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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH 16, 1994
REGISTRATION NO. 33-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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<TABLE>
<S> <C>
PAINEWEBBER FINANCE L.L.C. PAINE WEBBER GROUP INC.
(Exact name of registrant as specified in its (Exact name of guarantor as specified in its
charter) charter)
DELAWARE DELAWARE
(State or other jurisdiction of incorporation (State or other jurisdiction of incorporation
or organization) or organization)
APPLIED FOR 13-2760086
(I.R.S. Employer Identification No.) (I.R.S. Employer Identification No.)
C/O THEODORE A. LEVINE THEODORE A. LEVINE
VICE PRESIDENT, GENERAL COUNSEL VICE PRESIDENT, GENERAL COUNSEL
& SECRETARY & SECRETARY
PAINE WEBBER GROUP INC. PAINE WEBBER GROUP INC.
1285 AVENUE OF THE AMERICAS 1285 AVENUE OF THE AMERICAS
NEW YORK, NEW YORK 10019 NEW YORK, NEW YORK 10019
(212) 713-2000 (212) 713-2000
(Name, address, including zip code, and (Name, address, including zip code, and
telephone number, including area telephone number, including
code, of principal executive offices and area code, of principal executive offices and
agent for service) agent for service)
PLEASE SEND COPIES OF ALL COMMUNICATIONS TO:
PETER S. WILSON RICHARD D. SPIZIRRI
CRAVATH, SWAINE & MOORE DAVIS POLK & WARDWELL
WORLDWIDE PLAZA 450 LEXINGTON AVENUE
825 EIGHTH AVENUE NEW YORK, NEW YORK 10017
NEW YORK, NEW YORK 10019 (212) 450-4000
(212) 474-1000
</TABLE>
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
From time to time after the effective date of this Registration Statement.
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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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CALCULATION OF REGISTRATION FEE
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PROPOSED PROPOSED
AMOUNT MAXIMUM MAXIMUM
TITLE OF EACH CLASS OF TO BE OFFERING PRICE AGGREGATE
SECURITIES TO BE REGISTERED REGISTERED(1) PER UNIT(2) OFFERING PRICE(2)
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<S> <C> <C> <C>
Exchangeable Cumulative Preferred Limited Liability
Company Interests of PaineWebber Finance L.L.C........ 16,000,000 interests $25 $400,000,000
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Backup Undertakings by Paine Webber Group Inc. (3)..... -- -- --
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Series Preferred Stock of Paine Webber Group Inc.
(3)(4)................................................ -- -- --
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Depositary Shares representing Series Preferred Stock
of Paine Webber Group Inc. (3)(4)..................... -- -- --
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TITLE OF EACH CLASS OF AMOUNT OF
SECURITIES TO BE REGISTERED REGISTRATION FEE
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<S> <C>
Exchangeable Cumulative Preferred Limited Liability
Company Interests of PaineWebber Finance L.L.C........ $137,932
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Backup Undertakings by Paine Webber Group Inc. (3)..... --
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Series Preferred Stock of Paine Webber Group Inc.
(3)(4)................................................ --
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Depositary Shares representing Series Preferred Stock
of Paine Webber Group Inc. (3)(4)..................... --
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</TABLE>
(1) The number of Exchangeable Cumulative Preferred Limited Liability Company
Interests being registered hereby is such number of such Preferred Limited
Liability Company Interests, not to exceed 16,000,000, as may from time to
time be issued by PaineWebber Finance L.L.C.
(2) Estimated solely for the purpose of determining the registration fee.
(3) No additional consideration will be received for the Backup Undertakings or
Preferred Stock of Paine Webber Group Inc. or Depositary Shares representing
such Preferred Stock.
(4) There are also being registered hereunder such indeterminate number of (i)
shares of Preferred Stock of Paine Webber Group Inc. issuable in exchange
for the Exchangeable Cumulative Preferred Limited Liability Company
Interests of PaineWebber Finance L.L.C. and (ii) Depositary Shares
representing shares of such Preferred Stock.
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THE REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANTS
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 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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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 ANY SUCH STATE.
SUBJECT TO COMPLETION -- MARCH 16, 1994
PRELIMINARY PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED MARCH [ ], 1994)
[ ] INTERESTS
PAINEWEBBER FINANCE L.L.C.
% EXCHANGEABLE
CUMULATIVE PREFERRED LIMITED LIABILITY COMPANY INTERESTS, SERIES A
(LIQUIDATION PREFERENCE $25 PER SERIES A INTEREST)
GUARANTEED TO THE EXTENT SET FORTH HEREIN BY
PAINE WEBBER GROUP INC.
The % Exchangeable Cumulative Preferred Limited Liability Company
Interests, Series A (the "Series A Interests"), offered hereby are being issued
by PaineWebber Finance L.L.C. (the "Company"), a Delaware limited liability
company. All the common limited liability company interests (the "Common
Interests") in the Company are owned, directly and indirectly, by Paine Webber
Group Inc. (the "Guarantor"), a Delaware corporation. The net proceeds from the
sale of the Company's limited liability company interests, including the Series
A Interests, will be loaned by the Company to the Guarantor in exchange for one
or more notes of the Guarantor (the "Loan Notes"). Interest and principal
payments on the Loan Notes are intended to fund the payment of periodic
distributions ("dividends") and redemption and liquidation distributions on the
Series A Interests.
The payment of dividends, if and to the extent declared out of moneys held by
the Company and legally available therefor, and payments on liquidation or
redemption with respect to the Series A Interests, are guaranteed by the
Guarantor to the extent described in the accompanying Prospectus. Holders of the
Series A Interests will be entitled to receive cumulative cash dividends, at an
annual rate of % of the liquidation preference of $25 per Series A Interest,
accruing from the date of original issuance and payable monthly in arrears on
the last day of each calendar month, commencing March [ ], 1994.
The Series A Interests are redeemable as provided herein at the option of the
Company (with the Guarantor's consent) at any time after March [ ], 1999 and
will be redeemed, under certain circumstances, from the proceeds of any cash
prepayment or repayment by the Guarantor of the Loan Notes, in each case at a
cash redemption price of $25 per Series A Interest, plus accrued and unpaid
dividends to the redemption date. See "Certain Terms of the Series A
Interests -- Optional Redemption". In the event of the liquidation of the
Company, holders of Series A Interests will be entitled to receive for each
Series A Interest a liquidation preference of $25 plus accrued and unpaid
dividends to the date of payment, subject to certain limitations. See "Certain
Terms of the Series A Interests -- Liquidation Distribution".
Subject to certain conditions, on any dividend payment date on or after
September [ ], 1994, the Guarantor may deliver to the Company, in exchange for
the Loan Notes, Depositary Shares representing a new issue of the Guarantor's
% Cumulative Preferred Stock, Series [ ] (the "Guarantor Preferred Stock"),
having a liquidation preference of $200 per share, and an aggregate fair market
value, as determined by the Guarantor's financial advisor (which may be an
affiliate of the Guarantor), or an aggregate liquidation preference, all as more
fully described herein, equal to the unpaid principal amount of the Loan Notes
and any unpaid interest accrued to the date of such exchange. Each Depositary
Share will represent one-eighth of a share of the Guarantor Preferred Stock,
will have a proportionate liquidation preference of $25, and will entitle the
holder to all proportional rights and preferences of the Guarantor Preferred
Stock. In the event of such exchange, the Company shall be obligated to redeem
the Series A Interests, as an entirety, solely in exchange for Depositary Shares
at a rate of one Depositary Share for each outstanding Series A Interest (or,
under certain circumstances, 1.2 Depositary Shares for each Series A Interest,
with a corresponding increase in the number of Depositary Shares that the
Guarantor is obligated to deliver to the Company). See "Certain Terms of the
Series A Interests -- Mandatory Redemption" and "Certain Terms of the Depositary
Shares".
Application will be made to list the Series A Interests on the New York Stock
Exchange (the "NYSE").
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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 SUPPLEMENT
OR THE PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
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Price to Underwriting Proceeds to
Public(1) Commissions(2) Company(1)(4)
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<S> <C> <C> <C>
Per Series A Interest........... $25.00 (3) $25.00
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Total(5)........................ $[ ] (3) $[ ]
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</TABLE>
(1) Plus accrued dividends, if any, from the date of original issuance of any
Series A Interests.
(2) The Company and the Guarantor have agreed to indemnify the several
Underwriters against certain liabilities, including liabilities under the
Securities Act of 1933, as amended. See "Underwriting".
(3) Because the proceeds from the sale of the Series A Interests will be loaned
to the Guarantor, the Guarantor will pay to the Underwriters, as
compensation for their services under the Underwriting Agreement, a
commission of $ per Series A Interest (or $ in the aggregate). See
"Underwriting".
(4) Expenses of the offering, which are payable by the Guarantor, are estimated
to be $ .
(5) The Company has granted to the Underwriters a 30-day option to purchase, on
the same terms set forth above, up to [ ] additional Series A Interests at
the price to public (with an additional underwriting commission) solely to
cover over-allotments, if any. If the option is exercised in full, the total
price to public, proceeds to Company and underwriting commissions (payable
by the Guarantor) will be $ , $ and $ , respectively. See
"Underwriting".
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The Series A Interests are offered by the Underwriters, subject to prior
sale, when, as and if delivered to and accepted by the several Underwriters, and
subject to their right to reject any order in whole or in part. It is expected
that delivery of the Series A Interests will be made only in book-entry form
through the facilities of The Depository Trust Company on or about March ,
1994.
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PAINEWEBBER INCORPORATED
[OTHER UNDERWRITERS]
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The date of this Prospectus Supplement is March , 1994.
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IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE SECURITIES
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 OR
OTHERWISE AND, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
The Company will not register Series A Interests in the name of, or record
the transfer of Series A Interests to, or pay any dividend or distribution on or
with respect to the Series A Interests to, any holder, if or to the extent such
holder, or any person for whom such holder is acting as a nominee, (a) is known
by the Company or its transfer agent to have an address of record outside the
United States or (b) is known by the Company or its transfer agent to be other
than (i) a citizen or resident of the United States, (ii) a corporation,
partnership or other entity organized under the laws of the United States or any
of its states or the District of Columbia or (iii) an estate or trust that is
subject to United States Federal income tax on its worldwide income without
regard to source (any such person or entity being a "non-U.S. Person"). The
foregoing transfer restrictions shall not preclude the settlement of any
transaction in the Series A Interests entered into through the facilities of the
NYSE. Payments of dividends payable on Series A Interests to a non-U.S. Person
that, despite the foregoing restrictions, holds Series A Interests may be
reduced by United States Federal withholding tax. Accordingly, the holding of
Series A Interests is not suitable for non-U.S. Persons.
PAINEWEBBER FINANCE L.L.C.
The Company is a limited liability company formed under the laws of the
State of Delaware. The Guarantor owns, directly and indirectly, all the
outstanding Common Interests of the Company, which Common Interests are
nontransferable. The Company exists solely for the purpose of issuing preferred
limited liability company interests (the "Preferred Interests" and, together
with the Common Interests, the "Membership Interests") and Common Interests and
lending the net proceeds thereof to the Guarantor or its subsidiaries in
exchange for one or more Loan Notes. The Company will be managed by the
Guarantor, in its capacity as a holder of Common Interests (in such capacity,
the "Managing Member"). Holders of Membership Interests in the Company are
referred to herein as "Members".
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 Guarantor employs
approximately 14,400 people in 281 offices worldwide as of December 31, 1993.
The Guarantor'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 Guarantor 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 Guarantor 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 Guarantor 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 a client's account.
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INSTITUTIONAL SALES AND TRADING is comprised of five businesses: Fixed
Income, U.S. Equity, International, Derivatives and Research. The Guarantor
places securities with, and executes trades on behalf of, institutional clients
both domestically and internationally. In addition, the Guarantor takes
positions in both listed and unlisted equity and fixed income securities to
facilitate client transactions or for the Guarantor's own account.
Through the INVESTMENT BANKING group, the Guarantor 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 Guarantor's securities
business is regulated by various agencies, including the Securities and Exchange
Commission (the "Commission"), the NYSE, the Commodity Futures Trading
Commission and the NASD.
The Guarantor'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
"Guarantor" refer collectively to Paine Webber Group Inc. and its operating
subsidiaries, unless the context otherwise requires.
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CERTAIN TERMS OF THE SERIES A INTERESTS
GENERAL
The following is a summary description of certain terms of the Series A
Interests and supplements the description of certain general terms of the
Preferred Interests of any series set forth in the accompanying Prospectus under
the heading "Description of the Preferred Interests", to which description
reference is hereby made. As indicated therein, Preferred Interests of the
Company may be issued from time to time in one or more series with such dividend
rights, liquidation preferences, redemption provisions, voting rights and other
rights, powers and duties as are established by the Limited Liability Company
Agreement (the "L.L.C. Agreement") of the Company and a written action (the
"Action") taken, or to be taken, by the Managing Member to amend and supplement
the L.L.C. Agreement (which Actions, when taken, are deemed to amend and
supplement and be a part of the L.L.C. Agreement). The Series A Interests
constitute one such series of Preferred Interests of the Company. The summary of
certain terms of the Series A Interests set forth below does not purport to be
complete and is subject to, and qualified in its entirety by reference to, the
L.L.C. Agreement (including the Action) establishing the rights, powers and
duties relating to the Series A Interests, a copy of which Action will have been
filed with the Commission at or prior to the time of the sale of the Series A
Interests.
DIVIDENDS
Cumulative dividends on the Series A Interests will accrue at a rate per
annum of % of the liquidation preference thereof (or $ per Series A
Interest per annum) from the date of original issuance thereof and will be
payable monthly in arrears on the last day of each calendar month of each year,
commencing March [ ], 1994, when, as and if declared by the Managing Member,
except as otherwise described under "Description of the Preferred
Interests -- Dividends and -- Certain Restrictions on the Company" in the
accompanying Prospectus, to holders of record on the fifth Business Day
preceding the relevant payment date. Payment of dividends is limited in relation
to the amount of funds held by the Company and legally available therefor. See
"Description of the Preferred Interests -- Dividends" in the accompanying
Prospectus. Dividends will be computed on the basis of twelve 30-day months and
a 360-day year and, for any dividend period shorter than a full calendar month,
will be computed on the basis of the actual number of calendar days elapsed in
such period.
Dividends on the Series A Interests will be declared by the Managing Member
in any calendar year or portion thereof to the extent that the Company
reasonably anticipates that at the time of payment it will have, and will be
paid by the Company to the extent that at the time of proposed payment it has,
funds legally available for the payment of such dividends and sufficient to
permit such payment. It is anticipated that such funds will be derived from
payments by the Guarantor of interest on the Loan Notes. See "Description of the
Loans".
MANDATORY REDEMPTION
The proceeds from any prepayment or repayment in cash of the principal of
any Loan Notes shall be applied to redeem Series A Interests at a redemption
price of $25 per Series A Interest plus accrued and unpaid dividends to the date
fixed for redemption, provided that all or any portion of the principal amount
prepaid or repaid by the Guarantor may be reloaned to the Guarantor, and not
used for such redemption, if at the time of such new loan, and as determined in
the judgment of the Managing Member and its financial advisor (which may be an
affiliate of the Guarantor), (i) the Guarantor is not the subject of a pending
case under the United States Bankruptcy Code, (ii) the Guarantor is not in
default on any loan pertaining to Preferred Interests of any other series
ranking pari passu with the Series A Interests, (iii) the Guarantor has timely
made all required monthly payments of interest on the Loan Notes for the
immediately preceding nine months, (iv) the Company is not in arrearage on
payments of dividends on the Series A Interests, (v) the Guarantor is expected
to be able to make timely payment of principal and interest on such new loan,
(vi) such new loan is being made on terms, and under circumstances, that are no
less favorable to the Company than those that a lender would require for a
similar loan to an unrelated party, (vii) such new loan is being
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made at a rate of interest sufficient to provide monthly payments of interest
equal to or greater than the amount of monthly dividend payments required in
respect of the Series A Interests, (viii) such new loan is being made for a
fixed term that is consistent with market circumstances and the Guarantor's
financial condition, and (ix) in any event, no new loan shall have a final
maturity later than the ninetieth anniversary of the original issuance of the
Series A Interests.
As more fully described under "Description of the Loans -- Optional
Exchange", on any dividend payment date on or after September [ ], 1994, the
Guarantor may deliver to the Company, in exchange for the Loan Notes, Depositary
Shares representing Guarantor Preferred Stock having an aggregate fair market
value, as determined by the Guarantor's financial advisor (which may be an
affiliate of the Guarantor), or aggregate liquidation preference, whichever is
greater, equal to the unpaid principal amount of the Loan Notes plus all accrued
and unpaid interest thereon. In the event of such exchange, the Company will be
obligated to redeem all the Series A Interests as an entirety solely in exchange
for Depositary Shares, each representing a one-eighth interest in a share of
Guarantor Preferred Stock at a rate of one Depositary Share for each Series A
Interest to be redeemed; provided, however, that if, on the date that notice of
the redemption is mailed to holders of Series A Interests, the rating assigned
to any outstanding publicly held long-term senior unsecured debt obligation of
the Guarantor by either Standard & Poor's Corporation or Moody's Investors
Services, Inc. is not at least BBB-and Baa3 (or the equivalent ratings),
respectively, then (i) the rate of exchange shall be 1.2 Depositary Shares for
each Series A Interest to be redeemed and (ii) the Guarantor shall be obligated
to deliver to the Company in exchange for the Loan Notes 1.2 times the number of
Depositary Shares which would have been deliverable otherwise. See "Certain
Terms of the Guarantor Preferred Stock" and "Certain Terms of the Depositary
Shares." On the redemption date, all dividends on the Series A Interests so
redeemed will cease to accrue and all rights of the holders of the Series A
Interests as members of the Company shall cease, except the right to receive the
Depositary Shares. Notice of such redemption will be given by the Company by
mail to each record holder of Series A Interests not less than 30 nor more than
60 days prior to the date fixed for such redemption. If, in connection with such
redemption, a holder of Series A Interests would otherwise be entitled to a
fractional Depositary Share, such holder will receive, in lieu of such
fractional Depositary Share, a cash payment in an amount representing such
holder's proportionate interest in the net proceeds from the sale on behalf of
such holder and all other holders who otherwise would be entitled to a
fractional Depositary Share, of whole Depositary Shares representing the
aggregate of such fractional Depositary Shares. The Company shall appoint an
agent (which may be an affiliate of the Company) to conduct such sale.
OPTIONAL REDEMPTION
The Series A Interests are redeemable for cash, at the option of the
Company (with the prior consent of the Guarantor), in whole or in part, at any
time and from time to time, on or after March [ ], 1999, upon not less than 30
nor more than 60 days' notice to the holders of the Series A Interests, at the
redemption price of $25 per Series A Interest, plus accrued and unpaid dividends
to the date fixed for redemption.
LIQUIDATION DISTRIBUTION
In the event of any liquidation, dissolution or winding up of the Company,
before any payment or distribution of the assets of the Company shall be made to
or set apart for the holders of any class or classes of Membership Interests or
any series of Preferred Interests ranking junior to the Series A Interests upon
liquidation, the holders of the Series A Interests shall be entitled to receive,
but together with the holders of every other series of Preferred Interests
outstanding, if any, ranking pari passu with the Series A Interests as to
distribution of assets on liquidation, dissolution or winding up of the Company
("Company Liquidation Parity Interests"), an amount equal, in the case of the
holders of the Series A Interests, to the aggregate of the liquidation
preference of $25 per Series A Interest and all accrued and unpaid dividends to
the date of payment (the "Liquidation Distribution"); but such holders shall be
entitled to no further payment. If, upon any such liquidation, dissolution or
winding up, the Liquidation Distribution can be paid only in part because the
Company has insufficient assets available to pay in full the aggregate
Liquidation Distribution and the aggregate maximum Liquidation Distribution on
the Company Liquidation Parity Interests, then the amounts
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payable directly by the Company on the Series A Interests and on such Company
Liquidation Parity Interests shall be paid on a pro rata basis, so that
(i) (x) the aggregate amount paid as the Liquidation Distribution on
the Series A Interests bears to (y) the aggregate amount paid as the
Liquidation Distribution on the Company Liquidation Parity Interests the
same ratio as
(ii) (x) the aggregate Liquidation Distribution bears to (y) the
aggregate maximum Liquidation Distribution on the Company Liquidation
Parity Interests.
VOTING RIGHTS
If (i) the Company fails to pay dividends in full on the Series A Interests
for nine consecutive monthly dividend periods or (ii) the Guarantor breaches any
of its obligations under the Loan Notes or the Guarantor breaches any of its
obligations under the Guarantee (as defined in "Description of the Guarantee" in
the accompanying Prospectus), then the holders of the outstanding Series A
Interests, together with the holders of any other series of Preferred Interests
having the right to vote for the appointment of a trustee in such event, acting
as a single class, will be entitled, by ordinary resolution passed by the
holders of a majority in liquidation preference (plus all accrued and unpaid
dividends) of such Preferred Interests present in person or by proxy at a
separate general meeting of such holders convened for such purpose, to appoint
and authorize a trustee to enforce against the Guarantor the Company's rights as
a creditor in respect of the Loan Notes, to enforce the obligations undertaken
by the Guarantor under the Guarantee and to declare and pay dividends. Not later
than 30 days after such entitlement arises, the Managing Member will convene a
separate general meeting for the above purpose. If the Managing Member fails to
convene such meeting within such 30-day period, the holders of 10% in aggregate
liquidation preference (plus all accrued and unpaid dividends) of the
outstanding Series A Interests and such other Preferred Interests will be
entitled to convene such separate general meeting. The provisions of the L.L.C.
Agreement relating to the convening and conduct of the general meetings of
Members will apply with respect to any such separate general meeting. Any
trustee so appointed shall vacate office, subject to the terms of such other
Preferred Interests, if the Company (or the Guarantor pursuant to the Guarantee)
shall have paid in full all accrued and unpaid dividends on the Series A
Interests (if the event that gave rise to such appointment was clause (i) of
this paragraph) or such breach by the Guarantor shall have been cured (if the
event that gave rise to such appointment was clause (ii) of this paragraph).
If any resolution is proposed for adoption by the Members of the Company
providing for, or the Managing Member proposes to take, any action that will (x)
amend, alter or repeal the provisions of the L.L.C. Agreement (including the
Actions) creating the Series A Interests so as to materially and adversely
affect any rights or powers of the Series A Interests or the holders thereof or
result in the authorization or issuance of any Membership Interests of the
Company ranking, as to dividends or upon liquidation, senior to the Series A
Interests, (y) result in the liquidation, dissolution or winding up of the
Company or (z) modify the provisions of the L.L.C. Agreement prohibiting
transfer or assignment of Common Interests, then the holders of outstanding
Series A Interests (and, in the case of a resolution described in clause (x)
above that would, to a like extent, materially and adversely affect the rights
or powers of any Company Dividend Parity Interests (as defined in "Description
of the Preferred Interests -- Certain Restrictions on the Company" in the
accompanying Prospectus) or any Company Liquidation Parity Interests, such
Company Dividend Parity Interests or such Company Liquidation Parity Interests,
as the case may be, or, in the case of any resolution described in clause (y) or
(z) above, all Company Liquidation Parity Interests) will be entitled to vote
together as a class on such resolution (but not on any other resolution) (i) at
a separate meeting of such holders, (ii) at the general meeting of Members
called for the purpose of adopting such resolution or (iii) without a meeting
but in writing, and such resolution shall not be effective except with the
approval, in the case of clauses (i) and (ii), of the holders of 66 2/3% in
aggregate liquidation preference (plus all accrued and unpaid dividends) of such
outstanding Interests present in person or by proxy at a meeting at which
66 2/3% in aggregate liquidation preference (plus all accrued and unpaid
dividends) of such Interests are so present or, in the case of clause (iii), by
the holders of 66 2/3% in aggregate liquidation preference (plus all accrued and
unpaid dividends) of such Interests; provided, however, that no such approval
shall be required under clauses
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(x) and (y) if the liquidation, dissolution and winding up of the Company is
proposed or initiated upon the initiation of proceedings, or after proceedings
have been initiated, for the liquidation, dissolution or winding up of the
Guarantor.
The rights attached to the Series A Interests will be deemed not to be
varied by the creation or issue of, and no vote will be required for the
creation of, any further series of Preferred Interests or any further Membership
Interests of the Company ranking as to dividends or upon liquidation pari passu
with or junior to the Series A Interests.
The Company will cause a notice of any meeting at which holders of the
Series A Interests are entitled to vote to be mailed to each holder of record of
the Series A Interests. Each such notice will include a statement setting forth
(i) the date of such meeting, (ii) a description of any resolution proposed for
adoption at such meeting on which such holders are entitled to vote and (iii)
instructions for the delivery of proxies.
No vote of the holders of the Series A Interests will be required for the
Company to redeem and cancel Series A Interests in accordance with the L.L.C.
Agreement (including the Actions).
Notwithstanding that holders of Series A Interests are entitled to vote
under any of the circumstances described above, any of the Series A Interests
and such other Preferred Interests entitled to vote with such Series A Interests
as a single class outstanding at such time that are owned by the Guarantor or
any entity owned 20% or more by the Guarantor, either directly or indirectly,
shall not be entitled to vote and shall, for the purposes of such vote, be
treated as if they were not outstanding.
TRANSFER RESTRICTIONS WITH RESPECT TO NON-U.S. PERSONS
The Company will not register Series A Interests in the name of, or record
the transfer of Series A Interests to, or pay any dividend or distribution on or
with respect to the Series A Interests to, any holder, if or to the extent such
holder, or any person for whom such holder is acting as a nominee, (a) is known
by the Company or its transfer agent to have an address of record outside the
United States or (b) is known by the Company or its transfer agent to be other
than (i) a citizen or resident of the United States, (ii) a corporation,
partnership or other entity organized under the laws of the United States or any
of its states or the District of Columbia or (iii) an estate or trust that is
subject to United States Federal income tax on its worldwide income without
regard to source (any such person or entity being a "non-U.S. Person"). The
foregoing transfer restrictions shall not preclude the settlement of any
transaction in the Series A Interests entered into through the facilities of the
NYSE. Payments of dividends payable on Series A Interests to a non-U.S. Person
that, despite the foregoing restrictions, hold Series A Interests may be reduced
by United States Federal withholding tax. Accordingly, the holding of Series A
Interests is not suitable for non-U.S. Persons.
DESCRIPTION OF THE LOANS
Set forth below is condensed information concerning the loans from the
Company to the Guarantor of the net proceeds of the issuance of the Series A
Interests and the Common Interests. The loans will be made pursuant to a loan
agreement between the Company and the Guarantor (the "Loan Agreement"). This
summary description of the Loan Agreement does not purport to be complete and is
subject to, and qualified in its entirety by reference to, the form of such Loan
Agreement filed as an exhibit to the Registration Statement of which this
Prospectus Supplement forms a part.
GENERAL
Pursuant to the Loan Agreement, the Company has agreed to make a loan (the
"Initial Loan") to the Guarantor in the aggregate principal amount of $ ,
such amount being the sum of (i) the aggregate stated liquidation preference of
the Series A Interests issued and sold by the Company and (ii) the aggregate
cash consideration paid by the holders of the outstanding Common Interests to
the Company for such Common Interests. In the event that the Underwriters'
over-allotment option is exercised, the Company has agreed to make an additional
loan (together with the Initial Loan, the "Loans") to the Guarantor pursuant to
the Loan Agreement equal to the aggregate stated liquidation preference of the
Series A Interests so sold upon
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such exercise plus the related aggregate additional cash consideration paid by
the Managing Member to the Company for additional Common Interests. If the
over-allotment option is exercised in full, such additional loan will equal
$ .
The entire principal amount of the Loans shall become due and payable
(together with any accrued and unpaid interest thereon), on the earliest of
March , 2024 (the "Maturity Date") or the date upon which the Guarantor shall
be dissolved, wound up or liquidated, the date upon which the Company shall be
dissolved, wound up or liquidated or the date of acceleration of the Loans
pursuant to an Event of Default (as defined under "Events of Default" below),
subject to relending under conditions described under "Certain Terms of the
Series A Interests -- Mandatory Redemption". The Loans will be evidenced by the
Loan Notes.
OPTIONAL PREPAYMENT
The Guarantor shall have the right to prepay the Loans, without premium or
penalty,
(i) in whole or in part (together with any accrued but unpaid
interest, including Additional Interest (as defined below under
"--Additional Interest"), if any, on the portion being prepaid) at any time
on or after March [ ], 1999; or
(ii) in whole (together with all accrued and unpaid interest,
including Additional Interest, if any, thereon) at any time after the date
hereof if the Guarantor is or would be required to pay any Additional
Interest pursuant to the terms of the Loan Agreement or, if such
requirement shall relate only to a portion of the Loans, the portion of the
Loans affected by any such requirement (together with all accrued and
unpaid interest, including Additional Interest, if any, on the portion
being prepaid); provided that the Guarantor shall not have the right to
prepay the Loans as a result of the payment of Additional Interest unless
the payment of such Additional Interest is imposed by reason of a change in
law or regulation, or a written change in interpretation of law or
regulation, by any legislative body, court, governmental agency or
regulatory authority (a "Change of Law"), and that in no event shall the
Guarantor have the right to prepay the Loan, or any portion thereof, under
this clause (ii) based on a de minimis obligation to pay Additional
Interest.
No assurance can be given that there will not be a Change of Law.
OPTIONAL EXCHANGE
On any dividend payment date on or after September [ ], 1994, the Guarantor
shall have the right, subject to certain conditions, to issue and deliver to the
Company, in exchange for the Loan Notes, freely transferable Depositary Shares
representing shares of Guarantor Preferred Stock having an aggregate fair market
value, as determined by the Guarantor's financial advisor (which may be an
affiliate of the Guarantor), or an aggregate liquidation preference, whichever
is greater, equal to the unpaid principal amount of the Loan Note plus any
accrued and unpaid interest (including Additional Interest, if any) thereon to
the date of such exchange. In the event that the rate of exchange applicable to
redemption by the Company of Series A Interests for Depositary Shares in
connection with an exchange for the Loan Notes, as more fully described under
"Certain Terms of the Series A Interests -- Mandatory Redemption", is 1.2
Depositary Shares for each Series A Interest redeemed, then the Guarantor shall
be obligated to deliver to the Company in exchange for the Loan Notes 1.2 times
the number of Depositary Shares which would have been deliverable otherwise. The
Guarantor shall give the Company written notice of its intention to effect such
exchange not less than seventy-five (75) days nor more than ninety (90) days
prior to the intended date of such exchange.
Notwithstanding the foregoing, such exchange of the Depositary Shares for
the Loan Notes may be made only if, on the date that the Guarantor gives to the
Company notice of its intention to effect such exchange and on the date of such
exchange, (i) the Guarantor is not in default on any loan made by the Company to
the Guarantor, (ii) the Guarantor is not in default under any indebtedness for
borrowed money whether or not evidenced by a note (other than inter-company
indebtedness and indebtedness in respect of agreements in the ordinary course of
business to purchase or repurchase securities or loans), indebtedness secured by
purchase money mortgages or conditional sale, finance lease or other title
retention agreements and obligations under
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any other lease of real or personal property, which would be included in
determining total liabilities at the date such indebtedness is determined, which
indebtedness or obligations are in excess of $25,000,000 and have been or could
be declared due and payable prior to maturity, (iii) there have not occurred
certain events of bankruptcy, insolvency or reorganization, and (iv) the total
consolidated stockholders' equity of the Guarantor, as shown on the most recent
publicly available consolidated balance sheet of the Guarantor, is at least
$500,000,000. Prior to the delivery of the Depositary Shares in exchange for the
Loan Notes, the Guarantor will use its best efforts to list the Depositary
Shares on the NYSE. If the Guarantor is unable to list the Depositary Shares on
the NYSE, it will use its best efforts to list the Depositary Shares on another
national securities exchange or to include the Depositary Shares for trading on
an interdealer quotation system.
INTEREST
The Loans shall bear interest at an annual rate of % from the date they
are made until maturity. Such interest shall be payable on the last day of each
calendar month of each year, commencing March [ ], 1994. Interest will be
computed on the basis of twelve 30-day months and a 360-day year and, for any
interest period that is shorter than a full calendar month, will be calculated
on the basis of the actual number of days elapsed in such period. If any date on
which interest is payable on the Loans is not a Business Day (as defined below),
then payment of the interest due 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 date; provided, however, that the Guarantor shall have the right at any
time or times during the term of the Loans, so long as the Guarantor is not in
default in the payment of interest on the Loans, to extend the interest payment
period by a further period, not to exceed nine months, at the end of which
further period the Guarantor shall pay all interest then accrued and unpaid
(together with interest thereon at the rate specified for the Loans to the
extent permitted by applicable law); and provided further that, during any such
extended interest period, or at any time during which there is an uncured Event
of Default under the Loans, the Guarantor shall not pay any dividends on, or
redeem, purchase, acquire or make a liquidation payment with respect to, any of
its shares of capital stock or make any guarantee payments with respect to the
foregoing (other than payments under any guarantee of the Series A Interests).
The Guarantor shall give the Company not less than five Business Days' prior
notice of its selection of such longer interest payment period. The term
"Business Day" shall mean each day, other than a Saturday or Sunday, that is not
a day on which banks in the City of New York are authorized or obligated by law
or executive order to close.
ADDITIONAL INTEREST
If at any time following the date of the Loan Agreement the Company shall
be required to pay, with respect to its income derived from the interest
payments on the Loans, any amounts, for or on account of any taxes, duties or
governmental charges of whatever nature imposed by the United States (or any
political subdivision thereof or therein), or any other taxing authority, then,
in any such case, the Guarantor will pay as interest such additional amounts
("Additional Interest") as may be necessary in order that the net amounts
received and retained by the Company after the payment of such taxes, duties,
assessments or governmental charges shall result in the Company's having such
funds as it would have had in the absence of the obligation to pay such taxes,
duties, assessments or governmental charges.
METHOD AND DATE OF PAYMENT
Each payment by the Guarantor of principal and interest (including
Additional Interest, if any) on the Loans shall be made to the Company in United
States Dollars at such place and to such account as may be designated by the
Company.
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SET-OFF
Notwithstanding anything to the contrary in the Loan Agreement, the
Guarantor shall have the right to set-off any payment it is otherwise required
to make thereunder with and to the extent the Guarantor has theretofore made, or
is concurrently on the date of such payment making, a payment under the
Guarantee.
SUBORDINATION
The Guarantor and the Company covenant and agree that each of the Loans is
subordinate and junior in right of payment to all Senior Indebtedness as
provided in the Loan Agreement. The term "Senior Indebtedness" shall mean (a)
the principal of, premium, if any, and accrued and unpaid interest on (i)
indebtedness of the Guarantor for money borrowed, whether outstanding on the
date of execution of the Loan Agreement or thereafter created, incurred or
assumed, (ii) guarantees by the Guarantor of indebtedness for money borrowed by
any other person, whether outstanding on the date of execution of the Loan
Agreement or thereafter created, incurred or assumed, (iii) indebtedness
evidenced by notes, debentures, bonds or other instruments of indebtedness for
the payment of which the Guarantor is responsible or liable, by guarantees or
otherwise, whether outstanding on the date of execution of the Loan Agreement or
thereafter created, incurred or assumed, (iv) obligations of the Guarantor under
any agreement to lease, or any lease of, any real or personal property, whether
outstanding on the date of execution of the Loan Agreement or thereafter
created, incurred or assumed, and (v) without duplication of the foregoing,
indebtedness of the Guarantor under the Indenture dated as of March 15, 1988,
between the Guarantor and Chemical Bank (Delaware), as amended, relating to
subordinated debt securities of the Guarantor, and indebtedness or guarantees
ranking superior or pari passu in right of payment thereto, in each case whether
outstanding on the date of the Loan Agreement or thereafter created, incurred or
assumed (the Loans being expressly neither superior nor pari passu in right of
payment to or with any indebtedness described in this clause (v)), (b) any other
indebtedness, liability or obligation, contingent or otherwise, of the Guarantor
and any guarantee, endorsement or other contingent obligation of the Guarantor
in respect of any indebtedness, liability or obligation, whether outstanding on
the date of execution of the Loan Agreement or thereafter created, incurred or
assumed, and (c) modifications, renewals, extensions and refundings of any such
indebtedness, liabilities, obligations or guarantees; unless, in the instrument
creating or evidencing the same or pursuant to which the same is outstanding, it
is provided that such indebtedness, liabilities, obligations or guarantees, or
such modifications, renewals, extensions or refundings thereof, are not superior
in right of payment to the Loans. The Senior Indebtedness shall continue to be
Senior Indebtedness and entitled to the benefits of the subordination provisions
irrespective of any amendment, modification or waiver of any term of the Senior
Indebtedness or extension or renewal of the Senior Indebtedness.
If (i) the Guarantor defaults in the payment of any principal, or premium,
if any, or interest on any Senior Indebtedness when the same becomes due and
payable, whether at maturity or at a date fixed for prepayment or declaration or
otherwise or (ii) an event of default occurs with respect to any Senior
Indebtedness permitting the holders thereof to accelerate the maturity thereof
and written notice of such event of default is given to the Guarantor by the
holders of Senior Indebtedness, then unless and until such default in payment or
event of default shall have been cured or waived or shall have ceased to exist,
no direct or indirect payment (in cash, property or securities, by set-off or
otherwise) shall be made or agreed to be made on account of the Loans or
interest thereon or in respect of any repayment, redemption, retirement,
purchase or other acquisition of the Loans.
In the event of (i) any insolvency, bankruptcy, receivership, liquidation,
reorganization, readjustment, composition or other similar proceeding relating
to the Guarantor, its creditors or its property, (ii) any proceeding for the
liquidation, dissolution or other winding up of the Guarantor, voluntary or
involuntary, whether or not involving insolvency or bankruptcy proceedings,
(iii) any assignment by the Guarantor for the benefit of creditors, or (iv) any
other marshalling of the assets of the Guarantor, all Senior Indebtedness
(including, without limitation, interest accruing after the commencement of any
such proceeding, assignment or marshalling of assets) shall first be paid in
full before any payment or distribution, whether in cash, securities or other
property, shall be made by the Guarantor on account of the Loans. In any such
event, any payment or distribution, whether in cash, securities or other
property (other than securities of the Guarantor
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or any other corporation provided for by a plan of reorganization or a
readjustment, the payment of which is subordinate, at least to the extent
provided in the subordination provisions of the Loan Agreement with respect to
the indebtedness evidenced by the Loans, to the payment of all Senior
Indebtedness at the time outstanding and to any securities issued in respect
thereof under any such plan of reorganization or readjustment), which would
otherwise (but for the subordination provisions) be payable or deliverable in
respect of the Loans (including any such payment or distribution which may be
payable or deliverable by reason of the payment of any other indebtedness of the
Guarantor being subordinated to the payment of the Loans) shall be paid or
delivered directly to the holders of Senior Indebtedness, or to their
representative or trustee, in accordance with the priorities then existing among
such holders until all Senior Indebtedness shall have been paid in full. No
present or future holder of any Senior Indebtedness shall be prejudiced in the
right to enforce subordination of the indebtedness constituting the Loans by any
act or failure to act on the part of the Guarantor.
Senior Indebtedness shall not be deemed to have been paid in full unless
the holders thereof shall have received cash, securities or other property equal
to the amount of such Senior Indebtedness then outstanding. Upon the payment in
full of all Senior Indebtedness, the Company shall be subrogated to all the
rights of any holders of Senior Indebtedness to receive any further payments or
distributions applicable to the Senior Indebtedness until the Loans shall have
been paid in full, and such payments or distributions received by the Company,
by reason of such subrogation, of cash, securities or other property which
otherwise would be paid or distributed to the holders of Senior Indebtedness,
shall, as between the Guarantor and its creditors other than the holders of
Senior Indebtedness, on the one hand, and the Company, on the other, be deemed
to be a payment by the Guarantor on account of Senior Indebtedness, and not on
account of the Loans.
COVENANTS
The Guarantor will agree that, so long as the Series A Interests are
outstanding, (i) it shall not declare or pay any dividend on, or redeem,
purchase, acquire or make a liquidation payment with respect to, any of its
capital stock, or make any guarantee payments with respect to the foregoing
(other than payments pursuant to any guarantee of the Series A Interests) if at
such time (x) there shall have occurred any event that, with the giving of
notice or the lapse of time or both, would constitute an Event of Default or (y)
the Guarantor shall be in default with respect to its payment or other
obligations under any guarantee of the Series A Interests, (ii) it shall
maintain ownership, directly or indirectly, of all of the Common Interests,
(iii) in its capacity as a holder of Common Interests, it shall make such
contributions to the Company so as to cause the Common Interests held by the
Guarantor to be entitled in the aggregate to at least 21% of all interest in the
capital, income, gain, loss, deduction, credit and distributions of the Company,
(iv) it shall not voluntarily dissolve, wind-up or liquidate the Company, (v) it
shall timely perform all of its duties as Managing Member of the Company, and
(vi) it shall use its reasonable efforts to cause the Company to remain a
limited liability company under the laws of the State of Delaware and otherwise
continue to be treated as a partnership for United States Federal income tax
purposes.
The Guarantor also will agree (i) that its obligations under the Loan
Agreement will also be for the benefit of the holders from time to time of the
Series A Interests and that such holders will be entitled to enforce the Loan
Agreement directly against the Guarantor, and (ii) not to permit another entity
to merge with or into it unless (a) at such time no Event of Default has
occurred and is continuing, or would occur as a result of such merger and (b)
the Guarantor is the survivor of such merger or the entity formed by or
resulting from such merger shall expressly assume payment of the principal of
and premium, if any, and interest on (and any Additional Interest payable in
respect of) the Loans.
EVENTS OF DEFAULT
If one or more of the following events (each an "Event of Default") shall
occur and be continuing:
(a) default in the payment of interest on the Loans (including any
Additional Interest) when due that continues for 10 days (whether by virtue
of the subordination provisions of the Loan Agreement or
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otherwise); provided, however, that a valid extension of the interest
payment period by the Guarantor shall not constitute a default in the
payment of interest for this purpose (see "Interest" above);
(b) default in the payment of principal on the Loans when due (whether
by virtue of the subordination provisions of the Loan Agreement or
otherwise);
(c) dissolution, winding up or liquidation of the Company;
(d) the bankruptcy, insolvency or liquidation of the Guarantor; or
(e) the breach by the Guarantor of any of its covenants contained in
the Loan Agreement continued for 30 days after notice to the Guarantor from
any holder of the Series A Interests;
then (i) in the case of clauses (a), (b) and (e), and at any time thereafter
during the continuance of such event, the Company will have the right to declare
the principal of and the interest on the Loans (including any Additional
Interest and any interest subject to an extension of the interest payment
period) and any other amounts payable on the Loans to be forthwith due and
payable, and (ii) in the case of clauses (c) and (d), the principal of and
interest on the Loans (including any Additional Interest and any interest
subject to an extension of the interest payment period) and any other amounts
payable on the Loans shall automatically become due and payable, whereupon in
either case the Loans and any other amounts payable under the Loan Agreement
shall be forthwith due and payable without presentment, demand, protest or other
notice of any kind, all of which will be waived by the Guarantor, and the
Company will have the right to enforce its other rights as a defaulted creditor
with respect to the Loans. Under the terms of the Series A Interests, the
holders of outstanding Series A Interests will have the rights referred to under
"Certain Terms of the Series A Interests--Voting Rights", including the right to
appoint a trustee, which trustee shall be authorized to exercise the Company's
rights to accelerate the principal amount of the Loans and to enforce the
Company's other rights under the Loan Agreement.
MISCELLANEOUS
The Guarantor shall have the right at all times to assign any of its rights
or obligations under the Loan Agreement to a direct or indirect wholly owned
subsidiary of the Guarantor; provided, however, that, in the event of any such
assignment, the Guarantor shall remain jointly and severally liable for all such
obligations. The Company may not assign any of its rights under the Loan
Agreement without the prior written consent of the Guarantor. Subject to the
foregoing, the Loan Agreement shall be binding upon and inure to the benefit of
the Guarantor and the Company and their respective successors and assigns. Any
assignment by the Guarantor or the Company in contravention of such provisions
will be null and void.
The Loan Agreement will be governed by and construed in accordance with the
internal laws of the State of New York.
The Loan Agreement may be amended by mutual consent of the parties in the
manner the parties shall agree; provided, however, that, so long as any of the
Series A Interests remain outstanding, no such amendment shall be made that
materially and adversely affects the rights of the holders of the Series A
Interests, no termination of the Loan Agreement shall occur, and no Event of
Default or compliance with any covenant under the Loan Agreement may be waived
by the Company, without the prior approval of the holders of at least 66 2/3% in
liquidation preference of all Series A Interests then outstanding, in writing or
at a duly constituted meeting of such holders, unless and until the Loans and
all accrued and unpaid interest thereon (including Additional Interest, if any)
shall have been paid in full.
CERTAIN TERMS OF THE DEPOSITARY SHARES
The following is a summary description of certain terms of the Depositary
Shares and Depositary Receipts (as defined below) and supplements the
description of certain terms of the Depositary Shares and Depositary Receipts
set forth under "Description of the Depositary Shares" in the accompanying
Prospectus, to which description reference is hereby made. The summary
description of the Depositary Shares and Depositary Receipts set forth below
does not purport to be complete and is subject to, and qualified in its
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entirety by reference to, the Deposit Agreement referred to below, the form of
which (including the form of Depositary Receipt) is filed as an exhibit to the
Registration Statement of which this Prospectus Supplement forms a part.
Each Depositary Share represents a one-eighth interest in a share of
Guarantor Preferred Stock. The shares of the Guarantor Preferred Stock
underlying the Depositary Shares will be deposited with Chemical Bank, as
Depositary (the "Depositary"), under a Deposit Agreement (the "Deposit
Agreement") among the Guarantor, 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 and will be eligible for book-entry trading through the
facilities of The Depository Trust Company. 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-eighth interest in a share of the Guarantor
Preferred Stock underlying such Depositary Share, to all rights and preferences
of a share of Guarantor Preferred Stock (including dividend, voting, redemption
and liquidation rights). Since each share of Guarantor Preferred Stock entitles
the holder thereof to one vote on all matters on which the Guarantor Preferred
Stock is entitled to vote, each Depositary Share will in effect entitle the
holder thereof to one-eighth of a vote thereon, rather than one full vote. The
Guarantor does not expect that there will be any trading market for the shares
of Guarantor Preferred Stock except as represented by the Depositary Shares. The
principal office of the Depositary is currently located at 450 West 33rd Street,
New York, New York. See "Certain Terms of the Guarantor Preferred
Stock -- Voting Rights" below, and "Description of the Guarantor Preferred
Stock -- Voting Rights", "Description of the Depositary Shares" and "Book-Entry
Procedures and Settlement" in the accompanying Prospectus.
Chemical Bank will be the transfer agent and registrar for the Depositary
Shares.
CERTAIN TERMS OF THE GUARANTOR PREFERRED STOCK
The following is a summary description of certain terms of the Guarantor
Preferred Stock and supplements the description of certain general terms of the
Series Preferred Stock of the Guarantor set forth under "Description of the
Guarantor Preferred Stock" in the accompanying Prospectus. The Guarantor
Preferred Stock is a series of the preferred stock, par value $20 per share, of
the Guarantor, which preferred stock may be issued from time to time in one or
more series, the shares of each series to have such powers, designations,
preferences and relative, participating, optional or other special rights, and
qualifications, limitations or restrictions thereof, as are stated in the
Guarantor's Restated Certificate of Incorporation or in a resolution or
resolutions providing for the issue of such series adopted by the Guarantor's
Board of Directors (the "Board of Directors") or a duly authorized committee
thereof. The summary of certain terms of the Guarantor Preferred Stock set forth
below does not purport to be complete and is subject to, and qualified in its
entirety by reference to, the Guarantor's Restated Certificate of Incorporation,
including the Certificate of Designations relating to the Guarantor Preferred
Stock, which are filed as exhibits to or incorporated by reference in the
Registration Statement of which this Prospectus Supplement forms a part.
GENERAL
The Guarantor Preferred Stock on the date of original issue will rank
equally as to payment of dividends and distribution of assets upon dissolution,
liquidation or winding up of the Guarantor with each other then outstanding
series of preferred stock of the Guarantor. See "Description of the Guarantor
Preferred Stock" in the accompanying Prospectus. The Guarantor Preferred Stock
will rank senior to the Guarantor's Common Stock, par value $1 per share (the
"Guarantor Common Stock"). The Guarantor is authorized by its Restated
Certificate of Incorporation to issue 20,000,000 shares of Series Preferred
Stock, par value $20 per share. As of the date of this Prospectus Supplement,
there were no outstanding shares of Series Preferred Stock of the Guarantor. See
"Description of the Guarantor Preferred Stock -- General" in the accompanying
Prospectus.
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DIVIDENDS AND DISTRIBUTIONS
The holders of shares of Guarantor Preferred Stock will be entitled to
receive, when and as declared by the Board of Directors of the Guarantor (or a
duly authorized committee thereof) out of net profits or net assets of the
Guarantor legally available for the payment of dividends, cumulative cash
dividends at the annual rate of % of the liquidation preference of $200 per
share of Guarantor Preferred Stock (equivalent to $ per annum per share of
Guarantor Preferred Stock and $ per annum per Depositary Share), and no
more, in equal monthly payments (rounded down to the nearest cent) in arrears on
the last day of each calendar month of each year, commencing with the first full
calendar month following the date of issue of the Guarantor Preferred Stock. In
the event that any date on which dividends are payable on the Guarantor
Preferred Stock of any series is not a Business Day, then payment of the
dividend 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 date. Dividends will
be payable to the holders of record on the fifth Business Day preceding the
relevant payment date. Dividends will be computed on the basis of twelve 30-day
months and a 360-day year and, for any dividend period shorter than a full
calendar month, will be calculated on the basis of the actual number of days
elapsed in such period. Dividends payable on the Guarantor Preferred Stock will
begin to accrue and be cumulative from the date of original issue. Accrued but
unpaid dividends will not bear interest. Dividends paid on the shares of
Guarantor 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 monthly dividends payable on shares of the Guarantor Preferred
Stock are in arrears, thereafter and until all accrued and unpaid dividends,
whether or not declared, on the outstanding shares of Guarantor Preferred Stock
have been paid in full or declared and set apart for payment, the Guarantor will
not: (i) declare or pay dividends, or make any other distribution, on any shares
of Guarantor 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 Guarantor Preferred Stock ("Guarantor Junior Stock"), other
than dividends or distributions payable in Guarantor 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 Guarantor Preferred
Stock ("Guarantor Parity Stock"), other than dividends or distributions payable
in Guarantor Junior Stock, and other than dividends paid ratably on the
Guarantor Preferred Stock and all Guarantor 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 Guarantor Junior Stock, provided that
the Guarantor may at any time redeem, purchase or otherwise acquire any shares
of Guarantor Junior Stock in exchange for shares of Guarantor Junior Stock; or
(iv) redeem or purchase or otherwise acquire for consideration any shares of
Guarantor Preferred Stock or Guarantor 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 and classes, shall
determine in good faith will result in fair and equitable treatment among the
respective series or classes. See "Description of the Guarantor Preferred
Stock -- Dividends" in the accompanying Prospectus.
Payment of dividends payable on shares of the Guarantor Preferred Stock to
non-U.S. Persons (as defined under "Certain Terms of the Series A
Interests -- Transfer Restrictions with Respect to Non-U.S. Persons" above) will
be reduced by United States Federal withholding tax.
