-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, RP8FRHk4G/N8se0Ur/DjneBr7w10IJXrMhxoiZCUmYWBi+QMMMnEZrhu3/r5/Hs+ 532Ix9jZftcoI3HW+G9Wqw== 0000947871-00-000317.txt : 20000427 0000947871-00-000317.hdr.sgml : 20000427 ACCESSION NUMBER: 0000947871-00-000317 CONFORMED SUBMISSION TYPE: S-8 PUBLIC DOCUMENT COUNT: 6 FILED AS OF DATE: 20000426 EFFECTIVENESS DATE: 20000426 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PAINE WEBBER GROUP INC CENTRAL INDEX KEY: 0000075754 STANDARD INDUSTRIAL CLASSIFICATION: SECURITY BROKERS, DEALERS & FLOTATION COMPANIES [6211] IRS NUMBER: 132760086 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-8 SEC ACT: SEC FILE NUMBER: 333-35684 FILM NUMBER: 609689 BUSINESS ADDRESS: STREET 1: 1285 AVE OF THE AMERICAS CITY: NEW YORK STATE: NY ZIP: 10019 BUSINESS PHONE: 2127132000 MAIL ADDRESS: STREET 1: 1285 AVENUE OF THE AMERICAS CITY: NEW YORK STATE: NY ZIP: 10019 FORMER COMPANY: FORMER CONFORMED NAME: PAINE WEBBER INC DATE OF NAME CHANGE: 19840523 S-8 1 FORM S-8 As filed with the Securities and Exchange Commission on April 26, 2000 Registration No. 333- - -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ------------------------- Form S-8 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 ---------------------------- PAINE WEBBER GROUP INC. (Exact name of registrant as specified in its charter) Delaware 13-2760086 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 1285 Avenue of the Americas New York, New York 10019 (Address of principal executive offices, including zip code) ----------------------------- PAINE WEBBER GROUP INC. 6.25% CONVERTIBLE DEBENTURES DUE 2007 IN CONNECTION WITH THE 2000 KEEP PROGRAM (Full title of the plan) Theodore A. Levine Senior Vice President, General Counsel and Secretary Paine Webber Group Inc. 1285 Avenue of the Americas New York, New York 10019 (Name and address of agent for service) (212) 713-2879 (Telephone number, including area code, of agent for service) CALCULATION OF REGISTRATION FEE
- ------------------------------------------------------------------------------------------------------ Proposed Proposed Amount Title of Securities Amount to be Maximum Maximum of to be Registered Registered Offering Price Aggregate Offering Registration Fee Per Share Price(1) - ------------------------------------------------------------------------------------------------------ Common Stock, par value 2,000,000 Issuable Upon Not Applicable Not Applicable $1.00 per share Conversion - ------------------------------------------------------------------------------------------------------ Series A Convertible 2,000,000 Issuable Upon Not Applicable Not Applicable Redeemable Preferred Conversion Stock - ------------------------------------------------------------------------------------------------------ 6.25% Convertible $76,375,000 100% of the $76,375,000 $20,163 Debentures Due Face Amount January 20, 2007 - ------------------------------------------------------------------------------------------------------
(1) Estimated solely for purposes of calculating the registration fee pursuant to Rule 457(i) under the Securities Act of 1933, as amended (the "Securities Act"). Part I INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS Item 1. Plan Information.* Item 2. Registration Information and Employee Plan Annual Information.* - -------- o Information required by Part I to be contained in the Section 10(a) prospectus is omitted from this Registration Statement in accordance with Rule 428 under the Securities Act, and the "Note" to Part I of Form S-8. Part II INFORMATION REQUIRED IN THE REGISTRATION STATEMENT Item 3. Incorporation of Documents by Reference. The following documents that Paine Webber Group Inc. (the "Registrant") has filed with the Securities and Exchange Commission (the "Commission") are incorporated in this Form S-8 Registration Statement (the "Registration Statement")by reference and made a part hereof: (a) the Registrant's latest Annual Report on Form 10-K filed pursuant to Section 13 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"); (b) the Registrant's latest Quarterly Reports on Form 10-Q filed pursuant to Section 13 of the Exchange Act; (c) the Registrant's Current Reports on Form 8-K filed pursuant to Section 13 of the Exchange Act; (d) the Registrant's definitive proxy statement or information statements filed pursuant to Section 14 of the Exchange Act in connection with Registrant's latest annual meeting of shareholders and any definitive proxy or information statements as filed in connection with any subsequent special meetings of its stockholders; and (e) the description of the Registrant's common stock contained in the Registrant's Registration Statement on Form 8-A filed under Section 12 of the Exchange Act, including Amendment No. 4 thereto dated January 30, 1986, and any other amendment or report filed under the Exchange Act for the purpose of updating such description. All documents that the Registrant files pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act subsequent to the effective date of this Registration Statement, but prior to the filing of a post-effective amendment to this Registration Statement indicating that all securities offered hereby have been sold or deregistering all securities then remaining unsold, shall be deemed to be incorporated by reference herein and to be a part hereof from the date of filing of such documents. Any statement contained herein or in any document incorporated or deemed to be incorporated by reference herein shall be deemed to be modified or superseded for purposes of this Registration Statement to the extent that a statement contained herein 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 to constitute a part of this Registration Statement, except as so modified or superseded. 3 Item 4. Description of Securities. Debentures The 6.25% Convertible Debentures (the "Debentures") will be unsecured obligations of the Registrant, will be limited to $76,375,000 aggregate principal amount and will mature on January 20, 2007 (if not previously converted or redeemed as described below). The Debentures will bear interest from January 20, 2000 at a rate of 6.25% per annum until paid in full. Interest will be payable semi-annually on the last days of June and December, commencing June 30, 2000, until maturity. The Debentures will be convertible into 2,000,000 shares of Series A Convertible Redeemable Preferred Stock (the "Preferred Stock"), which has $38.1875 per share liquidation value. The Preferred Stock is immediately convertible into 2,000,000 shares of Common Stock, $1.00 par value (the "Common Stock"). Preferred Stock The Preferred Stock will have a liquidation value of $38.1875 per share and will be immediately convertible into Common Stock at an initial price of $38.1875 per share, subject to adjustment for capital changes, noncash distributions on Common Stock and distributions to holders of Common Stock of rights to purchase Common Stock at a price below its current market price. The annual dividend of $ 0.48 on each share of Preferred Stock will be cumulative from the date of issuance and will be payable in quarterly installments on the last days of March, June, September and December, when and as declared. Shares of Preferred Stock may be redeemed by the Registrant at any time, in whole but not in part, upon not less than 25 days' notice, at a redemption price of $38.1875 per share plus accrued dividends. Any shares of Preferred Stock called for redemption may be converted, as described above, until the redemption date. Holders of shares of Preferred Stock will be entitled to receive the liquidation value of $38.1875 per share, plus accrued dividends, upon any liquidation, dissolution or winding up of the Registrant, whether voluntary or involuntary, before any distribution of the assets of the Registrant to holders of Common Stock and ratably with holders of all other shares of Series Preferred Stock of the Registrant ("Series Preferred Stock"). Holders of shares of Preferred Stock will have no voting rights except as provided by law or when dividends payable on the Preferred Stock are in arrears in an amount equivalent to three full semi-annual dividends. In the latter event, the holders of shares of Preferred Stock, together with the holders of other Series Preferred Stock, may elect two additional directors of the Registrant. Holders of shares of Preferred Stock will have no preemptive rights. Transfer Restrictions The Debentures and the Preferred Stock may not be sold, pledged, transferred or otherwise disposed of except by will or pursuant to the laws of descent and distribution or as security for funds to finance the investor's purchase of a Debenture. 4 Conversion While an investor is employed by the Registrant, his Debenture will become convertible into Preferred Stock on or after January 20, 2003 at the Preferred Stock liquidation value of $38.1875. Such conversion will be effective as of the date the notice of conversion is provided to the Registrant. In the event the Registrant has previously given a 60-day prior written notice of redemption, the investor may elect to convert prior to the redemption date and such conversion will be effectuated as of the date set forth in the notice of conversion as long as the investor remains employed as of such date. However, under certain circumstances described below, the investor may convert the Debenture regardless of how long it had been held at a conversion price of $38.1875. Redemption On and after January 20, 2004, the Debenture may be redeemed by the Registrant at its principal amount plus accrued interest (to the extent not previously redeemed or converted) upon giving 60 days prior written notice and such redemption will be effective at the end of such 60 day period. However, if the investor is entitled to convert the Debenture, he may elect to do so following the receipt of such notice of redemption from the Registrant and such conversion will be effective as of the date of such notice of conversion as long as such notice is provided to the Registrant prior to the date the redemption was to occur. Change in Control Conversion or Redemption In the event that prior to January 20, 2003, (i) the Registrant enters into an agreement, (ii) the Board of Directors of the Registrant approves a transaction, or (iii) there is a tender offer, which in either case, might result in a change in control, the investor may elect to have the Debenture converted even if his employment is terminated other than for cause or the Registrant may elect to redeem such Debenture prior to the effective time of the change in control and such conversion or redemption will be effective as of the effective time of the change in control. However, if the Registrant elects to redeem the Debenture prior to the investor's election to convert, the investor may still elect to convert such Debenture rather than having the Registrant redeem it as long as the investor provides a notice of conversion prior to the effective time of the change in control. In the event the Debenture is not redeemed or converted prior to the change in control which occurs prior to January 20, 2003, such Debenture shall become fully convertible following the change in control but the Registrant may not redeem such Debenture until on or after January 20, 2004. Any conversion or redemption following a change in control will be implemented in accordance with the procedures described in the Debenture. In the event that the change in control does not become effective, any election to convert or redeem will not be effectuated unless the Debenture otherwise becomes convertible or redeemable as described in the Debenture. In the event that on or after January 20, 2003, (i) the Registrant enters into an agreement, (ii) the Board of Directors of the Registrant approves a transaction, or (iii) there is a tender offer, which in either case, might result in a change in control, the Debenture will remain convertible in accordance with the procedures described in the Debentures even if the investor's employment is terminated other than for cause. However the Registrant may elect to redeem such Debenture prior to such change in control which occurs on or after January 20, 2003. 