof
shall be issued to the Holder of such repaid Note.
If a Bearer Note is represented by a Global Security, the Depositary will
be the Holder of such Note and therefore will be the only entity that can
exercise a right to repayment. In order to ensure that the Depositary will
timely exercise a right to repayment with respect to a particular Bearer Note,
the beneficial owner of such Note must instruct the broker or other direct or
indirect participant through which it holds an interest in such Note to notify
the Depositary of its desire to exercise a right to repayment. Different firms
have different cut-off times for accepting instructions from their customers
and, accordingly, each beneficial owner should consult the broker or other
direct or indirect participant through which it holds an interest in a Bearer
Note in order to ascertain the cut-off time by which such an instruction must be
given in order for timely notice to be delivered to the Depositary.
Notwithstanding anything in this Prospectus Supplement to the contrary, if
a Bearer Note is an Original Issue Discount Note (other than an Indexed Note),
the amount payable on such Note in the event of redemption or repayment prior to
its Stated Maturity (other than pursuant to an optional redemption by the
Company at a stated Redemption Price) shall be the Amortized Face Amount of such
Note as of the date of redemption or the date or repayment, as the case may be.
The Amortized Face Amount of a Note on any date shall be the amount equal to (i)
the Issue Price set forth on the face of the applicable Pricing Supplement plus
(ii) that portion of the difference between such Issue Price and the stated
principal amount of such Note that has accrued by such date at (x) the Bond
Yield to Maturity set forth on the face of the applicable Pricing Supplement or
(y) if so specified in the applicable Pricing Supplement, the Bond Yield to Call
set forth on the face thereof (computed in each case in accordance with
generally accepted United States bond yield computation principles), provided,
however, that in no event shall the Amortized Face Amount of a Note exceed its
stated principal amount. The Bond Yield to Call listed on the face of a Pricing
Supplement shall be computed on the basis of the first occurring Optional
Redemption Date with respect to such Note and the amount payable on such
Optional Redemption Date. In the event that any such Note is not redeemed on
such first occurring Optional Redemption Date, the Bond Yield to Call with
respect to such Note shall be recomputed on such Optional Redemption Date on the
basis of the next occurring Optional Redemption Date and the
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amount payable on such Optional Redemption Date, and shall continue to be so
recomputed on each succeeding Opional Redemption Date until the Note is so
redeemed.
The Company may at any time purchase Bearer Notes at any price in the open
market or otherwise. Bearer Notes so purchased by the Company may, at the
discretion of the Company, be held or resold (in which case the Company will
comply with applicable selling restrictions contained in the Treasury
Regulations as described herein) or surrendered to the Trustee for such Notes
for cancellation (together with any unmatured Coupons attached thereto or
purchased therewith).
TAX REDEMPTION
The Bearer Notes of a series may be redeemed at the option of the Company
in whole, but not in part, at any time on giving at least 30 but not more than
60 days' notice in accordance with 'Notices' below (which notice shall be
irrevocable), at the respective Redemption Prices thereof, if the Company has or
will become obligated to pay additional interest on such Notes as described
under 'Payment of Additional Interest' below as a result of any change in, or
amendment to, the laws (or any regulations or rulings promulgated thereunder) of
the United States or any political subdivision or taxing authority thereof or
therein, or any change in the application or official interpretation of such
laws, regulations or rulings, which change or amendment becomes effective on or
after their respective Original Issue Dates, and such obligation cannot be
avoided by the Company taking reasonable measures available to it; provided that
no such notice of redemption shall be given earlier than 90 days prior to the
earliest date on which the Company would be obligated to pay such additional
interest were a payment in respect of such Notes then due. Prior to the
publication of any notice of redemption pursuant to this paragraph, the Company
shall deliver to the Trustee for the Notes to be redeemed a certificate stating
that the Company is entitled to effect such redemption and setting forth a
statement of facts showing that the conditions precedent to the right of the
Company so to redeem have occurred, and an opinion of independent counsel to the
effect that the Company has or will become obligated to pay such additional
interest as a result of such change or amendment (Section 1302).
PAYMENT OF ADDITIONAL INTEREST
The Company will, subject to the exceptions and limitations set forth
below, pay as additional interest to the Holder of a Bearer Note or Coupon that
is a United States Alien (as defined below) such amounts as may be necessary so
that every net payment on such Note or Coupon, after deduction or withholding
for or on account of any present or future tax, assessment or other governmental
charge imposed upon or as a result of such payment by the United States (or any
political subdivision or taxing authority thereof or therein), will not be less
than the amount provided in such Note or Coupon to be then due and payable.
However, the Company will not be required to make any such payment of additional
interest to such Holder for or on account of:
(a) any tax, assessment or other governmental charge that would not
have been imposed but for (i) the existence of any present or former
connection between such Holder (or between a fiduciary, settlor or
beneficiary of, or a person holding a power over, such Holder, if such
Holder is an estate or a trust, or a member or shareholder of such Holder,
if such Holder is a partnership or a corporation) and the United States,
including, without limitation, such Holder (or such fiduciary, settlor,
beneficiary, person holding a power, member or shareholder) being or having
been a citizen or resident thereof or being or having been engaged in trade
or business or present therein or having or having had a permanent
establishment therein or (ii) such Holder's past or present status as a
passive foreign investment company, a personal holding company, a foreign
personal holding company, a controlled foreign corporation for United
States tax purposes or a private foundation or other tax-exempt
organization with respect to the United States or as a corporation that
accumulates earnings to avoid United States federal income tax;
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(b) any estate, inheritance, gift, sales, transfer or personal
property tax or any similar tax, assessment or other governmental charge;
(c) any tax, assessment or other governmental charge that would not
have been imposed but for the presentation by the Holder of a Bearer Note
or Coupon for payment more than 15 days after the date on which such
payment became due and payable or on which payment thereof was duly
provided for, whichever occurred later;
(d) any tax, assessment or other governmental charge that is payable
otherwise than by deduction or withholding from a payment on a Bearer Note
or Coupon;
(e) any tax, assessment or other governmental charge required to be
deducted or withheld by any Paying Agent from a payment on a Bearer Note or
Coupon, if such payment can be made without such deduction or withholding
by any other Paying Agent;
(f) any tax, assessment or other governmental charge that would not
have been imposed but for a failure to comply with any applicable
certification, documentation, information or other reporting requirement
concerning the nationality, residence, identity or connection with the
United States of the Holder or beneficial owner of a Bearer Note or Coupon
if, without regard to any tax treaty, such compliance is required by
statute or regulation of the United States as a pre-condition to relief or
exemption from such tax, assessment or other governmental charge; or
(g) any tax, assessment or other governmental charge imposed on a
Holder that actually or constructively owns ten percent or more of the
combined voting power of all classes of stock of the Company (taking into
account applicable attribution of ownership rules under Section 871(h)(3)
of the Internal Revenue Code of 1986, as amended (the 'Code')) or is a
controlled foreign corporation related to the Company through stock
ownership;
nor shall such additional interest be paid with respect to a payment on a Bearer
Note or Coupon to a Holder that is a fiduciary or partnership or other than the
sole beneficial owner of such payment to the extent a beneficiary or settlor
with respect to such fiduciary or a member of such partnership or a beneficial
owner would not have been entitled to the additional interest had such
beneficiary, settlor, member or beneficial owner been the Holder of such Bearer
Note or Coupon (Section 1202).
The term 'United States Alien' means any person who, for United States
federal income tax purposes, is a foreign corporation, a nonresident alien
individual, a nonresident alien fiduciary of a foreign estate or trust, or a
foreign partnership one or more of the members of which is, for United States
federal income tax purposes, a foreign corporation, a nonresident alien
individual or a nonresident alien fiduciary of a foreign estate or trust
(Section 101).
SPECIAL TAX REDEMPTION
If the Company shall determine that any payment made outside the United
States by the Company or any of its Paying Agents in respect of any Bearer Note
of a series that is not a Floating Rate Note or Coupon appertaining thereto (an
'Affected Security') would, under any present or future laws or regulations of
the United States, be subject to any certification, documentation, information
or other reporting requirement of any kind, the effect of which requirement is
the disclosure to the Company, any Paying Agent or any governmental authority of
the nationality, residence or identity of a beneficial owner of such Affected
Security that is a United States Alien (other than such a requirement (a) that
would not be applicable to a payment made by the Company or any one of its
Paying Agents (i) directly to the beneficial owner or (ii) to a custodian,
nominee or other agent of the beneficial owner or (b) that can be satisfied by
such custodian, nominee or other agent certifying to the effect that the
beneficial owner is a United States Alien; provided that, in any case referred
to in clause (a) (ii) or (b), payment by the custodian, nominee or agent to the
beneficial owner is not otherwise subject to any such requirement), then the
Company shall elect either (x) to redeem such Affected Securities in whole, but
not in part, at the Redemption Price thereof, or (y) if the conditions described
in the next succeeding paragraph are
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satisfied, to pay the additional interest specified in such paragraph. The
Company shall make such determination as soon as practicable and publish prompt
notice thereof (the 'Determination Notice') stating the effective date of such
certification, documentation, information or other reporting requirement,
whether the Company elects to redeem the Affected Securities or to pay the
additional interest specified in the next succeeding paragraph and (if
applicable) the last date by which the redemption of the Affected Securities
must take place, as described in the next succeeding sentence. If the Affected
Securities are to be redeemed as described in this paragraph, the redemption
shall take place on such date, not later than one year after the publication of
the Determination Notice, as the Company shall specify by notice given to the
Trustee for the Notes to be redeemed at least 60 days before the Redemption
Date. Notice of such redemption shall be given to the Holders of the Affected
Securities at least 30 but not more than 60 days prior to the Redemption Date.
Notwithstanding the foregoing, the Company shall not so redeem the Affected
Securities if the Company shall subsequently determine, at least 30 days prior
to the Redemption Date, that subsequent payments on the Affected Securities
would not be subject to any such certification, documentation, information or
other reporting requirement, in which case the Company shall publish prompt
notice of such subsequent determination and any earlier redemption notice given
as described in this paragraph shall be revoked and of no further effect. Prior
to the publication of any Determination Notice as described in this paragraph,
the Company shall deliver to the Trustee for the Notes to be redeemed a
certificate stating that the Company is obligated to make such determination and
setting forth a statement of facts showing that the conditions precedent to the
obligation of the Company to redeem the Affected Securities or to pay the
additional interest specified in the next succeeding paragraph have occurred,
and an opinion of independent counsel to the effect that such conditions have
occurred.
If and so long as the certification, documentation, information or other
reporting requirement referred to in the preceding paragraph would be fully
satisfied by payment of a backup withholding tax or similar charge, the Company
may elect to pay as additional interest such amounts as may be necessary so that
every net payment made outside the United States following the effective date of
such requirement by the Company or any of its Paying Agents in respect of any
Affected Security of which the beneficial owner is a United States Alien (but
without any requirement that the nationality, residence or identity of such
beneficial owner be disclosed to the Company, any Paying Agent or any
governmental authority), after deduction or withholding for or on account of
such backup withholding tax or similar charge (other than a backup withholding
tax or similar charge that (i) would not be applicable in the circumstances
referred to in the parenthetical clause of the first sentence of the preceding
paragraph or (ii) is imposed as a result of presentation of such Affected
Security for payment more than 15 days after the date on which such payment
became due and payable or on which payment thereof was duly provided for,
whichever occurred later), will not be less than the amount provided in such
Affected Security to be then due and payable. If the Company elects to pay
additional interest as described in this paragraph, then the Company shall have
the right thereafter to redeem the Affected Securities at any time in whole, but
not in part, at the Redemption Price thereof, subject to the provisions
described in the last three sentences of the immediately preceding paragraph. If
the Company elects to pay additional interest as described in this paragraph and
the condition specified in the first sentence of this paragraph should no longer
be satisfied, then the Company shall redeem the Affected Securities in whole,
but not in part, at the Redemption Price thereof, subject to the provisions of
the last three sentences of the immediately preceding paragraph. Any redemption
payments made by the Company as described in the two immediately preceding
sentences shall be subject to the continuing obligation of the Company to pay
additional interest as described in this paragraph (Section 1302).
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DEFEASANCE
The defeasance provisions described in the Prospectus will not be
applicable to the Bearer Notes.
REPLACEMENT OF BEARER NOTES AND COUPONS
If an individual Bearer Note or Coupon is mutilated, destroyed, stolen or
lost it may be replaced at the specified office of the Principal Paying Agent
for such Note in London; or, so long as the Bearer Notes are listed on the
Luxembourg Stock Exchange, at the specified office of the Paying Agent in
Luxembourg, upon payment by the claimant of such expenses as may be incurred in
connection therewith and, in the case of destruction, theft or loss, on such
terms as to evidence and indemnity as the Company or the Trustee for such Note
may reasonably require. Mutilated or defaced Bearer Notes or Coupons must be
surrendered before replacements will be issued.
NOTICES
All notices to Holders of Bearer Notes will be deemed to have been duly
given if published on two separate Business Days in a leading London daily
newspaper (which is expected to be the Financial Times) and, so long as the
Bearer Notes are listed on the Luxembourg Stock Exchange and the rules of such
exchange so requires, in Luxembourg in a newspaper of general circulation in
Luxembourg (which is expected to be the Luxemburger Wort). Such notices shall be
deemed to have been given on the date of the first such publication.
UNCLAIMED MONIES
All monies paid by the Company to a Trustee or a Paying Agent for the
payment of principal of or any premium or interest on any Bearer Note or for the
payment of any Coupon which remain unclaimed at the end of two years after such
payments shall have become due and payable will be repaid to the Company, at its
written request, and the Holder of such Note or Coupon will thereafter look only
to the Company for payment, such payment to be made only outside the United
States.
GOVERNING LAW
The Indenture and the Notes will be governed by, and construed in
accordance with, the laws of the State of New York.
CURRENCY RISKS
EXCHANGE RATES AND EXCHANGE CONTROLS
An investment in a Bearer Note having a Specified Currency other than the
currency of the country in which a purchaser is resident or the currency
(including ECU and any other such composite currency) in which a purchaser
conducts its business or activities (the 'home currency') entails significant
risks that are not associated with a similar investment in a security
denominated in the home currency. Such risks include, without limitation, the
possibility of significant changes in rates of exchange between the home
currency and such Specified Currency and the possibility of the imposition or
modification of foreign exchange controls with respect to such Specified
Currency. Such risks generally depend on factors over which the Company has no
control and which cannot be readily foreseen, such as economic and political
events and the supply of and demand for the relevant currencies. In recent
years, rates of exchange for certain currencies have been highly volatile, and
such volatility may be expected in the future. Fluctuations in any particular
exchange rate that have occurred in the past are not necessarily indicative,
however, of fluctuations in the rate that may occur during the term of any
Bearer Note. Depreciation of the Specified Currency for a Bearer Note against
the relevant home currency would result in a decrease in the effective yield of
such Note below its coupon rate and, in certain circumstances, could result in a
substantial loss to the investor on a home currency basis.
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Governments have from time to time imposed, and may in the future impose,
exchange controls that could affect exchange rates as well as the availability
of a Specified Currency for making payments in respect of Bearer Notes
denominated in such currency. At present, the Company has identified the
following currencies in which payments of principal, premium and interest on
Bearer Notes may be made: Australian dollars, Canadian dollars, Danish kroner,
English pounds sterling, French francs, German deutsche marks, Hong Kong
dollars, Italian lire, Japanese yen, New Zealand dollars, Pounds sterling, U.S.
dollars and ECU. However, the Company may determine at any time to issue Bearer
Notes with Specified Currencies other than those listed. There can be no
assurances that exchange controls will not restrict or prohibit payments of
principal, premium or interest in any Specified Currency. Even if there are no
actual exchange controls, it is possible that, on a payment date with respect to
any particular Bearer Note, the currency in which amounts then due in respect of
such Note are payable would not be available to the Company. In that event, the
Company will make such payments in the manner set forth under 'Payment Currency'
below.
THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS DO NOT DESCRIBE
ALL THE RISKS OF AN INVESTMENT IN BEARER NOTES DENOMINATED IN A CURRENCY OTHER
THAN A PROSPECTIVE PURCHASER'S HOME CURRENCY, AND THE COMPANY DISCLAIMS ANY
RESPONSIBILITY TO ADVISE PROSPECTIVE PURCHASERS OF SUCH RISKS AS THEY EXIST AT
THE DATE OF THIS PROSPECTUS SUPPLEMENT OR AS SUCH RISKS MAY CHANGE FROM TIME TO
TIME. PROSPECTIVE PURCHASERS SHOULD CONSULT THEIR OWN FINANCIAL AND LEGAL
ADVISORS AS TO THE RISKS ENTAILED BY AN INVESTMENT IN BEARER NOTES DENOMINATED
IN A CURRENCY OTHER THAN THE PURCHASER'S HOME CURRENCY. SUCH NOTES ARE NOT AN
APPROPRIATE INVESTMENT FOR PERSONS WHO ARE UNSOPHISTICATED WITH RESPECT TO
FOREIGN CURRENCY TRANSACTIONS.
Any Pricing Supplement relating to Bearer Notes having a Specified Currency
other than U.S. dollars will contain a description of any material exchange
controls affecting such currency and any other required information concerning
such currency.
VALUE OF ECU
The ECU for the purpose of any Notes denominated or payable in ECU ('ECU')
is the same as the ECU that is from time to time used as the unit of account of
the European Communities ('EC'). Changes to the ECU may be made by the EC, in
which event the ECU will change accordingly.
PAYMENT CURRENCY
Except as set forth below, if payment in respect of a Bearer Note is
required to be made in a Specified Currency other than U.S. dollars and such
currency is unavailable due to the imposition of exchange controls or other
circumstances beyond the Company's control or is no longer used by the
government of the country issuing such currency or for the settlement of
transactions by public institutions of or within the international banking
community, then all payments in respect of such Note shall be made in U.S.
dollars until such currency is again available or so used. The amounts so
payable on any date in such currency shall be converted into U.S. dollars on the
basis of the most recently available Market Exchange Rate for such currency or
as otherwise indicated in the applicable Pricing Supplement. Any payment in
respect of such Note made under such circumstances in U.S. dollars will not
constitute an Event of Default under the Indenture under which such Note shall
have been issued.
If payment in respect of a Bearer Note is required to be made in ECU and
the ECU is not then used in the European Monetary System, then the Trustee for
such Note shall, without liability on its part, choose a component currency (the
'Payment Currency') of the ECU in which all payments in respect of such Note and
any related Coupons shall be made until the ECU is again so used. Notice of the
Payment Currency selected by such Trustee shall be given in accordance with
'Description of Bearer Notes--Notices' above. The amount of each payment in such
Payment Currency shall be computed on
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the basis of the equivalent of the ECU in that currency, determined as described
below, as of the fourth Luxembourg business day prior to the date on which such
payment is due. Any payment in respect of such Note made under such
circumstances in the Payment Currency will not constitute an Event of Default
under the Indenture under which such Note shall have been issued.
Notwithstanding the foregoing, on the first Luxembourg business day on
which the ECU is no longer used in the European Monetary System, each Trustee
shall, without liability on its part, choose a Payment Currency in which all
payments in respect of Bearer Notes and Coupons for which such Trustee serves as
Trustee denominated in ECU having a due date prior thereto but not yet presented
for payment are to be made. The amount of each payment in such Payment Currency
shall be computed on the basis of the equivalent of the ECU in that currency,
determined as described below, as of such first Luxembourg business day. Any
payment in respect of such Notes made under such circumstances in the Payment
Currency will not constitute an Event of Default under the Indenture under which
such Notes shall have been issued.
The equivalent of the ECU in the relevant Payment Currency as of any date
(the 'Day of Valuation') shall be determined by the Luxembourg Stock Exchange on
the following basis. The component currencies of the ECU for this purpose (the
'Components') shall be the currency amounts that were components of the ECU when
the ECU was most recently used in the European Monetary System or for the
settlement of transactions by public institutions of or within the EU. The
equivalent of the ECU in the Payment Currency shall be calculated by, first,
aggregating the U.S. dollar equivalents of the Components, and then, using the
rate used for determining the U.S. dollar equivalent of the Components in the
Payment Currency as set forth below, calculating the equivalent in the Payment
Currency of such aggregate amount of U.S. dollars.
The U.S. dollar equivalent of each of the Components for each series of
Bearer Notes shall be determined by the Luxembourg Stock Exchange on the basis
of the middle spot delivery quotations prevailing at 2:30 p.m. Luxembourg time
on the Day of Valuation, as obtained by the Luxembourg Stock Exchange from one
or more major banks, selected by the Trustee for such Notes (with the approval
of the Company), in the country of issue of the Component in question.
If the official unit of any component currency of the ECU is altered by way
of combination or subdivision, the number of units of that currency as a
Component shall be divided or multiplied in the same proportion. If two or more
component currencies are consolidated into a single currency, the amounts of
those currencies as Components shall be replaced by an amount in such single
currency equal to the sum of the amounts of the consolidated component
currencies expressed in such single currency. If any component currency is
divided into two or more currencies, the amount of that currency as a Component
shall be replaced by amounts of such two or more currencies, each of which shall
be equal to the amount of the former component currency divided by the number of
currencies into which that currency was divided.
If no direct quotations are available for a Component on a Day of Valuation
from any of the banks selected by a Trustee (with the approval of the Company)
for this purpose, because foreign exchange markets are closed in the country of
issue of that Component, or for any other reason, in computing the U.S. dollar
equivalent of such Component the Luxembourg Stock Exchange shall (except as
provided below) use the most recent direct quotations for such Component
obtained by it; provided that such most recent quotations may be used only if
they were prevailing in the country of issue not more than two Luxembourg
business days before such Day of Valuation. Beyond such period of two Luxembourg
business days, the Luxembourg Stock Exchange shall determine the U.S. dollar
equivalent of such Component on the basis of cross rates derived from the middle
spot delivery quotations for such Component and for the U.S. dollar prevailing
at 2:30 p.m. Luxembourg time on such Day of Valuation, as obtained by the
Luxembourg Stock Exchange from one or more major banks, selected by such Trustee
(with the approval of the Company), in a country other than the country of issue
of such Component. Notwithstanding the foregoing, within such period of two
Luxembourg business days, the Luxembourg Stock Exchange shall determine the U.S.
dollar equivalent of such Component on the
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basis of such cross rates if such Trustee and the Company judge that the
equivalent so calculated is more representative than the U.S. dollar equivalent
calculated on the basis of such most recent direct quotations. Unless otherwise
specified by such Trustee, if there is more than one market for dealing in any
component currency by reason of foreign exchange regulations or for any other
reason, the market to be referred to in respect of such currency shall be that
upon which a non-resident issuer of securities denominated in such currency
would purchase such currency in order to make payments in respect of such
securities.
All determinations referred to above made by a Trustee or the Luxembourg
Stock Exchange shall be at their respective sole discretion (except to the
extent expressly provided herein that any determination made by a Trustee is
subject to the approval of the Company) and shall, in the absence of manifest
error, be conclusive for all purposes and binding on holders of Bearer Notes,
and such Trustee shall have no liability therefor.