LIQUIDATION RIGHTS
Upon any liquidation, dissolution or winding up of the Guarantor (whether
voluntary or involuntary), no distribution will be made (i) to the holders of
shares of Guarantor Junior Stock, unless, prior thereto, the holders of shares
of Guarantor Preferred Stock shall have received $200 per share (equivalent to
$25 per Depositary Share), plus an amount per share equal to all accrued but
unpaid dividends thereon (whether or
S-14
<PAGE> 16
not earned or declared) to the date of such payment or (ii) to the holders of
shares of Guarantor Parity Stock, except distributions made ratably on the
Guarantor Preferred Stock and all such Guarantor 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 Guarantor Preferred Stock are
entitled, such holders shall be entitled to no further payment. See "Description
of the Guarantor Preferred Stock -- Liquidation Rights" in the accompanying
Prospectus.
REDEMPTION
The shares of the Guarantor Preferred Stock may not be redeemed by the
Guarantor prior to March [ ], 1999 (if issued prior thereto). The Guarantor, at
its option, may redeem shares of Guarantor Preferred Stock, as a whole or in
part, at any time or from time to time on or after March [ ], 1999 at a price of
$200 per share ($25 per Depositary Share), plus an amount per share equal to all
accrued but unpaid dividends thereon, whether or not declared, to the date fixed
for redemption. See "Description of the Guarantor Preferred Stock -- Redemption"
in the accompanying Prospectus.
VOTING RIGHTS
Holders of the Guarantor Preferred Stock will have no voting rights except
as set forth below or as otherwise from time to time required by law.
Whenever dividends payable on the shares of Guarantor Preferred Stock shall
be in arrears for eighteen monthly dividend periods, whether or not consecutive,
including any periods in which dividends on the Series A Shares were not paid in
cash, the holders of the outstanding shares of Guarantor Preferred Stock (voting
separately as a class with all other series of Series Preferred Stock of the
Guarantor upon which like voting rights have been conferred and are exercisable)
will be entitled to vote for the election of two of the authorized number of
directors of the Guarantor at the earlier of (i) the next annual meeting of
stockholders or (ii) a special meeting of holders of the Guarantor Preferred
Stock called for that purpose, and at each subsequent annual meeting of
stockholders until all accrued dividends on the Guarantor Preferred Stock have
been fully paid or set apart for payment. The term of office of all directors
elected by the holders of shares of Guarantor Preferred Stock shall terminate
immediately upon the termination of the right of the holders of the Guarantor
Preferred Stock to vote for directors. Whenever the shares of Guarantor
Preferred Stock become entitled to vote, each holder of the Guarantor Preferred
Stock will have one vote for each share held.
So long as any shares of the Guarantor Preferred Stock remain outstanding,
the Guarantor shall not, without the consent of the holders of at least 66 2/3%
of the shares of Guarantor Preferred Stock outstanding at the time (voting
separately as a class with all other series of Series Preferred Stock of the
Guarantor upon which like voting rights have been conferred and are
exercisable), (i) issue or increase the authorized amount of any class or series
of capital stock of the Guarantor ranking senior to the Guarantor Preferred
Stock as to dividends or upon liquidation or (ii) amend, alter or repeal the
provisions of the Guarantor's Restated Certificate of Incorporation or the
resolutions contained in the Certificate of Designations, whether by merger,
consolidation or otherwise, so as to materially and adversely affect any power,
preference or special right of the shares of Guarantor Preferred Stock or of the
holders thereof; provided, however, that any increase in the amount of
authorized Guarantor Common Stock or authorized Series Preferred Stock of the
Guarantor, any increase or decrease in the number of shares of any series of
Series Preferred Stock of the Guarantor or the creation and issuance of
Guarantor Common Stock or any other series of Series Preferred Stock of the
Guarantor, in each case ranking on a parity with or junior to the shares of
Guarantor Preferred Stock as to dividends and upon liquidation, shall not be
deemed to materially and adversely affect the powers, preferences or special
rights of the shares of Guarantor Preferred Stock.
The foregoing voting provisions shall not apply if, at or prior to the time
when the act with respect to which such vote would otherwise be required shall
be effected, all outstanding shares of Guarantor Preferred Stock shall have been
redeemed or called for redemption and sufficient funds shall have been deposited
in trust to effect such a redemption. See "Description of the Guarantor
Preferred Stock -- Voting Rights" in the accompanying Prospectus.
S-15
<PAGE> 17
UNDERWRITING
Subject to the terms and conditions set forth in the Underwriting
Agreement, the Company has agreed to sell to each of the Underwriters named
below, and each of the Underwriters has severally agreed to purchase, the number
of Series A Interests set forth opposite its name.
<TABLE>
<CAPTION>
NUMBER OF
UNDERWRITERS SERIES A INTERESTS
---------------------------------------------------------------------- ------------------
<S> <C>
PaineWebber Incorporated..............................................
------------------
Total.......................................................
------------------
------------------
</TABLE>
The Underwriters have advised the Company that they propose to offer the
Series A Interests to the public initially at the offering price set forth on
the cover page of this Prospectus Supplement, and to certain dealers at such
price less a concession not in excess of $[ ] per Series A Interest. The
Underwriters may allow and such dealers may reallow a concession not in excess
of $[ ] per Series A Interest to certain other dealers. After the initial public
offering, the public offering price and such concessions may be changed.
The Underwriting Agreement provides that the obligations of the
Underwriters are subject to certain conditions precedent and that the
Underwriters will purchase all the Series A Interests if any are purchased.
The Company has granted to the Underwriters an option exercisable during a
30-day period after the date of this Prospectus Supplement to purchase, at the
initial public offering price (with an additional underwriting commission), up
to [ ] additional Series A Interests for the sole purpose of covering
over-allotments, if any. To the extent that the Underwriters exercise such
option, each Underwriter will be committed, subject to certain conditions, to
purchase a number of the additional Series A Interests proportionate to such
Underwriter's initial commitment.
The Company and the Guarantor have agreed to indemnify the Underwriters
against, and to contribute to losses arising out of, certain liabilities,
including liabilities under the Securities Act of 1933, as amended.
Prior to this offering, there has been no market for the Series A
Interests. Application will be made to list the Series A Interests on the NYSE.
The Company will use its best efforts to maintain the listing of the Series A
Interests on the NYSE or another national securities exchange. Nevertheless, no
assurances can be given as to the liquidity of the market for the Series A
Interests.
PaineWebber or other affiliates of the Guarantor may offer and sell
previously issued Series A Interests or Depositary Shares from time to time in
the course of its or their business as a broker-dealer (subject to obtaining any
necessary approvals of the NYSE or other national securities exchange or trading
market for any such offers and sales). PaineWebber or such other affiliates may
act as principal or agent in those transactions. The Series A Interests or
Depositary Shares may by offered or sold in such transactions on any securities
exchange on which such securities may be listed. Sales will be made at prices
related to prevailing prices at the time of sale.
PaineWebber is a wholly owned subsidiary of the Guarantor and an affiliate
of the Company.
The underwriting of the Series A Interests offered hereby will conform to
the requirements set forth in the applicable sections of Schedule E of the
ByLaws of the NASD.
S-16
<PAGE> 18
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 ANY SUCH STATE.
SUBJECT TO COMPLETION -- MARCH 16, 1994
PROSPECTUS
PAINEWEBBER FINANCE L.L.C.
EXCHANGEABLE CUMULATIVE PREFERRED LIMITED LIABILITY
COMPANY INTERESTS
GUARANTEED TO THE EXTENT SET FORTH HEREIN BY
PAINE WEBBER GROUP INC.
PaineWebber Finance L.L.C. (the "Company"), a Delaware limited liability
company, may offer from time to time, in one or more series, its Exchangeable
Cumulative Preferred Limited Liability Company Interests (the "Preferred
Interests"). All the common limited liability company interests (the "Common
Interests") in the Company are owned, directly and indirectly, by Paine Webber
Group Inc. (the "Guarantor"), a Delaware corporation. The total number of
Preferred Interests of all series to be issued under the Registration Statement
of which this Prospectus forms a part will not exceed 16,000,000.
The payment of periodic distributions ("dividends"), if and to the extent
declared out of moneys held by the Company and legally available therefor, and
payments on liquidation or redemption with respect to the Preferred Interests,
will be guaranteed (the "Guarantee") by the Guarantor to the extent described
herein. The Guarantee will rank junior to all liabilities of the Guarantor and
pari passu with the most senior preferred stock issued by the Guarantor. See
"PaineWebber Finance L.L.C.", "Description of the Preferred
Interests -- Mandatory Redemption" and "Description of the Guarantee" for a
description of various contractual backup obligations of the Guarantor. Under
certain circumstances, but subject to certain conditions, the Company may redeem
all, but not less than all, the Preferred Interests of any series solely in
exchange for depositary shares (the "Depositary Shares") each representing a
fractional interest in a share of a newly-issued series of Series Preferred
Stock, par value $20 per share (the "Guarantor Preferred Stock"), of the
Guarantor. See "Description of the Preferred Interests -- Mandatory Redemption".
The terms of the Preferred Interests of a particular series will be
determined in light of market conditions at the time of sale. Information
relating to the specific number of Preferred Interests, title and liquidation
preference of each Preferred Interest, issuance price, dividend rate or method
of calculation, dividend periods, dividend payment dates, any redemption or
sinking fund provisions, any national securities exchange or other trading
market on which the Preferred Interests may be listed or registered, the terms
of any Depositary Shares representing shares in a series of Guarantor Preferred
Stock that may be issuable in exchange for the Preferred Interests and other
specific terms of each series of Preferred Interests in respect of which this
Prospectus is being delivered shall be set forth in the applicable Prospectus
Supplement (the "Prospectus Supplement").
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
------------------------
The Preferred Interests may be sold by the Company directly to purchasers,
through agents designated from time to time, to dealers, through underwriting
syndicates led by one or more managing underwriters or through one or more
underwriters. If underwriters or agents are involved in the offering of any
Preferred Interests, their names are set forth in the applicable Prospectus
Supplement. If an underwriter, agent or dealers are involved in the offering of
any Preferred Interests, descriptions of their compensation and indemnification
arrangements and the net proceeds to the Company are set forth in the applicable
Prospectus Supplement.
This Prospectus and the related Prospectus Supplement may be used by
PaineWebber Incorporated ("PaineWebber"), a wholly owned subsidiary of the
Guarantor and an affiliate of the Company, or by other affiliates of the
Guarantor in connection with offers and sales related to secondary market
transactions in the Preferred Interests, Guarantor Preferred Stock or Depositary
Shares at negotiated prices related to prevailing market prices at the time of
sale or otherwise (subject to obtaining any necessary approvals of the New York
Stock Exchange or other national securities exchange or trading market for any
such offers and sales). PaineWebber or such other affiliates may act as
principal or agent in such transactions.
------------------------
PAINEWEBBER INCORPORATED
------------------------
The date of this Prospectus is March , 1994.
<PAGE> 19
IN CONNECTION WITH AN OFFERING OR DISTRIBUTION, THE UNDERWRITERS OR, TO THE
EXTENT PERMITTED BY APPLICABLE LAW, THE AGENTS FOR SUCH OFFERING OR DISTRIBUTION
MAY OVERALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET
PRICE OF THE SECURITIES OFFERED HEREBY AT LEVELS ABOVE THOSE WHICH MIGHT
OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON THE
NEW YORK STOCK EXCHANGE OR OTHERWISE AND, IF COMMENCED, MAY BE DISCONTINUED AT
ANY TIME.
------------------------
AVAILABLE INFORMATION
The Guarantor 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"). Such reports, proxy
statements and other information can be inspected and copied at the office of
the Commission at Room 1024, 450 Fifth Street, N.W., Washington, D.C., as well
as at the Regional Offices of the Commission at North Western Atrium Center, 500
West Madison Street, Suite 1400, Chicago, Illinois, and Seven World Trade
Center, 13th Floor, New York, New York. Copies can also be obtained by mail from
the Public Reference Section of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549 at prescribed rates. Reports, proxy statements and other
information concerning the Guarantor can also be inspected at the offices of the
New York Stock Exchange (the "NYSE"), 20 Broad Street, New York, New York, and
the Pacific Stock Exchange, 111 Sansome Street, San Francisco, California. The
Company and the Guarantor have 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 Preferred Interests and the
Guarantee, the Guarantor Preferred Stock and the Depositary Shares. 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.
No separate financial statements of the Company have been included herein.
The Company and the Guarantor do not consider that such financial statements
would be material to holders of the Preferred Interests because the Company is a
newly organized special purpose entity, has no operating history and no
independent operations and is not engaged in any activity other than the
issuance of the Preferred Interests and the Common Interests, and the lending of
the net proceeds thereof to the Guarantor and its subsidiaries. The Company is a
Delaware limited liability company and will be managed by the Guarantor, in its
capacity as a holder of Common Interests. The Guarantor directly and indirectly
owns all the outstanding Common Interests, which Common Interests are
nontransferable.
------------------------
DOCUMENTS INCORPORATED BY REFERENCE
The Guarantor's Annual Report on Form 10-K for the fiscal year ended
December 31, 1992, the Guarantor's Quarterly Reports on Form 10-Q for the
quarters ended March 31, 1993, June 30, 1993 and September 30, 1993, and the
Guarantor's Current Reports on Form 8-K dated February 4, 1993, May 25, 1993,
August 5, 1993, October 12, 1993, October 26, 1993 and January 14, 1994, as
filed with the Commission pursuant to the Exchange Act (File No. 1-7367), are
hereby incorporated by reference in this Prospectus.
All documents filed by the Guarantor 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 offered hereby shall be
deemed to be incorporated in this Prospectus by reference and to be a part
hereof from the respective date of filing of each such document. Any statement
contained 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 herein, in any Prospectus Supplement
or in any other 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.
2
<PAGE> 20
The Guarantor will furnish without charge upon written or oral request by
any person, including any beneficial owner, to whom this Prospectus is
delivered, a copy of any of or all the documents referred to above which have
been or may be incorporated in this Prospectus by reference, other than exhibits
to such documents unless such exhibits are specifically incorporated by
reference into 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) 713-2722.
------------------------
NO DEALER, SALESMAN OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS, A
PROSPECTUS SUPPLEMENT OR THE DOCUMENTS INCORPORATED BY REFERENCE AND, IF GIVEN
OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING
BEEN AUTHORIZED BY THE COMPANY, PAINE WEBBER GROUP INC. OR ANY AGENT,
UNDERWRITER OR DEALER. NEITHER THIS PROSPECTUS NOR ANY PROSPECTUS SUPPLEMENT
CONSTITUTES AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY OF THE
SECURITIES OFFERED HEREBY IN ANY JURISDICTION TO ANY PERSON TO WHOM IT IS
UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION IN SUCH JURISDICTION. THE DELIVERY
OF THIS PROSPECTUS AND A PROSPECTUS SUPPLEMENT AT ANY TIME DOES NOT IMPLY THAT
THE INFORMATION THEY CONTAIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THEIR
RESPECTIVE DATES.
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 Guarantor employs
approximately 14,400 people in 281 offices worldwide as of December 31, 1993.
The Guarantor'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, and other specialized
subsidiaries. The Guarantor 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 Guarantor 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 Guarantor 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 a client's account.
INSTITUTIONAL SALES AND TRADING is comprised of five businesses: Fixed
Income, U.S. Equity, International, Derivatives and Research. The Guarantor
places securities with, and executes trades on behalf of, institutional clients
both domestically and internationally. In addition, the Guarantor takes
positions in both listed and unlisted equity and fixed income securities to
facilitate client transactions or for the Guarantor's own account.
Through the INVESTMENT BANKING group, the Guarantor provides financial
advice to, and raises capital for, a broad range of domestic and international
corporate clients. Corporate Finance manages and
3
<PAGE> 21
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 Guarantor's securities
business is regulated by various agencies, including the Commission, the NYSE,
the Commodity Futures Trading Commission and the NASD.
The Guarantor'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
"Guarantor" refer collectively to Paine Webber Group Inc. and its operating
subsidiaries, unless the context otherwise requires.
PAINEWEBBER FINANCE L.L.C.
The Company is a limited liability company formed under the laws of the
State of Delaware. The Company's offices are located at 1285 Avenue of the
Americas, New York, New York 10019 (Telephone: (212) 713-2000). The Guarantor
owns, directly and indirectly, all the outstanding Common Interests, which
Common Interests are nontransferable. The Company exists solely for the purpose
of issuing Preferred Interests and Common Interests (the Preferred Interests and
Common Interests, collectively, the "Membership Interests") and lending the net
proceeds thereof to the Guarantor and its subsidiaries in exchange for one or
more notes of the Guarantor or the applicable subsidiary (each a "Loan Note").
The Company will be managed by the Guarantor, in its capacity as a holder of
Common Interests (in such capacity, the "Managing Member"). Holders of
Membership Interests in the Company are referred to herein as "Members".
The Company's Limited Liability Company Agreement (the "L.L.C. Agreement")
provides that the Guarantor, as Managing Member, will have unlimited liability
for all the debts, obligations and liabilities of the Company, as if the Company
were a limited partnership under the Delaware Revised Uniform Limited
Partnership Act of which the Managing Member were a general partner.
USE OF PROCEEDS
Unless otherwise indicated in the applicable Prospectus Supplement, the
Company intends to lend to the Guarantor or its subsidiaries the net proceeds
from the issuance and sale of the Preferred Interests, together with the
proceeds from the issuance and sale of its Common Interests, to be used by the
Guarantor or its subsidiaries for general corporate purposes, including, but not
limited to, funding investments in or extensions of credit to subsidiaries,
repayments of indebtedness of the Guarantor or its subsidiaries, and possible
acquisitions. The precise amount and timing of the application of the funds will
depend upon future requirements and the availability of other funds to the
Guarantor and its subsidiaries. Management expects that additional financings
will be engaged in as needs arise.
4
<PAGE> 22
RATIO OF EARNINGS TO COMBINED FIXED CHARGES
AND PREFERRED STOCK DIVIDENDS
The following table sets forth the ratio of earnings to combined fixed
charges and preferred stock dividends for the Guarantor for the five-year period
ended December 31, 1992, and the nine-month period ended September 30, 1993.
<TABLE>
<CAPTION>
NINE MONTHS
FISCAL YEAR ENDED ENDED
DECEMBER 31 SEPTEMBER 30
- ---------------------------------------------- ------------
1988 1989 1990 1991 1992 1993
- ------ ------ ------ ------ ------ ------------
<S> <C> <C> <C> <C> <C>
1.0 1.0 * 1.2 1.3 1.4
</TABLE>
--------------------
* For 1990, earnings were inadequate to cover combined fixed charges
and preferred stock dividends and would have had to increase
approximately $125,807,000 in order to cover the deficiency.
For purposes of computing the ratio of earnings to combined fixed charges
and preferred stock dividends (tax effected), "earnings" consist of earnings
before fixed charges and income taxes and "fixed charges" consist of interest
expense incurred on securities sold under repurchase agreements, short-term
borrowings, long-term borrowings and that portion of rental expense estimated to
be representative of the interest factor.
DESCRIPTION OF THE PREFERRED INTERESTS
The following is a summary description of certain general terms of the
Preferred Interests to which any Prospectus Supplement may relate. The
particular terms of the Preferred Interests of a series and the extent, if any,
to which such general terms do not apply to such series of Preferred Interests
will be described in such Prospectus Supplement. The summaries of certain terms
of the Preferred Interests set forth below and in the applicable Prospectus
Supplement do not purport to be complete and are subject to, and qualified in
their entirety by reference to, the L.L.C. Agreement and written actions (the
"Actions") taken, or to be taken, by the Managing Member establishing the
rights, powers and duties relating to the Preferred Interests of any series
(which Actions, when taken, are deemed to amend and supplement and be a part of
the L.L.C. Agreement). The L.L.C. Agreement has been filed as an exhibit to the
Registration Statement of which this Prospectus forms a part, and a copy of the
Actions will be filed with the Commission at or prior to the time of the sale of
the Preferred Interests of any series.
GENERAL
The Company is authorized to issue from time to time Preferred Interests,
in one or more series, with such dividend rights, liquidation preferences,
redemption provisions, voting rights and other rights, powers and duties as
shall be established by the L.L.C. Agreement and the Actions providing for the
issuance thereof adopted, or to be adopted, by the Managing Member. The
Preferred Interests of any series will be issued in registered form only.
The Managing Member is authorized, subject to the provisions of the L.L.C.
Agreement, to establish by Actions for each such series of Preferred Interests,
and the applicable Prospectus Supplement shall set forth with respect to such
series: (i) the number of Preferred Interests to constitute such series and the
distinctive designation thereof; (ii) the dividend rate, the conditions and
dates upon which such dividends shall be payable, the preference or relation
which such dividends shall bear to the dividends payable on any other class of
Membership Interests or on any other series of Preferred Interests, and whether
such dividends shall be cumulative or noncumulative; (iii) whether the Preferred
Interests of such series shall be subject to redemption, and, if so, the times,
prices and other terms and conditions thereof; (iv) the rights of the holders of
Preferred Interests of such series upon the liquidation, dissolution or winding
up of the Company; (v) whether the Preferred Interests of such series shall be
subject to a retirement or sinking fund, and, if so, the extent, terms and
provisions relative to the operation thereof; (vi) whether the Preferred
Interests of such series shall be convertible into, or exchangeable for,
Membership Interests of any other class or series of Preferred Interests, or
securities of any other kind, including securities issued by the Guarantor or
any of its
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<PAGE> 23
affiliates, and, if so, the price or rate of conversion or exchange and any
method of adjusting the same; (vii) the limitations and restrictions, if any, to
be applicable while any Preferred Interests of such series are outstanding upon
the payment of dividends or making of other distributions on, and upon the
purchase, redemption or other acquisition by the Company of, Common Interests or
any other class of Membership Interests or any other series of Preferred
Interests ranking junior to the Preferred Interests of such series either as to
dividends or upon liquidation; (viii) the conditions or restrictions, if any,
upon the creation of indebtedness of the Company or upon the issue of any
additional Membership Interests (including additional Preferred Interests of
such series or of any other series) ranking on a parity with or prior to the
Preferred Interests of such series as to dividends or distributions of assets
upon liquidation; (ix) the voting rights, if any, of Preferred Interests of such
series in addition to those set forth in "Voting Rights" below; and (x) any
other relative rights, powers and duties as shall not be inconsistent with the
L.L.C. Agreement. In connection with the foregoing the Managing Member is
authorized to take any action, including amendment of the L.L.C. Agreement,
without the vote or approval of any holder of Preferred Interests, including any
Action to create under the provisions of the L.L.C. Agreement a class (or series
of a class) or group of Membership Interests that was not previously
outstanding.
All Preferred Interests of any one series shall be identical with each
other in all respects, except that Preferred Interests of any one series issued
at different times may differ as to the dates from which dividends, if any,
thereon shall be cumulative. All series of Preferred Interests shall rank
equally and be identical in all respects, except as permitted by the L.L.C.
Agreement provisions summarized in the preceding paragraph; and all Preferred
Interests shall rank senior to the Common Interests both as to dividends and
upon liquidation. The Common Interests are also subject to all the rights,
powers and duties of the Preferred Interests as are established in the L.L.C.
Agreement and as shall be established in any Actions of the Managing Member
pursuant to the authority summarized in the preceding paragraph. The Preferred
Interests shall have the dividend, redemption and voting rights set forth below
unless otherwise specified in the applicable Prospectus Supplement.
DIVIDENDS
Cumulative dividends on any series of Preferred Interests will accrue from
the date of original issue thereof and will be payable in arrears at the dates
specified in the applicable Prospectus Supplement relating to such series.
Payment of dividends is limited in relation to the amount of funds held by the
Company and legally available therefor. See "Description of the Loans" in the
applicable Prospectus Supplement and "Description of the Guarantee -- General"
below.
The dividends payable on Preferred Interests of a particular series will be
fixed at the rate specified in the applicable Prospectus Supplement relating to
such series. Dividends declared on the Preferred Interests of any series will be
payable to the record holders thereof as they appear on the register for the
Preferred Interests of such series on the relevant record date, which, in each
case, will be, unless otherwise specified in the Prospectus Supplement relating
to such series, five Business Days (as defined below) prior to the relevant
payment date. Subject to any applicable fiscal or other laws and regulations,
each such payment will be made as described under "Book-Entry Procedures and
Settlement." In the event that any date on which dividends are payable on the
Preferred Interests is not a Business Day, then payment of the dividend 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 date. The term "Business Day" shall
mean each day, other than a Saturday or Sunday, that is not a day on which banks
in the City of New York are authorized or obligated by law or executive order to
close.
Dividends on the Preferred Interests of any series will be cumulative.
Dividends on the Preferred Interests of any series will be declared by the
Managing Member in any calendar year or portion thereof to the extent that the
Company reasonably anticipates that at the time of payment it will have, and
will be paid by the Company to the extent that at the time of proposed payment
it has, funds legally available for the payment of such dividends and sufficient
to permit such payment.
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If dividends can be paid only in part on the Preferred Interests of a
particular series in any calendar year or portion thereof as a result of the
lack of sufficient funds legally available for the payment of dividends, then
such partial dividends shall be paid on the respective dividend payment dates on
a pro rata basis to holders of such Preferred Interests.
If at any time dividends on the Preferred Interests are in arrears for any
dividend period, any dividend payments in respect thereof must be applied in
respect of all dividend periods in arrears, pro rata in accordance with the
respective amounts in arrears for each such period in equal amounts for each
such period.
Except as described herein and in the Prospectus Supplement relating to the
Preferred Interests of a particular series, holders of the Preferred Interests
will have no other right to participate in the profits of the Company.
CERTAIN RESTRICTIONS ON THE COMPANY
If dividends have not been paid in full on the Preferred Interests of any
series, the Company shall not:
(i) pay, or declare and set aside for payment, any dividends on any
other Preferred Interests ranking pari passu with the Preferred Interests
of such series as to dividends ("Company Dividend Parity Interests"),
unless the amount of any dividends declared on any Company Dividend Parity
Interests is paid on the Company Dividend Parity Interests and the
Preferred Interests of such series on a pro rata basis on the date such
dividends are paid on such Company Dividend Parity Interests, so that
(x)(A) the aggregate amount of dividends paid on the Preferred
Interests of such series bears to (B) the aggregate amount of dividends
paid on such Company Dividend Parity Interests the same ratio as
(y)(A) the aggregate of all accumulated arrears of unpaid dividends
in respect of the Preferred Interests of such series bears to (B) the
aggregate of all accumulated arrears of unpaid dividends in respect of
such Company Dividend Parity Interests;
(ii) pay, or declare and set aside for payment, any dividends on any
shares of the Company ranking junior to the Preferred Interests of such
series as to dividends ("Company Dividend Junior Interests"); or
(iii) redeem, purchase or otherwise acquire any Company Dividend
Parity Interests or Company Dividend Junior Interests;
until, in each case, such time as all accumulated arrears of unpaid dividends on
the Preferred Interests of such series shall have been paid in full for all
dividend periods terminating on or prior to, in the case of clauses (i) and
(ii), such payment, and in the case of clause (iii), the date of such
redemption, purchase or acquisition. As of the date of this Prospectus, there
are no Company Dividend Parity Interests outstanding.
MANDATORY REDEMPTION
The proceeds from the repayment or any prepayment in cash of the principal
of any Loan Note must be applied to redeem the Preferred Interests of the
related series at the redemption price set forth in the applicable Prospectus
Supplement; provided that all or any portion of the amounts so repaid or prepaid
may be loaned or reloaned to the Guarantor or one of its subsidiaries and not
used for such redemption if at the time of such new loan, and as determined in
the judgment of the Guarantor, in its capacity as the Managing Member, and its
financial advisor (which may be an affiliate of the Guarantor), (a) the
Guarantor is not the subject of a pending case under the United States
Bankruptcy Code, (b) the Guarantor is not in default on any loan pertaining to
Preferred Interests of any other series ranking pari passu with such series, (c)
the Guarantor has timely made all required monthly payments of interest on the
repaid or prepaid loan for the immediately preceding nine months, (d) the
Company is not in arrearage on payments of dividends on the Preferred Interests
of such series, (e) the Guarantor is expected to be able to make timely payment
of principal and interest on such new loan, (f) such new loan is being made on
terms, and under circumstances, that are no less favorable to the Company than
those that a lender would require for a similar loan to an unrelated party, (g)
such new loan is being made at a rate of interest sufficient to provide monthly
payments of interest equal
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<PAGE> 25
to or greater than the amount of monthly dividends required on the Preferred
Interests of such series, (h) such new loan is being made for a fixed term that
is consistent with market circumstances and the Guarantor's financial condition,
and (i) in any event, no new loan shall have a final maturity later than the
ninetieth anniversary of the original issuance of the Preferred Interests of
such series.
The loan agreement governing the loan by the Company to the Guarantor of
the proceeds from the issuance of each series of Preferred Interests will accord
to the Guarantor the right, at its option but subject to certain conditions, to
issue and deliver to the Company, on any dividend payment date, in exchange for
the note evidencing such loan, shares of a newly-issued series of Guarantor
Preferred Stock (or Depositary Shares representing the same), all as more fully
set forth in the applicable Prospectus Supplement. Such exchange option may not
be exercised prior to the expiration of six months following the date of the
original issuance of such series. In the event of such exchange, the Company
shall be obligated to redeem, as an entirety, the series of Preferred Interests
the proceeds of which were the subject of such loan, solely in exchange for
shares of the same series of Guarantor Preferred Stock (or Depositary Shares
representing the same) so delivered to the Company in exchange for the
promissory note, all upon such terms, and subject to such conditions, as shall
be set forth in the resolutions creating such series of Preferred Interests and
in the applicable Prospectus Supplement.
OPTIONAL REDEMPTION
The Preferred Interests of any series will be redeemable at the option of
the Company, if at all, as specified in the Prospectus Supplement relating to
such series.
Notice of any redemption of the Preferred Interests of any series will be
given by the Company by mail to each record holder to be redeemed not fewer than
30 nor more than 60 days prior to the date fixed for redemption thereof.
In the event that fewer than all the outstanding Preferred Interests of a
particular series are to be redeemed, the Preferred Interests of such series to
be redeemed will be selected as described under "Book-Entry Procedures and
Settlement". The Company will not redeem fewer than all the outstanding
Preferred Interests of a particular series unless all accrued and unpaid
dividends have been paid on all Preferred Interests of such series for all
dividend periods terminating on or prior to the date of redemption.
If the Company gives a notice of redemption in respect of Preferred
Interests of a particular series, then, by 12:00 noon, New York time, on the
redemption date, the Company will irrevocably deposit with The Depository Trust
Company ("DTC", which term as used herein includes any successor or alternate
depository selected by the Company) funds sufficient to pay the applicable
redemption price, including an amount equal to all accrued and unpaid dividends
to the date fixed for redemption, and will give DTC irrevocable instructions and
authority to pay the redemption price to the holders thereof. See "Book-Entry
Procedures and Settlement". If notice of redemption shall have been given and
funds deposited as required, then upon the date of such deposit, all rights of
holders of such Preferred Interests of a series so called for redemption will
cease, except the right of the holders of such Preferred Interests to receive
the redemption price, but without interest, and such Preferred Interests will
cease to be outstanding. In the event that any date on which any payment in
respect of the redemption of Preferred Interests of any series is not a Business
Day, then payment of the redemption price 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
falls in the next calendar year, such payment will be made on the immediately
preceding Business Day. In the event that payment of the redemption price in
respect of Preferred Interests of any series is improperly withheld or refused
and not paid either by the Company or by the Guarantor pursuant to the
Guarantee, dividends on such Preferred Interests will continue to accrue, at the
then applicable rate, from the redemption date to the date of payment of such
redemption price.
Subject to the foregoing and applicable law (including, without limitation,
U.S. Federal securities laws), the Guarantor or its subsidiaries may at any time
and from time to time purchase outstanding Preferred Interests of any series by
tender, in the open market or by private agreement.
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<PAGE> 26
REGISTRAR, TRANSFER AGENT AND PAYING AGENT
Chemical Bank will act as registrar, transfer agent and paying agent for
the Preferred Interests (the "Paying Agent").
Registration of transfers of Preferred Interests of any series will be
effected without charge by or on behalf of the Company, but upon payment (with
the giving of such indemnity as the Company may require) in respect of any tax
or other governmental charges which may be imposed in relation to it.
The Company will not be required to register or cause to be registered the
transfer of Preferred Interests of a particular series after such Preferred
Interests have been called for redemption.
Additional transfer restrictions, if any, relating to the Preferred
Interests of any series will be set forth in the Prospectus Supplement relating
to such series.
MISCELLANEOUS
Holders of Preferred Interests will have no preemptive rights.
DESCRIPTION OF THE GUARANTEE
Set forth below is condensed information concerning the guarantee (the
"Guarantee") which will be executed and delivered by the Guarantor for the
benefit of the holders from time to time of Preferred Interests. This summary
does not purport to be complete and is subject to, and qualified in its entirety
by reference to, the Guarantee, a form of which has been filed as an exhibit to
the Registration Statement of which this Prospectus forms a part.
GENERAL
The Guarantor will irrevocably and unconditionally agree, to the extent set
forth herein, to pay in full, to the holders of the Preferred Interests of any
series, the Guarantee Payments (as defined below) (except to the extent paid by
the Company), as and when due, regardless of any defense, right of set-off or
counterclaim which the Company may have or assert. The following payments,
without duplication, to the extent not paid by the Company (the "Guarantee
Payments") will be subject to the Guarantee: (i) any accrued and unpaid
dividends which have been theretofore declared on the Preferred Interests of
such series out of funds held by the Company and legally available therefor,
(ii) the redemption price (including all accrued and unpaid dividends to the
date of payment) payable with respect to Preferred Interests of such series
called for redemption by the Company as an optional redemption or otherwise out
of funds held by the Company and legally available therefor, (iii) the lesser of
(a) the aggregate of the liquidation preference of the Preferred Interests of
such series and all accrued and unpaid dividends to the date of payment and (b)
the amount of remaining assets of the Company after satisfaction of other
parties having claims which, as a matter of law, are prior to those of the
holders of Preferred Interests of such series, and (iv) in the event of any
redemption by the Company of Preferred Interests in exchange for Depositary
Shares in connection with an exchange of such Depositary Shares for a note
evidencing Loans, delivery of the proper number of Depositary Shares (and cash
payments in lieu of fractional Depositary Shares, if any) to the Paying Agent
for further distribution to a holder whose Preferred Interests are redeemed. The
Guarantor's obligation to make a Guarantee Payment may be satisfied by direct
payment of the required amount by the Guarantor to the holders of Preferred
Interests of any series or by causing the Company to pay such amount to such
holders.
CERTAIN COVENANTS OF THE GUARANTOR
If, at any time that the Guarantor is not in compliance with its
obligations under the Guarantee, the Board of Directors of the Guarantor
declares dividends on any shares of capital stock of the Guarantor ranking
junior to the Guarantor's obligations under the Guarantee as to dividends, the
Guarantor shall, or shall cause the Company to, set aside for payment in a
segregated account at the office of the Paying Agent an amount equal to all
accrued and unpaid dividends on the Preferred Interests of each series out of
moneys held and
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<PAGE> 27
legally available therefor and irrevocably instruct the Paying Agent to pay such
amounts as dividends on the Preferred Interests of such series on the day prior
to the date on which such dividends declared by the Guarantor are payable. The
Paying Agent shall make such payment on such day unless it shall have received,
prior to 10:00 a.m., New York time, on such day, a certificate from the
Guarantor certifying that such dividend declaration has been lawfully rescinded
in full. In such case, the amounts deposited in such account shall be remitted
forthwith to the Guarantor or the Company, as the case may be. In all cases, any
interest accrued on the amounts deposited in such account shall be remitted by
the Paying Agent to the Guarantor or the Company, as the case may be.
In addition, if, at any time the Guarantor is not in compliance with its
obligations under the Guarantee, the Guarantor (or any subsidiary of the
Guarantor using funds provided by the Guarantor) redeems or purchases or
otherwise acquires any shares of capital stock of the Guarantor ranking junior
to the Guarantor's obligations under the Guarantee upon liquidation, all accrued
and unpaid dividends on the Preferred Interests of each series payable out of
moneys held and legally available therefor shall immediately become due and
payable under the Guarantee; provided, however, that no such payment shall be
required if any such shares of the Guarantor are redeemed, purchased or
otherwise acquired in connection with any employee stock option or benefit plan
of the Guarantor.
Neither the Guarantor nor any subsidiary of the Guarantor using funds
provided by the Guarantor shall redeem, purchase or acquire, or pay a
liquidation preference with respect to, any preferred stock of the Guarantor
ranking pari passu with the Guarantee, any preferred or preference stock of
affiliates of the Guarantor (including the Company) entitled to the benefits of
a guarantee of the Guarantor ranking pari passu with the Guarantee, any
preferred or preference stock of affiliates of the Guarantor entitled to the
benefits of a guarantee ranking junior to the Guarantee upon liquidation or any
other capital stock of the Guarantor ranking junior to the Guarantee if at such
time the Guarantor shall be in default with respect to its obligations under the
Guarantee, except, in each case, any preferred or preference stock redeemed,
purchased or otherwise acquired in connection with any employee stock option or
benefit plan of the Guarantor.
Neither the Guarantor nor any subsidiary of the Guarantor using funds
provided by the Guarantor, shall pay dividends, or make guarantee payments with
respect to dividends, on any preferred or preference stock of affiliates of the
Guarantor entitled to the benefits of a guarantee ranking junior to the
Guarantee as to dividends of the Guarantor if at such time the Guarantor shall
be in default with respect to its obligations under the Guarantee.
Pursuant to the Guarantee, the Guarantor will agree that, so long as the
Preferred Interests of a series are outstanding (i) it shall maintain ownership,
directly or indirectly, of 100% of the Common Interests, (ii) in its capacity as
a holder of Common Interests, it shall make such contributions to the Company so
as to cause the Common Interests held by the Guarantor to be entitled in the
aggregate to at least 21% of all interest in the capital, income, gain, loss,
deduction, credit and distributions of the Company, (iii) it shall not
voluntarily dissolve, wind-up or liquidate the Company and (iv) it shall use its
reasonable efforts to cause the Company to remain a limited liability company
under the laws of the State of Delaware and otherwise continue to be treated as
a partnership for United States Federal income tax purposes.
If the Guarantor issues, at any time following the date of this Prospectus,
any preferred shares ranking senior to its obligations under the Guarantee or
enters into any guarantee in respect of any preferred or preference shares of
any affiliate of the Guarantor, which guarantee would rank junior to all
liabilities of the Guarantor but senior to the Guarantee as to dividends, upon
liquidation and as to rights upon redemption, then the Guarantee will be deemed
to give the holders of Preferred Interests such rights and entitlements as are
contained in or attached to such other preferred or preference stock or
guarantee such that the Guarantee ranks pari passu as to such rights and
entitlements with any such other preferred or preference stock or guarantee.
AMENDMENTS AND ASSIGNMENT
Except with respect to any changes which do not materially and adversely
affect the rights of holders of Preferred Interests (in which case no vote will
be required), the Guarantee may only be amended by an
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<PAGE> 28
instrument in writing signed by the Guarantor with the prior approval of the
holders of not less than 66 2/3% in liquidation preference of all Preferred
Interests then outstanding given either in writing or by vote at a duly
constituted meeting of such holders. All guarantees and agreements contained in
the Guarantee shall bind the successors, assigns, receivers, trustees and
representatives of the Guarantor and shall inure to the benefit of the holders
of the Preferred Interests. The Guarantor will not assign its obligations under
the Guarantee without the prior approval of the holders of not less than 66 2/3%
in liquidation preference of all Preferred Interests then outstanding given
either in writing or by vote at a duly constituted meeting of such holders.
TERMINATION OF THE GUARANTEE
The Guarantee will terminate and be of no further force and effect as to a
series of Preferred Interests upon either (i) full payment of the redemption
price (including all accrued and unpaid dividends) for all Preferred Interests
of such series, including any redemption of all of a series of Preferred
Interests in exchange for Guarantor Preferred Stock (or Depositary Shares
representing the same) or (ii) full payment of the amounts payable to holders of
Preferred Interests of such series upon liquidation of the Company. The
Guarantee will continue to be effective or will be reinstated, as the case may
be, with respect to Preferred Interests of such series if at any time any holder
of Preferred Interests of such series must restore payment of any sums paid
under the Preferred Interests of such series or under the Guarantee for any
reason whatsoever.
STATUS OF THE GUARANTEE
The Guarantee will constitute an unsecured obligation of the Guarantor and
will rank (i) junior in right of payment to all liabilities of the Guarantor,
(ii) pari passu with the most senior preferred stock now or hereafter issued by
the Guarantor and with any guarantee now or hereafter entered into by the
Guarantor in respect of any preferred or preference stock of any affiliate of
the Guarantor and (iii) senior to the Guarantor's common stock.
The Guarantee will constitute a guarantee of payment and not of collection.
A holder of Preferred Interests may enforce the Guarantee directly against the
Guarantor, and the Guarantor will waive any right or remedy to require that any
action be brought against the Company or any other person or entity before
proceeding against the Guarantor. The Guarantee will not be discharged except by
payment of the Guarantee Payments in full (to the extent not paid by the
Company) and by complete performance of all obligations of the Guarantor under
the Guarantee.
GOVERNING LAW
The Guarantee will be governed and construed in accordance with the
internal laws of the State of New York.
DESCRIPTION OF THE GUARANTOR PREFERRED STOCK
The following is a summary description of certain general terms of the
Guarantor Preferred Stock to which any Prospectus Supplement may relate. The
particular terms of the Guarantor Preferred Stock and the extent, if any, to
which such general terms do not apply to such Guarantor Preferred Stock will be
described in such Prospectus Supplement. The summaries of certain terms of the
Guarantor Preferred Stock set forth below and in the applicable Prospectus
Supplement do not purport to be complete and are subject to, and qualified in
their entirety by reference to, the Guarantor's Restated Certificate of
Incorporation (the "Certificate of Incorporation"), including the applicable
Certificate of Designations (the "Certificate of Designations") relating to the
Guarantor Preferred Stock of a series. The Certificate of Incorporation and any
such Certificate of Designations will be filed as exhibits to or incorporated by
reference in the Registration Statement of which this Prospectus forms a part.
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GENERAL
The Guarantor is authorized by the Certificate of Incorporation to issue
20,000,000 shares of Series Preferred Stock, which may be issued from time to
time in one or more series, the shares of each series to have such powers,
designations, preferences and relative, participating, optional or other special
rights, and qualifications, limitations or restrictions thereof, as are stated
and expressed in the Certificate of Incorporation or in a resolution or
resolutions providing for the issue of such series, adopted by the Guarantor's
Board of Directors (the "Board of Directors").
The Board of Directors is authorized, subject to the provisions of the
Certificate of Incorporation, to fix for each such series of Series Preferred
Stock, and the applicable Prospectus Supplement shall set forth with respect to
each series of Guarantor Preferred Stock: (i) the number of shares to constitute
such series and the distinctive designation thereof; (ii) the dividend rate, the
conditions and dates upon which such dividends shall be payable, the preference
or relation which such dividends shall bear to the dividends payable on any
other class or series of capital stock, and whether such dividends shall be
cumulative or noncumulative; (iii) whether the shares of such series shall be
subject to redemption, and, if so, the times, prices and other terms and
conditions thereof; (iv) the rights of the holders of shares of such series upon
the liquidation, dissolution or winding up of the Guarantor; (v) whether the
shares of such series shall be subject to a retirement or sinking fund, and, if
so, the extent, terms and provisions relative to the operation thereof; (vi)
whether the shares of such series shall be convertible into, or exchangeable
for, shares of stock of any other class or series of the same class, and, if so,
the price or rate of conversion or exchange and any method of adjusting the
same; (vii) the limitations and restrictions, if any, to be applicable while any
shares of such series are outstanding upon the payment of dividends or making of
other distributions on, and upon the purchase, redemption or other acquisition
by the Guarantor of, the Common Stock, par value $1.00 per share, of the
Guarantor (the "Common Stock") or any other class of stock ranking junior to the
shares of such series either as to dividends or upon liquidation; (viii) the
conditions or restrictions, if any, upon the creation of indebtedness of the
Guarantor or upon the issue of any additional stock (including additional shares
of such series or of any other series or of any other class) ranking on a parity
with or prior to the shares of such series as to dividends or distribution of
assets on liquidation, dissolution or winding up; (ix) the voting rights, if
any, of shares of such series in addition to those set forth in "Voting Rights"
below; and (x) any other preference and relative, participating, optional, or
other special rights, qualifications, limitations or restrictions thereof as
shall not be inconsistent with the Certificate of Incorporation.
The Guarantor Preferred Stock will, when issued, be fully paid and
nonassessable. All shares of any one series of Guarantor Preferred Stock shall
be identical with each other in all respects, except that shares of any one
series issued at different times may differ as to the dates from which
dividends, if any, thereon shall be cumulative. All series of Guarantor
Preferred Stock shall rank equally and be identical in all respects, except as
permitted by the Certificate of Incorporation provisions summarized in the
preceding paragraph; and all shares of Guarantor Preferred Stock shall rank
senior to the Common Stock both as to dividends and upon liquidation. The Common
Stock is also subject to all the other powers, rights, privileges, preferences
and priorities of the Guarantor Preferred Stock as are stated in the Certificate
of Incorporation and as shall be stated and expressed in any resolution or
resolutions adopted by the Board of Directors pursuant to the authority
summarized in the preceding paragraph. Unless otherwise stated in the applicable
Prospectus Supplement, the shares of each series of Guarantor Preferred Stock
will upon issuance rank on a parity as to dividends and distributions upon
liquidation with the 7.5% Convertible Preferred Stock, 7.5% Convertible
Preferred Stock, Series B, Cumulative Participating Convertible Voting Preferred
Stock, Series A and 6% Convertible Preferred Stock, of the Guarantor, which the
Guarantor is authorized to issue but no shares of which are issued and
outstanding as of the date of this Prospectus. The Guarantor Preferred Stock
will have no preemptive rights to subscribe for any additional securities that
may be issued by the Guarantor.
DIVIDENDS
Unless otherwise set forth in the applicable Prospectus Supplement, 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 Guarantor ranking junior to any
series of the Guarantor Preferred Stock as to the payment of dividends, the
holders of the
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<PAGE> 30
Guarantor Preferred Stock of that series will be entitled to receive, when and
as declared by the Board of Directors, out of the net profits or net assets of
the Guarantor legally available therefor, dividends payable at such times and at
such rates as will be specified in the applicable Prospectus Supplement. Such
rates may be fixed or variable or both. If variable, the formula used for
determining the dividend rate for each dividend period will be specified in the
applicable Prospectus Supplement. Unless otherwise set forth in the applicable
Prospectus Supplement, dividends will be payable to the holders of record as
they appear on the stock transfer records of the Guarantor on such dates as may
be fixed by the Board of Directors.
Dividends on any series of Guarantor Preferred Stock may be cumulative or
noncumulative, as specified in the applicable Prospectus Supplement. If the
Board of Directors fails to declare a dividend payable on a dividend payment
date on any series of Guarantor Preferred Stock for which dividends are
noncumulative ("Noncumulative Guarantor Preferred Stock"), then the holders of
the Guarantor Preferred Stock of that series will have no right to receive a
dividend in respect of the dividend period relating to such dividend payment
date, and the Guarantor will have no obligation to pay the dividend accrued for
such period, whether or not dividends on that series are declared or paid on any
future dividend payment dates. If dividends on any series of Guarantor Preferred
Stock are not paid in full or declared in full and sums set apart for the
payment thereof, then no dividends shall be declared and paid on that series
unless declared and paid ratably on all shares of every series of Guarantor
Preferred Stock then outstanding, including dividends accrued or in arrears, if
any, in proportion to the respective amounts that would be payable per share if
all such dividends were declared and paid in full.
The Prospectus Supplement relating to a series of Guarantor Preferred Stock
will specify the conditions and restrictions, if any, on the payment of
dividends or on the making of other distributions on, or the purchase,
redemption or other acquisition by the Guarantor or any subsidiary thereof of,
the Common Stock or of any other class of stock of the Guarantor ranking junior
to the shares of that series as to dividends or upon liquidation and any other
preferences, rights, restrictions and qualifications that are not inconsistent
with the Certificate of Incorporation.
LIQUIDATION RIGHTS
In the event of any liquidation, dissolution or winding up of the
Guarantor, before any payment or distribution of the assets of the Guarantor
(whether capital or surplus) shall be made to or set apart for the holders of
Common Stock or any other class or classes of stock of the Guarantor ranking
junior to the Guarantor Preferred Stock upon liquidation, the holders of the
shares of the Guarantor Preferred Stock shall be entitled to receive payment at
the rate specified in the applicable Certificate of Designations for such
series, plus (if dividends on shares of such series of Guarantor Preferred Stock
shall be cumulative) an amount equal to all unpaid dividends (whether or not
earned or declared) accrued to the date of final distribution to such holders;
but such holders shall be entitled to no further payment. If, upon any
liquidation, dissolution or winding up of the Guarantor, the assets of the
Guarantor or proceeds thereof, distributable among the holders of the shares of
the Guarantor Preferred Stock shall be insufficient to pay in full the
preferential amount aforesaid, then such assets, or the proceeds thereof, shall
be distributed among such holders ratably in accordance with the respective
amounts which would be payable on such shares if all amounts payable thereon
were paid in full. For the purposes hereof, the voluntary sale, conveyance,
exchange or transfer (for cash, shares of stock, securities or other
consideration) of all or substantially all the property or assets of the
Guarantor shall be deemed a voluntary liquidation, dissolution or winding up of
the Guarantor, but a consolidation or merger of the Guarantor with one or more
other corporations shall not be deemed to be a liquidation, dissolution or
winding up, voluntary or involuntary.
REDEMPTION
Any series of Guarantor Preferred Stock may be redeemable, in whole or in
part, at the option of the Guarantor or pursuant to a retirement or sinking fund
or otherwise, on terms and at the times and the redemption prices specified in
the applicable Certificate of Designations. If less than all shares of the
series at the time outstanding are to be redeemed, the shares to be redeemed
will be selected pro rata or by lot, in such manner as may be prescribed by
resolution of the Board of Directors.
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Notice of any redemption of a series of Guarantor Preferred Stock will 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 Guarantor, postage prepaid, not less than 30 nor more than 60 days
prior to the redemption date, addressed to the respective holders of record of
shares of that series at the addresses shown on the stock transfer records of
the Guarantor, but the mailing of such notice will not be a condition of such
redemption. In order to facilitate the redemption of shares of Guarantor
Preferred Stock, the Board of Directors may fix a record date for the
determination of the shares to be redeemed, and such record date will not be
more than 60 days nor less than 30 days prior to the redemption date.
Prior to the redemption date, the Guarantor will deposit money for the
payment of the redemption price with a bank or trust company doing business in
the Borough of Manhattan, The City of New York, and having a capital and surplus
of at least $10,000,000. Unless the Guarantor fails to make such deposit, on the
redemption date, all dividends on the series of Guarantor Preferred Stock called
for redemption will cease to accrue and all rights of the holders of shares of
that series as stockholders of the Guarantor shall cease, except the right to
receive the redemption price (but without interest). Unless otherwise specified
in the applicable Prospectus Supplement, any monies so deposited which remain
unclaimed by the holders of the shares of that series at the end of six years
after the redemption date will become the property of, and will be paid by the
bank or trust company with which it has been so deposited to, the Guarantor.