5 However, if the Registrant elects to redeem the Debenture prior to the investor's election to convert, the investor may still elect to convert such Debenture rather than having the Registrant redeem it as long as the investor provides a notice of conversion prior to the effective time of the change in control. In the event the Debenture is not redeemed or converted prior to the change in control which occurs on or after January 20, 2003 or such change in control does not occur, such Debenture shall remain fully convertible to the extent such Debenture remains outstanding following the change in control but the Registrant may not redeem such Debenture until on or after January 20, 2004 in accordance with the procedures described in the Debenture. Events of Default Events of default under a Debenture include the following: (i) nonpayment of principal when due; (ii) nonpayment of' interest for ten business days after it is due; (iii) material inaccuracy of any representation or warranty by the Registrant in the Purchase Agreement; (iv) failure by the Registrant, for 30 days after receipt of notice, to perform or observe in any material respect any other term, covenant or agreement in the Debenture or the Purchase Agreement; and (v) occurrence of certain events of bankruptcy or insolvency involving the Registrant or PaineWebber Incorporated, including commencement of a voluntary or involuntary proceeding under the federal bankruptcy laws. If any event of default occurs and is continuing, the holder of any Debenture may declare his Debenture to be due and payable immediately. Termination for Cause If the investor is terminated for cause, his Debenture will cease to be convertible as of the date of such termination and the Registrant will redeem it at the principal amount, plus accrued interest as of such date of termination. Termination Without Cause or Voluntary Terminations If the investor is terminated without cause or the investor incurs a voluntary termination, to the extent that the Debenture is vested at the date of termination, such Debenture shall remain convertible for 90 days following such termination of employment with such conversion effective as of the date of a notice of conversion is provided to the Registrant. To the extent that the investor does not elect to have such Debentures converted or if such Debentures are not vested at such termination of employment, the Registrant will redeem the Debenture as soon as practicable following the expiration of the conversion period, if any, at its principal amount, plus accrued interest. Termination Due to Death, Disability or Retirement If the investor is an employee of the Registrant at the time of his death or termination of employment due to retirement or disability, his Debenture will be convertible in full for one year following such event, regardless of the period of time that he held the Debenture. Such conversion will be effective as of the date the investor provides the Registrant with a notice of conversion. If the investor does not convert the Debenture, the Registrant will redeem it, at its principal amount, plus accrued interest as soon a practicable following the expiration of the one year period described above. 6 Loans To finance the purchase price of a Debenture, the Registrant will lend to each investor up to 100% of the principal amount of his Debenture, at an annual interest rate of 6.25% payable semi-annually on each June 30 and December 31, commencing June 30, 2000. Each loan will be non-recourse with respect to principal and recourse with respect to interest and such loan will be secured by the Debenture and evidenced by a promissory note (the "Note"). The Note will be payable on January 20, 2004, but will accelerate upon a conversion or redemption of the Debenture and may be accelerated by the Registrant upon the occurrence of any event of default (as defined in the Notes). Events of default under the Note include the following: (i) nonpayment of principal when due; (ii) nonpayment of interest for ten business days after it is due; (iii) failure by the investor for 30 days after receipt of notice to comply with any of his other agreements in the Note or the purchase agreement; and (iv) certain events of bankruptcy or insolvency, including commencement of a voluntary or involuntary proceeding under the federal bankruptcy laws. If any event of default occurs and is continuing, the Registrant may declare the Note to be due and payable immediately. Item 5. Interests of Named Experts and Counsel. The legality of the securities offered hereby has been passed upon for the Registrant by Theodore A. Levine, Senior Vice President and General Counsel of Registrant, who owns beneficially 42,079 shares of Registrant's Common Stock and has options to purchase 125,000 shares of the Registrant's common Stock that are not currently exercisable. Item 6. Indemnification of Directors and Officers. Section 102 of the General Corporation Law of the State of Delaware gives corporations the power to eliminate 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 directors of the Registrant) of the Registrant filed as Exhibit 3.1 of the Registrant's Form 10-Q for the quarter ended March 31, 1998 is incorporated herein by reference. Article VII of the registrant's By-Laws (relating to indemnification of directors and officers of the Registrant) filed as Exhibit 3.5 of Registrant's Form 10-K for the year ended December 31, 1997 is incorporated herein by reference. The Registrant also maintains directors and officers liability and corporate reimbursement insurance which provides for coverage against loss arising from claims made against directors and officers in their capacity as such. The general scope of coverage is any breach of duty, neglect, error, misstatement, misleading statement or omission. Such policy does not exclude liabilities under the Securities Act. The Registrant also maintains fiduciary liability insurance for losses in connection with claims made against directors or officers for violation of any of the responsibilities, obligations or duties imposed upon fiduciaries under the Employee Retirement Income Act of 1974, as amended. 7 Item 7. Exemption from Registration Claimed. Not applicable. Item 8. Exhibits. Exhibit Index EXHIBIT NUMBER DESCRIPTION OF DOCUMENT 4.1 Paine Webber Group Inc. 6.25% Convertible Debentures Due January 20, 2007 4.2 Paine Webber Group Inc. Series A Convertible Redeemable Preferred Stock 4.3 Paine Webber Group Inc. Purchase Agreement for the 6.25% Convertible Debentures Due January 5 Opinion of Theodore A. Levine as to the legality of the Securities being registered 23.1 Consent of Ernst & Young LLP 23.2 Consent of Theodore A. Levine (set forth in Exhibit 5 Opinion) 24 Power of Attorney (set forth on the signature page of this Registration Statement) Item 9. Undertakings. (a) The undersigned Registrant hereby undertakes: (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; (ii) to reflect in the prospectus any facts or events arising after the effective date of this Registration Statement (or the most recent post-effective amendment thereof) which, individually or in aggregate, represent a fundamental change in the information set forth in this Registration Statement; and (iii) to include any material information with respect to the plan of distribution not previously disclosed in this Registration Statement or any material change to such information in the Registration Statement; provided, however, that the undertakings set forth in paragraphs (1)(i) and (1)(ii) above do not apply if the registration statement is on Form S-3, Form S-8 or Form F-3, and the information required to be included in a post-effective amendment by those paragraphs is contained in periodic reports filed by the Registrant pursuant to Section 13 or Section 8 15(d) of the Exchange Act that are incorporated by reference in this Registration Statement; (2) That, for the purpose of determining any liability under the Securities Act, 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; and (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) The Registrant further undertakes that, for purposes of determining any liability under the Securities Act, each filing of the Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the Exchange Act that is incorporated by reference in this Registration Statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at the time shall be deemed to be the initial bona fide offering thereof. (c) Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the Registrant pursuant to the foregoing provisions, or otherwise, the Registrant has been advised that in the opinion of the Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue. 9 SIGNATURES Pursuant to the requirements of the Securities Act, the Registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-8, 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 February 29, 2000. PAINE WEBBER GROUP INC. (Registrant) By: /s/ Donald B. Marron -------------------- Donald B. Marron Chairman of the Board and Chief Executive Officer POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS that each person whose signature appears below constitutes and appoints DONALD B. MARRON, F. DANIEL CORKERY and REGINA DOLAN, and each of them (with full power to each of them to act alone), their true and lawful attorney-in-fact agent, with full power of substitution and resubstitution, for them and in their 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 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 an 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 substitutes, may lawfully do or cause to be done by virtue thereof. Pursuant to the requirements of the Securities Act, this Registration Statement has been signed by the following persons in the capacities and dates indicated. Name and Signature Title Date - ------------------ ----- ---- /s/ Donald B. Marron - -------------------------- Donald B. Marron Chairman of the Board February 29, 2000 Chief Executive Officer and Director /s/Jerome Fadden - -------------------------- Jerome Fadden Senior Vice President February 29, 2000 (Principal Financial and Chief Financial Officer Accounting Officer) 10 Name and Signature Title Date - ------------------ ----- ---- /s/ Regina A. Dolan - -------------------------- Regina A. Dolan Senior Vice President February 29, 2000 Officer and Director /s/ E. Garrett Bewkes, Jr. - -------------------------- /s/ E. Garrett Bewkes, Jr. Director February 29, 2000 /s/ Reto Braun - -------------------------- /s/ Reto Braun Director February 29, 2000 /s/ Joseph J. Grano, Jr. - -------------------------- /s/ Joseph J. Grano, Jr. Director February 29, 2000 /s/ Frank P. Doyle - -------------------------- /s/ Frank P. Doyle Director February 29, 2000 /s/ James W. Kinnear - -------------------------- /s/ James W. Kinnear Director February 29, 2000 /s/ Naoshi Kiyono - -------------------------- /s/ Naoshi Kiyono Director February 29, 2000 /s/ Robert M. Loeffler - -------------------------- /s/ Robert M. Loeffler Director February 29, 2000 /s/ Edward Randall, III - -------------------------- /s/ Edward Randall, III Director February 29, 2000 /s/ Henry Rosovsky - -------------------------- /s/ Henry Rosovsky Director February 29, 2000 11 Name and Signature Title Date - ------------------ ----- ---- /s/ Ken-ichi Sekiguchi - -------------------------- /s/ Ken-ichi Sekiguchi Director February 29, 2000 /s/ John R. Torell, III - -------------------------- /s/ John R. Torell, III Director February 29, 2000 12 EXHIBIT INDEX Exhibit Number Description - ------- ----------- 4.1 Paine Webber Group Inc. 6.25% Convertible Debentures Due January 20, 2007 4.2 Paine Webber Group Inc. Series A Convertible Redeemable Preferred Stock 4.3 Paine Webber Group Inc. Purchase Agreement for the 6.25% Convertible Debentures Due January 20, 2007 5.1 Opinion of Theodore A. Levine (set forth in Exhibit 5) 23.1 Consent of Ernst & Young LLP 23.2 Consent of Theodore A. Levine (included in its opinion filed as Exhibit 5.1) 24 Powers of attorney (included on signature page) EX-4.1 2 EXHIBIT 4.1 The transfer of this Debenture is subject to the restrictions set forth in Section 4 of the Purchase Agreement dated January 20, 2000 between Paine Webber Group Inc. and the original holder of this Debenture. PAINE WEBBER GROUP INC. 6.25% CONVERTIBLE DEBENTURE DUE 2007 No. New York, New York $ January 20, 2000 PAINE WEBBER GROUP INC., a Delaware corporation (the "Company"), for value received, hereby promises to pay to (the "Employee") the principal amount of ($ ) on January 20, 2007, and to pay interest (computed on the basis of a 360-day year for the actual number of days elapsed) on the unpaid balance of such principal amount at a rate of 6.25% per annum from the date hereof, payable semiannually on each June 30 and December 31 after the date hereof, commencing June 30, 2000, until such unpaid balance shall become due and payable (whether at maturity or at a date fixed for prepayment or by acceleration or otherwise). If any payment of principal of or interest on this Debenture is due on a day that is not a Business Day, such payment shall be made on the next succeeding Business Day. Payments of principal of and interest on this Debenture shall be made in lawful money of the United States of America at the principal office of the Company in the borough of Manhattan, the City and State of New York, or at such other office or agency in such Borough as the Company shall have designated by written notice to the registered holder hereof, or by a check of the Company payable to the registered holder hereof in such money and mailed to such holder at his registered address. This Debenture is being issued pursuant to, and is subject to and incorporates by reference all of the terms of, the Purchase Agreement dated as of the date hereof between the Company and the Employee (the "Purchase Agreement"), including but not limited to the covenants set forth in Section 7 thereof. 1. Conversion and Redemption. On and subject to the terms and conditions set forth below, all or any portion of the unpaid principal amount of this Debenture equal to $1,000 or any integral multiple thereof may be converted into ____ shares of Series A Convertible Redeemable Preferred Stock established or to be established by the Company pursuant to the terms of the Purchase Agreement (the "Preferred Stock") at a conversion price equal to the liquidation value of $38.1875 per share (the "Conversion Price"). No part of this Debenture may be converted prior to January 20, 2003, except as described below. On such date and thereafter the original principal amount hereof shall become fully convertible into shares of Preferred Stock at the Conversion Price. 1 Upon any conversion of this Debenture, the registered holder hereof shall deliver to the Company a Notice of Conversion in the form attached to this Debenture. The foregoing notwithstanding, this Debenture shall be convertible as provided herein only under the following circumstances: (a) While the Employee is a full-time employee of the Company or any Subsidiary, he shall be entitled to convert this Debenture on or after January 20, 2003 as of the date the Employee provides a Notice of Conversion, provided that, if the Company has elected to redeem the debenture as described below, the Employee may still elect to convert as of the date a Notice of Conversion is provided to the Company as long as the Employee remains employed as of the date of such Notice of Conversion and such Notice of Conversion is provided to the Company prior to the date set forth in the redemption notice, except as otherwise provided in clause (e) below. (b) For one year following the death of the Employee or termination of his employment with the Company or any Subsidiary due to Retirement or Disability, the Employee or his estate or other legal representative, as the case may be, shall be entitled to convert 100% of the principal amount hereof and such conversion shall be effective as of the date the Notice of Conversion is provided to the Company. If the Employee does not elect conversion pursuant to this clause (b), the Company will automatically redeem such Debenture for 100% principal amount, plus accrued interest as soon a practicable following the expiration of the one year period described herein. (c) For ninety days following a Termination Without Cause or a Voluntary Termination by the Employee that occurs on or after January 20, 2003, the Employee shall be entitled to convert 100% of the principal amount hereof and such conversion shall be effective as of the date of the Notice of Conversion. To the extent that the Employee does not elect conversion pursuant to this clause (c) or if such termination of employment occurs prior to January 20, 2003, the Company will automatically redeem such Debenture for 100% principal amount, plus accrued interest as soon a practicable following the expiration of the conversion period described herein, if any. (d) If the Employee's employment is terminated for Cause, the Debenture will cease to be convertible as of the date of such termination of employment and the Company will redeem it at the principal amount, plus accrued interest as of such date. (e) (A) In the event that prior to January 20, 2003, (i) the Company enters into an agreement, (ii) the Board of Directors of the Company approves a transaction, or (iii) there is a tender offer, which in either case, might result in a Change in Control, the Employee may elect to have the Debenture converted even if his employment is terminated other than for Cause or the Company may elect to redeem such Debenture prior to the effective time of the Change in Control and such conversion or redemption will be effective as of the effective time of the Change in Control. However, if the Company elects to redeem the Debenture prior to the Employee's election to convert, the Employee may still elect to convert such Debenture rather than having the Company redeem it as 2 long as the Employee provides a Notice of Conversion prior to the effective time of the Change in Control. In the event the Debenture is not redeemed or converted prior to the Change in Control which occurs prior to January 20, 2003, such Debenture shall become fully convertible following the Change of Control but the Company may not redeem such Debenture until on or after January 20, 2004 as described below. Any conversion or redemption following a Change in Control will be implemented in accordance with the procedures described herein. In the event that the Change in Control does not become effective, any election to convert or redeem will not be effectuated unless the Debenture otherwise becomes convertible or redeemable as described herein. (B) In the event that on or after January 20, 2003, (i) the Company enters into an agreement, (ii) the Board of Directors of the Company approves a transaction, or (iii) there is a tender offer, which in either case, might result in a Change in Control, the Debenture will remain convertible in accordance with the procedures described herein, even if the Employee's employment is terminated other than for Cause. However the Company may elect to redeem such Debenture prior to such Change in Control which occurs on or after January 20, 2003. However, if the Company elects to redeem the Debenture prior to the Employee's election to convert, the Employee may still elect to convert such Debenture rather than having the Company redeem it as long as the Employee provides a Notice of Conversion to the Company prior to the effective time of the Change in Control. In the event the Debenture is not redeemed or converted prior to the Change in Control which occurs on or after January 20, 2003 or such Change in Control does not occur, such Debenture shall remain fully convertible to the extent such Debenture remains outstanding following the Change in Control but the Company may not redeem such Debenture until on or after January 20, 2004 in accordance with the procedures described herein. Notwithstanding the foregoing, on or after January 20, 2004, the Company may redeem the Debenture, provided that it has not already been converted or redeemed upon giving 60 days prior written notice and such redemption will be effective at the end of the 60 day period. However, if the Employee is entitled to convert the Debenture as described above, the Employee may elect to do so following the receipt of a notice of redemption from the Company and such conversion will be effective as of the date of the Notice of Conversion as long as such notice is provided to the Company prior to the date such redemption was to occur. Promptly after a conversion of this Debenture or any portion hereof, the Company shall pay to the registered holder hereof all interest accrued hereon, or on the portion hereof converted, to the Conversion Date (as hereinafter defined) and shall issue and deliver to the registered holder hereof a certificate or certificates registered in his or its name for the number of whole shares of Preferred Stock issuable upon such conversion. The "Conversion Date" is the date on which this Debenture, or any portion hereof, is surrendered for conversion as provided above. 3 If less than the full principal amount of this Debenture is converted, the Company shall also deliver to the Pledgee, if any, or otherwise to the registered holder hereof a new Debenture in the form hereof for the balance of the principal amount of this Debenture. 