FOREIGN CURRENCY JUDGMENTS
The Notes will be governed by and construed in accordance with the law of
the State of New York. Courts in the United States customarily have not rendered
judgments for money damages denominated in any currency other than the U.S.
dollar. A 1987 amendment to the Judiciary Law of the State of New York provides,
however, that an action based upon an obligation denominated in a currency other
than U.S. dollars will be rendered in the foreign currency of the underlying
obligation and converted into U.S. dollars at the rate of exchange prevailing on
the date of the entry of the judgment or decree.
RISKS OF INDEXED NOTES
An investment in Indexed Notes may entail significant risks that are not
associated with a similar investment in a debt instrument that has a fixed
principal amount, is denominated in U.S. dollars and bears interest at either a
fixed rate or a floating rate determined by reference to nationally published
interest rate references. The risks of a particular Indexed Note will depend on
the terms of such Indexed Note, but may include, without limitation, the
possibility of significant changes in the prices of securities, currencies,
intangibles, goods, articles or commodities or of other objective price,
economic or other measures making up the relevant Index (the 'Underlying
Assets'). Such risks generally depend on factors over which the Company has no
control and which cannot readily be foreseen, such as economic and political
events and the supply of and demand for the Underlying Assets. In recent years,
currency exchange rates and prices for various Underlying Assets have been
highly volatile, and such volatility may be expected in the future. Fluctuations
in any such rates or prices that have occurred in the past are not necessarily
indicative, however, of fluctuations that may occur during the term of any
Indexed Note.
In considering whether to purchase Indexed Notes, investors should be aware
that the calculation of amounts payable in respect of Indexed Notes may involve
reference to an Index determined by an affiliate of the Company or to prices
which are published solely by third parties or entities which are not subject to
regulation under the laws of the United States.
THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS DO NOT DESCRIBE
ALL THE RISKS OF AN INVESTMENT IN INDEXED NOTES, AND THE COMPANY DISCLAIMS ANY
RESPONSIBILITY TO ADVISE PROSPECTIVE PURCHASERS OF SUCH RISKS AS THEY EXIST AT
THE DATE OF THIS PROSPECTUS SUPPLEMENT OR AS SUCH RISKS MAY CHANGE FROM TIME TO
TIME. THE RISK OF LOSS AS A RESULT OF THE LINKAGE OF PRINCIPAL OR INTEREST
PAYMENTS ON INDEXED NOTES TO AN INDEX AND TO THE UNDERLYING ASSETS CAN BE
SUBSTANTIAL. PROSPECTIVE PURCHASERS SHOULD CONSULT THEIR OWN FINANCIAL AND LEGAL
ADVISORS AS TO THE RISKS ENTAILED BY AN INVESTMENT IN INDEXED NOTES. AN INDEXED
NOTE IS NOT AN APPROPRIATE INVESTMENT FOR PERSONS WHO ARE UNSOPHISTICATED WITH
RESPECT TO TRANSACTIONS IN THE UNDERLYING ASSETS OF ANY INDEX RELEVANT TO THAT
INDEXED NOTE.
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<PAGE>
TAXATION IN THE UNITED STATES
Under current United States Federal income and estate tax law, (a) payment
on a Bearer Note or Coupon by the Company or any paying agent to a holder that
is a United States Alien will not be subject to withholding of the United States
Federal income tax provided that, with respect to payments of interest,
including original issue discount, the holder does not actually or
constructively own ten percent or more of the combined voting power of all
classes of stock of the Company (taking into account the applicable attribution
of ownership rules under Section 871(h)(3) of the Code) and is not a controlled
foreign corporation related to the Company through stock ownership; (b) a holder
of a Bearer Note or Coupon that is a United States Alien will not be subject to
United States Federal income tax on gain realized on the sale, exchange or
redemption of such Note or Coupon, provided that such holder does not have a
connection with or status with respect to the United States described in clause
(a) under 'Payment of Additional Interest'; (c) a beneficial owner of a Bearer
Note or Coupon that is a United States Alien will not be required to disclose
its nationality, residence or identity to the Company, a paying agent (acting in
its capacity as such) or any United States governmental authority in order to
receive payment on such Note or Coupon from the Company or a paying agent
outside the United States (although the beneficial owner of an interest in a
Temporary Global Note will be required to provide a Certificate of Non-U.S.
Beneficial Ownership to Euroclear or Cedel in order to exchange such interest or
to receive interest payments with respect thereto, as described in 'Description
of Bearer Notes--Payments and Paying Agents' above); and (d) a Bearer Note or
Coupon will not be subject to United States Federal estate tax as a result of
the death of a holder who is not a citizen or resident of the United States at
the time of death, provided that such holder did not at the time of death
actually or constructively own ten percent or more of the combined voting power
of all classes of stock of the Company and, at the time of such holder's death,
payments of interest on such Note or Coupon would not have been effectively
connected with the conduct by such holder of a trade or business in the United
States.
Special tax considerations may apply to certain Indexed Notes or any Notes
providing for contingent payments. Any such considerations will be described in
the applicable Pricing Supplement.
United States information reporting requirements and backup withholding tax
will not apply to payments on a Bearer Note or Coupon made outside the United
States by the Company or any paying agent (acting in its capacity as such) to a
holder that is a United States Alien. Information reporting requirements and
backup withholding tax also will not apply to any payment on a Bearer Note or
Coupon outside the United States by a foreign office of a custodian, nominee or
other agent of the beneficial owner of such Note or Coupon, provided that such
custodian, nominee or agent (i) is not a U.S. Person, (ii) derives less than 50%
of its gross income for certain periods from the conduct of a trade or business
in the United States and (iii) is not a controlled foreign corporation as to the
United States (a person described in (i), (ii) and (iii) being hereinafter
referred to as a 'foreign controlled person'). Payment in respect of a Bearer
Note or Coupon outside the United States to the beneficial owner thereof by a
foreign office of any custodian, nominee or agent that is not a foreign
controlled person will not be subject to backup withholding tax, but will be
subject to information reporting requirements unless such custodian, nominee or
agent has documentary evidence in its records that the beneficial owner is a
United States Alien or the beneficial owner otherwise establishes an exemption.
Information reporting requirements and backup withholding tax will not
apply to any payment of the proceeds of the sale of a Bearer Note or Coupon
effected outside the United States by a foreign office of a 'broker' (as defined
in applicable Treasury regulations), provided that such broker is a foreign
controlled person. Payment of the proceeds of the sale of a Bearer Note or
Coupon effected outside the United States by a foreign office of any broker that
is not a foreign controlled person will not be subject to backup withholding
tax, but will be subject to information reporting requirements unless such
broker has documentary evidence in its records that the beneficial owner is a
United States Alien and certain other conditions are met, or the beneficial
owner otherwise establishes an exemption.
S-29
<PAGE>
PLAN OF DISTRIBUTION
The Bearer Notes are being offered on a continuous basis by the Company
through the Agents, each of which has agreed to use its reasonable efforts to
solicit orders to purchase Bearer Notes. The Company will have the sole right to
accept orders to purchase Bearer Notes and may reject proposed purchases in
whole or in part. Each Agent shall have the right, in its discretion reasonably
exercised and without notice to the Company, to reject any proposed purchase of
Bearer Notes in whole or in part. The Company will pay each Agent a commission
of from not more than .125% to not more than .750% of the principal amount of
Bearer Notes sold through it, depending upon the Stated Maturity.
The Company may also sell Bearer Notes at a discount to an Agent for its
own account or for resale to one or more purchasers at varying prices related to
prevailing market prices at the time of resale or, if set forth in the
applicable Pricing Supplement, at a fixed public offering price, all as
determined by the Agent. After any initial public offering of Bearer Notes to be
resold to purchasers at a fixed public offering price, the public offering price
and any concession or discount may be changed. In addition, an Agent may offer
Bearer Notes purchased by it as principal to other dealers. Bearer Notes sold by
an Agent to a dealer may be sold at a discount and, unless otherwise specified
in the applicable Pricing Supplement, such discount allowed will not be in
excess of the discount received by the Agent from the Company. Unless otherwise
specified in the applicable Pricing Supplement, any Bearer Note purchased by an
Agent as principal will be purchased at 100% of the principal amount or face
amount thereof less a percentage equal to the commission applicable to an agency
sale of a Bearer Note of identical maturity.
In compliance with United States Federal income tax laws and regulations,
the Company and each Agent have agreed that in connection with the original
issuance of any Bearer Note and during the period ending 40 days after the
Original Issue Date of such Note they will not offer, sell or deliver such Note,
directly or indirectly, to a U.S. Person or to any person within the United
States and its possessions, except to the extent permitted under U.S. Treasury
regulations. Under those regulations, Bearer Notes may be offered and sold
during that period to international organizations, to foreign central banks and
to foreign branches of U.S. financial institutions that satisfy requirements
prescribed by the regulations. Confirmations sent by an Agent in connection with
sales of Bearer Notes need not contain certain purchaser representations.
The Bearer Notes have not been and will not be registered under the
Securities and Exchange Law of Japan (the 'Securities and Exchange Law').
Accordingly, each of the Agents will represent and agree that it has not,
directly or indirectly, offered or sold and will not, directly or indirectly,
offer or sell any Bearer Notes in Japan or to a resident of Japan except
pursuant to an exemption from the registration requirements of, and otherwise in
compliance with the Securities and Exchange Law and other relevant laws and
regulations of Japan. As used in this paragraph, 'resident of Japan' means any
person resident in Japan, including any corporation or other entity organized
under the laws of Japan or located in Japan.
Each Agent will agree that:
1. it has not offered or sold and will not offer or sell prior to the
date six months after their date of issue any Bearer Notes, having a
maturity of one year or greater, to persons in the United Kingdom, except
to persons whose ordinary activities involve them in acquiring, holding,
managing or disposing of investments (as principal or agent) for the
purposes of their businesses or otherwise in circumstances that have not
resulted and will not result in an offer to the public in the United
Kingdom within the meaning of the Public Offers of Securities Regulations
1995;
2. it has complied with and will comply with all applicable provisions
of the Financial Services Act 1986 with respect to anything done by it in
relation to the Bearer Notes in, from or otherwise involving the United
Kingdom; and
3. it has only issued or passed on and will only issue or pass on in
the United Kingdom any document received by it in connection with the issue
of the Bearer Notes to a person who is of a kind described in Article 11(3)
of the Financial Services Act 1986 (Investment Advertisements)
S-30
<PAGE>
(Exemptions) Order 1995 or is a person to whom such document may otherwise
lawfully be issued or passed on.
Bearer Notes that are denominated in German deutsche marks will be offered
by the Company through Salomon Brothers AG. Each issue of Bearer Notes
denominated or payable in, or linked to, German deutsche marks will take place
only in compliance with the guidelines of the German central bank regarding the
issue of debt securities denominated in German deutsche marks. In particular,
only credit institutions domiciled in Germany will act as dealers in relation to
such Notes except in the case of a syndicated issue of Bearer Notes denominated
in German deutsche marks (where only the lead manager specified in the Pricing
Supplement need be such a credit institution). Each issue of Indexed Notes
denominated in German deutsche marks will be made in compliance with the policy
of the German central bank regarding the indexation of debt obligations
denominated in German deutsche marks of non-German issuers.
There can be no assurance as to the existence of a secondary market for any
Bearer Notes, or that the Bearer Notes will be sold.
An Agent, whether acting as agent or principal, may be deemed to be an
'underwriter' within the meaning of the Securities Act. The Company has agreed
to indemnify the Agents against certain liabilities, including liabilities under
the Securities Act, or to contribute to payments that the Agent may be required
to make in respect thereof.
In addition to the Bearer Notes being offered through the Agents as
described herein, Registered Notes that may have terms identical or similar to
the terms of the Bearer Notes may be concurrently offered by the Company on a
continuous basis in the United States by Salomon Brothers Inc, as U.S. Agent
pursuant to the Global Selling Agency Agreement between the Company, Salomon
Brothers International Limited, Salomon Brothers AG, Salomon Brothers Hong Kong
Limited and Salomon Brothers Inc (the 'Selling Agency Agreement'). Pursuant to
the Selling Agency Agreement, Salomon Brothers Inc may also purchase Registered
Notes as principal for its own account or for resale. Any Registered Notes so
offered and sold will reduce correspondingly the maximum aggregate principal
amount of Bearer Notes that may be offered by this Prospectus Supplement and the
Prospectus.
GENERAL INFORMATION
Application has been made to list the Bearer Notes on the Luxembourg Stock
Exchange. In connection with such listing, the Certificate of Incorporation and
By-Laws of the Company and a legal notice relating to the issuance of the Bearer
Notes have been deposited with the Chief Registrar of the District Court of
Luxembourg, where copies may be obtained upon request.
The issuance of the Notes was authorized by action of the Board of
Directors of the Company on September 7, 1988, March 7, 1990, May 2, 1990, June
5, 1991, September 5, 1991, June 2, 1993, December 1, 1993, May 4, 1994,
December 7, 1994 and May 3, 1995, and by action of the executive committee of
the Board of Directors on July 24, 1991 and by action of an authorized officer
of the Company on February 12, 1993, December 14, 1993, October 12, 1994 and
April , 1996.
So long as the Bearer Notes of either series are listed on the Luxembourg
Stock Exchange, copies of the Pricing Supplements for such series of Notes, the
Registration Statement (and the documents incorporated by reference therein),
the annual and quarterly reports, Certificate of Incorporation and By-Laws of
the Company, the Indenture for such series of Notes and the Selling Agency
Agreement will be available for inspection at the office of the Listing Agent or
at the office of the Paying Agent for such series of Notes in Luxembourg during
the term of the Bearer Notes. In addition, copies of such annual and quarterly
reports and such Pricing Supplements may be obtained at such offices.
Except as otherwise disclosed or incorporated by reference herein, the
Company is not involved in any litigation or arbitration proceedings relating to
claims or amounts which it believes will be material in the context of the issue
of the Bearer Notes and is not aware that any such litigation or arbitration
proceedings are pending or threatened.
S-31
<PAGE>
Under Article 109G of the Treaty establishing the European Communities, as
amended by the treaty on European Union, the currency composition of the ECU may
not be changed. From the start of the third stage of European monetary union,
the value of the ECU as against the currencies of the member states
participating in the third stage will be irrevocably fixed, and the ECU will
become a currency of its own right.
As of the date of this Prospectus Supplement, there has been no material
adverse change in the financial position of the Company since the date of the
latest audited financial statements contained or incorporated by reference in
the accompanying Prospectus.
The Bearer Notes have been accepted for clearance through Euroclear and
CEDEL.
Each Pricing Supplement will contain the following information in respect
of the issue of the Notes to which it relates:
<TABLE>
<S> <C>
(i) Principal Amount or Face Amount
(ii) Issue Price
(iii) Proceeds to Company on original issuance
(iv) Commission or Discount on original issuance
(v) Salomon Brothers International Limited's capacity on original issuance
(vi) Original Issue Date
(vii) Stated Maturity
(viii) Specified Currency (If other than U.S. Dollars)
(ix) Authorized Denominations (If other than as set forth in the Prospectus
Supplement)
(x) Interest Payment Dates:
Accrue to pay: / / Yes / / No
(xi) Indexed Principal Note: / / Yes / / No
(xii) Type of Interest on Note (Fixed Rate, Floating Rate or Indexed Rate)
(xiii) Interest Rate (Fixed Rate Notes)
(xiv) Initial Interest Rate (Floating Rate Notes)
(xv) Base Rate
(xvi) Calculation Agent (If other than Citibank)
(xvii) Computation of Interest
(xviii) Interest Reset Dates
(xix) Rate Determination Dates
(xx) Index Maturity
(xxi) Spread (+/-)
(xxii) Spread Multiplier
(xxiii) Change in Spread, Spread Multiplier or Fixed Interest Rate prior to
Stated Maturity: / / Yes / / No
(xxiv) Maximum Interest Rate
(xxv) Minimum Interest Rate
(xxvi) Amortizing Note: / / Yes / / No
(xxvii) Optional Redemption: / / Yes / / No
Optional Redemption Dates
Redemption Prices
Redemption: / / In whole only and not in part / / May be in whole or
in part
(xxviii) Optional Repayment: / / Yes / / No
Optional Repayment Dates
Optional Repayment Prices
(xxix) Discount Note: / / Yes / / No
Total Amount of OID:
Yield to Maturity
(xxx) Listed on Luxembourg Stock Exchange: / / Yes / / No
</TABLE>
S-32
<PAGE>
REGISTERED OFFICE OF SALOMON INC
Seven World Trade Center
New York, New York 10048
TRUSTEE FOR SERIES D NOTES TRUSTEE FOR SERIES E NOTES
Citibank, N.A. Bankers Trust Company
120 Wall Street Four Albany Street
New York, New York 10043 New York, New York 10015
PRINCIPAL PAYING AGENT PRINCIPAL PAYING AGENT
FOR SERIES D NOTES FOR SERIES E NOTES
Citibank, N.A. Bankers Trust Company
336 Strand 1 Appold Street, Broadgate
London, WC2R 1HB London, EC2A 2HE
PAYING AGENT FOR SERIES D NOTES PAYING AGENT FOR SERIES E NOTES
Citibank (Luxembourg) S.A. Bankers Trust Luxembourg, S.A.
58 Boulevard Grand-Bouchese Charlotte P.O. Box 807
L-1330 Luxembourg 14 Boulevard F.D. Roosevelt
L-2450 Luxembourg
LEGAL ADVISOR TO SALOMON INC LEGAL ADVISOR TO THE AGENTS
Cravath, Swaine & Moore Cleary, Gottlieb, Steen & Hamilton
825 Eighth Avenue One Liberty Plaza
New York, N.Y. 10019 New York, N.Y. 10006
AUDITOR TO SALOMON INC
Arthur Andersen LLP
1345 Avenue of the Americas
New York, N.Y. 10105
LISTING AGENT
Kredietbank S.A. Luxembourgeoise
43 Boulevard Royal
Luxembourg City 2955
Luxembourg
<PAGE>
SUBJECT TO COMPLETION DATED APRIL 3, 1996
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 , 1996.
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus and any prospectus supplement shall not constitute
an offer to sell or the solicitation of an offer to buy nor shall there be
any sale of these securities in any State in which such offer, solicitation or
sale would be unlawful prior to registration or qualification under the
securities laws of any such State.
<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.
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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
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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
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<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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<PAGE>
Security registered in their names, will not receive or be entitled to receive
physical delivery of any such Debt Securities and will not be considered the
Holders thereof under the Indenture governing such Debt Securities.
Subject to the restrictions discussed under 'Limitations on Issuance of
Bearer Securities and Bearer Warrants' below, payments of principal of (and
premium, if any) and any interest on individual Debt Securities represented by a
Global Security will be made to the Depositary or its nominee, as the case may
be, as the Holder of such Global Security. None of the Company, the Trustee for
such Debt Securities, any Paying Agent or the Security Registrar for such Debt
Securities will have any responsibility or liability for any aspect of the
records relating to or payments made on account of beneficial interests in such
Global Security or for maintaining, supervising or reviewing any records
relating to such beneficial interests.
The Company expects that the Depositary for any Debt Securities, upon
receipt of any payment of principal, premium or interest in respect of a
definitive Global Security representing any of such Debt Securities, will credit
immediately participants' accounts with payments in amounts proportionate to
their respective beneficial interests in the principal amount of such Global
Security as shown on the records of such Depositary. The Company also expects
that payments by participants to owners of beneficial interests in such Global
Security held through such participants will be governed by standing
instructions and customary practices, as is now the case with securities held
for the accounts of customers in bearer form or registered in 'street name', and
will be the responsibility of such participants. Receipt by owners of beneficial
interests in a temporary Global Security of payments of principal, premium or
interest in respect thereof will be subject to the restrictions discussed under
'Limitations on Issuance of Bearer Securities and Bearer Warrants' below.
If the Depositary for any Debt Securities is at any time unwilling or
unable to continue as depositary and a successor depositary is not appointed by
the Company within ninety days, the Company will issue individual Debt
Securities in exchange for the Global Security or Securities representing such
Debt Securities. In addition, the Company may at any time and in its sole
discretion determine not to have certain Debt Securities represented by one or
more Global Securities and, in such event, will issue individual Debt Securities
in exchange for the Global Security or Securities representing such Debt
Securities. Further, if the Company so specifies with respect to any Debt
Securities, an owner of a beneficial interest in a Global Security representing
such Debt Securities may, on terms acceptable to the Company and the Depositary
for such Global Security, receive individual Debt Securities in exchange for
such beneficial interest. In any such instance, an owner of a beneficial
interest in a Global Security will be entitled to physical delivery of
individual Debt Securities represented by such Global Security equal in
principal amount to such beneficial interest and to have such Debt Securities
registered in its name (if the Debt Securities are issuable as Registered
Securities). Individual Debt Securities so issued will be issued (i) as
Registered Securities in denominations, unless otherwise specified by the
Company, of $1,000 and integral multiples thereof if the Debt Securities are
issuable as Registered Securities, (ii) as Bearer Securities in the denomination
or denominations specified by the Company if the Debt Securities are issuable as
Bearer Securities or (iii) as either Registered or Bearer Securities, if the
Debt Securities are issuable in either form (Section 305). See, however,
'Limitations on Issuance of Bearer Securities and Bearer Warrants' below for a
description of certain restrictions on the issuance of individual Bearer
Securities in exchange for beneficial interests in a Global Security.
SENIOR DEBT
The Debt Securities and Coupons that will constitute part of the senior
debt of the Company will be issued under the Senior Debt Indenture and will rank
pari passu with all other unsecured debt of the Company except subordinated
debt.
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SUBORDINATED DEBT
The Debt Securities and Coupons that will constitute part of the
subordinated debt of the Company will be issued under the Subordinated Debt
Indenture and will be subordinate and junior in the right of payment, to the
extent and in the manner set forth in the Subordinated Debt Indenture, to all
'Senior Indebtedness' of the Company. The Subordinated Debt Indenture defines
'Senior Indebtedness' as the following indebtedness or obligations, whether
outstanding at the date of such Indenture or thereafter incurred, assumed,
guaranteed or otherwise created, unless in the instrument creating or evidencing
any such indebtedness or obligation or pursuant to which the same is outstanding
it is provided that such indebtedness or obligation is not superior in right of
payment to the subordinated Debt Securities and any appurtenant Coupons: (a) all
indebtedness of the Company (including indebtedness of others guaranteed by the
Company), other than the subordinated Debt Securities and any appurtenant
Coupons and other than the debt securities issuable under the indenture dated as
of July 1, 1986 between the Company and Bank of New York, as trustee, that (i)
is for money borrowed, (ii) arises in connection with the acquisition of any
business, properties, securities or assets of any kind, other than in the
ordinary course of the Company's business as heretofore conducted or (iii) is
secured, in whole or in part, by real or personal property, (b) obligations of
the Company (including obligations of others guaranteed by the Company) as
lessee under leases required to be capitalized on the balance sheet of the
lessee under generally accepted accounting principles and leases of property or
assets made as part of any sale and lease-back transaction and (c) amendments,
renewals, extensions, modifications and refundings of any such indebtedness or
obligation (Subordinated Debt Indenture, Section 101). The subordinated Debt
Securities and any appurtenant Coupons will not be superior in right of payment
to the debt securities issuable under the indenture dated as of July 1, 1986
between the Company and Bank of New York, as trustee (Subordinated Debt
Indenture, Section 1601).