CONVERSION RIGHTS
Guarantor Preferred Stock will not be convertible into Common Stock.
VOTING RIGHTS
Except as otherwise stated in the Certificate of Incorporation or by the
Board of Directors in the resolution providing for the issue of any series of
Guarantor Preferred Stock and set forth in the Prospectus Supplement applicable
to a particular series of Guarantor Preferred Stock, and except as required by
the laws of the State of Delaware, holders of the Guarantor Preferred Stock of
that series will not have any voting rights except as set forth below. Whenever
dividends on any series of Guarantor Preferred Stock or any other class or
series of stock ranking on a parity with that series with respect to the payment
of dividends shall be in arrears for dividend periods, whether or not
consecutive, containing in the aggregate a number of months equivalent to six
calendar quarters, the holders of shares of that series (voting separately as a
class with all other series of Guarantor Preferred Stock upon which like voting
rights have been conferred and are exercisable) will be entitled to vote for the
election of two of the authorized number of directors of the Guarantor at the
next annual meeting of stockholders and at each subsequent meeting until all
dividends accrued on that series have been fully paid or set apart for payment.
The term of office of all directors elected by the holders of a series of
Guarantor Preferred Stock shall terminate immediately upon the termination of
the right of the holders of that series to vote for directors. Whenever the
shares of a series are or become entitled to vote, each holder of shares of that
series will have one vote for each share held.
So long as shares of any series of Guarantor Preferred Stock remain
outstanding, the Guarantor shall not, without the consent of the holders of at
least 66 2/3% of the shares of that series outstanding at the time (voting
separately as a class with all other series of Guarantor Preferred Stock upon
which like voting rights have been conferred and are exercisable), (i) issue or
increase the authorized amount of any class or series of capital stock of the
Guarantor ranking senior to the shares of that series as to dividends or upon
liquidation or (ii) amend, alter or repeal the provisions of the Certificate of
Incorporation or of the resolutions contained in the applicable Certificate of
Designations, whether by merger, consolidation or otherwise, so as to materially
and adversely affect any power, preference or special right of the outstanding
shares of that series or the holders thereof; provided, however, that any
increase in the amount of the authorized Common Stock or authorized Guarantor
Preferred Stock or the creation and issuance of Common Stock or any other series
of Guarantor Preferred Stock ranking on a parity with or junior to a series of
Guarantor Preferred Stock as to dividends and upon liquidation, shall not be
deemed to materially and adversely affect the powers, preferences or special
rights of the shares of that series.
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Unless otherwise indicated in the applicable Prospectus Supplement, the
transfer agent, dividend disbursing agent and registrar for each series of
Guarantor Preferred Stock will be Chemical Bank.
DESCRIPTION OF THE DEPOSITARY SHARES
The following summary and the summary in any Prospectus Supplement of
certain terms of the Depositary Shares and Depositary Receipts (as defined
below) do not purport to be complete and are subject to, and qualified in their
entirety by reference to, the Deposit Agreement relating to the applicable
series of Guarantor Preferred Stock, the form of which is filed as an exhibit to
the Registration Statement of which this Prospectus forms a part.
GENERAL
The Guarantor, at its option, may elect to offer fractional interests in
shares of a series of Guarantor Preferred Stock, rather than whole shares. If
the option is exercised, the Guarantor will provide for the issuance by a
depositary of depositary receipts ("Depositary Receipts") evidencing depositary
shares ("Depositary Shares"), each of which will represent a fractional interest
(to be specified in the applicable Prospectus Supplement) in a share of a
particular series of the Guarantor Preferred Stock as more fully described
below.
If the Guarantor offers fractional shares of any series of Guarantor
Preferred Stock, those shares will be deposited under a separate deposit
agreement (a "Deposit Agreement") among the Guarantor, a bank or trust company
selected by the Guarantor and having its principal office in the United States
and having a combined capital and surplus of at least $50,000,000 (the
"Depositary") and the holders from time to time of the Depositary Receipts
issued thereunder by that Depositary. The applicable Prospectus Supplement will
set forth the name and address of the Depositary. Subject to the terms of the
Deposit Agreement, each owner of a Depositary Share will be entitled, through
the Depositary, and in proportion to the applicable fractional interest in a
share of Guarantor Preferred Stock underlying such Depositary Share, to all the
rights and preferences of the Guarantor Preferred Stock relating thereto,
including dividend, voting, redemption and liquidation rights.
Pending the preparation of definitive Depositary Receipts, the Depositary,
upon the written order of the Guarantor, shall execute and deliver temporary
Depositary Receipts substantially identical to (and entitling the holders
thereof to all the rights pertaining to) the definitive Depositary Receipts but
not in definitive form. Definitive Depositary Receipts will be prepared
thereafter without unreasonable delay, and temporary Depositary Receipts will be
exchangeable for definitive Depositary Receipts without charge to the holder.
DIVIDENDS AND OTHER DISTRIBUTIONS
The Depositary will distribute to the holders of Depositary Receipts
evidencing Depositary Shares all cash dividends or other cash distributions
received in respect of the underlying fractional shares of Guarantor Preferred
Stock in proportion to the respective holdings of the Depositary Shares on the
relevant record date. However, the Depositary will distribute only the amount
that can be distributed without attributing to any holder of Depositary Shares a
fraction of one cent, and any balance not so distributed 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
holders of Depositary Receipts then outstanding.
If the Guarantor distributes property other than cash in respect of shares
of Guarantor Preferred Stock deposited under a Deposit Agreement, the Depositary
will distribute the property received by it to the record holders of Depositary
Receipts evidencing the Depositary Shares relating to those shares of Guarantor
Preferred Stock, in proportion, as nearly as may be practicable, to their
respective holdings of the Depositary Shares on the relevant record date, unless
the Depositary determines that it is not feasible to make such a distribution,
in which case the Depositary may, with the approval of the Guarantor, adopt such
method as it deems equitable and practicable to give effect to the distribution,
including the sale of the property so received and distribution of the net
proceeds from such sale to the holders of the Depositary Receipts.
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Each Deposit Agreement will also contain provisions relating to the manner
in which any subscription or similar rights offered by the Guarantor to holders
of the Guarantor Preferred Stock deposited under such Deposit Agreement will be
made available to holders of Depositary Shares.
REDEMPTION OF DEPOSITARY SHARES
If the shares of the Guarantor Preferred Stock deposited under a Deposit
Agreement are subject to redemption, in whole or in part, then, upon any such
redemption, the Depositary Shares relating to those deposited shares will be
redeemed from the proceeds received by the Depositary as a result of the
redemption. Whenever the Guarantor redeems shares of Guarantor Preferred Stock
held by a Depositary, the Depositary will redeem as of the same redemption date
the number of Depositary Shares representing the shares of Guarantor 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 the applicable fraction of the per share
redemption price of the Guarantor Preferred Stock underlying such Depositary
Share. 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.
If notice of redemption shall have been given as described above, from and
after the date fixed for redemption, unless the Guarantor shall have failed to
redeem the shares of Guarantor 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 shares of Guarantor Preferred Stock deposited under a Deposit
Agreement are entitled to vote, the Depositary will mail the information
contained in that notice of meeting (and any accompanying proxy materials) to
the holders of the Depositary Shares relating to such Guarantor Preferred Stock
as of the record date for such meeting. Each such holder will be entitled,
subject to any applicable restrictions, to instruct the Depositary as to the
exercise of the voting rights of the Guarantor Preferred Stock represented by
such holder's Depositary Shares. The Depositary will endeavor, insofar as
practicable, to vote the Guarantor Preferred Stock represented by those
Depositary Shares in accordance with the holder's instructions, and the
Guarantor will agree to take all action deemed necessary by the Depositary to
enable the Depositary to do so. The Depositary will abstain from voting shares
of Guarantor Preferred Stock deposited under a Deposit Agreement as to which it
has not received specific instructions from the holders of the Depositary Shares
representing those shares.
WITHDRAWAL OF STOCK
Upon surrender of Depositary Receipts at the principal office of the
relevant Depositary (unless the Depositary Shares evidenced thereby have
previously been called for redemption), and subject to the terms of the related
Deposit Agreement, the owner of the Depositary Shares evidenced thereby shall be
entitled to delivery of whole shares of Guarantor Preferred Stock and all money
and other property, if any, represented by those Depositary Shares. Fractional
shares of Guarantor Preferred Stock will not be delivered. If the Depositary
Receipts surrendered by the holder evidence Depositary Shares in excess of those
representing the number of whole shares of Guarantor Preferred Stock to be
withdrawn, the Depositary will deliver to the holder at the same time a new
Depositary Receipt evidencing the Depositary Shares. Holders of shares of
Guarantor Preferred Stock thus withdrawn will not thereafter be entitled to
deposit such shares under a Deposit Agreement or to receive Depositary Shares
therefor. The Guarantor does not expect that there will be any public trading
market for the Guarantor Preferred Stock, except as represented by Depositary
Shares.
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AMENDMENT AND TERMINATION OF THE DEPOSIT AGREEMENT
The form of Depositary Receipt evidencing any Depositary Shares and any
provision of a Deposit Agreement may at any time and from time to time be
amended by agreement between the Guarantor and the Depositary. However, any
amendment that materially and adversely alters the rights of the existing
holders of Depositary Shares will not be effective unless and until approved by
the holders of at least a majority of the Depositary Shares then outstanding
under that Deposit Agreement. Each Deposit Agreement will provide that each
holder of Depositary Shares at the time an amendment becomes effective who
continues to hold those Depositary Shares will be deemed to have consented to
the amendment and will be bound thereby. Except as may be necessary to comply
with any mandatory provisions of applicable law, no amendment may impair the
right, subject to the terms of the related Deposit Agreement, of any holder of
any Depositary Shares to surrender the Depositary Receipt evidencing those
Depositary Shares to the Depositary together with instructions to deliver to the
holder the whole shares of Guarantor Preferred Stock represented by the
surrendered Depositary Shares and all money and other property, if any,
represented thereby. A Deposit Agreement may be terminated by the Guarantor or
the Depositary only if (i) all outstanding Depositary Shares issued thereunder
have been redeemed or (ii) there has been a final distribution in respect of the
Guarantor Preferred Stock relating to those Depositary Shares in connection with
any liquidation, dissolution or winding up of the Guarantor and the amount
received by the Depositary as a result of that distribution has been distributed
by the Depositary to the holders of those Depositary Shares.
CHARGES OF DEPOSITARY
The Guarantor will pay all transfer and other taxes and governmental
charges arising solely from the existence of the depositary arrangements. The
Guarantor will pay charges of any Depositary in connection with the initial
deposit of Guarantor Preferred Stock and the initial issuance of the relevant
Depositary Shares and any redemption of such Guarantor Preferred Stock. Holders
of Depositary Shares will pay any other taxes and charges incurred for their
accounts as are provided in the relevant Deposit Agreement.
MISCELLANEOUS
Each Depositary will forward to the holders of Depositary Shares issued by
that Depositary all reports and communications from the Guarantor that are
delivered to the Depositary and that the Guarantor is required to furnish to the
holders of the Guarantor Preferred Stock held by the Depositary. In addition,
each Depositary will make available for inspection by the holders of those
Depositary Shares, at the principal office of such Depositary and at such other
places as it may from time to time deem advisable, all reports and
communications received from the Guarantor that are received by such Depositary
as the holder of Guarantor Preferred Stock.
Neither any Depositary nor the Guarantor will assume any obligation or will
be subject to any liability under a Deposit Agreement to holders of the
Depositary Shares other than for its negligence or willful misconduct. Neither
any Depositary nor the Guarantor will be liable if it is prevented or delayed by
law or any circumstance beyond its control in performing its obligations under a
Deposit Agreement. The obligations of the Guarantor and any Depositary under a
Deposit Agreement will be limited to performance in good faith of their duties
thereunder, and they will not be obligated to prosecute or defend any legal
proceeding in respect of any Depositary Shares or Guarantor Preferred Stock
unless satisfactory indemnity is furnished. The Guarantor and any Depositary may
rely on written advice of counsel or accountants, on information provided by
persons presenting Guarantor Preferred Stock for deposit, holders of Depositary
Shares or other persons believed in good faith to be competent to give such
information and on documents believed to be genuine and to have been signed or
presented by the proper party or parties.
RESIGNATION AND REMOVAL OF DEPOSITARY
A Depositary may resign at any time by delivering to the Guarantor notice
of its election to do so, and the Guarantor may at any time remove any
Depositary, any such resignation or removal to take effect upon the appointment
of a successor Depositary and its acceptance of such appointment. Such successor
Depositary
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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.
BOOK-ENTRY PROCEDURES AND SETTLEMENT
Each series of Preferred Interests and each series of Guarantor Preferred
Stock (or Depositary Shares) (collectively, the "Securities") may be issued in
certificated or book-entry form, as specified in the applicable Prospectus
Supplement. The Securities issued in book-entry form from the perspective of the
beneficial owners thereof (the "Securityholders") will be issued in the form of
a single global stock certificate or a single global Depositary Receipt (as the
case may be) registered in the name of the nominee of DTC.
DTC is a limited-purpose trust company created to hold securities for its
participating organizations (the "Participants") and to facilitate the clearance
and settlement of transactions in those securities between Participants through
electronic book-entry changes in the accounts of the Participants. Participants
include securities brokers and dealers, banks and trust companies, clearing
corporations and certain other organizations. Access to DTC's system is also
available to others (such as banks, brokers, dealers and trust companies) that
clear through or maintain a custodial relationship with a Participant, either
directly or indirectly ("Indirect Participants"). Persons who are not
Participants or Indirect 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 securities held in book-entry form. Owners of beneficial interests in the
global stock certificate or Depositary Receipt will not be entitled to have the
Securities registered in their names, will not receive or be entitled to receive
physical delivery of the Securities in definitive form, and will not be
considered the holders thereof under the L.L.C. Agreement, the Actions or any
Deposit Agreement.
None of the Company, the Guarantor nor the Depositary will have any
responsibility or liability for any aspect of the records relating to or
payments made on account of beneficial ownership interests in the global stock
certificate or Depositary Receipt, or for maintaining, supervising or reviewing
any records relating to such beneficial ownership interests.
A Securityholder's ownership of the Securities issued in book-entry form
will be recorded on or through the records of the brokerage firm or other entity
that maintains that Securityholder's account. In turn, the total number of
shares of the Securities held by an individual brokerage firm or other entity
for its clients will be maintained on the records of DTC in the name of that
brokerage firm or other entity (or in the name of a Participant that acts as
agent for the Securityholder's brokerage firm or other entity if it is not a
Participant). Therefore, a Securityholder must rely upon the records of the
Securityholder's brokerage firm or other entity to evidence the Securityholder's
ownership of the Securities and transfer of ownership of those Securities may be
effected only through the brokerage firm or other entity that maintains the
Securityholder's account.
If less than all of the Preferred Interests of any series are being
redeemed, DTC's practice is to determine by lot the amount of the interest of
each participant in such series to be redeemed.
Dividends or other distributions payable in respect of the Securities will
be paid by the Company, the Guarantor or the Depositary, as the case may be, to
DTC. DTC will be responsible for crediting the amount of payments that it
receives to the accounts of the Participants in accordance with their respective
standard procedures, which currently provide for payment in next-day funds. Each
Participant will be responsible for disbursing the payments for which it is so
credited to the Securityholders that it represents and to each brokerage firm or
other entity for which it acts as agent. Each such brokerage firm or other
entity will be responsible for disbursing funds to the Securityholders that it
represents. It is suggested that any purchaser of the Securities with accounts
at more than one brokerage firm or other entity effect transactions in the
Securities only through the brokerage firm or firms or other entity or entities
that hold such purchaser's Securities.
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If DTC is at any time unwilling or unable to continue as depository in
respect of a global certificate or global Depositary Receipt and a successor
depository is not appointed by the Company, the Guarantor or the Depositary, as
the case may be, within 90 days, the Company or the Guarantor, as the case may
be, will issue Securities in definitive form in exchange for the global stock
certificate or global Depositary Receipt. In addition, the Company or the
Guarantor, as the case may be, may determine at any time not to have the
Securities represented by a global stock certificate or global Depositary
Receipt (as the case may be), and, in such event, will issue the Securities in
definitive form in exchange for such global stock certificate or global
Depositary Receipt. In either instance, an owner of a beneficial interest in the
global stock certificate or global Depositary Receipt will be entitled to have
the Securities equal in aggregate amount to that beneficial interest registered
in its name and will be entitled to physical delivery of a definitive
certificate or other instrument evidencing such Securities. The registered
holder of the Securities will be entitled to receive the dividends or other
distributions or, if applicable, the redemption price payable in respect of such
Securities, upon surrender of the certificate (or Depositary Receipt) evidencing
such Securities to the Company, the Guarantor or the Depositary, as the case may
be, in accordance with the procedures set forth in the L.L.C. Agreement, the
Actions or Deposit Agreement (as the case may be).
TAXATION
The following is a summary of the principal U.S. Federal income tax
consequences, based on the advice of Cravath, Swaine & Moore, of the purchase,
ownership, and disposition of the Preferred Interests, to a holder that is a
citizen or resident of the United States, a corporation, partnership, or other
entity created or organized under the laws of the United States or any state
thereof or the District of Columbia, an estate or trust the income of which is
subject to U.S. Federal income taxation regardless of source, or a person that
is otherwise subject to U.S. Federal income tax on a net income basis with
respect to the Preferred Interests (a "U.S. Holder"). Because the Preferred
Interests are intended to be offered and sold only to investors that are U.S.
Holders, this summary does not address the U.S. Federal income tax consequences
to persons other than U.S. Holders.
This summary is based on the U.S. Federal income tax laws, regulations, and
rulings and decisions now in effect, all of which are subject to change,
possibly on a retroactive basis. It does not include any description of the tax
laws of any state or local government or of any foreign government that may be
applicable to the Preferred Interests or the holders thereof. This summary
considers only initial U.S. Holders (except where otherwise expressly indicated)
that hold the Preferred Interests as capital assets, and does not address the
tax consequences applicable to subsequent purchasers of Preferred Interests or
to investors that may be subject to special tax rules such as banks, insurance
companies, dealers in stocks, tax exempt persons or persons that will hold the
Preferred Interests as a position in a "straddle", as part of a "synthetic
security" or "hedge", or as part of a "conversion transaction" or other
integrated investment. This summary also does not address the tax consequences
to persons that have a functional currency other than the U.S. dollar.
INVESTORS SHOULD CONSULT THEIR OWN TAX ADVISORS IN DETERMINING THE U.S.
FEDERAL INCOME TAX CONSEQUENCES OF HOLDING THE PREFERRED INTERESTS AS WELL AS
THE APPLICATION OF ANY STATE, LOCAL OR FOREIGN TAX LAWS.
Income from the Preferred Interests
In the opinion of Cravath, Swaine & Moore, the Company will be treated as a
partnership for U.S. Federal income tax purposes. Such opinion relies, in part,
upon the opinion of Richards, Layton & Finger, P.A., special Delaware counsel to
the Company, as to certain matters. Each U.S. Holder will be required to include
in its gross income its distributive share of the Company's net income. A U.S.
Holder's distributive share of such income will generally equal the amount of
such dividends on the Preferred Interests, except (a) income will accrue to a
U.S. Holder as interest accrues on the Loan Notes rather than when dividends are
paid on the Preferred Interests, and (b) in the limited circumstances described
below under "Potential Extension of the Payment Period" and "Use of Convention".
Any amount so included in a U.S. Holder's gross income will increase its tax
basis in the Preferred Interests and the amount of cash dividends to
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the U.S. Holder will reduce its tax basis in the Preferred Interests. No portion
of such income will be eligible for the dividends-received deduction.
Disposition of the Preferred Interests
Except as described below under "Redemption of the Preferred Interests in
Exchange for Guarantor Preferred Stock", gain or loss will be recognized on a
sale, exchange or other disposition of the Preferred Interests (including a
distribution of cash in redemption of all of a U.S. Holder's Preferred
Interests) equal to the difference between the amount realized and the U.S.
Holder's tax basis in such Preferred Interests. In the case of a cash
distribution in partial redemption of a U.S. Holder's Preferred Interests, no
loss will be recognized, the U.S. Holder's tax basis in the Preferred Interests
will be reduced by the amount of the distribution, and the U.S. Holder will
recognize gain to the extent, if any, that the amount of the distribution
exceeds its tax basis in the Preferred Interests. Gain or loss recognized by a
U.S. Holder on the sale or exchange (or on a distribution of cash in redemption)
of Preferred Interests held for more than one year will generally be long-term
capital gain or loss (although under some circumstances a subsequent U.S. Holder
may have ordinary income in such cases).
The Company will not make an election under section 754 of the Internal
Revenue Code of 1986, as amended (the "Code"). As a result, a subsequent
purchaser of Preferred Interests will not be permitted to adjust its taxable
income from the Company to reflect any difference between its purchase price for
the Preferred Interests and the Company's underlying tax basis for its assets.
Redemption of the Preferred Interests in Exchange for Guarantor Preferred
Stock
The Guarantor will have the right, subject to certain conditions, to issue
and deliver to the Company, in exchange for a Loan Note, shares of a series of
Guarantor Preferred Stock (or Depositary Shares). As discussed under
"Description of the Preferred Interests -- Mandatory Redemption", in the event
of such exchange, the Company is obligated to redeem such series of Preferred
Interests, as an entirety, solely in exchange for shares of the same series of
Guarantor Preferred Stock (or Depositary Shares) so delivered to the Company by
the Guarantor. Such an exchange should be treated as a non-taxable exchange to
each U.S. Holder (except to the extent any Guarantor Preferred Stock (or
Depositary Shares) received is allocable to accrued but unpaid interest on a
Loan Note not previously allocated to the U.S. Holder) and should result in the
U.S. Holder receiving an aggregate tax basis in the Guarantor Preferred Stock
(or Depositary Shares) so received (other than any portion of such stock
allocable to such accrued but unpaid interest on a Loan Note) which should be
equal to such U.S. Holder's aggregate tax basis in its Preferred Interests. Any
Guarantor Preferred Stock (or Depositary Shares) received by a U.S. Holder which
is allocable to such accrued but unpaid interest on the Loan Note would be
taxable to such U.S. Holder as a payment of such interest in accordance with
such U.S. Holder's Federal income tax accounting method and the U.S. Holder
would take a fair value tax basis in such Guarantor Preferred Stock (or
Depositary Shares). Owners of the Depositary Shares will be treated for Federal
income tax purposes as if they were owners of the Guarantor Preferred Stock
represented by such Depositary Shares. A U.S. Holder's holding period in the
Guarantor Preferred Stock (or Depositary Shares) received in redemption of
Preferred Interests will include the period for which the Preferred Interests
were held by the U.S. Holder.
However, it is possible that a U.S. Holder may have a taxable income, gain,
loss or deduction equal to the difference, if any, between the fair market value
of the Guarantor Preferred Stock (or Depositary Shares) received by a U.S.
Holder upon such redemption and the U.S. Holder's tax basis in the Preferred
Interests so redeemed. If such a loss (or expense item) is recognized, its
deductibility by a U.S. Holder may be subject to limitations (such as the
limitation on deductibility of capital losses), the application of which will
depend upon the U.S. Holder's personal tax situation. A U.S. Holder's aggregate
tax basis in the Guarantor Preferred Stock (or Depositary Shares) received upon
such redemption should be equal to such U.S. Holder's aggregate tax basis in the
Preferred Interests so redeemed, increased by any gain recognized upon the
redemption exchange and reduced by any loss (or expense item) referred to above
recognized upon such redemption.
20
<PAGE> 38
A U.S. Holder will recognize gain or loss measured by the difference, if
any, between cash received in respect of a fractional Depositary Share and the
U.S. Holder's tax basis in such fractional Depositary Share.
If the Preferred Interests are redeemed in exchange for Guarantor Preferred
Stock (or Depositary Shares), any distributions paid on the Guarantor Preferred
Stock (or Depositary Shares) will be taxable to a U.S. Holder as ordinary
dividend income to the extent of the Guarantor's current and accumulated
earnings and profits. To the extent that the amount of distributions paid on
such Guarantor Preferred Stock (or Depositary Shares) exceeds the Guarantor's
current and accumulated earnings and profits (as determined for U.S. Federal
income tax purposes), such excess distributions will be treated first as a
return of capital (reducing the U.S. Holder's adjusted tax basis in such
Guarantor Preferred Stock (or Depositary Shares)), and then as capital gain.
Such capital gain would be long-term capital gain if the U.S. Holder's holding
period for the Guarantor Preferred Stock (or Depositary Shares) exceeds one
year. To the extent that distributions on the Guarantor Preferred Stock (or
Depositary Shares) are treated as dividends, a U.S. Holder that is a corporation
may be eligible for the 70% dividends-received deduction, subject to certain
limitations and certain holding period requirements (although the benefit of
such deduction may be reduced or eliminated by the alternative minimum tax). The
dividends-received deduction may also be reduced if the Guarantor Preferred
Stock is considered "debt financed" for U.S. Federal income tax purposes.
In addition, if the Guarantor Preferred Stock (or Depositary Shares) are
issued in exchange for the Loan Note and at the time of issuance have a fair
market value that is less than or exceeds their liquidation preference (such
difference, the "discount" or "premium", respectively), then it is possible but
not certain that a U.S. Holder receiving such Guarantor Preferred Stock (or
Depositary Shares) may be required (a) if the Guarantor Preferred Stock (or
Depositary Shares) are issued at a discount, to take the amount of the discount
into income as a constructive dividend over some period of time (which period,
if the exchange date is prior to March [ ], 1999, would probably end on March
[ ], 1999), and (b) if the Guarantor Preferred Stock (or Depositary Shares) are
issued at a premium, to treat all actual dividends on the Guarantor Preferred
Stock (or Depositary Shares) as "extraordinary dividends", which requires that
the holder's tax basis in the Guarantor Preferred Stock (or Depositary Shares)
be reduced by the portion of the dividends that are not subject to tax by virtue
of the dividends received deduction. These results are uncertain and are subject
to change by tax regulations that may be issued prior to (or perhaps after) the
issuance of the Guarantor Preferred Stock (or Depositary Shares).
A U.S. Holder of Guarantor Preferred Stock (or Depositary Shares) will
recognize capital gain or loss on the sale or other disposition thereof equal to
the difference between the amount realized and the U.S. Holder's tax basis
therefor. Gain or loss recognized by a U.S. Holder on the sale or exchange of
Guarantor Preferred Stock (or Depositary Shares) held for more than one year
generally will be long-term capital gain or loss. A redemption of the Guarantor
Preferred Stock (or Depositary Shares) for cash will generally be treated as a
sale or exchange resulting in capital gain or loss unless the U.S. Holder owns
other shares of stock of the Guarantor and certain other conditions apply, in
which case such redemption will be treated as a distribution (as described in
the preceding paragraph). However, under certain circumstances, a subsequent
U.S. Holder who receives Guarantor Preferred Stock in exchange therefor may have
ordinary income on a disposition of the Guarantor Preferred Stock.
Potential Extension of the Payment Period
Under the terms of an agreement governing a Loan Note, the Guarantor may be
permitted to extend the interest payment period of such Loan Note. If the
payment period is extended, the Company will continue to accrue income equal to
the amount of the interest payment due at the end of the extended payment period
over the term of the extended payment period.
Accrued income for any month will be allocated but not distributed to
holders of record of the Preferred Interests on the record date for dividends in
respect of such month. As a result, holders of record during an extended
interest payment period will be required to include in gross income an amount
equal to the dividends accrued on the Preferred Interests in advance of the
receipt of such dividend in cash. The subsequent receipt of cash in respect of
such dividend will not also be includible in gross income.
21
<PAGE> 39
Use of Convention
The Company will adopt a convention under which all of the net income
accrued by the Company in any calendar month will be allocated to holders of
record on the record date for dividends in respect of such month. It is unclear
whether this convention will be respected for U.S. Federal income tax purposes.
If it is not respected, the distributive share of the Company's net income
allocable to Preferred Interests in respect of a month in which such interests
are sold may be allocated between the seller and the purchaser on some other
basis. Any amount so allocated to the holder, whether as seller or purchaser,
would be includible in the holder's income and would increase such holder's tax
basis in the Preferred Interests.
Company Information Returns and Audit Procedures
The Managing Member will furnish each holder with a Schedule K-1 setting
forth such holder's allocable share of the income of the Company. The Schedule
K-1 will be furnished within 90 days after the close of the Company's taxable
year.
Any person who holds Preferred Interests as a nominee for another person is
required by law to furnish to the Company: (a) the name, address, and taxpayer
identification number of the beneficial owner and the nominee; (b) notice of
whether the beneficial owner is (i) a person that is not a United States person,
(ii) a foreign government, an international organization, or any wholly owned
agency or instrumentality of either of the foregoing, or (iii) a tax-exempt
entity; (c) the amount and description of Preferred Interests held, acquired or
transferred for the beneficial owner; and (d) certain information including the
dates of acquisitions and transfers, means of acquisitions and transfers and
acquisition cost for purchases, as well as the amount of net proceeds from
sales. Brokers and financial institutions are required to furnish additional
information, including certain information on Preferred Interests that they
acquire, hold or transfer for their own account. A penalty of $50 per failure
(up to a maximum of $100,000 per calendar year) is imposed by the Code for
failure to report such information to the Company.
ERISA MATTERS
The Company, the Guarantor, PaineWebber and other affiliates of the Company
or the Guarantor may each be considered a "party in interest" (within the
meaning of the Employee Retirement Income Security Act of 1974, as amended
("ERISA")) or a "disqualified person" (within the meaning of Section 4975 of the
Code) with respect to many employee benefit plans ("Plans") that are subject to
ERISA. The purchase and/or holding of Preferred Interests, Guarantor Preferred
Stock or Depositary Shares 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, the Guarantor, PaineWebber or any other affiliate of the Company or the
Guarantor is a service provider (or otherwise is a party in interest or a
disqualified person) may constitute or result in a prohibited transaction under
ERISA or Section 4975 of the Code, unless such Preferred Interests, Guarantor
Preferred Stock or Depositary Shares are acquired pursuant to and in accordance
with an applicable exemption, such as Prohibited Transaction Class Exemption
("PTCE") 84-14 (an exemption for certain transactions determined by an
independent qualified professional asset manager), PTCE 91-38 (an exemption for
certain transactions involving bank collective investment funds) or PTCE 90-1
(an exemption for certain transactions involving insurance company pooled
separate accounts). Any pension or other employee benefit plan proposing to
acquire any Preferred Interests, Guarantor Preferred Stock or Depositary Shares
should consult with its counsel. In addition, prospective purchasers should
consider the possible application of John Hancock Mutual Life Ins. Co. v. Harris
Bank and Trust, a U.S. Supreme Court case decided December 13, 1993, which
interpreted the fiduciary responsibility rules of ERISA to conclude that the
assets held in an insurance company's general account may be deemed to be "plan
assets" for ERISA purposes under certain circumstances.
22
<PAGE> 40
PLAN OF DISTRIBUTION
The Company may sell the Preferred Interests being offered hereby (i)
directly to one or more purchasers, (ii) through agents designated from time to
time, (iii) to dealers or (iv) through underwriters or a group of underwriters.
The applicable Prospectus Supplement will set forth the terms of the offering of
the Preferred Interests, including the name or names of any underwriters, the
purchase price of the Preferred Interests and the proceeds to the Company from
such sale, any underwriting commissions and other items constituting
underwriters' compensation, any initial public offering price, any discounts or
concessions allowed or reallowed or paid to dealers and any securities exchanges
on which the Preferred Interests may be listed.
If underwriters are used in the sale, Preferred Interests 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
Preferred Interests may be offered to the public either through underwriting
syndicates represented by managing underwriters or by underwriters without a
syndicate. Such managing underwriter or underwriters may include PaineWebber or
other affiliates of the Company or the Guarantor. Unless otherwise set forth in
the applicable Prospectus Supplement, the obligations of the underwriters to
purchase the Preferred Interests will be subject to certain conditions
precedent, and the underwriters will be obligated to purchase all the Preferred
Interests if any 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.
Preferred Interests may 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 Preferred Interests will be named, and any commissions payable by the
Company to such agents will be set forth, in the applicable Prospectus
Supplement. Such agents may include PaineWebber or other affiliates of the
Company or the Guarantor. Unless otherwise indicated in the applicable
Prospectus Supplement, any such agent will be acting on a best efforts basis for
the period of its appointment.
Any underwriters, dealers or agents participating in the distribution of
Preferred Interests may be deemed to be underwriters and any discounts or
commissions received by them in connection therewith may be deemed to be
underwriting discounts and commissions under the Securities Act. Agents and
underwriters may be entitled under agreements entered into with the Company and
the Guarantor to indemnification by the Company and the Guarantor against
certain 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 Guarantor or its
affiliates in the ordinary course of business.
PaineWebber or other affiliates of the Guarantor may offer and sell
previously issued Preferred Interests, Guarantor Preferred Stock or Depositary
Shares of any series from time to time in the course of its or their business as
a broker-dealer (subject to obtaining any necessary approvals of the New York
Stock Exchange or other national securities exchange or trading market for any
such offers and sales). PaineWebber or such other affiliates may act as
principal or agent in those transactions. The Preferred Interests, Guarantor
Preferred Stock or Depositary Shares may be offered or sold in such transactions
on any securities exchange on which such securities may be listed. Sales will be
made at prices related to prevailing prices at the time of sale.
All distributions of the Preferred Interests will conform to the
requirements set forth in the applicable sections of Schedule E of the By-Laws
of the NASD.
23
<PAGE> 41
LEGAL MATTERS
The validity of the Preferred Interests offered hereby will be passed upon
by Richards, Layton & Finger, P.A., special Delaware counsel to the Company. The
validity of the Guarantee relating to the Preferred Interests and validity of
the Guarantor Preferred Stock (and Depositary Shares representing the same) will
be passed upon on behalf of the Company and the Guarantor by Cravath, Swaine &
Moore, New York, New York, and on behalf of any underwriters or agents by Davis
Polk & Wardwell, New York, New York.
EXPERTS
The consolidated financial statements of the Guarantor for the year
December 31, 1992, incorporated by reference in the Guarantor's Annual Report on
Form 10-K for the fiscal year ended December 31, 1992, 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.
24
<PAGE> 42
- --------------------------------------------------------------------------
- --------------------------------------------------------------------------
No dealer, salesman or any other person has been authorized to give any
information or to make any representation not contained in this Prospectus
Supplement or the accompanying Prospectus and, if given or made, such
information or representation must not be relied upon as having been authorized
by the Company, Paine Webber Group Inc. or any agent, underwriter or dealer.
Neither this Prospectus Supplement nor the accompanying Prospectus constitutes
an offer to sell or a solicitation of an offer to buy any of the securities
offered hereby in any jurisdiction to any person to whom it is unlawful to make
such offer or solicitation in such jurisdiction. The delivery of this Prospectus
Supplement and the accompanying Prospectus at any time does not imply that the
information they contain is correct as of any time subsequent to their
respective dates.
-----------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
Prospectus Supplement
PaineWebber Finance L.L.C.................. S-2
Paine Webber Group Inc..................... S-2
Certain Terms of the Series A Interests.... S-4
Description of the Loans................... S-7
Certain Terms of the Depositary Shares..... S-13
Certain Terms of the Guarantor Preferred
Stock.................................... S-13
Underwriting............................... S-16
Prospectus
Available Information...................... 2
Documents Incorporated by Reference........ 2
Paine Webber Group Inc..................... 3
PaineWebber Finance L.L.C.................. 4
Use of Proceeds............................ 4
Ratio of Earnings to Combined Fixed Charges
and Preferred Stock Dividends............ 5
Description of the Preferred Interests..... 5
Description of the Guarantee............... 9
Description of the Guarantor Preferred
Stock.................................... 11
Description of the Depositary Shares....... 15
Book-Entry Procedures and Settlement....... 18
Taxation................................... 19
ERISA Matters.............................. 22
Plan of Distribution....................... 22
Legal Matters.............................. 23
Experts.................................... 23
- ---------------------------------------------------
- ---------------------------------------------------
</TABLE>
- -------------------------------------------------------
- -------------------------------------------------------
[ ] INTERESTS
PAINEWEBBER FINANCE L.L.C.
% EXCHANGEABLE CUMULATIVE
PREFERRED LIMITED LIABILITY
COMPANY INTERESTS,
SERIES A
(LIQUIDATION PREFERENCE
$25 PER SERIES A INTEREST)
GUARANTEED TO THE EXTENT
SET FORTH HEREIN BY
PAINE WEBBER GROUP INC.
-------------------------------
PROSPECTUS SUPPLEMENT
-------------------------------
PAINEWEBBER INCORPORATED
[OTHER UNDERWRITERS]
------------------------
MARCH , 1994
- -------------------------------------------------------
- -------------------------------------------------------
<PAGE> 43
PART II.
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the estimated expenses in connection with
the issuance and distribution of the securities being registered. All the
amounts shown are estimates.
<TABLE>
<S> <C>
Registration fee.......................................................... $137,932
NASD filing fee........................................................... 30,500
Rating agency fees........................................................ 20,000
Fees and expenses of accountants.......................................... 50,000
Fees and expenses of counsel.............................................. 100,000
Printing and engraving expenses........................................... 75,000
Blue Sky fees and expenses................................................ 25,000
Miscellaneous............................................................. 30,000
--------
Total........................................................... $468,432
--------
--------
</TABLE>
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 Restated Certificate of Incorporation (relating to the
elimination of personal liability) of Paine Webber Group Inc. is hereby
incorporated by reference to Exhibit 3 to Paine Webber Group Inc.'s Quarterly
Report on Form 10-Q for the fiscal quarter ended March 31, 1987 filed with the
Commission pursuant to the Securities Exchange Act of 1934. Article VII of Paine
Webber Group Inc.'s By-Laws (relating to indemnification) is hereby incorporated
by reference to Exhibit 3.1 to Paine Webber Group Inc.'s Annual Report on Form
10-K for the fiscal year ended December 31, 1987 filed with the Commission
pursuant to the Securities Exchange Act of 1934 (File No. 1-7367.)
Paine Webber Group Inc. 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 the Securities Act of 1933. Paine Webber Group Inc. 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 included as Exhibit 1
hereto for certain indemnification provisions.
ITEM 16. EXHIBITS.
<TABLE>
<S> <C> <C>
1 -- Form of Underwriting Agreement.
3.1 -- Certificate of Formation of PaineWebber Finance L.L.C.
3.2 -- Limited Liability Company Agreement of PaineWebber Finance L.L.C.
4.1 -- Form of Payment and Guarantee Agreement of Paine Webber Group Inc.
4.2 -- Form of Loan Agreement between PaineWebber Finance L.L.C. and Paine Webber
Group Inc.
</TABLE>
II-1
<PAGE> 44
<TABLE>
<S> <C> <C>
4.3 -- Restated Certificate of Incorporation of Paine Webber Group Inc. as filed with
the Office of the Secretary of State of the State of Delaware on May 4, 1987
(incorporated by reference to Paine Webber Group Inc.'s Form 10-Q for the
quarter ended March 31, 1987).
4.4 -- Certificate of Stock Designation (elimination) relating to Paine Webber Group
Inc.'s 7% Cumulative Convertible Exchangeable Voting Preferred Stock, Series A
as filed with the Office of the Secretary of State of the State of Delaware on
November 5, 1992 (incorporated by reference to Exhibit 3.1 of Paine Webber
Group Inc.'s Form 10-K for the year ended December 31, 1992).
4.5 -- Certificate of Designation, Preference and Rights relating to Paine Webber
Group Inc.'s 7% Cumulative Convertible Exchangeable Voting Preferred Stock,
Series A as filed with the Office of the Secretary of State of the State of
Delaware on December 15, 1987 (incorporated by reference to Exhibit 3.1 of
Paine Webber Group Inc.'s Form 10-Q for the quarter ended June 30, 1988).
4.6 -- Certificate of Amendment to the Restated Certificate of Incorporation of Paine
Webber Group Inc. as filed with the Office of the Secretary of State of the
State of Delaware on June 3, 1988 (incorporated by reference to Exhibit 3.2 of
Paine Webber Group Inc.'s Form 10-Q for the quarter ended June 30, 1988).
4.7 -- Certificate of Powers, Designations, Preferences and Rights relating to Paine
Webber Group Inc.'s 7.5% Convertible Preferred Stock as filed with the Office
of the Secretary of State of the State of Delaware on January 16, 1992
(incorporated by reference to Exhibit 3.1 to Paine Webber Group Inc.'s Form
10-K for the year ended December 31, 1991).
4.8 -- Certificate of Powers, Designations, Preferences and Rights relating to Paine
Webber Group Inc.'s 7.5% Convertible Preferred Stock, Series B, as filed with
the Office of the Secretary of State of the State of Delaware on January 16,
1992 (incorporated by reference to Exhibit 3.2 to Paine Webber Group Inc.'s
Form 10-K for the year ended December 31, 1991).
4.9 -- Certificate of Designation, Preference and Rights relating to Paine Webber
Group Inc.'s Cumulative Participating Convertible Voting Preferred Stock,
Series A as filed with the Office of the Secretary of State of the State of
Delaware on November 5, 1992 (incorporated by reference to Exhibit 3 of Paine
Webber Group Inc.'s Form 10-Q for the quarter ended September 30, 1992).
4.10 -- Certificate of Powers, Designations, Preferences and Rights relating to Paine
Webber Group Inc.'s 6% Convertible Preferred Stock as filed with the Office of
the Secretary of State of the State of Delaware on February 10, 1994 (to be
filed by amendment or incorporated by reference to Paine Webber Group Inc.'s
Form 8-K to be filed prior to the effective date of this Registration
Statement).
4.11 -- By-Laws of Paine Webber Group Inc. as amended March 1, 1988 (incorporated by
reference to Exhibit 3.1 of Paine Webber Group Inc.'s Form 10-K for the year
ended December 31, 1987).
4.12 -- Form of Deposit Agreement.
5.1 -- Opinion of Richards, Layton & Finger, P.A. as to legality of the Preferred
Interests.
5.2 -- Opinion of Cravath, Swaine & Moore as to legality of the Guarantee and the
Guarantor Preferred Stock.
8 -- Opinion of Cravath, Swaine & Moore as to tax matters.
12 -- Computation of Ratio of Earnings to Combined Fixed Charges and Preferred Stock
Dividends (incorporated by reference to Exhibit 12.1 to Paine Webber Group
Inc.'s Quarterly Report on Form 10-Q for the quarter ended September 30, 1993).
23.1 -- Consent of Ernst & Young.
23.2 -- Consent of Richards, Layton & Finger, P.A. (included in Exhibit 5.1).
23.3 -- Consents of Cravath, Swaine & Moore (included in Exhibits 5.2 and 8).
24 -- Powers of attorney (set forth on the signature pages of this Registration
Statement).
</TABLE>
II-2
<PAGE> 45
ITEM 17. UNDERTAKINGS.
The undersigned Registrants each hereby undertake:
(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 Paine Webber
Group Inc. pursuant to Section 13 or Section 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 Paine Webber Group Inc.'s annual
report pursuant to Section 13(a) or Section 15(d) of the Securities
Exchange Act of 1934 that is 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 Registrants pursuant to the provisions described
under Item 15 above, or otherwise, the Registrants have 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 Registrants of
expenses incurred or paid by a director, officer or controlling person of
the Registrants 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, each 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.
II-3
<PAGE> 46
The undersigned Registrants each hereby undertake:
(d)(1) That, 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 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.
(2) That, 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.
The Company hereby undertakes to provide to the underwriters of the
Preferred Interests at the closing specified in the underwriting agreement
certificates for such Preferred Interests in such denominations and
registered in such names as required by the underwriters to permit prompt
delivery to each purchaser thereof.
II-4
<PAGE> 47
SIGNATURES OF PAINEWEBBER FINANCE L.L.C.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, PAINEWEBBER
FINANCE L.L.C. 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 TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO
DULY AUTHORIZED, IN THE CITY OF NEW YORK, STATE OF NEW YORK, ON MARCH 15, 1994.
PAINEWEBBER FINANCE L.L.C.,
By: PAINE WEBBER GROUP INC.,
as Managing Member
By: /s/ Regina Dolan
------------------------------------
(Regina Dolan, Chief Financial
Officer of the Managing Member)
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints REGINA DOLAN, PIERCE R. SMITH and THEODORE A.
LEVINE, and each of them (with full power to each of them to act alone), his
true and lawful attorney-in-fact and agent, with full power of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign any or all amendments (including post-effective amendments)
to this Registration Statement, and to file the same, with all exhibits thereto
and other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents, and each of them,
full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises, as fully to all
intents and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, or any of them, or his or
their substitute or substitutes, may lawfully do or cause to be done by virtue
hereof.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT AND POWER OF ATTORNEY HAS BEEN SIGNED BY THE FOLLOWING
PERSONS IN THE CAPACITIES AND ON THE DATES INDICATED.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------------------------------------------- ---------------------------- ----------------
<S> <C> <C>
/s/ REGINA DOLAN Chief Financial Officer of March 15, 1994
------------------------------- the Managing Member
(REGINA DOLAN) (principal executive officer
of PaineWebber Finance
L.L.C.)
/s/ PIERCE R. SMITH Treasurer of the Managing March 15, 1994
------------------------------- Member (principal financial
(PIERCE R. SMITH) and accounting officer of
PaineWebber Finance L.L.C.)
</TABLE>
II-5
<PAGE> 48
SIGNATURES OF PAINE WEBBER GROUP INC.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, PAINE WEBBER
GROUP INC. CERTIFIES THAT IT HAS REASONABLE GROUNDS TO BELIEVE THAT IT MEETS ALL
OF THE REQUIREMENTS FOR FILING ON FORM S-3 AND HAS DULY CAUSED THIS REGISTRATION
STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY
AUTHORIZED, IN THE CITY OF NEW YORK, STATE OF NEW YORK, ON MARCH 15, 1994.
PAINE WEBBER GROUP INC.
(Registrant)
By: /s/ DONALD B. MARRON
-------------------------------------
(Donald B. Marron, Chairman of the
Board, Chief Executive Officer and
Director)
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints DONALD B. MARRON, PIERCE R. SMITH and THEODORE A.
LEVINE, and each of them (with full power to each of them to act alone), his
true and lawful attorney-in-fact and agent, with full power of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign any or all amendments (including post-effective amendments)
to this Registration Statement, and to file the same, with all exhibits thereto
and other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents, and each of them,
full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises, as fully to all
intents and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, or any of them, or his or
their substitute or substitutes, may lawfully do or cause to be done by virtue
hereof.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT AND POWER OF ATTORNEY HAS BEEN SIGNED BY THE FOLLOWING
PERSONS IN THE CAPACITIES AND ON THE DATES INDICATED.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ---------------------------------------- ---------------------------- -----------------------
<C> <S> <C>
/s/ DONALD B. MARRON Chairman of the Board, Chief March 15, 1994
---------------------------- Executive Officer, Director
(DONALD B. MARRON) (principal executive
officer)
/s/ REGINA DOLAN Vice President and Chief March 15, 1994
---------------------------- Financial Officer (principal
(REGINA DOLAN) financial and accounting
officer)
/s/ T. STANTON ARMOUR Director March 15, 1994
----------------------------
(T. STANTON ARMOUR)
/s/ E. GARRETT BEWKES, JR. Director March 15, 1994
----------------------------
(E. GARRETT BEWKES, JR.)
/s/ JOHN A. BULT Director March 15, 1994
----------------------------
(JOHN A. BULT)
/s/ YOZO FUJISAWA Director March 15, 1994
----------------------------
(YOZO FUJISAWA)
</TABLE>
II-6
<PAGE> 49
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ---------------------------------------- ---------------------------- -----------------------
<C> <S> <C>
/s/ JOSEPH J. GRANO, JR. Director March 15, 1994
-------------------------------
(JOSEPH J. GRANO, JR.)
/s/ PAUL B. GUENTHER Director March 15, 1994
-------------------------------
(PAUL B. GUENTHER)
/s/ JOHN E. KILGORE, JR. Director March 15, 1994
-------------------------------
(JOHN E. KILGORE, JR.)
/s/ ROBERT M. LOEFFLER Director March 15, 1994
-------------------------------
(ROBERT M. LOEFFLER)
/s/ EDWARD RANDALL, III Director March 15, 1994
-------------------------------
(EDWARD RANDALL, III)
/s/ HENRY ROSOVSKY Director March 15, 1994
-------------------------------
(HENRY ROSOVSKY)
/s/ KYOSAKU SORIMACHI Director March 15, 1994
-------------------------------
(KYOSAKU SORIMACHI)
</TABLE>
II-7
<PAGE> 50
EXHIBIT INDEX
<TABLE>
<CAPTION>
SEQUENTIALLY
NUMBERED
EXHIBIT PAGE
NO. DESCRIPTION
------- --------------------------------------------------------------------
<C> <C> <S> <C>
1 -- Form of Underwriting Agreement.
3.1 -- Certificate of Formation of PaineWebber Finance L.L.C.
3.2 -- Limited Liability Company Agreement of PaineWebber Finance
L.L.C.
4.1 -- Form of Payment and Guarantee Agreement of Paine Webber Group
Inc.
4.2 -- Form of Loan Agreement between PaineWebber Finance L.L.C. and
Paine Webber Group Inc.
4.3 -- Restated Certificate of Incorporation of Paine Webber Group Inc.
as filed with the Office of the Secretary of State of the State
of Delaware on May 4, 1987 (incorporated by reference to Paine
Webber Group Inc.'s Form 10-Q for the quarter ended March 31,
1987).
4.4 -- Certificate of Stock Designation (elimination) relating to Paine
Webber Group Inc.'s 7% Cumulative Convertible Exchangeable
Voting Preferred Stock, Series A as filed with the Office of the
Secretary of State of the State of Delaware on November 5, 1992
(incorporated by reference to Exhibit 3.1 of Paine Webber Group
Inc.'s Form 10-K for the year ended December 31, 1992).
4.5 -- Certificate of Designation, Preference and Rights relating to
Paine Webber Group Inc.'s 7% Cumulative Convertible Exchangeable
Voting Preferred Stock, Series A as filed with the Office of the
Secretary of State of the State of Delaware on December 15, 1987
(incorporated by reference to Exhibit 3.1 of Paine Webber Group
Inc.'s Form 10-Q for the quarter ended June 30, 1988).
4.6 -- Certificate of Amendment to the Restated Certificate of
Incorporation of Paine Webber Group Inc. as filed with the
Office of the Secretary of State of the State of Delaware on
June 3, 1988 (incorporated by reference to Exhibit 3.2 of Paine
Webber Group Inc.'s Form 10-Q for the quarter ended June 30,
1988).
4.7 -- Certificate of Powers, Designations, Preferences and Rights
relating to Paine Webber Group Inc.'s 7.5% Convertible Preferred
Stock as filed with the Office of the Secretary of State of the
State of Delaware on January 16, 1992 (incorporated by reference
to Exhibit 3.1 to Paine Webber Group Inc.'s Form 10-K for the
year ended December 31, 1991).
4.8 -- Certificate of Powers, Designations, Preferences and Rights
relating to Paine Webber Group Inc.'s 7.5% Convertible Preferred
Stock, Series B, as filed with the Office of the Secretary of
State of the State of Delaware on January 16, 1992 (incorporated
by reference to Exhibit 3.2 to Paine Webber Group Inc.'s Form
10-K for the year ended December 31, 1991).
