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Registration No. 33-53776
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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POST-EFFECTIVE
AMENDMENT NO. 1 TO
FORM S-3
REGISTRATION STATEMENT
under
THE SECURITIES ACT OF 1933
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PAINE WEBBER GROUP INC.
(Exact name of Registrant as specified in its charter)
Delaware 13-2760086
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1285 Avenue of the Americas
New York, New York 10019
(212) 713-2000
(Address, including zip code, and telephone number, including area code,
of Registrant's principal executive offices)
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THEODORE A. LEVINE, ESQ.
Vice President, General Counsel and Secretary
Paine Webber Group Inc.
1285 Avenue of the Americas
New York, New York 10019
(212) 713-2000
(Name, address, including zip code, and telephone number, including
area code, of agent for service)
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Please send copies of all communications to:
DAVID G. ORMSBY, ESQ.
Cravath, Swaine & Moore
825 Eighth Avenue
New York, New York 10019
(212) 474-1000
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Approximate date of commencement of proposed sale to the public:
From time to time after the Registration Statement becomes effective as deter-
mined by market conditions.
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If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the
following box. / /
If any of the securities being registered on this Form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities Act
of 1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box. /x/
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PROSPECTUS
PAINE WEBBER GROUP INC.
EXCHANGE RATE CURRENCY WARRANTS
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Paine Webber Group Inc. (the 'Company') intends to issue from time to time
up to $56,082,500 of its exchange rate currency warrants entitling the holders
thereof to receive from the Company, upon exercise, the cash settlement value,
if any, in U.S. dollars of the right to purchase ('Currency Call Warrants') or
to sell ('Currency Put Warrants') an amount of non-U.S. currency or currencies
for a specified amount of U.S. dollars, as determined by the Company at the time
of the offering. Such amount will be based on either (i) the rate of exchange of
the U.S. dollar as compared to a specified non-U.S. currency or units of two or
more specified non-U.S. currencies (the 'Reference Currency') or (ii) the rate
of exchange of the U.S. dollar determined by reference to an index of two or
more specified non-U.S. currencies or currency units (the 'Index Currencies')
(such an index of Index Currencies being referred to hereinafter as a 'Currency
Index'). In the case of a particular Currency Index, additions, deletions or
substitutions of Index Currencies included therein may occur if, in the view of
the publisher of such Currency Index, a particular Index Currency is no longer
appropriate for inclusion therein. See 'Risk Factors -- Potential Modifications
of Currency Indices' herein. The Currency Call Warrants and the Currency Put
Warrants are hereinafter collectively referred to as the 'Warrants'. The
Warrants will be offered on specific terms to be determined at the time of sale.
With regard to the Warrants in respect of which this Prospectus is being
delivered, the Prospectus Supplement sets forth (i) the aggregate amount and
offering price of such Warrants, (ii) the particular Reference Currency or
Currency Index (including each Index Currency included therein), as applicable,
to which the cash settlement value of such Warrants is related, (iii) whether
such Warrants are Currency Put Warrants or Currency Call Warrants, (iv) the date
on which the right to exercise such Warrants commences and the expiration date
of such Warrants, (v) the manner in which such Warrants may be exercised and any
restrictions on, or other special provisions relating to, the exercise of such
Warrants, (vi) whether and under what circumstances such Warrants may be
cancelled by the Company prior to their expiration date, (vii) the method of
determining the amount payable in connection with the exercise or cancellation
of such Warrants, including, if the Warrants relate to a particular Currency
Index, the predetermined amount to which the level of the Currency Index upon
exercise of such Warrants is compared and the method of translating movements in
the level of the Currency Index into a cash amount in U.S. dollars, (viii) the
amount payable on cancellation of such Warrants, if applicable (the
'Cancellation Amount'), and the predetermined sum or range of sums (the 'Minimum
Expiration Value'), if any, payable in certain circumstances upon expiration or
exercise of such Warrants, (ix) any national securities exchange on which such
Warrants will be listed, (x) certain U.S. Federal income tax consequences
relating to such Warrants and (xi) any other specific terms of, or information
regarding, such Warrants.
The Warrants are unsecured contractual obligations of the Company and will
rank on a parity with all other unsecured and unsubordinated indebtedness of the
Company.
THE WARRANTS INVOLVE A HIGH DEGREE OF RISK, INCLUDING FOREIGN EXCHANGE
RISKS. PURCHASERS SHOULD RECOGNIZE THAT THEIR WARRANTS, OTHER THAN WARRANTS
HAVING A MINIMUM EXPIRATION VALUE, MAY EXPIRE WORTHLESS. PURCHASERS SHOULD BE
PREPARED TO SUSTAIN A TOTAL LOSS OF THE PURCHASE PRICE OF THEIR WARRANTS, AND
ARE ADVISED TO CONSIDER CAREFULLY THE INFORMATION UNDER 'RISK FACTORS' HEREIN
AND THE INFORMATION REGARDING THE WARRANTS AND, IN THE CASE OF WARRANTS RELATING
TO A PARTICULAR CURRENCY INDEX, THE CURRENCY INDEX SET FORTH IN THE PROSPECTUS
SUPPLEMENT.
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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.
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The Warrants may be sold by the Company directly to purchasers, through
agents designated from time to time, through underwriting syndicates led by one
or more managing underwriters or through one or more underwriters. Any such
managing underwriters, underwriters or agents may include PaineWebber
Incorporated ('PaineWebber'). If underwriters or agents are involved in the
offering of any Warrants, the names of such underwriters or agents will be set
forth in the Prospectus Supplement. If an underwriter, agent or dealer is
involved in the offering of any Warrants, the underwriter's discount, agent's
commission or dealer's purchase price will be set forth in, or may be calculated
from the information set forth in, the Prospectus Supplement, and the net
proceeds to the Company from such offering will be the public offering price of
the Warrants less such discount in the case of an offering through an agent, and
less, in each case, the other expenses of the Company associated with the
issuance and distribution of the Warrants.
PaineWebber expects to offer and sell issued Warrants from time to time in
the course of its business as a broker-dealer. PaineWebber may act as principal
or agent in such transactions. This Prospectus and the related Prospectus
Supplement may be used by PaineWebber in connection with such transactions. See
'Plan of Distribution' herein.
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PAINEWEBBER INCORPORATED
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The date of this Prospectus is July , 1994.
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AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the 'Exchange Act'), and in accordance
therewith files reports, proxy statements and other information with the
Securities and Exchange Commission (the 'Commission'). Reports, proxy statements
and other information concerning the Company can be inspected and copied at the
public reference facilities maintained by the Commission at Room 1024, Judiciary
Plaza, 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 Northwestern Atrium Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661-2511. Copies of such material can be obtained upon
written request addressed to the Commission, Public Reference Section, 450 Fifth
Street, N.W., Washington, D.C. 20549, at prescribed rates. In addition, reports,
proxy statements and other information concerning the Company may be inspected
at the offices of The New York Stock Exchange, Inc., 20 Broad Street, New York,
New York 10005, and The Pacific Stock Exchange, 115 Sansome Street, Suite 1004,
San Francisco, California 94104.
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 Warrants. This Prospectus does not contain
all of 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.
DOCUMENTS INCORPORATED BY REFERENCE
The following documents filed by the Company with the Commission pursuant
to Section 13 of the Exchange Act are incorporated herein by reference: (i) the
Annual Report on Form 10-K (including the portions of the Company's annual
report to stockholders incorporated by reference therein) for the year ended
December 31, 1993 (the '1993 Form 10-K'); (ii) the Quarterly Report on Form 10-Q
for the quarter ended March 31, 1994; and (iii) the Current Reports on Form 8-K
dated January 27, 1994, March 17, 1994, March 18, 1994 and June 15, 1994.
All documents filed by the Company pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date of this Prospectus and prior to
the termination of the offering of the Warrants shall be deemed to be
incorporated by reference in this Prospectus and to be a part hereof from the
date of filing of such 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).
Requests for such copies should be directed to Assistant Secretary, Paine Webber
Group Inc., 1285 Avenue of the Americas, New York, New York 10019; telephone
(212) 731-2722.