In the event (a) of any insolvency or bankruptcy proceedings, or any
receivership, liquidation, reorganization or other similar proceedings in
respect of the Company or a substantial part of its property, or (b) that (i) a
default shall have occurred with respect to the payment of principal of (and
premium, if any) or any interest on or other monetary amounts due and payable on
any Senior Indebtedness, or (ii) there shall have occurred an event of default
(other than a default in the payment of principal, premium, if any, or interest,
or other monetary amounts due and payable) with respect to any Senior
Indebtedness, as defined therein or in the instrument under which the same is
outstanding, permitting the holder or holders thereof to accelerate the maturity
thereof (with notice or lapse of time, or both), and such event of default shall
have continued beyond the period of grace, if any, in respect thereof, and such
default or event of default shall not have been cured or waived or shall not
have ceased to exist, or (c) that the principal of and accrued interest on the
subordinated Debt Securities issued under the Subordinated Debt Indenture shall
have been declared due and payable upon an Event of Default pursuant to Section
502 thereof and such declaration shall not have been rescinded and annulled as
provided therein, then the holders of all Senior Indebtedness shall first be
entitled to receive payment of the full amount due thereon, or provision shall
be made for such payment in money or money's worth, before the Holders of any of
the subordinated Debt Securities or Coupons issued under the Subordinated Debt
Indenture are entitled to receive a payment on account of the principal of (and
premium, if any) or any interest on the indebtedness evidenced by such Debt
Securities or such Coupons (Subordinated Debt Indenture, Section 1601). If this
Prospectus is being delivered in connection with a series of subordinated Debt
Securities, the related Prospectus Supplement will set forth the amount of
Senior Indebtedness outstanding as of the most recent practicable date.
LIMITATION ON LIENS
The Senior Debt Indenture provides that the Company will not, and will not
permit any Restricted Subsidiary to, incur, issue, assume, guarantee or suffer
to exist any indebtedness for borrowed money if the payment of such indebtedness
is secured by a pledge of, lien on or security interest in any shares of stock
of any Restricted Subsidiary without effectively providing for the equal and
ratable securing of the payment of the Debt Securities issued thereunder (Senior
Debt Indenture, Section 1205). The term
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'Restricted Subsidiary' is defined in the Senior Debt Indenture to mean each of
Salomon Brothers Inc, Phibro Inc. and, with respect to the Company's Medium-Term
Notes Series D and E, Philipp Brothers, Inc. and any Subsidiary of the Company
owning, directly or indirectly, any of the common stock of, or succeeding to any
substantial part of the business now conducted by, any of such corporations.
EVENTS OF DEFAULT
The following will constitute Events of Default under each Indenture with
respect to any series of Debt Securities issued thereunder: (i) default in the
payment of the principal of (and premium, if any, on) any Debt Security of such
series when due; (ii) default for 30 days in the payment of any interest on any
Debt Security of such series or of any related Coupon when due; (iii) default in
the deposit of any sinking fund payment, when and as due by the terms of any
Debt Security of such series; (iv) default in the performance of any other
covenant in such Indenture, continued for 60 days after written notice thereof
by the applicable Trustee or the Holders of at least 25% in principal amount of
the Debt Securities of such series then Outstanding; and (v) certain events of
bankruptcy, insolvency or reorganization (Section 501). Any additional Events of
Default provided with respect to a series of Debt Securities will be set forth
in the applicable Prospectus Supplement. No Event of Default with respect to a
particular series of Debt Securities issued under either Indenture necessarily
constitutes an Event of Default with respect to any other series of Debt
Securities.
Each Indenture provides that if an Event of Default specified therein shall
occur and be continuing with respect to a series of Debt Securities issued
thereunder, either the Trustee thereunder or the Holders of at least 25% in
principal amount of the Debt Securities of such series then Outstanding may
declare the principal of and all accrued interest on all Debt Securities of such
series (or, in the case of Discount Securities, an amount equal to such portion
of the principal amount thereof as will be specified in the related Prospectus
Supplement) to be due and payable. In certain cases, the Holders of a majority
in principal amount of the Debt Securities then Outstanding of a series may, on
behalf of the Holders of all such Debt Securities, rescind and annul such
declaration and its consequences (Section 502).
Each Indenture contains a provision entitling the Trustee thereunder,
subject to the duty of such Trustee during the continuance of a default to act
with the required standard of care, to be indemnified by the Holders of the Debt
Securities or any Coupons of any series thereunder before proceeding to exercise
any right or power under such Indenture with respect to such series at the
request of such Holders (Section 603). Each Indenture provides that no Holder of
a Debt Security or any Coupon of any series thereunder may institute any
proceeding, judicial or otherwise, to enforce such Indenture except in the case
of failure of the Trustee thereunder, for 60 days, to act after it receives (i)
written notice of such default, (ii) a written request to enforce such Indenture
by the Holders of at least 25% in aggregate principal amount of the Debt
Securities then Outstanding of such series (and the Trustee receives no
direction inconsistent with such written request from the Holders of a majority
in aggregate principal amount of the Debt Securities then outstanding of such
series) and (iii) an offer of reasonable indemnity (Section 507). This provision
will not prevent any Holder of any such Debt Security from enforcing payment of
the principal thereof (and premium, if any, thereon) and any interest thereon or
of any such Coupon from enforcing payment thereof at the respective due dates
thereof (Section 508). The Holders of a majority in aggregate principal amount
of the Debt Securities then Outstanding of any series may direct the time,
method and place of conducting any proceedings for any remedy available to the
applicable Trustee or of exercising any trust or power conferred on it with
respect to the Debt Securities of such series. However, such Trustee may refuse
to follow any direction that conflicts with law or the applicable Indenture or
that would be unjustly prejudicial to Holders not joining therein (Section 512).
Each Indenture provides that the Trustee thereunder will, within 90 days
after the occurrence of a default with respect to any series of Debt Securities
thereunder known to it, give to the Holders of Debt Securities and Coupons of
such series notice of such default, unless such default shall have been cured or
waived; but, except in the case of a default in the payment of the principal of
(and premium, if any) or any interest on any Debt Security or of any Coupon of
such series or in the payment of any sinking fund
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<PAGE>
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 be addedejnformation 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.
27
<PAGE>
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
28
<PAGE>
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
29
<PAGE>
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
30
<PAGE>
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>
SUBJECT TO COMPLETION DATED APRIL 3, 1996
PROSPECTUS
$1,000,000,000
SALOMON INC
NOTES, SERIES G
DUE MORE THAN NINE MONTHS FROM DATE OF ISSUE
Salomon Inc (the 'Company') may from time to time offer its Notes, Series G (the
'Notes') with an aggregate initial public offering price or purchase price of up
to $1,000,000,000. The sale of other securities under the Registration Statement
of which this Prospectus forms a part or under a Registration Statement to which
this Prospectus relates may reduce the amount of Notes that may be sold
hereunder. Each Note will mature more than nine months from its date of issue.
The interest rate or interest rate formula, reset provisions, Issue Price,
Stated Maturity, Interest Payment Dates, repayment provisions and certain other
terms (including a Survivor's Option, if applicable) with respect to each Note
will be established at the time of issuance and set forth in a pricing
supplement to this Prospectus (a 'Pricing Supplement'). A Note may bear interest
at a fixed rate (a 'Fixed Rate Note'), which may be zero in the case of certain
Discount Notes, or at a floating rate (a 'Floating Rate Note') determined by
reference to LIBOR, the CD Rate, the Commercial Paper Rate, the Federal Funds
Rate or the Treasury Rate, as selected by the purchaser and agreed to by the
Company, adjusted by the Spread or Spread Multiplier, if any, applicable to such
Note. Such fixed rate, Spread or Spread Multiplier may be subject to change as
described in the applicable Pricing Supplement. A Note may be issued as an
amortizing note (an 'Amortizing Note') on which a portion or all the principal
amount is payable prior to Stated Maturity in accordance with a schedule or by
application of a formula. The Pricing Supplement also will state whether
interest will be payable monthly, quarterly or semi-annually. Unless otherwise
specified in the applicable Pricing Supplement, in the case of a Note that
provides for monthly interest payments, interest will be payable, in arrears, on
the fifteenth day of each calendar month; provided, however, that in the case of
such Note issued between the first and fifteenth day of a calendar month,
interest otherwise payable on the fifteenth day of such calendar month will be
payable on the fifteenth day of the next succeeding calendar month. Unless
otherwise specified in the applicable Pricing Supplement, in the case of a Note
that provides quarterly interest payments, interest will be payable, in arrears,
commencing on the day that is three months from (i) the day on which such Note
is issued, if such Note is issued on the fifteenth day of a calendar month, or
(ii) the preceding fifteenth day of a calendar month prior to the issuance of
such Note. Unless otherwise specified in the applicable Pricing Supplement, in
the case of a Note that provides for semi-annual interest payments, interest
will be payable, in arrears, commencing on the day that is six months from (i)
the day on which such Note is issued, if such Note is issued on the fifteenth
day of a calendar month, or (ii) the preceding fifteenth day of a calendar month
prior to the issuance of such Note.
Each Note will be issued in book-entry form and will be represented only by a
global certificate (a 'Global Certificate') registered in the name of a nominee
of The Depository Trust Company, as depositary (the 'Depositary'), and
certificates representing Notes will not be issued to the beneficial owners
thereof except as otherwise set forth herein. See 'Book-Entry Procedures and
Settlement' and 'Certificated Notes' under 'Description of the Notes' herein.
Beneficial ownership of a Note will be recorded on or through the records of the
brokerage firm or other entity that maintains the beneficial owner's account.
Transfer of ownership of any Note may be effected only through the selling
owner's brokerage firm or such other entity.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS OR ANY PRICING SUPPLEMENT HERETO. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRICE TO UNDERWRITER'S DISCOUNT PROCEEDS TO THE
PUBLIC(1) OR COMMISSION(2) COMPANY(3)
<S> <C> <C> <C>
Per Note... 100.000% .500%-2.750% 97.250%-99.500%
Total...... $1,000,000,000 $5,000,000-$27,500,000 $972,500,000-$995,000,000
</TABLE>
- --------------------------------------------------------------------------------
(1) Unless otherwise specified in the applicable Pricing Supplement, the price
to public will be 100% of the principal amount.
(2) The underwriter's discount, which will be a percentage of the principal
amount of each Note, will vary depending on the Stated Maturity of such
Note.
(3) Before deduction of expenses payable by the Company estimated at $4,525,000,
including reimbursement of certain expenses of Salomon Brothers Inc (the
'Underwriter').
The Notes will be sold through the Underwriter acting as principal, unless
otherwise specified in the applicable Pricing Supplement. The Pricing Supplement
with respect to each offering of Notes will set forth, among other things, the
fixed price to public of such Notes, or that such Notes will be resold to one or
more purchasers at varying prices related to prevailing market prices at the
time of resale,the proceeds to the Company from such sale, the underwriter's
discount and any dealer's selling concession and the name of the underwriter, if
other than Salomon Brothers Inc. The Notes will not be listed on any securities
exchange, and there can be no assurance that the maximum amount of Notes offered
by this Prospectus will be sold or that there will be a secondary market for the
Notes. The Company reserves the right to withdraw, cancel or modify the offer
made hereby without notice. Any Notes offered through the Underwriter (or any
other underwriter named in the applicable Pricing Supplement) acting as
principal are offered subject to receipt and acceptance by the Underwriter, to
prior sale and to the Underwriter's right to reject any order in whole or in
part and to withdraw, cancel or modify the offer made hereby without notice. See
'Plan of Distribution'.
The Prospectus and the accompanying Pricing Supplement may be used by the
Company, Salomon Brothers Inc, a wholly owned subsidiary of the Company, or
other affiliates of the Company in connection with offers and sales related to
secondary market transactions in the Notes offered hereby and approximately
$454,602,000 of Notes initially sold pursuant to an earlier prospectus, as
described herein. Salomon Brothers Inc or other such Company affiliates may act
as principal or agent in such transactions. Such sales will be made at varying
prices related to prevailing market prices at the time of sale.
- -------------------------------------------------
SALOMON BROTHERS INC
- --------------------------------------------------------------------------------
The date of this Prospectus is April , 1996
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus and any prospectus supplement shall not constitute
an offer to sell or the solicitation of an offer to buy nor shall there be
any sale of these securities in any State in which such offer, solicitation or
sale would be unlawful prior to registration or qualification under the
securities laws of any such State.
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the 'Exchange Act'), and in accordance
therewith files reports, proxy statements and other information with the
Securities and Exchange Commission (the 'Commission'). Reports, proxy statements
and other information concerning the Company can be inspected and copied at the
public reference facilities maintained by the Commission at Room 1024, 450 Fifth
Street, N.W., Washington, D.C. 20549, and at the Commission's Regional Offices
at Seven World Trade Center, 13th Floor, New York, New York 10048, and Citicorp
Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of
such material can be obtained upon written request addressed to the Commission,
Public Reference Section, 450 Fifth Street, N.W., Washington, D.C. 20549, at
prescribed rates. In addition, reports, proxy statements and other information
concerning the Company may be inspected at the offices of the New York Stock
Exchange, Inc., 20 Broad Street, New York, New York 10005 and the American Stock
Exchange, 86 Trinity Place, New York, New York 10006.
The Company has filed with the Commission a registration statement on Form
S-3 (herein, together with all amendments and exhibits, referred to as the
'Registration Statement') under the Securities Act of 1933, as amended (the
'Securities Act'), relating to the Notes. This Prospectus does not contain all
the information set forth in the Registration Statement, certain parts of which
are omitted in accordance with the rules and regulations of the Commission. For
further information, reference is hereby made to the Registration Statement.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents, filed by the Company with the Commission pursuant
to Section 13 of the Exchange Act (File No. 1-4346), are incorporated herein by
reference: (i) the Annual Report on Form 10-K for the year ended December 31,
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 Notes shall be deemed to be incorporated
by reference in this Prospectus.
Any statement contained herein or in a document incorporated or deemed to
be incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained herein
or in any subsequently filed document which also is or is deemed to be
incorporated by reference herein modifies or supersedes such statement. Any such
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this Prospectus.
THE COMPANY WILL PROVIDE WITHOUT CHARGE TO EACH PERSON, INCLUDING ANY
BENEFICIAL OWNER, TO WHOM A COPY OF THIS PROSPECTUS IS DELIVERED, ON THE WRITTEN
OR ORAL REQUEST OF ANY SUCH PERSON, A COPY OF ANY OR ALL OF THE DOCUMENTS
INCORPORATED HEREIN BY REFERENCE, EXCEPT THE EXHIBITS TO SUCH DOCUMENTS (UNLESS
SUCH EXHIBITS ARE SPECIFICALLY INCORPORATED BY REFERENCE IN SUCH DOCUMENTS).
WRITTEN REQUESTS FOR SUCH COPIES SHOULD BE DIRECTED TO THE CORPORATE SECRETARY,
SALOMON INC, SEVEN WORLD TRADE CENTER, NEW YORK, NEW YORK 10048. TELEPHONE
REQUESTS FOR SUCH COPIES SHOULD BE DIRECTED TO THE CORPORATE SECRETARY AT (212)
783-7000.
------------------------
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITER MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE DEBT SECURITIES
AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH
STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
2
<PAGE>
Pursuant to a Prospectus dated December 14, 1993 (and applicable Pricing
Supplements) filed with the Commission under Registration Statement No. 33-51269
and a Prospectus dated October 12, 1994 (and applicable Pricing Supplements)
filed with the Commission under Registration Statement No. 33-54929, the Company
had outstanding as of March 31, 1996 approximately $454,602,000 of its Notes,
Series G. The Notes offered by this Prospectus are part of the same series of
Notes as the Notes described in the preceding sentence.
SALOMON INC
Salomon Inc was incorporated in 1960 under the laws of the State of
Delaware. 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
The proceeds to be received by the Company from the sale of the Notes will
be used for general corporate purposes, principally to fund the business of its
operating units and to fund investments in, or extensions of credit to, its
subsidiaries and to lengthen the average maturity of liabilities, which may
include the reduction of short-term liabilities or the refunding of maturing
indebtedness.
RATIO OF EARNINGS TO FIXED CHARGES
The ratio of earnings to fixed charges was 1.12, 0.83, 1.32, 1.25 and 1.16,
for the years 1995, 1994, 1993, 1992 and 1991, respectively. Such ratios were
calculated by dividing fixed charges into the sum of earnings before taxes and
fixed charges. Fixed charges consist largely of interest expense, including
capitalized interest, and a portion of rental expense representative of the
interest factor. For the year ended December 31, 1994, earnings as defined were
inadequate to cover fixed charges. The amount by which fixed charges exceed
earnings as defined for the year ended December 31, 1994 was $834 million.
DESCRIPTION OF THE NOTES
The Notes will be issued as a series under an indenture, dated as of
December 1, 1988 (as amended or supplemented from time to time, the
'Indenture'), between the Company and Citibank, N. A., a national banking
association (the 'Trustee'). The Notes will rank pari passu with all other
unsecured debt of the Company except subordinated debt. A copy of the Indenture
has previously been filed with the Commission and is incorporated by reference
as part of the Registration Statement. The following summary of certain
provisions of the Indenture and the Notes does not purport to be complete and
such summary is subject to the detailed provisions of the Indenture, to which
reference is hereby made for a full description of such provisions, including
the definition of certain capitalized terms used herein, and for other
information regarding the Notes. Numerical references in parentheses below are
to sections in the Indenture. Wherever particular sections or defined terms of
the Indenture are referred to, such sections or defined terms are incorporated
herein by reference as part of the statement made, and the statement is
qualified in its entirety by such reference.
3
<PAGE>
The Indenture does not limit the aggregate principal amount of Debt
Securities, which term includes the Notes offered hereby, that may be issued
thereunder and provides that Debt Securities may be issued from time to time in
series (Section 301).
GENERAL
At the date of this Prospectus, the Notes offered pursuant to this
Prospectus are limited to an aggregate initial public offering price or purchase
price of up to $1,000,000,000, which amount may be reduced as a result of the
sale of other securities under the Registration Statement of which this
Prospectus forms a part or under a Registration Statement to which this
Prospectus relates. In addition, the Company had outstanding as of March 31,
1996 approximately $454,602,000 of Series G Notes sold pursuant to an earlier
prospectus. The aggregate amount of Notes may be increased from time to time to
such larger amount as may be authorized by the Company. The Notes will be
represented only by Global Certificates registered in the name of a nominee of
the Depositary, except as described below under 'Certificated Notes'. The
nominal authorized denominations of the Notes will be $1,000 and any larger
amount that is an integral multiple of $1,000. Each Note will mature more than
nine months from its date of issue on the day that is the final Interest Payment
Date for such Note.
Each Note will bear interest from its Original Issue Date (as defined
below)at the rate per annum stated on the face thereof until the principal
amount thereof is paid or made available for payment. Interest on each Note will
be payable, in arrears, either monthly, quarterly or semi-annually. Unless
otherwise specified in the applicable Pricing Supplement, in the case of a Note
that provides for monthly interest payments, interest will be payable on the
fifteenth day of each calendar month; provided, however, that in the case of
such Note issued between a Regular Record Date (as defined below) and an
Interest Payment Date, interest will be payable on the next succeeding Interest
Payment Date. Unless otherwise specified in the applicable Pricing Supplement,
in the case of a Note that provides for quarterly interest payments, interest
will be payable commencing on the day that is three months from (i) the Original
Issue Date, if such Note is issued on the fifteenth day of a calendar month, or
(ii) the preceding fifteenth day of a calendar month prior to the Original Issue
Date. Unless otherwise specified in the applicable Pricing Supplement, in the
case of a Note that provides for semi-annual interest payments, interest will be
payable commencing on the day that is six months from (i) the Original Issue
Date, if such Note is issued on the fifteenth day of a calendar month, or (ii)
the preceding fifteenth day of a calendar month prior to the Original Issue
Date. Unless otherwise specified in the applicable Pricing Supplement, the
Regular Record Date with respect to any Interest Payment Date for a Note will be
the first day of the calendar month in which such Interest Payment Date occurs,
except that the Regular Record Date with respect to the final Interest Payment
Date will be the final Interest Payment Date. Each payment of interest in
respect of an Interest Payment Date will include interest accrued to such
Interest Payment Date.
The Pricing Supplement relating to a Note will set forth, among other
things, the following terms: (i) whether such Note is a Fixed Rate Note, a
Floating Rate Note and/or an Amortizing Note, (ii) the price at which such Note
will be issued (the 'Issue Price'); (iii) the date on which such Note will be
issued (the 'Original Issue Date'); (iv) the date on which such Note will mature
(the 'Stated Maturity'); (v) if such Note is a Fixed Rate Note, the rate per
annum at which such Note will bear interest, if any, and whether and the manner
in which such rate may be changed prior to its Stated Maturity; (vi) if such
Note is a Floating Rate Note, the Base Rate, the Initial Interest Rate, the
Interest Period or the Interest Reset Dates, the Interest Payment Dates, and, if
applicable, the Index Maturity, the Maximum Interest Rate, the Minimum Interest
Rate, the Spread or Spread Multiplier (all as defined below), and any other
terms relating to the particular method of calculating the interest rate for
such Note and whether and the manner in which such Spread or Spread Multiplier
may be changed prior to Stated Maturity; (vii) whether such Note is an Original
Issue Discount Note (as defined below); (viii) if such Note is an Amortizing
Note, the terms for repayment prior to Stated Maturity; (ix) whether such Note
may be redeemed at the option of the Company, or repaid at the option of the
Holder, prior to Stated Maturity as described under 'Optional Redemption,
Repayment and Repurchase' below and, if so, the provisions
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relating to such redemption or repayment, including, in the case of an Original
Issue Discount Note, the information necessary to determine the amount due upon
redemption; (x) whether the Holder of such Note has a Survivor's Option, as
described below under 'Repayment Upon Death'; and (xi) any other terms not
inconsistent with the provisions of the Indenture.
'Original Issue Discount Note' means (i) a Note, including any Note whose
interest rate is zero, that has a stated redemption price at Stated Maturity
that exceeds its Issue Price by at least 0.25% of its stated redemption price at
Stated Maturity, multiplied by the number of full years from the Original Issue
Date to the Stated Maturity for such Note and (ii) any other Note designated by
the Company as issued with original issue discount for United States Federal
income tax purposes.
A 'basis point' or 'bp' equals one one-hundredth of a percentage point.
REPAYMENT UPON DEATH
The Pricing Supplement relating to any Note will indicate whether the
Holder of such Note will have the option (the 'Survivor's Option') to elect
repayment of such Note prior to its Stated Maturity in the event of the death of
the beneficial owner of such Note. SEE THE PRICING SUPPLEMENT TO DETERMINE
WHETHER THE SURVIVOR'S OPTION APPLIES TO ANY PARTICULAR NOTE.