4.9 -- Certificate of Designation, Preference and Rights relating to
Paine Webber Group Inc.'s Cumulative Participating Convertible
Voting Preferred Stock, Series A as filed with the Office of the
Secretary of State of the State of Delaware on November 5, 1992
(incorporated by reference to Exhibit 3 of Paine Webber Group
Inc.'s Form 10-Q for the quarter ended September 30, 1992).
</TABLE>
<PAGE> 51
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NO. DESCRIPTION PAGE
------- -------------------------------------------------------------------- ------------
<C> <C> <S> <C>
4.10 -- Certificate of Powers, Designations, Preferences and Rights
relating to Paine Webber Group Inc.'s 6% Convertible Preferred
Stock as filed with the Office of the Secretary of State of the
State of Delaware on February 10, 1994 (to be filed by amendment
or incorporated by reference to Paine Webber Group Inc.'s Form
8-K to be filed prior to the effective date of this Registration
Statement).
4.11 -- By-Laws of Paine Webber Group Inc. (incorporated by reference to
Exhibit 3.1 of Paine Webber Group Inc.'s Form 10-K for the year
ended December 31, 1987).
4.12 -- Form of Deposit Agreement.
5.1 -- Opinion of Richards, Layton & Finger, P.A. as to legality of the
Preferred Interests.
5.2 -- Opinion of Cravath, Swaine & Moore as to legality of the
Guarantee and the Guarantor Preferred Stock.
8 -- Opinion of Cravath, Swaine & Moore as to tax matters.
12 -- Computation of Ratio of Earnings to Combined Fixed Charges and
Preferred Stock Dividends (incorporated by reference to Exhibit
12.1 to Paine Webber Group Inc.'s Quarterly Report on Form 10-Q
for the quarter ended September 30, 1993).
23.1 -- Consent of Ernst & Young.
23.2 -- Consent of Richards, Layton & Finger, P.A. (included in Exhibit
5.1).
23.3 -- Consents of Cravath, Swaine & Moore (included in Exhibits 5.2
and 8).
24 -- Powers of attorney (set forth on the signature pages of this
Registration Statement).
</TABLE>
<PAGE> 1
EXHIBIT 1
[Draft -- 3/16/94]
_____________Series A Interests
PaineWebber Finance L.L.C.
___% Exchangeable Cumulative Preferred Limited Liability
Company Interests, Series A
(Liquidation Preference $25 Per Series A Interest)
FORM OF UNDERWRITING AGREEMENT
[date]
--------------------------------
<PAGE> 2
________________Series A Interest
PAINEWEBBER FINANCE L.L.C.
___% Exchangeable Cumulative Preferred Limited Liability
Company Interests, Series A Interst
(Liquidation Preference $25 Per Series A Interest)
----------------------------------------
FORM OF UNDERWRITING AGREEMENT
[date]
-------------------------------------
To the several Underwriters named in Schedule I hereto
c/o PAINEWEBBER INCORPORATED
1285 Avenue of the Americas
New York, New York 10019
Ladies and Gentlemen:
PaineWebber Finance L.L.C., a limited liability company formed under
the laws of Delaware (the "Company"), proposes to issue and sell to the several
Underwriters named in Schedule I hereto (the "Underwriters") an aggregate of
_______ preferred limited liability company interests (the "Preferred
Interests") of its __% Exchangeable Cumulative Preferred Limited Liability
Company Interests, Series A (the "Firm Series A Interests"). The Company has
also agreed to grant to you and the other Underwriters an option (the "Option")
to purchase up to an additional ___ Preferred Interests of its ___%
Exchangeable Cumulative Preferred Limited Liability Company Interests, Series A
(the "Option Series A Interests") on the terms and for the purposes set forth
in Section 1(b). The Firm Series A Interests and the Option Series A Interests
are hereinafter collectively referred to as the "Series A Interests." The
payment of dividends on the Series A Interests, as well as distributions on
redemption and liquidation, will be guaranteed, to the extent set forth in the
Final Prospectus (as defined in section 3 (b) hereof), by Paine Webber Group
Inc., a Delaware corporation, (the "Guarantor") (the obligations of the Company
in respect of such guarantee being referred to herein as the "Backup
Undertakings"). The Series A Interests, together with the related Backup
2
<PAGE> 3
Undertakings, are sometimes referred to collectively as the Securities.
Capitalized terms used but not separately defined herein are defined in the
Final Prospectus and used herein as so defined.
The Securities are more fully described in the Final Prospectus
referred to below [and in Schedule ( ) attached hereto].
1. Agreement to Sell and Purchase. (a) On the basis of the
representations, warranties and agreements of the Company and the Guarantor
herein contained and subject to all the terms and conditions of this Agreement,
the Company agrees to sell to each Underwriter, and each Underwriter, severally
and not jointly, agrees to purchase from the Company at the purchase price per
Preferred Interest for the Firm Series A Interests to be agreed upon by
PaineWebber Incorporated acting as representative (the "Representative") of the
several Underwriters named in Schedule I hereto and the Company in accordance
with Section 1(c) or 1(d) and set forth in the Price Determination Agreement,
the number of Firm Series A Interests set forth opposite the name of such
Underwriter in Schedule I, plus such additional number of Firm Series A
Interests which such Underwriter may become obligated to purchase pursuant to
Section 9 hereof. If the Company elects to rely on Rule 430A (as hereinafter
defined), Schedule I may be attached to the Price Determination Agreement.
(b) Subject to all the terms and conditions of this Agreement, the
Company grants the Option to the several Underwriters to purchase, severally
and not jointly, up to ___ Option Series A Interests from the Company at the
same price per Preferred Interest as the Underwriters shall pay for the Firm
Series A Interests. The Option may be exercised only to cover over-allotments
in the sale of the Firm Series A Interests by the Underwriters and may be
exercised in whole or in part at any time (but not more than once) on or before
the 45th day after the date of the underwriting agreement (this "Agreement")
(or, if the Company has elected to rely on Rule 430A, on or before the 45th day
after the date of the Price Determination Agreement), upon written or
telegraphic notice (the "Option Series A Interests Notice") by the
Representative to the Company no later than 12:00 noon, New York City time, at
least two and no more than five business days before the date specified for
closing in the Option Preferred Series A Interests Notice (the "Option Closing
Date") setting forth the aggregate number of Option Series A Interests to be
purchased and the time and date for such purchase. On the Option Closing Date,
the Company will issue and sell to the
3
<PAGE> 4
Underwriters the number of Option Series A Interests set forth in the Option
Series A Interests Notice, and each Underwriter will purchase such percentage
of the Option Series A Interests as is equal to the percentage of Firm Series A
Interests that such Underwriter is purchasing, as adjusted by the
Representative in such manner as they deem advisable to avoid fractional
Prefferred Interests.
(c) If the Company has elected not to rely on Rule 430A, the initial
public offering price per Preferred Interest for the Firm Series A Interests
and the purchase price per Preferred Interest for the Firm Series A Interests
to be paid by the several Underwriters shall be agreed upon and set forth in
the Price Determination Agreement, which shall be dated the date hereof, and an
amendment to the Registration Statement (as hereinafter defined) containing
such Preferred Interest price information shall be filed before the
Registration Statement becomes effective.
(d) If the Company has elected to rely on Rule 430A, the initial
public offering price per Preferred Interest for the Firm Series A Interests
and the purchase price per Preferred Interest for the Firm Series A Interests
to be paid by the several Underwrites shall be agreed upon and set forth in the
Price Determination Agreement. In the event that the Price Determination
Agreement has not been executed by the close of business on the fourth business
day following the date on which the Registration Statement becomes effective,
this Agreement shall terminate forthwith, without liability of any party to any
other party except that Section 7 shall remain in effect.
2. Delivery and Payment. Delivery of the Firm Series A Interests
shall be made to the Representative for the accounts of the Underwriters
against payment of the purchase price by credit to the account of the Company
with the Depository Trust Company. Such payments shall be made at 10:00 a.m.,
New York City time, on the fifth business day following the date of this
Agreement or, if the Company has elected to rely on Rule 430A, the fifth
business day after the date on which the first bona fide offering of the Firm
Series A Interests to the public is made by the Underwriters or at such time on
such other date, not later than seven business days after the date of this
Agreement, as may be agreed upon by the Company and the Representative (such
date is hereinafter referred to as the "Closing Date"). The Guarantor agrees
to issue the Backup Undertakings concurrently with the issue and sale of the
Firm Series A Interests as contemplated herein. [Series A Interests to be
purchased by the Underwriters are sometimes called the Underwriters' Series A
Interests.]
4
<PAGE> 5
To the extent the Option is exercised, delivery of the Option Series
A Interests against payment by the Underwriters (in the manner specified above)
will take place at the offices specified above for the Closing Date at the time
and date (which may be the Closing Date) specified in the Option Series A
Interests Notice. [The Series A Interests shall be in temporary or definitive
form (and, if in temporary form, exchangeable for the Series A Interests in
definitive form, when prepared, without charge) and shall be in such
denominations and registered in such names as you may request in writing at
least two business day's prior to Closing Date, provided that such Series A
Interests may be represented by a global certificate registered in the name of
Cede & Co. as nominee of The Depository Trust Company ("Cede") or to such
other accounts as you may direct. Such Series A Interests, in either
definitive or temporary form, will be made available for examination and
packaging by you on or before the first business day prior to Closing Date
unless represented by a global certificate.]
The cost of original issue tax stamps, if any, in connection with the
issuance and delivery of the Firm Series A Interests and Option Series A
Interests by the Company to the respective Underwriters shall be borne by the
Company. The Company will pay and save each Underwriter and any subsequent
holder of the Series A Interests harmless from any and all liabilities with
respect to or resulting from any failure or delay in paying Federal and state
stamp and other transfer taxes, if any, which may be payable or determined to
be payable in connection with the original issuance or sale to such Underwriter
of the Firm Series A Interests and Option Series A Interests.
3. Representations and Warranties of the Company and the Guarantor.
Each of the Company and the Guarantor jointly and severally represents and
warrants to, and agrees with, the several Underwriters as set forth below in
this Section 3. Certain terms used in this Section 3 are defined in paragraph
(b) hereof.
(a) The Company and the Guarantor meet the requirements for the use
of Form S-3 under the Securities Act of 1933, as amended (the "1933 Act"), and
have prepared and filed with the Securities and Exchange Commission (the
"Commission") pursuant to the 1933 Act and the rules and regulations
promulgated by the Commission thereunder (the "Regulations"), a registration
statement (Registration No.________) on such Form, including a basic
prospectus, for registration under the 1933 Act of the offering and sale of the
Series A Interests and the Backup Undertakings. The Company and the Guarantor
have filed one or more amendments
5
<PAGE> 6
to such registration statement as may have been required to be filed through
the date hereof, and may have used a Preliminary Final Prospectus, each of
which has previously been furnished to you. Such registration statement, as so
amended, has become effective. The offering of the Series A Interests is a
Delayed Offering and, accordingly, it is not necessary that any further
information with respect to the Series A Interests and the offering thereof
required by the 1933 Act and the Regulations to be included in the Final
Prospectus have been included in an amendment to such registration statement
prior to the Effective Date. The Company and the Guarantor will next file with
the Commission pursuant to Rules 415 and 424(b)(2), (3) or (5) a final
supplement to the form of prospectus included in such registration statement
relating to the Series A Interests and the offering thereof. As filed, such
final prospectus supplement shall include all required information with respect
to the Series A Interests and the offering thereof and, except to the extent
the Underwriters shall agree in writing to a modification, shall be in all
substantive respects in the form furnished to you prior to the Execution Time
or, to the extent not completed at the Execution Time, shall contain only such
specific additional information and other changes (beyond that contained in the
Basic Prospectus and any Preliminary Final Prospectus) as the Company and the
Guarantor have advised you, prior to the Execution Time, will be included or
made therein.
(b) The terms which follow, when used in this Agreement, shall have
the meanings indicated. The term the Effective Date shall mean each date that
the Registration Statement and any post-effective amendment or amendments
thereto became or become effective. Execution Time shall mean the date and
time that this Agreement is executed and delivered by the parties hereto.
Basic Prospectus shall mean the prospectus referred to in paragraph (a) above
contained in the Registration Statement at the Effective Date including any
Preliminary Final Prospectus. Preliminary Final Prospectus shall mean any
preliminary prospectus supplement to the Basic Prospectus which describes the
Series A Interests and the offering thereof and is used prior to the filing of
the Final Prospectus. Final Prospectus shall mean the prospectus supplement
relating to the Series A Interests that is first filed pursuant to Rule 424(b)
after the Execution Time, together with the Basic Prospectus. Registration
Statement shall mean the various parts of the registration statement referred
to in paragraph (a) above, including all exhibits thereto and the documents
incorporated by reference in the Final Prospectus contained in such
Registration Statement at the time such part of the Registration Statement
becomes
6
<PAGE> 7
effective, each as amended at the Execution Time (or, if not effective at the
Execution Time, in the form in which it shall become effective) and, in the
event any post-effective amendment thereto becomes effective prior to the
Closing Date (as such term is hereinafter defined), shall also mean such
registration statement as so amended. Rule 415, Rule 424 and Regulation S-K
refer to such rules or regulations under the 1933 Act. Any reference herein to
the Registration Statement, the Basic Prospectus, any Preliminary Final
Prospectus or the Final Prospectus shall be deemed to refer to and include the
documents incorporated by reference therein pursuant to Item 12 of Form S-3
under the 1933 Act, as of the date of such Registration Statement, Basic
Prospectus, Preliminary Final Prospectus, or Final Prospectus, as the case may
be; and any reference to any amendment or supplement with respect to the
Registration Statement, the Basic Prospectus, any Preliminary Final Prospectus
or the Final Prospectus shall be deemed to refer to and include any documents
filed under the Securities Exchange Act of 1934, as amended (the "1934 Act"),
and incorporated by reference in such Registration Statement, Basic Prospectus,
Preliminary Final Prospectus, or Final Prospectus, as the case may be, and any
reference to any amendment to the Registration Statement shall be deemed to
refer to and include any annual report of the Guarantor filed pursuant to
Section 13(a) or 15(d) of the 1934 Act after the Effective Date that is
incorporated by reference in such Registrations Statement. A Delayed Offering
shall mean an offering of securities pursuant to Rule 415 which does not
commence promptly after the effective date of a registration statement, with
the result that only information required pursuant to Rule 415 need be included
in such registration statement at the effective date thereof with respect to
the securities so offered.
(c) Each of the Company and the Guarantor has been duly formed or
incorporated and is validly existing as a company or corporation in good
standing under the laws of Delaware with corporate power and authority to own,
lease and operate its respective properties and to conduct its respective
businesses as described in the Final Prospectus and any amendment or supplement
thereto; and each of the Company and the Guarantor is duly qualified as a
foreign corporation to transact business, and is in good standing, in each
jurisdiction in which such qualification is required, whether by reason of the
ownership or leasing of property or the conduct of business, except where the
failure to so qualify would not have a material adverse effect on the
operations, business, or properties of the Company or on the Guarantor and its
subsidiaries considered as one enterprise.
7
<PAGE> 8
(d) The Company has the corporate power and authority to enter into
this Agreement and to issue, sell and deliver the Series A Interests, and the
Guarantor has the corporate power and authority to enter into this Agreement
and to issue the Backup Undertakings and the Guarantor Preferred Stock. This
Agreement has been duly and validly authorized, executed and delivered by each
of the Company and the Guarantor, is a valid and binding agreement of each of
the Company and the Guarantor and is enforceable as to each of the Company and
the Guarantor in accordance with its terms.
(e) On the Effective Date, and at all times subsequent thereto to
and including the Closing Date, and if later the Option Closing Date, and
during such longer period as the Final Prospectus may be required to be
delivered in connection with sales by the Underwriters or a dealer, and during
such longer period until any post-effective amendment to the Registration
Statement shall become effective, the Registration Statement (including any
post-effective amendment) and the Final Prospectus (as amended or as
supplemented if the Company and the Guarantor shall have filed with the
Commission any amendment or supplement to the Registration Statement or the
Final Prospectus) will contain all statements which are required to be stated
therein in accordance with the 1933 Act and the Regulations, will comply with
the requirements of the 1933 Act and the Regulations and the 1934 Act and the
rules and regulations thereunder, and will not contain any untrue statement of
a material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein in the light of the
circumstances in which they were made not misleading, and no event will have
occurred which should have been set forth in an amendment or supplement to the
Registration Statement or the Final Prospectus which has not then been set
forth in such an amendment or supplement: and each Basic Prospectus and each
Preliminary Final Prospectus, as of the date filed with the Commission, did not
include any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein
in light of the circumstances in which they were made not misleading; provided,
however, that neither the Company nor the Guarantor makes any representations
and warranties as to information contained in or omitted from the Registration
Statement, the Basic Prospectus, any Preliminary Final Prospectus, or the Final
Prospectus made in reliance upon and in conformity with information furnished
to the Company or the Guarantor in writing by any Underwriter expressly for use
in the Registration Statement or such Basic Prospectus, Preliminary Final
Prospectus, or Final Prospectus, as set
8
<PAGE> 9
forth in Section 7. For purposes of this Agreement, the amounts of selling
concession and reallowance set forth in the Final Prospectus constitute the
only information relating to any Underwriter furnished in writing to the
Company by the Representative specifically for inclusion in the Registration
Statement or such Basic Prospectus, Preliminary Final Prospectus, or Final
Prospectus, as set forth in Section 7. The Company has not distributed any
offering material in connection with the offering or sale of the Series A
Interests other than the Registration Statement, the Basic Prospectus, the
Preliminary Final Prospectus or the Final Prospectus.
(f) Neither the Commission nor the Blue Sky or securities authority
of any jurisdiction has issued an order (a "Stop Order") suspending the
effectiveness of the Registration Statement, preventing or suspending the use
of the Basic Prospectus, any Preliminary Final Prospectus, the Final
Prospectus, the Registration Statement or any amendment or supplement thereto,
refusing to permit the effectiveness of the Registration Statement, suspending
the registration or qualification of the Securities, nor has any of such
authorities instituted or, to the knowledge of the Company or the Guarantor,
threatened to institute any proceedings with respect to a Stop Order in any
jurisdiction in which the Series A Interests are to be sold or in which the
Securities may be issued, nor, with respect to accuracy on the Closing Date,
has there been any Stop Order instituted or, to the knowledge of the Company or
the Guarantor, threatened on or after the effective date of the Registration
Statement in any jurisdiction.
(g) The documents incorporated by reference in the Final Prospectus
and any amendment or supplement thereto (the "Incorporated Documents"), at the
time they were or hereafter are filed with the Commission, complied, or when so
filed will comply, in all material respects with the requirements of the 1933
Act or the 1934 Act, as applicable, and the rules and regulations thereunder
and did not and will not contain an untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they are
made, not misleading.
(h) Subsequent to the respective dates as of which information is
given in the Registration Statement and the Final Prospectus and prior to the
Closing Date, except as set forth in or contemplated by the Registration
Statement and the Final Prospectus, (i) there has not been and will not have
been any change in the capitalization of the Company, or in the business,
properties, business
9
<PAGE> 10
prospects, condition (financial or otherwise) or results of operations of the
Company or the Guarantor and its subsidiaries considered as one enterprise,
arising for any reason whatsoever, (ii) neither the Company nor the Guarantor
has incurred, nor will it incur any material liabilities or obligations, direct
or contingent, nor has it entered into nor will it enter into any material
transactions other than pursuant to this Agreement and the transactions
referred to herein and (iii) the Company has not and will not have paid or
declared any dividends or other distributions of any kind on any class of its
Prefferred Interests.
[(i) The Company has [no] subsidiaries.]
(j) The Series A Interests have been duly authorized (or will have
been so authorized prior to each issuance of Series A Interests) by the Company
and when the Interests have been issued and delivered against payment therefor
as provided in this Agreement, such Series A Interests will have been duly and
validly issued and fully paid and non-assessable; the Backup Undertakings and
the Guarantor Preferred Stock have been duly authorized (or will have been so
authorized prior to each issuance thereof) by the Guarantor, and when the
Guarantor Preferred Stock has been issued as provided in this Agreement, such
Guarantor Preferred Stock will have been duly and validly issued and fully paid
and non-assessable; and when the Backup Undertakings have been issued as
provided in this Agreement, such Undertakings will have been duly executed,
issued and delivered, will constitute valid and legally binding obligations of
the Guarantor and will be enforceable as to the Guarantor in accordance with
their terms. The Securities will conform to the descriptions thereof contained
in the Final Prospectus.
(k) The execution, delivery and performance of this Agreement, the
issuance and sale of the Series A Interests, the issuance of the Backup
Undertakings and the Guarantor Preferred Stock and the consummation by the
Company and the Guarantor of the transactions contemplated hereby will not (A)
conflict with or result in a breach of any of the terms and provisions of, or
constitute a default or an event which with notice or lapse of time, or both,
would constitute a default or require consent under, or result in the creation
or imposition of any lien, charge or encumbrance upon any property or assets of
the Company or of the Guarantor or any of its subsidiaries considered as one
enterprise pursuant to, the terms of any contract, agreement, indenture,
mortgage, loan agreement, note, lease or other instrument, franchise, license
or permit to which
10
<PAGE> 11
the Company or the Guarantor or any of its subsidiaries is a party or by which
the Company or the Guarantor or any of its subsidiaries or the respective
properties or assets of the Company, the Guarantor or any of its subsidiaries
may be bound or subject, or (B) violate or conflict with any provision of the
Certificate of Formation or Limited Liability Company Agreement of the Company
or the certificate of incorporation or by-laws of the Guarantor or any of its
subsidiaries, or any law, judgment, decree, order, statute, rule or regulation
of any court in any public, governmental or regulatory agency or body or any
arbitrator having jurisdiction over the Company or the Guarantor or any of its
subsidiaries, or any of the respective properties or assets of the Company, the
Guarantor or any of its subsidiaries. No consent, approval, authorization,
order, registration, filing, qualification, license or permit of or with any
court or any public, governmental or regulatory agency or body having
jurisdiction over the Company or the Guarantor or any of its subsidiaries, or
any of the respective properties or assets of the Company, the Guarantor or any
of its subsidiaries, is required for the execution, delivery and performance of
this Agreement, and the consummation of the transactions contemplated hereby,
including the issuance, sale and delivery of the Series A Interests and the
issuance of the Backup Undertakings or the Guarantor Preferred Stock, except
(1) such as may be required under state and foreign securities or Blue Sky laws
in connection with the purchase and distribution of the Series A Interests by
the Underwriters and (2) such as have been made or obtained or will be made or
obtained before the Closing Date under the 1933 Act.
(l) There are no holders of securities of the Company, the Guarantor
or any subsidiary of the Guarantor who, pursuant to any agreement,
understanding or otherwise, have any right to have securities of the Company or
the Guarantor or any subsidiary registered under the 1933 Act in connection
with the offering contemplated by the Final Prospectus.
(m) Ernst & Young, the accountants who certified the financial
statements included or incorporated by reference in the Guarantor's most recent
Annual Report on Form 10-K, which is incorporated by reference in the Final
Prospectus, were independent public accountants at the time such statements
were certified and during the periods covered by such statements as required by
the 1933 Act and the Regulations.
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<PAGE> 12
(n) The financial statements of the Guarantor and its consolidated
subsidiaries included or incorporated by reference in the Registration
Statement and the Final Prospectus, and any amendment or supplement thereto,
present fairly the consolidated financial position of the Guarantor and its
consolidated subsidiaries as of the dates indicated and the consolidated
results of their operations for the periods specified; and said financial
statements have been prepared in conformity with generally accepted accounting
principles in the United States applied on a consistent basis. No other
financial statements or schedules of the Guarantor are required by the Act, the
Regulations, the 1934 Act and the rules and regulations thereunder to be
included in the Registration Statement and the Final Prospectus.
(o) Except as may be set forth in the Final Prospectus, there is no
action, suit or proceeding before or by any court or governmental agency or
body or arbitrator, domestic or foreign, now pending, or, to the knowledge of
the Company or the Guarantor, threatened against or affecting, the Company or
the Guarantor or any of their respective officers in their capacities as such,
except those which do not and in the future will not have a material adverse
effect on the financial condition, results of operations, business or
properties of the Company, or of the Guarantor and its subsidiaries considered
as one enterprise, or which is required to be disclosed in the Registration
Statement or the Final Prospectus; and there are no contracts or documents of
the Company or the Guarantor which are required to be filed as exhibits to the
Registration Statement by the 1933 Act or the Regulations which have not been
so filed.
(p) The Company and the Guarantor possess such certificates,
licenses, authorities or permits issued by the appropriate state, federal or
foreign regulatory agencies or bodies necessary to conduct the business now
operated by them, except those which if not obtained, individually or in the
aggregate, would not have a material adverse effect on the financial condition,
results of operations, business or properties of the Company or the Guarantor
and its subsidiaries considered as one enterprise, and neither the Company nor
the Guarantor has received any notice of proceedings relating to the revocation
or modification of any such certificate, authority or permit which, singly or
in the aggregate, if the subject of any unfavorable decision, ruling or
finding, would materially and adversely affect the financial condition, results
of operations, business or properties of the Company, or of the Guarantor and
its subsidiaries considered as one enterprise. Each of the Company and the
Guarantor have (i) complied in all
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<PAGE> 13
respects with all laws, regulations and orders applicable to it or its business
and (ii) performed all its obligations required to be performed by it, and is
not, and at the Closing Date will not be, in default, under any indenture,
mortgage, deed of trust, voting trust agreement, loan agreement, bond,
debenture, note agreement, lease, contract or other agreement or instrument
(collectively, a "contract or other agreement") to which it is a party or by
which its property is bound or affected. To the best knowledge of the Company,
no other party under any contract or other agreement to which it is a party is
in default in any respect thereunder. The Company is not on the date hereof,
nor on the Closing Date will be, in violation of any provision of its
Certificate of Formation or the Limited Liability Company Agreement.
(q) The Company maintains a system of internal accounting controls
sufficient to provide reasonable assurance that (i) transactions are executed
in accordance with management's general or specific authorization, (ii)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles and to
maintain accountability for assets; (iii) access to assets is permitted only in
accordance with management's general or specific authorization; and (iv) the
recorded accountability for assets is compared with existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.
(r) No statement, representation, warranty or covenant made by the
Company or the Guarantor in this Agreement or made in any certificate or
document required by this Agreement to be delivered to the Representative was
or will be, when made, inaccurate, untrue or incorrect.
(s) Prior to the Closing Date, the Series A Interests will be duly
authorized for listing by the New York Stock Exchange Inc. (the "NYSE") upon
official notice of issuance.
(t) The Company nor, to the Company's knowledge, any employee or
agent of the Company has made any payment of funds of the Company or received
or retained any funds in violation of any law, rule or regulation or of a
character required to be disclosed in the Final Prospectus.
(u) The Company is not an "investment company" or an "affiliated
person" of, or "promotor" or "principal underwriter" for, an "investment
company," as such terms are defined in the Investment Company Act of 1940, as
amended.
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<PAGE> 14
4. Covenants of the Company and the Guarantor. The Company and the
Guarantor jointly and severally covenant and agree with the several
Underwriters as follows:
(a) The Company and the Guarantor will use their best efforts to
cause the Registration Statement, if not effective at the Execution Time, to
become effective as promptly as possible. The Company or the Guarantor will
notify you immediately, and confirm such notice in writing, (i) when the
Registration Statement (including any amendments thereto) becomes effective,
(ii) of any request by the Commission for any amendment of or supplement to the
Registration Statement or the Final Prospectus or for any additional
information, (iii) of the issuance by the Commission of a Stop Order suspending
the effectiveness of the Registration Statement (including any post-effective
amendment thereto) or of the initiation, or the threatening, of any proceedings
therefor, (iv) of the receipt of any comments from the Commission and (v) of
the receipt by the Company or the Guarantor of any notification with respect to
the suspension of the qualification of the Series A Interests for sale or the
issuance of the Backup Undertakings in any jurisdiction or the initiation, or
threatening, of any proceeding for that purpose. If the Commission shall
propose or enter a Stop Order at any time, the Company and the Guarantor will
make every reasonable effort to prevent the issuance of any such Stop Order
and, if issued, to obtain the withdrawal of such order as soon as possible.
(b) During the time when a prospectus relating to the Securities is
required to be delivered hereunder or under the 1933 Act or the Regulations,
the Company and the Guarantor will comply so far as each is able with all
requirements imposed upon it by the 1933 Act, as now existing and as hereafter
amended, and by the Regulations, as from time to time in force, so far as
necessary to permit the continuance of sales of, or dealing in, the Securities
in accordance with the provisions thereof and the Final Prospectus. If at any
time when a prospectus relating to the Securities is required to be delivered
under the 1933 Act, any event shall have occurred as a result of which, in the
judgment of the Company, the Guarantor, you or your counsel, the Final
Prospectus as then amended or supplemented includes an untrue statement of a
material fact or omits to state any material fact required to be stated therein
or necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading, or if it shall be necessary at any
time to amend or supplement the Final Prospectus or Registration Statement to
comply with the 1933 Act or the Regulations, the Company
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<PAGE> 15
and the Guarantor will notify you promptly and prepare and file with the
Commission an appropriate amendment or supplement (in form and substance
satisfactory to you) which will correct such statement or omission and will use
its best efforts to have any amendment to the Registration Statement declared
effective as soon as possible and will deliver to the several Underwriters,
without charge, such number of copies thereof as may be reasonably requested by
the Underwriters; provided that the Company and the Guarantor will promptly
notify you if such judgment has been reached by it.
(c) The Company or the Guarantor will promptly deliver to you
without charge, two signed copies of the Registration Statement, including
financial statements and schedules and all exhibits thereto including the
Incorporated Documents, and the Company or the Guarantor will promptly deliver
without charge to you such number of copies of the Basic Prospectus, any
Preliminary Final Prospectus, the Final Prospectus, the Registration Statement,
and all amendments of and supplements to such documents, if any, as may be
reasonably requested by the Underwriters.
(d) The Company and the Guarantor will endeavor in good faith, in
cooperation with you to timely qualify the Securities for offering and sale
under the securities laws of such jurisdictions as you may designate and to
maintain such qualification in effect for so long as required for the
distribution thereof; provided that in no event shall the Company or the
Guarantor be obligated to qualify to do business in any jurisdiction where it
is not now so qualified or to take action which would subject it to general
service of process in any jurisdiction where it is not now so subject or to
conduct its business in a manner in which it is not currently so conducting its
business.
(e) The Guarantor will make generally available (within the meaning
of Section 11(a) of the 1933 Act and Rule 158 of the Regulations) to its
security holders and to you as soon as practicable, but in no event later than
the last day of the fifteenth full calendar month following the calendar
quarter in which the Effective Date falls, an earnings statement which need not
be audited but which shall satisfy the provisions of Section 11(a) of the 1933
Act and Rule 158 of the Regulations.
(f) The Company and the Guarantor, during the period when the Final
Prospectus is required to be delivered under the 1933 Act, will file promptly
all documents
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<PAGE> 16
required to be filed with the Commission pursuant to Section 13 or 14 of the
1934 Act.
(g) During the period of five years after the date hereof, the
Guarantor will furnish to you (i) as soon as publicly available, a copy of each
Annual Report on Form 10-K, Quarterly Report on Form 10-Q, Current Report on
Form 8-K, annual report to stockholders and definitive proxy statement of the
Guarantor filed with the Commission under the 1934 Act or mailed to
stockholders and (ii) from time to time, such other information concerning the
Guarantor as you may reasonably request.
(h) The Company will apply the proceeds from the sale of the Series
A Interests as set forth under the caption Use of Proceeds in the Final
Prospectus.
(i) Prior to the Closing Date, the Guarantor shall furnish to you,
as soon as they have been prepared, copies of any unaudited interim
consolidated financial statements of the Guarantor and its subsidiaries, for
any periods subsequent to the periods covered by the financial statements
appearing or incorporated by reference in the Registration Statement and the
Final Prospectus.
(j) Neither the Company nor the Guarantor will file any amendment or
supplement to the Registration Statement or the Final Prospectus at any time,
whether before or after the effective date of the Registration Statement,
unless such filing shall comply with the 1933 Act and the Regulations and
unless you shall previously have been advised of such filing and furnished with
a copy thereof, and you and your counsel shall have approved such filing.
(k) The Company and the Guarantor will comply with all provisions of
all undertakings contained in the Registration Statement.
(l) The Company and the Guarantor consent to the use of the Final
Prospectus or any amendment or supplement thereto by you and by all dealers to
whom the Series A Interests may be sold, both in connection with the offering
or sale of the Series A Interests and for such period of time thereafter as the
Final Prospectus is required by law to be delivered in connection therewith.
5. Payment of Expenses. Whether or not the transactions
contemplated in this Agreement are consummated or this Agreement is terminated,
the Company and the Guarantor hereby covenant and agree with the several
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<PAGE> 17
Underwriters that the Company or the Guarantor will pay or cause to be paid all
costs and expenses incident to the performance of the obligations of the
Company and the Guarantor under this Agreement, including but not limited to
the following: (i) the fees, disbursements and expenses of the Company's and
the Guarantor's counsel and accountants in connection with the registration of
the Securities under the 1933 Act and all other expenses in connection with the
preparation, printing and filing of the Registration Statement, the Basic
Prospectus, any Preliminary Final Prospectus, the Final Prospectus and
amendments and supplements thereto and the mailing and delivering of copies
thereof to the Underwriters and dealers; (ii) all costs and expenses related to
the issuance and delivery of the Series A Interests to the Underwriters,
including any transfer or other taxes payable thereon; (iii) the cost of
printing or producing this Agreement, any Blue Sky and legal investment
memoranda and any other documents in connection with the offering, purchase,
sale and delivery of the Series A Interests; (iv) all expenses in connection
with the qualification of the Series A Interests for offering and sale under
state securities laws, including the fees, disbursements and expenses of
counsel for the Underwriters in connection with such qualification and in
connection with the Blue Sky and legal investment memoranda; (v) any fees
charged by securities rating agencies for rating the Series A Interests; (vi)
any filing fees incident to any required reviews by the National Association of
Securities Dealers, Inc. (the "NASD") of the terms of the sale of the Series A
Interests if the Series A Interests are so rated; (vii) the costs and expenses
of any qualified independent underwriter which may be required by the rules and
regulations of the NASD; (viii) all costs and expenses incident to listing the
Series A Interests on the NYSE or other national securities exchange; (ix) the
cost of preparing certificates for the Series A Interests and the cost and
charges of The Depository Trust Company and its nominee for acting as
depository for the Series A Interests and otherwise effecting any book entry
ownership system for the Series A Interests; (x) the cost and charges of any
transfer agent, calculation agent, registrar, or disbursing agent; and (xi) all
other costs and expenses incident to the performance of the Company's or the
Guarantor's obligations hereunder which are not otherwise specifically provided
for in this Section. It is understood, however, that, except as provided in
this Section and in Sections 7 and 8 hereof, the Underwriters will pay all of
their own costs and expenses, including the fees of its counsel, transfer taxes
on the resale of any of the Series A Interests by them and any advertising
expenses connected with any offers they may make.
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<PAGE> 18
If this Agreement is entered into and the purchase of Series A
Interests by the Underwriters pursuant to this Agreement is not consummated
because any condition to the obligations of the Underwriters set forth in
Section 6 hereof is not satisfied, because of any termination pursuant to
Section 11(b) hereof or because of any refusal, inability or failure on the
part of the Company or the Guarantor to perform any agreement herein or comply
with any provision hereof other than by reason of a default by the
Underwriters, the Company or the Guarantor will reimburse the Underwriters
severally upon demand for all out-of-pocket expenses (including reasonable fees
and disbursements of counsel) that shall have been incurred by them in
connection with the proposed purchase and sale of the Series A Interests.
6. Conditions of Underwriters' Obligations. The obligations of the
several Underwriters to purchase and pay for the Series A Interests, as
provided herein, shall be subject to the continuing accuracy of the
representations and warranties of the Company and the Guarantor herein
contained, as of the date hereof and at the Closing Date, to the absence from
any certificates, opinions, written statements or letters furnished to you
pursuant to this Section 6 or to Davis Polk & Wardwell (Underwriters' Counsel)
pursuant to this Section 6 of any misstatement or omission, to the performance
by the Company and the Guarantor of their respective obligations hereunder in
all material respects and to the following additional conditions:
(a) If the Registration Statement has not become effective prior to
the Execution Time, the Registration Statement shall have become effective not
later than 5:00 p.m., New York City time, on the date of this Agreement or such
later date and time as shall be consented to in writing by you, and, if filing
of the Final Prospectus, or any supplement thereto, is required pursuant to
Rule 424(b), the Final Prospectus, and any such supplement, shall have been
filed in the manner and within the time period required by Rule 424(b).
(b) At the Closing Date (i) no Stop Order suspending the
effectiveness of the Registration Statement or any part thereof shall have been
issued under the 1933 Act, and no proceeding under the 1933 Act or the 1934 Act
therefor shall have been initiated or threatened by the Commission; no order
suspending the effectiveness of the qualification or registration of the Series
A Interests under the securities or Blue Sky laws of any jurisdiction shall be
in effect and no proceeding for such purpose shall
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<PAGE> 19
be pending before or threatened or contemplated by the authorities of any such
jurisdiction, or, with respect to the filing of any Form 8-A under the 1934
Act, by any national securities exchange; and all requests for additional
information on the part of the Commission shall have been complied with or such
requests shall have been otherwise satisfied; (ii) the rating assigned by any
nationally recognized securities rating agency to any debt securities,
preferred stock or other obligations of the Guarantor as of the date of this
Agreement shall not have been lowered since the execution of this Agreement and
no such agency shall have publicly announced that it has under surveillance or
review, with possible negative implications, its rating of any of the debt
securities or preferred stock of the Guarantor; and (iii) since the respective
dates as of which information is given in the Registration Statement and the
Final Prospectus, except as otherwise stated therein or contemplated thereby,
there shall not have been any material adverse change in, or any adverse
development which materially affects, the financial condition, results of
operations, business or properties of the Company or the Guarantor and its
subsidiaries considered as one enterprise, the effect of which is in your
reasonable judgment so material and adverse as to make it impracticable or
inadvisable to proceed with the public offering or the delivery of the Series A
Interests on the terms and in the manner contemplated in the Final Prospectus.
(c) Since the respective dates as of which information is given in
the Registration Statement and the Final Prospectus, there shall have been no
litigation or other proceeding instituted against the Company or any of its
respective officers or directors in their capacities as such, before or by any
Federal, state or local court, commission, regulatory body, administrative
agency or other governmental body, domestic or foreign, in which litigation or
proceeding an unfavorable ruling, decision or finding would materially and
adversely affect the business, properties, business prospects, condition
(financial or otherwise) or results of operations of the Company.
(d) Each of the representations and warranties of the Company
contained herein shall be true and correct in all material respects on the
Closing Date and, with respect to the Option Series A Interests, on the Option
Closing Date, if applicable, as if made on the Closing Date or on the Option
Closing Date, if applicable, and all covenants and agreements herein contained
to be performed on the part of the Company and all conditions herein contained
to be fulfilled or complied with by the Company on or prior to the Closing Date
and, with respect to the Option Series A
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<PAGE> 20
Interests, on or prior to the Option Closing Date, if applicable, shall have
been duly performed, fulfilled or complied with.
(e) On the Closing Date, you shall have received the opinion of
Cravath, Swaine & Moore, counsel for the Company and the Guarantor, dated the
date of delivery, substantially in the form set forth in Exhibit [ ] hereto,
addressed to the Underwriters and in form and scope reasonably satisfactory to
Underwriters' Counsel.
[(f) On the Closing Date, you shall have received the opinion of
Cravath, Swaine & Moore, special tax counsel for the Company and the Guarantor,
dated the date of delivery, substantially in the form set forth in Exhibit [ ]
hereto, addressed to the Underwriters and in form and scope reasonably
satisfactory to Underwriters' Counsel.]
(g) On the Closing Date, you shall have received the opinion of
_____________, General Counsel of the Guarantor, dated the date of delivery,
substantially in the form set forth in Exhibit [ ] hereto, addressed to the
Underwriters and in form and scope reasonably satisfactory to Underwriters'
Counsel.
(h) On the Closing Date, you shall have received a certificate of
the Guarantor in its capacity as managing member [and direct or indirect owner
of all the common limited liability company interests (the "Common Interests")]
of the Company (the "Managing Member") and of the Chief Financial Officer or
the Controller of the Guarantor, dated the Closing Date, to the effect that the
conditions set forth in subsections (a) and (b) of this Section 6 have been
satisfied, that as of the date hereof and on the Closing Date, the
representations and warranties of the Company and the Guarantor set forth in
Section 3 hereof are accurate, and that on the Closing Date, the obligations of
the Company and the Guarantor to be performed hereunder on or prior to the
Closing Date have been duly performed in all material respects. In addition,
such certificate shall state that the signer of such certificate has carefully
examined the Registration Statement and the Final Prospectus (including the
Incorporated Documents) and (A) as of the date of such certificate, such
documents are true and correct in all material respects and do not omit to
state a material fact required to be stated therein or necessary in order to
make the statements therein not true or misleading and (B) in the case of the
certificate delivered on the Closing Date and the Option Closing Date, if
applicable, since the Effective Date no event has occurred as a result of which
it is necessary to amend or
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<PAGE> 21
supplement the Final Prospectus in order to make the statements therein not
untrue or misleading in any material respect and there has been no document
required to be filed under the 1934 Act and the rules and regulations
thereunder that upon such filing would be deemed to be incorporated by
reference into the Final Prospectus that has not been so filed.
(i) Concurrently with the execution and delivery of this Agreement,
or, if the Company elects to rely on Rule 430A, on the date of the Final
Prospectus, Ernst & Young shall have furnished to the Representative a letter,
dated the date of its delivery, addressed to the Representative and in form and
substance satisfactory to the Representative, confirming that they are
independent accountants with respect to the Company and the Guarantor as
required by the Act and the Regulations and with respect to the financial and
other statistical and numerical information contained in the Registration
Statement or incorporated by reference therein. On the Closing Date and, as to
the Option Series A Interests, the Option Closing Date, if applicable, Ernst &
Young shall have furnished to the Representative a letter, dated the date of
its delivery, which shall confirm, on the basis of a review in accordance with
the procedures set forth in the letter from Ernst & Young, that nothing has
come to their attention during the period from the date of the letter referred
to in the prior sentence to a date (specified in the letter) not more than five
days prior to the Closing Date and the Option Closing Date, if applicable,
which would require any change in their letter dated the date hereof if it were
required to be dated and delivered on the Closing Date and the Option Closing
Date, if applicable.
(j) The Underwriters shall have received from Underwriters' Counsel
an opinion, dated the Closing Date, with respect to [the Guarantor Preferred
Stock and the Depositary Shares evidencing the same] the Registration
Statement, the Final Prospectus, and any amendments or supplements to the
Registration Statement or Final Prospectus and such other related matters, as
you may reasonably require, and the Company and the Guarantor shall have
furnished to Underwriters' Counsel such documents as they request for the
purpose of enabling them to pass upon such matters.
(k) All proceedings taken in connection with the sale or issuance of
the Securities as contemplated herein shall be satisfactory in form and scope
to you and to Underwriters' Counsel, and prior to the Closing Date, the Company
and the Guarantor shall have furnished to you such
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<PAGE> 22
further information, certificates and documents as you may reasonably request.
(l) The NASD, upon review of the terms of the public offering of the
Series A Interests, shall have no objections to the fairness of the
underwriting terms and arrangements of the offering.
(m) The Series A Interests shall be qualified for sale in such
states as the Representative may reasonably request, each such qualification
shall be in effect and not subject to any stop order or other proceeding on the
Closing Date or the Option Closing Date, if applicable.
(n) Prior to the Closing Date, the Series A interests shall have
been duly authorized for listing by the NYSE upon official notice of issuance.
(o) The Company shall have furnished to the Representative such
certificates, in addition to that specifically mentioned herein, as the
Representative may have reasonably requested as to the accuracy and
completeness on the Closing Date and the Option Closing Date, if applicable, of
any statement in the Registration Statement or the Prospectus or any documents
filed under the 1934 Act and deemed to be incorporated by reference into the
Final Prospectus, as to the accuracy on the Closing Date and the Option Closing
Date, if applicable, of the representations and warranties of the Company
herein, as to the performance by the Company of its obligations hereunder, or
as to the fulfillment of the conditions concurrent and precedent to the
obligations hereunder of the Representative.
(p) If any of the conditions specified in this Section 6 shall not
have been fulfilled when and as required by this Agreement, or if any of the
certificates, opinions, written statements or letters furnished to you or to
Underwriters' Counsel pursuant to this Section 6 shall not be in all material
respects reasonably satisfactory in form and scope to you and to Underwriters'
Counsel, all your obligations hereunder may be canceled by you on, or at any
time prior to, the Closing Date. Notice of such cancellation shall be given to
the Company and the Guarantor in writing, or by telephone, telex or telecopy,
confirmed in writing.
7. Indemnification. (a) The Company and the Guarantor agree,
jointly and severally, to indemnify and hold harmless each Underwriter and each
person, if any, who controls any Underwriter within the meaning of Section 15
of
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<PAGE> 23
the 1933 Act or Section 20(a) of the 1934 Act, against any and all losses,
liabilities, claims, damages and out-of-pocket expenses whatsoever, joint or
several (including but not limited to attorneys' fees and any and all expenses
whatsoever reasonably incurred in investigating, preparing or defending against
any litigation, commenced or threatened, or any claim whatsoever, and any and
all amounts paid in settlement of any claim or litigation), as and when
incurred, to which you or any such person may become subject under the 1933
Act, the 1934 Act or otherwise, insofar as such losses, liabilities, claims,
damages or expenses (or actions in respect thereof) arise out of or are based
upon (i) any untrue statement or alleged untrue statement of a material fact
contained in the Registration Statement or any related Basic Prospectus,
Preliminary Final Prospectus, or Final Prospectus, or in any supplement thereto
or amendment thereof, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein (in the case of the Basic Prospectus,
any Preliminary Final Prospectus or the Final Prospectus, in light of the
circumstances under which they were made) not misleading or (ii) any breach of
any representation, warranty, covenant or agreement of the Company or the
Guarantor contained in this Agreement; provided, however, that neither the
Company nor the Guarantor will be liable to any Underwriter or any person so
controlling such Underwriter in any such case to the extent, but only to the
extent, that any such loss, liability, claim, damage or expense arises out of
or is based upon (x) any such untrue statement or alleged untrue statement or
omission or alleged omission made therein in reliance upon and in conformity
with written information furnished to the Company or the Guarantor by or on
behalf of any Underwriter through you expressly for use therein, such written
information being as set forth in the penultimate sentence of subsection (b)
below or (y) any failure of such Underwriter to deliver the Final Prospectus to
a purchaser of Series A Interests as required by applicable law. This
indemnity agreement will be in addition to any liability which the Company and
the Guarantor may otherwise have, including under this Agreement.
(b) Each Underwriter severally, and not jointly, agrees to indemnify
and hold harmless the Company and the Guarantor, each of their respective
directors, each of their respective officers who shall have signed the
Registration Statement, and each other person, if any, who controls the Company
or the Guarantor within the meaning of Section 15 of the 1933 Act or Section
20(a) of the 1934 Act to the same
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<PAGE> 24
extent as the foregoing indemnity from the Company and the Guarantor to each
Underwriter against any losses, liabilities, claims, damages and expenses
whatsoever, joint and several (including but not limited to attorneys' fees and
any and all out-of-pocket expenses whatsoever reasonably incurred in
investigating, preparing or defending against any litigation, commenced or
threatened, or any claim whatsoever and any and all amounts paid in settlement
of any claim or litigation), as and when incurred, to which they or any of them
may become subject under the 1933 Act, the 1934 Act or otherwise, insofar as
such losses, liabilities, claims, damages or expenses (or actions in respect
thereof) arise out of or are based upon any untrue statement or alleged untrue
statement of a material fact contained in the Registration Statement, or any
related Basic Prospectus, Preliminary Final Prospectus or Final Prospectus, or
in any amendment thereof or supplement thereto, or arise out of or are based
upon the omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein (in the case
of a Basic Prospectus, Preliminary Final Prospectus or Final Prospectus, in
light of the circumstances under which they were made) not misleading, in each
case to the extent, but only to the extent, that any such loss, liability,
claim, damage or expense arises out of or is based upon any such untrue
statement or alleged untrue statement or omission or alleged omission made
therein in reliance upon and in conformity with written information furnished
to the Company or the Guarantor by or on behalf of such Underwriter through you
expressly for use therein. For all purposes of this Agreement, the amounts of
the selling concession and reallowance set forth in the Final Prospectus
constitute the only information furnished in writing by or on behalf of any
Underwriter expressly for inclusion in any Basic Prospectus or Preliminary
Final Prospectus, the Final Prospectus, or the Registration Statement (as from
time to time amended or supplemented), or any amendment or supplement thereto.
This indemnity will be in addition to any liability which any Underwriter may
otherwise have, including under this Agreement; provided, however, that in no
case shall any Underwriter be liable or responsible for any amount in excess of
the underwriting discounts and commissions received by such Underwriter.
(c) Promptly after receipt by an indemnified party under subsection
(a) or (b) above of notice of the commencement of any action, such indemnified
party shall, if a claim in respect thereof is to be made against the
indemnifying party under such subsection, notify each party against whom
indemnification is to be sought in writing of the commencement thereof (but the
failure so to notify an
24
<PAGE> 25
indemnifying party shall not relieve it from any liability which it may have
under this Section 7 except to the extent that it has been prejudiced in any
material respect by such failure or from any liability which it may have
otherwise). In case any such action is brought against any indemnified party,
and it notifies an indemnifying party of the commencement thereof, the
indemnifying party will be entitled to participate therein, and to the extent
it may elect by written notice delivered to the indemnified party promptly
after receiving the aforesaid notice from such indemnified party, to assume the
defense thereof with counsel satisfactory to such indemnified party.
Notwithstanding the foregoing, the indemnified party or parties shall have the
right to employ its or their own counsel in any such case, but the fees and
expenses of such counsel shall be at the expense of such indemnified party or
parties unless (i) the employment of such counsel shall have been authorized in
writing by one of the indemnifying parties in connection with the defense of
such action, (ii) the indemnifying parties shall not have employed counsel to
have charge of the defense of such action within a reasonable time after notice
of commencement of the action, or (iii) such indemnified party or parties shall
have reasonably concluded (based on advice of counsel) that there may be
defenses available to it or them which are different from or additional to
those available to one or all of the indemnifying parties (in which case the
indemnifying parties shall not have the right to direct the defense of such
action on behalf of the indemnified party or parties, it being understood,
however, that the indemnifying party shall not, in connection with any one such
claim, action or proceeding or separate but substantially similar or related
claims, actions or proceedings in the same jurisdiction arising out of the same
general allegations or circumstances, be liable for the fees and expenses of
more than one separate firm (together with appropriate local counsel) at any
time for the indemnified party or parties, which firm shall be designated in
writing by the indemnified party or parties, unless such indemnified party or
parties shall have reasonably concluded that there may be defenses available to
it or them which are different from or additional to those available to one or
all of the other indemnified parties (in which case the indemnifying party
shall be liable for the fees and expenses of only one additional separate firm
(together with appropriate local counsel) for such indemnified party or parties
at any time), in any of which event such fees and expenses shall be borne by
the indemnifying parties. Anything in this Section 7 to the contrary
notwithstanding, an indemnifying party shall not be liable for any settlement
of any claim or action
25
<PAGE> 26
effected without its written consent; provided, however, that such consent was
not unreasonably withheld.