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References herein to 'U.S. dollar', 'dollar', 'U.S.$' or '$' are to the
lawful currency of the United States of America.
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RISK FACTORS
The Warrants involve a high degree of risk, including foreign exchange
risks. Prospective purchasers of the Warrants should recognize that their
Warrants, other than any Warrants having a Minimum Expiration Value, may expire
worthless. Purchasers should be prepared to sustain a total loss of the purchase
price of their Warrants. Prospective purchasers of the Warrants should be
experienced with respect to options and options transactions, should understand
the risks of foreign currency transactions and should reach an investment
decision only after careful consideration, with their advisers, of the
suitability of the Warrants in light of their particular financial
circumstances, the information set forth below and under 'Description of
Warrants' herein and the information regarding the Warrants and, in the case of
Warrants relating to a particular Currency Index, the Currency Index set forth
in the Prospectus Supplement.
POSSIBLE ILLIQUIDITY OF SECONDARY MARKET
It is not possible to predict the price at which the Warrants will trade in
the secondary market or whether such market will be liquid or illiquid. If
additional warrants or options relating to particular non-U.S. currencies or
particular currency indices are subsequently offered to the public, the supply
of warrants and options relating to such non-U.S. currencies or currency
indices, as applicable, in the market will increase, which could cause the price
at which the Warrants and such other warrants and options trade in the secondary
market to decline significantly. The Company intends to list the Warrants of
each issue on a national securities exchange. In the event of a delisting or
suspension of trading on such exchange, the Company will use its best efforts to
list the Warrants on another national securities exchange. If the Warrants are
not listed or traded on any securities exchange, pricing information for the
Warrants may be more difficult to obtain and the liquidity of the Warrants may
be adversely affected. To the extent Warrants are exercised, the number of
Warrants outstanding will decrease, resulting in a lessening of the liquidity of
the Warrants. A lessening of the liquidity of the Warrants may cause, in turn,
an increase in volatility associated with the price of the Warrants.
RELATIONSHIP BETWEEN CASH SETTLEMENT VALUE AND FOREIGN EXCHANGE RATE
OR CURRENCY INDEX LEVEL
Each Warrant will entitle the beneficial owner thereof (the
'Warrantholder') to receive from the Company upon exercise thereof a cash value
(the 'Cash Settlement Value') that (i) in the case of a Currency Put Warrant,
will be determined by reference to the amount, if any, by which a predetermined
exchange rate of a Reference Currency as compared to the U.S. dollar or a
predetermined level or range of levels of a Currency Index, as applicable (the
'Strike Rate'), exceeds the then-current spot exchange rate of such Reference
Currency as compared to the U.S. dollar or the then-current level or range of
levels of such Currency Index, as applicable (the 'Spot Rate'), and (ii) in the
case of a Currency Call Warrant, will be determined by reference to the amount,
if any, by which the Spot Rate at the time of exercise of such Warrant exceeds
the Strike Rate. However, a Warrantholder will receive a cash payment upon
exercise only if the Warrants are 'in-the-money' -- that is, having a Cash
Settlement Value greater than zero at the time -- except that, in the case of
any Warrants having a Minimum Expiration Value, in certain circumstances the
Warrantholder will receive upon expiration or exercise a cash payment in an
amount equal to the greater of the applicable Cash Settlement Value and such
Minimum Expiration Value. The Cash Settlement Value of a Currency Put Warrant
will be greater than zero only if the Spot Rate on the applicable valuation date
following exercise is less than the Strike Rate for such Warrant (that is, if
the Reference Currency or the Index Currencies (on average), as applicable,
appreciates against the U.S. dollar). The Cash Settlement Value of a Currency
Call Warrant will be greater than zero only if the Spot Rate for such Warrant is
greater than the Strike Rate on the applicable valuation date following exercise
(that is, if the Reference Currency or the Index Currencies (on average), as
applicable, depreciates against the U.S. dollar).
EXTRAORDINARY EVENTS; EXERCISE LIMITATION EVENTS;
CANCELLATION OF WARRANTS; DELAYED EXERCISE
If so specified in the Prospectus Supplement, the Warrants of an issue may
be cancelled by the Company upon the occurrence of one or more events
('Extraordinary Events') described in the Prospectus Supplement. In such event,
Warrantholders will have the right to receive only the Cancellation Amount,
which may be a
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predetermined amount, or an amount to be determined in accordance with a
predetermined formula, specified in such Prospectus Supplement. Certain events
that may constitute Extraordinary Events and therefore lead to cancellation of
the Warrants of an issue may be events that would tend to increase the Cash
Settlement Value otherwise applicable to the Warrants of such issue. In
addition, if so specified in the Prospectus Supplement, any exercise of the
Warrants may be suspended by the Company, and the valuation of and payment for
such Warrants may be postponed and/or the determination of the Cash Settlement
Amount thereof may be made on a different basis, upon the occurrence of an
Extraordinary Event or certain other events ('Exercise Limitation Events')
specified in the Prospectus Supplement.
CERTAIN FACTORS AFFECTING VALUE AND TRADING PRICE OF WARRANTS
Unless otherwise specified in the Prospectus Supplement, the Warrants of
each issue will have a Cash Settlement Value of zero at the time of the initial
public offering of such Warrants. The Cash Settlement Value of the Warrants at
any time prior to expiration is expected typically to be less than the trading
price of the Warrants at that time. The difference between the trading price and
the Cash Settlement Value will reflect, among other things, a 'time value' for
the Warrants. The 'time value' of the Warrants will depend partly upon the
length of the period remaining to expiration and expectations concerning the
value of the Reference Currency or Index Currencies, as applicable, as compared
to the U.S. dollar during such period. Unless otherwise specified in the
applicable Prospectus Supplement, the expiration date of the Warrants of a
particular issue will be accelerated should such Warrants be delisted from, or
should there be a permanent suspension of their trading on, any national
securities exchange on which such Warrants are traded, unless such Warrants
simultaneously are accepted for listing on another national securities exchange.
Any such acceleration would result in the total loss of any otherwise remaining
'time value', and could occur when such Warrants are out-of-the-money, thus
resulting in the total loss of the purchase price of such Warrants.
Warrantholders should be aware that PaineWebber and its affiliates take
positions in various non-U.S. currencies, including, from time to time, a
Reference Currency or one or more Index Currencies, as applicable, to facilitate
client transactions and as principal positions for PaineWebber's or such
affiliates' own accounts. Through such activities, PaineWebber and its
affiliates may take positions in a Reference Currency or one or more Index
Currencies, as applicable, that are inconsistent with an investment in the
Warrants.
Before exercising or selling Warrants, Warrantholders should carefully
consider, among other things, (i) the trading price of the Warrants, (ii) the
exchange rate or rates of the Reference Currency or Index Currencies, as
applicable, as compared to the U.S. dollar at such time, (iii) the time
remaining to expiration, (iv) the probable range of Cash Settlement Values, (v)
any Minimum Expiration Value and (vi) any related transaction costs.
The trading price of a Warrant at any time is expected to be dependent on
(i) the relationship between the Strike Rate and the Spot Rate at such time,
(ii) any Minimum Expiration Value and (iii) a number of other interrelated
factors, including those listed below. The relationship among these factors is
complex. However, the expected effect on the trading price of a Warrant of each
of the factors listed below, assuming in each case that all other factors are
held constant, is as follows:
(1) The prevailing Spot Rate of the Reference Currency or any Index
Currency. If the value of the Reference Currency or any Index Currency, as
applicable, falls in relation to the U.S. dollar, the trading price of a
Currency Call Warrant is expected to increase and the trading price of a
Currency Put Warrant is expected to decrease; if the value of the Reference
Currency or any Index Currency, as applicable, rises in relation to the
U.S. dollar, the trading price of a Currency Call Warrant is expected to
decrease and the trading price of a Currency Put Warrant is expected to
increase.
(2) The volatility of the exchange rate of the Reference Currency or
any Index Currency. If the volatility of the exchange rate of the Reference
Currency or any Index Currency, as applicable, as compared to the U.S.
dollar, increases, the trading price of both Currency Put and Call Warrants
is expected to increase; if such volatility decreases, the trading price of
both Currency Put and Call Warrants is expected to decrease.