Pursuant to exercise of the Survivor's Option, if applicable, the Company
will repay any Note properly tendered for repayment by or on behalf of the
person (the 'Representative') that has authority to act on behalf of the
deceased beneficial owner of such Note under the laws of the appropriate
jurisdiction (including, without limitation, the personal representative,
executor, surviving joint tenant or surviving tenant by the entirety of such
deceased beneficial owner) at a price equal to 100% of the principal amount
thereof plus accrued interest to the date of such repayment (except that in the
case of an Original Issue Discount Note, the Company will repay at a price equal
to (i) the issue price set forth in the applicable Pricing Supplement plus (ii)
that portion of the difference between the issue price and the principal amount
of such Note that has accrued at the yield to maturity set forth in the Pricing
Supplement (computed in accordance with generally accepted United States bond
yield computation principles) by such date of repayment, but in no event in
excess of 100% of the principal amount thereof, plus accrued interest to the
date of such repayment), subject to the following limitations. The Company may,
in its sole discretion, limit to $2,500,000 the aggregate principal amount of
Notes as to which exercises of the Survivor's Option will be accepted in any
calendar year (the 'Annual Put Limitation') and, in the event that the Annual
Put Limitation is applied, limit to $250,000 the aggregate principal amount of
Notes (or portions thereof) as to which exercise of the Survivor's Option will
be accepted in such calendar year with respect to any individual deceased
beneficial owner of Notes. Moreover, the Company will not make principal
repayments pursuant to exercise of the Survivor's Option in amounts that are
less than $5,000, and, in the event that the limitations described in the
preceding sentence would result in the partial repayment of any Note, the
principal amount of such Note remaining outstanding after repayment must be at
least $5,000 (the minimum authorized denomination of the Notes). Any Note
tendered pursuant to exercise of the Survivor's Option may be withdrawn by a
written request of its Holder received by the Trustee prior to its repayment.
Each Note that is tendered pursuant to valid exercise of the Survivor's
Option will be accepted promptly in the order all such Notes are tendered,
except for any Note (or portion thereof) the acceptance of which would (i)
contravene the Annual Put Limitation or (ii) result in the acceptance during the
then current calendar year of an aggregate principal amount of Notes (or
portions thereof) exceeding $250,000 with respect to the relevant individual
deceased beneficial owner. If as of the end of any calendar year the Company has
not imposed the Annual Put Limitation or the aggregate principal amount of Notes
that have been accepted pursuant to exercise of the Survivor's Option during
such year has not exceeded the Annual Put Limitation for such year, any
exercise(s) of the Survivor's Option with respect to Notes (or portions thereof)
not accepted during such calendar year because more than $250,000 aggregate
principal amount of Notes was tendered with respect to an individual deceased
beneficial owner will be accepted in the order all such Notes were tendered, to
the extent that any such
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exercise would not trigger the Annual Put Limitation, if any, for such calendar
year. Any Note (or portion thereof)accepted for repayment pursuant to exercise
of the Survivor's Option will be repaid on the first Interest Payment Date that
occurs 20 or more calendar days after the date of such acceptance. Each Note (or
any portion thereof) tendered for repayment that is not accepted in any calendar
year due to the application of the Annual Put Limitation will be deemed to be
tendered in the following calendar year in the order in which all such Notes
were originally tendered, unless any such Note is withdrawn by its Holder. In
the event that a Note (or any portion thereof) tendered for repayment pursuant
to valid exercise of the Survivor's Option is not accepted, the Trustee will
deliver a notice to any affected Representative by first-class mail to the
broker or other entity that represents the deceased beneficial owner of the Note
or, in the case of a certificated Note, to the registered Holder thereof at its
last known address as indicated on the records of the Security Registrar that
states the reasons such Note (or portion thereof) has not been accepted for
repayment.
Subject to the foregoing, in order for a Survivor's Option to be validly
exercised, the Trustee must receive (i) a written request for repayment signed
by the Representative, and such signature must be guaranteed by a member firm of
a registered national securities exchange or of the National Association of
Securities Dealers, Inc. or a commercial bank or trust company having an office
or correspondent in the United States, (ii) tender of the Note to be repaid,
(iii) appropriate evidence satisfactory to the Company and the Trustee that (A)
the Representative has authority to act on behalf of the deceased beneficial
owner, (B) the death of such beneficial owner has occurred and (C) the deceased
was the beneficial owner of such Note at the time of death, (iv) if applicable,
a properly executed assignment or endorsement, and (v) if the Note is held by a
nominee of the deceased beneficial owner, a certificate satisfactory to the
Trustee from such nominee attesting to the beneficial ownership of such Note.
All questions as to the eligibility or validity of any exercise of the
Survivor's Option will be determined by the Company, in its sole discretion,
which determinations will be final and binding on all parties.
If a Note is represented by a Global Certificate, the Depositary's nominee
will be the Holder of such Note and therefore will be the only entity that can
exercise the Survivor's Option for such Note. To obtain repayment pursuant to
exercise of the Survivor's Option with respect to such Note, the Representative
must provide to the broker or other entity through which the deceased beneficial
owner holds an interest in such Note (i) the documents described in clauses (i)
and (iii) of the preceding paragraph and (ii) instructions to such broker or
other entity to notify the Depositary of such Representative's desire to obtain
repayment pursuant to exercise of the Survivor's Option. Such broker or other
entity will provide to the Trustee (i) the documents received from the
Representative referred to in clause (i) of the preceding sentence, (ii) its
tender of such Note pursuant to exercise of the Survivor's Option and (iii) a
certificate satisfactory to the Trustee from such broker or other entity stating
that it represents the deceased beneficial owner. Such broker or other entity
will be responsible for disbursing any payments it receives pursuant to exercise
of the Survivor's Option to the appropriate Representative.
A REPRESENTATIVE MAY OBTAIN THE FORMS USED TO EXERCISE THE SURVIVOR'S
OPTION FROM CITIBANK, N. A., THE TRUSTEE, AT 111 WALL STREET, 5TH FLOOR, NEW
YORK, NEW YORK 10043 (TELEPHONE (212) 412-6206), DURING NORMAL BUSINESS HOURS.
OPTIONAL REDEMPTION, REPAYMENT AND REPURCHASE
The Pricing Supplement relating to each Note will indicate either that
such Note cannot be redeemed prior to its Stated Maturity or that such Note will
be redeemable at the option of the Company, in whole or in part, and the date or
dates (each an 'Optional Redemption Date') on which such Note may be redeemed
and the price (the 'Redemption Price') at which (together with accrued interest
to such Optional Redemption Date) such Note may be redeemed on each such
Optional Redemption Date. The Company may exercise such option with respect to a
Note by notifying the Trustee for such Note at least 45 days prior to any
Optional Redemption Date. Unless otherwise specified in the applicable Pricing
Supplement, at least 30 but not more than 60 days prior to the date of
redemption,
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such Trustee shall mail notice of such redemption, first class, postage prepaid,
to the Holder of such Note. In the event of redemption of a Note in part only, a
new Note or Notes for the unredeemed portion thereof shall be issued to the
Holder thereof upon the cancellation thereof. The Notes will not be subject to
any sinking fund.
The Pricing Supplement relating to each Note will also indicate whether the
Holder of such Note will have the option to elect repayment of such Note by the
Company prior to its Stated Maturity, and, if so, such Pricing Supplement will
specify the date or dates on which such Note may be repaid (each an 'Optional
Repayment Date') and the price (the 'Optional Repayment Price') at which,
together with accrued interest to such Optional Repayment Date, such Note may be
repaid on each such Optional Repayment Date.
In order for a Note to be repaid, the Trustee for such Note must receive,
at least 30 but not more than 45 days prior to an Optional Repayment Date (i)
such Note with the form entitled 'Option to Elect Repayment' on the reverse
thereof duly completed, or (ii) a telegram, telex, facsimile transmission or
letter from a member of a national securities exchange or the National
Association of Securities Dealers, Inc. or a commercial bank or trust company in
the United States setting forth the name of the Holder of such Note, the
principal amount of such Note to be repaid, the certificate number or a
description of the tenor and terms of such Note, a statement that the option to
elect repayment is being exercised thereby and a guarantee that the Note to be
repaid with the form entitled 'Option to Elect Repayment' on the reverse of the
Note duly completed will be received by such Trustee not later than five
Business Days after the date of such telegram, telex, facsimile transmission or
letter. If the procedure described in clause (ii) of the preceding sentence is
followed, then such Note and form duly completed must be received by such
Trustee by such fifth Business Day. Any tender of a Note by the Holder for
repayment (except pursuant to a Reset Notice or an Extension Notice) shall be
irrevocable. The repayment option may be exercised by the Holder of a Note for
less than the entire principal amount of such Note provided that the principal
amount of such Note remaining outstanding after repayment is an authorized
denomination. Upon such partial repayment, such Note shall be cancelled and a
new Note or Notes for the remaining principal amount thereof shall be issued in
the name of the Holder of such repaid Note.
If a Note is represented by a Global Security, the Depositary's nominee
will be the Holder of such Note and therefore will be the only entity that can
exercise a right to repayment. In order to ensure that the Depositary's nominee
will timely exercise a right to repayment with respect to a particular Note, the
beneficial owner of such Note must instruct the broker or other direct or
indirect participant through which it holds an interest in such Note to notify
the Depositary of its desire to exercise a right to repayment. Different firms
have different cut-off times for accepting instructions from their customers
and, accordingly, each beneficial owner should consult the broker or other
direct or indirect participant through which it holds an interest in a Note in
order to ascertain the cut-off time by which such an instruction must be given
in order for timely notice to be delivered to the Depositary.
Notwithstanding anything in this Prospectus to the contrary, if a Note is
an Original Issue Discount Note, the amount payable on such Note in the event of
redemption or repayment prior to its Stated Maturity (other than pursuant to an
optional redemption by the Company at a stated Redemption Price) shall be the
Amortized Face Amount of such Note as of the date of redemption or the date of
repayment, as the case may be.
The Company may at any time purchase Notes at any price in the open market
or otherwise. Notes so purchased by the Company, may, at the discretion of the
Company, be held or resold or surrendered to the Trustee for cancellation. The
Notes will not be subject to a sinking fund.
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BOOK-ENTRY PROCEDURES AND SETTLEMENT
The Notes offered hereby will be issued only in book-entry form from the
perspective of beneficial owners of Notes ('Noteholders'), except as described
below under 'Certificated Notes'. Notes having the same Original Issue Date,
interest rate and Stated Maturity will typically be issued in the form of a
single Global Certificate registered in the name of a nominee of the Depositary
(Section 303).
The Depositary's nominee will be considered the sole Holder of the Notes
represented by a Global Certificate for all purposes of the Indenture. Owners of
beneficial interests in a Global Certificate will not be entitled to have Notes
registered in their names, will not receive or be entitled to receive physical
delivery of Notes in definitive form and will not be considered the Holders of
Notes under the Indenture (except as described below under 'Certificated
Notes').
A Noteholder's beneficial ownership of a Note will be recorded on or
through the records of the brokerage firm or other entity that maintains such
Noteholder's account. In turn, the total number of Notes held by an individual
brokerage firm or other entity for its clients will be maintained on the records
of the Depositary in the name of such brokerage firm or other entity (or in the
name of a Participant (as defined below) that acts as the agent for the
Noteholder's brokerage firm or other entity if it is not a Participant).
Therefore, a Noteholder must rely upon the records of such brokerage firm or
other entity to evidence such Noteholder's beneficial ownership of a Note.
Transfer of ownership of any Note may be effected only through the selling
Noteholder's brokerage firm or such other entity.
The Depositary has advised the Company as follows: The Depositary is a
limited-purpose trust company organized under New York Banking Law, a 'banking
organization' within the meaning of the New York Banking Law, a member of the
Federal Reserve System, a 'clearing corporation' within the meaning of the New
York Uniform Commercial Code, and a 'clearing agency' registered pursuant to the
provisions of Section 17A of the Exchange Act. The Depositary was created to
hold securities of its Participants and to facilitate the clearance and
settlement of transactions among its Participants in such securities through
electronic book-entry changes in accounts of the Participants, thereby
eliminating the need for physical movement of securities certificates.
Participants include securities brokers and dealers (including the Underwriter),
banks, trust companies, clearing corporations and certain other organizations,
some of whom (and/or their representatives) own the Depositary. Access to the
Depositary's book-entry system is also available to others, such as banks,
brokers, dealers and trust companies that clear through or maintain a custodial
relationship with a Participant, either directly or indirectly.
PAYMENTS OF INTEREST AND PRINCIPAL
Payments of interest and principal on a Note payable on any Interest
Payment Date and at Stated Maturity will be made by the Company to the Trustee
in immediately available funds, unless such Note is represented by an individual
certificate. See 'Certificated Notes' below. Thereafter on such Interest Payment
Date or at Stated Maturity, the Trustee will pay to the Depositary, in funds
immediately available to the Depositary, the amount of interest and principal
(if any) due on such date. Any payment required to be made in respect of a Note
on a day (including the day of Stated Maturity) that is not a Business Day need
not be made on such day, but may be made on the next succeeding Business Day
with the same force and effect as if made on such day, and no additional
interest shall accrue as a result of such delayed payment. 'Business Day' with
respect to any Note means any day, other than a Saturday or Sunday, that is (i)
not a day on which banking institutions are authorized or required by law or
regulation to be closed in the City of New York and (ii) if such Note is a LIBOR
Note (as defined below), a London Banking Day. 'London Banking Day' with respect
to any Note means any day on which dealings in deposits in U.S. dollars are
transacted in the London interbank market.
Unless otherwise specified in the applicable Pricing Supplement, if the
principal of any Discount Note is declared to be due and payable immediately as
described under 'Description of the Notes--Events of Default', the amount of
principal due and payable with respect to such Note shall be limited to the
aggregate principal amount of such Note multiplied by the sum of the Issue Price
(expressed as a
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percentage of the aggregate principal amount) plus the original issue discount
amortized from the date of issue to the date of declaration, which amortization
shall be calculated using the 'interest method' (computed in accordance with
generally accepted accounting principles in effect on the date of declaration).
The Depositary will be responsible for crediting the payments on the
Notes that it receives from the Trustee to the accounts of Participants in
accordance with procedures that provide for payment in same-day funds. Each
Participant will be responsible for disbursing such payments to the
Noteholders that it represents and to each brokerage firm or other entity for
which it acts as agent. Each such brokerage firm or other entity will be
responsible for disbursing funds to the Noteholders that it represents.
All moneys paid by the Company to the Trustee or any other Paying Agent for
the payment of principal of or interest on any Note that remain unclaimed at the
end of two years after such principal or interest shall have become due and
payable will be repaid to the Company, and the Holder of such Note will
thereafter look only to the Company for payment thereof (Section 1204).
None of the Company, the Trustee or any other Paying Agent or Security
Registrar will have any responsibility or liability for any aspect of the
records relating to, or payments made on account of, beneficial ownership
interests in the Notes, or for maintaining, supervising or reviewing any records
relating to such beneficial ownership interests.
FIXED RATE NOTES
Each Fixed Rate Note will bear interest from its Original Issue Date, or
from the last Interest Payment Date to which interest has been paid or duly
provided for, at the rate per annum stated in the applicable Pricing Supplement
until the principal amount thereof is paid or made available for payment, except
that if so specified in the applicable Pricing Supplement, the rate of interest
payable on certain Fixed Rate Notes may be subject to adjustment from time to
time as described in such Pricing Supplement. Unless otherwise specified in the
applicable Pricing Supplement, if an Interest Payment Date with respect to any
Fixed Rate Note would otherwise be a day that is not a Business Day, such
Interest Payment Date shall not be postponed; provided, however, that any
payment required to be made in respect of such Note on a date (including the day
of Stated Maturity) that is not a Business Day for such Note need not be made on
such date, but may be made on the next succeeding Business Day with the same
force and effect as if made on such date, and no additional interest shall
accrue as a result of such delayed payment. However, if with respect to any
Fixed Rate Note, 'Accrue to Pay' is specified in the applicable Pricing
Supplement, and any Interest Payment Date with respect to such Fixed Rate Note
would otherwise be a day that is not a Business Day, such Interest Payment Date
shall be postponed to the next succeeding Business Day. Each payment of interest
in respect of an Interest Payment Date shall include interest accrued through
the day before such Interest Payment Date. Unless otherwise specified in the
applicable Pricing Supplement, interest on Fixed Rate Notes will be computed on
the basis of a 360-day year of twelve 30-day months ('30 over 360').
FLOATING RATE NOTES
From its Original Issue Date to but not including the first Interest Reset
Date (the 'Initial Interest Period'), each Floating Rate Note will bear interest
at the Initial Interest Rate set forth, or otherwise described in the Pricing
Supplement. From each Interest Reset Date to but not including the following
Interest Reset Date (each such period, an 'Interest Reset Period'; and together
with the Initial Interest Period, the 'Interest Periods'), the interest rate for
each Floating Rate Note will be determined by reference to an interest rate
basis (the 'Base Rate'), plus or minus the Spread, if any, or multiplied by the
Spread Multiplier, if any. The 'Spread' is the number of basis points that may
be specified in the applicable Pricing Supplement as being applicable to such
Note, and the 'Spread Multiplier' is the percentage that may be specified in the
applicable Pricing Supplement as being applicable to such Note, except that if
so specified in the applicable Pricing Supplement, the Spread or Spread
Multiplier
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on certain Floating Rate Notes may be subject to adjustment from time to time as
described in such Pricing Supplement. The applicable Pricing Supplement will
designate one of the following Base Rates as applicable to a Floating Rate Note:
(i) LIBOR (a 'LIBOR Note'), (ii) the Commercial Paper Rate (a 'Commercial Paper
Rate Note'), (iii) the Treasury Rate (a 'Treasury Rate Note'), (iv) the Federal
Funds Rate (a 'Federal Funds Rate Note') or (v) the CD Rate (a 'CD Rate Note').
The 'Index Maturity' for any Floating Rate Note is the period of maturity of the
instrument or obligation from which the Base Rate is calculated. 'H.15(519)'
means the publication entitled 'Statistical Release H.15(519), 'Selected
Interest Rates', or any successor publication, published by the Board of
Governors of the Federal Reserve System. 'Composite Quotations' means the daily
statistical release entitled 'Composite 3:30 p.m. Quotations for U.S. Government
Securities' published by the Federal Reserve Bank of New York.
As specified in the applicable Pricing Supplement, a Floating Rate Note may
also have either or both of the following (in each case expressed as a rate per
annum on a simple interest basis): (i) a maximum limitation, or ceiling, on the
rate at which interest may accrue during any interest period ('Maximum Interest
Rate') and (ii) a minimum limitation, or floor, on the rate at which interest
may accrue during any interest period ('Minimum Interest Rate'). In addition to
any Maximum Interest Rate that may be applicable to any Floating Rate Note, the
interest rate on a Floating Rate Note will in no event be higher than the
maximum rate permitted by applicable law, as the same may be modified by United
States law of general application. The Notes will be governed by the law of the
State of New York and, under such law as of the date of this Prospectus
Supplement, the maximum rate of interest under provisions of the penal law, with
certain exceptions, is 25% per annum on a simple interest basis. Such maximum
rate of interest only applies to obligations that are less than $2,500,000.
The Company will appoint, and enter into agreements with, agents (each a
'Calculation Agent') to calculate interest rates on Floating Rate Notes. Unless
otherwise specified in a Pricing Supplement, Citibank, N.A. shall be the
Calculation Agent for each Note. All determinations of interest by the
Calculation Agent shall, in the absence of manifest error, be conclusive for all
purposes and binding on the holders of the Floating Rate Notes.
The interest rate on each Floating Rate Note will be reset daily, weekly,
monthly, quarterly, semiannually or annually (each day on which the interest
rate is reset, an 'Interest Reset Date'), as specified in the applicable Pricing
Supplement. Unless otherwise specified in the applicable Pricing Supplement, the
Interest Reset Period will be monthly for Floating Rate Notes on which interest
is payable monthly, quarterly for Floating Rate Notes on which interest is
payable quarterly, and semiannually for Floating Rate Notes on which interest is
payable semiannually. Unless otherwise specified in the applicable Pricing
Supplement, the Interest Reset Dates will be, in the case of Floating Rate Notes
that reset daily, each Business Day; in the case of Floating Rate Notes (other
than Treasury Rate Notes) that reset weekly, Wednesday of each week; in the case
of Treasury Rate Notes that reset weekly, Tuesday of each week (except as
provided below under 'Treasury Rate Notes'); in the case of Floating Rate Notes
that reset monthly, quarterly or semiannually, each Interest Payment Date other
than the Final Interest Payment Date; provided, however,that in all instances
involving Floating Rate Notes issued prior to September 16, 1994 the interest
rate in effect for the ten days immediately prior to Stated Maturity will be
that in effect on the tenth day preceding Stated Maturity. If an Interest Reset
Date for any Floating Rate Note would otherwise be a day that is not a Business
Day, such Interest Reset Date shall be postponed to the next succeeding Business
Day, except that, in the case of a LIBOR Note, if such Business Day is in the
next succeeding calendar month, such Interest Reset Date shall be the
immediately preceding Business Day.
Unless otherwise specified in the applicable Pricing Supplement, the rate
of interest that goes into effect on any Interest Reset Date shall be determined
on a date (the 'Rate Determination Date') preceding such Interest Reset Date, as
further described below. Such Rate Determination Date may be referred to below
as a 'CD Rate Determination Date' in the case of a CD Rate Note, a 'Commercial
Paper Rate Determination Date' in the case of a Commercial Paper Rate Note, a
'Federal Funds Rate
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Determination Date' in the case of a Federal Funds Rate Note, a 'LIBOR
Determination Date' in the case of a LIBOR Note or a 'Treasury Rate
Determination Date' or a 'Constant Maturity Treasury Rate Determination Date' in
the case of a Treasury Rate Note.
Unless otherwise specified in the applicable Pricing Supplement, interest
payable in respect of Floating Rate Notes shall be the accrued interest from and
including the Original Issue Date or the last date to which interest has been
paid, as the case may be, to but excluding the applicable Interest Payment Date.
In the case of a Floating Rate Note that resets daily or weekly, interest
payable shall be the accrued interest from and including the Original Issue Date
or the last date to which interest has been accrued and paid, as the case may
be, to but excluding the Record Date immediately preceding the applicable
Interest Payment Date, except that, at Stated Maturity, interest payable will
include interest accrued to but excluding the date of Stated Maturity.
With respect to a Floating Rate Note with more than one Interest Reset Date
during any period for which accrued interest is being calculated, accrued
interest shall be calculated by multiplying the principal amount of such Note by
an accrued interest factor. Such accrued interest factor will be computed by
adding the interest factors calculated for each day in the period for which
accrued interest is being calculated. The interest factor (expressed as a
decimal calculated to seven decimal places without rounding) for each such day
is computed, unless otherwise specified in the applicable Pricing Supplement, by
dividing the interest rate in effect on such day by 360 ('Actual over 360'), in
the case of LIBOR Notes, Commercial Paper Rate Notes, Federal Funds Rate Notes
and CD Rate Notes, or by the actual number of days in the year ('Actual over
Actual'), in the case of Treasury Rate Notes. For purposes of making the
foregoing calculation, the interest rate in effect on any Interest Reset Date
will be the applicable rate as reset on such date. With respect to all other
Floating Rate Notes, accrued interest shall be calculated by multiplying the
principal amount of such Note (or, in the case of a Floating Rate Note that is
an Indexed Principal Note, its Face Amount) by the interest rate in effect
during the period for which accrued interest is being calculated, and
multiplying that product by the quotient obtained by dividing the number of days
in the period for which accrued interest is being calculated by 360, in the case
of LIBOR Notes, Commercial Paper Rate Notes, Federal Funds Rate Notes and CD
Rate Notes, or by the actual number of days in the year, in the case of Treasury
Rate Notes.