2. Events of Default; Acceleration. If any of the following conditions or events ("Events of Default") shall occur and be continuing (whether such occurrence shall be voluntary or involuntary or come about or be effected by operation of law or otherwise): (a) the Company fails to (i) make any payment or prepayment of principal of this Debenture when due, or (ii) pay any interest on this Debenture when due and such failure to pay interest or such other amounts remains unremedied for ten Business Days; or (b) any representation or warranty made by the Company in the Purchase Agreement proves to have been incorrect, in any material respect when made; or (c) the Company fails to perform or observe any other term, covenant or agreement contained in this Debenture or the Purchase Agreement on its part to be performed or observed, and any such failure remains unremedied for 30 days after notice thereof is given to the Company by the registered holder of this Debenture; or (d) the Company or PaineWebber Incorporated ("PWI"): (i) voluntarily commences any proceeding or files any petition seeking relief under Title 11 of the United States Code or any other Federal or state bankruptcy, insolvency or similar law, (ii) consents to the institution of, or fails to controvert in a timely and appropriate manner, any such proceeding or the filing of any such petition, (iii) applies for or consents to the appointment of a receiver, trustee, custodian, sequestrator or similar official for the Company or PWI or for a substantial part of the property of either of them, or (iv) makes a general assignment for the benefit of creditors; or (e) an involuntary proceeding is commenced or a voluntary petition is filed in a court of competent jurisdiction seeking: (i) relief against the Company or PWI, or all or a substantial part of the property of either of them, under Title 11 of the United States Code or any other federal or state bankruptcy, insolvency or similar law, (ii) the appointment of a receiver, trustee, custodian, sequestrator or similar official for the Company or PWI or for a substantial part of the property of either of them, or (iii) the winding-up or liquidation of the Company or PWI; 4 and such proceeding or petition continues undismissed for 60 days or an order or decree approving or ordering any of the foregoing is entered; then, at any time thereafter during the continuance of any such event, the registered holder hereof may, by written notice to the Company, declare this Debenture to be due and payable, whereupon it shall forthwith mature and become due and payable, together with all interest accrued thereon, without presentment, demand, protest or further notice, all of which are hereby expressly waived by the Company. 5 3. Definitions. "Board" shall mean the Board of Directors of the Company. "Business Day" shall mean any day on which banking institutions in the Borough of Manhattan, City and State of New York, are open for business and not authorized or obligated by law or executive order to close. "Cause" shall mean (i) the Employee's conviction or plea of no contest to a felony involving the business of the Company or any Subsidiary, (ii) the Employee's fraud against the business of the Company or any Subsidiary as determined by the Compensation Committee, (iii) any intentional act or omission by the Employee not undertaken in the good faith belief that it was in pursuit of the business of the Company or any Subsidiary and which is intended to cause and does cause material injury to the business, financial condition or prospects of the Company or any Subsidiary, or (iv) the Employee's continued and repeated failure to perform the material duties of the Employee's position with the Company or any Subsidiary (other than by reason of approved leave of absence, illness or disability) after the Employee has received written notice from the Company or any Subsidiary of such failure. "Change in Control" shall mean the occurrence of one or more of the following events: (i) Any "person" (as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), other than the Company or any Subsidiary (collectively referred to as "PWG"), any trustee or other fiduciary holding securities under an employee benefit plan of PWG, or any corporation owned, directly or indirectly, by the stockholders of Paine Webber in substantially the same proportions as their contemporaneous ownership of voting securities of Paine Webber, is or becomes a "20% Beneficial Owner." For purposes of this provision, a "20% Beneficial Owner" shall mean a person who is or becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of Company representing 20% or more of the combined voting power of Company's then-outstanding voting securities (a "20% Beneficial Owner"); provided that (A) the term "20% Beneficial Owner" shall not include any Beneficial Owner that has crossed such 20% threshold solely as a result of an acquisition of securities directly from Company, or solely as a result of an acquisition by Company of Company securities, until such time thereafter as such person acquires additional voting securities other than directly from Company and, after giving effect to such acquisition, such person would constitute a 20% Beneficial Owner and (B) with respect to any person who is and remains eligible to file a Schedule 13G pursuant to Rule 13d-1(b)(1) under the Exchange Act with respect to Company securities, there shall be excluded from the number of securities deemed to be beneficially owned by such person for purposes of determining whether such person is a 20% Beneficial Owner a number of securities representing 10% of the combined voting power of Company's then-outstanding voting securities; (ii) during any period of two consecutive years, individuals who at the beginning of such period constitute the Board of Directors of the Company, 6 together with any new director (other than a director designated by a person who has entered into an agreement with Company to effect a transaction described in paragraph (i), (iii) or (iv) hereof) whose election by the Board of Directors or nomination for election by Company's stockholders was approved by a vote of at least two-thirds (K) of the directors then still in office who either were directors at the beginning of the period or whose election or nomination for election was previously so approved (the "Continuing Directors"), cease for any reason to constitute at least a majority thereof; (iii) the stockholders of Company approve a merger, consolidation, recapitalization, or reorganization of Company, or a reverse stock split of any class of voting securities of Company, or the consummation of any such transaction if stockholder approval is not obtained, other than any such transaction which would result in at least 80% of the total voting power represented by the voting securities of Company or the surviving entity outstanding immediately after such transaction being beneficially owned by persons who together beneficially owned at least 80% of the combined voting power of the voting securities of Company outstanding immediately prior to such transaction, with the relative voting power of each such continuing holder compared to the voting power of each other continuing holder not substantially altered as a result of the transaction; provided that, for purposes of this paragraph (iii), such continuity of ownership (and preservation of relative voting power) shall be deemed to be satisfied if the failure to meet such 80% threshold (or to substantially preserve such relative voting power) is due solely to the acquisition of voting securities by an employee benefit plan of Company or such surviving entity or of any subsidiary of Company or such surviving entity; (iv) the stockholders of Company approve a plan of complete liquidation of PWG or an agreement for the sale or disposition by PWG of all or substantially all of PWG's assets (or any transaction having a similar effect); or (v) any other event which the Board of the Company determines shall constitute a Change in Control for purposes of the Program. "Common Stock" shall mean the common stock, $1.00 par value per share, of the Company. "Disability" shall have the same meaning as is ascribed to such term in the PaineWebber Long Term Disability Plan. "Pledgee" shall mean any person or other entity that holds the Debenture in pledge and has given written notice thereof, and of its current mailing address, to the Company. "Retirement" shall mean the Employee's termination of employment on the first day of the month coincident with or next following (x) the tenth anniversary of the date on which his employment with the Company commenced and the date the Employee is at least 55 years old; provided that the Compensation Committee of the Company approves of such retirement, or (y) the date of his 65th birthday. 7 "Subsidiary" shall mean any corporation, association or other business entity which is required to be consolidated with the Company under generally accepted accounting principles. "Termination Without Cause" shall mean a termination by the Company or a Subsidiary of the Employee's employment for any reason other than death, Retirement, Disability or Cause, if the Employee does not continue in the employment of, or promptly commence employment with, the Company or any Subsidiary. "Voluntary Termination" shall mean a termination of employment with the Company or a Subsidiary at the initiative of the Employee, (unless upon such termination, the Employee remains in the employment of, or commences employment with, the Company or one or more Subsidiaries. 4. Governing Law. This Debenture shall be governed by and construed in accordance with the laws of the State of New York, without reference to principles of conflict of laws. PAINE WEBBER GROUP INC. By: ------------------------ Title: 8 EX-4.2 3 EXHIBIT 4.2 PAINE WEBBER GROUP INC. TERMS OF THE SERIES A CONVERTIBLE REDEEMABLE PREFERRED STOCK This series of Series Preferred Stock authorized under the Restated Certificate of Incorporation of Paine Webber Group Inc. (the "Certificate of Incorporation") shall be the Series A Convertible Redeemable Preferred Stock, (the "Convertible Preferred Stock"). (i) Holders of shares of Convertible Preferred Stock will be entitled to receive, when and as declared by the Board of Directors (the "Board") of Paine Webber Group Inc. (the "Corporation") out of assets of the Corporation legally available for payment, an annual cash dividend of $.48 per share, payable in quarterly installments on March 31, June 30, September 30 and December 31, commencing June 30, 2000. Dividends on the Convertible Preferred Stock will be cumulative from the date of initial issuance of any shares of Convertible Preferred Stock. Dividends will be payable to holders of record as they appear on the stock books of the Corporation on such record dates, not more than 60 days nor less than 10 days preceding the payment dates thereof, as shall be fixed by the Board. When dividends are not paid in full upon the Convertible Preferred Stock and any other preferred stock ranking on a parity as to dividends with the Convertible Preferred Stock (such other preferred stock and the Convertible Preferred Stock hereinafter being collectively referred to as "Parity Preferred Stock"), all dividends declared upon shares of Parity Preferred Stock will be declared pro rata so that in all cases the amount of dividends declared per share on the Convertible Preferred Stock and such other Parity Preferred Stock shall bear to each other the same ratio that accumulated and unpaid dividends per share on the shares of Convertible Preferred Stock and such other Parity Preferred Stock bear to each other. Except as set forth in the preceding sentence, unless full cumulative dividends on the Convertible Preferred Stock have been paid, no dividends (other than in Common Stock of the Corporation (as defined in paragraph (iii)(I) below) or any other stock of the Corporation ranking junior to the Convertible Preferred Stock as to dividends) may be paid or declared and set aside for payment or other distribution made upon the Common Stock or on any other stock of the Corporation ranking junior to or on a parity with the Convertible Preferred Stock as to dividends, nor may any Common Stock or any other stock of the Corporation ranking junior to or on a parity with the Convertible Preferred Stock as to dividends be redeemed, purchased or otherwise acquired for any consideration (or any payment made to or available for a sinking fund for the redemption of any shares of such stock) by the Corporation (except by conversion into or exchange for stock of the Corporation ranking junior to the Convertible Preferred Stock as to dividends). Dividends payable