<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 19, 1996
REGISTRATION NO. 333-2897
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
AMENDMENT NO. 3
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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<TABLE>
<S> <C> <C>
SALOMON INC DELAWARE 22-1660266
SI FINANCING TRUST I DELAWARE TO BE APPLIED FOR
(EXACT NAME OF REGISTRANT (STATE OR OTHER JURISDICTION (I.R.S. EMPLOYER IDENTIFICATION NO.)
AS SPECIFIED IN ITS CHARTER) OF INCORPORATION OR ORGANIZATION)
</TABLE>
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:
<TABLE>
<S> <C>
GREGORY M. SHAW, ESQ. ALLAN G. SPERLING, ESQ.
CRAVATH, SWAINE & MOORE CLEARY, GOTTLIEB, STEEN & HAMILTON
825 EIGHTH AVENUE ONE LIBERTY PLAZA
NEW YORK, NEW YORK 10019 NEW YORK, NEW YORK 10006
</TABLE>
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE OF THE SECURITIES TO THE
PUBLIC: As soon as practicable on or after the effective date of this
Registration Statement.
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 (the 'Securities Act'), 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. / /
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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. / /
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If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. /x/
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CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
PROPOSED MAXIMUM PROPOSED MAXIMUM
OFFERING PRICE AGGREGATE AMOUNT OF
AMOUNT TO BE PER OFFERING REGISTRATION
TITLE OF EACH CLASS OF SECURITIES TO BE REGISTERED REGISTERED(1) UNIT(1)(2)(3) PRICE(1)(2)(3) FEE(1)
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<S> <C> <C> <C> <C>
Units...............................................
Preferred Securities................................
Guarantee of Preferred Securities by Salomon Inc and
certain back-up undertakings(4)...................
Subordinated Debt Securities........................
Purchase Contracts..................................
Cumulative Preferred Stock Series F (without par
value)............................................
Depositary Shares...................................
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Total....................................... $250,000,000(5) 100% $250,000,000(5) $86,206.90
</TABLE>
(1) Pursuant to Rule 457(o) under the Securities Act, which permits the
registration fee to be calculated on the basis of the maximum aggregate
offering price of all the securities listed, the table does not specify by
each class information as to the amount to be registered, proposed maximum
offering price per unit or proposed maximum aggregate offering price. The
proposed maximum aggregate offering price of all the securities listed
includes the consideration required to be paid in connection with the
settlement of the Purchase Contracts.
(2) Estimated solely for the purpose of calculating the registration fee.
(3) Exclusive of accrued interest and dividends, if any.
(4) No separate consideration will be received for the Guarantee. The Guarantee
includes the rights of holders of the Preferred Securities under the
Guarantee and certain back-up undertakings, comprised of obligations of
Salomon Inc under the Indenture and pursuant to the Declaration to provide
certain indemnities in respect of, and be responsible for certain costs,
expenses, debts and liabilities of SI Financing Trust I, as described in the
Registration Statement. All obligations under the Declaration, including the
indemnity obligation, are included in the back-up undertakings.
(5) There is also being registered an indeterminate amount of all the types of
securities being registered hereunder that may 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.
------------------------
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>
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 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 SUCH STATE.
SUBJECT TO COMPLETION
JUNE 19, 1996
PROSPECTUS
10,000,000 % TRUST PREFERRED STOCK(SERVICE MARK) (TRUPS(SERVICE MARK))*
UNITS
consisting of
SI FINANCING TRUST I
10,000,000 % PREFERRED SECURITIES
FULLY AND UNCONDITIONALLY GUARANTEED BY SALOMON INC
and
SALOMON INC
10,000,000 PURCHASE CONTRACTS
EACH REQUIRING THE PURCHASE ON , 2021 (OR EARLIER) OF ONE DEPOSITARY
SHARE REPRESENTING A ONE-TWENTIETH INTEREST IN A SHARE OF % CUMULATIVE
PREFERRED STOCK, SERIES F, LIQUIDATION PREFERENCE $500 PER SHARE, OF SALOMON INC
AT A PURCHASE PRICE OF $25 PER DEPOSITARY SHARE.
Each % Trust Preferred Stock(Service Mark) (TRUPS(Service Mark))* Unit (a
'Unit') will consist of (i) a % Preferred Security (the 'Preferred
Security') of SI Financing Trust I (the 'Trust'), having a stated liquidation
amount of $25 (the 'Stated Amount'), and (ii) a related contract (the 'Purchase
Contract') requiring the purchase on , 2021 (or earlier as
described below) of one Depositary Share (a 'Depositary Share') representing a
one-twentieth interest in a share of % Cumulative Preferred Stock, Series
F, liquidation preference $500 per share (the 'Series F Preferred Stock'), of
Salomon Inc (the 'Company') at a purchase price of $25 per Depositary Share. A
holder of a Unit (a 'Unitholder') may cause the Preferred Security to be repaid
and the proceeds thereof to be used to pay the purchase price of a Depositary
Share under the Purchase Contract. (continued on following page)
SEE 'RISK FACTORS' BEGINNING ON PAGE 12 FOR A DISCUSSION OF CERTAIN FACTORS THAT
SHOULD BE CAREFULLY CONSIDERED BY PROSPECTIVE PURCHASERS.
The Units have been approved for listing on the New York Stock Exchange ('NYSE')
under the symbol 'SB PrG', subject to official notice of issuance. Prior to this
offering there has been no public market for the Units. In the event that a
Preferred Security is separated from the related Purchase Contract, the
resulting separated Purchase Contract will not be transferable without the prior
written consent of the Company and will not be tradable on the NYSE. The
Preferred Securities will not be listed or traded on any securities exchange.
Unless and until a significant number of Preferred Securities are separated from
the related Purchase Contracts, there will be no market for the Preferred
Securities and even then there is not expected to be a market for Preferred
Securities separate from the Units. The Depositary Shares have been approved for
listing on the NYSE, subject to official notice of issuance. The Series F
Preferred Stock will not be listed and the Company does not expect that there
will be any trading market for the Series F Preferred Stock except as
represented by the Depositary Shares.
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 REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
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<S> <C> <C> <C>
PRICE TO UNDERWRITING PROCEEDS TO
PUBLIC(1) DISCOUNT COMPANY(1)(2)
Per Unit..............
Total(3)..............
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</TABLE>
(1) Plus accrued distributions on the Preferred Securities and Contract Fees, if
any, from , 1996.
(2) Before deducting expenses payable by the Company estimated to be
$ .
(3) The Company and the Trust have granted to the Underwriters a 30-day option
to purchase up to an aggregate of additional Units at the Price to
Public, less the Underwriting Discount, solely to cover over-allotments, if
any. If the Underwriters exercise such option in full, the total Price to
Public, Underwriting Discount and Proceeds to Company will be $ ,
$ and $ , respectively. See 'Underwriting.'
The Units are offered subject to receipt and acceptance by the Underwriters, to
prior sale and to the Underwriters' right to reject any order in whole or in
part and to withdraw, cancel or modify the offer without notice. It is expected
that delivery of the Units will be made through the facilities of The Depository
Trust Company, on or about , 1996.
The Company or one or more of its subsidiaries may from time to time purchase or
acquire a position in the Units and may, at its option, hold or resell such
Units. Salomon Brothers Inc, an indirect wholly owned subsidiary of the Company,
expects to offer and sell previously issued Units in the course of its business
as a broker-dealer. Salomon Brothers Inc may act as principal or agent in such
transactions. This Prospectus may be used by the Company or any of its
subsidiaries, including Salomon Brothers Inc, in connection with such
transactions. Such sales, if any, will be made at varying prices related to
prevailing market prices at the time of sale.
*Salomon Inc has filed applications with the United States Patent and Trademark
Office for the registration of the Trust Preferred Stock and TRUPS service
marks.
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SALOMON BROTHERS INC
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The date of this Prospectus is , 1996.
<PAGE>
(continued from previous page)
Each Unit will entitle the holder thereof to receive % of the Stated Amount
per annum (equivalent to $ per annum), consisting of (i) % per annum of
the Stated Amount in distributions on the related Preferred Security and (ii)
% per annum of the Stated Amount in Contract Fees (as defined herein).
Distributions on the Preferred Securities and Contract Fees will accrue from the
date of original issuance of the Units and will be payable quarterly in arrears
on each , , and
(each, a 'Payment Date'), commencing on , 1996. In addition, each
Unit will entitle the holder thereof to all other proportional rights and
preferences of the Preferred Securities (including voting, redemption, repayment
and liquidation rights).
Each Depositary Share will entitle the holder thereof to all proportional rights
and preferences of the Series F Preferred Stock (including dividend, voting,
redemption and liquidation rights). The proportionate liquidation preference of
each Depositary Share will be $25. See 'Description of the Depositary Shares.'
Dividends on the Series F Preferred Stock will be cumulative from the date of
issue and will be payable quarterly on each Payment Date at the rate of %
per annum (equivalent to $ per annum per Depositary Share). See
'Description of the Depositary Shares-- Dividends and Other Distributions.' The
Series F Preferred Stock will be redeemable at the option of the Company at any
time on or after the later of , 2001 or the date of issue, in
whole or in part, at a redemption price of $500 per share (equivalent to $25 per
Depositary Share), plus accrued and unpaid dividends to the redemption date.
Each Preferred Security will represent a preferred undivided beneficial interest
in the assets of the Trust. The Company will, directly or indirectly, own all
the common securities (the 'Common Securities' and, together with the Preferred
Securities, the 'Trust Securities') representing undivided beneficial interests
in the assets of the Trust. The Trust exists for the sole purpose of issuing the
Preferred Securities and Common Securities and investing the proceeds thereof in
the % Subordinated Debt Securities due , 2026 (the
'Subordinated Debt Securities') of the Company. Upon an event of default under
the Declaration (as defined herein), the holders of Preferred Securities will
have a preference over the holders of the Common Securities with respect to
payments in respect of distributions and payments upon redemption, liquidation
or otherwise. The payment of distributions out of money held by the Trust, and
payments upon redemption or repayment of the Preferred Securities or liquidation
of the Trust, as described below, are guaranteed by the Company (the
'Guarantee') to the extent described under 'Description of the Guarantee.' The
Guarantee covers payments of distributions and other payments on the Preferred
Securities only if and to the extent that the Trust has funds available therefor
which will not be the case unless the Company has made a payment of interest or
principal or other payments on the Subordinated Debt Securities held by the
Trust as its sole asset. The Guarantee, when taken together with the Company's
obligations under the Subordinated Debt Securities and the Indenture (as defined
herein) and its obligations under the Declaration (as defined herein), including
its liabilities to pay costs, expenses, debts and obligations of the Trust
(other than with respect to the Trust Securities), provides a full and
unconditional guarantee of amounts due on the Preferred Securities. See 'Risk
Factors--Rights under the Guarantee.' The obligations of the Company under the
Guarantee will be subordinate and junior in right of payment to all other
liabilities of the Company and pari passu with the most senior preferred stock
issued from time to time by the Company. The obligations of the Company under
the Subordinated Debt Securities are subordinate and junior in right of payment
to all present and future Senior Indebtedness (as defined herein) of the
Company, which aggregated approximately $96.1 billion at March 31, 1996, and
rank pari passu with the Company's other general unsecured obligations.
The Subordinated Debt Securities purchased by the Trust may be subsequently
distributed pro rata to holders of the Preferred Securities and Common
Securities in connection with the dissolution of the Trust at any time at the
option of the Company or upon the occurrence of certain events. In the event the
Subordinated Debt Securities are distributed to the holders of the Preferred
Securities, a Unit will thereafter consist of a Subordinated Debt Security and a
related Purchase Contract and a Unitholder
2
<PAGE>
may cause such Subordinated Debt Security to be repaid and the proceeds thereof
to be used to pay the purchase price of a Depositary Share under the Purchase
Contract.
The distribution rate and the payment dates for the Preferred Securities will
correspond to the interest rate and the payment dates on the Subordinated Debt
Securities, which will be the sole assets of the Trust. As a result, if
principal or interest is not paid on the Subordinated Debt Securities, no
amounts will be paid on the Preferred Securities. If the Company does not make
principal or interest payments on the Subordinated Debt Securities, the Trust
will not have sufficient funds to make distributions on the Preferred
Securities, in which event the Guarantee will not apply to such distributions
until the Trust has sufficient funds available therefor.
The Subordinated Debt Securities will be redeemable at the option of the
Company, in whole (but not in part), on or after , 2001 on any
Payment Date; provided, however, that after the settlement date for the Purchase
Contracts, the right of the Company to redeem any Subordinated Debt Securities
that remain outstanding will be postponed or suspended until the fifth
anniversary of such date. If the Company redeems the Subordinated Debt
Securities, the Trust must redeem the Trust Securities at the Stated Amount
thereof plus any accrued and unpaid distributions thereon to the date of
redemption (subject to the right of holders of record on the relevant record
date to receive distributions due on a Payment Date) (the 'Redemption Price')
and any outstanding Purchase Contracts will terminate. Any Preferred Securities
not previously redeemed will be redeemed upon maturity of the Subordinated Debt
Securities. See 'Description of the Preferred Securities--Mandatory Redemption.'
In addition, upon the occurrence of a Tax Event (as defined herein) or
Investment Company Event (as defined herein), unless the Subordinated Debt
Securities are redeemed in the limited circumstances described herein, the Trust
will be dissolved with the result that the Subordinated Debt Securities will be
distributed to the holders of the Preferred Securities and Common Securities, on
a pro rata basis, in lieu of any cash distribution. In certain circumstances in
the case of a Tax Event, the Company will have the right to redeem the
Subordinated Debt Securities, which would result in the redemption by the Trust
of the Trust Securities in the same amount on a pro rata basis and the
termination of any outstanding Purchase Contracts. See 'Description of the
Preferred Securities--Tax Event or Investment Company Event Redemption or
Distribution; Optional Distribution.'
In the event of the liquidation of the Trust, either (i) the holders of the
Preferred Securities will be entitled to receive for each Preferred Security the
Stated Amount plus accrued and unpaid distributions thereon (including interest
thereon) to the date of payment and any outstanding Purchase Contracts will
terminate or (ii) the Subordinated Debt Securities will be distributed to the
holders of the Preferred Securities. See 'Description of the Preferred
Securities--Liquidation Distribution Upon Dissolution.'
The Preferred Securities initially will be pledged with the Collateral Agent (as
defined herein) to secure the obligations of Unitholders to purchase the
Depositary Shares under the Purchase Contracts. A Preferred Security may be
separated from the related Purchase Contract at the option of a Unitholder prior
to settlement of the Purchase Contract by the delivery to the Collateral Agent
of Eligible Collateral (as defined herein) having an aggregate principal amount
equal to the Stated Amount of such Preferred Security. See 'Description of the
Units--Separation of Preferred Security from the Related Purchase Contract.' The
Eligible Collateral will be pledged with the Collateral Agent as substitute
collateral to secure such Unitholder's obligation under the separated Purchase
Contract. Upon separation of the Preferred Security from a Purchase Contract,
the related Unit will cease to be outstanding and the Preferred Security will be
released to the holder of the separated Purchase Contract (each Unitholder or
holder of a separated Purchase Contract, a 'Holder'). Thereafter, the separated
Purchase Contract will be nontransferable without the prior written consent of
the Company. There can be no assurance that the Units will not be delisted from
the NYSE or that trading in the Units on the NYSE will not be suspended in the
event that there is a significant decrease in the number of outstanding Units as
a result of the election by Unitholders to separate the Preferred Securities
from the related Purchase Contracts which would cause the number of Units to
fall below the minimum requirements for the listing of securities on the NYSE.
See 'Risk Factors--Absence of Trading Market; Separation of Units.'
3
<PAGE>
The Collateral Agent will pay directly to Holders of separated Purchase
Contracts any distributions received on the Eligible Collateral, and if at any
time the aggregate principal amount at maturity of the Holder's Eligible
Collateral exceeds the required principal amount of Eligible Collateral, such
excess amount will be released to the Holder at the Holder's request. See
'Description of the Units-- Reinvestment of Eligible Collateral' and
'--Distributions on Collateral.' A Holder of a separated Purchase Contract may
reestablish prior to settlement of the Purchase Contract a transferable Unit
consisting of a Preferred Security and a related Purchase Contract by delivering
a Preferred Security to the Collateral Agent in exchange for the release of
Eligible Collateral having a corresponding aggregate principal amount.
The Company may, at its option, accelerate, in whole (but not in part), the
settlement of the Purchase Contracts to any Payment Date. See 'Description of
the Units--Description of the Purchase Contracts--Acceleration of Purchase.' A
Unitholder may settle a Purchase Contract by instructing the Collateral Agent to
present the related Preferred Security to the Trust for repayment and to apply
$25 of the proceeds therefrom in satisfaction of the Purchase Contract (a
'Collateral Settlement') or by delivering $25 in cash to the Collateral Agent (a
'Cash Settlement'), in each case on the Business Day immediately prior to the
settlement date for the Purchase Contract, provided that failure to provide
instructions or deliver cash will be deemed to be an election to effect a
Collateral Settlement. To the extent a Unitholder effects a Cash Settlement, the
related Preferred Security will be released to the Unitholder. A Holder of a
separated Purchase Contract will be required to settle such Purchase Contract
from the proceeds of the related Eligible Collateral. See 'Description of the
Units--Description of the Purchase Contracts--Payment of Purchase Price;
Delivery of Depositary Shares.'
Upon the settlement of the Purchase Contracts on , 2021 or
earlier if the Purchase Contracts are accelerated, the Units and any separated
Purchase Contracts will cease to be outstanding.
Holders of Preferred Securities that have been separated from Purchase Contracts
will have the right to require the Trust to repay such Preferred Securities on
the Business Day immediately prior to the settlement date for the Purchase
Contracts.
Holders of Preferred Securities that remain outstanding after an accelerated
settlement date for the Purchase Contracts will have the right to require the
Trust to repay such Preferred Securities on the fifth anniversary of such date.
See 'Description of the Units--Description of the Purchase Contracts-- Payment
of Purchase Price; Delivery of Depositary Shares.'
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE UNITS OFFERED
HEREBY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET.
SUCH TRANSACTIONS MAY BE EFFECTED ON THE NEW YORK STOCK EXCHANGE, IN THE
OVER-THE-COUNTER MARKET OR OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE
DISCONTINUED AT ANY TIME.
4
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the information 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'). Such reports, proxy
statements and other information filed by the Company can be inspected and
copied at the public reference facilities maintained by the Commission at Room
1024, 450 Fifth Street, N.W., Washington, D.C. 20549, and at the Commission's
Regional Offices at Seven World Trade Center, 13th Floor, New York, New York
10048, and Citicorp Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661. Copies of such material can be obtained upon written request
addressed to the Commission, Public Reference Section, 450 Fifth Street, N.W.,
Washington, D.C. 20549, at prescribed rates. In addition, reports, proxy
statements and other information concerning the Company may be inspected at the
offices of the New York Stock Exchange, Inc., 20 Broad Street, New York, New
York 10005 and at the offices of the American Stock Exchange, 86 Trinity Place,
New York, New York 10006.
The Company has filed with the Commission a registration statement on Form
S-3 (herein, together with all amendments and exhibits, referred to as the
'Registration Statement') under the Securities Act of 1933, as amended (the
'Securities Act') relating to the Securities. This Prospectus does not contain
all the information set forth in the Registration Statement, certain parts of
which are omitted in accordance with the rules and regulations of the
Commission. For further information, reference is hereby made to the
Registration Statement 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; (ii) the Quarterly Report on Form 10-Q for the quarter ended March 31,
1996; and (iii) the Current Reports on Form 8-K dated January 23, 1996, February
1, 1996, February 12, 1996, April 23, 1996, April 29, 1996 and May 30, 1996.
All reports and other documents filed by the Company pursuant to Section
13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date of this
Prospectus and prior to the termination of the offering of the Securities hereby
shall be deemed to be incorporated by reference in this Prospectus and to be a
part hereof from the date of filing such reports and documents.
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.
5
<PAGE>
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more detailed
information appearing elsewhere in this Prospectus. Investors should carefully
consider the information set forth under the heading 'Risk Factors.' For
definitions of capitalized terms used in this Prospectus, see 'Glossary of
Defined Terms.'
THE OFFERING
<TABLE>
<S> <C>
Units Offered............................. 10,000,000 % Trust Preferred StockSM (TRUPSSM) Units.
Each Unit will consist of (i) a % Preferred Security of SI
Financing Trust I and (ii) a Purchase Contract requiring the purchase
on , 2021 (or earlier as described below) of one
Depositary Share representing a one-twentieth interest in a share of
% Cumulative Preferred Stock, Series F, of Salomon Inc at a
purchase price of $25 per Depositary Share. A Unitholder may cause a
Preferred Security to be repaid and the proceeds thereof to be used
to pay the purchase price of a Depositary Share under the Purchase
Contract.
Distributions and Contract Fees........... Each Unit will entitle the holder thereof to receive % of the
Stated Amount per annum (equivalent to $ per annum),
consisting of (i) % per annum of the Stated Amount in
distributions on the related Preferred Security and (ii) % per
annum of the Stated Amount in Contract Fees. Distributions on the
Preferred Securities and Contract Fees will accrue from the date of
original issuance of the Units and will be payable quarterly in
arrears on each , , and (each, a
'Payment Date'), commencing , 1996.
Depositary Shares......................... Each Depositary Share will entitle the holder thereof to all
proportional rights and preferences of the Series F Preferred Stock
(including dividend, voting, redemption and liquidation rights). The
proportionate liquidation preference of each Depositary Share will be
$25. Dividends on the Series F Preferred Stock will be cumulative
from the date of issue and will be payable quarterly on each Payment
Date at the rate of % per annum (equivalent to $ per annum
per Depositary Share). The Series F Preferred Stock will be
redeemable at the option of the Company at any time on or after the
later of , 2001 or the date of issue, in whole or in part,
at a redemption price of $500 per share (equivalent to $25 per
Depositary Share), plus accrued and unpaid dividends to the
redemption date.
Preferred Securities...................... Each Preferred Security will represent a preferred undivided
beneficial interest in the assets of the Trust. The Trust exists for
the sole purpose of issuing the Preferred Securities and the Common
Securities (which will be owned directly or indirectly by the
Company) and investing the proceeds thereof in the % Subordinated
Debt Securities due , 2026 of the Company. The
distribution rate and the payment dates for the Preferred Securities
will correspond to the interest rate and the payment dates on the
Subordinated Debt Securities, which will be the sole assets of the
Trust. As a result, if principal or
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6
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<TABLE>
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interest is not paid on the Subordinated Debt Securities, no amounts
will be paid on the Preferred Securities.
Distribution of Subordinated Debt
Securities.............................. The Subordinated Debt Securities purchased by the Trust may be
subsequently distributed pro rata to holders of the Preferred
Securities and Common Securities in connection with the dissolution
of the Trust at any time at the option of the Company or upon the
occurrence of certain events. In the event the Subordinated Debt
Securities are distributed to the holders of the Preferred
Securities, a Unit will thereafter consist of a Subordinated Debt
Security and a related Purchase Contract and a Unitholder may cause
such Subordinated Debt Security to be repaid and the proceeds thereof
to be used to pay the purchase price of a Depositary Share under the
Purchase Contract.
Redemption of Preferred Securities;
Termination of Purchase
Contracts; Tax Event or Investment
Company Event........................... Upon the optional redemption by the Company of the Subordinated Debt
Securities, the Preferred Securities will be redeemed at the Stated
Amount thereof plus any accrued and unpaid distributions thereon to
the date of redemption and any outstanding Purchase Contracts will
terminate. The Subordinated Debt Securities will be redeemable at the
option of the Company, in whole (but not in part), on and after
, 2001 on any Payment Date; provided, however, that after
the settlement date for the Purchase Contracts, the right of the
Company to redeem any Subordinated Debt Securities that remain
outstanding will be postponed or suspended until the fifth
anniversary of such date. Any Preferred Securities not previously
redeemed will be redeemed on maturity of the Subordinated Debt
Securities. In addition, upon the occurrence of a Tax Event or
Investment Company Event, unless the Subordinated Debt Securities are
redeemed in the limited circumstances described herein, the Trust
will be dissolved with the result that the Subordinated Debt
Securities will be distributed to the holders of the Preferred
Securities and Common Securities, on a pro rata basis, in lieu of any
cash distribution. In certain circumstances in the case of a Tax
Event, the Company will have the right to redeem the Subordinated
Debt Securities, which would result in the redemption by the Trust of
the Trust Securities in the same amount on a pro rata basis and the
termination of any outstanding Purchase Contracts.
Liquidation............................... In the event of the liquidation of the Trust, either (i) the holders
of the Preferred Securities will be entitled to receive for each
Preferred Security the Stated Amount plus accrued and unpaid
distributions thereon (including interest thereon) to the date of
payment and any outstanding Purchase Contracts will terminate or (ii)
the Subordinated Debt Securities will be distributed to the holders
of the Preferred Securities.
Guarantee................................. The payment of distributions out of money held by the Trust, and
payments upon redemption or repayment of the Preferred
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Securities or liquidation of the Trust, are guaranteed by the Company
to the extent described under 'Description of the Guarantee.' The
Guarantee does not cover payment of distributions when the Trust does
not have sufficient available funds to pay such distributions. The
Guarantee, when taken together with the Company's obligations under
the Subordinated Debt Securities and the Indenture and its
obligations under the Declaration, including its liabilities to pay
costs, expenses, debts and obligations of the Trust (other than with
respect to the Trust Securities), provides a full and unconditional
guarantee of amounts due on the Preferred Securities.
Pledge of Preferred Securities or Eligible
Collateral.............................. The Preferred Securities initially will be pledged with The Bank of
New York, as Collateral Agent for the Company (the 'Collateral
Agent'), to secure the obligation of Unitholders to purchase the
Depositary Shares under the Purchase Contracts. A Preferred Security
may be separated from the related Purchase Contract prior to
settlement of the Purchase Contract at the option of the Unitholder
by the delivery to the Collateral Agent of (i) cash or (ii) U.S.
Treasury Securities with a maturity of 30 days or less at the time of
determination ('Eligible Collateral') having an aggregate principal
amount equal to the Stated Amount of such Preferred Security. See
'Description of the Units--Separation of Preferred Security from the
Related Purchase Contract.' The Eligible Collateral will be pledged
with the Collateral Agent as substitute collateral to secure such
Unitholder's obligation under the separated Purchase Contract. Upon
separation of the Preferred Security from a Purchase Contract, the
related Unit will cease to be outstanding and the Preferred Security
will be released to the Holder of the separated Purchase Contract.
Thereafter, the separated Purchase Contract will be nontransferable
without the prior written consent of the Company. There can be no
assurance that the Units will not be delisted from the NYSE or that
trading in the Units on the NYSE will not be suspended in the event
that there is a significant decrease in the number of outstanding
Units as a result of the election by Unitholders to separate the
Preferred Securities from the related Purchase Contracts which would
cause the number of Units to fall below the minimum requirements for
the listing of securities on the NYSE. See 'Risk Factors--Absence of
Trading Market; Separation of Units.'
The Collateral Agent will pay directly to Holders of separated
Purchase Contracts any distributions received on the Eligible
Collateral, and if at any time the aggregate principal amount at
maturity of such holder's Eligible Collateral exceeds the required
principal amount of Eligible Collateral, such excess amount will be
released to such Holder at the Holder's request.
Reestablishment of Unit................... A Holder of a separated Purchase Contract may reestablish prior to
settlement of the Purchase Contract a transferable Unit consisting of
a Preferred Security and a related Purchase Contract by delivering a
Preferred Security to the Collateral Agent in exchange for the
release of Eligible Collateral having a corresponding aggregate
principal amount.
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Acceleration of Purchase Contracts........ The Company may, at its option, on not less than 45 nor more than 60
days' notice, accelerate, in whole (but not in part), the settlement
of the Purchase Contracts to any Payment Date, subject to
cancellation or rescission in certain circumstances. The Company
might, for example, choose to accelerate the settlement of the
Purchase Contracts for any of the following reasons: (i) if the
Company is required to comply with the capital requirements of any
applicable laws or regulations, (ii) if the rating agencies in their
analysis of the Company's capital structure no longer treat the Units
similarly to the Company's perpetual preferred stock, (iii) for
accounting reasons, including if the Preferred Securities are no
longer recorded on the Company's consolidated balance sheet as
described under 'Accounting Treatment' or the Company desires to
reclassify the Preferred Securities as equity, (iv) if the Company
desires to meet any future capital structure goal or (v) for tax
reasons, including if for Federal income tax purposes the
Subordinated Debt Securities are no longer classified as indebtedness
of the Company. See 'Description of the Units--Description of the
Purchase Contracts--Acceleration of Purchase.'
Settlement of Purchase Contracts; Certain
Rights of Holders of Preferred
Securities.............................. A Unitholder may settle a Purchase Contract by instructing the
Collateral Agent to present the related Preferred Security to the
Trust for repayment and to apply $25 of the proceeds therefrom in
satisfaction of the Purchase Contract (a 'Collateral Settlement') or
by delivering $25 in cash to the Collateral Agent (a 'Cash
Settlement'). To the extent a Unitholder effects a Cash Settlement,
the related Preferred Security will be released to the Unitholder. A
Holder of a separated Purchase Contract will be required to settle
the Purchase Contract from the proceeds of the related Eligible
Collateral. See 'Description of the Units-- Description of the
Purchase Contracts--Payment of Purchase Price; Delivery of Depositary
Shares.'
A Unitholder may effect a Cash Settlement by (a) providing the Unit
Agent with notice of its election to effect a Cash Settlement not
less than 10 nor more than 30 days prior to the settlement date for
the Purchase Contract and (b) making a payment of the purchase price
to the Collateral Agent prior to 9:00 a.m., New York City time, on
the Business Day immediately preceding the settlement date. A
Unitholder may effect a Collateral Settlement by directing the Unit
Agent not less than 10 nor more than 30 days prior to the settlement
date for the Purchase Contract to instruct the Collateral Agent to
present the related Preferred Security to the Trust for repayment
prior to 10:00 a.m., New York City time, on the Business Day
immediately preceding the settlement date. A Unitholder who does not
make an effective Cash Settlement or direct the Unit Agent to deliver
an instruction for a Collateral Settlement will be deemed to have
elected a Collateral Settlement.
</TABLE>
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<TABLE>
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Upon the settlement of the Purchase Contracts on, ,
2021 or earlier if the Purchase Contracts are accelerated, the Units
and any separated Purchase Contracts will cease to be outstanding.
Holders of Preferred Securities that have been separated from
Purchase Contracts will have the right to require the Trust to repay
such Preferred Securities on the Business Day immediately prior to
the settlement date for the Purchase Contracts.