Unless otherwise specified in the applicable Pricing Supplement, all
percentages resulting from any calculation of the rate of interest on a Floating
Rate Note will be rounded, if necessary, to the nearest 1/100,000 of 1%
(.0000001), with five one-millionths of a percentage point rounded upward, and
all currency amounts used in or resulting from such calculation on Floating Rate
Notes will be rounded to the nearest one-hundredth of a unit (with .005 of a
unit being rounded upward).
If an Interest Payment Date with respect to any Floating Rate Note would
otherwise be a day that is not a Business Day, such Interest Payment Date shall
be postponed to the next succeeding Business Day, except that, in the case of a
LIBOR Note, if such Business Day is in the next succeeding calendar month, such
Interest Payment Date shall be the immediately preceding Business Day; provided,
however, if with respect to any Floating Rate Note, the applicable Pricing
Supplement provides that the Note does not Accrue to Pay, if an Interest Payment
Date with respect to such Floating Rate Note would otherwise be a day that is
not a Business Day, such Interest Payment Date shall not be postponed; provided,
further, that any payment required to be made in respect of a Floating Rate Note
that is not Accrue to Pay on a date (including the day of Stated Maturity)that
is not a Business Day for such Note need not be made on such date, but may be
made on the next succeeding Business Day with the same force and effect as if
made on such dates, and no additional interest shall accrue as a result of such
delayed payment.
Upon the request of the Holder of any Floating Rate Note, the Calculation
Agent for such Note will provide the interest rate then in effect and, if
determined, the interest rate that will become effective on the next Interest
Reset Date with respect to such Floating Rate Note.
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CD Rate Notes
Each CD Rate Note will bear interest for each Interest Reset Period at the
interest rate calculated with reference to the CD Rate and the Spread or Spread
Multiplier, if any, specified in such Note and in the applicable Pricing
Supplement.
Unless otherwise specified in the applicable Pricing Supplement, the 'CD
Rate' for each Interest Reset Period shall be the rate as of the second Business
Day prior to the Interest Reset Date for such Interest Reset Period (a 'CD Rate
Determination Date') for negotiable certificates of deposit having the Index
Maturity designated in the applicable Pricing Supplement as published in
H.15(519) under the heading 'CDs (Secondary Market)'. In the event that such
rate is not published prior to 3:00 p.m., New York City time, on the Calculation
Date (as defined below) pertaining to such CD Rate Determination Date, then the
'CD Rate' for such Interest Reset Period will be the rate on such CD Rate
Determination Date for negotiable certificates of deposit of the Index Maturity
designated in the applicable Pricing Supplement as published in Composite
Quotations under the heading 'Certificates of Deposit'. If by 3:00 p.m., New
York City time, on such Calculation Date such rate is not yet published in
either H.15(519) or Composite Quotations, then the 'CD Rate' for such Interest
Reset Period will be calculated by the Calculation Agent for such CD Rate Note
and will be the arithmetic mean of the secondary market offered rates as of
10:00 a.m., New York City time, on such CD Rate Determination Date of three
leading nonbank dealers in negotiable U.S. dollar certificates of deposit in The
City of New York selected by the Calculation Agent for such CD Rate Note for
negotiable certificates of deposit of major United States money center banks of
the highest credit standing (in the market for negotiable certificates of
deposit) with a remaining maturity closest to the Index Maturity designated in
the Pricing Supplement in a denomination of $5,000,000; provided, however, that
if the dealers selected as aforesaid by such Calculation Agent are not quoting
offered rates as mentioned in this sentence, the 'CD Rate' for such Interest
Reset Period will be the same as the CD Rate for the immediately preceding
Interest Reset Period (or, if there was no such Interest Reset Period, the
Initial Interest Rate).
The 'Calculation Date' pertaining to any CD Rate Determination Date shall
be the tenth calendar day after such CD Rate Determination Date or, if such day
is not a Business Day, the next succeeding Business Day.
Commercial Paper Rate Notes
Each Commercial Paper Rate Note will bear interest for each Interest Reset
Period at the interest rate calculated with reference to the Commercial Paper
Rate and the Spread or Spread Multiplier, if any, specified in such Note and in
the applicable Pricing Supplement.
Unless otherwise specified in the applicable Pricing Supplement, the
'Commercial Paper Rate' for each Interest Reset Period will be determined by the
Calculation Agent for such Commercial Paper Rate Note as of the second Business
Day prior to the Interest Reset Date for such Interest Reset Period (a
'Commercial Paper Rate Determination Date') and shall be the Money Market Yield
(as defined below)on such Commercial Paper Rate Determination Date of the rate
for commercial paper having the Index Maturity specified in the applicable
Pricing Supplement, as such rate shall be published in H.15(519)under the
heading 'Commercial Paper'. In the event that such rate is not published prior
to 3:00 p.m., New York City time, on the Calculation Date (as defined below)
pertaining to such Commercial Paper Rate Determination Date, then the
'Commercial Paper Rate' for such Interest Reset Period shall be the Money Market
Yield on such Commercial Paper Rate Determination Date of the rate for
commercial paper of the specified Index Maturity as published in Composite
Quotations under the heading 'Commercial Paper'. If by 3:00 p.m., New York City
time, on such Calculation Date such rate is not yet published in either
H.15(519) or Composite Quotations, then the 'Commercial Paper Rate' for such
Interest Reset Period shall be the Money Market Yield of the arithmetic mean of
the offered rates, as of 11:00 a.m., New York City time, on such Commercial
Paper Rate Determination Date of three leading dealers of commercial paper in
The City of New York selected by the Calculation Agent for such Commercial Paper
Rate Note for commercial paper of the specified Index Maturity placed for an
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industrial issuer whose bonds are rated 'AA' or the equivalent by a nationally
recognized rating agency; provided, however, that if the dealers selected as
aforesaid by such Calculation Agent are not quoting offered rates as mentioned
in this sentence, the 'Commercial Paper Rate' for such Interest Reset Period
will be the same as the Commercial Paper Rate for the immediately preceding
Interest Reset Period (or, if there was no such Interest Reset Period, the
Initial Interest Rate).
'Money Market Yield' shall be a yield calculated in accordance with the
following formula:
D X 360
Money Market Yield = -------------- X 100
360 - (D X M)
where 'D' refers to the applicable per annum rate for commercial paper quoted on
a bank discount basis and expressed as a decimal, and 'M' refers to the actual
number of days in the specified Index Maturity.
The 'Calculation Date' pertaining to any Commercial Paper Rate
Determination Date shall be the tenth calendar day after such Commercial Paper
Rate Determination Date or, if such day is not a Business Day, the next
succeeding Business Day.
Federal Funds Rate Notes
Each Federal Funds Rate Note will bear interest for each Interest Reset
Period at the interest rate calculated with reference to the Federal Funds Rate
and the Spread or Spread Multiplier, if any, specified in such Note and in the
applicable Pricing Supplement.
Unless otherwise specified in the applicable Pricing Supplement, the
'Federal Funds Rate' for each Interest Reset Period shall be the effective rate
on the Interest Reset Date for such Interest Reset Period (a 'Federal Funds Rate
Determination Date') for Federal Funds as published in H.15(519) under the
heading 'Federal Funds (Effective)'. In the event that such rate is not
published prior to 3:00 p.m., New York City time, on the Calculation Date (as
defined below) pertaining to such Federal Funds Rate Determination Date, the
'Federal Funds Rate' for such Interest Reset Period shall be the rate on such
Federal Funds Rate Determination Date as published in Composite Quotations under
the heading 'Federal Funds/Effective Rate'. If by 3:00 p.m., New York City time,
on such Calculation Date such rate is not yet published in either H.15(519) or
Composite Quotations, then the 'Federal Funds Rate' for such Interest Reset
Period shall be the rate on such Federal Funds Rate Determination Date made
publicly available by the Federal Reserve Bank of New York which is equivalent
to the rate which appears in H.15(519) under the heading 'Federal Funds
(Effective)'; provided, however, that if such rate is not made publicly
available by the Federal Reserve Bank of New York by 3:00 p.m., New York City
time, on such Calculation Date, the 'Federal Funds Rate' for such Interest Reset
Period will be the same as the Federal Funds Rate in effect for the immediately
preceding Interest Reset Period (or, if there was no such Interest Reset Period,
the Initial Interest Rate). In the case of a Federal Funds Rate Note that resets
daily, the interest rate on such Note for the period from and including a Monday
to but excluding the succeeding Monday will be reset by the Calculation Agent
for such Note on such second Monday (or, if not a Business Day, on the next
succeeding Business Day) to a rate equal to the average of the Federal Funds
Rates in effect with respect to each such day in such week.
The 'Calculation Date' pertaining to any Federal Funds Rate Determination
Date shall be the next succeeding Business Day.
LIBOR Notes
Each LIBOR Note will bear interest for each Interest Reset Period at the
interest rate calculated with reference to LIBOR and the Spread or Spread
Multiplier, if any, specified in such Note and in the applicable Pricing
Supplement.
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With respect to LIBOR indexed to the offered rates for U.S. dollar
deposits, 'LIBOR' for each Interest Reset Period will be determined by the
Calculation Agent for such LIBOR Notes as follows:
(i) On the second London Banking Day prior to the Interest Reset Date
for such Interest Reset Period (a 'LIBOR Determination Date'), the
Calculation Agent for such LIBOR Note will determine the offered rates for
deposits in U.S. dollars for the period of the Index Maturity specified in
the applicable Pricing Supplement, commencing on such Interest Reset Date,
which appear on the Designated LIBOR Page at approximately 11:00 a.m.,
London time, on such LIBOR Determination Date. If 'LIBOR Telerate' is
designated in the applicable Pricing Supplement, 'Designated LIBOR Page'
means the display designated as page '3750' on the Dow Jones Telerate
Service (or such other page as may replace page '3750' on such service or
such other service as may be nominated by the British Bankers' Association
for the purpose of displaying the London interbank offered rates of major
banks), and LIBOR for such Interest Reset Period will be the relevant
offered rate or determined by the Calculation Agent. If 'LIBOR Reuters' is
designated in the applicable Pricing Supplement, 'Designated LIBOR Page'
means the display designated as page 'LIBO' on the Reuters Monitor Money
Rates Service (or such other page as may replace the LIBO page on such
service or such other service as may be nominated by the British Bankers'
Association for the purpose of displaying London interbank offered rates of
major banks)provided that at least two such offered rates appear on the
Designated LIBOR Page, in which case 'LIBOR' for such Interest Reset Period
will be the arithmetic mean of such offered rates as determined by the
Calculation Agent for such LIBOR Note.
(ii) If LIBOR cannot be determined as above (either because the
Designated LIBOR Page is no longer available or because less than two rates
appear on page 'LIBO' on the Reuters Monitor Money Rate Services) on such
LIBOR Determination Date, the Calculation Agent for such LIBOR Note will
request the principal London offices of each of four major banks in the
London interbank market selected by such Calculation Agent to provide such
Calculation Agent with its offered quotations for deposits in the Specified
Currency for the period of the specified Index Maturity, commencing on such
Interest Reset Date, to prime banks in the London interbank market at
approximately 11:00 a.m., London time, on such LIBOR Determination Date and
in a principal amount equal to an amount of not less than $1,000,000 or the
equivalent thereof in the Specified Currency that is representative of a
single transaction in such market at such time. If at least two such
quotations are provided, 'LIBOR' for such Interest Reset Period will be the
arithmetic mean of such quotations. If fewer than two such quotations are
provided, 'LIBOR' for such Interest Reset Period will be the arithmetic
mean of rates quoted by three major banks in The City of New York selected
by the Calculation Agent for such LIBOR Note at approximately 11:00 a.m.,
New York City time, on such LIBOR Determination Date for loans in the
Specified Currency to leading European banks, for the period of the
specified Index Maturity, commencing on such Interest Reset Date, and in a
principal amount equal to an amount of not less than $1,000,000 or the
equivalent thereof in the Specified Currency that is representative of a
single transaction in such market at such time; provided, however, that if
fewer than three banks selected as aforesaid by such Calculation Agent are
quoting rates as mentioned in this sentence, 'LIBOR' for such Interest
Reset Period will be the same as LIBOR for the immediately preceding
Interest Reset Period (or, if there was no such Interest Reset Period, the
Initial Interest Rate).
Treasury Rate Notes
Each Treasury Rate Note will bear interest for each Interest Reset Period
at the interest rate calculated with reference to the Treasury Rate and the
Spread or Spread Multiplier, if any, specified in such Note and in the
applicable Pricing Supplement.
Unless 'Constant Maturity' is specified or unless otherwise specified in
the applicable Pricing Supplement, the 'Treasury Rate' for each Interest Reset
Period will be the rate for the auction held on the Treasury Rate Determination
Date (as defined below) for such Interest Reset Period of direct
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obligations of the United States ('Treasury securities') having the Index
Maturity specified in the applicable Pricing Supplement, as such rate shall be
published in H.15(519)under the heading 'U.S. Government Securities-Treasury
bills-auction average (investment)' or, in the event that such rate is not
published prior to 3:00 p.m., New York City time, on the Calculation Date (as
defined below) pertaining to such Treasury Rate Determination Date, the auction
average rate (expressed as a bond equivalent on the basis of a year of 365 or
366 days, as applicable, and applied on a daily basis) on such Treasury Rate
Determination Date as otherwise announced by the United States Department of the
Treasury. In the event that the results of the auction of Treasury securities
having the specified Index Maturity are not published or reported as provided
above by 3:00 p.m., New York City time, on such Calculation Date, or if no such
auction is held on such Treasury Rate Determination Date, then the 'Treasury
Rate' for such Interest Reset Period shall be calculated by the Calculation
Agent for such Treasury Rate Note and shall be a yield to maturity (expressed as
a bond equivalent on the basis of a year of 365 or 366 days, as applicable, and
applied on a daily basis) of the arithmetic mean of the secondary market bid
rates, as of approximately 3:30 p.m., New York City time, on such Treasury Rate
Determination Date, of three leading primary United States government securities
dealers selected by such Calculation Agent for the issue of Treasury securities
with a remaining maturity closest to the specified Index Maturity; provided,
however, that if the dealers selected as aforesaid by such Calculation Agent are
not quoting bid rates as mentioned in this sentence, then the 'Treasury Rate'
for such Interest Reset Period will be the same as the Treasury Rate for the
immediately preceding Interest Reset Period (or, if there was no such Interest
Reset Period, the Initial Interest Rate).
The 'Treasury Rate Determination Date' for each Interest Reset Period will
be the day of the week in which the Interest Reset Date for such Interest Reset
Period falls on which Treasury securities would normally be auctioned. Treasury
securities are normally sold at auction on Monday of each week, unless that day
is legal holiday, in which case the auction is normally held on the following
Tuesday, except that such auction may be held on the preceding Friday. If, as
the result of a legal holiday, an auction is so held on the preceding Friday,
such Friday will be the Treasury Rate Determination Date pertaining to the
Interest Reset Period commencing in the next succeeding week. If an auction date
shall fall on any day that would otherwise be an Interest Reset Date for a
Treasury Rate Note, then such Interest Reset Date shall instead be the Business
Day immediately following such auction date.
If 'Constant Maturity' is specified in the applicable Pricing Supplement,
the 'Treasury Rate' for each Interest Reset Period will be the rate that is set
forth in the Federal Reserve Board publication H.15(519) opposite the caption
'U.S. Government/Securities/Treasury Constant Maturities/' in the Index Maturity
with respect to the applicable Constant Maturity Treasury Rate Determination
Date (as defined below). If the H.15(519) is not published, the 'Constant
Maturity-Treasury Rate' shall be the rate that was set forth on Telerate Page
7055, or its successor page (as determined by the Calculation Agent), on the
applicable Constant Maturity Treasury Rate Determination Date opposite the
applicable Index Maturity. If no such rate is set forth, then the Constant
Maturity Treasury Rate for such Interest Reset Period shall be established by
the Calculation Agent as follows. The Calculation Agent will contact the Federal
Reserve Board and request the Constant Maturity Treasury Rate, in the applicable
Index Maturity, for the Constant Maturity Treasury Determination Date. If the
Federal Reserve Board does not provide such information, then the Constant
Maturity Treasury Rate for such Interest Reset Date will be the arithmetic mean
of bid-side quotations, expressed in terms of yield, reported by three leading
U.S. government securities dealers (one of which may be Salomon Brothers Inc),
according to their written records, as of 3:00 p.m. (New York City time) on the
Constant Maturity Treasury Rate Determination Date, for the noncallable U.S.
Treasury Note that is nearest in maturity to the Index Maturity, but not less
than exactly the Index Maturity and for the noncallable U.S. Treasury Note that
is nearest in maturity to the Index Maturity, but not more than exactly the
Index Maturity. The Calculation Agent shall calculate the Constant Maturity
Treasury Rate by interpolating to the Index Maturity based on an actual/actual
date count basis, the yield on the two Treasury Notes selected. If the
Calculation Agent cannot obtain three such adjusted quotations, the Constant
Maturity Treasury Rate for such Interest Reset Date will be the arithmetic mean
of all such quotations, or if only one such quotation is
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obtained, such quotation, obtained by the Calculation Agent. In all events, the
Calculation Agent shall continue polling dealers until at least one adjusted
yield quotation can be determined.
'The Constant Maturity Treasury Rate Determination Date' shall be the tenth
Business Day prior to the Interest Reset Date for the applicable Interest Reset
Period.
The Treasury constant maturity rate for a Treasury security maturity (the
'CMT Rate') as published in H.15(519) as of any Business Day is intended to be
indicative of the yield of a U.S. Treasury security having as of such Business
Day a remaining term to maturity equivalent to such maturity. The CMT Rate as of
any Business Day is based upon an interpolation by the U.S. Treasury of the
daily yield curve of outstanding Treasury securities. This yield curve, which
relates the yield on a security to its time to maturity, is based on the
over-the-counter market bid yields on actively traded Treasury securities. Such
yields are calculated from composites of quotations reported by leading U.S.
government securities dealers, which may include Salomon Brothers Inc. Certain
constant maturity yield values are read from the yield curve. Such interpolation
from the yield curve provides a theoretical yield for a Treasury security having
ten years to maturity, for example, even if no outstanding Treasury security has
as of such date exactly ten years remaining to maturity.
The 'Calculation Date' pertaining to any Treasury Rate Determination Date
or Constant Maturity Rate Determination Date, as applicable, shall be the tenth
calendar day after such Treasury Rate Determination Date or Constant Maturity
Rate Determination Date, as applicable, or, if such a day is not a Business Day,
the next succeeding Business Day.
AMORTIZING NOTES
The Company may from time to time offer Notes ('Amortizing Notes') on which
a portion or all the principal amount is payable prior to Stated Maturity in
accordance with a schedule or by application of a formula. Further information
concerning additional terms and conditions of any Amortizing Notes, including
terms for repayment thereof, will be set forth in the applicable Pricing
Supplement.
CERTIFICATED NOTES
If the Depositary is at any time unwilling or unable to continue as
depositary and a successor depositary is not appointed by the Company within 90
days, the Company will issue Notes in definitive form in exchange for each
Global Certificate. In addition, the Company may at any time and in its sole
discretion determine not to have Notes represented by Global Certificates and,
in such event, will issue individual Notes in definitive form in exchange for
Global Certificates. In either instance, a beneficial owner of Notes represented
by a Global Certificate will be entitled to have such Notes registered in its
name and will be entitled to physical delivery of such Notes in definitive form.
Individual Notes so issued will be issued as registered Debt Securities, without
coupons, in one or more authorized denominations as described above under
'General' (Section 305). Payments of interest on such Notes (other than interest
payable at Stated Maturity) will be made by check mailed to the registered
Holders thereof. Principal and interest payable at the Stated Maturity of any
such Note will be paid in immediately available funds upon surrender of such
Note at the corporate trust office or agency of the Trustee in the City of New
York (Section 307).
Certificated Notes may be transferred or exchanged at the corporate trust
office or agency of the Trustee in the City of New York, subject to the
limitations provided in the Indenture, without the payment of any service
charge, other than any tax or governmental charge payable in connection
therewith (Section 305).
If a certificated Note is mutilated, destroyed, lost or stolen, it may be
replaced at the corporate trust office or agency of the Trustee in the City of
New York upon payment by the Holder of such expenses as may be incurred by the
Company and the Trustee in connection therewith and the furnishing of such
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evidence and indemnity as the Company and the Trustee may require. Mutilated
Notes must be surrendered before new Notes will be issued (Section 306).
LIMITATION ON LIENS
The Indenture provides that the Company will not, and will not permit any
Restricted Subsidiary to, incur, issue, assume, guarantee or suffer to exist any
indebtedness for borrowed money if the payment of such indebtedness is secured
by a pledge of, lien on or security interest in any shares of stock of any
Restricted Subsidiary without effectively providing for the equal and ratable
securing of the payment of the Notes (Section 1205). The term 'Restricted
Subsidiary' is defined in the Indenture to mean each of Phibro Inc. and Salomon
Brothers Inc and any Subsidiary of the Company owning, directly or indirectly,
any of the common stock of, or succeeding to any substantial part of the
business now conducted by, any of such corporations.
EVENTS OF DEFAULT
The following events will constitute Events of Default with respect to the
Notes under the Indenture: (i) default in the payment of the principal of (and
premium, if any, on) any Note when due; (ii) default for 30 days in the payment
of any interest on any Note when due; (iii) default in the performance of any
other applicable covenant in the Indenture, continued for 60 days after written
notice thereof by the Trustee or the Holders of at least 25% in principal amount
of the Notes then Outstanding; and (iv) certain events of bankruptcy, insolvency
or reorganization (Section 501).
The Indenture provides that if an Event of Default specified therein shall
occur and be continuing, either the Trustee thereunder or the Holders of at
least 25% in principal amount of the Notes then Outstanding may declare the
principal of and all accrued interest on all such Notes to be due and payable
immediately. In certain cases, the Holders of a majority in principal amount of
the Outstanding Notes may on behalf of the Holders of all such Notes waive,
rescind and annul such declaration and its consequences (Section 502).
The Indenture contains a provision entitling the Trustee, subject to the
duty of the Trustee during the continuance of an Event of Default to act with
the required standard of care, to be indemnified by the Holders of the Notes
before proceeding to exercise any right or power under the Indenture with
respect to the Notes at the request of such Holders (Section 603). The Indenture
provides that no Holder of a Note may institute any proceeding, judicial or
otherwise, to enforce the Indenture except in the case of failure of the
Trustee, for 60 days, to act after it receives (i) written notice of such Event
of Default from such Holder, (ii) a written request to enforce the Indenture by
the Holders of at least 25% in principal amount of the Notes then Outstanding
(and the Trustee receives no direction inconsistent with such written request
from the Holders of a majority in principal amount of the Notes then
Outstanding) and (iii) an offer of reasonable indemnity (Section 507). This
provision will not prevent any Holder of a Note from enforcing payment of the
principal thereof (and premium, if any, thereon) and interest thereon at the
respective due dates thereof (Section 508). The Holders of a majority in
principal amount of the Notes then Outstanding may direct the time, method and
place of conducting any proceedings for any remedy available to the Trustee or
of exercising any trust or power conferred on the Trustee with respect to the
Notes. However, the Trustee may refuse to follow any direction that conflicts
with law or the Indenture or that would be unjustly prejudicial to Holders not
joining therein (Section 512).