for any partial dividend period shall be calculated on the basis of a 360-day year of 12 30-day months. (ii) The shares of Convertible Preferred Stock shall rank prior to the shares of Common Stock and of any other class of stock of the Corporation ranking junior to the Series Preferred Stock upon 2 liquidation, so that, in the event of any liquidation, dissolution or winding-up of the Corporation, whether voluntary or involuntary, the holders of the Convertible Preferred Stock shall be entitled to receive out of the assets of the Corporation available for distribution to its stockholders, whether from capital, surplus or earnings, before any distribution is made to holders of shares of Common Stock or any other such junior stock, an amount equal to $38.1875 per share (the "Liquidation Preference" of a share of Convertible Preferred Stock) plus an amount equal to all dividends (whether or not earned or declared) accumulated and unpaid on the shares of Convertible Preferred Stock to the date of final distribution. If, upon any liquidation, dissolution or winding-up of the Corporation, the assets of the Corporation, or proceeds thereof, distributable among the holders of shares of Parity Preferred Stock shall be insufficient to pay in full the liquidation preference amounts of the Parity Preferred Stock and all dividends (whether or not earned or declared) accumulated and unpaid thereon, then such assets, or the proceeds thereof, shall be distributable 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 Corporation shall be deemed a voluntary liquidation, dissolution or winding-up of the Corporation, but a consolidation or merger of the Corporation with one or more other corporations shall not be deemed to be a liquidation, dissolution or winding-up, voluntary or involuntary. (iii) (I) Subject to and upon compliance with the provisions of this paragraph (iii), the holder of a share of Convertible Preferred Stock shall have the right, at his or her option, at any time, except that, if such share is called for redemption, not after the date fixed for such redemption, to convert such share into that number of fully paid and nonassessable shares of Common Stock (calculated as to each conversion to the nearest 1/100th of a share) obtained by dividing the Liquidation Preference of such share being converted by the Conversion Price (as defined below), upon surrender of such share so to be converted, such surrender to be made in the manner provided in subsection (II) of this paragraph (iii). The term "Common Stock" shall mean the Common Stock, $1 par value, of the Corporation as the same exists at the date of this Certificate or as such stock may be constituted from time to time, except that, for the purpose of subsection (V) of this paragraph (iii), the term "Common Stock" shall also mean and include stock of the Corporation of any class, whether now or hereafter authorized, which shall have the right to participate in the distribution of either earnings or assets of the Corporation without limit as to amount or percentage. The term "Conversion Price" shall mean $38.1875, as adjusted in accordance with the provisions of this paragraph (iii). (II) In order to exercise the conversion privilege, the holder of each share of Convertible Preferred Stock to be converted shall surrender the Certificate representing such share at the office of the conversion agent for the Convertible Preferred Stock in the 2 Borough of Manhattan, City of New York, appointed for such purpose by the Corporation, with the Notice of Election to Convert on the back of said certificate completed and signed. Unless the shares issuable on conversion are to be issued in the same name as the name in which such share of Convertible Preferred Stock is registered, each share surrendered for conversion shall be accompanied by instruments of transfer, in form satisfactory to the Corporation and duly executed by the holder or his duly authorized attorney, and an amount sufficient to pay any transfer or similar tax. No payment or adjustment shall be made on conversion for dividends accumulated on the Convertible Preferred Stock surrendered for conversion or for dividends on Common Stock delivered on such conversion. As promptly as practicable after the surrender of the certificates for shares of Convertible Preferred Stock as aforesaid, the Corporation shall issue and shall deliver at such office to such holder, or on his written order, a certificate or certificates for the number of full shares of Common Stock issuable upon the conversion of such shares in accordance with the provisions of this paragraph (iii), and any fractional interest in respect of a share of Common Stock arising upon such conversion shall be settled as provided in subsection (III) of this paragraph (iii). Each conversion shall be deemed to have been effected immediately prior to the close of business on the date on which the certificates for shares of Convertible Preferred Stock shall have been surrendered and such notice received by the Corporation as aforesaid, and the person or persons in whose name or names any certificate or certificates for shares of Common Stock shall be issuable upon such conversion shall be deemed to have become the holder or holders of record of the shares represented thereby at such time on such date, and such conversion shall be at the Conversion Price in effect at such time on such date, unless the stock transfer books of the Corporation shall be closed on that date, in which event such person or persons shall be deemed to have become such holder or holders of record at the close of business on the next succeeding day on which such stock transfer books are open, but such conversion shall be at the Conversion Price in effect on the date upon which such shares shall have been surrendered and such notice received by the Corporation. All shares of Common Stock delivered upon conversions of the Convertible Preferred Stock will upon delivery be duly and validly issued and fully paid and nonassessable, free of all liens and charges and not subject to any preemptive rights. (III) No fractional shares or scrip representing fractions of shares of Common Stock shall be issued upon conversion of the Convertible Preferred Stock. Instead of any fractional interest in a share of Common Stock which would otherwise be deliverable upon the conversion of a share of Convertible Preferred Stock, the Corporation shall pay to the holder of such share an amount in cash (computed to the nearest cent) equal to the current market price (as defined in subsection (IV)(d) of this paragraph (iii)) thereof at the close of business on the business day next preceding the day of conversion. If more than one share shall be surrendered for conversion at one time by the same holder, the number of full shares of Common Stock issuable upon conversion thereof shall be computed on the basis of the aggregate Liquidation Preference of the shares of Convertible Preferred Stock so surrendered. (IV) The Conversion Price shall be adjusted from time to time as follows: 3 (a) In case the Corporation shall hereafter (i) pay a dividend or make a distribution on the Common Stock in shares of Common Stock, (ii) subdivide its outstanding shares of Common Stock into a greater number of shares, (iii) combine its outstanding shares of Common Stock into a smaller number of shares, or (iv) issue by reclassification of the Common Stock any shares of capital stock of the Corporation, the Conversion Price in effect immediately prior to such action shall be adjusted so that the holder of any share of Convertible Preferred Stock thereafter surrendered for conversion shall be entitled to receive the number of shares of Common Stock or other capital stock of the Corporation which he would have owned or been entitled to receive immediately following such action had such share been converted immediately prior thereto. An adjustment made pursuant to this subdivision (a) shall become effective immediately after the record date, in the case of a dividend or distribution, or immediately after the effective date, in the case of a subdivision, combination or reclassification. If, as a result of an adjustment made pursuant to this subdivision (a), the holder of any share of Convertible Preferred Stock thereafter surrendered for conversion shall become entitled to receive shares of two or more classes of capital stock or shares of Common Stock and other capital stock of the Corporation, the Board (whose determination shall be conclusive and shall be described in a statement filed with the conversion agent by the Corporation as soon as practicable) shall determine the allocation of the adjusted Conversion Price between or among shares of such classes of capital stock or shares of Common Stock and other capital stock. (b) In case the Corporation shall hereafter issue rights or warrants to holders of its outstanding shares of Common Stock generally entitling them (for a period expiring within 45 days after the record date mentioned below) to subscribe for or purchase shares of Common Stock at a price per share less than the current market price per share (as determined pursuant to subdivision (d) of this subsection (IV)) of the Common Stock on the record date mentioned in the next sentence (other than pursuant to an automatic dividend reinvestment plan of the Corporation or any substantially similar plan), the Conversion Price shall be adjusted so that the same shall equal the price determined by multiplying the Conversion Price in effect immediately prior to the date of issuance of such rights or warrants by a fraction of which the numerator shall be the number of shares of Common Stock outstanding on the date of issuance of such rights or warrants plus the number of shares which the aggregate offering price of the total number of shares so offered would purchase at such current market price, and of which the denominator shall be the number of shares of Common Stock outstanding on the date of issuance of such rights or warrants plus the number of additional shares of Common Stock offered for subscription or purchase. Such adjustment shall become effective immediately after the record date for the determination of stockholders entitled to receive such rights or warrants. (c) In case the Corporation shall hereafter distribute to holders of its outstanding shares of Common Stock generally evidences of its indebtedness or assets (excluding any cash dividend paid from retained earnings of the Corporation and dividends or distributions payable in 4 stock for which adjustment is made pursuant to subdivision (a) of this subsection (IV)) or rights or warrants to subscribe to securities of the Corporation (excluding those referred to in subdivision (b) of this subsection (IV)), then in each such case the Conversion Price shall be adjusted so that the same shall equal the price determined by multiplying the Conversion Price in effect immediately prior to the date of such distribution by a fraction of which the numerator shall be the current market price per share (determined as provided in subdivision (d) of this subsection (IV)) of the Common Stock on the record date mentioned in the next sentence less the then fair market value (as determined by the Board, whose determination shall be conclusive and shall be described in a statement filed with the conversion agent by the Corporation as soon as practicable) of the portion of the evidences of indebtedness or assets so distributed to the holder of one share of Common Stock or of such subscription rights or warrants applicable to one share of Common Stock, and of which the