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(3) The time remaining to the expiration date of the Warrants. As the
time remaining to the expiration date of the Warrants decreases, the
trading price of the Warrants is expected to decrease.
(4) The interest rate differential between U.S. dollar and Reference
Currency or Index Currency fixed income instruments. If interest rates
applicable to fixed income instruments denominated in a Reference Currency
or any Index Currency, as applicable, increase relative to interest rates
applicable to fixed income instruments denominated in U.S. dollars, the
value of the Reference Currency or Index Currency, as applicable, in
relation to the U.S. dollar is expected to increase and, as a result, the
trading price of Currency Put Warrants is expected to increase and the
trading price of Currency Call Warrants is expected to decrease. If
interest rates applicable to fixed income instruments denominated in U.S.
dollars increase relative to interest rates applicable to fixed income
instruments denominated in a Reference Currency or any Index Currency, as
applicable, the trading price of Currency Put Warrants is expected to
decrease and the trading price of Currency Call Warrants is expected to
increase.
As noted above, these hypothetical scenarios are based on the assumption that
all other factors are held constant. In reality, it is unlikely that only one
factor would change in isolation, because changes in one factor usually cause,
or result from, changes in others. Some of the factors referred to above are in
turn influenced by various political, economic and other factors referred to
herein and in the Prospectus Supplement.
TIME LAG AFTER EXERCISE AND POTENTIAL INTERIM CHANGES IN SPOT RATE
Unless otherwise specified in the Prospectus Supplement, in the case of
any exercise of Warrants, there will be a time lag between the time a
Warrantholder gives instructions to exercise and the time the Spot Rate relating
to such exercise, and thus the Cash Settlement Value, is determined. Unless
otherwise specified in the Prospectus Supplement, the delay will, at a minimum,
amount to an entire day and could be significantly longer, particularly in the
case of a delay in exercise of Warrants arising from any daily maximum exercise
limitation, as described in the immediately following paragraph, or following
the occurrence of an Extraordinary Event or an Exercise Limitation Event, as
described under 'Extraordinary Events; Exercise Limitation Events; Cancellation
of Warrants; Delayed Exercise' above. The Spot Rate may change significantly
during any such period, and such movement or movements could decrease the Cash
Settlement Value of the Warrants being exercised and may result in such Cash
Settlement Value being zero.
LIMITATIONS ON EXERCISE
If so indicated in the Prospectus Supplement, the Company will have the
option to limit the number of Warrants exercisable on any date to the maximum
number specified in the Prospectus Supplement and, in conjunction with such
limitation, to limit the number of Warrants exercisable by any person or entity
on such date. In the event that the total number of Warrants being exercised on
any date exceeds such maximum number and the Company elects to limit the number
of Warrants exercisable on such date, a Warrantholder may not be able to
exercise on such date all Warrants that such holder desires to exercise.
Warrants to be exercised on such date will be selected on a pro rata basis or in
any other manner specified in the Prospectus Supplement. Unless otherwise
specified in the Prospectus Supplement, the Warrants tendered for exercise but
not exercised on such date will be automatically exercised on the next date on
which Warrants may be exercised, subject to the same daily maximum limitation
and delayed exercise provisions described in this paragraph. Unless otherwise
specified in the Prospectus Supplement, any such limitation will not apply in
the event of automatic exercise, including at expiration.
MINIMUM EXERCISE AMOUNT
If so indicated in the Prospectus Supplement, a Warrantholder must tender a
specified minimum number of Warrants at any one time in order to exercise
(except in the event of automatic exercise, including at expiration). Thus,
except in such an event, Warrantholders with fewer than the specified minimum
number of Warrants will either have to sell their Warrants or purchase
additional Warrants, incurring transaction costs in each case, in
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order to realize upon their investment. Furthermore, such Warrantholders incur
the risk that there may be differences between the trading price of the Warrants
and the Cash Settlement Value of such Warrants.
OFFERING PRICE OF WARRANTS
The initial offering price of Warrants may be in excess of the price that a
commercial user of a Reference Currency or Index Currencies, as applicable,
might pay in the interbank market for a comparable option involving
significantly larger amounts of underlying non-U.S. currencies.
CERTAIN RISK CONDITIONS
The purchaser of a Warrant may lose his entire investment except, if so
indicated in the Prospectus Supplement, to the extent of any Minimum Expiration
Value attributable to such Warrant. This risk reflects the nature of a Warrant
as an asset which, other factors held constant, tends to decline in value over
time and which may, depending on the prevailing Spot Rate as compared to the
Strike Rate, become worthless when it expires (except to the extent of any
Minimum Expiration Value). Assuming all other factors are held constant, the
more a Warrant is 'out-of-the-money' and the shorter its remaining term to
expiration, the greater the risk that a purchaser of the Warrant will lose all
or part of his investment. This means that if (a) in the case of a Currency Put
Warrant, the Spot Rate at expiration is greater than or equal to the Strike Rate
or (b) in the case of a Currency Call Warrant, the Spot Rate at expiration is
less than or equal to the Strike Rate, then a Warrantholder who has not sold his
Warrant in the secondary market prior to expiration will necessarily lose his
entire investment in the Warrant upon expiration (except to the extent of any
Minimum Expiration Value).
The risk of the loss of some or all of the purchase price of a Warrant upon
expiration means that, in order to recover and realize a return upon his
investment, a purchaser of a Warrant must generally be correct about both the
direction, timing and magnitude of an anticipated change in the value of the
relevant Reference Currency or Index Currencies, as applicable, in relation to
the U.S. dollar. If the Spot Rate as compared to the Strike Rate does not
decline, in the case of a Currency Put Warrant, or does not rise, in the case of
a Currency Call Warrant, before the Warrant expires to an extent sufficient to
cover a purchaser's cost of the Warrant (i.e., the purchase price plus
transaction costs, if any), the purchaser will lose all or part of his
investment in such Warrant upon expiration. Warrantholders will thus bear the
foreign exchange risks of the U.S. dollar in relation to the relevant Reference
Currency or Index Currencies, as applicable.
CERTAIN FACTORS AFFECTING CURRENCY INDICES
With regard to a Warrant relating to a particular Currency Index, the Cash
Settlement Value of such Warrant at any time will depend primarily on the level
of such Currency Index at such time in relation to the Strike Rate, which level
in turn will be based primarily on the rates of exchange of the relevant Index
Currencies as compared to the U.S. dollar. Prospective purchasers of Warrants
should familiarize themselves with the basic features of the relevant Currency
Index, including the Index Currencies included therein and the general method of
calculation of such Currency Index. The general method of calculation of a
Currency Index can influence significantly the relationship between movements in
the rates of exchange of the Index Currencies included in such Currency Index as
compared to the U.S. dollar and changes in the level of such Currency Index. For
example, the weight accorded to a particular Index Currency within a Currency
Index can alter such relationship. To illustrate this point, assuming that a
particular Currency Index included within it the Australian dollar and the Swiss
franc as its Index Currencies, if the Australian dollar was more heavily
weighted than the Swiss franc within such Currency Index, movements in the rate
of exchange of the Australian dollar as compared to the U.S. dollar would have a
greater influence on the level of such Currency Index than would corresponding
movements in the rate of exchange of the Swiss franc as compared to the U.S.
dollar. Alternatively, in the foregoing illustration, if the Australian dollar
and the Swiss franc were equally weighted in such Currency Index, movements in
the rates of exchange of the Australian dollar and the Swiss franc as compared
to the U.S. dollar would influence the level of such Currency Index equally.
Consequently, prospective purchasers are advised to consider carefully the
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information set forth in the Prospectus Supplement regarding the Currency Index,
the Index Currencies and the method of calculation of the Currency Index.
The rates of exchange of the Index Currencies as compared to the U.S.
dollar primarily will determine the level of the related Currency Index.