Holders of Preferred Securities that remain outstanding after an
accelerated settlement date for the Purchase Contracts will have the
right to require the Trust to repay such Preferred Securities on the
fifth anniversary of such date. See 'Description of the
Units--Description of the Purchase Contracts--Payment of Purchase
Price; Delivery of Depositary Shares.'
Listing................................... The Units have been approved for listing on the NYSE under the symbol
'SB PrG', subject to official notice of issuance. Prior to this
offering there has been no public market for the Units. In the event
the Preferred Security is separated from the related Purchase
Contract, the resulting separated Purchase Contract will not be
tradable on the NYSE. The Preferred Securities will not be listed or
traded on any securities exchange, and unless and until a significant
number of Preferred Securities are separated from the related
Purchase Contracts, there will be no market for the Preferred
Securities. The Depositary Shares have been approved for listing on
the NYSE, subject to official notice of issuance. The Series F
Preferred Stock will not be listed and the Company does not expect
that there will be any trading market for the Series F Preferred
Stock except as represented by the Depositary Shares.
Certain Potential Benefits of Investment
in Units................................ The Company expects that the aggregate rate of the distributions on
the Preferred Securities and the Contract Fees will be higher than
the dividend rate that the Company would be required to pay if the
Company were to issue directly shares of its preferred stock in lieu
of issuance of the Units. In addition, a Unitholder will have the
option (i) to retain the related Preferred Security by making a Cash
Settlement of the Purchase Contract, which Preferred Security will be
non-redeemable by the Company for five years from the settlement of
the Purchase Contract and may be presented to the Trust for repayment
by the holder on the fifth anniversary of such settlement, or (ii) to
separate the related Preferred Security from the Purchase Contract at
any time prior to the settlement of the Purchase Contract by
depositing Eligible Collateral with the Collateral Agent in exchange
for such Preferred Security. In making the determination whether to
elect a Cash Settlement, a Unitholder should give careful
consideration at the time of such determination to, among other
things, prevailing interest rates on securities with terms similar to
the Preferred Security, the credit quality of the Company and the
terms of the Preferred Security. A Unitholder might elect a Cash
Settlement if, for example, the interest rate on securities
</TABLE>
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<TABLE>
<S> <C>
with similar terms and of similar credit quality were lower than the
interest rate on the Preferred Security. In the event a Holder's
Purchase Contract is secured by Eligible Collateral, the proceeds
from the Eligible Collateral will be applied automatically to the
settlement of the Purchase Contract without any exercise of
discretion by the Holder.
In Respect of the Company:
Certain Federal Income Tax Consequences;
Rating Agencies Treatment; and
Accounting Treatment.................... Tax counsel to the Company has advised the Company that the
Subordinated Debt Securities will be classified for Federal income
tax purposes as indebtedness of the Company. See 'United States
Federal Income Taxation.' It is the Company's understanding that the
rating agencies, in their analysis of the Company's capital
structure, will treat the Units similarly to the Company's perpetual
preferred stock. On the Company's consolidated balance sheet, the
Subordinated Debt Securities will not be recorded and the Preferred
Securities and Purchase Contracts will be recorded as described under
'Accounting Treatment.'
Forms of Securities....................... Units and Preferred Securities will be issued in book-entry form and
represented by a global certificate or certificates registered in the
name of Cede & Co., as nominee for The Depository Trust Company
('DTC'). Separated Purchase Contracts secured by Eligible Collateral
will be represented by a certificate or certificates that will be in
definitive form only. It is expected that Depositary Receipts (as
defined herein) evidencing the Depositary Shares will be issued in
book-entry form and represented by a global certificate or
certificates registered in the name of Cede & Co., as nominee for
DTC.
Unit Agreement; Unit Agent................ The Units will be issued under the Unit Agreement to be dated as of
, 1996 (the 'Unit Agreement'), between the Company and
Chemical Bank, a New York banking corporation, as the agent for the
Holders of Units and separated Purchase Contracts from time to time
(together with any successor thereto in such capacity, the 'Unit
Agent'). The Unit Agreement will not be qualified as an indenture
under the Trust Indenture Act (as defined herein), and the Unit Agent
will not be required to qualify as a trustee thereunder.
</TABLE>
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RISK FACTORS
Prospective purchasers of the Units should carefully review the information
contained elsewhere in this Prospectus and should particularly consider the
following matters:
HOLDERS WILL BE REQUIRED TO PURCHASE DEPOSITARY SHARES
Pursuant to the Purchase Contract, the Company may require each Holder to
purchase a Depositary Share on any Payment Date. Accordingly, each Unitholder
must be prepared to purchase the Depositary Share for cash or instruct the
Collateral Agent to present such Unitholder's related Preferred Security to the
Trust for repayment. A failure to deliver cash or provide instructions to the
Collateral Agent will be deemed to be an election to effect a Collateral
Settlement by the Unitholder. A Holder of a separated Purchase Contract will be
required to purchase the Depositary Share from the proceeds of the related
Eligible Collateral. Thus, following the settlement of the Purchase Contract, a
Unitholder who does not elect to effect a Cash Settlement will own a Depositary
Share rather than a beneficial interest in a pledged Preferred Security, and a
Holder of a separated Purchase Contract will own a Depositary Share rather than
a beneficial interest in Eligible Collateral, and the market value of the
Depositary Share may be materially different than the value of the Preferred
Security or Eligible Collateral. Moreover, prospective purchasers should
consider that upon a Collateral Settlement of a Purchase Contract, a Unitholder
will effectively exchange the Preferred Security of the Trust, whose assets
consist of the Subordinated Debt Securities, for a Depositary Share representing
a one-twentieth interest in a share of Series F Preferred Stock, which will be
subordinated in right of payment to all existing and future indebtedness of the
Company.
NO ADJUSTMENT OF DIVIDEND ON SERIES F PREFERRED STOCK
Prospective purchasers should consider the fact that the dividend rate of
the Series F Preferred Stock will not be adjusted to reflect subsequent changes
in interest rates or the financial condition of the Company. Accordingly, the
market value of a Depositary Share on a Purchase Date may be more or less than
$25, the purchase price of a Depositary Share.
NO RELATIONSHIP BETWEEN EVENTS OF DEFAULT WITH RESPECT TO SUBORDINATED DEBT
SECURITIES OR PREFERRED SECURITIES AND OBLIGATIONS UNDER PURCHASE CONTRACTS
The obligation of a Holder under a Purchase Contract to purchase a
Depositary Share will not be terminated or otherwise affected by the occurrence
and continuance of an Event of Default (as defined herein) with respect to
Subordinated Debt Securities or a Declaration Event of Default (as defined
herein) with respect to the Preferred Securities. The Purchase Contracts will
terminate, however, if the Company redeems the Subordinated Debt Securities or,
in certain circumstances, the Preferred Securities are not repaid at the Stated
Purchase Date (as defined herein). See 'Description of the Units--Description of
the Purchase Contracts--Termination.' In addition, the Company will not be
entitled to accelerate the obligation of a Holder under a Purchase Contract if,
in certain circumstances, the Preferred Securities are not repaid at an Early
Purchase Date (as defined herein). See 'Description of the Units--Description of
the Purchase Contracts--Payment of Purchase Price; Delivery of Depositary
Shares.'
TAX EVENT OR INVESTMENT COMPANY EVENT REDEMPTION OR DISTRIBUTION; OPTIONAL
DISTRIBUTION
Upon the occurrence of a Tax Event, an Investment Company Event or an
Optional Distribution (as defined herein), the Trust will be dissolved (except
in the limited circumstances described in the following sentence) with the
result that the Subordinated Debt Securities will be distributed to the holders
of the Trust Securities. In certain circumstances involving a Tax Event, the
Company will have the right to redeem the Subordinated Debt Securities, in whole
(but not in part), in which event the Trust will redeem Trust Securities on a
pro rata basis to the same extent as the Subordinated Debt Securities
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<PAGE>
are redeemed. See 'Description of the Preferred Securities--Tax Event or
Investment Company Event Redemption or Distribution; Optional Distribution.'
Under current United States Federal income tax law, a distribution of
Subordinated Debt Securities upon the dissolution of the Trust would not be a
taxable event to holders of the Preferred Securities, including the Collateral
Agent. Upon occurrence of a Tax Event, however, a dissolution of the Trust in
which holders of the Preferred Securities receive cash would be a taxable event
to such holders, provided, however, that the initial Holders of the related
Units should not recognize gain or loss because such Holders' tax basis in the
Preferred Securities will equal the amount of cash received. See 'United States
Federal Income Taxation--U.S. Holders--Redemption of Preferred Securities and
Cancellation of Purchase Contract.'
There can be no assurance as to the impact on the market prices for the
Units of a distribution of the Subordinated Debt Securities in exchange for
Preferred Securities upon a dissolution or liquidation of the Trust. Because the
Units will consist of Subordinated Debt Securities and related Purchase
Contracts upon the occurrence of an Investment Company Event, an Optional
Distribution or, in certain circumstances, a Tax Event or liquidation of the
Trust, prospective purchasers of Units are also making an investment decision
with regard to the Subordinated Debt Securities and should carefully review all
the information regarding the Subordinated Debt Securities contained herein. See
'Description of the Preferred Securities--Tax Event or Investment Company Event
Redemption or Distribution; Optional Distribution' and 'Description of the
Subordinated Debt Securities--General.'
UNIT AGREEMENT NOT QUALIFIED UNDER TRUST INDENTURE ACT; LIMITED OBLIGATIONS OF
UNIT AGENT
Although the Preferred Securities constituting a part of the Units will be
issued pursuant to a Declaration (as defined herein) qualified under the Trust
Indenture Act of 1939, as amended (the 'Trust Indenture Act'), the Unit
Agreement will not be qualified as an indenture under the Trust Indenture Act,
and the Unit Agent will not be required to qualify as a trustee thereunder.
Accordingly, Holders will not have the benefit of the protection of the Trust
Indenture Act. The protections generally afforded the holder of a security
issued under an indenture that has been qualified under the Trust Indenture Act
include disqualification of the indenture trustee for 'conflicting interests' as
defined under the Trust Indenture Act, provisions preventing a trustee that is
also a creditor of the issuer from improving its own credit position at the
expense of the security holders immediately prior to or after a default under
the indenture and the requirement that the indenture trustee deliver reports at
least annually with respect to certain matters concerning the indenture trustee
and the securities. Under the terms of the Unit Agreement, the Unit Agent will
not be required to resign as agent in the event of a 'conflicting interest,'
will not be obligated to establish a separate account for the benefit of Holders
in the case of a credit relationship with the Company at the time of a default
under the Unit Agreement and will not be required to furnish any annual reports.
With respect to the Preferred Security, a Unitholder, as the holder of an
underlying Preferred Security, will have the protections of the Declaration,
which will be qualified under the Trust Indenture Act.
ABSENCE OF TRADING MARKET; SEPARATION OF UNITS
There is no existing trading market for the Units and there can be no
assurance as to the liquidity of any such market that may develop, the ability
of the Unitholders to sell such securities, the price at which the Unitholders
would be able to sell such securities or whether a trading market, if it
develops, will continue. If such a market were to exist, the Units could trade
at prices higher or lower than their initial offering amount, depending on many
factors, including prevailing interest rates, the market for similar securities
and the operating results of the Company. Unless or until a significant number
of Preferred Securities are separated from the Units there will be no market for
the Preferred Securities. The Preferred Securities will not be listed on any
securities exchange, and, regardless of a listing or lack thereof, the same
considerations referred to above would be equally applicable to the Preferred
Securities. In addition, upon such separation, the separated Purchase Contract
will be nontransferable without the prior written consent of the Company.
Holders should carefully consider the likely illiquidity
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of the Preferred Securities and Purchase Contracts prior to making an election
to separate. See 'Description of the Units.'
The Units have been approved for listing on the NYSE under the symbol 'SB
PrG', subject to official notice of issuance. However, there can be no assurance
that, if so listed, the Units will not later be delisted or that trading in the
Units on the NYSE will not be suspended in the event that there is a significant
decrease in the number of outstanding Units as a result of the election by
Unitholders to separate the Preferred Securities from the related Purchase
Contracts which would cause the number of Units to fall below the minimum
requirements for the listing of securities on the NYSE. In the event of
delisting or suspension of trading on such market, the Company will apply for
quotation on another trading market or for listing of the Units on another
national securities exchange. If the Units are not listed or traded on any
securities exchange or trading market, or if trading of the Units is suspended,
pricing information for the Units may be difficult to obtain, and the liquidity
of the Units may be adversely affected.
The Depositary Shares have been approved for listing on the NYSE, subject
to official notice of issuance. The Series F Preferred Stock will not be listed
on an exchange and the Company does not expect that there will be any trading
market for the Series F Preferred Stock except as represented by the Depositary
Shares.
LIMITED VOTING RIGHTS
Holders of Preferred Securities will have limited voting rights and will
not be entitled to vote to appoint, remove or replace, or to increase or
decrease the number of, Trustees, which voting rights are vested exclusively in
the Company as holder of the Common Securities. See 'Description of the
Preferred Securities--Voting Rights.'
RIGHTS UNDER THE GUARANTEE
The Guarantee will be qualified as an indenture under the Trust Indenture
Act. The Unit Agent will act as the Guarantee Trustee under the Guarantee for
the purposes of compliance with the Trust Indenture Act. The Guarantee Trustee
will hold the Guarantee for the benefit of the holders of the Preferred
Securities.
The Guarantee guarantees to the holders of the Preferred Securities the
payment of (i) any accrued and unpaid distributions that are required to be paid
on the Preferred Securities to the extent the Trust has funds available
therefor, (ii) the Redemption Price, including all accrued and upaid
distributions, with respect to Preferred Securities called for redemption by the
Trust, to the extent the Trust has funds available therefor, (iii) the amount
payable with respect to any Preferred Securities presented for repayment by the
holders thereof to the extent the Trust has funds available therefor and (iv)
upon a voluntary or involuntary dissolution, winding-up or termination of the
Trust (other than in connection with the distribution of Subordinated Debt
Securities to the holders of Preferred Securities or a redemption or repayment
of all the Preferred Securities), the lesser of (a) the aggregate of the Stated
Amount and all accrued and unpaid distributions on the Preferred Securities to
the date of payment, to the extent the Trust has funds available therefor, and
(b) the amount of assets of the Trust remaining available for distribution to
holders of Preferred Securities. The holders of a majority in liquidation amount
of the Preferred Securities have the right to direct the time, method and place
of conducting any proceeding for any remedy available to the Guarantee Trustee
or to direct the exercise of any trust or power conferred upon the Guarantee
Trustee under the Guarantee. Notwithstanding the foregoing, any holder of
Preferred Securities may institute a legal proceeding directly against the
Company to enforce such holder's rights to receive payment under the Guarantee
without first instituting a legal proceeding against the Trust, the Guarantee
Trustee or any other person or entity. If the Company were to default on its
obligation to pay amounts payable on the Subordinated Debt Securities or
otherwise, the Trust would lack available funds for the payment of distributions
or amounts payable on redemption or repayment of the Preferred Securities or
otherwise, and in such event, holders of the Preferred
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Securities would not be able to rely upon the Guarantee for payment of such
amounts. Instead, holders of the Preferred Securities would rely on the
enforcement (i) by the Property Trustee of its rights as registered holder of
the Subordinated Debt Securities or (ii) by such holder of its rights against
the Company to enforce payments on the Subordinated Debt Securities. See
'Description of the Guarantee' and 'Description of the Subordinated Debt
Securities.' The Declaration provides that each holder of Preferred Securities,
by acceptance thereof, agrees to the provisions of the Guarantee, including the
subordination thereof, and the Indenture.
EFFECT OF PROPOSED CHANGES IN TAX LAWS
The Clinton Administration has proposed a number of statutory changes in
the Federal income tax rules concerning debt and equity. Under one such
proposal, debt with a maximum maturity of more than 20 years that is not shown
as debt on the applicable balance sheet of the issuer would be recharacterized
as equity of the issuer, with the result that interest would be non-deductible
to the issuer. Under another proposal, no interest deduction would be allowed to
the issuer on debt that is payable in equity of the issuer. These proposals
would generally apply to all debt issued on or after December 7, 1995. The first
proposal would, and the second proposal might, apply to the Subordinated Debt
Securities. If either proposal did apply, a Tax Event would occur.
However, the Chairmen of the House Ways and Means Committee and the Senate
Finance Committee, as well as the Ranking Minority Member of the House Ways and
Means Committee, have publicly indicated their intent that the proposals, if
enacted, would not apply to debt issued prior to the date of 'appropriate
Congressional action'. No such Congressional action has yet occurred or is
expected to occur prior to the issuance of the Units. Nevertheless, no assurance
can be given that a Tax Event will not occur.
NON-U.S. HOLDERS
A Non-U.S. Holder (as defined herein) will be subject to U.S. withholding
tax with respect to any Contract Fee payments, as well as dividends on the
Depositary Shares, at a rate of 30% unless an applicable income tax treaty
provides a lower rate. Individual Non-U.S. Holders of Units, Purchase Contracts
or Depositary Shares would also be potentially subject to U.S. estate tax. See
'United States Federal Income Taxation--Non-U.S. Holders.'
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
March 31, 1996, the Company employed 8,365 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.
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RECENT DEVELOPMENTS
On April 23, 1996, the Company announced first quarter 1996 net income of
$276 million, compared to net income of $81 million in the same period a year
ago. Fully diluted earnings per share were $2.21 and $0.59 for the three month
periods ended March 31, 1996 and 1995, respectively. Book value per common share
was $37.98 at March 31, 1996.
ACCOUNTING TREATMENT
The financial statements of SI Financing Trust I will be reflected in the
Company's consolidated financial statements with the Preferred Securities shown
as 'company obligated mandatorily redeemable preferred securities of subsidiary
SI Financing Trust I, holding solely $ principal amount of % Subordinated
Debt Securities due , 2026 of Salomon Inc.' In addition, the Company's
consolidated financial statements will disclose, in an audited footnote, that
the Trust is wholly-owned and that the Company's obligations under the
Guarantee, the Subordinated Debt Securities, the Indenture and the Declaration,
in the aggregate, constitute a full and unconditional guarantee by the Company
of the Trust's obligations under the Preferred Securities. Under current
generally accepted accounting principles, the Purchase Contracts will not be
recorded on the Company's consolidated balance sheet but will be disclosed in
the footnotes to the financial statements. See 'Ratio of Earnings to Fixed
Charges.'
USE OF PROCEEDS
The proceeds to be received by the Company from the sale of the Securities
will be used for general corporate purposes, principally to fund the business of
its operating units and to fund investments in, or extensions of credit to, its
subsidiaries and to lengthen the average maturity of liabilities, which may
include the reduction of short-term liabilities or the refunding of maturing
indebtedness.
RATIO OF EARNINGS TO FIXED CHARGES
The 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 of Fixed Charges........................................ 1.12 0.83(1) 1.32 1.25 1.16
Ratio of Earnings to Fixed Charges and Preferred Dividends................ 1.10 0.81(1) 1.30 1.21 1.14
</TABLE>
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(1) For the year ended December 31, 1994, earnings as defined were inadequate to
cover fixed charges, including preferred dividends. The amount by which
fixed charges exceeded 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.
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.
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SI FINANCING TRUST I
SI Financing Trust I is a statutory business trust formed under Delaware
law pursuant to (i) a declaration of trust, executed by the Company, as sponsor
(the 'Sponsor'), and the trustees of the Trust (the 'Company Trustees') and (ii)
the filing of a certificate of trust with the Secretary of State of the State of
Delaware. Such declaration will be amended and restated in its entirety (as so
amended and restated, the 'Declaration'), substantially in the form filed as an
exhibit to the Registration Statement of which this Prospectus is a part, upon
issuance of the Preferred Securities. The Declaration will be qualified under
the Trust Indenture Act. Upon issuance of the Preferred Securities, the
purchasers thereof will own all of the Preferred Securities. The Company will
directly or indirectly acquire Common Securities in an aggregate liquidation
amount equal to 3% of the total capital of the Trust. The Trust exists for the
exclusive purposes of (i) issuing the Trust Securities representing undivided
beneficial interests in the assets of the Trust, (ii) investing the gross
proceeds of the Trust Securities in the Subordinated Debt Securities and (iii)
engaging in only those other activities necessary or incidental thereto. The
Trust has a term of 35 years, but may terminate earlier as provided in the
Declaration.
Pursuant to the Declaration, the number of the Company Trustees will
initially be five. Three of the Company Trustees will be persons who are
employees or officers of the Company or affiliates of the Company (the 'Regular
Trustees'). The fourth Company Trustee will be an entity that maintains its
principal place of business in the state of Delaware (the 'Delaware Trustee').
Initially, Chemical Bank Delaware, a Delaware banking corporation, will be the
Delaware Trustee. The fifth Company Trustee will be a financial institution that
is unaffiliated with the Company and will serve as property trustee under the
Declaration and as indenture trustee for the purposes of the Trust Indenture Act
(the 'Property Trustee'). Initially, Chemical Bank, a New York banking
corporation, an affiliate of the Delaware Trustee, will be the Property Trustee
until removed or replaced by the holder of the Common Securities. For purposes
of compliance with the provisions of the Trust Indenture Act, Chemical Bank will
act as indenture trustee under the Guarantee (the 'Guarantee Trustee'). In
addition, Chemical Bank will act as the Unit Agent under the Unit Agreement.
The Property Trustee will hold title to the Subordinated Debt Securities
for the benefit of the holders of the Trust Securities and the Property Trustee
will have the power to exercise all rights, powers, and privileges under the
Indenture (as defined herein) as the holder of the Subordinated Debt Securities.
In addition, the Property Trustee will maintain exclusive control of a
segregated non-interest-bearing bank account (the 'Property Account') to hold
all payments made in respect of the Subordinated Debt Securities for the benefit
of the holders of the Trust Securities. The Property Trustee will make payments
of distributions and payments on liquidation, redemption, repayment and
otherwise to the holders of the Trust Securities out of funds from the Property
Account. The Guarantee Trustee will hold the Guarantee for the benefit of the
holders of the Preferred Securities. The Company, as the direct or indirect
holder of all the Common Securities, will have the right to appoint, remove or
replace any Company Trustee and to increase or decrease the number of Company
Trustees; provided that, (i) the number of Company Trustees shall be at least
three and (ii) at least two shall be Regular Trustees. The Company will pay all
fees and expenses related to the Trust, the offering of the Trust Securities and
the issuance of the Subordinated Debt Securities. See 'Description of the
Subordinated Debt Securities-- Miscellaneous.'
The rights of the holders of the Preferred Securities, including economic
rights, rights to information and voting rights, are set forth in the
Declaration, the Delaware Business Trust Act (the 'Trust Act') and the Trust
Indenture Act. See 'Description of the Preferred Securities.'
DESCRIPTION OF THE UNITS
The description of certain provisions of the Unit Agreement, the Pledge
Agreement, the Units and the Purchase Contracts does not purport to be complete
and is qualified in its entirety by reference to the Unit Agreement, the Pledge
Agreement, the Units and the Purchase Contracts, forms of which have
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been filed with the Commission as exhibits to the Registration Statement of
which this Prospectus is a part.
GENERAL
Each Unit will consist of (i) a Preferred Security of the Trust and (ii) a
related Purchase Contract requiring the purchase on , 2021 (or
earlier as described below) of one Depositary Share representing a one-twentieth
interest in a share of Series F Preferred Stock of the Company at a purchase
price of $25 per Depositary Share. A Unitholder may cause a Preferred Security
to be repaid and the proceeds thereof to be used to pay the purchase price of a
Depositary Share under the Purchase Contract.
Each Unit will entitle the holder thereof to receive % of the Stated
Amount per annum (equivalent to $ per annum), consisting of (i) %
per annum of the Stated Amount in distributions on the related Preferred
Security and (ii) % per annum of the Stated Amount in fees payable in respect
of the related Purchase Contract ('Contract Fees'). Distributions on the
Preferred Securities and Contract Fees will accrue from the date of original
issuance of the Units and will be payable quarterly in arrears on each Payment
Date, commencing , 1996. In addition, each Unit will entitle the
holder thereof to all other proportional rights and preferences of the Preferred
Securities (including voting, redemption, repayment and liquidation rights).
Each Depositary Share will entitle the holder thereof to all proportional
rights and preferences of the Series F Preferred Stock (including dividend,
voting, redemption and liquidation rights). The proportionate liquidation
preference of each Depositary Share will be $25. See 'Description of the
Depositary Shares.' Dividends on the Series F Preferred Stock will be cumulative
from the date of issue and will be payable quarterly on each Payment Date at the
rate of % per annum (equivalent to $ per annum per Depositary
Share). See 'Description of the Depositary Shares--Dividends and Other
Distributions.' The Series F Preferred Stock will be redeemable at the option of
the Company at any time on or after the later of , 2001 or the date
of issue, in whole or in part, at a redemption price of $500 per share
(equivalent to $25 per Depositary Share), plus accrued and unpaid dividends to
the redemption date.
Each Preferred Security will represent a preferred undivided beneficial
interest in the assets of the Trust. The Trust exists for the sole purpose of
issuing the Preferred Securities and Common Securities and investing the
proceeds thereof in the Subordinated Debt Securities of the Company. The
distribution rate and the payment dates for the Preferred Securities will
correspond to the interest rate and the payment dates on the Subordinated Debt
Securities, which will be the sole assets of the Trust. As a result, if
principal or interest is not paid on the Subordinated Debt Securities, no
amounts will be paid on the Preferred Securities. See 'Description of the
Preferred Securities' and 'Description of the Subordinated Debt Securities.'
The Subordinated Debt Securities purchased by the Trust may be subsequently
distributed pro rata to holders of the Preferred Securities and Common
Securities in connection with the dissolution of the Trust at any time at the
option of the Company or upon the occurrence of certain events. In the event the
Subordinated Debt Securities are distributed to the holders of the Preferred
Securities, a Unit will thereafter consist of a Subordinated Debt Security and a
related Purchase Contract and a Unitholder may cause such Subordinated Debt
Security to be repaid and the proceeds thereof to be used to pay the purchase
price of a Depositary Share under the Purchase Contract.
The Subordinated Debt Securities will be redeemable at the option of the
Company, in whole (but not in part), on or after , 2001 on any
Payment Date; provided, however, that after the settlement date for the Purchase
Contracts, the right of the Company to redeem any Subordinated Debt Securities
that remain outstanding will be postponed or suspended until the fifth
anniversary of such date. If the Company redeems the Subordinated Debt
Securities, the Trust must redeem the Trust Securities at the Redemption Price
and any outstanding Purchase Contracts will terminate. Any
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Preferred Securities not previously redeemed will be redeemed upon maturity of
the Subordinated Debt Securities. See 'Description of the Preferred
Securities--Mandatory Redemption.' In addition, upon the occurrence of a Tax
Event or Investment Company Event (as defined herein), unless the Subordinated
Debt Securities are redeemed in the limited circumstances described herein, the
Trust will be dissolved with the result that the Subordinated Debt Securities
will be distributed to the holders of the Preferred Securities and Common
Securities, on a pro rata basis, in lieu of any cash distribution. In certain
circumstances in the case of a Tax Event, the Company will have the right to
redeem the Subordinated Debt Securities, which would result in the redemption by
the Trust of the Trust Securities in the same amount on a pro rata basis and the
termination of any outstanding Purchase Contracts. See 'Description of the
Preferred Securities--Tax Event or Investment Company Event Redemption or
Distribution; Optional Distribution.'
In the event of the liquidation of the Trust, either (i) the holders of the
Preferred Securities will be entitled to receive for each Preferred Security the
Stated Amount plus accrued and unpaid distributions thereon (including interest
thereon) to the date of payment and any outstanding Purchase Contracts will
terminate or (ii) the Subordinated Debt Securities will be distributed to the
holders of the Preferred Securities. See 'Description of the Preferred
Securities--Liquidation Distribution Upon Dissolution.'
The payment of distributions out of money held by the Trust, and payments
upon redemption or repayment of the Preferred Securities or liquidation of the
Trust, are guaranteed by the Company to the extent described under 'Description
of the Guarantee.' The Guarantee does not cover payment of distributions when
the Trust does not have sufficient available funds to pay such distributions.
The Guarantee, when taken together with the Company's obligations under the
Subordinated Debt Securities and the Indenture and its obligations under the
Declaration, including its liabilities to pay costs, expenses, debts and
obligations of the Trust (other than with respect to the Trust Securities),
provides a full and unconditional guarantee of amounts due on the Preferred
Securities.
The Preferred Securities initially will be pledged with the Collateral
Agent for the Company to secure the obligation of Unitholders to purchase the
Depositary Shares under the Purchase Contracts. A Preferred Security may be
separated from the related Purchase Contract prior to the settlement of the
Purchase Contract at the option of a Unitholder by the delivery of Eligible
Collateral having an aggregate principal amount equal to the Stated Amount of
such Preferred Security to the Collateral Agent. See '--Separation of Preferred
Security from the Related Purchase Contract.' The Eligible Collateral will be
pledged with the Collateral Agent as substitute collateral to secure such
Unitholder's obligation under the separated Purchase Contract (pledged Preferred
Securities and Eligible Collateral are, collectively, the 'Collateral'). Upon
separation of the Preferred Security from a Purchase Contract, the related Unit
will cease to be outstanding and the Preferred Security will be released to the
Holder of the separated Purchase Contract. Thereafter, the separated Purchase
Contract will be nontransferable without the prior written consent of the
Company. The Collateral Agent will pay directly to Holders of separated Purchase
Contracts any distributions received on the Eligible Collateral, and if at any
time the aggregate principal amount at maturity of the Holder's Eligible
Collateral exceeds the required principal amount of Eligible Collateral, such
excess amount will be released to the Holder at the Holder's request.
See '--Reinvestment of Eligible Collateral' and '--Distributions on Collateral.'
A Holder of a separated Purchase Contract may reestablish prior to the
settlement of the Purchase Contract a transferable Unit consisting of a
Preferred Security and a related Purchase Contract by delivering a Preferred
Security to the Collateral Agent in exchange for the release of Eligible
Collateral having a corresponding aggregate principal amount.
The Company may, at its option, accelerate, in whole (but not in part), the
settlement of the Purchase Contracts to any Payment Date. See '--Description of
the Purchase Contracts--Acceleration of Purchase.'
A Unitholder may settle a Purchase Contract by instructing the Collateral
Agent to present the related Preferred Security to the Trust for repayment and
to apply $25 of the proceeds therefrom in satisfaction of the Purchase Contract
(a 'Collateral Settlement') or by delivering $25 in cash to the
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Collateral Agent (a 'Cash Settlement'), provided that failure to provide
instructions or deliver cash will be deemed to be an election to effect a
Collateral Settlement. To the extent a Unitholder effects a Cash Settlement, the
related Preferred Security will be released to the Unitholder. A Holder of a
separated Purchase Contract will be required to settle the Purchase Contract
from the proceeds of the related Eligible Collateral. See '--Description of the
Purchase Contracts--Payment of Purchase Price; Delivery of Depositary Shares.'