The Indenture provides that the Trustee will, within 90 days after the
occurrence of any default with respect to the Notes, give to the Holders of
Notes notice of each such default known to the Trustee, unless such default
shall have been cured or waived; but, except in the case of a default in the
payment of the principal of (and premium, if any) or interest on any Note, the
Trustee shall be protected in withholding such notice if it determines in good
faith that the withholding of such notice is in the interest of the Holders of
Notes (Section 602).
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The Company will be required to file annually with the Trustee a
certificate of an appropriate officer of the Company as to the absence of
certain defaults under the terms of the Indenture (Section 1206).
MODIFICATION AND WAIVER
The Indenture contains provisions for convening meetings of Holders to
consider matters affecting their interests (Article Nine).
Modifications of and amendments to the Indenture may be made by the Company
and the Trustee with the consent of the Holders of a majority in principal
amount of the Outstanding Debt Securities of each series affected by such
modification or amendment; provided, however, that no such modification or
amendment may, among other things, without the consent of the Holder of each
Outstanding Debt Security affected thereby: (i) change the Stated Maturity of
the principal of, or any installment of interest payable on, any Debt Security;
(ii) reduce the principal amount of, or any interest on or any premium payable
upon redemption of, any Debt Security; (iii) impair the right to institute suit
for the enforcement of any payment on or with respect to any Debt Security; or
(iv) reduce the percentage of the principal amount of the Outstanding Debt
Securities of any series, the consent of the Holders of which is required for
modification or amendment of the Indenture or for waiver of compliance with
certain provisions of the Indenture or waiver of certain defaults (Section
1102).
The Holders of a majority in principal amount of the Outstanding Debt
Securities of each series may, on behalf of all Holders of Debt Securities of
that series, waive, insofar as that series is concerned, compliance by the
Company with certain restrictive provisions of the Indenture before the time for
such compliance (Section 1207). The Holders of a majority in principal amount of
the Outstanding Debt Securities of each series may, on behalf of all Holders of
Debt Securities of that series, waive any past default under the Indenture with
respect to the Debt Securities of that series, except a default in the payment
of the principal of (and premium, if any) or any interest on any Debt Securities
or in respect of a covenant or provision the modification or amendment of which
would require the consent of the Holder of each Outstanding Debt Security
affected thereby (Section 513).
CONSOLIDATION, MERGER AND TRANSFER OR LEASE OF ASSETS
The Indenture provides that the Company may not consolidate with or merge
into any corporation, or transfer or lease its assets substantially as an
entirety to any Person, unless: (i) the successor corporation or transferee or
lessee (the 'Successor Corporation') is a corporation organized under the laws
of the United States or any political subdivision thereof; (ii) the Successor
Corporation assumes the Company's obligations under the Indenture and on the
Debt Securities; (iii) after giving effect to the transaction, no Event of
Default and no event that, after notice or lapse of time, or both, would become
an Event of Default shall have occurred and be continuing; and (iv) certain
other conditions are met (Section 1001).
CONCERNING THE TRUSTEE
The Company and certain of its subsidiaries maintain lines of credit and
have other customary banking relationships with the Trustee and certain of its
affiliates.
UNITED STATES TAX CONSIDERATIONS
The following is a summary of the principal U.S. Federal income tax
considerations that may be relevant to a holder of a Note that is (i) a U.S.
Person (as defined below) or that otherwise is subject to U.S. Federal income
taxation on a net income basis in respect of a Note (a 'U.S. Holder') or (ii) a
non-U.S. Person. This summary is based on U.S. Federal income tax laws,
regulations, rulings and decisions now in effect, all of which are subject to
prospective or retroactive change. Except to the extent discussed below under
'Non-United States Persons', this summary deals only with U.S. Holders
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that will hold Notes as capital assets. Except as expressly indicated, it deals
only with initial holders and does not address tax considerations applicable to
investors that may be subject to special tax rules, such as banks, insurance
companies, dealers in securities, persons that will hold Notes as a position in
a 'straddle' for tax purposes or as part of a 'synthetic security' or other
integrated investment (including a 'conversion transaction') comprised of a Note
and one or more other investments, or persons that have a 'functional currency'
other than the U.S. dollar. It does not include any description of the tax laws
of any state or local governments, or of any foreign government, that may be
applicable to the Notes or to the holders thereof.
As used in this Prospectus, 'U.S. Person' means a citizen or resident of
the United States, a corporation created or organized in or under the laws of
the United States, or a person otherwise subject to United States Federal income
taxation on its worldwide income.
Investors should consult their own tax advisors in determining the tax
consequences to them of holding Notes, including the application to their
particular situation of the U.S. Federal income tax considerations discussed
below, as well as the application of state, local or other tax laws.
U.S. HOLDERS
PAYMENTS OF INTEREST
In general, interest on a Note (other than certain payments on a Discount
Note, as defined and described below under 'Original Issue Discount') will be
taxable to a U.S. Holder as ordinary income at the time it is received or
accrued, depending on the holder's method of accounting for tax purposes.
ORIGINAL ISSUE DISCOUNT
The following discussion summarizes the United States Federal income tax
consequences to U.S. Holders of Notes issued with original issue discount
('OID'). U.S. Holders of Notes issued with OID generally will be subject to
special tax accounting rules provided in the Internal Revenue Code of 1986, as
amended (the 'Code'). Treasury Department regulations (the 'OID Regulations')
illustrate the rules provided by the Code.
General. A Note will be treated as issued with OID (a 'Discount Note') if
the excess of the Note's 'stated redemption price at maturity' over its issue
price is greater than a de minimis amount (set forth in the Code and the OID
Regulations). Generally, the issue price of a Note (or any Note that is part of
an issue of Notes) will be the first price at which a substantial amount of
Notes that are part of such issue of Notes are sold (other than to underwriters,
placement agents or wholesalers). Under the OID Regulations, the 'stated
redemption price at maturity' of a Note is the sum of all payments provided by
the Note that are not payments of 'qualified stated interest'. A 'qualified
stated interest' payment includes any stated interest payment on a Note that is
unconditionally payable at least annually at a single fixed rate (or at certain
floating rates) that appropriately takes into account the length of the interval
between stated interest payments.
In general, if the excess of a Note's stated redemption price at maturity
over its issue price is less than 1/4 of one percent of the Note's stated
redemption price at maturity multiplied by the number of complete years to
maturity, then such excess constitutes 'de minimis OID'. Under the OID
Regulations, unless the election described below under 'Election to Treat All
Interest as Original Issue Discount' is made, such a Note will not be treated as
issued with OID (in which case the following paragraphs under 'Original Issue
Discount' will not apply) and a U.S. Holder of such a Note will recognize
capital gain with respect to such de minimis OID as stated principal payments on
the Note are made. The amount of such gain with respect to each such payment
will equal the product of the total amount of the Note's de minimis OID and a
fraction, the numerator of which is the amount of the principal payment made and
the denominator of which is the stated principal amount of the Note.
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<PAGE>
In certain cases, Notes that bear stated interest and are issued at par may
be deemed to bear OID for Federal income tax purposes, with the result that the
inclusion of interest in income for Federal income tax purposes may vary from
the actual cash payments of interest made on such Notes, generally accelerating
income for cash method taxpayers. Under the OID Regulations, a Note may be a
Discount Note where, among other things, (i) a Note bearing interest at a
floating rate (a 'Floating Rate Note') provides for a maximum interest rate or a
minimum interest rate that is reasonably expected as of the issue date to cause
the yield on the debt instrument to be significantly less, in the case of a
maximum rate, or more, in the case of a minimum rate, than the expected yield
determined without the maximum or minimum rate, as the case may be; (ii) a
Floating Rate Note provides for significant front-loading or back-loading of
interest; or (iii) certain Notes bear interest at a floating rate in combination
with one or more other floating or fixed rates. Notice will be given in the
applicable Pricing Supplement when the Company determines that a particular Note
will be a Discount Note.
The Code and the OID Regulations provide rules that require a U.S. Holder
of a Discount Note having a maturity of more than one year from its date of
issue to include OID in gross income before the receipt of cash attributable to
such income, without regard to the holder's method of accounting for tax
purposes. The amount of OID includible in gross income by a U.S. Holder of a
Discount Note is the sum of the 'daily portions' of OID with respect to the
Discount Note for each day during the taxable year or portion of the taxable
year in which the U.S. Holder holds such Discount Note ('accrued OID'). The
daily portion is determined by allocating to each day in any 'accrual period' a
pro rata portion of the OID allocable to that accrual period. Under the OID
Regulations, accrual periods with respect to a Note may be any set of periods
(which may be of varying lengths) selected by the U.S. Holder as long as (i) no
accrual period is longer than one year and (ii) each scheduled payment of
interest or principal on the Note occurs on the first day or final day of an
accrual period.
The amount of OID allocable to an accrual period equals the excess of (a)
the product of the Discount Note's adjusted issue price at the beginning of the
accrual period and the Discount Note's yield to maturity (determined on the
basis of compounding at the close of each accrual period and properly adjusted
for the length of the accrual period) over (b) the sum of any payments of
qualified stated interest on the Discount Note allocable to the accrual period.
In the case of a Discount Note that is a Floating Rate Note, both the yield to
maturity and the qualified stated interest will be determined for these purposes
as though the Note will bear interest in all periods at a fixed rate generally
equal to the rate that would be applicable to interest payments on the Note on
its date of issue or, in the case of certain Floating Rate Notes, the rate that
reflects the yield that is reasonably expected for the Note. (Additional rules
may apply if interest on a Floating Rate Note is based on more than one interest
index). The 'adjusted issue price' of a Discount Note at the beginning of the
first accrual period is the issue price and at the beginning of any accrual
period thereafter is (x) the sum of the issue price of such Discount Note, the
accrued OID for each prior accrual period (determined without regard to the
amortization of any acquisition premium or bond premium, which are discussed
below), and the amount of any qualified stated interest on the Note that has
accrued prior to the beginning of the accrual period but is not payable until a
later date, less (y) any prior payments on the Discount Note that were not
qualified stated interest payments. If a payment (other than a payment of
qualified stated interest) is made on the first day of an accrual period, then
the adjusted issue price at the beginning of such accrual period is reduced by
the amount of the payment. All payments on a Discount Note (other than a payment
of qualified stated interest) generally will be viewed first as payments of
previously accrued OID (to the extent thereof), with payments made for the
earliest accrual periods first, and then as a payment of principal. If a portion
of the initial purchase price of a Note is attributable to interest that accrued
prior to the Note's issue date, the first stated interest payment on the Note is
to be made within one year of the Note's issue date and such payment will equal
or exceed the amount of pre-issuance accrued interest, then the issue price will
be decreased by the amount of pre-issuance accrued interest, in which case a
portion of the first stated interest payment will be treated as a return of the
excluded pre-issuance accrued interest and not as an amount payable on the Note.
20
<PAGE>
The OID Regulations contain certain special rules that generally allow any
reasonable method to be used in determining the amount of OID allocable to a
short initial accrual period (if all other accrual periods are of equal length)
and require that the amount of OID allocable to the final accrual period equal
the excess of the amount payable at the maturity of the Discount Note (other
than any payment of qualified stated interest) over the Discount Note's adjusted
issue price as of the beginning of such final accrual period. In addition, if an
interval between payments of qualified stated interest on a Discount Note
contains more than one accrual period, then the amount of qualified stated
interest payable at the end of such interval is allocated pro rata (on the basis
of their relative lengths) between the accrual periods contained in the
interval.
U.S. Holders of Discount Notes generally will have to include in income
increasingly greater amounts of OID over the life of the Notes.
Acquisition Premium. A U.S. Holder that purchases a Discount Note for an
amount in excess of its issue price but less than its stated redemption price at
maturity (any such excess being 'acquisition premium'), and that does not make
the election described below under 'Original Issue Discount--Election To Treat
All Interest as Original Issue Discount', is permitted to reduce the daily
portions of OID by a fraction, the numerator of which is the excess of the U.S.
Holder's purchase price for the Note over the issue price, and the denominator
of which is the excess of the sum of all amounts payable on the Note after the
purchase date, other than payments of qualified stated interest, over the Note's
issue price. Alternatively, a U.S. Holder may elect to compute OID accruals as
described under 'Original Issue Discount--General' above, treating the U.S.
Holder's purchase price as the issue price.
Short-Term Notes. Under the Code, special rules apply with respect to OID
on Notes that mature one year or less from the date of issuance ('Short-Term
Notes'). In general, a cash basis U.S. Holder of a Short-Term Note is not
required to include OID in income as it accrues for United States Federal income
tax purposes unless it elects to do so. Accrual basis U.S. Holders and certain
other U.S. Holders, including banks, regulated investment companies, dealers in
securities and cash basis U.S. Holders who so elect, are required to include OID
in income as it accrues on Short-Term Notes on a straight-line basis or, at the
election of the U.S. Holder, under the constant yield method (based on daily
compounding). In the case of U.S. Holders not required and not electing to
include OID in income currently, any gain realized on the sale or retirement of
Short-Term Notes will be ordinary income to the extent of the OID accrued on a
straight-line basis (unless an election is made to accrue the original issue
discount under the constant yield method) through the date of sale or
retirement. U.S. Holders who are not required and do not elect to include OID on
Short-Term Notes in income as it accrues will be required to defer deductions
for interest on borrowings allocable to Short-Term Notes in an amount not
exceeding the deferred income until the deferred income is realized.
Any U.S. Holder of a Short-Term Note can elect to apply the rules in the
preceding paragraph taking into account the amount of 'acquisition discount', if
any, with respect to the Note (rather than the OID with respect to such Note).
Acquisition discount is the excess of the stated redemption price at maturity of
the Short-Term Note over the U.S. Holder's purchase price therefor. Acquisition
discount will be treated as accruing on a ratable basis or, at the election of
the U.S. Holder, on a constant yield basis.
For purposes of determining the amount of OID subject to these rules, the
OID Regulations provide that no interest payments on a Short-Term Note are
qualified stated interest, but instead such interest payments are included in
the Short-Term Notes's stated redemption price at maturity.
NOTES PURCHASED AT A PREMIUM
Under the Code, a U.S. Holder that purchases a Note for an amount in excess
of its stated redemption price at maturity will not be subject to the OID rules
and may elect to treat such excess as 'amortizable bond premium', in which case
the amount of qualified stated interest required to be included in the U.S.
Holder's income each year with respect to interest on the Note will be reduced
by the amount of amortizable bond premium allocable (based on the Note's yield
to maturity) to such year.
21
<PAGE>
Any election to amortize bond premium is applicable to all bonds (other than
bonds the interest on which is excludible from gross income) held by the U.S.
Holder at the beginning of the first taxable year to which the election applies
or thereafter acquired by the U.S. Holder, and may not be revoked without the
consent of the Internal Revenue Service ('IRS'). See also 'Original Issue
Discount--Election to Treat All Interest as Original Issue Discount'.
NOTES PURCHASED AT A MARKET DISCOUNT
A Note, other than a Short-Term Note, will be treated as issued at a market
discount (a 'Market Discount Note') if the amount for which a U.S. Holder
purchased the Note is less than the Note's issue price, subject to a de minimis
rule similar to the rule relating to de minimis OID described under 'Original
Issue Discount--General'.
In general, any gain recognized on the maturity or disposition of a Market
Discount Note will be treated as ordinary income to the extent that such gain
does not exceed the accrued market discount on such Note. Alternatively, a U.S.
Holder of a Market Discount Note may elect to include market discount in income
currently over the life of the Market Discount Note. Such an election applies to
all debt instruments with market discount acquired by the electing U.S. Holder
on or after the first day of the first taxable year to which the election
applies and may not be revoked without the consent of the IRS.
Market discount accrues on a straight-line basis unless the U.S. Holder
elects to accrue such discount on a constant yield to maturity basis. Such an
election is applicable only to the Market Discount Note with respect to which it
is made and is irrevocable. A U.S. Holder of a Market Discount Note that does
not elect to include market discount in income currently generally will be
required to defer deductions for interest on borrowings allocable to such Note
in an amount not exceeding the accrued market discount on such Note until the
maturity or disposition of such Note.
The market discount rules do not apply to a Short-Term Note.
ELECTION TO TREAT ALL INTEREST AS ORIGINAL ISSUE DISCOUNT.
Any U.S. Holder may elect to include in gross income all interest that
accrues on a Note using the constant yield method described above under the
heading 'Original Issue Discount--General,' with the modifications described
below. For purposes of this election, interest includes stated interest, OID, de
minimis OID, market discount, acquisition discount, de minimis market discount
and unstated interest, as adjusted by any amortizable bond premium or
acquisition premium.
In applying the constant yield method to a Note with respect to which this
election has been made, the issue price of such Note will equal the electing
U.S. Holder's adjusted basis in the Note immediately after its acquisition, the
issue date of the Note will be the date of its acquisition by the electing U.S.
Holder, and no payments on the Note will be treated as payments of qualified
stated interest. This election is generally applicable only to the Note with
respect to which it is made and may not be revoked without the consent of the
IRS. If this election is made with respect to a Note with amortizable bond
premium, the electing U.S. Holder will be deemed to have elected to apply
amortizable bond premium against interest with respect to all debt instruments
with amortizable bond premium (other than debt instruments the interest on which
is excludible from gross income) held by such electing U.S. Holder as of the
beginning of the taxable year in which the election is made or any debt
instruments acquired thereafter. The deemed election with respect to amortizable
bond premium may not be revoked without the consent of the IRS.
If the election described above to apply the constant yield method to all
interest on a Note is made with respect to a Market Discount Note, as defined
above, then the electing U.S. Holder will be treated as having made the election
discussed above under 'Notes Purchased at a Market Discount' to include market
discount in income currently over the life all debt instruments held or
thereafter acquired by such U.S. Holder.
22
<PAGE>
PURCHASE, SALE AND RETIREMENT OF THE NOTES
A U.S. Holder's tax basis in a Note will generally equal its U.S dollar
cost, increased by the amount of any OID or market discount (or acquisition
discount, in the case of a Short-Term Note) included in the U.S. Holder's income
with respect to the Note and the amount, if any, of income attributable to de
minimis OID included in the U.S. Holder's income with respect to the Note, and
reduced by the sum of (i) the amount of any payments that are not qualified
stated interest payments, and (ii) the amount of any amortizable bond premium
applied to reduce interest on the Note. A U.S. Holder generally will recognize
gain or loss on the sale or retirement of a Note equal to the difference between
the amount realized on the sale or retirement and the U.S. Holder's tax basis in
such Note. Except to the extent described above under 'Original Issue
Discount--Short Term Notes' or 'Market Discount', and except to the extent
attributable to accrued but unpaid interest, gain or loss recognized on the sale
or retirement of a Note will be capital gain or loss and will be long-term
capital gain or loss if the Note was held for more than one year.
NON-UNITED STATES PERSONS
Under the U.S. Federal income tax laws as in effect on the date of this
Prospectus and subject to the discussion of backup withholding below, payments
of principal (and premium, if any) and interest, including OID, by the Company
or any agent of the Company (acting in its capacity as such) to any holder of a
Note that is not a U.S. Person will not be subject to U.S. Federal withholding
tax; provided, in the case of interest, including OID, that (i) such holder does
not actually or constructively own 10% or more of the total combined voting
power of all classes of stock of the Company entitled to vote, (ii) such holder
is not a controlled foreign corporation for U.S. tax purposes that is related to
the Company (directly or indirectly) through stock ownership and (iii) either
(A) the beneficial owner of the Note certifies to the Company or its agent,
under penalties of perjury, that it is not a U.S. Person and provides its name
and address or (B) a securities clearing organization, bank or other financial
institution that holds customers' securities in the ordinary course of its trade
or business (a 'financial institution') and holds the Note certifies to the
Company or its agent under penalties of perjury that such statement has been
received from the beneficial owner by it or by another financial institution and
furnishes the payor with a copy thereof.
If a holder of a Note that is not a U.S. Person is engaged in a trade or
business in the United States and interest, including OID, on the Note is
effectively connected with the conduct of such trade or business, such holder,
although exempt from the withholding tax discussed in the preceding paragraph
(provided that such holder furnishes a properly executed IRS Form 4224 on or
before any payment date to claim such exemption), may be subject to U.S. Federal
income tax on such interest, and OID, in the same manner as if it were a U.S.
Person. In addition, if such a holder is a foreign corporation, it may be
subject to a branch profits tax equal to 30% of its effectively connected
earnings and profits for the taxable year, subject to certain adjustments. For
purposes of the branch profits tax, interest (including OID) on a Note will be
included in the earnings and profits of such holder if such interest (or OID) is
effectively connected with the conduct by such holder of a trade or business in
the United States.
Any capital gain or market discount realized upon the sale, exchange,
retirement or other disposition of a Note by a holder that is not a U.S. Person
will not be subject to U.S. Federal income or withholding taxes if (i) such gain
is not effectively connected with a U.S. trade or business of the holder and
(ii) in the case of an individual, such holder (A) is not present in the United
States for 183 days or more in the taxable year of the sale, exchange,
retirement or other disposition or (B) does not have a tax home (as defined in
Section 911(d)(3) of the Code) in the United States in the taxable year of the
sale, exchange, retirement or other disposition and the gain is not attributable
to an office or other fixed place of business maintained by such individual in
the United States.
Notes held by an individual who is neither a citizen nor a resident of the
United States for U.S. Federal tax purposes at the time of such individual's
death will not be subject to U.S. Federal estate tax
23
<PAGE>
provided that the income from such Notes was not or would not have been
effectively connected with a U.S. trade or business of such individual and that
such individual qualified for the exemption from U.S. Federal withholding tax
(without regard to the certification requirements) that is described above.
Purchasers of Notes that are not a U.S. Person should consult their own tax
advisors with respect to the possible applicability of United States withholding
and other taxes upon income realized in respect of the Notes.
BACKUP WITHHOLDING AND INFORMATION REPORTING
For each calendar year in which the Notes are outstanding, the Company is
required to provide the IRS with certain information, including the holder's
name, address and taxpayer identification number (either the holder's Social
Security number or its employer identification number, as the case may be), the
aggregate amount of principal and interest paid (including OID, if any) to that
holder during the calendar year and the amount of tax withheld, if any. This
obligation, however, does not apply with respect to certain U.S. holders,
including corporations, tax-exempt organizations, qualified pension and profit
sharing trusts and individual retirement accounts.
In the event that a U.S. holder subject to the reporting requirements
described above fails to supply its taxpayer identification number in the manner
required by applicable law, provides an incorrect taxpayer identification number
that is used by a payor on an information return or underreports its tax
liability, the Company, its agents or paying agents or a broker may be required
to 'backup' withhold a tax equal to 31 percent of each payment of interest
(including OID) and principal (and premium, if any) on the Notes. This backup
withholding is not an additional tax and may be credited against the U.S.
holder's U.S. Federal income tax liability, provided that the required
information is furnished to the IRS.