Prospective purchasers of Warrants relating to a particular Currency Index
should recognize that it is impossible to predict whether the level of such
Index will rise or fall. As noted below under 'Certain Foreign Currency Exchange
Risks', the rates of exchange of the Index Currencies as compared to the U.S.
dollar will be influenced by the complex and interrelated political, economic,
financial and other factors that can affect the interbank market in currencies
generally.
EFFECT OF CREDIT RATING REDUCTION
The value of the Warrants is expected to be affected, in part, by
investors' general appraisal of the Company's creditworthiness. Such perceptions
are generally influenced by the ratings accorded to the Company's outstanding
securities by the standard statistical rating services, such as Moody's
Investors Service, Inc. and Standard & Poor's Corporation. A reduction in the
rating, if any, accorded to outstanding debt securities of the Company by one of
these rating agencies could result in a reduction in the trading value of the
Warrants.
WARRANTS ARE UNSECURED OBLIGATIONS
The Warrants are unsecured contractual obligations of the Company and will
rank on a parity with the Company's other unsecured contractual obligations and
with the Company's unsecured and unsubordinated debt. The Company may issue
several issues of Warrants relating to various Reference Currencies or Currency
Indices. However, no assurance can be given that the Company will issue any
Warrants other than the Warrants to which a particular Prospectus Supplement
relates. At any given time the number of Warrants outstanding may be
substantial. Options and warrants provide opportunities for investment and pose
risks to investors as a result of fluctuations in the value of the underlying
investment. In general, certain of the risks associated with the Warrants are
similar to those generally applicable to other options or warrants of private
corporate issuers. However, unlike options or warrants on equities or debt
securities, which are priced primarily on the basis of the value of a single
underlying security, the trading value of a Warrant is likely to reflect
primarily present and expected rates of exchange of the Reference Currency or
Index Currencies, as applicable, as compared to the U.S. dollar.
The Warrants are not standardized foreign currency options of the type
issued by the Options Clearing Corporation (the 'OCC'), a clearing agency
regulated by the Commission. For example, unlike purchasers of OCC standardized
options who have the credit benefits of guarantees and margin and collateral
deposits by OCC clearing members to protect the OCC from a clearing member's
failure, purchasers of Warrants must look solely to the Company for performance
of its obligations to pay the Cash Settlement Value or, if applicable, the
Minimum Expiration Value upon the exercise or expiration of the Warrants. In
addition, OCC standardized options provide for physical delivery of the
underlying foreign currency (rather than cash settlement in U.S. dollars), and
permit immediate determination of value upon exercise. Further, the market for
the Warrants is not expected to be generally as liquid as the market for some
OCC standardized options.
POTENTIAL MODIFICATIONS OF CURRENCY INDICES
With regard to Warrants relating to a particular Currency Index, such Index
may be compiled and published by either a third party or the Company or an
affiliate of the Company. If such Index is compiled and published by the Company
or any such affiliate, such Index will be based on a group of Index Currencies
selected by the Company or such affiliate solely in connection with the issuance
of such Warrants. The policies of the publisher of the Currency Index concerning
additions, deletions and substitutions of Index Currencies and the manner in
which Currency Index calculations take account of certain changes affecting the
Index Currencies can significantly affect the performance of such Currency
Index. Additions, deletions or substitutions of Index Currencies may be
occasioned by the publisher's view that a particular Index Currency is no longer
appropriate
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for inclusion in the applicable Currency Index due to, for example, the
absorption of such Index Currency into a currency or monetary unit comprising
one or more other non-U.S. currencies. Although in the Company's view the
absorption of any Index Currency is unlikely to occur, the European Economic
Community has been seeking the approval of each of its member nations to issue a
new currency -- the European Currency Unit or ECU -- that would absorb and
replace the individual currencies issued by such member nations. To the extent a
particular Currency Index includes an Index Currency issued by any such member
nation at the time, if at all, such Index Currency is absorbed into and replaced
by the ECU, the publisher of such Currency Index could choose to replace such
absorbed Index Currency with another Index Currency and assign either the weight
previously accorded to the replaced Index Currency to the replacement Index
Currency or a greater or lesser weight, or it could choose not to replace such
absorbed Index Currency and re-weight the remaining Index Currencies within such
Currency Index equally or otherwise, depending on its policies. Although a
Currency Index is normally calculated in a manner intended to ensure that such
additions, deletions, substitutions and changes do not, by themselves,
instantaneously change the level of the Currency Index, the level of the
Currency Index over time may be influenced by changes in the composition and
characteristics of the Index Currencies. Whether to add, delete or substitute
Index Currencies, and the method of adjusting the Currency Index in respect of
changes affecting the Index Currencies, are typically solely within the
discretion of the publisher of the Currency Index. In contrast to standardized
stock index options of the type issued by the OCC, the terms of which may be
adjusted if the publisher of the related stock index changes the composition or
method of calculation of such stock index in a manner that causes a significant
discontinuity in the index level, the terms of the Warrants will not be adjusted
as a result of changes in the related Currency Index.
The publisher of a Currency Index may replace such Currency Index with a
successor index or may cease publishing such Index entirely. The Prospectus
Supplement specifies how the Cash Settlement Value of the related Warrants will
be determined in such circumstances. Although the method used will generally be
intended to enable Cash Settlement Values to be determined on as consistent a
basis as practicable, discontinuities may arise in such circumstances. Moreover,
information regarding the current level of certain substitute indices may not be
readily available to Warrantholders, which may adversely affect the trading
market for their Warrants.
CERTAIN CONSIDERATIONS REGARDING HEDGING
Prospective purchasers intending to purchase Warrants to hedge against the
market risk associated with investing in a Reference Currency or Index
Currencies, as applicable, should recognize the complexities of utilizing
Warrants in this manner. For example, the value of the Warrants may not exactly
correlate with the value of the Reference Currency or Index Currencies, as
applicable. Due to fluctuating supply and demand for the Warrants, there is no
assurance that their value will correlate with movements of the Reference
Currency or Index Currencies, as applicable, until their expiration.
CERTAIN FOREIGN CURRENCY EXCHANGE RISKS
The value of any currency, including the U.S. dollar and any Reference
Currency or Index Currency designated in the applicable Prospectus Supplement,
may be affected by complex political and economic factors. The spot exchange
rate of any Reference Currency or Index Currency as compared to the U.S. dollar
is at any moment a result of the supply of and demand for such Currency, and
changes in such rate result over time from the interaction of many factors
directly or indirectly affecting economic and political conditions in the
foreign country which has such Currency as its currency and in the United
States, including economic and political developments in other countries. Of
particular importance are the relative rates of inflation, interest rate levels,
the balance of payments and the extent of governmental surpluses or deficits in
the relevant foreign country and in the United States, all of which are in turn
sensitive to the monetary, fiscal and trade policies pursued by the governments
of the relevant foreign country, the United States and other countries important
to international trade and finance.
Such information relating to any relevant foreign country may not be as
well known or as rapidly or thoroughly reported in the United States as
comparable United States developments. Prospective purchasers of
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Warrants should be aware of the possible lack of availability of important
information that can affect the value of any Reference Currency or Index
Currency in relation to the U.S. dollar and must be prepared to make special
efforts to obtain such information on a timely basis.
Foreign exchange rates can either be fixed by sovereign governments or
float. Exchange rates of most economically developed nations, including each
foreign country which has a Reference Currency or an Index Currency as its
currency, are permitted to fluctuate in value relative to the U.S. dollar.
Governments, however, sometimes do not allow their currencies to float freely in
response to economic forces. Sovereign governments in fact use a variety of
techniques, such as intervention by a country's central bank or imposition of
regulatory controls or taxes, to affect the exchange rates of their currencies.
Governments may also issue a new currency to replace an existing currency or
alter the exchange rate or relative exchange characteristics by devaluation or
revaluation of a currency. Thus, a special risk in purchasing Warrants is that
their liquidity, trading value and Cash Settlement Value could be affected by
governmental actions which could change or interfere with theretofore freely
determined currency valuation, fluctuations in response to other market forces
and the movement of currencies across borders. There will be no adjustment or
change in the terms of the Warrants in the event that exchange rates should
become fixed, or in the event of any devaluation or revaluation or imposition of
exchange or other regulatory controls or taxes, or in the event of other
developments affecting any Reference Currency or Index Currency, the U.S. dollar
or any other currency. In contrast, the OCC has reserved the authority to adjust
the terms of its standardized options for certain governmental actions and to
impose special exercise settlement procedures.