8. Contribution. In order to provide for just and equitable
contribution in circumstances in which the indemnification provided for in
Section 7 hereof is for any reason held to be unavailable from the Company and
the Guarantor or the Underwriters or is insufficient to hold harmless a party
indemnified hereunder, the Company, the Guarantor and the Underwriters shall
contribute to the aggregate losses, claims, damages, liabilities and
out-of-pocket expenses of the nature contemplated by such indemnification
provision (including any investigative, legal and other expenses reasonably
incurred in connection with, and any amount paid in settlement of, any action,
suit or proceeding or any claims asserted, but after deducting in the case of
losses, claims, damages, liabilities and expenses suffered by the Company or
the Guarantor, any contribution received by the Company or the Guarantor from
persons, other than the Underwriters, who may also be liable for contribution,
including persons who control the Company or the Guarantor within the meaning
of Section 15 of the 1933 Act or Section 20(a) of the 1934 Act, officers of the
Company or the Guarantor who signed the Registration Statement and directors of
the Company or the Guarantor) to which the Company, the Guarantor and one or
more of the Underwriters may be subject, in such proportions as is appropriate
to reflect the relative benefits received by the Company and the Guarantor on
the one hand and the Underwriters on the other from the offering of the Series
A Interests or, if such allocation is not permitted by applicable law or
indemnification is not available as a result of the indemnifying party not
having received notice as provided in Section 7 hereof, in such proportion as
is appropriate to reflect not only the relative benefits referred to above but
also the relative fault of the Company and the Guarantor on the one hand and
the Underwriters on the other in connection with the statements or omissions
which resulted in such losses, claims, damages, liabilities or expenses, as
well as any other relevant equitable considerations. The relative benefits
received by the Company and the Guarantor on the one hand and the Underwriters
on the other shall be deemed to be in the same proportion as the total proceeds
from the offering (net of underwriting discounts and commissions but before
deducting expenses) received by the Company bear to the underwriting discounts
and commissions received by the Underwriters, respectively, in each case as set
forth in the table on the cover page of the Final Prospectus. The relative
fault of the Company and the Guarantor on the one hand and of the Underwriters
on the other shall be determined by reference
26
<PAGE> 27
to, among other things, whether the untrue or alleged untrue statement of a
material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company or the Guarantor or by the
Underwriters and the parties relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission. The Company,
the Guarantor and the Underwriters agree that it would not be just and
equitable if contribution pursuant to this Section 8 were determined by pro
rata allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation which does not take account of
the equitable considerations referred to above. Notwithstanding the provisions
of this Section 8, (i) in no case shall any Underwriter be liable or
responsible for any amount in excess of the underwriting discount applicable to
the Series A Interests purchased by such Underwriter hereunder, and (ii) no
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the 1933 Act) shall be entitled to contribution from any person who
was not guilty of such fraudulent misrepresentation. For purposes of this
Section 8, each person, if any, who controls an Underwriter within the meaning
of Section 15 of the 1933 Act or Section 20(a) of the 1934 Act shall have the
same rights to contribution as such Underwriter, and each person, if any, who
controls the Company or the Guarantor within the meaning of Section 15 of the
1933 Act or Section 20(a) of the 1934 Act, each officer of the Company and of
the Guarantor who shall have signed the Registration Statement and each
director of the Guarantor shall have the same rights to contribution as the
company and the Guarantor, subject in each case to clauses (i) and (ii) of the
preceding sentence of this Section 8. Any party entitled to contribution will,
promptly after receipt of notice of commencement of any action, suit or
proceeding against such party in respect of which a claim for contribution may
be made against another party or parties under this Section, notify such party
or parties from whom contribution may be sought, but the omission to so notify
such party or parties shall not relieve the party or parties from whom
contribution may be sought from any obligation it or they may have under this
Section 8 or otherwise. No party shall be liable for contribution with respect
to any action or claim settled without its consent; provided, however, that
such consent was not unreasonably withheld.
The indemnity and contribution agreements contained in this Section 8
and the representations and warranties of the Company contained in this
Agreement shall remain operative and in full force and effect regardless of (i)
any investigation made by or on behalf of the
27
<PAGE> 28
Underwriters, (ii) acceptance of any of the Series A Interests and payment
therefor or (iii) any termination of this Agreement.
9. Default by an Underwriter. (a) If any Underwriter or
Underwriters shall default on the Closing Date, in its or their obligation to
purchase Firm Series A Interests hereunder and if the number of Firm Series A
Interests with respect to which such default relates does not (after giving
effect to arrangements, if any, made by you pursuant to subsection (b) below)
exceed in the aggregate 10% of the number of Firm Series A Interests which all
Underwriters have agreed to purchase hereunder then such number of Firm Series
A Interests to which the default relates shall be purchased by the
non-defaulting Underwriters in proportion to their respective commitments
hereunder or in such other proportions as the Representative may specify,
provided that in no event shall the maximum number of Firm Series A Interests
which any underwriter has become obligated to purchase pursuant to Section 1 be
increased pursuant to this Section 9 by more than one-ninth of the number of
Firm Series A Interests agreed to be purchased by such Underwriter without the
prior written consent of such underwriter.
(b) If such default relates to more than 10% of the number of Firm
Series A Interests, you may in your discretion arrange for yourself or for
another party or parties (including any non-defaulting Underwriter or
Underwriters who so agree) to purchase such principal amount of Firm Series A
Interests to which such default relates on the terms contained herein. If
within two calendar days after such a default, you do not arrange for the
purchase of such principal amount of Firm Series A Interests to which such
default relates as provided in this Section 9, this Agreement shall thereupon
terminate, without liability on the part of the Company or the Guarantor with
respect thereto (except in each case as provided in Sections 5, 7 and 8 hereof)
or the several non-defaulting Underwriters, but nothing in this Agreement
shall relieve a defaulting Underwriter or Underwriters of its or their
liability, if any, to the other several Underwriters and the Company and the
Guarantor for damages occasioned by its or their default hereunder.
(c) If the number of Series A Interests to which the default relates
is to be purchased by the non-defaulting Underwriters, or is to be purchased by
another party or parties as aforesaid, you or the Company or the Guarantor
shall have the right to postpone the Closing Date for a period, not exceeding
seven business days, in order to
28
<PAGE> 29
effect whatever changes may thereby be made necessary in the Registration
Statement or the Final Prospectus or in any other documents and arrangements,
and the Company and the Guarantor agree to file promptly any amendment or
supplement to the Registration Statement or the Final Prospectus which, in the
opinion of Underwriters' Counsel, may thereby be made necessary or advisable.
The term Underwriter as used in this agreement shall include any party
substituted under this Section 9 with like effect as if it had originally been
a party to this Agreement with respect to such Series A Interests.
10. Survival of Representations and Agreements. All
representations, warranties, covenants and agreements of the Underwriters, the
Company and the Guarantor contained in this Agreement, including the
representations and warranties contained in Section 3, the agreements contained
in Section 5, the indemnity agreements contained in Section 7 and the
contribution agreements contained in Section 8, shall remain operative and in
full force and effect regardless of any investigation made by or on behalf of
any Underwriter or any controlling person thereof or by or on behalf of the
Company, the Guarantor, any of their respective officers and directors or any
controlling person thereof, and shall survive delivery of and payment for the
Series A Interests to and by the several Underwriters. The representations
contained in Section 3 and the agreements contained in Sections 5, 7, 9 and 12
hereof shall survive the termination of this Agreement including pursuant to
Section 11 hereof.
Anything herein to the contrary notwithstanding, the indemnity
agreement of the Company and the Guarantor in subsection (a) of Section 7
hereof, the representations and warranties in subsections (c) and (f) of
section 3 hereof and any representation or warranty as to the accuracy of the
Registration Statement or the Final Prospectus contained in any certificate
furnished by the Company or the Guarantor pursuant to Section 6 hereof, insofar
as they may constitute a basis for indemnification for liabilities (other than
payment by the Company or the Guarantor of expenses incurred or paid in the
successful defense of any action, suit or proceeding) arising under the 1933
Act, shall not extend to the extent of and interest therein of a controlling
person or partner of an Underwriter who is a director, officer or controlling
person of the Company or the Guarantor when the Registration Statement has
become effective, except in each case to the extent that an interest of such
character shall have been determined by a court of appropriate jurisdiction as
not against public policy as expressed in the 1933 Act. Unless in the opinion
of counsel for the Company or the Guarantor the matter has been settled by
controlling
29
<PAGE> 30
precedent, the Company or the Guarantor will, if a claim for such
indemnification is asserted, submit to a court of appropriate jurisdiction the
question whether such interest is against public policy as expressed in the
1933 Act and will be governed by the final adjudication of such issue.
11. Effective Date of this Agreement and Termination. (a) This
Agreement shall become effective as of the time, after the Registration
Statement becomes effective, of the release by you for publication of the first
newspaper advertisement which is subsequently published relating to the Firm
Series A Interests or the time, after the Registration Statement becomes
effective, when the Firm Series A Interests are first released by you for
offering to you or dealers by letter or telegram, whichever shall first occur.
You or the Company or the Guarantor may prevent this Agreement from becoming
effective without liability of any party to any other party, except as noted
below in this Section 11, by giving the notice indicated in Section 11(c)
before the time this Agreement becomes effective.
(b) You shall have the right to terminate this Agreement at any
time prior to the Closing Date (or the Option Closing Date as the case may be)
if, after the date hereof: (i) any domestic or international event or act or
occurrence has materially disrupted, or in your opinion will in the immediate
future materially disrupt, the securities markets; (ii) a general suspension
of, or a general limitation on prices for, trading in securities on the NYSE or
the American Stock Exchange or in the over-the-counter market shall have
occurred; (iii) a banking moratorium shall have been declared either by Federal
or New York State authorities; (iv) there shall have occurred any outbreak or
material escalation of hostilities or other calamity or crisis the effect of
which on the financial markets of the United States or on the United States is
such as to make it, in the judgment of the Underwriters, inadvisable to market
the Series A Interests on the terms contemplated by the Final Prospectus; (v)
any restriction materially adversely affecting the distribution of the Series A
Interests which was not in effect on the date hereof shall have become
effective; or (vi) there shall have been such change in the market for the
securities of the Company or the Guarantor or securities in general or in
political, financial or economic conditions as in your judgment makes it
inadvisable to proceed with the offering, sale and delivery of the Series A
Interests on the terms contemplated by the Final Prospectus.
30
<PAGE> 31
(c) Any notice of termination pursuant to this Section 11 shall be
by telephone, telex, or telegraph, confirmed in writing by letter.
12. Notice. All communications hereunder, except as may be
otherwise specifically provided herein, shall be in writing and, if sent to
you, shall be mailed, delivered, or telexed or telecopied and confirmed in
writing, to such Underwriter c/o PaineWebber Incorporated, 1285 Avenue of the
Americas, New York, New York 10019, Attention: Corporate Finance Department; if
sent to the Company or the Guarantor, shall be mailed, delivered, or telexed or
telecopied and confirmed in writing to the Company or the Guarantor, c/o Paine
Webber Group Inc., 1285 Avenue of the Americas, New York, New York 10019,
Attention: [Theodore A. Levine].
13. Parties. This Agreement shall inure solely to the benefit of,
and shall be binding upon, the several Underwriters, the Company, the Guarantor
and the controlling persons, directors, officers, employees and agents referred
to in Sections 7 and 8 and their respective successors and assigns, and no
other person shall have or be construed to have any legal or equitable right,
remedy or claim under or in respect of or by virtue of this Agreement or any
provision herein contained. The term successors and assigns shall not include
a purchaser, in its capacity as such, of Series A Interests from any of the
Underwriters. Notwithstanding anything contained in this Agreement to the
contrary, all of the obligations of the Underwriters hereunder are several and
not joint.
14. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
15. Construction. This Agreement shall be construed in accordance
with the laws of the State of New York without regard to principles of
conflicts of law.
In case any provision in this Agreement shall be invalid, illegal or
unenforceable, the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby.
The Company, the Guarantor and the Underwriters each hereby
irrevocably waive any right they may have to a trial by jury in respect of any
claim based upon or arising out of this Agreement or the transactions
contemplated hereby.
31
<PAGE> 32
32
<PAGE> 33
Please confirm that the foregoing correctly sets forth the agreement
among the Company, the Guarantor and the several Underwriters.
Very truly yours,
PAINEWEBBER FINANCE L.L.C.
By:
-----------------------
Title:
PAINE WEBBER GROUP INC.
By:
-----------------------
Title:
Confirmed as of the date first
above mentioned:
PAINEWEBBER INCORPORATED
Acting on behalf of itself
and as the Representative of the
other several Underwriters
named in Schedule I hereof.
By: PAINEWEBBER INCORPORATED
By:
------------------------
Title:
33
<PAGE> 34
SCHEDULE I
UNDERWRITERS
Number of
Firm Series A
Name of Interests
Underwriters to be Purchased
------------ ---------------
PaineWebber Incorporated
Total . . . . . . . . . . . . . . . . . . . -----------
===========
<PAGE> 35
EXHIBIT A
PAINEWEBBER FINANCE L.L.C.
-----------------
PRICE DETERMINATION AGREEMENT
[Date]
PAINEWEBBER INCORPORATED
As Representative of the several Underwriters
c/o PaineWebber Incorporated
1285 Avenue of the Americas
New York, New York 10019
Ladies and Gentlemen:
Reference is made to the Underwriting Agreement, dated _________,
1994 (the "Underwriting Agreement"), among PAINEWEBBER FINANCE L.L.C., a
Delaware limited liability company, (the "Company") PAINE WEBBER GROUP INC., a
Delaware Corporation, ("PWG") and the several Underwriters named in Schedule I
thereto or hereto (the "Underwriters") for whom PaineWebber Incorporated is
acting as representative (the "Representative"). The Underwriting Agreement
provides for the purchase by the Underwriters from the Company, subject to the
terms and conditions set forth therein, of an aggregate of ______ Preferred
Interests of the Company's __% Exchangeable Cumulative Preferred Limited
Liability Company Interests, Series A (the "Firm Series A Interests"). This
Agreement is the Price Determination Agreement referred to in the Underwriting
Agreement.
Pursuant to Section 1 of the Underwriting Agreement, the
undersigned agree with the Representative as follows:
1. The initial public offering price per Preffered Interest
for the Firm Series A Interests shall be $25.00.
2. The purchase price per Series A Interests for the Firm
Series A Interests to be paid by the several Underwriters shall be $________
representing an amount equal to the initial public offering price set forth
above, less $_____ per Series A Interests.
<PAGE> 36
The Company represents and warrants to each of the Underwriters
that the representations and warranties of the Company set forth in Section 3
of the Underwriting Agreement are accurate as though expressly made at and as
of the date hereof.
As contemplated by the Underwriting Agreement, attached as
Schedule I is a completed list of the several Underwriters, which shall be a
part of this Agreement and the Underwriting Agreement.
THIS AGREEMENT SHALL BE GOVERNED BY THE LAW OF THE STATE OF NEW
YORK.
If the foregoing is in accordance with your understanding of the
agreement among the Underwriters, the Company and the Guarantor, please sign
and return to the Company and the Guarantor a counterpart hereof, whereupon
this instrument along with all counterparts and together with the Underwriting
Agreement shall be a binding agreement among the Underwriters, the Company and
the Guarantor in accordance with its terms and the terms of the Underwriting
Agreement.
Very truly yours,
PAINEWEBBER FINANCE L.L.C.
By:
--------------------
Title:
PAINE WEBBER GROUP INC.
By:
--------------------
Title:
Confirmed as of the date
first above mentioned
PAINEWEBBER INCORPORATED
Acting on behalf of itself
and as the Representative
of the other several Underwriters
named in Schedule I hereof.
By: PAINEWEBBER INCORPORATED
By:
--------------------------
Title:
2
<PAGE> 37
EXHIBIT B
TO
UNDERWRITING AGREEMENT
----------------------
FORM OF
OPINION OF CRAVATH, SWAINE & MOORE
[Closing Date]
PaineWebber Incorporated
as Representative of the
several Underwriters
c/o PaineWebber Incorporated
1285 Avenue of the Americas
New York, New York 10019
Ladies and Gentlemen:
We have acted as counsel for PaineWebber Finance L.L.C. (the
"Company"), a Delaware limited liability company, and Paine Webber Group Inc.
("PWG"), a Delaware corporation, the "Guarantor," in connection with the
issuance and sale today by the Company to you of ___ preferred limited
liability company interests (the "Preferred Interests") of its %
Exchangeable Cumulative Preferred Limited Liability Company Interests, Series A
(the "Series A Interests") guaranteed by PWG (the "Guaranties") to the extent
set forth in the Final Prospectus relating to the Series A Interests pursuant
to the terms of the underwriting agreement among you, the Company and PWG (the
"Underwriting Agreement"). This opinion is given pursuant to Section ___ of
the Underwriting Agreement. Capitalized terms not otherwise defined herein are
defined as set forth in the Underwriting Agreement.
We have participated in the preparation of the Underwriting
Agreement, the Payment and Guarantee Agreement, the Loan Agreement, the Deposit
Agreement, the Series A Interests, the Guaranties, the Registration Statement,
the Prospectus and the supplement to the Prospectus. As to various questions
of fact material to our opinion, we have relied upon representations made in
the Underwriting Agreement, the Payment and Guarantee Agreement, the Loan
Agreement and the Deposit Agreement, and upon certificates of the Managing
Member of the Company and officers of PWG. We have also examined such
certificates of public officials, corporate documents and records and other
certificates,
<PAGE> 38
opinions and instruments and have made such other investigations as we have
deemed necessary in connection with the opinions hereinafter set forth.
Based on the foregoing and upon such investigation as we have
deemed necessary, we give you our opinion as follows with respect to the
Company.
1. The execution, delivery and performance by the Company of
the Limited Liability Agreement and by the Company and PWG of the
Underwriting Agreement, the Payment and Guarantee Agreement, the Deposit
Agreement and the Loan Agreement have been duly authorized by all requisite
corporate action, and the Underwriting Agreement, the Payment and Guarantee
Agreement, the Deposit Agreement and the Loan Agreement have been duly
executed and delivered by the Company and PWG. The issue and delivery of
the Series A Interests have been duly authorized by all requisite corporate
action, and the Series A Interests have been duly issued and delivered by
the Company.
2. The Underwriting Agreement and the Loan Agreement are
legal, valid and binding obligations of the Company and PWG and are
enforceable against the Company and PWG in accordance with their terms,
except as may be limited by bankruptcy, insolvency or other similar laws
affecting the enforcement of creditors' rights in general and except as
rights to indemnity and contribution under the Underwriting Agreement may
be limited under applicable law. The enforceability of the Company's and
PWG's obligations under the Underwriting Agreement and the Loan Agreement
are subject to general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law).
3. The statements in the Prospectus Supplement under "Certain
Terms of the Series A Interests," "Description of the Loans," "Certain
Terms of the Depositary Shares" and "Certain Terms of the Guarantor
Preferred Stock," and in the Basic Prospectus under "Description of
Preferred Interests," "Description of Guarantee," and "Description of the
Guarantor Preferred Stock," insofar as such statements constitute a summary
of the legal matters, documents or proceedings referred to therein, fairly
present the information called for with respect to such legal matters,
documents and proceedings.
2
<PAGE> 39
4. The statements made under the caption "Taxation" in the
Basic Prospectus, insofar as they describe matters of U.S. law, legal
conclusions or the opinion of such counsel, are fair summaries thereof;
our opinion filed as Exhibit 8.2 is hereby confirmed; and the Underwriters
may rely on such opinion as though it were addressed to them.
5. The Company is not considered an "investment company"
under Section 3(a) of the 1940 Act, nor does the ownership of the Common
Interests by PWG cause PWG to be considered an "investment company" under
Section 3(a) of the 1940 Act.
6. The Registration Statement and the Final Prospectus
(including any documents incorporated by reference into the Final
Prospectus, at the time they were filed) comply or complied in all material
respects as to form with the requirements of the Act and the rules and
regulations thereunder (except that we express no opinion as to financial
statements, schedules and other financial and statistical data contained in
the Registration Statement or the Final Prospectus (or incorporated by
reference therein).
7. We have participated in the preparation of the
Registration Statement and the Final Prospectus and nothing has come to our
attention which has caused us to believe that, both as of the Effective
Date and as of the date hereof, the Registration Statement, or any
amendment thereto, contained or contains any untrue statement of a material
fact or omitted or omits to state a material fact required to be stated
therein or necessary to make the statements therein not misleading or that
any Final Prospectus or any amendment or supplement thereto (including any
documents incorporated by reference into the Final Prospectus) at the time
such Final Prospectus was issued, at the time any such amended or
supplemented Final Prospectus was issued, or on the date hereof, contained
or contains any untrue statement of a material fact or omitted or omits to
state a material fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made not misleading
(except that we express no opinion as to financial statements, schedules
and other financial or statistical data contained in the Registration
Statement or the Final Prospectus (or incorporated by reference therein).
3
<PAGE> 40
EXHIBIT C
TO
UNDERWRITING AGREEMENT
----------------------
FORM of OPINION of
[General Counsel of Paine Webber Group Inc.]
[Closing Date]
PaineWebber Incorporated
as Representative of the
several Underwriters
c/o PaineWebber Incorporated
1285 Avenue of the Americas
New York, New York 10019
Ladies and Gentlemen:
I have acted as general counsel for Paine Webber Group Inc.
("PWG"), a Delaware corporation, the "Guarantor," in connection with the
issuance and sale today by PaineWebber Finance L.L.C. (the "Company") to you
pursuant to the terms of the underwriting agreement among you, the Company and
PWG (the "Underwriting Agreement"), of ________ preferred limited liability
company interests (the "Preferred Interests") of its % Exchangeable
Cumulative Preferred Limited Liability Company Interests, Series A (the "Series
A Interests") guaranteed by PWG (the "Guaranties") to the extent set forth in
the Final Prospectus relating to the Series A Interests. This opinion is given
pursuant to Section ___ of the Underwriting Agreement. Capitalized terms not
otherwise defined herein are defined as set forth in the Underwriting
Agreement.
I have participated in the preparation of the Underwriting
Agreement, the Payment and Guarantee Agreement, the Loan Agreement, the Deposit
Agreement, the Series A Interests, the Guaranties, the Registration Statement,
the Prospectus and the supplement to the Prospectus. As to various questions
of fact material to my opinion, I have relied upon representations made in the
Underwriting Agreement, the Payment and Guarantee Agreement, the Loan Agreement
and the Deposit Agreement, and upon certificates of the Managing Member of the
Company and officers of PWG. I have also examined such certificates of public
officials, corporate documents and records and other certificates, opinions and
instruments and have made such other
<PAGE> 41
investigations as I have deemed necessary in connection with the opinions
hereinafter set forth.
Based on the foregoing and upon such investigation as I have
deemed necessary, I give you my opinion as follows with respect to PWG:
1. PWG has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the State of Delaware;
2. Each of PWG's subsidiaries has been duly incorporated and is
validly existing as a corporation in good standing under the laws of the
state of its incorporation, and all of the outstanding shares of capital
stock of each such subsidiary has been duly authorized and validly issued
and are fully paid and non-assessable, and (except for directors'
qualifying shares, if any) are owned directly or indirectly by PWG;
3. Other than as set forth or contemplated in the Final
Prospectus, there are no legal or governmental proceedings pending or
threatened involving PWG or any of its subsidiaries of a character required
to be disclosed in the Registration Statement or Final Prospectus which are
not adequately disclosed in the Registration Statement or Final Prospectus;
4. The Underwriting Agreement and the Pricing Agreement with
respect to the Series A Interests have been duly authorized, executed and
delivered by PWG;
5. Each of the Loan Agreement, the Payment and Guarantee
Agreement and the Deposit Agreement has been duly authorized, executed and
delivered by PWG and, assuming the due authorization, execution and
delivery by the Company, constitutes a valid and legally binding agreement
of PWG enforceable in accordance with its terms, subject to (1) bankruptcy,
insolvency, reorganization, fraudulent transfer, moratorium and other
similar laws now or hereafter in effect relating to or affecting creditors'
rights and (2) general principles of equity (regardless of whether
considered in a proceeding at law or in equity);
6. On the date hereof, the performance by PWG of its obligations
under the Loan Agreement, the Payment and Guarantee Agreement, the Deposit
Agreement, the Underwriting Agreement, and the Pricing Agreement with
respect to the Series A Interests will not (1) conflict
2
<PAGE> 42
with or result in a breach or violation by PWG of any of the terms or
provisions of, or constitute a default by PWG under, any indenture,
mortgage, deed of trust,loan agreement or other similar agreement or
instrument known to such counsel to which PWG is a party or by which PWG is
bound or to which any of the property or assets of PWG is subject, except,
in all such cases, for such conflicts, breaches, violations or defaults as
would not have a material adverse effect on the financial condition of PWG
and its subsidiaries taken as a whole or would not have a material adverse
effect on the issuance or sale of the Series A Interests, and (2) result in
any violation of (A) the provisions of the Certificate of Incorporation or
By-Laws of PWG or (B) any statute of the United States or the State of
Delaware or any order, rule or regulation known to such counsel of any
court or governmental agency or body of the United States or the State of
Delaware having jurisdiction over PWG or any of its properties, except with
respect to clause (B) of this Paragraph (6), such violations as would not
have a material adverse effect on the financial condition of PWG and its
subsidiaries taken as a whole or would not have a material adverse effect
on the issuance or sale of the Series A Interests (and except that for
purposes of this paragraph (6) I express no opinion as to any violation of
any fraudulent transfer laws or other antifraud laws or as to any violation
of any federal or state securities laws or blue sky or insurance laws;
provided further, that insofar as performance by PWG of its obligations
under the Loan Agreement, the Payment and Guarantee Agreement, the Deposit
Agreement, the Underwriting Agreement and the Pricing Agreement relating to
the Series A Interests is concerned, I express no opinion as to bankruptcy,
insolvency, reorganization, moratorium and other similar laws now or
hereafter in effect relating to or affecting creditors' rights);
7. The documents incorporated by reference in the Prospectus as
amended or supplemented (other than the financial statements and related
notes, information as to reserves, the financial statement schedules and
the other financial and statistical data included therein or omitted
therefrom, as to which I express no opinion), when they became effective or
were filed with the Commission, as the case may be, complied as to form in
all material respects with the requirements of the Act or the Exchange Act,
as applicable, and the rules and regulations of the Commission thereunder;
and
3
<PAGE> 43
8. Under the laws of the State of Delaware and under the federal
laws of the United States, no consent, approval, authorization, order,
registration, filing or qualification of or with any court or governmental
agency or body is required for the issue and sale of the Series A Interests
being delivered on the date hereof in accordance with the Underwriting
Agreement or the Pricing Agreement relating to the Series A Interests,
except for such consents, approvals, authorizations, orders, registrations,
filings or qualifications as have been obtained under the Act or made with
the Secretary of State of Delaware and such consents, approvals,
authorizations, orders, registrations, filings or qualifications as may be
required under state securities or Blue Sky laws in connection with the
purchase and sale and distribution of the Series A Interests by the
Underwriters, and except those which, if not obtained, will not have a
material adverse effect on the financial condition of PWG and its
subsidiaries taken as a whole.
In addition, I know of no contract or other document (i) of a
character required to be filed as an exhibit to the Registration Statement or
to any of the documents incorporated by reference into the Final Prospectus as
amended or supplemented which is not so filed, (ii) required to be incorporated
by reference into the Final Prospectus as amended or supplemented which is not
so incorporated by reference or (iii) required to be described in the
Registration Statement or the Final Prospectus as amended or supplemented which
is not so described.
4
<PAGE> 44
EXHIBIT D
TO
UNDERWRITING AGREEMENT
----------------------
FORM OF
OPINION OF DAVIS POLK & WARDWELL
COUNSEL FOR THE UNDERWRITERS
[Closing Date]
PaineWebber Incorporated
as Representative of the
several Underwriters
c/o PaineWebber Incorporated
1285 Avenue of the Americas
New York, New York 10019
Ladies and Gentlemen:
We have acted as counsel for the several underwriters (the
"Underwriters") named in the underwriting agreement dated as of ,
1994, among you, PaineWebber Finance L.L.C. (the "Company") and Paine Webber
Group Inc. ("PWG") (the "Underwriting Agreement") in connection with the
purchase by the several Underwriters of ___ preferred limited liability company
interests (the "Preferred Interests" of the Company's % Exchangeable
Cumulative Preferred Limited Liability Company Interests, Series A (the "Series
A Interests") guaranteed by PWG (the "Guaranties") to the extent set forth in
the Final Prospectus relating to the Series A Interests. Capitalized terms not
otherwise defined herein are defined as set forth in the Underwriting
Agreement.
We have examined originals or copies, certified or otherwise
identified to our satisfaction, of such documents, corporate records,
certificates of public officials and other instruments as we have deemed
necessary or advisable for the purpose of rendering this opinion, including
those relating to the authorization, execution and delivery by the Company and
PWG of the Underwriting Agreement, the Payment and Guarantee Agreement, the
Loan Agreement and the Deposit Agreement, the authorization, issuance and sale
of the Series A Interests by the Company and the authorization and issuance by
PWG of the Guaranties.
We have participated in the preparation of the Company's and PWG's
registration statement on Form S-3
<PAGE> 45
(Registration No. ________) (other than the documents incorporated by reference
in the prospectus included therein (the "Incorporated Documents")) filed with
the Securities and Exchange Commission (the "Commission") pursuant to the
provisions of the Securities Act of 1933, as amended (the "Act"). Although we
did not participate in the preparation of the Incorporated Documents, we have
reviewed such documents. In addition, we have reviewed evidence that the
registration statement was declared effective under the Act on ,
1994. The registration statement (including the Incorporated Documents) as
amended to the date of the Underwriting Agreement is hereinafter referred to as
the "Registration Statement", and the prospectus included in the Registration
Statement as supplemented by the prospectus supplement specifically relating to
the Series A Interests is hereinafter referred to as the "Prospectus".
Based upon the foregoing, we are of the opinion that:
1. each of the Underwriting Agreement, the Payment and
Guarantee Agreement, the Loan Agreement and the Deposit Agreement has been
duly authorized, executed and delivered by the Company and PWG and is a
valid and binding agreement of the Company and PWG, except as rights to
indemnity and contribution thereunder may be limited by applicable law; and
2. the statements in the Prospectus Supplement under "Certain
Terms of the Series A Interests," "Description of the Loans," "Certain
Terms of the Depositary Shares" and "Certain Terms of the Guarantor
Preferred Stock," and in the Basic Prospectus under "Description of
Preferred Interests," "Description of Guarantee," "Description of the
Guarantor Preferred Stock" and "Plan of Distribution," insofar as such
statements constitute a summary of the legal matters, documents or
proceedings referred to therein, fairly present the information called for
with respect to such legal matters, documents and proceedings.
We have not ourselves checked the accuracy or completeness of, or
otherwise verified, the information furnished with respect to other matters in
the Registration Statement or the Prospectus. We have generally reviewed and
discussed with the representative of the Underwriters and with certain officers
and employees of, and counsel and independent public accountants for, the
Company and PWG the information furnished, whether or not subject to our check
or verification, we (i) are of the opinion that (except for
2
<PAGE> 46
the financial statements and related schedules included therein, as to which we
are not called upon to express an opinion) the Registration Statement and the
Prospectus comply as to form in all material respects with the Act and the
applicable rules and regulations thereunder and (ii) believe that (except for
the financial statements and related schedules included therein, as to which we
are not called upon to express a belief) the Registration Statement and
Prospectus on the date of the Underwriting Agreement did not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not misleading, and
that the Prospectus (except as aforesaid) does not contain any untrue statement
of a material fact or omit to state a material fact necessary in order to make
the statements therein, in light of the circumstances under which they were
made, not misleading.
We have examined the opinion dated the date hereof of the General
Counsel of PWG and the opinion dated the date hereof of Cravath, Swaine &
Moore, special counsel to the Company and PWG, delivered to the Underwriters
pursuant to the Underwriting Agreement, and we believe that such opinions are
responsive to the requirements thereof. We have also examined the letter dated
the date hereof of Ernst & Young relating to the financial statements
incorporated by reference in the Registration Statement and the other matters
referred to in such letter, delivered to the Underwriters pursuant to the
Underwriting Agreement. We have participated in discussions with your
representative and representatives of Ernst & Young relating to the form of
such letter, and we believe that it is substantially in the form agreed to.
We are members of the Bar of the State of New York and the
foregoing opinion is limited to the laws of the State of New York, the laws of
the State of Delaware and the Federal laws of the United States of America.
This opinion is rendered solely to you in connection with the
above matter. This opinion may not be relied upon by you for any other purpose
or relied upon by or furnished to any other person without our prior written
consent.
Very truly yours,
3
<PAGE> 1
EXHIBIT 3.1
CERTIFICATE OF FORMATION
OF
PAINEWEBBER FINANCE L.L.C.
This Certificate of Formation of PaineWebber Finance L.L.C.
(the "Company") is being duly executed and filed by Paine Webber Group Inc., as
an authorized person, to form a limited liability company under the Delaware
Limited Liability Company Act, 6 Del. C. Section 18-101, et seq.:
1. The name of the Company is "PaineWebber Finance L.L.C.".
2. The address of the Company's registered office in the
State of Delaware is in care of The Corporation Trust Company, Corporation
Trust Center, 1209 Orange Street, Wilmington, New Castle County, Delaware
19801. The name of the Company's agent for service of process in the State of
Delaware at such address is The Corporation Trust Company.
<PAGE> 2
2
3. The latest date on which the Company is to dissolve is
March 15, 2109.
IN WITNESS WHEREOF, the undersigned has caused this
Certificate of Formation to be duly executed as of the 15th day of March 1994.
PAINE WEBBER GROUP INC., as
an authorized person
by /s/Theodore A. Levine
------------------------------
Name: Theodore A. Levine
Title: Vice President-Secretary
<PAGE> 1
EXHIBIT 3.2
LIMITED LIABILITY COMPANY AGREEMENT dated as
of March 15, 1994 (this "Agreement"), by and among
PAINE WEBBER GROUP INC., a Delaware corporation
("PWG"), as a Common Member (as defined herein) and
in its capacity as the Managing Member (as defined
herein), and the other members (collectively with the
Managing Member, the "Members") from time to time of
PAINEWEBBER FINANCE L.L.C., a Delaware limited
liability company (the "Company").
Preliminary Statement
PWG and PaineWebber Finance Holdings Inc. desire to form the
Company under the Delaware Limited Liability Company Act (as amended from time
to time, the "Act") for the purpose of the Company issuing Membership Interests
(as defined herein), on the terms and conditions set forth herein, and lending
the net proceeds thereof to PWG or its subsidiaries in exchange for one or more
notes.
In that connection, the Members desire to enter into a written
agreement, in accordance with the Act, as to the affairs of the Company and the
conduct of its business.
Accordingly, in consideration of the mutual promises made
herein, the parties hereto hereby agree as follows:
ARTICLE I
Definitions
SECTION 1.01. Definitions. Capitalized terms used but not
otherwise defined herein shall have the meanings assigned to them in the Act.
ARTICLE II
General Provisions
SECTION 2.01. Company Name. The name of the Company is
"PaineWebber Finance L.L.C.". The name of the
<PAGE> 2
2
Company may be changed from time to time by the Managing Member in its sole
discretion.
SECTION 2.02. Registered Office; Registered Agent. (a) The
Company shall maintain a registered office in the State of Delaware at, and the
name and address of the Company's registered agent in the State of Delaware is,
The Corporation Trust Company, Corporation Trust Center, 1209 Orange Street,
Wilmington, New Castle County, Delaware 19801. Such office and such agent may
be changed from time to time by the Managing Member in its sole discretion.
(b) The business address of the Managing Member is 1285 Avenue
of the Americas, New York, New York 10019, or such other place as the Managing
Member shall determine in its sole discretion.
SECTION 2.03. Nature of Business Permitted; Powers. The
Company may carry on any lawful business, purpose or activity (with the
exception of the business of granting policies of insurance, or assuming
insurance risks or banking as defined in Section 126 of Title 8 of the
Delaware Code), including issuing Membership Interests, on the terms and
conditions set forth herein, and lending the net proceeds thereof to PWG or its
subsidiaries in exchange for one or more notes. The Company shall possess and
may exercise all the powers and privileges granted by the Act or by any other
law or by this Agreement, together with any powers incidental thereto, so far
as such powers and privileges are necessary or convenient to the conduct,
promotion or attainment of the business purposes or activities of the Company.
SECTION 2.04. Business Transactions of a Member with the
Company. In accordance with Section 18-107 of the Act, a Member (including the
Managing Member) may lend money to, borrow money from, act as surety, guarantor
or endorser for, guarantee or assume one or more specific obligations of,
provide collateral for, and transact other business with, the Company and,
subject to applicable law, shall have the same rights and obligations with
respect to any such matter as a person who is not a Member.
SECTION 2.05. Fiscal Year. The fiscal year of the Company
(the "Fiscal Year") for financial statement and Federal income tax purposes
shall be the same and shall, except as otherwise required in accordance with
the Internal
<PAGE> 3
3
Revenue Code of 1986, as amended (the "Code"), end on December 31 of each year.
SECTION 2.06. Certificate of Information. The Managing
Member is hereby designated as an "authorized person", within the meaning of
the Act, to execute, deliver and file the Certificate of Formation of the
Company (and any amendments, restatements, corrections or cancelation thereof).
As soon as practicable following or contemporaneously with the execution of
this Agreement, the Managing Member shall file the Certificate of Formation of
the Company with the office of the Secretary of State of the State of Delaware.
ARTICLE III
Members
SECTION 3.01. Admission of Members. (a) In accordance with
the Act, (i) a person shall be admitted as a Member, or shall become an
assignee of a Membership Interest or other rights or powers of a Member to the
extent assigned, and shall become bound by the terms of this Agreement, (A) if
such person (or a representative authorized by such person orally, in writing
or by other action such as payment for a Membership Interest) executes this
Agreement or any other writing (including, without limitation, a subscription
agreement) evidencing the intent of such person to become a Member or assignee,
as the case may be, or (B) without execution of this Agreement, if such person
acquires a Membership Interest from the Company or by assignment (which shall
be the only condition for becoming a Member or assignee) and requests (which
request shall be deemed to have been made upon such acquisition or assignment)
that the records of the Company reflect such admission or assignment, and (ii)
this Agreement shall not be unenforceable by reason of its not having been
signed by a person being admitted as a Member or becoming an assignee as
provided in the preceding clause (i) or by reason of its having been signed by
a representative as provided in the Act.
The Company shall be promptly notified by any assignor of a
Membership Interest of any assignment thereof. The Company will reflect
admission of a Member in the records of the Company as soon as is reasonably
practicable after (i) in the case of a person acquiring a Membership
<PAGE> 4
4
Interest directly from the Company, the time of payment therefor, and (ii) in
the case of an assignment, notification thereof (the Company being entitled to
assume, in the absence of actual knowledge to the contrary, that proper payment
for a Membership Interest has been made by an assignee thereof).
(b) Whether acquiring a Membership Interest directly from the
Company or by assignment, a person shall be admitted as a Member upon the
acquisition or assignment, as the case may be, of such Membership Interest and
the reflection of such person's admission as a Member in the records of the
Company. The consent of any Member (including the Managing Member) shall not
be required for the admission of a Member.
(c) Notwithstanding the foregoing, the Company will not
register Membership Interests in the name of, or record the transfer or
assignment of Membership Interests to, or pay any interim or other distribution
on or with respect to Membership Interests to, any holder, if such holder, or
to the extent any person for whom such holder is acting as a nominee, (i) is
known by the Company or its transfer agent to have an address of record outside
the United States or (ii) is known by the Company or its transfer agent to be
other than (a) a citizen or resident of the United States, (b) a corporation,
partnership or other entity organized under the laws of the United States or
any of its states or the District of Columbia or (c) an estate or trust that is
subject to United States Federal income tax on its worldwide income without
regard to source (any such person or entity being a "non-U.S. Person"). The
foregoing transfer restrictions shall not preclude the settlement of any
transaction in Membership Interests entered into through the facilities of the
New York Stock Exchange or other national securities exchange or trading
market.
SECTION 3.02. Classes and Voting. (a) The Membership
Interests of the Company shall be divided into two classes: (i) series
preferred Membership Interests ("Preferred Interests") and (ii) common
Membership Interests ("Common Interests"). Members holding Preferred Interests
shall be referred to herein as "Preferred Members" and Members holding Common
Interests shall be referred to herein as "Common Members". Common Interests
shall be non-assignable and non-transferable, and may only be issued to and
held by the Managing Member and its affiliates. Any purported assignment or
transfer of Common Interests shall
<PAGE> 5
5
be void and ineffective. Preferred Interests shall be freely assignable and
transferable, subject to the provisions of Section 3.01(c).
(b) The Preferred Interests may be issued from time to time
in one or more series, the Membership Interests of each series to have such
relative rights, powers and duties as may from time to time be established in a
written action or actions ("Actions") of the Managing Member providing for the
issue of such series as hereinafter provided. Authority is hereby expressly
granted to the Managing Member, subject to the provisions of this Section 3.02,
to authorize the issue of one or more series of Preferred Interests, and with
respect to each such series to establish by an Action or Actions providing for
the issue of such series:
(i) the maximum number of Preferred Interests to constitute
such series and the distinctive designation thereof;
(ii) whether the Preferred Interests of such series shall
have voting rights, in addition to any voting rights provided by law,
and, if so, the terms of such voting rights;
(iii) the periodic distribution rate, if any, on the
Preferred Interests of such series, the conditions and dates upon
which such distributions shall be payable, the preference or relation
which such distributions shall bear to the periodic distributions
payable on any other class or classes of Membership Interests or on
any other series of Preferred Interests, and whether such
distributions shall be cumulative or noncumulative;
(iv) whether the Preferred Interests of such series shall be
subject to redemption by the Company, and, if made subject to
redemption, the times, prices and other terms and conditions of such
redemption;
(v) the rights of the holders of Preferred Interests of such
series upon the liquidation, dissolution or winding up of the Company;
(vi) whether or not the Preferred Interests of such series
shall be subject to the operation of a retirement or sinking fund,
and, if so, the extent to
<PAGE> 6
6
and manner in which any such retirement or sinking fund shall be
applied to the purchase or redemption of the Preferred Interests of
such series for retirement or to other company purposes and the terms
and provisions relative to the operation thereof;
(vii) whether or not the Preferred Interests of such series
shall be convertible into, or exchangeable for, Membership Interests
of any other class or classes, or of any other series of Preferred
Interests, or securities of any other kind, including securities
issued by the Managing Member or any of its affiliates, and if so
convertible or exchangeable, the price or prices or the rate or rates
of conversion or exchange and the method, if any, of adjusting the
same;
(viii) the limitations and restrictions, if any, to be effective
while any Preferred Interests of such series are outstanding upon the
payment of periodic distributions or other distributions on, and upon
the purchase, redemption or other acquisition by the Company of,
Common Interests or any other class or classes of Membership Interests
or any other series of Preferred Interests ranking junior to the
Preferred Interests of such series either as to periodic distributions
or distributions of assets upon liquidation;
(ix) the conditions or restrictions, if any, upon the
creation of indebtedness of the Company or upon the issue of any
additional Membership Interests (including additional Preferred
Interests of such series or of any other series) ranking on a parity
with or prior to the Preferred Interests of such series as to periodic
distributions or distributions of assets upon liquidation; and
(x) any other relative rights, powers and duties as shall not
be inconsistent with this Section 3.02.
In connection with the foregoing and without limiting the
generality thereof, the Managing Member is hereby expressly authorized to take
any action, including the amendment of this Agreement, without the vote or
approval of any Member, including any action to create under the provisions of
this Agreement a class (or series of a class) or group of Membership Interests
that was not previously outstanding. Without the vote or approval of any
<PAGE> 7
7
Member, the Managing Member may execute, swear to, acknowledge, deliver, file
and record whatever documents may be required in connection with the issue from
time to time of Preferred Interests in one or more series as shall be
necessary, convenient or desirable to reflect the issue of such series. The
Managing Member shall do all things it deems to be appropriate or necessary to
comply with the Act and is authorized and directed to do all things it deems to
be necessary or permissible in connection with any future issuance, including
compliance with any statute, rule, regulation or guideline of any federal,
state or other governmental agency or any securities exchange.
Any Action or Actions of the Managing Member pursuant to the
provisions of this paragraph (b) shall be deemed an amendment and supplement to
and part of this Agreement.
(c) All Preferred Interests of any one series shall be
identical with each other in all respects, except that Preferred Interests of
any one series issued at different times may differ as to the dates from which
periodic distributions, if any, thereon shall be cumulative; and all series of
Preferred Interests shall rank equally and be identical in all respects, except
as permitted by the provisions of paragraph (b) of this Section 3.02; and all
Preferred Interests shall rank senior to the Common Interests both as to
periodic distributions and distributions of assets upon liquidation.
(d) In the event of any liquidation, dissolution or winding
up of the Company, before any payment or distribution of the assets of the
Company shall be made to or set apart for the holders of any class or classes
of Membership Interests of the Company ranking junior to the Preferred
Interests upon liquidation, the holders of the Preferred Interests shall be
entitled to receive payment of the amount fixed in the Action or Actions
adopted by the Managing Member providing for the issue of such series, plus (if
periodic distributions on Preferred Interests of such series shall be
cumulative) an amount equal to all periodic distributions (whether or not
earned or declared) accumulated to the date of final distribution to such
holders; but they shall be entitled to no further payment. If, upon any such
liquidation, dissolution or winding up of the Company, the assets of the
Company or proceeds thereof, distributable among the Preferred Interests shall
be insufficient to pay in full the preferential amounts
<PAGE> 8
8
aforesaid, then such assets, or the proceeds thereof, shall be distributed
among the Preferred Members ratably in accordance with the respective amounts
which would be payable on their respective Preferred Interests if all amounts
payable thereon were paid in full (taking into account the relative rank of the
respective series of Preferred Interests). For the purposes of this paragraph
(d), the voluntary sale, conveyance, exchange or transfer (for cash, shares of
stock, securities, or other consideration) of all or substantially all the
property or assets of the Company shall be deemed a voluntary liquidation,
dissolution or winding up of the Company, but a consolidation or merger of the
Company with one or more other business entities shall not be deemed to be a
liquidation, dissolution or winding up, voluntary or involuntary.
(e) Except as shall be otherwise established in this
Agreement or in any Action or Actions of the Managing Member providing for the
issue of any series of Preferred Interests and except as otherwise required by
the Act, the Preferred Members shall have no right or power to vote on any
question or matter or in any proceeding or to be represented at, or to receive
notice of, any meeting of Members.
(f) All Common Interests shall be identical with each other
in every respect. The Common Interests shall entitle the holders thereof to
the voting rights set forth in Section 4.03.
(g) The Common Interests are subject to all the rights,
powers and duties of the Preferred Interests as are established herein and as
shall be established in any Action or Actions of the Managing Member pursuant
to authority expressly granted to and vested in it by the provisions of this
Section 3.02.
(h) The Company may merge with, or consolidate into, another
Delaware limited liability company or other business entity (as defined in
Section 18-209(a) of the Act) upon the approval of the Managing Member. In
accordance with Section 18-209 of the Act (including Section 18-209(f)),
notwithstanding anything to the contrary contained in this Agreement, an
agreement of merger or consolidation approved by the Managing Member may (a)
effect any amendment to this Agreement or (b) effect the adoption of a new
limited liability company agreement for the Company if it is
<PAGE> 9
9
the surviving or resulting limited liability company in the merger or
consolidation. Any amendment to this Agreement or adoption of a new limited
liability company agreement made pursuant to the foregoing sentence shall be
effective at the effective time or date of the merger or consolidation. The
provisions of this Section 3.02(h) shall not be construed to limit the
accomplishment of a merger or consolidation or of any of the matters referred
to herein by any other means otherwise permitted by law.
SECTION 3.03. Liability of Members. (a) Except as otherwise
provided in the Act and in Section 4.04, the debts, obligations and liabilities
of the Company, whether arising in contract, tort or otherwise, shall be solely
the debts, obligations and liabilities of the Company; and no Member, other
than the Managing Member as provided in Section 4.04, shall be obligated
personally for any such debt, obligation or liability of the Company solely by
reason of being a Member.
(b) Except as otherwise expressly required by law, a Member,
other than the Managing Member as provided in Section 4.04, shall not have any
liability in excess of (i) the amount of its capital contribution to the
Company, (ii) its share of any assets and undistributed profits of the Company,
(iii) its obligation to make other payments, if any, expressly provided for in
this Agreement and (iv) the amount of any distributions wrongfully distributed
to it.
SECTION 3.04. Events of Cessation of Membership.
Notwithstanding the otherwise applicable events set forth in Section 18-304 of
the Act, a person shall cease to be a Member only upon the lawful assignment of
all its Membership Interests (including upon any redemption or other repurchase
by the Company or the Managing Member), and the compliance, in cases other than
any such redemption or repurchase, of the assignee with the provisions of
Section 3.01.
SECTION 3.05. Access to and Confidentiality of Information;
Records. (a) Each Member shall have the right, subject to such reasonable
standards (including standards governing time, location and expense) as may be
established by the Managing Member from time to time, to obtain from the
Company from time to time upon reasonable demand for any purpose reasonably
related to the Member's interest as a Member of the Company, the documents and
other information described in Section 18-305(a) of the Act.
<PAGE> 10
10
(b) The Managing Member shall have the right to keep
confidential from the Members (or any of them), for such period of time as the
Managing Member deems reasonable, any information which the Managing Member
reasonably believes to be in the nature of trade secrets or other information
the disclosure of which the Managing Member in good faith believes is not in
the best interest of the Company or could damage the Company or its business or
which the Company is required by law or by agreement with a third party to keep
confidential.
(c) Any demand by a Member pursuant to this Section 3.05 shall
be in writing and shall state the purpose of such demand.
SECTION 3.06. Meetings of Members. (a) Meetings of the
Members of any class (or series thereof) or of all classes (or series thereof)
of the Company's Membership Interests may be called at any time by the Managing
Member or as provided in any Action establishing a series of Preferred
Interests. Except to the extent otherwise provided in any such Action, the
provisions of this Section 3.06 shall apply to meetings of Members.
(b) The Managing Member may fix a date not more than 60 nor
less than 10 days preceding the date of any meeting of Members, or preceding
the last day on which the consent of Members may be effectively expressed for
any purpose without a meeting, as a record date for the determination of the
Members entitled (i) to notice of, and to vote at, such meeting and any
adjournment thereof or (ii) to express such consent, and, in either such case,
such Members, and only such Members as shall be Members of record on the date
so fixed, shall be entitled to notice of, and to vote at, such meeting and any
adjournment thereof, or to express such consent, as the case may be,
notwithstanding any transfer of any Membership Interest on the books of the
Company after any such record date fixed as aforesaid.
(c) Except as otherwise provided by law, the holders of a
majority of the Membership Interests entitled to vote at the meeting shall
constitute a quorum at all meetings of the Members. If a class or series of a
class of Membership Interests is entitled to vote as such a class or series at
a meeting of Members, a majority of the Membership Interests of each such class
or series entitled to vote at such meeting shall constitute a quorum at such
meeting. In the absence of a quorum, the holders of a majority of all
<PAGE> 11
11
such Membership Interests present in person or by proxy may adjourn any
meeting, from time to time, until a quorum shall be present. At any such
adjourned meeting at which a quorum shall be present, any business may be
transacted which might have been transacted at the meeting as originally
called.