Under current Treasury Regulations, backup withholding and information
reporting will not apply to payments made by the Company or any agent thereof
(in its capacity as such) to a holder of a Note that is not a U.S. person if
such holder has provided the required certification that it is not a U.S. person
as set forth in clause (iii) in the first paragraph under 'Non-United States
Persons' above, or has otherwise established an exemption (provided that neither
the Company nor its agent has actual knowledge that the holder is a U.S. person
or that the conditions of any exemption are not in fact satisfied).
Payment of the proceeds from the sale of a Note to or through a foreign
office of a broker will not be subject to information reporting or backup
withholding, except that if the broker is a U.S. person, a controlled foreign
corporation for U.S. tax purposes or a foreign person 50 percent or more of
whose gross income from all sources for the three-year period ending with the
close of its taxable year preceding the payment was effectively connected with a
U.S. trade or business, information reporting may apply to such payments.
Payment of the proceeds from a sale of a Note to or through the U.S. office of a
broker is subject to information reporting and backup withholding unless the
holder or beneficial owner certifies as to its taxpayer identification number or
otherwise establishes an exemption from information reporting and backup
withholding.
PLAN OF DISTRIBUTION
Subject to the terms and conditions set forth in an underwriting agreement
(the 'Underwriting Agreement') entered into by the Company and the Underwriter,
the Company has agreed to sell to the Underwriter, and the Underwriter has
agreed to purchase, the Notes from time to time. Notes acquired by the
Underwriter pursuant to the Underwriting Agreement are expected to be offered
either directly to the public or to certain dealers (the 'Dealers') that will
then reoffer the Notes to the public. Sales by the Underwriter to any Dealer
will be made pursuant to an agreement between the Underwriter and such Dealer
(each a 'Dealer Agreement').
The Pricing Supplement with respect to each offering of Notes by the
Company will set forth, among other things, the fixed price to public of such
Notes, or that such Notes will be resold to one or
24
<PAGE>
more purchasers at varying prices related to prevailing market prices at the
time of resale, and the proceeds to the Company from such sale, any underwriting
discounts and other items constituting Underwriter's compensation, and any
discounts or concessions allowed, reallowed or paid to Dealers. The Company will
pay underwriting compensation in connection with any issue of Notes of from not
more than .500% to not more than 2.750% of the principal amount of Notes sold by
an underwriter, depending upon the Stated Maturity. After any initial public
offering of Notes, the price to public of such Notes, and the related
underwriting discount and selling concession, may be changed.
The Underwriter has advised the Company that all initial offers by it and
by the Dealers, unless otherwise set forth in the applicable Pricing Supplement,
are proposed to be made at prices equal to 100% of the principal amount of the
Notes being sold, less, in the case of an offer by the Underwriter to a Dealer,
a price concession not in excess of the amount set forth in the applicable
Pricing Supplement. Offers and sales by the Underwriter or Dealers subsequent to
the initial offering may be at varying prices determined at the time of sale.
If specified in the applicable Pricing Supplement, Notes may also be sold
directly by the Company, through underwriters other than the Underwriter, or
through underwriters acting as agents, from time to time. Any underwriters other
than the Underwriter will agree to act in accordance with this Plan of
Distribution as if they were the Underwriter. Unless otherwise specified in such
Pricing Supplement, any underwriter acting as agent will be acting on a best
efforts basis for the period of its appointment. All commissions payable by the
Company to any such underwriter, whether acting as principal or as agent, will
be set forth in such Pricing Supplement.
The Notes will not be listed on any securities exchange and will not be
traded, when issued, on any other established trading market. The Underwriter or
any Dealer, including Salomon Brothers Inc, may make a market in the Notes, but
are not obligated to do so. Any market-making so undertaken may be discontinued
at any time without notice. There can thus be no assurance that a secondary
market for the Notes will exist or as to the liquidity of any such market.
Moreover, the Company reserves the right to withdraw, cancel or modify the offer
made hereby at any time without notice, and any such withdrawal, cancellation or
modification also may adversely affect the liquidity of the Notes.
The Underwriting Agreement provides, and the terms of each Dealer Agreement
will provide, that the obligations of the Underwriter or a Dealer to purchase
Notes will be subject to certain conditions precedent. The Underwriter will be
obligated to purchase all the Notes offered by any Pricing Supplement naming it
if any such Notes are purchased.
The Company has agreed to indemnify the Underwriter against certain
liabilities, including liabilities under the Securities Act, or to contribute to
payments that the Underwriter may be required to make in respect thereof.
Salomon Brothers Inc is an indirect wholly owned subsidiary of the Company,
and its participation in the offer and sale of Notes complies with Schedule E of
the By-Laws of the National Association of Securities Dealers, Inc. regarding
the underwriting by Salomon Brothers Inc of securities of its parent. Schedule E
provides, among other things, that Notes may not be purchased from or sold to a
customer discretionary account by the Underwriter or a Dealer without the prior
specific written approval of the customer.
ERISA MATTERS
The Employee Retirement Income Security Act of 1974, as amended ('ERISA'),
imposes certain restrictions on employee benefit plans ('Plans') that are
subject to ERISA and on persons who are fiduciaries with respect to such Plans.
In accordance with ERISA's general fiduciary requirements, a fiduciary with
respect to any such Plan who is considering the purchase of Notes on behalf of
such Plan should determine whether such purchase is permitted under the
governing Plan documents and is prudent and appropriate for the Plan in view of
its overall investment policy and the composition and
25
<PAGE>
diversification of its portfolio. Other provisions of ERISA and Section 4975 of
the Internal Revenue Code of 1986, as amended (the 'Code'), prohibit certain
transactions involving the assets of a Plan and persons who have certain
specified relationships to the Plan ('parties in interest' within the meaning of
ERISA or 'disqualified persons' within the meaning of Section 4975 of the Code).
Thus, a Plan fiduciary considering the purchase of Notes should consider whether
such a purchase might constitute or result in a prohibited transaction under
ERISA or Section 4975 of the Code.
The Company, directly or through its affiliates, may be considered a 'party
in interest' or a 'disqualified person' with respect to many Plans that are
subject to ERISA. The purchase of Notes by a Plan that is subject to the
fiduciary responsibility provisions of ERISA or the prohibited transaction
provisions of Section 4975 of the Code (including individual retirement accounts
and other plans described in Section 4975(e)(1) of the Code) and with respect to
which the Company is a party in interest or a disqualified person may constitute
or result in a prohibited transaction under ERISA or Section 4975 of the Code,
unless such Notes are acquired pursuant to and in accordance with an applicable
exemption, such as Prohibited Transaction Class Exemption ('PTCE') 84-14 (an
exemption for certain transactions determined by an independent qualified
professional asset manager), PTCE 91-38 (an exemption for certain transactions
involving bank collective investment funds), 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
NOTES 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, to the
extent and for the periods indicated in their reports included therein, and are
incorporated by reference in this Prospectus in reliance upon such reports and
upon the authority of said firm as experts in accounting and auditing in giving
such reports.
LEGAL OPINIONS
Certain legal matters relating to the Notes will be passed upon for the
Company by Cravath, Swaine & Moore, New York, New York, and for the Underwriter
by Cleary, Gottlieb, Steen & Hamilton, New York, New York.
26
<PAGE>
NO DEALER, SALESPERSON OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS (INCLUDING THE ACCOMPANYING PRICING SUPPLEMENT) 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 UNDERWRITER. NEITHER THE DELIVERY OF THIS PROSPECTUS (INCLUDING THE
ACCOMPANYING PRICING SUPPLEMENT) NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY
CIRCUMSTANCES, CREATE AN IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE
AFFAIRS OF THE COMPANY SINCE THE DATES AS OF WHICH INFORMATION IS GIVEN IN THIS
PROSPECTUS (INCLUDING THE ACCOMPANYING PRICING SUPPLEMENT). THIS PROSPECTUS
(INCLUDING THE ACCOMPANYING PRICING SUPPLEMENT) DOES NOT CONSTITUTE AN OFFER OR
SOLICITATION BY ANYONE IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION
IS NOT AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS
NOT QUALIFIED TO DO SO OR TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH
OFFER OR SOLICITATION.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information............................. 2
Incorporation of Certain Documents by Reference... 2
Salomon Inc....................................... 3
Use of Proceeds................................... 3
Ratio of Earnings to Fixed Charges................ 3
Description of the Notes.......................... 3
United States Tax Considerations.................. 18
Plan of Distribution.............................. 24
ERISA Matters..................................... 25
Experts........................................... 26
Legal Opinions.................................... 26
</TABLE>
$1,000,000,000
SALOMON INC
NOTES, SERIES G
DUE MORE THAN NINE
MONTHS FROM DATE OF ISSUE
- -------------------------
Salomon Brothers Inc.
------------------------------------------------
PROSPECTUS
DATED APRIL , 1996
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.*
<TABLE>
<S> <C>
Commission Registration Fee... $1,244,446
Accounting Fees............... 50,000
Trustees' Fees and Expenses... 275,000
Blue Sky Fees and Expenses.... 20,000
Printing and Engraving Fees... 200,000
Rating Agency Fees............ 190,000
NASD Fee...................... 30,500
Legal Fees and Expenses....... 300,000
Miscellaneous................. 10,054
----------
Total.................... $2,320,000
----------
----------
</TABLE>
- ------------------
* All amounts are estimated except for the Commission registration fee and the
NASD fee.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Reference is made to Section 145 of the Delaware General Corporation Law
which provides for indemnification of directors and officers in certain
circumstances.
Article Fourteenth of the registrant's Certificate of Incorporation
provides for indemnification of directors and officers of the registrant against
certain liabilities incurred as a result of their duties as such and Article
Sixteenth of the registrant's Certificate of Incorporation provides for the
elimination of the monetary liability of directors for certain actions as such.
The registrant's Certificate of Incorporation, as amended, is filed as Exhibit
4(a) to the Registration Statement on Form S-3 (No. 2-84733) filed June 29,
1983, Exhibit 3 to the Quarterly Report on Form 10-Q for the quarter ended June
30, 1986, Exhibit 3 to the Quarterly Report on Form 10-Q for the quarter ended
June 30, 1987, Exhibit 4 to Quarterly Report on Form 10-Q for the quarter ended
September 30, 1987, Exhibit A to Exhibit 1 to Registration Statement on Form 8-A
filed February 11, 1988, Exhibit 3 to Current Report on Form 8-K dated June 13,
1991, Exhibit 4(a) to Current Report on Form 8-K dated February 22, 1993, and
Exhibit 4(a) to Current Report on Form 8-K dated February 12, 1996.
The registrant maintains insurance policies covering liabilities of
directors and officers to the extent not covered by indemnification from the
registrant, subject to the conditions and exclusions of the policies, deductible
provisions, a maximum amount of coverage of $35 million and disputes with
insurers about availability of coverage.
For the undertaking with respect to indemnification, see Item 17 herein.
See the Form of proposed Underwriting Agreement, the Form of Global Selling
Agency Agreement and the Form of Continuous Underwriting Agreement filed as
Exhibit 1(a), (b) and (c) for certain indemnification provisions.
ITEM 16. EXHIBITS.
<TABLE>
<S> <C>
1(a) -- Proposed Form of Underwriting Agreement for Debt Securities to be
distributed in the United States (incorporated by reference to Exhibit
1(a) to Registration Statement No. 33-57922). A form of Underwriting
Agreement relating to any other offering of Securities (and not filed as
an Exhibit hereto) will be filed as an Exhibit to a Current Report on
Form 8-K and incorporated herein by reference.
1(b) -- Form of Global Selling Agency Agreement (incorporated by reference to
Exhibit 1(b) to Registration Statement No. 33-54929).
</TABLE>
II-1
<PAGE>
<TABLE>
<S> <C>
1(c) -- Form of Continuous Underwriting Agreement between Salomon Inc and
Salomon Brothers Inc relating to the Notes, Series G (incorporated by
reference to Exhibit 1(c) to Registration Statement 33-54929).
1(d) -- Form of Underwriting Agreement for Preferred Stock (incorporated by
reference to Exhibit 1 to Registration Statement 33-48199).
1(e) -- Form of Underwriting Agreement for Index Warrants (incorporated by
reference to Exhibit 1(a) to Registration Statement 33-56481).
4(a) -- Certificate of Incorporation of the Company, as amended (incorporated by
reference to Exhibits 3 to Quarterly Reports on Form 10-Q for the
quarters ended June 30, 1987 and June 30, 1986, Exhibit 4(a) to
Registration Statement Number 2-84733 on Form S-3 filed June 30, 1983,
Exhibit 4 to Quarterly Report on Form 10-Q for the quarter ended
September 30, 1987, Exhibit A to Exhibit 1 to Registration Statement on
Form 8-A filed February 11, 1988, Exhibit 3 to Current Report on Form
8-K dated June 13, 1991 Exhibit 4(a) to Current Report on Form 8-K dated
February 22, 1993 and Exhibit 4(a) to Current Report on Form 8-K dated
February 12, 1996).
4(b) -- By-laws of the Company, as amended (incorporated by reference to Exhibit
3(b) to the Annual Report on Form 10-K for the year ended December 31,
1994).
4(c) -- Form of Certificate of Common Stock, par value $1.00 per share, of the
Company (incorporated by reference to Exhibit 4(c) to Registration
Statement No. 2-84733).
4(d) -- Senior Debt Indenture, dated as of December 1, 1988, between Salomon Inc
and Citibank, N.A., as Trustee (incorporated by reference to Exhibit 8
to the Company's Current Report on Form 8-K dated December 29, 1988).
4(e) -- First Supplemental Indenture dated as of September 7, 1990 to Senior
Debt Indenture dated as of December 1, 1988 between Salomon Inc and
Citibank, N.A. (incorporated by reference to Exhibit 4(b) to
Registration Statement No. 33-39502).
4(f) -- Second Supplemental Indenture dated June 12, 1991 to Senior Debt
Indenture dated as of December 1, 1988 between Salomon Inc and Citibank,
N.A. (incorporated by reference to Exhibit 4(c) to Registration
Statement No. 33-41209).
4(g) -- Third Supplemental Indenture dated as of July 1, 1992 to Senior Debt
Indenture, dated as of December 1, 1988 between Salomon Inc and
Citibank, N.A. (incorporated by reference to Exhibit 4(d) to
Registration Statement No. 33-49136).
4(h) -- Fourth Supplemental Indenture, dated as of October 29, 1992, between
Salomon Inc and Citibank, N.A. (incorporated by reference to Exhibit
4(e) to Registration Statement No. 33-57922).
4(i) -- Fifth Supplemental Indenture dated as of December 14, 1993, between
Salomon Inc and Citibank, N.A. (incorporated by reference to Exhibit
4(f) to Registration Statement No. 33-51269).
4(j) -- Sixth Supplemental Indenture dated as of December 29, 1994 between
Salomon Inc and Citibank, N.A.
4(k) -- Seventh Supplemental Indenture dated as of February 1, 1996 between
Salomon Inc and Citibank, N.A.
4(l) -- Subordinated Debt Indenture, dated as of December 1, 1988, between
Salomon Inc and Bankers Trust Company, as Trustee (incorporated by
reference from Exhibit 7 to the Company's Current Report on Form 8-K
dated August 2, 1989).
4(m) -- First Supplemental Indenture dated as of September 7, 1990 to
Subordinated Debt Indenture dated as of December 1, 1988 between Salomon
Inc and Bankers Trust Company (incorporated by reference from Exhibit
4(b) to Registration Statement No. 33-39502).
4(n) -- Second Supplemental Indenture dated as of December 14, 1993, between
Salomon Inc and Bankers Trust Company.
</TABLE>
II-2
<PAGE>
<TABLE>
<S> <C>
4(o) -- Senior Debt Indenture, dated as of January 20, 1993, between Salomon Inc
and BankAmerica National Trust Company, as Trustee (incorporated by
reference to Exhibit 3 to the Company's Current Report on Form 8-K dated
January 12, 1993).
4(p) -- Senior Debt Indenture, dated as of February 8, 1993, between Salomon Inc
and The First National Bank of Chicago, as Trustee (incorporated by
reference to Exhibit 3 to the Company's Current Report on Form 8-K dated
February 1, 1993).
4(q) -- Senior Debt Indenture, dated as of July 28, 1992, between Salomon Inc
and United States Trust Company of New York, as Trustee (incorporated by
reference to Exhibit 4.1 to the Company's Current Report on Form 8-K
dated July 28, 1992).
4(r) -- 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).
4(s) -- Form of Senior Debt Indenture (incorporated by reference to Exhibit 4(f)
to Registration Statement No. 33-41932).
4(t) -- Form of Subordinated Debt Indenture (incorporated by reference to
Exhibit 4(g) to Registration Statement No. 33-41932).
4(u) -- Forms of Medium-Term Registered Notes, Series D and Series E.
4(v) -- Forms of Medium-Term Bearer Notes, Series D and Series E.
4(w) -- Forms of Medium-Term Temporary Global Notes, Series D and Series E.
4(x) -- Forms of Medium-Term Permanent Global Notes, Series D and Series E.
4(y) -- Forms of Notes, Series G.
4(z) -- Form of proposed Warrant Agreement for Warrants not attached to Debt
Securities, with form of proposed Warrant Certificate attached as
Exhibit A thereto, for Warrants in registered form (incorporated by
reference to Exhibit 4(c) to Registration Statement No. 33-25002). A
form of Warrant Agreement relating to any Warrants in bearer form will
be filed as an Exhibit to a Current Report on Form 8-K and incorporated
herein by reference.
4(aa) -- Form of proposed Warrant Agreement for Warrants attached to Debt
Securities, with form of proposed Warrant Certificate attached as
Exhibit A thereto, for Warrants in registered form (incorporated by
reference to Exhibit 4(d) to Registration Statement No. 33-25002). A
form of Warrant Agreement relating to any Warrants in bearer form will
be filed as an Exhibit to a Current Report on Form 8-K and incorporated
herein by reference.
4(bb) -- Senior Debt Indenture, dated as of January 18, 1994, between Salomon Inc
and Chemical Bank, as Trustee (incorporated by reference to Exhibit 4 to
the Company's Current Report on Form 8-K dated January 18, 1994).
4(cc) -- Form of proposed Index Warrant Agreement for Index Warrants, with form
of proposed Index Warrant Certificate attached as Exhibit A thereto, for
Index Warrants in registered form (incorporated by reference to Exhibit
4(a) to Registration Statement No. 33-56481).
4(dd) -- Form of proposed Deposit Agreement (incorporated by reference to Exhibit
4(d) to Registration Statement No. 33-48199).
5 -- Opinion of Cravath, Swaine & Moore.
12 -- Calculation of Ratios of Earnings to Fixed Charges (incorporated by
reference to Exhibit 12(a) to the Company's Annual Report on Form 10-K
for the year ended December 31, 1995).
23(a) -- Consent of Arthur Andersen L.L.P.
23(b) -- Consent of Cravath, Swaine & Moore (included in Exhibit 5).
24 -- Powers of Attorney.
25(a) -- Form T-1 Statement of Eligibility and Qualification of BankAmerica
National Trust Company under the Trust Indenture Act of 1939.*
</TABLE>
II-3
<PAGE>
<TABLE>
<S> <C>
25(b) -- Form T-1 Statement of Eligibility and Qualification of The Bank of New
York under the Trust Indenture Act of 1939.*
25(c) -- Form T-1 Statement of Eligibility and Qualification of Chemical Bank
under the Trust Indenture Act of 1939.*
25(d) -- Form T-1 Statement of Eligibility and Qualification of Citibank, N.A.
under the Trust Indenture Act of 1939.*
25(e) -- Form T-1 Statement of Eligibility and Qualification of The First
National Bank of Chicago under the Trust Indenture Act of 1939.*
25(f) -- Form T-1 Statement of Eligibility and Qualification of United States
Trust Company of New York under the Trust Indenture Act of 1939.*
25(g) -- Form T-1 Statement of Eligibility and Qualification of Bankers Trust
Company under the Trust Indenture Act of 1939.*
</TABLE>
- ------------------
* A Form T-1 Statement of Eligibility and Qualification of Trustees other than
those as to which Form T-1s are filed herewith may be filed as an Exhibit to a
Current Report on Form 8-K and incorporated herein by reference.
ITEM 17. UNDERTAKINGS.
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made of
the securities registered hereby, a post-effective amendment to this
registration statement:
(i) to include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933, as amended;
(ii) to reflect in the prospectus any facts or events arising after
the effective date of this registration statement (or the most recent
post-effective amendment hereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in this
registration statement; and
(iii) to include any material information with respect to the plan of
distribution not previously disclosed in this registration statement or any
material change to such information in this registration statement;
provided, however, that the undertakings set forth in clauses (i) and (ii) above
do not apply if the information required to be included in a post-effective
amendment by those clauses is contained in periodic reports filed by the
registrant pursuant to section 13 or section 15(d) of the Securities Exchange
Act of 1934, as amended, that are incorporated by reference in this registration
statement.
(2) That, for the purpose of determining any liability under the Securities
Act of 1933, as amended, each such post-effective amendment shall be deemed to
be a new registration statement relating to the securities offered herein, and
the offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.
(4) That, for purposes of determining any liability under the Securities
Act of 1933, as amended, each filing of the registrant's annual report pursuant
to section 13(a) or section 15(d) of the Securities Exchange Act of 1934, as
amended, that is incorporated by reference in this registration statement shall
be deemed to be a new registration statement relating to the securities offered
herein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
(5) Insofar as indemnification for liabilities arising under the Securities
Act of 1933, as amended, may be permitted to directors, officers and controlling
persons of the registrant pursuant to the provisions described under Item 15
above, or otherwise, the registrant has been advised that in the
II-4
<PAGE>
opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in such Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities (other
than the payment by the registrant of expenses incurred or paid by a director,
officer or controlling person of the registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered hereby, the registrant
will, unless in the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as
expressed in such Act and will be governed by the final adjudication of such
issue.
(6) For purposes of determining any liability under the Securities Act of
1933, as amended, the information omitted from the form of prospectus filed as
part of this registration statement in reliance upon Rule 430A and contained in
a form of prospectus filed by the registrant pursuant to Rule 424(b) (1) or (4)
or 497(h) under the Securities Act shall be deemed to be part of this
registration statement as of the time it was declared effective.
(7) For the purpose of determining any liability under the Securities Act
of 1933, as amended, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
II-5
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, SALOMON INC
CERTIFIES THAT IT HAS REASONABLE GROUNDS TO BELIEVE THAT IT MEETS ALL OF THE
REQUIREMENTS FOR FILING ON FORM S-3 AND HAS DULY CAUSED THIS REGISTRATION
STATEMENT OR AMENDMENT THERETO TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED
THEREUNTO DULY AUTHORIZED, IN THE CITY OF NEW YORK, STATE OF NEW YORK, ON THE
3RD DAY OF APRIL, 1996.
SALOMON INC
By: /s/ Arnold S. Olshin
(Arnold S. Olshin, Secretary)
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT OR AMENDMENT THERETO HAS BEEN SIGNED BELOW BY THE
FOLLOWING PERSONS IN THE CAPACITIES WITH SALOMON INC AND ON THE DATES INDICATED.