Upon the settlement of the Purchase Contracts on , 2021 or
earlier if the Purchase Contracts are accelerated, the Units and any separated
Purchase Contracts will cease to be outstanding.
Holders of Preferred Securities that have been separated from Purchase
Contracts will have the right to require the Trust to repay such Preferred
Securities on the Business Day immediately prior to the settlement date for the
Purchase Contracts.
Holders of Preferred Securities that remain outstanding after an
accelerated settlement date for the Purchase Contracts will have the right to
require the Trust to repay such Preferred Securities on the fifth anniversary of
such date. See 'Description of the Units--Description of the Purchase
Contracts-- Payment of Purchase Price; Delivery of Depositary Shares.'
The Units have been approved for listing on the NYSE under the symbol 'SB
PrG', subject to official notice of issuance. Prior to this offering there has
been no public market for the Units. In the event the Preferred Security is
separated from the related Purchase Contract, the resulting separated Purchase
Contract will not be tradable on the NYSE. The Preferred Securities will not be
listed or traded on any securities exchange, and unless and until a significant
number of Preferred Securities are separated from the related Purchase
Contracts, there will be no market for the Preferred Securities and even then
there is not expected to be a market for Preferred Securities separate from the
Units. The Depositary Shares have been approved for listing on the NYSE, subject
to official notice of issuance. The Series F Preferred Stock will not be listed
and the Company does not expect that there will be any trading market for the
Series F Preferred Stock except as represented by the Depositary Shares.
Units and Preferred Securities will be issued in book-entry form and
represented by a global certificate or certificates registered in the name of
Cede & Co., as nominee for DTC. Separated Purchase Contracts secured by Eligible
Collateral will be represented by a certificate or certificates that will be in
definitive form only. See '--Separation of Preferred Security from the Related
Purchase Contract' and '--Book-Entry System.' It is expected that Depositary
Receipts evidencing the Depositary Shares will be issued in book-entry form and
represented by a global certificate or certificates registered in the name of
Cede & Co., as nominee for DTC.
The Units will be issued under the Unit Agreement to be dated as of
, 1996, between the Company and the Unit Agent. The Unit Agreement
will not be qualified as an indenture under the Trust Indenture Act, and the
Unit Agent will not be required to qualify as a trustee thereunder.
DESCRIPTION OF THE PURCHASE CONTRACTS
General
Each Purchase Contract will obligate the Holder to purchase, and the
Company to sell, on , 2021 (the 'Stated Purchase Date') (or earlier
as described below), one Depositary Share evidencing ownership of a
one-twentieth interest in a share of Series F Preferred Stock, at a purchase
price of $25 per Depositary Share (the 'Purchase Price'). Prior to the purchase
of Depositary Shares pursuant to the Purchase Contracts, Holders will not be
shareholders of the Company or have any of the rights and privileges of a
shareholder. Certain rights and obligations of the Company and the Holders under
the Purchase Contracts are subject to termination in certain circumstances. See
'--Termination.' If the Stated Purchase Date is not a Business Day, such Stated
Purchase Date shall be the immediately preceding Business Day. 'Business Day'
means any day that is not a Saturday,
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Sunday or a day on which the NYSE or banking institutions or trust companies in
The City of New York are authorized or obligated by law or executive order to be
closed.
Each Holder will, under the terms of the Unit Agreement, the Units and the
Purchase Contracts, be deemed to have irrevocably (i) agreed to be bound by the
terms of the Purchase Contracts and Pledge Agreement for so long as such Holder
remains a Holder, (ii) appointed the Unit Agent as such Holder's
attorney-in-fact to enter into and perform the Purchase Contracts and Pledge
Agreement on behalf of and in the name of such Holder and (iii) pledged the
Preferred Security or Eligible Collateral, agreed to the terms of the Pledge
Agreement and authorized the Unit Agent to enter into the Pledge Agreement on
each Holder's behalf.
Acceleration of Purchase
The Company may, at its option, in whole (but not in part), on not less
than 45 nor more than 60 days' notice, accelerate the obligation of the Holders
to purchase, and the Company to sell, on the next succeeding Payment Date (such
Payment Date, an 'Early Purchase Date' and, together with the Stated Purchase
Date, a 'Purchase Date'), one Depositary Share per Purchase Contract. Any
acceleration notice may be canceled if the Company gives written notice of such
cancellation to the Unit Agent and the Holders on or before the twentieth day
immediately prior to the applicable Early Purchase Date. In addition, in certain
circumstances, an acceleration may be rescinded. See '--Payment of Purchase
Price; Delivery of Depositary Shares.' If an Early Purchase Date is not a
Business Day, such Early Purchase Date shall be the immediately preceding
Business Day.
The cancellation or rescission of any notice of acceleration will not
prevent the Company from giving notice of an acceleration at a later date.
Contract Fees
The Company is obligated, under the terms of each Purchase Contract, to pay
Contract Fees in respect thereof equal to % per annum of the Stated Amount.
The Contract Fees will be payable quarterly on each Payment Date, commencing
, 1996, to the persons in whose names the related Units or separated
Purchase Contracts are registered at the close of business on the fifteenth day
immediately preceding such Payment Date. Contract Fees payable for any period
will be computed on the basis of a 360-day year of twelve 30-day months. If a
Payment Date falls on a day that is not a Business Day, the Contract Fee may be
paid on the next succeeding Business Day, and no additional amounts will accrue
as a result of such delayed payment, except that, if such Business Day is in the
next succeeding calendar year, such payment shall be made on the immediately
preceding Business Day with the same force and effect as if made on such Payment
Date. The Contract Fee with respect to any Purchase Contract will cease to be
payable in respect of any period after the Purchase Date (or in the case of a
Put Default (as defined herein) the Delayed Purchase Date (as defined herein))
or, if earlier, in respect of any period after termination of the Purchase
Contract. The failure by the Company to pay the Contract Fees on any Payment
Date will result in the termination of the Purchase Contracts if such failure
shall continue for a period of more than 30 days following such Payment Date
without being remedied.
Payment of Purchase Price; Delivery of Depositary Shares
Under the terms of the Unit Agreement, on the Purchase Date a Unitholder
may pay for the Depositary Share to be issued under the related Purchase
Contract by effecting a Cash Settlement or a Collateral Settlement.
A Unitholder may effect a 'Cash Settlement' of a Purchase Contract by (a)
providing the Unit Agent with notice of its election to effect a Cash Settlement
not less than 10 nor more than 30 days prior to the Purchase Date and (b) making
a payment of the Purchase Price to the Collateral Agent prior to 9:00 a.m., New
York City time, on the Business Day immediately preceding the Purchase Date by
check or wire transfer in immediately available funds payable to or upon the
order of the Company. Upon receipt of notice from a Unitholder electing a Cash
Settlement, the Unit Agent promptly will notify the
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Collateral Agent of such Unitholder's election. The funds received by the
Collateral Agent will be invested promptly in overnight Federal funds and paid
to the Company on the Purchase Date in settlement of the Purchase Contract. Any
funds received by the Collateral Agent in respect of the interest earned from
the investment in overnight Federal funds will be distributed to the Unit Agent
for payment to the Unitholder. If a Unitholder properly effects a Cash
Settlement of a Purchase Contract, the Unit with respect to such Purchase
Contract will be canceled and the related Preferred Security will be released to
the Unit Agent for the benefit of the Unitholder free and clear of any security
interest of the Company.
A Unitholder may effect a 'Collateral Settlement' of a Purchase Contract by
directing the Unit Agent not less than 10 nor more than 30 days prior to the
Purchase Date, on behalf of the Unitholder, to instruct the Collateral Agent to
present the related Preferred Security to the Trust for repayment prior to 10:00
a.m., New York City time, on the Business Day immediately preceding the Purchase
Date at the Stated Amount thereof plus any accrued and unpaid distributions
thereon to the date of repayment (subject to the right of holders of record on
the relevant record date to receive distributions due on a Payment Date) (the
'Repayment Price') and to apply $25 of the proceeds therefrom to the settlement
of the Purchase Contract held by the Unitholder. On such Business Day, the
Property Trustee will, on behalf of the holders of Preferred Securities,
including the Collateral Agent and holders of separated Preferred Securities,
who have delivered such Preferred Securities to the Trust for repayment, present
Subordinated Debt Securities in an aggregate principal amount equal to the
Stated Amount of such Preferred Securities to the Company for immediate
repayment on such Business Day at the Subordinated Debt Repayment Price (as
defined herein). Upon repayment of such Subordinated Debt Securities, (a) the
proceeds therefrom will be applied to repay the Preferred Securities at the
Repayment Price and (b) the Property Trustee will (i) transfer to the Collateral
Agent funds in an aggregate amount equal to the Repayment Price of the Preferred
Securities pledged with the Collateral Agent and (ii) with respect to separated
Preferred Securities, pay immediately the Repayment Price to the holders
thereof. Any funds received by the Collateral Agent in respect of the repayment
of the pledged Preferred Securities will be invested promptly in overnight
Federal funds and paid to the Company on the Purchase Date in settlement of the
related Purchase Contracts. Any funds received by the Collateral Agent (a) in
excess of the aggregate Purchase Price of the Purchase Contracts being settled
thereby or (b) in respect of the interest earned from the investment in
overnight Federal funds will be distributed to the Unit Agent for payment to the
relevant Unitholders. In addition, if the rate of interest per annum paid on
such investment is less than %, the Company shall make a distribution to the
Unit Agent for payment to the relevant Unitholders of an amount per Purchase
Contract equal to one day's interest on the Stated Amount at the rate of % per
annum less the amount of interest actually earned from such investment per
Purchase Contract.
A Unitholder who does not make an effective Cash Settlement or direct the
Unit Agent to deliver an instruction for a Collateral Settlement will be deemed
to have elected a Collateral Settlement, and the Unitholder's Purchase Contract
automatically will be settled accordingly.
A Holder of a separated Purchase Contract will be required under the terms
of the Unit Agreement to pay for the Depositary Share to be issued under the
Purchase Contract from the proceeds of the related Eligible Collateral, which
will be applied automatically by the Collateral Agent to the separated Purchase
Contract on the Purchase Date without receiving any instruction from the Holder
of the separated Purchase Contract. During the 30 days immediately prior to the
Purchase Date, the Collateral Agent will reinvest any maturing Eligible
Collateral in instruments maturing no later than the Business Day immediately
prior to the Purchase Date. On the Business Day immediately prior to the
Purchase Date, the maturing Eligible Collateral will be invested in overnight
Federal funds and paid to the Company on the Purchase Date in settlement of the
related Purchase Contracts. In the event the sum of the proceeds from the
related Eligible Collateral and the interest earned from the investment in
overnight Federal funds is in excess of such aggregate Purchase Price, such
excess amount will be distributed by the Collateral Agent to the Holders of the
related Purchase Contracts on the Purchase Date.
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Upon receiving a payment of the Purchase Price, the Company will be
obligated to issue and deliver the Series F Preferred Stock to the Depositary
(as defined herein), and Depositary Shares will be distributed to the Holders or
their designees.
If any of the Preferred Securities are presented by the Collateral Agent
for repayment in connection with settlement of the related Purchase Contracts on
an Early Purchase Date but are not repaid in accordance with their terms (a 'Put
Default') and such Put Default shall continue for more than two Business Days
(the 'Extension Period'), (a) the Company will not be entitled to accelerate the
obligations of the Holders to any Early Purchase Date, (b) notice of any such
acceleration will be rescinded and annulled automatically, (c) any payments
deposited with the Collateral Agent to effect a Cash Settlement will be returned
to the Unit Agent, for distribution to the relevant Unitholders, and (d) any
proceeds received by the Collateral Agent from the Eligible Collateral will be
reinvested in accordance with the written instructions of the Holders of the
related separated Purchase Contracts or, in the absence of such instructions, to
the extent possible, in the same type or types of Eligible Collateral originally
deposited with the Collateral Agent. If a Put Default shall occur and continue
for more than two Business Days in connection with a settlement of the related
Purchase Contracts on the Stated Purchase Date, the Purchase Contracts will
terminate. See '--Termination.' However, if such Preferred Securities are repaid
at the Repayment Price on any day during the Extension Period, the Company and
the Holders will be obligated to settle the Purchase Contracts on their original
terms on the immediately following Business Day (a 'Delayed Purchase Date').
During the Extension Period and until settlement on the Delayed Purchase Date,
if any, any payments deposited with the Collateral Agent to effect a Cash
Settlement and any proceeds received by the Collateral Agent from the Eligible
Collateral or any repaid Preferred Securities shall be invested in overnight
Federal funds.
After the Purchase Date (or a related Delayed Purchase Date), the right of
the Company to redeem any Subordinated Debt Securities that remain outstanding
after such date will be postponed or suspended until the fifth anniversary of
such date. In addition, if the Purchase Date (or a related Delayed Purchase
Date) is an Early Purchase Date, holders of Preferred Securities that remain
outstanding after such date will have the right to require the Trust to repay
such Preferred Securities on the fifth anniversary of such date. See
'Description of the Preferred Securities--Optional Redemption by the Company'
and '--Repayment at the Option of the Holder' and 'Description of the
Subordinated Debt Securities--Optional Redemption by the Company' and
'--Repayment at the Option of the Holder.'
Termination
Each Purchase Contract and the rights and obligations of the Company and of
the Holders thereunder (including the right and obligation to purchase
Depositary Shares) will terminate (i) upon the optional redemption by the
Company of the Subordinated Debt Securities as described in 'Description of the
Subordinated Debt Securities--Optional Redemption by the Company,' (ii) upon
certain events of bankruptcy, insolvency or reorganization with respect to the
Company, (iii) upon the occurrence of a Put Default that continues for more than
two Business Days in connection with a settlement of the related Purchase
Contracts at the Stated Purchase Date, (iv) upon default in the payment of any
Contract Fee when it becomes due and payable and continuance of such default for
more than 30 days or (v) upon the occurrence of a Liquidation Distribution (as
defined herein) in connection with a liquidation of the Trust. See 'Description
of the Preferred Securities--Liquidation Distribution Upon Dissolution.' Upon
termination of the Purchase Contracts, the Collateral Agent will release the
Collateral held by it from the security interest of the Company for distribution
to the Holders. Any such termination will be without liability to the Holders or
the Company.
Except as described above, the obligation of a Holder under a Purchase
Contract to purchase a Depositary Share will not be terminated or otherwise
affected by the occurrence and continuance of an Event of Default with respect
to the Subordinated Debt Securities or a Declaration Event of Default with
respect to the Preferred Securities. In addition, the Company will not be
entitled to accelerate the obligation of a Holder under a Purchase Contract if,
in certain circumstances, the Preferred Securities
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are not repaid at an Early Purchase Date. See '--Payment of Purchase Price;
Delivery of Depositary Shares.'
Contract Fees with respect to any terminated Purchase Contracts will cease
to accrue in respect of any period from and after the date of termination. The
Company's obligations to pay any accrued Contract Fees will be deemed fulfilled
if the Company deposits with the Unit Agent funds necessary to pay such accrued
Contract Fees, in trust with irrevocable instructions and authorization that
such funds be delivered to the Holders of the Purchase Contracts.
VOTING RIGHTS OF UNITHOLDERS WITH RESPECT TO PREFERRED SECURITIES
Under the terms of the Pledge Agreement, the Unit Agent will be entitled to
exercise the voting and any other consensual rights pertaining to the Preferred
Securities pledged with the Collateral Agent. As soon as practicable after
receipt of notice from the Collateral Agent of any meeting at which holders of
the Preferred Securities which are part of the Units are entitled to vote or of
notice of any solicitation of consents or request for waiver or other action by
holders of the Preferred Securities which are part of the Units, the Unit Agent
promptly will convey such notice or request to the Unitholders as of the record
date for such meeting, consent, waiver or other action. Each such Unitholder
will be entitled, subject to any applicable restrictions, to instruct the Unit
Agent to vote the amount of Preferred Securities related to such Units. The Unit
Agent will endeavor, insofar as practicable, to vote the amount of the related
Preferred Securities in accordance with the instructions of the Unitholders as
conveyed to the Unit Agent, and the Company and the Trust will agree to take all
action which may be deemed necessary by the Unit Agent in order to enable the
Unit Agent to do so. The Unit Agent will abstain from voting shares of the
Preferred Securities which are part of the Units to the extent it does not
receive specific instructions from the Holders of the related Units.
SEPARATION OF PREFERRED SECURITY FROM THE RELATED PURCHASE CONTRACT
A Unitholder may separate Preferred Securities from the related Purchase
Contracts at any time on or prior to the 32nd day immediately preceding the
Purchase Date by (a) depositing with the Collateral Agent (i) cash and/or (ii)
U.S. Treasury Securities with a maturity of 30 days or less at the time of
determination ('Eligible Collateral') having an aggregate principal amount equal
to the Stated Amount of the Preferred Securities and (b) transferring the
related Units to the Unit Agent accompanied by a notice to the Unit Agent
stating that the Unitholder has transferred Eligible Collateral to the
Collateral Agent and requesting that the Unit Agent instruct the Collateral
Agent to release the Preferred Securities related to such Units. Upon such
deposit and receipt of an instruction from the Unit Agent, the Collateral Agent
will effect the release of the Preferred Securities from the pledge of the
Pledge Agreement free and clear of the Company's security interest therein to
the Unit Agent, which will (i) cancel the related Units, (ii) transfer the
Preferred Securities to the former Unitholder and (iii) deliver certificates in
definitive form to the former Unitholder evidencing its separated Purchase
Contracts.
Separated Purchase Contracts secured by Eligible Collateral will be
nontransferable without the prior written consent of the Company and the
certificates representing such Purchase Contracts will be in definitive form
only and bear a legend in substantially the following form:
THE SALE, ASSIGNMENT, TRANSFER OR OTHER DISPOSITION OF THE PURCHASE
CONTRACTS EVIDENCED BY THIS CERTIFICATE, OR ANY INTEREST IN SUCH PURCHASE
CONTRACTS, IS RESTRICTED BY THE TERMS OF THE UNIT AGREEMENT DATED
, 1996, A COPY OF WHICH IS ON FILE AT THE PRINCIPAL EXECUTIVE
OFFICES OF THE AGENT. NO SUCH SALE, ASSIGNMENT, TRANSFER OR OTHER
DISPOSITION SHALL BE EFFECTIVE WITHOUT THE PRIOR WRITTEN CONSENT OF THE
COMPANY.
A Holder of separated Purchase Contracts may at any time on or prior to the
32nd day immediately preceding the Purchase Date reestablish transferable Units
consisting of Purchase Contracts and Preferred Securities by (a) transferring
Preferred Securities to the Collateral Agent with an instruction
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that the Collateral Agent (i) release Eligible Collateral having a corresponding
aggregate principal amount and (ii) notify the Unit Agent of the receipt of the
Preferred Securities and (b) delivering the certificates evidencing the
separated Purchase Contracts to the Unit Agent. The Unit Agent will effect the
reestablishment of the transferable Units by depositing the relevant number of
Units into DTC for the credit of such Holder (or its designee).
Holders who elect to separate the Preferred Security from the related
Purchase Contract shall be responsible for any fees or expenses payable to the
Collateral Agent for its services as Collateral Agent for the Eligible
Collateral and the Company shall not be responsible for any such fees or
expenses.
Unless and until a significant number of underlying Preferred Securities
are separated from the Units, there will be no market for the Preferred
Securities. Even if a significant number of Preferred Securities are so
separated, there can be no assurance that an active trading market will develop
or be sustained. The Preferred Securities will not be listed on any securities
exchange. Holders should carefully consider the likely illiquidity of the
Preferred Securities prior to making any election to separate.
Except as described above, a Preferred Security that secures a Purchase
Contract is not separable therefrom and both components may be transferred only
as a whole in the form of Units. Unitholders may separate Preferred Securities,
and Holders of separated Purchase Contracts may reestablish Units, only in
integral multiples of 400 Units.
REINVESTMENT OF ELIGIBLE COLLATERAL
The Collateral Agent will reinvest the full amount of the proceeds of any
maturing Eligible Collateral pledged by a Holder of the related Purchase
Contracts in Eligible Collateral maturing on or before the Purchase Date in
accordance with the specific instructions furnished in writing to the Collateral
Agent by the Holder at least one Business Day in advance or, in the absence of
any instructions, in the same type or types of Eligible Collateral originally
deposited with the Collateral Agent, until the settlement or termination of such
Purchase Contracts or the reestablishment of Units consisting of such Purchase
Contracts and Preferred Securities.
If at any time the aggregate principal amount at maturity of the Eligible
Collateral pledged by a Holder exceeds the product of the Stated Amount and the
number of related Purchase Contracts, the Holder may request the Collateral
Agent to release such excess amount to the Holder free and clear of the
Company's security interest therein, and the Collateral Agent will effect such
release.
Holders of separated Purchase Contracts will be responsible for any
brokerage or other fees or expenses relating to the reinvestment or release of
the related Eligible Collateral.
DISTRIBUTIONS ON COLLATERAL
Upon receipt of cash distributions on the pledged Preferred Securities, the
Collateral Agent will distribute the payments to the Unit Agent who will in turn
distribute those payments to the persons in whose names the related Units are
registered at the close of business on the Business Day immediately preceding
the date of such distribution. Upon receipt of any interest or other cash
distributions on the Eligible Collateral (other than the proceeds of any
maturing Eligible Collateral), the Collateral Agent will distribute the payments
directly to the Holders of the related Purchase Contracts.
PLEDGE AGREEMENT
The Collateral will be pledged to the Collateral Agent, for the benefit of
the Company, pursuant to a pledge agreement, to be dated as of ,
1996 (the 'Pledge Agreement'), to secure the obligations of the Holders to
purchase Depositary Shares under the Purchase Contracts. The rights of the
Holders to the Collateral will be subject to the Company's security interest
therein created by the Pledge Agreement. No Collateral will be released by the
Collateral Agent from the pledge arrangement except upon (i) the termination of
the related Purchase Contracts, (ii) the effective Cash Settlement of
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the related Purchase Contracts, (iii) the deposit of Eligible Collateral by a
Unitholder to separate a Preferred Security from the related Purchase Contract
or (iv) the repledge of a Preferred Security by a Holder of a separated Purchase
Contract to reestablish a transferable Unit. See '--Description of the Purchase
Contracts--Payment of Purchase Price; Delivery of Depositary Shares,'
'--Termination' and '--Separation of Preferred Security from the Related
Purchase Contract.' Subject to such security interest and the terms of the Unit
Agreement and the Pledge Agreement, each Unitholder will be entitled through the
Unit Agent and the Collateral Agent to all the proportional rights and
preferences of a Preferred Security (including distribution, voting, redemption,
repayment and liquidation rights) and each Holder of a separated Purchase
Contract will retain beneficial ownership of the Eligible Collateral pledged in
respect of such Purchase Contracts (including the right to receive any
distributions paid on such Eligible Collateral). See '--Voting Rights of
Unitholders with Respect to Preferred Securities' and '--Distributions on
Collateral.' The Company will have no interest in the Collateral other than its
security interest.
OTHER PLEDGE AND PAYMENT PROVISIONS
In the event Subordinated Debt Securities are received by the Collateral
Agent in respect of Preferred Securities held as Collateral upon the occurrence
of a Tax Event, Investment Company Event, Optional Distribution (as defined
herein) or liquidation of the Trust, the Subordinated Debt Securities will be
held by the Collateral Agent to secure the obligations to purchase Depositary
Shares under the related Purchase Contracts. Thereafter the Collateral Agent
will have such rights and obligations with respect to the Subordinated Debt
Securities that it had in respect of Preferred Securities. Among other things,
the Collateral Agent will be obligated with respect to the Subordinated Debt
Securities to present the Subordinated Debt Securities for repayment in
connection with a Collateral Settlement, to receive and distribute interest
payments to the Unit Agent for distribution to the Unitholders and to release
the Subordinated Debt Securities upon delivery of Eligible Collateral, in each
case, to the same extent as would have been required with respect to Preferred
Securities. In the event of the optional redemption of the Subordinated Debt
Securities by the Company as described in 'Description of the Subordinated Debt
Securities--Optional Redemption by the Company' or upon the occurrence of a
Liquidation Distribution in connection with a liquidation of the Trust, any cash
or other property received by the Collateral Agent in respect of Preferred
Securities held as Collateral will be distributed to the Unit Agent for
distribution to the Unitholders, any Eligible Collateral held by it will be
released to the Holders of separated Purchase Contracts and the Purchase
Contracts will be terminated. See '--Description of the Purchase
Contracts--Termination.'
CERTAIN PROVISIONS OF THE UNIT AGREEMENT AND THE PLEDGE AGREEMENT
Payment in Respect of Units and Separated Purchase Contracts; Delivery of
Depositary Shares or Preferred Securities
Payments on the Units in respect of distributions on the Preferred
Securities and Contract Fees will be made to DTC, which shall credit the
relevant accounts at DTC on the applicable Payment Dates. Payments on any
separated Purchase Contracts in respect of Contract Fees will be payable at the
office of the Unit Agent in the Borough of Manhattan, The City of New York, or,
at the option of the Company, by check mailed to the address of the person
entitled thereto as shown on the register for the related separated Purchase
Contracts.
Depositary Shares will be delivered, or, if the Purchase Contract is
terminated, or a Unitholder elects to settle the Purchase Contract by making a
cash payment to the Collateral Agent, the related Preferred Securities will be
distributed in each case at the offices of the Unit Agent.
The Unit Agent will have no obligation to invest or to pay interest on any
amounts held by the Unit Agent pending distribution, except as described above.
No service charge will be made to the Unitholder for any registration of
transfer or exchange of the Units, except for any tax or other governmental
charge incidental thereto.
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Modification
The Unit Agreement and the Pledge Agreement will contain provisions
permitting the Company and the Unit Agent or Collateral Agent, as the case may
be, with the consent of the Holders of not less than 66-2/3% of the combined
number of the Units and separated Purchase Contracts at the time outstanding, to
modify the terms of the Units, the Purchase Contracts, the Unit Agreement and
the Pledge Agreement, except that no such modification may, without the consent
of the Holder of each outstanding Unit or separated Purchase Contract affected
thereby, (a) change any Payment Dates, (b) increase the amount or decrease the
types of Collateral required to be pledged to secure a Holder's obligations
under the Purchase Contracts, impair the right of the Holder of any Purchase
Contract to receive distributions on the related Collateral or otherwise
adversely affect the Holder's rights in or to such Collateral, (c) change the
place or currency of payment or reduce any Contract Fees, (d) impair the right
to institute suit for the enforcement of any Purchase Contract, (e) reduce the
amount of Depositary Shares purchasable under any Purchase Contract, increase
the price to purchase Depositary Shares on settlement of Purchase Contracts or
change the Stated Purchase Date, (f) reduce the above-stated percentage of
outstanding Units and separated Purchase Contracts, the consent of whose Holders
is required for the modification or amendment of the provisions of the Units,
the Purchase Contracts, the Unit Agreement or the Pledge Agreement, (g)
materially and adversely alter the rights of the holders of Preferred Securities
or (h) cause the Trust for United States Federal income tax purposes to be
classified as other than a grantor trust.
Merger, Consolidation and Sales of Assets
The Company will covenant in the Unit Agreement that it will not merge or
consolidate with any other entity or sell, transfer or lease all or
substantially all of its assets to another corporation unless the Company is the
continuing corporation or the successor entity is a corporation organized under
the laws of the United States of America or a state thereof ('Successor
Corporation') and such Successor Corporation expressly assumes the obligations
of the Company under the Purchase Contracts, the Unit Agreement and the Pledge
Agreement, the Company or such Successor Corporation is not, immediately after
such merger, consolidation, sale, transfer or lease, in default in the
performance of any of its obligations thereunder and such merger, consolidation,
sale, transfer or lease will not cause the Trust for United States Federal
income tax purposes to be classified as other than a grantor trust. Under the
terms of the Unit Agreement, in the case of any such consolidation, merger,
sale, transfer or lease, unless the Purchase Contracts have been terminated (see
'Description of the Purchase Contracts--Termination'), each Holder of Units or
separated Purchase Contracts then outstanding will have the right and the
obligation to purchase on the Purchase Date, either directly or through the
purchase of depositary shares, the same number of shares of preferred stock of
the Successor Corporation, with substantially the same preferences, rights and
powers as the Series F Preferred Stock, as such Holder would have purchased if a
Purchase Date with respect to such Purchase Contracts had occurred immediately
prior to such consolidation, merger, sale, transfer or lease. If, however, the
Successor Corporation does not have publicly held equity securities outstanding
but is a direct or indirect subsidiary of a corporation that does, then, at the
election of the Successor Corporation, the preferred stock may be preferred
stock of any such publicly held parent.
Title
The Company, the Unit Agent and the Collateral Agent may treat the
registered owner of any Unit or separated Purchase Contract as the absolute
owner thereof for the purpose of making payment and settling the Purchase
Contracts and for all other purposes.
Governing Law
The Unit Agreement, the Pledge Agreement, the Units and the Purchase
Contracts will be governed by, and construed in accordance with, the laws of the
State of New York.
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Information Concerning the Unit Agent
Chemical Bank, a New York banking corporation, will be the Unit Agent. The
Unit Agent will act as the agent for the holders of Units and separated Purchase
Contracts from time to time. The Unit Agreement will not obligate the Unit Agent
to exercise any discretionary actions in connection with a default under the
terms of the Units, the Unit Agreement or the Preferred Securities. The Unit
Agent also serves as the Property Trustee and the Guarantee Trustee.
The Unit Agreement will contain provisions limiting the liability of the
Unit Agent. The Unit Agreement will contain provisions under which the Unit
Agent may resign or be replaced. Such resignation or replacement would be
effective upon appointment of a successor.
Information Concerning the Collateral Agent
The Bank of New York will be the Collateral Agent. The Collateral Agent
will act solely as the agent of the Company and will not assume any obligation
or relationship of agency or trust for or with any of the Holders except for the
obligations owed by a pledgee of property to the owner thereof under the Pledge
Agreement and applicable law.
The Pledge Agreement will contain provisions limiting the liability of the
Collateral Agent. The Pledge Agreement will contain provisions under which the
Collateral Agent may resign or be replaced. Such resignation or replacement
would be effective upon the appointment of a successor.
Miscellaneous
The Unit Agreement will provide that the Company will pay all fees and
expenses related to (i) the offering of the Units, (ii) the retention of the
Collateral Agent and (iii) the enforcement by the Unit Agent of the rights of
the Unitholders; provided, however, that holders who elect to separate the
Preferred Security from the related Purchase Contract shall be responsible for
any fees or expenses payable to the Collateral Agent for its services as
Collateral Agent for the Eligible Collateral, and the Company shall not be
responsible for any such fees or expenses. See '--Separation of Preferred
Security from the Related Purchase Contract.'