(d) Except as otherwise provided by law or by this Agreement,
every Member who is entitled to vote shall at every meeting of the Members be
entitled to one vote for each Membership Interest held by such Member on the
record date. Except as otherwise provided by law, no vote on any question upon
which a vote of the Members may be taken need be by ballot unless the Managing
Member shall determine that it shall be by ballot or the holders of a majority
of the Membership Interests present in person or by proxy and entitled to
participate in such vote shall so demand. In a vote by ballot each ballot
shall state the number of Membership Interests voted and the name of the Member
or proxy voting. Unless otherwise provided by law or by this Agreement
(including any Action), all questions shall be decided by the vote of the
holders of a majority of the Membership Interests present in person or by proxy
at the meeting and entitled to vote on the question.
(e) Each Member entitled to vote at a meeting of Members or
to express consent to Company action in writing without a meeting may authorize
another person or persons to act for him by proxy. A proxy acting for any
Member shall be duly appointed by an instrument in writing subscribed by such
Member.
(f) Any action required to or which may be taken at a meeting
of Members may be taken without a meeting, without prior notice and without a
vote, if a consent or consents in writing, setting forth the action so taken,
shall be signed by the holders of outstanding Membership Interests having not
less than the minimum number of votes that would be necessary to authorize or
take such action at a meeting at which all Membership Interests entitled to
vote thereon were present and voted and shall be delivered to the Company by
delivery to the Managing Member (who shall have custody of the books in which
proceedings of meetings of Members are recorded).
(g) The Managing Member, in its sole discretion, shall
establish all other provisions relating to meetings of Members, including
notice of the time, place or purpose of any meeting at which any matter is to
be voted on by any
<PAGE> 12
12
Members, waiver of any such notice, action by consent without a meeting, the
establishment of a record date, quorum requirements, voting in person or by
proxy or any other matter with respect to the exercise of any such right to
vote, in accordance with Section 18-302(c) of the Act.
ARTICLE IV
Management
SECTION 4.01. Management of the Company. The business and
affairs of the Company shall be managed, and all actions required under this
Agreement shall be determined, solely and exclusively by PWG, in its capacity
as a Common Member (in such capacity, the "Managing Member"), which shall have
all rights and powers on behalf and in the name of the Company to perform all
acts necessary and desirable to the objects and purposes of the Company. There
shall not be a "manager" (within the meaning of the Act) of the Company. The
Managing Member, to the extent of its rights and powers set forth in this
Agreement, is an agent of the Company for the purpose of the Company's
business, and the actions of the Managing Member taken in accordance with such
rights and powers shall bind the Company. Without limiting the generality of
the foregoing, the Managing Member shall have the power to:
(a) authorize and engage in transactions and dealings on
behalf of the Company, including transactions and dealings with any
Member or any affiliate of any Member (including the Managing Member);
(b) call meetings of Members or any class or series thereof;
(c) issue Membership Interests, including additional Common
Interests to the Managing Member and its affiliates;
(d) pay all expenses incurred in forming the Company;
(e) borrow money on behalf of the Company, issue or guarantee
evidences of indebtedness and obtain lines of credit, loan commitments
and letters of credit for the account of the Company and secure the
same by
<PAGE> 13
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mortgage, pledge or other lien on any assets of the Company;
(f) lend money, with or without security, to any person,
including any Member or any affiliate of any Member (including the
Managing Member);
(g) determine and make distributions, in cash or otherwise, on
Membership Interests, in accordance with the provisions of this
Agreement and of the Act;
(h) establish or set aside in its sole discretion any reserve
or reserves for contingencies and for any other proper Company
purpose;
(i) redeem or repurchase on behalf of the Company Membership
Interests which may be so redeemed or repurchased;
(j) appoint (and dismiss from appointment) officers, attorneys
and agents on behalf of the Company, and employ (and dismiss from
employment) any and all persons providing legal, accounting or
financial services to the Company, or such other employees or agents
as the Managing Member deems necessary or desirable for the management
and operation of the Company, including, without limitation, any
Member or any affiliate of any Member (including the Managing Member);
(k) incur and pay all expenses and obligations incident to the
operation and management of the Company, including, without
limitation, the services referred to in the preceding paragraph,
taxes, interest, travel, rent, insurance, supplies, salaries and wages
of the Company's employees and agents;
(l) acquire and enter into any contract of insurance necessary
or desirable for the protection or conservation of the Company and its
assets or otherwise in the interest of the Company as the Managing
Member shall determine;
(m) open accounts and deposit, maintain and withdraw funds in
the name of the Company in banks, savings and loan associations,
brokerage firms or other financial institutions;
<PAGE> 14
14
(n) effect a dissolution of the Company and to act as
liquidator or the person winding up the Company's affairs, all in
accordance with the provisions of this Agreement and of the Act;
(o) bring and defend (or settle) on behalf of the Company
actions and proceedings at law or equity before any court or
governmental, administrative or other regulatory agency, body or
commission or any arbitrator or otherwise;
(p) prepare and cause to be prepared reports, statements and
other relevant information for distribution to Members as may be
required or determined to be appropriate by the Managing Member from
time to time;
(q) prepare and file all necessary returns and statements and
pay all taxes, assessments and other impositions applicable to the
assets of the Company; and
(r) execute all other documents or instruments, perform all
duties and powers and do all things for and on behalf of the Company
in all matters necessary or desirable or incidental to the foregoing.
Notwithstanding any other provisions of this Agreement or of
any Action, the Company and the Managing Member on behalf of the Company may
enter into and execute, deliver, acknowledge and perform, as the case may be,
any registration statement under the Securities Act of 1933, any guarantee
agreements and loan agreements in connection with the lending to PWG or its
subsidiaries of the proceeds of the issuance of Membership Interests by the
Company, and any other contracts or agreements contemplated thereby, or
specifically described therein, all without any further act, approval or vote
of the Members. Without limiting the generality of the foregoing, the Managing
Member is hereby authorized and directed to operate the Company in such a way
that the Company would not be deemed to be an "investment company" for purposes
of the Investment Company Act of 1940, as amended. In this connection, the
Managing Member is authorized to take any action which it determines in its
sole discretion to be necessary or desirable to cause the Company to be so
operated.
<PAGE> 15
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SECTION 4.02. Contributions by the Managing Member. The
Managing Member, in its capacity as a Common Member, shall make such
contributions to the Company, either in connection with the purchase of Common
Interests or otherwise, so as to cause its Common Interests to be entitled in
the aggregate to at least 21% of all interest in the capital, income, gain,
loss, deduction, credit and distributions of the Company. In addition, it is
understood that the obligations undertaken by the Managing Member under Section
4.04 shall be considered as additional contributions to the Company of the
Managing Member.
SECTION 4.03. Classes and Voting. The Common Interests shall
entitle the holders thereof to one vote for each such Common Interest upon all
matters upon which Common Members have the right to vote regardless of the
voting rights of any other Member.
SECTION 4.04. Liability of Managing Member. The Managing
Member, in its capacity as a Common Member, shall be liable to creditors of the
Company (hereinafter referred to individually as a "Third Party Creditor", and
collectively as the "Third Party Creditors") for the debts, obligations and
liabilities of the Company, whether arising in contract, tort or otherwise, and
shall be obligated personally for all such debts, obligations and liabilities
of the Company, in the same way and to the same extent as if the Company were a
limited partnership under the Delaware Revised Uniform Limited Partnership Act
of which the Managing Member were a general partner. In furtherance but not in
limitation of the generality of the foregoing, the Managing Member (a) shall be
liable for any and all debts, obligations and other liabilities of the Company,
whether arising under contract or by tort, statute, operation of law or
otherwise, any and all of which shall be enforceable directly and absolutely
against the Managing Member by each Third Party Creditor and (b) shall be
deemed to and does assume, as a surety and not as a guarantor, each debt,
obligation or other liability of the Company to a Third Party Creditor.
SECTION 4.05. Books and Records; Accounting. (a) The
Managing Member shall keep or cause to be kept at the address of the Managing
Member (or at such other place as the Managing Member shall determine in its
sole discretion) true and full books and records regarding the status of the
business and financial condition of the Company.
<PAGE> 16
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(b) The Company's books of account shall be kept on the same
basis followed by the Company and the Managing Member for Federal income tax
purposes except to the extent otherwise determined by the Managing Member.
SECTION 4.06. Company Tax Returns. (a) The Managing Member
shall cause to be prepared and timely filed all tax returns required to be
filed for the Company. The Managing Member may, in its sole discretion, make
or refrain from making any Federal, state or local income or other tax
elections for the Company that it deems necessary or advisable; provided, that
the Company shall not make an election pursuant to Code Section 754.
(b) The Managing Member is hereby designated as the Company's
"Tax Matters Partner" under Code Section 6231(a)(7) and shall have all the
powers and responsibilities of such position as provided in the Code. The
Managing Member is specifically directed and authorized to take whatever steps
the Managing Member, in its sole discretion, deems necessary or desirable to
perfect such designation, including filing any forms or documents with the
Internal Revenue Service and taking such other action as may from time to time
be required under the Regulations issued under the Code. Expenses incurred by
the Tax Matters Partner, in its capacity as such, will be borne by the Company.
SECTION 4.07. Reliance by Third Parties. Persons dealing
with the Company are entitled to rely conclusively upon the power and authority
of the Managing Member herein set forth.
SECTION 4.08. Expenses. Except as otherwise provided in this
Agreement, the Company shall be responsible for and shall pay all expenses out
of funds of the Company determined by the Managing Member to be available for
such purpose, provided that such expenses are those of the Company or are
otherwise incurred by the Managing Member in connection with this Agreement,
including, without limitation:
(a) all expenses incurred by the Managing Member or its
affiliates in organizing the Company;
(b) all expenses related to the business of the Company and
all routine administrative expenses of the Company, including the
maintenance of books and records
<PAGE> 17
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of the Company, the preparation and dispatch to the Members of checks,
financial reports, tax returns and notices required pursuant to this
Agreement or in connection with the holding of any meetings of the
Members;
(c) all expenses incurred in connection with any indebtedness
or guarantees of the Company or any proposed or definitive credit
facility or other credit arrangement;
(d) all expenses incurred in connection with any litigation or
arbitration involving the Company (including the cost of any
investigation and preparation) and the amount of any judgment or
settlement paid in connection therewith (other than expenses incurred
by the Managing Member in connection with any litigation or
arbitration brought by or on behalf of any Member against the Managing
Member);
(e) all expenses for indemnity or contribution payable by the
Company to any Person;
(f) all expenses incurred in connection with the collection of
amounts due to the Company from any person;
(g) all expenses incurred in connection with the preparation
of amendments to this Agreement; and
(h) all expenses incurred in connection with the liquidation,
dissolution and winding up of the Company.
SECTION 4.09. Duties. (a) The Managing Member, or any
affiliate thereof, may engage in or possess an interest in any other business
ventures of any nature or description, independently or with others, similar or
dissimilar to the business of the Company, and neither the Company nor any of
the Members shall have any rights by virtue of this Agreement in and to such
independent ventures or the income or profits derived therefrom, and the
pursuit of any such venture, even if competitive with the business of the
Company, shall not be deemed wrongful or improper. The Managing Member, and
affiliates thereof, shall not be obligated to present any particular investment
opportunity to the Company even if such opportunity is of a character which, if
presented to the Company, could be taken by the Company, and the Managing
Member, or any affiliate thereof,
<PAGE> 18
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shall have the right to take for its own account (individually or as a
stockholder, partner or fiduciary or otherwise) or to recommend to others any
such particular investment opportunity.
(b) Whenever in this Agreement a person is permitted or
required to make a decision (i) in its "sole discretion", "sole and absolute
discretion" or "discretion" or under a grant of similar authority or latitude,
the person shall be entitled to consider only such interests and factors as it
desires, including its own interests, or (ii) in its "good faith" or under
another express standard, the person shall act under such express standard and
shall not be subject to any other or different standards imposed by this
Agreement or any other agreement contemplated herein or by relevant provisions
of law or in equity or otherwise.
(c) To the extent that, at law or in equity, a Covered Person
(as defined herein) has duties (including fiduciary duties) and liabilities
relating thereto to the Company or to the Members, the Covered Person acting in
connection with the Company's business or affairs shall not be liable to the
Company or to any Members for its good faith reliance on the provisions of this
Agreement. The provisions of this Agreement, to the extent that they restrict
the duties and liabilities of a Covered Person otherwise existing at law or in
equity, are agreed by the Members to replace such other duties and liabilities
of such Covered Person.
ARTICLE V
Finance
SECTION 5.01. Form of Contribution. The contribution of a
Member to the Company may, as determined by the Managing Member in its sole
discretion, be in cash, property or services rendered, or a promissory note or
other obligation to contribute cash or property or to perform services.
SECTION 5.02. Allocation of Profits and Losses. The profits
and losses of the Company shall, subject to the applicable terms of Section
3.02 and of any Action establishing a series of Preferred Interests, be
allocated entirely to the Common Members.
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SECTION 5.03. Allocation of Distributions. The distributions
of the Company shall, subject to the applicable terms of Section 3.02 and of
any Action establishing a series of Preferred Interests, be allocated entirely
to the Common Members.
ARTICLE VI
Distributions and Resignations
SECTION 6.01. Interim Distribution. Preferred Members shall
receive periodic distributions, if any, in accordance with the applicable terms
of Section 3.02 of this Agreement and of any Action establishing a series of
Preferred Interests, and Common Members shall receive periodic distributions,
subject to the applicable terms of Section 3.02 of this Agreement and of any
Action establishing a series of Preferred Interests, and to the provisions of
the Act, as and when declared by the Managing Member, in its sole discretion.
SECTION 6.02. Resignation of the Managing Member. The
Managing Member and the other Common Members shall have no right to resign from
the Company prior to the dissolution and winding up of the Company.
SECTION 6.03. Resignation of Member. A Preferred Member may
not resign from the Company prior to the dissolution and winding up of the
Company except upon the assignment of its Membership Interests (including any
redemption or other repurchase by the Company or the Managing Member) as
contemplated by Section 3.04 of this Agreement.
SECTION 6.04. Distribution Upon Resignation. Upon
resignation any resigning Member shall not be entitled to receive any
distribution and shall not otherwise be entitled to receive the fair value of
its Membership Interest.
SECTION 6.05. Distribution in Kind. Notwithstanding the
provisions of Section 18-605 of the Act, a Member, in the sole discretion of
the Managing Member and in accordance with the applicable terms of Section 3.02
and of any Action establishing a series of Preferred Interests, may receive
distributions from the Company in any form other than cash, and may be
compelled to accept a distribution of
<PAGE> 20
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any asset in kind from the Company such that the percentage of the asset
distributed to him exceeds a percentage of that asset which is equal to the
percentage in which the Member shares in distributions from the Company.
SECTION 6.06. Record Dates. The Managing Member in its sole
discretion, and in accordance with the applicable terms of any Action
establishing a series of Preferred Interests, shall have the right to establish
a record date with respect to allocations and distributions by the Company.
ARTICLE VII
Assignment of Membership Interests
SECTION 7.01. Assignment of Membership Interests. Common
Interests shall be non-assignable and non-transferable, and may only be issued
to and held by the Managing Member and its affiliates. Any purported
assignment or transfer of Common Interests shall be void. Preferred Interests
shall be freely assignable and transferable, subject to the provisions of
Section 3.01(c).
SECTION 7.02. Right of Assignee to Become a Member. An
assignee shall become a Member as contemplated in Section 3.01.
SECTION 7.03. Certificates. Membership Interests in the
Company may, in the Managing Member's sole discretion, be evidenced by a
certificate of limited liability company interest (including, as appropriate an
L.L.C. Certificate (as defined herein)) issued by the Company.
ARTICLE VIII
Dissolution
SECTION 8.01. Duration and Dissolution. The Company shall be
dissolved and its affairs shall be wound up upon the first to occur of the
following:
(a) March 15, 2109;
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(b) the Managing Member makes an assignment for the benefit
of creditors, files a voluntary petition in bankruptcy, is adjudged
bankrupt or insolvent, or has entered against it an order for relief,
in any bankruptcy or insolvency proceeding, files a petition or answer
seeking for itself any reorganization, arrangement, composition,
readjustment, liquidation, dissolution or other similar relief under
any statute, law or regulation, files an answer or other pleading
admitting or failing to contest the material allegations of a petition
filed against it in any proceeding of this nature, seeks, consents or
acquiesces in the appointment of a trustee, receiver or liquidator of
the Managing Member or any substantial part of its properties, or 120
days after the commencement of any proceeding against the Managing
Member seeking reorganization, arrangement, composition, readjustment,
liquidation, dissolution or similar relief under any statute, law or
regulation, if the proceeding has not been dismissed, or if within 90
days after the appointment without its consent or acquiescence of a
trustee, receiver or liquidator of the Managing Member or of all or
any substantial part of its properties, the appointment is not vacated
or stayed, or within 90 days after the expiration of any such stay,
the appointment is not vacated;
(c) a decision made in writing by the Managing Member, in its
sole discretion, to dissolve the Company;
(d) the written consent of all Members; and
(e) the entry of a decree of judicial dissolution under
Section 18-802 of the Act.
Other than as set forth in Section 8.01(b) above, the death,
retirement, resignation, expulsion, bankruptcy or dissolution of a Member or
the occurrence of any other event which terminates the continued membership of
a Member in the Company shall not cause the Company to be dissolved and its
affairs wound up so long as there are at all times at least two Members of the
Company, and, in any such event, the business and affairs of the Company shall
be continued in accordance with the Act without any action and without the
consent of any Member.
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SECTION 8.02. Winding Up. Subject to the provisions of the
Act, the Managing Member shall have the exclusive right to wind up the
Company's affairs in accordance with Section 18-803 of the Act (and shall
promptly do so upon dissolution of the Company in accordance with Section
8.01), and shall also have the exclusive right to act as or appoint a
liquidating trustee in connection therewith.
SECTION 8.03. Distribution of Assets. Upon the winding up of
the Company, the assets shall be distributed in the manner provided in Section
18-804 of the Act, subject to the applicable provisions of Section 3.02 and of
any Action establishing a series of Preferred Interests.
ARTICLE IX
Reports
SECTION 9.01. Form K-1. After the end of each fiscal year,
the Managing Member shall cause to be prepared and transmitted, as promptly as
possible, and in any event within 90 days of the close of the fiscal year, a
federal income tax form K-1 for each Member.
SECTION 9.02. Certain Information from Nominees of Members.
Any person who holds Preferred Interests as a nominee for another person is
required to furnish to the Company: (a) the name, address, and taxpayer
identification number of the beneficial owner (which may be a Preferred
Security Owner (as defined herein)) and the nominee (which may be a Clearing
Agency (as defined herein)); (b) notice of whether the beneficial owner is (i)
a person that is not a United States person, (ii) a foreign government, an
international organization, or any wholly owned agency or instrumentality of
either of the foregoing, or (iii) a tax- exempt entity; (c) the amount and
description of Preferred Interests held, acquired, or transferred for the
beneficial owner; and (d) certain information including the dates of
acquisitions and transfers, means of acquisitions and transfers, and
acquisition cost for purchases, as well as the amount of net proceeds from
sales. Brokers and financial institutions are required to furnish additional
information, including certain information on Preferred Interests that they
acquire, hold, or transfer for their own account. A penalty of $50 per failure
(up to a maximum of
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$100,000 per calendar year) is imposed by the Code for failure to report such
information to the Company.
ARTICLE X
Exculpation and Indemnification
SECTION 10.01. Exculpation. Notwithstanding any other
provisions of this Agreement, whether express or implied, or obligation or duty
at law or in equity, neither the Managing Member, nor any of its respective
officers, directors, stockholders, partners, employees, representatives or
agents nor any officer, employee, representative or agent of the Company or any
of its affiliates (individually, a "Covered Person" and collectively, the
"Covered Persons") shall be liable to the Company or any Member for any act or
omission (in relation to the Company, this Agreement, any related document or
any transaction or investment contemplated hereby or thereby) taken or omitted
in good faith by a Covered Person and in the reasonable belief that such act or
omission is in or is not contrary to the best interests of the Company and is
within the scope of authority granted to such Covered Person by this Agreement,
provided that such act or omission does not constitute fraud, willful
misconduct, bad faith or gross negligence.
SECTION 10.02. Indemnification. To the fullest extent
permitted by law, the Company shall indemnify and hold harmless each Covered
Person from and against any and all losses, claims, demands, liabilities,
expenses, judgments, fines, settlements and other amounts arising from any and
all claims, demands, actions, suits or proceedings, civil, criminal,
administrative or investigative, in which the Covered Person may be involved,
or threatened to be involved, as a party or otherwise, by reason of its
management of the affairs of the Company or which relates to or arises out of
the Company or its property, business or affairs. A Covered Person shall not
be entitled to indemnification under this Section 10.02 with respect to any
claim, issue or matter in which it has engaged in fraud, willful misconduct,
bad faith or gross negligence. To the fullest extent permitted by law,
expenses (including legal fees) incurred by a Covered Person in defending any
claim, demand, action, suit or proceeding may, from time to time, be advanced
by the Company prior to the final disposition of such claim, demand, action,
suit or proceeding upon receipt by the Company of an undertaking by or on
behalf of the
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Covered Person to repay such amount if it shall be determined that the Covered
Person is not entitled to be indemnified as authorized in this Section 10.02.
ARTICLE XI
Book-Entry Interests
SECTION 11.01. Definitions. As used in this Article or
elsewhere in this Agreement, the following terms shall have the meanings
specified below:
"Book-Entry Interest" shall mean a beneficial interest in the
L.L.C. Certificates, ownership and transfers of which shall be made through
book entries by a Clearing Agency as described in Section 11.03.
"Clearing Agency" shall mean an organization registered as a
"clearing agency" pursuant to the Exchange Act.
"Clearing Agency Participant" shall mean a broker, dealer,
bank, other financial institution or other person for whom from time to time a
Clearing Agency effects book-entry transfers and pledges of securities
deposited with the Clearing Agency.
"Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended.
"L.L.C. Certificate" shall mean a certificate evidencing the
Preferred Interest of a Member in the Company, in the form approved by the
Managing Member.
"Membership Interest" shall mean the entire limited liability
company interest of a Member in the Company at any particular time, including
the right of such Member to any and all benefits to which a Member may be
entitled as provided in this Agreement, together with the obligations of such
Member to comply with all of the terms and provisions of this Agreement.
"Preferred Security Owner" shall mean, with respect to a
Book-Entry Interest, a person who is the beneficial owner of such Book-Entry
Interest, as reflected on the books of the Clearing Agency, or on the books of
a person maintaining an account with such Clearing Agency
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(directly as a Clearing Agency Participant or as an indirect participant, in
each case in accordance with the rules of such Clearing Agency).
SECTION 11.02. General. Except to the extent otherwise
provided in any Action establishing a series of Preferred Interests or required
after consultation with the Clearing Agency, the provisions of this Article
shall be applicable to the Preferred Interests.
SECTION 11.03. Book-Entry Interests. The L.L.C.
Certificates, on original issuance, will be issued in the form of a typewritten
L.L.C. Certificate or L.L.C. Certificates representing the Book-Entry
Interests, to be delivered to The Depository Trust Company, the initial
Clearing Agency, by, or on behalf of, the Company. Such L.L.C. Certificate or
L.L.C. Certificates shall initially be registered on the books and records of
the Company in the name of Cede & Co. or another nominee of the initial
Clearing Agency, and no Preferred Security Owner will receive a definitive
L.L.C. Certificate representing such Preferred Security Owner's interests in
such L.L.C. Certificate, except as provided in Section 11.05. Unless and until
definitive, fully registered L.L.C. Certificates (the "Definitive L.L.C.
Certificates") have been issued to the Preferred Security Owners pursuant to
Section 11.05:
(i) the provisions of this Section shall be in full force and
effect;
(ii) the Company shall be entitled to deal with the Clearing
Agency or the Clearing Agency's nominee for all purposes of this
Agreement (including the payment of periodic distributions on the
L.L.C. Certificates and the giving of instructions or directions
hereunder) as the sole holder of the L.L.C. Certificates and shall
have no obligation to the Preferred Security Owners;
(iii) the rights of the Preferred Security Owners shall be
exercised only through the Clearing Agency and shall be limited to
those established by law and agreements between such Preferred
Security Owners and Clearing Agency or the Clearing Agency's nominee
and/or the Clearing Agency Participants; and, unless or until the
Definitive L.L.C. Certificates are issued pursuant to Section 11.05,
the initial Clearing Agency will make book-entry transfers among the
Clearing Agency Participants and receive and transmit payments of
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dividends on the L.L.C. Certificates to such Clearing Agency
Participants; and
(iv) whenever this Agreement (including the applicable terms
of any Actions establishing a series of Preferred Interests) requires
or permits actions to be taken by the Managing Member, a trustee or
other person based upon or subject to resolutions, votes, consents,
meetings or other instructions or directions of a percentage of the
Preferred Interests, the Clearing Agency shall be deemed to represent
such percentage only to the extent that it has received instructions
to such effect from the Preferred Security Owners and/or Clearing
Agency Participants owning or representing, respectively, such
required percentage of the beneficial interests in the L.L.C.
Certificates and has delivered such instructions to the Managing
Member, trustee or other person, as the case may be.
SECTION 11.04. Notices to Clearing Agency. Whenever a notice
or other communication to the Preferred Members is required under this
Agreement, unless and until Definitive L.L.C. Certificates shall have been
issued to the Preferred Security Owners pursuant to Section 11.05, the Managing
Member shall give all such notices and communications specified herein to be
given to the Preferred Members to the Clearing Agency or its nominee, and shall
have no obligations to the Preferred Members.
SECTION 11.05. Definitive L.L.C. Certificates. If (i) the
Managing Member advises the Company in writing that the Clearing Agency is no
longer willing or able to properly discharge its responsibilities with respect
to the L.L.C. Certificates and the Managing Member is unable to locate a
qualified successor, or (ii) the Company elects to terminate the book-entry
system through the Clearing Agency, then the Clearing Agency shall notify all
Preferred Security Owners of the occurrence of any such event and of the
availability of Definitive L.L.C. Certificates to Preferred Security Owners
requesting the same. Upon surrender of the typewritten L.L.C. Certificate or
L.L.C. Certificates representing the Book-Entry Interests by the Clearing
Agency, accompanied by registration instructions, the Managing Member shall
cause Definitive L.L.C. Certificates to be delivered to the Preferred Security
Owners in accordance with the instructions of the Clearing Agency. Neither the
Managing Member nor the Company shall be liable for any delay in delivery of
such
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instructions and may conclusively rely on, and shall be protected in relying
on, such instructions. Any person receiving a Definitive L.L.C. Certificate
shall be deemed to have acquired a Membership Interest from the Company and
shall thereupon be admitted to the Company as a Preferred Member as
contemplated in Section 3.01. Definitive L.L.C. Certificates shall be printed,
lithographed or engraved or may be produced in any other manner as in
reasonably acceptable to the Managing Member, as evidenced by its execution
thereof (manually or by facsimile).
ARTICLE XII
Miscellaneous
SECTION 12.01. Amendment to the Agreement. Except as
otherwise provided in this Agreement or by any applicable terms of any Action
establishing a series of Preferred Interests, this Agreement may be amended by,
and only by, a written instrument executed by the Managing Member; provided,
however, that (a) no amendment shall be made, and any such purported amendment
shall be void and ineffective, unless the Company shall have received in
advance the written opinion of independent legal counsel that, after giving
effect to the amendment, the Company will be treated as a partnership for
purposes of United States Federal income taxation and (b) the terms of any
Action establishing a series of Preferred Interests may be amended only as set
forth in such Action.
SECTION 12.02. Successors; Counterparts. This Agreement (a)
shall be binding as to the executors, administrators, estates, heirs and legal
successors, or nominees or representatives, of the Members and (b) may be
executed in several counterparts with the same effect as if the parties
executing the several counterparts had all executed one counterpart.
SECTION 12.03. Governing Law; Severability. This Agreement
shall be governed by and construed in accordance with the laws of the State of
Delaware without giving effect to the principles of conflict of laws thereof.
In particular, this Agreement shall be construed to the maximum extent possible
to comply with all the terms and conditions of the Act. If, nevertheless, it
shall be determined by a court of competent jurisdiction that any provisions or
wording of this Agreement shall be invalid or unenforceable under the Act or
other applicable law, such invalidity or
<PAGE> 28
28
unenforceability shall not invalidate the entire Agreement. In that case, this
Agreement shall be construed so as to limit any term or provision so as to make
it enforceable or valid within the requirements of applicable law, and, in the
event such term or provisions cannot be so limited, this Agreement shall be
construed to omit such invalid or unenforceable terms or provisions. If it
shall be determined by a court of competent jurisdiction that any provision
relating to the distributions and allocations of the Company or to any expenses
payable by the Company is invalid or unenforceable, this Agreement shall be
construed or interpreted so as (a) to make it enforceable or valid and (b) to
make the distributions and allocations as closely equivalent to those set forth
in this Agreement as is permissible under applicable law.
SECTION 12.04. Filings. Following the execution and delivery
of this Agreement, the Managing Member shall promptly prepare any documents
required to be filed and recorded under the Act, and the Managing Member shall
promptly cause each such document to be filed and recorded in accordance with
the Act and, to the extent required by local law, to be filed and recorded or
notice thereof to be published in the appropriate place in each jurisdiction in
which the Company may hereafter establish a place of business. The Managing
Member shall also promptly cause to be filed, recorded and published such
statements of fictitious business name and any other notices, certificates,
statements or other instruments required by any provision of any applicable law
of the United States or any state or other jurisdiction which governs the
conduct of its business from time to time.
SECTION 12.05. Power of Attorney. Each Member does hereby
constitute and appoint the Managing Member as its true and lawful
representative and attorney-in-fact, in its name, place and stead to make,
execute, sign, deliver and file (a) a Certificate of Formation of the Company,
any amendment thereof required because of an amendment to this Agreement or in
order to effectuate any change in the membership of the Company, (b) any
amendments to this Agreement and (c) all such other instruments, documents and
certificates which may from time to time be required by the laws of the United
States of America, the State of Delaware or any other jurisdiction, or any
political subdivision or agency thereof, to effectuate, implement and continue
the valid and subsisting existence of the Company or to dissolve
<PAGE> 29
29
the Company or for any other purpose consistent with this Agreement and the
transactions contemplated hereby.
The power of attorney granted hereby is coupled with an
interest and shall (a) survive and not be affected by the subsequent death,
incapacity, disability, dissolution, termination or bankruptcy of the Member
granting the same or the transfer of all or any portion of such Member's
Membership Interest and (b) extend to such Member's successors, assigns and
legal representatives.
SECTION 12.06. Headings. Section and other headings
contained in this Agreement are for reference purposes only and are not
intended to describe, interpret, define or limit the scope or intent of this
Agreement or any provision hereof.
SECTION 12.07. Additional Documents. Each Member, upon the
request of the Managing Member, agrees to perform all further acts and execute,
acknowledge and deliver any documents that may be reasonably necessary to carry
out the provisions of this Agreement.
SECTION 12.08. Notices. All notices, requests and other
communications to any Member shall be in writing (including telecopier or
similar writing) and shall be given to such Member (and any other person
designated by such Member) at its address or telecopier number set forth in a
schedule filed with the records of the Company or such other address or
telecopier number as such Member may hereafter specify for the purpose by
notice to the Managing Member (if such party is not the Managing Member) or to
all the other Members (if such party is the Managing Member). Each such
notice, request or other communication shall be effective (a) if given by
telecopier, when transmitted to the number specified pursuant to this Section
and the appropriate confirmation is received, (b) if given by mail, 72 hours
after such communication is deposited in the mails with first class postage
prepaid, addressed as aforesaid, or (c) if given by any other means, when
delivered at the address specified pursuant to this Section.
<PAGE> 30
30
IN WITNESS WHEREOF, the undersigned have duly executed this
Agreement as of the date first above written.
PAINE WEBBER GROUP INC.,
by /s/Theodore A. Levine
----------------------
Name: Theodore A. Levine
Title: Vice President
PAINEWEBBER FINANCE HOLDINGS INC.,
by /s/F. Daniel Corkery
----------------------
Name: F. Daniel Corkery
Title: Vice President
<PAGE> 1
EXHIBIT 4.1
[Draft--3/14/94]
PAYMENT AND GUARANTEE AGREEMENT dated as of
March [ ], 1994 ("Guarantee Agreement"), executed
and delivered by Paine Webber Group Inc., a Delaware
corporation (the "Guarantor"), for the benefit of the
Holders (as defined below) from time to time of the
Preferred Interests (as defined below) of PaineWebber
Finance L.L.C., a Delaware limited liability company
(the "Company").
WHEREAS up to 16,000,000 preferred limited liability company
interests (the "Preferred Interests") may be issued from time to time by the
Company, in addition to the Company's common limited liability company
interests (the "Common Interests");
WHEREAS it is intended that the proceeds of the issuance of
the Preferred Interests and the Common Interests will be loaned to the
Guarantor and its subsidiaries;
NOW, THEREFORE, in consideration of the purchase by each
Holder of Preferred Interests, which purchase the Guarantor hereby agrees shall
benefit the Guarantor, the Guarantor executes and delivers this Guarantee
Agreement for the benefit of the Holders.
ARTICLE I
Certain Definitions
As used in this Guarantee Agreement, the terms set forth
shall, unless the context otherwise requires, have the following meanings:
"Guarantee Payments" shall mean the following items, without
duplication, to the extent not paid by the Company: (i) any accrued and unpaid
periodic distributions ("dividends") which have been theretofore declared on
the Preferred Interests of any series out of funds held by the Company and
legally available therefor, (ii) the redemption price (including all accrued
and unpaid dividends to the date of payment) payable with respect to Preferred
Interests of any series called for redemption by the Company as an optional
redemption or otherwise out of funds held by the Company and legally available
therefor, (iii) the lesser of (a) the aggregate of the liquidation preference
of the Preferred Interests of any series and all accrued and unpaid
<PAGE> 2
2
dividends to the date of payment and (b) the amount of remaining assets of the
Company after satisfaction of other parties having claims which, as a matter of
law, are prior to those of the Holders of such series, and (iv) in the event of
any redemption by the Company of Preferred Interests in exchange for Depositary
Shares in connection with an exchange of such Depositary Shares for a note
evidencing Loans, delivery of the proper number of Depositary Shares (and cash
payments in lieu of fractional Depositary Shares, if any) to the Paying Agent
for further distribution to a Holder whose Preferred Interests are redeemed.
"Holder" shall mean any holder from time to time of any
Preferred Interests of any series; provided, however, that in determining
whether the Holders of the requisite percentage of Preferred Interests have
given any request, notice, consent or waiver hereunder, the term "Holder" shall
not include the Guarantor or any entity owned 20% or more by the Guarantor,
either directly or indirectly.
"Loan Agreement" shall mean a Loan Agreement pursuant to which
the Company will loan to the Guarantor or one or more of its subsidiaries the
proceeds received by the Company from the issuance and sale of a series of its
Preferred Interests and, to the extent not loaned under a prior Loan Agreement,
the Common Interests.
"Loans" shall mean the loans from the Company to the Guarantor
or one or more of its subsidiaries pursuant to a Loan Agreement.
"Paying Agent" shall mean Chemical Bank, as registrar,
transfer agent and paying agent.
ARTICLE II
The Guarantee
SECTION 2.01. The Guarantor irrevocably and unconditionally
agrees to pay in full to the Holders the Guarantee Payments (except to the
extent paid by the Company), as and when due, regardless of any defense, right
of set-off or counterclaim which the Company may have or assert. The
Guarantor's obligation to make a Guarantee Payment may be satisfied by direct
payment of the required
<PAGE> 3
3
amount by the Guarantor to the Holders or by causing the Company to pay such
amount to the Holders.
SECTION 2.02. The Guarantor hereby waives notice of
acceptance of this Guarantee Agreement and of any liability to which it applies
or may apply, presentment, demand for payment, protest, notice of nonpayment,
notice of dishonor, notice of redemption and all other notices and demands.
SECTION 2.03. The obligations, covenants, agreements and
duties of the Guarantor under this Guarantee Agreement shall in no way be
affected or impaired by reason of the happening from time to time of any of the
following:
(a) the release or waiver, by operation of law or otherwise,
of the performance or observance by the Company of any express or implied
agreement, covenant, term or condition relating to the Preferred Interests of
any series to be performed or observed by the Company;
(b) the extension of time for the payment by the Company of
all or any portion of the dividends, redemption price, liquidation
distributions or any other sums payable under the terms of the Preferred
Interests of any series or the extension of time for the performance of any
other obligation under, arising out of, or in connection with, the Preferred
Interests of any series;
(c) any failure, omission, delay or lack of diligence on the
part of the Holders to enforce, assert or exercise any right, privilege, power
or remedy conferred on the Holders pursuant to the terms of the Preferred
Interests of any series, or any action on the part of the Company granting
indulgence or extension of any kind;
(d) the voluntary or involuntary liquidation, dissolution,
sale of any collateral, receivership, insolvency, bankruptcy, assignment for
the benefit of creditors, reorganization, arrangement, composition or
readjustment of debt of, or other similar proceedings affecting, the Company or
any of the assets of the Company;
(e) any invalidity of, or defect or deficiency in, any of the
Preferred Interests of any series; or
(f) the settlement or compromise of any obligation guaranteed
hereby or hereby incurred.
<PAGE> 4
4
There shall be no obligation of the Holders to give notice to,
or obtain consent of, the Guarantor with respect to the happening of any of the
foregoing.
SECTION 2.04. This is a guarantee of payment and not of
collection. A Holder may enforce this Guarantee Agreement directly against the
Guarantor, and the Guarantor hereby waives any right or remedy to require that
any action be brought against the Company or any other person or entity before
proceeding against the Guarantor. Subject to Section 2.05, all waivers herein
contained shall be without prejudice to the Holders' rights at the Holders'
option to proceed against the Company, whether by separate action or by
joinder. The Guarantor agrees that this Guarantee Agreement shall not be
discharged except by payment of the Guarantee Payments in full (to the extent
not paid by the Company) and by complete performance of all obligations of the
Guarantor contained in this Guarantee Agreement.
SECTION 2.05. The Guarantor shall be subrogated to all rights
(if any) of the Holders against the Company in respect of any amounts paid to
the Holders by the Guarantor under this Guarantee Agreement and shall have the
right to waive payment of any amount in respect of which payment has been made
to the Holders by the Guarantor pursuant to Section 2.01; provided, however,
that the Guarantor shall not (except to the extent required by mandatory
provisions of law) exercise any rights which it may acquire by way of
subrogation or any indemnity, reimbursement or other agreement, in all cases as
a result of a payment under this Guarantee Agreement, if at the time of any
such payment, any amounts are due and unpaid under this Guarantee Agreement.
If any amount shall be paid to the Guarantor in violation of the preceding
sentence, the Guarantor agrees to pay over such amount to the Holders.
SECTION 2.06. The Guarantor acknowledges that its obligations
hereunder are independent of the obligations of the Company with respect to the
Preferred Interests and that the Guarantor shall be liable as principal and
sole debtor hereunder to make Guarantee Payments pursuant to the terms of this
Guarantee Agreement notwithstanding the occurrence of any event referred to in
subsections (a) through (f), inclusive, of Section 2.03.
<PAGE> 5
5
ARTICLE III
Certain Covenants of the Guarantor and
Status of the Guarantee
SECTION 3.01. So long as any Preferred Interests of any
series remain outstanding, if at such time the Guarantor shall be in default
with respect to its obligations under this Guarantee Agreement, neither the
Guarantor nor any subsidiary of the Guarantor using funds provided by the
Guarantor shall redeem, purchase or acquire or pay a liquidation preference
with respect to (a) any preferred stock of the Guarantor ranking pari passu
with this Guarantee Agreement, (b) any preferred or preference stock of
affiliates of the Guarantor (including the Company) entitled to the benefits of
a guarantee of the Guarantor ranking pari passu with this Guarantee Agreement,
(c) any preferred or preference stock of affiliates of the Guarantor entitled
to the benefits of a guarantee ranking junior to this Guarantee Agreement upon
liquidation or (d) any other capital stock of the Guarantor ranking junior to
this Guarantee Agreement, except, in each case, any preferred or preference
stock redeemed, purchased or otherwise acquired in connection with any employee
stock option or benefit plan of the Guarantor. The Guarantor shall take all
actions necessary to ensure the compliance of its subsidiaries with this
Section 3.01.
SECTION 3.02. The Guarantor covenants that, so long as any
Preferred Interests of any series remain outstanding (i) it shall maintain
ownership, directly or indirectly, of 100% of the Common Interests, (ii) in its
capacity as a holder of Common Interests, it shall make such contributions to
the Company, either in connection with the purchase of Common Interests or
otherwise, so as to cause the Common Interests held by the Guarantor to be
entitled in the aggregate to at least 21% of all interest in the capital,
income, gain, loss, deduction, credit and distributions of the Company, (iii)
it shall not voluntarily dissolve, wind-up or liquidate the Company and (iv) it
shall use its reasonable efforts to cause the Company to remain a limited
liability company under the laws of the State of Delaware and otherwise
continue to be treated as a partnership for United States Federal income tax
purposes.
SECTION 3.03. If, at any time the Guarantor is not in
compliance with its obligations under this Guarantee Agreement, the Board of
Directors of the Guarantor declares
<PAGE> 6
6
dividends on any shares of capital stock of the Guarantor ranking junior to the
Guarantor's obligations under this Guarantee Agreement as to dividends, the
Guarantor shall, or shall cause the Company to, set aside for payment in a
segregated account at the office of the Paying Agent an amount equal to all
accrued and unpaid dividends on the Preferred Interests of each series out of
moneys held and legally available therefor and irrevocably instruct the Paying
Agent to pay such amounts as dividends on the Preferred Interests of such
series on the day prior to the date on which such dividends declared by the
Guarantor are payable. The Paying Agent shall make such payment on such day
unless it shall have received, prior to 10:00 a.m., New York time, on such day,
a certificate from the Guarantor certifying that such dividend declaration has
been lawfully rescinded in full. In such case, the amounts deposited in such
account shall be remitted forthwith to the Guarantor or the Company, as the
case may be. In all cases, any interest accrued on the amounts deposited in
such account shall be remitted by the Paying Agent to the Guarantor or the
Company, as the case may be.
SECTION 3.04. If, at any time the Guarantor is not in
compliance with its obligations under this Guarantee Agreement, the Guarantor
(or any subsidiary of the Guarantor using funds provided by the Guarantor)
redeems or purchases or otherwise acquires any shares of capital stock of the
Guarantor ranking junior to the Guarantor's obligations under this Guarantee
Agreement upon liquidation, all accrued and unpaid dividends on the Preferred
Interests of each series payable out of moneys held and legally available
therefor shall immediately become due and payable under this Guarantee
Agreement; provided, however, that no such payment shall be required if any
such shares of the Guarantor are redeemed, purchased or otherwise acquired in
connection with any employee stock option or benefit plan of the Guarantor.
SECTION 3.05. Neither the Guarantor, nor any subsidiary of
the Guarantor using funds provided by the Guarantor, shall pay dividends, or
make guarantee payments with respect to dividends, on any preferred or
preference stock of affiliates of the Guarantor entitled to the benefits of a
guarantee ranking junior to this Guarantee Agreement as to dividends of the
Guarantor if at such time the Guarantor shall be in default with respect to its
obligations under this Guarantee Agreement.
<PAGE> 7
7
SECTION 3.06. If the Guarantor issues, at any time following
the date of the Prospectus dated March [ ], 1994, relating to the Preferred
Interests, Guarantor Preferred Stock and Depositary Shares, any preferred
shares ranking senior to its obligations under this Guarantee Agreement or
enters into any guarantee in respect of any preferred or preference shares of
any affiliate of the Guarantor, which guarantee would rank junior to all
liabilities of the Guarantor but senior to this Guarantee Agreement as to
dividends, upon liquidation or as to rights upon redemption, then this
Guarantee Agreement will be deemed to give the holders of Preferred Interests
such rights and entitlements as are contained in or attached to such other
preferred or preference stock or guarantee such that this Guarantee Agreement
ranks pari passu as to such rights and entitlements with any such other
preferred or preference stock or other guarantee.
SECTION 3.07. This Guarantee Agreement will constitute an
unsecured obligation of the Guarantor and will rank (i) junior in right of
payment to all liabilities of the Guarantor, (ii) pari passu with the most
senior preferred stock now or hereafter issued by the Guarantor and with any
guarantee now or hereafter entered into by the Guarantor in respect of any
preferred or preference stock of any affiliate of the Guarantor and (iii)
senior to the Guarantor's common stock.
ARTICLE IV
Termination of the Guarantee
This Guarantee Agreement shall terminate and be of no further
force and effect as to a series of Preferred Interests upon either (i) full
payment of the redemption price (including all accrued and unpaid dividends)
for all Preferred Interests of such series, including any redemption of all of
a series of Preferred Interests in exchange for a series of Parent Preferred
Stock or Depositary Shares (as such terms are defined in the Loan Agreement) or
(ii) full payment of the amounts payable to the Holders of such series upon
liquidation of the Company; provided, however, that this Guarantee Agreement
shall continue to be effective or shall be reinstated, as the case may be, with
respect to Preferred Interests of such series if at any time any Holder of
Preferred Interests of such series must restore payment of any sums paid under
the Preferred Interests of such
<PAGE> 8
8
series or under this Guarantee Agreement for any reason whatsoever.
ARTICLE V
Miscellaneous Agreements and Provisions
SECTION 5.01. All guarantees and agreements contained in this
Guarantee Agreement shall bind the successors, assigns, receivers, trustees and
representatives of the Guarantor and shall inure to the benefit of the Holders.
The Guarantor shall not assign its obligations hereunder without the prior
approval of the Holders of not less than 66-2/3% in liquidation preference of
all Preferred Interests then outstanding given either in writing or by vote at
a duly constituted meeting of such Holders.
SECTION 5.02. Except with respect to any changes which do not
materially and adversely affect the rights of Holders (in which case no vote
will be required), this Guarantee Agreement may only be amended by an
instrument in writing signed by the Guarantor with the prior approval of the
Holders of not less than 66-2/3% in liquidation preference of all Preferred
Interests then outstanding given either in writing or by vote at a duly
constituted meeting of such Holders.
SECTION 5.03. Any notice, request or other communication
required or permitted to be given hereunder to the Guarantor shall be given in
writing and delivered personally or by telegram or facsimile transmission or by
registered or certified mail (return receipt requested) at the following
address (and if so given, shall be deemed effective when received), to it:
Paine Webber Group Inc.
1285 Avenue of the Americas
New York, New York 10019
Facsimile No: (212) 713-2114
Attention: Theodore A. Levine
Vice President, General
Counsel & Secretary
Any notice, request or other communication required or
permitted to be given hereunder to the Holders shall be given by the Guarantor
in the same manner as notices sent by the Company to the Holders.
<PAGE> 9
9
SECTION 5.04. The masculine and neuter genders used herein
shall include the masculine, feminine and neuter genders.
SECTION 5.05. This Guarantee Agreement is solely for the
benefit of the Holders and is not separately transferable from the Preferred
Interests.
SECTION 5.06. THIS GUARANTEE AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE
OF NEW YORK.
THIS PAYMENT AND GUARANTEE AGREEMENT is executed as of the day
and year first above written.
PAINE WEBBER GROUP INC.,
By: _________________________
Name:
Title:
Accepted and agreed:
PAINEWEBBER FINANCE L.L.C.,
By: Paine Webber Group Inc.,
as Managing Member,
By: ___________________________
Name:
Title:
<PAGE> 1
EXHIBIT 4.2
[Draft--3/14/94]
LOAN AGREEMENT dated as of [ ],
199[ ], between Paine Webber Group Inc., a Delaware
corporation (the "Guarantor"), and PaineWebber
Finance L.L.C., a Delaware limited liability company
(the "Company").
WHEREAS the sole purpose for which the Company was formed is
to issue preferred and common limited liability company interests
(respectively, "Preferred Interests" and "Common Interests") and lend the net
proceeds thereof to the Guarantor and its subsidiaries (the Guarantor
guaranteeing, in connection therewith, certain payment obligations of the
Company with respect to such Preferred Interests);
WHEREAS consistent therewith, the Guarantor has asked the
Company to make loans to the Guarantor in the aggregate principal amount of up
to $[ ]; and
WHEREAS the Company intends to make the aforementioned loans
to the Guarantor, on the terms and conditions set forth herein.
NOW, THEREFORE, the Guarantor and the Company hereby agree as
follows:
ARTICLE I
The Loans
SECTION 1.01. The Loans. Subject to the terms and conditions
herein, (a) the Company agrees to make a loan to the Guarantor on the date
hereof in the principal amount of $[ ] in next-day funds, and (b) in the
event that the underwriters' over-allotment option described in the Prospectus
Supplement dated [ ], 199[ ], relating to the Series [ ] Interests
(as defined below) is exercised, the Company agrees to make an additional loan
to the Guarantor equal to the aggregate stated liquidation preference of the
Series [ ] Interests so sold upon such exercise plus the related aggregate
additional cash consideration paid by the Guarantor to the Company for
additional Common Interests (each such loan, a "Loan" and, collectively, the
"Loans"). The Loans shall be evidenced by a promissory note (a "Note") of the
Guarantor to the Company, in substantially the form of Exhibit A hereto.
<PAGE> 2
2
SECTION 1.02. Term of the Loans. The entire principal amount
of the Loans outstanding shall become due and payable (together with any
accrued and unpaid interest thereon) on the earliest of (a) [insert date of the
30th anniversary of the date of this Loan Agreement] (the "Maturity Date"), (b)
the date upon which the Guarantor shall be dissolved, wound up or liquidated,
(c) the date upon which the Company shall be dissolved, wound up or liquidated,
or (d) the date of acceleration of the Loans pursuant to Section 7.01 hereof;
provided that all or any portion of the principal amount prepaid or repaid by
the Guarantor may be reloaned to the Guarantor, and not used by the Company for
redemption of Series [ ] Interests, if at the time of such new loan, and as
determined in the judgment of the Guarantor, in its capacity as a holder of
Common Interests (in such capacity, the "Managing Member"), and its financial
advisor (which may be an affiliate of the Guarantor), (i) the Guarantor is not
the subject of a pending case under the United States Bankruptcy Code, (ii) the
Guarantor is not in default on any loan pertaining to Preferred Interests of
any other series ranking pari passu with the ___% Cumulative Preferred
Interests, Series [ ] issued by the Company (the "Series [ ] Interests"),
(iii) the Guarantor has timely made all required monthly payments of interest
on the Loans for the immediately preceding nine months, (iv) the Company is not
in arrearage on payments of dividends on the Series [ ] Interests, (v) the
Guarantor is expected to be able to make timely payment of principal and
interest on such new loan, (vi) such new loan is being made on terms, and under
circumstances, that are no less favorable to the Company than those that a
lender would require for a similar loan to an unrelated party, (vii) such new
loan is being made at a rate of interest sufficient to provide monthly payments
of interest equal to or greater than the amount of monthly dividend payments
required in respect of the Series [ ] Interests, (viii) such new loan is being
made for a fixed term that is consistent with market circumstances and the
Guarantor's financial condition, and (ix) in any event, no new loan shall have
a final maturity later than the ninetieth anniversary of the original issuance
of the Series [ ] Interests.