The interbank market in foreign currencies is a global, around-the-clock
market. Therefore, the hours of trading for the Warrants will not conform to the
hours during which any Reference Currency or Index Currency and the U.S. dollar
are traded. To the extent that any national securities exchange on which the
Warrants are traded is closed while the market for a particular Reference
Currency or Index Currency remains open, significant price and rate movements
may take place in the underlying foreign exchange markets that will not be
reflected immediately in the price of a Warrant on such exchange. The
possibility of such movements should be taken into account in relating closing
prices for the Warrants on such exchange to prices and rates in the underlying
foreign exchange markets.
There is no systematic reporting of last-sale information for foreign
currencies. Reasonably current bid and offer information is available on the
floor of any exchange where foreign currency is traded, in certain brokers'
offices, in bank foreign currency trading offices, and to others who wish to
subscribe for this information, but such information will not necessarily
reflect the particular quoted rate, which is designated in the applicable
Prospectus Supplement, used to calculate the Spot Rate. There is no regulatory
requirement that available bid and offer information be firm or revised on a
timely basis. The absence of last-sale information and the limited availability
of quotations to individual investors may make it difficult for many investors
to obtain timely, accurate data about the state of the underlying foreign
exchange market. In addition, the quotation information that is available is
representative of very large round lot or 'wholesale' transactions in the
interbank market and does not reflect exchange rates for smaller odd lot or
'retail' transactions. Because more favorable rates are generally obtained in
large transactions, the rate that will be obtained at any given time in
connection with the exercise of a small aggregate number of Warrants is likely
to be less favorable than the rates reported in quotation information generally
available to investors at such time.
In general, a wholesale, round lot quote would be obtained in a transaction
valued at approximately $5 million or more and a retail, odd lot quote would be
obtained in a transaction valued at less than approximately $5 million.
Furthermore, the difference between a wholesale, round lot quote and a retail,
odd lot quote generally would not be expected to exceed approximately one
percent. However, on any given day and in the context of any particular
transaction, the distinction between, and the size of, a wholesale, round lot
transaction and a retail, odd lot transaction and the variation of the
difference between the related quotes can vary, in some cases materially,
because of the many factors that influence the foreign exchange market, as more
fully discussed above. Accordingly, no assurance can be given as to whether the
aggregate number of Warrants exercised on any day will constitute a wholesale,
round lot transaction or a retail, odd lot transaction or as to the quotes to be
obtained in connection therewith.
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PAINE WEBBER GROUP INC.
Paine Webber Group Inc. is a holding company which, together with its
operating subsidiaries, forms one of the largest full-service securities and
commodities firms in the industry. Founded in 1879, the Company employs
approximately 14,400 people in 281 offices worldwide. The Company's principal
line of business is to serve the investment and capital needs of individual,
corporate, institutional and public agency clients through its broker-dealer
subsidiary, PaineWebber Incorporated ('PaineWebber'), and other specialized
subsidiaries. The Company holds memberships in all major securities and
commodities exchanges in the United States, and makes a market in many
securities traded on the Automated Quotation System of the National Association
of Securities Dealers, Inc. ('NASD') or in other over-the-counter markets.
Additionally, PaineWebber is a primary dealer in U.S. government securities.
The Company is comprised of four interrelated core business groups --
Retail Sales and Marketing, Institutional Sales and Trading, Investment Banking
and Asset Management -- which utilize common operational and administrative
personnel and facilities.
Retail Sales and Marketing consists primarily of a domestic branch office
system and consumer product groups through which PaineWebber and certain other
subsidiaries provide clients with financial services and products, including the
purchase and sale of securities, option contracts, commodity and financial
futures contracts, direct investments, selected insurance products, fixed income
instruments and mutual funds. The Company may act as principal or agent in
providing these services. Fees charged vary according to the size and complexity
of a transaction, and the activity level of the client's account.
Institutional Sales and Trading is comprised of five businesses: Fixed
Income, U.S. Equity, International, Derivatives and Research. The Company places
securities with, and executes trades on behalf of, institutional clients both
domestically and internationally. In addition, the Company takes positions in
both listed and unlisted equity and fixed income securities to facilitate client
transactions or for the Company's own account.
Through the Investment Banking group, the Company provides financial advice
to, and raises capital for, a broad range of domestic and international
corporate clients. Corporate Finance manages and underwrites public offerings,
participates as an underwriter in syndicates of public offerings managed by
others, and provides advice in connection with mergers and acquisitions, lease
financings and debt restructurings. The Municipal Securities group originates,
underwrites, sells and trades taxable and tax-exempt issues for municipal and
public agency clients.
The Asset Management group is comprised of Mitchell Hutchins Asset
Management Inc. ('MHAM'), Mitchell Hutchins Institutional Investors Inc.
('MHII') and Mitchell Hutchins Investment Advisory division ('MHIA'). MHAM and
MHII provide investment advisory and portfolio management services to pension
and endowment funds. MHAM also provides investment advisory and portfolio
management services to individuals and mutual funds. MHIA provides portfolio
management services to individuals, trusts and institutions.
The securities business is one of the nation's most highly regulated
industries. Violations of applicable regulations can result in the revocation of
broker-dealer licenses, the imposition of censures or fines, and the suspension
or expulsion of a firm, its officers or employees. The Company's securities
business is regulated by various agencies, including the Commission, the New
York Stock Exchange, the Commodity Futures Trading Commission and the NASD.
The Company's principal executive offices are located at 1285 Avenue of the
Americas, New York, New York 10019 (Telephone (212) 713-2000).
For purposes of the foregoing description, all references to the 'Company'
refer collectively to Paine Webber Group Inc. and its operating subsidiaries
unless the context otherwise requires.
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USE OF PROCEEDS
As may be described in further detail in the Prospectus Supplement, a
substantial portion of the proceeds to be received by the Company from the sale
of each issue of Warrants may be used by the Company or one or more of its
subsidiaries to hedge currency risks with respect to such Warrants. The
remainder of such proceeds, if any, will be used by the Company or its
subsidiaries for general corporate purposes.
DESCRIPTION OF WARRANTS
The following description of the terms of the Warrants sets forth certain
general terms and provisions of the Warrants to which any Prospectus Supplement
may relate. The particular terms of the Warrants offered by any Prospectus
Supplement and the extent, if any, to which such general provisions do not apply
to the Warrants so offered will be described in such Prospectus Supplement.
Each issue of Warrants will be issued under a separate warrant agreement
(each, a 'Warrant Agreement') to be entered into between the Company and a bank
or trust company, as warrant agent (the 'Warrant Agent'), all as described in
the Prospectus Supplement relating to such Warrants. A single bank or trust
company may act as Warrant Agent for more than one issue of Warrants. The
Warrant Agent will act solely as the agent of the Company under the applicable
Warrant Agreement and will not assume any obligation or relationship of agency
or trust for or with any holders of such Warrants. An example of a Warrant
Agreement, including warrant certificates, is filed as an exhibit to the
Registration Statement. The following summaries of certain provisions of the
Warrants and the Warrant Agreements do not purport to be complete and are
subject to, and are qualified in their entirety by reference to, all the
provisions of each issue of Warrants and the related Warrant Agreement.
The Company will have the right to 'reopen' a previous issue of Warrants
and to issue additional Warrants of such issue.