Subject to the foregoing and applicable law (including, without limitation,
United States Federal securities laws), the Company or its subsidiaries may at
any time, and from time to time, purchase outstanding Units by tender, in the
open market or by private agreement.
BOOK-ENTRY SYSTEM
DTC will act as securities depositary for Units. Those Units deposited with
DTC (the 'Global Units') will be represented by one or more certificates issued
only as fully registered securities registered in the name of Cede & Co. (DTC's
nominee).
The laws of some jurisdictions require that certain purchasers of
securities take physical delivery of securities in definitive form. Such laws
may impair the ability to transfer beneficial interests in the Global Units as
represented by a global certificate.
DTC is a limited-purpose trust company organized under the New York Banking
Law, a 'banking organization' within the meaning of the New York Banking Law, a
member of the Federal Reserve System, a 'clearing corporation' within the
meaning of the New York Uniform Commercial Code, and a 'clearing agency'
registered pursuant to the provisions of Section 17A of the Exchange Act. DTC
holds securities that its participants ('Participants') deposit with DTC. DTC
also facilitates the settlement among Participants of securities transactions,
such as transfers and pledges, in deposited securities through electronic
computerized book-entry changes in Participants' accounts, thereby eliminating
the need for physical movement of securities certificates. Participants include
securities brokers and dealers, banks, trust companies, clearing corporations
and certain other organizations. DTC is owned by a number of its Participants
and by the NYSE, the American Stock Exchange, Inc., and the National Association
of Securities Dealers, Inc. (the 'NASD'). Access to the DTC system is also
available to others, such as securities brokers and dealers, banks and trust
companies that clear transactions
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through or maintain a direct or indirect custodial relationship with a
Participant, either directly or indirectly ('Indirect Participants'). The rules
applicable to DTC and its Participants are on file with the Commission.
Purchases of Global Units within the DTC system must be made by or through
Participants, which will receive a credit for Global Units on DTC's records. The
ownership interest of each actual purchaser of Global Units (the 'Beneficial
Owner') is in turn to be recorded on the Participants' and Indirect
Participants' records. Beneficial Owners will not receive written confirmation
from DTC of their purchases, but Beneficial Owners are expected to receive
written confirmations providing details of the transactions, as well as periodic
statements of their holdings, from the Participants or Indirect Participants
through which the Beneficial Owners purchased Global Units. Transfers of
ownership interests in the Global Units are to be accomplished by entries made
on the books of Participants and Indirect Participants acting on behalf of
Beneficial Owners. Beneficial Owners will not receive certificates representing
their ownership interests in Global Units, except in the event that use of the
book-entry system for Global Units is discontinued.
To facilitate subsequent transfers, all Global Units deposited by
Participants with DTC are registered in the name of DTC's nominee, Cede & Co.
The deposit of Global Units with DTC and their registration in the name of Cede
& Co. effect no change in beneficial interest. DTC has no knowledge of the
actual Beneficial Owners of the Global Units; DTC's records reflect only the
identity of the Participants to whose accounts such Global Units are credited,
which may or may not be the Beneficial Owners. The Participants and Indirect
Participants will remain responsible for keeping account of their holdings on
behalf of their customers.
So long as DTC or its nominee is the registered owner or holder of a Global
Unit, DTC or such nominee, as the case may be, will be considered the sole owner
or holder of the Units represented thereby for all purposes under the Unit
Agreement and the Units. No beneficial owner of an interest in a Global Unit
will be able to transfer that interest except in accordance with DTC's
applicable procedures, in addition to those provided for under the Unit
Agreement.
Transfers between Participants in DTC will be effected in the ordinary way
in accordance with DTC rules and will be settled in same-day funds. If a holder
requires physical delivery of a Unit in a definitive form, for any reason,
including to sell Units to persons in states which require such delivery of such
Units or to pledge such Units, such holder must transfer its interest in the
Global Unit in accordance with the normal procedures of DTC and the procedures
set forth in the Unit Agreement.
DTC has advised the Unit Agent that it will take any action permitted to be
taken by a Unitholder only at the direction of one or more Participants to whose
account the DTC interests in the Global Units are certified and only in respect
of such portion of the aggregate number of Units as to which such Participant or
Participants has or have given such direction. However, if there shall have
occurred and be continuing a default by the Company in respect of its
obligations under one or more Purchase Contracts, DTC will exchange the Global
Units for Units in definitive form, which it will distribute to its
Participants.
Conveyance of notices and other communications by DTC to Participants, by
Participants to Indirect Participants and by Participants and Indirect
Participants to Beneficial Owners will be governed by arrangements among them,
subject to any statutory or regulatory requirements that may be in effect from
time to time.
Although voting with respect to the Global Units is limited, in those cases
where a vote is required, neither DTC nor Cede & Co. will itself consent or vote
with respect to Global Units. Under its usual procedures, DTC would mail an
Omnibus Proxy to the Unit Agent as soon as possible after the record date. The
Omnibus Proxy assigns Cede & Co.'s consenting or voting rights to those
Participants to whose accounts the Global Units are credited on the record date
(identified in a listing attached to the Omnibus Proxy).
Payments on the Global Units held in book-entry form in respect of
distributions on Preferred Securities and Contract Fees will be made to DTC in
immediately available funds. DTC's practice is to
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credit Participants' accounts on the relevant payment date in accordance with
their respective holdings shown on DTC's records unless DTC has reason to
believe that it will not receive payments on such payment date. Payments by
Participants and Indirect Participants to Beneficial Owners will be governed by
standing instructions and customary practices, as is the case with securities
held for the account of customers in bearer form or registered in 'street name,'
and such payments will be the responsibility of such Participants and Indirect
Participants and not of DTC or the Unit Agent, subject to any statutory or
regulatory requirements to the contrary that may be in effect from time to time.
Payments of Contract Fees and distributions on Preferred Securities to DTC are
the responsibility of the Unit Agent; disbursement of such payments to
Participants is the responsibility of DTC; and disbursement of such payments to
the Beneficial Owners is the responsibility of Participants and Indirect
Participants.
Except as provided herein, a Beneficial Owner in a global certificate
representing the Global Units will not be entitled to receive physical delivery
of Global Units. Accordingly, each Beneficial Owner must rely on the procedures
of DTC to exercise any rights under the Global Units.
Although DTC has agreed to the foregoing procedures in order to facilitate
transfers of interest in the Global Units among Participants of DTC, DTC is
under no obligation to perform or continue to perform such procedures, and such
procedures may be discontinued at any time. Neither the Company, the Trust nor
the Unit Agent will have any responsibility for the performance by DTC or its
Participants or Indirect Participants under the rules and procedures governing
DTC. DTC may discontinue providing its services as securities depositary with
respect to the Global Units at any time by giving reasonable notice to the
Company. Under such circumstances, in the event that a successor securities
depositary is not obtained, Global Units certificates are required to be printed
and delivered. Additionally, the Company may decide to discontinue use of the
system of book-entry transfers through DTC (or any successor depositary) with
respect to the Global Units. In that event, certificates for Global Units will
be printed and delivered.
The information in this section concerning DTC and DTC's book-entry system
has been obtained from sources that the Company believes to be reliable, but the
Company takes no responsibility for the accuracy thereof.
LISTING
The Units have been approved for listing on the NYSE under the symbol 'SB
PrG', subject to official notice of issuance.
DESCRIPTION OF THE PREFERRED SECURITIES
The Preferred Securities will be issued pursuant to the terms of the
Declaration. The Declaration will be qualified as an indenture under the Trust
Indenture Act. The Property Trustee, Chemical Bank, will act as the indenture
trustee for purposes of compliance with the provisions of the Trust Indenture
Act. The terms of the Preferred Securities will include those stated in the
Declaration and those made part of the Declaration by the Trust Indenture Act.
The following summary of the principal terms and provisions of the Preferred
Securities does not purport to be complete and is subject to, and qualified in
its entirety by reference to, the Declaration, the Trust Act and the Trust
Indenture Act.
GENERAL
The Declaration authorizes the Regular Trustees to issue on behalf of the
Trust the Trust Securities, which represent undivided beneficial interests in
the assets of the Trust. All of the Common Securities will be owned, directly or
indirectly, by the Company. The Common Securities rank pari passu, and payments
will be made thereon on a pro rata basis, with the Preferred Securities, except
that upon the occurrence of a Declaration Event of Default, the rights of the
holders of the Common Securities to receive payment of periodic distributions
and payments upon liquidation, redemption and otherwise will be subordinated to
the rights of the holders of the Preferred Securities. The Declaration does not
permit the issuance by the Trust of any securities other than the Trust
Securities or the incurrence of any indebtedness by the Trust. Pursuant to the
Declaration, the Property Trustee will own
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the Subordinated Debt Securities purchased by the Trust for the benefit of the
holders of the Trust Securities. The payment of distributions out of money held
by the Trust, and payments upon redemption or repayment of the Preferred
Securities or liquidation of the Trust, are guaranteed by the Company to the
extent described under 'Description of the Guarantee.' The Guarantee will be
held by Chemical Bank, the Guarantee Trustee, for the benefit of the holders of
the Preferred Securities. The Guarantee does not cover payment of distributions
when the Trust does not have sufficient available funds to pay such
distributions. In such event, the remedy of a holder of Preferred Securities is
to vote to direct the Property Trustee to enforce the Property Trustee's rights
under the Subordinated Debt Securities except in the limited circumstances in
which the holder may take Direct Action (as defined herein). See 'Description of
the Preferred Securities--Voting Rights' and '--Declaration Events of Default.'
The procedures whereby Unitholders may exercise voting rights under the
Declaration are described under '--Book-Entry Only Issuance' and 'Description of
the Units--Voting Rights of Unitholders with Respect to Preferred Securities.'
DISTRIBUTIONS
Distributions on the Preferred Securities will be fixed at a rate per annum
of % of the Stated Amount of $25 per Preferred Security. Distributions in
arrears for more than one quarter will bear interest thereon at the rate per
annum of % thereof compounded quarterly. The term 'distribution' as used
herein includes any such interest payable unless otherwise stated. The amount of
distributions payable for any period will be computed on the basis of a 360-day
year of twelve 30-day months.
Distributions on the Preferred Securities will be cumulative, will accrue
from , 1996, and will be payable quarterly in arrears on each Payment
Date commencing , 1996, when, as and if available for payment.
Distributions will be made by the Property Trustee, except as otherwise
described below.
Distributions on the Preferred Securities must be paid on the dates payable
to the extent that the Trust has funds available for the payment of such
distributions in the Property Account. The Trust's funds available for
distribution to the holders of the Preferred Securities will be limited to
payments received from the Company on the Subordinated Debt Securities. See
'Description of the Subordinated Debt Securities.' The payment of distributions
out of moneys held by the Trust is guaranteed by the Company to the extent set
forth under 'Description of the Guarantees.'
Distributions payable on any Payment Date on the Preferred Securities will
be payable to the holders thereof as they appear on the books and records of the
Trust at the close of business on the fifteenth day immediately preceding such
Payment Date. Such distributions will be paid through the Property Trustee who
will hold amounts received in respect of the Subordinated Debt Securities in the
Property Account for the benefit of the holders of the Trust Securities. In the
event that any date on which distributions are to be made on the Preferred
Securities is not a Business Day, then payment of the distributions payable on
such date will be made on the next succeeding day which is a Business Day (and
without any interest or other payment in respect of any such delay), except
that, if such Business Day is in the next succeeding calendar year, such payment
shall be made on the immediately preceding Business Day, in each case with the
same force and effect as if made on such Payment Date.
REPAYMENT AT THE OPTION OF THE HOLDER
Each holder of Preferred Securities, including the Collateral Agent, will
have the right to require the Trust to repay all or a portion of the Preferred
Securities owned or pledged with such holder (the 'Put Option') on the Business
Day immediately preceding the settlement date for the Purchase Contracts (the
'Initial Put Option Exercise Date') at the Repayment Price and will be paid by
the Trust in immediately available funds, subject to certain conditions. In
addition, holders of Preferred Securities that remain outstanding after an
accelerated settlement date for the Purchase Contracts will have a Put Option
with respect to the Preferred Securities owned by such holder on the fifth
anniversary of such date (the 'Fifth Anniversary Put Option Exercise Date' and,
together with the Initial Put Option Exercise
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Date, the 'Put Option Exercise Date') at the Repayment Price. See 'Description
of the Units-- Description of the Purchase Contracts--Payment of Purchase Price;
Delivery of Depositary Shares.'
The Trust will obtain the funds to repay the Preferred Securities under the
Put Option by presenting to the Company, pursuant to the Trust's optional right
to repayment under the Subordinated Debt Securities, Subordinated Debt
Securities in an aggregate principal amount equal to the Stated Amount of such
Preferred Securities. See 'Description of the Subordinated Debt
Securities--Repayment at the Option of the Holder.'
In order for the Preferred Securities to be repaid on the Put Option
Exercise Date, the Trust must receive at the office or agency of the Property
Trustee maintained for that purpose in the Borough of Manhattan, The City of New
York, either (i) not less than 10 nor more than 30 days prior to the Initial Put
Option Exercise Date or (ii) not less than 30 nor more than 60 days prior to the
Fifth Anniversary Put Option Exercise Date, the Preferred Securities to be
repaid with the form entitled 'Option to Elect Repayment' on the reverse thereof
or otherwise accompanying such Preferred Security duly completed. Any such
notice received by the Trust will be irrevocable. All questions as to the
validity, eligibility (including time of receipt) and acceptance of the
Preferred Securities for repayment will be determined by the Trust, whose
determination will be final and binding. Notwithstanding the foregoing, so long
as the holder of the Preferred Securities presented for repayment is the
Collateral Agent, such Preferred Securities may be received at such office or
agency of the Property Trustee at any time prior to 10:00 a.m., New York City
time, on the Put Option Exercise Date and in the form and manner as may be
designated by the Collateral Agent.
The Trust will comply with the provisions of Rule 13e-4, Rule 14e-1 and any
other tender offer rules under the Exchange Act if required and will file
Schedule 13E-4 or any other schedule if required thereunder.
Payment of the Repayment Price to holders of Preferred Securities will be
made through the Property Trustee, provided that the Company has paid the
Property Trustee a sufficient amount of cash in connection with the related
repayment of the Subordinated Debt Securities. Notwithstanding the foregoing, so
long as the holder of any Preferred Securities presented for repayment is the
Collateral Agent, the payment of the Repayment Price in respect of such
Preferred Securities will be made no later than 1:00 p.m., New York City time,
on the Put Option Exercise Date by check or wire transfer in immediately
available funds at such place and to such account as may be designated by the
Collateral Agent. If the Property Trustee holds immediately available funds
sufficient to pay the Repayment Price of the Preferred Securities presented for
repayment, then, immediately prior to the close of business on the Put Option
Exercise Date, such Preferred Securities will cease to be outstanding and
distributions thereon will cease to accrue, whether or not Preferred Securities
are delivered to the Property Trustee, and all other rights of the holder in
respect of the Preferred Securities will terminate and lapse (other than the
right to receive the Repayment Price, but without interest on such Repayment
Price). Neither the Regular Trustees nor the Trust will be required to register
or cause to be registered the transfer of any Preferred Securities for which
repayment has been elected. Except as described in the immediately following
paragraph, if payment of the Repayment Price in respect of Preferred Securities
is (i) improperly withheld or refused and not paid either by the Property
Trustee or by the Company as guarantor pursuant to the Preferred Securities
Guarantee, or (ii) not paid by the Property Trustee as the result of an Event of
Default with respect to the Subordinated Debt Securities presented for repayment
as described, distributions on such Preferred Securities will continue to
accrue, from the original Put Option Exercise Date to the actual date of
payment, in which case the actual payment date will be considered the Put Option
Exercise Date for purposes of calculating the Repayment Price.
If any of the Preferred Securities presented by the Collateral Agent for
repayment in connection with an accelerated settlement date are not repaid and
the failure to repay continues for more than two Business Days, then (a) any
exercise of the optional right to elect repayment of the Preferred Securities
will be deemed rescinded and annulled automatically, (b) any presentation of the
related Subordinated Debt Securities to the Company for repayment will be deemed
rescinded and annulled automatically and (c) any payments received by the
Property Trustee from the repayment of such Subordinated Debt
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Securities will be returned to the Company. See 'Description of the
Units--Description of the Purchase Contracts--Payment of Purchase Price;
Delivery of Depositary Shares.'
The rescission or annulment of any exercise of the optional right to elect
repayment of the Preferred Securities will not prevent holders of Preferred
Securities from exercising such right at a later date.
OPTIONAL REDEMPTION BY THE COMPANY
The Company is permitted to redeem the Subordinated Debt Securities, in
whole (but not in part), after , 2001 upon not less than 30 nor
more than 60 days' notice on any Payment Date. See 'Description of the
Subordinated Debt Securities--Optional Redemption by the Company.'
Notwithstanding the foregoing, after a settlement of the Purchase Contracts on
the Purchase Date (or a related Delayed Purchase Date), the right of the Company
to redeem any Subordinated Debt Securities that remain outstanding after such
date will be postponed or suspended until the fifth anniversary of such date.
See 'Description of the Units--Description of the Purchase
Contracts--Acceleration of Purchase.' Upon the redemption of the Subordinated
Debt Securities in the manner described in this paragraph, the Trust will, to
the extent of the proceeds of such redemption, redeem Preferred Securities and
Common Securities at the Redemption Price.
MANDATORY REDEMPTION
The Subordinated Debt Securities will mature on , 2026. Upon
the repayment of the Subordinated Debt Securities, whether at maturity or upon
redemption, the proceeds from such repayment or redemption shall simultaneously
be applied to redeem Trust Securities having an aggregate liquidation amount
equal to the aggregate principal amount of the Subordinated Debt Securities so
repaid or redeemed at the Redemption Price.
TAX EVENT OR INVESTMENT COMPANY EVENT REDEMPTION OR DISTRIBUTION; OPTIONAL
DISTRIBUTION
If, at any time, a Tax Event shall occur and be continuing, the Trust
shall, except in the limited circumstances described below, be dissolved with
the result that Subordinated Debt Securities with an aggregate principal amount
equal to the aggregate stated liquidation amount of, with an interest rate
identical to the distribution rate of, and accrued and unpaid interest equal to
accrued and unpaid distributions on, the Trust Securities, would be distributed
to the holders of the Trust Securities in liquidation of such holders' interests
in the Trust on a pro rata basis within 90 days following the occurrence of such
Tax Event; provided that such dissolution and distribution shall be conditioned
on (i) the Regular Trustees' receipt of an opinion of nationally recognized
independent tax counsel experienced in such matters (a 'No Recognition
Opinion'), which opinion may rely on published revenue rulings of the Internal
Revenue Service, to the effect that the holders of the Trust Securities will not
recognize any gain or loss for United States Federal income tax purposes as a
result of such dissolution and distribution of Subordinated Debt Securities and
(ii) the Company being unable to avoid such Tax Event within such 90 day period
by taking some ministerial action or pursuing some other reasonable measure that
will have no adverse effect on the Trust, the Company or the holders of the
Trust Securities. Furthermore, if (i) the Company has received an opinion (a
'Redemption Tax Opinion') of nationally recognized independent tax counsel
experienced in such matters that, as a result of a Tax Event, there is more than
an insubstantial risk that the Company would be precluded from deducting the
interest on the Subordinated Debt Securities for United States Federal income
tax purposes, even after the Subordinated Debt Securities were distributed to
the holders of Trust Securities in liquidation of such holders' interests in the
Trust as described above, or (ii) the Regular Trustees shall have been informed
by such tax counsel that it cannot deliver a No Recognition Opinion to the
Trust, the Company shall have the right, upon not less than 30 nor more than 60
days' notice, to redeem the Subordinated Debt Securities in whole (but not in
part) for cash at the Subordinated Debt Redemption Price within 90 days
following the occurrence of such Tax Event, and, following such redemption,
Trust Securities with an aggregate liquidation amount equal to the aggregate
principal amount of the Subordinated Debt Securities so redeemed shall be
redeemed by the Trust (a 'Tax Event Redemption') at the Redemption Price;
provided, however, that, if at the time there is available to the
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Company or the Trust the opportunity to eliminate, within such 90 day period,
the Tax Event by taking some ministerial action, such as filing a form or making
an election or pursuing some other similar reasonable measure that has no
adverse effect on the Trust, the Company or the holders of the Trust Securities,
the Company or the Trust will pursue such measure in lieu of redemption. See
'Mandatory Redemption.'
'Tax Event' means that the Regular Trustees shall have received an opinion
of a nationally recognized independent tax counsel experienced in such matters
(a 'Dissolution Tax Opinion') to the effect that, as a result of (a) any
amendment to, or change (including any announced prospective change) in, the
laws (or any regulations thereunder) of the United States or any political
subdivision or taxing authority thereof or therein or (b) any amendment to or
change in an interpretation or application of such laws or regulations by any
legislative body, court, governmental agency or regulatory authority (including
the enactment of any legislation and the publication of any judicial decision or
regulatory determination on or after such date), there is more than an
insubstantial risk that (i) the Trust is or will be subject to United States
Federal income tax with respect to interest accrued or received on the
Subordinated Debt Securities, (ii) interest payable to the Trust on the
Subordinated Debt Securities is or will not be deductible by the Company in
whole or in part for United States Federal income tax purposes or (iii) the
Trust is or will be subject to more than a de minimis amount of other taxes,
duties or other governmental charges, which change or amendment becomes
effective on or after the date of this Prospectus.
If an Investment Company Event shall occur and be continuing, the Company
shall cause the Regular Trustees to liquidate the Trust and cause the
Subordinated Debt Securities to be distributed to the holders of the Preferred
Securities in liquidation of the Trust within 90 days following the occurrence
of such Investment Company Event.
'Investment Company Event' means that the Regular Trustees shall have
obtained an opinion from independent counsel experienced in practice under the
Investment Company Act of 1940, as amended (the '1940 Act'), to the effect that,
as a result of the occurrence of a change in law or regulation or a written
change in interpretation or application of law or regulation by any legislative
body, court, governmental agency or regulatory authority (a 'Change in 1940 Act
Law'), there is more than an insubstantial risk that the Trust is or will be
considered an investment company which is required to be registered under the
1940 Act, which Change in 1940 Act Law becomes effective on or after the
original issue date of the Trust Securities.
The Trust may be dissolved at any time at the option of the Company with
the result that Subordinated Debt Securities with an aggregate principal amount
equal to the aggregate stated liquidation amount of, with an interest rate
identical to the distribution rate of, and accrued and unpaid interest equal to
accrued and unpaid distributions on, the Trust Securities, would be distributed
as soon as practicable to the holders of the Trust Securities in liquidation of
such holders' interests in the Trust on a pro rata basis (an 'Optional
Distribution').
The distribution by the Company of the Subordinated Debt Securities will
effectively result in the cancellation of the Preferred Securities.
After the date for any distribution of Subordinated Debt Securities upon
dissolution of the Trust, (i) the Preferred Securities will no longer be deemed
to be outstanding and (ii) DTC or its nominee, as the record holder of the
Preferred Securities, will receive a registered global certificate or
certificates representing the Subordinated Debt Securities to be delivered upon
such distribution.
REDEMPTION PROCEDURES--OPTIONAL REDEMPTION BY THE COMPANY; MANDATORY REDEMPTION;
TAX EVENT REDEMPTION
The Trust may not redeem fewer than all of the outstanding Preferred
Securities unless all accrued and unpaid distributions have been paid on all
Preferred Securities for all quarterly distribution periods terminating on or
prior to the date of redemption.
If the Trust gives notice of a redemption in respect of Preferred
Securities (which notice shall be irrevocable), and if the Company has paid to
the Property Trustee a sufficient amount of cash in
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connection with the related redemption or maturity of the Subordinated Debt
Securities as described under '--Optional Redemption by the Company,'
'--Mandatory Redemption' or '--Tax Event or Investment Company Event Redemption
or Distribution; Optional Distribution' above, then the Property Trustee will
irrevocably deposit with DTC funds sufficient to pay the applicable Redemption
Price to the holders of the Preferred Securities. If notice of such redemption
shall have been given and funds deposited as required, then immediately prior to
the close of business on the date of such deposit, the Preferred Securities will
cease to be outstanding and distributions thereon will cease to accrue, and all
other rights of the holder in respect of the Preferred Securities shall
terminate and lapse (other than the right to receive the Redemption Price, but
without interest on such Redemption Price. In the event that any date fixed for
such redemption of Preferred Securities is not a Business Day, then payment of
the Redemption Price payable on such date will be made on the next succeeding
day that is a Business Day (without any interest or other payment in respect of
any such delay), except that, if such Business Day falls in the next succeeding
calendar year, such payment will be made on the immediately preceding Business
Day. In the event that payment of the Redemption Price for the redemption of the
Preferred Securities is improperly withheld or refused and not paid either by
the Trust or by the Company pursuant to the Guarantee, distributions on such
Preferred Securities will continue to accrue at the then applicable rate from
the original redemption date to the date of payment, in which case the actual
payment date will be considered the date fixed for redemption for purposes of
calculating the Redemption Price.
The Trust will not be required to register or cause to be registered the
transfer of Preferred Securities after such Preferred Securities have been
called for redemption.
Subject to the foregoing and applicable law (including, without limitation,
United States Federal securities laws), the Company or its subsidiaries may at
any time, and from time to time, purchase outstanding Preferred Securities by
tender, in the open market or by private agreement.
LIQUIDATION DISTRIBUTION UPON DISSOLUTION
In the event of any voluntary or involuntary liquidation, dissolution,
winding-up or termination of the Trust, the holders of the Preferred Securities
will be entitled to receive out of the assets of the Trust, after satisfaction
of liabilities to creditors, distributions in an amount equal to the aggregate
of the Stated Amount per Preferred Security plus accrued and unpaid
distributions thereon to the date of payment (the 'Liquidation Distribution'),
unless, in connection with such termination, Subordinated Debt Securities in an
aggregate stated principal amount equal to the aggregate Stated Amount of, with
an interest rate identical to the distribution rate of, and accrued and unpaid
interest equal to accrued and unpaid distributions on, the Preferred Securities
have been distributed on a pro rata basis to the holders of the Preferred
Securities. If such Liquidation Distribution can be paid only in part because
the Trust has insufficient assets available to pay in full the aggregate
Liquidation Distribution, then the amounts payable directly by the Trust on the
Preferred Securities shall be paid on a pro rata basis, provided that such
amounts may be paid in any combination of cash, Subordinated Debt Securities or
other property held by the Trust. The holders of the Common Securities will be
entitled to receive distributions upon any such dissolution pro rata with the
holders of the Preferred Securities, except that if a Declaration Event of
Default has occurred and is continuing, the Preferred Securities shall have a
preference over the Common Securities with regard to such distributions.
Pursuant to the Declaration, the Trust will terminate on ,
2031, or earlier upon (i) the bankruptcy of the Company, (ii) the filing of a
certificate of dissolution or its equivalent with respect to the Company (except
for permitted mergers, consolidations or reorganizations of the Company), the
filing of a certificate of cancellation with respect to the Trust, or the
revocation of the charter of the Company and expiration of 90 days after the
date of revocation without a reinstatement thereof, (iii) the entry of a decree
of judicial dissolution of the Company or the Trust, (iv) the occurrence of a
Tax Event or Investment Company Event followed by the distribution of the
Subordinated Debt Securities, (v) the occurrence of an Optional Distribution or
(vi) the redemption or repayment of all the Trust Securities.
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DECLARATION EVENTS OF DEFAULT
An event of default under the Indenture (an 'Event of Default') constitutes
an event of default under the Declaration with respect to the Trust Securities
(a 'Declaration Event of Default'), provided that, pursuant to the Declaration,
the holder of the Common Securities will be deemed to have waived any
Declaration Event of Default with respect to the Common Securities until all
Declaration Events of Default with respect to the Preferred Securities have been
cured, waived or otherwise eliminated. Until such Declaration Events of Default
with respect to the Preferred Securities have been so cured, waived, or
otherwise eliminated, the Property Trustee will be deemed to be acting solely on
behalf of the holders of the Preferred Securities and only the holders of the
Preferred Securities will have the right to direct the Property Trustee with
respect to certain matters under the Declaration, and therefore the Indenture.
If the Property Trustee fails to enforce its rights under the Subordinated Debt
Securities after a recordholder of Preferred Securities has made a written
request, such holder of Preferred Securities may institute a legal proceeding
directly against the Company to enforce the Property Trustee's rights under the
Subordinated Debt Securities without first instituting any legal proceeding
against the Property Trustee or any other person or entity. Notwithstanding the
foregoing, if a Declaration Event of Default has occurred and is continuing and
such event is attributable to the failure of the Company to pay interest or
principal on the Subordinated Debt Securities on the date such interest or
principal is otherwise payable (or in the case of a redemption or repayment, the
redemption date or repayment date, respectively), then a holder of Preferred
Securities may directly institute a proceeding for enforcement of payment to
such holder directly of the principal of or interest on the Subordinated Debt
Securities having a principal amount equal to the aggregate Stated Amount of the
Preferred Securities of such holder (a 'Direct Action') on or after the
respective due date specified in the Subordinated Debt Securities. In connection
with such Direct Action, the Company will be subrogated to the rights of such
holder of Preferred Securities under the Declaration to the extent of any
payment made by the Company to such holder of Preferred Securities in such
Direct Action. The holders of Preferred Securities will not be able to exercise
directly any other remedy available to the holders of the Subordinated Debt
Securities.
Upon the occurrence of a Declaration Event of Default, the Property Trustee
as the sole holder of the Subordinated Debt Securities will have the right under
the Indenture to declare the principal of and interest on the Subordinated Debt
Securities to be immediately due and payable. The Company and the Trust are each
required to file annually with the Property Trustee an officer's certificate as
to its compliance with all conditions and covenants under the Declaration.
VOTING RIGHTS
Except as described herein, under the Trust Act, the Trust Indenture Act
and 'Description of the Guarantee--Amendments and Assignment,' and as otherwise
required by law and the Declaration, the holders of the Preferred Securities
will have no voting rights.