<PAGE> 3
3
SECTION 1.03. Optional Prepayment. The Guarantor shall have
the right to prepay the Loans, without premium or penalty,
(a) in whole or in part (together with any accrued but unpaid
interest, including Additional Interest (as defined in Section 2.02
below), if any, on the portion being prepaid) at any time on or after
March [ ], 1999; or
(b) in whole (together with all accrued and unpaid interest,
including Additional Interest, if any, thereon) at any time after the
date hereof if the Guarantor is or would be required to pay any
Additional Interest pursuant to the terms of this Agreement or, if
such requirement shall relate only to a portion of the Loans, the
portion of the Loans affected by any such requirement (together with
all accrued and unpaid interest, including Additional Interest, if
any, on the portion being prepaid); provided that the Guarantor shall
not have the right to prepay the Loans as a result of the payment of
Additional Interest unless the payment of such Additional Interest is
imposed by reason of a Change of Law (as defined below). Furthermore,
in no event shall the Guarantor have the right to prepay the Loan, or
any portion thereof, under this clause (b) based on a de mimimis
obligation to pay Additional Interest.
The term "Change of Law" shall mean a change in law or regulation, or
a written change in interpretation of law or regulation, by any legislative
body, court, governmental agency or regulatory authority.
<PAGE> 4
4
SECTION 1.04. Optional Exchange. On any Series [ ] Interests
dividend payment date on or after [insert date of sixth anniversary of the date
of this Agreement], the Guarantor shall have the right to issue and deliver to
the Company, in exchange for the Note, freely transferable Depositary Shares
(the "Depositary Shares") each representing a fractional interest in a new
issue of the Guarantor's [ ]% Cumulative Preferred Stock, Series [ ]
(the "Guarantor Preferred Stock"), having an aggregate fair market value, as
determined by the Guarantor's financial advisor (which may be an affiliate of
the Guarantor), or an aggregate liquidation preference, whichever is greater,
equal to the unpaid principal amount of the Note plus any accrued and unpaid
interest (including Additional Interest, if any) thereon to the date of such
exchange; provided, however, that if, on the date that notice of the redemption
of the Series [ ] Interests in connection with an exchange for the Note is
mailed to holders of Series [ ] Interests, the rating assigned to any
outstanding publicly held long-term senior unsecured debt obligation of the
Guarantor by either Standard & Poor's Corporation or Moody's Investors
Services, Inc. is not at least BBB- and Baa3 (or the equivalent ratings),
respectively, then the Guarantor shall be obligated to deliver to the Company
in exchange for the Note 1.2 times the number of Depositary Shares which would
have been deliverable otherwise.
Notwithstanding the foregoing, such exchange of the Depositary
Shares for the Note may be made only if, on the date that the Guarantor gives
to the Company notice of its intention to effect such exchange and on the date
of such exchange, (i) the Guarantor is not in default on any loan made by the
Company to the Guarantor, (ii) the Guarantor is not in default under any
indebtedness for borrowed money whether or not evidenced by a note (other than
indebtedness owing to the Guarantor or a subsidiary and indebtedness in respect
of agreements in the ordinary course of business to purchase or repurchase
securities or loans), indebtedness secured by purchase money mortgages or
conditional sale, finance lease or other title retention agreements and
obligations under any other lease of real or personal property, which, in all
such cases, would be included in accordance with generally accepted accounting
principles in determining total liabilities as shown on the liability side of a
balance sheet as at the date as of which such indebtedness is to be determined,
which indebtedness or obligations are in excess of $25,000,000 and have been or
<PAGE> 5
5
could be declared due and payable prior to maturity, (iii) the Guarantor has
not generally failed to pay its debts as such debts become due, or admitted in
writing its inability to pay its debts generally, or made a general assignment
for the benefit of creditors, or voluntarily filed a petition for relief or
reorganization under the United States Bankruptcy Code, (iv) no proceeding has
been instituted against the Guarantor seeking liquidation, winding up,
reorganization, arrangement, adjustment, protection, relief, or composition of
the Guarantor or its debt under any law relating to bankruptcy, insolvency or
reorganization or relief of debtors, or seeking the entry of an order for
relief or the appointment of a receiver, trustee or other similar official,
which proceeding has not theretofore been stayed or dismissed, (v) the total
consolidated stockholders' equity of the Guarantor, as shown on the most recent
publicly available consolidated balance sheet of the Guarantor, is at least
$500,000,000, and (vi) there have been fully satisfied such additional
conditions, if any, as may be set forth in a supplement or addendum to this
Agreement. The Guarantor shall give the Company written notice of its
intention to effect such exchange not less than seventy-five (75) days nor more
than ninety (90) days prior to the intended date of such exchange.
ARTICLE II
Interest
SECTION 2.01. Interest on the Loans. The Loans shall bear
interest at an annual rate of [ ]% from the date they are made until maturity.
Such interest shall be payable on the last day of each calendar month of each
year, commencing [ ], 199[ ]. Interest will be computed on the basis of
twelve 30-day months and a 360-day year and, for any interest period that is
shorter than a full calendar month, will be calculated on the basis of the
actual number of days elapsed in such period. If any date on which interest is
payable on the Loan is not a Business Day (as defined below), then payment of
the interest due 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
<PAGE> 6
6
date. A "Business Day" shall mean each day, other than a Saturday or Sunday,
that is not a day on which banks in The City of New York are authorized or
obligated by law or executive order to close.
SECTION 2.02. Additional Interest. If at any time following
the date hereof the Company shall be required to pay, with respect to its
income derived from the interest payments on the Loan, any amounts, for or on
account of any taxes, duties or governmental charges of whatever nature imposed
by the United States (or any political subdivision thereof or therein), or any
other taxing authority, then, in any such case, the Guarantor will pay as
interest such additional amounts ("Additional Interest") as may be necessary in
order that the net amounts received and retained by the Company after the
payment of such taxes, duties, assessments or governmental charges shall result
in the Company's having such funds as it would have had in the absence of the
obligation to pay such taxes, duties, assessments or governmental charges.
SECTION 2.03. Extension of Interest Payment Period.
Notwithstanding the provisions of Section 2.01, the Guarantor shall have the
right at any time or times during the term of the Loans, so long as the
Guarantor is not in default in the payment of interest on the Loans, to extend
the interest payment period by a further period, not to exceed nine months, at
the end of which further period the Guarantor shall pay all interest then
accrued and unpaid (together with interest thereon at the rate specified for
the Loans to the extent permitted by applicable law); provided that, during any
such extended interest payment period, or at any time during which there is an
uncured Event of Default (as defined herein), the Guarantor shall not pay any
dividends on, or redeem, purchase, acquire or make a liquidation payment with
respect to, any of its shares of capital stock or make any guarantee payments
with respect to the foregoing (other than payments under any guarantee of the
Series [ ] Interests). Prior to the termination of any such extended interest
payment period, the Guarantor may further extend the interest payment period,
provided that such further extension of the interest payment period, together
with all prior extensions thereof, shall not exceed an aggregate of nine
months. The Guarantor shall give the Company notice of its election to extend
the interest payment period one Business Day prior to the earlier of (i) the
date the Company declares the related dividend on the Series [ ] Interests or
(ii) the date the
<PAGE> 7
7
Company is required to give notice of the record or payment date of such
related dividend to the New York Stock Exchange or other applicable
self-regulatory organization, but in any event not less than five Business Days
prior to such record date.
ARTICLE III
Payments
SECTION 3.01. Method and Date of Payment. Each payment by
the Guarantor of principal and interest (including Additional Interest, if any)
on the Loans shall be made to the Company in United States Dollars at such
place and to such account as may be designated by the Company.
SECTION 3.02. Set-Off. Notwithstanding anything to the
contrary herein, the Guarantor shall have the right to set-off any payment it
is otherwise required to make hereunder with and to the extent the Guarantor
has theretofore made, or is concurrently on the date of such payment making, a
payment under any guarantee of the Series [ ] Interests.
ARTICLE IV
Subordination
SECTION 4.01. Subordination. The Guarantor and the Company
covenant and agree that each of the Loans is subordinate and junior in right of
payment to all Senior Indebtedness as provided herein. The term "Senior
Indebtedness" shall mean (a) the principal of, premium, if any, and accrued and
unpaid interest (including interest accruing on or after the filing of any
petition in bankruptcy or for reorganization relating to the Guarantor) on (i)
indebtedness of the Guarantor for money borrowed, whether outstanding on the
date of execution of this Agreement or thereafter created, incurred or assumed,
(ii) guarantees by the Guarantor of indebtedness for money borrowed by any
other person, whether outstanding on the date of execution of this Agreement or
thereafter created, incurred or assumed, (iii) indebtedness evidenced by notes,
debentures, bonds or other instruments of indebtedness for the payment of which
the Guarantor is responsible or liable, by guarantees or otherwise, whether
outstanding on the date
<PAGE> 8
8
of execution of this Agreement or thereafter created, incurred or assumed, (iv)
obligations of the Guarantor under any agreement of lease, or any lease of, any
real or personal property, whether outstanding on the date of execution of this
Agreement or thereafter created, incurred or assumed, and (v) without
duplication of the foregoing, indebtedness of the Guarantor under the Indenture
dated as of March 15, 1988, between the Guarantor and Chemical Bank (Delaware),
as amended, relating to subordinated debt securities of the Guarantor, and
indebtedness or guarantees ranking superior or pari passu in right of payment
thereto, in each case whether outstanding on the date of this Agreement or
thereafter created, incurred or assumed (the Loan being expressly neither
superior nor pari passu in right of payment to or with any indebtedness
described in this clause (v)), (b) any other indebtedness, liability or
obligation, contingent or otherwise, of the Guarantor and any guarantee,
endorsement or other contingent obligation of the Guarantor in respect of any
indebtedness, liability or obligation, whether outstanding on the date of
execution of this Agreement or thereafter created, incurred or assumed, and (c)
modifications, renewals, extensions and refundings of any such indebtedness,
liabilities, obligations or guarantees; unless, in the instrument creating or
evidencing the same or pursuant to which the same is outstanding, it is
provided that such indebtedness, liabilities, obligations or guarantees or such
modifications, renewals, extensions or refundings thereof are not superior in
right of payment to the Loans. The Senior Indebtedness shall continue to be
Senior Indebtedness and entitled to the benefits of these subordination
provisions irrespective of any amendment, modification or waiver of any term of
the Senior Indebtedness or extension or renewal of the Senior Indebtedness.
If (i) the Guarantor shall default in the payment of any
principal, or premium, if any, or interest on any Senior Indebtedness when the
same becomes due and payable, whether at maturity or at a date fixed for
prepayment or declaration or otherwise or (ii) an event of default occurs with
respect to any Senior Indebtedness permitting the holders thereof to accelerate
the maturity thereof and written notice of such event of default is given to
the Guarantor by the holders of Senior Indebtedness, then unless and until such
default in payment or event of default shall have been cured or waived or shall
have ceased to exist, no direct or indirect payment (in cash, property,
securities, by set-off or otherwise) shall be made or agreed to be made
<PAGE> 9
9
on account of the Loans or interest thereon or in respect of any repayment,
redemption, retirement, purchase or other acquisition of the Loans. The
Guarantor will given prompt written notice to the Company of any default in the
payment of any Senior Indebtedness.
In the event of (i) any insolvency, bankruptcy, receivership,
liquidation, reorganization, readjustment, composition or other similar
proceeding relating to the Guarantor, its creditors or its property, (ii) any
proceeding for the liquidation, dissolution or other winding up of the
Guarantor, voluntary or involuntary, whether or not involving insolvency or
bankruptcy proceedings, (iii) any assignment by the Guarantor for the benefit
of creditors, or (iv) any other marshalling of the assets of the Guarantor, all
Senior Indebtedness (including, without limitation, interest accruing after the
commencement of any such proceeding, assignment or marshalling of assets) shall
first be paid in full before any payment or distribution, whether in cash,
securities or other property, shall be made by the Guarantor on account of the
Loans. In any such event, any payment or distribution, whether in cash,
securities or other property (other than securities of the Guarantor or any
other corporation provided for by a plan of reorganization or readjustment, the
payment of which is subordinate, at least to the extent provided in the
subordination provisions hereof with respect to the indebtedness evidenced by
the Loans, to the payment of all Senior Indebtedness at the time outstanding
and to any securities issued in respect thereof under any such plan of
reorganization or readjustment), which would otherwise (but for the
subordination provisions hereof) be payable or deliverable in respect of the
Loans (including any such payment or distribution which may be payable or
deliverable by reason of the payment of any other indebtedness of the Guarantor
being subordinated to the payment of the Loans) shall be paid or delivered
directly to the holders of Senior Indebtedness or to their representative, or
to the trustee under the indenture or agreement (if any) pursuant to which
Senior Indebtedness may have been issued, in accordance with the priorities
then existing among such holders until all Senior Indebtedness shall have been
paid in full. No present or future holder of any Senior Indebtedness shall be
prejudiced in the right to enforce subordination of the indebtedness
constituting the Loans by any act or failure to act on the part of the
Guarantor.
<PAGE> 10
10
Senior Indebtedness shall not be deemed to have been paid in
full unless the holders thereof shall have received cash, securities or other
property equal to the amount of such Senior Indebtedness then outstanding.
Upon the payment in full of all Senior Indebtedness, the Company shall be
subrogated to all the rights of any holders of Senior Indebtedness to receive
any further payments or distributions applicable to the Senior Indebtedness
until the Loans shall have been paid in full, and such payments or
distributions received by the Company, by reason of such subrogation, of cash,
securities or other property which otherwise would be paid or distributed to
the holders of Senior Indebtedness, shall, as between the Guarantor and its
creditors other than the holders of Senior Indebtedness, on the one hand, and
the Company, on the other, be deemed to be payment by the Guarantor on account
of Senior Indebtedness, and not on account of the Loans.
ARTICLE V
Representations and Warranties
SECTION 5.01. Representations and Warranties. The Guarantor
represents and warrants to the Company that:
(a) Good Standing. The Guarantor is a corporation duly
incorporated and validly existing under the laws of the State of Delaware, with
full power and authority to own its properties and conduct its business as now
being conducted.
(b) Power and Authority. The Guarantor has full power and
authority to enter into this Agreement and to incur and perform the obligations
provided for herein, all of which have been duly authorized by all proper and
necessary action.
(c) No Conflict. The execution and delivery of this
Agreement and the performance by the Guarantor of all its obligations hereunder
will not conflict with or result in a breach or violation of any of the terms
or provisions of, or constitute a default under, any indenture, mortgage, deed
of trust, loan agreement or other agreement or instrument to which the
Guarantor is a party or by which the Guarantor is bound or subject, nor will
this Agreement result in a violation of the provisions of the Guarantor's
Restated Certificate of Incorporation or By-laws.
<PAGE> 11
11
(d) Binding Agreement. This Agreement constitutes the valid
and legally binding obligation of the Guarantor enforceable in accordance with
its terms, subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general applicability relating
to or affecting creditors' rights and to general equity principles.
ARTICLE VI
Covenants
SECTION 6.01. Covenants. (a) The Guarantor agrees that, so
long as the Series [ ] Interests are outstanding, (i) it shall not declare or
pay any dividend on, or redeem, purchase, acquire or make a liquidation payment
with respect to, any of its capital stock, or make any guarantee payments with
respect to the foregoing (other than payments pursuant to any guarantee of the
Series [ ] Interests) if at such time (x) there shall have occurred any event
that, with the giving of notice or the lapse of time or both, would constitute
an Event of Default or (y) the Guarantor shall be in default with respect to
its payment or other obligations under any guarantee of the Series [ ]
Interests, (ii) it shall maintain ownership, directly or indirectly, of 100% of
the Common Interests, (iii) in its capacity as a holder of Common Interests, it
shall make such contributions to the Company, either in connection with the
purchase of Common Interests or otherwise, so as to cause the Common Interests
held by the Guarantor to be entitled in the aggregate to at least 21% of all
interest in the capital, income, gain, loss, deduction, credit and
distributions of the Company, (iv) it shall not voluntarily dissolve, wind-up
or liquidate the Company, (v) it shall timely perform all of its duties as the
Managing Member (as defined in the Prospectus Supplement dated March [ ],
relating to the Series [ ] Interests) of the Company, and (vi) it shall use
its reasonable efforts to cause the Company to remain a limited liability
company under the laws of the State of Delaware and otherwise continue to be
treated as a partnership for United States Federal income tax purposes.
(b) The Guarantor agrees that its obligations under this
Agreement will also be for the benefit of the holders from time to time of
Series [ ] Interests, and the Guarantor acknowledges and agrees that such
holders will be
<PAGE> 12
12
entitled to enforce this Agreement directly against the Guarantor.
(c) The Guarantor agrees not to permit another entity to
merge with or into it unless (i) at such time no Event of Default has occurred
and is continuing, or would occur as a result of such merger, and (ii) the
Guarantor is the survivor of such merger or the entity formed by or resulting
from such merger shall expressly assume payment of the principal of and
premium, if any, and interest on (and any Additional Interest payable in
respect of) the Loans.
ARTICLE VII
Events of Default
SECTION 7.01. Events of Default. If one or more of the
following events (each an "Event of Default") shall occur and be continuing:
(a) default in the payment of interest on the Loans (including
any Additional Interest) when due that continues for 10 days (whether
by virtue of the provisions of Article IV or otherwise); provided,
however, that a valid extension of the interest payment period by the
Guarantor pursuant to Section 2.03 shall not constitute a default in
the payment of interest for this purpose;
(b) default in the payment of principal on the Loans when due
(whether by virtue of the provisions of Article IV or otherwise);
(c) the dissolution, winding up or liquidation of the Company;
(d) the bankruptcy, insolvency or liquidation of the
Guarantor; or
(e) the breach by the Guarantor of any of its covenants
contained herein continued for 30 days after notice to the Guarantor
from any holder of the Series [ ] Interests;
then (i) in the case of clauses (a), (b) and (e), and at any time thereafter
during the continuance of such event, the Company will have the right to
declare the principal of and
<PAGE> 13
13
the interest on the Loans (including any Additional Interest and any interest
subject to an extension of the interest payment period) and any other amounts
payable on the Loans to be forthwith due and payable, and (ii) in the case of
clauses (c) and (d), the principal of any interest on the Loans (including any
Additional Interest and any interest subject to an extension of the interest
payment period) and any other amounts payable on the Loans shall automatically
become due and payable, whereupon in either case the Loans and any other
amounts payable hereunder shall be forthwith due and payable without
presentment, demand, protest or other notice of any kind, all of which are
hereby expressly waived, anything in this Agreement to the contrary
notwithstanding, and the Company will have the right to enforce its other
rights as a defaulted creditor with respect to the Loans. The Guarantor
expressly acknowledges that under the terms of the Series [ ] Interests, the
holders of the outstanding Series [ ] Interests shall have the rights
particularly described in the action of the Managing Member establishing the
rights and powers of the Series [ ] Interests, including the right to appoint
a trustee, which trustee shall be authorized to exercise the Company's rights
to accelerate the principal amount of the Loan and to enforce the Company's
other rights under this Agreement, and the Guarantor agrees to cooperate with
such trustee.
ARTICLE VIII
Miscellaneous
SECTION 8.01. Notices. All notices hereunder shall be deemed
given by a party hereto if in writing and delivered personally or by telegram
or facsimile transmission or by registered or certified mail (return receipt
requested) to the other party at the following address for
<PAGE> 14
14
such party (or at such other address as shall be specified by like notice):
If to the Company, to:
PaineWebber Finance L.L.C.
In care of Paine Webber Group Inc.
1285 Avenue of the Americas
New York, NY 10019
Facsimile No.: (212) 713-2114
Attention: Vice President, General
Counsel & Secretary
If to the Guarantor, to:
Paine Webber Group Inc.
1285 Avenue of the Americas
New York, NY 10019
Facsimile No.: (212) 713-2114
Attention: Vice President, General
Counsel & Secretary
Any notice given in accordance with the foregoing shall be
effective when received.
SECTION 8.02. Binding Effect. The Guarantor shall have the
right at all times to assign any of its rights or obligations under this
Agreement to a direct or indirect wholly owned subsidiary of the Guarantor;
provided, however, that, in the event of any such assignment, the Guarantor
shall remain jointly and severally liable for all such obligations. The Company
may not assign any of its rights hereunder without the prior written consent of
the Guarantor. Subject to the foregoing, this Agreement shall be binding upon
and inure to the benefit of the Guarantor and the Company and their respective
successors and assigns. Any assignment by the Guarantor or the Company in
contravention of such provisions will be null and void. This Agreement may not
otherwise be assigned by the Guarantor or the Company.
<PAGE> 15
15
SECTION 8.03. GOVERNING LAW. THIS AGREEMENT SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF
NEW YORK.
SECTION 8.04. Counterparts. This Agreement may be executed
in counterparts, each of which shall be deemed an original, but all of which
taken together shall constitute one and the same instrument.
SECTION 8.05. Amendments. This Agreement may be amended by
mutual consent of the parties in the manner the parties shall agree; provided,
however, that, so long as any of the Series [ ] Interests remain outstanding,
no such amendment shall be made that materially and adversely affects the
rights of the holders of the Series A Interests, no termination of this
Agreement shall occur, and no Event of Default or compliance with any covenant
under this Agreement may be waived by the Company, without the prior approval
of the holders of at least 66-2/3% in liquidation preference of all Series A
Interests then outstanding, in writing or at a duly constituted meeting of such
holders, unless and until the Loans and all accrued and unpaid interest thereon
(including Additional Interest, if any) shall have been paid in full.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their respective officers thereunto duly authorized
as of the day and year first above written.
PAINE WEBBER GROUP INC.,
by
------------------------
Name:
Title:
<PAGE> 16
16
PAINEWEBBER FINANCE L.L.C.,
by Paine Webber Group Inc.,
as Managing Member,
by
-----------------------------
Name:
Title:
<PAGE> 17
EXHIBIT A
PROMISSORY NOTE
U.S. $[ ] Dated: [ ], 199[ ]
FOR VALUE RECEIVED, the undersigned, PAINE WEBBER GROUP INC.,
a Delaware corporation (the "Borrower"), HEREBY PROMISES TO PAY to PAINEWEBBER
FINANCE L.L.C., a Delaware limited liability company (the "Lender"), or its
registered assigns the principal sum of [ ] United States Dollars
($[ ]), or if less, the unpaid principal amount of the Loans
(as defined in the Loan Agreement referred to below) of the Lender to the
Borrower, payable at such times, and in such amounts, as are specified in
the Loan Agreement.
The Borrower promises to pay (i) interest on the unpaid
principal amount of the Loans from the date hereof until such principal amount
is paid in full, at such interest rates, and payable at such times, as are
specified in the Loan Agreement and (ii) Additional Interest (as defined in the
Loan Agreement referred below), if any.
Both principal and interest are payable in lawful money of
the United States of America.
This Promissory Note is the Note referred to in, and is
entitled to the benefits of, the Loan Agreement dated as of [ ], 199[ ]
(said Agreement, as it may be amended or otherwise modified from time to time,
the "Loan Agreement"), between the Borrower and the Lender. The Loan
Agreement, among other things, (i) provides for the Loans of the Lender in an
aggregate amount not to exceed the United States Dollar amount first above
mentioned, the indebtedness of the Borrower resulting from such Loans being
evidenced by this Note, (ii) contains provisions for acceleration of the
maturity of the unpaid principal amount of this Note upon the happening of
certain stated events and also for prepayments on account of the principal
hereof prior to the maturity hereof upon the terms and conditions therein
specified and (iii) contains provisions regarding the subordination of the
Loans to Senior Indebtedness (as defined in the Loan Agreement) of the
Borrower.
Demand, presentment, protest and notice of non-payment and
protest are hereby waived by the Borrower.
<PAGE> 18
2
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED
IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK.
PAINE WEBBER GROUP INC.,
by
-------------------------------
Name:
Title:
<PAGE> 1
EXHIBIT 4.12
[Draft--3/14/94]
================================================================================
PAINE WEBBER GROUP INC.,
CHEMICAL BANK, as Depositary
AND
THE HOLDERS FROM TIME TO TIME
OF THE DEPOSITARY RECEIPTS HEREIN
-----------------------------
Deposit Agreement
relating to [ ]%
Cumulative Preferred Stock,
Series [ ] of
Paine Webber Group Inc.
------------------------------
Dated as of March [ ], 1994
================================================================================
<PAGE> 2
EXHIBIT 4.12
[Draft--3/14/94]
DEPOSIT AGREEMENT dated as of March [ ],
1994 among PAINE WEBBER GROUP INC., a
corporation duly organized and existing under
the laws of the State of Delaware, CHEMICAL
BANK, a New York banking corporation and the
holders from time to time of the Receipts
described herein.
WHEREAS it is desired to provide, as hereinafter set forth in
this Deposit Agreement, for the deposit of shares of [ ]% Cumulative Preferred
Stock, Series [ ] of PAINE WEBBER GROUP INC. with the Depositary for the
purposes set forth in this Deposit Agreement and for the issuance hereunder of
Receipts (as hereinafter defined) evidencing Depositary Shares (as hereinafter
defined) in respect of the Stock (as hereinafter defined) so deposited;
NOW, THEREFORE, in consideration of the premises, the parties
hereto agree as follows:
ARTICLE I
Definitions
The following definitions shall for all purposes, unless
otherwise indicated, apply to the respective terms used in this Deposit
Agreement and the Receipts:
"Certificate of Designations" shall mean the Certificate of
Designations filed with the Secretary of State of Delaware establishing the
Stock as a series of preferred stock of the Company.
"Certificate of Incorporation" shall mean the Restated
Certificate of Incorporation, as amended from time to time, of the Company.
"Company" shall mean Paine Webber Group Inc., a Delaware
corporation having its principal office at 1285 Avenue of the Americas, New
York, New York 10019, and its successors.
"Deposit Agreement" shall mean this Deposit Agreement, as
amended or supplemented from time to time.
<PAGE> 3
2
"Depositary" shall mean Chemical Bank, a New York banking
corporation, and any successor as Depositary hereunder.
"Depositary Shares," shall mean Depositary Preferred Shares,
each representing a one-eighth interest in a share of Stock and evidenced by a
Receipt.
"Depositary's Agent" shall mean an agent appointed by the
Depositary pursuant to Section 7.05.
"Depositary's Office" shall mean the principal office of the
Depositary for purposes hereof, currently located at 450 West 33rd Street, New
York, New York, at which at any particular time its depositary receipt business
shall be administered.
"Receipt" shall mean one of the depositary receipts issued
hereunder, whether in definitive or temporary form.
"Record Holder" as applied with respect to a Receipt shall
mean the person in whose name a Receipt is registered on the books of the
Depositary maintained for such purpose.
"Registrar" shall mean any bank or trust company which shall
be appointed to register ownership and transfers of Receipts as herein
provided.
"Stock" shall mean shares of the Company's [ ]% Cumulative
Preferred Stock, Series [ ], $20.00 par value.
ARTICLE II
Form of Receipts, Deposit of Stock, Execution and
Delivery, Transfer, Surrender and Redemption of Receipts
SECTION 2.01. Form and Transfer of Receipts. Definitive
Receipts shall be engraved or printed or lithographed on steel-engraved borders
and shall be substantially in the form set forth in Exhibit A annexed to this
Deposit Agreement, with appropriate insertions, modifications and omissions, as
hereinafter provided. Pending the preparation of definitive Receipts, the
Depositary, upon the written order of the Company delivered in compliance with
Section 2.02, shall execute and deliver temporary Receipts sub-
<PAGE> 4
3
stantially identical to (and entitling the holders thereof to all the rights
pertaining to) the definitive Receipts but not in definitive form. Temporary
Receipts shall be printed, lithographed, typewritten, mimeographed or otherwise
substantially of the tenor of the definitive Receipts in lieu of which they are
issued and with such appropriate insertions, omissions, substitutions and other
variations as the persons executing such Receipts may determine, as evidenced
by their execution of such Receipts. If temporary Receipts are issued, the
Company and the Depositary will cause definitive Receipts to be prepared
without unreasonable delay. After the preparation of definitive Receipts, the
temporary Receipts shall be exchangeable for definitive Receipts upon surrender
of the temporary Receipts at the Depositary's office, or such other office as
the Depositary may designate, without charge to the holder. Upon surrender for
cancellation of any one or more temporary Receipts, the depositary shall
execute and deliver in exchange therefor definitive Receipts representing the
same number of Depositary Shares as represented by the surrendered temporary
Receipt or Receipts. Such exchange shall be made at the Company's expense and
without any charge therefor. Until so exchanged, the temporary Receipts shall
in all respects be entitled to the same benefits under this Agreement, and with
respect to the Stock, as definitive Receipts.
Receipts shall be executed by the Depositary by the manual
signature of a duly authorized officer of the Depositary; provided, that such
signature may be a facsimile if a Registrar for the Receipts (other than the
Depositary) shall have been appointed and such Receipts are countersigned by
manual signature of a duly authorized officer of the Registrar. No Receipt
shall be entitled to any benefits under this Deposit Agreement or be valid or
obligatory for any purpose unless it shall have been executed manually by a
duly authorized officer of the Depositary or, if a Registrar for the Receipts
(other than the Depositary) shall have been appointed, by facsimile signature
of a duly authorized officer of the Depositary and countersigned manually by a
duly authorized officer of such Registrar. The Depositary shall record on its
books each Receipt so signed and delivered as hereinafter provided.
Receipts shall be in denominations of any number of whole
Depositary Shares.
<PAGE> 5
4
Receipts may be endorsed with or have incorporated in the text
thereof such legends or recitals or changes not inconsistent with the
provisions of this Deposit Agreement as may be required by the Depositary or
required to comply with any applicable law or any regulation thereunder or with
the rules and regulations of any securities exchange upon which the Stock, the
Depositary Shares or the Receipts may be listed or to conform with any usage
with respect thereto, or to indicate any special limitations or restrictions to
which any particular Receipts are subject.
Title to Depositary Shares evidenced by a Receipt which is
properly endorsed, or accompanied by a properly executed instrument of
transfer, shall be transferable by delivery with the same effect as in the case
of a negotiable instrument; provided, however, that until transfer of a Receipt
shall be registered on the books of the Depositary as provided in Section 2.04,
the Depositary may, notwithstanding any notice to the contrary, treat the
record holder thereof at such time as the absolute owner thereof for the
purpose of determining the person entitled to distributions of dividends or
other distributions or to any notice provided for in this Deposit Agreement and
for all other purposes.
SECTION 2.02. Deposit of Stock; Execution and Delivery of
Receipts in Respect Thereof. Subject to the terms and conditions of this
Deposit Agreement, the Company may from time to time deposit shares of Stock
under this Deposit Agreement by delivery to the Depositary of a certificate or
certificates for the Stock to be deposited, properly endorsed or accompanied,
if required by the Depositary, by a duly execute instrument of transfer or
endorsement, in form satisfactory to the Depositary, together with all such
certifications as may be required by the Depositary in accordance with the
provisions of this Deposit Agreement, and together with a written order
directing the Depositary to execute and deliver to, or upon the written order
of, the person or persons stated in such order a Receipt or Receipts for the
number of Depositary Shares representing interests in such deposited Stock.
Deposited Stock shall be held by the Depositary at the
Depositary's Office or at such other place or places as the Depositary shall
determine.
Upon receipt by the Depositary of a certificate or
certificates for Stock deposited in accordance with the
<PAGE> 6
5
provisions of this Section, together with the other documents required as above
specified, and upon recordation of the Stock on the books of the Company in the
name of the Depositary or its nominee, the Depositary, subject to the term and
conditions of this Deposit Agreement, shall execute and deliver, to or upon the
order of the person or persons named in the written order delivered to the
Depositary referred to in the first paragraph of this Section, a Receipt for
the number of Depositary Shares relating to the Stock so deposited and
registered in such name or names as may be requested by such person or persons.
The Depositary shall execute and deliver such Receipt at the Depositary's
Office or such other offices, if any, as the Depositary may designate.
Delivery at other offices shall be at the risk and expense of the person
requesting such delivery. However, in each case, such delivery will be made
only upon payment to the Depositary of all taxes and governmental charges and
fees payable by the depositor, as provided in Section 5.07.
SECTION 2.03. Redemption of Stock. Whenever the Company
shall elect to redeem shares of Stock in accordance with the provisions of the
Certificate of Incorporation and the Certificate of Designations, it shall
(unless otherwise agreed in writing with the Depositary) give the Depositary
not less than 30 nor more than 60 days' notice of the date of such proposed
redemption of Stock. On the date of such redemption, provided that the Company
shall then have paid in full to the Depositary the redemption price of the
Stock to be redeemed, plus any accrued and unpaid dividends thereon, the
Depositary shall redeem the number of Depositary Shares representing such
Stock. The Depositary shall mail notice of such redemption and the proposed
simultaneous redemption of the number of Depositary Shares representing the
Stock to be redeemed, first-class postage prepaid, not less than 20 and not
more than 50 days prior to the date fixed for redemption of such Stock and
Depositary Shares (the "Redemption Date"), to the record holders of the
Receipts evidencing the Depositary Shares to be so redeemed, at the addresses
of such holders as they appear on the records of the Depositary; but neither
failure to mail any such notice to one or more such holders nor any defect in
any notice to one or more such holders shall affect the sufficiency of the
proceedings for redemptions to the other holders. Each such notice shall
state: (i) the Redemption Date; (ii) the number of Depositary Shares to be
redeemed and, if less than all the Depositary Shares held by any such holder
are to be redeemed, the number of such Depositary
<PAGE> 7
6
Shares held by such holder to be so redeemed; (iii) the redemption price (which
shall include full cumulative dividends thereon to the Redemption Date); (iv)
the place or places where Receipts evidencing Depositary Shares are to be
surrendered for payment of the redemption price; and (v) that dividends in
respect of the Stock underlying the Depositary Shares to be redeemed will cease
to accumulate at the close of business on such Redemption Date. In case less
than all the outstanding Depositary Shares are to be redeemed, the Depositary
Shares to be so redeemed shall be selected by lot or pro rata as may be
determined by the Depositary to be equitable.
Notice having been mailed by the Depositary as aforesaid, from
and after the Redemption Date (unless the Company shall have failed to redeem
the shares of Stock to be redeemed by it as set forth in the Company's notice
provided for in the preceding paragraph) all dividends in respect of the shares
of Stock so called for redemption shall cease to accumulate, the Depositary
Shares being redeemed from such proceeds shall be deemed no longer to be
outstanding, all rights of the holders of Receipts evidencing such Depositary
Shares (except the right to receive the redemption price) shall, to the extent
of such Depositary Shares, cease and terminate and, upon surrender in
accordance with such notice of the Receipts evidencing any such Depositary
Shares (properly endorsed or assigned for transfer, if the Depositary shall so
require), such Depositary Shares shall be redeemed by the Depositary at a
redemption price per Depositary Share equal to one-eighth of the redemption
price per share paid in respect of the shares of Stock plus all money and other
property, if any, represented by such Depositary Shares, including all amounts
paid by the Company in respect of dividends which on the Redemption Date have
accumulated on the shares of Stock to be so redeemed and have not theretofore
been paid.
If less than all the Depositary Shares evidenced by a Receipt
are called for redemption, the Depositary will deliver to the holder of such
Receipt upon its surrender to the Depositary, together with the redemption
payment, a new Receipt evidencing the Depositary Shares evidenced by such prior
Receipt and not called for redemption.
SECTION 2.04. Registration of Transfer of Receipts. Subject
to the terms and conditions of this Deposit Agreement, the Depositary shall
register on its books from time to time transfers of Receipts upon any
<PAGE> 8
7
surrender thereof by the holder in person or by duly authorized attorney,
properly endorsed or accompanied by a properly executed instrument of transfer.
Thereupon the Depositary shall execute a new Receipt or Receipts evidencing the
same aggregate number of Depositary Shares as those evidenced by the Receipt or
Receipts surrendered and deliver such new Receipt or Receipts to or upon the
order of the person entitled thereto.
SECTION 2.05. Split-ups and Combinations of Receipts;
Surrender of Receipts and Withdrawal of Stock. Upon surrender of a Receipt or
Receipts at the Depositary's Office or at such other offices as it may
designate for the purpose of effecting a split-up or combination of such
Receipt or Receipts, and subject to the terms and conditions of this Deposit
Agreement, the Depositary shall execute and deliver a new Receipt or Receipts
in the authorized denomination or denominations requested, evidencing the
aggregate number of Depositary Shares evidenced by the Receipt or Receipts
surrendered.
Any holder of a Receipt or Receipts representing any number of
whole shares of Stock may withdraw the Stock and all money and other property,
if any, represented thereby by surrendering such Receipt or Receipts at the
Depositary's Office or at such other offices as the depositary may designate
for such withdrawals. Thereafter, without unreasonable delay, the Depositary
shall deliver to such holder, or to the person or persons designated by such
holder as hereinafter provided, the number of whole shares of Stock and all
money and other property, if any, represented by the Receipt or Receipts
surrendered for withdrawal, but holders of such whole shares of Stock will not
thereafter be entitled to deposit such Stock hereunder or to receive Depositary
Shares therefor. If a Receipt delivered by the holder to the Depositary in
connection with such withdrawal shall evidence a number of Depositary Shares in
excess of the number of Depositary Shares representing the number of whole
shares of Stock and such money and other property, if any, to be so withdrawn,
deliver to such holder, or (subject to Section 2.04) upon his order, a new
Receipt evidencing such excess number of Depositary Shares. Delivery of the
Stock and the money and other property being withdrawn may be made by the
delivery of such certificates, documents of title and other instruments as the
Depositary may deem appropriate.
<PAGE> 9
8
If the Stock and the money and other property being withdrawn
are to be delivered to a person or persons other than the record holder of the
Receipt or Receipts being surrendered for withdrawal of Stock, such holder
shall execute and deliver to the Depositary a written order so directing the
Depositary and the Depositary may require that the Receipt or Receipts
surrendered by such holder for withdrawal of such shares of Stock be properly
endorsed in blank or accompanied by a properly executed instrument of transfer
in blank.
Delivery of the Stock and the money and other property, if
any, represented by Receipts surrendered for withdrawal shall be made by the
Depositary at the Depositary's Office, except that, at the request, risk and
expense of the holder surrendering such Receipt or Receipts and for the account
of the holder thereof, such delivery may be made at such other place as may be
designated by such holder.
SECTION 2.06. Limitation on Execution and Delivery, Transfer,
Surrender and Exchange of Receipts. As a condition precedent to the execution
and delivery, registration of transfer, split-up, combination, surrender or
exchange of any Receipt, the Depositary, any of the Depositary's Agents or the
Company may require payment to it of a sum sufficient for the payment (or, in
the event that the Depositary or the Company shall have made such payment, the
reimbursement to it) of any charges or expenses payable by the holder of a
Receipt pursuant to Section 5.07, may require the production of evidence
satisfactory to it as to the identity and genuineness of any signature and may
also require compliance with such regulations, if any, as the Depositary or the
Company may establish consistent with the provisions of this Deposit Agreement.
The deposit of Stock may be refused, the delivery of Receipts
against Stock may be suspended, the registration of transfer of Receipts may be
refused and the registration of transfer, surrender or exchange of outstanding
Receipts may be suspended (i) during any period when the register of
stockholders of the Company is closed or (ii) if any such action is deemed
necessary or advisable by the Depositary, any of the Depositary's Agents or the
Company at any time or from time to time because of any requirement of law or
of any government or governmental body or commission or under any provision of
this Deposit Agreement.
<PAGE> 10
9
SECTION 2.07. Lost Receipts, etc. In case any Receipt shall
be mutilated, destroyed, lost or stolen, the Depositary in its discretion may
execute and deliver a Receipt of like form and tenor in exchange and
substitution for such mutilated Receipt, or in lieu of and in substitution for
such destroyed, lost or stolen Receipt, upon (i) the filing by the holder
thereof with the Depositary of evidence satisfactory to the Depositary of such
destruction or loss or theft of such Receipt, of the authenticity thereof and
of his or her ownership thereof and (ii) the furnishing of the Depositary with
reasonable indemnification satisfactory to it.
SECTION 2.08. Cancellation and Destruction of Surrendered
Receipts. All Receipts surrendered to the Depositary or any Depositary's Agent
shall be canceled by the Depositary. Except as prohibited by applicable law or
regulation, the Depositary is authorized to destroy all receipts so canceled.
ARTICLE III
Certain Obligations of the Holders
of Receipts and the Company
SECTION 3.01. Filing Proofs, Certificates and Other
Information. Any holder of a Receipt may be required from time to time to file
such proof of residence, or other matters or other information, to execute such
certificates and to make such representations and warranties as the Depositary
or the Company may reasonably deem necessary or proper. The Depositary or the
Company may withhold the delivery, or delay the registration of transfer,
redemption or exchange, of any Receipt or the withdrawal of the Stock
represented by the Depositary Shares evidenced by any Receipt or the
distribution of any dividend or other distribution or the sale of any rights or
of the proceeds thereof until such proof or other information is filed or such
certificates are executed or such representations and warranties are made.
SECTION 3.02. Payment of Taxes or Other Governmental Charges.
Holders of Receipts shall be obligated to make payments to the Depositary of
certain charges and expenses, as provided in Section 5.07. Registration of
transfer of any Receipt or any withdrawal of Stock and all money or other
property, if any, represented by the
<PAGE> 11
10
Depositary Shares evidenced by such Receipt may be refused until such payment
due is made, and any dividends, interest payments or other distributions may be
withheld or all or any part of the Stock or other property represented by the
Depositary Shares evidenced by such Receipt and not theretofore sold may be
sold for the account of the holder thereof (after attempting by reasonable
means to notify such holder prior to such sale), and such dividends, interest
payments or other distributions or the proceeds of any such sale may be applied
to any payment of such charges or expenses, the holder of such Receipt
remaining liable of any deficiency.
SECTION 3.03. Warranty as to Stock. The Company hereby
represents and warrants that the Stock, when issued, will be validly issued,
fully paid and nonassessable. Such representation and warranty shall survive
the deposit of the Stock and the issuance of Receipts.
ARTICLE IV
The Deposited Securities; Notices
SECTION 4.01. Cash Distributions. Whenever the Depositary
shall receive any cash dividend or other cash distribution on Stock, the
Depositary shall, subject to Sections 3.01 and 3.02, distribute to record
holders of Receipts on the record date fixed pursuant to Section 4.04 such
amounts of such dividend or distribution as are, as nearly as practicable, in
proportion to the respective numbers of Depositary Shares evidenced by the
Receipts held by such holders; provided, however, that in case the Company or
the Depositary shall be required to withhold and shall withhold from any cash
dividend or other cash distribution in respect of the Stock an amount on
account of taxes, the amount made available for distribution or distributed in
respect of Depositary Shares shall be reduced accordingly. The Depositary
shall distribute or make available for distribution, as the case may be, 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 shall be held by the Depositary (without liability for interest
thereon) and shall be added to and be treated as part of the next sum received
by the Depositary for distribution to record holders of Receipts then
outstanding.
<PAGE> 12
11
SECTION 4.02. Distributions Other than Cash. Whenever the
Depositary shall receive any distribution other than cash on Stock, the
Depositary shall, subject to Sections 3.01 and 3.02, distribute to record
holders of Receipts on the record date fixed pursuant to Section 4.04 such
amounts of the securities or property received by it as are, as nearly as
practicable, in proportion to the respective number of Depositary Shares
evidenced by the Receipts held by such holders, in any manner that the
Depositary may deem equitable and practicable for accomplishing such
distribution. If in the opinion of the Depositary such distribution cannot be
made proportionately among such record holders, or if for any other reason
(including any requirement that the Company or the Depositary withhold an
amount on account of taxes) the Depositary deems, after consultation with the
Company, such distribution not to be feasible, the Depositary may, with the
approval of the Company, adopt such method as it deems equitable and
practicable for the purpose of effecting such distribution, including the sale
(at public or private sale) of the securities or property thus received, or any
part thereof, at such place or places and upon such terms as it may deem
proper. The net proceeds of any such sale shall, subject to Sections 3.01 and
3.02, be distributed or made available for distribution, as the case may be, by
the Depositary to record holders of Receipts as provided by Section 4.01 in the
case of a distribution received in cash.
SECTION 4.03. Subscription Rights, Preferences or Privileges.
If the Company shall at any time offer or cause to be offered to the persons in
whose names Stock is recorded on the books of the Company any rights,
preferences or privileges to subscribe for or to purchase any securities or any
rights, preferences or privileges of any other nature, such rights, preferences
or privileges shall in each such instance be made available by the Depositary
to the record holders of Receipts in such manner as the depositary may
determine, either by the issue to such record holders of warrants representing
such rights, preferences or privileges or by such other method as may be
approved by the Depositary in its discretion with the approval of the Company;
provided, however, that (i) if at the time of issue or offer of any such
rights, preferences or privileges the Depositary determines that it is not
lawful or (after consultation with the Company) not feasible to make such
rights, preferences or privileges available to holders of Receipts by the issue
of warrants or otherwise, or (ii) if and to the extent so instructed by holders
of Receipts who do not desire to exer-
<PAGE> 13
12
cise such rights, preferences or privileges, then the Depositary, in its
discretion (with the approval of the Company, in any case where the Depositary
has determined that it is not reasonable to make such rights, preferences or
privileges available), may, if applicable laws or the terms of such rights,
preferences or privileges permit such transfer, sell such rights, preferences
or privileges at public or private sale, at such place or places and upon such
terms as it may deem proper. The net proceeds of any such sales shall be
distributed by the Depositary to the record holders of Receipts entitled
thereto as provided by Section 4.01 in the case of a distribution received in
cash.
If registration under the Securities Act of 1933, as amended,
of the securities to which any rights, preferences or privileges relate is
required in order for holders of Receipts to be offered or sold the securities
to which such rights, preferences or privileges relate, the Company agrees with
the Depositary that it will file promptly a registration statement pursuant to
such Act with respect to such rights, preferences or privileges and securities
and use its best efforts and take all steps available to it to cause such
registration statement to become effective sufficiently in advance of the
expiration of such rights, preferences or privileges to enable such holders to
exercise such rights, preferences or privileges. In no event shall the
Depositary make available to the holders of Receipts any right, preference or
privilege to subscribe for or to purchase any securities unless and until such
a registration statement shall have become effective or unless the offering and
sale of such securities to such holders are exempt from registration under the
provisions of such Act.
If any other action under the laws of any jurisdiction or any
governmental or administrative authorization, consent or permit is required in
order for such rights, preferences or privileges to be made available to
holders of Receipts, the Company agrees with the Depositary that the Company
will use its best efforts to take such action or obtain such authorization,
consent or permit sufficiently in advance of the expiration of such rights,
preferences or privileges to enable such holders to exercise such rights,
preferences or privileges.
SECTION 4.04. Notice of Dividends, etc.; Fixing of Record
Date for Holders of Receipts. Whenever any cash dividend or other cash
distribution shall become payable or any distribution other than cash shall be
made, or if
<PAGE> 14
13
rights, preferences or privileges shall at any time be offered, with respect to
Stock, or whenever the Depositary shall receive notice of (a) any meeting at
which holders of Stock are entitled to vote or of which holders of Stock are
entitled to notice or (b) any election on the part of the Company to redeem any
Shares of Stock, the Depositary shall in each such instance fix a record date
(which shall be the same date as the record date fixed by the Company with
respect to the Stock) for the determination of the holders of Receipts who
shall be entitled hereunder to receive a distribution in respect of such
dividend, distribution, rights, preferences or privileges or the net proceeds
of the sale thereof, or to give instructions for the exercise of voting rights
at any such meeting or to receive notice of such meeting or redemption of
Stock.
SECTION 4.05. Voting Rights. Upon receipt of notice of any
meeting at which the holders of Stock are entitled to vote, the Depositary
shall, as soon as practicable thereafter, mail to the record holders of
Receipts a notice which shall contain (i) such information as is contained in
such notice of meeting and (ii) a statement that the holders may, subject to
any applicable restrictions, instruct the Depositary as to the exercise of the
voting rights pertaining to the amount of Stock underlying their respective
Depositary Shares (including an express indication that instructions may be
given to the Depositary to give a discretionary proxy to a person designated by
the Company) and a brief statement as to the manner in which such instructions
may be given. Upon the written request of the holders of Receipts on such
record date, the Depositary shall endeavor insofar as practicable to vote or
cause to be voted, in accordance with the instructions set forth in such
requests, the maximum number of whole shares of Stock underlying the Depositary
Shares evidenced by all Receipts as to which any particular voting instructions
are received. The Company hereby agrees to take all action which may be deemed
necessary by the Depository in order to enable the Depository to vote such
Stock or cause such Stock to be voted. In the absence of specific instructions
from the holder of the Receipt, the Depositary will abstain from voting (but,
at its discretion, not from appearing at any meeting with respect to such Stock
unless directed to the contrary by the holders of all the Receipts) to the
extent of the Stock underlying the Depositary Shares evidenced by such Receipt.
SECTION 4.06. Changes Affecting Deposited Securities and
Reclassification, Recapitalization, etc. Upon
<PAGE> 15
14
any change in par or stated value, split-up, combination or any of the
reclassification of the Stock, or upon any recapitalization, reorganization,
merger, amalgamation or consolidation or sale of all or substantially all the
Company's assets affecting the Company or to which it is a party, the
Depositary may in its discretion with the approval of, and shall upon the
instructions of, the Company, and (in either case) in such manner as the
Depositary may deem equitable, (i) make such adjustments in (a) the fraction of
an interest in one share of Stock underlying one Depositary Share and (b) the
ratio of the redemption price per Depositary Share to the redemption price of a
share of Stock, in each case as may be necessary fully to reflect the effects
of such change in par or stated value, split-up, combination or other
reclassification of Stock, or of such recapitalization, reorganization, merger,
amalgamation or consolidation or sale and (ii) treat any securities which shall
be received by the Depositary in exchange for or upon conversion of or in
respect of the Stock as new deposited securities so received in exchange for or
upon conversion or in respect of such Stock. In any such case the Depositary
may in its discretion, with the approval of the Company, execute and deliver
additional Receipts, or may call for the surrender of all outstanding Receipts
to be exchanged for new Receipts specifically describing such new deposited
securities.
Anything to the contrary herein notwithstanding, holders of
Receipts shall have the right from and after the effective date of any such
change in par or stated value, split-up, combination or other reclassification
of Stock or any such recapitalization, reorganization, merger, amalgamation or
consolidation to surrender such Receipts to the Depositary with instructions to
convert, exchange or surrender the shares of Stock attributable thereto into or
for, as the case may be, the kind and amount of shares of stock and other
securities and property and cash into which the Stock represented by such
Receipts was converted or for which such Stock was exchanged or surrendered
after giving effect to such transaction.
SECTION 4.07. Inspection of Reports. The Depositary shall
make available for inspection by holders of Receipts at the Depositary's
Office, 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 Stock.
<PAGE> 16
15
SECTION 4.08. List of Receipt Holders. Promptly upon request
from time to time by the Company, the Depositary shall furnish to it a list, as
of a recent date, of the names, addresses and holdings of Stock of all persons
in whose names Receipts are registered on the books of the Depositary or
Registrar, as the case may be.
ARTICLE V
The Depositary, the Depositary's Agents,
the Registrar and the Company
SECTION 5.01. Maintenance of Offices, Agencies and Transfer
Books by the Depositary; Registrar. Upon execution of this Deposit Agreement,
the Depositary shall maintain, at the Depositary's Office, facilities for the
execution and delivery, registration and registration of transfer, surrender
and exchange of Receipts, and at the offices of the Depositary's Agents, if
any, facilities of the delivery, registration or transfer, surrender and
exchange of Receipts, all in accordance with the provisions of this Deposit
Agreement.