GENERAL
Each Warrant will entitle the Warrantholder to receive from the Company
upon exercise the Cash Settlement Value of such Warrant, which will be a cash
amount in U.S. dollars (i) in the case of a Currency Put Warrant, determined by
reference to the amount, if any, by which the Spot Rate is less than the Strike
Rate on the applicable valuation date following exercise and (ii) in the case of
a Currency Call Warrant, determined by reference to the amount, if any, by which
the Spot Rate on the applicable valuation date following exercise exceeds the
Strike Rate. The Prospectus Supplement for an issue of Warrants will set forth
the formula pursuant to which the Cash Settlement Value of such Warrants will be
determined. The Strike Rate may either be a fixed amount or an amount that
varies during the term of such Warrants in accordance with a schedule or
formula. Certain Warrants will, if specified in the Prospectus Supplement,
entitle the Warrantholder to receive from the Company, upon automatic exercise
at expiration and under any other circumstances specified in the Prospectus
Supplement, an amount equal to the greater of the applicable Cash Settlement
Value and the Minimum Expiration Value of such Warrants. In addition, if so
specified in the Prospectus Supplement, following the occurrence of an
Extraordinary Event or an Exercise Limitation Event, the Cash Settlement Value
of a Warrant may, at the option of the Company, be determined on a different
basis, including in connection with automatic exercise at expiration.
A Warrant will be settled only in U.S. dollars and, accordingly, will not
require or entitle a Warrantholder to sell, deliver, purchase or take delivery
of any non-U.S. currency to or from the Company, and the Company will be under
no obligation to, nor will it, purchase or take delivery of or sell or deliver
any non-U.S. currency from or to Warrantholders pursuant to the Warrants.
Unless otherwise specified in the Prospectus Supplement, the Warrants will
be deemed to be automatically exercised upon expiration. Upon such automatic
exercise, Warrantholders will be entitled to receive the Cash Settlement Value
of the Warrants, if any, except that holders of any Warrants having a Minimum
Expiration Value will be entitled to receive an amount equal to the greater of
such Cash Settlement Value and the applicable Minimum Expiration Value. The
Minimum Expiration Value may be either a fixed amount or an amount that varies
during the term of the Warrants in accordance with a schedule or formula. Any
Minimum Expiration
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Value applicable to an issue of Warrants, as well as any additional
circumstances resulting in the automatic exercise of such Warrants, will be
specified in the related Prospectus Supplement.
If so specified in the Prospectus Supplement, the Warrants may be cancelled
by the Company upon the occurrence of an Extraordinary Event. Any Extraordinary
Events or Exercise Limitation Events relating to an issue of Warrants will be
set forth in the related Prospectus Supplement. Upon such cancellation, the
related Warrantholders will be entitled to receive only the applicable
Cancellation Amount specified in such Prospectus Supplement. The Cancellation
Amount may be either a fixed amount or an amount that varies during the term of
the Warrants in accordance with a schedule or formula.
Reference is hereby made to the Prospectus Supplement relating to the
particular issue of Warrants offered thereby for the terms of such Warrants,
including, where applicable: (i) the aggregate amount of such Warrants; (ii) the
offering price of such Warrants; (iii) either (a) the Reference Currency, which
may be a non-U.S. currency or units of two or more non-U.S. currencies, or (b)
the Currency Index (including each Index Currency included therein), which may
be compiled and published by a third party or by the Company or an affiliate of
the Company, in either case relating to such Warrants; (iv) whether such
Warrants are Currency Put Warrants or Currency Call Warrants; (v) the date on
which the right to exercise such Warrants may be exercised; (vi) the manner in
which such Warrants may be exercised; (vii) the minimum number, if any, of such
Warrants that are exercisable by a Warrantholder at any one time; (viii) the
maximum number, if any, of such Warrants that may, subject to the Company's
election, be exercised by all Warrantholders (or by any person or entity) on any
day; (ix) any provisions permitting a Warrantholder to condition an exercise
notice on the absence of certain specified changes in the Spot Rate after the
exercise date, any provisions permitting the Company to suspend exercise of such
Warrants or to redeem such Warrants based on market conditions or other
circumstances and any special provisions relating to the exercise of such
Warrants; (x) any provisions for the automatic exercise of such Warrants other
than at expiration; (xi) any provisions permitting the Company to cancel such
Warrants upon the occurrence of certain events; (xii) the method of determining
the amount payable in connection with the exercise or cancellation of such
Warrants, including (a) the Strike Rate, (b) the method of determining the Spot
Rate, (c) the method of expressing movements in either (1) the exchange rate of
the applicable Reference Currency in relation to U.S. dollars as a cash amount
in U.S. dollars or (2) the level of the applicable Currency Index as a cash
amount in U.S. dollars, and (d) any Cancellation Amount or Minimum Expiration
Value applicable to such Warrants; (xiii) the time or times at which amounts
will be payable in respect of such Warrants following exercise or automatic
exercise; (xiv) any national securities exchange on which such Warrants will be
listed; (xv) any provisions for issuing such Warrants in certificated form from
the perspective of Warrantholders; (xvi) if such Warrants are not issued in
book-entry form, the place or places at which payment of the Cash Settlement
Value, Cancellation Amount, if any, and Minimum Expiration Value, if any, of
such Warrants is to be made by the Company; and (xvii) any other material terms
of such Warrants.
Prospective purchasers of Warrants should be aware of special United States
Federal income tax considerations applicable to instruments such as the
Warrants. The Prospectus Supplement relating to each issue of Warrants will
describe such tax considerations. The summary of United States Federal income
tax considerations contained in the Prospectus Supplement will be presented for
informational purposes only, however, and will not be intended as legal or tax
advice to prospective purchasers. Prospective purchasers of Warrants are urged
to consult their own tax advisers prior to any acquisition of Warrants.
BOOK-ENTRY PROCEDURES AND SETTLEMENT
Unless otherwise specified in the Prospectus Supplement, the Warrants
offered thereby will be issued in book-entry form from the perspective of
Warrantholders. Such Warrants will be issued in the form of a single global
certificate representing all the Warrants (the 'global certificate') registered
in the name of the nominee of the depository, The Depository Trust Company
('DTC', which term, as used herein, includes any successor depository selected
by the Company).
DTC is a limited-purpose trust company which was created to hold securities
for its participating organizations (the 'Participants') and to facilitate the
clearance and settlement of securities transactions between Participants in such
securities through electronic book-entry changes in accounts of its
Participants. Participants include securities brokers and dealers, banks and
trust companies, clearing corporations and certain other
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organizations. Access to DTC's system is also available to others such as banks,
brokers, dealers and trust companies that clear through or maintain a custodial
relationship with a Participant, either directly or indirectly ('indirect
participants'). Persons who are not Participants may beneficially own securities
held by DTC only through Participants or indirect participants.
DTC's nominee for all purposes will be considered the sole owner or holder
of the Warrants under the related Warrant Agreement. Owners of beneficial
interests in the global certificate will not be entitled to have Warrants
registered in their names, will not receive or be entitled to receive physical
delivery of Warrants in definitive form and will not be considered the holders
thereof under the related Warrant Agreement, except in certain limited
circumstances discussed below.
Neither the Company nor the Warrant Agent 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 certificate, or for maintaining,
supervising or reviewing any records relating to such beneficial ownership
interests.
A Warrantholder's ownership of a Warrant will be recorded on or through the
records of the brokerage firm or other entity that maintains such
Warrantholder's account. In turn, the total number of Warrants held by an
individual brokerage firm for its clients will be maintained on the records of
DTC in the name of such brokerage firm (or in the name of a Participant or
indirect participant that acts as agent for the Warrantholder's brokerage firm
if such firm is not a Participant or indirect participant). Therefore, a
Warrantholder must rely upon the foregoing procedures to evidence such
Warrantholder's ownership of a Warrant. Transfer of ownership of any Warrant may
be effected only through the selling Warrantholder's brokerage firm.
The Cash Settlement Value and, if applicable, the Cancellation Amount or
Minimum Expiration Value payable in respect of the Warrants will be paid by the
Warrant Agent to DTC. DTC will be responsible for crediting the amount of such
payments to the accounts of the Participants or indirect participants in
accordance with its standard procedures, which currently provide for payments in
next-day funds settled through the New York Clearing House. Each Participant or
indirect participant will be responsible for disbursing such payments to the
beneficial owners of the Warrants that it represents and to each brokerage firm
for which it acts as agent. Each such brokerage firm will be responsible for
disbursing funds to the owners of the Warrants that it represents. It is
suggested that any purchaser of Warrants with accounts at more than one
brokerage firm only effect transactions in the Warrants, including exercises,
through the brokerage firm or firms that hold such purchaser's Warrants.