The holders of a majority in aggregate liquidation amount of the Preferred
Securities have the right to direct the time, method and place of conducting any
proceeding for any remedy available to the Property Trustee, or direct the
exercise of any trust or power conferred upon the Property Trustee under the
Declaration including the right to direct the Property Trustee, as holder of the
Subordinated Debt Securities, to (i) exercise the remedies available under the
Indenture with respect to the Subordinated Debt Securities, (ii) waive any past
Event of Default that is waivable under the Indenture, (iii) exercise any right
to rescind or annul a declaration that the principal of all the Subordinated
Debt Securities shall be due and payable or (iv) consent to any amendment,
modification or termination of the Indenture or the Subordinated Debt Securities
requiring the consent of the holders of the Subordinated Debt Securities;
provided, however, that, where a consent or action under the Indenture would
require the consent or act of more than a majority of the holders (a
'Super-Majority') affected thereby, only the holders of at least such
Super-Majority of the Preferred Securities may direct the Property Trustee to
give such consent or take such action. If the Property Trustee fails to enforce
its rights under the Subordinated Debt Securities after a holder of record of
Preferred Securities has made a written request, such holder of record may
institute a legal proceeding directly against the Company to enforce the
Property Trustee's rights under the Subordinated Debt Securities without first
instituting any legal
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proceeding against the Property Trustee or any other person or entity.
Notwithstanding the foregoing, if a Declaration Event of Default has occurred
and is continuing and such event is attributable to the failure of the Company
to pay interest or principal on the Subordinated Debt Securities on the date
such interest or principal is otherwise payable (or in the case of redemption or
repayment, the redemption date or repayment date, respectively), then a holder
of Preferred Securities may directly institute a proceeding for enforcement of
payment to such holder of the principal of or interest on the Subordinated Debt
Securities having a principal amount equal to the aggregate Stated Amount of the
Preferred Securities of such holder on or after the respective due date
specified in the Subordinated Debt Securities. The Property Trustee shall notify
all holders of the Preferred Securities of any notice of default received from
the Indenture Trustee with respect to the Subordinated Debt Securities. Such
notice shall state that such Event of Default also constitutes a Declaration
Event of Default. Except with respect to directing the time, method and place of
conducting a proceeding for a remedy, the Property Trustee shall not take any of
the actions described in clauses (i), (ii), (iii) or (iv) above unless the
Property Trustee has obtained an opinion of tax counsel to the effect that, as a
result of such action, the Trust will not fail to be classified as a grantor
trust for United States Federal income tax purposes.
In the event the consent of the Property Trustee, as the holder of the
Subordinated Debt Securities, is required under the Indenture with respect to
any amendment, modification or termination of the Indenture or the Subordinated
Debt Securities, the Property Trustee shall request the direction of the holders
of the Trust Securities with respect to such amendment, modification or
termination and shall vote with respect to such amendment, modification or
termination as directed by a majority in liquidation amount of the Trust
Securities voting together as a single class; provided, however, that where a
consent under the Indenture would require the consent of a Super-Majority, the
Property Trustee may only give such consent at the direction of the holders of
at least the proportion in liquidation amount of the Trust Securities which the
relevant Super-Majority represents of the aggregate principal amount of the
Subordinated Debt Securities outstanding. The Property Trustee shall be under no
obligation to take any such action in accordance with the directions of the
holders of the Trust Securities unless the Property Trustee has obtained an
opinion of tax counsel to the effect that for the purposes of United States
Federal income tax the Trust will not be classified as other than a grantor
trust.
A waiver of an Event of Default will constitute a waiver of the
corresponding Declaration Event of Default.
Any required approval or direction of holders of Preferred Securities may
be given at a separate meeting of holders of Preferred Securities convened for
such purpose, at a meeting of all of the holders of Trust Securities or pursuant
to written consent. The Regular Trustees will cause a notice of any meeting at
which holders of Preferred Securities are entitled to vote, or of any matter
upon which action by written consent of such holders is to be taken, to be
mailed to each holder of record of Preferred Securities. Each such notice will
include a statement setting forth the following information: (i) the date of
such meeting or the date by which such action is to be taken; (ii) a description
of any resolution proposed for adoption at such meeting on which such holders
are entitled to vote or of such matter upon which written consent is sought; and
(iii) instructions for the delivery of proxies or consents. No vote or consent
of the holders of Preferred Securities will be required for the Trust to redeem
or repay and cancel Preferred Securities or distribute Subordinated Debt
Securities in accordance with the Declaration.
Notwithstanding that holders of Preferred Securities are entitled to vote
or consent under any of the circumstances described above, any of the Preferred
Securities that are owned at such time by the Company or any entity directly or
indirectly controlling or controlled by, or under direct or indirect common
control with, the Company, shall not be entitled to vote or consent and shall,
for purposes of such vote or consent, be treated as if such Preferred Securities
were not outstanding.
Holders of the Preferred Securities will have no rights to appoint or
remove the Company Trustees, who may be appointed, removed or replaced solely by
the Company as the indirect or direct holder of all of the Common Securities.
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MODIFICATION OF THE DECLARATION
The Declaration may be modified and amended if approved by a majority of
the Regular Trustees (and in certain circumstances the Property Trustee),
provided that, if any proposed amendment provides for, or the Regular Trustees
otherwise propose to effect, (i) any action that would adversely affect the
powers, preferences or special rights of the Trust Securities, whether by way of
amendment to the Declaration or otherwise or (ii) the dissolution, winding-up or
termination of the Trust other than pursuant to the terms of the Declaration,
then the holders of the Trust Securities voting together as a single class will
be entitled to vote on such amendment or proposal and such amendment or proposal
shall not be effective except with the approval of at least 66-2/3% in
liquidation amount of the Trust Securities affected thereby; provided that, if
any amendment or proposal referred to in clause (i) above would adversely affect
only the Preferred Securities or the Common Securities, then only the affected
class will be entitled to vote on such amendment or proposal and such amendment
or proposal shall not be effective except with the approval of 66-2/3% in
liquidation amount of such class of securities.
Notwithstanding the foregoing, no amendment or modification may be made to
the Declaration if such amendment or modification would (i) cause the Trust to
be classified for purposes of United States Federal income taxation as other
than a grantor trust, (ii) reduce or otherwise adversely affect the powers of
the Property Trustee or (iii) cause the Trust to be deemed an 'investment
company' that is required to be registered under the 1940 Act.
MERGERS, CONSOLIDATIONS OR AMALGAMATIONS
The Trust may not consolidate, amalgamate, merge or be replaced by, or
convey, transfer or lease its properties and assets substantially as an entirety
to, any corporation or other body, except as described below. The Trust may,
with the consent of the Regular Trustees and without the consent of the holders
of the Trust Securities, the Property Trustee or the Delaware Trustee
consolidate, amalgamate, merge with or into, or be replaced by a trust organized
as such under the laws of any State; provided that, (i) such successor entity
either (x) expressly assumes all of the obligations of the Trust under the Trust
Securities or (y) substitutes for the Preferred Securities other securities
having substantially the same terms as the Preferred Securities (the 'Successor
Securities'), so long as the Successor Securities rank the same as the Preferred
Securities rank with respect to distributions and payments upon liquidation,
redemption and otherwise, (ii) the Company expressly acknowledges a trustee of
such successor entity possessing the same powers and duties as the Property
Trustee as the holder of the Subordinated Debt Securities, (iii) such merger,
consolidation, amalgamation or replacement does not cause the Preferred
Securities (including any Successor Securities) or Units to be downgraded by any
nationally recognized statistical rating organization, (iv) such merger,
consolidation, amalgamation or replacement does not adversely affect the rights,
preferences and privileges of the holders of the Preferred Securities (including
any Successor Securities) in any material respect (other than with respect to
any dilution of the holders' interest in the new entity), (v) such successor
entity has a purpose identical to that of the Trust, (vi) prior to such merger,
consolidation, amalgamation or replacement, the Company has received an opinion
of a nationally recognized independent counsel to the Trust experienced in such
matters to the effect that, (a) such merger, consolidation, amalgamation or
replacement does not adversely affect the rights, preferences and privileges of
the holders of the Preferred Securities (including any Successor Securities) in
any material respect (other than with respect to any dilution of the holders'
interest in the new entity), (b) following such merger, consolidation,
amalgamation or replacement, neither the Trust nor such successor entity will be
required to register as an investment company under the 1940 Act and (c) such
merger, consolidation, amalgamation or replacement does not result in a taxable
event to any holders of Preferred Securities or Units or otherwise affect the
Federal income tax consequences of any investment in the Preferred Securities or
Units and (vii) the Company guarantees the obligations of such successor entity
under the Successor Securities at least to the extent provided by the Guarantee.
Notwithstanding the foregoing, the Trust shall not, except with the consent of
the holders of 100% in liquidation amount of the Trust Securities, consolidate,
amalgamate, merge with or into, or be replaced by any other entity or permit any
other entity to consolidate, amalgamate, merge with or into, or replace it, if
such consolidation,
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amalgamation, merger or replacement would cause the Trust or the Successor
Entity to be classified as other than a grantor trust for United States Federal
income tax purposes.
BOOK-ENTRY ONLY ISSUANCE
DTC will act as securities depositary for the Preferred Securities. The
Preferred Securities will be issued in the form of one or more global Preferred
Securities certificates, representing the total aggregate number of Preferred
Securities, fully registered in the name of Cede & Co., and will be deposited
with DTC. For a description of DTC and the specific terms of the depositary
arrangements, see 'Description of the Units--Book-Entry System.' As of the date
of this Prospectus, the descriptions herein of DTC's book-entry system and DTC's
practices as they relate to purchases, transfers, notices and payments with
respect to the Global Units apply in all material respects to any obligations
represented by one or more global Preferred Securities certificates held by DTC.
The Company may appoint a successor to DTC or any successor depositary in the
event DTC or such successor depositary is unable or unwilling to continue as a
depository for the global Preferred Securities certificates.
The laws of some jurisdictions require that certain purchasers of
securities take physical delivery of securities in definitive form. Such laws
may impair the ability to transfer beneficial interests in the global Preferred
Securities as represented by a global certificate.
DTC has advised the Company that it will take any action permitted to be
taken by a holder of Preferred Securities only at the direction of one or more
Participants to whose account the DTC interests in the global Preferred
Securities certificates are credited and only in respect of such portion of the
aggregate liquidation amount of Preferred Securities as to which such
Participant or Participants has or have given such direction. However, if there
is a Declaration Event of Default under the Preferred Securities, DTC will
exchange the global Preferred Securities certificates for definitive ones, which
it will distribute to its Participants.
Redemption notices in respect of the Preferred Securities held in
book-entry form will be sent to Cede & Co. If less than all of the Preferred
Securities are being redeemed, DTC will determine the amount of the interest of
each Participant to be redeemed in accordance with its procedures.
Although voting with respect to the Preferred Securities is limited, in
those cases where a vote is required, neither DTC nor Cede & Co. will itself
consent to vote with respect to Preferred Securities. Under its usual
procedures, DTC would mail an Omnibus Proxy to the Trust as soon as possible
after the record date. The Omnibus Proxy assigns Cede & Co.'s consenting or
voting rights to those Participants to whose accounts the Preferred Securities
are credited on the record date (indentified in a listing attached to the
Omnibus Proxy).
Except as provided herein, a Beneficial Owner in a global Preferred
Security certificate will not be entitled to receive physical delivery of
Preferred Securities. Accordingly, each Beneficial Owner must rely on the
procedures of DTC to exercise any rights under the Preferred Securities.
DTC may discontinue providing its services as securities depositary with
respect to the Preferred Securities at any time by giving reasonable notice to
the Trust. Under such circumstances, in the event that a successor securities
depositary is not obtained, Preferred Securities certificates are required to be
printed and delivered. Additionally, the Regular Trustees (with the consent of
the Company) may decide to discontinue use of the system of book-entry transfers
through DTC (or any successor depositary) with respect to the Preferred
Securities. In that event, certificates for the Preferred Securities will be
printed and delivered.
PAYMENT AND PAYING AGENCY
Payments in respect of the Preferred Securities shall be made to DTC, which
shall credit the relevant accounts at DTC on the applicable distribution dates.
The Paying Agent initially will be Chemical Bank.
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INFORMATION CONCERNING THE PROPERTY TRUSTEE
The Property Trustee, prior to the occurrence of a default with respect to
the Trust Securities, undertakes to perform only such duties as are specifically
set forth in the Declaration and, after default, shall exercise the same degree
of care as a prudent individual would exercise in the conduct of his or her own
affairs. Subject to such provisions, the Property Trustee is under no obligation
to exercise any of the powers vested in it by the Declaration at the request of
any holder of Preferred Securities, unless offered reasonable indemnity by such
holder against the costs, expenses and liabilities which might be incurred
thereby. The holders of Preferred Securities will not be required to offer such
indemnity in the event such holders, by exercising their voting rights, direct
the Property Trustee to take any action it is empowered to take under the
Declaration following a Declaration Event of Default. The Property Trustee also
serves as the Guarantee Trustee and the Unit Agent.
GOVERNING LAW
The Declaration and the Preferred Securities will be governed by, and
construed in accordance with, the laws of the State of Delaware.
MISCELLANEOUS
The Regular Trustees are authorized and directed to operate the Trust so
that the Trust will not be required to register as an 'investment company' under
the 1940 Act or characterized as other than a grantor trust for United States
Federal income tax purposes. The Company is authorized and directed to conduct
its affairs so that the Subordinated Debt Securities will be treated as
indebtedness of the Company for United States Federal income tax purposes. In
this connection, the Company and the Regular Trustees are authorized to take any
action, not inconsistent with applicable law, the certificate of trust of the
Trust or the certificate of incorporation of the Company, that each of the
Company and the Regular Trustees determines in its discretion to be necessary or
desirable to achieve such end, as long as such action does not adversely affect
the interests of the holders of the Preferred Securities or vary the terms
thereof.
Holders of the Preferred Securities have no preemptive rights.
DESCRIPTION OF THE GUARANTEE
Set forth below is a summary of the principal terms and provisions of the
Guarantee which will be executed and delivered by the Company for the benefit of
the holders from time to time of Preferred Securities. The Guarantee will be
qualified as an indenture under the Trust Indenture Act. Chemical Bank will act
as indenture trustee under the Guarantee (the 'Guarantee Trustee') for purposes
of compliance with the provisions of the Trust Indenture Act. The terms of the
Guarantee will be those set forth in the Guarantee and those made part of the
Guarantee by the Trust Indenture Act. This summary does not purport to be
complete and is subject in all respects to the provisions of, and is qualified
in its entirety by reference to, the Guarantee, which is filed as an exhibit to
the Registration Statement of which this Prospectus is a part, and the Trust
Indenture Act. The Guarantee Trustee will hold the Guarantee for the benefit of
the holders of the Preferred Securities.
GENERAL
Pursuant to the Guarantee, the Company irrevocably agrees, to the extent
set forth therein, to pay in full to the holders of the Preferred Securities
issued by the Trust, the Guarantee Payments (as defined herein), as and when
due, regardless of any defense, right of set-off or counterclaim which the Trust
may have or assert. The following payments with respect to the Preferred
Securities, to the extent not paid by the Trust (the 'Guarantee Payments'), will
be subject to the Guarantee (without duplication): (i) any accrued and unpaid
distributions that are required to be paid on the Preferred Securities to the
extent of funds of the Trust available therefor, (ii) the amount payable upon
redemption of the Preferred Securities, payable out of funds of the Trust
available therefor with respect to any Preferred Securities called for
redemption by the Trust, (iii) the amount payable with respect to any Preferred
Securities presented for repayment by the holders thereof to the extent the
Trust has funds available therefor, and (iv) upon a liquidation of the Trust
(other than in connection with the distribution of the Subordinated Debt
Securities to the holders of the Preferred Securities or the redemption or
repayment of all the Preferred Securities), the lesser of (a) the aggregate of
the Stated Amount and all
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accrued and unpaid distributions on the Preferred Securities to the date of
payment, to the extent of funds of the Trust available therefor and (b) the
amount of assets of the Trust remaining available for distribution to holders of
Preferred Securities. The Company's obligation to make a Guarantee Payment may
be satisfied by direct payment of the required amounts by the Company to the
holders of Preferred Securities or by causing the Trust to pay such amounts to
such holders.
The Guarantee will not apply to the payment of distributions and other
payments on the Preferred Securities when the Property Trustee does not have
sufficient funds in the Property Account to make such distributions or other
payments. If the Company does not make interest payments on the Subordinated
Debt Securities held by the Property Trustee, the Trust will not make
distributions on the Preferred Securities issued by the Trust and will not have
funds available therefor. See 'Description of the Subordinated Debt
Securities--Certain Covenants.' The Guarantee, when taken together with the
Company's obligations under the Subordinated Debt Securities, the Indenture and
the Declaration, including its obligations to pay costs, expenses, debts and
liabilities of the Trust (other than with respect to the Trust Securities), will
provide a full and unconditional guarantee on a subordinated basis by the
Company of amounts due on the Preferred Securities.
The Company has also agreed separately irrevocably and unconditionally to
guarantee the obligations of the Trust with respect to the Common Securities
(the 'Common Securities Guarantee') to the same extent as the Guarantee, except
that upon the occurrence and during the continuation of a Declaration Event of
Default, holders of Preferred Securities shall have priority over holders of
Common Securities with respect to distributions and payments on liquidation,
redemption or otherwise.
The procedures whereby Unitholders may exercise voting rights under the
Guarantee are described in 'Description of the Units--Voting Rights of
Unitholders with Respect to Preferred Securities.'
CERTAIN COVENANTS OF THE COMPANY
In the Guarantee, the Company has covenanted that, so long as any Preferred
Securities remain outstanding, if (i) the Company shall be in default with
respect to its payment or other obligations under the Guarantee or (ii) there
shall have occurred and be continuing any event that, with the giving of notice
or the lapse of time or both, would constitute an Event of Default under the
Indenture, then the Company will not (a) declare or pay dividends on, make
distributions with respect to, or redeem, purchase or acquire, or make a
liquidation payment with respect to, any of its capital stock, except for
dividends or distributions in shares of its capital stock of the same class on
which such dividend or distribution is being paid and conversions or exchanges
of common stock of one class into common stock of another class or (b) make any
payment of interest, principal or premium, if any, on or repay, repurchase or
redeem any debt securities of the Company that rank pari passu with or junior to
the Subordinated Debt Securities (except by conversion into or exchange for
shares of its capital stock and except for a redemption, purchase or other
acquisition of shares of its capital stock made for the purpose of an employee
incentive plan or benefit plan of the Company or any of its subsidiaries).
AMENDMENTS AND ASSIGNMENT
Except with respect to any changes that do not materially adversely affect
the rights of holders of Preferred Securities (in which case no vote will be
required), the Guarantee may be amended only with the prior approval of the
holders of not less than 66-2/3% in aggregate liquidation amount of the
outstanding Preferred Securities. The manner of obtaining any such approval of
holders of the Preferred Securities will be as set forth under 'Description of
the Preferred Securities--Voting Rights.' All guarantees and agreements
contained in the Guarantee shall bind the successors, assigns, receivers,
trustees and representatives of the Company and shall inure to the benefit of
the holders of the Preferred Securities then outstanding. Except in connection
with any permitted merger or consolidation of the Company with or into another
entity or any permitted sale, transfer or lease of the Company's assets to
another entity as described below under 'Description of the Subordinated Debt
Securities-- Merger, Consolidation or Sale of Assets,' the Company may not
assign its rights or delegate its obligations under the Guarantee without the
prior approval of the holders of at least 66-2/3% of the aggregate liquidation
amount of the Preferred Securities then outstanding.
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TERMINATION OF THE GUARANTEE
The Guarantee will terminate as to each holder of Preferred Securities and
be of no further force and effect upon (a) full payment of the amount payable
upon redemption or repayment of such holder's Preferred Securities or (b) the
distribution of Subordinated Debt Securities to the holders of all of the
Preferred Securities, and will terminate completely upon full payment of the
amounts payable upon liquidation of the Trust. The Guarantee will continue to be
effective or will be reinstated, as the case may be, if at any time any holder
of Preferred Securities must restore payment of any sums paid under such
Preferred Securities or the Guarantee.
EVENTS OF DEFAULT
An event of default under the Guarantee will occur upon the failure of the
Company to perform any of its obligations thereunder for more than 30 days.
The holders of a majority in aggregate liquidation amount of the Preferred
Securities have the right to direct the time, method and place of conducting any
proceeding for any remedy available to the Guarantee Trustee in respect of the
Guarantee or to direct the exercise of any trust or power conferred upon the
Guarantee Trustee under the Guarantee. If the Guarantee Trustee fails to enforce
the Guarantee, any holder of Preferred Securities may institute a legal
proceeding directly against the Company to enforce the Guarantee Trustee's
rights under the Guarantee, without first instituting a legal proceeding against
the Trust, the Guarantee Trustee or any other person or entity. Notwithstanding
the foregoing, if the Company has failed to make a guarantee payment, a holder
of Preferred Securities may directly institute a proceeding against the Company
for enforcement of the Guarantee for such payment. The Company waives any right
or remedy to require that any action be brought first against the Trust or any
other person or entity before proceeding directly against the Company.
STATUS OF THE GUARANTEE; SUBORDINATION
The Guarantee will constitute an unsecured obligation of the Company and
will rank (i) subordinate and junior in right of payment to all liabilities of
the Company except any liabilities that may be made pari passu expressly by
their terms, (ii) pari passu with the most senior preferred or preference stock
now or hereafter issued by the Company and with any guarantee now or hereafter
entered into by the Company in respect of any preferred or preference stock of
any affiliate of the Company and (iii) senior to the Company's common stock. The
Declaration provides that each holder of Preferred Securities by acceptance
thereof agrees to the subordination provisions and other terms of the Guarantee.
Upon the bankruptcy, liquidation or winding up of the Company, its obligations
under the Guarantee will rank junior to all its other liabilities (except as
aforesaid) and, therefore, funds may not be available for payment under the
Guarantee.
The Guarantee will constitute a guarantee of payment and not of collection
(that is, the guaranteed party may institute a legal proceeding directly against
the guarantor to enforce its rights under the Guarantee without instituting a
legal proceeding against any other person or entity).
INFORMATION CONCERNING THE GUARANTEE TRUSTEE
The Guarantee Trustee, prior to the occurrence of a default with respect to
the Guarantee, has undertaken to perform only such duties as are specifically
set forth in the Guarantee and, after default with respect to the Guarantee,
shall exercise the same degree of care as a prudent individual would exercise in
the conduct of his or her own affairs. Subject to such provision, the Guarantee
Trustee is under no obligation to exercise any of the powers vested in it by the
Guarantee at the request of any holder of Preferred Securities unless it is
offered reasonable indemnity against the costs, expenses and liabilities that
might be incurred thereby. The Guarantee Trustee also serves as the Property
Trustee and the Unit Agent.
GOVERNING LAW
The Guarantee will be governed by, and construed in accordance with, the
laws of the State of New York.
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DESCRIPTION OF THE SUBORDINATED DEBT SECURITIES
Set forth below is a description of the specific terms of the Subordinated
Debt Securities in which the Trust will invest the proceeds from the issuance
and sale of the Trust Securities. The Subordinated Debt Securities are a series
of debt securities to be issued under an Indenture dated as of December 1, 1988
(the 'Base Indenture') as supplemented from time to time and as supplemented by
the Third Supplemental Indenture dated as of , 1996 between the Company
and Bankers Trust Company, a New York banking corporation, as trustee (the
'Indenture Trustee') (the 'Indenture'). The Indenture is qualified under the
Trustee Indenture Act. The following description does not purport to be complete
and is subject to, and is qualified in its entirety by reference to, the
Indenture, a copy of which is filed with the Commission as an exhibit to the
Registration Statement of which this Prospectus is a part. The terms of the
Subordinated Debt Securities will include those stated in the Indenture and
those made a part of the Indenture by reference to the Trust Indenture Act.
GENERAL
The Subordinated Debt Securities will be issued as unsecured debt under the
Indenture. The Subordinated Debt Securities will be in an aggregate principal
amount equal to the sum of the aggregate Stated Amount of the Preferred
Securities and the capital contributed by the Company in exchange for the Common
Securities.
The Subordinated Debt Securities are not subject to a sinking fund
provision. The entire principal amount of the Subordinated Debt Securities will
mature and become due and payable, together with any accrued and unpaid interest
thereon including Additional Interest (as defined herein), if any, on
, 2026.
The Subordinated Debt Securities will initially be issued in certificated
form in denominations of $25 and integral multiples thereof and may be
transferred or exchanged at the offices described below. Principal and interest
will be payable, the transfer of the Subordinated Debt Securities will be
registrable and Subordinated Debt Securities will be exchangeable for
Subordinated Debt Securities of other denominations of a like aggregate
principal amount at the corporate trust office of the Indenture Trustee in the
City and State of New York; provided that payment of interest may be made at the
option of the Company by check mailed to the address of the persons entitled
thereto. If Subordinated Debt Securities are distributed to holders of Preferred
Securities in liquidation of such holders' interests in the Trust, such
Subordinated Debt Securities will be issued as a Global Security (as defined
herein). Payments on Subordinated Debt Securities issued as a Global Security
will be made to DTC, a successor depositary.
The covenants contained in the Indenture and the Subordinated Debt
Securities would not afford holders of Subordinated Debt Securities protection
in the event of a highly leveraged or other similar transaction that may
adversely affect such holders.
SUBORDINATION
The Indenture provides that the Subordinated Debt Securities are
subordinated and junior in right of payment to all Senior Indebtedness (as
defined herein) of the Company. Upon any distribution of assets of the Company
to creditors upon any dissolution, winding-up, liquidation or reorganization,
whether voluntary or involuntary, or in bankruptcy, insolvency, receivership or
other proceedings, all principal, premium, if any, and interest due or to become
due on all Senior Indebtedness of the Company must be paid in full before the
holders of Subordinated Debt Securities are entitled to receive or retain any
payment. Upon satisfaction of all claims of all Senior Indebtedness then
outstanding, the rights of the holders of the Subordinated Debt Securities will
be subrogated to the rights of the holders of Senior Indebtedness of the Company
to receive payments or distributions applicable to Senior Indebtedness until all
amounts owing on the Subordinated Debt Securities are paid in full.
In addition, no payment of principal, premium, if any, or interest on the
Subordinated Debt Securities may be made in the event and during the
continuation of any default in payment of any Senior Indebtedness or if any
event of default shall exist under any Senior Indebtedness, as 'event of
default' is defined therein or in the agreement under which the same is
outstanding.
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The term 'Senior Indebtedness' means, with respect to the Company, the
following indebtedness or obligations, whether outstanding at the date of the
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: (a) all indebtedness of the Company (including
indebtedness of others guaranteed by the Company), other than the subordinated
Debt Securities (as defined in the Indenture) and any appurtenant Coupons (as
defined in the Indenture) 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 theretofore 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.
The Indenture does not limit the aggregate amount of Senior Indebtedness
that may be issued by the Company. As of March 31, 1996, the aggregate principal
amount of Senior Indebtedness outstanding was $96.1 billion, consisting of the
following: $13.1 billion of term debt, $0.7 billion in commercial paper and
$82.3 billion in other short-term borrowings.
REPAYMENT AT THE OPTION OF THE HOLDER
The Property Trustee, as holder of the Subordinated Debt Securities, will
have the right to require the Company to repay all or a portion of the
Subordinated Debt Securities held by the Property Trustee (the 'Subordinated
Debt Put Option') on the Initial Put Option Exercise Date at a repayment price
of par plus any accrued and unpaid interest, including Additional Interest (as
defined herein), if any, to the date of repayment (the 'Subordinated Debt
Repayment Price') and will be paid by the Company in immediately available
funds, subject to certain conditions. In addition, after the settlement of the
Purchase Contracts on an Early Purchase Date (or a related Delayed Purchase
Date), the Property Trustee, as holder of any Subordinated Debt Securities that
remain outstanding after such date, will have a Subordinated Debt Put Option
with respect to Subordinated Debt Securities held by the Property Trustee on the
Fifth Anniversary Put Option Exercise Date at the Subordinated Debt Repayment
Price.
In order for the Subordinated Debt Securities to be repaid on the Put
Option Exercise Date, the Company must receive at the office or agency of the
Indenture Trustee maintained for that purpose in the Borough of Manhattan, the
City of New York, either (i) not less than 10 nor more than 30 days prior to the
Initial Put Option Exercise Date or (ii) not less than 25 nor more than 60 days
prior to the Fifth Anniversary Put Option Exercise Date, the Subordinated Debt
Securities to be repaid with the form entitled 'Option to Elect Repayment' on
the reverse thereof or otherwise accompanying such Subordinated Debt Securities
duly completed. Any such notice received by the Company will be irrevocable. All
questions as to the validity, eligibility (including time of receipt) and
acceptance of the Subordinated Debt Securities for repayment will be determined
by the Company, whose determination will be final and binding. Notwithstanding
the foregoing, so long as the holder of the Subordinated Debt Securities
presented for repayment is the Property Trustee or the Collateral Agent, and
assuming prior notice to the Indenture Trustee, such Subordinated Debt
Securities may be received at such office or agency of the Indenture Trustee at
any time prior to 11:00 a.m., New York City time, on the Put Option Exercise
Date in the form and manner as may be designated by the Property Trustee or the
Collateral Agent and acceptable to the Indenture Trustee.
The Company will comply with the provisions of Rule 13e-4, Rule 14e-1 and
any other tender offer rules under the Exchange Act if required and will file
Schedule 13E-4 or any other schedule if required thereunder.
Payment of the Subordinated Debt Repayment Price to holders of Subordinated
Debt Securities will be made through the Indenture Trustee, subject to the
Indenture Trustee's receipt of payment from the Company in accordance with the
terms of the Indenture. Notwithstanding the foregoing, so long as the holder of
any Subordinated Debt Securities presented for repayment is the Property Trustee
or the
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Collateral Agent, the payment of the Subordinated Debt Repayment Price in
respect of such Subordinated Debt Securities will be made no later than 12:00
noon, New York City time, on the Put Option Exercise Date by check or wire
transfer in immediately available funds at such place and to such account as may
be designated by the Property Trustee or the Collateral Agent, as the case may
be. If the Indenture Trustee holds immediately available funds sufficient to pay
the Subordinated Debt Repayment Price of the Subordinated Debt Securities
presented for repayment, then immediately prior to the close of business on the
Put Option Exercise Date, such Subordinated Debt Securities will cease to be
outstanding and interest thereon will cease to accrue, whether or not such
Subordinated Debt Securities have been received by the Company, and all other
rights of the Holder in respect of the Subordinated Debt Securities will
terminate and lapse (other than the right to receive the Subordinated Debt
Repayment Price, but without interest on such Subordinated Debt Repayment
Price). Neither the Indenture Trustee nor the Company will be required to
register or cause to be registered the transfer of any Subordinated Debt
Securities for which repayment has been elected. Except as described in the
immediately following paragraph, if payment of the Subordinated Debt Repayment
Price in respect of Subordinated Debt Securities is improperly withheld or
refused and not paid by the Company, interest on such Subordinated Debt
Securities will continue to accrue, from the original Put Option Exercise Date
to the actual date of payment, in which case the actual payment date will be
considered the Put Option Exercise Date for purposes of calculating the
Subordinated Debt Repayment Price.