denominator shall be such current market price per share of Common Stock. Such adjustment shall become effective immediately after the record date for the determination of stockholders entitled to receive such distribution. (d) For the purpose of subsection (III) and subdivisions (b) and (c) of this subsection (IV), the current market price per share of Common Stock on any date shall mean the price of a share of Common Stock on the relevant date, determined on the basis of the last reported sale price regular way of the Common Stock as reported on the composite tape; or similar reporting system, for issues listed on the New York Stock Exchange (or if the Common Stock is not then listed on that Exchange, for issues listed on such other national securities exchange upon which the Common Stock is listed as may be designated by the Board for the purposes hereof) or, if there is no such reported sale on the day in question, on the basis of the average of the closing bid and asked quotations as so reported, or, if the Common Stock is not then listed on any national securities exchange, on the basis of the closing price, if the Common Stock is a national market issue, or the average of the high bid and low asked quotations on the day in question in the over-the-counter market as reported by the National Association of Securities Dealers' Automated Quotations System, or if not so quoted, as reported by National Quotation Bureau, Incorporated, or a similar organization. (e) In any case in which this paragraph (iii) shall require that an adjustment be made immediately following a record date or an effective date, the Corporation may elect to defer (but only until five business days following the filing by the Corporation with the conversion agent of the certificate of independent public accountants required by subdivision (g) of this subsection (IV)) issuing to the holder of any share of Convertible Preferred Stock converted after such record date or effective date the additional shares of Common Stock or other capital stock issuable upon such conversion over and above the shares of Common Stock or other capital stock issuable upon such conversion on the basis of the Conversion Price prior to adjustment, and paying to such holder any amount of cash in lieu of a fractional share. 5 (f) No adjustment in the Conversion Price shall be required to be made unless such adjustment would require an increase or decrease of at least 1% of such price; provided, however, that any adjustments which by reason of this subdivision (f) are not required to be made shall be carried forward and taken into account in any subsequent adjustment. All calculations under this paragraph (iii) shall be made to the nearest cent or to the nearest 1/100th of a share, as the case may be. Anything in this paragraph (iii) to the contrary notwithstanding, the Corporation shall be entitled to make such reduction in the Conversion Price, in addition to those required by this paragraph (iii), as it in its discretion shall determine to be advisable in order that any stock dividend, subdivision of shares, distribution of rights to purchase stock or securities, or distribution of securities convertible into or exchangeable for stock hereafter made by the Corporation to its stockholders shall not be taxable to the recipients. (g) Whenever the Conversion Price is adjusted as herein provided, (i) the Corporation shall promptly file with the conversion agent a certificate of a firm of independent public accountants (who may be the regular accountants employed by the Corporation) setting forth the Conversion Price after such adjustment and setting forth a brief statement of the facts requiring such adjustment and the manner of computing the same, which certificate shall be conclusive evidence of the correctness of such adjustment, and (ii) a notice stating that the Conversion Price has been adjusted and setting forth the adjusted Conversion Price shall forthwith be mailed by the Corporation to the holders of the Convertible Preferred Stock at their addresses as shown on the stock books of the Corporation. (h) In the event that at any time as a result of an adjustment made pursuant to subdivision (a) of this subsection (IV), the holder of any share of Convertible Preferred Stock thereafter surrendered for conversion shall become entitled to receive any shares of the Corporation other than shares of Common Stock, thereafter the Conversion Price of such other shares so receivable upon conversion of any share shall be subject to adjustment from time to time in a manner and on terms as nearly equivalent as practicable to the provisions with respect to Common Stock contained in this paragraph (iii). (V) In case: (a) the Corporation shall take any action which would require any adjustment in the Conversion Price pursuant to subsection (IV)(c); or (b) the Corporation shall authorize the granting to the holders of the Common Stock of rights or warrants to subscribe for or purchase any shares of stock of any class or of any other rights; or (c) there shall be any capital stock reorganization or reclassification of the Common Stock (other than a subdivision or combination of the outstanding Common Stock and other than a change in the par value of the Common Stock), 6 or any consolidation or merger to which the Corporation is a party or any statutory exchange of securities with another corporation and for which approval of any stockholders of the Corporation is required, or any sale or transfer of all or substantially all the assets of the Corporation; or (d) there shall be a voluntary dissolution, liquidation or winding-up of the Corporation; then the Corporation shall cause to be filed with the conversion agent, and shall cause to be mailed to the holders of shares of the Convertible Preferred Stock at their addresses as shown on the stock books of the Corporation, at least 10 days prior to the applicable date hereinafter specified, a notice stating (i) the date on which a record is to be taken for the purpose of such distribution or rights, or, if a record is not to be taken, the date as of which the holders of Common Stock of record to be entitled to such distribution or rights are to be determined, or (ii) the date on which such reorganization, reclassification, consolidation, merger, statutory exchange, sale, transfer, dissolution, liquidation or winding-up is expected to become effective, and the date as of which it is expected that holders of Common Stock of record shall be entitled to exchange their shares of Common Stock for securities or other property deliverable upon such reorganization, reclassification, consolidation, merger, statutory exchange, sale, transfer, dissolution, liquidation or winding-up. Failure to give such notice or any defect therein shall not affect the legality or validity of the proceedings described in subdivision (a), (b), (c) or (d) of this subsection (V). (VI) The Corporation covenants that it will at all times reserve and keep available, free from preemptive rights, out of the aggregate of its authorized but unissued shares of Common Stock or its issued shares of Common Stock held in its treasury, or both, for the purpose of effecting conversions of the Convertible Preferred Stock, the full number of shares of Common Stock deliverable upon the conversion of all shares of Convertible Preferred Stock then outstanding and not theretofore converted or then deliverable upon conversion of the Corporation's 6.25% Convertible Debentures Due January 20, 2007 (the "2007 Debentures"). For purposes of this subsection (VI), the number of shares of Common Stock that shall be deliverable upon the conversion of all such shares of Convertible Preferred Stock shall be computed as if at the time of computation all such shares were held by a single holder. Before taking any action that would cause an adjustment reducing the Conversion Price below the then par value (if any) of the shares of Common Stock deliverable upon conversion of the Convertible Preferred Stock, the Corporation will take any corporate action which may, in the opinion of its counsel, be necessary in order that the Corporation may validly and legally issue fully paid and nonassessable shares of Common Stock at such adjusted Conversion Price. To the extent not already listed, the Corporation will endeavor to list the shares of Common Stock required to be delivered upon conversion of the Convertible Preferred Stock prior to such delivery upon each national securities exchange, if any, upon which the outstanding Common Stock is listed at the time of such delivery. 7 Prior to the delivery of any securities which the Corporation shall be obligated to deliver upon conversion of the Convertible Preferred Stock, the Corporation will endeavor to comply with all federal and state laws and regulations thereunder requiring the registration of such securities with, or any approval of or consent to the delivery thereof by, any governmental authority. (VII) The Corporation will pay any and all documentary stamp or similar issue or transfer taxes payable in respect of the issue or delivery of shares of Common Stock on conversions of the Convertible Preferred Stock pursuant hereto; provided, however, that the Corporation shall not be required to pay any tax which may be payable in respect of any transfer involved in the issue or delivery of shares of Common Stock in a name other than that of the holder of the Convertible Preferred Stock to be converted and no such issue or delivery shall be made unless and until the person requesting such issue or delivery has paid to the Corporation the amount of any such tax or has established, to the satisfaction of the Corporation, that such tax has been paid. (VIII) Notwithstanding any other provision herein to the contrary, in case of any consolidation or merger to which the Corporation is a party (other than a merger or consolidation in which the Corporation is the continuing corporation), or in case of any statutory exchange of securities with another corporation (including any exchange effected in connection with a merger of a third corporation into the Corporation), the holder of each share of Convertible Preferred Stock then outstanding shall have the right thereafter to convert such share into the kind and amount of securities, cash or other property receivable upon such consolidation, merger or statutory exchange by a holder of the number of shares of Common Stock into which such share of Convertible Preferred Stock might have been converted immediately prior to such consolidation, merger or statutory exchange, assuming such holder of Common Stock failed to exercise his rights of election, if any, as to the kind or amount of securities, cash or other property receivable upon such consolidation, merger or statutory exchange (provided that if the kind or amount of securities, cash or other property receivable upon such consolidation, merger or statutory exchange is not the same for each share of Common Stock in respect of which such rights of election shall not have been exercised ("non-electing share"), then for the purpose of this subsection (VIII) the kind and amount of securities, cash or other property receivable upon such consolidation, merger or statutory exchange for each nonelecting share shall be deemed to be the kind and amount so receivable per share by a plurality of the nonelecting shares). Thereafter, the holders of the Convertible Preferred Stock shall be entitled to appropriate adjustments with respect to their conversion rights to the end that the provisions set forth in this paragraph (iii) shall correspondingly be made applicable, as nearly as may be reasonable, in relation to any shares of stock or other securities or property thereafter deliverable on the conversion of the Convertible Preferred Stock. Any such adjustment shall be approved by a firm of independent public accountants, evidenced by a certificate to that effect delivered to the conversion agent; and any adjustment so approved shall for all purposes hereof conclusively be deemed to be an appropriate adjustment. The above provisions of this subsection (VIII) shall similarly apply to successive consolidations, mergers or statutory exchanges. 