<TABLE>
<CAPTION>
SIGNATURES TITLE DATE
- ------------------------ -------------------------------------- --------------
<S> <C> <C>
* Chief Executive Officer, Chairman and April 3, 1996
(Robert E. Denham) Director
* Chief Financial Officer April 3, 1996
(Jerome H. Bailey)
/s/ Richard J. Carbone Principal Accounting Officer and April 3, 1996
(Richard J. Carbone) Controller
* Director April 3, 1996
(Dwayne O. Andreas)
* Director April 3, 1996
(Warren E. Buffett)
* Director April 3, 1996
(Claire M. Fagin)
* Director April 3, 1996
(John L. Haseltine)
* Director April 3, 1996
(Gedale B. Horowitz)
* Director April 3, 1996
(Deryck C. Maughan)
* Director April 3, 1996
(David O. Maxwell)
* Director April 3, 1996
(William F. May)
* Director April 3, 1996
(Charles T. Munger)
</TABLE>
II-6
<PAGE>
<TABLE>
<S> <C> <C>
* Director April 3, 1996
(Shigeru Myojin)
* Director April 3, 1996
(Louis A. Simpson)
* Director April 3, 1996
(Robert G. Zeller)
</TABLE>
- ------------------
* The undersigned, by signing his name hereto, does hereby sign this
registration statement or amendment thereto on behalf of each of the
above-indicated directors and officers of Salomon Inc pursuant to powers of
attorney executed on behalf of each such director and officer.
By: /s/ Arnold S. Olshin
(Arnold S. Olshin,
Attorney-in-Fact)
II-7
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER EXHIBIT PAGE
- ------ -----------------------------------------------------------------------
<S> <C> <C>
1(a) -- Proposed Form of Underwriting Agreement for Debt Securities
to be distributed in the United States (incorporated by
reference to Exhibit 1(a) to Registration Statement No.
33-57922). A form of Underwriting Agreement relating to any
other offering of Securities (and not filed as an Exhibit
hereto) will be filed as an Exhibit to a Current Report on
Form 8-K and incorporated herein by reference.
1(b) -- Form of Global Selling Agency Agreement (incorporated by
reference to Exhibit 1(b) to Registration Statement No.
33-54929).
1(c) -- Form of Continuous Underwriting Agreement between Salomon
Inc and Salomon Brothers Inc relating to the Notes, Series
G (incorporated by reference to Exhibit 1(c) to
Registration Statement 33-54929).
1(d) -- Form of Underwriting Agreement for Preferred Stock
(incorporated by reference to Exhibit 1 to Registration
Statement 33-48199).
1(e) -- Form of Underwriting Agreement for Index Warrants
(incorporated by reference to Exhibit 1(a) to Registration
Statement 33-56481).
4(a) -- Certificate of Incorporation of the Company, as amended
(incorporated by reference to Exhibits 3 to Quarterly
Reports on Form 10-Q for the quarters ended June 30, 1987
and June 30, 1986, Exhibit 4(a) to Registration Statement
Number 2-84733 on Form S-3 filed June 30, 1983, Exhibit 4
to Quarterly Report on Form 10-Q for the quarter ended
September 30, 1987, Exhibit A to Exhibit 1 to Registration
Statement on Form 8-A filed February 11, 1988, Exhibit 3 to
Current Report on Form 8-K dated June 13, 1991 and Exhibit
4(a) to Current Report on Form 8-K dated February 22, 1993
and Exhibit 4(a) to Current Report on Form 8-K dated
February 12, 1996).
4(b) -- By-laws of the Company, as amended (incorporated by
reference to Exhibit 3(b) to the Annual Report on Form 10-K
for the year ended December 31, 1994).
4(c) -- Form of Certificate of Common Stock, par value $1.00 per
share, of the Company (incorporated by reference to Exhibit
4(c) to Registration Statement No. 2-84733).
4(d) -- Senior Debt Indenture, dated as of December 1, 1988,
between Salomon Inc and Citibank, N.A., as Trustee
(incorporated by reference to Exhibit 8 to the Company's
Current Report on Form 8-K dated December 29, 1988).
4(e) -- First Supplemental Indenture dated as of September 7, 1990
to Senior Debt Indenture dated as of December 1, 1988
between Salomon Inc and Citibank, N.A. (incorporated by
reference to Exhibit 4(b) to Registration Statement No.
33-39502).
4(f) -- Second Supplemental Indenture dated June 12, 1991 to Senior
Debt Indenture dated as of December 1, 1988 between Salomon
Inc and Citibank, N.A. (incorporated by reference to
Exhibit 4(c) to Registration Statement No. 33-41209).
4(g) -- Third Supplemental Indenture dated as of July 1, 1992 to
Senior Debt Indenture, dated as of December 1, 1988 between
Salomon Inc and Citibank, N.A. (incorporated by reference
to Exhibit 4(d) to Registration Statement No. 33-49136).
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER EXHIBIT PAGE
- ------ -----------------------------------------------------------------------
<S> <C> <C>
4(h) -- Fourth Supplemental Indenture, dated as of October 29,
1992, between Salomon Inc and Citibank, N.A. (incorporated
by reference to Exhibit 4(e) to Registration Statement No.
33-57922).
4(i) -- Fifth Supplemental Indenture dated as of December 14, 1993,
between Salomon Inc and Citibank, N.A. (incorporated by
reference to Exhibit 4(f) to Registration Statement No.
33-51269).
4(j) -- Sixth Supplemental Indenture dated as of December 29, 1994
between Salomon Inc and Citibank, N.A.+
4(k) -- Seventh Supplemental Indenture dated as of February 1, 1996
between Salomon Inc and Citibank, N.A.+
4(l) -- Subordinated Debt Indenture, dated as of December 1, 1988,
between Salomon Inc and Bankers Trust Company, as Trustee
(incorporated by reference from Exhibit 7 to the Company's
Current Report on Form 8-K dated August 2, 1989).
4(m) -- First Supplemental Indenture dated as of September 7, 1990
to Subordinated Debt Indenture dated as of December 1, 1988
between Salomon Inc and Bankers Trust Company (incorporated
by reference from Exhibit 4(b) to Registration Statement
No. 33-39502).
4(n) -- Second Supplemental Indenture dated as of December 14,
1993, between Salomon Inc and Bankers Trust Company.
4(o) -- Senior Debt Indenture, dated as of January 20, 1993,
between Salomon Inc and BankAmerica National Trust Company,
as Trustee (incorporated by reference to Exhibit 3 to the
Company's Current Report on Form 8-K dated January 12,
1993).
4(p) -- Senior Debt Indenture, dated as of February 8, 1993,
between Salomon Inc and The First National Bank of Chicago,
as Trustee (incorporated by reference to Exhibit 3 to the
Company's Current Report on Form 8-K dated February 1,
1993).
4(q) -- Senior Debt Indenture, dated as of July 28, 1992, between
Salomon Inc and United States Trust Company of New York, as
Trustee (incorporated by reference to Exhibit 4.1 to the
Company's Current Report on Form 8-K dated July 28, 1992).
4(r) -- 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).
4(s) -- Form of Senior Debt Indenture (incorporated by reference to
Exhibit 4(f) to Registration Statement No. 33-41932).
4(t) -- Form of Subordinated Debt Indenture (incorporated by
reference to Exhibit 4(g) to Registration Statement No.
33-41932).
4(u) -- Forms of Medium-Term Registered Notes, Series D and Series
E.*
4(v) -- Forms of Medium-Term Bearer Notes, Series D and Series E.*
4(w) -- Forms of Medium-Term Temporary Global Notes, Series D and
Series E.*
4(x) -- Forms of Medium-Term Permanent Global Notes, Series D and
Series E.*
4(y) -- Forms of Notes, Series G.*
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER EXHIBIT PAGE
- ------ -----------------------------------------------------------------------
<S> <C> <C>
4(z) -- Form of proposed Warrant Agreement for Warrants not
attached to Debt Securities, with form of proposed Warrant
Certificate attached as Exhibit A thereto, for Warrants in
registered form (incorporated by reference to Exhibit 4(c)
to Registration Statement No. 33-25002). A form of Warrant
Agreement relating to any Warrants in bearer form will be
filed as an Exhibit to a Current Report on Form 8-K and
incorporated herein by reference.
4(aa) -- Form of proposed Warrant Agreement for Warrants attached to
Debt Securities, with form of proposed Warrant Certificate
attached as Exhibit A thereto, for Warrants in registered
form (incorporated by reference to Exhibit 4(d) to
Registration Statement No. 33-25002). A form of Warrant
Agreement relating to any Warrants in bearer form will be
filed as an Exhibit to a Current Report on Form 8-K and
incorporated herein by reference.
4(bb) -- Senior Debt Indenture, dated as of January 18, 1994,
between Salomon Inc and Chemical Bank, as Trustee
(incorporated by reference to Exhibit 4 to the Company's
Current Report on Form 8-K dated January 18, 1994).
4(cc) -- Form of proposed Index Warrant Agreement for Index
Warrants, with form of proposed Index Warrant Certificate
attached as Exhibit A thereto, for Index Warrants in
registered form (incorporated by reference to Exhibit 4(a)
to Registration Statement No. 33-56481).
4(dd) -- Form of proposed Deposit Agreement (incorporated by
reference to Exhibit 4(d) to Registration Statement No.
33-48199).
5 -- Opinion of Cravath, Swaine & Moore.**
12 -- Calculation of Ratios of Earnings to Fixed Charges
(incorporated by reference to the Company's Annual Report
on Form 10-K for the year ended December 31, 1995).
23(a) -- Consent of Arthur Andersen L.L.P.+
23(b) -- Consent of Cravath, Swaine & Moore (included in Exhibit 5).
24 -- Powers of Attorney.**
25(a) -- Form T-1 Statement of Eligibility and Qualification of
BankAmerica National Trust Company under the Trust
Indenture Act of 1939.***
25(b) -- Form T-1 Statement of Eligibility and Qualification of The
Bank of New York under the Trust Indenture Act of 1939.***
25(c) -- Form T-1 Statement of Eligibility and Qualification of
Chemical Bank under the Trust Indenture Act of 1939.***
25(d) -- Form T-1 Statement of Eligibility and Qualification of
Citibank, N.A. under the Trust Indenture Act of 1939.***
25(e) -- Form T-1 Statement of Eligibility and Qualification of The
First National Bank of Chicago under the Trust Indenture
Act of 1939.***
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER EXHIBIT PAGE
- ------ -----------------------------------------------------------------------
<S> <C> <C>
25(f) -- Form T-1 Statement of Eligibility and Qualification of
United States Trust Company of New York under the Trust
Indenture Act of 1939.***
25(g) -- Form T-1 Statement of Eligibility and Qualification of
Bankers Trust Company under the Trust Indenture Act of
1939.***
</TABLE>
- ------------------
+ Filed herewith.
* To be filed by Amendment.
** Previously filed.
*** A Form T-1 Statement of Eligibility and Qualification of other Trustees
other than those as to which Form T-1s are filed herewith may be filed as an
Exhibit to a Current Report on Form 8-K and incorporated herein by
reference.
SIXTH SUPPLEMENTAL INDENTURE
This Sixth Supplemental Indenture (the "Supplemental Indenture")
is made and entered into as of December 29, 1994 between Salomon Inc, a
Delaware corporation (the "Company"), and Citibank, N.A., a national banking
association (the "Trustee"), as Trustee under the Indenture dated as of
December 1, 1988, as amended as of September 7, 1990, June 12, 1991, July 1,
1992, October 29, 1992 and December 14, 1993, between the Company and the
Trustee (as amended to the date hereof, the "Indenture").
The parties hereto previously entered into the Indenture to
provide for the issuance and sale by the Company of its Senior Debt
Securities (the "Debt Securities"). Section 1101(5) of the Indenture
authorizes the Company and the Trustee, without the consent of any holder of
Securities, to enter into a supplemental indenture to change any of the
provisions of the Indenture, provided that any such change shall become
effective only when there is no Outstanding Debt Security or Coupon (as such
terms are defined in the Indenture) of any series created prior to the
execution of such supplemental indenture that is entitled to the benefit of
such provision and as to which such supplemental indenture would apply.
All acts and things necessary to make this Sixth Supplemental
Indenture a valid and binding agreement for the purposes herein expressed
have been duly done and performed, and the execution and delivery of this
Sixth Supplemental Indenture have been duly authorized by the Company.
The parties hereto now desire to amend the Indenture and,
accordingly, agree as follows:
ARTICLE I
The first paragraph of Section 1305 is hereby amended as to
Debt Securities originally issued on or after December 29, 1994 to read in
its entirety as follows:
Section 1305. Notice of Redemption.
Notice of redemption shall be given by the Company or, at the
Company's request, by the Trustee in the name and at the expense of the
Company, not more than 60 days prior, and not less than the number of days
specified in any Debt Security, which shall not be less than 15 days prior,
to the Redemption Date, to the Holders of Debt Securities of any series to
be redeemed in whole or in part pursuant to this Article Thirteen, in the
manner provided by Section 105. Any notice so given shall be conclusively
presumed to have been duly given, whether or not the Holder receives such
notice. Failure to give such notice, or any defect in such notice to the
Holder of any Debt Security of a series designated for redemption, in whole
or in part, shall not affect the sufficiency of any notice of redemption
with respect to the Holder of any other Debt Security of such series.
ARTICLE II
Except as amended as set forth above, the Indenture is in all
respects ratified and confirmed and the terms, provisions and conditions
thereof shall remain in full force and effect. This Supplemental Indenture
shall take effect on the date hereof, but shall apply only to Debt
Securities originally issued on or after December 29, 1994, and shall have
no effect on any Debt Securities originally issued prior to December 29,
1994.
ARTICLE III
This Supplemental Indenture shall be deemed to be a contract
made and to be performed entirely in the State of New York, and for all
purposes shall be governed and construed in accordance with the laws of said
State without regard to the conflicts of laws rules of said State. This
Supplemental Indenture may be executed in any number of counterparts, all
which taken together constitute one and the same instrument. This
Supplemental Indenture is subject to the terms and conditions in the
Indenture including terms and conditions limiting the liabilities of the
Trustee. The Trustee has no responsibility for the correctness of the
statements of fact herein contained which shall be taken as the statements
of the Company and makes no representations as to the validity or
sufficiency of the Sixth Supplemental Indenture.
IN WITNESS WHEREOF, the parties hereto have caused this
Supplemental Indenture to be duly executed, and their respective corporate
seals to be hereunto affixed and attested, all as of the day and year first
above written.
SALOMON INC
By: /s/ William J. Jennings
William J. Jennings
Senior Vice President
Attest:
/s/ Arnold S. Olshin
Arnold S. Olshin
Secretary
CITIBANK, N.A., as Trustee
By: /s/ Arthur W. Aslanian
Arthur W. Aslanian
Vice President
Attest:
/s/ P. DeFelice
Vice President
STATE OF NEW YORK )
) SS.:
COUNTY OF NEW YORK )
On the 28th day of December, 1994, before me personally came
WILLIAM JENNINGS, to me known, who, being by me duly sworn, did depose and
say that he is the SENIOR VICE PRESIDENT of SALOMON INC, one of the
corporations described in and which executed the foregoing instrument; that
he knows the seal of said corporation; that the seal affixed to said
instrument is such corporate seal; that it was so affixed by authority of
the Board of Directors of said corporation, and that he signed his name
thereto by like authority.
/s/ Kathleen A. Burns
Notary Public
SEAL
STATE OF NEW YORK )
) SS.:
COUNTY OF NEW YORK )
On the 28th day of December, 1994, before me personally came
ARTHUR W. ASLANIAN, to me known, who, being by me duly sworn, did depose and
say that he is a Vice President of CITIBANK, N.A., one of the corporations
described in and which executed the foregoing instrument; that he knows the
seal of said corporation; that the seal affixed to said instrument is such
corporate seal; that it was so affixed by authority of the Board of
Directors of said corporation, and that he signed his name thereto by like
authority.
/s/ Jeffry Berger
Notary Public
SEAL
SALOMON INC
TO
CITIBANK, N.A.
Trustee
SEVENTH SUPPLEMENTAL INDENTURE
Dated as of February 1, 1996
Supplemental to Indenture dated as of December 1, 1988
This Seventh Supplemental Indenture (the "Supplemental
Indenture") is made and entered into as of February 1, 1996 between Salomon Inc,
a Delaware corporation (the "Company"), and Citibank, N.A., a national banking
association (the "Trustee"), as Trustee under the Indenture dated as of December
1, 1988, as amended as of September 7, 1990, June 12, 1991, July 1, 1992,
October 29, 1992, December 14, 1993 and December 29, 1994, between the Company
and the Trustee (as amended to the date hereof, the "Indenture").
WHEREAS, the parties hereto previously entered into the
Indenture to provide for the issuance and sale by the Company from time to time
of its Senior Debt Securities (the "Debt Securities");
WHEREAS, Sections 1101(5) and (11) of the Indenture provide that
the Company, when authorized by a Board Resolution, and the Trustee, at any
time and from time to time, may enter into an indenture supplemental to the
Indenture, in form satisfactory to the Trustee, without the consent of any
holder of Debt Securities, (a) to change or eliminate any of the provisions
of the Indenture, provided that any such change or elimination shall become
effective only when there is no Outstanding Debt Security or Coupon (as such
terms are defined in the Indenture) of any series created prior to the
execution of such supplemental indenture that is entitled to the benefit of
such provision and as to which such supplemental indenture would apply and
(b) to cure any ambiguity, to correct or supplement any provision in the
Indenture that may be defective or inconsistent with any other provision in
the Indenture, or to make any other provisions with respect to matters or
questions arising under the Indenture that shall not be inconsistent with
any provision of the Indenture, provided such other provisions shall not
adversely affect the interests of the holders of Outstanding Debt Securities
or Coupons, if any, of any series in any material respect;
WHEREAS, all acts and things necessary to make this Supplemental
Indenture a valid and binding agreement for the purposes herein expressed
have been duly done and performed, and the execution and delivery of this
Supplemental Indenture have been duly authorized by the Company; and
WHEREAS, the parties hereto now desire to amend the Indenture:
NOW, THEREFORE, the parties agree as follows:
1. The Indenture is hereby amended as follows:
(a) By amending Section 301 of the Indenture by (i) deleting
the word "and" at the end of subsection (17); (ii) adding as a new subsection
(18) the following "(18) the terms and conditions, if any, upon which the Debt
Securities of the 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"; and (iii)
renumbering current subsection (18) of Section 301 to subsection (19);
(b) By amending subsection (c) of Section 601 by (i) deleting
the word "and" at the end of clause (3); (ii) replacing the period at the end of
clause (4) with "; and"; and (iii) adding as a new clause (5) the following:
"the Trustee shall not at any time be under any duty or
responsibility to any Holder of a Debt Security that 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, (A) to make or cause to be made any
adjustment of the amount of the, among other things, securities,
instruments, contracts, currencies, commodities or other forms of property,
rights or interests or any combination of the foregoing that may be issued,
transferred or delivered to such Holder, or to determine whether any facts
exist which may require any such adjustment, or with respect to the nature
or extent of any such adjustment when made, or with respect to any method
employed in making the same, (B) to account for the validity or value (or
the kind or amount) of the, among other things, securities, instruments,
contracts, currencies, commodities or other forms of property, rights or
interests or any combination of the foregoing that may at any time be
issued, transferred or delivered to such Holder or (C) with respect to the
failure of the Company to issue, transfer or deliver any of the, among
other things, securities, instruments, contracts, currencies, commodities
or other forms of property, rights or interests or any combination of the
foregoing pursuant to the terms of such Debt Security."; and
(c) By amending subsection (1) of Section 1102 by placing a
comma before the semicolon at the end of such subsection and adding after such
comma the following "or change the terms or conditions of any Debt Securities so
as to adversely affect the terms or conditions upon which such Debt Securities
are 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".
2. Except as amended as set forth above, the Indenture is in
all respects ratified and confirmed and the terms, provisions and conditions
thereof shall remain in full force and effect. This Supplemental Indenture
shall take effect on the date hereof, and shall apply only to Debt Securities
originally issued on or after the date hereof, and shall have no effect on any
other Debt Securities originally issued prior to the date hereof.
3. This Supplemental Indenture shall be deemed to be a
contract made and to be performed entirely in the State of New York, and for all
purposes shall be governed and construed in accordance with the laws of the
State of New York without regard to the conflicts of laws rules of the State of
New York. This Supplemental Indenture may be executed in any number of
counterparts, all of which taken together constitute one and the same
instrument. This Supplemental Indenture is subject to the terms and conditions
in the Indenture including terms and conditions limiting the liabilities of the
Trustee. The Trustee has no responsibility for the correctness of the
statements of fact herein contained which shall be taken as the statements of
the Company and makes no representations as to the validity or sufficiency of
the Seventh Supplemental Indenture.
IN WITNESS WHEREOF, the parties hereto have caused this
Supplemental Indenture to be duly executed, and their respective corporate seals
to be hereunto affixed and attested, all as of the day and year first above
written.
SALOMON INC
By /s/ William J. Jennings
Name: William J. Jennings
Title: Vice President
Attest: /s/ Arnold Olshin
Name: Arnold Olshin
Title: Secretary
CITIBANK, N.A.,
as Trustee
By: /s/ Arthur W. Aslanian
Name: Arthur W. Aslanian
Title: Vice President
Attest: /s/ P. DeFelice
Name: P. DeFelice
Title: Vice President
STATE OF NEW YORK )
) SS.:
COUNTY OF NEW YORK)
On the 8th day of March , 1996, before me personally came
William J. Jennings, to me known, who, being by me duly sworn, did depose and
say that he is the Senior V/P of SALOMON INC, one of the corporations described
in and which executed the foregoing instrument; that he knows the seal of said
corporation; that the seal affixed to said instrument is such corporate seal;
that it was so affixed by authority of the Board of Directors of said
corporation, and that he signed her name thereto by like authority.
/s/ Linda A. Staiti
Notary Public
SEAL
STATE OF NEW YORK )
) SS.:
COUNTY OF NEW YORK)
On the [19] day of [March], 1996, before me personally came
Arthur Aslanian, to me known, who, being by me duly sworn, did depose and
say that he is a Vice President of CITIBANK, N.A., one of the corporations
described in and which executed the foregoing instrument; that he knows the
seal of said corporation; that the seal affixed to said instrument is such
corporate seal; that it was so affixed by authority of the Board of
Directors of said corporation, and that he signed his name thereto by like
authority.
/s/ Doris Ware
Notary Public
SEAL
ARTHUR
ANDERSEN
ARTHUR ANDERSEN & CO. SC
Arthur Andersen LLP
1345 Avenue of the Americas
New York NY 10105
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
SALOMON INC
AMENDMENT NO. 1 TO FORM S-3 REGISTRATION STATEMENT
DATED APRIL 1, 1996
$10,000,000,000 Salomon Inc Debt Securities and
Warrants to Purchase Debt Securities, Preferred Stock and Index Warrants
As independent public accountants, we hereby consent to the incorporation by
reference in the above mentioned Registration Statement of our report dated
February 6, 1996 incorporated by reference in Salomon Inc's Form 10-K for the
year ended December 31, 1995 and to all references to our Firm included in the
above mentioned Registration Statement.
/s/ Arthur Andersen LLP
ARTHUR ANDERSEN LLP
New York, New York
April 1, 1996