If a Put Default, including a default in the payment of the Subordinated
Debt Repayment Price, shall occur and continue for more than two Business Days
following an Initial Put Option Exercise Date, and the Purchase Date is an Early
Purchase Date, then (i) any exercise of the optional right to elect repayment of
the Subordinated Debt Securities will be deemed rescinded and annulled
automatically and (ii) any Subordinated Debt Securities delivered to the Company
pursuant to such election will be returned to the holders who effected such
delivery.
The rescission or annulment of any exercise of the optional right to elect
repayment of the Subordinated Debt Securities will not prevent holders of the
Subordinated Debt Securities from exercising such right at a later date.
OPTIONAL REDEMPTION BY THE COMPANY
The Company shall have the right to redeem the Subordinated Debt
Securities, in whole (but not in part), at any time on or after ,
2001 upon not less than 30 nor more than 60 days' notice on any Payment Date, at
a redemption price of par plus any accrued and unpaid interest, including
Additional Interest, if any, to the date of redemption (the 'Subordinated Debt
Redemption Price'). Notwithstanding the foregoing, after the settlement of the
Purchase Contracts on the Purchase Date (or a related Delayed Purchase Date),
the right of the Company to redeem any Subordinated Debt Securities that remain
outstanding after such date will be postponed or suspended until the fifth
anniversary of such date. See 'Description of the Units--Description of the
Purchase Contracts-- Acceleration of Purchase.'
The Company may also redeem the Subordinated Debt Securities, at any time
in certain circumstances upon the occurrence of a Tax Event as described under
'Description of the Preferred Securities--Tax Event or Investment Company Event
Redemption or Distribution; Optional Distribution,' upon not less than 30 nor
more than 60 days' notice, at the Subordinated Debt Redemption Price.
MATURITY DATE
The maturity date of the Subordinated Debt Securities is ,
2026.
INTEREST
Each Subordinated Debt Security shall bear interest at the rate of %
per annum from the original date of issuance, payable quarterly in arrears on
each Payment Date, commencing 1996, to the person in whose name such
Subordinated Debt Security is registered, at the close of business on the
fifteenth day immediately preceding such Payment Date.
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The amount of interest payable for any period will be computed on the basis
of a 360-day year of twelve 30-day months. The amount of interest payable for
any period shorter than a full quarterly period for which interest is computed,
will be computed on the basis of the actual number of days elapsed per 30-day
month. In the event that any Payment Date falls on a day that is not a Business
Day, then payment of the interest payable on such date will be made on the next
succeeding day that is a Business Day (and without any interest or other payment
in respect of any such delay), except that, if such Business Day is in the next
succeeding calendar year, then such payment shall be made on the immediately
preceding Business Day, with the same force and effect as if made on such
Payment Date.
ADDITIONAL INTEREST
If at any time the Trust shall be required to pay any taxes, duties,
assessments or governmental charges of whatever nature (other than withholding
taxes) imposed by the United States, or any other taxing authority, then, in any
such case, the Company will pay as additional interest ('Additional Interest')
such additional amounts as shall be required so that the net amounts received
and retained by the Trust after paying any such taxes, duties, assessments or
other governmental charges will be not less than the amounts the Trust would
have received had no such taxes, duties, assessments or other governmental
charges been imposed.
EFFECT OF PROPOSED CHANGES IN TAX LAWS
The Clinton Administration has proposed a number of statutory changes in
the Federal income tax rules concerning debt and equity. Under one such
proposal, debt with a maximum maturity of more than 20 years that is not shown
as debt on the applicable balance sheet of the issuer would be recharacterized
as equity of the issuer, with the result that interest would be non-deductible
to the issuer. Under another proposal, no interest deduction would be allowed to
the issuer on debt that is payable in equity of the issuer. These proposals
would generally apply to all debt issued on or after December 7, 1995. The first
proposal would, and the second proposal might, apply to the Subordinated Debt
Securities. If either proposal did apply, a Tax Event would occur.
However, the Chairman of the House Ways and Means Committee and the Senate
Finance Committee, as well as the Ranking Minority Member of the House Ways and
Means Committee, have publicly indicated their intent that the proposals, if
enacted, would not apply to debt issued prior to the date of 'appropriate
Congressional action'. No such Congressional action has yet occurred or is
expected to occur prior to the issuance of the Units. Nevertheless, no assurance
can be given that a tax event will not occur.
CERTAIN COVENANTS
In the Indenture, the Company has covenanted that, so long as any
Subordinated Debt Securities are outstanding, if (i) there shall have occurred
and be continuing an event that, with the giving of notice or the lapse of time
or both, would constitute an Event of Default or (ii) the Company shall be in
default with respect to its payment of any obligations under the Guarantee, then
the Company will not (a) declare or pay dividends on, make distributions with
respect to, or redeem, purchase or acquire, or make a liquidation payment with
respect to, any of its capital stock, except for dividends or distributions in
shares of its capital stock of the same class on which such dividend or
distribution is being paid and conversions or exchanges of common stock of one
class into common stock of another class or (b) make any payment of interest,
principal or premium, if any, on or repay, repurchase or redeem any debt
securities issued by the Company that rank pari passu with or junior to the
Subordinated Debt Securities (except by conversion into or exchange for shares
of its capital stock and except for a redemption, purchase or other acquisition
of shares of its capital stock made for the purpose of an employee incentive
plan or benefit plan of the Company or any of its subsidiaries).
For so long as the Trust Securities remain outstanding, the Company has
agreed to (i) directly or indirectly maintain 100% ownership of the Common
Securities of the Trust; provided, however, that any permitted successor of the
Company under the Indenture may succeed to the Company's ownership of such
Common Securities and (ii) use its reasonable efforts to cause the Trust to (x)
remain a statutory
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business trust, except in connection with the distribution of Subordinated Debt
Securities to the holders of Trust Securities in liquidation of the Trust, the
redemption of all of the Trust Securities of the Trust or certain mergers,
consolidations or amalgamations, each as permitted by the Declaration and (y)
otherwise continue to be classified as a grantor trust for United States Federal
income tax purposes.
MERGER, CONSOLIDATION OR SALE OF ASSETS
The Indenture provides that the Company shall not consolidate with or merge
into any other corporation or person, or, directly or indirectly, convey,
transfer or lease all or substantially all of the properties and assets of the
Company on a consolidated basis to any person, unless either the Company is the
continuing corporation or such corporation or person expressly assumes by
supplemental indenture all the obligations of the Company under the Indenture
and the Subordinated Debt Securities, no default or Event of Default under the
Indenture shall exist immediately after the transaction, the Trust shall not
fail to be classified as a grantor trust for United States Federal income tax
purposes as a result of the transaction and the surviving corporation or such
person is a corporation, partnership or trust organized and validly existing
under the laws of the United States of America, any state thereof or the
District of Columbia.
EVENTS OF DEFAULT
The Indenture provides that any one or more of the following described
events which has occurred and is continuing constitutes an 'Event of Default'
with respect to the Subordinated Debt Securities: (i) failure for 30 days to pay
interest on the Subordinated Debt Securities, including any Additional Interest
in respect thereof, when due; or (ii) failure to pay principal of or premium, if
any, on the Subordinated Debt Securities when due whether at maturity, upon
redemption, upon repayment, or otherwise; provided, however, that a default in
the payment of the Subordinated Debt Repayment Price on the Initial Put Option
Exercise Date, unless such default continues for more than two Business Days
following the Stated Purchase Date, will not constitute a default for this
purpose; or (iii) failure by the Company to observe or perform any other
covenant contained in the Indenture for 60 days after notice to the Company by
the Trustee or by the holders of not less than 25% in aggregate outstanding
principal amount of the Subordinated Debt Securities; or (iv) the dissolution,
winding up or termination of the Trust, except in connection with (x) the
distribution of Subordinated Debt Securities to the holders of Preferred
Securities upon the occurrence of a Tax Event, Investment Company Event,
Optional Distribution or liquidation of the Trust, (y) the redemption or
repayment of all the Trust Securities at the Redemption Price or Repayment
Price, as applicable or (z) in connection with certain mergers, consolidations
or amalgamations permitted by the Declaration; or (v) certain events of
bankruptcy, insolvency or reorganization of the Company.
The Indenture Trustee or the holders of not less than 25% in aggregate
principal amount of the outstanding Subordinated Debt Securities may declare the
principal of and interest (including any Additional Interest) on the
Subordinated Debt Securities due and payable immediately on the occurrence of an
Event of Default; provided, however, that, after such acceleration, but before a
judgment or decree based on acceleration, the holders of a majority in aggregate
principal amount of outstanding Subordinated Debt Securities may, under certain
circumstances, rescind and annul such acceleration if all Events of Default,
other than the nonpayment of accelerated principal, have been cured or waived as
provided in the Indenture. For information as to waiver of defaults, see
'Modification of the Indenture.'
A default under any other indebtedness of the Company or the Trust would
not constitute an Event of Default under the Subordinated Debt Securities.
Subject to the provisions of the Indenture relating to the duties of the
Indenture Trustee in case an Event of Default occurs and is continuing, the
Indenture Trustee will be under no obligation to exercise any of its rights or
powers under the Indenture at the request or direction of any holders of
Subordinated Debt Securities, unless such holders shall have offered to the
Indenture Trustee reasonable indemnity. Subject to such provisions for the
indemnification of the Indenture Trustee, the holders of a majority in
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aggregate principal amount of the outstanding Subordinated Debt Securities will
have the right to direct the time, method and place of conducting any proceeding
for any remedy available to the Indenture Trustee, or exercising any trust or
power conferred on the Indenture Trustee.
No holder of any Subordinated Debt Security will have any right to
institute any proceeding with respect to the Indenture or for any remedy
thereunder, unless such holder shall have previously given to the Indenture
Trustee written notice of a continuing Event of Default and unless the holders
of at least 25% in aggregate principal amount of the outstanding Subordinated
Debt Securities shall also have made written request, and offered reasonable
indemnity, to the Indenture Trustee to institute such proceeding as Indenture
Trustee, and the Indenture Trustee shall not have received from the holders of a
majority in aggregate principal amount of the outstanding Subordinated Debt
Securities a direction inconsistent with such request and the Indenture Trustee
shall have failed to act under the Indenture for 60 days after it receives such
notice, request and offer of indemnity. However, such limitations do not apply
to a suit instituted by a holder of Subordinated Debt Securities for enforcement
of payment of the principal of or interest (including any Additional Interest),
on such Subordinated Debt Security on or after the respective due dates
expressed in such Subordinated Debt Security.
The holders of a majority in aggregate principal amount of the outstanding
Subordinated Debt Securities may, on behalf of the holders of all the
Subordinated Debt Securities, waive any past default, except a default in the
payment of principal, premium, if any, or interest (including any Additional
Interest) on the Subordinated Debt Securities.
The Property Trustee is the initial holder of the Subordinated Debt
Securities. An Event of Default also constitutes a Declaration Event of Default.
The holders of Preferred Securities in certain circumstances have the right to
direct the Property Trustee to exercise its rights as the holder of the
Subordinated Debt Securities. See 'Description of the Preferred
Securities--Declaration Events of Default' and '--Voting Rights.'
Notwithstanding the foregoing, if an Event of Default has occurred and is
continuing and such event is attributable to the failure of the Company to pay
interest or principal on the Subordinated Debt Securities on the date such
interest or principal is otherwise payable (or in the case of redemption or
repayment, the redemption date or repayment date, respectively), the Company
acknowledges that a holder of Preferred Securities may institute a Direct Action
for payment on or after the respective due date specified in the Subordinated
Debt Securities. Notwithstanding any payments made to such holder of Preferred
Securities by the Company in connection with a Direct Action, the Company shall
remain obligated to pay the principal of or interest on the Subordinated Debt
Securities held by the Trust or the Property Trustee of the Trust, and the
Company shall be subrogated to the rights of the holder of such Preferred
Securities with respect to payments on the Preferred Securities to the extent of
any payments made by the Company to such holder in any Direct Action. The
holders of Preferred Securities will not be able to exercise directly any other
remedy available to the holders of the Subordinated Debt Securities.
The Indenture provides that the Indenture Trustee will, within 90 days
after the occurrence of a default known to it with respect to the Subordinated
Debt Securities, give to the holders of Subordinated Debt Securities 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 or any interest
(including Special Interest) on any Subordinated Debt Security, 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
Subordinated Debt Securities.
The Company is required to file annually with the Indenture Trustee and the
Property Trustee a certificate as to whether or not the Company is in compliance
with all the conditions and covenants under the Indenture.
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MODIFICATION OF THE INDENTURE
The Indenture contains provisions permitting the Company and the Indenture
Trustee, with the consent of the holders of not less than a majority in
aggregate principal amount of the outstanding Subordinated Debt Securities, to
modify the Indenture or the rights of the holders of Subordinated Debt
Securities; provided, however, that no such modification may, without the
consent of the holder of each outstanding Subordinated Debt Security affected
thereby, (i) extend the stated maturity of the Subordinated Debt Securities or
reduce the principal amount thereof, or reduce the rate or extend the time of
payment of interest thereon, or reduce any premium payable upon the redemption
thereof, (ii) change the currency in which the principal of (and premium, if
any) or interest on any Subordinated Debt Security is denominated or payable,
(iii) impair the right to institute suit for the enforcement of any payment on
or with respect to any Subordinated Debt Security or (iv) reduce the percentage
in aggregate principal amount of outstanding Subordinated Debt Securities, the
holders of which are required to consent to any such supplemental indenture.
In addition, the Company and the Indenture Trustee may execute, without the
consent of any holder of Subordinated Debt Securities, any supplemental
indenture to cure any ambiguities, comply with the Trust Indenture Act and for
certain other customary purposes.
The Indenture may not be amended to alter or impair the subordination of
the Subordinated Debt Securities without the consent of each holder of Senior
Indebtedness then outstanding.
GOVERNING LAW
The Indenture and the Subordinated Debt Securities will be governed by, and
construed in accordance with, the laws of the State of New York.
INFORMATION CONCERNING THE INDENTURE TRUSTEE
The Indenture Trustee, prior to default, undertakes to perform only such
duties as are specifically set forth in the Indenture and, after default, shall
exercise the same degree of care as a prudent individual would exercise in the
conduct of his or her own affairs. Subject to such provision, the Indenture
Trustee is under no obligation to exercise any of the powers vested in it by the
Indenture at the request of any holder of Subordinated Debt Securities, unless
offered reasonable indemnity by such holder against the costs, expenses and
liabilities which might be incurred thereby. The Indenture Trustee is not
required to expend or risk its own funds or otherwise incur personal financial
liability in the performance of its duties if the Indenture Trustee reasonably
believes that repayment or adequate indemnity is not reasonably assured to it.
The Company and certain of its subsidiaries maintain lines of credit and
have other customary banking relationships with the Indenture Trustee and
certain of its affiliates. The borrowings of the Company under the lines of
credit constitute Senior Indebtedness.
BOOK-ENTRY AND SETTLEMENT
If distributed to holders of Preferred Securities in connection with a
liquidation of the Trust, the Subordinated Debt Securities will be issued in the
form of one or more global certificates (each a 'Global Security') registered in
the name of a depositary or its nominee. Except under the limited circumstances
described below, Subordinated Debt Securities represented by the Global Security
will not be exchangeable for, and will not otherwise be issuable as,
Subordinated Debt Securities in definitive form. The Global Securities described
above may not be transferred except by the depositary to a nominee of the
depositary or by a nominee of the depositary to the depositary or another
nominee of the depositary or to a successor depositary or its nominee.
The laws of some jurisdictions require that certain purchasers of
securities take physical delivery of such securities in definitive form. Such
laws may impair the ability to transfer beneficial interests in a Global
Security.
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Except as provided below, owners of beneficial interests in a Global
Security will not be entitled to receive physical delivery of Subordinated Debt
Securities in definitive form and will not be considered the holders (as defined
in the Indenture) thereof for any purpose under the Indenture, and no Global
Security representing Subordinated Debt Securities shall be exchangeable, except
for another Global Security of like denomination and tenor to be registered in
the name of the depositary or its nominee, or to a successor depositary or its
nominee. Accordingly, each Beneficial Owner must rely on the procedures of the
depositary or if such person is not a Participant, on the procedures of the
Participant through which such person owns its interest, to exercise any rights
of a holder under the Indenture.
THE DEPOSITARY
If Subordinated Debt Securities are distributed to holders of Preferred
Securities in liquidation of such holders' interests in the Trust, DTC will act
as securities depositary for the Subordinated Debt Securities. For a description
of DTC and the specific terms of the depositary arrangements, see 'Description
of the Units--Book-Entry System.' As of the date of this Prospectus, the
descriptions herein of DTC's book-entry system and DTC's practices as they
relate to purchases, transfers, notices and payments with respect to the Units
apply in all material respects to any debt obligations represented by one or
more Global Securities held by DTC. The Company may appoint a successor to DTC
or any successor depositary in the event DTC or such successor depositary is
unable or unwilling to continue as a depository for the Global Securities.
None of the Company, the Trust, the Indenture Trustee, any paying agent and
any other agent of the Company or the Indenture Trustee will have any
responsibility or liability for any aspect of the records relating to or
payments made on account of beneficial ownership interests in a Global Security
representing such Subordinated Debt Securities or for maintaining, supervising
or reviewing any records relating to such beneficial ownership interests.
DISCONTINUANCE OF THE DEPOSITARY'S SERVICES
A Global Security shall be exchangeable for Subordinated Debt Securities
registered in the names of persons other than the depositary or its nominee only
if (i) the depositary notifies the Company that it is unwilling or unable to
continue as a depositary for such Global Security and no successor depositary
shall have been appointed, (ii) the depositary, at any time, ceases to be a
clearing agency registered under the Exchange Act at which time the depositary
is required to be so registered to act as such depositary and no successor
depositary shall have been appointed, (iii) the Company, in its sole discretion,
determines that such Global Security shall be so exchangeable or (iv) there
shall have occurred an Event of Default with respect to such Subordinated Debt
Securities. Any Global Security that is exchangeable pursuant to the preceding
sentence shall be exchangeable for Subordinated Debt Securities registered in
such names as the depositary shall direct. It is expected that such instructions
will be based upon directions received by the depositary from its Participants
with respect to ownership of beneficial interests in such Global Security.
MISCELLANEOUS
In the Indenture, the Company has agreed to pay for all debts and
obligations (other than with respect to the obligation to pay the stated
liquidation amount of and any distributions on the Trust Securities) and all
costs and expenses of the Trust, including the fees and expenses of the Company
Trustees and any taxes and all costs and expenses with respect thereto, to which
the Trust may become subject, except for United States withholding taxes.
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EFFECT OF OBLIGATIONS UNDER THE SUBORDINATED
DEBT SECURITIES AND THE GUARANTEE
As set forth in the Declaration, the sole purpose of the Trust is to issue
the Trust Securities evidencing undivided beneficial interests in the assets of
the Trust, and to invest the proceeds from such issuance and sale in the
Subordinated Debt Securities.
As long as payments of interest and other payments are made when due on the
Subordinated Debt Securities, such payments will be sufficient to cover
distributions and payments due on the Trust Securities because of the following
factors: (i) the aggregate principal amount of Subordinated Debt Securities will
be equal to the sum of the aggregate stated liquidation amount of the Trust
Securities; (ii) the interest rate and the interest and other payment dates on
the Subordinated Debt Securities will match the distribution rate and
distribution and other payment dates for the Preferred Securities; (iii) the
Company shall pay all, and the Trust shall not be obligated to pay, directly or
indirectly, any, costs, expenses, debt and obligations of the Trust (other than
with respect to the Trust Securities); and (iv) the Declaration further provides
that the Regular Trustees shall not take or cause or permit the Trust to, among
other things, engage in any activity that is not consistent with the purposes of
the Trust.
Payments of distributions (to the extent funds therefor are available) and
other payments due on the Preferred Securities (to the extent funds therefor are
available) are guaranteed by the Company as and to the extent set forth under
'Description of the Guarantee.' If the Company does not make interest payments
on the Subordinated Debt Securities purchased by the Trust, it is expected that
the Trust will not have sufficient funds to pay distributions on the Preferred
Securities. The Guarantee does not apply to any payment of distributions unless
and until the Trust has sufficient funds for the payment of such distributions.
The Guarantee covers the payment of distributions and other payments on the
Preferred Securities only if and to the extent that the Company has made a
payment of interest or principal on the Subordinated Debt Securities held by the
Trust as its sole asset.
If the Company fails to make interest or other payments on the Subordinated
Debt Securities when due, the Declaration provides a mechanism whereby the
holders of the Preferred Securities, using the procedures described in
'Description of the Preferred Securities--Book-Entry Only Issuance' and
'--Voting Rights,' may direct the Property Trustee to enforce its rights under
the Subordinated Debt Securities. If the Property Trustee fails to enforce its
rights under the Subordinated Debt Securities, a holder of Preferred Securities
may institute a legal proceeding against the Company to enforce the Property
Trustee's rights under the Subordinated Debt Securities without first
instituting any legal proceeding against the Property Trustee or any other
person or entity. Notwithstanding the foregoing, if a Declaration Event of
Default has occurred and is continuing and such event is attributable to the
failure of the Company to pay interest or principal on the Subordinated Debt
Securities on the date such interest or principal is otherwise payable (or in
the case of redemption or repayment, the redemption date or repayment date,
respectively), then a holder of Preferred Securities may directly institute a
proceeding for enforcement of payment to such holder of the principal of or
interest on the Subordinated Debt Securities having a principal amount equal to
the aggregate Stated Amount of the Preferred Securities of such holder on or
after the respective due date specified in the Subordinated Debt Securities. In
connection with such Direct Action, the Company will be subrogated to the rights
of such holder of Preferred Securities under the Declaration to the extent of
any payment made by the Company to such holder of Preferred Securities in such
Direct Action. The Company, under the Guarantee, acknowledges that the Guarantee
Trustee shall enforce the Guarantee on behalf of the holders of the Preferred
Securities. If the Company fails to make payments under the Guarantee, the
Guarantee provides a mechanism whereby the holders of the Preferred Securities
may direct the Guarantee Trustee to enforce its rights thereunder. Any holder of
Preferred Securities may institute a legal proceeding directly against the
Company to enforce the Guarantee Trustee's rights under the Guarantee without
first instituting a legal proceeding against the Trust, the Guarantee Trustee or
any other person or entity.
The Guarantee, when taken together with the Company's obligations under the
Subordinated Debt Securities and the Indenture and its obligations under the
Declaration, including its obligations to pay costs, expenses, debts and
liabilities of the Trust (other than with respect to the Trust Securities),
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provides a full and unconditional guarantee of amounts due on the Preferred
Securities. See 'Description of the Guarantee--General.'
DESCRIPTION OF THE SERIES F PREFERRED STOCK
The description of certain provisions of the Series F Preferred Stock set
forth below 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) and the Certificate of Designations relating to the Series F Preferred
Stock, both of which are filed as an exhibit to or 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 (as amended) to issue 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 the Company's Series A Cumulative Convertible Preferred Stock,
225,000 shares of the Company's 9.50% Cumulative Preferred Stock, Series C,
400,000 shares of the Company's 8.08% Cumulative Preferred Stock, Series D and
500,000 shares of the Company's 8.40% Cumulative Preferred Stock, Series E
outstanding. The Series A Cumulative Convertible Preferred Stock, the 9.50%
Cumulative Preferred Stock, Series C, the 8.08% Cumulative Preferred Stock,
Series D, and the 8.40% Cumulative Preferred Stock, Series E, rank on a 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 (as
defined herein) 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 Series
F Preferred Stock, with respect to the payment of dividends and the distribution
of assets upon liquidation, dissolution or winding up.
Pursuant to action of the Board of Directors or a duly authorized committee
thereof, the shares of Series F Preferred Stock represented by the Depositary
Shares constitute a single series of preferred stock. The Series F Preferred
Stock will not be convertible into Common Stock or shares of any other class or
series of stock of the Company. The Series F Preferred Stock will, when issued
in accordance with the terms of the Purchase Contracts, be fully paid and
nonassessable. The Series F Preferred Stock will have no preemptive rights to
subscribe for any additional securities which may be issued by the Company.
First Chicago Trust Company of New York is the registrar, transfer agent
and dividend disbursing agent for the shares of Series F Preferred Stock.
RANK
As of the date of this Prospectus, the Series F Preferred Stock would rank
as to payment of dividends and distribution of assets upon dissolution,
liquidation or winding up of the Company on a parity with each other outstanding
series of preferred stock of the Company and prior to the Common Stock, $1.00
par value, of the Company (the 'Common Stock') and, when and if issued, to
shares of Series B Junior Participating Preferred Stock.
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DIVIDENDS AND DISTRIBUTIONS
The holders of shares of Series F 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 Series F Preferred Stock as
to the payment of dividends, will be entitled to receive, when and as declared
by the Board of Directors out of net profits or net assets of the Company
legally available for the payment of dividends, cumulative cash dividends at the
annual rate of % of the liquidation preference per share of Series F
Preferred Stock (equivalent to $ per annum per share of Series F
Preferred Stock), and no more, in equal quarterly payments (rounded down to the
nearest cent) on each Payment Date, commencing on the first Payment Date
following the date of issuance of the Series F Preferred Stock. Dividends will
be payable to the holders of record at the close of business on the fifteenth
day (whether or not a business day) immediately preceding a Payment Date or such
other date, no more than 60 days prior to a Payment Date, as may be determined
by the Board of Directors or a duly authorized committee thereof.
Dividends payable on the Series F Preferred Stock will begin to accrue and
be cumulative from the date of original issue. The amount of dividends payable
for any period shorter than a full quarterly dividend period will be determined
on the basis of twelve 30-day months and a 360-day year. Accrued but unpaid
dividends will not bear interest. Dividends paid on the shares of Series F
Preferred Stock in an amount less than the total amount of such dividends at the
time accrued and payable will be allocated pro rata on a share-by-share basis
among all such shares at the time outstanding.
Whenever quarterly dividends payable on shares of Series F Preferred Stock
are in arrears, thereafter and until all accrued and unpaid dividends, whether
or not declared, on the outstanding shares of Series F Preferred Stock have been
paid in full or declared and set apart for payment, the Company will not: (i)
declare or pay dividends, or make any other distributions, on any shares of
Common Stock or other capital stock ranking junior (either as to payment of
dividends or distribution of assets upon liquidation, dissolution or winding up)
to the Series F Preferred Stock ('Junior Stock'), other than dividends or
distributions payable in Junior Stock; (ii) declare or pay dividends, or make
any other distributions, on any shares of capital stock ranking on a parity
(either as to payment of dividends or distribution of assets upon liquidation,
dissolution or winding up) with the Series F Preferred Stock ('Parity Stock'),
other than dividends or distributions payable in Junior Stock, and other than
dividends paid ratably on the Series F Preferred Stock and all Parity Stock on
which dividends are payable or in arrears, in proportion to the total amounts to
which the holders of all such shares are then entitled; (iii) redeem or purchase
or otherwise acquire for consideration any shares of Junior Stock, provided that
the Company may at any time redeem, purchase or otherwise acquire any shares of
Junior Stock in exchange for shares of Junior Stock; or (iv) redeem or purchase
or otherwise acquire for consideration any shares of Series F Preferred Stock or
Parity Stock, except in accordance with a purchase offer made in writing or by
publication (as determined by the Board of Directors) to all holders of such
shares upon such terms as the Board of Directors, after consideration of the
respective annual dividend rates and other relative rights and preferences of
the respective series or classes, shall determine in good faith will result in
fair and equitable treatment among the respective series or classes.
LIQUIDATION RIGHTS
Upon any liquidation, dissolution or winding up of the Company, no
distribution will be made (i) to the holders of shares of Junior Stock, unless,
prior thereto, the holders of shares of Series F Preferred Stock shall have
received $500 per share, plus an amount per share equal to all accrued but
unpaid dividends thereon, whether or not declared, to the date of such payment
or (ii) to the holders of shares of Parity Stock, except distributions made
ratably on the Series F Preferred Stock and all such Parity Stock, in proportion
to the total amounts to which the holders of all such shares are entitled upon
such liquidation, dissolution or winding up. After payment of the full amount of
the liquidating distribution to which holders of the Series F Preferred Stock
are entitled, such holders will have no right or claim to any of the remaining
assets of the Company.
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
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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
The shares of the Series F Preferred Stock will not be redeemable by the
Company prior to the later of , 2001, and the date of issue of
the Series F Preferred Stock. The Company, at its option, may redeem its shares
of Series F Preferred Stock, as a whole or in part, at any time or from time to
time on or after the later of , 2001, and the date of issue of
the Series F Preferred Stock at a price of $500 per share, plus an amount per
share equal to all accrued but unpaid dividends thereon, whether or not
declared, to the date fixed for redemption.
Notice of any redemption of Series F 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 or its agent, 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 Series F Preferred Stock at the
addresses shown on the stock transfer records of the Company's transfer agent,
but the mailing of such notice will not be a condition of such redemption. In
order to facilitate the redemption of shares of Series F Preferred Stock, the
Board of Directors may fix a record date for the determination of shares of
Series F 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 or on the redemption date, the Company will deposit money for the
payment of the redemption price with First Chicago Trust Company of New York or
another 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 Series F Preferred Stock will cease to accrue and all rights of
the holders of Series F Preferred Stock as stockholders of the Company shall
cease, except the right to receive the redemption price (but without interest).
Any monies so deposited which remain unclaimed by the holders of such Series F
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.
VOTING RIGHTS
Holders of the Series F Preferred Stock will have no voting rights except
as set forth below or as otherwise from time to time required by law.