If DTC is at any time unwilling or unable to continue as depository and a
successor depository is not appointed by the Company within 90 days, the Company
will issue Warrants in definitive form in exchange for the global certificate.
In addition, the Company may at any time determine not to have the Warrants
represented by a global certificate and, in such event, will issue Warrants in
definitive form in exchange for such global certificate. In either instance, an
owner of a beneficial interest in the global certificate will be entitled to
have Warrants equal in aggregate amount to such beneficial interest registered
in its name and will be entitled to physical delivery of such Warrants in
definitive form.
LISTING
Unless otherwise indicated in the Prospectus Supplement, the Warrants will
be listed on a national securities exchange as specified in the Prospectus
Supplement. It is expected that such exchange will cease trading an issue of
Warrants as of the close of business on the related expiration date of such
Warrants.
MODIFICATION
The Warrant Agreement and the terms of the related Warrants may be amended
by the Company and the Warrant Agent, without the consent of the holders of any
Warrants, for the purpose of curing any ambiguity or curing, correcting or
supplementing any defective or inconsistent provision contained therein,
maintaining the listing of such Warrants on any national securities exchange or
registration of such Warrants under the Exchange Act, permitting the issuance of
individual Warrant certificates to Warrantholders, reflecting the issuance by
the Company of additional Warrants of the same issue or reflecting the
appointment of a successor depository, or in
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any other manner which the Company may deem necessary or desirable and which, as
determined by the Company in its sole discretion, will not materially and
adversely affect the interests of the Warrantholders.
The Company and the Warrant Agent also may modify or amend the Warrant
Agreement and the terms of the related Warrants, with the consent of the holders
of not less than a majority in number of the then outstanding Warrants affected
by such modification or amendment, for any purpose, provided that no such
modification or amendment that (i) in the case of Currency Put Warrants,
decreases the Strike Rate or, in the case of Currency Call Warrants, increases
the Strike Rate, (ii) otherwise changes the determination of the Cash Settlement
Value or Cancellation Amount, if any, or Minimum Expiration Value, if any, of
the Warrants (or any aspects of such determination) so as to reduce the amount
receivable upon exercise, cancellation or expiration, (iii) shortens the period
of time during which the Warrants may be exercised, (iv) decreases the Minimum
Expiration Value, if any, or (v) otherwise materially and adversely affects the
exercise rights of the Warrantholders or reduces the percentage of the number of
outstanding Warrants the consent of whose holders is required for modification
or amendment of the Warrant Agreement or the terms of the related Warrants, may
be made without the consent of each Warrantholder affected thereby.
MERGER, CONSOLIDATION, SALE OR OTHER DISPOSITIONS
If at any time there is a merger or consolidation involving the Company or
a sale, transfer, conveyance or other disposition of all or substantially all of
the assets of the Company, then the successor or assuming corporation will
succeed to and be substituted for the Company under the Warrant Agreement and
the related Warrants, with the same effect as if it had been named in such
Warrant Agreement and Warrants as the Company. The Company will thereupon be
relieved of any further obligation under such Warrant Agreement and Warrants
and, in the event of any such sale, transfer, conveyance (other than by way of
lease) or other disposition, the Company as the predecessor corporation may
thereupon or at any time thereafter be dissolved, wound up or liquidated.
ENFORCEABILITY OF RIGHTS BY WARRANTHOLDERS
Any Warrantholder may, without the consent of the Warrant Agent or any
other Warrantholder, enforce by appropriate legal action on his own behalf his
right to exercise, and to receive payment for, his Warrants.
PLAN OF DISTRIBUTION
The Company may sell the Warrants in any of three ways: (i) through
underwriters; (ii) directly to one or more purchasers; or (iii) through agents.
The Prospectus Supplement with respect to the Warrants being offered thereby
sets forth the terms of the offering of such Warrants, including the names of
any underwriters, the purchase price of such Warrants and the proceeds to the
Company from such sale, any underwriting discounts and other items constituting
underwriters' compensation, any initial public offering price, any discounts or
concessions allowed or reallowed or paid to dealers and any national securities
exchange on which such Warrants will be listed. Only underwriters so named in
the Prospectus Supplement are deemed to be underwriters in connection with the
Warrants offered thereby.
If underwriters are used in the sale, the Warrants will be acquired by the
underwriters for their own account and may be resold from time to time in one or
more transactions, including negotiated transactions, at a fixed public offering
price or at varying prices determined at the time of sale. The Warrants may be
offered to the public either through underwriting syndicates represented by
managing underwriters or by underwriters without a syndicate. Such managing
underwriters or underwriters may include PaineWebber. Unless otherwise set forth
in the Prospectus Supplement, the obligations of the underwriters to purchase
such Warrants will be subject to certain conditions precedent, and the
underwriters will be obligated to purchase all the Warrants offered by the
Prospectus Supplement if any of such Warrants are purchased. Any initial public
offering price and any discounts or concessions allowed or reallowed or paid to
dealers may be changed from time to time.
Warrants may also be sold directly by the Company or through agents
designated by the Company from time to time. Any agents involved in the offer or
sale of the Warrants will be named, and any commissions payable by the Company
to such agents will be set forth, in the Prospectus Supplement. Such agents may
include
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PaineWebber. Unless otherwise indicated in the Prospectus Supplement, any such
agent is acting on a best-efforts basis for the period of its appointment.
The Warrants, including additional Warrants of a previous issue, may be
sold on any national securities exchange on which the Warrants are listed.
Agents and underwriters may be entitled under agreements entered into with
the Company to indemnification by the Company against certain civil liabilities,
including liabilities under the Securities Act, or to contribution with respect
to payments which the agents or underwriters may be required to make in respect
thereof. Agents and underwriters may be customers of, engage in transactions
with, or perform services for, the Company or its affiliates in the ordinary
course of business.
PaineWebber expects to offer and sell previously issued Warrants from time
to time in the course of its business as a broker-dealer. PaineWebber may act as
principal or agent in such transactions. The Warrants may be offered or sold in
such transactions on any national securities exchange on which the Warrants are
listed. Sales will be made at prices related to prevailing prices at the time of
sale.
PaineWebber is a wholly owned subsidiary of the Company. The participation
of PaineWebber in the offer and sale of the Warrants will comply with the
requirements of Schedule E of the By-Laws of the NASD regarding underwriting
securities of an affiliate. Under the provisions of Schedule E, when a NASD
member such as PaineWebber distributes securities of an affiliate, the price of
the securities can be no higher than that recommended by a 'qualified
independent underwriter', as such term is defined in Schedule E, meeting certain
standards. In accordance with such requirement, PaineWebber will select a
'qualified independent underwriter' in connection with each issue of Warrants to
conduct due diligence and recommend a price for such Warrants in compliance with
the requirements of Schedule E.
ERISA CONSIDERATIONS
The Employee Retirement Income Security Act of 1974, as amended ('ERISA'),
imposes certain restrictions on employee benefit plans ('Plans') which are
subject to ERISA, and on those persons who are fiduciaries with respect to such
Plans. In accordance with ERISA's general fiduciary requirements, a fiduciary
with respect to any such Plan who is considering the purchase of Warrants on
behalf of such Plan should determine whether such purchase is permitted under
the governing Plan documents, is prudent and is appropriate for the Plan in view
of its overall investment policy and the composition and diversification of its
portfolio. See 'Risk Factors' herein. Other provisions of ERISA and section 4975
of the Internal Revenue Code of 1986, as amended (the 'Code'), prohibit certain
transactions involving the assets of a Plan and persons who have certain
specified relationships to the Plan ('parties in interest' within the meaning of
ERISA or 'disqualified persons' within the meaning of section 4975 of the Code).
Thus, a Plan fiduciary considering the purchase of Warrants should consider
whether such a purchase might constitute or result in a prohibited transaction
under ERISA or section 4975 of the Code.