8 (iv) Upon any conversion or redemption of shares of Convertible Preferred Stock, the shares of Convertible Preferred Stock so converted or redeemed shall have the status of authorized and unissued shares of Series Preferred Stock, and the number of shares of Series Preferred Stock which the Corporation shall have authority to issue shall not be decreased by the conversion or redemption of shares of Convertible Preferred Stock. (v) The holders of shares of Convertible Preferred Stock shall have no voting rights whatsoever, except for any voting rights to which they may be entitled under the laws of the State of Delaware, and except as follows: (I) If and whenever at any time or times dividends payable on the Convertible Preferred Stock or on any other Parity Preferred Stock shall have been in arrears and unpaid in an aggregate amount equal to or exceeding the amount of dividends payable thereon for six quarterly periods or three semi-annual periods, as the case may be, then the holders of Parity Preferred Stock shall have, in addition to the other voting rights set forth herein, the exclusive right, voting separately as a class, to elect two directors of the Corporation, such directors to be in addition to the number of directors constituting the Board of Directors immediately prior to the accrual of such right, the remaining directors to be elected by the other class or classes of stock entitled to vote therefor at each meeting of stockholders held for the purpose of electing directors. Such voting right shall continue until such time as all cumulative dividends accumulated on all the Parity Preferred Stock having cumulative dividends shall have been paid in full and until any noncumulative dividends payable on all the Parity Preferred Stock having noncumulative dividends shall have been paid regularly for at least one year, at which time such voting right of the holders of the Parity Preferred Stock shall terminate, subject to revesting in the event of each and every subsequent event of default of the character indicated above. Whenever such voting right shall have vested, such right may be exercised initially either at a special meeting of the holders of the Parity Preferred Stock, called as hereinafter provided, or at any annual meeting of stockholders held for the purpose of electing directors, and thereafter at each successive annual meeting. At any time when such voting right shall have vested in the holders of the Parity Preferred Stock, and if such right shall not already have been initially exercised, a proper officer of the Corporation shall, upon the written request of the holders of record of 10% in number of shares of the Parity Preferred Stock then outstanding, addressed to the Secretary of the Corporation, call a special meeting of the holders of the Parity Preferred Stock and of any other class or classes of stock having voting power with respect thereto for the purpose of electing directors. Such meeting shall be held at the earliest practicable date upon the notice required for annual meetings of stockholders at the place for holding of annual meetings of stockholders of the Corporation, or, if none, at a place designated by the Secretary of the Corporation. 9 If such meeting shall not be called by the proper officers of the Corporation within 30 days after the personal service of such written request upon the Secretary of the Corporation, or within 30 days after mailing the same within the United States of America, by registered mail, addressed to the Secretary of the Corporation at its principal office (such mailing to be evidenced by the registry receipt issued by the postal authorities), then the holders of record of 10% in number of shares of the Parity Preferred Stock then outstanding may designate in writing one of their number to call such meeting at the expense of the Corporation, and such meeting may be called by such person so designated upon the notice required for annual meetings of stockholders and shall be held at the same place as is elsewhere provided for in this subsection (I). Any holder of the Parity Preferred Stock shall have access to the stock books of the Corporation for the purpose of causing a meeting of stockholders to be called pursuant to the provisions of this paragraph. Notwithstanding the provisions of this paragraph, however, no such special meeting shall be called during a period within 90 days immediately preceding the date fixed for the next annual meeting of stockholders. At any meeting held for the purpose of electing directors at which the holders of the Parity Preferred Stock shall have the right to elect directors as provided herein, the presence in person or by proxy of the holders of 33-1/3% of the then-outstanding shares of the Parity Preferred Stock shall be required and be sufficient to constitute a quorum of the Parity Preferred Stock for the election of directors by the holders of the Parity Preferred Stock. At any such meeting or adjournment thereof (A) the absence of a quorum of the holders of the Parity Preferred Stock shall not prevent the election of directors other than those to be elected by the holders of the Parity Preferred Stock and the absence of a quorum or quorums of the holders of other classes of capital stock entitled to elect such other directors shall not prevent the election of directors to be elected by the holders of the Parity Preferred Stock and (B) in the absence of a quorum of the holders of any class of stock entitled to vote for the election of directors, a majority of the holders present in person or by proxy of such class shall have the power to adjourn the meeting for the election of directors which the holders of such class are entitled to elect, from time to time, without notice other than announcement at the meeting, until a quorum shall be present. The directors elected pursuant to this subsection (I) shall serve until the next annual meeting or until their respective successors shall be elected and shall qualify; provided, however, that when the right of the holders of the Parity Preferred Stock to elect directors as herein provided shall terminate, the terms of office of all persons so elected by the holders of the Parity Preferred Stock shall terminate, and the number of directors of the Corporation shall thereupon be such number as may be provided in the By-Laws of the Corporation irrespective of any increase made pursuant to this subsection (I). (II) So long as any shares of the Convertible Preferred Stock remain outstanding, the Corporation will not, either directly or indirectly or through merger or consolidation with any other corporation: 10 (a) without the affirmative vote at a meeting or the written consent with or without a meeting of the holders of at least 66-2/3% in number of shares of the Series Preferred Stock of all series then outstanding, (A) create any class or classes of stock ranking equal or prior to the Series Preferred Stock either as to dividends or upon liquidation or increase the authorized number of shares of any class or classes of stock ranking equal or prior to the Series Preferred Stock either as to dividends or upon liquidation, (B) amend, alter or repeal any of the provisions of the Certificate of Incorporation so as to affect adversely the preferences, special rights or powers of the Series Preferred Stock or (C) authorize any reclassification of the Series Preferred Stock; (b) without the affirmative vote at a meeting or the written consent with or without a meeting of the holders of at least 66-2/3% in number of shares of the Convertible Preferred Stock then outstanding, amend, alter or repeal any of the provisions hereof so as to affect adversely the preferences, special rights or powers of the Convertible Preferred Stock; or (c) without the affirmative vote at a meeting or the written consent with or without a meeting of the holders of at least a majority in number of shares of the Series Preferred Stock of all series then outstanding, increase the authorized number of shares of the Series Preferred Stock. (vi) The shares of the Convertible Preferred Stock may be redeemed at the option of the Corporation as a whole at any time on or after January 20, 2004, upon not less than 25 or more than 60 days' prior notice mailed to the holders of the shares to be redeemed at their addresses as shown on the stock books of the Corporation, at a redemption price of $38.1875 per share, together with an amount equal to all dividends (whether or not earned or declared) accumulated and unpaid to the date fixed for redemption. Upon such redemption date, all holders of shares of Convertible Preferred Stock shall cease to be stockholders with respect to such shares and thereafter such shares shall no longer be transferable on the books of the Corporation and such holders shall have no interest or claim against the Corporation with respect to such shares except the right to receive payment of the redemption price upon surrender of their certificates. If full cumulative dividends on the Convertible Preferred Stock have not been paid, the Corporation may not purchase or acquire any shares of the Convertible Preferred Stock otherwise than pursuant to a purchase or exchange offer made on the same terms to all holders of the Convertible Preferred Stock. (vii) No consent of the holders of the Convertible Preferred Stock shall be required for (i) the creation of any indebtedness of any kind of the Corporation, (ii) the creation of any class of stock of the Corporation ranking junior as to dividends or upon liquidation to the Series Preferred Stock or (iii) any increase or decrease in the amount 11 of authorized Common Stock or any increase, decrease or change in the par value thereof or in any other terms thereof. (viii) The Board reserves the right by subsequent amendment from time to time to increase (subject to the provisions of paragraph (v)(II)(c)) or decrease the number of shares which constitute the Convertible Preferred Stock (but not below the aggregate number of shares thereof then outstanding or then deliverable upon conversion of the 2007 Debentures) and in other respects to amend the terms of the Convertible Preferred Stock within the limitations provided by law, resolutions of the Board and the Certificate of Incorporation. 12 EX-4.3 4 EXHIBIT 4.3 PURCHASE AGREEMENT PURCHASE AGREEMENT (the "Agreement") dated as of January 20, 2000 between PAINE WEBBER GROUP INC., a Delaware corporation (the "Company"), and (the "Employee"). WHEREAS, the Employee wishes to purchase from the Company, and the Company wishes to issue and sell to the Employee, ___ of the Company's 6.25% Convertible Debentures Due 2007 (the "Debenture" or "Debentures") in the aggregate principal amount of $ on the terms set forth herein; and WHEREAS, the Company has duly authorized the issuance to the Employee of the Debenture substantially in the form being issued and delivered to the Employee simultaneously with the execution and delivery of this Agreement; NOW, THEREFORE, in consideration of the mutual agreements contained herein, the parties hereto agree as follows: 1. SALE OF DEBENTURE In reliance on the representations and agreements contained herein, simultaneously with the execution and delivery of this Agreement by the parties hereto the Employee is purchasing from the Company, and the Company is issuing and selling to the Employee, ___ Debentures at a purchase price of $________ (the "Purchase Price"). In payment therefor, the Employee is delivering to the Company a promissory note in an amount equal to 100% of the Purchase Price. The principal amount due on Note is non-recourse and the interest thereon is recourse. 