If on any date a total of six quarterly dividends on the Series F Preferred
Stock have fully accrued but have not been paid in full, the holders of shares
of Series F Preferred Stock, together with the holders of all other then
outstanding shares of any series or class of preferred stock of the Company as
to which series or class a total of six quarterly dividends have fully accrued
but have not been paid in full and which series or class is entitled to the
rights described in this paragraph (collectively, 'Defaulted Preferred Stock'),
will have the right, voting together as a class, to elect two directors to the
Board of Directors. Such right of the holders of Defaulted Preferred Stock to
vote for the election of such two directors may be exercised at any annual
meeting or at any special meeting called for such purpose as hereinafter
provided or at any adjournment thereof, or by the written consent, delivered to
the Secretary of the Company, of the holders of a majority of all outstanding
shares of Defaulted Preferred Stock, until dividends in default on the
outstanding shares of Defaulted Preferred Stock have been paid in full (or such
dividends have been declared and funds sufficient therefor set apart for
payment), at which time the term of office of the two directors so elected will
terminate automatically. So long as such right to elect two directors continues
(and unless such right has been exercised by written consent of the holders of a
majority of the outstanding shares of Defaulted Preferred Stock), the Secretary
of the Company may call, and upon the written request of the holders of record
of a majority of the outstanding shares of Defaulted Preferred Stock addressed
to him at the principal office of the Company will be required to call, a
special meeting of the holders of such shares for election of such two
directors. Such meeting will be held within 30 days after delivery of such
request to the Secretary, at the place and upon
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the notice provided by law and in the Company's By-laws for the holding of
meetings of stockholders. No such special meeting or adjournment thereof shall
be held on a date less than 30 days before an annual meeting of stockholders or
any special meeting in lieu thereof. If at any such annual or special meeting or
any adjournment thereof the holders of a majority of the then outstanding shares
of Defaulted Preferred Stock entitled to vote in such election are present or
represented by proxy, or if the holders of a majority of the outstanding shares
of Defaulted Preferred Stock have acted by written consent in lieu of a meeting,
then the authorized number of directors will be increased by two, and the
holders of the Defaulted Preferred Stock will be entitled to elect the two
additional directors. Directors so elected will serve until the next annual
meeting or until their successors are elected and qualify, unless the term of
office of the persons so elected as directors has terminated under the
circumstances described in the second sentence of this paragraph. In case of any
vacancy occurring among the directors elected by the holders of the Defaulted
Preferred Stock as a class, the remaining director who has been so elected may
appoint a successor to hold office for the unexpired term of the director whose
place is vacant. If both directors so elected by the holders of Defaulted
Preferred Stock as a class cease to serve as directors before their terms
expire, the holders of the Defaulted Preferred Stock then outstanding and
entitled to vote for such directors may, by written consent as described above,
or at a special meeting of such holders called as described above, elect
successors to hold office for the unexpired terms of the directors whose places
are vacant.
So long as any shares of Series F Preferred Stock are outstanding, without
first obtaining the consent or approval of the holders of at least two-thirds of
the number of the then outstanding shares of Series F Preferred Stock and all
other series of the Company's preferred stock (the Series F 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 outstanding 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 shares are entitled to vote
separately as a class, the Company may not amend the provisions of the
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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 Series F Preferred Stock will be entitled to one vote on
matters on which holders of the Series F Preferred Stock are entitled to vote.
Since each share of Outstanding Preferred Stock will be entitled to one vote,
the voting power of Series F 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 outstanding shares of
Outstanding Preferred Stock, not the aggregate liquidation preference or initial
offering price of the shares of such series.
DESCRIPTION OF THE DEPOSITARY SHARES
The description of certain provisions of the Depositary Shares set forth
below does not purport to be complete and is subject to and qualified in its
entirety by reference to the Deposit Agreement referred to below, the form of
which (including the form of Depositary Receipt (as defined herein)) is filed as
an exhibit or incorporated by reference in the Registration Statement of which
this Prospectus forms a part.
Each Depositary Share represents a one-twentieth interest in a share of
Series F Preferred Stock. The shares of Series F Preferred Stock underlying the
Depositary Shares will be deposited with First Chicago Trust Company of New
York, as Depositary (the 'Depositary') under a Deposit Agreement (the 'Deposit
Agreement') among the Company, the Depositary and the holders from time to time
of the depositary receipts issued by the Depositary thereunder (the 'Depositary
Receipts'). The Depositary Receipts so issued will evidence the Depositary
Shares. Subject to the terms of the Deposit Agreement, each owner of a
Depositary Share will be entitled through the Depositary, in proportion to the
one-twentieth interest in a share of Series F Preferred Stock underlying such
Depositary Share, to all rights and preferences of a share of Series F Preferred
Stock (including dividend, voting, redemption and liquidation rights). Since
each share of Series F Preferred Stock entitles the holder thereof to one vote
on matters on which the Series F Preferred Stock is entitled to vote, each
Depositary Share will, in effect, entitle the holder thereof to one-twentieth of
a vote thereon, rather than one full vote. The principal office of the
Depositary is currently located at 14 Wall Street, New York, New York.
First Chicago Trust Company of New York will be the transfer agent and
registrar for the Depositary Shares.
DIVIDENDS AND OTHER DISTRIBUTIONS
The Depositary will distribute all cash dividends or other cash
distributions received in respect of the Series F Preferred Stock to the record
holders of Depositary Shares 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 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 the Series
F Preferred Stock deposited under the 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.
If, however, the Depositary determines that it is not feasible to make such
distribution, 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.
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REDEMPTION OF DEPOSITARY SHARES
The Depositary Shares will be redeemed from the proceeds received by the
Depositary as a result of any redemption of the Series F Preferred Stock held by
the Depositary. Whenever the Company redeems shares of Series F 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 Series F
Preferred Stock so redeemed. The Depositary will mail the notice of redemption
not less than 20 and not more than 50 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 $25.00 per Depositary
Share plus accrued but unpaid dividends on the Series F 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 Series F 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.
VOTING RIGHTS
As soon as practicable after receipt of notice of any meeting at which the
holders of the Series F Preferred Stock are entitled to vote, the Depositary
will mail the information contained in such notice of meeting to the holders of
the Depositary Shares as of the record date for such meeting. Each such record
holder of Depositary Shares will be entitled, subject to any applicable
restrictions, to instruct the Depositary as to the exercise of the voting rights
pertaining to the amount of the Series F Preferred Stock represented by such
record holder's Depositary Shares. The Depositary will endeavor, insofar as
practicable, to vote the amount of the Series F 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 Series F 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
Depositary (unless the related Depositary Shares have previously been called for
redemption), and subject to the terms of the Deposit Agreement, the owner of the
Depositary Shares evidenced thereby is entitled to delivery of whole shares of
Series F Preferred Stock and all money and other property, if any, represented
by such Depositary Shares. Partial shares of Series F 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 Series F 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 Series F Preferred Stock thus withdrawn will not thereafter be
entitled to deposit such shares under the Deposit Agreement or to receive
Depositary Shares therefor. The Company does not expect that there will be any
public trading market for the Series F Preferred Stock, except as represented by
the Depositary Shares.
AMENDMENT AND TERMINATION OF THE DEPOSIT AGREEMENT
The form of Depositary Receipt evidencing the Depositary Shares and any
provision of the 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
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by the holders of at least a majority of the Depositary Shares then outstanding
under the Deposit Agreement. The Deposit Agreement provides 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
rights, subject to the terms of the Deposit Agreement, of any owner of any
Depositary Shares issued under the 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 Series F 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.
The 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 Series F Preferred
Stock in connection with any liquidation, dissolution or winding up of the
Company and such distribution has been distributed to the holders of the
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 the Depositary in connection with the initial deposit of the
Series F Preferred Stock and the initial issuance of the Depositary Shares and
any redemption of the Series F 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 Deposit Agreement to be for their accounts.
MISCELLANEOUS
The Depositary will forward to the holders of the Depositary Shares all
reports and communications from the Company which are delivered to the
Depositary and which the Company is required to furnish to the holders of the
Series F Preferred Stock. In addition, the Depositary will make available for
inspection by holders of the Depositary Shares at the principal office of the
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
the Depositary as the holder of the Series F Preferred Stock.
Neither the Depositary nor the Company will assume any obligation or will
be subject to any liability under the Deposit Agreement to holders of the
Depositary Shares other than for its negligence or willful misconduct. Neither
the 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
the Deposit Agreement. The obligations of the Company and any Depositary under
the Deposit Agreement are 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 Series F Preferred Stock
unless satisfactory indemnity is furnished. The Company and the Depositary may
rely on written advice of counsel or accountants, on information provided by
persons presenting Series F 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
The 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 the 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.
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BOOK-ENTRY PROCEDURES AND SETTLEMENT WITH RESPECT TO SERIES F PREFERRED STOCK
AND DEPOSITARY SHARES
The Series F Preferred Stock or Depositary Shares will initially be issued
in book-entry form in the form of one or more global stock certificates or
Depositary Receipts registered in the name of the nominee of the depository, DTC
(which term, as used herein, includes any successor or alternate depository
selected by the Company).
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 certificates or Depositary Receipts
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 the
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 certificates or Depositary
Receipts, or for maintaining, supervising or reviewing any records relating to
such beneficial ownership interests.
The recording of beneficial ownership of, and the payment of dividends or
other distributions on, Series F Preferred Stock or Depositary Shares held in
global form, and the circumstances under which the Company will issue Series F
Preferred Stock or Depositary Shares in definitive form in exchange for the
global stock certificates or Depositary Receipts will be as described above with
regard to the Global Units under 'Description of the Units--Book-Entry System.'
UNITED STATES FEDERAL INCOME TAXATION
GENERAL
The following is a summary of the material United States Federal income tax
consequences of the purchase, ownership and disposition of Units, Subordinated
Debt Securities, Preferred Securities, Purchase Contracts, Series F Preferred
Stock and Depositary Shares (collectively, 'Covered Securities'). It represents
the views of Cravath, Swaine & Moore, tax counsel to the Trust ('Tax Counsel').
Unless otherwise stated, it deals only with holders who purchase Units upon
their original issuance ('Initial Holders') for an amount equal to the Stated
Amount of the Preferred Securities, and who hold the Covered Securities as
capital assets.
This summary does not address tax considerations applicable to investors
that (i) are subject to special U.S. Federal income tax treatment, such as
dealers in securities, (ii) hold any of the Covered Securities as part of a
'straddle,' 'conversion transaction,' or other integrated investment comprised
of any of the Covered Securities and one or more other investments or (iii) have
a functional currency other than the U.S. Dollar. It does not address (i) the
tax consequences to shareholders, partners or beneficiaries of a holder of
Covered Securities or (ii) alternative minimum taxes or state, local or foreign
taxes.
This summary is based on the Internal Revenue Code, Treasury regulations
thereunder and administrative and judicial interpretations thereof, as of the
date hereof, all of which are subject to change, possibly on a retroactive
basis. This discussion is not binding on the Internal Revenue Service (the
'Service'). There is no authority on securities similar to the Units, and there
can be no assurance that the Service will take a similar view with respect to
the tax consequences described below.
For purposes of this summary, a 'U.S. Holder' is a holder who is (i) a
citizen or a resident of the United States (or any state thereof), (ii) a
corporation organized in or under the laws of the United States or any political
subdivision thereof, (iii) an estate or trust, the income of which is subject to
United States Federal income tax regardless of its source and (iv) a partnership
to the extent any of its partners are otherwise U.S. Holders. A 'Non-U.S.
Holder' is any holder who is not a U.S. Holder.
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CLASSIFICATION OF THE TRUST
In the opinion of Tax Counsel, under current law, and based on certain
assumptions concerning the underlying documents for the transaction, described
in the opinion of Tax Counsel filed as an exhibit to the Registration Statement
of which this Prospectus is a part, the Trust will be classified for Federal
income tax purposes as a grantor trust and not as a partnership or an
association taxable as a corporation. Moreover, according to such opinion, each
holder of a Preferred Security will be considered the owner of an undivided
interest in the Subordinated Debt Securities and will take into account a pro
rata share of all items of income, expense or deduction of the Trust.
CLASSIFICATION OF THE SUBORDINATED DEBT SECURITIES
The question of whether a security is debt or equity for Federal income tax
purposes is inherently factual, and there is no authority concerning the tax
characterization of securities having terms similar to the Subordinated Debt
Securities. Nevertheless, in the opinion of Tax Counsel, under current law, the
Subordinated Debt Securities will be classified as indebtedness of the Company.
The opinion of Tax Counsel is based on certain facts and assumptions,
including assumptions concerning the underlying documents for the transaction,
described in the opinion of Tax Counsel filed as an exhibit to the Registration
Statement of which this Prospectus is a part. The assumed facts include (i) the
Preferred Securities would (if rated) be treated by one or more major rating
agencies as subordinated debt for ratings purposes upon issuance of the Units
and carry at least an investment grade rating, (ii) the rates paid on the
Subordinated Debt Securities, the Depositary Shares and the Purchase Contracts
are market rates, (iii) the expectation that Subordinated Debt Securities would,
if traded, trade at a significant premium if the Company were to accelerate the
Purchase Contracts immediately after issuance of the Units, and (iv) there is a
significant possibility (taking into account interest rate levels and the credit
quality of the Company) that, upon the Company's acceleration of the Purchase
Contracts, it would be in the interest of holders of Units to pay cash for the
Depositary Shares and retain the Preferred Securities, and that in such case a
market would develop for the Preferred Securities so that a significant number
of holders of Units would do so.
EFFECT OF PROPOSED CHANGES IN TAX LAWS
The Clinton Administration has proposed a number of statutory changes in
the Federal income tax rules concerning debt and equity. Under one such
proposal, debt with a maximum maturity of more than 20 years that is not shown
as debt on the applicable balance sheet of the issuer would be recharacterized
as equity of the issuer, with the result that interest would be non-deductible
to the issuer. Under another proposal, no interest deduction would be allowed to
the issuer on debt that is payable in equity of the issuer. These proposals
would generally apply to all debt issued on or after December 7, 1995. The first
proposal would, and the second proposal might, apply to the Subordinated Debt
Securities. If either proposal did apply, a Tax Event would occur.
However, the Chairmen of the House Ways and Means Committee and the Senate
Finance Committee, as well as the Ranking Minority Member of the House Ways and
Means Committee, have publicly indicated their intent that the proposals, if
enacted, would not apply to debt issued prior to the date of 'appropriate
Congressional action.' No such Congressional action has yet occurred or is
expected to occur prior to the issuance of the Units. Nevertheless, no assurance
can be given that a Tax Event will not occur.
U.S. HOLDERS
Acquisition of the Units
The purchase price of each Unit must be allocated between the Preferred
Security and the Purchase Contract included in a Unit in proportion to their
respective fair market values at the time of purchase. Such allocation will
establish the holder's initial tax basis in the Preferred Security or Purchase
Contract.
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The Company will take the position that, at the time of issuance of the
Units, the fair market value of the Preferred Security is equal to its Stated
Amount, and the fair market value of the Purchase Contract is zero. As a result,
an Initial Holder should allocate the entire purchase price for a Unit (i.e.,
the Stated Amount of the Preferred Security) to the Preferred Security, and
should not allocate any portion of the purchase price to the Purchase Contract.
The Company's position will be binding on each Initial Holder, unless the holder
explicitly discloses (on a statement attached to the holder's timely filed
Federal income tax return for the year in which the Unit is acquired) that the
holder's position is different than the Company's.
Current Distributions
Interest income on the Subordinated Debt Securities will be taxable to
holders of Preferred Securities when received by the Trust or accrued by the
holder, in accordance with the holder's method of accounting. Payments by the
Company under the Guarantee will be treated as if made on the Subordinated Debt
Securities. Distributions by the Trust on the Preferred Securities representing
interest received by the Trust on the Subordinated Debt Securities will not
otherwise be taxable to holders, and will not be eligible for the corporate
dividends received deduction.
The Company believes, and intends to file information returns on the basis
that, the Contract Fee constitutes ordinary income to holders. Holders should
consult their own tax advisors concerning the proper characterization of the
Contract Fee, including the possibility that the Contract Fee should not be
included in income upon receipt by analogy to the treatment of option premium.
Sale or Disposition of Units
A U.S. Holder will generally recognize gain or loss on the sale or other
disposition of a Covered Security. Such gain or loss will be separately
calculated with respect to the Preferred Security and the Purchase Contract, by
allocating the sale proceeds between those items in proportion to their fair
market values. The aggregate amount of gain or loss should generally equal the
difference between the sum of any cash and the fair market value of the property
received in the sale or other disposition (reduced by any amount attributable to
accrued interest, which will be taxable as such) and the holder's tax basis in
the Unit. Any gain or loss will generally be capital gain or loss and will be
long-term capital gain or loss if the Unit was held for more than one year.
If the sale or disposition of the Units occurs when the Purchase Contract
has a negative value, the holder might be considered to have received additional
consideration for the Preferred Security in an amount equal to such negative
value, and to have paid such amount to be released from the holder's obligation
under the Purchase Contract. Such a characterization should not have an adverse
effect on holders. Holders should consult their tax advisors regarding a sale or
disposition of Units at a time when the Purchase Contract has a negative value.
Redemption of Preferred Securities and Cancellation of Purchase Contract
Upon a redemption or repayment by the Trust of Preferred Securities, an
Initial Holder should not recognize gain or loss because the holder's tax basis
in the Preferred Security will equal the amount received on the redemption or
repayment. If the Purchase Contract is canceled at the same time, the Initial
Holder will have no gain or loss because the tax basis of the Purchase Contract
is zero.
Purchase of Depositary Shares
An Initial Holder who exercises the Put Option should not recognize any
taxable gain or loss. A U.S. Holder who retains the Preferred Security and
tenders cash under the Purchase Contract will have no taxable gain or loss.
A U. S. Holder's tax basis in the Depositary Share will equal the purchase
price for such Depositary Share plus the holder's tax basis in the Purchase
Contract (zero in the case of an Initial Holder). The holding period for the
Depositary Shares will begin on the day after the purchase date.
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Termination of Purchase Contract
An Initial Holder would not recognize gain or loss upon termination of a
Purchase Contract upon the bankruptcy of the Company, following a Put Default,
or otherwise, since such holder's tax basis in the Purchase Contract is zero.
Separation of a Unit
A U.S. Holder that elects to post Eligible Collateral and separate the
Preferred Security from the related Purchase Contract would not recognize
taxable gain or loss, and the holder's tax basis in the Preferred Security and
Purchase Contract will remain unchanged. The U.S. Holder will recognize ordinary
income with respect to interest earned on the Eligible Collateral. If the holder
pays cash to acquire a Depositary Share under the Purchase Contract, the
holder's tax basis in the Depositary Share will be the purchase price paid for
such Depositary Share plus the tax basis in the Purchase Contract (which would
be zero in the case of an Initial Holder).
If the U.S. Holder delivers a Preferred Security to the Collateral Agent in
exchange for release of the Eligible Collateral and issuance of a Unit to the
holder, the holder should not have taxable gain or loss.
Secondary Holders of Units
The purchase price paid for a Unit by a holder that is not an Initial
Holder (a 'Secondary Holder') must be allocated between the Preferred Security
and the Purchase Contact in accordance with their respective fair market values
at the time of purchase. This allocation will establish the holder's tax basis
in each such security. Subject to the market discount and premium rules
discussed below, a Secondary Holder will be taxable on current income from a
Unit as discussed under 'Current Distributions.'
If a Secondary Holder purchases a Unit when the Purchase Contract has a
negative value, the holder generally should have an aggregate tax basis in a
Unit equal to the price paid for the Unit. However, Secondary Holders should
consult their tax advisors regarding the consequences of such a purchase.
If the tax basis of a Preferred Security at the time of purchase is less
than the Stated Amount, the difference generally will be considered 'market
discount' with respect to the underlying Subordinated Debt Security, which could
result in a portion of any gain realized on the sale or disposition of the
Preferred Security being recharacterized as ordinary income. If the tax basis of
a Preferred Security at the time of purchase exceeds the Stated Amount, the
excess will be 'bond premium' with respect to the underlying Subordinated Debt
Security, which the holder may elect to amortize as an offset to interest income
on the Subordinated Debt Security. Secondary Holders should consult their tax
advisors regarding the application of the market discount and bond premium rules
to the Preferred Securities.
A Secondary Holder may recognize taxable gain or loss upon a sale or other
disposition of Units. See 'Sale or Disposition of Units.' Upon the redemption or
repayment of Preferred Securities by the Trust and cancellation of the Purchase
Contract, the holder may have taxable gain or loss on the Preferred Securities
and may have a taxable loss equal to the holder's basis in the Purchase
Contract. Any loss on the sale or cancellation of the Purchase Contract will be
a capital loss.
A Secondary Holder that acquires Depositary Shares will generally be
subject to the rules under 'Purchase of Depositary Shares.' However, certain
consequences will differ. For example, a Secondary Holder that exercises the Put
Option may recognize a taxable gain upon the redemption or repayment of the
Preferred Security, although any loss on the redemption or repayment may not be
recognized. Moreover, a Secondary Holder's tax basis in the Depositary Shares
will include any tax basis of the holder in the Purchase Contract.
Distribution of Subordinated Debt Securities by the Trust
If Subordinated Debt Securities are distributed to holders in exchange for
the Preferred Securities in liquidation of the Trust, the distribution would not
be taxable to holders. A holder's tax basis and holding period in the Preferred
Securities would carry over to the Subordinated Debt Securities.
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Depositary Shares
A holder of Depositary Shares will be treated as the owner of the Series F
Preferred Stock represented by such Depositary Shares. Distributions made with
respect to the Depositary Shares will constitute dividends to the extent paid
out of current or accumulated earnings and profits of the Company, as determined
for U.S. Federal income tax purposes. Dividends will be eligible for the
corporate dividends received deduction, subject to applicable limitations.
A U.S. holder who sells or otherwise disposes of a Depositary Share
generally will recognize capital gain or loss for U.S. Federal income tax
purposes in an amount equal to the difference between the amount realized and
the holder's tax basis (assuming, in the case of a redemption of the stock, that
the holder does not own, and is not deemed to own, any common stock of the
Company). Such capital gain or loss will be long-term capital gain or loss if
the holder has held the stock for more than one year.
NON-U.S. HOLDERS
The discussion below applies to Non-U.S. Holders and assumes that (i) an
individual Non-U.S. Holder is not present in the United States for 183 days or
more in the taxable year and (ii) the Non-U.S. Holder's ownership of a Covered
Security is not effectively connected with the conduct of a trade or business in
the United States.
Current Payments
A Non-U.S. Holder of a Preferred Security would not be subject to U.S.
Federal income or withholding tax with respect to the holder's pro rata share of
interest paid on the Subordinated Debt Securities, provided that the Non-U.S.
Holder (i) 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) 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) satisfies certain applicable certification requirements regarding the
holder's identity and residence. However, U.S. withholding tax would apply to
interest paid on the Subordinated Debt Securities if, contrary to the opinion of
Tax Counsel, the Service successfully contended that the Subordinated Debt
Securities were equity rather than debt for Federal income tax purposes.
Non-U.S. Holders of Purchase Contracts will be subject to U.S. withholding
tax with respect to any Contract Fee payments at a 30% rate or such lower rate
as may be specified by an applicable income tax treaty.
Dividends on Depositary Shares
A Non-U.S. Holder of a Depositary Share will be subject to withholding tax
with respect to dividend distributions on such stock at a 30% rate or such lower
rate as may be specified by an applicable income tax treaty.
Sale or Disposition
A Non-U.S. Holder will not be subject to U.S. Federal income or withholding
tax with respect to a sale, redemption or other disposition of a Covered
Security (assuming, in the case of a redemption of a Depositary Share, that the
holder does not own and is not deemed to own any Common Stock of the Company).
Estate Tax Consequences
In the case of a Non-U.S. Holder that is an individual, Purchase Contracts
and Depositary Shares would be deemed to be situated in the United States for
United States estate tax purposes. As a result, the estate of an individual
Non-U.S. Holder would be required to file United States estate tax returns, and
might be liable for United States estate tax, if the value of the Purchase
Contracts and the Depositary Shares (together with other United States assets)
owned by the Non-U.S. Holder exceeded $60,000 (reduced by the amount of certain
gifts and other adjustments).
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ERISA CONSIDERATIONS
Generally, employee benefit plans that are subject to the Employee
Retirement Income Security Act of 1974, as amended ('ERISA'), or Section 4975 of
the Code or entities whose assets are considered assets of such plans ('Plans'),
may purchase Units, Preferred Securities and Depositary Shares subject to the
investing fiduciary's determination that the investment in Units, Preferred
Securities and Depositary Shares satisfied ERISA's fiduciary standards and other
requirements applicable to investments by the Plan.
In any case, Salomon Inc and/or any of its affiliates may be considered a
'party in interest' (within the meaning of ERISA) or a 'disqualified person'
(within the meaning of Section 4975 of the Code) with respect to certain plans
(generally, Plans maintained or sponsored by, or contributed to by, any such
persons or Plans with respect to which any such person is a fiduciary or service
provider). The acquisition and ownership of Units, Preferred Securities and
Depositary Shares by a Plan with respect to which Salomon Inc or any of its
affiliates is considered a party in interest or a disqualified person, may
constitute or result in a prohibited transaction under ERISA or Section 4975 of
the Code, unless such securities are acquired pursuant to and in accordance with
an applicable exemption.
Any Plans proposing to acquire the Units, Preferred Securities or
Depositary Shares should consult with their own ERISA counsel and should not
acquire the Units, Preferred Securities or Depositary Shares unless it is
determined that such acquisition does not constitute a prohibited transaction.
Any such acquisition by a Plan shall be deemed a representation by the Plan and
the fiduciary effecting the investment on behalf of the Plan that such
acquisition does not and will not constitute a prohibited transaction for which
an exemption is not available.
UNDERWRITING
Subject to the terms and conditions set forth in an underwriting agreement
(the 'Underwriting Agreement') among the Company, the Trust and the Underwriters
named below (the 'Underwriters'), the Company and the Trust have agreed to sell
to each of the Underwriters named below, and each of such Underwriters, for whom
Salomon Brothers Inc is acting as representative, has severally agreed to
purchase from the Company and the Trust, the number of Units set forth below
opposite such Underwriter's name.
<TABLE>
<CAPTION>
UNDERWRITER NUMBER OF UNITS
- ---------------------------------------------------------------------------------------------- ----------------
<S> <C>
Salomon Brothers Inc..........................................................................
......................................................................
......................................................................
----------------
Total......................................................................................... 10,000,000
----------------
----------------
</TABLE>
In the Underwriting Agreement, the several Underwriters have agreed,
subject to the terms and conditions set forth therein, that the obligations of
the Underwriters are subject to certain conditions precedent and that the
Underwriters will purchase all of the Units offered hereby if any of the Units
are purchased.
The Company and the Trust have been advised by the Underwriters that the
Underwriters propose to offer the Units directly to the public initially at the
public offering price set forth on the cover of this Prospectus and to certain
dealers at such price less a concession not in excess of $ per Unit.
The Underwriters may allow, and such dealers may reallow, a concession not in
excess of $ per Unit to other dealers. After the initial public
offering, such public offering price and such concession and reallowance may be
changed.
The Underwriting Agreement provides that the Company and the Trust will
indemnify the Underwriters against certain liabilities, including liabilities
under the Securities Act of 1933, as amended, or contribute to payments the
Underwriters may be required to make in respect thereof.
64
<PAGE>
The Company and the Trust have granted to the Underwriters an option,
exercisable for the 30-day period after the date of this Prospectus, to purchase
up to an additional Units from the Company and the Trust, at the same
price per Unit as the initial Units to be purchased by the Underwriters. The
Underwriters may exercise such option only for the purpose of covering over-
allotments, if any, incurred in connection with the sale of Units offered
hereby. To the extent that the Underwriters exercise such option, each
Underwriter will have a firm commitment, subject to certain conditions, to
purchase the same proportion of the Units as the number of Units to be purchased
and offered by such Underwriter in the above table bears to the total number of
initial Units to be purchased by the Underwriters.
Salomon Brothers Inc is an indirect wholly owned subsidiary of the Company.
The participation of Salomon Brothers Inc in the offer and sale of the Units in
respect of which this Prospectus is delivered complies with the requirements of
Schedule E of the By-laws of the NASD regarding underwriting securities of an
affiliate of an NASD member. Salomon Brothers Inc may act as underwriter in an
'at the market' equity offering pursuant to Rule 415(a)(4) under the Securities
Act.
The Units are a new issue of securities with no established trading market.
Application will be made to list the Units on the NYSE. The Underwriters may
make a market in the Units, but the Underwriters are not obligated to do so and
may discontinue market-making at any time without notice. No assurance can be
given as to the liquidity of the trading market of the Units. See 'Risk
Factors--Absence of Trading Market; Separation of the Units.'
In the ordinary course of their respective businesses, certain of the
Underwriters and their respective affiliates have engaged in and may in the
future engage in commercial and investment banking transactions with the Company
and its affiliates.
EXPERTS
The financial statements and related schedules included in the Company's
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 Trust and the Company by Cravath, Swaine & Moore, New York, New York, and
for the Underwriters by Cleary, Gottlieb, Steen & Hamilton, New York, New York.
65
<PAGE>
GLOSSARY OF DEFINED TERMS
'1940 Act' means the Investment Company Act of 1940, as amended.
'Additional Interest' has the meaning set forth under 'Description of the
Subordinated Debt Securities--Additional Interest.'
'Base Indenture' means the indenture dated as of December 1, 1988 between the
Company and Bankers Trust Company, as indenture trustee.
'Beneficial Owner' has the meaning set forth under 'Description of the
Units--Book-Entry System.'
'Board of Directors' means the Board of Directors of the Company or a duly
authorized committee thereof.
'Business Day' means any day that is not a Saturday, Sunday or a day on which
the NYSE or banking institutions or trust companies in The City of New York are
authorized or obligated by law or executive order to be closed.
'Cash Settlement' has the meaning set forth under 'Description of the
Units--Description of the Purchase Contracts--Payment of Purchase Price;
Delivery of Depositary Shares.'
'Change in 1940 Act Law' has the meaning set forth under 'Tax Event or
Investment Company Event Redemption or Distribution; Optional Distribution.'
'Collateral' means, collectively, pledged Preferred Securities and Eligible
Collateral.
'Collateral Agent' means The Bank of New York, as Collateral Agent under the
Pledge Agreement, or any successor thereto.
'Collateral Settlement' has the meaning set forth under 'Description of the
Units--Description of the Purchase Contracts--Payment of Purchase Price;
Delivery of Depositary Shares.'
'Commission' means the Securities and Exchange Commission.
'Common Securities Guarantee' means the guarantee by the Company of the
obligations of the Trust with respect to the Common Securities.
'Common Security' means an undivided beneficial interest in the assets of the
Trust.
'Common Stock' means the Common Stock, $1.00 par value, of the Company.
'Company' means Salomon Inc until a successor organization or company shall have
become such, and thereafter Company shall mean such successor organization or
company.
'Company Trustees' means the trustees of the Trust.
'Contract Fee' means the fee payable by the Company in respect of each Purchase
Contract, equal to % per annum of the Stated Amount, computed on the basis
of a 360-day year consisting of 12 months of 30 days.
'Covered Securities' has the meaning set forth under 'United States Income
Taxation--General.'
'Declaration' means the Amended and Restated Declaration of Trust of the Trust
dated as of , 1996 among the Company, as sponsor, the trustees
named therein and the holders from time to time of individual beneficial
interests in the assets of the Trust.
'Declaration Event of Default' means, in respect of the Trust Securities, an
Event of Default has occurred and is continuing in respect of the Subordinated
Debt Securities.
'Defaulted Preferred Stock' has the meaning set forth under 'Description of the
Series F Preferred Stock--Voting Rights.'
'Delaware Trustee' means Chemical Bank Delaware, as trustee under the
Declaration, or any successor thereto that maintains its principal place of
business in the State of Delaware.