The Company and PaineWebber may each be considered a 'party in interest' or
a 'disqualified person' with respect to many Plans. The purchase of Warrants by
a Plan that is subject to the fiduciary responsibility provisions of ERISA or
the prohibited transaction provisions of section 4975 of the Code (including
individual retirement arrangements and other plans described in section
4975(e)(1) of the Code) and with respect to which the Company or PaineWebber is
a service provider (or otherwise is a 'party in interest' or 'disqualified
person') may constitute or result in a nonexempt prohibited transaction under
ERISA or section 4975 of the Code, unless such Warrants are acquired pursuant to
and in accordance with an applicable exemption, such as Prohibited Transaction
Class Exemption ('PTCE') 90-1 (an exemption for certain transactions involving
insurance company pooled separate accounts), PTCE 84-14 (an exemption for
certain transactions determined by an independent qualified professional asset
manager) or PTCE 91-38 (an exemption for certain transactions involving bank
collective investment funds). Any pension or other employee benefit plan
proposing to acquire any Warrants should consult with its counsel.
15
<PAGE>
EXPERTS
The consolidated financial statements of the Company incorporated by
reference in the 1993 Form 10-K have been audited by Ernst & Young, independent
auditors, as set forth in their report thereon included therein and incorporated
herein by reference. Such consolidated financial statements are incorporated
herein by reference in reliance upon such report given upon the authority of
such firm as experts in accounting and auditing.
LEGAL OPINIONS
The validity of the Warrants will be passed upon for the Company by
Cravath, Swaine & Moore, New York, New York.
16
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
The following table sets forth all expenses payable by the Registrant in
connection with the issuance and distribution of the securities being
registered. All the amounts shown are estimates.
Accounting fees and expenses .................... $ 2,000
Legal fees and expenses ......................... 2,500
Printing expenses ............................... 5,000
Miscellaneous ................................... 500
-------
Total ............................ $10,000
=======
Item 15. Indemnification of Directors and Officers.
Section 102 of the General Corporation Law of the State of Delaware gives
corporations the power to eliminate or limit the personal liability of directors
under certain circumstances. Section 145 of the General Corporation Law of the
State of Delaware gives corporations the power to indemnify directors and
officers under certain circumstances.
Article IX of the Registrant's Restated Certificate of Incorporation
(relating to the elimination of personal liability) is hereby incorporated by
reference to Exhibit 3 to the Registrant's Quarterly Report on Form 10-Q for the
quarter ended March 31, 1987, filed with the Securities and Exchange Commission
pursuant to the Securities Exchange Act of 1934. Article VII of the
Registrant's By-Laws (relating to indemnification) is hereby incorporated by
reference to Exhibit 3.1 to the Registrant's Annual Report on Form 10-K for the
year ended December 31, 1987, filed with the Securities and Exchange Commission
pursuant to the Securities Exchange Act of 1934.
The Registrant also maintains directors and officers liability and
corporate reimbursement insurance which provides for coverage against loss
arising from claims made against directors and officers in their capacity as
such. The general scope of coverage is any breach of duty, neglect, error,
misstatement, misleading statement or omission. Such policy does not exclude
liabilities under
<PAGE>
2
the Securities Act of 1933. The Registrant also maintains fiduciary liability
insurance for losses in connection with claims made against directors or
officers for violation of any of the responsibilities, obligations or duties
imposed upon fiduciaries under the Employee Retirement Income Security Act of
1974.
See the proposed form of Underwriting Agreement filed as Exhibit 1 for
certain indemnification provisions.
Item 16. Exhibits.
1 */ -- Proposed form of Underwriting Agreement.
4 */ -- Proposed form of Warrant Agreement, with the proposed forms
of Warrant Certificate and Global Warrant Certificate
attached as Exhibit A and A-1 thereto.
5 */ -- Opinion of Cravath, Swaine & Moore, in respect of the legality of
the Exchange Rate Currency Warrants registered hereunder.
8 */ -- Opinion of Cravath, Swaine & Moore regarding tax matters
(included in Exhibit 5).
23.1 **/ -- Consent of Ernst & Young relating to the Registrant's Annual
Report on Form 10-K for the year ended December 31, 1993.
23.2 */ -- Consents of Cravath, Swaine & Moore (included in Exhibit 5).
24 */ -- Power of Attorney.
- ---------------
*/ Previously filed.
**/ Filed herewith.
<PAGE>
3
Item 17. Undertakings.
The undersigned Registrant hereby undertakes:
(a)(1) To file, during any period in which offers or sales are being made,
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;
(ii) to reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent post-
effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
registration statement;
(iii) to include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement;
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the Registrant pursuant to
Section 13 or 15(d) of the Securities Exchange Act of 1934 that are incorporated
by reference in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to
be a new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination of
the offering.
(b) That, for purposes of determining any liability under the Securities
Act of 1933, each filing of the Registrant's annual report pursuant to Section
13(a) or 15(d) of the Securities Exchange Act of 1934 that is
<PAGE>
4
incorporated by reference in the registration statement 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.
(c) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the provisions described under Item 15
above, or otherwise, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public policy
as expressed in the Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
The undersigned registrant hereby undertakes that:
(d)(1) For purposes of determining any liability under the Securities
Act of 1933, the information omitted from the form of prospectus filed as part
of this registration statement in reliance upon Rule 430A and contained in a
form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or
497(h) under the Securities Act shall be deemed to be part of this registration
statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities
Act of 1933, 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.
<PAGE>
5
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all the
requirements for filing on Form S-3 and has duly caused this Amended
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in The City of New York, State of New York, on July 19, 1994.
PAINE WEBBER GROUP INC.,
(Registrant)
by *
---------------------------
(Donald B. Marron,
Chairman of the Board,
Chief Executive Officer and
Director)
*by /s/ Pierce R. Smith
-----------------------
Pierce R. Smith,
Attorney-in-Fact
Pursuant to the requirements of the Securities Act of 1933, this Amended
Registration Statement has been signed
<PAGE>
6
by the following persons in the capacities and on the dates indicated.
Signature Title Date
- -------------------------- ------------------------------------ -------------
* Chairman of the Board, Chief Execu- July 19, 1994
- -------------------------- tive Officer, and Director (princi-
(Donald B. Marron) pal executive officer)
/s/ Regina A. Dolan Vice President and Chief Financial July 19, 1994
- -------------------------- Officer (principal financial and
(Regina A. Dolan) accounting officer)
* Director July 19, 1994
- --------------------------
(T. Stanton Armour)
* Director July 19, 1994
- --------------------------
(E. Garrett Bewkes, Jr.)
* Director July 19, 1994
- --------------------------
(John A. Bult)
* Director July 19, 1994
- --------------------------
(Yozo Fujisawa)
Director
- --------------------------
(Joseph J. Grano, Jr.)
* Director July 19, 1994
- --------------------------
(Paul B. Guenther)
* Director July 19, 1994
- --------------------------
(John E. Kilgore, Jr.)
*by /s/ Pierce R. Smith
-----------------------
Pierce R. Smith,
Attorney-in-Fact
<PAGE>
7
* Director July 19, 1994
- --------------------------
(Robert M. Loeffler)
* Director July 19, 1994
- --------------------------
(Edward Randall, III)
* Director July 19, 1994
- --------------------------
(Henry Rosovsky)
* Director July 19, 1994
- --------------------------
(Kyosaku Sorimachi)
*by /s/ Pierce R. Smith
-----------------------
Pierce R. Smith,
Attorney-in-Fact
<PAGE>
INDEX TO EXHIBITS
Exhibit
Number Exhibit
- ------- -----------------------------------------------------------------------
23.1 Consent of Ernst & Young relating to the Registrant's Annual Report on
Form 10-K for the year ended December 31, 1993.
EXHIBIT 23.1
Consent of Independent Auditors
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-3) and related Prospectus of Paine Webber Group
Inc. for the registration of Exchange Rate Currency Warrants and to the
incorporation by reference therein of our report dated January 24, 1994, except
for the note as to the subsequent event, for which the date is February 3, 1994,
with respect to the consolidated financial statements and schedules of Paine
Webber Group Inc. included or incorporated by reference in its Annual Report
(Form 10-K) for the year ended December 31, 1993, filed with the Securities and
Exchange Commission.
/s/ Ernst & Young
New York, New York
July 19, 1994