2. REPRESENTATIONS AND WARRANTIES OF THE EMPLOYEE The Employee hereby represents and warrants that: 2.1 Investment Intent. The Debenture, the shares of Series A Convertible Redeemable Preferred Stock, liquidation value $38.1875 per share, of the Company (the "Preferred Stock") issuable upon conversion of the Debenture, and the shares of Common Stock, $1.00 par value per share, of the Company (the "Common Stock") issuable upon conversion of the Preferred Stock are being or will be acquired by the Employee solely for his own account for investment and not with a view to, or any present intention of, distribution thereof. 2.2 Nature of Employee. The Employee has such knowledge in business and financial matters that he is capable of evaluating the merits and risks of his investment in the Debenture, the Preferred Stock and the Common Stock and has had an opportunity to ask questions concerning the Company and the Debenture, the Preferred Stock and the Common Stock. The Employee has previously been provided with the most recent copies of the Company's proxy statement, its Annual Report on Form 10-K for the fiscal year ending December 31, 1999 and the 10(a) Prospectus, dated April 26, 2000 describing this offering of Debentures. 1 3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY The Company represents and warrants that: 3.1 Existence and Authority. The Company (i) is a corporation duly organized and validly existing in good standing under the laws of the State of Delaware and (ii) has all requisite power and authority to enter into this Agreement, to issue the Debentures and to carry out its obligations under this Agreement and the Debentures. 3.2 No Conflict. The execution, delivery and performance of this Agreement and the Debentures do not and will not conflict with, violate or result in a default under the certificate of incorporation or by-laws of the Company or any other agreement or instrument to which the Company is a party or by which it or any of its property is bound or any law or regulation or require the consent of any governmental body or other regulatory authority. 3.3 No Default. No default has occurred and is continuing and no condition exists that, upon the issuance of the Debentures, would constitute an Event of Default (as defined in the Debenture) or, with the lapse of time or the giving of notice or both, would become an Event of Default. 3.4 Corporate Proceedings. (a) The Company has taken all corporate actions necessary to be taken by it to authorize the execution and delivery of this Agreement, the issuance and delivery of the Debentures and the performance by it of all obligations on its part to be performed under this Agreement and the Debentures. (b) The Company shall take all corporate action necessary to be taken by it to establish the Preferred Stock, having the terms specified in Exhibit A hereto, and to reserve sufficient shares of Preferred Stock for issuance upon conversion of the Debentures. The shares of Preferred Stock, when issued, will be duly and validly issued, fully paid and nonassessable. (c) The Company shall reserve sufficient shares of Common Stock, whether authorized but unissued or issued but not outstanding, for issuance upon conversion of the Preferred Stock that will become issuable on or after such dates upon conversion of the Debentures. The shares of Common Stock to be issued upon conversion of the Preferred Stock, when issued, will be duly and validly issued and fully paid and nonassessable. 4. RESTRICTIONS ON TRANSFER 4.1 Securities Act of 1933. The Debenture and the shares of Preferred Stock and Common Stock issuable upon conversion of the Debenture and the Preferred Stock, respectively, may not be sold, transferred or otherwise disposed of until a registration statement, filed by the Company pursuant to the 1933 Act with respect to such security is declared effective. 4.2 Limited Transfer of Debenture and Preferred Stock. The Debenture and the shares of Preferred Stock issuable upon conversion of the Debenture may not be sold, pledged, 2 transferred or otherwise disposed of, except that they (a) may be transferred by will or pursuant to the laws of descent and distribution, and (b) may be pledged as security for funds borrowed to finance or refinance the purchase of the Debenture. 4.3 Transferees of Debenture and Preferred Stock. All subsequent holders of the Debenture and the shares of Preferred Stock issuable upon conversion of the Debentures shall be subject to this Agreement and shall succeed to all the rights and obligations of the Employee hereunder. 5. COMPANY COVENANTS The Company covenants and agrees that as long as the Debenture remains outstanding the Company shall refrain from taking any action, by amendment of its certificate of incorporation or otherwise, that would impair the rights of the holders of Preferred Stock (whether or not any Preferred Stock is at the time outstanding). 6. DEFINITIONS "Event of Default" shall mean one of the Events of Default enumerated under the heading "Events of Default; Acceleration" in the Debenture. "Person" shall mean any corporation, banking corporation or association, partnership, trust, estate, individual, unincorporated business entity or government or agency or political subdivision thereof. "Subsidiary" shall mean any corporation, association or other business entity which is required to be consolidated with the Company under generally accepted accounting principles. 7 MISCELLANEOUS 7.1 Replacement of Debenture. Upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of the Debenture and, in the case of such mutilation, upon surrender or cancellation of such Debenture, the Company, at its expense, shall execute and deliver in lieu thereof a new Debenture of like tenor dated the date to which interest shall have been paid on such Debenture or, if no interest shall have been so paid, then dated the date of such Debenture. 7.2 Amendment or Waiver. Any amendment or modification of this Agreement must be in writing and signed by both the Employee and an authorized officer of the Company. A waiver of any provision of this Agreement must be in writing and signed by the Employee or an authorized officer of the Company, as the case may be. No waiver by the Company or the Employee of any breach by the other party of any condition or provision contained in this Agreement to be performed by such other party shall be deemed a waiver of a similar or dissimilar condition or provision at the same or any prior or subsequent time. 3 7.3 Severability. In the event that any provision or portion of this Agreement shall be determined to be invalid or unenforceable for any reason, in whole or in part, the remaining provisions of this Agreement shall be unaffected thereby and shall remain in full force and effect to the fullest extent permitted by law. 7.4 Notices. Any notice herein required or permitted to be given shall be in writing and shall be deemed to have been given when delivered personally or sent by certified or registered mail, postage prepaid, return receipt requested, duly addressed to the party concerned at the address indicated below or to such other address as such party may subsequently give notice of If to the Company: Paine Webber Group Inc. 1285 Avenue of the Americas New York, New York 10019 Attention: Matthew Levitan If to the Employee: To the Employee at his address as it appears in the records of the Company 7.5 Headings. The section headings contained in this Agreement are for convenience only and shall not in any way affect the meaning or construction of this Agreement. 7.6 Counterparts. This Agreement may be executed in separate counterparts, all of which taken together shall constitute one and the same agreement. 7.7 Choice of Law. This Agreement shall be governed by and construed and interpreted in accordance with the laws of the State of New York, without reference to principles of conflict of laws. 7.8 Successors and Assigns. Except as otherwise expressly indicated herein, this Agreement is intended to inure to the benefit of and be enforceable by the Employee and his beneficiary, estate or other legal representative and permitted assigns and the Company and its successors and assigns. 4 IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and year first written above. PAINE WEBBER GROUP INC. By: ---------------------------------- Title: [Employee] EX-23.1 5 EXHIBIT 23.1 Exhibit 23.1 Consent of Independent Auditors We consent to the incorporation by reference in the Registration Statement (Form S-8) of Paine Webber Group Inc. pertaining to the Paine Webber Group Inc. 6.25% Convertible Debentures Due 2007 in Connection with the 2000 KEEP Program of our report dated January 31,2000, 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, 1999. /s/ Ernst & Young New York, New York April 26, 2000 EX-23.2 6 EXHIBIT 23.2 Exhibit 23.2 PaineWebber Group Inc. 1285 Avenue of the Americas New York, NY 10019-6025 212 713-2879 Theodore A. Levine General Counsel Senior Vice President Secretary [Company Letterhead] April 25, 2000 Paine Webber Group Inc. 1285 Avenue of the Americas New York, New York 10019 I am Senior Vice President and General Counsel of and have acted as counsel for Paine Webber Group Inc., a Delaware corporation (the "Company"), in connection with the proposed filing with the Securities and Exchange Commission expected to be made on or about April 26, 2000, under the Securities Act of 1933, as amended, of a Registration Statement on Form S-8 (the "Registration Statement") for the purpose of registering $76,375,000 of 6.25% Convertible Debentures due February 28, 2007 (the "Debentures"); 2,000,000 shares of Series A Convertible Redeemable Preferred Stock (the "Preferred Stock") and 2,000,000 shares of Common Stock, $1 par value of the Company (the "Common Stock") in accordance with the terms of the Paine Webber 2000 KEEP Program (the "Program"). In such capacity, I have examined the Restated Certificate of Incorporation and By-Laws of the Company, the Plan, and such other documents of the Company as I have deemed necessary or appropriate for the purposes of the opinion expressed herein. Based upon the foregoing and having regard for such legal considerations as I have deemed relevant, I am of the opinion that the Debentures, the Preferred Stock and Common Stock have been duly authorized by the Company and, when (a) issued and delivered by the Company in accordance with the terms of the Program and (b) paid for in full in accordance with the terms of the Program, the Debentures, the Preferred Stock and Common Stock will be issued, fully paid and non-assessable. The opinion expressed below is limited to the General Corporation Law of Delaware, and we do not express any opinion herein concerning any other law. I consent to the filing of this opinion as an exhibit to the Registration Statement and to the use of my name wherever appearing in the Registration Statement and any amendment thereto. Very truly yours, /s/ Theodore A. Levine 1 -----END PRIVACY-ENHANCED MESSAGE-----