G-1
<PAGE>
'Delayed Purchase Date' has the meaning set forth under 'Description of the
Units--Description of the Purchase Contracts--Payment of Purchase Price;
Delivery of Depositary Shares.'
'Deposit Agreement' means the Depositary Agreement dated as of
, 1996 among the Company, the Depositary and the holders from
time to time of the Depositary Receipts.
'Depositary' means First Chicago Trust Company of New York, as Depositary under
the Deposit Agreement, or any successor thereto.
'Depositary Receipt' means any one of the receipts evidencing an interest in the
Depositary Shares issued under the Deposit Agreement.
'Depositary Share' means any one of the Depositary Shares, each evidencing a
one-twentieth interest in a share of Series F Preferred Stock, held by the
Depositary under the Deposit Agreement.
'Direct Action' has the meaning set forth under 'Description of the Preferred
Securities--Declaration Events of Default.'
'Dissolution Tax Opinion' has the meaning set forth under 'Description of the
Preferred Securities-- Tax Event or Investment Company Event Redemption or
Distribution; Optional Distribution.'
'DTC' means The Depository Trust Company.
'Early Purchase Date' has the meaning set forth under 'Description of the
Units--Description of the Purchase Contracts--Acceleration of Purchase.'
'Eligible Collateral' means (i) cash and/or (ii) U.S. Treasury Securities with a
maturity at the time of determination of 30 days or less.
'ERISA' means the Employee Retirement Income Security Act of 1974, as amended.
'Event of Default' means an event of default under the Indenture.
'Exchange Act' means the Securities Exchange Act of 1934, as amended.
'Extension Period' has the meaning set forth under 'Description of the
Units--Description of the Purchase Contracts--Payment of Purchase Price;
Delivery of Depositary Shares.'
'Fifth Anniversary Put Option Exercise Date' means the fifth anniversary of an
Early Purchase Date.
'Global Security' means a global certificate representing the Subordinated Debt
Securities registered in the name of a depositary or its nominee.
'Global Unit' means a Unit deposited with DTC.
'Guarantee' means the guarantee by the Company of the obligations of the Trust
with respect to the Preferred Securities.
'Guarantee Payments' means the following payments or distributions, without
duplication, with respect to the Preferred Securities, to the extent not paid or
made by the Trust: (i) any accrued and unpaid distributions that are required to
be paid on the Preferred Securities to the extent of funds of the Trust
available therefor; (ii) the amount payable upon redemption of the Preferred
Securities, payable out of funds of the Trust available therefor with respect to
any Preferred Securities called for redemption by the Trust; (iii) the amount
payable with respect to any Preferred Securities presented for repayment by the
holders thereof to the extent the Trust has funds available therefor; and (iv)
upon a liquidation of the Trust (other than in connection with the distribution
of Subordinated Debt Securities to the holders of the Preferred Securities or
the redemption or repayment of all Preferred Securities), the lesser of (a) the
aggregate of the Stated Amount and all accrued and unpaid distributions on the
Preferred Securities to the date of payment, to the extent of funds of the Trust
available therefor and (b) the amount of assets of the Trust remaining available
for distribution to holders.
'Guarantee Trustee' means Chemical Bank, as guarantee trustee under the
Guarantee, or any successor thereto.
G-2
<PAGE>
'Holder' means a Unitholder or holder of a separated Purchase Contract.
'Indirect Participants' has the meaning set forth under 'Description of the
Units--Book-Entry System.'
'Indenture' means the Base Indenture as supplemented from time to time and as
supplemented by the Third Supplemental Indenture dated as of ,
1996 between the Company and the Indenture Trustee.
'Indenture Trustee' means Bankers Trust Company, as trustee under the Indenture,
or any successor thereto.
'Initial Holders' has the meaning set forth under 'United States Income
Taxation--General.'
'Initial Put Option Exercise Date' means the Business Day immediately preceding
the Purchase Date (or the related Delayed Purchase Date).
'Investment Company Event' has the meaning set forth under 'Description of the
Preferred Securities--Tax Event or Investment Company Event Redemption or
Distribution; Optional Distribution.'
'Junior Stock' has the meaning set forth under 'Description of the Series F
Preferred Stock--Dividends and Distributions.'
'Liquidation Distribution' has the meaning set forth under 'Description of the
Preferred Securities-- Liquidation Distribution Upon Dissolution.'
'NASD' means the National Association of Securities Dealers, Inc.
'No Recognition Opinion' has the meaning set forth under 'Description of the
Preferred Securities-- Tax Event or Investment Company Event Redemption or
Distribution; Optional Redemption.'
'Non-U.S. Holder' has the meaning set forth under 'United States Federal Income
Taxation-- General.'
'NYSE' means the New York Stock Exchange, Inc.
'Optional Distribution' has the meaning set forth under 'Description of the
Preferred Securities--Tax Event or Investment Company Event Redemption or
Distribution; Optional Redemption.'
'Outstanding Preferred Stock' has the meaning set forth under 'Description of
the Series F Preferred Stock--Voting Rights.'
'Participants' has the meaning set forth under 'Description of the
Units--Book-Entry System.'
'Parity Stock' has the meaning set forth under 'Description of the Series F
Preferred Stock--Dividends and Distributions.'
'Payment Date' means each , , and
, commencing , 1996.
'Plans' has the meaning set forth under 'ERISA Considerations.'
'Pledge Agreement' means the Pledge Agreement dated as , 1996
among the Company, the Collateral Agent and the Unit Agent, as unit agent and as
attorney-in-fact for the Holders from time to time.
'Preferred Securities' means the % Preferred Securities of the Trust, each
having a Stated Amount, representing preferred undivided beneficial interests in
the assets of the Trust.
'Property Account' has the meaning set forth under 'SI Financing Trust I.'
'Property Trustee' means Chemical Bank, as property trustee under the
Declaration, or any successor thereto that is a financial institution
unaffiliated with the Company.
G-3
<PAGE>
'Purchase Contract' means, with respect to any Unit or separated Purchase
Contract, the contract obligating the Company to sell, and the Holder of such
Unit or separated Purchase Contract to purchase, a Depositary Share at a
purchase price of $25.
'Purchase Date' means the Stated Purchase Date or an Early Purchase Date.
'Purchase Price' means the price of one Depositary Share under a Purchase
Contract and is equal to $25.
'Put Default' has the meaning set forth under 'Description of the
Units--Description of the Purchase Contracts--Payment of Purchase Price;
Delivery of Depositary Shares.'
'Put Option' has the meaning set forth under 'Description of the Preferred
Securities--Repayment at the Option of the Holder.'
'Put Option Exercise Date' means the Initial Put Option Exercise Date or the
Fifth Anniversary Put Option Exercise Date.
'Redemption Price' means, with respect to a Preferred Security, the Stated
Amount plus any accrued and unpaid distributions thereon to the date of
redemption (subject to the rights of holders of record on the relevant record
date to receive distributions due on a Payment Date).
'Redemption Tax Opinion' has the meaning set forth under 'Description of the
Preferred Securities-- Tax Event or Investment Company Event Redemption or
Distribution; Optional Distribution.'
'Registration Statement' means the registration statement on Form S-3 of the
Company and the Trust relating to the Securities, with all amendments and
exhibits thereto.
'Regular Trustee' means any trustee under the Declaration that is an employee or
officer of the Company or an affiliate of the Company.
'Repayment Price' means, with respect to a Preferred Security, the Stated Amount
plus any accrued and unpaid distributions thereon to the date of repayment
(subject to the rights of holders of record on the relevant record date to
receive distributions due on a Payment Date).
'Rights' has the meaning specified under 'Description of the Series F Preferred
Stock--General.'
'Salomon Brothers' means Salomon Brothers Holding Company Inc and its
subsidiaries, including Salomon Brothers Inc.
'Secondary Holder' has the meaning set forth under 'United States Income
Taxation--U.S. Holders-- Secondary Holders of Units.'
'Securities Act' means the Securities Act of 1933, as amended.
'Senior Indebtedness' has the meaning set forth under 'Description of the
Subordinated Debt Securities--Subordination.'
'Senior Stock' has the meaning set forth under 'Description of the Series F
Preferred Stock--Voting Rights.'
'Series F Preferred Stock' means the % Cumulative Preferred Stock, Series F,
liquidation preference $500 per share, of the Company.
'Service' means the Internal Revenue Service.
'Sponsor' means Salomon Inc, or any successor entity in a merger, in its
capacity as sponsor of the Trust.
'Stated Amount' means the stated liquidation amount of the Preferred Securities
and is equal to $25.
'Stated Purchase Date' means , 2021.
'Subordinated Debt Put Option' has the meaning set forth under 'Description of
the Subordinated Debt Securities--Repayment at the Option of the Holder.'
G-4
<PAGE>
'Subordinated Debt Redemption Price' means, with respect to a Subordinated Debt
Security, par plus any accrued and unpaid interest, including Additional
Interest, if any, to the date of redemption.
'Subordinated Debt Repayment Price' means, with respect to a Subordinated Debt
Security, par plus any accrued and unpaid interest, including Additional
Interest, if any, to the date of repayment.
'Subordinated Debt Securities' means the % Subordinated Debt Securities due
, 2026 of the Company.
'Successor Corporation' has the meaning set forth under 'Description of the
Units--Certain Provisions of the Unit Agreement and the Pledge
Agreement--Merger, Consolidation and Sales of Assets.'
'Successor Securities' has the meaning set forth under 'Description of the
Preferred Securities-- Mergers, Consolidations or Amalgamations.'
'Super-Majority' means where consent or action under the Indenture would require
the consent or act of more than a majority of the holders affected thereby.
'Tax Counsel' means Cravath, Swaine & Moore, tax counsel to the Trust.
'Tax Event' has the meaning set forth under 'Description of the Preferred
Securities--Tax Event or Investment Company Event Redemption or Distribution;
Optional Distribution.'
'Tax Event Redemption' has the meaning set forth under 'Description of the
Preferred Securities--Tax Event or Investment Company Event Redemption or
Distribution; Optional Distribution.'
'Trust' means SI Financing Trust I.
'Trust Act' means The Delaware Business Trust Act, as it may be amended from
time to time.
'Trust Indenture Act' means the Trust Indenture Act of 1939, as amended.
'Trust Securities' means the Common Securities and the Preferred Securities.
'Underwriters' means the underwriters named in the Underwriting Agreement.
'Underwriting Agreement' means the underwriting agreement dated
, 1996 between the Company and the Trust, on the one hand, and
Salomon Brothers Inc, as representative of the Underwriters named therein, on
the other hand.
'Unit' means a % Trust Preferred StockSM (TRUPSSM) Unit consisting of (i) a
Preferred Security and (ii) a Purchase Contract.
'Unit Agent' means Chemical Bank, as agent under the Unit Agreement, and any
successor thereto.
'Unit Agreement' means the Unit Agreement to be dated as of ,
1996 between the Company and the Unit Agent.
'Unitholder' means the holder of a Unit.
'U.S. Holder' has the meaning set forth under 'United States Federal Income
Taxation--General.'
G-5
<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 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 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. THIS PROSPECTUS
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........................ 5
Incorporation of Certain Documents by
Reference.................................. 5
Prospectus Summary........................... 6
Risk Factors................................. 12
Salomon Inc.................................. 15
Recent Developments.......................... 16
Accounting Treatment......................... 16
Use of Proceeds.............................. 16
Ratio of Earnings to Fixed Charges........... 16
SI Financing Trust I......................... 17
Description of the Units..................... 17
Description of the Preferred Securities...... 30
Description of the Guarantee................. 40
Description of the Subordinated Debt
Securities................................. 43
Effect of Obligations under the Subordinated
Debt Securities and the Guarantee.......... 51
Description of the Series F Preferred
Stock...................................... 52
Description of the Depositary Shares......... 56
United States Federal Income Taxation........ 59
ERISA Considerations......................... 64
Underwriting................................. 64
Experts...................................... 65
Legal Opinions............................... 65
Glossary of Defined Terms.................... G-1
</TABLE>
10,000,000 %
TRUST PREFERRED STOCK(SERVICE MARK)
(TRUPS(SERVICE MARK)) UNITS
consisting of
SI FINANCING TRUST I
10,000,000 %
PREFERRED SECURITIES
FULLY AND UNCONDITIONALLY GUARANTEED BY
SALOMON INC
and
SALOMON INC
10,000,000 PURCHASE CONTRACTS
EACH REQUIRING THE PURCHASE ON ,
2021 (OR EARLIER) OF ONE DEPOSITARY SHARE REPRESENTING A ONE-TWENTIETH INTEREST
IN A SHARE OF % CUMULATIVE PREFERRED STOCK, SERIES F, LIQUIDATION PREFERENCE
$500 PER SHARE, OF SALOMON INC AT A PURCHASE PRICE OF $25 PER DEPOSITARY SHARE.
- ------------------------------------------------------
SALOMON BROTHERS INC
- ------------------------------------------------------------------------
PROSPECTUS
DATED , 1996
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.*
<TABLE>
<S> <C>
Commission Registration Fee.......................................... $86,206.90
Accounting Fees......................................................
Trustees', Collateral Agent's and Preferred Stock Depositary's Fees
and Expenses.......................................................
Blue Sky Fees and Expenses...........................................
Printing and Engraving Fees..........................................
Rating Agency Fees...................................................
NASD Fee............................................................. 25,500
NYSE Listing Fee.....................................................
Legal Fees and Expenses..............................................
Miscellaneous........................................................
----------
Total Expenses.................................................. $
----------
----------
</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 Company's Certificate of Incorporation provides
for indemnification of directors and officers of the Company against certain
liabilities incurred as a result of their duties as such and Article Sixteenth
of the Company's Certificate of Incorporation provides for the elimination of
the monetary liability of directors for certain actions as such. The Company'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 the 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 Company maintains insurance policies covering liabilities of directors
and officers to the extent not covered by indemnification from the Company,
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 Underwriting Agreement filed as Exhibit 1 for certain
indemnification provisions.
II-1
<PAGE>
ITEM 16. EXHIBITS.
<TABLE>
<S> <C> <C>
1 -- Form of Underwriting Agreement.*
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, 1995).
4(c) -- Certificate of Trust of SI Financing Trust I.**
4(d) -- Declaration of Trust of SI Financing Trust I between Salomon Inc, as Sponsor, and Nazareth A.
Festekjian, Philip U. Tremmel, Marwan A. Marshi, Chemical Bank and Chemical Bank Delaware, not in
their individual capacities but solely as Trustees.**
4(e) -- 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 February
12, 1996).
4(f) -- First Supplemental Indenture dated as of September 7, 1990 to Indenture dated as of December 1, 1988
betweeen Salomon Inc and Bankers Trust Company, as Trustee (incorporated by reference from Exhibit
4(b) to Registration Statement No. 33-39502).
4(g) -- Second Supplemental Indenture dated as of December 14, 1993 to Indenture dated as of December 1, 1988
between Salomon Inc and Bankers Trust Company, as Trustee (incorporated by reference from Exhibit 4(m)
to Registration Statement No. 33-48199).
4(h) -- Third Supplemental Indenture dated as of 1996 to Indenture dated as of December 1, 1988
between Salomon Inc and Bankers Trust Company, as Trustee.*
4(i) -- Form of Amended and Restated Declaration of Trust of SI Financing Trust I (including as an exhibit
thereto the Form of Preferred Security).*
4(j) -- Form of Subordinated Debt Security (included in 4(h) above).*
4(k) -- Form of Pledge Agreement between Salomon Inc, The Bank of New York, as Collateral Agent, and Chemical
Bank, as Unit Agent.*
4(l) -- Form of Unit Agreement between Salomon Inc and Chemical Bank, as Unit Agent (including as an exhibit
thereto the Form of Unit Certificate).*
4(m) -- Form of Guarantee with respect to Preferred Securities.*
4(n) -- Form of Certificate of Designations relating to the Series F Preferred Stock.*
4(o) -- Form of Certificate of Series F Preferred Stock, without par value, of the Company.*
4(p) -- Form of Deposit Agreement.*
5(a) -- Opinion of Cravath, Swaine & Moore.*
5(b) -- Opinion of Morris, Nichols, Arsht & Tunnell.*
8 -- Opinion re: Tax Matters.+
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 Exhibits 5(a) and 8).*
</TABLE>
II-2
<PAGE>
<TABLE>
<S> <C> <C>
24 -- Powers of Attorney.*
25(a) -- Form T-1 Statement of Eligibility under the Trust Indenture Act of 1939 of Bankers Trust Company, as
Trustee under the Indenture.*
25(b) -- Form T-1 Statement of Eligibility under the Trust Indenture Act of 1939 of Chemical Bank, as Property
Trustee under the Amended and Restated Declaration of Trust of SI Financing Trust I.*
25(c) -- Form T-1 Statement of Eligibility under the Trust Indenture Act of 1939 of Chemical Bank, as Guarantee
Trustee under the Guarantee of Salomon Inc for the benefit of the holders of Preferred Securities of
SI Financing Trust I.*
</TABLE>
- ------------------
* To be filed by amendment.
** Previously filed.
+ Filed herewith.
ITEM 17. UNDERTAKINGS
The undersigned registrants hereby undertake that:
(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 Company'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 Company pursuant to the provisions described under Item 15 above,
or otherwise, the Company has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in such Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the Company of expenses incurred or paid by a
II-3
<PAGE>
director, officer or controlling person of the Company 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 Company 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 registrants pursuant to Rule 424(b)(1) or (4)
or 497(h) under the Securities Act shall be deemed to be part of this
registration statement as of the time it was declared effective.
(7) For the purpose of determining any liability under the Securities Act
of 1933, as amended, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
II-4
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT, SALOMON INC AND SI
FINANCING TRUST I EACH HEREBY 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 19TH DAY OF JUNE, 1996.
SI FINANCING TRUST I
BY: SALOMON INC, as Sponsor
By: /s/ ARNOLD S. OLSHIN
(Arnold S. Olshin, Secretary)
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 June 19, 1996
(Robert E. Denham) Director
* Chief Financial Officer June 19, 1996
(Jerome H. Bailey)
/s/ RICHARD J. CARBONE Principal Accounting Officer and June 19, 1996
(Richard J. Carbone) Controller
* Director June 19, 1996
(Dwayne O. Andreas)
* Director June 19, 1996
(Warren E. Buffett)
* Director June 19, 1996
(Claire M. Fagin)
* Director June 19, 1996
(John L. Haseltine)
* Director June 19, 1996
(Gedale B. Horowitz)
* Director June 19, 1996
(Deryck C. Maughan)
* Director June 19, 1996
(David O. Maxwell)
</TABLE>
II-5
<PAGE>
<TABLE>
<S> <C> <C>
* Director June 19, 1996
(William F. May)
* Director June 19, 1996
(Charles T. Munger)
* Director June 19, 1996
(Shigeru Myojin)
* Director June 19, 1996
(Louis A. Simpson)
* Director June 19, 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)
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER EXHIBIT PAGE
- ------- ------------------------------------------------------------------------------------- ------------
<S> <C> <C> <C>
1 -- Form of Underwriting Agreement.*
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, 1995).
4(c) -- Certificate of Trust of SI Financing Trust I.**
4(d) -- Declaration of Trust of SI Financing Trust I between Salomon Inc, as Sponsor, and
Nazareth A. Festekjian, Philip U. Tremmel, Marwan A. Marshi, Chemical Bank and
Chemical Bank Delaware, not in their individual capacities but solely as Trustees.**
4(e) -- 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 February 12, 1996).
4(f) -- First Supplemental Indenture dated as of September 7, 1990 to Indenture dated as of
December 1, 1988 between Salomon Inc and Bankers Trust Company, as Trustee
(incorporated by reference from Exhibit 4(b) to Registration Statement No. 33-39502).
4(g) -- Second Supplemental Indenture dated as of December 14, 1993 to Indenture dated as of
December 1, 1988 between Salomon Inc and Bankers Trust Company, as Trustee
(incorporated by reference from Exhibit 4(m) to Registration Statement No. 33-48199).
4(h) -- Third Supplemental Indenture dated as of , 1996 to Indenture dated as
of December 1, 1988 between Salomon Inc and Bankers Trust Company, as Trustee.*
4(i) -- Form of Amended and Restated Declaration of Trust of SI Financing Trust I (including
as an exhibit thereto the Form of Preferred Security).*
4(j) -- Form of Subordinated Debt Security (included in 4(h) above).*
4(k) -- Form of Pledge Agreement between Salomon Inc, The Bank of New York, as Collateral
Agent, and Chemical Bank, as Unit Agent.*
4(l) -- Form of Unit Agreement between Salomon Inc and Chemical Bank, as Unit Agent
(including as an exhibit thereto the Form of Unit Certificate).*
4(m) -- Form of Guarantee with respect to Preferred Securities.*
4(n) -- Form of Certificate of Designations relating to the Series F Preferred Stock.*
4(o) -- Form of Certificate of Series F Preferred Stock, without par value, of the Company.*
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SEQUENTIALLY
NUMBERED
EXHIBIT PAGE
NUMBER EXHIBIT -
- ------- -------------------------------------------------------------------------------------
<S> <C> <C> <C>
4(p) -- Form of Deposit Agreement.*
5(a) -- Opinion of Cravath, Swaine & Moore.*
5(b) -- Opinion of Morris, Nichols, Arsht & Tunnell.*
8 -- Opinion re: Tax Matters.+
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 Exhibits 5(a) and 8).*
24 -- Powers of Attorney.*
25(a) -- Form T-1 Statement of Eligibility under the Trust Indenture Act of 1939 of Bankers
Trust Company, as Trustee under the Indenture.*
25(b) -- Form T-1 Statement of Eligibility under the Trust Indenture Act of 1939 of Chemical
Bank, as Property Trustee under the Amended and Restated Declaration of Trust of SI
Financing Trust I.*
25(c) -- Form T-1 Statement of Eligibility under the Trust Indenture Act of 1939 of Chemical
Bank, as Guarantee Trustee under the Guarantee of Salomon Inc for the benefit of the
holders of Preferred Securities of SI Financing Trust I.*
</TABLE>
- ------------------
* To be filed by amendment.
** Previously filed.
+ Filed herewith.
II-6
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER EXHIBIT PAGE
- ------- ------------------------------------------------------------------------------------- ------------
<S> <C> <C> <C>
1 -- Form of Underwriting Agreement.*
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, 1995).
4(c) -- Certificate of Trust of SI Financing Trust I.**
4(d) -- Declaration of Trust of SI Financing Trust I between Salomon Inc, as Sponsor, and
Nazareth A. Festekjian, Philip U. Tremmel, Marwan A. Marshi, Chemical Bank and
Chemical Bank Delaware, not in their individual capacities but solely as Trustees.**
4(e) -- 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 February 12, 1996).
4(f) -- First Supplemental Indenture dated as of September 7, 1990 to Indenture dated as of
December 1, 1988 between Salomon Inc and Bankers Trust Company, as Trustee
(incorporated by reference from Exhibit 4(b) to Registration Statement No. 33-39502).
4(g) -- Second Supplemental Indenture dated as of December 14, 1993 to Indenture dated as of
December 1, 1988 between Salomon Inc and Bankers Trust Company, as Trustee
(incorporated by reference from Exhibit 4(m) to Registration Statement No. 33-48199).
4(h) -- Third Supplemental Indenture dated as of , 1996 to Indenture dated as
of December 1, 1988 between Salomon Inc and Bankers Trust Company, as Trustee.*
4(i) -- Form of Amended and Restated Declaration of Trust of SI Financing Trust I (including
as an exhibit thereto the Form of Preferred Security).*
4(j) -- Form of Subordinated Debt Security (included in 4(h) above).*
4(k) -- Form of Pledge Agreement between Salomon Inc, The Bank of New York, as Collateral
Agent, and Chemical Bank, as Unit Agent.*
4(l) -- Form of Unit Agreement between Salomon Inc and Chemical Bank, as Unit Agent
(including as an exhibit thereto the Form of Unit Certificate).*
4(m) -- Form of Guarantee with respect to Preferred Securities.*
4(n) -- Form of Certificate of Designations relating to the Series F Preferred Stock.*
4(o) -- Form of Certificate of Series F Preferred Stock, without par value, of the Company.*
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SEQUENTIALLY
NUMBERED
EXHIBIT PAGE
NUMBER EXHIBIT -
- ------- -------------------------------------------------------------------------------------
<S> <C> <C> <C>
4(p) -- Form of Deposit Agreement.*
5(a) -- Opinion of Cravath, Swaine & Moore.*
5(b) -- Opinion of Morris, Nichols, Arsht & Tunnell.*
8 -- Opinion re: Tax Matters.+
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 Exhibits 5(a) and 8).*
24 -- Powers of Attorney.*
25(a) -- Form T-1 Statement of Eligibility under the Trust Indenture Act of 1939 of Bankers
Trust Company, as Trustee under the Indenture.*
25(b) -- Form T-1 Statement of Eligibility under the Trust Indenture Act of 1939 of Chemical
Bank, as Property Trustee under the Amended and Restated Declaration of Trust of SI
Financing Trust I.*
25(c) -- Form T-1 Statement of Eligibility under the Trust Indenture Act of 1939 of Chemical
Bank, as Guarantee Trustee under the Guarantee of Salomon Inc for the benefit of the
holders of Preferred Securities of SI Financing Trust I.*
</TABLE>
- ------------------
* To be filed by amendment.
** Previously filed.
+ Filed herewith.
<PAGE>
EXHIBIT 8
June 19, 1996
SALOMON INC
SI FINANCING TRUST I
TRUST PREFERRED STOCK(SERVICE MARK) UNITS
Dear Sirs:
We have acted as special federal tax counsel for Salomon Inc, a Delaware
corporation (the 'Company'), and SI Financing Trust I, a statutory business
trust created under the Business Trust Act of the State of Delaware (the
'Trust'), in connection with the preparation and filing with the Securities and
Exchange Commission (the 'Commission') under the Securities Act of 1933, as
amended (the 'Act'), of a Registration Statement on Form S-3 (No. 333-02987), as
amended (the 'Registration Statement'), for the Registration under the Act of
(a) Trust Preferred Stock(Service Mark) Units (the 'Units') consisting of
Preferred Securities issued by the Trust (the 'Preferred Securities') and
Purchase Contracts of the Company (the 'Purchase Contracts') requiring the
purchase of depositary shares (the 'Depositary Shares') each representing a
one-twentieth interest in a share of the Company's Cumulative Preferred Stock,
Series F (the 'Series F Preferred Stock'), (b) Subordinated Debt Securities (the
'Subordinated Debt Securities') issued by the Company, and (c) the Company's
Guarantee of the Preferred Securities. Capitalized terms not otherwise defined
herein have the meanings assigned to them in the Registration Statement.
In that connection, we have examined originals, or copies certified or
otherwise identified to our satisfaction, of such documents, corporate records
and other instruments as we have deemed necessary or appropriate for the
purposes of this opinion. We assume that all transactions relating to the Trust
and the securities described in the preceding paragraph will be carried out in
accordance with the terms of the governing documents without any amendments
thereto or waiver of any terms thereof, that such documents represent the entire
agreement of the parties thereto, and that all representations and warranties
contained in such documents are true.
In addition, we have been informed by the Company of the following facts,
which we have assumed to be true and upon which we have relied, without
independent investigation, in expressing the opinions set forth below:
1. A Unit will be issued to the public for the Stated Amount of the
Preferred Securities.
2. The Preferred Securities would (if rated) be treated by one or more
major rating agencies as subordinated debt for ratings purposes. At the
time of the issuance, the Company's subordinated debt carries an investment
grade rating and therefore, the Preferred Securities would also carry an
investment grade rating, if rated. To avoid confusion by the market, the
rating agencies will most likely not rate the Preferred Securities unless
and until they are separated from the Units.
3. The interest rate on the Subordinated Debt Securities is a market
rate for subordinated debt of the Company with a 30-year term issued at par
and callable after 5 years.
4. The dividend rate on the Series F Preferred Stock represented by
the Depositary Shares is slightly above a market rate for preferred stock
of the Company issued at par and having the terms of the Series F Preferred
Stock that the Company would be required to pay if the Company were to
issue directly such preferred stock in lieu of issuance of the Units.
5. The annual fee payable under the Purchase Contracts is a market
rate.
6. Under current market conditions, if the Company accelerated the
exercise of the Purchase Contracts immediately after issuance of the Units,
immediately following such exercise the Preferred Securities standing alone
would, if traded, trade at approximately $104.5 (due to the 5-year put
feature that first becomes effective upon acceleration of the Purchase
Contracts).
<PAGE>
7. There is a significant possibility (taking into account interest
rate levels and the credit quality of the Company) that, upon the Company's
acceleration of the Purchase Contracts, it would be in the interest of
Unitholders to pay cash for the Depositary Shares and retain the Preferred
Securities, and that in such case a market would develop for the Preferred
Securities so that a significant number of Unitholders would do so.
The question of whether a security is debt or equity for Federal income tax
purposes is inherently factual, and there is no authority concerning the tax
characterization of securities having terms similar to the Subordinated Debt
Securities. Nevertheless, based on the accuracy of the foregoing and on our
analysis of the law and the facts, in our opinion, under current law, for
Federal income tax purposes the Subordinated Debt Securities will be classified
as indebtedness of the Company. Moreover, in our opinion, and without regard to
the numbered factual statements above, the Trust will be classified as a grantor
trust for Federal income tax purposes and not as a partnership or an association
taxable as a corporation. Accordingly, each holder of a Preferred Security will
be considered the owner of an undivided interest in the Subordinated Debt
Securities and will take into account a pro rata share of all items of income,
expense or deduction of the Trust.
We express no opinion as to the possible effects on the foregoing opinions
of future changes in the law, which may be retroactive, including changes
proposed by the Clinton Administration on March 20, 1996. We assume no
obligation to modify or update this opinion to reflect future changes in the
law.
Based on the foregoing, and subject to the assumptions, qualifications and
limitations contained herein, we hereby confirm that the statements set forth in
the form of Prospectus included in the Registration Statement under the heading
'UNITED STATES FEDERAL INCOME TAXATION' accurately describe under current law
the material United States Federal income tax consequences of the purchase,
ownership and disposition of Units, Subordinated Debt Securities, Preferred
Securities, Purchase Contracts, Series F Preferred Stock and Depositary Shares
to holders who purchase Units upon their original issuance for an amount equal
to the Stated Amount of the Preferred Securities and who hold such securities as
capital assets.
We know that we are referred to under the heading 'LEGAL OPINIONS' in the
form of Prospectus included in the Registration Statement, and we hereby consent
to the use of our name therein and to the filing of this opinion as Exhibit 8 to
the Registration Statement.
Very truly yours,
/s/ Cravath, Swaine & Moore
Salomon Inc
Seven World Trade Center
New York, NY 10048
2