The Depositary shall keep books at the Depositary's Office for
the registration and registration of transfer of Receipts, which books at all
reasonable times shall be open for inspection by the record holders of
Receipts; provided, that any such holder requesting to exercise such right
shall certify to the Depositary that such inspection shall be for a proper
purpose reasonably related to such person's interest as an owner of Depositary
Shares evidenced by the Receipts.
The Depositary may close such books, at any time or from time
to time, when deemed expedient by it in connection with the performance of its
duties hereunder.
If the Receipts or the Depositary Shares evidenced thereby or
the Stock underlying such Depositary Shares shall be listed on the New York
Stock Exchange, the Depositary may, with the approval of the Company, appoint a
Registrar for registration of such Receipts or Depositary Shares in accordance
with any requirements of such Exchange. Such Registrar (which may be the
Depositary if so permitted by the requirements of such Exchange) may be removed
and a substitute Registrar appointed by the Depositary upon the request or with
the approval of the company. If the
<PAGE> 17
16
Receipts, such Depositary Shares or such Stock are listed on one or more other
stock exchanges, the Depositary will, at the request of the Company, arrange
such facilities for the delivery, registration, registration of transfer,
surrender and exchange of such Receipts, such Depositary Shares or such Stock
as may be required by law or applicable stock exchange regulation.
SECTION 5.02. Prevention of or Delay in Performance by the
Depositary, the Depositary's Agents, the Registrar or the Company. Neither the
Depositary nor any Depositary's Agent nor any Registrar nor the Company shall
incur any liability to any holder of any Receipt if by reason of any provision
of any present or future law, or regulation thereunder, of the United States of
America or of any other governmental authority or, in the case of the
Depositary, the Depositary's Agent or the Registrar, by reason of any
provision, present or future, of the Certificate of Incorporation (including
the Certificate of Designations) or by reason of any act of God or war or other
circumstance beyond the control of the relevant party, the Depositary, the
Depositary's Agent, the Registrar or the Company shall be prevented or
forbidden from doing or performing any act or thing which the terms of this
Deposit Agreement provide shall be done or performed; nor shall the Depositary,
any Depositary's Agent, any Registrar or the Company incur any liability to any
holder of a Receipt (i) by reason of any nonperformance or delay, caused as
aforesaid, in the performance of any act or thing which the terms of this
Deposit Agreement provide shall or may be done or performed, or (ii) by reason
of any exercise of, or failure to exercise, any discretion provided for in this
Deposit Agreement except, in case of any such exercise or failure to exercise
discretion not caused as aforesaid, if caused by the negligence or wilful
misconduct of the party charged with such exercise or failure to exercise.
SECTION 5.03. Obligations of the Depositary, the Depositary's
Agents, the Registrar and the Company. Neither the Depositary nor any
Depositary's Agent nor any Registrar nor the Company assumes any obligation or
shall be subject to any liability under this Deposit Agreement to holders of
Receipts other than for its negligence or wilful misconduct.
Neither the Depositary nor any Depositary's Agent nor any
Registrar nor the Company shall be under any obligation to appear in, prosecute
or defend any action, suit or other proceeding in respect of the Stock, the
Depositary
<PAGE> 18
17
Shares or the Receipts which in its opinion may involve it in expense or
liability unless indemnity satisfactory to it against all expense and liability
be furnished as often as may be required.
Neither the Depositary nor any Depositary's Agent nor any
Registrar nor the Company shall be liable for any action or any failure to act
by it in reliance upon the written advice of legal counsel or accountants, or
information from any person presenting Stock for deposit, any holder of a
Receipt or any other person believed by it in good faith to be competent to
give such information. The Depositary, any Depositary's Agent, any Registrar
and the Company may each rely and shall each be protected in acting upon any
written notice, request, direction or other document believed by it to be
genuine and to have been signed or presented by the proper party or parties.
The Depositary shall not be responsible for any failure to
carry out any instruction to vote any of the shares of Stock or for the manner
or effect of any such vote, as long as any such action or nonaction is in good
faith. The Depositary undertakes, and any Registrar shall be required to
undertake, to perform such duties and only such duties as are specifically set
forth in this Agreement, and no implied covenants or obligations shall be read
into this Agreement against the Depositary or any Registrar. The Depositary
will indemnify the Company against any liability which may arise out of acts
performed or omitted by the Depositary or its agent due to this or their
negligence or bad faith. The Depositary, the Depositary's Agents and any
Registrar may own and deal in any class of securities of the Company or its
affiliates and in Receipts. The Depositary may also act as transfer agent or
registrar of any of the securities of the Company and its affiliates.
SECTION 5.04. Resignation and Removal of the Depositary;
Appointment of Successor Depositary. The Depositary may at any time resign as
Depositary hereunder by notice of its election so to do delivered to the
Company, such resignation to take effect upon the appointment of a successor
depositary and its acceptance of such appointment as hereinafter provided.
The Depositary may at any time be removed by the Company by
notice of such removal delivered to the Depositary, such removal to take effect
upon the appointment of a
<PAGE> 19
18
successor Depositary and its acceptance of such appointment as hereinafter
provided.
In case the Depositary acting hereunder shall at any time
resign or be removed, the Company shall, within 60 days after the delivery of
the notice of resignation or removal, as the case may be, appoint a successor
Depositary, which shall 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. Every successor Depositary shall execute and deliver to its
predecessor and to the Company an instrument in writing accepting its
appointment hereunder, and thereupon such successor Depositary, without any
further act or deed, shall become fully vested with all the rights, powers,
duties and obligations of its predecessor and for all purposes shall be the
Depositary under this Deposit Agreement, and such predecessor, upon payment of
all sums due it and on the written request of the Company, shall execute and
deliver an instrument transferring to such successor all rights and powers of
such predecessor hereunder, shall duly assign, transfer and deliver all right,
title and interest in the Stock and any moneys or property held hereunder to
such successor and shall deliver to such successor a list of the record holders
of all outstanding Receipts. Any successor Depositary shall promptly mail
notice of its appointment to the record holders of Receipts.
Any corporation into or with which the Depositary may be
merged, consolidated or converted shall be the successor of such Depositary
without the execution or filing of any document or any further act. Such
successor Depositary may authenticate the Receipts in the name of the
predecessor Depositary or in the name of the successor Depositary.
SECTION 5.05. Corporate Notices and Reports. The Company
agrees that it will deliver to the Depositary, and the Depositary will,
promptly after receipt thereof, transmit to the record holders of Receipts, in
each case at the address recorded in the Depositary's books, copies of all
notices and reports (including, without limitation, financial statements)
required by law, the rules of any national securities exchange upon which the
Stock, the Depositary Shares or the Receipts are listed or by the Certificate
of incorporation (including the Certificate of Designations) to be furnished by
the Company to holders of Stock. Such transmission will be at the Company's
expense, and the Company will provide the Depositary with such number of
<PAGE> 20
19
copies of such documents as the Depositary may reasonably request. In
addition, the Depositary will transmit to the holders of Receipts (at the
Company's expense) such other documents as may be requested by the Company.
SECTION 5.06. Indemnification by the Company. The Company
shall indemnify the Depositary, any Depositary's Agent and any Registrar
against, and hold each of them harmless from, any loss, liability or expense
(including the costs and expenses of defending itself) which may arise out of
(i) acts performed or omitted in connection with this Agreement and the
Receipts (a) by the Depositary, any Registrar or any of their respective agents
(including any Depositary's Agent), except for any liability arising out of
negligence or bad faith on the respective parts of any such person or persons,
or (b) by the company or any of its agents (other than the Depositary, the
Depositary's Agents, the Registrar, if any, or any of their agents), or (ii)
the offer, sale or registration of the Receipts or the Stock pursuant to the
provisions hereof.
SECTION 5.07. Charges and Expenses. The Company shall pay
all transfer and other taxes and governmental charges arising solely from the
existence of the depositary arrangements. The Company shall pay all charges of
the Depositary in connection with the initial deposit of the Stock and the
initial issuance of the Depositary Shares in any redemption of the Stock at the
option of the Company. All other transfer and other taxes and governmental
charges shall be at the expense of holders of Depositary Shares. If, at the
request of a holder or Receipts, the Depositary incurs charges or expenses for
which it is not otherwise liable hereunder, such holder will be liable for such
shares and expenses. All other charges and expenses of the Depositary and any
Depositary's Agent hereunder and of any Registrar (including, in each case,
fees and expenses of counsel) incident to the performance of their respective
obligations hereunder will be paid upon consultation and agreement between the
Depositary and the Company as to the amount and nature of such charges and
expenses. The Depositary shall present its statement for charges and expenses
to the Company once every three months or at such other intervals as the
Company and the Depositary may agree.
<PAGE> 21
20
ARTICLE VI
Amendment and Termination
SECTION 6.01. Amendment. The form of the Receipts and any
provisions of this Deposit Agreement may at any time and from time to time be
amended by agreement between the Company and the Depositary in any respect
which they may deem necessary or desirable; provided, however, that no such
amendment which shall materially and adversely alter the rights of the holders
of Receipts shall be effective unless such amendment shall have been approved
by the holders or at least a majority of the Depositary Shares then
outstanding. Every holder of an outstanding Receipt at the time any such
amendment becomes effective shall be deemed, by continuing to hold such
Receipt, to consent and agree to such amendment and to be bound by the Deposit
Agreement as amended thereby. In no event shall any amendment impair the
right, subject to the provisions of Sections 2.05 and 2.06 hereof, of any owner
of any Depositary Shares to surrender the Receipt evidencing such Depositary
Shares with instructions to the Depositary to deliver to the holder the Stock
and all money and other property, if any, represented thereby, except in order
to comply with mandatory provisions of applicable law.
SECTION 6.02. Termination. This Agreement may be terminated
by the Company or the Depositary only after (i) all outstanding Depositary
Shares shall have been redeemed pursuant to Section 2.03 or (ii) there shall
have been made a final distribution in respect of the Stock in connection with
any liquidation, dissolution or winding up of the Company and such distribution
shall have been distributed to the holders of Depositary Shares pursuant to
Section 4.01 or 4.02, as applicable.
Upon the termination of this Deposit Agreement, the Company
shall be discharged from all obligations under this Deposit Agreement except
for its obligations to the Depositary, any Depositary's Agent and any Registrar
under Sections 5.06 and 5.07.
<PAGE> 22
21
ARTICLE VII
Miscellaneous
SECTION 7.01. Counterparts. This Deposit Agreement may be
executed in any number of counterparts, and by each of the parties hereto on
separate counterparts, each of which counterparts, when so executed and
delivered, shall be deemed an original, but all such counterparts taken
together, shall constitute one and the same instrument.
SECTION 7.02. Exclusive Benefit of Parties. This Deposit
Agreement is for the exclusive benefit of the parties hereto, and their
respective successors hereunder, and shall not be deemed to give any legal or
equitable right, remedy or claim to any other person whatsoever.
SECTION 7.03. Invalidity of Provisions. In case any one or
more of the provisions contained in this Deposit Agreement or in the Receipts
should be or become invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions contained
herein or therein shall in no way be affected, prejudiced or disturbed thereby.
SECTION 7.04. Notices. Any and all notices to be given to
the Company hereunder or under the Receipts shall be in writing and shall be
deemed to have been duly given if personally delivered or sent by mail or
telegram or telex confirmed by letter, addressed to the Company at 1285 Avenue
of the Americas, New York, New York 10019, to the attention of the Secretary,
or at any other address of which the Company shall have notified the Depositary
in writing.
Any and all notices to be given to the Depositary hereunder
or under the Receipts shall be in writing and shall be deemed to have been duly
given if personally delivered or sent by mail or by telegram or telex confirmed
by letter, addressed to the Depositary at the Depositary's Office, or at any
other address of which the Depositary shall have notified the Company in
writing.
Any and all notices to be given to any record holder of a
Receipt hereunder or under the Receipts shall be in writing and shall be deemed
to have been duly given if personally delivered or sent by mail or by telegram
or telex confirmed by letter, addressed to such record holder at the address of
such record holder as it appears on the books of
<PAGE> 23
22
the Depositary, or if such holder shall have filed with the Depositary a
written request that notices intended for such holder be mailed to some other
address, at the address designated in such request.
Delivery of a notice sent by mail or by telegram or telex
shall be deemed to be effected at the time when a duly addressed letter
containing the same (or a confirmation thereof in the case of a telegram or
telex message) is deposited, postage prepaid, in a post office letter box. The
Depositary or the Company may, however, act upon any telegram or telex message
received by it from the other or from any holder of a Receipt, notwithstanding
that such telegram or telex message shall not subsequently be confirmed by
letter or as aforesaid.
SECTION 7.05. Depositary's Agents. The Depositary may from
time to time appoint Depositary's Agents to act in any respect for the
depositary for the purposes of this Deposit Agreement and may at any time
appoint additional Depositary's Agents and vary or terminate the appointment of
such Depositary's Agents. The Depositary will notify the Company of any such
action.
SECTION 7.06. Holders of Receipts Are Parties. The holders
of Receipts from time to time shall be parties to this Deposit Agreement and
shall be bound by all of the terms and conditions hereof and of the Receipts by
acceptance of delivery thereof.
SECTION 7.07. GOVERNING LAW. THIS DEPOSIT AGREEMENT AND THE
RECEIPTS AND ALL RIGHTS HEREUNDER AND THEREUNDER AND PROVISIONS HEREOF AND
THEREOF SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL
LAWS OF THE STATE OF NEW YORK.
SECTION 7.08. Inspection of Deposit Agreement. Copies of
this Deposit Agreement shall be filed with the Depositary and the Depositary's
Agents and shall be open to inspection during business hours at the
Depositary's Office and the respective offices of the Depositary's Agents, if
any, by any holder of a Receipt.
SECTION 7.09. Headings. The headings of articles and sections
in this Deposit Agreement and in the form of the Receipt set forth in Exhibit A
hereto have been inserted for convenience only and are not be regarded as a
part of this Deposit Agreement or the Receipts or to have any
<PAGE> 24
23
bearing upon the meaning or interpretation of any provision contained herein or
in the Receipts.
IN WITNESS WHEREOF, the Company and the Depositary have duly
executed this Agreement, as of the day and year first above set forth, and all
holders by Receipts shall become parties hereto by and upon acceptance of them
of delivery of Receipts issued in accordance with the terms hereof.
PAINE WEBBER GROUP INC.,
by
------------------------------------
Authorized Officer
(Seal]
Attest:
- ----------------------------
CHEMICAL BANK, as Depositary,
by
------------------------------------
Authorized Officer
(Seal]
Attest:
- ---------------------------
<PAGE> 25
EXHIBIT A
FORM OF FACE OF DEPOSITARY RECEIPT
DEPOSITARY RECEIPT
FOR
DEPOSITARY SHARES,
EACH REPRESENTING A ONE-EIGHTH
INTEREST IN A SHARE OF [ ]% CUMULATIVE
PREFERRED STOCK, SERIES [ ]
($20.00 par value)
OF
PAINE WEBBER GROUP INC.
(INCORPORATED UNDER THE LAWS OF THE STATE OF DELAWARE)
NUMBER ________ DEPOSITARY SHARES
(EACH DEPOSITARY SHARE REPRESENTS A ONE-EIGHTH
INTEREST IN A SHARE OF [ ]% CUMULATIVE
PREFERRED STOCK, SERIES [ ] ($20.00 par
value) OF PAINE WEBBER GROUP INC.)
CUSIP [ ]
1. Chemical Bank, a New York banking corporation, as Depositary (the
"Depositary"), hereby certifies that [ ] is the registered owner of
Depositary Shares ("Depositary Shares"), each Depositary Share representing a
one-eighth interest in a share of [ ]% Cumulative Preferred Stock, Series
[ ], $20.00 par value (the "Preferred Stock"), of Paine Webber Group Inc., a
corporation duly organized and existing under the laws of the State of Delaware
(the "Company"). Subject to the terms of the Deposit Agreement (as defined
below), each owner of a Depositary Share is entitled, through the Depositary,
and in proportion to the fractional interest in a share of the Preferred Stock
underlying the Depositary Shares set forth above, to all the rights and
preferences of the Preferred Stock relating thereto, including dividend,
voting, redemption and liquidation rights contained in the Company's Restated
Certificate of Incorporation (the "Certificate of Incorporation"), and the
certificate of designations adopted
<PAGE> 26
by the Company's Board of Directors and filed with the Secretary of State of
the State of Delaware establishing the Preferred Stock as a series of preferred
stock of the Company and setting forth the number, terms, powers, designations,
rights, preferences, qualifications, restrictions and limitations of the
Preferred Stock (the "Certificate of Designations"), copies of which are on
file at the Depositary's Office located, as of the execution date of the
Depositary Agreement, at 450 West 33rd Street, New York, New York.
2. The Deposit Agreement. Depositary Receipts (the "Receipts"), of which
this Receipt is one, are made available upon the terms and conditions set forth
in the Deposit Agreement, dated as of March [ ], 1994 (the "Deposit
Agreement"), among the Company, the Depositary and the holders from time to
time of Receipts. The Deposit Agreement (copies of which are on file at the
Depositary's Office) sets forth the rights of holders of Receipts and the
rights and duties of the Depositary and the Company in respect of the Preferred
Stock deposited, and any and all other property and cash deposited from time to
time, thereunder. The statements made on the face and the reverse of this
Receipt are summaries of certain provisions of the Deposit Agreement and are
subject to the detailed provisions thereof, to which reference is hereby made.
Unless otherwise expressly herein provided, all capitalized terms used herein
shall have the meanings ascribed thereto in the Deposit Agreement.
3. Redemption. Whenever the Company shall be permitted and shall elect to
redeem shares of Preferred Stock in accordance with the provisions of the
Certificate of Incorporation and the Certificate of Designations, it shall
(unless otherwise agreed in writing with the Depositary) give the Depositary
not less than 30 nor more than 60 days' notice of the date of such proposed
redemption of Preferred Stock. The Depositary shall mail notice of such
redemption and the proposed simultaneous redemption of the number of Depositary
Shares representing the Preferred Stock to be redeemed, first-class postage
prepaid, not less than 20 and not more than 50 days prior to the date fixed for
redemption of such Preferred Stock and Depositary Shares (the "Redemption
Date") to the record holders of the Receipts evidencing the Depositary Shares
to be so redeemed. Each such notice shall state: (a) the Redemption Date;
A-2
<PAGE> 27
(b) the number of Depositary Shares to be redeemed and, if less than all the
Depositary Shares held by any such holder are to be redeemed the number of the
Depositary Shares held by such holder to be redeemed; (c) the redemption price
(which shall include full cumulative dividends thereon to the Redemption Date);
(d) the place or places where Receipts evidencing Depositary Shares are to be
surrendered for payment of the redemption price; and (e) the dividends in
respect of the Preferred Stock underlying the Depositary Shares to be redeemed
will cease to accumulate at the close of business on such Redemption Date. In
case less than all the outstanding Depositary Shares are to be redeemed, the
Depositary Shares to be so redeemed shall be selected by lot or pro rate as may
be determined by the Depositary to be equitable. Notice having been mailed by
the Depositary as aforesaid, from and after the Redemption Date (unless the
Company shall be failed to redeemed the shares of Preferred Stock to be
redeemed by it on such date), all dividends in respect of the shares of
Preferred Stock so called for redemption shall cease to accumulate, the
Depositary Shares being redeemed from such proceeds shall be deemed no longer
to be outstanding, all rights of the holders of Receipts evidencing such
Depositary Shares (except the right to receive the redemption price) shall, to
the extent of such Depositary Shares, cease and terminate and, upon surrender
in accordance with such notice of the Receipts evidencing any such Depositary
Shares (properly endorsed or assigned for transfer, if the Depositary shall so
require), such Depositary Shares shall be redeemed by the Depositary at a
redemption price per Depositary Share equal to one-eighth of the redemption
price per share paid in respect of the shares of Preferred Stock plus all money
and other property, if any, represented by such Depositary Shares, including
all amounts paid by the Company in respect of dividends which on the Redemption
Date have accumulated on the shares of Preferred Stock to be so redeemed and
have not theretofore been paid.
4. Transfer, Split-ups, Combinations. This Receipt is transferable on the
books of the Depositary upon surrender of this Receipt of the Depositary by the
holder in person or by duly authorized attorney, properly endorsed or
accompanied by a properly executed instrument of transfer, and upon such
transfer the Depositary shall execute a new Receipt to or upon the order of the
person entitled thereto, as provided in the Deposit Agreement. This Receipt
may be
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<PAGE> 28
split into other Receipts or combined with other Receipts into one Receipt,
subject to the terms and conditions of the Deposit Agreement, evidencing the
same aggregate number of Depositary Shares as the Receipt or Receipts
surrendered.
5. Surrender of Receipts and Withdrawal of Preferred Stock. The holder of
this Receipt, if this Receipt (together with any other Receipts surrendered by
such holder) represents any number of whole shares of Preferred Stock, may
withdraw the Preferred Stock and all money and other property, if any,
represented hereby by surrendering this Receipt (and such other Receipts) at
the Depositary's Office or at such other offices as the Depositary may
designated for such withdrawals. Upon such surrender, the Depositary shall
deliver to such holder, or upon the order of such other person or persons
designated by such holder as provided in the Deposit Agreement, the number of
whole shares of Preferred Stock and all money and other property, if any,
represented by the Receipt or Receipts so surrendered for withdrawal, but
holders of such whole shares of Preferred Stock will not thereafter be entitled
to deposit such Preferred Stock under the Deposit Agreement or to receive
Depositary Shares therefor. If a Receipt delivered by the holder to a
Depositary in connection with such withdrawal shall evidence a number of
Depositary Shares in excess of the number of Depositary Shares representing the
number of whole shares of Preferred Stock to be so withdrawn, the Depositary
shall at the same time, in addition to such number of whole shares of Preferred
Stock and such money and other property, if any, to be so withdrawn, deliver to
such holder, or (subject to the provisions of the Deposit Agreement) upon his
order, a new Receipt evidencing such excess number of Depositary Shares.
Delivery of the Preferred Stock and money and other property being withdrawn
may be made by the delivery of such certificates, documents of title and other
instruments as the Depositary may deem appropriate, which, if required by law,
shall be properly endorsed or accompanied by proper instruments of transfer.
If the Preferred Stock and the money and other property being withdrawn are
to be delivered to a person or persons other than the record holder of this
Receipt or such other Receipts being surrendered for withdrawal of Preferred
Stock, such holder shall execute and deliver to the Depositary a written order
so directing the Depositary, and
A-4
<PAGE> 29
the Depositary may require that this Receipt or such other Receipts surrendered
by such holder for withdrawal of such shares of Preferred Stock be properly
endorsed in blank or accompanied by a properly executed instrument of transfer
in blank.
6. Suspension of Delivery, Transfer, etc. The transfer or surrender of
this Receipt may be suspended during any period when the register of
stockholders of the Company is closed or if any such action is deemed necessary
or advisable by the Depositary, any agent of the Depositary or the Company at
any time or from time to time because of any requirement of law or any
government or governmental body or commission, or under any provision of the
Deposit Agreement.
7. Payment of Taxes or Other Governmental Charges. If any tax or other
governmental charge shall become payable by or on behalf of the Depositary with
respect to this Receipt, such tax (including transfer taxes, if any) or
governmental charge shall be payable by the holder hereof, subject to certain
exception in the Deposit Agreement. Transfer of this Receipt may be refused
until such payment is made, and any dividends, interest payments or other
distributions may be withheld or all or any part of the Preferred Stock or
other property represented by this Receipt and not theretofore sold may be sold
for the account of the holder thereof (after attempting by reasonable means to
notify such holder prior to such sale), and such dividends, interest payments
or other distributions or the proceeds of any such sale may be applied to any
payment of such charges or expenses, the holder of this Receipt remaining
liable for any deficiency.
8. Warranty by the Company. The Company has represented and warranted that
the Preferred Stock, when issued, will be validly issued, fully paid and
nonassessable.
9. Amendment. The form of the Receipts and any provisions of the Deposit
Agreement may at any time and from time to time be amended by agreement between
the Company and the Depositary in any respect which they deem necessary or
desirable; provided, however, that no such amendment which shall materially and
adversely alter the rights of the holders of Receipts shall be effective unless
such amendment
A-5
<PAGE> 30
shall have been approved by the holders of at least a majority of the
Depositary Shares then outstanding. A holder of a Receipt at the time any such
amendment so becomes effective shall be deemed, by continuing to hold such
Receipt, to consent and agree to such amendment and to be bound by the Deposit
Agreement as amended thereby. In no event shall any amendment impair the
right, subject to the provisions of Sections 2.05 and 2.06 of the Deposit
Agreement, of the owner of the Depositary Shares evidenced by this Receipt to
surrender this Receipt with instructions to the Depositary to delivery to the
holder the number of whole shares of the Preferred Stock and all money and
other property, if any, represented thereby, except in order to comply with
mandatory provisions of applicable law.
Dated: CHEMICAL BANK
Depositary, Transfer Agent and Registrar
By
-----------------------------------
Authorized Officer
FURTHER CONDITIONS AND AGREEMENTS FORMING PART OF THIS RECEIPT APPEAR ON THE
REVERSE SIDE.
FORM OF REVERSE OF DEPOSITARY RECEIPT
10. Charges of Depositary. The Company will pay all transfer and other
taxes and governmental charges arising solely from the existence of the
depositary arrangements and all charges of the Depositary in connection with
the initial deposit of the Preferred Stock and the initial issuance of the
Depositary Shares and any redemption of the Preferred Stock at the option of
the Company. All other transfer and other taxes and other governmental charges
shall be at the expense of the holders of Depositary Shares.
11. Title to Receipts. This Receipt (and the Depositary Shares evidenced
hereby), when properly endorsed or accompanied by a properly executed
instrument of
A-6
<PAGE> 31
transfer, is transferable by delivery with the same effect as in the case of a
negotiable instrument; provided, however, that until transfer of a Receipt
shall be registered on the books of the Depositary, the Depositary may,
notwithstanding any notice to the contrary, treat the record holder hereof at
such time as the absolute owner hereof for the purpose of determining the
person entitled to distributions of dividends or other distributions or to any
notice provided for in the Deposit Agreement, and for all other purposes.
12. Dividends and Distributions. Whenever the Depositary receives any cash
dividend or other cash distribution on the Preferred Stock, the Depositary
will, subject to the provisions of the Deposit Agreement, make such
distribution to the Receipt holders as nearly as practicable in proportion to
the number of Depositary Shares evidenced by the Receipts held by them;
provided, however, that the amount distributed will be reduced by any amounts
required to be withheld by the Company or the Depositary on account of taxes.
Other distributions received on the Preferred Stock may be distributed to
holders of Receipts as provided in the Deposit Agreement.
13. Fixing of Record Date. Whenever any cash dividend or other cash
distribution shall become payable or any distribution other than cash shall be
made, or if rights, preferences or privileges shall at any time be offered,
with respect to the Preferred Stock, or whenever the Depositary shall receive
notice of (a) any meeting at which holders of Preferred Stock are entitled to
vote or of which holders of Preferred Stock are entitled to notice or (b) any
election on the part of the Company to redeem any shares of Preferred Stock,
the Depositary shall in each instance fix a record date (which shall be the
record date fixed by the Company with respect to the Preferred Stock), for the
determination of the holders of Receipts who shall be entitled to receive such
dividend, distribution, rights, preferences or privileges or the net proceeds
of the sale thereof, or to give instructions for the exercise of voting rights
at any such meeting, or who shall be entitled to notice of such meeting or
redemption of Preferred Stock or for any other appropriate reasons.
14. Voting Rights. Upon receipt of notice of any meeting at which holders
of Preferred Stock are entitled to
A-7
<PAGE> 32
vote, the Depositary shall, as soon as practicable thereafter, mail to the
record holders of Receipts a notice which shall contain (i) such information as
is contained in such notice of meeting and (ii) a statement that the holders
may, subject to any applicable restrictions, instruct the Depositary as to the
exercise of the voting rights pertaining to the amount of Preferred Stock
relating to their respective Depositary Shares (including an express indication
that instructions may be given to the Depositary to give a discretionary proxy
to a person designated by the Company) and a brief statement as to the manner
in which such instructions may be given. Upon the written request of the
holders of Receipts on such record date, the Depositary shall endeavor insofar
as practicable to vote or cause to be voted, in accordance with the
instructions set forth in such request, the maximum number of whole shares of
Preferred Stock underlying the Depositary Shares evidenced by all Receipts as
to which any particular voting instructions are received. In the absence of
specific instructions from the holder of a Receipt, the Depositary will abstain
from voting (but, at its discretion, not from appearing at any meeting with
respect to such Preferred Stock unless directed to the contrary by the holders
of all the Receipts) to the extent of the Preferred Stock underlying the
Depositary Shares evidenced by such Receipt.
15. Changes Affecting Deposited Securities. Upon any change in par or
stated value, split-up, combination or any other reclassification of the
Preferred Stock or upon any recapitalization, reorganization, merger
amalgamation or consolidation or sale of all or substantially all of the
Company's assets affecting the Company or to which it is a party, the
Depositary may in its discretion with the approval of, and shall upon the
instructions of, the Company, and (in either case) in such manner as the
Depositary may deem equitable, (i) make such adjustments in (a) the fraction of
an interest in one share of Preferred Stock underlying one Depositary Share and
(b) the ratio of the redemption price per Depositary Share to the redemption
price of a share of Preferred Stock, in each case as may be necessary fully to
reflect the effect of such change in par or stated value, split-up, combination
or other reclassification of Preferred Stock, or such recapitalization,
reorganization, merger, amalgamation or consolidation or sale and (ii) treat
any securities which shall be received by the Depositary in exchange for or
upon
A-8
<PAGE> 33
conversion or in respect of the Preferred Stock as new deposited securities so
received in exchange for or upon conversion or in respect of such Preferred
Stock. In any such case, the Depositary may in its discretion, with the
approval of the Company, execute and deliver additional Receipts, or it may
call for the surrender of outstanding Receipts to be exchanged for new Receipts
specifically describing such new deposited securities. Anything to the
contrary herein or in the Deposit Agreement notwithstanding, holders of
Receipts shall have the right from and after the effective date of any such
change in par or stated value, split-up, combination or other reclassification
of the Preferred Stock or any such recapitalization, reorganization, merger,
amalgamation, consolidation or sale to surrender such Receipts to the
Depositary with instructions to convert, exchange or surrender the Preferred
Stock represented thereby only into or for, as the case may be, the kind and
amount of shares of stock and other securities and property and cash into which
the Preferred Stock represented by such Receipts was converted or for which
such Preferred Stock was exchanged or surrendered after giving effect to such
transaction.
16. Prevention of or Delay in Performance by the Depositary, the
Depositary's Agents, the Registrar or the Company. Neither the Depositary nor
any Depositary's Agent nor any Registrar nor the Company shall incur any
liability to any holder of any Receipt if by reason of any provision of any
present or future law or regulation thereunder of the United States of America
or any other governmental authority or, in the case of the Depositary, the
Depositary's Agent or any Registrar, by reason of any provision, present or
future, of the Certificate of Incorporation (including the Certificate of
Designations) or by reason of any act of God or war or other circumstance
beyond their control, the Depositary, the Depositary's Agent, any Registrar or
the Company shall be prevented or forbidden from doing or performing any act or
thing which the terms of the Deposit Agreement provide shall be done or
performed; nor shall the Depositary, any Depositary's Agent, any Registrar or
the Company incur any liability to any holder of a Receipt by reason of
nonperformance or delay, caused as aforesaid, in performance of any act or
thing which by the terms of the Deposit Agreement it is provided shall or may
be done or performed, or by reason of any exercise of, or failure to exercise,
any discretion provided for in the Deposit
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<PAGE> 34
Agreement except, in the case of any exercise or failure to exercise discretion
not caused as aforesaid, if caused by the negligence or wilful misconduct of
the party charged with the exercise or failure to exercise.
17. Obligations of the Depositary, the Depositary's Agents, the Registrar
and the Company. Neither the Depositary nor any Depositary's Agent nor any
Registrar nor the Company assumes any obligation or shall be subject to any
liability under the Deposit Agreement to holders of Receipts other than for its
negligence or wilful misconduct. Neither the Depositary nor any Depositary's
Agent nor any Registrar nor the Company shall be under any obligation to appear
in, prosecute or defend any action, suit or other proceeding in respect of the
Preferred Stock, the Depositary Shares or the Receipts which in its opinion may
involve it in expense or liability unless indemnity satisfactory to it against
all expense and liability be furnished as often as may be required. Neither
the Depositary nor any Depositary's Agent nor any Registrar nor the Company
shall be liable for any action or any failure to act by it in reliance upon the
written advice of legal counsel or accountants, or information from any person
presenting Preferred Stock for deposit, any holder of a Receipt or any other
person believed by it in good faith to be competent to give such information.
The Depositary, any Depositary's Agent, any Registrar and the Company may each
rely and shall each be protected in acting upon any written notice, request,
direction or other document believed by it to be genuine and to have been
signed or presented by the proper party or parties. The Depositary shall not
be responsible for any failure to carry out any instruction to vote any of the
share of Preferred Stock or for the manner or effect of any such vote, as long
as any such action or non-action is in good faith. The Depositary undertakes,
and any Registrar shall be required to undertake, to perform such duties and
only such duties as are specifically set forth in the Deposit Agreement, and no
implied covenants or obligations shall be read into the Deposit Agreement
against the Depositary or any Registrar. The Depositary will indemnify the
Company against any liability which may arise out of acts performed or omitted
by the Depositary or its agents due to its or their negligence or bad faith.
The Depositary, the Depositary's Agents and any Registrar may own and deal in
any class of securities of the Company and its affiliates and in Receipts. The
Depositary may also act
A-10
<PAGE> 35
as transfer agent or registrar of any of the securities of the Company and its
affiliates.
18. Resignation and Removal of Depositary. The Depositary may at any time
(i) resign by written notice of its election to do so delivered to the Company,
such resignation to take effect upon the appointment of a successor Depositary
and its acceptance of such appointment, or (ii) be removed by the Company by
notice of such removal delivered to the Depositary, such removal to take effect
upon the appointment of a successor Depositary and its acceptance of such
appointment, all as provided in the Deposit Agreement.
19. Termination of Deposit Agreement. The Deposit Agreement may be
terminated by the Company or the Depositary only after (i) all outstanding
Depositary Shares shall have been redeemed or (ii) there shall have been made a
final distribution in respect of the Preferred Stock in connection with any
liquidation, dissolution or winding up of the Company and such distribution
shall have been distributed to the holders of Receipts. Upon the termination
of the Deposit Agreement, the Company shall be discharged from all obligations
thereunder except for its obligations to the Depositary, any Depositary's Agent
and any Registrar with respect to indemnification, charges and expenses in
either case in accordance with the terms of the Deposit Agreement.
20. Governing Law. THIS RECEIPT AND THE DEPOSIT AGREEMENT AND ALL RIGHTS
HEREUNDER AND THEREUNDER AND PROVISIONS HEREOF AND THEREOF SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK.
This Receipt shall not be entitled to any benefits under the Deposit
Agreement or be valid or obligatory for any purpose, unless this Receipt shall
have been authenticated, manually or, if a Registrar for the Receipts (other
than the Depositary) shall have been appointed, by facsimile signature of a
duly authorized officer of the Depositary and, if authenticated by facsimile
signature of the Depositary, shall have been countersigned manually by such
Registrar by the signature of a duly authorized officer.
A-11
<PAGE> 36
A COPY OF THE DEPOSIT AGREEMENT AND A FULL STATEMENT OF THE DESIGNATION,
RELATIVE RIGHTS, INTERESTS, PREFERENCES AND RESTRICTIONS OF THE PREFERRED STOCK
REPRESENTED BY THIS RECEIPT AND OF EACH CLASS OF SHARES OR SERIES THEREOF THAT
THE COMPANY IS AUTHORIZED TO ISSUE WILL BE FURNISHED BY THE COMPANY, WITHOUT
CHARGE, TO EACH HOLDER OF A RECEIPT UPON WRITTEN REQUEST TO THE SECRETARY OF
THE COMPANY AT 1285 AVENUE OF THE AMERICAS, NEW YORK, NEW YORK 10019.
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto
PLEASE INSERT SOCIAL SECURITY
OR OTHER IDENTIFYING NUMBER OF ASSIGNEE
- -------------------------------------------------------
Please print or typewrite name and address of assignee
- -------------------------------------------------------
the within Receipt and all rights and interests
represented thereby, and hereby irrevocably constitutes
and appoints
- -------------------------------------------------------
attorney to transfer the same on the books of the within
named Depositary, with full power of substitution in the
premises.
Dated: Signature
------------- --------------------
ASSIGNMENT AND TRANSFER SIGNATURE LINES
NOTE: The signature to any endorsement hereon must correspond with the name as
written upon the face of this Receipt in every particular, without alteration
or enlargement or any change whatever. If the endorsement be executed by an
attorney, executor, administrator, trustee
A-12
<PAGE> 37
or guardian, the person executing the endorsement must give his full title in
such capacity, and proper evidence of authority to act in such capacity, if not
on file with the Depositary, must be forwarded with this Receipt. All
endorsements or assignments of Receipts must be guaranteed by a New York Stock
Exchange member firm or member of the Clearing House of the American Stock
Exchange Clearing Corporation or by a bank or trust company having an office or
correspondent in (The City of New York).
A-13
<PAGE> 1
EXHIBIT 5.1
RICHARDS, LAYTON & FINGER
ONE RODNEY SQUARE
P.O. BOX 551
WILMINGTON, DELAWARE 19899
TELEPHONE (302) 658-6541
TELECOPIER (302) 658-6548
March 16, 1994
PaineWebber Finance L.L.C.
c/o Paine Webber Group Inc.
1285 Avenue of the Americas
New York, New York 10019
Re: PaineWebber Finance L.L.C.
Gentlemen:
We have acted as special Delaware counsel for PaineWebber Finance L.L.C., a
Delaware limited liability company (the "Company"), in connection with the
matters set forth herein. At your request, this opinion is being furnished to
you.
For purposes of giving the opinions hereinafter set forth, our examination
of documents has been limited to the examination of executed or conformed
counterparts, or copies otherwise proved to our satisfaction, of the following:
<PAGE> 2
PaineWebber Finance L.L.C.
March 16, 1994
Page 2
(a) The Certificate of Formation of the Company, dated as of March 15, 1994
(the "Certificate"), as filed in the office of the Secretary of State of the
State of Delaware (the "Secretary of State") on March 15, 1994;
(b) The Limited Liability Company Agreement of the Company, dated as of
March 15, 1994 (the "LLC Agreement");
(c) A registration statement (the "Registration Statement") on Form S-3,
including a related preliminary prospectus and prospectus supplement (the
"Prospectus"), in a form to be filed by Paine Webber Group Inc., a Delaware
corporation, and the Company with the Securities and Exchange Commission on
March 16, 1994; and
(d) A Certificate of Good Standing for the Company, dated March 16, 1994,
obtained from the Secretary of State.
Initially capitalized terms used herein and not otherwise defined are used
as defined in the LLC Agreement.
For purposes of this opinion, we have not reviewed any documents other than
the documents listed above, and we have assumed that there exists no provision
in any document not listed above that bears upon or is inconsistent with the
opinions stated herein. We have conducted no independent factual investigation
of our own, but rather have relied solely upon the foregoing documents, the
statements and information set
<PAGE> 3
PaineWebber Finance L.L.C.
March 16, 1994
Page 3
forth therein and the additional matters recited or assumed herein, all of
which we have assumed to be true, complete and accurate in all material
respects.
With respect to all documents examined by us, we have assumed that (i) all
signatures on documents examined by us are genuine, (ii) all documents
submitted to us as originals are authentic, and (iii) all documents submitted
to us as copies conform with the original copies of those documents.
For purposes of this opinion, we have assumed (i) the due authorization,
execution and delivery by all parties thereto of all documents examined by us,
(ii) that the LLC Agreement constitutes the entire agreement among the parties
thereto with respect to the subject matter thereof, including with respect to
the admission of members to, and the creation, operation, management and
termination of, the Company, and that the LLC Agreement and the Certificate are
in full force and effect and have not been amended, (iii) the due organization
or due formation, as the case may be, and valid existence in good standing of
each party to the documents examined by us under the laws of the jurisdiction
governing its organization or formation, (iv) that the Company is not treated
as a corporation for purposes of United States income taxation, (v) that each
of the parties to the LLC Agreement has the power and authority to execute and
deliver, and to perform its obligations under, the LLC Agreement, (vi) the
acquisition by each Preferred Member (as defined below) of Preferred
<PAGE> 4
PaineWebber Finance L.L.C.
March 16, 1994
Page 4
Interests (as defined in the Prospectus), and the payment by each Preferred
Member to the Company of the full consideration due from it for the Preferred
Interests acquired by it, (vii) that the books and records of the Company set
forth all information required by the LLC Agreement and the Delaware Limited
Liability Company Act (6 Del. C. $ 18-101, et seq.) (the "Act"), including all
information with respect to all persons and entities to be admitted as
Preferred Members and their contributions to the Company, and (viii) that the
Preferred Interests are issued and sold to the Preferred Members pursuant to a
duly established Action and as described in the Registration Statement and the
LLC Agreement. Insofar as the opinions expressed herein relate to Preferred
Interests and persons and entities to be admitted to the Company as members in
connection with their purchase of Preferred Interests (the "Preferred
Members"), the opinions expressed herein relate solely to the Preferred Members
and to the Preferred Interests to be issued in connection with the Registration
Statement. We have not participated in the preparation of the Registration
Statement and assume no responsibility for its contents.
This opinion is limited to the laws of the State of Delaware (excluding the
securities laws of the State of Delaware), and we have not considered and
express no opinion on the laws of any other jurisdiction, including federal
laws and rules and regulations relating thereto. Our opinions are rendered
only with respect to Delaware laws and rules, regulations and orders thereunder
which are currently in effect.
<PAGE> 5
PaineWebber Finance L.L.C.
March 16, 1994
Page 5
Based upon the foregoing, and upon our examination of such questions of law
and statutes of the State of Delaware as we have considered necessary or
appropriate, and subject to the assumptions, qualifications, limitations and
exceptions set forth herein, we are of the opinion that:
1. The Company has been duly formed and is validly existing in good
standing as a limited liability company under the Act.
2. The Preferred Interests to be issued to the Preferred Members will
represent valid limited liability company interests and, subject to the
qualifications set forth herein, will be fully paid and nonassessable limited
liability company interests in the Company, as to which the Preferred Members,
in their capacity as members of the Company, will have no liability solely by
reason of being Preferred Members in excess of their obligations, if any, to
make contributions to the Company, their obligations, if any, to make other
payments provided for in the LLC Agreement and their share of the Company's
assets and undistributed profits (subject to the obligation of a Preferred
Member to repay any funds wrongfully distributed to it).
3. The LLC Agreement is a valid and binding agreement of the parties
thereto, and is enforceable against the parties thereto, in accordance with
its terms.
The opinions expressed in paragraph 3 above are subject to the effect upon
the LLC Agreement of (i) bankruptcy, insolvency, moratorium, fraudulent
<PAGE> 6
PaineWebber Finance L.L.C.
March 16, 1994
Page 6
conveyance, receivership, reorganization, liquidation and other similar laws
relating to or affecting the rights and remedies of creditors generally, and
(ii) principles of equity (regardless of whether considered and applied in a
proceeding in equity or at law). In rendering the opinions expressed in
paragraph 3 above, we express no opinion on the effect upon the LLC Agreement
of applicable law relating to fiduciary duties.
We understand that you will file this opinion with the Securities and
Exchange Commission as to an exhibit to the Registration Statement to be filed
by you under the Securities Act of 1933, as amended. In connection with the
foregoing, we hereby consent to the filing of this opinion with the Securities
and Exchange Commission. We also understand that Cravath, Swaine & Moore will
rely as to matters of Delaware law upon this opinion in connection with an
opinion to be submitted by it to you to be filed with the Securities and
Exchange Commission as an exhibit to the Registration Statement to be filed by
you under the Securities Act of 1933, as amended. This opinion is rendered
solely for your and Cravath, Swaine & Moore's benefit in connection with the
foregoing. We hereby consent to the use of our name under the heading "Legal
Matters" in the Prospectus. In giving the foregoing consent, we do not thereby
admit that we come within the category of persons whose consent is required
under Section 7 of the Securities Act of 1933, as amended, or the rules and
regulations of the Securities and Exchange Commission thereunder. Except as
stated above, without our prior written consent, this opinion may not be
furnished or quoted to, or relied upon by, any other person or entity for any
purpose.
Very truly yours,
RICHARDS, LAYTON & FINGER
<PAGE> 1
EXHIBIT 5.2
CRAVATH, SWAINE & MOORE
Worldwide Plaza
825 Eighth Avenue
New York, NY 10019
March 16, 1994
Paine Webber Group Inc.
PaineWebber Finance L.L.C.
Dear Sirs:
We have acted as United States counsel for Paine Webber Group
Inc. (the "Guarantor") and PaineWebber Finance L.L.C. (the "Company") in
connection with the proposed issuance by the Company of up to 16,000,000
Exchangeable Cumulative Preferred Limited Liability Company Interests (the
"Preferred Interests") of the Company, the guarantee of certain payment
obligations of the Company with respect to the Preferred Interests by the
Guarantor and the possible issuance by the Guarantor, in exchange for the
Preferred Interests, of Depositary Shares (the "Depositary Shares")
representing shares of Series Preferred Stock, par value $20 per share (the
"Guarantor Preferred Stock"), of the Guarantor.
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 for the
purposes of this opinion, including the following: (a) the Restated
Certificate of Incorporation of the Guarantor; (b) the By-laws of the
Guarantor; (c) the proposed forms of Payment and Guarantee Agreement (the
"Guarantee") to be executed and delivered by the Guarantor for the benefit of
the holders from time to time of the Preferred Interests and Loan Agreement
between the Guarantor and the Company; and (d) the proposed form of Deposit
Agreement (a "Deposit Agreement") among the Guarantor, Chemical Bank (the
"Depositary") and the holders from time to time of certificates evidencing
Depositary Shares.
<PAGE> 2
Based upon the foregoing, we are of opinion as follows:
1. The Guarantor has been duly incorporated and is a validly
existing corporation under the laws of the State of Delaware.
2. The Guarantee has been duly authorized by all requisite
corporate action of the Guarantor and will, when executed, constitute a legal,
valid and binding obligation of the Guarantor enforceable against the Guarantor
in accordance with its terms (subject to applicable bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium or other laws affecting
creditors' rights generally from time to time in effect). The enforceability
of the Guarantee is also subject to general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or at law).
3. Assuming that a valid certificate of designations stating
the powers, designations, preferences and relative, participating, optional or
other special rights, and qualifications, limitations or restrictions thereof,
of any series of Guarantor Preferred Stock has been validly adopted, executed
and filed in accordance with the Restated Certificate of Incorporation of the
Guarantor and the Delaware General Corporation Law (the "DGCL") and
certificates evidencing the Guarantor Preferred Stock have been duly executed
and delivered against receipt of consideration approved by the Board of
Directors of the Guarantor which is not less than the par value of the
Guarantor Preferred Stock and otherwise in accordance with the DGCL, the
Guarantor Preferred Stock, when issued and delivered, will be duly authorized,
validly issued, fully paid and nonassessable.
4. Assuming due execution and delivery of a Deposit
Agreement, that the applicable amount of Guarantor Preferred Stock has been
deposited with the Depositary and that certificates representing the Depositary
Shares have been duly executed and delivered in accordance with such Deposit
Agreement, and making the same assumptions with respect to the issuance of such
Guarantor Preferred Stock set forth in the foregoing paragraph 3, the
Depositary Shares, when issued and delivered, will be duly and validly issued
and will be entitled to the benefits of such Deposit Agreement.
<PAGE> 3
3
We know that we may be referred to, as counsel who has passed
upon the validity of the Guarantee and the issuance of the Guarantor Preferred
Stock or Depositary Shares on behalf of the Guarantor, under the heading "LEGAL
MATTERS" in the Prospectus forming a part of the Registration Statement on Form
S-3 relating to the Preferred Interests, the Guarantee, the Guarantor Preferred
Stock and the Depositary Shares, filed with the Securities and Exchange
Commission pursuant to the Securities Act of 1933, and we hereby consent to
such use of our name in said Registration Statement and to the use of this
opinion for filing with said Registration Statement as Exhibit 5.2 thereto.
Very truly yours,
CRAVATH, SWAINE & MOORE
Paine Webber Group Inc.
1285 Avenue of the Americas
New York, NY 10019
PaineWebber Finance L.L.C.
In care of Paine Webber Group Inc.
1285 Avenue of the Americas
New York, NY 10019
22WD
<PAGE> 1
EXHIBIT 8
CRAVATH, SWAINE & MOORE
Worldwide Plaza
825 Eighth Avenue
New York, NY 10019
March 16, 1994
Paine Webber Group Inc.
PaineWebber Finance L.L.C.
Dear Sirs:
We have acted as special United States tax counsel for Paine
Webber Group Inc. (the "Guarantor") and PaineWebber Finance L.L.C. (the
"Company") in connection with the proposed issuance by the Company of up to
16,000,000 Exchangeable Cumulative Preferred Limited Liability Company
Interests (the "Preferred Interests") of the Company, the guarantee (the
"Guarantee") of certain payment obligations of the Company with respect to the
Preferred Interests by the Guarantor and the possible issuance by the
Guarantor, in exchange for the Preferred Interests, of Depositary Shares (the
"Depositary Shares") representing shares of Series Preferred Stock, par value
$20 per share (the "Guarantor Preferred Stock"), of the Guarantor.
We hereby confirm that the statements set forth in the
Prospectus forming a part of the Registration Statement referred to below (the
"Registration Statement") under the heading "TAXATION" accurately describe the
material Federal income tax consequences to holders of the Preferred Shares.
This opinion relies on the opinion of Richards, Layton & Finger, P.A. (filed as
Exhibit 5.1 to the Registration Statement) and assumes (i) that the Certificate
of Formation and Limited Liability Company Agreement of the Company are
enforceable in accordance with their terms and are not amended, (ii) the
initial and continuing accuracy of the facts, representations and assumptions
set forth in the Prospectus and Prospectus Supplement forming a part of the
<PAGE> 2
Registration Statement, and (iii) compliance by the Guarantor with all its
obligations and covenants related to the transactions contemplated therein,
including its covenants and obligations under the Payment and Guarantee
Agreement and Loan Agreement as referred to and described in said Prospectus
and Prospectus Supplement.
We know that we may be referred to under the headings
"TAXATION" and "LEGAL MATTERS" in the Prospectus forming a part of the
Registration Statement on Form S-3 relating to the Preferred Interests, the
Guarantee and the Guarantor Preferred Stock and the Depositary Shares, filed
with the Securities and Exchange Commission pursuant to the Securities Act of
1933, and we hereby consent to such use of our name in said Registration
Statement and to the use of this opinion for filing with said Registration
Statement as Exhibit 8 thereto.
Very truly yours,
CRAVATH, SWAINE & MOORE
Paine Webber Group Inc.
1285 Avenue of the Americas
New York, NY 10019
PaineWebber Finance L.L.C.
In care of Paine Webber Group Inc.
1285 Avenue of the Americas
New York, NY 10019
22WD
<PAGE> 1
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 PaineWebber
Finance L.L.C. for the registration of 16,000,000 shares of Exchangeable
Cumulative Preferred Limited Liability Company Interests of PaineWebber Finance
L.L.C. and to the incorporation by reference therein of our report dated
January 19, 1993, 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, 1992, filed with
the Securities and Exchange Commission.
/s/ ERNST & YOUNG
New York, New York
March 15, 1994
